Oaktree Capital Management
Annual Report 2020

Plain-text annual report

UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-K ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934. For the fiscal year ended December 31, 2020 or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934. For the transition period from to . Commission File Number 001-35500 Delaware (State or other jurisdiction of incorporation or organization) Oaktree Capital Group, LLC (Exact name of registrant as specified in its charter) 26-0174894 (I.R.S. Employer Identification Number) 333 South Grand Avenue, 28th Floor Los Angeles, CA 90071 Telephone: (213) 830-6300 (Address, zip code, and telephone number, including area code, of registrant’s principal executive offices) Title of each class 6.625% Series A preferred units 6.550% Series B preferred units Securities registered pursuant to Section 12(b) of the Act: Trading Symbol(s) OAK-PA OAK-PB Name of each exchange on which registered New York Stock Exchange New York Stock Exchange Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐ No ☒ Securities registered pursuant to Section 12(g) of the Act: None Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ☐ No ☒ Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 and 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter periods that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐ Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐ Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405 of this chapter) is not contained herein and will not be contained, to the best of the registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. ☒ Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act: Large Accelerated Filer Non-accelerated Filer ☐ ☒ Accelerated Filer Smaller Reporting Company Emerging Growth Company ☐ ☐ ☐ If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐ Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☐ Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒ As of February 24, 2021, there were 98,677,040 Class A units and 61,374,450 Class B units of the registrant outstanding. DOCUMENTS INCORPORATED BY REFERENCE None TABLE OF CONTENTS Business Risk Factors Unresolved Staff Comments Properties Legal Proceedings Mine Safety Disclosures Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Selected Financial Data Management’s Discussion and Analysis of Financial Condition and Results of Operations Quantitative and Qualitative Disclosures about Market Risk Financial Statements and Supplementary Data Changes in and Disagreements with Accountants on Accounting and Financial Disclosure Controls and Procedures Other Information Directors, Executive Officers and Corporate Governance Executive Compensation Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters Certain Relationships and Related Transactions, and Director Independence Principal Accounting Fees and Services Exhibits, Financial Statement Schedules Form 10-K Summary Page 8 20 44 44 44 44 45 45 46 66 69 132 132 132 133 139 146 148 152 153 154 PART I. Item 1. Item 1A. Item 1B. Item 2. Item 3. Item 4. PART II. Item 5. Item 6. Item 7. Item 7A. Item 8. Item 9. Item 9A. Item 9B. PART III. Item 10. Item 11. Item 12. Item 13. Item 14. PART IV. Item 15. Item 16. Signatures 2 FORWARD-LOOKING STATEMENTS This annual report contains forward-looking statements within the meaning of Section 27A of the U.S. Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the U.S. Securities Exchange Act of 1934, as amended (the “Exchange Act”), which reflect our current views with respect to, among other things, our future results of operations and financial performance. In some cases, you can identify forward-looking statements by words such as “anticipate,” “approximately,” “believe,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “outlook,” “plan,” “potential,” “predict,” “seek,” “should,” “will” and “would” or the negative version of these words or other comparable or similar words. These statements identify prospective information. Important factors could cause actual results to differ, possibly materially, from those indicated in these statements. Forward-looking statements are based on our beliefs, assumptions and expectations of our future performance, taking into account all information currently available to us. Such forward-looking statements are subject to risks and uncertainties and assumptions relating to our operations, financial results, financial condition, business prospects, growth strategy and liquidity. In addition to factors identified elsewhere in this annual report, the following factors, among others, could cause actual results to differ materially from forward-looking statements and information or historical performance: course and severity of the COVID-19 pandemic and its direct and indirect business impacts; disruptions resulting from the completion of the merger between an affiliate of Brookfield Asset Management Inc. and OCG that closed on September 30, 2019 that will impact OCG’s business, including current plans and operations; potential adverse reactions or changes to business relationships resulting from the completion of the merger; certain legal or regulatory restrictions resulting from the completion of the merger that may impact OCG’s ability to pursue certain business opportunities or strategic transactions; the ability of OCG to retain and hire key personnel; the continued availability of capital and financing following the merger; the business, economic and political conditions in the markets in which OCG operates; changes in OCG’s anticipated revenue and income, which are inherently volatile; changes in the value of OCG’s investments; the termination or amendment (including fee amendments) of certain service or sub-advisory agreements that generate revenues for OCG that are between OCG and its subsidiaries on the one hand and certain affiliates of OCG on the other hand; the pace of OCG’s raising of new funds; changes in assets under management; the timing and receipt of, and impact of taxes on, carried interest; distributions from and liquidation of OCG’s existing funds; the amount and timing of distributions on OCG’s preferred units; changes in OCG’s operating or other expenses; the degree to which OCG encounters competition; and general political, economic and market conditions. Any forward-looking statements and information speak only as of the date of this annual report or as of the date they were made, and except as required by law, OCG does not undertake any obligation to update forward-looking statements and information. For a more detailed discussion of these factors, also see the information under the captions “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in this annual report, and in each case any material updates to these factors contained in any of OCG’s future filings. As for the forward-looking statements and information that relate to future financial results and other projections, actual results will be different due to the inherent uncertainties of estimates, forecasts and projections and may be better or worse than projected and such differences could be material. Given these uncertainties, you should not place any reliance on these forward-looking statements and information. This annual report and its contents do not constitute and should not be construed as (a) a recommendation to buy, (b) an offer to buy or solicitation of an offer to buy, (c) an offer to sell or (d) advice in relation to, any securities of OCG or securities of any Oaktree investment fund. 3 We are providing the following summary of the risk factors contained in this annual report to enhance the readability and accessibility of our risk factor disclosures. We encourage you to carefully review the full risk factors contained in this annual report in their entirety for additional information regarding the material factors that make an investment in our preferred units speculative or risky. These risks and uncertainties include, but are not limited to, the following: Risk Factor Summary • Oaktree may alter the terms under which it or we do business when Oaktree or we deem it appropriate; • Our business could be materially harmed by conditions in the global financial markets and economies; • • The outbreak of COVID-19 may adversely affect us; If we were unable to raise capital from investors, it would adversely affect our financial condition; • We depend on OCM to advise our funds and support our operations; • Our revenues are volatile due to the nature and structure of our business; • Conflicts of interest or inter-fund governance matters could cause reputational harm to us; • The investment management business is intensely competitive, and poor performance of our funds could adversely affect our ability to raise capital for future funds; • We may not be able to maintain our current fee structure as a result of industry pressure from clients to reduce fees, which could have an adverse effect on our profit margins and results of operations; • We often pursue investment opportunities that involve business, regulatory, legal or other complexities; • • • • • • Extensive regulation and/or legal and regulatory changes, as well as regulatory compliance failures and negative publicity surrounding the financial industry in general, could adversely affect us; The replacement of LIBOR may adversely affect our credit arrangements and our collateralized loan obligation transactions; SEC rules barring so-called “bad actors” from relying on Rule 506 of Regulation D in private placements could materially adversely affect our business, financial condition and results of operations; Failure to comply with, or changes to, “pay to play” regulations could adversely affect our business; Failure to maintain the security of our information and technology networks could have a material adverse effect on us; Interruption of our information technology, communications systems or data services could disrupt our business, result in losses and/or limit our growth; • We are subject to substantial litigation risks and may face significant liabilities and damage to our professional reputation as a result; • • • Employee misconduct could harm us; The United Kingdom’s exit from the European Union could adversely affect us; The historical returns attributable to our funds should not be considered indicative of future results; • Certain of our funds make distressed debt investments that involve significant risks and potential liabilities; • Certain of our funds may be subject to risks arising from potential control group liability; • • Poor investment performance during periods of adverse market conditions may result in relatively high levels of investor redemptions, which can adversely impact the affected funds; Valuation methodologies for certain assets in our funds can be subject to significant subjectivity, and the values of assets established pursuant to the methodologies may never be realized; 4 • Our funds make investments in companies that are based outside the United States, which exposes us to additional risks; • We have made and expect to continue to make significant investments in our current and future funds, and we may lose money on some or all of our investments; • Our funds often invest in companies that are highly leveraged, a fact that may increase the risk of loss; • The use of leverage by our funds could have a material adverse effect on us; • Changes in the debt financing markets and higher interest rates may negatively impact our funds and their portfolio companies; • Our funds are subject to risks in using agents and third-party service providers; • • The market price of our preferred units could be adversely affected by various factors; If we fail to maintain effective internal controls over our financial reporting in the future, the accuracy and timing of our financial reporting may be adversely affected; • Distributions on the preferred units are discretionary and non-cumulative; • We have an indirect economic interest in only a portion of the earnings and cash flows of the Oaktree Operating Group, which may negatively impact our ability to pay distributions on our preferred units; • If we or any of our private funds were deemed an investment company under the Investment Company Act, applicable restrictions could make it impractical for us to continue our business or such funds; • Our operating agreement contains provisions that substantially limit remedies available to our preferred unitholders for actions that might otherwise result in liability for our officers and/or directors; • Our ability to make distributions to holders of any series of preferred units may be limited; • If the amount of distributions on the preferred units is greater than our gross ordinary income, then the amount that a holder of preferred units would receive upon liquidation may be less than the preferred unit liquidation value; • Holders of preferred units who are U.S. taxpayers should anticipate the need to file annually a request for an extension of the due date of their income tax return, and may be required to file amended income tax returns; • An investment in preferred units will give rise to UBTI to certain tax-exempt holders; • Non-U.S. holders face unique U.S. tax issues from owning preferred units that may result in adverse tax consequences to them; • Holders of preferred units may be subject to state and local taxes and return filing requirements as a result of investing in our preferred units; • Amounts distributed in respect of the preferred units could be treated as “guaranteed payments” for U.S. federal income tax purposes; and • Holders of preferred units who do not hold the units through the record date for a distribution may be allocated gross ordinary income even though no distribution is received. 5 MARKET AND INDUSTRY DATA This annual report includes market and industry data and forecasts that are derived from independent reports, publicly available information, various industry publications, other published industry sources and our internal data, estimates and forecasts. Independent reports, industry publications and other published industry sources generally indicate that the information contained therein was obtained from sources believed to be reliable. We have not commissioned, nor are we affiliated with, any of the sources cited herein. Our internal data, estimates and forecasts are based upon information obtained from investors in our funds, partners, trade and business organizations, and other contacts in the markets in which we operate and our management’s understanding of industry conditions. In this annual report, unless the context otherwise requires: “Oaktree” refers to (i) Oaktree Capital Group, LLC and, where applicable, its subsidiaries and affiliates prior to October 1, 2019 and (ii) the Oaktree Operating Group and, where applicable, their respective subsidiaries and affiliates after September 30, 2019. “OCG,” “Company,” “we,” “us,” “our” or “our company” refers to Oaktree Capital Group, LLC and, where applicable, its subsidiaries and affiliates, including, as the context requires, affiliated Oaktree Operating Group members after September 30, 2019. “OCM” refers to Oaktree Capital Management, L.P. and, where applicable, its subsidiaries and affiliates. OCM is one of the Oaktree Operating Group entities and acts as the U.S. registered investment adviser to most of the Oaktree funds. Subsequent to September 30, 2019, OCM is no longer our indirect subsidiary. “Oaktree Operating Group,” or “Operating Group,” refers collectively to the entities that either (i) act as or control the general partners and investment advisers of the Oaktree funds or (ii) hold interests in other entities or investments generating income for Oaktree. “OCGH” refers to Oaktree Capital Group Holdings, L.P., a Delaware limited partnership, which holds an interest in the Oaktree Operating Group and all of our Class B units. “OCGH unitholders” refers collectively to Oaktree senior executives, current and former employees and their respective transferees who hold interests in the Oaktree Operating Group through OCGH. “assets under management,” or “AUM,” generally refers to the assets Oaktree manages and equals the NAV (as defined below) of the assets Oaktree manages, the leverage on which management fees are charged, the undrawn capital that Oaktree is entitled to call from investors in the funds pursuant to their capital commitments, investment proceeds held in trust for use in investment activities and Oaktree’s pro rata portion of AUM managed by DoubleLine Capital LP and its affiliates (“DoubleLine”), in which Oaktree holds a minority ownership interest. For Oaktree’s collateralized loan obligation vehicles (“CLOs”), AUM represents the aggregate par value of collateral assets and principal cash, and for Oaktree’s BDCs, gross assets (including assets acquired with leverage), net of cash, for Oaktree’s special purpose acquisition companies, the proceeds of any initial public offering held in trust for use in a business combination, and for DoubleLine funds, NAV. Oaktree’s AUM amounts include AUM for which Oaktree charges no management fees. Oaktree’s definition of AUM is not based on any definition contained in our operating agreement or the agreements governing the funds that Oaktree manages. Oaktree’s calculation of AUM and the AUM-related metric described below may not be directly comparable to the AUM metrics of other investment managers. “incentive-creating assets under management,” or “incentive-creating AUM,” refers to the AUM that may eventually produce incentive income, as more fully described in “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Non-GAAP Measures—Assets Under Management—Incentive-creating Assets Under Management. “Class A units” refer to the common units of OCG designated as Class A units. “common units” or “common unitholders” refer to the Class A common units of OCG or Class A common unitholders, respectively, unless otherwise specified. “consolidated funds” refers to the funds and CLOs that we are required to consolidate as of the applicable reporting date. 6 “funds” refers to investment funds and, where applicable, CLOs and separate accounts that are managed by Oaktree or its subsidiaries. “Intermediate Holding Companies” collectively refers to the subsidiaries wholly owned by us. “net asset value,” or “NAV,” refers to the value of all the assets of a fund (including cash and accrued interest and dividends) less all liabilities of the fund (including accrued expenses and any reserves established by us, in our discretion, for contingent liabilities) without reduction for accrued incentives (fund level) because they are reflected in the partners’ capital of the fund. “preferred units” or “preferred unitholders” refer to the Series A and Series B preferred units of OCG or Series A and Series B preferred unitholders, respectively, unless otherwise specified. “senior executives” refers collectively to Howard S. Marks, Bruce A. Karsh, Jay S. Wintrob, John B. Frank and Sheldon M. Stone. 7 Part I. Item 1. Business Overview Oaktree is a leading global alternative investment management firm with expertise in investing in credit, real assets, private equity, and listed equities. Oaktree’s mission is to deliver superior investment results with risk under control and to conduct its business with the highest integrity. Oaktree emphasizes an opportunistic, value-oriented and risk-controlled approach to its investments. Over more than three decades, Oaktree has developed a large and growing client base through its ability to identify and capitalize on opportunities for attractive investment returns in less efficient markets. Oaktree was formed in 1995 by a group of individuals who had been investing together since the mid-1980s. Oaktree’s founders were pioneers in the management of high yield bonds, convertible securities and distressed debt. From those roots Oaktree has developed a diversified mix of specialized credit- and equity-oriented strategies. Oaktree operates according to a unifying investment philosophy, which consists of six tenets-risk control, consistency, market inefficiency, specialization, bottom-up analysis and disavowal of market timing-and is complemented by a set of core business principles that articulate our commitment to excellence in investing, commonality of interests with clients, a collaborative and cooperative culture, and a disciplined, opportunistic approach to the expansion of products. Brookfield Merger On March 13, 2019, Oaktree, Brookfield Asset Management Inc., a corporation incorporated under the laws of the Province of Ontario (“Brookfield”), Berlin Merger Sub, LLC, a Delaware limited liability company (“Merger Sub”) and a wholly-owned subsidiary of Brookfield, Oslo Holdings LLC, a Delaware limited liability company (“SellerCo”) and a wholly-owned subsidiary of Oaktree Capital Group Holdings, L.P. (“OCGH”), and Oslo Holdings Merger Sub LLC, a Delaware limited liability company and a wholly-owned subsidiary of Oaktree (“Seller MergerCo”) entered into an agreement and plan of merger (the “Merger Agreement”). Pursuant to the terms and conditions set forth in the Merger Agreement, effective on September 30, 2019, (i) Merger Sub merged with and into Oaktree (the “Merger”), with Oaktree continuing as the surviving entity, and (ii) immediately following the Merger, SellerCo merged with and into Seller MergerCo (the “Subsequent Merger” and together with the Merger, the “Mergers”), with Seller MergerCo continuing as the surviving entity. Upon the completion of the Mergers on September 30, 2019, Brookfield acquired 61.2% of Oaktree’s business in a stock and cash transaction. The remaining 38.8% of the business at that time continued to be owned by OCGH, whose unitholders consist primarily of Oaktree’s founders and certain other members of management and current and former employees. As part of the Merger, Brookfield acquired all outstanding vested OCG Class A units for, at the election of OCG Class A unitholders, either $49.00 in cash or 1.0770 Class A shares of Brookfield per OCG Class A unit (subject to pro-ration to ensure that no more than fifty percent (50%) of the aggregate merger consideration is paid in the form of cash or stock), in each case, without interest and subject to any applicable withholding taxes. In addition, as part of the Subsequent Merger the founders, senior management, and current and former employee-unitholders of OCGH sold 20% of their OCGH units to Brookfield for the same consideration as the OCG Class A unitholders received in the merger. Restructuring Transaction On the closing date of the Mergers, we and certain other entities entered into a Restructuring Agreement (the “Restructuring”) pursuant to which our direct and indirect ownership of general partner and limited partner interests in certain Oaktree Operating Group entities were transferred to newly-formed, indirect subsidiaries of Brookfield as of October 1, 2019. As a result, on October 1, 2019, four of the six Oaktree Operating Group entities were no longer our indirect subsidiaries. Accordingly, subsequent to that date, our consolidated financial statements reflect our indirect economic interest in only two of the Oaktree Operating Group entities: (i) Oaktree Capital I, L.P. (“Oaktree Capital I”), which acts as or controls the general partner of certain Oaktree funds and which holds a majority of Oaktree’s investments in its funds and (ii) Oaktree Capital Management (Cayman), L.P. (“OCM Cayman”), which represents Oaktree’s non-U.S. fee business. As of October 1, 2019, our consolidated financial statements no longer reflect any economic interests in the remaining four Oaktree Operating Group entities: (i) Oaktree Capital II, L.P. (“Oaktree Capital II”), which acts as or controls the general partner of certain Oaktree funds and which includes Oaktree’s investments in certain funds and other businesses, including Oaktree’s investment in DoubleLine Capital, L.P., (ii) Oaktree Capital Management, L.P. (“OCM”), an entity that serves as the U.S. registered investment adviser to most of the Oaktree funds, (iii) Oaktree Investment Holdings, L.P. (“Oaktree Investment Holdings”), which holds certain corporate investments in other entities and (iv) Oaktree AIF Investments, L.P. 8 (“Oaktree AIF”), which primarily holds interests in certain Oaktree fund investments for regulatory and structuring purposes. Please see “Business-Organizational Structure” below for a diagram of our organizational structure after the Restructuring. Prior to the Restructuring on October 1, 2019, our consolidated operating results included substantially all of the revenues and expenses of the Oaktree Operating Group and related consolidated funds and investment vehicles. Subsequent to the Restructuring, our consolidated operating results reflect only Oaktree Capital I and OCM Cayman and related consolidated funds and investment vehicles. Since the deconsolidation of the remaining four Oaktree Operating Group entities was not required to be presented on a retrospective basis, our results of operations for the year ended December 31, 2019 reflect a full year of activities for Oaktree Capital I and OCM Cayman and related funds and investment vehicles and only nine months of activities for the remaining four Oaktree Operating Group entities and related funds and investment vehicles and, as a result, are not directly comparable to prior periods. Our results of operations for the year ended December 31, 2020 only reflect activities for Oaktree Capital I and OCM Cayman and related funds and investment vehicles and do not include any activity for the remaining four Oaktree Operating Group entities and related funds and investment vehicles and, as a result, are not directly comparable to prior periods. As a result of the Restructuring, references to “Oaktree” in this annual report will generally refer to the collective business of the Oaktree Operating Group, of which we are a component. Structure and Operation of Our Business Our business is comprised of one segment, our investment management business, which consists of the investment management services that Oaktree provides to its clients, of which we are a component. Subsequent to the Restructuring we operate our business, in part, with service or subadvisory agreements that cover investment management and other supporting services either provided to, or provided by, OCM acting in its capacity as the investment manager of Oaktree funds. Generally, our employees directly provide investment management and administrative support for our non-U.S. fee-based operations, while providing investment management, marketing and administrative services to OCM. We receive fees from OCM for providing these services and pay fees to OCM based on the cost of administrative services it provides to us, including portions of certain of our executive officers’ compensation. In addition to such fee-based income as described in the preceding paragraph, our revenue includes the incentive income generated by certain funds that OCM manages of which we act as general partners, the investment income earned from the investments we make in Oaktree funds, third-party funds and other companies and management fees for funds where we act as the investment manager rather than OCM. The management fees that we receive are based on the contractual terms of the relevant fund and are typically calculated as a fixed percentage of gross assets or NAV of the particular fund. Incentive income represents our share (up to 20%) of the investors’ profits in most of the closed-end and evergreen funds. Investment income generally reflects the investment return on a mark-to-market basis and our equity participation on the amounts that we invest in Oaktree and third-party funds, as well as in collateralized loan obligation vehicles (“CLOs”) and other companies. Structure of Funds Closed-end Funds Oaktree’s closed-end funds are typically structured as limited partnerships that have a 10- or 11-year term and have a specified period during which clients can subscribe for limited partnership interests in the fund. Once a client is admitted as a limited partner, that client is required to contribute capital when called by us as the general partner, and generally cannot withdraw its investment. These closed-end funds have an investment period that generally ranges from three to five years, during which Oaktree is permitted to call the committed capital of those funds to make investments. As closed-end funds liquidate their investments, Oaktree typically distributes the proceeds to the clients, although during the investment period Oaktree has the ability to retain or recall such proceeds to make additional investments. Once a fund has committed to invest approximately 80% of its capital, Oaktree typically raises a new fund in the same strategy, generally ensuring that it always has capital to invest in new opportunities. Oaktree may also provide discretionary management services for clients within its closed-end fund strategies through a separate account or through a limited partnership or limited liability company managed by Oaktree with the client as the sole limited partner or sole non-managing member (a “fund-of-one”). Oaktree’s closed-end funds also include CLOs for which it serves as collateral manager. CLOs are structured finance vehicles in which Oaktree makes an investment and for which it is entitled to earn management fees. Investors in CLOs are generally unable to redeem their interests until the CLO liquidates, is called or otherwise terminates. 9 Open-end Funds Oaktree’s commingled open-end funds are typically structured as limited partnerships that are designed to admit clients as new limited partners (or accept additional capital from existing limited partners) on an ongoing basis during the fund’s life. Clients in commingled open- end funds typically contribute all of their committed capital upon being admitted to the fund. These funds do not have an investment period and do not distribute proceeds of realized investments to clients. Oaktree is permitted to commit the fund’s capital (including realized proceeds) to new investments at any time during the fund’s life. Clients in commingled open-end funds generally have the right to withdraw their capital from the fund on a monthly basis (with prior written notice of up to 90 days). Oaktree also provides discretionary management services for clients through separate accounts within the open-end fund strategies. Clients establish accounts with Oaktree by depositing funds or securities into accounts maintained by qualified independent custodians and granting Oaktree discretionary authority to invest such funds pursuant to their investment needs and objectives, as stated in an investment management agreement. Separate account clients generally may terminate Oaktree’s services at any time by providing us with prior notice of 30 days or less. Evergreen Funds Oaktree’s evergreen funds invest in marketable securities, private debt and equity, and in certain cases on a long or short basis. As with open-end funds, commingled evergreen funds are designed to accept new capital on an ongoing basis and generally do not distribute proceeds of realized investments to clients. Oaktree also provides discretionary management services for clients through separate accounts or funds-of-one within its evergreen fund strategies. Clients in evergreen funds are generally subject to a lock-up, which restricts their ability to withdraw their entire capital for a certain period of time after their initial subscription. Evergreen funds include business development companies (“BDCs”) and special purpose acquisition companies managed by Oaktree. Management Fees Oaktree receives management fees monthly or quarterly based on annual fee rates for our investment advisory services. The contractual terms of those management fees generally vary by fund structure. For most closed-end funds, the management fee rate is applied against committed capital during the fund’s investment period and the lesser of total funded capital or cost basis of assets in the liquidation period. For certain closed-end funds, management fees during the investment period may be calculated based on drawn capital or cost basis. Additionally, for those closed-end funds for which management fees are based on committed capital, Oaktree may elect to delay the start of the fund’s investment period and thus its full management fees, in which case Oaktree earns management fees based on drawn capital, and in certain cases, outstanding borrowings under a fund-level credit facility made in lieu of drawing capital, until it elects to start the fund’s investment period. Oaktree’s right to receive management fees typically ends after 10 or 11 years from either the initial closing date or the start of the investment period, even if assets remain in the fund. In the case of CLOs, the management fee is based on the aggregate par value of collateral assets and principal cash, as defined in the applicable CLO indentures, and a portion of the management fees is dependent on the sufficiency of the particular vehicle’s cash flow. For open-end funds, the management fee is generally based on the NAV of the fund or account. Evergreen funds typically pay management fees based on NAV, invested assets or contributions, and Oaktree’s BDCs pay management fees based on gross assets (including assets acquired with leverage), net of cash. In the case of certain open-end funds, Oaktree has the potential to earn performance-based fees, typically in reference to a relevant benchmark index or hurdle rate, which are classified as management fees. Management fees also include the quarterly incentive fees on investment income Oaktree earns from our BDCs and certain evergreen fund accounts, which are generally recurring in nature. In a number of strategies, Oaktree affords certain investors in the funds or clients of separate accounts more favorable economic terms than other investors in the same investment strategy, including with respect to management and performance-based fees, generally based on the aggregate size of commitments of such investor or client, as applicable, to one or more funds or accounts managed by Oaktree. Prior to the Restructuring, our consolidated operating results included management fees earned by OCM and OCM Cayman. Subsequent to the Restructuring, our consolidated operating results include management fees earned directly from the Oaktree funds where we act as investment manager rather than OCM and sub-advisory fees paid to us by OCM as compensation for services rendered by us in support of Oaktree’s investment management business. Sub-advisory fees are received monthly, quarterly or periodically, generally based on an allocation of profits or cost plus a profit margin. 10 Incentive Income We have the potential to earn incentive income from most of the closed-end funds managed by Oaktree in our capacity as the general partner of those funds. Substantially all of such funds follow the European-style waterfall, by which we receive incentive income only after the fund first distributes all contributed capital plus an annual preferred return, typically 8%. Once this occurs, we generally receive as incentive income 80% of all distributions otherwise attributable to our investors, and those investors receive the remaining 20% until we have received, as incentive income, 20% of all such distributions in excess of the contributed capital from the inception of the fund. Thereafter, all such future distributions attributable to our investors are distributed 80% to those investors and 20% to us as incentive income. As a result, we generally receive incentive income, if any, in the latter part of a fund’s life, although earlier in a fund’s term we may receive tax-related distributions, which we recognize as incentive income, to cover our allocable share of income taxes until we are otherwise entitled to payment of incentive income. We may also earn incentive income from certain evergreen funds on an annual basis, up to 20% of the year’s profits, subject to either a high-water mark or hurdle rate. The high-water mark refers to the highest historical NAV attributable to a limited partner’s account when either incentive income has been earned or the capital was contributed. Investment Income We earn investment income from our corporate investments in funds and companies, with Oaktree-managed funds constituting the majority of our corporate investments. Our investments in Oaktree-managed funds generally fall into one of four categories: general partner interests in commingled funds or funds-of-one, investments in CLOs, seed capital for new investment strategies prior to third-party capital raising, and corporate cash management. In the case of general partner interests in our closed-end or evergreen funds, we typically invest the greater of 2.5% of committed capital or $20 million in each fund, not to exceed $100 million per fund. For CLOs, we generally invest up to 10% of the CLO’s total par value. We may also invest in certain third-party managed funds or companies for strategic or financial purposes. Investment Approach As a component of Oaktree, we adhere to Oaktree’s goal of excellence in investing. This means achieving attractive investment returns without commensurate risk, an imbalance which can only be achieved in markets that are not “efficient.” Although Oaktree strives for superior returns, its first priority is that its actions produce consistency, protection of capital and outperformance in bad times. At its core, Oaktree is a contrarian, value-oriented investor focused on buying securities and companies at prices below their intrinsic value and selling or exiting those investments when they become fairly or fully valued. Oaktree believes it can do this best by investing in markets where specialization and superior analysis can offer an investing edge. In Oaktree’s investing activities, it adheres to the following fundamental tenets: • Focus on Risk-Adjusted Returns. Oaktree’s primary goal is not simply to achieve superior investment performance, but to do so with less-than-commensurate risk. Oaktree believes that the best long-term records are built more through the avoidance of losses in bad times than the achievement of superior relative returns in good times. Thus, rather than merely searching for prospective profits, Oaktree places the highest priority on preventing losses. It is Oaktree’s overriding belief that, especially in the opportunistic markets in which it works, “if we avoid the losers, the winners will take care of themselves.” • Emphasis on Consistency. Oaktree believes that a superior record is best built on a high batting average, rather than a mix of brilliant successes and dismal failures. Oscillating between top-quartile results in good years and bottom-quartile results in bad years is not acceptable. • The Importance of Market Inefficiency. Oaktree feels skill and hard work can lead to a “knowledge advantage,” and thus to potentially superior investment results, but not in the most efficient markets where larger numbers of participants have roughly equal access to information. Therefore, Oaktree only invests in less efficient markets in which dispassionate application of skill and effort should pay off for Oaktree clients. • Focus on Fundamental Analysis. Oaktree believes consistently excellent performance can only be achieved through superior knowledge of companies and their securities, not from macro-forecasting. Therefore, Oaktree employs a bottom-up approach to investing, based on proprietary, company-specific research. Oaktree’s investment professionals have developed a deep and thorough understanding of a wide number of companies and industries, providing Oaktree with a significant institutional knowledge 11 base. Oaktree uses overall portfolio structuring as a defensive tool to help it avoid dangerous concentration, rather than as an aggressive weapon expected to enable it to hold more of the things that do best. • Disavowal of Market Timing. Oaktree does not believe in the predictive ability required to correctly time markets. However, concern about the market climate may cause Oaktree to tilt toward more defensive investments, increase selectivity or act more deliberately. In our open-end and evergreen funds, Oaktree keeps portfolios fully invested whenever attractively priced assets can be bought. • Specialization. Oaktree offers a broad array of specialized investment strategies. It believes this offers the surest path to the results Oaktree, and its clients, seek. Clients interested in a single investment strategy can limit themselves to the risk exposure of that particular strategy, while clients interested in more than one investment strategy can combine investments in Oaktree funds to achieve their desired mix. Oaktree also provides clients both commingled and customized solutions with one-stop access to the breadth of its credit platform through its Multi-Strategy Credit strategy, which invests in a number of Oaktree liquid and illiquid credit strategies. Oaktree’s focus on specific strategies has allowed it to build investment teams with extensive experience and expertise. At the same time, Oaktree teams access and leverage each other’s expertise, affording Oaktree both the benefits of specialization and the strengths of a larger organization. Asset Classes and Investment Strategies Oaktree manages investments in a number of strategies across four asset classes: Credit, Private Equity, Real Assets and Listed Equities. The diversity of Oaktree’s investment strategies allows it to meet a wide range of investor needs suited for different market environments globally and, for certain strategies, targeted regions, while providing Oaktree with a long-term diversified revenue base. Oaktree adds new products when it identifies a market with potential for attractive returns that it believes can be exploited in a risk- controlled fashion, and where it has access to the investment talent capable of producing the results it seeks. Because of the high priority Oaktree places on assuring that these requirements are met, it prefers that new products represent “step-outs” from its current investment strategies into highly related fields that are managed by people with whom it has had extensive first-hand experience or for whom it can validate qualifications. When adding new products, Oaktree considers it far more important to avoid mistakes than to capture every opportunity. Oaktree’s asset classes are described below. We act as general partner or adviser for, and make investments in, funds that are within all four assets classes although we may not have an interest in a specific strategy group within each Oaktree asset class. Credit Oaktree’s credit strategies invest in both liquid and illiquid instruments, sourced directly from borrowers and via public markets. Oaktree focuses primarily on rated and non-rated debt of sub-investment grade issuers in developed and emerging markets, and it invests in an array of high yield bonds, convertible securities, leveraged loans, structured credit instruments, distressed debt and private debt. While varied in investment objective and risk-return profile, each of Oaktree’s credit strategies is grounded in its unifying investment philosophy, placing primary emphasis on risk control and consistency. Within the credit asset class, Oaktree’s strategies are: Distressed Debt, High Yield Bonds, Senior Loans, Private/Alternative Credit, Multi- Strategy Credit, Emerging Markets Debt and Convertible Securities. Private Equity Oaktree’s private equity strategies focus on a broad range of regions and market sectors, and they combine traditional private equity and distress-for-control activities. Using a flexible and opportunistic approach, Oaktree invests in companies it believes to be undervalued. Oaktree seeks to enhance value through key strategic and tactical initiatives, including rightsizing capital structures, streamlining operations, improving core businesses, and creating new platforms for growth. Oaktree teams leverage deep sector knowledge and extensive proprietary networks to gain superior access to deal flow, and they reflect Oaktree’s emphasis on risk control and downside protection. Within the private equity asset class, Oaktree’s strategies are: Corporate Private Equity and Special Situations. 12 Real Assets Oaktree’s real assets platform capitalizes on Oaktree’s global footprint, multi-disciplinary capabilities, extensive network of industry experts, and key relationships with operating partners. Oaktree adheres to its investment philosophy, emphasizing the purchase of assets – or liens on assets – where it believes the relationship between risk and return is asymmetrical and where it believes relationships and a knowledge advantage can make a significant positive impact on its ability to successfully source, purchase, manage and exit investments. Within the real assets asset class, Oaktree’s strategies are: Real Estate and Infrastructure. Listed Equities Oaktree’s listed equities strategies seek to invest in undervalued stocks in specific regions. By coupling fundamental analysis with in-depth country and industry knowledge, Oaktree looks to uncover stocks trading at a discount to their intrinsic value. Oaktree believes our superior knowledge allows us to identify attractive investment opportunities while limiting downside risk. Within the listed equities asset class, Oaktree’s strategies are: Emerging Market Equities and Value Equities. Investment Performance Oaktree’s investment professionals have generated impressive investment performance through multiple market cycles. Oaktree’s long term investment performance track record of positive gross and net IRRs reflects, among many factors, Oaktree’s practice of sizing funds in proportion to our view of the supply of potential attractive investment opportunities. Information regarding Oaktree’s most significant and longest-managed closed-end funds is shown below, as of or for the year ended December 31, 2020. ($ in millions) Credit: Distressed Debt Private/Alternative Credit Emerging Markets Debt Private Equity: Corporate Private Equity - European Principal Special Situations Corporate Private Equity - Power Opportunities Real Assets: Real Estate Opportunities Real Estate Debt Strategy Inception Assets Under (2) Management Since Inception through December 31, 2020 IRR Since Inception (1) Gross Net Gross Multiple of (3) Drawn Capital 1988 2001 2012 1999 1994 1995 1994 2010 $32,534 4,114 1,912 5,981 5,716 3,437 6,872 3,030 21.8% 13.0% 12.9% 12.2% 13.0% 34.6% 15.3% 14.6% 15.8% 8.8% 8.6% 7.9% 9.2% 26.4% 11.6% 10.1% 1.7x 1.3x 1.3x 1.7x 1.7x 2.3x 1.7x 1.2x (1) The internal rate of return (“IRR”) is the annualized implied discount rate calculated from a series of cash flows. It is the return that equates the present value of all capital invested in an investment to the present value of all returns of capital, or the discount rate that will provide a net present value of all cash flows equal to zero. Fund-level IRRs are calculated based upon the actual timing of cash contributions/distributions to investors and the residual value of such investor's capital accounts at the end of the applicable period being measured. Gross IRRs reflect returns before allocation of management fees, expenses and any incentive allocation to the fund's general partner. To the extent material, gross returns include certain transaction, advisory, directors or other ancillary fees ("fee income") paid directly to us in connection with the funds' activities (Oaktree credits all such fee income back to the respective fund(s) so that the funds' investors share pro rata in the fee income's economic benefit). Net IRRs reflect returns to non-affiliated investors after allocation of management fees, expenses and any incentive allocation to the fund's GP. The strategy inception and performance track record includes funds managed at Trust Company of the West by the portfolio managers and other senior investment professionals that joined Oaktree at its inception in 1995. (2) Assets Under Management as of December 31, 2020. All figures are based on the conversion of amounts or cash flows from EUR to USD using the foreign exchange spot rate of 1.22 as of December 31, 2020. (3) Gross multiple of drawn capital is calculated as drawn capital plus gross income and, if applicable, fee income before fees and expenses divided by drawn capital. 13 Performance of Oaktree’s open-end funds is in part measured in relation to applicable benchmark returns. Oaktree’s emphasis on risk control and credit selection has generally led to outperformance in challenging markets and over full market cycles. Information regarding Oaktree’s open-end funds, together with relevant benchmark data, is set forth below as of or for the periods ended December 31, 2020. ($ in millions) (2) : Credit High Yield Bonds U.S. High Yield Bonds Global High Yield Bonds European High Yield Bonds Convertibles High Income Convertibles Non-U.S. Convertibles U.S. Convertibles (3) Senior Loans U.S. Senior Loans European Senior Loans Listed Equities: Emerging Markets Equities Emerging Markets Equities Strategy Inception Assets Under Management Gross Net Relevant Benchmark Since Inception through December 31, 2020 Annualized Rates of Return (1) 1986 2010 1999 1989 1994 1987 2007 2006 $11,107 3,418 435 1,089 672 236 6,022 4,329 8.9 % 6.8 % 7.8 % 10.7 % 8.2 % 9.9 % 5.4 % 6.5 % 8.4 % 6.3 % 7.3 % 9.9 % 7.7 % 9.4 % 4.9 % 6.0 % 8.1 % 6.6 % 6.3 % 7.9 % 5.4 % 9.4 % 4.9 % 6.9 % 2011 7,931 5.1 % 4.3 % 3.7 % (1) Returns represent time-weighted rates of return, including reinvestment of income, net of commissions and transaction costs. The returns for Relevant Benchmarks are presented on a gross basis. The strategy inception and performance track record includes funds managed at Trust Company of the West by the portfolio managers and others senior investment professionals that joined Oaktree at its inception in 1995. (2) Excludes multi-strategy and structured credit funds. These funds include individual accounts across various strategies with different investment mandates. As such, a combined performance measure is not considered meaningful. (3) The majority of the AUM reflects levered closed-end vehicles, including CLOs and Enhanced Income Funds. The annualized rates of return reflect a composite of open-end accounts. 14 Information regarding Oaktree’s most significant Evergreen funds is shown below, as of or for the year ended December 31, 2020. ($ in millions) Credit: Private/Alternative Credit Strategic Credit (2) Distressed Debt Value Opportunities Emerging Markets Debt (3) Emerging Markets Debt Real Assets: Real Estate Real Estate Income (4) Listed Equities: Value/Other Equities Value Equities (5) Since Inception through December 31, 2020 Annualized Rates of Return (1) Strategy Inception Assets Under Management 2012 2007 2012 $6,133 1,136 929 Gross 9.0 % 8.9 % 9.4 % Net 6.8 % 5.4 % 7.1 % 2016 1,775 17.5 % 14.7 % 2012 1,006 17.5 % 12.5 % (1) Returns represent time-weighted rates of return. (2) AUM includes Oaktree’s publicly traded BDCs, Oaktree’s non-traded BDCs and two closed-end funds. The rates of return reflect the performance of a composite of certain evergreen accounts and exclude Oaktree’s publicly-traded BDCs. (3) AUM includes the Emerging Markets Debt Total Return and Emerging Markets Opportunities strategies. The rates of return reflect the performance of a composite of accounts for the Emerging Markets Debt Total Return strategy, including a single account with a December 2014 inception date. (4) AUM includes a non-traded REIT and a closed-end fund managed by Oaktree. The rates of return reflect the performance of certain evergreen accounts and exclude a non-traded REIT managed by Oaktree. (5) AUM includes Oaktree’s special purpose acquisition vehicles. Annualized rates of return reflect the performance of a composite of Oaktree’s Value Equities strategy. 15 Assets Under Management Oaktree’s assets under management increased $23.3 billion, or 18.7%, to $148.0 billion as of December 31, 2020 from $124.7 billion as of December 31, 2019, primarily driven by $21.0 billion of closed-end fund capital commitments and $9.2 billion of market value appreciation and foreign currency translation, partially offset by $7.1 billion of distributions from closed-end funds. The $21.0 billion of capital commitments to closed-end funds over the last twelve months included $13.3 billion for Oaktree Opportunities Fund XI, $2.0 billion for Oaktree Real Estate Opportunities Fund VIII, $1.0 billion for Oaktree European Capital Solutions Fund II, $0.9 billion for CLOs, and $0.7 billion for Oaktree Real Estate Debt Fund III. The following table details the change in Oaktree’s AUM during the years ended December 31, 2020 and 2019. (3) (2) (1) (4) Beginning balance Closed-end funds: Capital commitments/other Distributions for a realization event/other Change in uncalled capital commitments for funds entering or in liquidation Change in market value and foreign-currency translation Change in applicable leverage Open-end funds: Contributions Redemptions Change in market value and foreign-currency translation Evergreen funds: Contributions or new capital commitments Redemptions or distributions/other Change in market value and foreign-currency translation DoubleLine: Net change in DoubleLine (4) (4) (7) (5) (6) Ending balance Year ended December 31, 2020 2019 (in millions) $ 124,710 $ 119,560 21,028 (7,073) (320) 5,405 (49) 7,906 (4,937) 2,981 1,115 (1,052) 843 $ (2,554) 148,003 $ 9,745 (7,526) (705) 1,897 (2,454) 4,102 (10,551) 4,062 1,039 (724) 591 5,674 124,710 (1) These amounts include capital commitments, as well as the aggregate par value of collateral assets and principal cash related to new CLO formations. (2) These amounts include distributions for a realization event, tax-related distributions, reductions in the par value of collateral assets and principal cash resulting from the repayment of debt as return of principal by CLOs, and recallable distributions at the end of the investment period. (3) The change in uncalled capital commitments generally reflects declines attributable to funds entering their liquidation periods, as well as capital contributions to funds in their liquidation periods for deferred purchase obligations or other reasons. (4) The change in market value reflects the change in NAV of Oaktree’s funds, less management fees and other fund expenses, as well as changes in the aggregate par value of collateral assets and principal cash held by CLOs and other levered funds. (5) These amounts include contributions and capital commitments, and for Oaktree’s publicly-traded BDCs, issuances of equity or debt capital. (6) These amounts include redemptions and distributions, and for Oaktree’s publicly-traded BDCs, dividends, repurchases of equity capital or repayment of debt. (7) DoubleLine AUM reflects Oaktree’s pro-rata portion (based on Oaktree’s 20% ownership stake) of DoubleLine’s total AUM. 16 Marketing and Client Relations Client relationships are fundamental to Oaktree’s business and by extension, to our business. Oaktree believes its success is a byproduct of the success of Oaktree fund investors and thus always strive to achieve superior returns with risk under control, to charge fair and transparent management fees, and to conduct itself with the highest levels of professionalism and integrity. Oaktree has developed a loyal following among many of the world’s most significant institutional investors, and believes that their loyalty, as well as the loyalty of Oaktree’s other investors, results from Oaktree’s superior investment record, its reputation for integrity, and the fairness and transparency of its fee structures. We benefit from Oaktree’s extensive in-house global Marketing and Client Relations groups, which are dedicated to relationship management, sales and client service in the Americas, Asia/Pacific, Europe and the Middle East. This relationship management, sales and client service team is augmented by product specialists and dedicated support staff across the areas of due diligence services, product management and marketing programming. Human Capital We are a values-driven firm that seeks to demonstrate integrity in all that we do. We strive to maintain a work environment that fosters integrity, professionalism, excellence, candor and collegiality among our employees. Because our people are our most important asset, we are committed to cultivating an environment that is inclusive and honors diversity of thought. Providing training and career development opportunities and emphasizing strong support for our local communities through philanthropic initiatives are essential to our culture. We consider our labor relations to be good. As of December 31, 2020, OCM had 749 employees and we had 269 employees. Competition Oaktree and, by extension, we compete with many other firms in every aspect of our business, including raising funds, seeking investments and hiring and retaining professionals. Many of Oaktree’s competitors are substantially larger than Oaktree and have considerably greater financial, technical and marketing resources. Certain of these competitors periodically raise significant amounts of capital in investment strategies that are similar to Oaktree’s investment strategies. Some of these competitors also may have a lower cost of capital and access to funding sources that are not available to Oaktree, which may create further competitive disadvantages for us with respect to investment opportunities. In addition, some of these competitors may have higher risk tolerances or make different risk assessments than Oaktree does, allowing them to consider a wider variety of investments and establish broader networks of business relationships. In short, Oaktree and we operate in a highly competitive business and many of our competitors may be better positioned than we are to take advantage of opportunities in the marketplace. For additional information regarding the competitive risks that Oaktree and we face, please see “Risk Factors—Risks Relating to Our Business—The investment management business is intensely competitive.” Organizational Structure Oaktree Capital Group, LLC is a Delaware limited liability company that was formed on April 13, 2007. We are owned by our common and preferred unitholders. Oaktree’s operations are conducted through a group of operating entities collectively referred to as the “Oaktree Operating Group.” Prior to the Restructuring, we had an indirect economic interest in each of the members of the Oaktree Operating Group; however, after the Restructuring, we have an indirect economic interest in only two of the six Oaktree Operating Group members. Please see “Business-Restructuring Transaction” above for more details on which Oaktree Operating Group members remain our indirect subsidiaries and which Oaktree Operating Group members are no longer our indirect subsidiaries after the Restructuring. OCGH has a direct economic interest in all of the Oaktree Operating Group members. The interests in the Oaktree Operating Group are referred to as the “Oaktree Operating Group units.” An Oaktree Operating Group unit is not a separate legal interest but represents one limited partnership interest in each of the Oaktree Operating Group entities. 17 The diagram below depicts our organizational structure as of December 31, 2020. ______________________ (1) Holds 100% of the Class B units, which represents 86.15% of the total combined voting power of our outstanding Class A and Class B units. The Class B units have no economic interest in us. The general partner of Oaktree Capital Group Holdings, L.P. is Oaktree Capital Group Holdings GP, LLC, which is controlled by our senior executives. (2) Oaktree Capital Group, LLC is the public registrant and the issuer of the Series A and Series B preferred units listed on the NYSE. It also holds, directly or indirectly, the preferred mirror units issued by Oaktree Capital I, L.P. (3) The percent economic interest in Oaktree Operating Group represents the aggregate number of Oaktree Operating Group units held, directly or indirectly, as a percentage of the total number of Oaktree Operating Group units outstanding. As of December 31, 2020, there were 160,047,647 Oaktree Operating Group Units outstanding. (4) One additional entity, not reflected in this diagram, owns less than 1% interest in OCM Holdings I, LLC. 18 Regulatory Matters and Compliance Oaktree’s business, as well as the financial services industry in general, is subject to extensive regulation in the United States and elsewhere. Our indirect subsidiaries, Oaktree Capital Management (UK) LLP, Oaktree Capital Management (Europe) LLP and Oaktree Capital Management (International) Limited, are authorized and regulated by the U.K. Financial Conduct Authority (“FCA”) as an investment manager in the United Kingdom. The U.K. Financial Services and Markets Act 2000 (“FSMA”) and rules promulgated thereunder govern all aspects of the U.K. investment business, including sales, research and trading practices, the provision of investment advice, the use and safekeeping of client funds and securities, regulatory capital, recordkeeping, margin practices and procedures, the approval standards for individuals, anti-money laundering, periodic reporting, and settlement procedures. Similarly, we have a number of other non-U.S. subsidiaries that are regulated by the applicable regulators in their respective jurisdictions. Our affiliated entity OCM, who provides certain services to us, is registered as an investment adviser with the U.S. Securities and Exchange Commission (“SEC”). Registered investment advisers are subject to the requirements and regulations of the U.S. Investment Advisers Act of 1940, as amended (the “Advisers Act”). These requirements relate to, among other things, fiduciary duties to clients, maintaining an effective compliance program, solicitation agreements, conflicts of interest, recordkeeping and reporting, disclosure, limitations on agency cross and principal transactions between an adviser and advisory clients and general anti-fraud prohibitions. In addition, OCM is registered as a commodity pool operator and a commodity trading adviser with the U.S. Commodity Futures Trading Commission (“CFTC”). Registered commodity pool operators and commodity trading advisers are each subject to the requirements and regulations of the U.S. Commodity Exchange Act, as amended (the “Commodity Exchange Act”). These requirements relate to, among other things, maintaining an effective compliance program, recordkeeping and reporting, disclosure, business conduct, and general anti-fraud prohibitions. In addition, as a registered commodity pool operator and a commodity trading adviser with the CFTC, OCM is also required to be a member of the National Futures Association (the “NFA”), a self-regulatory organization for the U.S. derivatives industry. The NFA also promulgates and enforces rules governing the conduct of, and examines the activities of, its member firms. One of OCM’s indirect subsidiaries, OCM Investments, LLC, is registered as a broker-dealer with the SEC and in all 50 states, the District of Columbia and Puerto Rico, and is a member of the U.S. Financial Industry Regulatory Authority (“FINRA”). As a broker-dealer, this entity is subject to regulation and oversight by the SEC and state securities regulators. In addition, FINRA, a self-regulatory organization that is subject to oversight by the SEC, promulgates and enforces rules governing the conduct of, and examines the activities of, its member firms. Due to the limited authority granted to OCM Investments, LLC in its capacity as a broker-dealer, it is not required to comply with certain regulations covering trade practices among broker-dealers and the use and safekeeping of customers’ funds and securities. As a registered broker-dealer and member of a self-regulatory organization, OCM Investments, LLC, however, is subject to the SEC’s uniform net capital rule. Rule 15c3-1 of the Exchange Act specifies the minimum level of net capital a broker-dealer must maintain and also requires that a significant part of a broker-dealer’s assets be kept in relatively liquid form. The SEC and FINRA impose rules that require notification when net capital falls below certain predefined criteria, limit the ratio of subordinated debt to equity in the regulatory capital composition of a broker- dealer and constrain the ability of a broker-dealer to expand its business under certain circumstances. Additionally, the SEC’s uniform net capital rule imposes certain requirements that may have the effect of prohibiting a broker-dealer from distributing or withdrawing capital and requiring prior notice to the SEC for certain withdrawals of capital. Certain of our activities are subject to compliance with laws and regulations of U.S. federal, state and municipal governments, non- U.S. governments, their respective agencies and/or various self-regulatory organizations or exchanges relating to, among other things, antitrust laws, anti-money laundering laws, anti-bribery laws relating to foreign officials, and privacy laws with respect to client information, and some of our funds invest in businesses that operate in highly regulated industries. Any failure to comply with these rules and regulations could expose us to liability and/or reputational damage. Our business has operated for many years within a legal framework that requires our being able to monitor and comply with a broad range of legal and regulatory developments that affect our activities. However, additional legislation, changes in rules or changes in the interpretation or enforcement of existing laws and rules, either in the United States or elsewhere, may directly affect our mode of operation and profitability. Please see “Risk Factors—Risks Relating to Our Business— Regulatory changes in the United States, regulatory compliance failures and the effects of negative publicity surrounding the financial industry in general could adversely affect our reputation, business and operations.” 19 Financial and Other Information Financial and other information for the years ended December 31, 2020, 2019 and 2018 are discussed in “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Operating Metrics” included elsewhere in this annual report. Available Information Oaktree’s website address is www.oaktreecapital.com (the “Oaktree website”). Information on this website is not a part of this annual report and is not incorporated by reference herein. OCG makes available free of charge on this website or provides a link on this website to our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K and any amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Exchange Act, as soon as reasonably practicable after those reports are electronically filed with, or furnished to, the SEC. To access these filings, go to the “Unitholders—Investor Relations” section of the Oaktree website and then click on “SEC Filings.” In addition these reports and the other documents we file with the SEC are available at a website maintained by the SEC at www.sec.gov. Investors and others should note that OCG uses the Unitholders – Investor Relations section of the Oaktree website to announce material information to investors and the marketplace. While not all of the information that we posted on the Oaktree website is of a material nature, some information could be deemed to be material. Accordingly, we encourage investors, the media, and others interested in OCG to review the information that is shared on the Oaktree website at the Unitholders – Investor Relations section of the Oaktree website, ir.oaktreecapital.com. Information contained on, or available through, the Oaktree website is not incorporated by reference into this document. Item 1A. Risk Factors We are subject to a number of material risks inherent in our business. You should carefully consider the risks and uncertainties described below and other information included in this annual report. If any of the events described below occur, our business and financial results could be seriously harmed. The trading price of our preferred units could decline as a result of any of these risks, and you could lose all or part of your investment. Risks Relating to Our Business Given Oaktree’s focus on achieving superior investment performance with less-than-commensurate risk, and the priority afforded to its clients’ interests, Oaktree may reduce AUM, restrain its growth, reduce fees or otherwise alter the terms under which Oaktree or we do business when Oaktree or we deem it appropriate—even in circumstances where others might deem such actions unnecessary. This approach could adversely affect our results of operations. One of the means by which Oaktree seeks to achieve superior investment performance is by limiting the AUM in its strategies to an amount that it believes can be invested appropriately in accordance with Oaktree’s investment philosophy and current or anticipated economic and market conditions. In the past Oaktree has taken, and may continue to take, affirmative steps to limit the growth of AUM, including the AUM of the funds that produce revenues for us. These steps include: • • from time to time, Oaktree has suspended marketing certain open-end funds or other funds sub-advised by us or our affiliates, sometimes for long periods, and have declined to participate in searches aggregating billions of dollars; from time to time, Oaktree has returned capital from certain closed-end funds prior to the end of such funds’ respective investment periods or declined to call all of the capital committed to certain closed-end funds during those funds’ respective investment periods; • Oaktree intentionally sized certain closed-ended funds to be smaller than their predecessors even though additional capital could have been raised; and • since Oaktree’s founding it has turned away substantial amounts of capital offered to Oaktree for management. From time to time, Oaktree or we have, and may continue to, afford certain investors in our funds or separate account clients more favorable economic terms than other investors in the same fund or separate account clients within the same or similar investment strategy, including with respect to management fees and performance-based fees. The availability of such terms is generally based on the aggregate size of commitments of such investor or client to one or more funds or accounts managed by us or our affiliates. 20 Oaktree’s practice of putting clients’ interests first and forsaking short-term advantage by, for example, reducing assets under management or management fee or carried interest rates may reduce the profits we could otherwise realize in the short term and adversely affect our business and financial condition. Our unitholders should understand that in instances in which our clients’ interests diverge from the short-term interests of our unitholders, we intend to act in the interests of our clients. However, it is our fundamental belief that prioritizing our clients’ interests will maximize the long-term value of our business, which, in turn, will benefit our unitholders. Our business is materially affected by conditions in the global financial markets and economies, and any disruption or deterioration in these conditions could materially reduce our revenues, earnings and cash flow and adversely affect our overall performance, ability to raise or deploy capital, financial prospects and condition and liquidity position. Our business and the businesses in which our funds invest are materially affected by conditions in the global financial markets and economic conditions throughout the world that are outside our control, such as interest rates, the availability and cost of credit, inflation rates, economic uncertainty, political uncertainty, changes in laws (including laws relating to taxation), trade barriers, commodity prices, currency exchange rates and controls, volatility in financial markets, and national and international political circumstances (including wars, terrorist acts and security operations). These and other uncertain conditions in the global financial markets and economy have resulted in, and may continue to result in, adverse consequences for many of our funds, including restricting such funds’ investment activities and impeding such funds’ ability to effectively achieve their investment objectives. The economic environment in the past has resulted in, and may in the future result in, decreases in the market value of certain publicly-traded securities held by some of our funds. Illiquidity in certain portions of the financial markets could adversely affect the pace of realization of our funds’ investments or otherwise restrict the ability of our funds to realize value from their investments, thereby adversely affecting our ability to generate incentive or investment income. There can be no assurance that conditions in the global financial markets will not deteriorate and/or adversely affect our investments and overall performance. Our profitability may also be adversely affected by our fixed costs, such as the compensation and expenses of our staff, service fees paid to OCM under the Services Agreement, lease payments on our office space, interest payments on our debt, development of, and maintenance on, our information technology and infrastructure, and the possibility that we would be unable to scale back other costs and otherwise redeploy our resources within a time frame sufficient to match changes in market and economic conditions to take advantage of the opportunities that may be presented by these changes. As a result, we may not be able to adjust our resources to take advantage of new investment opportunities that may be created as a result of specific dislocations in the market. The outbreak of a novel strain of coronavirus disease (“COVID-19”) has significantly disrupted economic conditions and may adversely affect our operations, business, financial performance and operating results. The outbreak of infections caused by a novel coronavirus (including potential variants, “COVID-19”) has emerged as a serious threat to the health and economic wellbeing of the worldwide population and the overall economy. On March 11, 2020, the World Health Organization announced that infections of COVID-19 had become a pandemic. Since the beginning of the outbreak, many local, state, regional and national governments around the world have taken dramatic action including ordering all non-essential workers to stay home, mandating the closure of schools and non-essential business premises and imposing isolation measures on large portions of their populations. These measures are intended to protect human life but have had serious adverse impacts on domestic and foreign economies, and the severity and duration of these impacts are highly uncertain. The effectiveness of economic stabilization efforts, including proposed government payments to affected citizens and industries, is also uncertain, and some economists are predicting extended local or global recessions. Actions intended to mitigate the spread of COVID-19 have caused a dramatic increase in unemployment and economic instability in the United States and in certain other regions in which we operate and created significant uncertainty and volatility in our business and our funds’ and their respective portfolio companies’ businesses. Although it is impossible to predict with certainty the potential full magnitude of the business and economic ramifications, COVID-19 has impacted, and may further impact, our and our funds’ business, results of operations and financial condition in various ways, including but not limited to: • Difficult market and economic conditions have, and may continue to, adversely impact the valuations of our and our funds’ investments; • Limitations on travel and social distancing requirements implemented in response to COVID-19 may challenge our ability to market new or successor funds as anticipated prior to COVID-19, resulting in less or delayed revenues. In addition, in light of volatility in the public equity markets, fund investors may become limited by their 21 asset allocation policies to invest in new or successor funds that we provide, because these policies often restrict the amount that they are permitted to invest in alternative assets like the strategies of our investment funds; • Limitations on travel and social distancing requirements may also impact the investment operations of our funds, as our investment professionals may be unable to visit properties or other physical assets owned by our funds and may be limited in their ability to perform in- person due diligence for new investment opportunities; • While the market dislocation caused by COVID-19 may present attractive investment opportunities, increased volatility in the financial markets may limit our ability to complete those investments; • If the impact of COVID-19 continues, we and our funds may have more limited opportunities to successfully exit existing investments, due to, among other reasons, lower valuations, decreased revenues and earnings, lack of potential buyers with financial resources to pursue an acquisition or changes in receptivity of public investors to public equity offerings, resulting in a reduced ability to realize value from such investments; • Our portfolio companies are facing and may face in the future increased credit and liquidity risk due to volatility in financial markets, reduced revenue streams and limited or higher cost of access to preferred sources of funding, which may result in potential impairment of our or our funds’ equity investments. Changes in the debt financing markets may impact the ability of our portfolio companies to meet their respective financial obligations. We and our funds may experience similar difficulties, and certain funds have been forced to sell securities acquired with leverage when the value of those securities decreased substantially; • Borrowers under loans, notes and other credit instruments in our credit funds’ portfolio may be unable to meet their principal or interest payment obligations or satisfy financial covenants, and tenants leasing real estate properties owned by our funds may not be able to pay rents in a timely manner or at all, resulting in a decrease in the value of our funds’ credit and real estate investments and lower than expected returns. In addition, for variable interest instruments, lower reference rates resulting from government stimulus programs in response to COVID-19 could lead to lower interest income for our credit funds; • Many of our portfolio companies operate in industries that are materially impacted by COVID-19, including but not limited to the travel, hospitality, energy, finance and real estate industries. Many of these companies are facing operational and financial hardships resulting from the spread of COVID-19 and related governmental measures, such as the closure of company facilities, restrictions on travel, quarantines and stay-at-home orders. If the disruptions caused by COVID-19 continue and the restrictions put in place are not lifted, the businesses of these portfolio companies will suffer, and they could become insolvent, all of which may decrease the value of our funds’ investments; • While we have transitioned substantially all of our employees to a remote work environment in an effort to mitigate the spread of COVID-19, a further extended duration for these remote working arrangements and the continued spread of COVID-19 may negatively impact the ability of our and OCM’s key personnel to conduct our business and in turn negatively impact the business and operations of our funds; • Our transition to remote working has also increased our vulnerability to risks related to our computer and communications hardware and software systems and exacerbated certain related risks, including risks of phishing and other cybersecurity attacks; and • COVID-19 presents a significant threat to our employees’ well-being and morale. While we have implemented a business continuity plan to protect the health of our employees and have contingency plans in place for our and OCM’s key employees or executive officers who may become sick or otherwise unable to perform their duties for an extended period of time, such plans cannot anticipate all scenarios, and we may experience a loss of productivity or a delay in the rollout of certain strategic plans. We are continuing to monitor the spread of COVID-19 and related risks, including risks related to efforts to mitigate the disease’s spread, although the rapid development and fluidity of the situation precludes any prediction as to its ultimate impact on us. However, if the spread and related mitigation efforts continue, the impact could grow and our business, financial condition, results of operations and cash flows could be materially adversely affected. A prolonged widespread epidemic, or the perception that such an epidemic may continue to reoccur, could adversely impact global economies and financial markets, resulting in an economic downturn that may impact our or our funds’ business. The COVID-19 outbreak has negatively impacted our and our funds’ operations and revenue. We believe COVID-19’s future impact on our business, results of operations and financial condition will be significantly driven by a number of factors that we are unable to predict or control, including, for example: the severity and duration of the pandemic; the pandemic’s impact on the U.S. and global economies; the timing, scope and effectiveness of additional governmental responses to the pandemic; the timing and speed of economic recovery, including the 22 availability, administration and response of a treatment or vaccination for COVID-19; the impact of the pandemic and measures taken in response to it on overall supply and demand, goods and services, investor liquidity and liquidity in the financial markets, consumer confidence and levels of economic activity and the extent of disruption to important global, regional and local supply chains and economic markets; and the negative impact on our fund investors, vendors and other business partners that may indirectly adversely affect us. Any of the foregoing factors, and other cascading effects of the COVID-19 pandemic, could further impact our business, results of operations and financial condition, including by materially increasing our costs. Our business depends in large part on our ability to raise capital from investors. If we were unable to raise such capital, we would be unable to collect certain management fees or deploy such capital into investments, which would materially reduce our revenues and cash flow and adversely affect our financial condition. Our ability to raise capital from investors depends on a number of factors, including many that are outside our control. These include the general economic environment and the number of other investment funds being raised at the same time by our competitors that are focused on the same or similar investment strategies as our funds. Additionally, investors may reduce (or even eliminate) their investment allocations to alternative investments, including closed-ended private funds and hedge funds. Poor performance of our funds could also make it more difficult for us to raise new capital. Investors in our funds may decline to invest in future funds we raise, and investors in our open-end and evergreen funds may withdraw their investments in the funds (on specified withdrawal dates) as a result of poor performance. Our investors and potential investors continually assess our funds’ performance, both on a standalone basis and relative to market benchmarks and our competitors, and our ability to raise capital for existing and future funds and avoid excessive redemptions depends on our funds’ relative and absolute performance. To the extent economic and market conditions deteriorate, we may be unable to raise sufficient amounts of capital to support the investment activities of future funds. In addition, certain institutional investors, including sovereign wealth funds and public pension funds, have demonstrated an increased preference for alternatives to the traditional investment fund structure, such as managed accounts, funds-of-one and co-investment vehicles. There can be no assurance that such alternatives will be as profitable for us as the traditional investment fund structure, or as to the impact such a trend could have on the cost of our operations or profitability. Moreover, certain institutional investors are demonstrating a preference to make direct investments in alternative assets without the assistance of private equity advisers like us. Such institutional investors may become our competitors and could cease to be our clients. As some existing investors cease or significantly curtail making commitments to alternative investment funds, we may need to identify and attract new investors in order to maintain or increase the size of our investment funds. There are no assurances that we can find or secure capital commitments from new investors. If economic conditions were to deteriorate or if we are unable to find new investors, we might raise less than our desired amount for a given fund. If we were unable to successfully raise capital, it could materially reduce our revenue, earnings and cash flow and adversely affect our financial prospects and condition. In addition to a number of our own key personnel that we depend on, we also depend on OCM as the investment adviser to our funds to support our funds’ investment activities and a Services Agreement with OCM to support our operations; if the terms of the services provided by OCM were significantly altered or if the arrangements to provide such services were terminated, our ability to achieve our investment objective or operate as a public reporting company could be significantly harmed. We depend on the diligence, skill, judgment, reputation and business contacts of our key personnel and of key personnel of OCM provided to us through investment management agreements with our funds and a Services Agreement with us. Our future success will depend upon our and OCM’s ability to retain these key personnel and to recruit additional qualified personnel. These key personnel possess substantial experience and expertise in investing, are responsible for locating and executing our funds’ investments, have significant relationships with the institutions that are the source of many of our funds’ investment opportunities and in certain cases have strong relationships with our investors. Therefore, if these key personnel join competitors or form competing companies, it could result in the loss of significant investment opportunities and certain existing investors. OCM is not obligated to dedicate any specific personnel exclusively to us, nor are they or their personnel obligated to dedicate any specific portion of their time to the management of our business. Consequently, we may not receive the level of support and assistance that we otherwise might receive if our funds were managed directly by us. We are also subject to conflicts of interest arising out of our relationship with OCM, Brookfield and their respective affiliates. For example, Mr. Howard Marks, our Co-Chairman and one of our board members, is also the Co-Chairman of OCM and a board member of Brookfield. As discussed above (under “Business—Brookfield Merger”), Brookfield and its affiliates acquired a 61.2% interest in Oaktree upon the completion of the Mergers. Accordingly, Mr. Marks owes duties to 23 OCM and Brookfield, which duties may from time-to-time conflict with the interests of us and our preferred unitholders. Additionally, if our Services Agreement with OCM is significantly altered or terminated, it could result in the loss of significant key personnel of OCM that we depend on to operate as a public reporting company and could have a material adverse effect on our financial condition and results of operation. As the appointed investment adviser to our funds, OCM provides our funds services to evaluate, negotiate, structure, execute, monitor and service the funds’ investments. Key personnel of OCM have departed in the past and current key personnel could depart at any time. The termination of the Services Agreement or the departure of key personnel or of a significant number of the investment professionals or partners of OCM could have a material adverse effect on our ability to maintain our operations or achieve our funds’ investment objective. OCM may need to hire, train, supervise and manage new professionals to service our business and may not be able to find qualified professionals in a timely manner or at all. Our revenues are volatile due to the nature and structure of our business, and if we experience a substantial decline in our incentive and investment income, we may not be able to pay distributions on our preferred units. Our revenues and cash flow are more volatile and limited following the Merger and the Restructuring. The incentive income we receive and the investment income we recognize on our corporate investments in our funds and companies, which individually and collectively account for a substantial portion of our income, is now more limited than it was prior to October 1, 2019 as we no longer receive incentive or investment income from the entire Oaktree Operating Group, but rather incentive and investment income is received only from Oaktree Capital I and OCM Cayman. If we were to experience a significant reduction in incentive or investment income received from our funds, we may not be able to pay future distributions on our preferred units. Our failure to deal appropriately with conflicts of interest or inter-fund governance matters could damage our reputation and adversely affect our business. As we have expanded the number and scope of our strategies and distribution channels, including advising registered mutual funds and business development companies, we increasingly confront potential conflicts of interest that we need to manage and resolve. In our view, conflicts of interest may describe two types of potential situations: (i) where the interests of the funds we manage (or the investors in such funds) may conflict with one another; and (ii) where our interests, as manager or adviser, may conflict with the interests of our funds or our clients. Examples of potential inter-fund conflicts include: (i) the allocation of investment opportunities in situations where the investment focus of one or more of our funds overlaps (including certain instances in which funds registered under the Investment Company Act may be precluded from participating in certain opportunities as a result of regulatory restrictions applicable to companies with multiple types of funds with overlapping investment focuses); (ii) opportunities to co-invest directly alongside a fund that are offered to certain fund investors rather than to other Oaktree funds or other fund investors; (iii) investments by different funds at different levels of the capital structure of the same issuer; (iv) receipt of material, non-public information regarding an issuer by one strategy where another strategy does not wish to be restricted in trading the securities of that issuer; and (v) investments by a fund into a portfolio company held or controlled by another fund. Over time we have developed general guidelines or a course of conduct to manage these potential inter-fund governance matters, including establishing an inter-fund governance work group and standing committee composed of senior officers from our non-investment groups, including our legal and compliance departments. We seek to resolve such governance issues in good faith and with a view to the best interests of all of our clients, but there can be no assurance that we will make the correct judgment or that our judgment will not be questioned or challenged. In addition to the potential for conflict among our funds, we face the potential for conflict between us and our funds or clients. These conflicts may include: (i) personal trading by our personnel in the securities of issuers held by one or more of our funds; (ii) the allocation of investment opportunities among funds with different incentive fee structures, or where Oaktree personnel have invested more heavily in one fund than another; (iii) the use of subscription lines by our funds, which, among other things, may cause fund investors to indirectly bear interest expense when such investors would prefer to contribute capital and avoid the interest expense; and (iv) the determination of what constitutes fund-related expenses and the allocation of such expenses between our advised funds and us. We maintain internal controls and various policies and procedures, including oversight, codes of ethics and conduct, compliance systems and communication tools, to identify, prevent, mitigate or resolve conflicts of interest that may arise. Notwithstanding these efforts, it is possible that perceived or actual conflicts could give rise to investor dissatisfaction or litigation or regulatory enforcement actions. Appropriately dealing with conflicts of interest is complex and difficult, and any mistake could potentially create liability or damage our reputation. 24 Regulatory scrutiny of, or litigation in connection with, conflicts of interest could have a material adverse effect on our reputation, which in turn could materially adversely affect our business in a number of ways, such as causing investors to redeem their capital (to the degree they have that right), making it harder for us to raise new funds and discouraging others from doing business with us. The investment management business is intensely competitive. The investment management business is intensely competitive, with competition based on a variety of factors, including investment performance, the quality of service provided to clients, brand recognition and business reputation. Our investment management business competes for clients, personnel and investment opportunities with a large number of private equity funds, specialized investment funds, hedge funds, corporate buyers, traditional investment managers, commercial banks, investment banks, other investment managers and other financial institutions, and we expect that competition will increase. Numerous factors serve to increase our competitive risks, some of which are outside of our control: • • a number of our competitors have more personnel and greater financial, technical, marketing and other resources than we do, and, in the case of some competitors, longer operating histories, more established relationships and/or greater experience; some of our funds may not perform as well as competitors’ funds or other available investment products; • many of our competitors have raised, or are expected to raise, significant amounts of capital, and many of them have investment objectives similar to ours, which may create additional competition for investment opportunities and reduce the size and duration of pricing inefficiencies that we seek to exploit; • • • • • • • some of our competitors (including strategic competitors) may have a lower cost of capital and access to funding sources that are not available to us, which may create competitive disadvantages for us with respect to our funds, particularly our funds that directly use leverage or rely on debt financing of their portfolio companies to generate superior investment returns; some of our competitors have higher risk tolerances, different risk assessments or lower return thresholds, which could allow them to consider a wider variety of investments and to bid more aggressively than us for investments; our competitors may be able to achieve synergistic cost savings in respect of an investment that we cannot, which may provide them with a competitive advantage in bidding for an investment; there are relatively few barriers to entry impeding new investment funds, and the successful efforts of new entrants into our various lines of business, including major commercial and investment banks and other financial institutions, have resulted in increased competition; some of our competitors may have better expertise or be regarded by investors as having better expertise in a specific asset class or geographic region than we do; some investors may prefer to pursue investments directly instead of investing through one of our funds; and other industry participants will from time to time seek to recruit our investment professionals and other employees away from us. We may find it harder to raise funds, and we may lose investment opportunities in the future, if we do not match or improve on the fees, structures, products and terms offered by competitors to their fund clients. Alternatively, we may experience decreased profitability, rates of return and increased risk of loss if we match or improve on the prices, structures, products and terms offered by competitors. This competitive pressure could adversely affect our ability to make successful investments and limit our ability to raise future funds, either of which would adversely impact our business, revenues, results of operations and cash flow. Poor performance of our funds would cause a decline in our revenues, net income and cash flow and could adversely affect our ability to raise capital for future funds. When any of our funds perform poorly, either by incurring losses or underperforming benchmarks or our competitors, our investment record suffers. Poor investment performance by our funds also adversely affects our incentive income and, all else being equal, may lead to a decline in our AUM, resulting in a reduction of our management fees for certain funds. Moreover, in such circumstances, we may experience losses on our investments of our own capital. If a fund performs poorly, we will receive little or no incentive income with regard to the fund and little income or possibly losses from our own principal investment in the fund. Poor performance of our funds could also make it more difficult for us to raise new capital. Investors in our closed-end funds may decline to 25 invest in future closed-end funds we raise, and investors in our open-end and evergreen funds may withdraw their investments in the funds (on specified withdrawal dates) as a result of poor performance. Our investors and potential investors continually assess our funds’ performance, both on a standalone basis and relative to market benchmarks, our competitors, and other investment products, and our ability to raise capital for existing and future funds and avoid excessive redemption levels depends on our funds’ performance. We may not be able to maintain our current fee structure as a result of industry pressure from clients to reduce fees, which could have an adverse effect on our profit margins and results of operations. We may not be able to maintain our current fee structure as a result of industry pressure from clients to reduce fees. Although our investment management fees vary among and within asset classes, historically we have competed primarily on the basis of our performance and not on the level of our investment management fees relative to those of our competitors. In recent years, however, there has been a general trend toward lower fees in the investment management industry, and we have in certain cases lowered the fees we charge in order to remain competitive. Additionally, we have afforded, and reserve the right in our sole discretion to continue to afford, certain clients more favorable economic terms, including with respect to management fee rates and carried interest rates, in cases where such clients have committed capital to our funds or strategies that in the aggregate exceeds certain threshold amounts. In order to maintain our fee structure in a competitive environment, we must be able to continue to provide clients with investment returns and service that incentivize our investors to pay our current fee rates. We cannot provide any assurance that we will succeed in providing investment returns and service that will allow us to maintain our current fee structure. Fee reductions on existing or new business could have an adverse effect on our profit margins and results of operations. For more information about our fees please see “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” We often pursue investment opportunities that involve business, regulatory, legal or other complexities. We often pursue unusually complex investment opportunities involving substantial business, regulatory or legal complexity that would deter other investment managers. Our tolerance for complexity presents risks, as such transactions can be more difficult, expensive and time-consuming to finance and execute; it can be more difficult to manage or realize value from the assets acquired in such transactions; and such transactions sometimes entail a higher level of regulatory scrutiny or a greater risk of contingent liabilities. Any of these risks could harm the performance of our funds. Extensive regulation in the United States and abroad affects our activities and creates the potential for significant liabilities and penalties that could adversely affect our business and results of operations. Potential regulatory action poses a significant risk to our reputation and our business. Oaktree’s business, and by extension our business, is subject to extensive regulation in the United States and in the other countries in which our investment activities occur, including periodic examinations, inquiries and investigations by governmental and self-regulatory organizations in the jurisdictions in which Oaktree operates around the world. Many of these regulators, including U.S. federal and state and foreign government agencies and self-regulatory organizations, are empowered to impose fines, suspensions of personnel or other sanctions, including censure, the issuance of cease-and- desist orders or the suspension or expulsion of applicable licenses and memberships. Even if an investigation did not result in a sanction, or the sanction imposed against us or our personnel were small in monetary amount, adverse publicity relating to the investigation could harm our reputation and cause us to lose existing investors or fail to gain new investors. Each of the regulatory bodies with jurisdiction over us has regulatory powers dealing with many aspects of financial services, including the authority to grant, and in specific circumstances to cancel, permissions to carry on particular activities. A failure to comply with the applicable obligations imposed by the Advisers Act and the Investment Company Act, including recordkeeping, custody, advertising and operating requirements, disclosure obligations and prohibitions on fraudulent activities, could result in investigations, sanctions and reputational damage. Similarly, a failure to comply with the obligations imposed by the Commodity Exchange Act, including recordkeeping, reporting requirements, disclosure obligations and prohibitions on fraudulent activities, could also result in investigations, sanctions and reputational damage. Our funds are involved regularly in trading activities that implicate a broad number of U.S. securities law regimes, including laws governing trading on inside information, market manipulation and a broad number of technical trading requirements that implicate fundamental market regulation policies. Violation of these laws could result in severe restrictions on our activities and damage to our reputation. Our failure to comply with applicable laws or regulations could result in litigation, fines, censure, suspensions of personnel or other sanctions, including revocation of the registration of our relevant subsidiary as an investment adviser, CPO, CTA or registered broker-dealer. The regulations to which our business is subject are 26 designed primarily to protect investors in our funds and to ensure the integrity of the financial markets. They are not designed to protect our preferred unitholders. Even if a sanction imposed against us, one of our subsidiaries or our personnel by a regulator is for a small monetary amount, the adverse publicity related to the sanction could harm our reputation, which in turn could materially adversely affect our business in a number of ways, such as causing investors to redeem their capital (to the extent they have that right), making it harder for us to raise new funds and discouraging others from doing business with us. Some of our funds invest in businesses that operate in highly-regulated industries, including businesses that are regulated by the U.S. Federal Communications Commission, the U.S. Federal Energy Regulatory Commission, U.S. federal and state banking authorities and U.S. state gaming authorities, as well as equivalent foreign regulatory bodies. The regulatory regimes to which such businesses are subject may, among other things, condition our funds’ ability to invest in those businesses upon the satisfaction of applicable ownership restrictions or qualification requirements or, absent any applicable exemption, require us or our subsidiaries to comply with registration, reporting or other requirements. Moreover, our failure to obtain or maintain any regulatory approvals necessary for our funds to invest in such industries may disqualify our funds from participating in certain investments or require our funds to divest themselves of certain assets. Regulatory changes in the United States, regulatory compliance failures and the effects of negative publicity surrounding the financial industry in general could adversely affect our reputation, business and operations. The business in which we operate both in and outside the United States may be subject to new or additional regulations from time to time. We may be adversely affected as a result of new or revised legislation or regulations imposed by the SEC, the CFTC or other U.S. governmental regulatory authorities or self-regulatory organizations that supervise the financial markets and businesses such as ours. We also may be adversely affected by changes in the interpretation or enforcement of existing laws and rules by these governmental authorities and self-regulatory organizations. For example, in recent years, senior officials at the SEC have shown a willingness to pursue violations that could be viewed as minor on the theory that publicly pursuing minor violations could reduce the prevalence of more significant violations. It is difficult to determine the full extent of the impact on us of any new laws, regulations or initiatives that may be proposed or whether any of the proposals will become law. Any changes in the regulatory framework applicable to our business, including the changes described above, may impose additional costs on us, require the attention of our senior management or result in limitations on the manner in which we conduct our business. Moreover, as calls for additional regulation have increased, there may be a related increase in regulatory investigations of the trading and other investment activities of alternative asset management funds, including our funds. In addition, we may be adversely affected by changes in the interpretation or enforcement of existing laws and rules by these governmental authorities and self- regulatory organizations. Compliance with any new laws or regulations could make our overall compliance activities more difficult and expensive, affect the manner in which we conduct our business and adversely affect our profitability. Changes in law and government regulations may adversely affect our business, financial condition and results of operations. The current regulatory environment in the United States may be impacted by future legislative developments, such as amendments to key provisions of the Dodd-Frank Act. Any changes in the regulatory framework applicable to our business or the businesses of the portfolio companies of our funds may impose additional costs, require the attention of our senior management or result in limitations on the manner in which business is conducted, or may ultimately have an adverse impact on the competitiveness of certain nonbank financial service providers vis-à-vis traditional banking organizations. The replacement of LIBOR with an alternative reference rate may adversely affect our credit arrangements and our collateralized loan obligation transactions. LIBOR and certain other “benchmarks” are the subject of recent national, international, and other regulatory guidance and proposals for reform. These reforms have resulted in plans to phase out and eventually replace LIBOR which may cause such benchmarks to perform differently than in the past or have other consequences which cannot be predicted. On November 30, 2020, the FCA, which regulates LIBOR, announced that subject to confirmation following its consultation with the administrator of LIBOR, it would cease publication of the one-week and two-month USD LIBOR immediately after December 31, 2021, and cease publication of the remaining tenors immediately after June 30, 2023. Additionally, the Federal Reserve Board has advised banks to stop entering into new USD LIBOR-based 27 contracts. As a result of the phasing out of this benchmark, interest rates on our floating rate obligations, loans, deposits, derivatives, and other financial instruments tied to LIBOR rates, as well as the revenue and expenses associated with those financial instruments, may be adversely affected. It is unclear what methods of calculating a replacement benchmark will be established or adopted generally, and whether different industry bodies, such as the loan market and the derivatives market will adopt the same methodologies. To address the transition away from LIBOR, we have amended or will amend our credit agreements and related loan documentation to provide for an agreed upon methodology to calculate a new benchmark rate spreads, but there are as yet no comparable forward-looking benchmarks for the various LIBOR tenors. We are carefully evaluating our CLOs to identify any discrepancy between the interest rate an issuer pays on its liabilities compared to the interest rate on the underlying assets, or the amounts payable under a derivative used to hedge its currency or interest rate exposure. For our latest generation of CLOs, we have been incorporating or will incorporate provisions to address the transition from LIBOR, however certain older CLOs have not yet come up for amendment or refinancing, and as such may not currently contain clear LIBOR transition procedures. Additionally, there will be significant work required to transition to using the new benchmark rates and implement necessary changes to our systems, processes and models. This may impact our existing transaction data, products, systems, operations, and valuation processes. The calculation of interest rates under the replacement benchmarks could also negatively impact our business and financial results. We are assessing the impact of the transition; however, we cannot reasonably estimate the impact of the transition at this time. There is no guarantee that a transition from LIBOR to an alternative will not result in financial market disruptions, significant increases or volatility in risk-free benchmark rates, or borrowing costs to borrowers, any of which could have a material adverse effect on our business, result of operations, financial condition, and unit price. Regulatory changes in jurisdictions outside the United States could adversely affect our business. Certain of our subsidiaries operate outside the United States. In the United Kingdom, Oaktree Capital Management (UK) LLP, Oaktree Capital Management (Europe) LLP and Oaktree Capital Management (International) Limited are each subject to regulation by the Financial Conduct Authority. In Hong Kong, Oaktree Capital (Hong Kong) Limited is subject to regulation by the Hong Kong Securities and Futures Commission. In Singapore, Oaktree Capital Management Pte. Ltd. is subject to regulation by the Monetary Authority of Singapore. In Japan, Oaktree Japan, GK is subject to regulation by the Kanto Local Finance Bureau. In Luxembourg, Oaktree Capital Management (Lux) S.à r.l. is subject to regulation by the Commission de Surveillance du Secteur Financier. Our other European and Asian operations and our investment activities worldwide are subject to a variety of regulatory regimes that vary by country. In addition, we regularly rely on exemptions from various requirements of the regulations of certain foreign countries in conducting our asset management and fundraising activities. Each of the regulatory bodies with jurisdiction over us has regulatory powers dealing with many aspects of our business generally and financial services specifically, including the authority to grant, and in specific circumstances to cancel, permissions to carry on particular activities. We are involved regularly in trading activities that implicate a broad number of foreign (as well as U.S.) securities law regimes, including laws governing trading on inside information and market manipulation and a broad number of technical trading requirements that implicate fundamental market regulation policies. Additionally, we must comply with foreign laws governing the sale of interests in our funds and laws that govern other business activities. Violation of these laws could result in severe penalties, restrictions or prohibitions on our activities and damage to our reputation, which in turn could materially adversely affect our business in a number of ways, such as causing investors to redeem their capital (to the degree they have that right), making it harder for us to raise new funds and discouraging others from doing business with us. SEC rules barring so-called “bad actors” from relying on Rule 506 of Regulation D in private placements could materially adversely affect our business, financial condition and results of operations. Rules 501 and 506 of Regulation D under the Securities Act prohibit issuers deemed to be “bad actors” from relying on the exemptions available under Rule 506 of Regulation D (“Rule 506”) in connection with private placements (the “disqualification rule”). Specifically, an issuer will be precluded from conducting offerings that rely on the exemption from registration under the Securities Act provided by Rule 506 (“Rule 506 offerings”) if a “covered person” of the issuer has been the subject of a “disqualifying event” (each as defined below). “Covered persons” include, among others, the issuer, affiliated issuers, any investment manager or solicitor of the issuer, any director, executive officer or other officer participating in the offering of the issuer, any general partner or managing member of the foregoing entities, any promoter of the issuer and any beneficial owner of 20% or more of the issuer’s outstanding voting equity securities, calculated on the basis of voting power. A “disqualifying event” includes, among other things, certain (1) criminal convictions and court injunctions and restraining orders issued in connection with the purchase or sale of a security or false filings with the SEC; (2) final orders from the CFTC, 28 federal banking agencies and certain other regulators that bar a person from associating with a regulated entity or engaging in the business of securities, insurance or banking or that are based on certain fraudulent conduct; (3) SEC disciplinary orders relating to investment advisers, brokers, dealers and their associated persons; (4) SEC cease-and-desist orders relating to violations of certain anti-fraud provisions and registration requirements of the federal securities laws; (5) suspensions or expulsions from membership in a self-regulatory organization (“SRO”) or from association with an SRO member; and (6) U.S. Postal Service false representation orders. If any Oaktree covered person is subject to a disqualifying event, one or more of our funds could lose the ability to raise capital in a Rule 506 offering for a significant period of time. Most of our funds rely on Rule 506 to raise capital from investors during their fundraising periods. If one or more of our funds were to lose the ability to rely on the Rule 506 exemption because an Oaktree covered person has been the subject of a disqualifying event, our business, financial condition and results of operations could be materially and adversely affected. Failure to comply with “pay to play” regulations implemented by the SEC and certain states, and changes to the “pay to play” regulatory regimes, could adversely affect our business. In recent years, the SEC and several states have initiated investigations alleging that certain private equity firms and hedge funds or agents acting on their behalf have paid money to current or former government officials or their associates in exchange for improperly soliciting contracts with state pension funds. The SEC has also initiated a similar investigation into contracts awarded by sovereign wealth funds. Rule 206(4)-5 under the Advisers Act addresses “pay to play” practices by investment advisers involving campaign contributions and other payments to government officials able to exert influence on potential U.S. state and local government entity clients. Among other restrictions, the rule prohibits investment advisers from providing advisory services for compensation to a government entity for two years, subject to very limited exceptions, after the investment adviser, its senior executives or its personnel involved in soliciting investments from government entities make contributions to certain candidates and officials in a position to influence the hiring of an investment adviser by such government entity. The rule does not require any showing that a donation was made with intent to exert influence. Any donation that exceeds the limits set forth in Rule 206(4)-5 may lead to an investment adviser being required to forgo compensation from applicable government entities for two years; to the extent such fees have already been paid, the investment adviser may be required to forfeit the already-received compensation. Advisers are required to implement compliance policies designed, among other matters, to track contributions by certain of the adviser’s employees and engagements of third parties that solicit government entities and to keep certain records in order to enable the SEC to determine compliance with the rule. Additionally, California law requires placement agents (including in certain cases employees of investment managers) who solicit funds from California state retirement systems, such as the California Public Employees’ Retirement System and the California State Teachers’ Retirement System, to register as lobbyists, thereby becoming subject to increased reporting requirements and prohibited from receiving contingent compensation for soliciting investments from California state retirement systems. New York has adopted similar rules. Such rules may require the attention of our senior management and may result in fines if any of our funds are deemed to have violated any laws or regulations, thereby imposing additional expenses on us. For instance, in July 2018, Oaktree reached a settlement with the SEC related to its “pay to play” rules pursuant to which Oaktree paid a monetary settlement to the SEC and agreed not to violate the rule in the future. Any failure by us or by our senior executives or personnel involved in soliciting investment from government entities to comply with these rules could cause us to lose compensation for our advisory services or expose us to significant penalties and reputational damage. Failure to maintain the security of our information and technology networks, including personal data and client information, intellectual property and proprietary business information could have a material adverse effect on us. Security breaches and other disruptions of or incidents affecting our information and technology networks could result in compromising our information and intellectual property and expose us to significant liability, reputational harm, regulatory investigation and remediation costs, which could cause material harm to our business and financial results. In the ordinary course of our business, we collect, process and store sensitive data, including our proprietary business information and intellectual property, and personal data of our employees and our clients, in our data centers and on our networks (including data stored on systems maintained by third parties). The secure processing, maintenance and transmission of this information are critical to our operations. Although we take various measures and have made, and will continue to make, significant investments in an attempt to ensure the integrity of our systems and to safeguard against such failures or security breaches, there can be no assurance that these measures and investments will provide adequate protection. Despite our security measures, our information technology and infrastructure are vulnerable to different types of attacks by third parties or breaches due to employee error, malfeasance or other disruptions. Certain of our funds invest in strategic assets having a national or 29 regional profile or in infrastructure assets, the nature of which could expose them to a greater risk of being subject to a cyber attack or security breach. In addition, we and our employees have been and may continue to be the target of fraudulent emails or other targeted attempts to gain unauthorized access to proprietary or sensitive information, including personal data. There has been an increase in the frequency and sophistication of the data security threats we face, with attacks ranging from those common to businesses generally to those that are more advanced and persistent, which may target us because, as an investment management firm, we hold confidential and other price-sensitive information about the portfolio companies of our funds and their potential investments. As a result, we face a heightened risk of a security breach or disruption with respect to sensitive information resulting from an attack by computer hackers, foreign governments, cyber-terrorists or other bad actors. If successful, these types of attacks on our network or other systems could have a material adverse effect on our business and results of operations, due to, among other things, the loss, unauthorized access to or other misuse of personal, regulated, investor or proprietary data, interruptions or delays in our business and damage to our reputation. We are not currently aware of any cyberattacks or other incidents that, individually or in the aggregate, have materially affected, or would reasonably be expected to materially affect, our operations or financial condition. There can be no assurance that the various procedures and controls we utilize to mitigate these threats will be sufficient to prevent or detect disruptions to our systems. Because cyberattacks can originate from a wide variety of sources and the techniques used change frequently and are not recognized until launched, we may not learn about an attack until well after the attack occurs, and the full scope of a cyberattack may not be realized until an investigation has been performed. The costs related to data security threats or disruptions may not be fully insured or indemnified by other means. In addition, data security has become a top priority for regulators around the world. For example, the SEC announced in 2019 that one of the examination priorities for the Office of Compliance Inspections and Examinations is investment firms’ data security procedures and controls, including testing the implementation of those controls. A significant actual or potential theft, loss, corruption, exposure, fraudulent use or misuse of client, employee or other personal data, regulated or proprietary business data, whether by third parties or as a result of employee malfeasance or otherwise, non-compliance with our contractual or other legal obligations regarding such data or intellectual property or a violation of our privacy and security policies with respect to such data could result in significant remediation and other costs, fines, litigation or regulatory actions against us. Such an event could additionally disrupt our operations and the services we provide to clients, damage our reputation, result in a loss of a competitive advantage, impact our ability to provide timely and accurate financial data, and cause a loss of confidence in our services and financial reporting, which could adversely affect our business, revenues, competitive position and investor confidence. Additionally, the General Data Protection Regulation (“GDPR”) became applicable in all European Union (“EU”) member states on May 25, 2018. This regulation added a broad array of requirements for handling personal data of individuals that are residents of the EU and the processing and transfer of that data from the EU and could impose a fine of up to 4% of global annual revenue for violations. The GDPR has resulted in and will continue to result in significantly greater compliance burdens and costs for companies like us. Further, due to Brexit (discussed below), from the beginning of 2021 (when the transitional period following Brexit expired), we are required to comply with GDPR and also the UK equivalent. The relationship between the UK and the EU in relation to certain aspects of data protection law remains unclear, and any changes will lead to additional costs and increase our overall risk exposure. In addition to the GDPR, California enacted the California Consumer Privacy Act of 2018 (the “CCPA”), which went into effect on January 1, 2020. The CCPA imposes sweeping data protection obligations on many companies doing business in California and provides for substantial fines for non-compliance and, in some cases, a private right of action for consumers who are victims of data breaches involving their unencrypted personal information. Further, in November 2020, California voters passed the California Privacy Rights and Enforcement Act of 2020 (“CPRA”), which further expands the CCPA with additional data privacy compliance requirements that may impact our business, and establishes a regulatory agency dedicated to enforcing those requirements. It remains unclear how various provisions of the CCPA and CPRA will be interpreted and enforced. These and other data privacy laws and regulations and their interpretations continue to develop and may be inconsistent from jurisdiction to jurisdiction. In addition, on July 16, 2020, the European Court of Justice invalidated the EU-US Privacy Shield Framework under which personal data could be transferred from the EEA to US entities that had self-certified under the Privacy Shield Framework. This development requires us to review and amend the legal mechanisms by which we make and/or receive certain personal data transfers. The effects of the GDPR, CCPA, CPRA, and other U.S. state, U.S. federal, and international data privacy laws and regulations are significant and may require us to modify our data processing practices and policies and to incur substantial costs and potential liability in an effort to comply with such laws and regulations. 30 Interruption of our information technology, communications systems or data services could disrupt our business, result in losses and/or limit our growth. We rely heavily on our financial, accounting, communications and other information technology systems. If our systems do not operate properly, are disabled or are compromised, we could suffer financial loss, a disruption of our business, liability to our funds, regulatory intervention or reputational damage. Our information technology and communications systems are vulnerable to damage or disruption from fire, power loss, telecommunications failure, system malfunctions, natural disasters such as hurricanes, earthquakes and floods, acts of war or terrorism, employee errors or malfeasance, computer viruses, cyber-attacks, or other events which are beyond our control. We depend on Oaktree’s headquarters in Los Angeles, where a substantial portion of Oaktree’s personnel are located, for the continued operation of our business. An earthquake or other disaster or a disruption in the infrastructure that supports our business, including a disruption involving electronic communications or other services used by us or third parties with whom we conduct business, or directly affecting our headquarters, could have a material adverse impact on our ability to continue to operate our business without interruption. Insurance and other safeguards might only partially reimburse us for our losses, if at all. In addition, we rely on third‑party service providers for certain aspects of our business, including software vendors for portfolio management and accounting software, outside financial institutions for back office processing and custody of securities and third‑party broker‑dealers for the execution of trades. An interruption or deterioration in the performance of these third parties or failures of their information systems and technology could cause system interruption, delays, loss, corruption or exposure of critical data or intellectual property and impair the quality of the funds’ operations, which could impact our reputation and hence adversely affect our business. These risks could increase as vendors increasingly offer cloud-based software services rather than software services that can be operated within our own data centers. Our portfolio companies also rely on data processing systems and the secure processing, storage and transmission of information, including payment and health information. A disruption or compromise of these systems could have a material adverse effect on the value of these businesses. Such an event may have adverse consequences on our investments or assets of the same type, or may require portfolio companies to increase preventative security measures or expand insurance coverage. Any such interruption or deterioration in our operations could result in substantial recovery and remediation costs and liability to our clients, business partners and other third parties. While we have implemented disaster recovery plans, business continuity plans and backup systems to lessen the risk of any material adverse impact, our disaster recovery planning may not be sufficient to mitigate the harm and cannot account for all eventualities, and a catastrophic event that results in the destruction or disruption of any of our data, our critical business or information technology systems could severely affect our ability to conduct our business operations, and as a result, our future operating results could be materially adversely affected. We are subject to substantial litigation risks and may face significant liabilities and damage to our professional reputation as a result. In recent years, the volume of claims and amount of damages claimed in litigation and regulatory proceedings against investment managers have been increasing. Oaktree makes investment decisions on behalf of its clients that could result in substantial losses. This may subject us to the risk of legal liabilities or actions alleging negligence, breach of fiduciary duty, breach of contract or other causes of action. Heightened standards of care or additional fiduciary duties may apply in certain of our managed accounts or other advisory contracts. To the extent we enter into agreements with clients containing such terms or applicable law mandates a heightened standard of care or duties, we could, for example, be liable to certain clients for acts of simple negligence or breach of such duties. Further, we may be subject to litigation arising from investor dissatisfaction with the performance of our funds or from third-party allegations that we improperly exercised control or influence over portfolio investments or that we are liable for actions or inactions taken by portfolio companies that such third parties argue we control. In addition, we and our affiliates that are the investment managers and general partners of our funds, our funds themselves and those of our employees who are our, our subsidiaries’ or the funds’ officers and directors are each exposed to the risks of litigation specific to the funds’ investment activities and portfolio companies and, in cases where our funds own controlling interests in public companies, to the risk of shareholder litigation by the public companies’ other shareholders. Moreover, we are exposed to risks of litigation or investigation by investors and regulators relating to our having engaged, or our funds having engaged, in transactions that presented conflicts of interest that were not properly addressed. Please see also “—Extensive regulation in the United States and abroad affects our activities and creates the potential for significant liabilities and penalties that could adversely affect our business and results of operations.” 31 Substantial legal liability could materially adversely affect our business, financial condition or results of operations or cause significant reputational harm to us, which could seriously harm our business. We depend, to a large extent, on our business relationships and our reputation for integrity and high-caliber professional services to attract and retain investors. As a result, allegations of improper conduct asserted by private litigants or regulators, regardless of whether the ultimate outcome is favorable or unfavorable to us, as well as negative publicity and press speculation about us, our investment activities or the investment industry in general, whether or not valid, may harm our reputation, which may be more damaging to our business than to other types of businesses. Employee misconduct, which is difficult to detect and deter, could harm us by impairing our ability to attract and retain clients and subject us to significant legal liability and reputational harm. Fraud and other deceptive practices or other misconduct at the portfolio companies of our funds could similarly subject us to liability and reputational damage and also harm our performance. There have been a number of highly publicized cases involving fraud or other misconduct by individuals in the financial services industry, and there is a risk that Oaktree employees could engage in misconduct that adversely affects our business. Oaktree is subject to a number of obligations and standards arising from its investment management business and the authority over the assets Oaktree manages. The violation of any of these obligations or standards by any of Oaktree’s employees or advisors could adversely affect Oaktree clients and us. Our business often requires that we deal with confidential matters of great significance to companies in which our funds may invest or to Oaktree clients. If Oaktree employees improperly use or disclose confidential information, we could be subject to regulatory sanctions and suffer serious harm to our reputation, financial position and current and future business relationships. It is not always possible to deter employee misconduct, and the precautions we take to prevent this activity may not be effective in all cases. If Oaktree employees engage in misconduct, or if they are accused of misconduct, our business and our reputation could be adversely affected. In recent years, the U.S. Department of Justice and the SEC have devoted greater resources to enforcement of the Foreign Corrupt Practices Act (the “FCPA”). In addition, the United Kingdom has significantly expanded the reach of its anti-bribery laws. While we have developed and implemented policies and procedures designed to ensure compliance by us and our personnel with the FCPA, such policies and procedures may not be effective in all instances to prevent violations. Any determination that we or our personnel have violated the FCPA, UK anti-bribery laws or other applicable anti-corruption laws could subject us to, among other things, civil and criminal penalties, material fines, profit disgorgement, injunctions on future conduct, securities litigation and a general loss of investor confidence, any one of which could adversely affect our business, financial condition or results of operations. In addition, we may also be adversely affected if there is misconduct by personnel of portfolio companies in which our funds invest. For example, financial fraud or other deceptive practices at such portfolio companies, or failures by personnel at such portfolio companies to comply with anti-bribery, trade sanctions or other legal and regulatory requirements could adversely affect our business and reputation. Such misconduct might undermine our due diligence efforts with respect to such companies and could negatively affect the valuation of our funds’ investments. In addition, we may face increased risk of such misconduct to the extent our funds’ investment in markets outside the United States, particularly emerging markets, increases. The United Kingdom’s exit from the European Union, and the implementation of the trade and cooperation agreement between the United Kingdom and the European Union, could adversely affect us. On June 23, 2016, the United Kingdom (the “U.K.”) held a referendum on whether to remain a member state of the EU in which a majority of voters approved an exit from the EU, commonly referred to as “Brexit.” The U.K. withdrew from the EU on January 31, 2020, but the U.K. remained in the EU’s customs union and single market for a transition period that expired on December 31, 2020. On December 24, 2020, the U.K. and the EU entered into a trade and cooperation agreement (the “Trade and Cooperation Agreement”), which was applied on a provisional basis from January 1, 2021. While the economic integration does not reach the level that existed during the time the UK was a member state of the EU, the Trade and Cooperation Agreement sets out preferential arrangements in areas such as trade in goods and in services, digital trade and intellectual property. Negotiations between the UK and the EU are expected to continue in relation to the relationship between the UK and the EU in certain other areas which are not covered by the Trade and Cooperation Agreement. The long term effects of Brexit will depend on the effects of the implementation and application of the Trade and Cooperation Agreement and any other relevant agreements between the U.K. and the EU. The effects of Brexit remain uncertain and, as a result, we face risks associated with the potential uncertainty and disruptions that may follow Brexit and the implementation and application of the Trade and Cooperation Agreement, including with respect to volatility in exchange rates and interest rates and disruptions to the free movement of data, goods, services, people and capital between the U.K. and the EU. The uncertainty concerning 32 the U.K.’s future legal, political and economic relationship with the EU could adversely affect political, regulatory, economic or market conditions in the EU, the U.K. and worldwide and could contribute to instability in global political institutions, regulatory agencies and financial markets. These developments, or the perception that any of them could occur, have had and may continue to have a material adverse effect on global economic conditions and the stability of global financial markets and could significantly reduce global market liquidity and limit the ability of key market participants to operate in certain financial markets. In particular, it could also lead to a period of considerable uncertainty in relation to the U.K. financial and banking markets, as well as to the regulatory process in Europe. Asset valuations, currency exchange rates and credit ratings may also be subject to increased market volatility. Depending on the future relationship of the U.K. and the EU, the long-term effects of Brexit could be far-reaching. It could adversely affect the values of investments held by our funds, our ability to source new investments, and our ability to raise capital from investors in the U.K. and the EU. It has, and will in the future, also affect the ways in which we are able to operate in the U.K. and from the U.K. into the European Economic Area (the ”EEA”)(and vice-versa for our entities in the EEA), in particular because the U.K. lost the benefits of global trade agreements negotiated by the EU on behalf of its members, which may result in increased trade barriers that could make doing business in areas that are subject to such global trade agreements more difficult. In addition, Brexit could lead to legal uncertainty and potentially divergent national laws and regulations as the U.K. determines which laws of the EU to replace or replicate. It is difficult to predict the overall impact of the U.K. withdrawal from the EU, the implementation and application of the Trade and Cooperation Agreement and what the economic, tax, fiscal, legal, regulatory and other implications will be for the asset management industry and the broader European and global financial markets generally and for our business and our funds and their investments specifically. However, any of these effects of Brexit, and others we cannot anticipate, could adversely affect our business, results of operations, financial prospects and condition, and cash flow. Risks Relating to Our Funds Our results of operations are dependent on the performance of our funds. Poor fund performance will result in reduced revenues. Poor performance of our funds will also make it difficult for us to retain and attract investors to our funds, to retain and attract qualified professionals and to grow our business. The performance of each fund we manage is subject to some or all of the following risks. The historical returns attributable to our funds should not be considered indicative of the future results of our funds or of our future results or of any returns expected on an investment in our preferred units. The historical returns attributable to our funds should not be considered indicative of the future results of our funds. Poor performance of the funds we manage will cause a decline in our revenues and would therefore have a negative effect on our operating results. Moreover, with respect to the historical returns of our funds: • we may create new funds in the future that reflect a different asset mix and different investment strategies, as well as a varied geographic and industry exposure as compared to our present funds, and any such new funds could have different returns from our existing or previous funds; • our funds’ returns have previously benefited from investment opportunities and general market conditions that may not repeat themselves, and there can be no assurance that our current or future funds will be able to avail themselves of profitable investment opportunities; • many of our funds’ historical investments were made over a long period of time and over the course of various market and macroeconomic cycles, and the circumstances under which our current or future funds may make future investments may differ significantly from those conditions prevailing in the past; • • • newly established funds may generate lower returns during the period in which they initially deploy their capital; our funds may not be able to successfully identify, make and realize upon any particular investment or generate returns for their investors; and any material increase or decrease in the size of our funds could result in materially different rates of returns. The future internal rate of return for any current or future fund may vary considerably from the historical internal rate of return generated by any particular fund, or for our funds as a whole. In addition, future returns will be affected by the applicable risks described elsewhere in this annual report, including risks of the industries and businesses in which a particular fund invests. 33 Certain of our funds make distressed debt investments that involve significant risks and potential additional liabilities. Certain of our funds invest in obligors and issuers with weak financial conditions, poor operating results, substantial financing needs, negative net worth or significant competitive issues and/or securities that are illiquid, distressed or have other high-risk features. These funds also invest in obligors and issuers that are involved in bankruptcy or reorganization proceedings. In these situations, it may be difficult to obtain full information as to the exact financial and operating conditions of these obligors and issuers. Furthermore, some of our funds’ distressed debt investments may not be widely traded or may have no recognized market. Depending on the specific fund’s investment profile, a fund’s exposure to the investments may be substantial in relation to the market for those investments, and the acquired assets are likely to be illiquid and difficult to transfer. As a result, it may take a number of years for the market value of the investments to ultimately reflect their intrinsic value as we perceive it. A central strategy of our distressed debt funds, for example, is to anticipate the occurrence of certain corporate events, such as debt or equity offerings, restructurings, reorganizations, mergers, takeover offers and other transactions. If the relevant corporate event that we anticipate is delayed, changed or never completed, the market price and value of the applicable fund’s investment could decline sharply. In addition, these investments could subject a fund to certain potential additional liabilities that may exceed the value of its original investment. Under certain circumstances, payments or distributions on certain investments may be reclaimed if any such payment or distribution is later determined to have been a fraudulent conveyance, a preferential payment or similar transaction under applicable bankruptcy and insolvency laws. In addition, under certain circumstances, a lender that has inappropriately exercised control of the management and policies of a debtor may have its claims subordinated or disallowed or may be found liable for damages suffered by parties as a result of such actions. In the case where the investment in securities of troubled companies is made in connection with an attempt to influence a restructuring proposal or plan of reorganization in bankruptcy, the fund may become involved in substantial litigation. Certain of our funds may be subject to risks arising from potential control group liability. Certain of our investment funds could potentially be liable under U.S. Employee Retirement Income Security Act of 1974 ("ERISA") for the pension obligations of one or more of our portfolio companies if the investment fund were determined to be a "trade or business" under ERISA and deemed part of the same "controlled group" as the portfolio company under ERISA’s controlled group rules. While a number of cases have held that managing investments is not a “trade or business” for tax purposes, at least one federal Circuit Court has determined that a private equity fund could be a “trade or business” for ERISA controlled group liability purposes based on a number of factors, including the fund’s level of involvement in the management of its portfolio companies and the nature of its management fee arrangements. Litigation related to the Circuit Court’s decision suggests that additional factors may be relevant, including the structure of the investment and the nature of the fund’s relationship with other affiliated investors and co-investors in the portfolio company. If any of our funds are determined to be a trade or business for purposes of ERISA controlled group liability, it is possible that pension liabilities incurred by a portfolio company could result in liability being incurred by the fund, with a resulting need for additional capital contributions, the appropriation of such fund’s assets to satisfy such pension liabilities and/or the imposition of a lien by the PBGC on certain fund assets. Moreover, regardless of whether any of our funds were determined to be a trade or business for purposes of ERISA controlled group liability, a court might hold that one of our fund’s portfolio companies could become jointly and severally liable for another portfolio company’s unfunded pension liabilities pursuant to the ERISA “controlled group” rules, depending upon the relevant investment structures and ownership interests as noted above. Poor investment performance during periods of adverse market conditions may result in relatively high levels of investor redemptions, which can exacerbate the liquidity pressures on the affected funds, force the sale of assets at distressed prices or reduce the funds’ returns. Poor investment performance during periods of adverse market conditions, together with investors’ increased need for liquidity given adverse conditions in the credit markets during such periods, can prompt relatively high levels of investor redemptions at times when many funds may not have sufficient liquidity to satisfy some or all of their investor redemption requests. During times when market conditions are deteriorating, many funds may face additional redemption requests and/or compulsory investor withdrawals or redemptions, which will exacerbate the liquidity pressures on the affected funds. If such funds cannot satisfy their current and future redemption requests, they may be forced to sell assets at distressed prices or cease operations. Various measures taken by funds to improve their liquidity profiles (such as the implementation of “gates” or the suspension of redemptions) that reduce the amounts that would otherwise be paid out in response to redemption requests may have the effect of 34 incentivizing investors to “gross up” or increase the size of the future redemption requests they make, thereby exacerbating the cycle of redemptions. The liquidity issues for such funds are often further exacerbated by their fee structures, as a decrease in NAV decreases their management fees. Valuation methodologies for certain assets in our funds can be subject to significant subjectivity, and the values of assets established pursuant to the methodologies may never be realized. Our funds make investments for which market quotations are not readily available, and thus the process by which we value such investments involves inherent uncertainties. We are required by GAAP to make good faith determinations as to the fair value of these investments on a quarterly basis in connection with the preparation of our funds’ financial statements. There is no single method for determining fair value in good faith. The types of factors that may be considered when determining the fair value of an investment in a particular company include acquisition price of the investment, discounted cash flow valuations, historical and projected operational and financial results for the company, the strengths and weaknesses of the company relative to its comparable companies, industry trends, general economic and market conditions, information with respect to offers for the investment, the size of the investment (and any associated control) and other factors deemed relevant. Because valuations of investments for which market quotations are not readily available are inherently uncertain, may fluctuate over short periods of time and may be based on estimates, determinations of fair value may differ materially from the values that would have resulted if a ready market had existed. Even if market quotations are available for our investments, the quotations may not reflect the value that we would actually be able to realize because of various factors, including the possible illiquidity associated with a large ownership position, subsequent illiquidity in the market for a company’s securities, future market price volatility or the potential for a future loss in market value based on poor industry conditions or the market’s view of overall company and management performance. Because there is significant uncertainty in the valuation of, or in the stability of the value of, illiquid investments, the fair values of such investments as reflected in a fund’s NAV do not necessarily reflect the prices that would actually be obtained by us on behalf of the fund when such investments are sold. Sales at values significantly lower than the values at which investments have previously been reflected in a fund’s NAV may result in losses for the applicable fund, a decline in management fees and the loss of incentive income that may have been accrued by the applicable fund. Our funds make investments in companies that are based outside the United States, which exposes us to additional risks not typically associated with investing in companies that are based in the United States. Many of our funds invest a portion of their assets in the equity, debt, loans or other securities of issuers located outside the United States, while certain of our funds invest substantially all of their assets in these types of securities. Investments in non-U.S. securities involve certain factors not typically associated with investing in U.S. securities, including risks relating to: • • • • • • • • our funds’ abilities to exchange local currencies for U.S. dollars and other currency exchange matters, including fluctuations in currency exchange rates and costs associated with conversion of investment principal and income from one currency into another; controls on, and changes in controls on, foreign investment and limitations on repatriation of invested capital; less developed or less efficient financial markets than exist in the United States, which may lead to price volatility and relative illiquidity; the absence of uniform accounting, auditing and financial reporting standards, practices and disclosure requirements and less government supervision and regulation; differences in legal and regulatory environments, particularly with respect to bankruptcy and reorganization, less developed corporate laws regarding fiduciary duties and the protection of investors and less reliable judicial systems to enforce contracts and applicable law; less publicly available information in respect of companies in non-U.S. markets; heightened exposure to corruption risk; certain economic and political risks, including potential exchange control regulations and restrictions on our non-U.S. investments and repatriation of capital, potential political, economic or social instability, the possibility of nationalization or expropriation or confiscatory taxation and adverse economic and political developments; and 35 • the possible imposition of non-U.S. taxes or withholding on income and gains recognized with respect to the securities. There can be no assurance that adverse developments with respect to these risks will not adversely affect our funds that invest in securities of non-U.S. issuers. We have made and expect to continue to make significant investments in our current and future funds, and we may lose money on some or all of our investments. We have had a practice of making significant principal investments in Oaktree funds and expect to continue to make significant principal investments in our funds and may choose to increase the amount we invest at any time. Further, from time to time we make loans or otherwise extend credit or guarantees to our funds. Contributing capital, making other investments or extending credit to these funds is risky, and we may lose some or all of our investments. Any such loss could have a material adverse impact on our financial condition and results of operations. Our funds often invest in companies that are highly leveraged, a fact that may increase the risk of loss associated with the investments. Our funds often invest in companies whose capital structures involve significant leverage. These investments are inherently more sensitive to declines in revenues and to increases in expenses and interest rates. The leveraged capital structure of these companies places significant burdens on their cash flows and increases the exposure of our funds to adverse economic factors such as downturns in the economy or deterioration in the condition of the portfolio company or its industry. Additionally, the securities acquired by our funds may be the most junior in what could be a complex capital structure and thus subject us to the greatest risk of loss in the event of insolvency, liquidation, dissolution, reorganization or bankruptcy of one of these companies. The use of leverage by our funds could have a material adverse effect on our financial condition, results of operation and cash flow. Some of our funds use leverage (including through credit facilities, swaps and other derivatives) as part of their respective investment programs and may borrow a substantial amount of capital. The use of leverage poses a significant degree of risk and can enhance the magnitude of a significant loss in the value of the investment portfolio. To the extent that any fund leverages its capital structure, it is subject to the risks normally associated with debt financing, including the risk that its cash flows will be insufficient to meet principal and interest payments, which could significantly reduce or even eliminate the value of such fund’s investments. In addition, the interest expense and other costs incurred in connection with such leverage may not be recovered by the appreciation in the value of any associated securities or bank debt and will be lost – and the timing and magnitude of such losses may be accelerated or exacerbated – in the event of a decline in the market value of such securities or bank debt. In addition, such funds may be subject to margin calls or acceleration in the event of a decline in the value of the posted collateral. To meet liquidity needs as a result of margin calls or acceleration, we may elect to invest additional capital into or loan money to such funds. Any such investment or loan would be subject to the risk of loss. In addition, if we were to elect to enforce our rights against any fund with respect to a loan to such fund, we may damage our relationships with our investors and have difficulty raising additional capital. Any of the foregoing circumstances could have a material adverse effect on our financial condition, results of operations and cash flow. Changes in the debt financing markets and higher interest rates may negatively impact the ability of our funds and their portfolio companies to obtain attractive financing for their investments or refinance existing debt and may increase the cost of such financing if it is obtained, leading to lower-yielding investments and potentially decreasing our incentive income and investment income. The markets for debt financing are subject to retrenchment, resulting in more restrictive covenants or other more onerous terms (including posting additional collateral) in order to obtain financing, and in some cases lenders may refuse to provide any financing that would have been readily obtained under different credit conditions. In addition, higher interest rates generally impact the investment management industry by making it harder to obtain financing for new investments, refinance existing investment or liquidate debt investments, which can lead to reduced investment returns and missed investment opportunities. Since the most recent recession, the U.S. Federal Reserve has taken actions which have resulted in low interest rates prevailing in the marketplace for a historically long period of time. If our funds are unable to obtain committed debt financing or can only obtain debt at an increased interest rate or on other less advantageous terms, such funds’ investment activities may be restricted and their profits may be lower than they would otherwise have achieved, either of which could lead to a decrease in the incentive and investment income earned by us. Similarly, the portfolio companies owned by our funds regularly utilize the 36 corporate debt markets to obtain financing for their operations. To the extent that credit markets render such financing difficult or more expensive to obtain, the operating performance of those portfolio companies and therefore the investment returns on our funds may be negatively impacted. In addition, to the extent that the then-current markets make it difficult or impossible to refinance debt or extend maturities on outstanding debt, a portfolio company may be unable to repay such debt at maturity and may be forced to sell assets, undergo a recapitalization or seek bankruptcy protection. Any of the foregoing circumstances could impair the value of our funds’ investments in those portfolio companies and have a material adverse effect on our financial condition, results of operations and cash flow. Our funds are subject to risks in using prime brokers, custodians, counterparties, administrators, other agents and third-party service providers. Many of our funds depend on the services of prime brokers, custodians, counterparties, administrators and other agents and third- party services providers to carry out certain securities and derivatives transactions and other business functions. The terms of these contracts are often customized and complex, and many of these arrangements occur in markets or relate to products that are subject to limited or no regulatory oversight. In particular, some of our funds utilize prime brokerage arrangements with a relatively limited number of counterparties, which has the effect of concentrating the transaction volume (and related counterparty default risk) of such funds with these counterparties. Our funds are subject to the risk that the counterparty to one or more of these contracts defaults, either voluntarily or involuntarily, on its performance under the contract. Any such default may occur suddenly and without notice to us. Moreover, if a counterparty defaults, we may be unable to take action to cover our exposure, either because we lack contractual recourse or because market conditions make it difficult to take effective action. This inability could occur in times of market stress, which is when defaults are most likely to occur. In addition, risk-management models that we may employ from time to time may not accurately anticipate the impact of market stress or counterparty financial condition, and as a result, we may not have taken sufficient action to reduce our risks effectively. Default risk may arise from events or circumstances that are difficult to detect, foresee or evaluate. In addition, concerns about, or a default by, one large participant could lead to significant liquidity problems for other participants, which may in turn expose us to significant losses. In the event of a counterparty default, particularly a default by a major investment bank, one or more of our funds could incur material losses, and the resulting market impact of a major counterparty default could harm our business, results of operation and financial condition. In the event of the insolvency of a prime broker, custodian, counterparty or any other party that is holding assets of our funds as collateral, our funds might not be able to recover equivalent assets in full as they will rank among the prime broker’s, custodian’s or counterparty’s unsecured creditors in relation to the assets held as collateral. In addition, our funds’ cash held with a prime broker, custodian or counterparty generally will not be segregated from the prime broker’s, custodian’s or counterparty’s own cash, and our funds may therefore rank as unsecured creditors in relation thereto. Risks Relating to Our Preferred Units The market price of our preferred units could be adversely affected by various factors. The market price for the preferred units may fluctuate based on a number of factors, including: variations in our quarterly operating results or distributions, which may be substantial; the incurrence of additional indebtedness or additional issuances of other series or classes of preferred units; • • • whether we declare or fail to declare distributions on the preferred units from time to time and our ability to make distributions under the terms of our indebtedness; the credit ratings of the preferred units; a lack of liquidity in the trading of our preferred units (including, if the preferred units are voluntarily or involuntarily delisted from the New York Stock Exchange); the prevailing interest rates or rates of return being paid by other companies similar to us and the market for similar securities; and general market, political and economic conditions. • • • • 37 Our performance, market conditions and prevailing interest rates have fluctuated in the past and can be expected to fluctuate in the future. Fluctuations in these factors could have an adverse effect on the price and liquidity of the preferred units. In general, as market interest rates rise, securities with fixed interest rates or fixed distribution rates, such as the preferred units, decline in value. Consequently, if you purchase the preferred units and market interest rates increase, the market price of the preferred units may decline. We cannot predict the future level of market interest rates. Our ability to pay quarterly distributions on the preferred units will be subject to, among other things, general business conditions, our financial results, restrictions under the terms of our existing and future indebtedness or senior units, and our liquidity needs. Any reduction or discontinuation of quarterly distributions could cause the market price of the preferred units to decline significantly. Accordingly, the preferred units may trade at a discount to their purchase price. If we fail to maintain effective internal controls over our financial reporting in the future, the accuracy and timing of our financial reporting may be adversely affected. The Sarbanes-Oxley Act requires, among other things, that as a public company we maintain effective internal control over financial reporting and disclosure controls and procedures. We are required under Section 404 to provide an annual management assessment of the effectiveness of our internal controls over financial reporting. Following the Mergers, we are no longer required to include in our annual reports an opinion from our independent registered public accounting firm addressing its assessment of such controls. To maintain and improve the effectiveness of our disclosure controls and procedures, significant resources and management oversight are required. We have implemented and continue to implement additional procedures and processes for the purpose of addressing the standards and requirements applicable to public companies. If it is determined that we are not in compliance with Section 404 in the future, we would be required to implement remedial procedures and re-evaluate our internal controls over financial reporting and our operations, financial reporting or financial results could be adversely affected. Matters impacting our internal controls may cause us to be unable to report our financial information on a timely basis and thereby subject us to adverse regulatory consequences, including sanctions by the SEC, or violations of applicable stock exchange listing rules. Moreover, if a material misstatement occurs in the future, we may need to restate our financial results and there could be a negative reaction in the financial markets due to a loss of investor confidence in us and the reliability of our financial statements. This could materially adversely affect us and lead to a decline in the market price of our preferred units. Preparing our consolidated financial statements involves a number of complex manual and automated processes, which are dependent on individual data input or review and require significant management judgment. One or more of these elements may result in errors that may not be detected and could result in a material misstatement of our consolidated financial statements. Distributions on the preferred units are discretionary and non-cumulative. Distributions on each of the Series A preferred units and Series B preferred units are discretionary and non-cumulative. Holders of each series of our preferred shares will only receive distributions when, as and if declared by our board of directors. Consequently, if the board of directors does not authorize and declare a distribution for a distribution period, holders of each of our preferred units would not be entitled to receive any distribution for such distribution period, and such unpaid distribution will not be payable in such distribution period or in later distribution periods. We will have no obligation to pay distributions for a distribution period if our board of directors does not declare such distribution before the scheduled record date for such period, whether or not distributions are declared or paid for any subsequent distribution period with respect to our outstanding preferred units or any other preferred shares we may issue in the future. This may result in holders of our preferred units not receiving the full amount of distributions that they expect to receive, or any distributions, and may make it more difficult to resell our preferred units, or to do so at a price that the holder finds attractive. Our board of directors may, in its sole discretion, determine to suspend distributions on our outstanding preferred units, which may have a material adverse effect on the market price of those shares. There can be no assurances that our operations will generate sufficient cash flows to enable us to pay distributions on our preferred units. Our financial and operating performance is subject to prevailing economic and industry conditions and to financial, business and other factors, some of which are beyond our control. 38 Risks Relating to Our Organization and Structure We have an indirect economic interest in only a portion of the earnings and cash flows of the Oaktree Operating Group, which may negatively impact our ability to pay distributions on our preferred units. Following the Restructuring, the only entities within the Oaktree Operating Group in which we have an indirect economic interest are Oaktree Capital I and OCM Cayman. Please see “Management’s Discussion and Analysis of Financial Condition and Results of Operations —Restructuring Transaction.” We have no material assets other than the ownership of these indirect economic interests. Because we derive, and expect to continue to derive, a substantial portion of our revenue and cash flows from our indirect economic interests in each of Oaktree Capital I and OCM Cayman our success depends on the performance of these operating companies irrespective of the performance of the Oaktree Operating Group as a whole. Prior to the Restructuring, we derived management fees, incentive income and investment income from each member of the Oaktree Operating Group. However, subsequent to the Restructuring, we only derive incentive income and investment income from two of the six members of the Oaktree Operating Group. Additionally, subsequent to the Restructuring, a substantial portion of Oaktree’s management fees is not earned by us since we do not act as investment manager for the vast majority of Oaktree funds but rather the majority of our management fees are paid to us by OCM as compensation for services rendered by us in support of Oaktree’s investment management business. In addition, in 2020 we subscribed for a limited partner interest in, and made a capital commitment of, $750 million to Oaktree Opportunities Fund XI, L.P., a parallel investment vehicle thereof or a feeder fund in respect of one of the foregoing (such limited partner interest, the “Opps XI Investment” and such fund entities collectively, “Opps XI”). In order to make the Opps XI Investment, our sole Class A unitholder, or one of its affiliates, will contribute cash as a capital contribution (the “Opps XI Investment Cash”) as and to the extent required to satisfy the our obligations to Opps XI. We will use the Opps XI Investment Cash solely to fund the Opps XI Investment and satisfy its obligations in respect of Opps XI. Distributions from the Opps XI Investment are intended for the benefit of the Class A unitholder, subject to applicable law. Our preferred unitholders should not rely on distributions received by us in respect of our Opps XI Investment for payment of dividends or redemption of the preferred units. There can be no assurances that the distributions we receive from Oaktree Capital I and OCM Cayman or the management fees we receive from OCM will generate sufficient cash flows to enable us to pay distributions on our preferred units. If we or any of our private funds were deemed an investment company under the Investment Company Act, applicable restrictions could make it impractical for us to continue our business or such funds as contemplated and could have a material adverse effect on our business. A person will generally be deemed to be an “investment company” for purposes of the Investment Company Act if: • • it is or holds itself out as being engaged primarily, or proposes to engage primarily, in the business of investing, reinvesting or trading in securities; or absent an applicable exemption, it owns or proposes to acquire investment securities having a value exceeding 40% of the value of its total assets (exclusive of U.S. government securities and cash items) on an unconsolidated basis. We believe that we are engaged primarily in the business of providing asset management services and not primarily in the business of investing, reinvesting or trading in securities. We also believe that the primary source of income from our business is properly characterized as income earned in exchange for the provision of services. We hold ourselves out as an asset management firm and do not propose to engage primarily in the business of investing, reinvesting or trading in securities. Further, because we believe that the capital interests of the general partners of our funds in their respective funds are neither securities nor investment securities for purposes of the Investment Company Act, we believe that less than 40% of our total assets (exclusive of U.S. government securities and cash items) on an unconsolidated basis are comprised of assets that could be considered investment securities. Accordingly, we do not believe that we are an investment company under the Investment Company Act. The Investment Company Act and the rules thereunder contain detailed parameters for the organization and operation of investment companies. Among other things, the Investment Company Act and the rules thereunder limit or prohibit transactions with affiliates, impose limitations on the issuance of debt and equity securities, generally prohibit the issuance of options and impose certain governance requirements. We intend to conduct our operations so that we will not be deemed to be an investment company under the Investment Company Act. While we do 39 advise or sub-advise funds that are registered under the Investment Company Act, we operate our private funds so that they are not deemed to be investment companies that are required to be registered under the Investment Company Act. If anything were to happen that would cause us to be deemed to be an investment company under the Investment Company Act or that would require us to register our private funds under the Investment Company Act, requirements imposed by the Investment Company Act, including limitations on capital structure, ability to transact business with affiliates and ability to compensate senior employees, could make it impractical for us to continue our business or the private funds as currently conducted, impair the agreements and arrangements between and among OCGH, us, our private funds and our senior management, or any combination thereof, and materially adversely affect our business, financial condition and results of operations. In addition, we may be required to limit the amount of investments that we make as a principal or otherwise conduct our business in a manner that does not subject us to the registration and other requirements of the Investment Company Act. Our operating agreement contains provisions that substantially limit remedies available to our preferred unitholders for actions that might otherwise result in liability for our officers and/or directors. While our operating agreement provides that our officers and directors have fiduciary duties equivalent to those applicable to officers and directors of a Delaware corporation under the Delaware General Corporation Law (“DGCL”), the agreement also provides that our officers and directors are liable to us or our unitholders for an act or omission only if such act or omission constitutes a breach of the duties owed to us or our unitholders, as applicable, by any such officer or director and such breach is the result of willful malfeasance, gross negligence, the commission of a felony or a material violation of law, in each case, that has, or could reasonably be expected to have, a material adverse effect on us or fraud. Moreover, we have agreed to indemnify each of our directors and officers, to the fullest extent permitted by law, against all expenses and liabilities (including judgments, fines, penalties, interest, amounts paid in settlement with our approval and counsel fees and disbursements) arising from the performance of any of their obligations or duties in connection with their service to us, including in connection with any civil, criminal, administrative, investigative or other action, suit or proceeding to which any such person may be made party by reason of being or having been one of our directors or officers, except for any expenses or liabilities that have been finally judicially determined to have arisen primarily from acts or omissions that violated the standard set forth in the preceding sentence. Furthermore, our operating agreement provides that OCGH does not have any liability to us or our other unitholders for any act or omission and is indemnified in connection therewith. Under our operating agreement, each of our directors and us is entitled, subject to certain consent rights, to take actions or make decisions in its “sole discretion” or “discretion” or that it deems “necessary or appropriate” or “necessary or advisable.” In those circumstances, each of our directors or us is entitled to consider only such interests and factors as it desires, including our own or our directors’ interests, and neither it nor our board of directors has any duty or obligation (fiduciary or otherwise) to give any consideration to any interest of or factors affecting us or any unitholders, and neither we nor our board of directors is subject to any different standards imposed by our operating agreement, the Act or under any other law, rule or regulation or in equity, except that we must act in good faith at all times. These modifications of fiduciary duties are expressly permitted by Delaware law. These modifications are detrimental to our unitholders because they restrict the remedies available to them for actions that without those limitations might constitute breaches of duty (including fiduciary duty). Our ability to make distributions to holders of any series of preferred units may be limited by our holding company structure, applicable provisions of Delaware law, contractual restrictions and the terms of any senior securities we may issue in the future. We are a limited liability holding company and have no material assets other than the ownership of our interests in two members of the Oaktree Operating Group held through the Intermediate Holding Companies. We have no independent means of generating revenues. In connection with the issuance of our preferred units, we caused one member of the Oaktree Operating Group indirectly owned by us, Oaktree Capital I, to issue ‘mirror’ preferred units to an Intermediate Holding Company to correspond with each series of our preferred units. While we may use distributions from the entire Oaktree Operating Group to fund distributions to our preferred unitholders, we only enjoy preferential distribution rights with respect to a single member of the Oaktree Operating Group. The terms of the mirror preferred units also state that, subject to certain exceptions, no distributions may be declared or paid with respect to the common units of the member of the Oaktree Operating Group that issued them until distributions have been declared and paid or declared and set aside with respect to each series of mirror preferred units and the series of our preferred units to which they correspond. Accordingly, our ability to receive distributions from that member of the Oaktree Operating Group may be impaired to the extent we have not declared and paid or declared and set aside distributions on each series of mirror preferred units and each series of preferred units. 40 Under the Act, we may not make a distribution to a member if, after the distribution, all our liabilities, other than liabilities to members on account of their limited liability company interests and liabilities for which the recourse of creditors is limited to specific property of the limited liability company, would exceed the fair value of our assets. If we were to make such an impermissible distribution, any member who received a distribution and knew at the time of the distribution that the distribution was in violation of the Act would be liable to us for three years for the amount of the distribution. In addition, the Oaktree Operating Group’s cash flow may be insufficient to enable it to make required minimum tax distributions to holders of its units, in which case the Oaktree Operating Group may have to borrow funds or sell assets and thus our liquidity and financial condition could be materially adversely affected. Our operating agreement contains provisions authorizing the issuance of preferred units in us by our board of directors at any time without unitholder approval. Risks Relating to United States Taxation If the amount of distributions on the preferred units is greater than our gross ordinary income, then the amount that a holder of preferred units would receive upon liquidation may be less than the preferred unit liquidation value. In general, to the extent of our gross ordinary income in any taxable year, we will specially allocate to the preferred units items of our gross ordinary income in an amount equal to the distributions paid in respect of the preferred units during the taxable year. Similar allocations will be made with respect to any equity securities we issue in the future that rank equally with the preferred units. Allocations of gross ordinary income will increase the capital account balances of the holders of the preferred units. Distributions will correspondingly reduce the capital account balances of the holders of the preferred units. So long as our gross ordinary income equals or exceeds the distributions paid to the holders of the preferred units, the capital account balances of the holders preferred units with respect to the preferred units will equal the aggregate preferred unit liquidation value at the end of each taxable year. If the distributions paid in respect of the preferred units in a taxable year exceed our gross ordinary income, items of our gross ordinary income will be allocated to the preferred units pro-rata based on the amount of distributions paid in respect of the preferred units in such taxable year. If the distributions paid in respect of the preferred units in a taxable year exceed the proportionate share of our gross ordinary income allocated in respect of the preferred units for such year, the capital account balances of the holders of the preferred units with respect to the preferred units will be reduced below the aggregate preferred unit liquidation value by the amount of such excess. In that event, we will allocate additional gross ordinary income, to the extent available in any taxable year, in subsequent years until such excess is eliminated. If we were to have insufficient gross ordinary income to eliminate such excess, holders of preferred units would be entitled, upon our liquidation, dissolution or winding up, to less than the aggregate preferred unit liquidation value. In addition, to the extent that we make additional allocations of gross ordinary income in a taxable year to eliminate such excess from prior years, the gross ordinary income allocated to holders of the preferred units in such taxable year would exceed the distributions paid to the preferred units during such taxable year. In such taxable year, holders of preferred units may recognize taxable income in respect of their investments in the preferred units in excess of our cash distributions, thus giving rise to an out-of-pocket tax liability for such holders. Future issuances of equity securities that rank equally with the preferred units could increase the likelihood that the capital account balances of holders of the preferred units decrease below the aggregate preferred unit liquidation value and holders of preferred units bear an out-of-pocket tax liability in future taxable years. Holders of preferred units who are U.S. taxpayers should anticipate the need to file annually a request for an extension of the due date of their income tax return. In addition, it is possible that holders of preferred units may be required to file amended income tax returns. Holders of preferred units are required to take into account items of gross ordinary income that are allocated to them for our taxable year ending within or with their taxable year. It may require a substantial period of time after the end of our fiscal year to obtain the requisite information from all lower-tier entities so that tax information (including IRS Schedules K-1) may be prepared by us. For this reason, holders of preferred units who are U.S. taxpayers should anticipate the need to file annually with the IRS (and certain states) a request for an extension past the applicable due date of their income tax return for the taxable year. Because holders of our preferred units will be required to report the items of gross income that are allocated to them, tax reporting for such holders will generally be more complicated than for shareholders of a corporation. In addition, it is possible that a holder of preferred units will be required to file amended income tax returns as a result of adjustments to items on the corresponding income tax returns of the Company. Any obligation for a holder of preferred units to file amended income tax returns for that or any other reason, including any costs incurred in the preparation or filing of such returns, is the responsibility of each holder of preferred units. 41 An investment in preferred units will give rise to UBTI to certain tax-exempt holders. We will make investments through entities classified as partnerships or disregarded entities for U.S. federal income tax purposes in “debt-financed” property and, thus, an investment in preferred units will give rise to unrelated business taxable income (“UBTI”) to tax-exempt holders of preferred units. Moreover, if the IRS successfully asserts that we are engaged in a trade or business, then additional amounts of income could be treated as UBTI. Tax-exempt holders of our preferred units are strongly urged to consult their tax advisors regarding the tax consequences of owning our preferred units. Because we are under no obligation to minimize UBTI, tax-exempt U.S. holders of preferred units should consult their own tax advisers regarding all aspects of UBTI. Non-U.S. holders face unique U.S. tax issues from owning preferred units that may result in adverse tax consequences to them. In light of our investment activities, we may be, or may become, engaged in a U.S. trade or business for U.S. federal income tax purposes, in which case some portion of our income would be treated as effectively connected income, or “ECI,” with respect to non-U.S. holders of our preferred units. Moreover, dividends paid by real estate investment trust, or “REIT,” investments that are attributable to gains from the sale of U.S. real property interests may be treated as ECI with respect to non-U.S. holders of our preferred units. In addition, certain income of non-U.S. holders from U.S. sources not connected to any U.S. trade or business conducted by us could be treated as ECI. We may earn ECI and/or income treated as ECI. To the extent our income is treated as ECI, each non-U.S. holder generally would be subject to withholding tax on distributions attributable to such income, would be required to file a U.S. federal income tax return for such year reporting such income effectively connected with such trade or business and any other income treated as ECI, and would be subject to U.S. federal income tax at regular U.S. tax rates on any such income (state and local income taxes and filings may also apply in that event). Non-U.S. holders that are corporations may also be subject to a 30% branch profits tax (potentially reduced under an applicable tax treaty) on their allocable share of such income. In addition, if we are treated as being engaged in a U.S. trade or business, a portion of any gain recognized by non-U.S. holders on the sale or exchange of preferred units may be treated for U.S. federal income tax purposes as ECI. Consequently, such non-U.S. holders could be subject to U.S. federal income tax and branch profits tax on the sale or exchange of preferred units. In certain circumstances, for transfers on or after January 1, 2022, the transferee of such preferred units (or a broker through which the transfer is effected) may be required to deduct and withhold a tax equal to 10% of the amount realized (or deemed realized) on the sale or exchange of such preferred units, or such other amount as is specified in the Treasury Regulations. Because this guidance is recent, it is unclear how this provision may impact transfers of preferred units in the future. In addition, certain income from U.S. sources that is not ECI allocable to non-U.S. holders may be subject to withholding taxes imposed at the highest effective applicable tax rate. Non-U.S. holders of our preferred units are strongly urged to consult their tax advisors regarding the tax consequences of owning our preferred units. Holders of preferred units may be subject to state and local taxes and return filing requirements as a result of investing in our preferred units. In addition to U.S. federal income taxes, holders of our preferred units may be subject to other taxes, including state and local taxes, unincorporated business taxes and estate, inheritance or intangible taxes that are imposed by the various jurisdictions in which we do business or own property now or in the future, even if the holders of our preferred units do not reside in any of those jurisdictions. Holders of our preferred units may also be required to file state and local income tax returns and pay state and local income taxes in some or all of these jurisdictions. Further, holders of our preferred units may be subject to penalties for failure to comply with those requirements. It is the responsibility of each unitholder to file all U.S. federal, state and local tax returns that may be required of such unitholder. Amounts distributed in respect of the preferred units could be treated as “guaranteed payments” for U.S. federal income tax purposes. The treatment of interests in a partnership such as the preferred units and the payments received in respect of such interests is uncertain. The IRS may contend that payments on the preferred units represent “guaranteed payments,” which would generally be treated as ordinary income and may not have the same character when received by a holder as our gross ordinary income had when earned by us. If distributions on the preferred units are treated as “guaranteed payments,” a holder’s taxable income would be equal to the guaranteed payment accrued or received, regardless of the amount of our gross ordinary income. Our limited liability company agreement provides that we and all holders agree to treat payments made in respect of the preferred units as other than guaranteed payments. Potential holders of preferred units are encouraged to consult their own tax advisors regarding the treatment of payments on the preferred units as “guaranteed payments.” 42 Holders of preferred units who do not hold the units through the record date for a distribution may be allocated gross ordinary income even though no distribution is received. While distributions (if any) with respect to preferred units will be made on a quarterly basis, under the allocation methodology we have adopted we will prorate the total amount of gross ordinary income allocated to preferred units for a taxable year among holders of the preferred units on a monthly basis. As a result, a holder of a preferred unit who does not hold the preferred unit through the record date for a distribution may be allocated gross ordinary income even though no distribution is received. Holders of preferred units will remain liable for any income taxes associated with allocations of gross ordinary income even if they do not receive a distribution with respect to their preferred units or if the amount of such allocations exceed the amount of distributions they receive with respect to their preferred units. Any such gross ordinary income allocation will increase the holder’s adjusted basis in its preferred units. 43 Item 1B. Unresolved Staff Comments None. Item 2. Properties Properties Our principal executive offices are located in office space leased by OCM at 333 South Grand Avenue, 28th Floor, Los Angeles, California 90071. OCM also leases office space in New York City, Stamford and Houston. We lease the space for our offices in London, Frankfurt, Paris, Luxembourg, Beijing, Hong Kong, Shanghai, Seoul, Singapore, Sydney, Tokyo and Dubai. Certain affiliates of our managed funds lease office space in Amsterdam, Luxembourg, Dublin and Singapore. We do not own any real property. We consider our facilities to be suitable and adequate for the management and operation of our business. Item 3. Legal Proceedings For a discussion of legal proceedings, please see the section entitled “Legal Actions” in note 17 to our consolidated financial statements included elsewhere in this annual report, which section is incorporated herein by reference. Item 4. Mine Safety Disclosures None. 44 PART II. Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Market Information Our Class A units are not listed on a securities exchange. The number of holders of record of our Class A units as of February 24, 2021 was one. Equity Compensation Plan Information The following table sets forth information concerning the awards that may be issued under the 2011 Plan as of December 31, 2020. Plan Category Equity compensation plans approved by security holders Equity compensation plans not approved by security holders Total (3) Number of Securities to be Issued Upon Exercise of Outstanding Options, (1) Warrants and Rights (a) 15,846,913 — 15,846,913 Weighted-Average Exercise Price of Outstanding Options, Warrants and Rights (b) — — — Number of Securities Remaining Available for Future Issuance Under Equity Compensation Plans (excluding securities reflected in column (a)) (2) (c) 8,136,779 — 8,136,779 (1) Reflects the aggregate number of OCGH units, Class A units, phantom units and EVUs granted under the 2011 Plan as of December 31, 2020. Please see note 15 to our consolidated financial statements included elsewhere in this annual report for additional information. (2) The 2011 Plan provides that the maximum number of Units that may be delivered pursuant to awards under the 2011 Plan is 22,300,000, as increased on January 1 of each year beginning in 2012 by a number of Units equal to the excess of (a) 15% of the number of outstanding Oaktree Operating Group units on December 31 of the immediately preceding year over (b) the number of Oaktree Operating Group units that have been issued or are issuable under the 2011 Plan as of such date, except that our board of directors may, in its discretion, increase the number of Units covered by the 2011 Plan by a lesser amount. The issuance of Units or the payment of cash upon the exercise of an award or in consideration of the cancellation or termination of an award will reduce the total number of Units available under the 2011 Plan, as applicable. Units underlying awards under the 2011 Plan that are forfeited, cancelled, expire unexercised or are settled in cash will be available again to be used as awards under the 2011 Plan. However, Units used to pay the required exercise price or tax obligations, or Units not issued in connection with the settlement of an award or that are used or withheld to satisfy tax obligations of a participant, will not be available again for other awards under the 2011 Plan. (3) As of December 31, 2020, 4,929,054 OCGH units have been granted under the 2007 Plan. However, such amounts are not reflected in this table because our board of directors has resolved that the administrator of the 2007 Plan will no longer grant awards under the 2007 Plan. Unregistered Sales of Equity Securities and Purchases of Equity Securities in the Fourth Quarter of 2020 None. Item 6. Selected Financial Data Not Applicable. 45 Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations The following discussion and analysis should be read in conjunction with the consolidated financial statements of Oaktree Capital Group, LLC and the related notes included within this annual report. For a discussion and analysis of historical periods ended before January 1, 2019, please refer to “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our report on Form 10- K for the year ended December 31, 2019. This discussion contains forward-looking statements that are subject to risks and uncertainties and assumptions relating to our operations, financial results, financial condition, business prospects, growth strategy and liquidity. The factors listed under “Risk Factors” and “Forward-Looking Statements” in this annual report provide examples of risks, uncertainties and events that may cause our actual results to differ materially from the expectations described in any forward-looking statements. Business Overview Oaktree is a leading global alternative investment management firm with expertise in investing in credit, real assets, private equity, and listed equities. Oaktree’s mission is to deliver superior investment results with risk under control and to conduct its business with the highest integrity. Oaktree emphasizes an opportunistic, value-oriented and risk-controlled approach to its investments. Over more than three decades, Oaktree has developed a large and growing client base through its ability to identify and capitalize on opportunities for attractive investment returns in less efficient markets. Oaktree was formed in 1995 by a group of individuals who had been investing together since the mid-1980s. Oaktree’s founders were pioneers in the management of high yield bonds, convertible securities and distressed debt. From those roots Oaktree has developed a diversified mix of specialized credit- and equity-oriented strategies. Oaktree operates according to a unifying investment philosophy, which consists of six tenets-risk control, consistency, market inefficiency, specialization, bottom-up analysis and disavowal of market timing-and is complemented by a set of core business principles that articulate our commitment to excellence in investing, commonality of interests with clients, a collaborative and cooperative culture, and a disciplined, opportunistic approach to the expansion of products. Brookfield Merger On March 13, 2019, Oaktree, Brookfield Asset Management Inc., a corporation incorporated under the laws of the Province of Ontario (“Brookfield”), Berlin Merger Sub, LLC, a Delaware limited liability company (“Merger Sub”) and a wholly-owned subsidiary of Brookfield, Oslo Holdings LLC, a Delaware limited liability company (“SellerCo”) and a wholly-owned subsidiary of Oaktree Capital Group Holdings, L.P. (“OCGH”), and Oslo Holdings Merger Sub LLC, a Delaware limited liability company and a wholly-owned subsidiary of Oaktree (“Seller MergerCo”) entered into an agreement and plan of merger (the “Merger Agreement”). Pursuant to the terms and conditions set forth in the Merger Agreement, effective on September 30, 2019, (i) Merger Sub merged with and into Oaktree (the “Merger”), with Oaktree continuing as the surviving entity, and (ii) immediately following the Merger, SellerCo merged with and into Seller MergerCo (the “Subsequent Merger” and together with the Merger, the “Mergers”), with Seller MergerCo continuing as the surviving entity. Upon the completion of the Mergers on September 30, 2019, Brookfield acquired 61.2% of Oaktree’s business in a stock and cash transaction. The remaining 38.8% of the business at that time continued to be owned by OCGH, whose unitholders consist primarily of Oaktree’s founders and certain other members of management and current and former employees. As part of the Merger, Brookfield acquired all outstanding vested OCG Class A units for, at the election of OCG Class A unitholders, either $49.00 in cash or 1.0770 Class A shares of Brookfield per OCG Class A unit (subject to pro-ration to ensure that no more than fifty percent (50%) of the aggregate merger consideration is paid in the form of cash or stock), in each case, without interest and subject to any applicable withholding taxes. In addition, as part of the Subsequent Merger the founders, senior management, and current and former employee-unitholders of OCGH sold 20% of their OCGH units to Brookfield for the same consideration as the OCG Class A unitholders received in the merger. Restructuring Transaction On the closing date of the Mergers, we and certain other entities entered into a Restructuring Agreement (the “Restructuring”) pursuant to which our direct and indirect ownership of general partner and limited partner interests in certain Oaktree Operating Group entities were transferred to newly-formed, indirect subsidiaries of Brookfield as of October 1, 2019. As a result, on October 1, 2019, four of the six Oaktree Operating Group entities were no longer our indirect subsidiaries. Accordingly, our consolidated financial statements will reflect our indirect economic interest in only two of the Oaktree Operating Group entities: (i) Oaktree Capital I, L.P. (“Oaktree Capital 46 I”), which acts as or controls the general partner of certain Oaktree funds and which holds a majority of Oaktree’s investments in its funds and (ii) Oaktree Capital Management (Cayman), L.P. (“OCM Cayman”), which represents Oaktree’s non-U.S. fee business. As of October 1, 2019, our consolidated financial statements will no longer reflect any economic interests in the remaining four Oaktree Operating Group entities: (i) Oaktree Capital II, L.P. (“Oaktree Capital II”), which acts as or controls the general partner of certain Oaktree funds and which includes Oaktree’s investments in certain funds and other businesses, including Oaktree’s investment in DoubleLine Capital, L.P., (ii) Oaktree Capital Management, L.P. (“OCM”), an entity that serves as the U.S. registered investment adviser to most of the Oaktree funds, (iii) Oaktree Investment Holdings, L.P. (“Oaktree Investment Holdings”), which holds certain corporate investments in other entities and (iv) Oaktree AIF Investments, L.P. (“Oaktree AIF”), which primarily holds interests in certain Oaktree fund investments for regulatory and structuring purposes. As a consequence, the assets of Oaktree Capital II, OCM, Oaktree Investment Holdings and Oaktree AIF will no longer support our operations. Please see “Business—Organizational Structure” in this annual report for a diagram of our organizational structure after the Restructuring. Prior to the Restructuring on October 1, 2019, our consolidated operating results included substantially all of the revenues and expenses of the Oaktree Operating Group and related consolidated funds and investment vehicles. Subsequent to the Restructuring, our consolidated operating results reflect only Oaktree Capital I and OCM Cayman and related consolidated funds and investment vehicles. Since the deconsolidation of the remaining four Oaktree Operating Group entities was not required to be presented on a retrospective basis, our results of operations for the year ended December 31, 2019 reflect a full year of activities for Oaktree Capital I and OCM Cayman and related funds and investment vehicles and only nine months of activities for the remaining four Oaktree Operating Group entities and related funds and investment vehicles and, as a result, are not directly comparable to prior periods. Our results of operations for the year ended December 31, 2020 only reflect activities for Oaktree Capital I and OCM Cayman and related funds and investment vehicles and do not include any activity for the remaining four Oaktree Operating Group entities and related funds and investment vehicles and, as a result, are not directly comparable to prior periods. As a result of the Restructuring of our business, references to “Oaktree” in this annual report will generally refer to the collective business of the Oaktree Operating Group, of which we are a component. 47 Understanding Our Results—Consolidation of Oaktree Funds Generally accepted accounting principles in the United States (“GAAP”) requires us to consolidate entities in which we have a direct or indirect controlling financial interest based on either a variable interest model or voting interest model. A limited partnership or similar entity is a variable interest entity (“VIE”) if the unaffiliated limited partners do not have substantive kick-out or participating rights. Most of the Oaktree funds are VIEs because they have not granted unaffiliated limited partners substantive kick-out or participating rights. The Company consolidates those VIEs in which we are the primary beneficiary. For entities that are not VIEs, consolidation is evaluated through a majority voting interest model. Please see note 2 to our consolidated financial statements included elsewhere in this annual report for more information. We do not consolidate most of the Oaktree funds that are VIEs because we are not the primary beneficiary due to the fact that our fee arrangements are considered at-market and thus not deemed to be variable interests, and we do not hold any other interests in those funds that are considered to be more than insignificant. However, investment vehicles in which we have a significant investment, such as CLOs and certain Oaktree funds, are consolidated (“consolidated funds”). When a CLO or fund is consolidated, we reflect the assets, liabilities, revenues, expenses and cash flows of the consolidated funds on a gross basis, and the majority of the economic interests in those consolidated funds, which are held by third-party investors, are reflected as debt obligations of CLOs or non-controlling interests in consolidated funds in the consolidated financial statements. All of the revenues earned by us as investment manager of the consolidated funds are eliminated in consolidation. However, because the eliminated amounts are earned from and funded by third-party investors, the consolidation of a fund does not impact net income or loss attributable to us. Certain entities in which we have the ability to exert significant influence, including unconsolidated Oaktree funds for which we act as general partner, are accounted for under the equity method of accounting. As a result of the Restructuring, we re-assessed our prior variable interest entity consolidation determinations, noting that we were no longer the primary beneficiary of three funds in which our direct ownership interests are held by Oaktree Operating Group entities that are no longer directly controlled by us. Revenues On January 1, 2018, we adopted the new revenue recognition standard on a modified retrospective basis. As a result, prior period amounts continue to be reported under historic GAAP. Upon adoption, the Company recorded a cumulative-effect increase to retained earnings as of January 1, 2018 of $48.7 million, net of tax. This adjustment relates to incentive income that would have met the “probable that significant reversal will not occur” criteria as of January 1, 2018 under the new revenue standard. Please see notes 2 and 3 to our consolidated financial statements included elsewhere in this annual report for additional information on revenues. Our business generates three types of revenue: management fees, incentive income and investment income. Management fees earned from third parties are billed monthly or quarterly based on annual rates and are typically earned for each of the funds that we manage. The contractual terms of management fees generally vary by fund structure. Management fees also may include performance- based fees earned from certain open-end and evergreen fund accounts. Subsequent to the Restructuring, our management fees consist primarily of fees earned from funds managed by OCM Cayman and sub-advisory fees for services provided to OCM. We also have the potential to earn incentive income from most of the closed-end and certain evergreen funds managed by Oaktree in our capacity as the general partner of those funds. These closed-end funds generally provide that we receive incentive income only after we have returned to our investors all of their contributed capital plus an annual preferred return, typically 8%. Once this occurs, we generally receive as incentive income 80% of all distributions otherwise attributable to our investors, and those investors receive the remaining 20% until we have received, as incentive income, 20% of all such distributions in excess of the contributed capital from the inception of the fund. Thereafter, all such future distributions attributable to our investors are distributed 80% to those investors and 20% to us as incentive income. Our third revenue source, investment income, represents our pro-rata share of income or loss from our investments, generally in our capacity as general partner in Oaktree funds and as an investor in our CLOs and third-party managed funds and companies. Our consolidated revenues reflect the elimination of all management fees, incentive income and investment income earned related to consolidated Oaktree funds. Investment income is presented within the other income (loss) section of our consolidated statements of operations. Please see “Business—Structure and Operation of Our Business—Structure of Funds” in this annual report for a detailed discussion of the structure of Oaktree funds. 48 Expenses Compensation and Benefits Compensation and benefits expense reflects all compensation-related items not directly related to incentive income, investment income or the vesting of Class A units, OCGH units, OCGH equity value units (“EVUs”), deferred equity units and other performance-based units, and includes salaries, bonuses, compensation based on management fees or a definition of profits, employee benefits, payroll taxes and phantom equity awards. Phantom equity awards represent liability-classified awards subject to vesting and remeasurement at the end of each reporting period. Phantom equity award expense reflects the vesting of those liability-classified awards, the equity distribution declared in the period and changes in the Class A unit trading price. Compensation and benefits expense reflects the gross-up of reimbursable costs incurred on behalf of Oaktree funds in which the Company has determined it is the principal. Subsequent to the Restructuring, our consolidated operating results primarily include compensation and benefits expense related to employees of OCM Cayman. Equity-based Compensation Equity-based compensation expense reflects the non-cash charge associated with grants of Class A units, OCGH units, EVUs, deferred equity units and other performance-based units. Incentive Income Compensation Incentive income compensation expense primarily reflects compensation directly related to incentive income, which generally consists of percentage interests (sometimes referred to as “points”) that are granted to Oaktree investment professionals associated with the particular fund that generated the incentive income, and secondarily, compensation directly related to investment income. There is no fixed percentage for the incentive income-related portion of this compensation, either by fund or strategy. In general, within a particular strategy more recent funds have a higher percentage of aggregate incentive income compensation expense than do older funds. The percentage that consolidated incentive income compensation expense represents of the particular period’s consolidated incentive income may not be meaningful because incentive income from consolidated funds is eliminated in consolidation, whereas no incentive income compensation expense is eliminated in consolidation, and, in periods prior to the adoption of the new revenue standard on January 1, 2018, the criteria for recognizing income and expense differed and thus may have resulted in timing differences. General and Administrative General and administrative expense includes costs related to occupancy, outside auditors, tax professionals, legal advisers, research, consultants, travel and entertainment, communications and information services, business process outsourcing, foreign-exchange activity, insurance, placement costs, changes in the contingent consideration liability, and other general items related directly to the Company’s operations. These expenses are net of amounts borne by fund investors and are not offset by credits attributable to fund investors’ non-controlling interests in consolidated funds. General and administrative expense reflects the gross-up of reimbursable costs incurred on behalf of Oaktree funds in which the Company has determined it is the principal. Subsequent to the Restructuring, general and administrative expenses primarily include direct and reimbursable expenses incurred by Oaktree Capital I and OCM Cayman and the Company's share of certain expenses through a service agreement with OCM. Depreciation and Amortization Depreciation and amortization expense includes costs associated with the purchase of furniture and equipment, capitalized software, office leasehold improvements and acquired intangibles. Furniture and equipment and capitalized software costs are depreciated using the straight-line method over the estimated useful life of the asset, which is generally three to five years. Leasehold improvements are amortized using the straight-line method over the shorter of the respective estimated useful life or the lease term. Acquired intangibles primarily relate to contractual rights and are amortized over their estimated useful lives, which range from seven to 25 years. Subsequent to the Restructuring, the majority of Oaktree's acquired intangible assets are no longer included in our consolidated statement of financial condition. 49 Consolidated Fund Expenses Consolidated fund expenses consist primarily of costs, expenses and fees that are incurred by, or arise out of the operation and activities of or otherwise are related to, our consolidated funds, including, without limitation, travel expenses, professional fees, research and software expenses, insurance, and other costs associated with administering and supporting those funds. Inasmuch as most of these fund expenses are borne by third-party investors, they reduce the investors’ interests in the consolidated funds and have no impact on net income or loss attributable to the Company. Other Income (Loss) Interest Expense Interest expense primarily reflects the interest expense of the consolidated funds, as well as the interest expense of Oaktree and its operating subsidiaries. Prior to the Restructuring, our financial statements reflected debt service of the entire Oaktree Operating Group, however, OCM has historically been the only direct borrower or issuer under credit agreements and private placement notes with third parties and made all payments of principal and interest. Accordingly, our financial statements after the Restructuring generally will not reflect debt obligations, interest expense or related liabilities associated with our operating subsidiaries, until such time as Oaktree Capital I, one of our two remaining Oaktree Operating Group entities, directly borrows or issues notes under such arrangements. Interest and Dividend Income Interest and dividend income consists of interest and dividend income earned on the investments held by our consolidated funds, and interest income earned by Oaktree and its operating subsidiaries. Net Realized Gain (Loss) on Consolidated Funds’ Investments Net realized gain (loss) on consolidated funds’ investments consists of realized gains and losses arising from dispositions of investments held by our consolidated funds. Net Change in Unrealized Appreciation (Depreciation) on Consolidated Funds’ Investments Net change in unrealized appreciation (depreciation) on consolidated funds’ investments reflects both unrealized gains and losses on investments held by our consolidated funds and the reversal upon disposition of investments of unrealized gains and losses previously recognized for those investments. Investment Income Investment income represents our pro-rata share of income or loss from our investments, generally in our capacity as general partner in certain Oaktree funds and as an investor in our CLOs and third-party managed funds and companies. Investment income, as reflected in our consolidated statements of operations, excludes investment income earned by us from our consolidated funds. Other Income (Expense), Net Other income (expense), net represents non-operating income or expense, including income related to amounts received from a legacy Highstar fund for contractually reimbursable costs in connection with the Highstar acquisition. Income Taxes The Company is a publicly traded partnership. Because it satisfies the qualifying income test, it is not required to be treated as a corporation for U.S. federal and state income tax purposes. Instead, it is taxed as a partnership. Oaktree Holdings, Inc. and Oaktree AIF Holdings, Inc., which were two of our five Intermediate Holding Companies and wholly-owned subsidiaries, were subject to U.S. federal and state income taxes prior to the Restructuring. The remainder of our income is generally not subject to corporate-level taxation. Upon the Restructuring, Oaktree Holdings, Inc. and Oaktree AIF Holdings, Inc. merged with and into newly formed, indirect subsidiaries of Brookfield, with those subsidiaries surviving the mergers. As a result, as of October 1, 2019, Oaktree Holdings, Inc. and Oaktree AIF Holdings, Inc. ceased to exist and we will no longer include on our financial statements economic interests in Oaktree Capital II, L.P., Oaktree Investment Holdings, L.P., Oaktree 50 Capital Management, L.P., and Oaktree AIF Investments, L.P. All deferred tax balances related to these entities were deconsolidated as part of the Restructuring effective October 1, 2019. The Company’s effective tax rate is dependent on many factors, including the mix of revenues and expenses between our two corporate Intermediate Holding Companies that were subject to income tax through the date of the Restructuring, and our three other Intermediate Holding Companies that are not; consequently, the effective tax rate is subject to significant variation from period to period. Our non-U.S. income or loss before taxes is generally more predictable because, unlike U.S. pre-tax income, it is not significantly impacted by unrealized gains or losses. Non-U.S. tax expense typically represents a disproportionately large percentage of total income tax expense because nearly all of our non-U.S. income or loss is subject to corporate-level income tax, whereas a substantial portion of our U.S.-based income or loss is not subject to corporate-level taxes. In addition, changes in the proportion of non-U.S. pre-tax income to total pre-tax income impact our effective tax rate to the extent non-U.S. rates differ from the combined U.S. federal and state tax rate. Income taxes are accounted for using the liability method of accounting. Under this method, deferred tax assets and liabilities are recognized for the expected future tax consequences of differences between the carrying amounts of assets and liabilities and their respective tax bases using currently enacted tax rates. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period when the change is enacted. Deferred tax assets would be reduced by a valuation allowance if it becomes more likely than not that some portion or all of the deferred tax assets will not be realized. Net Income Attributable to Non-controlling Interests Net income attributable to non-controlling interests represents the ownership interests that third parties hold in entities that are consolidated in our financial statements. These interests fall into two categories: • Net Income Attributable to Non-controlling Interests in Consolidated Funds. This category represents the economic interests of the unaffiliated investors in the consolidated funds, as well as the equity interests held by third-party investors in CLOs that had not yet priced as of the respective period end. Those interests are primarily driven by the investment performance of the consolidated funds. In comparison to net income, this measure excludes our operating results and other items solely attributable to the Company; • Net Income Attributable to Non-controlling Interests in Consolidated Subsidiaries. This category primarily represents the economic interest in the Oaktree Operating Group owned by OCGH (“OCGH non-controlling interest”), as well as the economic interest in certain consolidated subsidiaries held by third parties. Prior to the Restructuring, this category included the OCGH non-controlling interest in all six Oaktree Operating Group entities; subsequent to the Restructuring, it includes only the OCGH non-controlling interest in Oaktree Capital I and OCM Cayman. The OCGH non-controlling interest is determined at the Oaktree Operating Group level based on the weighted average proportionate share of Oaktree Operating Group units held by the OCGH unitholders. Inasmuch as the number of outstanding Oaktree Operating Group units corresponds with the total number of outstanding Class A and OCGH units, changes in the economic interest held by the OCGH unitholders are driven by our additional issuances of Class A and OCGH units, as well as repurchases and forfeitures of, and exchanges between, Class A and OCGH units. Certain of our expenses, such as income tax and related administrative expenses of Oaktree Capital Group, LLC and its Intermediate Holding Companies, are solely attributable to the Class A unitholders. Please see note 13 to our consolidated financial statements included elsewhere in this annual report for additional information on the economic interest in the Oaktree Operating Group owned by OCGH. Net Income Attributable to Preferred Unitholders This category represents distributions declared, if any, on our preferred units. Please see note 13 to our consolidated financial statements for more information. 51 Operating Metrics We monitor certain operating metrics that we believe provide important information and data regarding our business. As a result of the Restructuring, a substantial portion of our revenues will be comprised of incentive income and investment income earned in our capacity as general partner of certain Oaktree funds. To analyze and monitor our operating performance we utilize incentive-creating AUM, incentives created (fund level) and accrued incentives (fund level). These operating metrics provide us with detailed information and insight into the operating performance of the funds we manage. Incentive-creating Assets Under Management. Incentive-creating AUM refers to the AUM that may eventually produce incentive income. It generally represents the NAV of Oaktree funds for which we are entitled to receive an incentive allocation, excluding CLOs and investments made by us and our or Oaktree employees and directors (which are not subject to an incentive allocation) and gross assets (including assets acquired with leverage), net of cash, for our BDCs. All funds for which we are entitled to receive an incentive allocation are included in incentive-creating AUM, regardless of whether or not they are currently above their preferred return or high-water mark and therefore generating incentives. Incentive-creating AUM does not include undrawn capital commitments. Accrued Incentives (Fund Level) and Incentives Created (Fund Level) Oaktree funds record as accrued incentives the incentive income that would be paid to us if the funds were liquidated at their reported values as of the date of the financial statements. Incentives created (fund level) refers to the gross amount of potential incentives generated by these funds during the period. We refer to the amount of accrued incentives recognized as revenue by us as incentive income. Amounts recognized by us as incentive income are no longer included in accrued incentives (fund level), the term we use for remaining fund- level accruals. The amount of incentives created may fluctuate substantially as a result of changes in the fair value of the underlying investments of the fund, as well as incentives created in excess of our typical 20% share due to catch-up allocations for applicable closed- end funds. In general, while in the catch-up layer, approximately 80% of any increase or decrease, respectively, in the fund’s NAV results in a commensurate amount of positive or negative incentives created (fund level). The same performance and market risks inherent in incentives created (fund level) affect the ability to ultimately realize accrued incentives (fund level). One consequence of the accounting method we follow for incentives created (fund level) is that accrued incentives (fund level) is an off-balance sheet metric, rather than being an on-balance sheet receivable that could require reduction if fund performance suffers. We track accrued incentives (fund level) because it provides an indication of potential future value, though the timing and ultimate realization of that value are uncertain. Incentives created (fund level), incentive income and accrued incentives (fund level) are presented gross, without deduction for direct compensation expense that is owed to Oaktree investment professionals associated with the particular fund when we earn the incentive income. We call that charge “incentive income compensation expense.” Incentive income compensation expense varies by the investment strategy and vintage of the particular fund, among many other factors. Incentives created (fund level) often reflects investments measured at fair value and therefore is subject to risk of substantial fluctuation by the time the underlying investments are liquidated. We earn the incentive income, if any, that the fund is then obligated to pay us with respect to our incentive interest (generally 20%) in the profits of our unaffiliated investors, subject to an annual preferred return of typically 8%. Incentive income is recognized when it is probable that significant reversal of revenue will not occur. We track incentives created (fund level) because it provides an indication of the value for us currently being created by investment activities of the funds and facilitates comparability with those companies in our industry that account for investments in carry funds as equity-method investments, thus effectively reflecting an accrual-based method for recognizing incentive income in their financial statements. 52 GAAP Consolidated Results of Operations (1)(2) The following table sets forth our audited consolidated statements of operations: Revenues: Management fees Incentive income Total revenues Expenses: Compensation and benefits Equity-based compensation Incentive income compensation Total compensation and benefits expense General and administrative Depreciation and amortization Consolidated fund expenses Total expenses Other income (loss): Interest expense Interest and dividend income Net realized loss on consolidated funds’ investments Net change in unrealized appreciation (depreciation) on consolidated funds’ investments Investment income Other income, net Total other income (loss) Income before income taxes Income taxes Net income Less: Net (income) loss attributable to non-controlling interests in consolidated funds Net (income) attributable to non-controlling interests in consolidated subsidiaries Net income attributable to Oaktree Capital Group, LLC Net (income) attributable to preferred unitholders Net income attributable to Oaktree Capital Group, LLC Class A unitholders Distributions declared per Class A unit Net income per unit (basic and diluted): Net income per Class A unit Weighted average number of Class A units outstanding Year Ended December 31, 2020 2019 2018 (in thousands, except per unit data) $ $ 185,727 243,337 429,064 $ 578,863 350,124 928,987 712,020 674,059 1,386,079 (131,562) (17,365) (104,469) (253,396) (23,065) (2,052) (33,153) (311,666) (157,686) 318,210 (105,957) (183,847) 103,828 — (25,452) 91,946 (8,211) 83,735 165,412 (83,428) 165,719 (27,316) 138,403 0.71 1.40 98,512 $ $ $ (368,196) (65,533) (175,753) (609,482) (189,447) (20,287) (23,315) (842,531) (197,159) 368,870 (17,773) 9,937 146,569 58 310,502 396,958 (9,620) 387,338 (93,620) (138,879) 154,839 (27,316) 127,523 4.96 1.59 80,045 $ $ $ (407,674) (62,989) (338,675) (809,338) (153,483) (25,862) (11,888) (1,000,571) (160,111) 287,155 (23,528) (164,592) 157,110 7,782 103,816 489,324 (24,779) 464,545 41,691 (282,818) 223,418 (12,277) 211,141 2.97 2.99 70,526 $ $ $ (1) As a result of the Restructuring, as of October 1, 2019, four of the six Oaktree Operating Group entities are no longer our indirect subsidiaries. The deconsolidation of the four Oaktree Operating Group entities that are no longer our indirect subsidiaries is presented on a prospective basis and did not require that prior periods be recast. Accordingly, effective October 1, 2019, our consolidated financial statements reflect our indirect economic interest in only two of the Oaktree Operating Group entities: (i) Oaktree Capital I, which acts as or controls the general partner of certain Oaktree funds and which holds a majority of Oaktree’s investments in its funds and (ii) OCM Cayman, which represents Oaktree’s non-U.S. fee business. (2) In the first quarter of 2018, Oaktree adopted the new revenue recognition standard on a modified retrospective basis, which did not require prior periods to be recast. Instead, a cumulative-effect adjustment to increase retained earnings of $48.7 million, net of tax, was recorded as of January 1, 2018. This adjustment relates to revenues that would have met the recognition criteria under the new standard as of January 1, 2018. 53 Year Ended December 31, 2020 Compared to Year Ended December 31, 2019 Revenues Management Fees Management fees decreased $393.1 million, or 67.9%, to $185.7 million for the year ended December 31, 2020, from $578.9 million for the year ended December 31, 2019. The decrease was primarily attributable to the impact of the Restructuring, which became effective on October 1, 2019. Incentive Income A summary of incentive income is set forth below: Incentive Income: Oaktree funds: Credit Private Equity Real Assets Listed Equities Non-Oaktree Total incentive income Year Ended December 31, 2020 2019 (in thousands) $ $ 59,945 173,662 5,625 4,105 — 243,337 $ $ 267,780 41,438 24,477 13,022 3,407 350,124 Incentive income decreased $106.8 million, or 30.5%, to $243.3 million for the year ended December 31, 2020, from $350.1 million for the year ended December 31, 2019. The decline in incentive income was primarily due to lower tax-related incentive income and the Restructuring. The year ended December 31, 2020 included $133.7 million from Oaktree Power Opportunities Fund IV while Oaktree Opportunities Fund VIII contributed $181.2 million of incentive income in 2019. Expenses Compensation and Benefits Compensation and benefits expense decreased $236.6 million, or 64.3%, to $131.6 million for the year ended December 31, 2020, from $368.2 million for the year ended December 31, 2019. The decline in compensation and benefits expense was primarily due to the Restructuring. Equity-based Compensation Equity-based compensation expense decreased $48.1 million, or 73.4%, to $17.4 million for the year ended December 31, 2020, from $65.5 million for the year ended December 31, 2019, primarily reflecting the impact of the Restructuring. Incentive Income Compensation Incentive income compensation expense decreased $71.3 million, or 40.6%, to $104.5 million for the year ended December 31, 2020, from $175.8 million for the year ended December 31, 2019, primarily reflecting the decrease in incentive income. General and Administrative General and administrative expense decreased $166.3 million, or 87.8%, to $23.1 million for the year ended December 31, 2020, from $189.4 million for the year ended December 31, 2019, primarily reflecting the impact of the Restructuring and costs incurred as part of the Mergers in 2019. Depreciation and Amortization Depreciation and amortization expense decreased $18.2 million, or 89.7%, to $2.1 million for the year ended December 31, 2020, from $20.3 million for the year ended December 31, 2019. The decrease primarily reflected the impact of the Restructuring. 54 Consolidated Fund Expenses Consolidated fund expenses increased $9.9 million, or 42.5%, to $33.2 million for the year ended December 31, 2020, from $23.3 million for the year ended December 31, 2019. This increase primarily reflects increased management fee expense related to certain of our consolidated CLO funds for the year ended December 31, 2020 as a result of the Restructuring and growth in the asset base of our consolidated funds. Other Income (Loss) Interest Expense Interest expense decreased $39.5 million, or 20.0%, to $157.7 million for the year ended December 31, 2020, from $197.2 million for the year ended December 31, 2019. The decrease was primarily attributable to a decline in underlying benchmark interest rates from 2019, offset by increased borrowings related to our CLOs. Interest and Dividend Income Interest and dividend income decreased $50.7 million, or 13.7%, to $318.2 million for the year ended December 31, 2020, from $368.9 million for the year ended December 31, 2019. The decrease was primarily attributable to our consolidated funds. Net Realized Gain (Loss) on Consolidated Funds’ Investments Net realized gain (loss) on consolidated funds’ investments decreased $88.2 million, to a net loss of $106.0 million for the year ended December 31, 2020, from a net loss of $17.8 million for the year ended December 31, 2019. The decrease in our net realized gain (loss) primarily reflects the performance of investments sold by our consolidated CLOs in each period. Net Change in Unrealized Appreciation (Depreciation) on Consolidated Funds’ Investments The net change in unrealized appreciation (depreciation) on consolidated funds’ investments decreased $193.7 million, to net depreciation of $183.8 million for the year ended December 31, 2020, from net appreciation of $9.9 million for the year ended December 31, 2019. Excluding the impact of the reversal of net realized gain (loss) on consolidated funds’ investments, the net change in unrealized appreciation (depreciation) on consolidated funds’ investments decreased $282.0 million to a net loss of $289.8 million for the year ended December 31, 2020, from $7.8 million for the year ended December 31, 2019. The decrease reflected in our consolidated funds’ performance in each period, primarily resulted from a consolidated open-end credit fund that was consolidated in 2019 and the first quarter of 2020, and deconsolidated thereafter. For the year ended December 31, 2020, unrealized appreciation (depreciation) related to this fund reflects the market declines in the first quarter of 2020, but due to its deconsolidation, did not benefit from the subsequent market recovery during the year. Investment Income A summary of investment income is set forth below: Income (loss) from investments in funds: Oaktree funds: Credit Private Equity Real Assets Listed Equities Non-Oaktree Total investment income - Oaktree and operating subsidiaries Eliminations Total investment income Year Ended December 31, 2020 2019 (in thousands) $ $ 52,574 58,139 (11,552) 2,103 (6,953) 94,311 9,517 103,828 $ $ 85,159 24,887 5,513 14,232 65,167 194,958 (48,389) 146,569 Investment income decreased $42.8 million, or 29.2%, to $103.8 million for the year ended December 31, 2020, from $146.6 million for the year ended December 31, 2019. The decrease primarily reflected lower returns on our Credit and Real Assets investments, and the Restructuring, partially offset by increased returns on our Private Equity investments. 55 Income Taxes Income taxes decreased $1.4 million, or 14.6%, to $8.2 million for the year ended December 31, 2020, from $9.6 million for the year ended December 31, 2019, primarily reflecting lower pre-tax income attributable to Class A unitholders and the impact of the Restructuring. The effective tax rates applicable to Class A unitholders for 2020 and 2019 were 4% and 5%, respectively. We generally expect variability in tax rates between periods, because the effective tax rate is a function of the mix of income and other factors, each of which can have a material impact on the particular period’s income tax expense and may vary significantly within or between years. Please see the Income Taxes section of “—Understanding Our Results—Consolidation of Oaktree Funds.” Net (Income) Loss Attributable to Non-controlling Interests in Consolidated Funds Net (income) loss attributable to non-controlling interests in consolidated funds increased $259.0 million, to net loss of $165.4 million for the year ended December 31, 2020, from net income of $93.6 million for the year ended December 31, 2019. The increase reflected our consolidated funds’ performance attributable to third-party investors in each period. These effects are described in more detail under “— Other Income (Loss)” above. Net Income Attributable to Oaktree Capital Group, LLC Class A Unitholders Net income attributable to OCG Class A unitholders increased $10.9 million, or 8.5%, to $138.4 million for the year ended December 31, 2020, from $127.5 million for the year ended December 31, 2019, primarily reflecting the impact of our allocated portion of consolidated funds’ performance in each period and the Restructuring. 56 Operating Metrics We monitor certain operating metrics that we believe provide important data regarding our business. These operating metrics include incentive-creating AUM, incentives created (fund level) and accrued incentives (fund level). As a result of the Restructuring, effective October 1, 2019, our Operating Metrics include only the portion associated with the two Oaktree Operating Group entities that remain our indirect subsidiaries. Operating Metrics: Assets under management (in millions): (1) Incentive-creating assets under management Accrued incentives (fund level): As of or for the Year Ended December 31, 2020 2019 2018 (in thousands except as otherwise indicated) $ 31,973 $ 25,330 $ 34,629 Incentives created (fund level) Incentives created (fund level), net of associated incentive income compensation expense Accrued incentives (fund level) Accrued incentives (fund level), net of associated incentive income compensation expense 656,590 309,715 1,314,443 610,207 269,421 132,959 938,806 439,128 297,316 148,362 1,722,120 811,796 (1) Our funds record as accrued incentives the incentive income that would be paid to us if the funds were liquidated at their reported values as of the date of the financial statements. Incentives created (fund level) refers to the gross amount of potential incentives generated by the funds during the period. We refer to the amount of incentive income recognized as revenue by us as incentive income. Amounts recognized by us as incentive income are no longer included in accrued incentives (fund level), the term we use for remaining fund-level accruals. Incentives created (fund level), incentive income and accrued incentives (fund level) are presented gross, without deduction for direct compensation expense that is owed to our investment professionals associated with the particular fund when we earn the incentive income. We call that charge “incentive income compensation expense.” Incentive income compensation expense varies by the investment strategy and vintage of the particular fund, among many factors. Incentive-creating AUM Incentive-creating AUM is set forth below and includes only incentive-creating AUM generated by our indirect subsidiaries, Oaktree Capital I and OCM Cayman for the years ended December 31, 2020 and 2019. Incentive-creating AUM does not include undrawn capital commitments. Incentive-creating Assets Under Management: Closed-end funds Evergreen funds DoubleLine Total Year Ended December 31, 2020 2020 As of December 31, 2019 (in millions) 2018 $ $ 28,099 3,874 — 31,973 $ $ 21,530 3,800 — 25,330 $ $ 27,809 6,215 605 34,629 Incentive-creating AUM increased $6.7 billion, or 26.5%, to $32.0 billion as of December 31, 2020, from $25.3 billion as of December 31, 2019. The increase primarily reflected $3.5 billion of drawdowns and contributions, net of distributions, and $3.2 billion attributable to market-value gains, inclusive of the impact foreign currency fluctuations, during the year ended December 31, 2020. 57 The following Incentive-creating AUM rollforward reflects beginning and ending balances, gross inflows and outflows, and change in market value (including foreign currency exchange impacts) as of December 31, 2020: Incentive-creating Assets Under Management: Beginning balance Contributions and Drawdowns Distributions Market appreciation (including foreign currency) Ending balance As of or for the Year Ended December 31, 2020 (in millions) $ $ 25,330 8,146 (4,699) 3,196 31,973 Accrued Incentives (Fund Level) and Incentives Created (Fund Level) Accrued incentives (fund level), gross and net of incentive income compensation expense, as well as changes in accrued incentives (fund level), are set forth below. Accrued Incentives (Fund Level): Beginning balance (1) Incentives created (fund level): Closed-end funds Evergreen funds DoubleLine Total incentives created (fund level) Less: incentive income recognized by us Less: Restructuring reallocation of accrued incentives Ending balance Accrued incentives (fund level), net of associated incentive income compensation expense As of or for the Year Ended December 31, 2020 2019 (in thousands) 2018 $ 938,806 $ 1,722,120 $ 1,920,339 638,158 18,432 — 656,590 (280,953) — 1,314,443 610,207 $ $ $ $ $ $ 227,680 37,141 4,600 269,421 (537,139) (515,596) 938,806 439,128 $ $ $ 270,694 24,622 2,000 297,316 (495,535) — 1,722,120 811,796 (1) As a result of the Restructuring, as of October 1, 2019, four of the six Oaktree Operating Group entities are no longer our indirect subsidiaries. Accordingly, effective October 1, 2019, our consolidated financial statements reflect our indirect economic interest in only two of the Oaktree Operating Group entities: (i) Oaktree Capital I, which acts as or controls the general partner of certain Oaktree funds and which holds a majority of Oaktree’s investments in its funds and (ii) OCM Cayman, which represents Oaktree’s non-U.S. fee business. Additionally, effective October 1, 2019, our Operating Metrics include only the portion associated with the remaining two Oaktree Operating Group entities. As of December 31, 2020, 2019 and 2018, the portion of net accrued incentives (fund level) represented by funds that were currently paying incentives was $152.3 million (or 25.0%), $80.6 million (18.4%) and $237.0 million (29.2%), respectively, with the remainder arising from funds that as of that date were not at the stage of their cash distribution waterfall where Oaktree was entitled to receive incentives, other than possibly tax-related distributions. As of December 31, 2020, $434.1 million, or 71.1%, of the net accrued incentives (fund level) was in evergreen or closed-end funds in their liquidation period. Please see “—Critical Accounting Policies—Fair Value of Financial Instruments” for a discussion of the fair-value hierarchy level established by GAAP. Year Ended December 31, 2020 Incentives created (fund level) was $656.6 million for the year ended December 31, 2020, primarily reflecting $491.9 million of incentives created (fund level) from Private Equity funds, $144.4 million from Credit funds, and $16.2 million from Real Asset funds. 58 GAAP Statement of Financial Condition We manage our financial condition without the consolidation of the Oaktree funds in which we serve as general partner. Since Oaktree’s founding, Oaktree and, by extension, we have managed our financial condition in a way that builds our capital base and maintains sufficient liquidity for known and anticipated uses of cash. Our assets do not include accrued incentives (fund level), an off-balance sheet metric. The following table presents our GAAP consolidating statement of financial condition: As of December 31, 2020 Oaktree and Operating Subsidiaries Consolidated Funds Eliminations Consolidated (in thousands) Assets: Cash and cash-equivalents U.S. Treasury and other securities Corporate investments Deferred tax assets Right-of-use assets Receivables and other assets Assets of consolidated funds Total assets Liabilities and Capital: Liabilities: Accounts payable and accrued expenses Due to affiliates Lease liabilities Debt obligations Liabilities of consolidated funds Total liabilities Non-controlling redeemable interests in consolidated funds Capital: Capital attributable to OCG preferred unitholders Capital attributable to OCG Class A unitholders Non-controlling interest in consolidated subsidiaries Non-controlling interest in consolidated funds Total capital Total liabilities and capital $ $ $ $ — — — — — — 8,868,489 8,868,489 — — — — 7,616,173 7,616,173 — — 331,042 205,927 715,347 1,252,316 8,868,489 $ $ $ $ — — (551,299) — — (3,470) — (554,769) 3,704 — — — (21,504) (17,800) 715,347 — (331,042) (205,927) (715,347) (1,252,316) (554,769) $ $ $ $ 329,253 9,562 971,952 4,172 37,942 172,745 8,868,489 10,394,115 150,355 9,688 44,068 — 7,594,669 7,798,780 715,347 400,584 934,469 544,935 — 1,879,988 10,394,115 $ $ $ $ 329,253 9,562 1,523,251 4,172 37,942 176,215 — 2,080,395 146,651 9,688 44,068 — — 200,407 — 400,584 934,469 544,935 — 1,879,988 2,080,395 59 Corporate Investments Oaktree funds: Credit Private Equity Real Assets Listed Equities Non-Oaktree Total corporate investments – Oaktree and operating subsidiaries Eliminations Total corporate investments – Consolidated Liquidity and Capital Resources As of December 31, 2020 2019 (in thousands) $ $ 1,037,836 284,465 151,552 30,911 18,487 1,523,251 (551,299) 971,952 $ $ 932,445 241,062 172,078 28,846 4,147 1,378,578 (669,441) 709,137 We manage our liquidity and capital requirements by focusing on our cash flows before the consolidation of Oaktree funds and the effect of normal changes in short-term assets and liabilities. Our primary cash flow activities on an unconsolidated basis involve (a) generating cash flow from operations, (b) generating income from investment activities, including strategic investments in certain third parties, (c) funding capital commitments that we have made to Oaktree funds in which we act as general partner, (d) funding our growth initiatives, (e) distributing cash flow to our Class A and OCGH unitholders, (f) borrowings, interest payments and repayments under credit agreements, our senior notes and other borrowing arrangements, and (g) issuances of, and distributions made on, our preferred units. As of December 31, 2020, the Company had $338.8 million of cash and U.S. Treasury and other securities and no outstanding debt. See the Future Sources and Uses of Liquidity section for additional details of Oaktree and its indirect subsidiaries financing activities in 2020. Ongoing sources of cash include (a) management and sub-advisory fees, which are collected monthly or quarterly, (b) incentive income, which is volatile and largely unpredictable as to amount and timing, and (c) distributions stemming from our corporate investments in funds and companies. We primarily use cash flow from operations and distributions from our corporate investments to pay compensation and related expenses, general and administrative expenses, income taxes, debt service, capital expenditures and distributions. This same cash flow, together with proceeds from equity and debt issuances, is also used to fund corporate investments, fixed assets and other capital items. Subject to applicable law and certain consent rights contained in our operating agreement, pursuant to a covenant in our operating agreement we plan to cause the Oaktree Operating Group, including our indirect subsidiaries Oaktree Capital I and OCM Cayman, to distribute, on a quarterly basis, at least 85% of its adjusted distributable earnings, as defined in our operating agreement, and we plan to distribute amounts we receive in respect of such distributions, less any tax and tax receivable obligations, to holders of our Class A units. Distributions from each Operating Group entity may not be proportionate to its share of adjusted distributable earnings. Distributions on the preferred units are discretionary and non-cumulative. We may redeem, at our option, out of funds legally available, the preferred units, in whole or in part, at any time on or after June 15, 2023 in respect of the Series A preferred units or September 15, 2023 in respect of the Series B preferred units, at a price of $25.00 per preferred unit plus declared and unpaid distributions to, but excluding, the redemption date, without payment of any undeclared distributions. Holders of the preferred units have no right to require the redemption of such preferred units. On August 3, 2020, we subscribed for a limited partner interest in, and made a capital commitment of, $750 million to Oaktree Opportunities Fund XI, L.P., a parallel investment vehicle thereof or a feeder fund in respect of one of the foregoing (such limited partner interest, the “Opps XI Investment” and such fund entities collectively, “Opps XI”). In order to make the Opps XI Investment, our sole Class A unitholder, or one of its affiliates, will contribute cash as a capital contribution (the “Opps XI Investment Cash”) as and to the extent required to satisfy our obligations to Opps XI. We will use the Opps XI Investment Cash solely to fund the Opps XI Investment and satisfy our obligations in respect of Opps XI. Distributions from the Opps XI Investment are intended for the benefit of the Class A unitholder, subject to applicable law. Our preferred unitholders should not rely on distributions received by 60 us in respect of the Opps XI Investment for payment of dividends or redemption of the preferred units. During the year ended December 31, 2020, $37.5 million of the $750 million capital commitment was funded. Consolidated Cash Flows The accompanying consolidated statements of cash flows include our consolidated funds, despite the fact that we typically have only a minority economic interest in those funds. The assets of consolidated funds, on a gross basis, are larger than the assets of our business and, accordingly, have a substantial effect on the cash flows reflected in our consolidated statements of cash flows. The primary cash flow activities of our consolidated funds involve: • raising capital from third-party investors; • using the capital provided by us and third-party investors to fund investments and operating expenses; • financing certain investments with indebtedness; • generating cash flows through the realization of investments, as well as the collection of interest and dividend income; and • distributing net cash flows to fund investors and to us. Because our consolidated funds are either treated as investment companies for accounting purposes or represent CLOs whose primary operations are investing activities, their investing cash flow amounts are included in our cash flows from operations. We believe that we and each of the consolidated funds has sufficient access to cash to fund our and their respective operations in the near term. Significant amounts from our consolidated statements of cash flows for the years ended December 31, 2020, 2019 and 2018 are discussed below. Operating Activities Operating activities used $1.1 billion, $3.1 billion and $617.0 million of cash in 2020, 2019 and 2018, respectively. These amounts principally reflected net income, purchases of securities, net of non-cash adjustments, in each of the respective periods and net purchases of securities of the consolidated funds. Investing Activities Investing activities provided $47.9 million of cash in 2020, provided $751.4 million of cash in 2019, and used $493.2 million of cash in 2018. Net activity from purchases, maturities and sales of U.S. Treasury and other securities included net purchases of $0.1 million in 2020, net proceeds of $527.3 million in 2019, and net purchases of $370.0 million in 2018. Corporate investments in funds and companies of $225.6 million, $264.7 million and $442.2 million in 2020, 2019 and 2018, respectively, consisted of the following: Funds Eliminated in consolidation Total investments 2020 592.3 (366.7) 225.6 $ $ Year Ended December 31, 2019 (in millions) $ $ 1,000.6 (735.9) 264.7 2018 739.2 (297.0) 442.2 $ $ Distributions and proceeds from corporate investments in funds and companies of $274.3 million, $495.5 million and $324.9 million in 2020, 2019 and 2018, respectively, consisted of the following: Funds Eliminated in consolidation Total investments 2020 498.3 (224.0) 274.3 $ $ Year Ended December 31, 2019 (in millions) $ $ 897.1 (401.6) 495.5 2018 562.9 (238.0) 324.9 $ $ Purchases of fixed assets were $0.7 million, $6.8 million and $5.8 million in 2020, 2019 and 2018, respectively. 61 Financing Activities Financing activities provided $1.5 billion of cash in 2020, $2.7 billion of cash in 2019 and $995.0 million of cash in 2018. Financing activities included: (a) net contributions from non-controlling interests in consolidated funds of $716.5 million, $557.2 million and $112.2 million in 2020, 2019 and 2018, respectively; (b) net borrowings on credit facilities of the consolidated funds of $397.8 million, $159.4 million and $0 in 2020, 2019 and 2018, respectively; (c) distributions to unitholders of $140.8 million, $827.1 million and $507.7 million in 2020, 2019 and 2018, respectively; (d) net capital contributions of $55.8 million, and net unit purchases of $12.2 million and $12.0 million in 2020, 2019 and 2018, respectively; (e) payments of debt issuance costs of $2.8 million, $4.2 million and $4.0 million in 2020, 2019 and 2018, respectively; and (f) proceeds from debt obligations issued by our CLOs of $1.1 billion, $4.8 billion and $1.7 billion in 2020, 2019 and 2018, respectively. Additionally, (a) 2018 included $400.6 million of net proceeds from the issuance of preferred units, (b) 2020, 2019, and 2018 included repayments of $599.1 million, $1.9 billion, and $730.5 million, respectively, related to CLO debt obligations that were refinanced. Future Sources and Uses of Liquidity We expect to continue to make distributions to our preferred unitholders in accordance with their contractual terms and our Class A unitholders pursuant to our distribution policy for our common units as described in our operating agreement. In the future, subject to our operating agreement we may also issue additional units or debt and other equity securities with the objective of increasing our available capital. In addition, we may, from time to time, repurchase our preferred units in open market or privately negotiated purchases or otherwise, redeem our preferred units pursuant to the terms of their respective governing documents, or repurchase OCGH units. In addition to our ongoing sources of cash that include management and sub-advisory fees, incentive income and distributions related to our corporate investments in funds and companies, we also have access to liquidity through our debt financings, credit agreements and equity financings. Prior to the Restructuring, our financial statements reflected debt and debt service of the entire Oaktree Operating Group, however, OCM has historically been the only direct borrower or issuer under credit agreements and private placement notes with third parties and made all payments of principal and interest. While certain Oaktree Operating Group entities (including Oaktree Capital I) are co- obligors and jointly and severally liable, debt obligations are reflected in the consolidated financial statements based upon the entity that actually made the borrowing and received the related proceeds. Accordingly, our financial statements after the Restructuring generally will not reflect debt obligations, interest expense or related liabilities associated with our operating subsidiaries, until such time as Oaktree Capital I, one of our two remaining Oaktree Operating Group entities, directly borrows or issues notes under such arrangements. We believe that the sources of liquidity described below will be sufficient to fund our working capital requirements for at least the next twelve months. Debt Financings In May 2020, OCM received commitments from certain accredited investors to purchase $250 million of senior unsecured notes that bear a blended 3.68% fixed rate of interest and a weighted average maturity of 2031. The notes are guaranteed by Oaktree Capital I, one of our consolidated subsidiaries, along with Oaktree Capital II and Oaktree AIF, as co-obligors. As OCM is the issuer of such senior unsecured notes, the outstanding principal and interest payments guaranteed by Oaktree Capital I will not be included in our financial statements unless an event of default occurs. The offering closed on July 22, 2020 and OCM received proceeds of $250 million on the closing date. In May 2020, Oaktree Capital I, along with certain other Oaktree Operating Group members as co-borrowers, entered into a credit agreement with a subsidiary of Brookfield that provides for a subordinated credit facility maturing on May 19, 2023. The subordinated credit facility has a revolving loan commitment of $250 million and borrowings generally bear interest at a spread to either LIBOR or an alternative base rate. Borrowings on the subordinated credit facility are subordinate to the outstanding debt obligations and borrowings on the primary credit facility of Oaktree Capital I and its co-borrowers as detailed in note 10 to our consolidated financial statements included elsewhere in this annual report. Oaktree Capital I is jointly and severally liable, along with its co-obligors for outstanding borrowings on the subordinated credit facility. As set forth in such note 10, the Company’s financial statements generally will not reflect debt obligations, interest expense or related liabilities associated with its operating subsidiaries until such time as Oaktree Capital I directly borrows from the subordinated credit facility. No amounts were outstanding on the subordinated credit facility as of December 31, 2020. 62 In December 2019, our former indirect subsidiaries OCM, Oaktree Capital II, Oaktree AIF, and our indirect subsidiary Oaktree Capital I (collectively, the “Borrowers”) entered into the Fifth Amendment to Credit Agreement (the “Fifth Amendment”), which amended the credit agreement dated as of March 31, 2014 (as amended through and including the Fifth Amendment, the “Credit Agreement”). The Fifth Amendment extended the maturity date of the Credit Agreement from March 29, 2023 to December 13, 2024, increased the revolving credit facility (the “Revolver”) from $500 million to $650 million, provided for the refinancing of the then-outstanding $150 million term loan balance with revolving loans, and provides the Borrowers with the option to extend the new maturity date by one year up to two times if the lenders holding at least 50% of the aggregate amount of the revolving loan commitment thereunder on the date of the Borrowers’ extension request consent to such extension. The Fifth Amendment also favorably updated the commitment fee and interest rate margins in the corporate ratings-based pricing grid, increased the AUM covenant threshold from $60 billion to $65 billion and made certain other amendments to the provisions of the Credit Agreement. Borrowings under the Credit Agreement generally bear interest at a spread to either LIBOR or an alternative base rate. Based on the current credit ratings of OCM, the interest rate on borrowings is LIBOR plus 0.88% per annum and the commitment fee on the unused portions of the Revolver is 0.08% per annum. The Credit Agreement contains customary financial covenants and restrictions, including (after giving effect to the Fifth Amendment) covenants regarding a maximum leverage ratio of 3.50x-to-1.00x and a minimum required level of assets under management (as defined in the credit agreement). As set forth in note 10 to our consolidated financial statements included elsewhere in this annual report, the Company’s financial statements generally will not reflect debt obligations, interest expense or related liabilities associated with its operating subsidiaries until such time as Oaktree Capital I directly borrows from the subordinated credit facility. As of December 31, 2020, OCM had no outstanding borrowings under the $650 million revolving credit facility. In December 2017, our former indirect subsidiary, OCM, issued and sold to certain accredited investors $250 million of 3.78% senior notes due 2032 (the “2032 Notes”). The 2032 Notes are senior unsecured obligations of the issuer, jointly and severally guaranteed by our indirect subsidiary, Oaktree Capital I and our former indirect subsidiaries, Oaktree Capital II and Oaktree AIF. The proceeds from the sale of the 2032 Notes and cash on hand were used to redeem the $250 million of 6.75% Senior Notes due 2019 and to pay the related make-whole premium to holders thereof. In connection with the Notes offering, we entered into a cross-currency swap agreement to euros, reducing the interest cost to 1.95% per year. The 2032 Notes provide for certain affirmative and negative covenants, including financial covenants relating to the issuer’s and guarantors’ combined leverage ratio and minimum assets under management. In addition, the 2032 Notes contain customary representations and warranties of the issuer and the guarantors, and customary events of default, in certain cases, subject to cure periods. The issuer may prepay all, or from time to time any part of, the 2032 Notes at any time, subject to the issuer’s payment of the applicable make-whole amount determined with respect to such principal amount prepaid. Upon the occurrence of a change of control, the issuer will be required to make an offer to prepay the 2032 Notes together with the applicable make-whole amount determined with respect to such principal amount prepaid. As OCM is the issuer of such senior unsecured notes, the outstanding principal and interest payments guaranteed by Oaktree Capital I will not be included in our financial statements unless an event of default occurs. In July 2016, our former indirect subsidiary, OCM, issued and sold to certain accredited investors $100 million of 3.69% senior notes due July 12, 2031 (the “2031 Notes”). The 2031 Notes are senior unsecured obligations of the issuer, jointly and severally guaranteed by our indirect subsidiary Oaktree Capital I, and our former indirect subsidiaries, Oaktree Capital II and Oaktree AIF pursuant to a note and guaranty agreement. The proceeds from the sale of the 2031 Notes were used to simultaneously repay $100 million of borrowings outstanding under the $250 million term loan due March 31, 2021. The 2031 Notes provide for certain affirmative and negative covenants, including financial covenants relating to the issuer’s and guarantors’ combined leverage ratio and minimum assets under management. In addition, the 2031 Notes contain customary representations and warranties of the issuer and the guarantors, and customary events of default, in certain cases, subject to cure periods. The issuer may prepay all, or from time to time any part of, the 2031 Notes at any time, subject to the issuer’s payment of the applicable make-whole amount determined with respect to such principal amount prepaid. Upon the occurrence of a change of control, the issuer will be required to make an offer to prepay the 2031 Notes together with the applicable make-whole amount determined with respect to such principal amount prepaid. As OCM is the issuer of such senior unsecured notes, the outstanding principal and interest payments guaranteed by Oaktree Capital I will not be included in our financial statements unless an event of default occurs. In September 2014, our former indirect subsidiary, OCM issued and sold to certain accredited investors $50 million aggregate principal amount of 3.91% Senior Notes, Series A, due September 3, 2024 (the “Series A Notes”), $100 million aggregate principal amount of 4.01% Senior Notes, Series B, due September 3, 2026 (the “Series B Notes”) and $100 million aggregate principal amount of 4.21% Senior Notes, Series C, due September 3, 2029 (the “Series C Notes” and together with the Series A Notes and the Series B Notes, the “Senior Notes”) pursuant to a 63 note and guarantee agreement. The Senior Notes are senior unsecured obligations of the issuer, guaranteed on a joint and several basis by our indirect subsidiary Oaktree Capital I, and our former indirect subsidiaries, Oaktree Capital II and Oaktree AIF. Interest on the 2014 Notes is payable semi-annually. The Senior Notes provide for certain affirmative and negative covenants, including financial covenants relating to the issuer’s and guarantors’ combined leverage ratio and minimum assets under management. In addition, the Senior Notes contain customary representations and warranties of the issuer and the guarantors, and customary events of default, in certain cases, subject to cure periods. The issuer may prepay all, or from time to time any part of, the Senior Notes at any time, subject to the issuer’s payment of the applicable make-whole amount determined with respect to such principal amount prepaid. Upon the occurrence of a change of control, the issuer will be required to make an offer to prepay the Senior Notes together with the applicable make-whole amount determined with respect to such principal amount prepaid. As OCM is the issuer of such senior unsecured notes, the outstanding principal and interest payments guaranteed by Oaktree Capital I will not be included in our financial statements unless an event of default occurs. Preferred Unit Issuances On May 17, 2018, we issued 7,200,000 of our 6.625% Series A preferred units representing limited liability company interests with a liquidation preference of $25.00 per unit. The issuance resulted in $173.7 million in net proceeds to us. Distributions on the Series A preferred units, when and if declared by the board of directors of Oaktree, will be paid quarterly on March 15, June 15, September 15 and December 15 of each year. The first distribution was paid on September 17, 2018. Distributions on the Series A preferred units are non- cumulative. On August 9, 2018, we issued 9,400,000 of our 6.550% Series B preferred units representing limited liability company interests with a liquidation preference of $25.00 per unit. The issuance resulted in $226.9 million in net proceeds to us. Distributions on the Series B preferred units, when and if declared by the board of directors of Oaktree, will be paid quarterly on March 15, June 15, September 15 and December 15 of each year. The first distribution was paid on December 17, 2018. Distributions on the Series B preferred units are non- cumulative. Unless distributions have been declared and paid or declared and set apart for payment on the preferred units for a quarterly distribution period, during the remainder of that distribution period we may not repurchase any common units or any other units that are junior in rank, as to the payment of distributions, to the preferred units and we may not declare or pay or set apart payment for distributions on any common units or junior units for the remainder of that distribution period, other than certain Permitted Distributions (as defined in the unit designation related to the applicable preferred units (each, the “Preferred Unit Designation”)). We may redeem, at our option, out of funds legally available, the preferred units, in whole or in part, at any time on or after June 15, 2023 in respect of the Series A preferred units or September 15, 2023 in respect of the Series B preferred units, at a price of $25.00 per preferred unit plus declared and unpaid distributions to, but excluding, the redemption date, without payment of any undeclared distributions. Holders of the preferred units have no right to require the redemption of the preferred units. If a Change of Control Event (as defined in the applicable Preferred Unit Designation) occurs prior to June 15, 2023 in respect of the Series A preferred units or September 15, 2023 in respect of the Series B preferred units, we may, at our option, out of funds legally available, redeem the applicable preferred units, in whole but not in part, upon at least 30 days’ notice, within 60 days of the occurrence of such Change of Control Event, at a price of $25.25 per preferred unit, plus declared and unpaid distributions to, but excluding, the redemption date, without payment of any undeclared distributions. If a Tax Redemption Event or Rating Agency Event (each, as defined in the applicable Preferred Unit Designation) occurs prior to June 15, 2023 in respect of the Series A preferred units or September 15, 2023 in respect of the Series B preferred units, we may, at our option, out of funds legally available, redeem the applicable preferred units, in whole but not in part, upon at least 30 days’ notice, within 60 days of the occurrence of such Tax Redemption Event or Rating Agency Event, at a price of $25.50 per preferred unit, plus declared and unpaid distributions to, but excluding, the redemption date, without payment of any undeclared distributions. The preferred units are not convertible into Class A units or any other class or series of our interests or any other security. Holders of the preferred units do not have any of the voting rights given to holders of our Class A units, except that holders of the preferred units are entitled to certain voting rights under certain conditions. 64 Contractual Obligations, Commitments and Contingencies In the ordinary course of business, we and our consolidated funds enter into contractual arrangements that may require future cash payments. The following table sets forth information related to anticipated future cash payments as of December 31, 2020: Oaktree and Operating Subsidiaries: Operating lease obligations OCG limited partner commitments to Oaktree (1) funds (2) Oaktree Capital I general partner commitments to Oaktree and third-party funds (2) Subtotal (3) Consolidated Funds: Debt obligations payable Interest obligations on debt (3) Debt obligations of CLOs Interest on debt obligations of CLOs (5) Commitments to fund investments (4) (4) Total $ 2021 2022-2023 2024-2025 (in thousands) Thereafter Total $ 6,927 $ 11,787 $ 9,354 $ 26,168 $ 54,236 712,500 350,598 1,070,025 — 6,862 10,086 125,370 1,115 1,213,458 $ — — 11,787 370,920 4,136 — 250,437 — 637,280 $ — — 9,354 — — — 250,437 — 259,791 $ — 712,500 — 26,168 — — 6,592,611 663,877 — 7,282,656 $ 350,598 1,117,334 370,920 10,998 6,602,697 1,290,121 1,115 9,393,185 (1) We lease our office space under agreements that expire periodically through 2031. The table includes both guaranteed and expected minimum lease payments for these leases and does not project other lease-related payments. (2) These obligations represent commitments by us to provide limited and general partner capital funding to our funds and limited partner capital funding to funds managed by unaffiliated third parties. These amounts are generally due on demand and are therefore presented in the 2021 column. Capital commitments are expected to be called over a period of several years. (3) These obligations represent future principal payments, gross of debt issuance costs, and for CLOs, the par value. (4) Interest obligations include accrued interest on outstanding indebtedness. Where applicable, current interest rates are applied to estimate future interest obligations on variable-rate debt. (5) These obligations represent commitments by our funds to make investments or fund uncalled contingent commitments. These amounts are generally due either on demand or by various contractual dates that vary by investment and are therefore presented in the 2021 column. Capital commitments are expected to be called over a period of several years. In some of our service contracts or management agreements, we have agreed to indemnify third-party service providers or separate account clients under certain circumstances. The terms of the indemnities vary from contract to contract and the amount of indemnification liability, if any, cannot be determined and has neither been included in the above table nor recorded in our consolidated financial statements as of December 31, 2020. Off-Balance Sheet Arrangements We do not have any off-balance sheet arrangements. Please see note 17 to our consolidated financial statements included elsewhere in this annual report for information on our commitments and contingencies. Critical Accounting Policies We prepare our consolidated financial statements in accordance with GAAP. In applying many of these accounting principles, we need to make assumptions, estimates or judgments that affect the reported amounts of assets, liabilities, revenues and expenses in our consolidated financial statements. We base our estimates and judgments on historical experience and other assumptions that we believe are reasonable under the circumstances. These assumptions, estimates or judgments, however, are both subjective and subject to change, and actual results may differ from our assumptions and estimates. If actual amounts are ultimately different from our estimates, the revisions are included in our results of operations for the period in which the actual amounts become known. We believe our critical accounting policies could potentially produce materially different results if we were to change underlying assumptions, estimates or judgments. For a summary of our significant accounting policies, please see the notes to our consolidated financial statements included elsewhere in this annual report. 65 Recent Accounting Developments Please see note 2 to our consolidated financial statements included elsewhere in this annual report for information regarding recent accounting developments. Item 7A. Quantitative and Qualitative Disclosures About Market Risk In the normal course of business, we are exposed to a broad range of risks inherent in the financial markets in which we participate, including price risk, interest-rate risk, access to and cost of financing risk, liquidity risk, counterparty risk and foreign exchange-rate risk. Potentially negative effects of these risks may be mitigated to a certain extent by those aspects of our investment approach, investment strategies, fundraising practices or other business activities that are designed to benefit, either in relative or absolute terms, from periods of economic weakness, tighter credit or financial market dislocations. Our predominant exposure to market risk is related to our role as general partner or investment adviser to our funds and as an investor in our CLOs, and the sensitivities to movements in the fair value of their investments on management fees, incentive income and investment income, as applicable. The fair value of the financial assets and liabilities of our funds and CLOs may fluctuate in response to changes in, among many factors, the fair value of securities, foreign-exchange rates, commodities prices and interest rates. Price Risk Impact on Net Change in Unrealized Appreciation (Depreciation) on Consolidated Funds’ Investments As of December 31, 2020, we had investments at fair value of $7.8 billion related to our consolidated funds, primarily consisting of investments held by our CLOs. We estimate that a 10% decline in market values would result in a decrease in unrealized appreciation (depreciation) on the consolidated funds’ investments of $779.9 million. Of this decline, approximately $244.0 million would impact net income and $150.5 million would impact net income attributable to OCG Class A unitholders, with the remainder attributable to non- controlling interests and third-party debt holders in our CLOs. The magnitude of the impact on net income is largely affected by the percentage of our equity ownership interest and levered nature of our CLO investments. Impact on Management Fees (before consolidation of funds) Management fees are generally assessed in the case of (a) our open-end and evergreen funds, based on NAV, and (b) our closed- end funds, based on committed capital, drawn capital or cost basis during the investment period and, during the liquidation period, based on the lesser of (i) the total funded committed capital or (ii) the cost basis of assets remaining in the fund. Management fees are affected by changes in market values to the extent they are based on NAV. For the years ended December 31, 2020 and 2019, NAV-based management fees represented approximately 5% and 33%, respectively, of total management fees. For the year ended December 31, 2020, we estimate that a 10% decline in market values of the investments held in our funds would have resulted in an approximate $0.2 million decrease in the amount of management fees received. These estimated effects are without regard to a number of factors that would be expected to increase or decrease the magnitude of the change to degrees that are not readily quantifiable, such as the use of leverage facilities in certain of our funds or the timing of fund flows. Impact on Incentive Income (before consolidation of funds) Incentive income is recognized only when it is probable that a significant reversal will not occur, which in the case of (a) our closed- end funds, generally occurs only after all contributed capital and an annual preferred return on that capital (typically 8%) have been distributed to the fund’s investors and (b) our active evergreen funds, generally occurs as of December 31, based on the increase in the fund’s NAV during the year, subject to any high-water marks or hurdle rates. In the case of closed-end funds, the link between short-term fluctuations in market values and a particular period’s incentive income may in part be indirect. Thus the effect on incentive income of a 10% decline in market values is not readily quantifiable. A decline in market values would be expected to cause a decline in incentive income. Impact on Investment Income (before consolidation of funds) Investment income or loss arises from our pro-rata share of income or loss from our investments, generally in our capacity as general partner in our funds and as an investor in our CLOs and third-party managed funds or companies. This income is directly affected by changes in market risk factors. Based on investments held as of December 31, 2020, a 10% decline in fair values of the investments held in our funds and other holdings would result in a $327.7 million decrease in the amount of investment income. The estimated decline of $327.7 million is 66 greater than 10% of the December 31, 2020 corporate investments balance primarily due to the levered nature of our CLO investments. These estimated effects are without regard to a number of factors that would be expected to increase or decrease the magnitude of the change to degrees that are not readily quantifiable, such as the use of leverage facilities in certain of our funds, the timing of fund flows or the timing of new investments or realizations. Exchange-rate Risk Our business is affected by movements in the exchange rate between the U.S. dollar and non-U.S. dollar currencies in the case of (a) management fees that vary based on the NAV of our funds that hold investments denominated in non-U.S. dollar currencies, (b) management fees received in non-U.S. dollar currencies, (c) operating expenses for our foreign offices that are denominated in non-U.S. dollar currencies, and (d) cash and other balances we hold in non-U.S. dollar currencies. We manage our exposure to exchange-rate risks through our regular operating activities and, when appropriate, through the use of derivative instruments. We estimate that for the year ended December 31, 2020, without considering the impact of derivative instruments, a 10% decline in the average exchange rate of the U.S. dollar would have resulted in the following approximate effects on our operating results: • • • • our management fees (relating to (a) and (b) above) would have increased by $20.0 million; our operating expenses would have increased by $17.7 million; OCGH interest in net income of consolidated subsidiaries would have increased by $0.4 million; and our income tax expense would have increased by $0.2 million. These movements would have increased our net income attributable to OCG Class A unitholders by $1.7 million. At any point in time, some of the investments held by our closed-end and evergreen funds may be denominated in non-U.S. dollar currencies on an unhedged basis. Changes in currency rates could affect incentive income, incentives created (fund level) and investment income with respect to such closed-end and evergreen funds; however, the degree of impact is not readily determinable because of the many indirect effects that currency movements may have on individual investments. Credit Risk We are party to agreements providing for various financial services and transactions that contain an element of risk in the event that the counterparties are unable to meet the terms of such agreements. In such agreements, we depend on the respective counterparty to make payment or otherwise perform. We generally endeavor to minimize our risk of exposure by limiting to reputable financial institutions the counterparties with which we enter into financial transactions. In other circumstances, availability of financing from financial institutions may be uncertain due to market events, and we may not be able to access these financing markets. Interest-rate Risk As of December 31, 2020, the Company and its operating subsidiaries had no debt obligations outstanding under the three senior notes issuances and revolving credit facility for which it is jointly and severally liable. Each senior notes issuance accrues interest at a fixed rate. The revolving credit facility accrues interest at a variable rate. Of the $0.3 billion of aggregate cash and U.S. Treasury and other securities as of December 31, 2020, we estimate that the Company and its operating subsidiaries would generate an additional $3.4 million in interest income on an annualized basis as a result of a 100-basis point increase in interest rates. Our consolidated funds have debt obligations, most of which accrue interest at variable rates. Changes in these rates would affect the amount of interest payments that our funds would have to make, impacting future earnings and cash flows. As of December 31, 2020, the consolidated funds had $6.0 billion of principal or par value, as applicable, outstanding under these debt obligations. We estimate that interest expense relating to variable-rate debt would increase on an annualized basis by $60.0 million in the event interest rates were to increase by 100 basis points. As credit-oriented investors, we are also subject to interest-rate risk through the securities we hold in our consolidated funds. A 100- basis point increase in interest rates would be expected to negatively affect prices of securities that accrue interest income at fixed rates and therefore negatively impact the net change in unrealized 67 appreciation (depreciation) on consolidated funds’ investments. The actual impact is dependent on the average duration of such holdings. Conversely, securities that accrue interest at variable rates would be expected to benefit from a 100-basis point increase in interest rates because these securities would generate higher levels of current income and therefore positively impact interest and dividend income. In cases where our funds pay management fees based on NAV, we would expect our management fees to experience a change in direction and magnitude corresponding to that experienced by the underlying portfolios. 68 Item 8. Financial Statements and Supplementary Data INDEX TO FINANCIAL STATEMENTS Audited Consolidated Financial Statements: Report of Independent Registered Public Accounting Firm Consolidated Statements of Financial Condition as of December 31, 2020 and 2019 Consolidated Statements of Operations for the Years Ended December 31, 2020, 2019 and 2018 Consolidated Statements of Comprehensive Income for the Years Ended December 31, 2020, 2019 and 2018 Consolidated Statements of Cash Flows for the Years Ended December 31, 2020, 2019 and 2018 Consolidated Statements of Changes in Unitholders’ Capital for the Years Ended December 31, 2020, 2019 and 2018 Notes to Consolidated Financial Statements Page 70 72 73 74 75 77 78 69 Report of Independent Registered Public Accounting Firm To the Unitholders and Board of Directors of Oaktree Capital Group, LLC Opinion on the Financial Statements We have audited the accompanying consolidated statements of financial condition of Oaktree Capital Group, LLC (the Company) as of December 31, 2020 and 2019, and the related consolidated statements of operations, comprehensive income, cash flows and changes in unitholders’ capital for each of the three years in the period ended December 31, 2020, and the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2020 and 2019, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2020, in conformity with U.S. generally accepted accounting principles. Basis for Opinion These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion. Critical Audit Matters The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments. The communication of the critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates. 70 Valuation of investments which utilize significant unobservable inputs Description of the Matter At December 31, 2020, the Company’s investments included $951.7 million of equity method investments in unconsolidated Oaktree funds (for which the carrying amount is affected by management’s estimate of the fair value of the fund’s investments) and $545.0 million of investments of consolidated funds, at fair value, categorized as Level III within the fair value hierarchy. The fair value of these fund investments is determined by management using the valuation techniques and significant unobservable inputs described in Notes 2 and 6 to the consolidated financial statements. Auditing the fair value of the Company’s fund investments categorized as Level III within the fair value hierarchy was complex and involved a high degree of auditor subjectivity due to estimation uncertainty resulting from the unobservable nature of the inputs used in the valuations and the limited number of comparable market transactions for the same or similar investments. How We Addressed the Matter in Our Audit We obtained an understanding, evaluated the design and tested the operating effectiveness of controls over the Company’s investment valuation process, including management's assessment of the significant inputs and estimates used in the fair value measurements. We performed the following procedures, among others, for a sample of the Company’s fund investments categorized as Level III: We tested the mathematical accuracy of the Company’s valuation models and agreed the values in the models to the Company’s books and records. We evaluated the valuation techniques used by the Company and considered the consistency in application of the valuation techniques to each subject investment and investment class. We evaluated the reasonableness of significant unobservable inputs by comparing the inputs used by the Company against third-party sources such as recent trades, market indexes or other market data, evaluated the consistency of forecasted cash flows with historical operating results and trends and assessed the appropriateness of management’s determination of comparable companies. Where applicable, we utilized our internal valuation specialists to assist with these procedures, including developing an independent range of inputs that we compared to the inputs selected by management or an independent fair value estimate that we compared to the Company’s fair value estimate. We considered other information obtained through the audit that corroborated or contradicted the Company’s inputs or fair value measurements. For a sample of investments sold during the year, we compared the transaction price to the Company’s fair value estimate as of the prior reporting period to assess the reasonableness of management’s fair value estimates. We also reviewed subsequent events and transactions, including sales of investments subsequent to the balance sheet date, and considered whether they corroborated or contradicted the Company’s year-end valuations. /s/ Ernst & Young LLP We have served as the Company’s auditor since 2016. Los Angeles, California February 26, 2021 71 Oaktree Capital Group, LLC Consolidated Statements of Financial Condition ($ in thousands) As of December 31, 2020 2019 Assets Cash and cash-equivalents U.S. Treasury and other securities Corporate investments (includes $15,429 and $34,934 measured at fair value as of December 31, 2020 and 2019, respectively) Due from affiliates Deferred tax assets Other assets Right-of-use assets Assets of consolidated funds: Cash and cash-equivalents Investments, at fair value Dividends and interest receivable Receivable for securities sold Derivative assets, at fair value Other assets, net Total assets Liabilities and Unitholders’ Capital Liabilities: Accrued compensation expense Accounts payable, accrued expenses and other liabilities Due to affiliates Debt obligations (Note 10) Operating lease liabilities Liabilities of consolidated funds: Accounts payable, accrued expenses and other liabilities Payables for securities purchased Derivative liabilities, at fair value Distributions payable Borrowings under credit facilities Debt obligations of CLOs Total liabilities Commitments and contingencies (Note 17) Non-controlling redeemable interests in consolidated funds Unitholders’ capital: Series A preferred units, 7,200,000 units issued and outstanding as of December 31, 2020 and 2019, respectively Series B preferred units, 9,400,000 units issued and outstanding as of December 31, 2020 and 2019, respectively Class A units, no par value, unlimited units authorized, 98,677,040 and 97,967,255 units issued and outstanding as of December 31, 2020 and 2019, respectively Class B units, no par value, unlimited units authorized, 61,370,607 and 61,793,286 units issued and outstanding as of December 31, 2020 and 2019, respectively Paid-in capital Retained earnings Accumulated other comprehensive loss Unitholders’ capital attributable to Oaktree Capital Group, LLC Non-controlling interests in consolidated subsidiaries Total unitholders’ capital Total liabilities and unitholders’ capital $ $ $ $ 329,253 9,562 971,952 129,541 4,172 43,204 37,942 871,088 7,799,309 29,169 107,179 508 61,236 10,394,115 136,865 13,490 9,688 — 44,068 82,005 593,855 933 10,098 370,920 6,536,858 7,798,780 715,347 173,669 226,915 — — 819,963 119,920 (5,414) 1,335,053 544,935 1,879,988 10,394,115 $ $ $ $ 323,550 9,232 709,137 164,189 3,096 41,198 39,702 518,243 7,358,409 25,058 58,622 6,890 7,436 9,264,762 130,818 11,316 87,063 — 45,793 89,937 367,983 2,551 34,434 158,477 5,767,999 6,696,371 866,222 173,669 226,915 — — 750,299 51,534 (3,501) 1,198,916 503,253 1,702,169 9,264,762 Please see accompanying notes to consolidated financial statements. 72 Oaktree Capital Group, LLC Consolidated Statements of Operations (in thousands, except per unit amounts) Revenues: Management fees Incentive income Total revenues Expenses: Compensation and benefits Equity-based compensation Incentive income compensation Total compensation and benefits expense General and administrative Depreciation and amortization Consolidated fund expenses Total expenses Other income (loss): Interest expense Interest and dividend income Net realized loss on consolidated funds’ investments Net change in unrealized appreciation (depreciation) on consolidated funds’ investments Investment income Other income, net Total other income (loss) Income before income taxes Income taxes Net income Less: Net (income) loss attributable to non-controlling interests in consolidated funds Net (income) attributable to non-controlling interests in consolidated subsidiaries Net income attributable to Oaktree Capital Group, LLC Net (income) attributable to preferred unitholders Net income attributable to Oaktree Capital Group, LLC Class A unitholders Distributions declared per Class A unit Net income per unit (basic and diluted): Net income per Class A unit Weighted average number of Class A units outstanding Year Ended December 31, 2020 2019 2018 $ $ 185,727 243,337 429,064 $ 578,863 350,124 928,987 712,020 674,059 1,386,079 (131,562) (17,365) (104,469) (253,396) (23,065) (2,052) (33,153) (311,666) (157,686) 318,210 (105,957) (183,847) 103,828 — (25,452) 91,946 (8,211) 83,735 165,412 (83,428) 165,719 (27,316) 138,403 0.71 1.40 98,512 $ $ $ (368,196) (65,533) (175,753) (609,482) (189,447) (20,287) (23,315) (842,531) (197,159) 368,870 (17,773) 9,937 146,569 58 310,502 396,958 (9,620) 387,338 (93,620) (138,879) 154,839 (27,316) 127,523 4.96 1.59 80,045 $ $ $ (407,674) (62,989) (338,675) (809,338) (153,483) (25,862) (11,888) (1,000,571) (160,111) 287,155 (23,528) (164,592) 157,110 7,782 103,816 489,324 (24,779) 464,545 41,691 (282,818) 223,418 (12,277) 211,141 2.97 2.99 70,526 $ $ $ Please see accompanying notes to consolidated financial statements. 73 Oaktree Capital Group, LLC Consolidated Statements of Comprehensive Income (in thousands) Net income Other comprehensive income (loss), net of tax: Foreign currency translation adjustments Other comprehensive income (loss), net of tax Total comprehensive income Less: Comprehensive (income) loss attributable to non-controlling interests in consolidated funds Comprehensive (income) attributable to non-controlling interests in consolidated subsidiaries Comprehensive income attributable to OCG Comprehensive (income) attributable to preferred unitholders Comprehensive income attributable to OCG Class A unitholders $ Year Ended December 31, 2020 2019 2018 $ 83,735 $ 387,338 $ 464,545 (3,088) (3,088) 80,647 165,412 (82,253) 163,806 (27,316) 136,490 (5,928) (5,928) 381,410 1,363 1,363 465,908 (93,620) 41,691 (137,505) 150,285 (27,316) 122,969 $ (283,571) 224,028 (12,277) 211,751 $ Please see accompanying notes to consolidated financial statements. 74 Oaktree Capital Group, LLC Consolidated Statements of Cash Flows (in thousands) Cash flows from operating activities: Net income Adjustments to reconcile net income to net cash used in operating activities: Adoption of revenue recognition standard Investment income Depreciation and amortization Equity-based compensation Net realized and unrealized loss from consolidated funds’ investments Accretion of original issue and market discount of consolidated funds’ investments, net Income distributions from corporate investments in funds and companies Other non-cash items Cash flows due to changes in operating assets and liabilities: (Increase) decrease in deferred tax assets Decrease in other assets Increase (decrease) in net due to affiliates Increase (decrease) in accrued compensation expense Increase (decrease) in accounts payable, accrued expenses and other liabilities Cash flows due to changes in operating assets and liabilities of consolidated funds: Increase in dividends and interest receivable (Increase) decrease in due from brokers (Increase) decrease in receivables for securities sold Increase in other assets Increase (decrease) in accounts payable, accrued expenses and other liabilities Increase (decrease) in payables for securities purchased Purchases of securities Proceeds from maturities and sales of securities Net cash used in operating activities Cash flows from investing activities: Purchases of U.S. Treasury and other securities Proceeds from maturities and sales of U.S. Treasury and other securities Corporate investments in funds and companies Distributions and proceeds from corporate investments in funds and companies Purchases of fixed assets Net cash provided by (used in) investing activities (continued) Year Ended December 31, 2020 2019 2018 $ 83,735 $ 387,338 $ 464,545 — (103,828) 2,052 17,365 289,804 (23,357) 52,988 46 (1,039) 1,227 (51,128) 5,763 (3,786) (2,352) (7,953) (65,019) (50,331) (16,875) 250,552 (4,343,064) 2,887,947 (1,077,253) (43,153) 43,053 (225,603) 274,265 (710) 47,852 — (146,569) 20,287 65,533 7,836 (3,625) 134,512 2,929 122 4,365 177,615 (155,900) 63,972 (7,092) 11,476 (25,285) (5,251) 61,380 56,694 (6,684,118) 2,900,134 (3,133,647) (602,600) 1,129,930 (264,673) 495,509 (6,764) 751,402 48,709 (157,110) 25,862 62,989 188,120 (4,999) 197,801 1,961 13,122 10,745 (241,067) 161,526 (22,537) (6,554) 42,683 75,122 (286) 13,632 (118,813) (4,949,238) 3,576,770 (617,017) (1,048,083) 678,067 (442,216) 324,898 (5,816) (493,150) Please see accompanying notes to consolidated financial statements. 75 Oaktree Capital Group, LLC Consolidated Statements of Cash Flows – (Continued) (in thousands) Cash flows from financing activities: Net proceeds from issuance of Class A units Purchase of OCGH units Capital contributions, net Repurchase and cancellation of units Distributions to Class A unitholders Distributions to OCGH unitholders Distributions to preferred unitholders Distributions to non-controlling interests Net proceeds from issuance of preferred units Payment of debt issuance costs Cash flows from financing activities of consolidated funds: Contributions from non-controlling interests Distributions to non-controlling interests Proceeds from debt obligations issued by CLOs Payment of debt issuance costs Repayment on debt obligations issued by CLOs Borrowings on credit facilities Repayments on credit facilities Net cash provided by financing activities Effect of exchange rate changes on cash Net increase (decrease) in cash and cash-equivalents Deconsolidation due to restructuring Initial consolidation (deconsolidation) of funds Cash and cash-equivalents, beginning balance Cash and cash-equivalents, ending balance Supplemental cash flow disclosures: Cash paid for interest Cash paid for income taxes Supplemental disclosure of non-cash activities: Net assets related to the initial consolidation of funds Net assets related to the deconsolidation of funds Net assets related to the deconsolidation due to restructuring Reconciliation of cash and cash-equivalents Cash and cash-equivalents – Oaktree Cash and cash-equivalents – Consolidated Funds Total cash and cash-equivalents * * * Year Ended December 31, 2020 2019 2018 — — 55,826 — (69,797) (43,678) (27,316) — — — 940,191 (223,674) 1,054,403 (2,780) (599,139) 446,300 (48,490) 1,481,846 7,251 459,696 — (101,148) 841,793 1,200,341 150,033 12,198 3,708 974,423 — 329,253 871,088 1,200,341 $ $ $ $ $ $ — — — (12,191) (439,433) (360,321) (27,316) (3,421) — — 664,679 (107,499) 4,754,098 (4,199) (1,893,506) 531,411 (372,000) 2,730,302 (8,289) 339,768 (145,295) (184,407) 831,727 841,793 136,385 8,887 162,630 1,030,712 500,629 323,550 518,243 841,793 $ $ $ $ $ $ 219,750 (219,525) — (12,195) (210,941) (284,507) (12,277) (4,921) 400,584 (2,235) 447,260 (335,041) 1,741,258 (1,771) (730,456) — — 994,983 (239) (115,423) — (12,315) 959,465 831,727 131,113 13,103 — 8,165 — 460,937 370,790 831,727 $ $ $ $ $ $ Please see accompanying notes to consolidated financial statements. 76 Oaktree Capital Group, LLC Consolidated Statements of Changes in Unitholders’ Capital (in thousands) Oaktree Capital Group, LLC Class A Units Class B Units Series A Preferred Units Series B Preferred Units Paid-in Capital Retained Earnings (Accumulated Deficit) Accumulated Other Comprehensive Income (Loss) Non- controlling Interests in Consolidated Subsidiaries Non- controlling Interests in Consolidated Funds Total Unitholders’ Capital 65,310 90,976 $ — $ — $ 788,413 $ 80,128 $ 443 $ 1,121,237 $ 30,396 $ 2,020,617 — 6,688 (115) — (221) — — — — — — — — 182 — (582) (5,104) — — 173,669 — — — — — 226,915 — — — — — 219,750 — — (228,469) (1,320) 20,355 — — — — — — — 7,103 — — — — — — — — — (6,890) 6,890 — — — (5,387) 5,387 — 80,106 27,460 — — — — — — — — — — — — — — 610 28,354 — — — (3,251) (1,596) — (80,106) 33,573 (289,428) 282,818 753 — — — — — — — — — (29,635) (761) — 48,709 620,334 — — (231,720) (2,916) 7,103 — 61,033 (542,281) 505,475 1,363 1,053 1,092,354 — 2,487,717 71,662 85,472 173,669 226,915 893,043 29,713 (3,149) (259) — 5,153 (3,429) (25,403) — — — — — — — — — — — — — — — — — — — — — — — — — (11,924) 11,924 — — — (15,392) 15,392 — — — (8,378) (413,074) 203,511 306,015 31,943 (262,761) — — 97,967 61,793 173,669 226,915 750,299 — — 710 — — — — — — — — 319 (710) (31) — — — — — — — — — — — — — — — — — — (11,924) 11,924 — — — (15,392) 15,392 — — — — — 57,317 1,832 10,515 — — — — — (210,941) 211,141 — 100,683 — — — — — — — (176,672) 127,523 — 51,534 (220) — — — — — — (69,797) 138,403 — — — — — — — — — — (4,554) (3,501) — — — — — — — — — (1,913) — — (3,813) (87,555) — (306,015) 34,519 (363,742) 138,879 (1,374) 503,253 (136) — — — — (3,323) 6,566 (43,678) 83,428 (1,175) — — — — — — — — — — — — — — — — — — — — — — — — (12,191) (500,629) 203,511 — 66,462 (830,491) 293,718 (5,928) 1,702,169 (356) — — — 57,317 (1,491) 17,081 (140,791) 249,147 (3,088) $ 1,879,988 Unitholders' capital as of December 31, 2017 Activity for the year ended December 31, 2018: Cumulative-effect adjustment from adoption of accounting guidance Issuance of units Cancellation of units associated with forfeitures Cancellation of units Repurchase and cancellation of units Purchase of non-controlling interests in subsidiary Deferred tax effect resulting from the purchase of OCGH units Equity reallocation between controlling and non-controlling interests Capital increase related to equity-based compensation Distributions declared Net income (loss) Foreign currency translation adjustment, net of tax Unitholders' capital as of December 31, 2018 Activity for the year ended December 31, 2019: Issuance of units Cancellation of units Repurchase and cancellation of units Restructuring equity distribution of entities Deferred tax effect resulting from the purchase of OCGH units Equity reallocation between controlling and non-controlling interests Capital increase related to equity-based compensation Distributions declared Net income Foreign currency translation adjustment, net of tax Unitholders’ capital as of December 31, 2019 Activity for the year ended December 31, 2020: Cumulative-effect adjustment from adoption of accounting guidance Issuance of units Unit exchange Cancellation of units associated with forfeitures Capital contributions Equity reallocation between controlling and non-controlling interests Capital increase related to equity-based compensation Distributions declared Net income Foreign currency translation adjustment, net of tax Unitholders’ capital as of December 31, 2020 98,677 61,371 $ 173,669 $ 226,915 $ 819,963 $ 119,920 $ (5,414) $ 544,935 $ Please see accompanying notes to consolidated financial statements. 77 Oaktree Capital Group, LLC Notes to Consolidated Financial Statements December 31, 2020 ($ in thousands, except where noted) 1. ORGANIZATION AND BASIS OF PRESENTATION As used in these consolidated financial statements: “Oaktree,” refers to (i) Oaktree Capital Group, LLC and, where applicable, its subsidiaries and affiliates prior to October 1, 2019 and (ii) the Oaktree Operating Group and, where applicable, their respective subsidiaries and affiliates after September 30, 2019; and the “Company” refers to Oaktree Capital Group, LLC and, where applicable, its subsidiaries and affiliates, including, as the context requires, affiliated Oaktree Operating Group members after September 30, 2019. Oaktree is a leader among global investment managers specializing in alternative investments. Oaktree emphasizes an opportunistic, value-oriented and risk-controlled approach to investments in credit, private equity, real assets and listed equities. Funds managed by Oaktree (the “Oaktree funds”) include commingled funds, separate accounts, collateralized loan obligation vehicles (“CLOs”) and business development companies (“BDCs”). Commingled funds include open-end and closed-end limited partnerships in which Oaktree makes an investment and for which it serves as the general partner. CLOs are structured finance vehicles in which Oaktree typically makes an investment and for which it serves as collateral manager. Oaktree Capital Group, LLC is a Delaware limited liability company that was formed on April 13, 2007. Prior to the Mergers described below, the Company was owned by (i) its public Class A common unitholders, (ii) its public Series A and Series B preferred unitholders and (iii) Oaktree Capital Group Holdings, L.P. (“OCGH”) who held 100% of the Company’s Class B common units which did not represent an economic interest in the Company. OCGH is owned by Oaktree’s senior executives, current and former employees, and certain other investors (collectively, the “OCGH unitholders”). The Class A units held by the public unitholders were entitled to one vote per unit and the Class B units held by OCGH were entitled to ten votes per unit. The number of Class B units held by OCGH increased or decreased in response to corresponding changes in OCGH’s economic interest in the Oaktree Operating Group; consequently, the OCGH unitholders’ economic interest in the Oaktree Operating Group is reflected within non-controlling interests in consolidated subsidiaries in the accompanying consolidated financial statements. Subsequent to the Mergers, (i) all of the Company’s Class A units, which are no longer publicly traded, are held by an affiliate of Brookfield Asset Management, Inc. (“Brookfield”), (ii) the Company’s public preferred unitholders continue to hold the Series A and Series B preferred units listed on the NYSE and (iii) OCGH continues to hold all of the Company’s Class B units. Subject to the operating agreement of the Company, to the extent the approval of any matter requires the vote of the Company’s unitholders, the Class A units continue to be entitled to one vote per unit and the Class B units continue to be entitled to ten votes per unit, voting together as a single class. Additionally, prior to the Restructuring as described below, the Company’s operations were conducted through a group of six operating entities collectively referred to as the “Oaktree Operating Group,” and the Company had an indirect economic interest in each of the members of the Oaktree Operating Group. However, after the Restructuring, the Company has an indirect economic interest in only two of the six Oaktree Operating Group members. OCGH has a direct economic interest in all six of the Oaktree Operating Group members. The interests in the Oaktree Operating Group are referred to as the “Oaktree Operating Group units.” An Oaktree Operating Group unit is not a separate legal interest but represents one limited partnership interest in each of the Oaktree Operating Group entities. As of October 1, 2019, Oaktree Capital Management, L.P. (“OCM”), a former indirect subsidiary of the Company, provides certain administrative and other services relating to the operations of the Company’s business pursuant to a Services Agreement between the Company and OCM (as amended from time to time, the “Services Agreement”). 78 Oaktree Capital Group, LLC Notes to Consolidated Financial Statements — (Continued) December 31, 2020 ($ in thousands, except where noted) Brookfield Merger On March 13, 2019, Oaktree, Brookfield, Berlin Merger Sub, LLC, a Delaware limited liability company (“Merger Sub”) and a wholly- owned subsidiary of Brookfield, Oslo Holdings LLC, a Delaware limited liability company (“SellerCo”) and a wholly-owned subsidiary of OCGH, and Oslo Holdings Merger Sub LLC, a Delaware limited liability company and a wholly-owned subsidiary of Oaktree (“Seller MergerCo”) entered into an Agreement and Plan of Merger (the “Merger Agreement”). Pursuant to the terms and conditions set forth in the Merger Agreement, on September 30, 2019, (i) Merger Sub merged with and into Oaktree (the “Merger”), with Oaktree continuing as the surviving entity, and (ii) immediately following the Merger, SellerCo merged with and into Seller MergerCo (the “Subsequent Merger” and together with the Merger, the “Mergers”), with Seller MergerCo continuing as the surviving entity. Upon the completion of the Mergers on September 30, 2019, Brookfield acquired 61.2% of Oaktree’s business in a stock and cash transaction. The remaining 38.8% of the business continued to be owned by OCGH, whose unitholders consist primarily of Oaktree’s founders and certain other members of management and current and former employees. As part of the Merger, Brookfield acquired all outstanding vested OCG Class A units for, at the election of OCG Class A unitholders, either $49.00 in cash or 1.0770 Class A shares of Brookfield per OCG Class A unit (subject to pro-ration to ensure that no more than fifty percent (50%) of the aggregate merger consideration is paid in the form of cash or stock), in each case, without interest and subject to any applicable withholding taxes. In addition, as part of the Subsequent Merger the founders, senior management, and current and former employee-unitholders of OCGH sold 20% of their OCGH units to Brookfield for the same consideration as the OCG Class A unitholders received in the merger. The aggregate amount of cash payable to Class A unitholders and OCGH unitholders in the transaction was approximately $2.4 billion and approximately 52.8 million Brookfield Class A shares were issued in the Mergers. In connection with the closing of the Merger, Oaktree Class A units were delisted from the New York Stock Exchange. Upon completion of the Merger, each unvested Class A Unit held by current, or in certain cases former, employees, officers and directors of Oaktree and its subsidiaries was converted into one unvested OCGH Unit (each, a “Converted OCGH Unit”) and became subject to the terms and conditions of the OCGH limited partnership agreement. The Converted OCGH Units will (i) be subject to the same vesting terms that were applicable to such units prior to the completion of the Merger, (ii) be entitled to receive ongoing distributions in respect of earnings, but not capital distributions and (iii) upon vesting, receive the accumulated value of capital distributions that accrued while such units were unvested. Please see note 15 for more information. Restructuring Transaction On the closing date of the Mergers, the Company and certain other entities entered into a Restructuring Agreement (the “Restructuring”) pursuant to which the Company’s direct and indirect ownership of general partner and limited partner interests in certain Oaktree Operating Group entities were transferred to newly-formed, indirect subsidiaries of Brookfield as of October 1, 2019. As a result, on October 1, 2019, four of the six Oaktree Operating Group entities were no longer indirect subsidiaries of the Company. Accordingly, the Company’s consolidated financial statements reflect its indirect economic interest in only two of the Oaktree Operating Group entities: (i) Oaktree Capital I, L.P. (“Oaktree Capital I”), which acts as or controls the general partner of certain Oaktree funds and which holds a majority of Oaktree’s investments in its funds and (ii) Oaktree Capital Management (Cayman), L.P. (“OCM Cayman”), which represents Oaktree’s non-U.S. fee business. As of October 1, 2019, the Company’s consolidated financial statements no longer reflects any economic interests in the remaining four Oaktree Operating Group entities: (i) Oaktree Capital II, L.P. (“Oaktree Capital II”), which acts as or controls the general partner of certain Oaktree funds and which includes Oaktree’s investments in certain funds and other businesses, including Oaktree’s investment in DoubleLine Capital, L.P., (ii) OCM, an entity that serves as the U.S. registered investment adviser to most of the Oaktree funds, (iii) Oaktree Investment Holdings, L.P. (“Oaktree Investment Holdings”), which holds certain corporate investments in other entities and (iv) Oaktree AIF Investments, L.P. (“Oaktree AIF”), which primarily holds interests in certain Oaktree fund investments for regulatory and structuring purposes. As a consequence, the assets of Oaktree Capital II, OCM, Oaktree Investment Holdings and Oaktree AIF will no longer directly support the Company’s operations. 79 Oaktree Capital Group, LLC Notes to Consolidated Financial Statements — (Continued) December 31, 2020 ($ in thousands, except where noted) As a result of the Restructuring of the Company’s business, references to “Oaktree” in these financial statements will generally refer to the collective business of the Oaktree Operating Group, of which the Company is a component. Basis of Presentation The accompanying consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”). The consolidated financial statements include the accounts of the Company, its wholly-owned or majority-owned subsidiaries and entities in which the Company is deemed to have a direct or indirect controlling financial interest based on either a variable interest model or voting interest model. Certain of the Oaktree funds consolidated by the Company are investment companies that follow a specialized basis of accounting established by GAAP. All intercompany transactions and balances have been eliminated in consolidation. The Restructuring was a transfer of assets among entities under common control, since both the transferring and receiving entities are under control of OCGH. Accordingly, the assets and liabilities were removed at book value and the transfer did not result in a gain or loss to the Company. The deconsolidation of the Oaktree Operating Group entities whose interests were transferred in the Restructuring was accounted for prospectively and did not require a recast of the Company's historical financial information. On October 1, 2019, the deconsolidation of entities whose interests were transferred in the Restructuring resulted in decreases in total assets of $1.7 billion, total liabilities of $1.2 billion, and total unitholders capital of $0.5 billion. Additionally, because the deconsolidation of the remaining four Oaktree Operating Group entities was not required to be presented on a retrospective basis, the Company’s results of operations for the year ended December 31, 2019 reflect a full year of activities for Oaktree Capital I and OCM Cayman and related funds and investment vehicles and only nine months of activities for the remaining four Oaktree Operating Group entities and related funds and investment vehicles and, as a result, are not directly comparable to prior periods. The Company’s results of operations for the year ended December 31, 2020 only reflect activities for Oaktree Capital I and OCM Cayman and related funds and investment vehicles and do not include any activity for the remaining four Oaktree Operating Group entities and related funds and investment vehicles and, as a result, are not directly comparable to prior periods. Use of Estimates The preparation of the consolidated financial statements in accordance with GAAP requires the Company to make estimates and assumptions that affect the reported amounts of assets and liabilities as of the date of the consolidated financial statements, as well as the reported amounts of income and expenses during the period then ended. Actual results could differ from these estimates. 80 Oaktree Capital Group, LLC Notes to Consolidated Financial Statements — (Continued) December 31, 2020 ($ in thousands, except where noted) 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Accounting Policies of the Company Consolidation The Company consolidates entities in which it has a direct or indirect controlling financial interest based on either a variable interest model or voting interest model. A limited partnership or similar entity is a variable interest entity (“VIE”) if the unaffiliated limited partners do not have substantive kick-out or participating rights. Most of the Oaktree funds are VIEs because they have not granted unaffiliated limited partners substantive kick-out or participating rights. The Company consolidates those VIEs in which it is the primary beneficiary. An entity is deemed to be the primary beneficiary if it holds a controlling financial interest. A controlling financial interest is defined as (a) the power to direct the activities of a VIE that most significantly impact the entity’s economic performance and (b) the obligation to absorb losses of the entity or the right to receive benefits from the entity that could potentially be significant to the VIE. The consolidation guidance requires an analysis to determine (a) whether an entity in which the Company holds a variable interest is a VIE and (b) whether the Company’s involvement, through holding interests directly or indirectly in the entity or contractually through other variable interests (e.g., management and performance-based fees), would give it a controlling financial interest. A decision maker’s fee arrangement is not considered a variable interest if (a) it is compensation for services provided, commensurate with the level of effort required to provide those services, and part of a compensation arrangement that includes only terms, conditions or amounts that are customarily present in arrangements for similar services negotiated at arm’s length (“at-market”), and (b) the decision maker does not hold any other variable interests that absorb more than an insignificant amount of the potential VIE’s expected residual returns. The Company determines whether it is the primary beneficiary of a VIE at the time it becomes involved with a VIE and reconsiders that conclusion at each reporting date. In evaluating whether the Company is the primary beneficiary, the Company evaluates its economic interests in the entity held either directly by the Company or indirectly through related parties. The consolidation analysis can generally be performed qualitatively; however, if it is not readily apparent that the Company is not the primary beneficiary, a quantitative analysis may also be performed. Investments and redemptions (either by the Company, affiliates of the Company or third parties) or amendments to the governing documents of the respective Oaktree funds could affect an entity’s status as a VIE or the determination of the primary beneficiary. The Company does not consolidate most of the Oaktree funds because it is not the primary beneficiary of those funds due to the fact that its fee arrangements are considered at-market and thus not deemed to be variable interests, and it does not hold any other interests in those funds that are considered to be more than insignificant. Please see note 4 for more information regarding both consolidated and unconsolidated VIEs. For entities that are not VIEs, consolidation is evaluated through a majority voting interest model. “Consolidated funds” refers to Oaktree-managed funds and CLOs that the Company is required to consolidate. When funds or CLOs are consolidated, the Company reflects the assets, liabilities, revenues, expenses and cash flows of the funds or CLOs on a gross basis, and the majority of the economic interests in those funds or CLOs, which are held by third-party investors, are reflected as non-controlling interests in consolidated funds or debt obligations of CLOs in the consolidated financial statements. All of the revenues earned by the Company as investment manager of the consolidated funds are eliminated in consolidation. However, because the eliminated amounts are earned from and funded by third-party investors, the consolidation of a fund does not impact net income or loss attributable to the Company. Certain entities in which the Company has the ability to exert significant influence, including unconsolidated Oaktree funds for which the Company acts as general partner, are accounted for under the equity method of accounting. Non-controlling Redeemable Interests in Consolidated Funds The Company records non-controlling interests to reflect the economic interests of the unaffiliated limited partners. These interests are presented as non-controlling redeemable interests in consolidated funds within the consolidated statements of financial condition, outside of the permanent capital section. Limited partners in open-end and evergreen funds generally have the right to withdraw their capital, subject to the terms of the respective limited partnership agreements, over periods ranging from one month to three years. While limited partners in 81 Oaktree Capital Group, LLC Notes to Consolidated Financial Statements — (Continued) December 31, 2020 ($ in thousands, except where noted) consolidated closed-end funds generally have not been granted redemption rights, these limited partners do have withdrawal or redemption rights in certain limited circumstances that are beyond the control of the Company, such as instances in which retaining the limited partnership interest could cause the limited partner to violate a law, regulation or rule. The allocation of net income or loss to non-controlling redeemable interests in consolidated funds is based on the relative ownership interests of the unaffiliated limited partners after the consideration of contractual arrangements that govern allocations of income or loss. At the consolidated level, potential incentives are allocated to non-controlling redeemable interests in consolidated funds until such incentives become allocable to the Company under the substantive contractual terms of the limited partnership agreements of the funds. Non-controlling Interests in Consolidated Funds Non-controlling interests in consolidated funds represent the equity interests held by third-party investors in CLOs that had not yet priced as of the respective period end. All non-controlling interests in those CLOs are attributed a share of income or loss arising from the respective CLO based on the relative ownership interests of third-party investors after consideration of contractual arrangements that govern allocations of income or loss. Investors in those CLOs are generally unable to redeem their interests until the respective CLO liquidates, is called or otherwise terminates. Non-controlling Interests in Consolidated Subsidiaries Non-controlling interests in consolidated subsidiaries reflect the portion of unitholders’ capital attributable to OCGH unitholders (“OCGH non-controlling interest”) and third parties. All non-controlling interests in consolidated subsidiaries are attributed a share of income or loss in the respective consolidated subsidiary based on the relative economic interests of the OCGH unitholders or third parties after consideration of contractual arrangements that govern allocations of income or loss. Please see note 13 for more information. Fair Value of Financial Instruments GAAP establishes a hierarchical disclosure framework that prioritizes the inputs used in measuring financial instruments at fair value into three levels based on their market observability. Market price observability is affected by a number of factors, such as the type of instrument and the characteristics specific to the instrument. Financial instruments with readily available quoted prices from an active market or for which fair value can be measured based on actively quoted prices generally will have a higher degree of market price observability and a lesser degree of judgment inherent in measuring fair value. Financial assets and liabilities measured and reported at fair value are classified as follows: • • • Level I – Quoted unadjusted prices for identical instruments in active markets to which the Company has access at the date of measurement. The types of investments in Level I include exchange-traded equities, debt and derivatives with quoted prices. Level II – Quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations in which all significant inputs are directly or indirectly observable. Level II inputs include interest rates, yield curves, volatilities, prepayment risks, loss severities, credit risks and default rates. The types of investments in Level II generally include corporate bonds and loans, government and agency securities, less liquid and restricted equity investments, over-the-counter traded derivatives, debt obligations of consolidated CLOs, and other investments where the fair value is based on observable inputs. Level III – Valuations for which one or more significant inputs are unobservable. These inputs reflect the Company’s assessment of the assumptions that market participants use to value the investment based on the best available information. Level III inputs include prices of quoted securities in markets for which there are few transactions, less public information exists or prices vary among brokered market makers. The types of investments in Level III include non-publicly traded equity, debt, real estate and derivatives. 82 Oaktree Capital Group, LLC Notes to Consolidated Financial Statements — (Continued) December 31, 2020 ($ in thousands, except where noted) In some instances, the inputs used to value an instrument may fall into multiple levels of the fair-value hierarchy. In such instances, the instrument’s level within the fair-value hierarchy is based on the lowest of the three levels (with Level III being the lowest) that is significant to the fair-value measurement. The Company’s assessment of the significance of an input requires judgment and considers factors specific to the instrument. Transfers of assets into or out of each fair value hierarchy level as a result of changes in the observability of the inputs used in measuring fair value are accounted for as of the beginning of the reporting period. Transfers resulting from a specific event, such as a reorganization or restructuring, are accounted for as of the date of the event that caused the transfer. In the absence of observable market prices, the Company values Level III investments inclusive of the Company’s investments in unconsolidated Oaktree funds using valuation methodologies applied on a consistent basis. The quarterly valuation process for Level III investments begins with each portfolio company, property or security being valued by the investment and/or valuation teams. With the exception of open-end funds, all unquoted Level III investment values are reviewed and approved by (i) the Company’s valuation officer, who is independent of the investment teams, (ii) a designated investment professional of each strategy and (iii) for a substantial majority of unquoted Level III holdings as measured by market value, a valuation committee of the respective strategy. For open-end funds, unquoted Level III investment values are reviewed and approved by the Company’s valuation officer. For certain investments, the valuation process also includes a review by independent valuation parties, at least annually, to determine whether the fair values determined by management are reasonable. Results of the valuation process are evaluated each quarter, including an assessment of whether the underlying calculations should be adjusted or recalibrated. In connection with this process, the Company periodically evaluates changes in fair-value measurements for reasonableness, considering items such as industry trends, general economic and market conditions, and factors specific to the investment. Certain assets are valued using prices obtained from pricing vendors or brokers. The Company seeks to obtain prices from at least two pricing vendors for the subject or similar securities. In cases where vendor pricing is not reflective of fair value, a secondary vendor is unavailable, or no vendor pricing is available, a comparison value made up of quotes for the subject or similar securities received from broker dealers may be used. These investments may be classified as Level III because the quoted prices may be indicative in nature for securities that are in an inactive market, may be for similar securities, or may require adjustment for investment-specific factors or restrictions. The Company evaluates the prices obtained from brokers or pricing vendors based on available market information, including trading activity of the subject or similar securities, or by performing a comparable security analysis to ensure that fair values are reasonably estimated. The Company also performs back-testing of valuation information obtained from pricing vendors and brokers against actual prices received in transactions. In addition to ongoing monitoring and back-testing, the Company performs due diligence procedures surrounding pricing vendors to understand their methodology and controls to support their use in the valuation process. Fair Value Option The Company has elected the fair value option for certain corporate investments that otherwise would not have reflected unrealized gains and losses in current-period earnings. Such election is irrevocable and is applied on an investment-by-investment basis at initial recognition. Unrealized gains and losses resulting from changes in fair value are reflected as a component of investment income in the consolidated statements of operations. The Company’s accounting for these investments is similar to its accounting for investments held by the consolidated funds at fair value and the valuation methods are consistent with those used to determine the fair value of the consolidated funds’ investments. The Company has elected the fair value option for the financial assets and financial liabilities of its consolidated CLOs. The assets and liabilities of CLOs are primarily reflected within the investments, at fair value and within the debt obligations of CLOs line items in the consolidated statements of financial condition. The Company’s accounting for CLO assets is similar to its accounting for its funds with respect to both carrying investments held by CLOs at fair value and the valuation methods used to determine the fair value of those investments. The fair value of CLO liabilities are measured as the fair value of CLO assets less the sum of (a) the fair value of any beneficial interests held by the Company and (b) the carrying value of any beneficial interests that represent compensation for services. Realized gains or losses and changes in the fair value of CLO assets, respectively, are included in net realized gain on consolidated funds’ investments and net change in unrealized appreciation (depreciation) on consolidated funds’ investments in the consolidated statements of operations. 83 Oaktree Capital Group, LLC Notes to Consolidated Financial Statements — (Continued) December 31, 2020 ($ in thousands, except where noted) Interest income of CLOs is included in interest and dividend income, and interest expense and other expenses, respectively, are included in interest expense and consolidated fund expenses in the consolidated statements of operations. Changes in the fair value of a CLO’s financial liabilities in accordance with the CLO measurement guidance are included in net change in unrealized appreciation (depreciation) on consolidated funds’ investments in the consolidated statements of operations. Please see notes 6 and 10 for more information. Foreign Currency The assets and liabilities of the Company’s foreign subsidiaries with non-U.S. dollar functional currencies are translated at exchange rates prevailing at the end of each reporting period. The results of foreign operations are translated at the weighted average exchange rate for each reporting period. Translation adjustments are included in other comprehensive income (loss) within the consolidated statements of financial condition until realized. Gains and losses resulting from foreign-currency transactions are included in general and administrative expense. Derivatives and Hedging A derivative is a financial instrument whose value is derived from an underlying financial instrument or index, such as interest rates, equity securities, currencies, commodities or credit spreads. Derivatives include futures, forwards, swaps or option contracts, and other financial instruments with similar characteristics. Derivative contracts often involve future commitments to exchange interest payment streams or currencies based on a notional or contractual amount (e.g., interest-rate swaps, foreign-currency forwards or cross-currency swaps). The Company enters into derivatives as part of its overall risk management strategy or to facilitate its investment management activities. The Company manages its exposure to interest rate and foreign exchange market risks, when deemed appropriate, through the use of derivatives, including foreign currency forward and option contracts, interest-rate and cross currency swaps with financial counterparties. Risks associated with fluctuations in interest rates and foreign-currency exchange rates in the normal course of business are addressed as part of the Company’s overall risk management strategy that may result in the use of derivatives to economically hedge or reduce these exposures. From time to time, the Company may enter into (a) foreign-currency option and forward contracts to reduce earnings and cash-flow volatility associated with changes in foreign-currency exchange rates, and (b) interest-rate swaps to manage all or a portion of the interest-rate risk associated with its variable-rate borrowings. As a result of the use of these or other derivative contracts, the Company is exposed to the risk that counterparties will fail to fulfill their contractual obligations. The Company attempts to mitigate this counterparty risk by entering into derivative contracts only with major financial institutions that have investment-grade credit ratings. Counterparty credit risk is evaluated in determining the fair value of derivatives. The Company recognizes all derivatives as assets or liabilities in its consolidated statements of financial condition at fair value. In connection with its derivative activities, the Company generally enters into agreements subject to enforceable master netting arrangements that allow the Company to offset derivative assets and liabilities in the same currency by specific derivative type or, in the event of default by the counterparty, to offset derivative assets and liabilities with the same counterparty. While these derivatives are eligible to be offset in accordance with applicable accounting guidance, the Company has elected to present derivative assets and liabilities based on gross fair value in its consolidated statements of financial condition. When the Company enters into a derivative contract, it may or may not elect to designate the derivative as a hedging instrument and apply hedge accounting as part of its overall risk management strategy. In other situations, when a derivative does not qualify for hedge accounting or when the derivative and the hedged item are both recorded in current-period earnings and thus deemed to be economic hedges, hedge accounting is not applied. Freestanding derivatives are financial instruments that we enter into as part of our overall risk management strategy but do not utilize hedge accounting. These financial instruments may include foreign-currency exchange contracts, interest-rate swaps and other derivative contracts. Derivatives that are designated as hedging instruments are classified as either a hedge of (a) a recognized asset or liability (“fair- value hedge”), (b) a forecasted transaction or of the variability of cash flows to be received or paid related to a recognized asset or liability (“cash-flow hedge”), or (c) a net investment in a foreign operation. For a fair-value hedge, the Company records changes in the fair value of the derivative and, to the extent that it is highly effective, changes in the fair value of the hedged asset or liability attributable to the hedged risk in current-period 84 Oaktree Capital Group, LLC Notes to Consolidated Financial Statements — (Continued) December 31, 2020 ($ in thousands, except where noted) earnings in the same caption in the consolidated statements of operations as the hedged item. Changes in the fair value of a derivative that is highly effective and is designated and qualifies as a cash-flow hedge, to the extent that the hedge is effective, are recorded in other comprehensive income (loss) until earnings are affected by the variability of cash flows of the hedged transaction. Any hedge ineffectiveness is recorded in current-period earnings. Changes in the fair value of derivatives designated as hedging instruments that are caused by factors other than changes in the risk being hedged are excluded from the assessment of hedge effectiveness and recognized in current-period earnings. For freestanding derivatives, changes in fair value are recorded in current-period earnings. The Company formally documents at inception the hedge relationship, including identification of the hedging instrument and the hedged item, as well as the risk management objectives, the strategy for undertaking the hedge transaction, and the evaluation of effectiveness of the hedged transaction. On a quarterly basis, the Company formally assesses whether the derivative it designated in each hedging relationship has been and is expected to remain highly effective in offsetting changes in the estimated fair value or cash flow of the hedged items. If it is determined that a derivative is not highly effective at hedging the designated exposure, hedge accounting is discontinued and the balance remaining in other comprehensive income (loss) is released to earnings. Cash and Cash-equivalents Cash and cash-equivalents include demand deposit accounts, money market funds and other short-term investments with maturities of three months or less at the date of acquisition. U.S. Treasury and Other Securities U.S. Treasury and other securities include holdings of U.S. Treasury bills, notes and bonds, time deposit securities and commercial paper with maturities greater than three months at the date of acquisition. These securities are classified as available-for-sale and are recorded at fair value with changes in fair value included in other comprehensive income (loss). Changes in fair value were not material for all years presented. Other securities include investment grade debt securities with maturities greater than three months from the date of acquisition that are issued or guaranteed by U.S. government-sponsored entities, sovereign debt, domestic and international corporate fixed and floating rate debt, and structured credit. These securities are classified as trading and are recorded at fair value with changes in fair value included in investment income. Corporate Investments Corporate investments consist of investments in funds, companies in which the Company does not have a controlling financial interest and non-investment grade debt securities. Investments for which the Company is deemed to exert significant influence are accounted for under the equity method of accounting and reflect Oaktree’s ownership interest in each fund or company. In the case of investments for which the Company is not deemed to exert significant influence or control, the fair value option of accounting has been elected. Investment income represents the Company’s pro-rata share of income or loss from these funds or companies, or the change in fair value of the investment, as applicable. Oaktree’s general partnership interests are substantially illiquid. While investments in funds reflect each respective fund’s holdings at fair value, equity-method investments in companies are not adjusted to reflect the fair value of the underlying company. The fair value of the underlying investments in Oaktree funds is based on the Company’s assessment, which takes into account expected cash flows, earnings multiples and/or comparisons to similar market transactions, among other factors. Valuation adjustments reflecting consideration of credit quality, concentration risk, sales restrictions and other liquidity factors are integral to valuing these instruments. Non-investment grade debt securities include domestic and international corporate fixed and floating rating debt and structured credit investments. These securities are classified as trading and are recorded at fair value with changes in fair value included in investment income. 85 Oaktree Capital Group, LLC Notes to Consolidated Financial Statements — (Continued) December 31, 2020 ($ in thousands, except where noted) Revenue Recognition On January 1, 2018, the Company adopted the new revenue recognition standard on a modified retrospective basis. Upon adoption, the Company recorded a cumulative-effect increase to unitholders’ capital as of January 1, 2018 of $48.7 million, net of tax. This adjustment relates to incentive income that would have met the “probable that significant reversal will not occur” criteria as of January 1, 2018 under the new revenue standard. The Company earns management fees and incentive income from the investment advisory services it provides to its customers. Revenue is recognized when control of the promised services is transferred to customers in an amount that reflects the consideration the Company expects to receive in exchange for those services. The Company typically enters into contracts with investment funds to provide investment management and administrative services. These services are generally capable of being distinct and each is accounted for as separate performance obligations comprised of distinct service periods because the services are performed over time. The Company determined that for accounting purposes, based on certain facts and circumstances specific to each investment fund structure, that either the investment fund or individual investors may be considered the customer with respect to commingled funds, while the individual investors are the customers with respect to separate account and fund-of-one vehicles. The Company receives management fees and/or incentive income with respect to its investment management services, and it is reimbursed by the funds for expenses incurred or paid on behalf of the funds with respect to its investment advisory services and its administrative services. The Company evaluates whether it is the principal (i.e., report as management fees on a gross basis) or agent (i.e., report as management fees on a net basis) with respect to each performance obligation and associated reimbursement arrangements. The Company has elected to apply the variable consideration exemption for its fee arrangements with its customers. Please see note 3 for more information on revenues. Management Fees Management fees are recognized over the period in which the investment management services are performed because customers simultaneously consume and receive benefits that are satisfied over time. The contractual terms of management fees generally vary by fund structure. For closed-end funds, the management fee rate is applied against committed capital, drawn capital or cost basis during the fund’s investment period and the lesser of total funded capital or cost basis of assets in the liquidation period. For closed-end funds that pay management fees based on committed capital, the Company may elect to delay the start of the fund’s investment period and thus its full management fees, in which case it earns management fees based on drawn capital, and in certain cases outstanding borrowings under a fund-level credit facility made in lieu of drawing capital, until the Company elects to start the fund’s investment period. The Company’s right to receive management fees typically ends after 10 or 11 years from either the initial closing date or the start of the investment period, even if assets remain in the fund. In the case of CLOs, the management fee is based on the aggregate par value of collateral assets and principal cash, as defined in the applicable CLO indentures, and a portion of the management fees is dependent on the sufficiency of the particular vehicle’s cash flow. For open-end and evergreen funds, the management fee is generally based on the NAV of the fund. For the BDCs, the management fee is based on gross assets (including assets acquired with leverage), net of cash. In the case of certain open-end fund accounts, the Company has the potential to earn performance-based fees, typically in reference to a relevant benchmark index or hurdle rate, which are classified as management fees. The Company also earns quarterly incentive fees on the investment income from certain evergreen funds, such as the BDCs and other fund accounts, which are generally recurring in nature and reflected as management fees. The ultimate amount of management fees that will be earned over the life of the contract is subject to a large number and broad range of possible outcomes due to market volatility and other factors outside of the Company’s control. As a result, the amount of revenue earned in any given period is generally determined at the end of each reporting period and relates to services performed during that period. Included in this amount is a gross-up for reimbursable costs incurred on behalf of the Oaktree funds in which the Company has determined it is the principal within the principal and agent relationship of the related fund. Such reimbursable costs are presented in compensation and benefits and general and administrative expenses. Subsequent to the Restructuring, our management fees consist primarily of fees earned from funds managed by OCM Cayman and sub- advisory fees for services provided to OCM. Our revenue recognition for sub-advisory fees is substantially similar to revenue recognition for management fees. 86 Oaktree Capital Group, LLC Notes to Consolidated Financial Statements — (Continued) December 31, 2020 ($ in thousands, except where noted) Incentive Income Incentive income generally represents 20% of each closed-end fund’s profits, subject to the return of contributed capital and a preferred return of typically 8% per annum, and up to 20% of certain evergreen fund’s annual profits, subject to high-water marks or hurdle rates. Incentive income is recognized when it is probable that a significant reversal will not occur. Revenue recognition is typically met (a) for closed-end funds, only after all contributed capital and the preferred return on that capital have been distributed to the fund’s investors, and (b) for certain evergreen funds, at the conclusion of each annual measurement period. Potential incentive income is highly susceptible to market volatility, the judgment and actions of third parties, and other factors outside of the Company’s control. The Company’s experience has demonstrated little predictive value in the amount of potential incentive income ultimately earned due to the highly uncertain nature of returns inherent in the markets and contingencies associated with many realization events. As a result, the amount of incentive income recognized in any given period is generally determined after giving consideration to a number of factors, including whether the fund is in its investment or liquidation period, and the nature and level of risk associated with changes in fair value of the remaining assets in the fund. In general, it would be unlikely that any amount of potential incentive income would be recognized until (a) the uncertainty is resolved or (b) the fund is near final liquidation, assets are under contract for sale or are of low risk of significant fluctuation in fair value, and the assets are significantly in excess of the threshold at which incentive income would be earned. Incentives received by the Company before the revenue recognition criteria have been met are deferred and recorded as a deferred incentive income liability within accounts payable, accrued expenses and other liabilities in the consolidated statements of financial condition. The Company may receive tax distributions related to taxable income allocated by funds, which are treated as an advance of incentive income and subject to the same recognition criteria. Tax distributions are contractually not subject to clawback. Total Compensation and Benefits Compensation and Benefits Compensation and benefits expense reflects all compensation-related items not directly related to incentive income, investment income or equity-based compensation, and includes salaries, bonuses, compensation based on management fees or a definition of profits, employee benefits, payroll taxes and phantom equity awards. Bonuses are generally accrued over the related service period. Phantom equity awards represent liability-classified awards subject to vesting and remeasurement at the end of each reporting period. Prior to the Merger, the remeasurement was based on changes in the Company’s Class A unit trading price. After the Merger, the remeasurement is based on changes in the value of Converted OCGH Units or other OCGH units, as applicable. Subsequent to the Restructuring, our consolidated operating results include compensation and benefits expense primarily related to employees of OCM Cayman. Equity-based Compensation Equity-based compensation expense reflects the non-cash charge associated with grants of Class A units, OCGH units, OCGH equity value units (“EVUs”), deferred equity units and other performance-based units, and is calculated based on the grant-date fair value of the unit award. A contemporaneous valuation report is utilized in determining fair value at the date of grant for OCGH unit awards. Prior to the Merger, each valuation report was based on the market price of the Class A units as well as other pertinent factors. A discount was then applied to the Class A unit market price to reflect the lack of marketability for equity-classified awards, if applicable. The determination of an appropriate discount for lack of marketability was based on a review of discounts on the sale of restricted shares of publicly-traded companies and multi-period put-based quantitative methods. Factors that influenced the size of the discount for lack of marketability applicable to OCGH units included (a) the estimated time it would take for an OCGH unitholder to exchange units into Class A units, (b) the volatility of the Company’s business and (c) thin trading of the Class A units. Each of these factors is subject to significant judgment. After the Merger, OCGH unit grants are valued based on a formula as described in note 15 under “Restated Exchange Agreement—Valuation” and reflect a discount for lack of marketability due to the post-vesting restrictions described in note 15. Factors that influence the formula-based valuation include the estimated time it would take for an OCGH unitholder to exchange units for value pursuant to the Restated Exchange Agreement and estimates of the Company’s future results, which are inputs to the valuation formula. Each of these factors is subject to significant judgment. 87 Oaktree Capital Group, LLC Notes to Consolidated Financial Statements — (Continued) December 31, 2020 ($ in thousands, except where noted) Equity-based awards that do not require future service (i.e., awards vested at grant) are expensed immediately. Equity-based awards that require future service are expensed on a straight-line basis over the requisite service period. Cash-settled equity-based awards are classified as liabilities and are remeasured at the end of each reporting period. With respect to forfeitures, the Company made an accounting policy election to account for forfeitures when they occur. Accordingly, no forfeitures have been assumed in the calculation of compensation expense. Incentive Income Compensation Incentive income compensation expense primarily reflects compensation directly related to incentive income, which generally consists of percentage interests (sometimes referred to as “points”) that the Company grants to its investment professionals associated with the particular fund that generated the incentive income, and secondarily, compensation directly related to investment income. The Company has an obligation to pay a fixed percentage of the incentive income earned from a particular fund, including income from consolidated funds that is eliminated in consolidation, to specified investment professionals responsible for the management of the fund. Amounts payable pursuant to these arrangements are recorded as compensation expense when they have become probable and reasonably estimable. The Company’s determination of the point at which it becomes probable and reasonably estimable that incentive income compensation expense should be recorded is based on its assessment of numerous factors, particularly those related to the profitability, realizations, distribution status, investment profile and commitments or contingencies of the individual funds that may give rise to incentive income. Incentive income compensation is generally expensed in the period in which the underlying income is recognized. Payment of incentive income compensation generally occurs in the same period the related income is received or in the next period. Participation in incentive income generated by the funds is subject to forfeiture upon departure and to vesting provisions (generally over a period of five years), in each case, under certain circumstances set forth in the applicable governing documents. These provisions are generally only applicable to incentive income compensation that has not yet been recognized as an expense by the Company or paid to the participant. Depreciation and Amortization Depreciation and amortization expense includes costs associated with the purchase of furniture and equipment, capitalized software, office leasehold improvements, corporate aircraft and acquired intangibles. Furniture and equipment and capitalized software costs are depreciated using the straight-line method over the estimated useful life of the asset, generally three to five years beginning in the first full month after the asset is placed in service. Leasehold improvements are amortized using the straight-line method over the shorter of the respective estimated useful life or the lease term. Corporate aircraft are depreciated using the straight-line method over their estimated useful life. Acquired intangibles primarily relate to contractual rights and are amortized over their estimated useful lives on a straight-line basis, which range from seven to 25 years. In connection with the Restructuring, the Company's indirect subsidiaries that held the acquired intangibles and corporate aircraft were deconsolidated, and these assets are no longer reflected on the statement of financial condition after September 30, 2019. Other Income (Expense), Net Other income (expense), net represents non-operating income or expense items. Income Taxes The Company is a publicly traded partnership. Because it satisfies the qualifying income test, it is not required to be treated as a corporation for U.S. federal and state income tax purposes; rather it is taxed as a partnership. The Company currently holds interests in Oaktree Capital I, L.P. (a non-corporate entity that is not subject to U.S. federal corporate income tax) and Oaktree Capital Management (Cayman), L.P. (which holds subsidiaries that are taxable in non-U.S. jurisdictions). Prior to the Restructuring on October 1, 2019, Oaktree Holdings, Inc. and Oaktree AIF Holdings, Inc., which were two of the Company’s Intermediate Holding Companies and wholly-owned corporate subsidiaries, were subject to U.S. federal and state income taxes. The remainder of the Company’s income was generally not subject to U.S. corporate-level taxation. 88 Oaktree Capital Group, LLC Notes to Consolidated Financial Statements — (Continued) December 31, 2020 ($ in thousands, except where noted) Upon the Restructuring, Oaktree Holdings, Inc. and Oaktree AIF Holdings, Inc. merged with and into newly formed, indirect subsidiaries of Brookfield, with those subsidiaries surviving the mergers. As a result, as of October 1, 2019, Oaktree Holdings, Inc. and Oaktree AIF Holdings, Inc. ceased to exist and the Company no longer includes on our financial statements economic interests in Oaktree Capital II, Oaktree Investment Holdings, OCM, and Oaktree AIF. All deferred tax balances related to these entities were deconsolidated as part of the Restructuring effective October 1, 2019. Income taxes are accounted for using the liability method of accounting. Under this method, deferred tax assets and liabilities are recognized for the expected future tax consequences of differences between the carrying amount of assets and liabilities and their respective tax bases, using currently enacted tax rates. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period when the change is enacted. Deferred tax assets would be reduced by a valuation allowance if it becomes more likely than not that some portion or all of the deferred tax assets will not be realized. The Company analyzes its tax filing positions for all open tax years in all of the U.S. federal, state, local and foreign tax jurisdictions where it is required to file income tax returns. If the Company determines that uncertainties in tax positions exist, a reserve is established. The Company recognizes accrued interest and penalties related to uncertain tax positions within income tax expense in the consolidated statements of operations. Tax laws are complex and subject to different interpretations by the taxpayer and respective governmental taxing authorities. Significant judgment is required in determining tax expense and in evaluating tax positions, including evaluating uncertainties. The Company reviews its tax positions quarterly and adjusts its tax balances as new information becomes available. The Oaktree funds are generally not subject to U.S. federal and state income taxes and, consequently, no income tax provision has been made in the accompanying consolidated financial statements because individual partners are responsible for their proportionate share of the taxable income. Comprehensive Income (Loss) Comprehensive income (loss) consists of net income (loss) and other gains and losses affecting unitholders’ capital that are excluded from net income (loss). Other gains and losses result from foreign-currency translation adjustments, net of tax, and unrealized gains and losses on cash-flow hedges. Accounting Policies of Consolidated Funds Investment Transactions and Income Recognition The consolidated funds record investment transactions at cost on trade date for publicly-traded securities or when they have an enforceable right to acquire the security, which is generally on the closing date if not publicly traded. Realized gains and losses on investments are recorded on a specific-identification basis. The consolidated funds record dividend income on the ex-dividend date and interest income on an accrual basis, unless the related investment is in default or if collection of the income is otherwise considered doubtful. The consolidated funds may hold investments that provide for interest payable in-kind rather than in cash, in which case the related income is recorded at its estimated net realizable amount. Income Taxes The consolidated funds may invest in operating entities that are treated as partnerships for U.S. federal income tax purposes which may give rise to unrelated business taxable income or income effectively connected with a U.S. trade or business. In such situations, the consolidated funds permit certain investors to elect to participate in these investments through a “blocker structure” using entities that are treated as corporations for U.S. federal income tax purposes and are generally subject to U.S. federal, state and local taxes. The consolidated funds withhold blocker expenses and tax payments from electing limited partners, which are treated as deemed distributions to such limited partners pursuant to the terms of the respective limited partnership agreement. 89 Oaktree Capital Group, LLC Notes to Consolidated Financial Statements — (Continued) December 31, 2020 ($ in thousands, except where noted) Foreign Currency Investments denominated in non-U.S. currencies are recorded in the consolidated financial statements after translation into U.S. dollars utilizing rates of exchange on the last business day of the period. Interest and dividend income is recorded net of foreign withholding taxes and calculated using the exchange rate in effect when the income is recognized. The effect of changes in exchange rates on assets and liabilities, income, and realized gains or losses is included as part of net realized gain (loss) on consolidated funds’ investments and net change in unrealized appreciation (depreciation) on consolidated funds’ investments in the consolidated statements of operations. Cash and Cash-equivalents Cash and cash-equivalents held at the consolidated funds represent cash that, although not legally restricted, is not available to support the general liquidity needs of the Company as the use of such amounts is generally limited to the investment activities of the consolidated funds. Cash-equivalents, a Level I valuation, include highly liquid investments such as money market funds, whose carrying value approximates fair value due to its short-term nature. Receivable for Investments Sold Receivables for investments sold by the consolidated funds are recorded at net realizable value. Changes in net realizable value are reflected within net change in unrealized appreciation (depreciation) on consolidated funds’ investments and realizations are reflected within net realized gain on consolidated funds’ investments in the consolidated statements of operations. Investments, at Fair Value The consolidated funds include investment limited partnerships and CLOs that reflect their investments, including majority-owned and controlled investments, at fair value. The Company has retained the specialized investment company accounting guidance for investment limited partnerships with respect to consolidated investments and has elected the fair value option for the financial assets of CLOs. Thus, the consolidated investments are reflected in the consolidated statements of financial condition at fair value, with unrealized gains and losses resulting from changes in fair value reflected as a component of net change in unrealized appreciation (depreciation) on consolidated funds’ investments in the consolidated statements of operations. Fair value is the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (i.e., the exit price). Non-publicly traded debt and equity securities and other securities or instruments for which reliable market quotations are not available are valued by management using valuation methodologies applied on a consistent basis. These securities may initially be valued at the acquisition price as the best indicator of fair value. The Company reviews the significant unobservable inputs, valuations of comparable investments and other similar transactions for investments valued at acquisition price to determine whether another valuation methodology should be utilized. Subsequent valuations will depend on the facts and circumstances known as of the valuation date and the application of valuation methodologies as further described below under “—Non-publicly Traded Equity and Real Estate Investments.” The fair value may also be based on a pending transaction expected to close after the valuation date. Exchange-traded Investments Securities listed on one or more national securities exchanges are valued at their last reported sales price on the date of valuation. If no sale occurred on the valuation date, the security is valued at the mean of the last “bid” and “ask” prices on the valuation date. Securities that are not readily marketable due to legal restrictions that may limit or restrict transferability are generally valued at a discount from quoted market prices. The discount would reflect the amount market participants would require due to the risk relating to the inability to access a public market for the security for the specified period and would vary depending on the nature and duration of the restriction and the perceived risk and volatility of the underlying securities. Securities with longer duration restrictions or higher volatility are generally valued at a higher discount. Such discounts are generally estimated based on put option models or an analysis of market studies. Instances where the Company has applied discounts to quoted prices of 90 Oaktree Capital Group, LLC Notes to Consolidated Financial Statements — (Continued) December 31, 2020 ($ in thousands, except where noted) restricted listed securities have been infrequent. The impact of such discounts is not material to the Company’s consolidated statements of financial condition and results of operations for all periods presented. Credit-oriented Investments (including Real Estate Loan Portfolios) Investments in corporate and government debt which are not listed or admitted to trading on any securities exchange are valued at the mean of the last bid and ask prices on the valuation date based on quotations supplied by recognized quotation services or by reputable broker-dealers. The market-yield approach is considered in the valuation of non-publicly traded debt securities, utilizing expected future cash flows and discounted using estimated current market rates. Discounted cash-flow calculations may be adjusted to reflect current market conditions and/or the perceived credit risk of the borrower. Consideration is also given to a borrower’s ability to meet principal and interest obligations; this may include an evaluation of collateral and/or the underlying value of the borrower utilizing techniques described below under “—Non- publicly Traded Equity and Real Estate Investments.” Non-publicly Traded Equity and Real Estate Investments The fair value of equity and real estate investments is determined using a cost, market or income approach. The cost approach is based on the current cost of reproducing a real estate investment less deterioration and functional and economic obsolescence. The market approach utilizes valuations of comparable public companies and transactions, and generally seeks to establish the enterprise value of the portfolio company or investment property using a market-multiple methodology. This approach takes into account the financial measure (such as EBITDA, adjusted EBITDA, free cash flow, net operating income, net income, book value or net asset value) believed to be most relevant for the given company or investment property. Consideration also may be given to factors such as acquisition price of the security or investment property, historical and projected operational and financial results for the portfolio company, the strengths and weaknesses of the portfolio company or investment property relative to its comparable companies or properties, industry trends, general economic and market conditions, and others deemed relevant. The income approach is typically a discounted cash-flow method that incorporates expected timing and level of cash flows. It incorporates assumptions in determining growth rates, income and expense projections, discount and capitalization rates, capital structure, terminal values, and other factors. The applicability and weight assigned to market and income approaches are determined based on the availability of reliable projections and comparable companies and transactions. The valuation of securities may be impacted by expectations of investors’ receptiveness to a public offering of the securities, the size of the holding of the securities and any associated control, information with respect to transactions or offers for the securities (including the transaction pursuant to which the investment was made and the elapsed time from the date of the investment to the valuation date), and applicable restrictions on the transferability of the securities. These valuation methodologies involve a significant degree of management judgment. Accordingly, valuations by the Company do not necessarily represent the amounts that eventually may be realized from sales or other dispositions of investments. Fair values may differ from the values that would have been used had a ready market for the investment existed, and the differences could be material to the consolidated financial statements. Securities Sold Short Securities sold short represent obligations of the consolidated funds to make a future delivery of a specific security and, correspondingly, create an obligation to purchase the security at prevailing market prices (or deliver the security, if owned by the consolidated funds) as of the delivery date. As a result, these short sales create the risk that the funds’ obligations to satisfy the delivery requirement may exceed the amount recorded in the accompanying consolidated statements of financial condition. Securities sold short are recorded at fair value, with the resulting change in value reflected as a component of net change in unrealized appreciation (depreciation) on consolidated funds’ investments in the consolidated statements of operations. When the securities are delivered, any gain or loss is included in net realized gain on consolidated funds’ investments. The funds maintain cash deposits with prime brokers in order to cover their 91 Oaktree Capital Group, LLC Notes to Consolidated Financial Statements — (Continued) December 31, 2020 ($ in thousands, except where noted) obligations on short sales. These amounts are included in due from brokers in the consolidated statements of financial condition. Options The purchase price of a call option or a put option is recorded as an investment, which is carried at fair value. If a purchased option expires, a loss in the amount of the cost of the option is realized. When there is a closing sale transaction, a gain or loss is realized if the proceeds are greater or less than, respectively, the cost of the option. When a call option is exercised, the cost of the security purchased upon exercise is increased by the premium originally paid. When a consolidated fund writes an option, the premium received is recorded as a liability and is subsequently adjusted to the current fair value of the option written. If a written option expires, a gain is realized in the amount of the premium received. The difference between the premium and the amount paid on effecting a closing purchase transaction, including brokerage commissions, is also treated as a realized gain or loss. The writer of an option bears the market risk of an unfavorable change in the price of the security underlying the written option. Options written are included in accounts payable, accrued expenses and other liabilities in the consolidated statements of financial condition. Total-return Swaps A total-return swap is an agreement to exchange cash flows based on an underlying asset. Pursuant to these agreements, a fund may deposit collateral with the counterparty and may pay a swap fee equal to a fixed percentage of the value of the underlying security (notional amount). A fund earns interest on cash collateral held on account with the counterparty and may be required to deposit additional collateral equal to the unrealized appreciation or depreciation on the underlying asset. Changes in the value of the swaps, which are recorded as unrealized gains or losses, are based on changes in the underlying value of the security. All amounts exchanged with the swap counterparty representing capital appreciation or depreciation, dividend income and expense, items of interest income on short proceeds, borrowing costs on short sales, and commissions are recorded as realized gains or losses. Dividend income and expense on the underlying assets are accrued as unrealized gains or losses on the ex-date. Due From Brokers Due from brokers represents cash owned by the consolidated funds and cash collateral on deposit with brokers and counterparties that are used as collateral for the consolidated funds’ securities and swaps. Risks and Uncertainties Certain consolidated funds invest primarily in the securities of entities that are undergoing, or are considered likely to undergo, reorganization, debt restructuring, liquidation or other extraordinary transactions. Investments in such entities are considered speculative and involve substantial risk of principal loss. Certain of the consolidated funds’ investments may also consist of securities that are thinly traded, securities and other assets for which no market exists, and securities which are restricted as to their transferability. Additionally, investments are subject to concentration and industry risks, reflecting numerous factors, including political, regulatory or economic issues that could cause the investments and their markets to be relatively illiquid and their prices relatively volatile. Investments denominated in non-U.S. currencies or involving non-U.S. domiciled entities are subject to risks and special considerations not typically associated with U.S. investments. Such risks may include, but are not limited to, investment and repatriation restrictions; currency exchange-rate fluctuations; adverse political, social and economic developments; less liquidity; smaller capital markets; and certain local tax law considerations. Credit risk is the potential loss that may be incurred from the failure of a counterparty or an issuer to make payments according to the terms of a contract. Some consolidated funds are subject to additional credit risk due to strategies of investing in debt of financially distressed issuers or derivatives, as well as involvement in privately-negotiated structured notes and structured-credit transactions. Counterparties include custodian banks, major brokerage houses and their affiliates. The Company monitors the creditworthiness of the financial institutions with which it conducts business. 92 Oaktree Capital Group, LLC Notes to Consolidated Financial Statements — (Continued) December 31, 2020 ($ in thousands, except where noted) Bank debt has exposure to certain types of risk, including interest rate, market, and the potential non-payment of principal and interest as a result of default or bankruptcy of the issuer. Loans are generally subject to prepayment risk, which will affect the maturity of such loans. The consolidated funds may enter into bank debt participation agreements through contractual relationships with a third-party intermediary, causing the consolidated funds to assume the credit risk of both the borrower and the intermediary. Certain consolidated funds may invest in real property and real estate-related investments, including commercial mortgage-backed securities (“CMBS”) and real estate loans, that entail substantial inherent risks. There can be no assurance that such investments will increase in value or that significant losses will not be incurred. CMBS are subject to a number of risks, including credit, interest rate, prepayment and market. These risks can be affected by a number of factors, including general economic conditions, particularly those in the area where the related mortgaged properties are located, the level of the borrowers’ equity in the mortgaged properties, and the relative timing and rate of delinquencies and prepayments of mortgage loans bearing a higher rate of interest. Real estate loans include residential or commercial loans that are non-performing at the time of their acquisition or that become non-performing following their acquisition. Non- performing real estate loans may require a substantial amount of workout negotiations or restructuring, which may entail, among other things, a substantial reduction in the interest rate and/or write-down of the principal balance. Moreover, foreclosure on collateral securing one or more real estate loans held by the consolidated funds may be necessary, which may be lengthy and expensive. Residential loans are typically subject to risks associated with the value of the underlying properties, which may be affected by a number of factors including general economic conditions, mortgage qualification standards, local market conditions such as employment levels, the supply of homes, and the safety, convenience and attractiveness of the properties and neighborhoods. Commercial loans are typically subject to risks associated with the ability of the borrower to repay, which may be impacted by general economic conditions, as well as borrower-specific factors including the quality of management, the ability to generate sufficient income to make scheduled principal and interest payments, or the ability to obtain alternative financing to repay the loan. Certain consolidated funds hold over-the-counter derivatives that may allow counterparties to terminate derivative contracts prior to maturity under certain circumstances, thereby resulting in an accelerated payment of any net liability owed to the counterparty. 93 Oaktree Capital Group, LLC Notes to Consolidated Financial Statements — (Continued) December 31, 2020 ($ in thousands, except where noted) Recent Accounting Developments In March 2020, the Financial Accounting Standards Board (“FASB”) issued guidance which provides temporary optional expedients and exceptions to the U.S. GAAP guidance on contract modifications and hedge accounting to ease the financial reporting burdens of the expected market transition from LIBOR and other interbank offered rates to alternative reference rates. The guidance is effective upon issuance and generally may be elected over time through December 31, 2022. The Company has not adopted any of the optional expedients or exceptions through December 31, 2020, but will continue to evaluate the possible adoption (including potential impact) of any such expedients or exceptions during the effective period as circumstances evolve. In August 2018, the FASB issued guidance that changes the fair value measurement disclosure requirements. The amendments remove or modify certain disclosures, while adding others. The guidance was effective for the Company in the first quarter of 2020. The Company adopted this guidance and it did not have a material impact on the consolidated financial statements. In January 2017, the FASB issued guidance to simplify the accounting for goodwill impairments by eliminating step 2 of the goodwill impairment test. This step currently requires an entity to perform a hypothetical purchase price allocation to derive the implied fair value of goodwill. Under the new guidance, an impairment loss is recognized if the carrying value of a reporting unit exceeds its fair value. The impairment loss would equal the amount of that excess, limited to the total amount of goodwill. All other goodwill impairment guidance remains largely unchanged. Entities will continue to have the option to perform a qualitative assessment to determine if a quantitative impairment test is necessary. The guidance was effective for the Company in the first quarter of 2020 on a prospective basis. The Company adopted this guidance and it did not have a material impact on the consolidated financial statements. In June 2016, the FASB issued guidance that significantly changes how entities will measure credit losses for most financial assets and certain other instruments that are not measured at fair value through net income. The revised credit loss guidance will replace the existing “incurred loss” model with an “expected loss” model for instruments measured at amortized cost, and require entities to record allowances for available-for-sale debt securities rather than reduce the carrying amount, as is required with the current other-than-temporary impairment credit loss model. It also simplifies the accounting model for purchased credit-impaired debt securities and loans. The Company reviewed its consolidated financial statements and determined that the amounts in scope were primarily related to short term receivables from Oaktree funds. The guidance was effective for the Company in the first quarter of 2020 and was adopted through a cumulative-effect adjustment to retained earnings as of January 1, 2020. The adoption of this guidance in the first quarter of 2020 did not have a material impact on the Company’s consolidated financial statements. Upon adoption the Company recorded a cumulative-effect adjustment to retained earnings of $0.4 million in its consolidated financial statements. 94 Oaktree Capital Group, LLC Notes to Consolidated Financial Statements — (Continued) December 31, 2020 ($ in thousands, except where noted) 3. REVENUES The Company provides investment management services through funds and separate accounts. The Company earns revenues from the management fees and incentive income generated by the funds that it manages. Additionally, for acting as a sub-investment manager, or sub-advisor, to certain Oaktree funds, the Company earns sub-advisory fees. Under certain subsidiary services agreements the Company provides certain investment and marketing related services to Oaktree affiliated entities. As a result of the Restructuring, which was effective October 1, 2019, sub-advisory fees are no longer eliminated in the consolidated operating results of the Company while management fees earned by OCM are no longer included in the Company's consolidated operating results. Revenues are affected by economic factors related to the asset class composition of the holdings and the contractual terms such as the basis for calculating the management fees and investors’ ability to redeem. Revenues by fund structure and sub-advisory fees are set forth below. Management Fees Closed-end Open-end Evergreen Sub-advisory fees Total Incentive Income Closed-end Evergreen Total Contract Balances Year Ended December 31, 2020 2019 2018 $ $ $ $ 1,982 9,262 — 174,483 185,727 218,660 24,677 243,337 $ $ $ $ 345,026 93,401 89,227 51,209 578,863 334,287 15,837 350,124 $ $ $ $ 466,319 142,013 103,688 — 712,020 651,021 23,038 674,059 The Company receives management fees monthly or quarterly in accordance with its contracts with customers. Incentive income is received when the fund makes a distribution. Contract assets relate to the Company’s conditional right to receive payment for its performance completed under the contract. Receivables are recorded when the right to consideration becomes unconditional (i.e., only requires the passage of time). Contract liabilities (i.e., deferred revenues) relate to payments received in advance of performance under the contract. Contract liabilities are recognized as revenues when the Company provides investment management services. The table below sets forth contract balances for the periods indicated: Receivables Contract assets Contract liabilities (1) (1) The changes in the balances primarily relate to accruals, net of payments received. 95 As of December 31, 2020 2019 $ $ 80,390 64,532 (100) 65,346 73,907 — Oaktree Capital Group, LLC Notes to Consolidated Financial Statements — (Continued) December 31, 2020 ($ in thousands, except where noted) 4. VARIABLE INTEREST ENTITIES The Company consolidates VIEs for which it is the primary beneficiary. VIEs include funds managed by Oaktree and CLOs for which Oaktree acts as collateral manager. The purpose of these VIEs is to provide investment opportunities for investors in exchange for management fees and, in certain cases, performance-based fees. While the investment strategies of the funds and CLOs differ by product, in general the fundamental risks of the funds and CLOs have similar characteristics, including loss of invested capital and reduction or absence of management and performance-based fees. As general partner or collateral manager, respectively, Oaktree generally considers itself the sponsor of the applicable fund or CLO. The Company does not provide performance guarantees and, other than capital commitments, has no financial obligation to provide funding to VIEs. Consolidated VIEs As of December 31, 2020, the Company consolidated 23 VIEs for which it was the primary beneficiary, including 10 funds managed by Oaktree and 13 CLOs for which Oaktree serves as collateral manager. Two of the consolidated funds, Oaktree Enhanced Income Retention Holdings III, LLC and Oaktree CLO RR Holder, LLC, were formed to satisfy risk retention requirements under Section 15G of the Exchange Act. As of December 31, 2019, the Company consolidated 22 VIEs. As of December 31, 2020, the assets and liabilities of the 23 consolidated VIEs representing funds and CLOs amounted to $8.4 billion and $7.6 billion, respectively. The assets of these consolidated VIEs primarily consisted of investments in debt and equity securities, while their liabilities primarily represented debt obligations issued by CLOs. The assets of these VIEs may be used only to settle obligations of the same VIE. In addition, there is no recourse to the Company for the VIEs’ liabilities. In exchange for managing either the funds’ or CLOs’ collateral, the Company typically earns management fees and may earn performance fees, all of which are eliminated in consolidation. As of December 31, 2020, the Company’s investments in consolidated VIEs had a carrying value of $538.1 million, which represented its maximum risk of loss as of that date. The Company’s investments in CLOs are generally subordinated to other interests in the CLOs and entitle the Company to receive a pro-rata portion of the residual cash flows, if any, from the CLOs. Please see note 10 for more information on CLO debt obligations. Unconsolidated VIEs The Company holds variable interests in certain VIEs in the form of direct equity interests that are not consolidated because it is not the primary beneficiary, inasmuch as its fee arrangements are considered at-market and it does not hold interests in those entities that are considered more than insignificant. The carrying value of the Company’s investments in VIEs that were not consolidated are shown below. Corporate investments Due from affiliates Maximum exposure to loss As of December 31, 2020 2019 $ $ 812,264 48,587 860,851 $ $ 693,090 87,524 780,614 96 Oaktree Capital Group, LLC Notes to Consolidated Financial Statements — (Continued) December 31, 2020 ($ in thousands, except where noted) 5. INVESTMENTS Corporate Investments Corporate investments consist of investments in funds and companies in which the Company does not have a controlling financial interest. Investments for which the Company is deemed to exert significant influence are accounted for under the equity method of accounting and reflect the Company’s ownership interest in each fund or company. In the case of investments for which the Company is not deemed to exert significant influence or control, the fair value option of accounting has been elected. Investment income represents the Company’s pro-rata share of income or loss from these funds or companies, or the change in fair value of the investment, as applicable. The Company’s general partnership interests are substantially illiquid. While investments in funds reflect each respective fund’s holdings at fair value, equity-method investments in companies are not adjusted to reflect the fair value of the underlying company. The fair value of the underlying investments in Oaktree funds is based on the Company’s assessment, which takes into account expected cash flows, earnings multiples and/or comparisons to similar market transactions, among other factors. Valuation adjustments reflecting consideration of credit quality, concentration risk, sales restrictions and other liquidity factors are integral to valuing these instruments. Corporate investments consisted of the following: Corporate Investments Equity-method investments: Funds Companies Other investments, at fair value Total corporate investments The components of investment income are set forth below: Investment Income Equity-method investments: Funds Companies Other investments, at fair value Total investment income Equity-method Investments As of December 31, 2020 2019 $ $ 951,660 4,863 15,429 971,952 Year Ended December 31, 2020 2019 $ $ 117,866 1,008 (15,046) 103,828 $ $ 68,145 57,475 20,949 146,569 $ $ $ $ 670,348 3,855 34,934 709,137 2018 66,922 73,868 16,320 157,110 The Company’s equity-method investments include its investments in Oaktree funds for which it serves as general partner, and other third-party funds and companies that are not consolidated, but for which the Company is deemed to exert significant influence. The Company’s share of income or loss generated by these investments is recorded within investment income in the consolidated statements of operations. The Company’s equity-method investments in Oaktree funds principally reflect the Company’s general partner interests in those funds, which typically does not exceed 2.5% in each fund. The Oaktree funds are investment companies that follow a specialized basis of accounting established by GAAP. Each reporting period, the Company evaluates each of its equity-method investments to determine if any are considered significant, as defined by the SEC. As of December 31, 2020 and 2019, or for the years ended December 31, 2020, 2019 and 2018, no individual equity- method investment met the significance criteria. 97 Oaktree Capital Group, LLC Notes to Consolidated Financial Statements — (Continued) December 31, 2020 ($ in thousands, except where noted) Summarized financial information of the Company’s equity-method investments is set forth below: Statements of Financial Condition Assets: Cash and cash-equivalents Investments, at fair value Other assets Total assets Liabilities and Capital: Debt obligations Other liabilities Total liabilities Total capital Total liabilities and capital Statements of Operations Revenues / investment income Interest expense Other expenses Net realized and unrealized gain on investments Net income Other Investments, at Fair Value As of December 31, 2020 2019 $ $ $ $ 3,627,763 42,314,215 1,512,269 47,454,247 5,959,409 3,018,263 8,977,672 38,476,575 47,454,247 Year Ended December 31, 2020 2019 $ $ 5,061,676 (341,823) (1,607,354) 7,202,148 10,314,647 $ $ 766,096 (150,078) (402,814) 1,077,761 1,290,965 $ $ $ $ $ $ 1,892,353 25,213,422 635,277 27,741,052 3,558,139 3,779,527 7,337,666 20,403,386 27,741,052 2018 1,861,551 (276,779) (876,627) 1,087,345 1,795,490 Other investments, at fair value primarily consist of: (a) investments in certain Oaktree and non-Oaktree funds for which the fair value option of accounting has been elected, (b) non-investment grade debt securities, and (c) derivatives utilized to hedge the Company’s exposure to investment income earned from its funds. The following table summarizes net gains (losses) attributable to the Company’s other investments: Realized gain Net change in unrealized gain (loss) Total gain (loss) Year Ended December 31, 2020 2019 2018 $ $ 8,946 (23,992) (15,046) $ $ 7,763 13,186 20,949 $ $ 18,208 (1,888) 16,320 98 Oaktree Capital Group, LLC Notes to Consolidated Financial Statements — (Continued) December 31, 2020 ($ in thousands, except where noted) Investments of Consolidated Funds Investments, at Fair Value Investments held and securities sold short by the consolidated funds are summarized below: Investments United States: Debt securities: Communication services Consumer discretionary Consumer staples Energy Financials Health care Industrials Information technology Materials Real estate Utilities Other Fair Value as of December 31, Fair Value as a Percentage of Investments of Consolidated Funds as of December 31, 2020 2019 2020 2019 $ $ 554,779 568,195 118,641 232,309 287,291 410,317 727,471 504,442 251,978 111,622 264,758 11,847 464,356 508,701 92,102 223,671 355,113 512,864 563,920 524,390 294,300 204,933 216,053 — 7.1 % 7.3 1.5 3.0 3.7 5.3 9.3 6.5 3.2 1.4 3.4 0.2 6.4 % 6.9 1.3 3.0 4.8 7.0 7.7 7.1 4.0 2.8 2.9 — Total debt securities (cost: $4,064,289 and $3,981,956 as of December 31, 2020 and 2019, respectively) 4,043,650 3,960,403 51.9 53.9 Equity securities: Communication services Consumer discretionary Energy Financials Industrials Utilities Total equity securities (cost: $282,682 and $137,149 as of December 31, 2020 and 2019, respectively) Real estate: Real estate Total real estate securities (cost: $6,760 and $230,741 as of December 31, 2020 and 2019, respectively) 16,822 604 21,747 85,715 8,752 77,085 210,725 6,879 6,879 312 658 256 — — 130,671 131,897 230,741 230,741 0.2 0.0 0.3 1.1 0.1 1.0 2.7 0.1 0.1 0.0 0.0 0.0 — — 1.8 1.8 3.1 3.1 99 Oaktree Capital Group, LLC Notes to Consolidated Financial Statements — (Continued) December 31, 2020 ($ in thousands, except where noted) Investments Europe: Debt securities: Communication services Consumer discretionary Consumer staples Energy Financials Health care Industrials Information technology Materials Real estate Utilities Other Fair Value as of December 31, Fair Value as a Percentage of Investments of Consolidated Funds as of December 31, 2020 2019 2020 2019 $ $ 471,595 755,084 219,934 8,033 75,988 629,210 487,243 255,662 303,468 26,100 9,397 4,628 469,822 659,001 178,609 11,316 101,933 579,765 362,120 177,152 230,289 96,315 3,852 — 6.0 % 9.7 2.8 0.1 1.0 8.1 6.2 3.3 3.9 0.3 0.1 0.1 6.4 % 9.0 2.4 0.2 1.4 7.9 4.9 2.4 3.1 1.3 0.1 — Total debt securities (cost: $3,233,125 and $2,876,531 as of December 31, 2020 and 2019, respectively) 3,246,342 2,870,174 41.6 39.0 Equity securities: Consumer discretionary Financials Total equity securities (cost: $2,919 and $1,227 as of December 31, 2020 and 2019, respectively) Asia and other: Debt securities: Communication services Consumer discretionary Consumer staples Energy Financials Government Health care Industrials Information technology Materials Real estate Utilities Other — 2,917 2,917 18,741 35,580 23,755 9,247 12,335 — 1,084 4,759 3,631 68,791 75,187 9,619 26,067 94 — 94 15,750 40,073 11,545 13,471 10,313 917 8,923 31,814 5,639 5,604 751 20,300 — Total debt securities (cost: $288,452 and $164,650 as of December 31, 2020 and 2019, respectively) 288,796 165,100 — 0.0 0.0 0.2 0.5 0.3 0.1 0.2 — 0.0 0.1 0.0 0.9 1.0 0.1 0.3 3.7 0.0 — 0.0 0.2 0.5 0.2 0.1 0.1 0.0 0.1 0.4 0.1 0.1 0.0 0.3 — 2.2 Total debt securities Total equity securities Total real estate Total investments, at fair value 7,578,788 213,642 6,879 7,799,309 $ 6,995,677 131,991 230,741 7,358,409 $ 97.2 2.7 0.1 100.0 % 95.1 1.8 3.1 100.0 % As of December 31, 2020 and 2019, no single issuer or investment had a fair value that exceeded 5% of Oaktree’s total consolidated net assets. 100 Oaktree Capital Group, LLC Notes to Consolidated Financial Statements — (Continued) December 31, 2020 ($ in thousands, except where noted) Net Gains (Losses) From Investment Activities of Consolidated Funds Net gains (losses) from investment activities in the consolidated statements of operations consist primarily of realized and unrealized gains and losses on the consolidated funds’ investments (including foreign exchange gains and losses attributable to foreign-denominated investments and related activities) and other financial instruments. Unrealized gains or losses result from changes in the fair value of these investments and other financial instruments. Upon disposition of an investment, unrealized gains or losses are reversed and an offsetting realized gain or loss is recognized in the current period. The following table summarizes net gains (losses) from investment activities: 2020 Net Change in Unrealized Appreciation (Depreciation) on Investments Net Realized Gain (Loss) on Investments Year Ended December 31, 2019 Net Realized Gain (Loss) on Investments Net Change in Unrealized Appreciation (Depreciation) on Investments 2018 Net Change in Unrealized Appreciation (Depreciation) on Investments Net Realized Gain (Loss) on Investments $ $ (8,926) (85,592) (11,184) (148) (107) (105,957) $ $ (137,882) (21,971) (23,813) (69) (112) (183,847) $ $ (11,227) — (6,546) — — (17,773) $ $ 137,521 (131,948) 4,364 — — 9,937 $ $ (26,109) — 513 858 1,210 (23,528) $ $ (252,038) 85,014 2,327 29 76 (164,592) Investments and other financial (1) instruments CLO liabilities Foreign-currency forward contracts Total-return and interest-rate swaps Options and futures (2) (2) (2) Total (1) Represents the net change in the fair value of CLO liabilities based on the more observable fair value of CLO assets, as measured under the CLO measurement guidance. Please see note 2 for more information. (2) Please see note 7 for additional information. 101 Oaktree Capital Group, LLC Notes to Consolidated Financial Statements — (Continued) December 31, 2020 ($ in thousands, except where noted) 6. FAIR VALUE Fair Value of Financial Assets and Liabilities The short-term nature of cash and cash-equivalents, receivables and accounts payable causes each of their carrying values to approximate fair value. The fair value of short-term investments included in cash and cash-equivalents is a Level I valuation. The Company’s other financial assets and financial liabilities by fair-value hierarchy level are set forth below. There were no transfers between Level I and Level II positions for the years ended December 31, 2020 and 2019. Please see notes 10 and 18 for the fair value of the Company’s outstanding debt obligations and amounts due from/to affiliates, respectively. Assets U.S. Treasury and other securities Corporate investments Foreign-currency forward contracts (1) (2) Total assets Liabilities Foreign-currency forward contracts (3) As of December 31, 2020 As of December 31, 2019 Level I Level II Level III Total Level I Level II Level III Total 9,562 — — 9,562 $ $ — 4,575 459 5,034 $ $ — 27,045 — 27,045 $ $ 9,562 31,620 459 41,641 $ $ 9,232 — — 9,232 $ $ — 4,717 — 4,717 $ $ — 30,311 — 30,311 $ $ 9,232 35,028 — 44,260 — $ (20,051) $ — $ (20,051) $ — $ (1,703) $ — $ (1,703) $ $ $ (1) For U.S. Treasury securities the carrying value approximates fair value due to their short-term nature and are classified as Level I investments within the fair value hierarchy detailed above. (2) Amounts are included in other assets in the consolidated statements of financial condition. (3) Amounts are included in accounts payable, accrued expenses and other liabilities in the consolidated statements of financial condition, except for $16,191 and $94 as of December 31, 2020 and 2019, respectively, which are included within corporate investments in the consolidated statements of financial condition. The table below sets forth a summary of changes in the fair value of Level III financial instruments: Beginning balance Contributions or additions Distributions Restructuring distribution of net assets Net gain included in earnings Ending balance Net change in unrealized gains (losses) attributable to financial instruments still held at end of period Year Ended December 31, 2020 2019 Corporate Investments Contingent Consideration Liability Corporate Investments Contingent Consideration Liability $ $ $ 30,311 2,562 (6,993) — 1,165 27,045 2,320 $ $ $ — — — — — — — $ $ $ 45,426 937 (9,643) (14,416) 8,007 30,311 8,007 $ $ $ (6,657) — — 6,657 — — — The table below sets forth a summary of the valuation techniques and quantitative information utilized in determining the fair value of the Company’s Level III financial instruments: Fair Value as of December 31, Financial Instrument 2020 2019 Valuation Technique Significant Unobservable Input Range Weighted Average Corporate investment – Limited partnership interests $ 27,045 $ 30,311 Market approach (value of underlying assets) Not applicable Not applicable Not applicable 102 Oaktree Capital Group, LLC Notes to Consolidated Financial Statements — (Continued) December 31, 2020 ($ in thousands, except where noted) Fair Value of Financial Instruments Held By Consolidated Funds The short-term nature of cash and cash-equivalents held at the consolidated funds causes their carrying value to approximate fair value. The fair value of cash-equivalents is a Level I valuation. Derivatives may relate to a mix of Level I, II or III investments, and therefore their fair-value hierarchy level may not correspond to the fair-value hierarchy level of the economically hedged investment. The table below summarizes the investments and other financial instruments of the consolidated funds by fair-value hierarchy level: As of December 31, 2020 As of December 31, 2019 Level I Level II Level III Total Level I Level II Level III Total Assets Investments: Corporate debt – bank debt Corporate debt – all other Equities – common stock Equities – preferred stock Real estate Total investments Derivatives: Foreign-currency forward contracts Options and futures Total derivatives Total assets Liabilities CLO debt obligations: Senior secured notes Subordinated notes Total CLO debt obligations (1) Derivatives: Foreign-currency forward contracts Total liabilities $ $ $ $ $ — — 3,052 — — 3,052 $ 6,363,403 881,018 1 — 6,879 7,251,301 $ $ 255,282 79,085 187,370 23,219 — 544,956 6,618,685 960,103 190,423 23,219 6,879 7,799,309 — 26 26 482 — 482 — — — 482 26 508 — — 552 — — 552 27 27 $ $ 5,911,523 903,246 345 — — 6,815,114 $ 149,642 31,266 130,437 657 230,741 542,743 6,061,165 934,512 131,334 657 230,741 7,358,409 6,863 — 6,863 — — — 6,890 — 6,890 3,078 $ 7,251,783 $ 544,956 $ 7,799,817 $ 579 $ 6,821,977 $ 542,743 $ 7,365,299 — — — — — $ (6,321,580) (215,278) $ (6,536,858) (933) $ (6,537,791) $ — — — — — $ (6,321,580) (215,278) $ (6,536,858) — — — $ (5,613,846) (154,153) $ (5,767,999) (933) (202) (2,349) $ (6,537,791) $ (202) $ (5,770,348) $ — — — — — $ (5,613,846) (154,153) (5,767,999) (2,551) $ (5,770,550) (1) The fair value of CLO liabilities is classified based on the more observable fair value of CLO assets. Please see notes 2 and 10 for more information. 103 Oaktree Capital Group, LLC Notes to Consolidated Financial Statements — (Continued) December 31, 2020 ($ in thousands, except where noted) The following tables set forth a summary of changes in the fair value of Level III investments: 2020 Beginning balance Deconsolidation of funds Transfers into Level III Transfers out of Level III Purchases Sales Realized losses, net Unrealized depreciation, net Ending balance Net change in unrealized depreciation attributable to assets still held at end of period 2019 Beginning balance Deconsolidation of funds Transfers into Level III Transfers out of Level III Purchases Sales Realized gains (losses), net Unrealized (depreciation) appreciation, net Ending balance Net change in unrealized (depreciation) appreciation attributable to assets still held at end of period Corporate Debt – Bank Debt Corporate Debt – All Other Equities – Common Stock Equities – Preferred Stock Real Estate Total $ $ $ $ $ $ 149,642 (150,358) 164,888 (76,444) 310,696 (122,416) (8,966) (11,760) 255,282 (9,637) 136,055 (121,146) 9,300 (5,293) 155,546 (15,282) 46 (9,584) 149,642 (9,780) $ $ $ $ $ $ 31,266 (14,601) 60,315 (27,809) 78,242 (39,784) (366) (8,178) 79,085 (1,002) 185,378 (116,714) — (57,325) 27,857 (8,471) (119) 660 31,266 390 $ $ $ $ $ $ 130,437 (264,513) 26,192 (53,532) 369,766 (110) (13,115) (7,755) 187,370 (11,957) 3,063 (3,063) 2,391 (504) 130,341 (266) (106) (1,419) 130,437 (1,419) $ $ $ $ $ $ 657 — — — 23,133 — — (571) 23,219 (557) 1,426 (1,426) 776 — — — — (119) 657 (119) $ $ $ $ $ $ 230,741 (269,404) — — 38,663 — — — — — — — — — 230,741 — — — 230,741 — $ $ $ $ $ $ 542,743 (698,876) 251,395 (157,785) 820,500 (162,310) (22,447) (28,264) 544,956 (23,153) 325,922 (242,349) 12,467 (63,122) 544,485 (24,019) (179) (10,462) 542,743 (10,928) Total realized and unrealized gains and losses recorded for Level III investments are included in net realized gain on consolidated funds’ investments or net change in unrealized appreciation (depreciation) on consolidated funds’ investments in the consolidated statements of operations. There were no transfers between Level I and Level II positions for the year ended December 31, 2020 and 2019. Transfers out of Level III are generally attributable to certain investments that experienced a more significant level of market trading activity or completed an initial public offering during the respective period and thus were valued using observable inputs. Transfers into Level III typically reflect either investments that experienced a less significant level of market trading activity during the period or portfolio companies that undertook restructurings or bankruptcy proceedings and thus were valued in the absence of observable inputs. 104 Oaktree Capital Group, LLC Notes to Consolidated Financial Statements — (Continued) December 31, 2020 ($ in thousands, except where noted) The following table sets forth a summary of the valuation techniques and quantitative information utilized in determining the fair value of the consolidated funds’ Level III investments as of December 31, 2020: Investment Type Fair Value Valuation Technique Significant Unobservable Inputs (1)(2) Credit-oriented investments: Energy: $ Financials: Health care: Industrials: Materials: Real estate: Other: Equity investments: 14,318 10,431 24,301 20,447 50,263 12,298 59,615 78,635 18,177 38,932 6,951 133,779 76,809 Total Level III investments $ 544,956 (4) Discounted cash flow Recent market information Recent market information Recent market information Recent market information (6) Recent transaction price Recent transaction price Recent transaction price Recent market information Recent market information Discounted cash flow (6) (6) (4) (5) (5) (5) (5) (5) (5) Recent transaction price Discounted cash flow (4) (6) Discount rate Quoted prices Quoted prices Quoted prices Quoted prices Quoted prices Quoted prices Quoted prices Quoted prices Quoted prices Discount rate Quoted prices Discount rate 105 Range Weighted Average (3) 7% – 9% Not applicable Not applicable Not applicable Not applicable Not applicable Not applicable Not applicable Not applicable Not applicable 6% – 8% Not applicable 6% – 8% 8% Not applicable Not applicable Not applicable Not applicable Not applicable Not applicable Not applicable Not applicable Not applicable 7% Not applicable 7% Oaktree Capital Group, LLC Notes to Consolidated Financial Statements — (Continued) December 31, 2020 ($ in thousands, except where noted) The following table sets forth a summary of the valuation techniques and quantitative information utilized in determining the fair value of the consolidated funds’ Level III investments as of December 31, 2019: Investment Type Fair Value Valuation Technique Significant Unobservable Inputs (1)(2) Range Weighted Average (3) Not applicable Not applicable Not applicable Not applicable Not applicable Not applicable 6% – 8% Not applicable Not applicable Not applicable Not applicable Not applicable Not applicable Not applicable 7% Not applicable Credit-oriented investments: Communication services: Financials: Health care: Real estate: $ Other: Equity investments: Real estate investments: Real estate: Total Level III investments 16,836 17,274 26,863 16,755 71,906 31,274 130,341 753 Recent market information Recent market information Recent market information Recent market information (6) Recent transaction price Recent market information (5) (5) (5) (5) (5) Discounted cash flow Recent market information (4) (5) Quoted prices Quoted prices Quoted prices Quoted prices Quoted prices Quotes prices Discount rate Quoted prices 230,741 Recent transaction price (6) Not applicable Not applicable Not applicable $ 542,743 (1) The discount rate is the significant unobservable input used in the fair-value measurement of performing credit-oriented investments in which the consolidated funds do not have a controlling interest in the underlying issuer, as well as certain equity investments and real estate loan portfolios. An increase (decrease) in the discount rate would result in a lower (higher) fair-value measurement. (2) Multiple of either earnings or underlying assets is the significant unobservable input used in the market approach for the fair-value measurement of distressed credit- oriented investments, credit-oriented investments in which the consolidated funds have a controlling interest in the underlying issuer, equity investments and certain real estate-oriented investments. An increase (decrease) in the multiple would result in a higher (lower) fair-value measurement. (3) The weighted average is based on the fair value of the investments included in the range. (4) A discounted cash-flow method is generally used to value performing credit-oriented investments in which the consolidated funds do not have a controlling interest in the underlying issuer, as well as certain equity investments, real estate-oriented investments and real estate loan portfolios. (5) Certain investments are valued using vendor prices or broker quotes for the subject or similar securities. Generally, investments valued in this manner are classified as Level III because the quoted prices may be indicative in nature for securities that are in an inactive market, may be for similar securities, or may require adjustment for investment-specific factors or restrictions. (6) Certain investments are valued based on recent transactions, generally defined as investments purchased or sold within six months of the valuation date. The fair value may also be based on a pending transaction expected to close after the valuation date. A significant amount of judgment may be required when using unobservable inputs, including assessing the accuracy of source data and the results of pricing models. The Company assesses the accuracy and reliability of the sources it uses to develop unobservable inputs. These sources may include third-party vendors that the Company believes are reliable and commonly utilized by other marketplace participants. As described in note 2, other factors beyond the unobservable inputs described above may have a significant impact on investment valuations. During the year ended December 31, 2020, the valuation technique for one Level III credit-oriented investment changed, due to its performance, from a discounted cash flow to a market approach based on comparable companies. During the year ended December 31, 2019, the valuation technique for one Level III credit-oriented investment changed from a discounted cash flow to a market approach based on comparable companies due to the anticipated restructuring of the portfolio company. 106 Oaktree Capital Group, LLC Notes to Consolidated Financial Statements — (Continued) December 31, 2020 ($ in thousands, except where noted) 7. DERIVATIVES AND HEDGING The fair value of freestanding derivatives consisted of the following: As of December 31, 2020 Foreign-currency forward contracts As of December 31, 2019 Foreign-currency forward contracts Assets Liabilities Notional Fair Value Notional Fair Value 22,624 $ 459 $ (288,626) $ (20,051) — $ — $ (156,281) $ (1,703) $ $ Realized and unrealized gains and losses arising from freestanding derivatives were recorded in the consolidated statements of operations as follows: Investment income General and administrative expense (1) Total gain (loss) Year Ended December 31, 2020 2019 2018 $ $ (13,045) $ 5,243 $ 9,191 (9,315) 2,143 (1,322) (22,360) $ 7,386 $ 7,869 (1) To the extent that the Company’s freestanding derivatives are utilized to hedge its foreign-currency exposure to investment income and management fees earned from consolidated funds, the related hedged items are eliminated in consolidation, with the derivative impact (a positive number reflects a reduction in expenses) reflected in consolidated general and administrative expense. There were no derivatives outstanding that were designated as hedging instruments for accounting purposes as of December 31, 2020 and 2019. Additionally, the Company had not designated any derivatives as fair-value hedges or hedges of net investments in foreign operations as of December 31, 2020 and 2019. Derivatives Held By Consolidated Funds Certain consolidated funds utilize derivatives in their ongoing investment operations. These derivatives primarily consist of foreign- currency forward contracts and options utilized to manage currency risk, interest-rate swaps to hedge interest-rate risk, options and futures used to hedge certain exposures for specific securities, and total-return swaps utilized mainly to obtain exposure to leveraged loans or to participate in foreign markets not readily accessible. The primary risk exposure for options and futures is price, while the primary risk exposure for total-return swaps is credit. None of the derivative instruments are accounted for as a hedging instrument utilizing hedge accounting. The fair value of derivatives held by the consolidated funds consisted of the following: As of December 31, 2020 Foreign-currency forward contracts Options and futures As of December 31, 2019 Foreign-currency forward contracts Assets Liabilities Notional Fair Value Notional Fair Value 28,638 22,567 51,205 $ $ 482 26 508 $ $ (47,787) — (47,787) $ $ (933) — (933) 166,917 $ 6,890 $ (140,276) $ (2,551) $ $ $ 107 Oaktree Capital Group, LLC Notes to Consolidated Financial Statements — (Continued) December 31, 2020 ($ in thousands, except where noted) The impact of derivatives held by the consolidated funds in the consolidated statements of operations was as follows: 2020 Net Change in Unrealized Appreciation (Depreciation) on Investments Net Realized Gain (Loss) on Investments Year Ended December 31, 2019 Net Realized Gain (Loss) on Investments Net Change in Unrealized Appreciation (Depreciation) on Investments Net Realized Gain (Loss) on Investments 2018 Net Change in Unrealized Appreciation (Depreciation) on Investments Foreign-currency forward contracts Total-return and interest-rate and credit default swaps Options and futures Total $ $ (11,184) $ (23,813) $ (6,546) $ 4,364 $ 513 $ (148) (107) (11,439) $ (69) (112) (23,994) $ — — (6,546) $ — — 4,364 $ 858 1,210 2,581 $ 2,327 29 76 2,432 Balance Sheet Offsetting The Company recognizes all derivatives as assets or liabilities at fair value in its consolidated statements of financial condition. In connection with its derivative activities, the Company generally enters into agreements subject to enforceable master netting arrangements that allow the Company to offset derivative assets and liabilities in the same currency by specific derivative type or, in the event of default by the counterparty, to offset derivative assets and liabilities with the same counterparty. While these derivatives are eligible to be offset in accordance with applicable accounting guidance, the Company has elected to present derivative assets and liabilities based on gross fair value in its consolidated statements of financial condition. The table below sets forth the setoff rights and related arrangements associated with derivatives held by the Company. The “gross amounts not offset in statements of financial condition” columns represent derivatives that management has elected not to offset in the consolidated statements of financial condition even though they are eligible to be offset in accordance with applicable accounting guidance. As of December 31, 2020 Derivative Assets: Foreign-currency forward contracts Derivative assets of consolidated funds: Foreign-currency forward contracts Options and futures Subtotal Total Derivative Liabilities: Foreign-currency forward contracts Derivative liabilities of consolidated funds: Foreign-currency forward contracts Total Gross and Net Amounts of Assets (Liabilities) Presented Gross Amounts Not Offset in Statements of Financial Condition Derivative Assets (Liabilities) Cash Collateral Received (Pledged) Net Amount 459 $ 459 $ — $ 482 26 508 967 (20,051) (933) (20,984) $ $ $ — — — 459 (459) — (459) $ $ $ — — — — — — — $ $ $ — 482 26 508 508 (19,592) (933) (20,525) $ $ $ $ 108 Oaktree Capital Group, LLC Notes to Consolidated Financial Statements — (Continued) December 31, 2020 ($ in thousands, except where noted) As of December 31, 2019 Derivative Assets: Foreign-currency forward contracts Derivative Liabilities: Foreign-currency forward contracts Derivative liabilities of consolidated funds: Foreign-currency forward contracts Total 8. FIXED ASSETS Gross and Net Amounts of Assets (Liabilities) Presented Gross Amounts Not Offset in Statements of Financial Condition Derivative Assets (Liabilities) Cash Collateral Received (Pledged) Net Amount $ $ $ 6,890 (1,703) (2,551) (4,254) $ $ $ — — — — $ $ $ — — — — $ $ $ 6,890 (1,703) (2,551) (4,254) Fixed assets, which consist of furniture and equipment, capitalized software, office leasehold improvements and prior to the Restructuring, company-owned aircraft, are included in other assets in the consolidated statements of financial position. The following table sets forth the Company’s fixed assets and accumulated depreciation: Furniture, equipment and capitalized software Leasehold improvements Other Fixed assets Accumulated depreciation Fixed assets, net 9. GOODWILL AND INTANGIBLES As of December 31, 2020 2019 $ $ 10,240 27,315 978 38,533 (25,257) 13,276 $ $ 9,608 25,764 937 36,309 (22,227) 14,082 Goodwill represents the excess of cost over the fair value of identifiable net assets of acquired businesses. Goodwill has an indefinite useful life and is not amortized, but instead is tested for impairment annually in the fourth quarter of each fiscal year, or more frequently if events or circumstances indicate that impairment may have occurred. Goodwill is included in other assets in the consolidated statements of financial position. As of December 31, 2020, the Company determined there was no goodwill impairment. The carrying value of goodwill was $18.4 million as of December 31, 2020 and 2019. As a result of the Restructuring, goodwill and intangible assets of $50.9 million and $301.7 million, respectively, were transferred as part of the deconsolidation of entities effective October 1, 2019. Amortization expense associated with the Company’s intangible assets was $12.6 million and $16.9 million for the years ended December 31, 2019 and 2018, respectively. No amortization expense associated with the Company’s intangible assets was recognized for the year ended December 31, 2020. As of December 31, 2020 and 2019, there were no outstanding intangible asset balances. 10. DEBT OBLIGATIONS AND CREDIT FACILITIES Prior to the Restructuring, the Company’s financial statements reflected debt and debt service of the entire Oaktree Operating Group. OCM, Oaktree Capital I, Oaktree Capital II and Oaktree AIF are co-obligors and jointly and severally liable for all debt obligations listed below, however, debt obligations are reflected in the consolidated financial statements based upon the entity that actually made the borrowing and received the related proceeds. OCM has historically been the only direct borrower or issuer under credit agreements and private placement notes with third parties and made all payments of principal and interest. In connection with the Restructuring, debt 109 Oaktree Capital Group, LLC Notes to Consolidated Financial Statements — (Continued) December 31, 2020 ($ in thousands, except where noted) obligations with a net carrying amount of $746.3 million related to OCM were transferred as part of the deconsolidation of entities effective October 1, 2019. Accordingly, the Company’s financial statements after the Restructuring generally will not reflect debt obligations, interest expense or related liabilities associated with its operating subsidiaries, until such time as Oaktree Capital I directly borrows or issues notes under such arrangements. As of December 31, 2020, Oaktree Capital I is jointly and severally liable, along with its co-obligors, for the debt obligations listed below with an aggregate outstanding principal balance of $850 million. On May 1, 2020, OCM received commitments from certain accredited investors to purchase $250 million of senior unsecured notes that bear a blended 3.68% fixed rate of interest and a weighted average maturity of 2031. The notes are guaranteed by Oaktree Capital I, a consolidated subsidiary of the Company, along with Oaktree Capital II and Oaktree AIF, as co-obligors. As OCM is the issuer of such senior notes, the outstanding principal and interest payments guaranteed by Oaktree Capital I will not be included in the Company’s financial statements unless an event of default occurs. The offering closed on July 22, 2020 and OCM received proceeds of $250 million on the closing date. Oaktree Capital I, along with certain other Oaktree Operating Group members as co-borrowers, are parties to a credit agreement with a subsidiary of Brookfield that provides for a subordinated credit facility maturing on May 19, 2023. The subordinated credit facility has a revolving loan commitment of $250 million and borrowings generally bear interest at a spread to either LIBOR or an alternative base rate. Borrowings on the subordinated credit facility are subordinate to the outstanding debt obligations and borrowings on the primary credit facility of Oaktree Capital I and its co-borrowers. Oaktree Capital I is jointly and severally liable, along with its co-obligors for outstanding borrowings on the subordinated credit facility. For reasons set forth in the preceding paragraph, the Company’s financial statements generally will not reflect debt obligations, interest expense or related liabilities associated with its operating subsidiaries until such time as Oaktree Capital I directly borrows from the subordinated credit facility. No amounts were outstanding on the subordinated credit facility as of December 31, 2020. As of December 31, 2020, Oaktree Capital I is jointly and severally liable, along with its co-obligors, for the debt obligations listed below with an aggregate outstanding principal balance of $850 million. The Company’s maximum exposure to these debt obligations is set forth below: $250,000, 3.78%, issued in December 2017, payable on December 18, 2032 Credit facility, issued in March 2014, variable rate obligations payable on December 13, 2024 $50,000, 3.91%, issued in September 2014, payable on September 3, 2024 $100,000, 4.01%, issued in September 2014, payable on September 3, 2026 $100,000, 4.21%, issued in September 2014, payable on September 3, 2029 $100,000, 3.69%, issued in July 2016, payable on July 12, 2031 $200,000, 3.64%, issued in July 2020, payable on July 22, 2030 $50,000, 3.84%, issued in July 2020, payable on July 22, 2035 (1) Total remaining principal As of December 31, 2020 2019 $ $ 250,000 — 50,000 100,000 100,000 100,000 200,000 50,000 850,000 $ $ 250,000 150,000 50,000 100,000 100,000 100,000 — — 750,000 (1) On December 13, 2019, the credit facility was amended to among other things, increase the revolving loan commitment from $500 million to $650 million, provide for the refinancing of the then-outstanding $150 million term loan with revolving loans, extend the maturity date from March 29, 2023 to December 13, 2024, favorably update the commitment fee and interest rate in the corporate ratings-based pricing grid and increase the asset under management covenant threshold from $60 billion to $65 billion. Borrowings generally bear interest at a spread to either LIBOR or an alternative base rate. Based on the current credit ratings of OCM, the interest rate on borrowings is LIBOR plus 0.88% per annum and the commitment fee on the unused portions of the revolving credit facility is 0.08% per annum. The credit agreement contains customary financial covenants and restrictions, including ones regarding a maximum leverage ratio and a minimum required level of assets under management (as defined in the credit agreement, as amended above). As of December 31, 2020, OCM had no outstanding borrowings under the revolving credit facility. OCM and the Company were in compliance with all financial maintenance covenants associated with its senior notes and bank credit facility as of December 31, 2020 and 2019, respectively. 110 Oaktree Capital Group, LLC Notes to Consolidated Financial Statements — (Continued) December 31, 2020 ($ in thousands, except where noted) Credit Facilities of the Consolidated Funds Certain consolidated funds may maintain revolving credit facilities that are secured by the assets of the fund or may issue senior variable rate notes to fund investments on a longer term basis, generally up to ten years. The obligations of the consolidated funds are nonrecourse to the Company. The consolidated funds had the following debt obligations outstanding: Credit Agreement Revolving credit facilities Senior variable rate notes Less: Debt issuance costs (1) Total debt obligations, net (2) Outstanding Amount as of December 31, 2020 2019 $ $ 370,920 — (4,932) 365,988 $ $ — 159,411 (934) 158,477 Facility Capacity $890,696 159,411 Weighted Average Interest Rate 1.85% 3.42 Weighted Average Remaining Maturity (years) 1.6 4.4 Commitment Fee Rate 0.25% N/A L/C Fee N/A N/A (1) The credit facility capacity is calculated on a pro rata basis using fund commitments as of December 31, 2020. (2) For the revolving credit facilities, amount is shown net of debt issuance costs that are included in other assets, net at December 31, 2020. As of December 31, 2020 and 2019, the consolidated funds had debt obligations with an aggregate outstanding principal balance of $370.9 million and $159.4 million, respectively. The carrying value of the revolving credit facilities approximated fair value due to recent issuance. The fair value of the senior variable rate notes is a Level III valuation and aggregated $159.1 million as of December 31, 2019, using prices obtained from pricing vendors. Financial instruments that are valued using quoted prices for the security or similar securities are generally classified as Level III because the quoted prices may be indicative in nature for securities that are in an inactive market, may be for similar securities, or may require adjustment for investment-specific factors or restrictions. As a result of the Restructuring, senior variable rate notes and debt issuance costs of $870.7 million and $4.6 million, respectively, were transferred as part of the deconsolidation of entities effective October 1, 2019. Debt Obligations of CLOs Debt obligations of CLOs represent amounts due to holders of debt securities issued by the CLOs, as well as term loans of CLOs that had not priced as of period end. Outstanding debt obligations of CLOs were as follows: Senior secured notes (2) Subordinated notes Total CLO debt obligations As of December 31, 2020 As of December 31, 2019 Weighted Average Interest Rate 2.00% N/A Weighted Average Remaining Maturity (years) 10.2 10.6 Fair Value (1) $ $ 6,321,580 215,278 6,536,858 Fair Value (1) $ $ 5,613,846 154,153 5,767,999 Weighted Average Interest Rate 2.85% N/A Weighted Average Remaining Maturity (years) 8.6 10.4 (1) The fair value of CLO liabilities was measured as the fair value of CLO assets less the sum of (a) the fair value of any beneficial interests held by the Company and (b) the carrying value of any beneficial interests that represent compensation for services. Please see notes 2 and 6 for more information. (2) The subordinated notes do not have a contractual interest rate; instead, they receive distributions from the excess cash flows generated by the CLO. The debt obligations of CLOs are nonrecourse to the Company and are backed by the investments held by the respective CLO. Assets of one CLO may not be used to satisfy the liabilities of another. As of December 31, 2020 and 2019, the fair value of CLO assets was $7.3 billion and $6.4 billion, respectively, and consisted of cash, corporate loans, corporate bonds and other securities. 111 Oaktree Capital Group, LLC Notes to Consolidated Financial Statements — (Continued) December 31, 2020 ($ in thousands, except where noted) The fair value of the Company’s CLO beneficial interests held at December 31, 2020 was calculated using a discounted cash flow model specific to each investment structure. The significant valuation inputs, including the input range and weighted average rate, are as follows: Valuation Input Discount rates Constant default rates Recovery rates Low 9.0% 2.0% 60.0% High 35.0% 2.0% 80.0% Weighted Average Rate 19.6% 2.0% 62.7% As of December 31, 2020, future scheduled principal or par value payments with respect to the debt obligations of CLOs were as follows: 2021 2022 2023 2024 2025 Thereafter Total $ $ 10,086 — — — — 6,592,611 6,602,697 112 Oaktree Capital Group, LLC Notes to Consolidated Financial Statements — (Continued) December 31, 2020 ($ in thousands, except where noted) 11. LEASES The Company has operating leases related to office space and certain equipment with remaining lease terms expiring within one year through 2031, some of which include options to extend the leases for up to five years and some of which include options to terminate the leases within one year. As of December 31, 2020, there were no finance leases outstanding and no additional operating leases that have not yet commenced. The components of lease expense included in general and administrative expense were as follows: Operating lease cost Sublease income Total lease cost Twelve months ended December 31, 2020 Twelve months ended December 31, 2019 $ $ 7,768 (382) 7,386 $ $ 15,984 (631) 15,353 Supplemental cash flow information related to leases was as follows: Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows used for operating leases Weighted average remaining lease term for operating leases (in years) Weighted average discount rate for operating leases As of December 31, 2020, maturities of operating lease liabilities were as follows: 2021 2022 2023 2024 2025 Thereafter Total lease payments Less: imputed interest Total operating lease liabilities 113 Twelve months ended December 31, 2020 $ 7,006 9.8 4.3 % 6,927 6,337 5,450 4,677 4,677 26,168 54,236 (10,168) 44,068 $ Oaktree Capital Group, LLC Notes to Consolidated Financial Statements — (Continued) December 31, 2020 ($ in thousands, except where noted) 12. NON-CONTROLLING REDEEMABLE INTERESTS IN CONSOLIDATED FUNDS The following table sets forth a summary of changes in the non-controlling redeemable interests in the consolidated funds. Dividends reinvested and in-kind contributions or distributions are non-cash in nature and have been presented on a gross basis in the table below. Beginning balance Initial consolidation of a fund Deconsolidation of funds due to restructuring Deconsolidation of funds Contributions Distributions Net income (loss) Change in distributions payable Foreign-currency translation and other Ending balance Year Ended December 31, 2020 2019 2018 $ $ 866,222 — — (704,903) 940,191 (223,674) (165,412) (10,050) 12,973 715,347 $ $ 961,622 96,248 (406,058) (423,598) 664,679 (107,499) 93,620 (16,105) 3,313 866,222 $ $ 860,548 — — — 447,260 (305,406) (40,930) 2,469 (2,319) 961,622 114 Oaktree Capital Group, LLC Notes to Consolidated Financial Statements — (Continued) December 31, 2020 ($ in thousands, except where noted) 13. UNITHOLDERS’ CAPITAL Unitholders’ capital reflects the economic interests attributable to Class A unitholders, preferred unitholders, non-controlling interests in consolidated subsidiaries and non-controlling interests in consolidated funds. Non-controlling interests in consolidated subsidiaries represent the portion of unitholders’ capital attributable to the OCGH non-controlling interest and third parties. The OCGH non-controlling interest is determined at the Oaktree Operating Group level, after giving effect to distributions, if any, attributable to the preferred unitholders, based on the proportionate share of Oaktree Operating Group units held by the OCGH unitholders. Certain expenses, such as income taxes and related administrative expenses of Oaktree Capital Group, LLC and its Intermediate Holding Companies, are solely attributable to the Class A unitholders. As of December 31, 2020 and 2019, respectively, OCGH units represented 61,370,607 of the total 160,047,647 Oaktree Operating Group units and 61,793,286 of the total 159,760,541 Oaktree Operating Group units. Based on allocable capital of $1,421,127 and $1,301,066 as of December 31, 2020 and 2019, respectively, the OCGH non-controlling interest was $544,935 and $503,253. As of December 31, 2020 and 2019, there were no non-controlling interests attributable to third parties. Distributions per Class A unit are set forth below: Payment Date Record Date Applicable to Period Ended Distribution Per Unit August 10, 2020 February 24, 2020 Total 2020 November 12, 2019 September 30, 2019 May 10, 2019 February 22, 2019 Total 2019 November 13, 2018 August 10, 2018 May 11, 2018 February 23, 2018 Total 2018 Preferred Unit Issuances July 31, 2020 February 3, 2020 June 30, 2020 December 31, 2019 October 31, 2019 September 30, 2019 May 6, 2019 February 15, 2019 November 5, 2018 August 6, 2018 May 7, 2018 February 16, 2018 September 30, 2019 - March 31, 2019 December 31, 2018 September 30, 2018 June 30, 2018 March 31, 2018 December 31, 2017 $ $ $ $ $ $ 0.49 0.22 0.71 0.03 3.13 1.05 0.75 4.96 0.70 0.55 0.96 0.76 2.97 On May 17, 2018, the Company issued 7,200,000 of its 6.625% Series A preferred units representing limited liability company interests with a liquidation preference of $25.00 per unit. The issuance resulted in $173.7 million in net proceeds to the Company. Distributions on the Series A preferred units, when and if declared by the board of directors of Oaktree, will be paid quarterly on March 15, June 15, September 15 and December 15 of each year. The first distribution was paid on September 17, 2018. Distributions on the Series A preferred units are non-cumulative. On August 9, 2018, the Company issued 9,400,000 of its 6.550% Series B preferred units representing limited liability company interests with a liquidation preference of $25.00 per unit. The issuance resulted in $226.9 million in net proceeds to the Company. Distributions on the Series B preferred units, when and if declared by the board of directors of Oaktree, will be paid quarterly on March 15, June 15, September 15 and December 15 of each year. The first distribution was paid on December 17, 2018. Distributions on the Series B preferred units are non-cumulative. Unless distributions have been declared and paid or declared and set apart for payment on the preferred units for a quarterly distribution period, during the remainder of that distribution period the Company may not repurchase any common units or any other units that are junior in rank, as to the payment of distributions, to the preferred units and the Company may not declare or pay or set apart payment for distributions on any common units or junior units for the remainder of that distribution period, other than certain Permitted Distributions (as defined in the unit designation related to the applicable preferred units (each, the “Preferred Unit Designation”)). 115 Oaktree Capital Group, LLC Notes to Consolidated Financial Statements — (Continued) December 31, 2020 ($ in thousands, except where noted) The Company may redeem, at its option, out of funds legally available, the preferred units, in whole or in part, at any time on or after June 15, 2023 in respect of the Series A preferred units or September 15, 2023 in respect of the Series B preferred units, at a price of $25.00 per preferred unit plus declared and unpaid distributions to, but excluding, the redemption date, without payment of any undeclared distributions. Holders of the preferred units have no right to require the redemption of the preferred units. If a Change of Control Event (as defined in the applicable Preferred Unit Designation) occurs prior to June 15, 2023 in respect of the Series A preferred units or September 15, 2023 in respect of the Series B preferred units, the Company may, at its option, out of funds legally available, redeem the applicable preferred units, in whole but not in part, upon at least 30 days’ notice, within 60 days of the occurrence of such Change of Control Event, at a price of $25.25 per preferred unit, plus declared and unpaid distributions to, but excluding, the redemption date, without payment of any undeclared distributions. If a Tax Redemption Event or Rating Agency Event (each, as defined in the applicable Preferred Unit Designation) occurs prior to June 15, 2023 in respect of the Series A preferred units or September 15, 2023 in respect of the Series B preferred units, the Company may, at its option, out of funds legally available, redeem the applicable preferred units, in whole but not in part, upon at least 30 days’ notice, within 60 days of the occurrence of such Tax Redemption Event or Rating Agency Event, at a price of $25.50 per preferred unit, plus declared and unpaid distributions to, but excluding, the redemption date, without payment of any undeclared distributions. The preferred units are not convertible into Class A units or any other class or series of the Company’s interests or any other security. Holders of the preferred units do not have any of the voting rights given to holders of our Class A units, except that holders of the preferred units are entitled to certain voting rights under certain conditions. The following table sets forth a summary of net income attributable to the preferred unitholders, the OCGH non-controlling interest and the Class A common unitholders: Weighted average Oaktree Operating Group units outstanding (in thousands): OCGH non-controlling interest Class A unitholders Total weighted average units outstanding Oaktree Operating Group net income: Net income attributable to preferred unitholders Net income attributable to OCGH non-controlling interest Net income attributable to OCG Class A unitholders (1) Oaktree Operating Group net income Net income attributable to OCG Class A unitholders: (2) Oaktree Operating Group net income attributable to OCG Class A unitholders Non-Operating Group income (expense) Income tax expense of Intermediate Holding Companies Net income attributable to OCG Class A unitholders Year Ended December 31, 2019 2020 2018 61,474 98,512 159,986 27,316 83,428 135,656 246,400 135,656 2,747 — 138,403 $ $ $ $ 79,084 80,045 159,129 27,316 137,100 137,921 302,337 137,921 (8,662) (1,736) 127,523 $ $ $ $ 86,390 70,526 156,916 12,277 280,159 228,791 521,227 228,791 (632) (17,018) 211,141 $ $ $ $ (1) Represents distributions declared, if any, on the preferred units. (2) Oaktree Operating Group net income does not include amounts attributable to other non-controlling interests, which amounted to $0, $1,779 and $2,659 for the years ended December 31, 2020, 2019 and 2018, respectively. As a result of the Restructuring, as of October 1, 2019, four of the six Oaktree Operating Group entities are no longer indirect subsidiaries of the Company. Accordingly, subsequent to that date, the consolidated financial statements reflect the Company’s indirect economic interest in only two of the Oaktree Operating Group entities: (i) Oaktree Capital I and (ii) OCM Cayman. 116 Oaktree Capital Group, LLC Notes to Consolidated Financial Statements — (Continued) December 31, 2020 ($ in thousands, except where noted) The change in the Company’s ownership interest in the Oaktree Operating Group is set forth below: Net income attributable to OCG Class A unitholders Equity reallocation between controlling and non-controlling interests Change from net income attributable to OCG Class A unitholders and transfers from non-controlling interests Year Ended December 31, 2020 2019 2018 $ $ 138,403 1,832 140,235 $ $ 127,523 306,015 433,538 $ $ 211,141 80,106 291,247 Please see notes 13, 14 and 15 for additional information regarding transactions that impacted unitholders’ capital. 14. EARNINGS PER UNIT The computation of net income per Class A unit is set forth below: Net income per Class A unit (basic and diluted): Net income attributable to OCG Class A unitholders Weighted average number of Class A units outstanding (basic and diluted) Basic and diluted net income per Class A unit Year Ended December 31, 2020 2019 2018 (in thousands, except per unit amounts) $ $ 138,403 98,512 1.40 $ $ 127,523 80,045 1.59 $ $ 211,141 70,526 2.99 Prior to the Mergers, OCGH units could be exchanged on a one-for-one basis into Class A units, subject to certain restrictions. The exchange of these units would have proportionally increased the Company’s interest in the Oaktree Operating Group. Subsequent to the Mergers, OCGH units are no longer exchangeable into Class A units. As the restrictions set forth in the then-current exchange agreement were in place for each applicable reporting period, those units were not included in the computation of diluted earnings per unit for the years ended December 31, 2020, 2019 and 2018. A deferred equity unit represents a special unit award that, when vested, will be settled with an unvested OCGH unit on a one-for- one basis. The number of deferred equity units that will vest is based on the achievement of certain performance targets through June 2024. Once a performance target has been met, the applicable number of OCGH units will be issued and begin to vest over periods of up to 10.0 years. The holder of a deferred equity unit is not entitled to any distributions until the issuance of an OCGH unit in settlement of a deferred equity unit. As of or for the years ended December 31, 2020 and 2019, no OCGH units were considered issuable under the terms of the arrangement; consequently, no contingently issuable units were included in the computation of diluted earnings per unit for those periods. Please see note 15 for more information. Certain compensation arrangements include performance-based awards that could result in the issuance of OCGH units, which would vest over periods of four to ten years from date of issuance. As of and for the years ended December 31, 2020 and 2019, no OCGH units were considered issuable under the terms of these arrangements; consequently, no contingently issuable units were included in the computation of diluted earnings per unit for those periods. The Company had a contingent consideration liability that was payable in cash and fully-vested OCGH units. In May 2018, the contingent consideration arrangement was modified in respect of certain performance targets and payment terms. The new arrangement provided for contingent consideration payable in cash and Class A units. As part of the Restructuring effective October 1, 2019, the contingent consideration arrangement was transferred to the entities that were deconsolidated and therefore no longer was an obligation of the Company. No Class A units or OCGH units were considered issuable under the terms of the arrangement as of or for the years ended December 31, 2020 and 2019; consequently, no contingently issuable units were included in the computation of diluted earnings per unit for those periods. Please see note 17 for more information. 117 Oaktree Capital Group, LLC Notes to Consolidated Financial Statements — (Continued) December 31, 2020 ($ in thousands, except where noted) 15. EQUITY-BASED AND OTHER DEFERRED COMPENSATION Long-Term Incentive Plan Awards In March 2020 the Company adopted the Oaktree Capital Group, LLC Long-Term Incentive Plan (the “LTIP”). The LTIP provides for the granting of cash-based incentive awards to senior executives, directors, officers, partners, employees, consultants and advisors of the Company and its affiliates. Awards may be denominated in U.S. dollars or other currencies determined by the LTIP’s plan administrator. The unvested value of each LTIP award adjusts over its vesting period to track the performance of a fund designated by the plan administrator or by the award recipient from investment options selected by the plan administrator. Investment options may include funds managed by Company affiliates or by third parties. Awards do not represent an actual interest in the funds whose performance they track. Such fund investments are purely nominal and solely for the purpose of calculating the value of an award on each vesting or payment date. Awards under the LTIP represent only a contractual right to receive a cash payment upon vesting from the Company or the affiliate that issued the award. Awards tracking the performance of funds that make periodic distributions to their investors may provide for award recipients to receive corresponding payments from the Company or the affiliate issuing the award, with the remaining unvested value of the award reduced to reflect the amount of each such payment. Each payment under an award is fully vested upon receipt. Awards denominated in currencies other than U.S. dollars which track the performance of U.S. dollar-denominated funds are nominally converted into U.S. dollars for performance tracking purposes, with amounts payable under the awards converted back into the original currency at a market rate at the time of each vesting payment. Certain recipients of awards denominated in currencies other than U.S. dollars which track the performance of U.S. dollar-denominated funds receive the option to hedge the value of their awards to a currency other than U.S. dollars. All such currency hedges are calculated on a purely hypothetical basis and do not represent a right to participate in actual currency hedging contracts. In 2020, the Company granted LTIP awards valued at $42.8 million to employees, partners and directors of the Company and its subsidiaries, subject to annual vesting over a weighted average period of approximately 4.7 years. As of December 31, 2020, the Company expected to recognize compensation expense on its unvested LTIP awards of $41.7 million, subject to adjustment based on future performance, over a weighted average period of 3.8 years. During the twelve months ended December 31, 2020, the Company recognized $11.0 million of compensation expense related to the LTIP, which was included in compensation and benefits expense in the consolidated statement of operations. Equity-Based Compensation In December 2011, the Company adopted the 2011 Oaktree Capital Group, LLC Equity Incentive Plan (the “2011 Plan”). The 2011 Plan provides for the granting of options, unit appreciation rights, restricted unit awards, unit bonus awards, phantom equity awards or other unit-based awards to senior executives, directors, officers, certain employees, consultants, and advisors of the Company and its affiliates. As of December 31, 2020, a maximum of 23,983,692 units have been authorized to be awarded pursuant to the 2011 Plan, and 15,846,913 units (including 2,000,000 EVUs) have been awarded under the 2011 Plan. Each Class A and OCGH unit, when issued, represents an indirect interest in one Oaktree Operating Group unit. Total vested and unvested Converted OCGH Units, OCGH units and Class A units issued and outstanding were 160,047,647 as of December 31, 2020. Restated Exchange Agreement At the closing of the Mergers, Oaktree entered into a Third Amended and Restated Exchange Agreement that will, among other things, allow limited partners of OCGH to exchange (“Exchanges”) certain vested limited partnership units of OCGH (“OCGH Units”) for cash, Brookfield Class A Shares, notes issued by a Brookfield subsidiary or equity interests in a subsidiary of OCGH that will entitle such limited partners to the proceeds from a note, or a combination of the foregoing. Either of such notes will have a three-year maturity and will accrue interest at the then-current 5-year treasury note rate plus 3%. Only Converted OCGH Units, OCGH Units issued and outstanding at the time of the closing of the Mergers, OCGH Units issued after the closing of the Mergers pursuant to agreements in effect on March 13, 2019, OCGH Units issuable upon vesting of certain phantom equity awards (“Phantom Units”) and other OCGH Units consented-to by Brookfield will be, when vested, eligible to participate in an Exchange. The form of the consideration in an Exchange is generally in the discretion of Brookfield, subject to certain limitations. 118 Oaktree Capital Group, LLC Notes to Consolidated Financial Statements — (Continued) December 31, 2020 ($ in thousands, except where noted) In general, OCGH limited partners will be entitled to provide an election notice to participate in an Exchange with respect to eligible vested OCGH Units during the first 60 calendar days of each year beginning January 1, 2022 (an “Open Period”). However, holders of Converted OCGH Units and Phantom Units will be eligible to provide an election notice with respect to their vested units beginning as early as 2020 and each year thereafter subject to certain limitations. Each Exchange will thereafter be consummated within the first 155 days of such calendar year, subject to extension in certain circumstances. Valuation Except as described below, each OCGH Unit will be valued (i) by applying a 13.5x multiple to the trailing three-year average (or two-year average for Exchanges in 2022) of fee-related earnings less stock-based compensation at grant value and excluding depreciation and amortization and a 6.75x multiple to the trailing three-year average of net incentives created, and (ii) adding 100% of the value of net cash (defined as cash less the face value of debt and preferred stock, other than certain preferred stock issued in connection with certain Exchanges), 100% of the value of corporate investments and 75% of fund-level net accrued incentives as of December 31 of the prior year, in each case subject to certain adjustments. Amounts received in respect of each OCGH Unit will be reduced by the amount of any non-tax related distributions received in the calendar year in which the Exchange occurs, but increased by an amount accruing daily from January 1 of such year to the date of the closing of the Exchange at a rate per annum equal to the 5-year treasury note rate as of December 31 of the prior year plus 3%. However, in 2020 and 2021, Converted OCGH Units and Phantom Units were and will be valued at $49.00 per unit, less the amount of any capital distributions received upon vesting. Thereafter any such Converted OCGH Units and Phantom Units will be valued using the same methodology applied to all other OCGH Units. Annual Limits Exchanges of OCGH Units, other than Converted OCGH Units and Phantom Units, will be subject to certain annual caps and limitations as follows: • Messrs. Howard Marks, Bruce Karsh, Jay Wintrob, John Frank, Sheldon Stone, Richard Masson and Larry Keele can, for the Open Period beginning in 2022, exchange up to 20% of the OCGH Units held by them collectively at the closing of the Mergers (or issued pursuant to agreements in place on March 19, 2019, or as agreed to by Brookfield). For each year thereafter, they will be able to exchange an additional 20% of such OCGH Units (subject to yearly caps and inclusive of any prior exchanges), such that they will be entitled to exchange 100% of their OCGH Units beginning during the Open Period in 2026 (subject to yearly caps and inclusive of any prior exchanges). • Current employees other than those included in the group named in the preceding bullet can, for the Open Period beginning in 2022, sell up to 12.5% of the OCGH Units held by them collectively at the closing (or issued pursuant to agreements in place on March 13, 2019, or as agreed to by Brookfield). For each year thereafter, they will be able to exchange an additional 12.5% of such OCGH Units (subject to yearly caps and inclusive of any prior exchanges). They will be entitled to exchange 100% of their OCGH Units beginning during the Open Period in 2029 (subject to yearly caps). Brookfield is not obligated to permit Exchanges that, in the aggregate together with Exchanges requested by all other OCGH limited partners, exceed certain maximum amounts per year. These maximum amounts are: 20% of the exchangeable OCGH Units in calendar year 2022, 25% in 2023, 30% in 2024, and 35% in 2025 and each year thereafter. In the event that OCGH limited partners wish to sell or exchange units in excess of the maximum amount for a given year, OCGH will reallocate the exchangeable units among the OCGH limited partners in its sole discretion so that the amount exchanged does not exceed the maximum amount for such year. • • With respect to Exchanges of Converted OCGH Units and Phantom Units, OCGH limited partners will not be entitled to exchange such units to the extent the aggregate exchange consideration payable in respect thereof, in any given Exchange, would exceed an amount equal to (i) the amount of exchange consideration that would have been payable in respect of Converted OCGH Units and Phantom Units that were eligible for participation in the applicable Open Period in accordance with their original vesting schedule as of the date the notice for such Exchange was delivered plus (ii) $20 million; and in the event that OCGH limited partners deliver election notices that would result in such excess, OCGH will reallocate such units among the OCGH limited partners in its sole discretion. 119 Oaktree Capital Group, LLC Notes to Consolidated Financial Statements — (Continued) December 31, 2020 ($ in thousands, except where noted) In the event that OCGH limited partners would, following an Exchange, beneficially own less than 1% of the equity of the Oaktree Operating Group (as defined in the operating agreement of the Company, as amended from time to time), Brookfield can require that all remaining OCGH Units be exchanged on 36-months’ notice. In addition, following the 8th anniversary of the closing date of the Mergers, Brookfield can discontinue the Exchange rights on 36-months’ notice. In the event that OCGH limited partners would, following the final Exchange pursuant to a discontinuation notice, beneficially own less than 5% of the equity of the Oaktree Operating Group, Brookfield can require that all remaining OCGH Units be exchanged in such final Exchange. As a result of the foregoing, the earliest the exchange rights can be terminated is the 11th anniversary of the closing date of the Mergers. Following the delivery of a discontinuation notice, the caps and limits set forth above will cease to be in effect. Revisions to the terms of the exchange agreement governing post-vesting restrictions and exchange consideration described above and to the terms of the operating agreement of the Company and the partnership agreement of OCGH resulted in a Type I modification of unvested Class A and OCGH units at September 30, 2019. There was no incremental compensation cost resulting from the modifications. OCGH Unit Awards The Company granted 150,000 OCGH units during 2020. As of December 31, 2020, the Company expected to recognize compensation expense on its unvested OCGH unit awards of $23.5 million over a weighted average period of 2.9 years. With respect to forfeitures, the Company made an accounting policy election to account for forfeitures when they occur. Accordingly, no forfeitures have been assumed in the calculation of compensation expense. The Company utilizes a contemporaneous valuation report in determining fair value at the date of grant for OCGH unit awards. Prior to the Merger, each valuation report was based on the market price of Oaktree’s Class A units. A discount was then applied to the Class A unit market price to reflect the lack of marketability for the OCGH units. The determination of an appropriate discount for lack of marketability was based on a review of discounts on the sale of restricted shares of publicly traded companies and multi-period put-based quantitative methods. Factors that influenced the size of the discount for lack of marketability include (a) the estimated time it would take for an OCGH unitholder to exchange units into Class A units, (b) the volatility of the Company’s business and (c) thin trading of the Class A units. Each of these factors is subject to significant judgment. The estimated time-to-liquidity assumption ranged between 7.0 years in March 2018 to 6.4 years in the most recent valuation in 2019. The estimated time to liquidity was influenced primarily by the need, prior to the Merger, for (a) the general partner of OCGH to elect in its discretion to declare an open period during which an OCGH unitholder could exchange his or her unrestricted vested OCGH units for, at the option of the Company’s board of directors, Class A units on a one-for-one basis, an equivalent amount of cash based on then-prevailing market prices, other consideration of equal value or any combination of the foregoing, and (b) the approval of the Company’s board of directors to exchange such OCGH units into any of the foregoing. Board approval was based primarily on the objective of maintaining an orderly market for Oaktree’s units, but may have taken into account any other factors that the board deemed appropriate in its sole discretion. Volatility was estimated from historical and implied volatilities of the Company and five other comparable public alternative asset management companies. In valuing employee OCGH unit grants, the discount percentage applied to the then-prevailing Class A unit trading price was 20% for all OCGH units granted in the first three quarters of 2018 and 17.5% for the fourth quarter of 2018 through September 30, 2019. After the Merger, OCGH unit grants are valued based on a formula as described above under “Restated Exchange Agreement - Valuation” and reflect a discount for lack of marketability due to the post-vesting restrictions described above. Factors that influence the formula-based valuation include the estimated time it would take for an OCGH unitholder to exchange units for value pursuant to the Restated Exchange Agreement and estimates of the Company’s future results, which are inputs to the valuation formula. Each of these factors is subject to significant judgment. The grant date fair value for all OCGH units granted in 2020 was $32.93 per unit. Through December 31, 2021, Converted OCGH Units will be valued at $49.00 per unit, less the amount of any capital distributions received upon vesting. Thereafter, any such Converted OCGH Units will be valued using the same methodology applied to all other OCGH units. 120 Oaktree Capital Group, LLC Notes to Consolidated Financial Statements — (Continued) December 31, 2020 ($ in thousands, except where noted) With respect to forfeitures, the Company made an accounting policy election to account for forfeitures when they occur. Accordingly, no forfeitures have been assumed in the calculation of compensation expense. A summary of the status of the Company’s unvested Converted OCGH units and other OCGH unit awards and a summary of changes for the periods presented are set forth below (actual dollars per unit): Balance, December 31, 2017 Granted Vested Forfeited Balance, December 31, 2018 Granted Vested Restructuring Forfeited (2) Balance, December 31, 2019 Granted Vested Forfeited Balance, December 31, 2020 Converted OCGH Units (1) OCGH Units Number of Units Weighted Average Grant Date Fair Value Number of Units Weighted Average Grant Date Fair Value 2,556,316 1,164,601 (920,439) (99,893) 2,700,585 1,494,324 (975,072) (2,380,641) (107,955) 731,241 — (253,696) (14,803) 462,742 $ $ 44.05 39.61 42.57 40.59 42.76 49.56 43.06 45.83 44.63 45.99 — 45.52 45.59 46.25 2,158,835 124,051 (418,837) — 1,864,049 1,873,155 (515,534) (2,600,264) — 621,406 150,000 (215,054) — 556,352 $ $ 39.79 31.80 37.23 — 39.83 39.95 35.44 40.87 — 39.49 32.93 39.10 — 37.87 (1) Upon completion of the Merger, each unvested Class A Unit held by current, or in certain cases former, employees, officers and directors of Oaktree and its subsidiaries was converted into one unvested OCGH Unit (each, a “Converted OCGH Unit”) and thereafter became subject to the terms and conditions of the OCGH limited partnership agreement. The Converted OCGH Units (i) are subject to the same vesting terms that were applicable to such units prior to the completion of the Merger, (ii) are entitled to receive ongoing distributions in respect of earnings, but not capital distributions and (iii) upon vesting, receive the accumulated value of capital distributions that accrued while such units were unvested. However, in 2020 and 2021, Converted OCGH Units will be valued at $49.00 per unit, less the amount of any capital distributions received upon vesting. (2) Effective with the Restructuring, compensation related to unvested equity awards granted for service provided by employees of OCM is no longer included in these consolidated financial statements. Equity Value Units OCGH equity value units (“EVUs”) represent special limited partnership units in OCGH that entitle the holder the right to receive special distributions that will be settled in OCGH units, based on value created during a specified period in excess of a fixed “Base Value.” The value created is measured on a per unit basis, based on the appreciation of the OCGH units (before the Merger, the Class A units) and certain components of quarterly distributions with respect to OCGH units over the period beginning on January 1, 2015 and ending on each of December 31, 2019, December 31, 2020 and December 31, 2021, with one-third of the EVUs recapitalizing on each such date. As of December 31, 2020, the value created did not exceed the Base Value. EVUs also give the holder the right, subject to service vesting and Oaktree performance relative to the accreting Base Value, to receive certain quarterly distributions from OCGH. EVUs do not entitle the holder to any voting rights. The value received under the EVUs will be reduced by (i) distributions received by the holder on 225,000 OCGH units granted to the holder on April 26, 2017, (ii) the value of the portion of profit sharing payments received by the holder attributable to the net incentive income received from certain funds, and (iii) the full value of the OCGH units granted to the holder on April 26, 2017. To the extent that the reduction relates to the value of any such OCGH units that are unvested at the time of the reduction, such OCGH units will vest at that time. 121 Oaktree Capital Group, LLC Notes to Consolidated Financial Statements — (Continued) December 31, 2020 ($ in thousands, except where noted) Certain EVUs provide the holder with liquidity rights in respect of the special distributions, if any, that will be settled in OCGH units. The fair value is affected by the Class A unit trading price and assumptions regarding certain complex and subjective variables, including the expected Class A unit trading price volatility, distributions and exercise timing, and the risk-free interest rate. All of the outstanding EVUs were granted to an employee of OCM, accordingly, subsequent to the Restructuring, compensation expense related to these awards is no longer included in these consolidated financial statements. Deferred Equity Units A deferred equity unit represents a special unit award that, when vested, will be settled with an unvested OCGH unit on a one-for- one basis. The number of deferred equity units that will vest is based on the achievement of certain performance targets through June 2024. Once a performance target has been met, the applicable number of OCGH units will be issued and begin to vest over periods of up to 10.0 years. The holder of a deferred equity unit is not entitled to any distributions until settled by the issuance of an OCGH unit. As of December 31, 2020, there were 767,499 deferred equity units outstanding, none of which were expected to vest. All of the outstanding deferred equity units were granted to employees of OCM, accordingly, subsequent to the Restructuring, compensation expense related to these awards is no longer included in these consolidated financial statements. 16. INCOME TAXES AND RELATED PAYMENTS The Company is a publicly traded partnership and currently holds interests in Oaktree Capital I, L.P. (a non-corporate entity that is not subject to U.S. federal and state corporate income tax) and Oaktree Capital Management (Cayman), L.P. (which holds subsidiaries that are taxable in non-U.S. jurisdictions). Prior to the Restructuring on October 1, 2019, Oaktree Holdings, Inc. and Oaktree AIF Holdings, Inc., two of its Intermediate Holding Companies, were wholly-owned corporate subsidiaries. Income earned by these corporate subsidiaries were subject to U.S. federal and state income taxes during the year. Income earned by non-corporate subsidiaries was not subject to U.S. federal corporate income tax and was allocated to the Oaktree Operating Group’s unitholders. Upon the Restructuring, Oaktree Holdings, Inc. and Oaktree AIF Holdings, Inc. merged with and into newly formed, indirect subsidiaries of Brookfield, with those subsidiaries surviving the mergers. As a result, as of October 1, 2019, Oaktree Holdings, Inc. and Oaktree AIF Holdings, Inc. ceased to exist and the Company no longer includes on its financial statements economic interests in Oaktree Capital II, L.P., Oaktree Investment Holdings, L.P., Oaktree Capital Management, L.P., and Oaktree AIF Investments, L.P. All deferred tax balances related to these entities were deconsolidated as part of the Restructuring effective October 1, 2019. 122 Oaktree Capital Group, LLC Notes to Consolidated Financial Statements — (Continued) December 31, 2020 ($ in thousands, except where noted) Income tax expense from operations consisted of the following: Current: U.S. federal income tax State and local income tax Foreign income tax Deferred: U.S. federal income tax State and local income tax Foreign income tax Total: U.S. federal income tax State and local income tax Foreign income tax Income tax expense The Company’s income (loss) before income taxes consisted of the following: Domestic income (loss) before income taxes Foreign income (loss) before income taxes Total income (loss) before income taxes Year Ended December 31, 2020 2019 2018 — — 8,147 8,147 — — 64 64 — — 8,211 8,211 $ $ $ $ $ $ (93) 1,674 7,933 9,514 519 (158) (255) 106 426 1,516 7,678 9,620 Year Ended December 31, 2020 2019 71,749 20,197 91,946 $ $ 380,653 16,305 396,958 $ $ $ $ $ $ $ $ 4,645 2,934 7,402 14,981 8,934 844 20 9,798 13,579 3,778 7,422 24,779 2018 467,264 22,060 489,324 $ $ $ $ $ $ $ $ The Company’s effective tax rate differed from the federal statutory rate for the following reasons: Income tax expense at federal statutory rate Income passed through State and local taxes, net of federal benefit Foreign taxes Other, net Total effective rate Year Ended December 31, 2020 2019 2018 21.00 % (16.39) — 4.32 — 8.93 % 21.00 % (20.96) 0.45 1.07 0.86 2.42 % 21.00 % (17.78) 0.55 0.57 0.72 5.06 % 123 Oaktree Capital Group, LLC Notes to Consolidated Financial Statements — (Continued) December 31, 2020 ($ in thousands, except where noted) The components of the Company’s deferred tax assets and liabilities were as follows: Deferred tax assets: Investment in partnerships Equity-based compensation expense Net operating losses Other (1) Total deferred tax assets Total deferred tax liabilities Net deferred tax assets before valuation allowance Valuation allowance Net deferred tax assets As of December 31, 2020 2019 2018 $ $ — — 2,264 1,908 4,172 — 4,172 — 4,172 $ $ — — — 3,096 3,096 — 3,096 — 3,096 $ $ 210,678 5,535 7,393 9,191 232,797 3,697 229,100 — 229,100 (1) As of December 31, 2020, balance of Other of $1,908 relates to fixed assets and accruals. When assessing the realizability of deferred tax assets, the Company considers whether it is probable that some or all of the deferred tax assets will not be realized. In determining whether the deferred tax assets are realizable, the Company considers the period of expiration of the tax asset, historical and projected taxable income, and tax liabilities for the tax jurisdiction in which the tax asset is located. The deferred tax asset recognized by the Company, as it relates to the higher tax basis in the carrying value of certain assets compared to the book basis of those assets, will be recognized in future years by these taxable entities. Deferred tax assets are based on the amount of the tax benefit that the Company’s management has determined is more likely than not to be realized in future periods. In determining the realizability of this tax benefit, management considered numerous factors that will give rise to pre-tax income in future periods. Among these are the historical and expected future book and tax basis pre-tax income of the Company and unrealized gains in the Company’s assets at the determination date. Based on these and other factors, the Company determined that, as of December 31, 2020, all deferred tax assets were more likely than not to be realized in future periods. The Company recognizes tax benefits related to its tax positions only where the position is “more likely than not” to be sustained in the event of examination by tax authorities. As part of its assessment, the Company analyzes its tax filing positions in all of the federal, state and foreign tax jurisdictions where it is required to file income tax returns, and for all open tax years in these jurisdictions. As of December 31, 2020, there is no remaining balance related to income tax reserves. The following is a reconciliation of unrecognized tax benefits (excluding interest and penalties thereon): Unrecognized tax benefits, January 1 Additions for tax positions related to the current year Additions for tax positions related to prior years Reductions for tax positions related to prior years Settlements Lapse in statute of limitations (1) Unrecognized tax benefits, December 31 Year Ended December 31, 2020 2019 2018 107 — — — — (107) — $ $ 2,699 — — (2,440) — (152) 107 $ $ 4,366 — — (18) (1,423) (226) 2,699 $ $ (1) Reduction of $2,440 during 2019 relates to the transfer of unrecognized tax benefits to Brookfield. As of October 1, 2019, all unrecognized tax benefits related to Oaktree Holdings, Inc., Oaktree AIF Holdings, Inc., and Oaktree Capital Management, L.P. were transferred through equity to Brookfield. 124 Oaktree Capital Group, LLC Notes to Consolidated Financial Statements — (Continued) December 31, 2020 ($ in thousands, except where noted) The Company recognizes interest and penalties related to unrecognized tax positions in the provision for income taxes in the consolidated statements of operations. As of December 31, 2020 and 2019, the aggregate amount of interest and penalties accrued was zero and $0.1 million, respectively. The Company recognized a net benefit of $0.1 million, net expense of $0.2 million and net benefit of $1.2 million in 2020, 2019 and 2018, respectively. The Company files its tax returns as prescribed by the tax laws of the jurisdictions in which it operates. In the normal course of business, the Company is subject to examination by federal, state, local and foreign tax regulators. With limited exceptions, the Company is no longer subject to income tax audits by taxing authorities for periods before 2017. The Company believes that it has adequately provided for any reasonably foreseeable outcomes related to its tax examinations and that any settlements related thereto will not have a material adverse effect on the Company’s consolidated financial statements; however, there can be no assurances as to the ultimate outcomes. Exchange Agreement and Tax Receivable Agreement Under the terms of an exchange agreement in effect prior to the Merger, each OCGH unitholder, subject to certain restrictions, including the approval of our board of directors, had the right to (or could have been required to) exchange his or her OCGH units for, at the option of the Company’s board of directors, Class A units, an equivalent amount of cash based on then-prevailing market prices, other consideration of equal value or any combination of the foregoing. These exchanges resulted in, increases in the tax basis of the tangible and intangible assets of the Oaktree Operating Group. These increases in tax basis have increased and will increase (for tax purposes) depreciation and amortization deductions and reduce gain on sales of assets, and therefore reduced the taxes of two Intermediate Holding Companies, Oaktree Holdings, Inc. and Oaktree AIF Holdings, Inc., that were our subsidiaries prior to the Merger. Prior to the Merger, Oaktree Holdings, Inc. and Oaktree AIF Holdings, Inc. entered into a tax receivable agreement with the OCGH (the “Original TRA”) unitholders that provided for the payment by Oaktree Holdings, Inc. and Oaktree AIF Holdings, Inc. to the OCGH unitholders of 85% of the amount of cash savings, if any, in U.S. federal, state and local income tax that Oaktree Holdings, Inc. or Oaktree AIF Holdings, Inc. actually realizes (or is deemed to realize in the case of an early termination payment by Oaktree Holdings, Inc. or Oaktree AIF Holdings, Inc. or a change of control, as discussed below) as a result of these increases in tax basis and of certain other tax benefits related to our entering into the tax receivable agreement, including tax benefits attributable to payments under the tax receivable agreement. These payment obligations were obligations of Oaktree Holdings, Inc. and Oaktree AIF Holdings, Inc. and not of the Oaktree Operating Group. For the years ended December 31, 2019 and 2018, respectively, amounts paid under the tax receivable agreement under this structure totaled $10.0 million and $20.7 million. At the closing of the Merger, Oaktree entered into a Third Amended and Restated Tax Receivable Agreement (the "TRA Amendment"), which amended and restated the Original TRA. Pursuant to the TRA Amendment, the Original TRA no longer applies and no Tax Benefit Payments (as defined in the Original TRA) will be made with respect to any exchanges of OCGH units that occur on or after March 13, 2019. With respect to any exchanges of OCGH units that occurred prior to March 13, 2019, the TRA Amendment provides that Tax Benefit Payments (as defined in the Original TRA) will continue to be made with respect to such exchanges in accordance with the Original TRA (as amended in certain respects, including that such payments will be calculated without taking into account any tax attributes of Brookfield). Note that upon closing of the Merger, all of the obligation for future Tax Benefit Payments were transferred to the entities that were deconsolidated as part of the Restructuring effective October 1, 2019. 125 Oaktree Capital Group, LLC Notes to Consolidated Financial Statements — (Continued) December 31, 2020 ($ in thousands, except where noted) 17. COMMITMENTS AND CONTINGENCIES In the normal course of business, Oaktree enters into contracts that contain certain representations, warranties and indemnifications. The Company’s exposure under these arrangements would involve future claims that have not yet been asserted. Inasmuch as no such claims currently exist or are expected to arise, the Company has not accrued any liability in connection with these indemnifications. Legal Actions Oaktree, its affiliates, investment professionals, and portfolio companies are routinely involved in litigation and other legal actions in the ordinary course of their business and investing activities. In addition, Oaktree is subject to the authority of a number of U.S. and non-U.S. regulators, including the SEC and the Financial Industry Regulatory Authority, and those authorities periodically conduct examinations of Oaktree and make other inquiries that may result in the commencement of regulatory proceedings against Oaktree and its personnel. Oaktree is currently not subject to any pending actions or regulatory proceedings that either individually or in the aggregate are expected to have a material impact on its consolidated financial statements. Incentive Income In addition to the incentive income recognized by the Company, certain of its funds have amounts recorded as potentially allocable to the Company as its share of potential future incentive income, based on each fund’s net asset value. Inasmuch as this incentive income is contingent upon future investment activity and other factors, it is not recognized by the Company as revenue until it is probable that a significant reversal will not occur. As of December 31, 2020 and 2019, respectively, the aggregate of such amounts recorded at the fund level in excess of incentive income recognized by the Company was $1,321,782 and $864,900, for which related direct incentive income compensation expense was estimated to be $710,774 and $462,684, respectively. Contingent Liabilities The Company had a contingent consideration obligation of up to $60.0 million related to the Highstar acquisition that was payable in cash and fully-vested OCGH units. The amount of contingent consideration was based on the achievement of certain performance targets over a period of up to seven years from the acquisition date of August 2014. In May 2018, the contingent consideration arrangement was modified in respect of certain performance targets and payment terms. The new arrangement provides for contingent consideration of up to $36.1 million, payable in cash and Class A units. The modification resulted in a $7.1 million reduction in the contingent consideration liability. Subsequent to the Restructuring, the contingent consideration obligation was no longer an obligation of the Company. As of December 31, 2020 and 2019, there was no contingent liability on the Company’s consolidated statement of financial condition. Changes in this liability resulted in an expense of $12.1 million in 2018. The fair value of the contingent consideration liability is a Level III valuation, which uses a discounted cash-flow analysis based on a probability-weighted average estimate of certain performance targets, including fundraising and revenue levels. The assumptions used in the analysis are inherently subjective, and thus the ultimate amount of the contingent consideration liability may differ materially from the most recent estimate. For periods prior to the Restructuring, the contingent consideration liability is included in accounts payable, accrued expenses and other liabilities in the consolidated statements of financial condition and changes in the liability are recorded in general and administrative expense in the consolidated statements of operations. Commitments to Funds As of December 31, 2020 and 2019, the Company, generally in its capacity as general partner, had undrawn capital commitments of $350.6 million and $237.3 million, respectively, including commitments to both unconsolidated and consolidated funds. Additionally, as of December 31, 2020, the Company had undrawn capital commitments of $712.5 million in its capacity as a limited partner in Opps XI (as defined in note 18). 126 Oaktree Capital Group, LLC Notes to Consolidated Financial Statements — (Continued) December 31, 2020 ($ in thousands, except where noted) Investment Commitments of the Consolidated Funds Certain of the consolidated funds are parties to credit arrangements that provide for the issuance of letters of credit and/or revolving loans, which may require the particular fund to extend loans to investee companies. The consolidated funds use the same investment criteria in making these commitments as they do for investments that are included in the consolidated statements of financial condition. The unfunded liability associated with these credit arrangements is equal to the amount by which the contractual loan commitment exceeds the sum of funded debt and cash held in escrow, if any. As of December 31, 2020 and 2019, the consolidated funds had potential aggregate commitments of $1.1 million and $2.3 million, respectively. These commitments are expected to be funded by the funds’ cash balances, proceeds from asset sales or drawdowns against existing capital commitments. A consolidated fund may agree to guarantee the repayment obligations of certain investee companies. As of December 31, 2020 and 2019, there were no guaranteed amounts under such arrangements. Certain consolidated funds are investment companies that are required to disclose financial support provided or contractually required to be provided to any of their portfolio companies. During the year ended December 31, 2020, the consolidated funds did not provide any financial support to portfolio companies. Operating Leases Oaktree leases its main headquarters office in Los Angeles and offices in 17 other cities in the U.S., Europe, Asia and Australia, pursuant to current lease terms expiring through 2031. The Company’s occupancy costs, including non-lease expenses, were $8,681, $20,081 and $22,369 for the years ended December 31, 2020, 2019 and 2018, respectively. As of December 31, 2020, the Company’s aggregate estimated minimum commitments under Oaktree’s operating leases were as follows: 2021 2022 2023 2024 2025 Thereafter Total $ $ 6,927 6,337 5,450 4,677 4,677 26,168 54,236 127 Oaktree Capital Group, LLC Notes to Consolidated Financial Statements — (Continued) December 31, 2020 ($ in thousands, except where noted) 18. RELATED PARTY TRANSACTIONS The Company considers its senior executives, employees and unconsolidated Oaktree funds to be affiliates (as defined in the FASB ASC Master Glossary). Amounts due from and to affiliates are set forth below. The fair value of amounts due from and to affiliates is a Level III valuation and was valued based on a discounted cash-flow analysis. The carrying value of amounts due from affiliates approximated fair value due to their short-term nature or because their weighted average interest rate approximated the Company’s cost of debt. The fair value of amounts due to affiliates approximated $3,399 and $85,151 as of December 31, 2020 and 2019, respectively. The valuation as of December 31, 2019 was based on a discount rate of 10.0%. The tax receivable agreement liability was transferred as part of the Restructuring on October 1, 2019. Due from affiliates: Loans Amounts due from unconsolidated funds Management fees and incentive income due from unconsolidated funds and affiliates Payments made on behalf of unconsolidated entities Non-interest bearing advances made to certain non-controlling interest holders and employees Total due from affiliates Due to affiliates: Amounts due to unconsolidated entities Amounts due to senior executives, certain non-controlling interest holders and employees Total due to affiliates Loans As of December 31, 2020 2019 $ $ $ $ 2,372 6,429 119,600 905 235 129,541 9,688 — 9,688 $ $ $ $ 2,596 2,415 88,043 71,051 84 164,189 86,575 488 87,063 Loans primarily consist of interest-bearing loans made to certain non-controlling interest holders, primarily certain employees, to meet tax obligations related to vesting of equity awards. The loans, which are generally recourse to the borrower or secured by vested equity and other collateral, typically bear interest at the Company’s cost of debt and generated interest income of $9, $73 and $211 for the years ended December 31, 2020, 2019 and 2018, respectively. Due From Oaktree Funds In the normal course of business, the Company advances certain expenses on behalf of Oaktree funds. Amounts advanced on behalf of consolidated funds are eliminated in consolidation. Certain expenses paid by the Company, which typically are employee travel and other costs associated with particular portfolio company holdings, are reimbursed to the Company by the portfolio companies. Revenues Earned From Oaktree Funds Management fees and incentive income earned from unconsolidated Oaktree funds totaled $0.2 billion, $0.8 billion and $1.3 billion for the years ended December 31, 2020, 2019 and 2018, respectively. Other Investment Transactions The Company’s senior executives, directors and senior professionals are permitted to invest their own capital (or the capital of family trusts or other estate planning vehicles they control) in Oaktree funds, for which they typically pay the particular fund’s full management fee but not its incentive allocation. To facilitate the funding of capital calls by funds in which employees are invested, the Company periodically advances on a short-term basis the capital calls on certain employees’ behalf. These advances are reimbursed generally toward the end of the calendar quarter in which the capital calls occurred. Amounts advanced by the Company are included within “non-interest bearing advances made to certain non-controlling interest holders and employees” in the table above. 128 Oaktree Capital Group, LLC Notes to Consolidated Financial Statements — (Continued) December 31, 2020 ($ in thousands, except where noted) Aircraft Services OCM owns an aircraft for business purposes. Howard Marks, the Company’s Co-Chairman, may use this aircraft for personal travel and will reimburse OCM to the extent his use of the aircraft for personal travel exceeds a certain threshold pursuant to an Oaktree policy. Oaktree also provides certain senior executives a personal travel allowance for private aircraft usage up to a certain threshold pursuant to the same Oaktree policy. Additionally, Oaktree occasionally makes use of an aircraft owned by one of its senior executives for business purposes at a price to Oaktree that is based on market rates. Special Allocations Certain senior executives receive special allocations based on a percentage of profits of the Oaktree Operating Group. These special allocations, which are recorded as compensation expense, are made on a current basis for so long as they remain senior executives of the Company, with limited exceptions. Administrative Services Effective October 1, 2019, the Company is party to the Services Agreement with OCM. Pursuant to the Services Agreement, OCM provides administrative services to the Company necessary for the operations of the Company, which include providing office facilities, equipment, clerical, bookkeeping and record keeping services at such facilities and such other services as OCM, subject to review by the Company’s Board of Directors, shall from time to time deem to be necessary or useful to perform its obligations under the Services Agreement. OCM may, on behalf of the Company, conduct relations and negotiate agreements with custodians, trustees, depositories, attorneys, underwriters, brokers and dealers, corporate fiduciaries, insurers, banks and such other persons in any such other capacity deemed to be necessary or desirable. OCM makes reports to the Company’s Board of Directors of its performance of obligations under the Services Agreement and furnishes advice and recommendations with respect to such other aspects of the Company’s business and affairs, in each case, as it shall determine to be desirable or as reasonably required by the Company’s Board of Directors. OCM is responsible for the financial and other records that the Company is required to maintain and prepares, prints and disseminates reports to the Company’s unitholders and all other materials filed with the SEC. In addition, OCM assists the Company in overseeing the preparation and filing of the Company’s tax returns, and generally overseeing the payment of the Company’s expenses and the performance of administrative and professional services rendered to the Company by others. On an annual basis the Company will reimburse OCM $750,000 of the costs incurred for providing these administrative services. This reimbursement is payable quarterly, in equal installments, and relates to the Company’s allocable portion of overhead and other expenses (facilities and personnel) incurred by OCM in performing its obligations under the Services Agreement. This amount includes the Company’s allocable portion of (i) the rent of the Company’s principal executive offices (which are located in a building owned by a Brookfield affiliate) at market rates and (ii) the costs of compensation and related expenses of various personnel at Oaktree that perform duties for the Company. The Services Agreement may be terminated by either party without penalty upon 90 days’ written notice to the other. For the year ended December 31, 2020 and 2019, the Company incurred administrative expenses of $0.8 million and $0.2 million, which was included in “Due to affiliates” in the Consolidated Statements of Financial Condition, reflecting the unpaid portion of administrative expenses and other reimbursable expenses payable to OCM. Leases OCM leases certain office space from affiliates of Brookfield. Effective with the Restructuring, OCM’s lease expense and obligations are no longer included in these consolidated financial statements. Rent expense associated with these leases was $4.5 million and $4.7 million for the years ended December 31, 2019 and 2018, respectively. 129 Oaktree Capital Group, LLC Notes to Consolidated Financial Statements — (Continued) December 31, 2020 ($ in thousands, except where noted) Subordinated Credit Facility Oaktree Capital I, along with certain other Oaktree Operating Group members as co-borrowers, are parties to a credit agreement with a subsidiary of Brookfield that provides for a subordinated credit facility maturing on May 19, 2023. The subordinated credit facility has a revolving loan commitment of $250 million and borrowings generally bear interest at a spread to either LIBOR or an alternative base rate. Borrowings on the subordinated credit facility are subordinate to the outstanding debt obligations and borrowings on the primary credit facility of Oaktree Capital I and its co-borrowers as detailed in note 10. Oaktree Capital I is jointly and severally liable, along with its co-obligors for outstanding borrowings on the subordinated credit facility. As set forth in note 10, the Company’s financial statements generally will not reflect debt obligations, interest expense or related liabilities associated with its operating subsidiaries until such time as Oaktree Capital I directly borrows from the subordinated credit facility. No amounts were outstanding on the subordinated credit facility as of December 31, 2020. Investment in Oaktree Opportunities Fund XI On August 3, 2020, the Company subscribed for a limited partner interest in, and made a capital commitment of, $750 million to Oaktree Opportunities Fund XI, L.P., a parallel investment vehicle thereof or a feeder fund in respect of one of the foregoing (such limited partner interest, the “Opps XI Investment” and such fund entities collectively, “Opps XI”). In order to make the Opps XI Investment, the Company’s sole Class A unitholder, or one of its affiliates, will contribute cash as a capital contribution (the “Opps XI Investment Cash”) as and to the extent required to satisfy the Company’s obligations to Opps XI. The Company will use the Opps XI Investment Cash solely to fund the Opps XI Investment and satisfy its obligations in respect of Opps XI and distributions from the Opps XI Investment are intended for the benefit of the Class A unitholder, subject to applicable law. The Company’s preferred unitholders should not rely on distributions received by the Company in respect of the Company’s Opps XI Investment for payment of dividends or redemption of the preferred units. For the year ended December 31, 2020, $37.5 million of the $750 million capital commitment was funded. 19. CAPITAL REQUIREMENTS OF REGULATED ENTITIES One of the Company’s indirect subsidiaries prior to the Restructuring is a registered U.S. broker-dealer that is subject to the minimum net capital requirements of the SEC and the U.S. Financial Industry Regulatory Authority. Additionally, two of the Company’s indirect subsidiaries based in London is subject to the capital requirements of the U.K. Financial Conduct Authority, and another based in Hong Kong is subject to the capital requirements of the Hong Kong Securities and Futures Ordinance. These entities operate in excess of their respective regulatory capital requirements. The regulatory capital requirements referred to above may restrict the Company’s ability to withdraw capital from its entities for purposes such as paying cash distributions or advances to the Company. As of December 31, 2020 and 2019, respectively, there was approximately $166.7 million and $190.7 million of such potentially restricted amounts. Effective with the Restructuring, the U.S. broker- dealer’s restricted amounts, if any, are no longer included in these consolidated financial statements. 20. SEGMENT REPORTING As a global investment manager, the Company provides investment management services through funds, separate accounts and subsidiary services agreements. The Company earns revenues from the management fees and incentive income generated by the funds that it manages or serves as the general partner. Additionally, for acting as a sub-investment manager, or sub-advisor, to certain Oaktree funds, the Company earns sub-advisory fees. Under the subsidiary services agreements, the Company provides certain investment and marketing related services to Oaktree affiliated entities. Management uses a consolidated approach to assess performance and allocate resources. As such, the Company’s business is comprised of one segment, the investment management business. 130 Oaktree Capital Group, LLC Notes to Consolidated Financial Statements — (Continued) December 31, 2020 ($ in thousands, except where noted) 21. SUBSEQUENT EVENTS Class A Unit Distribution A distribution of $1.07 per Class A unit was paid on February 25, 2021 to holders of record at the close of business on February 15, 2021. Preferred Unit Distributions A distribution of $0.414063 per Series A preferred unit will be paid on March 15, 2021 to Series A preferred unitholders of record at the close of business on March 1, 2021. A distribution of $0.409375 per Series B preferred unit will be paid on March 15, 2021 to Series B preferred unitholders of record at the close of business on March 1, 2021. 131 Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure None. Item 9A. Controls and Procedures Evaluation of Disclosure Controls and Procedures We maintain disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) that are designed to ensure that information required to be disclosed by us in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. In designing disclosure controls and procedures, our management necessarily was required to apply its judgment in evaluating the cost-benefit relationship of possible disclosure controls and procedures. The design of any disclosure controls and procedures also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired objectives. Our management, including our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures pursuant to Rule 13a-15 under the Exchange Act as of the end of the period covered by this report. Based on that evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that, as of the end of the period covered by this report, our disclosure controls and procedures (as defined in Rule 13a-15(e) under the Exchange Act) are effective at the reasonable assurance level to accomplish their objectives of ensuring that information we are required to disclose in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. Changes in Internal Control Over Financial Reporting No changes in our internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) occurred during our most recent quarter, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. Management’s Report on Internal Control Over Financial Reporting Our management is responsible for establishing and maintaining adequate internal control over financial reporting. Internal control over financial reporting is a process designed under the supervision of management, including our Chief Executive Officer and Chief Financial Officer, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of our consolidated financial statements for external reporting purposes in accordance with accounting principles generally accepted in the United States of America. Our internal control over financial reporting includes policies and procedures that pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect transactions and dispositions of assets; provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures are being made only in accordance with authorizations of management and the directors; and provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on our financial statements. Our management conducted an assessment of the effectiveness of our internal control over financial reporting as of December 31, 2020 based on criteria established in Internal Control—Integrated Framework 2013 issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on this assessment, management has determined that our internal control over financial reporting as of December 31, 2020 was effective. Item 9B. Other Information None. 132 PART III. Item 10. Directors, Executive Officers and Corporate Governance Executive Officers and Directors The following table sets forth information about our executive officers and directors as of February 24, 2021: Name Howard S. Marks Bruce A. Karsh Jay S. Wintrob John B. Frank Daniel D. Levin Position Age 74 Director and Co-Chairman 65 Director, Co-Chairman and Chief Investment Officer 63 Director and Chief Executive Officer 64 Director and Vice Chairman 42 Chief Financial Officer Sheldon M. Stone 68 Director and Principal Justin B. Beber J. Bruce Flatt Steven J. Gilbert D. Richard Masson Depelsha T. McGruder Marna C. Whittington Todd E. Molz 51 Director 55 Director 73 Director 62 Director 48 Director 73 Director 49 General Counsel, Chief Administrative Officer and Secretary Howard S. Marks is our Co-Chairman and a co-founder and has been a director since May 2007. Since the formation of Oaktree in 1995, Mr. Marks has been responsible for ensuring the firm’s adherence to its core investment philosophy; communicating closely with clients concerning products and strategies; and contributing his experience to big-picture decisions relating to investments and corporate direction. From 1985 until 1995, Mr. Marks led the groups at The TCW Group, Inc. that were responsible for investments in distressed debt, high yield bonds, and convertible securities. He was also Chief Investment Officer for Domestic Fixed Income at TCW. Previously, Mr. Marks was with Citicorp Investment Management for 16 years, where from 1978 to 1985 he was Vice President and senior portfolio manager in charge of convertible and high yield securities. Between 1969 and 1978, he was an equity research analyst and, subsequently, Citicorp’s Director of Research. Mr. Marks holds a B.S.Ec. degree cum laude from the Wharton School of the University of Pennsylvania with a major in finance and an M.B.A. in accounting and marketing from the Booth School of Business of the University of Chicago, where he received the George Hay Brown Prize. He is a CFA charterholder. Mr. Marks is a Trustee and Chairman of the Investment Committee at the Metropolitan Museum of Art. He is a member of the Investment Committee of the Royal Drawing School and is Professor of Practice at King’s Business School (both in London). He serves on the Shanghai International Financial Advisory Council and the Advisory Board of Duke Kunshan University. He is an Emeritus Trustee of the University of Pennsylvania, where from 2000 to 2010 he chaired the Investment Board. With over 40 years of investment experience, Mr. Marks’s extensive expertise in our industry, his perceptive market insights and his importance to our client development add value to our board of directors. ® 133 Bruce A. Karsh is our Co-Chairman and one of the firm’s co-founders and has been a director since May 2007. He also is Chief Investment Officer and serves as portfolio manager for Oaktree’s Distressed Opportunities, Value Opportunities and Multi-Strategy Credit strategies. Prior to co-founding Oaktree, Mr. Karsh was a managing director of TCW Asset Management Company, and the portfolio manager of the Special Credits Funds from 1988 until 1995. Prior to joining TCW, Mr. Karsh worked as Assistant to the Chairman of SunAmerica, Inc. Prior to that, he was an attorney with the law firm of O’Melveny & Myers. Before working at O’Melveny & Myers, Mr. Karsh clerked for the Honorable Anthony M. Kennedy, then of the U.S. Court of Appeals for the Ninth Circuit and retired Associate Justice of the U.S. Supreme Court. Mr. Karsh holds an A.B. degree in economics summa cum laude from Duke University, where he was elected to Phi Beta Kappa. He went on to earn a J.D. from the University of Virginia School of Law, where he served as Notes Editor of the Virginia Law Review and was a member of the Order of the Coif. Mr. Karsh serves on the boards of a number of privately held companies. He is a member of the investment committee of the Broad Foundations. Mr. Karsh is Trustee Emeritus of Duke University, having served as Trustee from 2003 to 2015, and as Chairman of the Board of DUMAC, LLC, the entity that managed Duke’s endowment, from 2005 to 2014. He previously served on the boards of Charter Communications, Inc.; Furniture Brands International; KinderCare Learning Centers, Inc.; and Littelfuse Inc. Mr. Karsh is highly respected as one of the leading portfolio managers in the area of distressed debt investing, one of our flagship investment strategies. Additionally, Mr. Karsh’s extensive leadership and management skills, his expertise in our industry and his current and past service on boards of other public companies add value to our board of directors. Jay S. Wintrob is our Chief Executive Officer and has served as a member of the Board of Directors since September 2011. Prior to joining the firm as Chief Executive Officer, he was President and Chief Executive Officer of AIG Life and Retirement, the U.S.-based life and retirement services segment of American International Group, Inc., from 2009 to 2014. Following AIG’s acquisition of SunAmerica in 1998, Mr. Wintrob was Vice Chairman and Chief Operating Officer of AIG Retirement Services, Inc. from 1998 to 2001, and President and Chief Executive Officer from 2001 to 2009. Mr. Wintrob began his career in financial services in 1987 as Assistant to the Chairman of SunAmerica Inc., and then went on to serve in several other executive positions, including President of SunAmerica Investments, Inc. overseeing the company’s invested asset portfolio. Prior to joining SunAmerica, Mr. Wintrob was with the law firm of O’Melveny & Myers. He received his B.A. and J.D. from the University of California, Berkeley. Mr. Wintrob is a board member of several non-profit organizations, including The Broad Foundations, the Doheny Eye Institute, The Los Angeles Music Center, the Skirball Cultural Center and Cedars-Sinai Medical Center. As our Chief Executive Officer, Mr. Wintrob has broad responsibilities for our business and his service on our board of directors helps ensure that our board is well informed about our operations. Additionally, Mr. Wintrob’s investment and finance expertise and knowledge of our company add value to our board of directors. John B. Frank is our Vice Chairman and works closely with Messrs. Marks, Karsh and Wintrob in managing the firm. He has been a director since May 2007. Mr. Frank joined in 2001 as General Counsel and was named Oaktree’s Managing Principal in early 2006, a position which he held for about nine years. As Managing Principal, Mr. Frank was the firm’s principal executive officer and responsible for all aspects of the firm’s management. Prior to joining us, Mr. Frank was a partner of the Los Angeles law firm of Munger, Tolles & Olson LLP, where he managed a number of notable merger and acquisition transactions. While at that firm, he served as primary outside counsel to public- and privately-held corporations, and as special counsel to various boards of directors and special board committees. Prior to joining Munger Tolles in 1984, Mr. Frank served as a law clerk to the Honorable Frank M. Coffin of the United States Court of Appeals for the First Circuit. Prior to attending law school, Mr. Frank served as a Legislative Assistant to the Honorable Robert F. Drinan, Member of Congress. Mr. Frank holds a B.A. degree with honors in history from Wesleyan University and a J.D. magna cum laude from the University of Michigan Law School, where he was Managing Editor of the Michigan Law Review and a member of the Order of the Coif. He is a member of the State Bar of California and, while in private practice, was listed in Woodward & White’s Best Lawyers in America. Mr. Frank is a member of the Board of Directors of Chevron Corporation and a Trustee of Wesleyan University, The James Irvine Foundation and the XPRIZE Foundation. Mr. Frank’s legal background and knowledge of our company add value to our board of directors. Daniel D. Levin is our Chief Financial Officer. He was previously Head of Corporate Finance and Chief Product Officer and a senior member of the corporate development group. Prior to joining Oaktree in 2011, Mr. Levin was a vice president in the Investment Banking division at Goldman, Sachs & Co., focusing on asset management firms and other financial institutions. His previous experience includes capital raising and mergers and acquisitions roles at Technoserve and Robertson Stephens, Inc. Mr. Levin received an M.B.A. with honors in finance from the Wharton School of the University of Pennsylvania and a B.A. degree with honors in economics and mathematics from Columbia University. 134 Sheldon M. Stone is a Principal and a co-founder and has been a director since May 2007. Mr. Stone is the head of Oaktree’s high yield bond area. In this capacity, he serves as co-portfolio manager of Oaktree’s U.S. High Yield Bond and Global High Yield Bond strategies. Mr. Stone, a co-founding member of Oaktree in 1995, established TCW’s High Yield Bond department with Mr. Marks in 1985 and ran the department for ten years. Prior to joining TCW, Mr. Stone worked with Mr. Marks at Citibank for two years where he performed credit analysis and managed high yield bond portfolios. From 1978 to 1983, Mr. Stone worked at The Prudential Insurance Company where he was a director of corporate finance, managing a fixed income portfolio exceeding $1 billion. Mr. Stone holds an A.B. degree from Bowdoin College and an M.B.A. in accounting and finance from Columbia University, where he serves on the Board of Overseers. In addition, he is a Trustee of the Colonial Williamsburg Foundation, an Adjunct Professor at the University of Southern California and a member of the investment committee for Bowdoin College. With over 35 years of experience in the fixed income markets, Mr. Stone brings a wealth of knowledge to the board of directors. As one of our co-founders, he is also closely familiar with our business. His investment background and insights into the fixed income markets add value to our board of directors. Justin B. Beber is a Managing Partner, Head of Corporate Strategy and Chief Legal Officer for Brookfield Asset Management, a leading global alternative asset manager. In this role, he provides strategic and legal advice across the asset management business, is counsel to and corporate secretary for the Brookfield Board of Directors, and has oversight of legal, compliance and risk activities. Previously, Mr. Beber served as Head of Strategic Initiatives for Brookfield Infrastructure Group with overall responsibility for corporate operations and transaction execution, as well as Chief Investment Officer for its water infrastructure business. Prior to joining Brookfield in 2007, Mr. Beber was a partner with a leading Toronto-based law firm, where his practice focused on corporate finance, mergers and acquisitions and private equity. Mr. Beber earned his combined MBA/LLB from the Schulich School of Business and Osgoode Hall Law School at York University in Canada and holds a Bachelor of Economics from McGill University. Mr. Beber has been an Oaktree director since 2019. Mr. Beber’s legal background and expertise in our industry add value to our board of directors. J. Bruce Flatt is Chief Executive Officer of Brookfield Asset Management, a leading global alternative asset manager, and has been a director since October 2019. Mr. Flatt joined Brookfield in 1990 and became CEO in 2002. Mr. Flatt has served on numerous public company boards over the past three decades. Mr. Flatt’s extensive leadership and management skills, his expertise in our industry and his current and past service on boards of other public companies add value to our board of directors. Steven J. Gilbert has been a director since October 2016. He is the founder and Chairman of the Board of Gilbert Global Equity Partners, L.P., an institutional investment firm established in 1997. In addition, Mr. Gilbert also founded Soros Capital, Commonwealth Capital Partners, and Chemical Venture Partners. He currently serves as Vice Chairman of the Executive Board of MidOcean Equity Partners, LP and Co-Chairman of Birch Grove Capital, and has served on the boards of more than 25 companies over the span of his career. Mr. Gilbert received a J.D. degree from Harvard Law School, an M.B.A. from Harvard Business School, and a B.S. in economics from the Wharton School of the University of Pennsylvania. Mr. Gilbert’s investment and finance expertise add value to our board of directors. D. Richard Masson has been a director since May 2007. Prior to his retirement from Oaktree in 2009, Mr. Masson was a co-founder and Principal of Oaktree, where he served as head of analysis for the Distressed Debt strategy from 1995 to 2001 and as co-head of analysis from 2001 to 2009. Prior thereto, he was Managing Director of TCW and its affiliate, TCW Asset Management Company, and head of the Special Credits Analytical Group. Prior to joining TCW in 1988, Mr. Masson worked for three years at Houlihan, Lokey, Howard and Zukin, Inc., where he was responsible for the valuation and analysis of securities and businesses. Prior to Houlihan, Mr. Masson was a senior accountant with the Comprehensive Professional Services Group at Price Waterhouse in Los Angeles. Mr. Masson holds a B.S. in business administration from the University of California, Berkeley and an M.B.A. in finance from the University of California at Los Angeles. He is a Certified Public Accountant (inactive). Mr. Masson’s investment and finance expertise and his familiarity with our company add value to our board of directors. 135 Depelsha T. McGruder is the chief operating officer and treasurer for the Ford Foundation and has been a director since February 2021. Prior to joining the Ford Foundation in 2020, she served as COO of New York Public Radio, overseeing internal operations and strategic planning for WNYC, WQXR, Gothamist.com, The Greene Space, and New Jersey Public Radio since 2018. Before her tenure at NYPR, Ms. McGruder spent 17 years at Viacom in senior leadership positions at both MTV and BET Networks. She started her career as a broadcast journalist, working as an on-air reporter, anchor, and producer for two commercial television stations in Georgia and subsequently spent time as a strategy consultant at Accenture in the media, telecommunications and high technology practice. Ms. McGruder is the founder and president of Moms of Black Boys United and M.O.B.B. United for Social Change, sister organizations dedicated to positively influencing how black boys and men are perceived and treated by law enforcement and in society. She holds a B.A. from Howard University and an M.B.A. from Harvard Business School. Ms. McGruder’s finance expertise add value to our board of directors. Marna C. Whittington, Ph.D., has been a director since June 2012. Ms. Whittington was the Chief Executive Officer of Allianz Global Investors Capital from 2001 until her retirement in January 2012. From 2002 to 2011, she was Chief Operating Officer of Allianz Global Investors, the parent company of Allianz Global Investors Capital. Prior to that, she was Managing Director and Chief Operating Officer of Morgan Stanley Investment Management. Ms. Whittington started in the investment management industry in 1992, joining Philadelphia- based Miller Anderson & Sherrerd. Previously, she was Executive Vice President and CFO of the University of Pennsylvania, and earlier, Secretary of Finance for the State of Delaware. Ms. Whittington currently serves as a director of Macy’s, Inc. and Phillips 66. She holds an M.S. degree and a Ph.D. from the University of Pittsburgh, both in quantitative methods, and a B.A. degree in mathematics from the University of Delaware. Ms. Whittington’s investment and finance expertise and her familiarity with our company add value to our board of directors. Todd E. Molz is our General Counsel and Chief Administrative Officer. He oversees the Compliance, Internal Audit and Administration functions and all aspects of our legal activities, including fund formation, acquisitions and other special projects. Prior to joining the firm in 2006, Mr. Molz was a Partner of the Los Angeles law firm of Munger, Tolles & Olson LLP, where his practice focused on tax and structuring aspects of complex and novel business transactions. Prior to joining Munger Tolles, Mr. Molz served as a law clerk to the Honorable Alfred T. Goodwin of the United States Court of Appeals for the Ninth Circuit. Mr. Molz received a B.A. degree in political science cum laude from Middlebury College and a J.D. degree with honors from the University of Chicago. While at Chicago, Mr. Molz served on the Law Review, received the John M. Olin Student Fellowship and was a member of the Order of the Coif. Mr. Molz serves on the Board of Directors of the Children’s Hospital of Los Angeles. There are no family relationships among any of our executive officers and directors. 136 Board Structure and Governance Composition of Our Board of Directors Our operating agreement establishes a board of directors responsible for the oversight of our business and operations. Our operating agreement provides that until the earliest to occur of (a) Messrs. Howard Marks and Bruce Karsh, collectively, ceasing to beneficially own at least 42% of the equity in the Oaktree Operating Group they owned as of September 30, 2019, (b) Messrs. Howard Marks and Bruce Karsh both ceasing to be actively and substantially involved in the oversight of the affairs of the Oaktree Operating Group business, (c) the incapacitation of both Messrs. Howard Marks and Bruce Karsh, (d) either Messrs. Howard Marks or Bruce Karsh becoming incapacitated, and the other ceasing to be actively and substantially involved in the oversight of the affairs of the Oaktree Operating Group business for a period of at least 90 consecutive days or an aggregate of 180 calendar days in any 360-day period, except as a result of incapacitation, or (e) September 30, 2026, the board of directors will be comprised of no less than five individuals and, without Brookfield’s consent, no more than 10 individuals, with two selected by OCGH and two selected by Brookfield. The remaining directors will be nominated by OCGH and be subject to joint written appointment by each of OCGH and Brookfield. Upon the occurrence of any events described in clauses (a) through (e) of the preceding sentence, for so long as the holders of OCGH units as of September 30, 2019 and certain related parties and certain permitted transferees (the “Permitted OCGH Holders”) continue to beneficially own at least 15% of the equity in the Oaktree Operating Group beneficially owned by them immediately after the closing of the mergers on September 30, 2019, OCGH will be entitled to appoint a number of directors equal to the greater of (i) a number of directors proportionate to such equity ownership and (ii) two directors. Otherwise, for so long as the Permitted OCGH Holders continue to beneficially own at least 5% (but less than 15%) of the equity of the Oaktree Operating Group beneficially owned by them immediately after the closing of the mergers on September 30, 2019, OCGH will be entitled to appoint one director. Brookfield will appoint the remaining directors to the board of directors. Our board of directors consists of Messrs. Marks, Karsh, Wintrob, Frank, Stone, Masson, Beber, Flatt, Gilbert and Mss. McGruder and Whittington (for a total of 11 directors). Subject to our operating agreement, actions by our board of directors must be taken with the approval of at least a majority of its members. Audit Committee Because our preferred equity, but not our common equity, is listed on the New York Stock Exchange, the corporate governance standards of the New York Stock Exchange do not generally apply to us, other than the requirement to maintain an audit committee that satisfies the requirements of Rule 10A-3 under the Exchange Act, and related certification requirements. The purpose of the audit committee is to assist our board of directors in overseeing and monitoring the quality and integrity of our financial statements, our compliance with legal and regulatory requirements, the performance of our internal audit function and our independent registered public accounting firm’s qualifications, independence and performance. Our audit committee is comprised of Messrs. Gilbert and Masson and Mss. McGruder and Whittington. Our board of directors has determined that Messrs. Gilbert and Masson and Mss. McGruder and Whittington meet the independence standards and financial literacy requirements for service on an audit committee of a board of directors under Rule 10A-3 promulgated under the Exchange Act and the NYSE rules. In addition, our board of directors has determined that each of Messrs. Gilbert and Masson and Mss. McGruder and Whittington is an “audit committee financial expert” within the meaning of Item 407(d)(5) of Regulation S-K and has “accounting or related financial management expertise” under applicable NYSE rules. The audit committee has a charter that is available on our website at www.oaktreecapital.com under the “Unitholders – Investor Relations” section. Code of Ethics We have a Code of Ethics, which applies to our principal executive officer, principal financial officer and principal accounting officer and is available on our website at www.oaktreecapital.com under the “Unitholders – Investor Relations” section. We intend to disclose any amendment to or waiver of the Code of Ethics on behalf of a principal executive officer, principal financial officer or principal accounting officer, either on our website or in a Current Report on Form 8-K filing. Communications to the Board of Directors The non-management members of our board of directors meet quarterly. The non-management directors have selected Mr. Gilbert, one of our non-management directors, to lead these meetings for 2021. All interested parties, including any employee or unitholder, may send communications to the non-management members of our board of directors by writing to: Oaktree Capital Group, LLC, Attn: General Counsel, 333 South Grand Avenue, 28th Floor, Los Angeles, CA 90071. 137 Section 16(a) Beneficial Ownership Reporting Compliance Section 16(a) of the Exchange Act requires our executive officers and directors and persons who beneficially own more than ten percent of a registered class of our equity securities to file initial reports of ownership and reports of changes in ownership with the SEC and furnish us with copies of all Section 16(a) forms they file. To our knowledge, based solely on our review of the copies of such reports furnished to us or written representations from such persons that they were not required to file a Form 5 to report previously unreported ownership or changes in ownership, we believe that, with respect to the year ended December 31, 2020, such persons complied with all such filing requirements. 138 Item 11. Executive Compensation Compensation Discussion and Analysis Overview of Compensation Philosophy and Program Except with respect to carried interest and profit sharing arrangements that certain of our Named Executive Officers (“NEOs”) receive from Oaktree Capital I, OCM Cayman or their respective consolidated subsidiaries, our NEOs do not receive compensation from us for their services. Rather, we pay a service fee to OCM pursuant to the Services Agreement, as described under “Certain Relationships and Related Transactions, and Director Independence—OCG Services Agreement with OCM,” and OCM compensates its officers and other employees that perform duties for us. Their compensation is set by OCM. Fiscal year 2020 is the first complete fiscal year in which we paid the service fee to OCM and our NEOs did not receive compensation from us for their services (other than carried interest and profit sharing arrangements that certain of our NEOs receive from Oaktree Capital I, OCM Cayman or their respective consolidated subsidiaries). Accordingly, the following discussion and analysis cannot be compared directly to the compensation discussion and analysis included in the Company’s annual reports for prior fiscal years. Our fundamental philosophy in compensating our key personnel under our carried interest and profit sharing arrangements has always been to align their interests with the interests of our clients and unitholders and to motivate and reward long-term performance. The alignment of interests is a defining characteristic of our business and one that we believe best optimizes long-term sustainable value. The following individuals were our NEOs for fiscal year 2020: (a) Bruce A. Karsh, our Co-Chairman and Chief Investment Officer; (b) Jay S. Wintrob, our Chief Executive Officer; (c) Daniel D. Levin, our Chief Financial Officer; and (d) John B. Frank, our Vice Chairman. We only have four NEOs for fiscal year 2020 because none of our other executive officers receive compensation from us or our subsidiaries. Profit Sharing Arrangements We paid Mr. Wintrob and Mr. Frank a certain percentage of our profits comprised of fee-related earnings, net investment income and net incentive income, with certain adjustments, attributable to Oaktree Capital I, OCM Cayman and their respective consolidated subsidiaries. More details regarding these arrangements, including certain changes made to Mr. Frank’s arrangement in 2020, are described below. Carried Interest or Incentive Income Mr. Karsh and Mr. Frank have a right to receive a portion of the incentive income generated by our funds through their participation interests in the carry pools generated by the general partners of these funds. The carry pools (and our NEOs’ participation therein) are referred to as our “Carry Plans.” Under the terms of the closed-end funds, we (and officers and employees who share in carried interest) are generally not entitled to carried interest distributions (other than tax distributions) until the investors in the funds have received a return of all contributed capital plus a preferred return, which is typically 8%. Because the aggregate amount of carried interest payable through the Carry Plans is directly tied to the realized performance of the funds, we believe this fosters a strong alignment of interests among the investors in those funds and these NEOs, and therefore benefits both those investors and our unitholders. For purposes of our financial statements, we treat the income allocated to all of our personnel who have participation interests in the incentive income generated by our funds as compensation, and the allocations of incentive income earned by our NEOs in respect of 2020 are accordingly set forth under “All Other Compensation” in the Summary Compensation Table below, even though they may not have received such amounts in cash. The Carry Plans largely consist of the participation interests in certain of our investment funds paid to the general partners of those funds, which in turn have granted a portion of such interests to our investment professionals. Certain investment funds and separate accounts that we manage pay incentive fees directly to certain members of the Oaktree Operating Group. Our NEOs with profit sharing arrangements will also receive a portion of incentive fees through those profit sharing arrangements. Compensation of the Individual NEOs A. Bruce A. Karsh All of the compensation earned by Mr. Karsh in fiscal year 2020 consisted of carried interest we received from certain of our Distressed Debt funds, our largest closed-end strategy. Mr. Karsh received such carried interest as the portfolio manager of these funds. 139 B. Jay S. Wintrob Pursuant to his employment agreement, Mr. Wintrob is entitled to profit sharing payments equal to a fixed percentage of Oaktree’s operating profit and income during the employment term. The fixed percentage is 1.5% in each of 2015-2022, up to the level of profit and income in 2014 and 1.75% of profit and income that exceeds the 2014 level, if any. Beginning in 2017, Mr. Wintrob’s profit sharing payments are calculated by including a portion of the net incentive income on pre-employment funds. For 2020 and later, the payments will be calculated taking into account 50% of the net incentive income earned by Oaktree that is derived from such funds. In all cases, Mr. Wintrob’s profit sharing payments will have a floor of $5,000,000 per year, pro-rated for partial years. Payments will be made, in arrears, in a combination of cash and awards under a long-term incentive plan administered by OCM, but at least the first $3,000,000 in each year will be paid in cash. The portion of Mr. Wintrob’s annual profit sharing attributable to 2020 that will be paid in the form of an award under a long-term incentive plan is not reflected in the Summary Compensation table below because that plan is a liability of OCM. When setting the level of Mr. Wintrob’s profit participation, including the annual floor, Howard Marks, our Co-Chairman, and Mr. Karsh took into account the anticipated performance of the Company, Mr. Wintrob’s role and responsibilities, the level of compensation of certain other NEOs and their subjective understanding of the market for chief executive officer compensation. Treatment of Profit Sharing Payments on Certain Terminations of Employment and Other Significant Events Other than Mr. Wintrob, each of our NEOs is either a founder of our company, has been promoted from within or has been employed by us for over a decade and has generally not received special severance or change in control benefits with their compensation arrangements. By contrast, Mr. Wintrob was hired from outside of Oaktree in 2014. His employment agreement is the product of an arm’s length negotiation we undertook with Mr. Wintrob before he joined the Company. In order to encourage Mr. Wintrob to join our Company, it was necessary to provide him with the security afforded by the continuation of his profit sharing payment levels following certain terminations from employment. Providing these profit sharing payment continuation protections was critical to reaching an agreement with Mr. Wintrob. We think this profit sharing payment continuation is appropriate and consistent with what might be included in a new chief executive officer’s compensation arrangements at a similarly situated company. C. Daniel D. Levin Mr. Levin does not receive compensation from us for his services. Rather, we pay a service fee to OCM pursuant to the Services Agreement, as described under “Certain Relationships and Related Transactions, and Director Independence—OCG Services Agreement with OCM,” and OCM compensates Mr. Levin, including for the duties that he performs for us. Mr. Levin’s compensation is set by OCM. D. John B. Frank Mr. Frank received a share of the carried interest from our largest closed-end strategy, Distressed Debt, both in recognition of his historical contributions to the management of some of the strategy’s investments and in lieu of other compensation, such as a greater profit sharing percentage or additional OCGH units. For 2020 Mr. Frank also received (a) 1.3% of the net incentive income of the Oaktree Operating Group from certain funds that existed as of December 31, 2014 (b) 1.0% of the net incentive income of Oaktree Operating Group from certain funds that started during 2015 or had substantial or final closings during 2015, and (c) 0.5% of the net incentive income of the Oaktree Operating Group from certain funds that started after December 31, 2015 or whose final or more substantial closing occurred after December 31, 2015. Additionally, for 2020 Mr. Frank was entitled to receive profit sharing payments that reflect 0.5% of the net investment income and fee-related earnings of the Oaktree Operating Group subject to certain adjustments. Mr. Frank’s profit sharing of net incentive income, net investment income and fee-related earnings was subject to a cap of $1.75 million in 2020. Mr. Frank’s remuneration for 2020 was determined based on his responsibilities as Vice Chairman. No Perquisites We do not provide our executive officers with perquisites. 140 Summary Compensation Table for 2020 The following table provides summary information concerning the compensation of Jay S. Wintrob, our principal executive officer, Daniel D. Levin, our chief financial officer, and our three other most highly compensated executive officers as of December 31, 2020, for services rendered to us during 2020. The figures in this table reflect carried interest and profit sharing arrangements that certain of our NEOs receive from Oaktree Capital I, OCM Cayman or their respective consolidated subsidiaries. Except with respect to carried interest and profit sharing arrangements that certain of our NEOs receive from Oaktree Capital I, OCM Cayman or their respective consolidated subsidiaries, our executive officers do not receive compensation or perquisites from us for their services. Rather, we pay a service fee to OCM pursuant to the Services Agreement, as described under “Certain Relationships and Related Transactions, and Director Independence—OCG Services Agreement with OCM,” and OCM compensates its officers and other employees that perform duties for us. Their compensation is set by OCM. Name and Principal Position Bruce A. Karsh, Co-Chairman and Chief Investment Officer Jay S. Wintrob, Chief Executive Officer Daniel D. Levin, Chief Financial Officer John B. Frank, Vice Chairman Year Salary ($) Bonus ($) Stock Awards ($) All Other Compensation ($) (1) Total ($) 2020 2019 2018 2020 2019 2018 2020 2019 2018 2020 2019 2018 $ $ $ $ $ $ $ $ $ $ $ $ — — — — — — — 375,000 500,000 — — — $ $ $ $ $ $ $ $ $ $ $ $ — — — — — — — 1,104,375 1,472,500 — — — $ $ $ $ $ $ $ $ $ $ $ $ — — — — 2,973,118 1,134,392 — 2,393,609 1,662,646 — — — $ $ $ $ $ $ $ $ $ $ $ $ 3,606,745 12,417,737 12,212,938 303,625 4,114,485 5,514,142 — — — 1,474,758 6,872,568 7,671,314 $ $ $ $ $ $ $ $ $ $ $ $ 3,606,745 12,417,737 12,212,938 303,625 7,087,603 6,648,534 — 3,872,984 3,635,146 1,474,758 6,872,568 7,671,314 (1) Please see the “All Other Compensation Supplemental Table” below. 141 All Other Compensation Supplemental Table The following table provides additional information regarding each component of the All Other Compensation column in the Summary Compensation Table: Name Bruce A. Karsh Jay S. Wintrob Daniel D. Levin John B. Frank Year 2020 2019 2018 2020 2019 2018 2020 2019 2018 2020 2019 2018 Payments in Respect of Carried Interest (1) $ $ $ $ $ $ $ $ $ $ $ $ 3,606,745 11,239,082 11,291,186 — — — — — — 1,171,444 4,355,588 5,154,630 (2) Profits Participation $ $ $ $ $ $ $ $ $ $ $ $ — — — 303,625 4,089,204 5,489,434 — — — 303,314 2,500,000 2,500,000 Airplane Use Perquisites Total $ $ $ $ $ $ $ $ $ $ $ $ — 1,142,639 835,537 — — — — — — — — — $ $ $ $ $ $ $ $ $ $ $ $ — 36,016 86,215 — 25,281 24,708 — — — — 16,980 16,684 $ $ $ $ $ $ $ $ $ $ $ $ 3,606,745 12,417,737 12,212,938 303,625 4,114,485 5,514,142 — — — 1,474,758 6,872,568 7,671,314 (1) Amounts included for 2020 represent amounts earned on an accrual basis in respect of participation interests in incentive income generated by our funds with respect to the year ended December 31, 2020. To the extent that timing differences may exist between when amounts are earned on an accrual basis and paid in cash, these amounts do not reflect actual cash carried interest distributions to the NEOs during such periods. Timing differences typically arise when cash is distributed in the quarter immediately following the one in which the related income was earned. (2) Amounts included for 2020 represent the amounts earned on an accrual basis in a given year in respect of the NEO’s annual profits participation interest. Non-competition, Non-solicitation and Confidentiality Restrictions Pursuant to the terms of OCGH’s partnership agreement or applicable equity grant agreements, our executive officers (including our NEOs) are subject to customary provisions regarding non-solicitation of our clients and employees, confidentiality, assignment of intellectual property and non-disparagement obligations. In addition, during the term of employment and for a period up to one year immediately following the resignation or termination of employment (other than a termination by us without cause), our executive officers may not, directly or indirectly: • • • engage in any business activity in which we operate, including any Competitive Business (as defined below); render any services to any Competitive Business; or acquire a financial interest in or become actively involved with any Competitive Business (other than as a passive investor holding a minimal percentage of the stock of a public company). Under the terms of OCGH’s partnership agreement or applicable equity grant agreements, and, in the case of Mr. Wintrob, also under the terms of his employment agreement, during the term of employment and for the two-year period immediately following the resignation or termination of employment for any reason, our executive officers may not solicit our customers or clients for a Competitive Business, induce any employee to leave our employ or hire or otherwise enter into any business affiliation with any person who was our employee during the twelve-month period preceding such executive officer’s termination of employment. “Competitive Business” means any business which is competitive with the business of any member of the Oaktree Operating Group or any of its affiliates (including raising, organizing, managing or advising any fund having an investment strategy in any way competitive with any of the funds managed by any member of the Oaktree Operating Group or any of its affiliates) anywhere in the United States or any other country where a member of the Oaktree Operating Group or any of its affiliates conducts business. 142 Incentive Income Participation in incentive income generated by our funds is typically subject to a five-year vesting schedule, under which a participating NEO’s interest will vest in increments of 22% on each of the first through fourth anniversaries of the closing date of the applicable fund, with the remaining 12% of the interest vesting on or after the fifth anniversary of such closing date, subject to certain limitations as set forth in the applicable governing documents. Under the terms of the applicable governing documents, NEOs are subject to various covenants addressing confidentiality, intellectual property, non-solicitation and non-disparagement. Pursuant to the applicable fund agreements, a participating NEO’s incentive income interest is subject to clawback in the event that the general partner of the applicable fund is required to return any distributions (other than tax distributions) received in respect of such NEO’s interest in the applicable fund. Grants of Plan-Based Awards in 2020 No grants of equity-based awards were made to our NEOs during the 2020 fiscal year. No grants of long-term incentive awards were made by us to our NEOs during the 2020 fiscal year. Potential Payments Upon Termination of Employment or Change in Control at 2021 Year End We do not have any formal cash-based severance or change of control plans or agreements in place for any of our NEOs. In all cases, neither Mr. Karsh nor Mr. Frank is entitled to any additional vesting of their participation rights in the incentive income generated by our funds as a result of a change in control of us or any of our affiliates. The impact of a termination of employment on the incentive income participation rights held by each of Messrs. Karsh and Frank is described below. Incentive Income (Messrs. Karsh and Frank) Generally, upon the earliest to occur of a participating NEO’s death, “disability” (as defined in the applicable governing documents), termination without “cause” (as defined in the applicable governing documents) or resignation (each, a “termination event”), such NEO’s incentive income interest will be converted into the right to receive a residual percentage (which cannot exceed the NEO’s interest prior to such termination event) of the distributions the NEO otherwise would have received absent such termination event, as described below. In the case of a termination event other than resignation, the residual percentage will be the participating NEO’s interest prior to such event. If a participating NEO resigns, the residual percentage generally will equal the product of: • • the participating NEO’s interest prior to such resignation; and the participating NEO’s vested percentage as of the resignation date (as discussed above under “—Carried Interest or Incentive Income”). If a participating NEO resigns and engages in competitive activity within two years following his resignation, the NEO’s residual percentage will be reduced further (by as much as 50%). In the event that a participating NEO is terminated for cause, he immediately forfeits all rights to further distributions of incentive income. The following table sets forth the estimated value of the incentive income distributions that would be made in respect of the participating NEO’s unvested incentive income interests under the Carry Plans attributable to OCG, assuming those interests became fully vested on December 31, 2020 upon a termination of employment without cause or for good reason (as applicable) or termination due to death, disability or resignation. No amount is payable or accelerated in respect of an interest in the incentive income upon an individual’s termination, regardless of the reason for the termination. Rather, an individual who is terminated will receive amounts payable as and when we receive the associated incentive income (which is expected to occur over a number of years) in accordance with the same payment schedule as would have been in effect in the absence of termination. The values disclosed below in respect of the rights of participating NEOs to continue to participate in distributions of incentive income, whether at the same level as before termination or at a reduced level as described above under “—Potential Payments Upon Termination of Employment or Change in Control at 2021 Year End,” have been determined assuming that each of the funds in respect of which the participating NEOs would have a right to incentive income had been liquidated on December 31, 2020 and all of the funds’ assets distributed in 143 accordance with their respective distribution provisions at a value equal to their book value as of December 31, 2020. We have calculated the amounts set forth below using these assumptions because distributions made on a liquidation basis would yield the maximum amounts potentially payable to each of the participating NEOs, had a termination of employment actually occurred on December 31, 2020. We note, however, that the values set forth below were computed based on assumptions that may not be accurate or applicable to a given circumstance of termination. The actual amounts to be paid upon a particular termination of employment cannot be directly determined since such payments would be based on several factors, including when termination of employment occurs, the circumstances of termination, the time period for fund liquidation, the investment performance of the fund and the value at which such liquidations actually occur, when Oaktree determines to make distributions from such funds, when income is realized from such funds and the actual amounts so realized. Estimated Distributions in Respect of Acceleration of Unvested Incentive Income Interests Name Bruce A. Karsh John B. Frank Liquidation Value of Interests Subject to Vesting Acceleration $ $ 2,166,431 791,283 Impact of Termination Without Cause or for Good Reason on Profit Sharing Payments (Mr. Wintrob) If Mr. Wintrob’s employment is terminated by OCM without cause or by Mr. Wintrob for good reason (as defined in Mr. Wintrob’s employment agreement), Mr. Wintrob will be entitled to, described above under “—Treatment of Profit Sharing Payments on Certain Terminations of Employment and Other Significant Events”,: (i) the profit sharing payments, through the fiscal quarter of termination, a portion of which are attributable to equity interests in Oaktree Capital I, OCM Cayman or their respective consolidated subsidiaries and (ii) immediate vesting of all unvested Converted OCGH Units delivered in respect of prior profit sharing payments. Any additional payments to which Mr. Wintrob is entitled in connection with such termination will be made by OCM and not by us. Under his employment agreement, • • “cause” includes (i) willful and continued failure to fulfill responsibilities under the employment agreement, (ii) gross negligence or willful misconduct detrimental to Oaktree, (iii) material breach of the employment agreement or any other agreement with Oaktree, (iv) material violation of a material regulation or regulatory rule, (v) conviction of, or entry of a guilty plea or of no contest to, certain felonies, (vi) court or regulatory order removing Mr. Wintrob as an officer (or equivalent person) of Oaktree or prohibiting him from participating in the conduct of any Oaktree affairs, (vii) fraud, theft misappropriation or dishonesty relating to Oaktree, or (viii) material breach of Oaktree policies; and “good reason” includes (i) a material diminution or adverse change in duties, authority, responsibilities, positions or reporting lines of authority under the employment agreement, (ii) relocation of Mr. Wintrob’s principal job location or office by more than 35 miles, and (iii) any material breach by Oaktree of the employment agreement. As a condition to receiving these entitlements, Mr. Wintrob will be required to sign a release of claims against OCM and related persons, including us. CEO Median Employee Pay Ratio As required by Section 953(b) of the Dodd-Frank Wall Street Reform and Consumer Protection Act, and Item 402(u) of Regulation S- K, we are providing the following information about the ratio of the annual total compensation of Mr. Wintrob, our Chief Executive Officer, to the median of the annual total compensation of our employees other than Mr. Wintrob. We selected December 31, 2020 as the date on which we would identify the median employee. To identify the median employee, we used the sum of 2020 base salary (annualized for full-time employees hired during 2020 and pro-rated for part-time and temporary employees), 2020 cash bonus, overtime pay accrued in 2020 and long-term incentive grants earned in respect of 2020 compensation. The 2020 annual total compensation of our Chief Executive Officer is the amount reflected in the “Total” column of our Summary Compensation Table for 2020. Mr. Wintrob had 2020 annual total compensation from us of $303,625. Our median employee’s annual total compensation for 2020 was $258,460. As a result, we estimate that Mr. Wintrob’s 2020 annual total compensation from us was approximately 1.2 times that of our median employee. 144 This pay ratio is a reasonable estimate calculated in a manner consistent with SEC rules based on our payroll and employment records and the methodology described above. The SEC rules for identifying the median compensated employee and calculating the pay ratio based on that employee’s annual total compensation allow companies to adopt a variety of methodologies, to apply certain exclusions and to make reasonable estimates and assumptions that reflect their compensation practices. As such, the pay ratio reported by other companies may not be comparable to the pay ratio reported above, as other companies may have different employment and compensation practices and may utilize different methodologies, exclusions, estimates and assumptions in calculating their own pay ratios. Director Compensation Table for 2020 The following table sets forth the cash and long-term incentive compensation paid to our outside directors listed below for the year ended December 31, 2020: Name Steven J. Gilbert D. Richard Masson Marna C. Whittington Fees Earned or Paid in Cash (1) $ $ $ 200,000 100,000 115,000 (2) Other Compensation $ $ $ 100,000 100,000 100,000 Total 300,000 200,000 215,000 $ $ $ (1) Annual cash retainer and fees for serving on our board of directors and for serving on the Audit Committee of our Board. Mr. Gilbert also receives an annual cash retainer of $100,000 for serving as our lead outside director. Depelsha T. McGruder is not listed in this table because she became our director in February 2021. Following the Restructuring, the members of our board of directors also serve on the board of Atlas OCM Holdings, LLC for no additional compensation. (2) Initial value of long-term incentive awards granted in 2020 under the Oaktree Capital Group, LLC Long-Term Incentive Plan, subject to four-year vesting. Please see note 15 to our consolidated financial statements included elsewhere in this annual report for additional information about the long- term incentive plan. During 2020, we compensated our outside directors named above through an annual cash retainer of $75,000 and the grant of long- term incentive awards. Directors who were also senior executives during any portion of 2020, specifically Messrs. Marks, Karsh, Stone, Wintrob and Frank, do not receive any additional compensation for serving on our board of directors. Members of our audit committee received an additional annual retainer of $25,000, and the chair of the audit committee received an additional annual retainer of $15,000. The lead outside director received an additional annual retainer of $100,000. All members of the board of directors are reimbursed for their reasonable out-of-pocket expenses incurred in attending board meetings. The long-term incentive awards granted in 2020 for Messrs. Gilbert and Masson and Ms. Whittington under the Oaktree Capital Group, LLC Long-Term Incentive Plan had an initial value equal to $100,000. Compensation Committee Interlocks and Insider Participation As described under “Directors, Executive Officers and Corporate Governance—Board Structure and Governance—Controlled Company Exemption,” we are a “controlled company” within the meaning of the NYSE corporate governance standards and do not have a compensation committee. For a description of certain transactions involving us and our directors and executive officers, please see “Certain Relationships and Related Transactions, and Director Independence.” Compensation Committee Report As described above, our board of directors does not have a compensation committee. The executive committee of the board of directors identified below has reviewed and discussed with management the foregoing Compensation Discussion and Analysis and, based on such review and discussion, has determined that the Compensation Discussion and Analysis should be included in this annual report. Howard S. Marks Bruce A. Karsh Jay S. Wintrob John B. Frank 145 Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters The following table sets forth information regarding the current beneficial ownership of our Class A units, Class B units, Series A preferred units, Series B preferred units and the OCGH units by: • each person known to us to beneficially own more than 5% of any class of the outstanding voting securities of Oaktree Capital Group, LLC; • each of our directors; • each of our named executive officers; and • all directors and executive officers as a group. In the following table, the applicable percentage ownership with respect to the Class A units and the Class B units beneficially owned represents the applicable unitholder’s holdings of Class A units and Class B units, respectively, as a percentage of 98,677,040 Class A units outstanding and 61,374,450 Class B units outstanding, respectively, as of February 24, 2021. The applicable percentage ownership with respect to the OCGH units beneficially owned represents the applicable unitholder’s holdings of OCGH units as a percentage of the 160,051,490 Oaktree Operating Group units outstanding as of February 24, 2021. The applicable unitholder’s aggregate holdings of Class A units and OCGH units represents such unitholder’s aggregate economic interest in the Oaktree Operating Group. Beneficial ownership is determined in accordance with the rules of the SEC. Under these rules, more than one person may be deemed a beneficial owner of the same securities, and a person may be deemed a beneficial owner of securities as to which he has no economic interest. To our knowledge, except as otherwise set forth in the notes to the following table, each person named in the table has sole voting and investment power with respect to all of the interests shown as beneficially owned by such person, subject to applicable community property laws. Unless otherwise specified, the address of each person named in the table is c/o Oaktree Capital Group, LLC, 333 South Grand Avenue, 28th Floor, Los Angeles, CA 90071. 146 Named Executive Officers and Directors Howard S. Marks Bruce A. Karsh Jay S. Wintrob John B. Frank Daniel D. Levin Sheldon M. Stone Todd E. Molz Justin B. Beber Bruce Flatt Steven J. Gilbert D. Richard Masson Depelsha T. McGruder Marna C. Whittington All executive officers and directors as a group (13 persons) 5% Unitholders Oaktree Capital Group Holdings, L.P. Brookfield U.S. Holdings, Inc. Class A Units Beneficially Owned Class B Units Beneficially Owned OCGH Units Beneficially Owned (1) Series A Preferred Units Beneficially Owned Series B Preferred Units Beneficially Owned Number Percent Number Percent Number Percent Number Percent Number Percent — — — — — — — — — — — — — — — — — — — — — — — — — — — (2) — (2) — — — — — — — — — — — — — — — — — — — — — — — — 12,047,050 12,042,778 332,712 1,465,604 121,629 6,493,406 238,210 — — 5,347 2,151,744 7.5 % 7.5 * * * 4.1 * — — * 1.3 — — 3,508 * — — — — — — — — — 4,211 — — — — — — — — — — — — — — — * — — — — — — — — — 25,000 — — — — — — — — — — — — — — — * — — — — 34,901,988 21.8 4,211 * 25,000 * — — 61,374,450 100 % 98,677,040 100 % — — — — — — — — — — — — — — * Represents less than 1%. (1) Subject to certain restrictions, each OCGH unitholder has the right to exchange his or her vested units for cash, Brookfield Class A shares, notes issued by a Brookfield subsidiary and/or equity interests in a subsidiary of OCGH that will entitle such unitholder to the proceeds from a note. The form of the consideration in an exchange is generally in the discretion of Brookfield, subject to certain limitations. (2) Excludes 61,374,450 Class B units held by OCGH. The general partner of OCGH is Oaktree Capital Group Holdings GP, LLC. In their capacities as members of the executive committee of Oaktree Capital Group Holdings GP, LLC holding more than 50% of the aggregate number of OCGH units held by all of the members of the executive committee as a group, Mr. Marks and Mr. Karsh may be deemed to be beneficial owners of the securities held by OCGH. Each of Mr. Marks and Mr. Karsh disclaims beneficial ownership of such securities. 147 Item 13. Certain Relationships and Related Transactions, and Director Independence Exchange Agreement The Third Amended and Restated Exchange Agreement allows, among other things, limited partners of OCGH to exchange their OCGH units that have vested for cash, Brookfield Class A Shares, notes issued by a Brookfield subsidiary or equity interests in a subsidiary of OCGH that will entitle such limited partners to the proceeds from a note. Either of such notes will have a three-year maturity and will accrue interest at the then-current 5-year treasury note rate plus 3%. Only Converted Class A Units (each “Converted OCGH Unit” being an unvested Class A Unit held by current, or in certain cases former, employees, officers and directors of Oaktree and its subsidiaries at the closing of the Mergers that was converted into one unvested OCGH Unit), OCGH Units issued and outstanding at the time of the closing of the Mergers, OCGH Units issued after the closing of the Mergers pursuant to agreements in effect on March 13, 2019, OCGH Units issuable upon vesting of certain phantom equity awards ("Phantom Units") and other OCGH Units consented-to by Brookfield will, when vested, be eligible to participate in an exchange. The form of the consideration in an exchange is generally in the discretion of Brookfield, subject to certain limitations. In general, OCGH limited partners will be entitled to provide an election notice to participate in an exchange with respect to eligible vested OCGH Units during the first 60 calendar days of each year beginning January 1, 2022. However, holders of Converted OCGH Units and Phantom Units are eligible to provide an election notice with respect to their vested units in 2021, subject to certain limitations. Each exchange will be consummated within the first 155 days of such calendar year, subject to extension in certain circumstances. Restructuring Agreement At the closing of the Merger, Oaktree and certain other entities entered into a Restructuring Agreement pursuant to which, effective as of October 1, 2019, Oaktree's direct and indirect ownership of general partner and limited partner interests in certain Oaktree Operating Group entities were transferred (the "Restructuring") to newly-formed, indirect subsidiaries of Brookfield. As a result, as of October 1, 2019, while Oaktree's consolidated financial statements will continue to reflect its indirect economic interest in Oaktree Capital I and OCM Cayman, such financial statements will no longer include economic interests in Oaktree Capital II, Oaktree Investment Holdings, OCM and Oaktree AIF. OCG Services Agreement with OCM OCG has entered into a Services Agreement with OCM, effective October 1, 2019 (the “Services Agreement”). OCM was an operating subsidiary of OCG prior to the Restructuring and provides certain services relating to the management and operation of our business. Under the Services Agreement, we are required to pay a fee of $750,000 to OCM annually for the services provided, payable in quarterly installments. The Services Agreement has an indefinite term, but may be terminated by us or OCM upon at least 90 days’ written notice to the other party. We incurred service fees of $750,000 for fiscal year 2020 under the Services Agreement. OCG Subsidiary Services Agreements with OCM Certain of our indirect subsidiaries outside of the United States have entered into agreements with OCM whereby such subsidiaries provide services to OCM in connection with OCM’s management and operation of Oaktree funds in OCM’s capacity as the investment manager of such funds. The agreements that we believe are material to our business and financial results are described below. Oaktree Capital Management (UK) LLP (“Oaktree UK LLP”) has entered into an Amended and Restated Services Agreement (the “UK LLP Services Agreement”) with OCM. Under the UK LLP Services Agreement, OCM has appointed Oaktree UK LLP as a sub- investment manager or sub-advisor to certain Oaktree funds. In such capacity, Oaktree UK LLP provides certain investment and marketing related services and trading and execution services on behalf of OCM for a service fee paid by OCM in an amount that is determined between the two parties from time to time. In addition, OCM provides certain trading and execution services and internal audit services to Oaktree UK LLP for a service fee paid by Oaktree UK LLP in an amount that is determined between the two parties from time to time. The UK LLP Services Agreement may be terminated, either in respect of an Oaktree fund or in its entirety, by either OCM or Oaktree UK LLP for any reason upon 30 days’ written notice to the other. For fiscal year 2020, OCM incurred Oaktree UK LLP $68.8 million as service fees under the UK LLP Services Agreement. Oaktree Capital Management (International) Limited (“OCM International”) has entered into a Services Agreement (the “OCMI Services Agreement”) with OCM. Under the OCMI Services Agreement, OCM has 148 appointed OCM International as a sub-investment manager and sub-advisor to certain Oaktree funds OCM manages. In such capacity, OCM International provides certain investment and marketing related services on behalf of OCM for a service fee paid by OCM in an amount that is determined between the two parties from time to time. The OCMI Services Agreement may be terminated, either in respect of an Oaktree fund or in its entirety, by either OCM or OCM International for any reason upon 30 days’ written notice to the other. For fiscal year 2020, OCM incurred OCM International $30.6 million as service fees under the OCMI Services Agreement. Oaktree Capital (Hong Kong) Limited (“Oaktree HK”) has entered into a Third Amended and Restated Services Agreement (the “HK Services Agreement”) with OCM. Under the HK Services Agreement, OCM has engaged Oaktree HK to provide certain investment and marketing related services to OCM as the investment manager of certain Oaktree funds for a service fee paid by OCM in an amount that is determined between the two parties from time to time. The HK Services Agreement may be terminated by either OCM or Oaktree HK for any reason upon 30 days’ written notice to the other. During fiscal year 2020, OCM incurred Oaktree HK $26.2 million as service fees under the HK Services Agreement. Oaktree Operating Group Partnership Agreements The Oaktree business is conducted through the Oaktree Operating Group and its subsidiaries. Pursuant to the partnership agreements of Oaktree Capital I and OCM Cayman, which are the two Oaktree Operating Group entities indirectly controlled by us, the Intermediate Holding Companies that are the general partners of those partnerships (or entities controlled by the Intermediate Holding Companies) have the right to determine when distributions will be made to the holders of Oaktree Operating Group units of those two entities and the amounts of any such distributions. Each of the Oaktree Operating Group partnerships has an identical number of common units outstanding, and we use the term “Oaktree Operating Group unit” to refer, collectively, to a unit in each of the Oaktree Operating Group partnerships. As of February 24, 2021, there were 160,051,490 Oaktree Operating Group units outstanding. The holders of Oaktree Operating Group units, including Oaktree Capital I, OCM Cayman and their respective Intermediate Holding Companies, will incur U.S. federal, state and local income taxes on their proportionate share of any net taxable income of the Oaktree Operating Group. Net profits and net losses of Oaktree Operating Group units generally are allocated to the holders of such units (including the Intermediate Holding Companies) pro rata in accordance with the percentages of their respective interests. The partnership agreement of each Oaktree Operating Group partnership provides for cash distributions, which we refer to as “tax distributions,” to the partners of such partnership if we determine that the allocation of the partnership’s income will give rise to taxable income for its partners. Generally, these tax distributions are computed based on our estimate of the net taxable income of the relevant entity allocable to a partner multiplied by an assumed tax rate equal to the highest effective marginal combined U.S. federal, state and local income tax rate prescribed for an individual or corporate resident in Los Angeles, California or New York, New York (taking into account the nondeductibility of certain expenses and the character of our income). Tax distributions are made only to the extent that all distributions from the Oaktree Operating Group for the relevant year were insufficient to cover such tax liabilities. The partnership agreements of the Oaktree Operating Group partnerships also provide that substantially all of our expenses will be borne by the Oaktree Operating Group. In connection with the Merger and Restructuring, the partnership agreements of the Oaktree Operating Group entities were amended in order to (i) align the governance provisions with the provisions of our operating agreement and the operating agreement of Atlas OCM Holdings, LLC, (ii) provide for cash distributions to be made in a manner consistent with the payment of obligations under any notes that may be issued pursuant to the exchange mechanism in the Exchange Agreement, (iii) provide for non-pro rata distributions to discharge expenses relating to indemnification of directors, officers and other indemnitees under our operating agreement and the operating agreement of Atlas OCM Holdings, LLC, and (iv) provide for the payment of certain expenses of the Oaktree Operating Group. The amendments also aligned the partnership agreements of the Oaktree Operating Group entities with the cash distribution policy adopted at the closing of the Merger, which generally provides for the distribution by entities within the Oaktree Operating Group to their equity holders of at least 85% of the cash available for distribution (taking into account the special distributions described in this paragraph). In connection with the issuance by the Company of each series of preferred units, Oaktree Capital I issued preferred units that have economic terms designed to mirror those of the Company’s preferred units and that are held directly or indirectly by the Company. 149 Aircraft Use OCM leases from Mr. Karsh on a non-exclusive basis an aircraft owned personally by him, pursuant to which he may use the plane for both Oaktree-related travel and personal travel. All payments related to the plane are made by OCM. Investments in Funds Our directors and executive officers are permitted to invest their own capital (or the capital of family trusts or other estate planning vehicles they control) in Oaktree funds. These investment opportunities are available to all Oaktree professionals who Oaktree has determined have a status that reasonably permits Oaktree to offer them these types of investments in compliance with applicable laws and regulations. These investment opportunities are available on the same terms and conditions as those applicable to third-party investors in Oaktree funds and bear their share of management fees, except that they are not subject to incentive fees. As of December 31, 2020, Oaktree manages approximately $946.2 million of AUM invested by our directors, executive officers and certain current and former employees in Oaktree funds. During the year ended December 31, 2020, the following current and former directors and executive officers made the following contributions of their own capital (and/or the capital of family trusts or other estate planning vehicles they control) to Oaktree funds and are expected to continue to contribute capital in Oaktree funds from time to time: Mr. Marks contributed an aggregate of $10,662,000; Mr. Karsh and an organization affiliated with Mr. Karsh contributed an aggregate of $94,702,561; Mr. Frank contributed an aggregate of $4,025,731; Mr. Stone contributed an aggregate of $6,989,981; Mr. Wintrob contributed an aggregate of $2,420,100; Mr. Masson contributed an aggregate of $282,063 and Mr. Levin contributed an aggregate of $792,240, respectively. During the year ended December 31, 2020, the following current and former directors and executive officers (and/or family trusts or other estate planning vehicles they control) received the following net distributions from Oaktree funds as a result of their invested capital: Mr. Stone received $8,496,701; Mr. Wintrob received $3,464,593; Mr. Frank received $2,070,610; Mr. Karsh and an organization affiliated with Mr. Karsh received an aggregate of $9,181,741; Mr. Marks received $6,259,235; Mr. Masson received $495,874; Mr. Molz received $158,777 and Ms. Whittington received $193,448, from Oaktree funds, respectively. Limitations on Liability; Indemnification of Directors, Officers and Manager Our operating agreement provides that our directors and officers will be liable to us or our unitholders for an act or omission only if such act or omission constitutes a breach of the duties owed to us or our unitholders, as applicable, by any such director or officer and such breach is the result of (a) willful malfeasance, gross negligence, the commission of a felony or a material violation of law, in each case, that has or could reasonably be expected to have a material adverse effect on us or (b) fraud. Moreover, in our operating agreement we have agreed to indemnify our directors and officers, to the fullest extent permitted by law, against all expenses and liabilities (including judgments, fines, penalties, interest, amounts paid in settlement with our approval and counsel fees and disbursements) arising from the performance of any of their obligations or duties in connection with their service to us, including in connection with any civil, criminal, administrative, investigative or other action, suit or proceeding to which any such person may be made a party by reason of being or having been one of our directors or officers or our manager, except for any expenses or liabilities that have been finally judicially determined to have arisen primarily from acts or omissions that violated the standard set forth in the preceding paragraph. The indemnification rights that we provide to our directors and officers are more expansive than those provided to the directors and officers of a Delaware corporation. Intercompany Loans We have from time to time put in place and expect in the future to continue putting in place one or more intercompany loans between OCM, Oaktree Capital II, Oaktree Investment Holdings or Oaktree AIF and certain of our operating company subsidiaries to facilitate short- term cash management. 150 Statement of Policy Regarding Transactions with Related Persons Our board of directors has adopted a written statement of policy for our company regarding transactions with related persons. Our related person policy covers any “related person transaction” including, but not limited to, any transaction, arrangement or relationship (including any indebtedness or guarantee of indebtedness) or series of similar transactions, arrangements or relationships that is reportable by us under Item 404(a) of Regulation S-K in which we were or are to be a participant and the amount involved exceeds $120,000 and in which any “related person” (as defined in Item 404(a) of Regulation S-K) had or will have a direct or indirect material interest. With certain limited exceptions, our related person policy requires that each related person transaction, and any material amendment or modification to a related person transaction, be reviewed and approved or ratified by a committee or subcommittee of our board of directors composed solely of disinterested directors, by a majority of the disinterested members of our board of directors, by a majority of disinterested members of the executive committee of our board of directors or as otherwise approved in accordance with our operating agreement. In light of the governance and related consent rights contained in our operating agreement, our related person policy does not separately apply to transactions between us and OCGH or Brookfield. Director Independence Because our preferred equity, but not our common equity, is listed on the New York Stock Exchange, the corporate governance standards of the New York Stock Exchange do not generally apply to us, other than the requirement to maintain an audit committee that satisfies the requirements of Rule 10A-3 under the Exchange Act, and related certification requirements. Presently, in applying such requirements, the board of directors has determined that the members of its audit committee, Messrs. Gilbert and Masson and Mss. McGruder and Whittington, satisfy the requirements of such rule. 151 Item 14. Principal Accounting Fees and Services The following table sets forth the aggregate fees for professional services provided by our independent registered public accounting firm, Ernst & Young LLP, for the years ended December 31, 2020 and 2019. (1) Audit fees Audit-related fees (3) Tax fees (2) For the Year Ended December 31, 2020 2019 Oaktree Capital Group, LLC Oaktree Consolidated Funds and Affiliates Oaktree Capital Group, LLC Oaktree Consolidated Funds and Affiliates $ $ 3,635 313 5,792 $ ($ in thousands) 616 166 704 $ 3,932 306 8,658 768 87 321 (1) Audit fees consist of fees for services related to the annual audit of our consolidated financial statements, reviews of our interim consolidated financial statements on Form 10-Q, statutory audits, and services that only the independent auditors can reasonably provide such as services associated with SEC registration statements or other documents issued in connection with securities offerings (including consents and comfort letters), accounting consultations related to transactions or events affecting the current period audit and services that are normally provided in connection with statutory and regulatory filings and engagements. (2) Audit-related fees include fees associated with examinations of operating controls at our investment adviser, accounting consultations related to the potential impact of future transactions or events, including the adoption of new accounting standards, and attestation services not required by statute or regulation. (3) Tax fees consist of fees related to tax compliance and tax advisory services. Tax fees in 2020 include $3,829 for tax compliance services and $2,667 for tax advisory services. Tax fees in 2019 include $3,209 for tax compliance services and $5,770 for tax advisory services. In accordance with our audit committee charter, the audit committee is required to approve, in advance, all audit and non-audit services to be provided by our independent registered public accounting firm. All services reported in the Audit, Audit-related and Tax categories above were approved by the audit committee. Our audit committee charter is available on our website at www.oaktreecapital.com under the “Unitholders—Investor Relations” section. 152 PART IV. Item 15. Exhibits, Financial Statement Schedules (a) The following documents are filed as part of this report: (1) (2) (3) Financial statements: Please see Item 8 above. Financial statement schedules: Schedules for which provision is made in the applicable accounting regulations of the SEC are not required under the related instructions or are not applicable and therefore have been omitted. Exhibits: For a list of exhibits filed with this report, please refer to the Exhibits Index on the page immediately preceding the exhibits, which Exhibit Index is incorporated herein by reference. 153 Item 16. Form 10-K Summary None. 154 Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. Date: February 26, 2021 SIGNATURES Oaktree Capital Group, LLC By: Name: /s/ Daniel D. Levin Daniel D. Levin Title: Chief Financial Officer and Authorized Signatory Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant in the capacities indicated on this 26th day of February 2021: Signature /s/ Howard S. Marks Howard S. Marks /s/ Bruce A. Karsh Bruce A. Karsh /s/ Jay S. Wintrob Jay S. Wintrob /s/ John B. Frank John B. Frank /s/ Daniel D. Levin Daniel D. Levin /s/ Sheldon M. Stone Sheldon M. Stone /s/ Justin B. Beber Justin B. Beber /s/ J. Bruce Flatt J. Bruce Flatt /s/ Steven J. Gilbert Steven J. Gilbert /s/ D. Richard Masson D. Richard Masson /s/ Marna C. Whittington Marna C. Whittington Title Director and Co-Chairman Director, Co-Chairman and Chief Investment Officer Director and Chief Executive Officer (Principal Executive Officer) Director and Vice Chairman Chief Financial Officer (Principal Financial Officer and Principal Accounting Officer) Director and Principal Director Director Director Director Director 155 Exhibit No. Description of Exhibit EXHIBITS INDEX 3.1 3.2 4.1 4.2 4.3 4.4 4.5 4.6 4.7 4.8 4.9 4.10 4.11 4.12 4.13 4.14 Restated Certificate of Formation of the Registrant (incorporated by reference to Exhibit 3.1 to the Registrant’s Registration Statement on Form S-1, filed with the SEC on June 17, 2011). Fifth Amended and Restated Operating Agreement of the registrant dated as of September 30, 2019 and effective as of October 1, 2019 (including Unit Designation, dated as of November 16, 2015, Unit Designation with respect to the Series A Preferred Units, dated May 17, 2018, and Unit Designation with respect to the Series B Preferred Units, dated August 9, 2018) (incorporated by reference to Exhibit 3.1 to the Registrant’s Current Report on Form 8-K dated October 4, 2019, filed with the SEC on October 4, 2019). Form of 6.625% Series A Preferred Unit Certificate (incorporated by reference to Exhibit 4.1 to the Registrant’s Current Report on Form 8-K, filed with the SEC on May 17, 2018). Form of 6.550% Series B Preferred Unit Certificate (incorporated by reference to Exhibit 4.1 to the registrant’s Current Report on Form 8-K, filed with the SEC on August 9, 2018). Note and Guaranty Agreement, dated as of July 11, 2014, by and among Oaktree Capital Management, L.P., Oaktree Capital I, L.P., Oaktree Capital II, L.P. and Oaktree AIF Investments, L.P. and each of the purchasers party thereto (incorporated by reference to Exhibit 4.1 to the Registrant’s Current Report on Form 8-K, filed with the SEC on July 15, 2014). Amendment to the 2014 Note and Guaranty Agreement, dated as of October 18, 2017, by and among Oaktree Capital Management, L.P., Oaktree Capital I, L.P., Oaktree Capital II, L.P. and Oaktree AIF Investments, L.P. and each of the holders party thereto.†† Second Amendment to the 2014 Note and Guaranty Agreement, dated as of April 24, 2020, by and among Oaktree Capital Management, L.P., Oaktree Capital I, L.P., Oaktree Capital II, L.P. and Oaktree AIF Investments, L.P. and each of the holders party thereto.†† Form of 3.91% Senior Notes, Series A, due September 3, 2024 (incorporated by reference to Exhibit 4.2 to the Registrant’s Current Report on Form 8-K, filed with the SEC on July 15, 2014). Form of 4.01% Senior Notes, Series B, due September 3, 2026 (incorporated by reference to Exhibit 4.3 to the Registrant’s Current Report on Form 8-K, filed with the SEC on July 15, 2014). Form of 4.21% Senior Notes, Series C, due September 3, 2029 (incorporated by reference to Exhibit 4.4 to the Registrant’s Current Report on Form 8-K, filed with the SEC on July 15, 2014). Note and Guaranty Agreement, dated as of July 12, 2016, by and among Oaktree Capital Management, L.P., Oaktree Capital I, L.P., Oaktree Capital II, L.P. and Oaktree AIF Investments, L.P. and each of the purchasers party thereto (incorporated by reference to Exhibit 4.1 to the Registrant’s Current Report on Form 8-K, filed with the SEC on July 12, 2016). Amendment to the 2016 Note and Guaranty Agreement, dated as of April 24, 2020, by and among Oaktree Capital Management, L.P., Oaktree Capital I, L.P., Oaktree Capital II, L.P. and Oaktree AIF Investments, L.P. and each of the holders party thereto.†† Form of 3.69% Senior Notes due July 12, 2031 (incorporated by reference to Exhibit 4.2 to the Registrant’s Current Report on Form 8-K, filed with the SEC on July 12, 2016). Note and Guaranty Agreement, dated as of November 16, 2017, by and among Oaktree Capital Management, L.P., Oaktree Capital I, L.P., Oaktree Capital II, L.P. and Oaktree AIF Investments, L.P. and each of the purchasers party thereto (incorporated by reference to Exhibit 4.1 to the Registrant’s Current Report on Form 8-K, filed with the SEC on November 17, 2017). Amendment to the 2017 Note and Guaranty Agreement, dated as of April 24, 2020, by and among Oaktree Capital Management, L.P., Oaktree Capital I, L.P., Oaktree Capital II, L.P. and Oaktree AIF Investments, L.P. and each of the holders party thereto.†† Form of 3.78% Senior Notes due December 18, 2032 (incorporated by reference to Exhibit 4.2 to the Registrant’s Current Report on Form 8-K, filed with the SEC on November 17, 2017). 156 4.15 4.16 4.17 4.18 10.1 10.2 10.3 10.4 10.5 10.6 10.7 10.8 10.9 Note and Guaranty Agreement, dated as of May 20, 2020, by and among Oaktree Capital Management, L.P., Oaktree Capital I, L.P., Oaktree Capital II, L.P., Oaktree AIF Investments, L.P. and each of the purchasers party thereto (incorporated by reference to Exhibit 4.1 to the Registrant’s Current Report on Form 8-K, filed with the SEC on May 26, 2020). Form of 3.64% Senior Notes, Series A, due July 22, 2030 (incorporated by reference to Exhibit 4.2 to the Registrant’s Current Report on Form 8-K, filed with the SEC on May 26, 2020). Form of 3.84% Senior Notes, Series B, due July 22, 2035 (incorporated by reference to Exhibit 4.3 to the Registrant’s Current Report on Form 8-K, filed with the SEC on May 26, 2020). Description of securities registered under Section 12 of the Securities Exchange Act of 1934 (incorporated by reference to Exhibit 4.11 to the Registrant's Annual Report on Form 10-K for the year ended December 31, 2019, filed with the SEC on March 2, 2020). Third Amended and Restated Limited Partnership Agreement of Oaktree Capital I, L.P., dated as of September 30, 2019 (including Unit Designation with respect to the Series A Preferred Mirror Units of Oaktree Capital I, L.P., dated May 17, 2018, and Unit Designation with respect to the Series B Preferred Mirror Units of Oaktree Capital I, L.P., dated August 9, 2018) (incorporated by reference to Exhibit 10.1 to the Registrant's Annual Report on Form 10-K for the year ended December 31, 2019, filed with the SEC on March 2, 2020). Second Amended and Restated Limited Partnership Agreement of Oaktree Capital Management (Cayman), L.P., dated as of September 30, 2019 (incorporated by reference to Exhibit 10.2 to the Registrant's Annual Report on Form 10-K for the year ended December 31, 2019, filed with the SEC on March 2, 2020). Restructuring Agreement, dated as of September 30, 2019, by and among Brookfield Asset Management Inc., Oaktree Capital Group, LLC, Berlin Merger Sub, LLC, Oslo Holdings LLC, Oslo Holdings Merger Sub LLC, Brookfield Holdings Canada Inc., Brookfield US Holdings, Inc., Brookfield US Inc., Atlas Holdings, LLC, Atlas OCM Holdings, LLC, Oaktree Capital Group Holdings, L.P. and the other parties thereto (incorporated by reference to Exhibit 10.2 to the Registrant’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2019, filed with the SEC on November 7, 2019). Third Amended and Restated Tax Receivable Agreement, dated as of September 30, 2019, by and among Brookfield Asset Management Inc., Oaktree Holdings, Inc., Oaktree AIF Holdings, Inc., Oaktree Capital II, L.P., Oaktree Capital Management, L.P., Oaktree Investment Holdings, L.P., Oaktree AIF Investments, L.P., Oaktree Capital Group Holdings, L.P. and the other parties thereto (incorporated by reference to Exhibit 10.3 to the Registrant’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2019, filed with the SEC on November 7, 2019). Third Amended and Restated Exchange Agreement, dated as of September 30, 2019, by and among Atlas Holdings, LLC, Atlas OCM Holdings, LLC, Oaktree Capital Group, LLC, OCM Holdings I, LLC, Oaktree New Holdings, LLC, Oaktree AIF Holdings II, LLC, Oaktree Holdings, Ltd., Oaktree Capital Group Holdings, L.P., Oaktree Capital I, L.P., Oaktree Capital II, L.P., Oaktree Capital Management, L.P., Oaktree Capital Management (Cayman), L.P., Oaktree AIF Investments, L.P., Oaktree Investment Holdings, L.P., OCGH ExchangeCo, L.P. and the other parties thereto (incorporated by reference to Exhibit 10.1 to the Registrant’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2019, filed with the SEC on November 7, 2019). Services Agreement, dated as of February 24, 2020, between Oaktree Capital Management, L.P. and Oaktree Capital Group, LLC (incorporated by reference to Exhibit 10.6 to the Registrant's Annual Report on Form 10-K for the year ended December 31, 2019, filed with the SEC on March 2, 2020). Amended & Restated Services Agreement, dated as of December 18, 2020, between Oaktree Capital Management, L.P. and Oaktree Capital Management (UK) LLP.† Services Agreement, dated as of September 25, 2018, between Oaktree Capital Management, L.P. and Oaktree Capital Management (International) Limited (incorporated by reference to Exhibit 10.8 to the Registrant's Annual Report on Form 10-K for the year ended December 31, 2019, filed with the SEC on March 2, 2020). Third Amended and Restated Services Agreement, dated as of January 6, 2021, between Oaktree Capital Management, L.P. and Oaktree Capital (Hong Kong) Limited.† 157 10.10 10.10.1 10.10.2 10.10.3 10.10.4 10.10.5 10.11* 10.12* 10.13* 10.14* 10.15* 10.16* Credit Agreement, dated as of March 31, 2014, by and among Oaktree Capital Management, L.P., Oaktree Capital II, L.P., Oaktree AIF Investments, L.P., Oaktree Capital I, L.P., the Lenders party thereto, Wells Fargo Bank, National Association, as Administrative Agent, L/C Issuer and Swing Line Lender, and Wells Fargo Securities, LLC, as Sole Lead Arranger and Sole Lead Bookrunner (incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K, filed with the SEC on April 4, 2014). First Amendment, dated as of November 3, 2014, to the March 31, 2014 Credit Agreement by and among Oaktree Capital Management, L.P., Oaktree Capital II, L.P., Oaktree AIF Investments, L.P., Oaktree Capital I, L.P., the Lenders party thereto, Wells Fargo Bank, National Association, as Administrative Agent, L/C Issuer and Swing Line Lender, and Wells Fargo Securities, LLC, as Sole Lead Arranger and Sole Lead Bookrunner (incorporated by reference to Exhibit 10.1 to the Registrant’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2014, filed with the SEC on November 7, 2014). Second Amendment, dated as of March 31, 2016, to the March 31, 2014 Credit Agreement, by and among Oaktree Capital Management, L.P., Oaktree Capital II, L.P., Oaktree AIF Investments, L.P., Oaktree Capital I, L.P., the Lenders party thereto, and Wells Fargo Bank, National Association, as Administrative Agent for the Lenders (incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K, filed with the SEC on April 6, 2016). Third Amendment, dated as of November 14, 2017, to the March 31, 2014 Credit Agreement, by and among Oaktree Capital Management, L.P., Oaktree Capital II, L.P., Oaktree AIF Investments, L.P., Oaktree Capital I, L.P., the Lenders party thereto, and Wells Fargo Bank, National Association, as Administrative Agent for the Lenders (incorporated by reference to Exhibit 10.9.3 to the Registrant’s Annual Report on Form 10-K for the year ended December 31, 2017, filed with the SEC on February 23, 2018). Fourth Amendment, dated as of March 29, 2018, to the March 31, 2014 Credit Agreement, by and among Oaktree Capital Management, L.P., Oaktree Capital II, L.P., Oaktree AIF Investments, L.P., Oaktree Capital I, L.P., the Lenders party thereto, and Wells Fargo Bank, National Association, as Administrative Agent for the Lenders (incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K, filed with the SEC on April 4, 2018). Fifth Amendment, dated as of December 13, 2019, to the March 31, 2014 Credit Agreement, by and among Oaktree Capital Management, L.P., Oaktree Capital II, L.P., Oaktree AIF Investments, L.P., Oaktree Capital I, L.P., the Lenders party thereto, and Wells Fargo Bank, National Association, as Administrative Agent for the Lenders (incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K, filed with the SEC on December 18, 2019). Summary Employment Agreement by and among Oaktree Capital Management Limited and Howard Marks, dated as of September 26, 2006 (incorporated by reference to Exhibit 10.14 to the Registrant’s Registration Statement on Form S-1, filed with the SEC on August 1, 2011). Sixth Amended and Restated Limited Partnership Agreement of Oaktree Fund GP I, L.P., dated as of March 20, 2015 (incorporated by reference to Exhibit 10.1 to the Registrant’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2015, filed with the SEC on August 6, 2015). Amended and Restated Oaktree Capital Group, LLC 2011 Equity Incentive Plan (incorporated by reference to Exhibit 4.4 to the Registrant’s Registration Statement on Form S-8, filed with the SEC on March 30, 2016). Form of Grant Agreement under the Oaktree Capital Group, LLC 2011 Equity Incentive Plan (incorporated by reference to Exhibit 10.20 to the Registrant’s Annual Report on Form 10-K for the year ended December 31, 2014, filed with the SEC on February 27, 2015). Third Amended and Restated Employment Agreement by and among the Registrant, Oaktree Capital Management, L.P. and Jay S. Wintrob dated February 25, 2020 (incorporated by reference to Exhibit 10.15 to the Registrant's Annual Report on Form 10-K for the year ended December 31, 2019, filed with the SEC on March 2, 2020). Third Amended and Restated Grant Agreement under the Oaktree Capital Group, LLC 2011 Equity Incentive Plan by and among Oaktree Capital Group Holdings, L.P., Oaktree Capital Group Holdings GP, LLC and Jay S. Wintrob dated February 20, 2018 (incorporated by reference to Exhibit 10.20 to the Registrant’s Annual Report on Form 10-K for the year ended December 31, 2017, filed with the SEC on February 23, 2018). 158 10.16.1* Amendment Letter dated as of February 25, 2020 to Third Amended and Restated Grant Agreement under the Oaktree Capital Group, LLC 2011 Equity Incentive Plan by and among Oaktree Capital Group Holdings, L.P., Oaktree Capital Group Holdings GP, LLC and Jay S. Wintrob dated February 20, 2018 (incorporated by reference to Exhibit 10.16.1 to the Registrant's Annual Report on Form 10-K for the year ended December 31, 2019, filed with the SEC on March 2, 2020). 10.17* 10.18* 10.19* 10.20* 10.21* 10.22* 21.1 23.1 31.1 31.2 32.1 32.2 Form of Oaktree Capital Group, LLC 2018 Class A Restricted Unit Award Agreement (incorporated by reference to Exhibit 10.20 to the Registrant’s Annual Report on Form 10-K for the year ended December 31, 2018, filed with the SEC on February 22, 2019). Form of Oaktree Capital Group Holdings, L.P. Restricted Unit Award Agreement (incorporated by reference to Exhibit 10.3 to the Registrant’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2016, filed with the SEC on May 9, 2016). Form of Oaktree Capital Group, LLC Class A Restricted Unit Award Agreement for Outside Directors (incorporated by reference to Exhibit 10.22 to the Registrant’s Annual Report on Form 10-K for the year ended December 31, 2018, filed with the SEC on February 22, 2019). Oaktree Capital Group, LLC Long-Term Incentive Plan† Form of Award Agreement under the Oaktree Capital Group, LLC Long-Term Incentive Plan† Summaries of compensation for Daniel D. Levin and John B. Frank (incorporated by reference to sections C and D, respectively, under “Executive Compensation-Compensation Discussion and Analysis-Compensation of the Individual NEOs” on pages 140-146 of the Registrant’s Annual Report on Form 10-K for the year ended December 31, 2020, filed with the SEC on February 26, 2021). Subsidiaries of the Registrant. Consent of Ernst & Young LLP. Certification of the Principal Executive Officer pursuant to Rule 13a-14(a) or 15d-14(a) of the Exchange Act, as adopted, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. Certification of the Principal Financial Officer pursuant to Rule 13a-14(a) or 15d-14(a) of the Exchange Act, as adopted, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. Certification of the Principal Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to section 906 of the Sarbanes-Oxley Act of 2002 (furnished herewith). Certification of the Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to section 906 of the Sarbanes-Oxley Act of 2002 (furnished herewith). 101.INS XBRL Instance Document. 101.SCH XBRL Taxonomy Extension Schema Document. 101.CAL XBRL Taxonomy Extension Calculation Linkbase Document. 101.LAB XBRL Taxonomy Extension Label Linkbase Document. 101.PRE XBRL Taxonomy Extension Presentation Linkbase Document. 101.DEF XBRL Taxonomy Extension Definition Linkbase Document. * Management contract or compensatory plan or arrangement. † Filed herewith. †† Filed herewith. The Company has either (i) omitted confidential portions of the referenced exhibit and filed such confidential portions separately with the Securities and Exchange Commission pursuant to a request for confidential treatment under Rule 406 promulgated under the Securities Act of 1933 or (ii) omitted portions of the referenced exhibit pursuant to Item 601(b) of Regulation S-K because it (a) is not material and (b) would be competitively harmful if publicly disclosed. 159 Exhibit 4.4 CERTAIN IDENTIFIED INFORMATION MARKED BY [***] HAS BEEN EXCLUDED FROM THIS EXHIBIT BECAUSE IT IS BOTH (I) NOT MATERIAL AND (II) WOULD LIKELY CAUSE COMPETITIVE HARM TO THE REGISTRANT IF PUBLICLY DISCLOSED AMENDMENT to Note Purchase Agreement This AMENDMENT to Note Purchase Agreement (“Amendment”) is entered into as of October 18, 2017 by and among Oaktree Capital Management, L.P., a Delaware limited partnership (the “Company”), Oaktree Capital I, L.P., a Delaware limited partnership (“Oaktree Capital I”), Oaktree Capital II, L.P., a Delaware limited partnership (“Oaktree Capital II”), Oaktree AIF Investments, L.P., a Delaware limited partnership (“Oaktree AIF” and collectively with the Company, Oaktree Capital I and Oaktree Capital II, the “Obligors”), and the undersigned holders (the “Holders”) of the Notes (as hereinafter defined) party hereto. Unless otherwise defined or amended herein, capitalized terms used in this Amendment shall have the meanings assigned to them in the Note Purchase Agreement (as hereinafter defined). Recitals WHEREAS, the Company and the Holders have agreed to amend certain provisions of that certain note purchase agreement (the “Note Purchase Agreement”), dated as of July 11, 2014 among the Obligors and the purchasers listed on Schedule B thereto relating to the issuance and sale of the Company’s 3.91% Senior Notes, Series A, due September 3, 2024, the Company’s 4.01% Senior Notes, Series B, due September 3, 2026, and the Company’s 4.21% Senior Notes, Series C, due September 3, 2029 (collectively, the “Notes”), and as otherwise amended and in effect from time to time, on the terms and conditions expressly set forth herein. Now therefore, in consideration of the premises and the mutual agreements herein contained, the parties hereto agree as follows: SECTION 1. REPRESENTATIONS and Warranties The Obligors, jointly and severally, represent and warrant to each Holder that: §1.1 Organization, Power and Authority. Each Obligor is a limited partnership duly organized, validly existing and in good standing under the laws of the State of Delaware, and is duly qualified as a foreign limited partnership and in good standing in each jurisdiction in which such qualification is required by law, other than those jurisdictions as to which the failure to be so qualified and in good standing could not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect. Each Obligor has the limited partnership power and authority to own or hold under lease the properties it purports to own or hold under lease, to transact its business and to execute this Amendment. §1.2 Authorization, etc. This Amendment has been duly authorized by all necessary limited partnership action on the part of each Obligor, and this Amendment constitutes a legal, valid and binding obligation of each Obligor, enforceable against each of them in accordance with its terms, except as such enforceability may be limited by (i) applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the enforcement of creditors’ rights generally and (ii) general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or at law). §1.3 Compliance with Laws, Other Instruments, etc. The execution, delivery and performance by each Obligor of this Amendment will not (i) contravene, result in any breach of, or constitute a default under, or result in the creation of any Lien in respect of any property of any Obligor or any Subsidiary under, any indenture, mortgage, deed of trust, loan, purchase or credit agreement, lease, corporate charter or by-laws, shareholders agreement or any other Material agreement or instrument to which any Obligor or any Subsidiary is bound or by which any Obligor or any Subsidiary or any of their respective properties may be bound or affected, (ii) conflict with or result in a breach of any of the terms, conditions or provisions of any order, judgment, decree or ruling of any court, arbitrator or Governmental Authority applicable to any Obligor or any Subsidiary or (iii) violate any provision or other statute or other rule or regulation of any Governmental Authority applicable to any Obligor or any Subsidiary. §1.4 Consent, etc. No consent, approval or authorization of, or registration, filing or declaration with, any Governmental Authority is required in connection with the execution, delivery or performance by any Obligor of this Amendment. §1.5 Absence of Defaults. Immediately prior to the execution, delivery and performance of this Amendment, and after giving effect thereto, no Default or Event of Default will exist. SECTION 2. Amendment - 2 - The Note Purchase Agreement is hereby amended as of the date this Amendment becomes effective pursuant to Section 3.1 hereof in the following respects: §2.1 Rating Section 9 of the Note Purchase Agreement is hereby amended, by inserting as a new Section 9.8 the following: Section 9.8. Rating. At any time the Non-Recourse CLO Subsidiary Indebtedness exceeds $100,000,000 in aggregate principal amount, the Obligors shall ensure that a public rating of one of the Obligors’ long term unsecured debt has been issued by at least one (1) Rating Agency. §2.1 Merger, Consolidation, Etc. Section 10.2 of the Note Purchase Agreement is hereby amended, by replacing the first paragraph of such provision with the following: Each Obligor will not, and will not permit any Subsidiary (other than any CLO Subsidiary) to, merge into or consolidate with any other Person, or permit any other Person to merge into or consolidate with it, or sell, transfer, lease or otherwise dispose of (in one transaction or in a series of transactions) all or substantially all of the Obligors’ assets (other than any CLO Subsidiaries) (measured on a collective basis across all Obligors), or all or substantially all of the Capital Stock of the Obligors’ Subsidiaries (measured on a collective basis across all Obligors) (in each case, whether now owned or hereafter acquired), or liquidate or dissolve, except that, if at the time thereof and immediately after giving effect thereto no Default or Event of Default shall have occurred and be continuing (i) any Person, including a Subsidiary or an Obligor, may merge into or consolidate with any of the Obligors in a transaction in which an Obligor is the surviving entity; (ii) any Person, other than an Obligor but including a Subsidiary, may merge into or consolidate with any Subsidiary in a transaction in which the surviving entity is a Subsidiary that is wholly owned by one or more of the Obligors; (iii) any Obligor may merge into or consolidate with any Subsidiary in a transaction in which the surviving entity is a Wholly Owned Subsidiary, provided that (solely in a case of such a transaction involving an Obligor other than Oaktree AIF), such Wholly Owned Subsidiary agrees to become an Obligor hereunder and executes and delivers documents reasonably requested by the Required Holders in form and substance reasonably satisfactory to the Required Holders with respect thereto (including, but not limited to, an opinion of counsel); (iv) any Subsidiary may sell, transfer, lease or otherwise dispose of its assets to any of the Obligors or to a Wholly Owned Subsidiary; (v) any Obligor may sell, transfer, lease or otherwise dispose of its assets (including any Capital Stock) to any other Obligor; (vi) any Obligor may sell, transfer, lease or otherwise dispose of its assets (including any Capital Stock) to a Wholly Owned Subsidiary of any Obligor, - 3 - provided that in the event such transaction results in a transfer, lease or other disposition of all or substantially all of the Obligors’ assets (measured on a collective basis across all Obligors) to one or more Subsidiaries, each Subsidiary agrees to become an Obligor hereunder and executes and delivers documents reasonably requested by the Required Holders in form and substance reasonably satisfactory to the Required Holders with respect thereto (including, but not limited to, an opinion of counsel); (vii) any Subsidiary may merge or consolidate with any other Person in a transaction in which the other Person is the surviving entity or sell, transfer, lease or otherwise dispose of its assets to any other Person which, in each case, (A) prior to such transaction did not have any operations and (B) the Obligors own the same type and percentage of equity interests in such other Person as the Obligors owned in such Subsidiary prior to such transaction; and (viii) Oaktree AIF or any Subsidiary of an Obligor may liquidate or dissolve if Oaktree AIF or such Obligor, respectively, determines in good faith that such liquidation or dissolution is in its best interests and is not materially disadvantageous to the holders of Notes. §2.3 Liens Section 10.5 of the Note Purchase Agreement is hereby amended, (a) by replacing the text of such provision up to but not including paragraph (a) and the following, with the following: The Obligors will not, and will not permit any Subsidiary (other than any CLO Subsidiary) to, create, incur, assume or permit to exist any Lien on any property or asset now owned or hereafter acquired by it, except: and (b) by inserting at the end of Section 10.5 the following new paragraph: Notwithstanding anything to the contrary in this Section 10.5, the Obligors shall not permit any of their CLO Subsidiaries to secure any Indebtedness outstanding under or pursuant to any Material Credit Facility unless and until the Notes (and any guaranty delivered in connection therewith) shall concurrently be secured equally and ratably with such Indebtedness pursuant to documentation reasonably acceptable to the Required Holders in substance and in form, including, without limitation, an intercreditor agreement and opinions of counsel to any such CLO Subsidiary from counsel that is reasonably acceptable to the Required Holders. §2.4 Limitation on Priority Indebtedness Section 10.7(b) of the Note Purchase Agreement is hereby amended and restated in its entirety as follows: The Obligors will not permit Priority Indebtedness at any time to exceed 15% of the difference between (a) Consolidated Total Assets and (b) the assets of the - 4 - CLO Subsidiaries (in each case, calculated as of the end of the most recently ended fiscal quarter for which financial statements have been delivered pursuant to Section 7.1). §2.5 Restrictive Agreements; Negative Pledge Clauses Section 10.8 of the Note Purchase Agreement is hereby amended and restated in its entirety as follows: The Obligors will not, and will not permit any of their respective Subsidiaries (other than any CLO Subsidiary) to, directly or indirectly, enter into, incur or permit to exist or become effective any agreement or other arrangement that prohibits, limits, restricts or imposes any condition upon (a) the ability of any Obligor or any Subsidiary to create, incur, assume or permit to exist any Lien upon any of its property, assets or revenues, whether now owned or hereafter acquired, or (b) the ability of any Subsidiary to pay dividends or other distributions on account of its Capital Stock or to make or repay loans or advances to the Obligors or any other Subsidiary or to deliver a Guaranty with respect to Indebtedness of the Obligors or any other Subsidiary; provided that (i) the foregoing shall not apply to restrictions and conditions imposed by law or by this Agreement; (ii) the foregoing shall not apply to restrictions and conditions existing on the date hereof identified on Schedule 10.8 (and any extension, renewal or amendment or modification thereof, provided that such extension, renewal, amendment or modification does not expand the scope of, any such restriction or condition); (iii) the foregoing shall not apply to customary restrictions and conditions contained in agreements relating to the sale of a Subsidiary, business or assets pending such sale, provided such restrictions and conditions apply only to the Subsidiary, business or assets that is to be sold and such sale is permitted hereunder; (iv) clause (a) of the foregoing shall not apply to restrictions or conditions imposed by any agreement relating to secured Indebtedness permitted by this Agreement if such restrictions or conditions apply only to the property or assets securing such Indebtedness; (v) clause (a) of the foregoing shall not apply to customary provisions in leases restricting the assignment thereof; and (vi) the foregoing shall not apply to restrictions and conditions contained in agreements evidencing a Permitted Financing. §2.6 Confidential Information Section 21 of the Note Purchase Agreement is hereby amended, by replacing the first paragraph of such provision with the following: For the purposes of this Section 21, “Confidential Information” means information delivered to any Purchaser by or on behalf of any Obligor or any Subsidiary in connection with the transactions contemplated by or otherwise pursuant to this Agreement (including, without limitation, pursuant to Section 7.1 - 5 - and Section 7.3) that is proprietary in nature and that was clearly marked or labeled or otherwise adequately identified when received by such Purchaser as being confidential information of such Obligor, such Subsidiary, any Affiliate or any investment fund or CLO that is managed by such Obligor or any of its Subsidiaries or for which such Obligor or any of its Subsidiaries acts as a general partner or an investment advisor, provided that such term does not include information that (a) was publicly known or otherwise known to such Purchaser prior to the time of such disclosure (other than from a source that Purchaser knew or should reasonably have known was bound by a confidentiality obligation with respect to such information), (b) subsequently becomes publicly known through no act or omission by such Purchaser or any Person acting on such Purchaser’s behalf, (c) otherwise becomes known to such Purchaser other than through disclosure by any Obligor or any Subsidiary or from a source that Purchaser knew or should reasonably have known was bound by a confidentiality obligation with respect to such information or (d) constitutes financial statements delivered to such Purchaser under Section 7.1 that are otherwise publicly available. No Purchaser shall use the Confidential Information for any purpose (including, without limitation, (x) to compete with the business of the Obligors, any of their Subsidiaries, any Affiliate or any investment fund or CLO that is managed by any of the Obligors or any of their Subsidiaries or for which any of the Obligors or any of their Subsidiaries acts as a general partner or an investment advisor or (y) in connection with the creation or management of any investment fund or CLO for which a Purchaser or any of its affiliates acts as a general partner or an investment advisor) other than purposes directly related to the holding of the Notes by the Purchaser. Each Purchaser will maintain the confidentiality of such Confidential Information in accordance with procedures adopted by such Purchaser in good faith to protect confidential information of third parties delivered to such Purchaser, provided that such Purchaser may deliver or disclose Confidential Information to (i) its directors, officers, employees, agents, attorneys, trustees and affiliates to the extent such Person needs to know such information for purposes directly related to the administration of the Purchaser’s holding of the Notes and who agree to hold confidential the Confidential Information substantially in accordance with this Section 21 and are prohibited from using the Confidential Information other than for purposes directly related to the Purchaser’s holding of the Notes, (ii) its auditors, financial advisors and other professional advisors who need to know such information for purposes directly related to the Purchaser’s holding of the Notes and agree to hold confidential the Confidential Information substantially in accordance with this Section 21 and are prohibited from using the Confidential Information other than for purposes directly related to the Purchaser’s holding of the Notes, (iii) any other holder of any Note, (iv) any Institutional Investor to which it sells or offers to sell such Note or any part thereof or any participation therein (if such Person has agreed in writing prior to its receipt of such Confidential Information to be bound by this Section 21), (v) any Person from which it offers to purchase any Security of the Obligors (if such Person has agreed in writing prior to its receipt of such - 6 - Confidential Information to be bound by this Section 21), (vi) any federal or state regulatory or tax authority having jurisdiction over such Purchaser, (vii) the NAIC or the SVO or, in each case, any similar organization, or any nationally recognized rating agency that requires access to information about such Purchaser’s investment portfolio, or (viii) any other Person to which such delivery or disclosure may be necessary or appropriate (provided that, solely with respect to clause (y) immediately below, the Purchaser shall use its reasonable efforts to cause such Person to agree in writing prior to its receipt of such Confidential Information to be bound by this Section 21), (w) to effect compliance with any law, rule, regulation or order applicable to such Purchaser, (x) in response to any subpoena or other legal process, (y) in connection with any litigation to which such Purchaser is a party or (z) if an Event of Default has occurred and is continuing, to the extent such Purchaser may reasonably determine such delivery and disclosure to be necessary or appropriate in the enforcement or for the protection of the rights and remedies under such Purchaser’s Notes or this Agreement. In the event of a disclosure pursuant to clause (vi) and (viii), such Purchaser shall, unless prohibited by applicable law or legal process, notify the Company as soon as practical in the event of any such disclosure and disclose Confidential Information to the minimum extent required or requested and shall, upon the Company’s request and expense, reasonably cooperate with the Company in connection with obtaining a protective order or other appropriate means to protect the confidentiality of the Confidential Information being disclosed. Each holder of a Note, by its acceptance of a Note, will be deemed to have agreed to be bound by and to be entitled to the benefits of this Section 21 as though it were a party to this Agreement. On reasonable request by the Obligors in connection with the delivery to any holder of a Note of information required to be delivered to such holder under this Agreement or requested by such holder (other than a holder that is a party to this Agreement or its nominee), such holder will enter into an agreement with the Obligors embodying this Section 21. §2.7 Defined Terms The following defined terms shall be added to the Note Purchase Agreement: “CLO” means a collateralized loan obligation vehicle or similar debt securitization vehicle or entity. “CLO Subsidiary” means, at any time, (i) any Subsidiary that (x) manages or has been established to manage one or more CLOs or (y) is an Affiliate of a Subsidiary described in clause (x) that purchases or otherwise acquires and/or retains securities, obligations or other interests in such CLO for the purpose of, among other things, satisfying (including on a prospective basis) any applicable risk retention laws, rules, regulations, guidelines, technical standards or guidance of any Governmental Authority and (ii) any Subsidiary of a Subsidiary described in the preceding clause (i). - 7 - “Fitch” means Fitch IBCA Inc., or any successor thereto. “Moody’s” means Moody’s Investors Services, Inc., or any successor thereto. “Non-CLO Subsidiary” means, at any time, any Subsidiary that is not a CLO Subsidiary. “Non-Recourse CLO Subsidiary Indebtedness” means the Indebtedness of a CLO Subsidiary that is non-recourse to each of the Obligors and its respective Non-CLO Subsidiaries. “Rating Agency” means Moody’s, S&P, Fitch or another nationally recognized rating agency reasonably acceptable to the Required Holders. “S&P” means Standard & Poor’s Ratings Group, a division of McGraw-Hill, or any successor thereto. In addition, the following defined terms shall be amended and restated in their entirety, as follows: “Combined Net Income” means, for any period, the combined net income (or loss) of the Obligors and their respective consolidated Subsidiaries, determined in accordance with GAAP; provided that there shall be excluded (a) the income (or deficit) of any Person accrued prior to the date it becomes a Subsidiary of any Obligor or is merged into or consolidated with any Obligor or any Subsidiary, (b) the income (or deficit) of any Person (other than a Non-CLO Subsidiary of any of the Obligors) in which any Obligor or any Subsidiary has an ownership interest, except to the extent that any such income is actually received by such Obligor or such Subsidiary in the form of dividends or similar distributions and (c) the undistributed earnings of any Subsidiary of the Obligors to the extent that the declaration or payment of dividends or similar distributions by such Subsidiary is not at the time permitted by the terms of any Contractual Obligation, Organizational Document or Requirement of Law applicable to such Subsidiary. “Combined Total Debt” means, at any date, the combined principal amount of all Indebtedness of the Obligors and their respective consolidated Subsidiaries at such date, determined in accordance with GAAP; provided that Combined Total Debt shall not include Non-Recourse CLO Subsidiary Indebtedness. “Controlled Entity” means OCG and OCGH and each of their respective subsidiaries other than (i) any investment fund or CLO or any subsidiary thereof that is managed by any subsidiary of OCG or OCGH or (ii) an entity held by OCG, OCGH or any of their respective subsidiaries that holds investments that it or an Affiliate thereof manages or intends to manage as part of an investment fund - 8 - or a CLO, including any entity formed for the purpose of holding investments in connection with seeding a new investment portfolio or strategy. “GAAP” means generally accepted accounting principles as in effect from time to time in the United States of America, except any requirement for the consolidation of investment funds or CLOs advised or managed by the Obligors and other entities that may be required by FASB ASC 810-20 or similar and subsequent authoritative accounting pronouncements. “Indebtedness” of any Person means, without duplication, (a) all indebtedness of such Person for borrowed money or payment obligations of such Person with respect to deposits or advances of any kind, (b) all payment obligations of such Person evidenced by bonds, debentures, notes or similar instruments, representing an extension of credit to such Person, (c) all obligations of such Person upon which interest charges are customarily paid, (d) all payment obligations of such Person under conditional sale or other title retention agreements relating to property acquired by such Person, (e) all obligations of such Person for the deferred purchase price of property or services (excluding current accounts payable incurred in the ordinary course of business), (f) all Indebtedness of others secured by (or for which the holder of such Indebtedness has an existing right, contingent or otherwise, to be secured by) any Lien on property owned or acquired by such Person, whether or not the Indebtedness secured thereby has been assumed, but only to the extent of the fair market value of the assets subject to such Lien, (g) all Guaranties by such Person of Indebtedness of others, (h) all Capital Lease Obligations of such Person, (i) all obligations, contingent or otherwise, of such Person as an account party in respect of reimbursement for draws under letters of credit and letters of guaranty, (j) all obligations, contingent or otherwise, of such Person in respect of bankers’ acceptances and (k) net liabilities of such Person under Hedging Agreements. The Indebtedness of any Person shall include the Indebtedness of any general partnership and any other entity under which the equity owners of such entity do not have limited liability, in each case, to the extent such Person is liable therefor as a result of such Person’s ownership interest in or other relationship with such entity, except to the extent (x) the terms of such Indebtedness provide that such Person is not liable therefor or (y) such Person (i) is a Subsidiary that serves as the general partner (or equivalent) of one or more investment funds or CLOs or their respective subsidiaries managed by any of the Obligors or any of their Affiliates and (ii) does not engage in any business other than to act as the general partner (or equivalent) of such investment funds or CLOs or their respective subsidiaries and does not own any assets other than the ownership interest in such investment funds or CLOs or their respective subsidiaries and any assets related solely to such Person’s role as general partner (or equivalent) of such investment funds or CLOs or their respective subsidiaries. “Material Credit Facility” means, as to the Obligors and their Subsidiaries, - 9 - (a) the Principal Credit Facility; (b) the Existing Note Agreements; and (c) any other agreement(s) creating or evidencing indebtedness for borrowed money entered into on or after the date of Closing by any Obligor or any Subsidiary (other than any CLO Subsidiary), or in respect of which any Obligor or any Subsidiary (other than any CLO Subsidiary) is an obligor or otherwise provides a guaranty or other credit support (“Credit Facility”), in a principal amount outstanding or available for borrowing equal to or greater than $250,000,000 (or the equivalent of such amount in the relevant currency of payment, determined as of the date of the closing of such facility based on the exchange rate of such other currency); provided that solely for the purposes of Section 9.7, the foregoing shall exclude any agreements with respect to a Lien permitted under Sections 10.5(d) and 10.5(e). “Priority Indebtedness” means (without duplication), as of the date of any determination thereof, the sum of (i) all unsecured Indebtedness of Subsidiaries (other than Non-Recourse CLO Subsidiary Indebtedness) (excluding (x) Indebtedness owing to any Obligor or any Wholly-Owned Subsidiary and (y) Indebtedness of any Obligor) and (ii) all Indebtedness of the Obligors and their Subsidiaries (other than Non-Recourse CLO Subsidiary Indebtedness) secured by Liens other than Indebtedness secured by Liens permitted by subparagraphs (a) through (h), inclusive, of Section 10.5. “Subsidiary” means any subsidiary of the Obligors other than any investment fund or CLO or any subsidiary thereof that is managed by any Obligor or any Subsidiary. For purposes of clarification, the term “Subsidiary” hereunder shall not include an entity held by an Obligor (or any of its Subsidiaries) that holds investments that an Obligor or an Affiliate thereof manages or intends to manage as part of an investment fund or a CLO, including any entity formed for the purpose of holding investments in connection with seeding a new investment portfolio or strategy. SECTION 3. MISCELLANEOUS §3.1 Conditions to Effectiveness. The effectiveness of this Amendment is expressly subject to the following conditions: (i) the representations and warranties made by the Obligors under Section 2 of this Amendment shall be true and correct, (ii) executed counterparts of this Amendment, duly executed by the Obligors and Required Holders shall have been delivered to the holders of the Notes and (iii) the Company shall have paid, or reimbursed the Holders for, the reasonable fees, charges and disbursements of special counsel to the Holders; provided that the Company shall not be liable for the - 10 - attorneys’ fees, costs and disbursements of more than one firm of special counsel (which firm shall be the firm retained to represent all holders of Notes collectively). §3.2 Instrument Pursuant to Note Purchase Agreement. This Amendment is executed pursuant to Section 18 of the Note Purchase Agreement and shall be construed, administered, and applied in accordance with all of the terms and provisions of the Note Purchase Agreement. Except as expressly set forth herein, all of the representations, warranties, terms, covenants and conditions of the Note Purchase Agreement shall remain unamended and in full force and effect. §3.3 Successors and Assigns. This Amendment shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns (including, without limitation, any subsequent holder of a Note) whether so expressed or not. §3.4 Counterparts. This Amendment may be executed in any number of counterparts, each of which shall be an original but all of which together shall constitute one instrument. §3.5 Governing Law. This Amendment shall be construed and enforced in accordance with, and the rights of the parties shall be governed by, the law of the State of New York, excluding choice-of-law principles of the law of such State that would require the application of the laws of a jurisdiction other than such State. - 11 - IN WITNESS WHEREOF, the parties hereto have duly executed and delivered this Amendment as of the date first set forth above. OAKTREE CAPITAL MANAGEMENT, L.P. By: __/s/ Jay Wintrob_______________________________ Name: Jay Wintrob Title: Chief Executive Officer By: __/s/ Daniel Levin_______________________________ Name: Daniel Levin Title: Chief Financial Officer OAKTREE CAPITAL I, L.P. By: __/s/ Jay Wintrob_______________________________ Name: Jay Wintrob Title: Chief Executive Officer By: __/s/ Daniel Levin_______________________________ Name: Daniel Levin Title: Chief Financial Officer OAKTREE CAPITAL II, L.P. By: __/s/ Jay Wintrob_______________________________ Name: Jay Wintrob Title: Chief Executive Officer By: __/s/ Daniel Levin_______________________________ Name: Daniel Levin Title: Chief Financial Officer OAKTREE AIF INVESTMENTS, L.P. By: __/s/ Jay Wintrob_______________________________ Name: Jay Wintrob Title: Chief Executive Officer By: __/s/ Daniel Levin_______________________________ Name: Daniel Levin Title: Chief Financial Officer Name of Holder: The Northwestern Mutual Life Insurance By: Northwestern Mutual Investment Management Company, LLC, its investment adviser By: __/s/ Michael H. Leske_______________________________ Name: Michael H. Leske Title: Managing Director Principal Amount of Senior Notes held: [***] [Signature Page to Amendment to Note Purchase Agreement] Name of Holder: Metropolitan Life Insurance Company, on behalf of its Separate Account 733 By: MetLife Insurance Advisors, LLC, its Investment Manager By: __/s/ John Wills_______________________________ Name: John Wills Title: Senior Vice President and Managing Director MetLife Insurance K.K. By: MetLife Insurance Advisors, LLC, its Investment Manager By: __/s/ John Wills_______________________________ Name: John Wills Title: Senior Vice President and Managing Director Just Retirement Limited By: MetLife Investment Management Limited, as Investment Manager By: __/s/ Jason Rothenberg_______________________________ Name: Jason Rothenberg Title: Authorised Signatory Principal Amount of Senior Notes held: [***] [Signature Page to Amendment to Note Purchase Agreement] Name of Holder: Massachusetts Mutual Life Insurance Company By: Barings LLC, as Investment Adviser By: __/s/ John B.Wheeler_______________________________ Name: John B. Wheeler Title: Managing Director Principal Amount of Senior Notes held: [***] [Signature Page to Amendment to Note Purchase Agreement] Name of Holder: MassMutual Asia Limited By: Barings LLC as Investment Adviser By: __/s/ John B.Wheeler_______________________________ Name: John B. Wheeler Title: Managing Director Principal Amount of Senior Notes held: [***] [Signature Page to Amendment to Note Purchase Agreement] Name of Holder: Banner Life Insurance Company By: Barings LLC as Investment Adviser By: __/s/ John B.Wheeler_______________________________ Name: John B. Wheeler Title: Managing Director Principal Amount of Senior Notes held: [***] [Signature Page to Amendment to Note Purchase Agreement] Name of Holder: American General Life Insurance Company The United States Life Insurance Company in the City of New York National Union Fire Insurance Company of Pittsburgh, PA Lexington Insurance Company United Guaranty Residential Insurance Company By: AIG Asset Management (U.S.) LLC, Investment Adviser By: __/s/ Gerald Herman_______________________________ Name: Gerald Herman Title: Managing Director Principal Amount of Senior Notes held: [***] [Signature Page to Amendment to Note Purchase Agreement] Name of Holder: Voya Retirement Insurance and Annuity Company (f/k/a ING Life Insurance and Annuity Company Voya Insurance and Annuity Company (F/K/A ING USA Annuity and Life Insurance Company) Reliastar Life Insurance Company Security Life of Denver Insurance Company By: Voya Investment Management LLC, as Agent By: __/s/ Joshua Winchester_____________________________ Name: Joshua Winchester Title: Vice President Principal Amount of Senior Notes held: [***] [Signature Page to Amendment to Note Purchase Agreement] Name of Holder: Phoenix Life Insurance Company By: __/s/ Christopher M. Wilkos_________________________ Name: Christopher M. Wilkos Title: Vice President Principal Amount of Senior Notes held: [***] Name of Holder: PHL Variable Insurance Company By: __/s/ Christopher M. Wilkos_________________________ Name: Christopher M. Wilkos Title: Vice President Principal Amount of Senior Notes held: [***] [Signature Page to Amendment to Note Purchase Agreement] Name of Holder: Gleaner Life Insurance Society Health Care Service Corporation Catholic United Financial American Republic Insurance Company Trustmark Insurance Company Blue Cross and Blue Shield of Florida, Inc. Fidelity Life Association Dearborn National Life Insurance Company Catholic Financial Life UnitedHealthcare Insurance Company Western Fraternal Life Association Catholic Life Insurance Minnesota Life Insurance Company By: Advantus Capital Management, Inc. By: __/s/ Theodore R. Hoxmeier________________________ Name: Theodore R. Hoxmeier Title: Vice President Principal Amount of Senior Notes held: [***] [Signature Page to Amendment to Note Purchase Agreement] Name of Holder: AXA Equitable Life Insurance Company By: __/s/ Amy Judd_________________________ Name: Amy Judd Title: Investment Officer Principal Amount of Senior Notes held: [***] Name of Holder: MONY Life Insurance Company of America By: __/s/ Amy Judd_________________________ Name: Amy Judd Title: Investment Officer Principal Amount of Senior Notes held: [***] [Signature Page to Amendment to Note Purchase Agreement] Name of Holder: Horizon Blue Cross Blue Shield of New Jersey By: Cudd & Co. (as nominee for Horizon Blue Cross Blue Shield of New Jersey) By: __/s/ Andrew J. Michaels_________________________ Name: Andrew J. Michaels Title: Vice President Principal Amount of Senior Notes held: [***] [Signature Page to Amendment to Note Purchase Agreement] Name of Holder: Gerber Life Insurance Company By: Band & Co. As Nominee for Gerber Life Insurance Company By: __/s/ Lorra Donnelly_________________________ Name: Lorra Donnelly Title: AVP Principal Amount of Senior Notes held: [***] [Signature Page to Amendment to Note Purchase Agreement] Name of Holder: Connecticut General Life Insurance Company By: Cigna Investments, Inc. (authorized agent) By: __/s/ Elisabeth V. Piker_________________________ Name: Elizabeth V. Piker Title: Managing Director Principal Amount of Senior Notes held: [***] Name of Holder: Cigna Life Insurance Company of New York By: Cigna Investments, Inc. (authorized agent) By: __/s/ Elisabeth V. Piker_________________________ Name: Elizabeth V. Piker Title: Managing Director Principal Amount of Senior Notes held: [***] [Signature Page to Amendment to Note Purchase Agreement] Name of Holder: Life Insurance Company of North America By: Cigna Investments, Inc. (authorized agent) By: __/s/ Elisabeth V. Piker_________________________ Name: Elizabeth V. Piker Title: Managing Director Principal Amount of Senior Notes held: [***] Name of Holder: Cigna Life Insurance Company of New York By: Cigna Investments, Inc. (authorized agent) By: __/s/ Elisabeth V. Piker_________________________ Name: Elizabeth V. Piker Title: Managing Director Principal Amount of Senior Notes held: [***] [Signature Page to Amendment to Note Purchase Agreement] Exhibit 4.5 Execution Version CERTAIN IDENTIFIED INFORMATION MARKED BY [***] HAS BEEN EXCLUDED FROM THIS EXHIBIT BECAUSE IT IS BOTH (I) NOT MATERIAL AND (II) WOULD LIKELY CAUSE COMPETITIVE HARM TO THE REGISTRANT IF PUBLICLY DISCLOSED SECOND AMENDMENT to Note Purchase Agreement This SECOND AMENDMENT to Note Purchase Agreement (“Amendment”) is entered into as of April 24, 2020 by and among Oaktree Capital Management, L.P., a Delaware limited partnership (the “Company”), Oaktree Capital I, L.P., a Delaware limited partnership (“Oaktree Capital I”), Oaktree Capital II, L.P., a Delaware limited partnership (“Oaktree Capital II”), Oaktree AIF Investments, L.P., a Delaware limited partnership (“Oaktree AIF” and collectively with the Company, Oaktree Capital I and Oaktree Capital II, the “Obligors”), and the undersigned holders (the “Holders”) of the Notes (as hereinafter defined) party hereto. Unless otherwise defined or amended herein, capitalized terms used in this Amendment shall have the meanings assigned to them in the Note Purchase Agreement (as hereinafter defined). Recitals WHEREAS, the Company and the Holders have agreed to amend certain provisions of that certain note purchase agreement (the “Note Purchase Agreement”), dated as of July 11, 2014, as amended by that certain Amendment to Note Purchase Agreement, dated as of October 18, 2017, among the Obligors and the purchasers listed on Schedule B thereto relating to the issuance and sale of the Company’s 3.91% Senior Notes, Series A, due September 3, 2024, the Company’s 4.01% Senior Notes, Series B, due September 3, 2026, and the Company’s 4.21% Senior Notes, Series C, due September 3, 2029 (collectively, the “Notes”), and as otherwise amended and in effect from time to time, on the terms and conditions expressly set forth herein. Now therefore, in consideration of the premises and the mutual agreements herein contained, the parties hereto agree as follows: SECTION 1. REPRESENTATIONS and Warranties The Obligors, jointly and severally, represent and warrant to each Holder that: §1.1 Organization, Power and Authority. Each Obligor is a limited partnership duly organized, validly existing and in good standing under the laws of the State of Delaware, and is duly qualified as a foreign limited partnership and in good standing in each jurisdiction in which such qualification is required by law, other than those jurisdictions as to which the failure to be so qualified and in good standing could not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect. Each Obligor has the limited partnership power and 44506610.1 ACTIVE 49388434v13 authority to own or hold under lease the properties it purports to own or hold under lease, to transact its business and to execute this Amendment. §1.2 Authorization, etc. This Amendment has been duly authorized by all necessary limited partnership action on the part of each Obligor, and this Amendment constitutes a legal, valid and binding obligation of each Obligor, enforceable against each of them in accordance with its terms, except as such enforceability may be limited by (i) applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the enforcement of creditors’ rights generally and (ii) general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or at law). §1.3 Compliance with Laws, Other Instruments, etc. The execution, delivery and performance by each Obligor of this Amendment will not (i) contravene, result in any breach of, or constitute a default under, or result in the creation of any Lien in respect of any property of any Obligor or any Subsidiary under, any indenture, mortgage, deed of trust, loan, purchase or credit agreement, lease, corporate charter or by-laws, shareholders agreement or any other Material agreement or instrument to which any Obligor or any Subsidiary is bound or by which any Obligor or any Subsidiary or any of their respective properties may be bound or affected, (ii) conflict with or result in a breach of any of the terms, conditions or provisions of any order, judgment, decree or ruling of any court, arbitrator or Governmental Authority applicable to any Obligor or any Subsidiary or (iii) violate any provision or other statute or other rule or regulation of any Governmental Authority applicable to any Obligor or any Subsidiary. §1.4 Consent, etc. No consent, approval or authorization of, or registration, filing or declaration with, any Governmental Authority is required in connection with the execution, delivery or performance by any Obligor of this Amendment. §1.5 Absence of Defaults. Immediately prior to the execution, delivery and performance of this Amendment, and after giving effect thereto, no Default or Event of Default will exist. SECTION 2. Amendment - 2 - The Note Purchase Agreement is hereby amended as of the date this Amendment becomes effective pursuant to Section 3.1 hereof in the following respects: §2.1 Liens Section 10.5(f) of the Note Purchase Agreement is hereby amended and restated in its entirety as follows: (f) in the case of any Obligor or any Subsidiary that serves as the direct or indirect general partner, manager, managing member or similar controlling entity of an investment fund managed by any of the Obligors or any of their Affiliates, any Lien on such Obligor or such Subsidiary’s interests and rights as such controlling entity of such fund or any special purpose vehicle owned by such fund; provided that such Lien shall not extend to such Obligor or Subsidiary’s right to receive distributions or any incentive allocation from such fund; §2.2 Restrictive Agreements; Negative Pledge Clauses (a) Section 10.8 of the Note Purchase Agreement is hereby amended and restated in its entirety as follows: Section 10.8. Restrictive Agreements; Negative Pledge Clauses. The Obligors will not, and will not permit any of their respective Subsidiaries (other than any CLO Subsidiary) to, directly or indirectly, enter into, incur or permit to exist or become effective any agreement or other arrangement that prohibits, limits, restricts or imposes any condition upon (a) the ability of any Obligor or any Subsidiary to create, incur, assume or permit to exist any Lien upon any of its property, assets or revenues, whether now owned or hereafter acquired, or (b) the ability of any Subsidiary to pay dividends or other distributions on account of its Capital Stock or to make or repay loans or advances to the Obligors or any other Subsidiary or to deliver a Guaranty with respect to Indebtedness of the Obligors or any other Subsidiary; provided that (i) the foregoing shall not apply to restrictions and conditions imposed by law or by this Agreement; (ii) the foregoing shall not apply to restrictions and conditions existing on the date hereof identified on Schedule 10.8 (and any extension, renewal or amendment or modification thereof, provided that such extension, renewal, amendment or modification does not expand the scope of, any such restriction or condition); (iii) the foregoing shall not apply to customary restrictions and conditions contained in agreements relating to the sale of a Subsidiary, business or assets pending such sale, provided such restrictions and conditions apply only to the Subsidiary, business or assets that is to be sold and such sale is permitted hereunder; (iv) clause (a) of the foregoing shall not apply to restrictions or conditions imposed by any agreement relating to secured Indebtedness permitted by this Agreement if such restrictions or conditions apply only to the property or assets securing such Indebtedness; (v) clause (a) of the foregoing shall not apply to customary - 3 - provisions in leases restricting the assignment thereof; and (vi) the foregoing shall not apply to restrictions and conditions (x) contained in agreements evidencing a Permitted Financing or (y) applicable to an Obligor or a Subsidiary that serves as the direct or indirect general partner, manager, managing member or similar controlling entity of one or more investment funds contained in subscription credit facility agreements. §2.3 FATCA Information Section 14 of the Note Purchase Agreement is hereby amended by inserting as a new Section 14.4 the following: Section 14.4.FATCA Information. By acceptance of any Note, the holder of such Note agrees that such holder will with reasonable promptness duly complete and deliver to the Company, or to such other Person as may be reasonably requested by any Obligor, from time to time (a) in the case of any such holder that is a United States Person, such holder’s United States tax identification number or other documentation reasonably requested by an Obligor necessary to establish such holder’s status as a United States Person under FATCA and as may otherwise be necessary for the Company to comply with its obligations under FATCA and (b) in the case of any such holder that is not a United States Person, such documentation prescribed by applicable law (including as prescribed by section 1471(b)(3)(C)(i) of the Code) and such additional documentation as may be necessary for the Company to comply with its obligations under FATCA and to determine that such holder has complied with such holder’s obligations under FATCA or to determine the amount (if any) to deduct and withhold from any such payment made to such holder. Nothing in this Section 14.4 shall require any holder to provide information that is confidential or proprietary to such holder unless the Company is required to obtain such information under FATCA and, in such event, the Company shall treat any such information it receives as confidential. §2.4 Defined Terms (a) The following defined terms shall be added to the Note Purchase Agreement: “AOH” means Atlas OCM Holdings, LLC, a Delaware limited liability company. “FATCA” means (a) sections 1471 through 1474 of the Code, as of the date of this Agreement (or any amended or successor version), together with any current or future regulations or official interpretations thereof, (b) any treaty, law or regulation of any other jurisdiction, or relating to an intergovernmental agreement between the United States of America and any other jurisdiction, which (in either - 4 - case) facilitates the implementation of the foregoing clause (a), and (c) any agreements entered into pursuant to section 1471(b)(1) of the Code. “United States Person” has the meaning set forth in Section 7701(a)(30) of the Code. (b) The following defined terms shall be amended and restated in their entirety, as follows: “Combined EBITDA” means, for any period, Combined Net Income for such period plus, (a) without duplication and to the extent reflected as a charge in the statement of such Combined Net Income for such period, the sum of (i) income tax expense, (ii) Combined Interest Expense, (iii) amortization or write-off of debt discount and debt issuance costs and commissions, discounts and other fees and charges associated with Indebtedness (including the Notes), (iv) depreciation and amortization expense, (v) amortization of intangibles (including, but not limited to, goodwill) and organization costs, (vi) any extraordinary, unusual or non-recurring expenses or losses (including, whether or not otherwise includable as a separate item in the statement of such Combined Net Income for such period, losses on sales of assets outside of the ordinary course of business) and (vii) any non-cash charges, including non-cash charges resulting from the vesting or issuance of equity to employees, principals or others, and minus, (b) without duplication and to the extent included as income or gain in the statement of such Combined Net Income for such period, the sum of (i) any extraordinary, unusual or non-recurring non-cash income or gains (including, whether or not otherwise includable as a separate item in the statement of such Combined Net Income for such period, non-cash gains on the sales of assets outside of the ordinary course of business) and (ii) any other non-cash income, all as determined on a combined basis, and plus or minus, as appropriate, (c) without duplication of the items set forth in clauses (a) and (b) above, the adjustments equivalent to those that OCG made to arrive at its “Adjusted Net Income” in its Annual Report on Form 10-K for the fiscal year ended December 31, 2018 (as filed with the SEC), to the extent relevant to the Obligors, and (d) without duplication of the items set forth in clauses (a), (b) and (c) above, the adjustments replacing investment income (loss) with receipts of investment income from funds and companies equivalent to those that OCG made to arrive at its “Distributable Earnings” in its Annual Report on Form 10-K for the fiscal year ended December 31, 2018 (as filed with the SEC), to the extent relevant to the Obligors; provided that the contribution to Combined EBITDA of a Subsidiary that is not a Wholly-Owned Subsidiary shall be calculated in proportion to the Obligors’ aggregate direct or indirect economic interests in such Subsidiary. For the purposes of calculating Combined EBITDA for any period of four consecutive fiscal quarters (each, a “Reference Period”) pursuant to any determination of the Combined Leverage Ratio, (i) if at any time during such - 5 - Reference Period the Obligors or any Subsidiary shall have made any Material Disposition, the Combined EBITDA for such Reference Period shall be reduced by an amount equal to the Combined EBITDA (if positive) attributable to the property that is the subject of such Material Disposition for such Reference Period or increased by an amount equal to the Combined EBITDA (if negative) attributable thereto for such Reference Period and (ii) if during such Reference Period the Obligors or any Subsidiary shall have made a Material Acquisition, Combined EBITDA for such Reference Period shall be calculated after giving pro forma effect thereto as if such Material Acquisition occurred on the first day of such Reference Period; provided that, with respect to any such Material Disposition or Material Acquisition, Combined EBITDA shall be adjusted to take into account compensation expense, occupancy costs, rental expenses and other reasonably identifiable and supportable cost and expense items that will be eliminated as a result of consummating such Material Disposition or Material Acquisition (“Disposition/Acquisition Addbacks”); provided further that (x) calculations of Disposition/Acquisition Addbacks shall be made in good faith by a Senior Financial Officer and (y) Disposition/Acquisition Addbacks shall not exceed 10% of Combined EBITDA for any Reference Period. As used in this definition, “Material Acquisition” means any acquisition of property or series of related acquisitions of property that (a) constitutes assets comprising in excess of 51% of an operating unit of a business or constitutes in excess of 51% of the common stock of a Person and (b) involves the payment of consideration by the Obligors and their respective Subsidiaries in excess of $250,000,000; and “Material Disposition” means any disposition of property or series of related dispositions of property that yields gross proceeds to one or more of the Obligors and their respective Subsidiaries in excess of $250,000,000. “Controlled Entity” means OCG and AOH and each of their respective subsidiaries other than (i) any investment fund or CLO or any subsidiary thereof that is managed by any subsidiary of OCG or AOH or (ii) an entity held by OCG, AOH or any of their respective subsidiaries that holds investments that it or an Affiliate thereof manages or intends to manage as part of an investment fund or a CLO, including any entity formed for the purpose of holding investments in connection with seeding a new investment portfolio or strategy. “Oaktree Parent Entities” means OCG, AOH and each of their respective subsidiaries that holds an equity interest in any of the Obligors. “Principal Credit Facility” means the Credit Agreement dated as of March 31, 2014, as amended by the First Amendment to Credit Agreement dated as of November 3, 2014, the Second Amendment to Credit Agreement dated as of March 31, 2016, the Third Amendment to Credit Agreement dated as of November 14, 2017, the Fourth Amendment to Credit Agreement dated as of March 29, 2018 and the Fifth Amendment to Credit Agreement dated as of December 13, 2019, among the Company, Oaktree Capital II, Oaktree AIF, - 6 - Oaktree Capital I, the lenders party thereto and Wells Fargo Bank, National Association, as administrative agent, letter of credit issuer and swing line lender, including any renewals, extensions, amendments, supplements, restatements, replacements or refinancing thereof (provided, however, if such replacement credit facility actually consists of multiple credit facilities, then the “Principal Credit Facility” for purposes of this definition shall be the single credit facility among such replacement credit facilities under which the Obligors have the ability to borrow the largest amount of principal). SECTION 3. MISCELLANEOUS §3.1 Conditions to Effectiveness. The effectiveness of this Amendment is expressly subject to the following conditions: (i) the representations and warranties made by the Obligors under Section 1 of this Amendment shall be true and correct, (ii) executed counterparts of this Amendment, duly executed by the Obligors and Holders constituting Required Holders shall have been delivered to the Holders, (iii) receipt by each Holder of (a) a certificate of the Secretary or Assistant Secretary of each Obligor, dated the date hereof, certifying as to (1) the resolutions attached thereto and the corporate proceedings relating to the authorization, execution and delivery of this Amendment and the performance of its obligations hereunder and (2) the Obligors’ organization documents currently in effect, and (b) a recent “good standing certificate” from the Secretary of State of the State of Delaware (which certificate shall indicate that the Obligor is in good standing and has legal existence in the State of Delaware), and (iv) the Company shall have paid, or reimbursed the Holders for, the reasonable fees, charges and disbursements of special counsel to the Holders; provided that the Company shall not be liable for the attorneys’ fees, costs and disbursements of more than one firm of special counsel (which firm shall be the firm retained to represent all holders of Notes collectively). §3.2 Instrument Pursuant to Note Purchase Agreement. This Amendment is executed pursuant to Section 18 of the Note Purchase Agreement and shall be construed, administered, and applied in accordance with all of the terms and provisions of the Note Purchase Agreement. Except as expressly set forth herein, all of the representations, warranties, terms, covenants and conditions of the Note Purchase Agreement shall remain unamended and in full force and effect. The execution, delivery and effectiveness of this Amendment shall not, except as expressly provided herein, (i) constitute an amendment or a waiver of, or consent to any departure from, any provision of the Note Purchase Agreement, (ii) operate as a waiver of any right, power or remedy of any holder of any Note, or (iii) constitute a waiver of any Default or Event of Default or any other - 7 - documents, instruments and agreements executed and/or delivered in connection therewith. §3.3 Successors and Assigns. This Amendment shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns (including, without limitation, any subsequent holder of a Note) whether so expressed or not. §3.4 Counterparts. This Amendment may be executed in any number of counterparts, each of which shall be an original but all of which together shall constitute one instrument. §3.5 Governing Law. This Amendment shall be construed and enforced in accordance with, and the rights of the parties shall be governed by, the law of the State of New York, excluding choice-of-law principles of the law of such State that would require the application of the laws of a jurisdiction other than such State. - 8 - IN WITNESS WHEREOF, the parties hereto have duly executed and delivered this Amendment as of the date first set forth above. OAKTREE CAPITAL MANAGEMENT, L.P. By: __/s/ Dan Levin_______________________________ Name: Dan Levin Title: Chief Financial Officer By: __/s/ Jeffrey Joseph_______________________________ Name: Jeffrey Joseph Title: Managing Director OAKTREE CAPITAL I, L.P. By: __/s/ Dan Levin_______________________________ Name: Dan Levin Title: Chief Financial Officer By: __/s/ Jeffrey Joseph_______________________________ Name: Jeffrey Joseph Title: Managing Director OAKTREE CAPITAL II, L.P. By: __/s/ Dan Levin_______________________________ Name: Dan Levin Title: Chief Financial Officer By: __/s/ Jeffrey Joseph_______________________________ Name: Jeffrey Joseph Title: Managing Director OAKTREE AIF INVESTMENTS, L.P. By: __/s/ Dan Levin_______________________________ Name: Dan Levin Title: Chief Financial Officer By: __/s/ Jeffrey Joseph_______________________________ Name: Jeffrey Joseph Title: Managing Director [Signature Page to Second Amendment to Note Purchase Agreement] Name of Holder: The Northwestern Mutual Life Insurance Company By: Northwestern Mutual Investment Management Company, LLC, its investment adviser By: __/s/ Michael H. Leske_________________________ Name: Michael H. Leske Title: Managing Director Principal Amount of Senior Notes held: [***] [Signature Page to Second Amendment to Note Purchase Agreement] Name of Holder: American General Life Insurance Company The United States Life Insurance Company in the City of New York National Union Fire Insurance Company of Pittsburgh, PA Lexington Insurance Company United Guaranty Residential Insurance Company By: AIG Asset Management (U.S.) LLC, Investment Adviser By: __/s/ Jason Young_______________________________ Name: Jason Young Title: Managing Director Principal Amount of Senior Notes held: [***] [Signature Page to Second Amendment to Note Purchase Agreement] Name of Holder: Massachusetts Mutual Life Insurance Company By: Barings LLC, as Investment Adviser By: __/s/ James Moore_______________________________ Name: James Moore Title: Managing Director YF Life Insurance International Limited By: Barings LLC, as Investment Adviser By: __/s/ James Moore_______________________________ Name: James Moore Title: Managing Director Banner Life Insurance Company By: Barings LLC, as Investment Adviser By: __/s/ James Moore_______________________________ Name: James Moore Title: Managing Director Principal Amount of Senior Notes held: [***] [Signature Page to Second Amendment to Note Purchase Agreement] Name of Holder: Minnesota Life Insurance Company Catholic Financial Insurance Fidelity Life Association UnitedHealthcare Insurance Company Trustmark Insurance Company Gleaner Life Insurance Society American Republic Insurance Company Blue Cross and Blue Shield of Florida, Inc. Catholic Financial Life Dearborn National Life Insurance Company Western Fraternal Life Association Health Care Service Corporation Catholic United Financial By: Securian Asset Management, Inc. By: __/s/ Jennifer L. Wolf________________________ Name: Jennifer L. Wolf Title: Vice President Principal Amount of Senior Notes held: [***] [Signature Page to Second Amendment to Note Purchase Agreement] Name of Holder: AXA Equitable Life Insurance Company By: __/s/ Amy Judd_________________________ Name: Amy Judd Title: Investment Officer Name of Holder: MONY Life Insurance Company of America By: __/s/ Amy Judd_________________________ Name: Amy Judd Title: Investment Officer Principal Amount of Senior Notes held: [***] [Signature Page to Second Amendment to Note Purchase Agreement] Name of Holder: Nassau Life Insurance Company PHL Variable Insurance Company By: Nassau Asset Management LLC, Its Investment Manager By: __/s/ David E. Czerniecki_________________________ Name: David E. Czerniecki Title: Chief Investment Officer Principal Amount of Senior Notes held: [***] [Signature Page to Second Amendment to Note Purchase Agreement] Name of Holder: Venerable Insurance and Annuity Company By: Apollo Insurance Solutions Group LP, its investment adviser By: Apollo Capital Management, L.P., its sub adviser By: Apollo Capital Management GP, LLC, its General Partner By: __/s/ Joseph D. Glatt_________________________ Name: Joseph D. Glatt Title: Vice President Principal Amount of Senior Notes held: [***] Name of Holder: Venerable Insurance and Annuity Company By: Apollo Insurance Solutions Group LP, its investment adviser By: Apollo Capital Management, L.P., its sub adviser By: Apollo Capital Management GP, LLC, its General Partner By: __/s/ Joseph D. Glatt_________________________ Name: Joseph D. Glatt Title: Vice President Principal Amount of Senior Notes held: [***] [Signature Page to Second Amendment to Note Purchase Agreement] Exhibit 4.10 Execution Version CERTAIN IDENTIFIED INFORMATION MARKED BY [***] HAS BEEN EXCLUDED FROM THIS EXHIBIT BECAUSE IT IS BOTH (I) NOT MATERIAL AND (II) WOULD LIKELY CAUSE COMPETITIVE HARM TO THE REGISTRANT IF PUBLICLY DISCLOSED AMENDMENT to Note Purchase Agreement This AMENDMENT to Note Purchase Agreement (“Amendment”) is entered into as of April 24, 2020 by and among Oaktree Capital Management, L.P., a Delaware limited partnership (the “Company”), Oaktree Capital I, L.P., a Delaware limited partnership (“Oaktree Capital I”), Oaktree Capital II, L.P., a Delaware limited partnership (“Oaktree Capital II”), Oaktree AIF Investments, L.P., a Delaware limited partnership (“Oaktree AIF” and collectively with the Company, Oaktree Capital I and Oaktree Capital II, the “Obligors”), and the undersigned holders (the “Holders”) of the Notes (as hereinafter defined) party hereto. Unless otherwise defined or amended herein, capitalized terms used in this Amendment shall have the meanings assigned to them in the Note Purchase Agreement (as hereinafter defined). Recitals WHEREAS, the Company and the Holders have agreed to amend certain provisions of that certain note purchase agreement (the “Note Purchase Agreement”), dated as of July 12, 2016 among the Obligors and the purchasers listed on Schedule B thereto relating to the issuance and sale of the Company’s 3.69% Senior Notes due July 12, 2031 (the “Notes”), and as otherwise amended and in effect from time to time, on the terms and conditions expressly set forth herein. Now therefore, in consideration of the premises and the mutual agreements herein contained, the parties hereto agree as follows: SECTION 1. REPRESENTATIONS and Warranties The Obligors, jointly and severally, represent and warrant to each Holder that: §1.1 Organization, Power and Authority. Each Obligor is a limited partnership duly organized, validly existing and in good standing under the laws of the State of Delaware, and is duly qualified as a foreign limited partnership and in good standing in each jurisdiction in which such qualification is required by law, other than those jurisdictions as to which the failure to be so qualified and in good standing could not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect. Each Obligor has the limited partnership power and authority to own or hold under lease the properties it purports to own or hold under lease, to transact its business and to execute this Amendment. 44506617.1 ACTIVE 49388434v13 §1.2 Authorization, etc. This Amendment has been duly authorized by all necessary limited partnership action on the part of each Obligor, and this Amendment constitutes a legal, valid and binding obligation of each Obligor, enforceable against each of them in accordance with its terms, except as such enforceability may be limited by (i) applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the enforcement of creditors’ rights generally and (ii) general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or at law). §1.3 Compliance with Laws, Other Instruments, etc. The execution, delivery and performance by each Obligor of this Amendment will not (i) contravene, result in any breach of, or constitute a default under, or result in the creation of any Lien in respect of any property of any Obligor or any Subsidiary under, any indenture, mortgage, deed of trust, loan, purchase or credit agreement, lease, corporate charter or by-laws, shareholders agreement or any other Material agreement or instrument to which any Obligor or any Subsidiary is bound or by which any Obligor or any Subsidiary or any of their respective properties may be bound or affected, (ii) conflict with or result in a breach of any of the terms, conditions or provisions of any order, judgment, decree or ruling of any court, arbitrator or Governmental Authority applicable to any Obligor or any Subsidiary or (iii) violate any provision or other statute or other rule or regulation of any Governmental Authority applicable to any Obligor or any Subsidiary. §1.4 Consent, etc. No consent, approval or authorization of, or registration, filing or declaration with, any Governmental Authority is required in connection with the execution, delivery or performance by any Obligor of this Amendment. §1.5 Absence of Defaults. Immediately prior to the execution, delivery and performance of this Amendment, and after giving effect thereto, no Default or Event of Default will exist. SECTION 2. Amendment The Note Purchase Agreement is hereby amended as of the date this Amendment becomes effective pursuant to Section 3.1 hereof in the following respects: §2.1 Liens Section 10.5(f) of the Note Purchase Agreement is hereby amended and restated in its entirety as follows: - 2 - (f) in the case of any Obligor or any Subsidiary that serves as the direct or indirect general partner, manager, managing member or similar controlling entity of an investment fund managed by any of the Obligors or any of their Affiliates, any Lien on such Obligor or such Subsidiary’s interests and rights as such controlling entity of such fund or any special purpose vehicle owned by such fund; provided that such Lien shall not extend to such Obligor or Subsidiary’s right to receive distributions or any incentive allocation from such fund; §2.2 Restrictive Agreements; Negative Pledge Clauses (a) Section 10.8 of the Note Purchase Agreement is hereby amended and restated in its entirety as follows: Section 10.8. Restrictive Agreements; Negative Pledge Clauses. The Obligors will not, and will not permit any of their respective Subsidiaries (other than any CLO Subsidiary) to, directly or indirectly, enter into, incur or permit to exist or become effective any agreement or other arrangement that prohibits, limits, restricts or imposes any condition upon (a) the ability of any Obligor or any Subsidiary to create, incur, assume or permit to exist any Lien upon any of its property, assets or revenues, whether now owned or hereafter acquired, or (b) the ability of any Subsidiary to pay dividends or other distributions on account of its Capital Stock or to make or repay loans or advances to the Obligors or any other Subsidiary or to deliver a Guaranty with respect to Indebtedness of the Obligors or any other Subsidiary; provided that (i) the foregoing shall not apply to restrictions and conditions imposed by law or by this Agreement; (ii) the foregoing shall not apply to restrictions and conditions existing on the date hereof identified on Schedule 10.8 (and any extension, renewal or amendment or modification thereof, provided that such extension, renewal, amendment or modification does not expand the scope of, any such restriction or condition); (iii) the foregoing shall not apply to customary restrictions and conditions contained in agreements relating to the sale of a Subsidiary, business or assets pending such sale, provided such restrictions and conditions apply only to the Subsidiary, business or assets that is to be sold and such sale is permitted hereunder; (iv) clause (a) of the foregoing shall not apply to restrictions or conditions imposed by any agreement relating to secured Indebtedness permitted by this Agreement if such restrictions or conditions apply only to the property or assets securing such Indebtedness; (v) clause (a) of the foregoing shall not apply to customary provisions in leases restricting the assignment thereof; and (vi) the foregoing shall not apply to restrictions and conditions (x) contained in agreements evidencing a Permitted Financing or (y) applicable to an Obligor or a Subsidiary that serves as the direct or indirect general partner, manager, managing member or similar controlling entity of one or more investment funds contained in subscription credit facility agreements. - 3 - §2.3 FATCA Information Section 14 of the Note Purchase Agreement is hereby amended by inserting as a new Section 14.4 the following: Section 14.4.FATCA Information. By acceptance of any Note, the holder of such Note agrees that such holder will with reasonable promptness duly complete and deliver to the Company, or to such other Person as may be reasonably requested by any Obligor, from time to time (a) in the case of any such holder that is a United States Person, such holder’s United States tax identification number or other documentation reasonably requested by an Obligor necessary to establish such holder’s status as a United States Person under FATCA and as may otherwise be necessary for the Company to comply with its obligations under FATCA and (b) in the case of any such holder that is not a United States Person, such documentation prescribed by applicable law (including as prescribed by section 1471(b)(3)(C)(i) of the Code) and such additional documentation as may be necessary for the Company to comply with its obligations under FATCA and to determine that such holder has complied with such holder’s obligations under FATCA or to determine the amount (if any) to deduct and withhold from any such payment made to such holder. Nothing in this Section 14.4 shall require any holder to provide information that is confidential or proprietary to such holder unless the Company is required to obtain such information under FATCA and, in such event, the Company shall treat any such information it receives as confidential. §2.4 Defined Terms (a) The following defined terms shall be added to the Note Purchase Agreement: “AOH” means Atlas OCM Holdings, LLC, a Delaware limited liability company. “FATCA” means (a) sections 1471 through 1474 of the Code, as of the date of this Agreement (or any amended or successor version), together with any current or future regulations or official interpretations thereof, (b) any treaty, law or regulation of any other jurisdiction, or relating to an intergovernmental agreement between the United States of America and any other jurisdiction, which (in either case) facilitates the implementation of the foregoing clause (a), and (c) any agreements entered into pursuant to section 1471(b)(1) of the Code. “United States Person” has the meaning set forth in Section 7701(a)(30) of the Code. (b) The following defined terms shall be amended and restated in their entirety, as follows: - 4 - “Combined EBITDA” means, for any period, Combined Net Income for such period plus, (a) without duplication and to the extent reflected as a charge in the statement of such Combined Net Income for such period, the sum of (i) income tax expense, (ii) Combined Interest Expense, (iii) amortization or write-off of debt discount and debt issuance costs and commissions, discounts and other fees and charges associated with Indebtedness (including the Notes), (iv) depreciation and amortization expense, (v) amortization of intangibles (including, but not limited to, goodwill) and organization costs, (vi) any extraordinary, unusual or non-recurring expenses or losses (including, whether or not otherwise includable as a separate item in the statement of such Combined Net Income for such period, losses on sales of assets outside of the ordinary course of business) and (vii) any non-cash charges, including non-cash charges resulting from the vesting or issuance of equity to employees, principals or others, and minus, (b) without duplication and to the extent included as income or gain in the statement of such Combined Net Income for such period, the sum of (i) any extraordinary, unusual or non-recurring non-cash income or gains (including, whether or not otherwise includable as a separate item in the statement of such Combined Net Income for such period, non-cash gains on the sales of assets outside of the ordinary course of business) and (ii) any other non-cash income, all as determined on a combined basis, and plus or minus, as appropriate, (c) without duplication of the items set forth in clauses (a) and (b) above, the adjustments equivalent to those that OCG made to arrive at its “Adjusted Net Income” in its Annual Report on Form 10-K for the fiscal year ended December 31, 2018 (as filed with the SEC), to the extent relevant to the Obligors, and (d) without duplication of the items set forth in clauses (a), (b) and (c) above, the adjustments replacing investment income (loss) with receipts of investment income from funds and companies equivalent to those that OCG made to arrive at its “Distributable Earnings” in its Annual Report on Form 10-K for the fiscal year ended December 31, 2018 (as filed with the SEC), to the extent relevant to the Obligors; provided that the contribution to Combined EBITDA of a Subsidiary that is not a Wholly-Owned Subsidiary shall be calculated in proportion to the Obligors’ aggregate direct or indirect economic interests in such Subsidiary. For the purposes of calculating Combined EBITDA for any period of four consecutive fiscal quarters (each, a “Reference Period”) pursuant to any determination of the Combined Leverage Ratio, (i) if at any time during such Reference Period the Obligors or any Subsidiary shall have made any Material Disposition, the Combined EBITDA for such Reference Period shall be reduced by an amount equal to the Combined EBITDA (if positive) attributable to the property that is the subject of such Material Disposition for such Reference Period or increased by an amount equal to the Combined EBITDA (if negative) attributable thereto for such Reference Period and (ii) if during such Reference Period the Obligors or any Subsidiary shall have made a Material Acquisition, Combined EBITDA for such Reference Period shall be calculated after giving pro - 5 - forma effect thereto as if such Material Acquisition occurred on the first day of such Reference Period; provided that, with respect to any such Material Disposition or Material Acquisition, Combined EBITDA shall be adjusted to take into account compensation expense, occupancy costs, rental expenses and other reasonably identifiable and supportable cost and expense items that will be eliminated as a result of consummating such Material Disposition or Material Acquisition (“Disposition/Acquisition Addbacks”); provided further that (x) calculations of Disposition/Acquisition Addbacks shall be made in good faith by a Senior Financial Officer and (y) Disposition/Acquisition Addbacks shall not exceed 10% of Combined EBITDA for any Reference Period. As used in this definition, “Material Acquisition” means any acquisition of property or series of related acquisitions of property that (a) constitutes assets comprising in excess of 51% of an operating unit of a business or constitutes in excess of 51% of the common stock of a Person and (b) involves the payment of consideration by the Obligors and their respective Subsidiaries in excess of $250,000,000; and “Material Disposition” means any disposition of property or series of related dispositions of property that yields gross proceeds to one or more of the Obligors and their respective Subsidiaries in excess of $250,000,000. “Controlled Entity” means OCG and AOH and each of their respective subsidiaries other than (i) any investment fund or CLO or any subsidiary thereof that is managed by any subsidiary of OCG or AOH or (ii) an entity held by OCG, AOH or any of their respective subsidiaries that holds investments that it or an Affiliate thereof manages or intends to manage as part of an investment fund or a CLO, including any entity formed for the purpose of holding investments in connection with seeding a new investment portfolio or strategy. “Material Credit Facility” means, as to the Obligors and their Subsidiaries, (a) the Principal Credit Facility; (b) the Existing Note Agreements; and (c) any other agreement(s) creating or evidencing indebtedness for borrowed money entered into on or after the date of Closing by any Obligor or any Subsidiary (other than any CLO Subsidiary), or in respect of which any Obligor or any Subsidiary (other than any CLO Subsidiary) is an obligor or otherwise provides a guaranty or other credit support (“Credit Facility”), in a principal amount outstanding or available for borrowing equal to or greater than $250,000,000 (or the equivalent of such amount in the relevant currency of payment, determined as of the date of the closing of such facility based on the exchange rate of such other currency); provided that solely for the purposes of Section 9.7, the foregoing shall exclude any agreements with respect to a Lien permitted under Sections 10.5(d) and 10.5(e). - 6 - “Oaktree Parent Entities” means OCG, AOH and each of their respective subsidiaries that holds an equity interest in any of the Obligors. “Principal Credit Facility” means the Credit Agreement dated as of March 31, 2014, as amended by the First Amendment to Credit Agreement dated as of November 3, 2014, the Second Amendment to Credit Agreement dated as of March 31, 2016, the Third Amendment to Credit Agreement dated as of November 14, 2017, the Fourth Amendment to Credit Agreement dated as of March 29, 2018 and the Fifth Amendment to Credit Agreement dated as of December 13, 2019, among the Company, Oaktree Capital II, Oaktree AIF, Oaktree Capital I, the lenders party thereto and Wells Fargo Bank, National Association, as administrative agent, letter of credit issuer and swing line lender, including any renewals, extensions, amendments, supplements, restatements, replacements or refinancing thereof (provided, however, if such replacement credit facility actually consists of multiple credit facilities, then the “Principal Credit Facility” for purposes of this definition shall be the single credit facility among such replacement credit facilities under which the Obligors have the ability to borrow the largest amount of principal). SECTION 3. MISCELLANEOUS §3.1 Conditions to Effectiveness. The effectiveness of this Amendment is expressly subject to the following conditions: (i) the representations and warranties made by the Obligors under Section 1 of this Amendment shall be true and correct, (ii) executed counterparts of this Amendment, duly executed by the Obligors and Holders constituting Required Holders shall have been delivered to the Holders, (iii) receipt by each Holder of (a) a certificate of the Secretary or Assistant Secretary of each Obligor, dated the date hereof, certifying as to (1) the resolutions attached thereto and the corporate proceedings relating to the authorization, execution and delivery of this Amendment and the performance of its obligations hereunder and (2) the Obligors’ organization documents currently in effect, and (b) a recent “good standing certificate” from the Secretary of State of the State of Delaware (which certificate shall indicate that the Obligor is in good standing and has legal existence in the State of Delaware), and (iv) the Company shall have paid, or reimbursed the Holders for, the reasonable fees, charges and disbursements of special counsel to the Holders; provided that the Company shall not be liable for the attorneys’ fees, costs and disbursements of more than one firm of special counsel (which firm shall be the firm retained to represent all holders of Notes collectively). §3.2 Instrument Pursuant to Note Purchase Agreement. This Amendment is executed pursuant to Section 18 of the Note Purchase Agreement and shall be construed, administered, and applied in accordance with all of the terms and provisions of the Note Purchase Agreement. Except as expressly set forth herein, all of the representations, warranties, terms, covenants and conditions of the Note Purchase Agreement shall remain unamended and in full force and effect. The execution, delivery and effectiveness of this - 7 - Amendment shall not, except as expressly provided herein, (i) constitute an amendment or a waiver of, or consent to any departure from, any provision of the Note Purchase Agreement, (ii) operate as a waiver of any right, power or remedy of any holder of any Note, or (iii) constitute a waiver of any Default or Event of Default or any other documents, instruments and agreements executed and/or delivered in connection therewith. §3.3 Successors and Assigns. This Amendment shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns (including, without limitation, any subsequent holder of a Note) whether so expressed or not. §3.4 Counterparts. This Amendment may be executed in any number of counterparts, each of which shall be an original but all of which together shall constitute one instrument. §3.5 Governing Law. This Amendment shall be construed and enforced in accordance with, and the rights of the parties shall be governed by, the law of the State of New York, excluding choice-of-law principles of the law of such State that would require the application of the laws of a jurisdiction other than such State. - 8 - IN WITNESS WHEREOF, the parties hereto have duly executed and delivered this Amendment as of the date first set forth above. OAKTREE CAPITAL MANAGEMENT, L.P. By: __/s/ Dan Levin_______________________________ Name: Dan Levin Title: Chief Financial Officer By: __/s/ Jeffrey Joseph_______________________________ Name: Jeffrey Joseph Title: Managing Director OAKTREE CAPITAL I, L.P. By: __/s/ Dan Levin_______________________________ Name: Dan Levin Title: Chief Financial Officer By: __/s/ Jeffrey Joseph_______________________________ Name: Jeffrey Joseph Title: Managing Director OAKTREE CAPITAL II, L.P. By: __/s/ Dan Levin_______________________________ Name: Dan Levin Title: Chief Financial Officer By: __/s/ Jeffrey Joseph_______________________________ Name: Jeffrey Joseph Title: Managing Director OAKTREE AIF INVESTMENTS, L.P. By: __/s/ Dan Levin_______________________________ Name: Dan Levin Title: Chief Financial Officer By: __/s/ Jeffrey Joseph_______________________________ Name: Jeffrey Joseph Title: Managing Director [Signature Page to Amendment to Note Purchase Agreement] Name of Holder: THE NORTHWESTERN MUTUAL LIFE INSURANCE COMPANY By: Northwestern Mutual Investment Management Company, LLC, its investment adviser By: __/s/ Michael H. Leske______________________________ Name: Michael H. Leske Its: Managing Director THE NORTHWESTERN MUTUAL LIFE INSURANCE COMPANY FOR ITS GROUP ANNUITY SEPARATE ACCOUNT By: __/s/ Michael H. Leske______________________________ Name: Michael H. Leske Its: Authorized Representative Principal Amount of Senior Notes held: [***] [Signature Page to Amendment to Note Purchase Agreement] Name of Holder: TEACHERS INSURANCE AND ANNUITY ASSOCIATION OF AMERICA, a New York domiciled life insurance company By: Nuveen Alternatives Advisors LLC, a Delaware limited liability company, its investment manager By: __/s/ Ho Young Lee______________________________ Name: Ho Young Lee Title: Managing Director Principal Amount of Senior Notes held: [***] [Signature Page to Amendment to Note Purchase Agreement] Name of Holder: MASSACHUSETTS MUTUAL LIFE INSURANCE COMPANY By: Barings LLC, as Investment Adviser By: __/s/ James Moore______________________________ Name: James Moore Title: Managing Director YF LIFE INSURANCE INTERNATIONAL LIMITED By: Barings LLC, as Investment Adviser By: __/s/ James Moore______________________________ Name: James Moore Title: Managing Director C.M. LIFE INSURANCE COMPANY By: Barings LLC, as Investment Adviser By: __/s/ James Moore______________________________ Name: James Moore Title: Managing Director Principal Amount of Senior Notes held: [***] [Signature Page to Amendment to Note Purchase Agreement] Name of Holder: NASSAU LIFE INSURANCE COMPANY PHL VARIABLE INSURANCE COMPANY By: Nassau Asset Management LLC, Its Investment Manager By: __/s/ David E. Czerniecki______________________________ Name: David E. Czerniecki Title: Chief Investment Officer Principal Amount of Senior Notes held: [***] [Signature Page to Amendment to Note Purchase Agreement] Exhibit 4.13 Execution Version CERTAIN IDENTIFIED INFORMATION MARKED BY [***] HAS BEEN EXCLUDED FROM THIS EXHIBIT BECAUSE IT IS BOTH (I) NOT MATERIAL AND (II) WOULD LIKELY CAUSE COMPETITIVE HARM TO THE REGISTRANT IF PUBLICLY DISCLOSED AMENDMENT to Note Purchase Agreement This AMENDMENT to Note Purchase Agreement (“Amendment”) is entered into as of April 24, 2020 by and among Oaktree Capital Management, L.P., a Delaware limited partnership (the “Company”), Oaktree Capital I, L.P., a Delaware limited partnership (“Oaktree Capital I”), Oaktree Capital II, L.P., a Delaware limited partnership (“Oaktree Capital II”), Oaktree AIF Investments, L.P., a Delaware limited partnership (“Oaktree AIF” and collectively with the Company, Oaktree Capital I and Oaktree Capital II, the “Obligors”), and the undersigned holders (the “Holders”) of the Notes (as hereinafter defined) party hereto. Unless otherwise defined or amended herein, capitalized terms used in this Amendment shall have the meanings assigned to them in the Note Purchase Agreement (as hereinafter defined). Recitals WHEREAS, the Company and the Holders have agreed to amend certain provisions of that certain note purchase agreement (the “Note Purchase Agreement”), dated as of November 16, 2017 among the Obligors and the purchasers listed on Schedule B thereto relating to the issuance and sale of the Company’s 3.78% Senior Notes due December 18, 2032 (the “Notes”), and as otherwise amended and in effect from time to time, on the terms and conditions expressly set forth herein. Now therefore, in consideration of the premises and the mutual agreements herein contained, the parties hereto agree as follows: SECTION 1. REPRESENTATIONS and Warranties The Obligors, jointly and severally, represent and warrant to each Holder that: §1.1 Organization, Power and Authority. Each Obligor is a limited partnership duly organized, validly existing and in good standing under the laws of the State of Delaware, and is duly qualified as a foreign limited partnership and in good standing in each jurisdiction in which such qualification is required by law, other than those jurisdictions as to which the failure to be so qualified and in good standing could not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect. Each Obligor has the limited partnership power and authority to own or hold under lease the properties it purports to own or hold under lease, to transact its business and to execute this Amendment. 44506624.1 ACTIVE 49388434v13 §1.2 Authorization, etc. This Amendment has been duly authorized by all necessary limited partnership action on the part of each Obligor, and this Amendment constitutes a legal, valid and binding obligation of each Obligor, enforceable against each of them in accordance with its terms, except as such enforceability may be limited by (i) applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the enforcement of creditors’ rights generally and (ii) general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or at law). §1.3 Compliance with Laws, Other Instruments, etc. The execution, delivery and performance by each Obligor of this Amendment will not (i) contravene, result in any breach of, or constitute a default under, or result in the creation of any Lien in respect of any property of any Obligor or any Subsidiary under, any indenture, mortgage, deed of trust, loan, purchase or credit agreement, lease, corporate charter or by-laws, shareholders agreement or any other Material agreement or instrument to which any Obligor or any Subsidiary is bound or by which any Obligor or any Subsidiary or any of their respective properties may be bound or affected, (ii) conflict with or result in a breach of any of the terms, conditions or provisions of any order, judgment, decree or ruling of any court, arbitrator or Governmental Authority applicable to any Obligor or any Subsidiary or (iii) violate any provision or other statute or other rule or regulation of any Governmental Authority applicable to any Obligor or any Subsidiary. §1.4 Consent, etc. No consent, approval or authorization of, or registration, filing or declaration with, any Governmental Authority is required in connection with the execution, delivery or performance by any Obligor of this Amendment. §1.5 Absence of Defaults. Immediately prior to the execution, delivery and performance of this Amendment, and after giving effect thereto, no Default or Event of Default will exist. SECTION 2. Amendment The Note Purchase Agreement is hereby amended as of the date this Amendment becomes effective pursuant to Section 3.1 hereof in the following respects: §2.1 Liens Section 10.5(f) of the Note Purchase Agreement is hereby amended and restated in its entirety as follows: - 2 - (f) in the case of any Obligor or any Subsidiary that serves as the direct or indirect general partner, manager, managing member or similar controlling entity of an investment fund managed by any of the Obligors or any of their Affiliates, any Lien on such Obligor or such Subsidiary’s interests and rights as such controlling entity of such fund or any special purpose vehicle owned by such fund; provided that such Lien shall not extend to such Obligor or Subsidiary’s right to receive distributions or any incentive allocation from such fund; §2.2 Restrictive Agreements; Negative Pledge Clauses (a) Section 10.8 of the Note Purchase Agreement is hereby amended and restated in its entirety as follows: Section 10.8. Restrictive Agreements; Negative Pledge Clauses. The Obligors will not, and will not permit any of their respective Subsidiaries (other than any CLO Subsidiary) to, directly or indirectly, enter into, incur or permit to exist or become effective any agreement or other arrangement that prohibits, limits, restricts or imposes any condition upon (a) the ability of any Obligor or any Subsidiary to create, incur, assume or permit to exist any Lien upon any of its property, assets or revenues, whether now owned or hereafter acquired, or (b) the ability of any Subsidiary to pay dividends or other distributions on account of its Capital Stock or to make or repay loans or advances to the Obligors or any other Subsidiary or to deliver a Guaranty with respect to Indebtedness of the Obligors or any other Subsidiary; provided that (i) the foregoing shall not apply to restrictions and conditions imposed by law or by this Agreement; (ii) the foregoing shall not apply to restrictions and conditions existing on the date hereof identified on Schedule 10.8 (and any extension, renewal or amendment or modification thereof, provided that such extension, renewal, amendment or modification does not expand the scope of, any such restriction or condition); (iii) the foregoing shall not apply to customary restrictions and conditions contained in agreements relating to the sale of a Subsidiary, business or assets pending such sale, provided such restrictions and conditions apply only to the Subsidiary, business or assets that is to be sold and such sale is permitted hereunder; (iv) clause (a) of the foregoing shall not apply to restrictions or conditions imposed by any agreement relating to secured Indebtedness permitted by this Agreement if such restrictions or conditions apply only to the property or assets securing such Indebtedness; (v) clause (a) of the foregoing shall not apply to customary provisions in leases restricting the assignment thereof; and (vi) the foregoing shall not apply to restrictions and conditions (x) contained in agreements evidencing a Permitted Financing or (y) applicable to an Obligor or a Subsidiary that serves as the direct or indirect general partner, manager, managing member or similar controlling entity of one or more investment funds contained in subscription credit facility agreements. - 3 - §2.3 Defined Terms (a) The following defined terms shall be added to the Note Purchase Agreement: “AOH” means Atlas OCM Holdings, LLC, a Delaware limited liability company. (b) The following defined terms shall be amended and restated in their entirety, as follows: “Combined EBITDA” means, for any period, Combined Net Income for such period plus, (a) without duplication and to the extent reflected as a charge in the statement of such Combined Net Income for such period, the sum of (i) income tax expense, (ii) Combined Interest Expense, (iii) amortization or write-off of debt discount and debt issuance costs and commissions, discounts and other fees and charges associated with Indebtedness (including the Notes), (iv) depreciation and amortization expense, (v) amortization of intangibles (including, but not limited to, goodwill) and organization costs, (vi) any extraordinary, unusual or non-recurring expenses or losses (including, whether or not otherwise includable as a separate item in the statement of such Combined Net Income for such period, losses on sales of assets outside of the ordinary course of business) and (vii) any non-cash charges, including non-cash charges resulting from the vesting or issuance of equity to employees, principals or others, and minus, (b) without duplication and to the extent included as income or gain in the statement of such Combined Net Income for such period, the sum of (i) any extraordinary, unusual or non-recurring non-cash income or gains (including, whether or not otherwise includable as a separate item in the statement of such Combined Net Income for such period, non-cash gains on the sales of assets outside of the ordinary course of business) and (ii) any other non-cash income, all as determined on a combined basis, and plus or minus, as appropriate, (c) without duplication of the items set forth in clauses (a) and (b) above, the adjustments equivalent to those that OCG made to arrive at its “Adjusted Net Income” in its Annual Report on Form 10-K for the fiscal year ended December 31, 2018 (as filed with the SEC), to the extent relevant to the Obligors, and (d) without duplication of the items set forth in clauses (a), (b) and (c) above, the adjustments replacing investment income (loss) with receipts of investment income from funds and companies equivalent to those that OCG made to arrive at its “Distributable Earnings” in its Annual Report on Form 10-K for the fiscal year ended December 31, 2018 (as filed with the SEC), to the extent relevant to the Obligors; provided that the contribution to Combined EBITDA of a Subsidiary that is not a Wholly-Owned Subsidiary shall be calculated in proportion to the Obligors’ aggregate direct or indirect economic interests in such Subsidiary. For the purposes of calculating Combined EBITDA for any period of four consecutive fiscal quarters (each, a “Reference Period”) pursuant to any - 4 - determination of the Combined Leverage Ratio, (i) if at any time during such Reference Period the Obligors or any Subsidiary shall have made any Material Disposition, the Combined EBITDA for such Reference Period shall be reduced by an amount equal to the Combined EBITDA (if positive) attributable to the property that is the subject of such Material Disposition for such Reference Period or increased by an amount equal to the Combined EBITDA (if negative) attributable thereto for such Reference Period and (ii) if during such Reference Period the Obligors or any Subsidiary shall have made a Material Acquisition, Combined EBITDA for such Reference Period shall be calculated after giving pro forma effect thereto as if such Material Acquisition occurred on the first day of such Reference Period; provided that, with respect to any such Material Disposition or Material Acquisition, Combined EBITDA shall be adjusted to take into account compensation expense, occupancy costs, rental expenses and other reasonably identifiable and supportable cost and expense items that will be eliminated as a result of consummating such Material Disposition or Material Acquisition (“Disposition/Acquisition Addbacks”); provided further that (x) calculations of Disposition/Acquisition Addbacks shall be made in good faith by a Senior Financial Officer and (y) Disposition/Acquisition Addbacks shall not exceed 10% of Combined EBITDA for any Reference Period. As used in this definition, “Material Acquisition” means any acquisition of property or series of related acquisitions of property that (a) constitutes assets comprising in excess of 51% of an operating unit of a business or constitutes in excess of 51% of the common stock of a Person and (b) involves the payment of consideration by the Obligors and their respective Subsidiaries in excess of $250,000,000; and “Material Disposition” means any disposition of property or series of related dispositions of property that yields gross proceeds to one or more of the Obligors and their respective Subsidiaries in excess of $250,000,000. “Controlled Entity” means OCG and AOH and each of their respective subsidiaries other than (i) any investment fund or CLO or any subsidiary thereof that is managed by any subsidiary of OCG or AOH or (ii) an entity held by OCG, AOH or any of their respective subsidiaries that holds investments that it or an Affiliate thereof manages or intends to manage as part of an investment fund or a CLO, including any entity formed for the purpose of holding investments in connection with seeding a new investment portfolio or strategy. “Oaktree Parent Entities” means OCG, AOH and each of their respective subsidiaries that holds an equity interest in any of the Obligors. “Principal Credit Facility” means the Credit Agreement dated as of March 31, 2014, as amended by the First Amendment to Credit Agreement dated as of November 3, 2014, the Second Amendment to Credit Agreement dated as of March 31, 2016, the Third Amendment to Credit Agreement dated as of November 14, 2017, the Fourth Amendment to Credit Agreement dated as of March 29, 2018 and the Fifth Amendment to Credit Agreement dated as of - 5 - December 13, 2019, among the Company, Oaktree Capital II, Oaktree AIF, Oaktree Capital I, the lenders party thereto and Wells Fargo Bank, National Association, as administrative agent, letter of credit issuer and swing line lender, including any renewals, extensions, amendments, supplements, restatements, replacements or refinancing thereof (provided, however, if such replacement credit facility actually consists of multiple credit facilities, then the “Principal Credit Facility” for purposes of this definition shall be the single credit facility among such replacement credit facilities under which the Obligors have the ability to borrow the largest amount of principal). SECTION 3. MISCELLANEOUS §3.1 Conditions to Effectiveness. The effectiveness of this Amendment is expressly subject to the following conditions: (i) the representations and warranties made by the Obligors under Section 1 of this Amendment shall be true and correct, (ii) executed counterparts of this Amendment, duly executed by the Obligors and Holders constituting Required Holders shall have been delivered to the Holders, (iii) receipt by each Holder of (a) a certificate of the Secretary or Assistant Secretary of each Obligor, dated the date hereof, certifying as to (1) the resolutions attached thereto and the corporate proceedings relating to the authorization, execution and delivery of this Amendment and the performance of its obligations hereunder and (2) the Obligors’ organization documents currently in effect, and (b) a recent “good standing certificate” from the Secretary of State of the State of Delaware (which certificate shall indicate that the Obligor is in good standing and has legal existence in the State of Delaware), and (iv) the Company shall have paid, or reimbursed the Holders for, the reasonable fees, charges and disbursements of special counsel to the Holders; provided that the Company shall not be liable for the attorneys’ fees, costs and disbursements of more than one firm of special counsel (which firm shall be the firm retained to represent all holders of Notes collectively). §3.2 Instrument Pursuant to Note Purchase Agreement. This Amendment is executed pursuant to Section 18 of the Note Purchase Agreement and shall be construed, administered, and applied in accordance with all of the terms and provisions of the Note Purchase Agreement. Except as expressly set forth herein, all of the representations, warranties, terms, covenants and conditions of the Note Purchase Agreement shall remain unamended and in full force and effect. The execution, delivery and effectiveness of this Amendment shall not, except as expressly provided herein, (i) constitute an amendment or a waiver of, or consent to any departure from, any provision of the Note Purchase Agreement, (ii) operate as a waiver of any right, power or remedy of any holder of any Note, or (iii) constitute a waiver of any Default or Event of Default or any other - 6 - documents, instruments and agreements executed and/or delivered in connection therewith. §3.3 Successors and Assigns. This Amendment shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns (including, without limitation, any subsequent holder of a Note) whether so expressed or not. §3.4 Counterparts. This Amendment may be executed in any number of counterparts, each of which shall be an original but all of which together shall constitute one instrument. §3.5 Governing Law. This Amendment shall be construed and enforced in accordance with, and the rights of the parties shall be governed by, the law of the State of New York, excluding choice-of-law principles of the law of such State that would require the application of the laws of a jurisdiction other than such State. - 7 - IN WITNESS WHEREOF, the parties hereto have duly executed and delivered this Amendment as of the date first set forth above. OAKTREE CAPITAL MANAGEMENT, L.P. By: __/s/ Dan Levin_______________________________ Name: Dan Levin Title: Chief Financial Officer By: __/s/ Jeffrey Joseph_______________________________ Name: Jeffrey Joseph Title: Managing Director OAKTREE CAPITAL I, L.P. By: __/s/ Dan Levin_______________________________ Name: Dan Levin Title: Chief Financial Officer By: __/s/ Jeffrey Joseph_______________________________ Name: Jeffrey Joseph Title: Managing Director OAKTREE CAPITAL II, L.P. By: __/s/ Dan Levin_______________________________ Name: Dan Levin Title: Chief Financial Officer By: __/s/ Jeffrey Joseph_______________________________ Name: Jeffrey Joseph Title: Managing Director OAKTREE AIF INVESTMENTS, L.P. By: __/s/ Dan Levin_______________________________ Name: Dan Levin Title: Chief Financial Officer By: __/s/ Jeffrey Joseph_______________________________ Name: Jeffrey Joseph Title: Managing Director [Signature Page to Amendment to Note Purchase Agreement] Name of Holder: The Variable Annuity Life Insurance Company By: AIG Asset Management (U.S.) LLC, Investment Adviser By: __/s/ Jason Young______________________________ Name: Jason Young Title: Managing Director Principal Amount of Senior Notes held: [***] [Signature Page to Amendment to Note Purchase Agreement] Name of Holder: ATHENE ANNUITY AND LIFE COMPANY By: Apollo Insurance Solutions Group LP, its investment adviser By: Apollo Capital Management, L.P., its sub adviser By: Apollo Capital Management GP, LLC, its General Partner By: __/s/ Joseph D. Glatt______________________________ Name: Joseph D. Glatt Title: Vice President Principal Amount of Senior Notes held: [***] VENERABLE INSURANCE AND ANNUITY COMPANY By: Apollo Insurance Solutions Group LP, its investment adviser By: Apollo Capital Management, L.P., its sub adviser By: Apollo Capital Management GP, LLC, its General Partner By: __/s/ Joseph D. Glatt______________________________ Name: Joseph D. Glatt Title: Vice President Principal Amount of Senior Notes held: [***] RELIASTAR LIFE INSURANCE COMPANY By: Voya Investment Management LLC, its investment adviser By: Apollo Insurance Solutions Group LP, its investment sub adviser By: Apollo Capital Management, L.P., its sub adviser By: Apollo Capital Management GP, LLC, its General Partner By: __/s/ Joseph D. Glatt______________________________ Name: Joseph D. Glatt Title: Vice President Principal Amount of Senior Notes held: [***] [Signature Page to Amendment to Note Purchase Agreement] Name of Holder: Minnesota Life Insurance Company Blue Cross and Blue Shield of Florida, Inc. American Republic Insurance Company UnitedHealthcare Insurance Company Polish National Alliance of the U.S. of N.A. Unity Financial Life Insurance Company Western Fraternal Life Association Catholic United Financial By: Securian Asset Management, Inc. By: __/s/ Jennifer L. Wolf________________________ Name: Jennifer L. Wolf Title: Vice President Principal Amount of Senior Notes held: [***] [Signature Page to Amendment to Note Purchase Agreement] Name of Holder: NASSAU LIFE INSURANCE COMPANY PHL VARIABLE INSURANCE COMPANY By: Nassau Asset Management LLC, Its Investment Manager By: __/s/ David E. Czerniecki______________________________ Name: David E. Czerniecki Title: Chief Investment Officer Principal Amount of Senior Notes held: [***] [Signature Page to Amendment to Note Purchase Agreement] Exhibit 10.7 Amended & Restated Services Agreement Oaktree Capital Management, L.P. and Oaktree Capital Management (UK) LLP 18 December 2020 1 THIS SERVICES AGREEMENT (this “Agreement”) is made on 18 December 2020 BETWEEN: (1) Oaktree Capital Management, L.P. a Delaware limited partnership of 333 South Grand Avenue, 28 Floor, Los Angeles, CA 90071 ("Oaktree th US"); and (2) Oaktree Capital Management (UK) LLP, a limited liability partnership (registered number OC363917) registered in England and Wales of Verde, 10 Bressenden Place, London SW1E 5DH (the "LLP"). RECITALS (A) (B) The LLP has been constituted for the purposes of carrying on the business of an investment manager and advisor in the United Kingdom. The LLP is authorised and regulated by the United Kingdom’s Financial Conduct Authority (or any successor body or bodies) (the "FCA") under Part 4A of the Financial Services and Markets Act 2000 ("FSMA") (with registration number 550908). This deed was entered into originally on 20 May 2013 by Oaktree US and the LLP and amended on a number of occasions thereafter (the “Original Agreement”). (C) The parties have agreed to enter into this deed to amend and restate the Original Agreement with effect from the date hereof. THE PARTIES AGREE AS FOLLOWS: 1. AMENDMENT AND RESTATEMENT 1.1 With effect from the date hereof, the parties hereby agree to amend and restate the Original Agreement, which is replaced and superseded in its entirety by this Agreement. 2. APPOINTMENT AND SCOPE OF AUTHORITY 2.1 The parties hereby agree that the agreements referred to in Schedule 4 (the "Terminated Agreements") shall terminate and cease to have effect for all purposes, and shall simultaneously be replaced by this Agreement, with effect from 17 November 2011 (the "Effective Date"). For the avoidance of doubt, the appointment of the LLP to provide services to Oaktree US shall be continuous before, on and after the Effective Date, but shall have effect from and after the Effective Date solely subject to the terms and conditions of this Agreement. 2.2 Oaktree US hereby confirms the appointment of the LLP as: (a) (b) sub-investment manager to the funds and separate accounts referred to in Schedule 3 (the "Discretionary Funds"); and sub-advisor to the funds and separate accounts referred to in Schedule 2 (the "Restricted Funds", and together with the Discretionary Funds, the "Funds"), to provide the services set out in Clauses 3 and 4, and the LLP accepts such appointments, on the terms and conditions set forth in this Agreement. 2.3 Oaktree US furthermore hereby appoints the LLP to provide certain additional services as set out in Clauses 5, 6.1 and 8, on the terms and conditions set forth in this Agreement and the LLP accepts such appointment. 2.4 The LLP acknowledges that it is a relying adviser under the U.S. Investment Advisers Act of 1940 (as amended) (the "Advisers Act") and the rules and regulations promulgated 2 thereunder. If and to the extent the assets of any Discretionary Fund or Restricted Fund managed by Oaktree US are treated as "plan assets" as determined pursuant to 29 C.F.R. 2501.3-101 (or any successor thereto), the LLP acknowledges that it will be a fiduciary for purposes of the U.S. Employee Retirement Income Security Act of 1974 ("ERISA") with respect to each employee benefit plan subject to section 406 of ERISA or section 4975 of the Internal Revenue Code of 1986 whose assets are deemed to be held by the applicable Fund to the extent required under ERISA to continue to manage or sub-advise the applicable Funds. 2.5 The appointment of the LLP pursuant to this Agreement shall be subject always to: (a) (b) (c) the terms and conditions in the limited partnership or other governing agreements under which the Funds were established (the "Fund Agreements"), and the LLP hereby agrees to observe the terms and conditions in such Fund Agreements; any restrictions, limitations or conditions on, or any amendments made to, the LLP's authority which may be imposed by Oaktree US as general partner and/or investment manager of the Funds from time to time; and Oaktree US’s power and authority to act at all times in respect of any of the Funds as general partner and/or investment manager of the Funds (as applicable) 2.6 Without limiting the discretion of Oaktree US pursuant to Clause 2.5(b), Oaktree US may limit the scope of the LLP's appointment in respect of any of the Funds by means of: (a) limiting the appointment to sub-advisory services in respect of a section of the relevant Fund's portfolio of investments; (b) limiting the appointment to sub-advisory services in respect of a particular investment or investments; (c) limiting the LLP's responsibility in respect of the monitoring and/or realisation of an investment or investments; or (d) retaining discretion to decide upon the acquisition, disposal, conversion or underwriting of investments. 2.7 Without limiting the discretion of Oaktree US pursuant to Clause 2.5(b), Oaktree US reserves the right as general partner and/or investment manager, in the interests of the Funds, to undertake the management of the Funds' investments and assets (to the extent not prohibited by any applicable law or regulation) to the exclusion of the LLP during any period in which the LLP is unable to perform its duties under this Agreement due to the permanent or temporary absence of the investment professional(s) employed for the time being by the LLP (whether due to holiday, sickness or otherwise). 2.8 The provisions in Clauses 2.5 to 2.7 shall have overriding effect against all other provisions of this Agreement. 2.9 Oaktree US agrees to provide the LLP with certain services as set out in Clauses 6.2, 7, 8 and 10, on the terms and conditions set forth in this Agreement. 3. SERVICES - DISCRETIONARY FUNDS 3.1 Without limiting the discretion of Oaktree US pursuant to Clause 2.5(b), and without prejudice to Clauses 2.6 and 2.7, the LLP shall be appointed to assist Oaktree US with the management of the investments and assets of the Discretionary Funds. 3.2 In connection with the appointment pursuant to Clause 3.1 but subject at all times to Clause 2: 3 (a) (b) Oaktree US hereby delegates to the LLP all such powers, authorities and discretions (including the discretionary power to buy, sell, convert, underwrite or otherwise deal in investments on behalf of the Discretionary Funds) as shall be necessary to enable the LLP to perform its duties as sub-manager under this Agreement; and the LLP shall have full power and authority hereunder to decide whether the Discretionary Funds should acquire or dispose of an investment and Oaktree US grants the LLP discretion, without consultation to Oaktree US, to: (i) (ii) make investment decisions with respect to invested assets of the Discretionary Funds; and enter into such investment documents and effect such transactions (including, if applicable, instructing the Custodian (as defined in Clause 11.1 below) of the Discretionary Funds in respect of transfers, withdrawals or receipts of money) as may be necessary or proper in connection with the performance by the LLP of its duties hereunder. 4. SERVICES - RESTRICTED FUNDS 4.1 Without limiting the discretion of Oaktree US pursuant to Clause 2.5(b), and without prejudice to Clauses 2.6 and 2.7, the sub-advisory services to be provided by the LLP in respect of the Restricted Funds will be limited to: (a) researching and identifying potential investment opportunities; (b) evaluating potential investment opportunities, including, but not limited to, the performance of due diligence services, verification of claims by potential counterparties, inspection of properties, preparation of financial projections and the like; (c) evaluating whether any investment held by the Restricted Funds should be sold or otherwise disposed; (d) (e) (f) taking all such actions and executing and delivering any and all orders, agreements, confirmations, transfers, notes, certificates, instruments or documents that may be required, or otherwise necessary or desirable, in connection with or relating to the acquisition or disposition of investments of the Restricted Funds in which the LLP is acting as sub-adviser ("Investment Documents"); PROVIDED HOWEVER, that the LLP may execute and deliver such Investment Documents as sub-adviser to the Restricted Funds only after the decision to acquire or dispose of such investment has been made by representatives of Oaktree US in the United States; signing or executing (for itself and/or on behalf of such Restricted Fund) a confidentiality agreement in respect of existing investments or potential investment opportunities or any other matters within the scope of the LLP's responsibilities and powers as a sub-adviser to such Restricted Fund; at the request of Oaktree US, providing and making available representatives of the LLP to serve as a member of the board of directors (or other equivalent bodies) of certain non-U.S. portfolio companies (or other equivalent bodies) in which the Restricted Funds invest; and (g) such other services as may from time to time be reasonably requested by Oaktree US. 4 4.2 For the avoidance of doubt, the LLP shall not have any authority hereunder to decide whether the Restricted Funds should acquire or dispose of an investment; such decisions to be reserved only for representatives of Oaktree US in the United States. 5. SERVICES - MARKETING 5.1 Without limiting the discretion of Oaktree US pursuant to Clause 2.5(b), and without prejudice to Clauses 2.6 and 2.7, the marketing and promotion services to be provided by the LLP in respect of the Funds will be: (a) (b) assisting Oaktree US to promote any Fund to potential investors in Europe and the Middle East to facilitate subscriptions from such investors; advising Oaktree US concerning all actions which it appears to the LLP that Oaktree US should consider taking to achieve effective promotion of investor interest in such Funds; (c) attending, if so requested by Oaktree US, meetings held with such investors; (d) if required by Oaktree US, arranging the administration of and receiving and collating application forms from such investors and passing the completed applications to Oaktree US for processing; and (e) the provision of any other marketing service as Oaktree US may require from time to time in Europe and the Middle East. 6. SERVICES – TRADING AND EXECUTION 6.1 Without limiting the discretion of Oaktree US pursuant to Clause 2.5(b), and without prejudice to Clauses 2.6 and 2.7, the LLP agrees to provide certain execution and trading services to Oaktree US, as set out in Schedule 5. 6.2 Oaktree US agrees to provide the LLP with certain trading cover and execution services in the circumstances and on the terms set out in Schedule 5. 7. SERVICES – INTERNAL AUDIT Oaktree US agrees to provide the LLP with internal audit services, as may from time to time be reasonably requested by the LLP. 8. SERVICES – GENERAL Either party shall provide any other services, in addition to those set out in this Agreement, which the other party may reasonably request from time to time. 9. FEES 9.1 In consideration of the provision of services by either party under this Agreement, either party may pay to the other party a fee, the amount of which is to be determined between the parties from time to time (the "Service Fee"). 5 10. ADMINISTRATIVE FUNCTIONS Oaktree US and its affiliates will provide certain fund and investor accounting, fund investor reporting, custodial services and similar administrative functions required in respect of the Funds. Oaktree US will provide such services in a manner and quality consistent with past practices in connection with the management of the Funds. 11. CUSTODY 11.1 All documents of or evidencing title to the Funds' investments shall be held in safe custody facilities by a custodian to be selected by Oaktree US (the “Custodian”) subject to the terms of a custody agreement made between Oaktree US and the Custodian and subject to such other arrangements and procedures as may be agreed between Oaktree US and the Custodian from time to time. The LLP shall at no time have custody or physical control of the invested assets of the Funds nor shall it be liable for any act or omission of the Custodian. 11.2 Oaktree US shall take such additional steps (in addition to the authorities and powers hereby conferred) as are necessary to procure that the LLP is able, on behalf of Oaktree US, to operate the bank accounts of the Discretionary Funds so far as necessary for the LLP to exercise all of its powers and discretions and perform all of its duties under this Agreement. 12. RECORDS AND REPORTS 12.1 The LLP shall maintain proper and complete records relating to the services to be provided under this Agreement for such period of time as may be required under applicable law, including (as applicable, in respect of the relevant Discretionary Funds) records with respect to the acquisition, holding and disposal of securities on behalf of the Funds, details of all brokers used and the aggregate dollar amount of brokerage commission paid in that regard to each broker. 12.2 Except as expressly authorised in this Agreement or as required by applicable law, regulation or court order, or as directed by Oaktree US in writing, the LLP shall keep confidential the records and other information pertaining to Oaktree US and the Funds or the investment assets the subject of this Agreement (save for any records or information pertaining to the LLP’s own employees and affiliates, which shall be excluded from the obligations contained in this clause). Upon termination of this Agreement, the LLP shall promptly, upon demand, return to Oaktree US all such records, except that the LLP may retain copies for its records as may be required by applicable law, regulation or court order, and provided that the LLP’s confidentiality obligations shall continue in full force and effect with respect to such retained records not within the public domain. 12.3 The LLP shall provide to Oaktree US promptly upon request any information available in the records maintained by the LLP relating to the Funds in such form as Oaktree US shall request. 13. LIABILITY AND INDEMNIFICATION 13.1 In providing its services under this Agreement, the LLP will discharge its duties in accordance with the same standard of care established for Oaktree US in the relevant Fund Agreements, and will be indemnified by each of the Funds as an agent of Oaktree US in accordance with such Fund Agreements. To the extent Oaktree US and its affiliates, directors, officers, employees, shareholders, assigns, representatives or agents (apart from the LLP) (collectively, "Oaktree US Indemnities") suffer any liability, loss (including amounts paid in settlement), damages or expenses (including reasonable attorneys' fees) (collectively "Losses") in connection with the Funds, and:- 6 (a) (b) Oaktree US Indemnities are not indemnified by the Funds for such Losses under the indemnification provisions of the applicable Fund Agreements; such Losses were suffered by virtue of the LLP's or its employees' acts or omissions, or alleged acts or omissions under this Agreement; and (c) the LLP (including its employees) is guilty of negligence or wilful misconduct, then the LLP will hold Oaktree US Indemnities harmless and indemnify it for such Losses; provided that the LLP shall not be liable for actions or omissions to act ordered by Oaktree US to which the LLP objected in writing at the time of such order. 13.2 The provisions of this Clause 10 shall survive the termination of this Agreement. 14. REPRESENTATIONS, WARRANTIES AND UNDERTAKINGS 14.1 Each of Oaktree US and the LLP represents and warrants to each other that it is duly organised, validly existing and in good standing under the laws of its jurisdiction of incorporation, and is duly authorised by all necessary corporate action to enter into this Agreement and perform its duties as described in this Agreement. 14.2 The LLP hereby undertakes to Oaktree US that it will take all reasonable steps within its power to remain an authorised person for the purposes of FSMA in respect of the services to be provided by it hereunder, with a scope of permission which will permit it to carry out its obligations and exercise its powers under this Agreement, and that it will comply with those FCA Rules which apply to the services to be provided hereunder. 15. COMPLIANCE WITH FCA RULES 15.1 Oaktree US will be the LLP's client for the purposes of the FCA Rules. Accordingly, in conformity with the FCA Rules, a number of additional statements and provisions are required to be included in this Agreement. Such additional statements and provisions are set out in Schedule 1 hereof ("Additional FCA Provisions"), which is hereby incorporated into and will form part of this Agreement and will apply to the services to be provided pursuant to this Agreement. 15.2 Nothing in this Agreement shall require or entitle the LLP to act as the alternative investment fund manager (as defined in the FCA Rules with effect from 22 July 2013) of any Fund or any other funds or separate accounts in connection with which Oaktree US may appoint the LLP as a sub- advisor or sub-manager (such other funds or separate accounts, together, the "New Funds") which is an alternative investment fund. The alternative investment fund manager of each Fund and New Fund which is an alternative investment fund shall be Oaktree US or Oaktree Capital Management (Lux.) S.à r.l., as the case may be, unless otherwise agreed. 16. TERM 16.1 Basic Term In relation to each Fund, this Agreement shall terminate on the earlier of (a) the completion of the winding up and termination of such Fund or (b) the date, if any, on which Oaktree US (or any affiliate it has substituted in its stead in accordance with such Fund's Fund Agreement) is removed as general partner of such Fund or, in the case of a Fund that is a separate account, as investment manager or similar or (c) the LLP ceasing to be authorised and regulated by the FCA. 7 16.2 Early Termination This Agreement may be terminated, either in respect of a Fund or in its entirety, by either Oaktree US or the LLP for any reason upon 30 days' written notice to the other. 17. TERMINATION CONSEQUENCES 17.1 Upon the termination of this Agreement, the LLP shall co-operate with Oaktree US and take all reasonable steps requested by Oaktree US in making an orderly transition to allow for continuity of management and to ensure that such termination shall not prejudice the completion of transactions already initiated. 17.2 The LLP shall forthwith upon termination deliver to Oaktree US a full account including a statement of all investments then under management, the income derived therefrom since the last report to Oaktree US, and the value at which they were acquired. The LLP shall also ensure that any documents relating to Oaktree US assets over which it has control are released as soon as practicable to Oaktree US or (if so instructed by Oaktree US) to any subsequent general partner. 17.3 Notwithstanding the termination of this Agreement, Oaktree US shall complete, or shall procure that any successor or general partner of the Funds shall complete, all investment transactions entered into by Oaktree US hereunder prior to the termination date. 18. MISCELLANEOUS 18.1 Governing Law This Agreement is governed by the laws of England and Wales. 18.2 Notices Any notices provided for in this Agreement shall be sent to the following addresses or such other address as a party may designate in writing: To Oaktree US: Oaktree Capital Management, LP th 333 Grand Avenue 28 Floor Los Angeles California 90071 Attention: Todd Molz, General Counsel Email: tmolz@oaktreecapital.com To the LLP: Oaktree Capital Management (UK) LLP Verde 10 Bressenden Place London SW1E 5DH United Kingdom Attention: Dominic Keenan, Head of Legal, EMEA & APAC Email: dkeenan@oaktreecapital.com All notices delivered by email, facsimile or hand shall be deemed given on the day received. All notices mailed shall be deemed to have been given two business days after they have been deposited as certified mail, return receipt requested, postage paid and properly addressed. 8 18.3 Assignment The LLP may not assign (within the meaning of the Advisers Act) its rights and obligations under this Agreement without the prior written consent of Oaktree US. 18.4 Entire Agreement (a) (b) This Agreement contains the entire agreement between Oaktree US and the LLP relating to the subject matter hereof and supersedes in its entirety all other prior agreements and all amendments thereto between Oaktree US and the LLP relating to the subject matter hereof, including those agreements referred to in Clause 18.4(b). For the avoidance of doubt, it is agreed and acknowledged that the Terminated Agreements are terminated with effect from the Effective Date and all of the parties’ obligations and liabilities will cease with effect from the Effective Date. 18.5 Counterparts This Agreement may be executed in any number of counterparts and this has the same effect as if the signatures on the counterparts were on a single copy of this Agreement. IN WITNESS whereof the parties have executed and delivered this Agreement as a deed as of the date appearing on the first page. 9 IN WITNESS whereof this deed has been executed and delivered on the date first above written: Executed as a deed by Oaktree Capital ) Management, L.P. ) ) ) Authorised Signatory /s/ Todd Molz Todd Molz Authorised Signatory /s/ Richard Ting Richard Ting Executed as a deed by Oaktree European Holdings LLC, in its capacity as a member of Oaktree Capital Management (UK) LLP: ) ) ) ) Signature Name of Authorized Signatory /s/ Todd Molz Todd Molz Signature of witness Name of witness /s/ Kirsten Molz Kirsten Molz Address of witness Signature Name of Authorized Signatory /s/ Richard Ting Richard Ting Signature of witness Name of witness /s/ Mary Ting Mary Ting Address of witness 10 THIRD AMENDED AND RESTATED SERVICES AGREEMENT Exhibit 10.9 THIS THIRD AMENDED AND RESTATED SERVICES AGREEMENT (this “Agreement”) is entered into on January _6__, 2021 by and between Oaktree Capital Management, L.P. (“OCMLP”), a Delaware limited partnership, and Oaktree Capital (Hong Kong) Limited, a Hong Kong company (“OCHK”). Each of the parties to this Agreement may be referred to herein individually as a “party” and collectively as the “parties”. R E C I T A L S: WHEREAS, the parties entered into that certain Second Amended and Restated Services Agreement on February 24, 2020 (the “Second A&R Services Agreement”); WHEREAS, the parties desire to amend and restate the Second A&R Services Agreement in its entirety and to enter into this Agreement; WHEREAS, OCMLP acts as the investment manager of various Oaktree Funds (as defined below) that makes or will make investments in various Asian countries; WHEREAS, OCHK has a team of professionals with experience and expertise in transactions involving investments in various Asian countries, and OCMLP desires OCHK to provide research, liaison, promotion, trading and related services to OCMLP in connection with investment opportunities in various Asian countries; WHEREAS, OCHK is able to provide placement agent and client relations services for capital raised from Asian investors, and trading services, for pooled investment vehicles, investment funds, separate accounts and co-investment opportunities managed by OCMLP (the “Oaktree Funds”); WHEREAS, OCHK is able to further assist OCMLP with the sub-management of investments and assets of certain Oaktree Funds under its Emerging Markets Equities strategy (the “EME Funds”); and WHEREAS, OCHK is licensed with the Securities and Futures Commission (“SFC”) in Hong Kong to conduct Type 1, 4 and 9 regulated activities. NOW, THEREFORE, in consideration of the mutual covenants, terms and conditions set forth in this Agreement, and for other good and valuable consideration, the parties hereby agree as follows: 1. Services 1.1 OCHK agrees to provide certain services to OCMLP as set forth in Schedule 1. All services set forth in Schedule 1 attached hereto, as the same may be amended by the parties from time to time, are referred to herein as the “Services”. 1.2 In rendering the Services, OCHK may utilize the services of its affiliates, attorneys, accountants, investment bankers, brokers, appraisers, advisers and other consultants, agents or representatives. 2. Service Fee In consideration of the provisions of the Services provided by OCHK, OCMLP shall compensate OCHK by remitting to it a service fee (the “Service Fee”) in accordance with the terms set forth in Schedule 2 attached hereto. 3. Representations and Warranties Each party hereby represents and warrants to the other party as follows: 3.1 It has been duly formed and is validly existing under the laws of its respective place of organization; 3.2 Its execution, delivery, and performance of this Agreement falls within the scope of its power, and will not constitute a violation or breach of the laws or contracts that are binding on it. It has obtained all necessary authorizations and consents required for the execution, delivery, and performance hereof; and 3.3 This Agreement, once executed by the parties, constitutes a lawful and binding obligation of each such party, which may be enforced against such party pursuant to the terms contained herein. 4. Indemnification and Exculpation 4.1 In the absence of fraud, bad faith, gross negligence, willful malfeasance, or an intentional and material breach of this Agreement, none of OCHK or any of its officers, directors, partners, agents, representatives or employees (each an “Indemnified Party”) shall have any liability, responsibility or accountability in damages or otherwise to OCMLP or the Oaktree Funds for any losses, claims, liabilities, damages, expenses (including legal fees and expenses) incurred by such Indemnified Party, in any way relating to or arising out of, or alleged to relate to or arise out of, any action or inaction on the part of any Indemnified Party in relation to performing its obligations under this Agreement. 4.2 In the absence of any Indemnified Party’s fraud, bad faith, gross negligence, willful malfeasance, or an intentional and material breach of this Agreement, OCMLP shall, or cause the relevant Oaktree Fund to, indemnify and hold harmless each Indemnified Party from and against, any losses, claims, liabilities, damages, expenses (including reasonable legal fees and expenses) incurred by such Indemnified Party to the extent solely relating to or arising out of any action on the part of such Indemnified Party in relation to performing its obligations under this Agreement. 5. Term and Termination 5.1 This Agreement shall be effective as of October 5, 2020, save for the sub-management of Lux EME Funds (as defined below) which shall be effective as of the date such sub-management is approved by the Commission de Surveillance du Secteur Financier (“CSSF”). 5.2 The term of this Agreement shall be automatically renewed for additional one-year terms as of each anniversary thereof unless terminated by either party upon 30 days’ written notice to the other. 5.3 On termination of this Agreement, OCHK shall be entitled to receive any fees and other money due but not yet paid to it with respect to the Services up to the date of such termination as provided in this Agreement, and shall repay to OCMLP any fees and other money paid to it in respect of any period after the date of such termination. 5.4 The termination of this Agreement shall be without prejudice to accrued rights and liabilities and any provisions expressed to survive the termination hereof. 6. Entire Agreement This Agreement shall constitute the entire agreement and understanding between the parties with respect to the subject matter hereof, and supersede and replace any prior agreements and understandings, whether oral or written, between them with respect to such matters. 7. Governing Law This Agreement is governed by, and shall be construed in accordance with, the laws of the State of California, U.S.A. 8. Services Not Exclusive The services of OCHK are not exclusive to OCMLP or the Oaktree Funds. OCMLP acknowledges that OCHK shall be free to provide services similar to those to be provided hereunder to other persons and to engage in additional activities. 9. Relationship of the Parties Nothing in this Agreement shall constitute or shall be deemed to constitute a joint venture, partnership, association, syndicate, or other arrangement between the parties or constitute OCHK to be an agent of OCMLP or any of its affiliates for any purpose whatsoever. OCHK shall have no authority or power to act for or represent OCMLP or any of its affiliates in any way, or to bind OCMLP or any of its affiliates or to enter into, negotiate or conclude any contract in the name of OCMLP or any of its affiliates. 10. Confidentiality OCHK shall keep confidential all information of OCMLP, its affiliates and its partners or potential partners to which it may have access in connection with the performance of the Services other than disclosed as required by applicable law, regulation or rule, or as requested by any regulator with jurisdiction over such party, or compelled to do so by any court of competent jurisdiction. 11. Notices 11.1 Any notice or other communication under or in connection with this Agreement (a “Notice”) shall be given: (i) in writing, (ii) in English and (iii) shall be delivered personally, by e-mail or sent by courier by an internationally recognized courier company (e.g. FedEx, DHL) or by fax, to the party due to receive the Notice at its address set out below. 11.2 In the absence of evidence of earlier receipt, a Notice shall be deemed to have been duly given if: (a) (b) (c) delivered personally, when left at the address set out below; sent by e-mail, the time of actual receipt of the e-mail by the recipient; sent by courier, two business days after posting it; or (d) sent by fax, when confirmation of its transmission has been recorded on the sender’s fax machine. 11.3 Notices shall be sent: if to OCMLP: th Oaktree Capital Management, L.P. 333 South Grand Ave., 28 Floor Los Angeles, CA 90071, U.S.A. Attention: General Counsel Fax: +1.213.830.6293 Email: LegalNotifications@oaktreecapital.com if to OCHK: Oaktree Capital (Hong Kong) Limited Suite 2001, 20/F, Champion Tower 3 Garden Road Central, Hong Kong Attention: Legal Counsel Fax: +852.3655.6900 Email: LegalNotifications@oaktreecapital.com 12. Successors and Assigns Except as set forth herein or by operation of law, neither party may assign or transfer any of their duties or obligations hereunder without the prior written consent of the other party; provided that this Agreement shall be binding upon, and inure to the benefit of, any successors and assigns of OCMLP or OCHK. 13. Severability If any term or provision of this Agreement shall be held to be illegal or unenforceable, in whole or in part, under any enactment or rule of law, such term or provision, or the relevant part thereof, shall to that extent be deemed not to form part of this Agreement and the enforceability of the remainder of this Agreement shall not be affected. 14. Counterparts This Agreement may be executed in any number of counterparts, each of which when executed shall constitute an original instrument, but all the counterparts together shall constitute one and the same instrument. 15. Survival Sections 4 (Indemnification and Exculpation), 7 (Governing Law), 10 (Confidentiality) and 15 (Survival) shall survive termination of this Agreement. 16. Amendments; Waiver This Agreement may be modified or amended at any time or from time to time only with the written consent of each of OCMLP and OCHK. Each amendment hereto shall be in the form of a written agreement expressed to be an amendment hereof. The parties agree that, to the fullest extent permitted by applicable law, no failure or delay by any party in exercising any right or remedy hereunder shall operate as a waiver thereof, and a waiver of a particular right or remedy on one occasion shall not be deemed a waiver of any other right or remedy or a waiver on any subsequent occasion. [Signature Page Follows] IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement to be duly executed by its respective authorized representative on the date first set forth above. OAKTREE CAPITAL MANAGEMENT, L.P. ___/s/Henry E. Orren_______ Name: Henry E. Orren Title: Authorized Signatory Name: Henry E. Orren Title: Authorized Signatory ___/s/Peter Boos_______ Name: Peter Boos Title: Authorized Signatory Date: January 6, 2021 Oaktree Capital (Hong Kong) Limited ___/s/Kwang Duk Choi_______ Name: Kwang Duk Choi Title: Authorized Signatory Name: Kwang Duk Choi Title: Authorized Signatory ___/s/Dominic Keenan _______ Name: Dominic Keenan Title: Authorized Signatory Name: Dominic Keenan Title: Authorized Signatory Date: January 6, 2021 [Signature Page to Third Amended and Restated Services Agreement] Exhibit 10.20 Oaktree Capital Group, LLC Long-Term Incentive Plan ARTICLE I. PURPOSE 1.01. The purpose of the Oaktree Capital Group, LLC Long-Term Incentive Plan (the “Plan”) is to assist the Oaktree Group (as defined below) to retain key employees, directors, consultants, other service providers, partners and members of any Oaktree Group Member (as defined below). continued growth, development and future business success of the Oaktree Group. 1.02. The Plan provides benefits to Eligible Persons (as defined below) who materially contribute to the 1.03. For U.S. tax purposes, (i) the Plan awards vest over time and are paid out soon after they vest and (ii) the Plan is not designed to provide for the deferral of compensation within the meaning of Section 409A of the Code (as defined below) and OCG (as defined below) intends that awards under the Plan will not be subject to Section 409A. an Award Agreement (as defined below) has been delivered, or, if applicable, signed by the relevant Oaktree Group Member. 1.04. The terms of the Plan are not binding upon OCG or any other Oaktree Group Member unless and until 1.05. No person is entitled to any particular assets held by OCG or any other Oaktree Group Member. ARTICLE II. DEFINITIONS As used in the Plan, the following terms shall have the meanings set forth below: 2.01. “Account” has the meaning set forth in Section 4.06. 2.02. “Alternative Notional Investment” means an investment fund or collective investment vehicle, other than the Designated Fund, in which the Plan Administrator elects to grant a notional interest, including any such fund or vehicle that is not managed by the Oaktree Group, or a deemed rate of interest, floating or fixed, and compounding in such manner and in respect of such principal amount as determined by the Plan Administrator in its sole discretion. portion of each Annual Participant’s total annual compensation 2.03. “Annual Award” means, as applicable, (i) for Annual Participants receiving Cash Awards, the fixed that is mandatorily and automatically deemed invested in the Designated Fund or an Alternative Notional Investment pursuant to an Annual Award under Section 3.02 of the Plan, and (ii) for Annual Participants receiving Partnership Awards, the Annual Participant’s incentive allocation that is automatically notionally invested in the Designated Fund or an Alternative Notional Investment pursuant to an Annual Award under Section 3.02 of the Plan, in each case, as set out in further detail in the Participant’s Award Agreement. who have been approved by the Plan Administrator to receive an Annual Award under the Plan. 2.04. “Annual Award Approval List” means, with respect to each Fiscal Year, the list of Eligible Persons 2.05. “Annual Participant” has the meaning set forth in Section 3.02. successor thereto. 2.06. “Atlas OCM” means Atlas OCM Holdings LLC, a Delaware limited liability company, and any Cash Award or a Partnership Award. 2.07. “Award” means an award granted under the Plan pursuant to Article IV hereof, which will be either a 2.08. “Award Agreement” has the meaning set forth in Section 3.01. 2.09. “Board” means the board of directors of OCG. savings and loan institutions are authorized or required by law to be closed in New York City. 2.10. “Business Day” means any day other than (i) a Saturday or Sunday or (ii) a day on which banking and subject to the vesting and other terms and conditions set forth in the Plan. 2.11. “Cash Award” means an Award payable in cash in the amount set forth in Sections 4.02(a) and 5.01, 2.12. “Cash Award Settlement Date” has the meaning set forth in Section 4.05. 2.13. “Cash Award Vesting Date” has the meaning set forth in Section 4.04(a). 2.14. “Cause” with respect to any Participant shall have the meaning given to such term in the applicable Award Agreement, and, if “Cause” is not defined in the Award Agreement, then Cause shall have the meaning given to such term in any employment, services or similar agreement between the Participant and an Oaktree Group Member, and, if “Cause” is not defined in any such agreement, “Cause” means the occurrence of any of the following events during the Participant’s provision of services to the Oaktree Group (regardless whether the occurrence is discovered before or after such Participant’s cessation of services to the Oaktree Group): (i) gross negligence or misconduct detrimental to an Oaktree Group Member, (ii) material breach of any agreement between such Participant and an Oaktree Group Member or written policies of the Oaktree Group applicable to such Participant, (iii) violation of any 2 applicable regulatory rule or regulation, (iv) conviction of, or entry of a plea of guilty or of no contest to, a felony (other than a motor-vehicle-related felony for which no custodial penalty is imposed), (v) entry of an order issued by any court or regulatory agency removing such Participant as an officer of an Oaktree Group Member, or prohibiting such Participant from participation in the conduct of the affairs of an Oaktree Group Member, and (vi) fraud, theft, misappropriation or dishonesty by such Participant relating to an Oaktree Group Member, including any theft of funds. 2.15. “Code” means the U.S. Internal Revenue Code of 1986, as amended from time to time. Administrator from time to time. 2.16. “Compensation Threshold” means $/£/€300,000 or such other amount as is determined by the Plan 2.17. “Control” means, with respect to any Person, the possession, directly or indirectly, of the power to direct or cause the direction of the management policies of a Person whether through the ownership of the voting securities of such Person or by contract or otherwise. collective investment vehicle is designated by the Plan Administrator. 2.18. “Designated Fund” means Oaktree Global Credit Fund, L.P., unless another investment fund or 2.19 “Disability” with respect to any Participant shall have the meaning given to such term in the applicable Award Agreement, and, if “Disability” is not defined in the Award Agreement, then Disability shall have the meaning given to such term (or a term of similar import) in any employment, services or similar agreement between the Participant and an Oaktree Group Member, and, if “Disability” (or a term of similar import) is not defined in any such agreement, “Disability” means such Participant’s substantial inability, as determined by the Plan Administrator, to perform services to the Oaktree Group in such Participant’s normal and regular manner by reason of illness or other physical or mental disability for a period of least 90 consecutive calendar days or an aggregate of 180 calendar days in any 360-day period. 2.20. “Distribution Date” has the meaning set forth in Section 5.01. 2.21. “Eligible Person” means any (i) individual employed by any Oaktree Group Member, (ii) partner, member or other individual providing services to an Oaktree Group Member, including, without limitation, any member of Oaktree UK LLP, (iii) director of any Oaktree Group Member, or (iv) consultant or advisor to any Oaktree Group Member. 2.22. “Entity” means any firm, company, corporation, body corporate, partnership, association, government, state or agency of a state, local, municipal or provincial authority or government body, joint venture, trust, individual proprietorship, business trust or other enterprise, entity or organization (whether or not having separate legal personality). 2.23. “Fiscal Year” means each fiscal year of OCG commencing with the fiscal year ending in 2019. 3 with the Eligible Person in accordance with the terms of this Plan. 2.24. “Grantor” means the Oaktree Group Member which grants an Award pursuant to an Award Agreement 2.25. “Law” means any applicable domestic or foreign federal, state, county, city, municipal, foreign, or other governmental statute, law, rule, regulation, ordinance, order, code, or requirement (including pursuant to any settlement agreement or consent decree) and any permit or license granted under any of the foregoing, or any requirement under the common law. liability partnership (or equivalent), including Oaktree UK LLP. 2.26. “Local Partnership” means any operating Subsidiary of OCG that is either a partnership or limited 2.27. “Oaktree Group” means, collectively, Atlas OCM and its direct and indirect Subsidiaries and OCG and its direct and indirect Subsidiaries, including any Local Partnership, and each such entity individually, an “Oaktree Group Member”. 2.28. “Oaktree UK LLP” means Oaktree Capital Management (UK) LLP. thereto. 2.29. “OCG” means Oaktree Capital Group, LLC, a Delaware limited liability company, and any successor 2.30. “Participant” has the meaning set forth in Section 3.01. 2.31. “Participant’s Local Currency” has the meaning set forth in Section 4.05(c). 2.32. “Partnership Award” has the meaning set forth in Section 4.02((b). 2.33. “Partnership Award Settlement Date” has the meaning set forth in Section 4.05. 2.34. “Partnership Award Vesting Date” has the meaning set forth in Section 4.04(b). 2.35. “Person” means any Entity or natural person 2.36. “Plan” has the meaning set forth in Section 1.01. that is appointed by such board to administer the Plan. 2.37. “Plan Administrator” means a committee of officers of OCG or members of OCG’s board of directors 2.38. “Quarterly Distributions” has the meaning set forth in Section 5.01. 2.39 “Quarterly Distribution Equivalent Payment” has the meaning set forth in Section 5.01. 4 2.40. “Quarterly Distribution Equivalent Profit Allocation” has the meaning set forth in Section 5.01. 2.41. “Securities Act” means the U.S. Securities Act of 1933, as amended from time to time. 2.42. “Settlement Date” means a Cash Award Settlement Date or Partnership Award Settlement Date, as applicable. 2.43. “Settlement Expiration Date” has the meaning set forth in Section 4.05. 2.44. “Subsidiary” means, with respect to any Person, any Entity of which (i) a majority of the total voting power of shares of stock or equivalent ownership interests entitled (without regard to the occurrence of any contingency) to vote in the election of directors, managers, trustees, or other members of the applicable governing body thereof, is at the time owned or controlled, directly or indirectly, by that Person or one or more of the other Subsidiaries of that Person or a combination thereof, or (ii) if no such governing body exists at such entity, or in relation to an entity which is a partnership or limited liability partnership (or equivalent), a majority of the total voting power of shares of stock or equivalent ownership interests of the entity is at the time owned or Controlled, directly or indirectly, by that Person or one or more Subsidiaries of that Person or a combination thereof. For purposes hereof, a Person or Persons shall be deemed to have a majority ownership interest in a limited liability company, partnership, association or other business entity if such Person or Persons shall be allocated a majority of limited liability company, partnership, association or other business entity gains or losses or shall be or control the manager, managing member or general partner of such limited liability company, partnership, association or other business entity. 2.45. “Tax” means any tax and any duty, impost, levy, withholding or governmental charge in the nature of tax whether domestic or foreign and any fine, penalty or interest connected therewith including (without prejudice to the generality of the foregoing) corporation tax, income tax, national insurance and social security contributions, apprenticeship levy, capital gains tax, inheritance tax, VAT or customs, excise and import duties. 2.46. “U.S. Person” has the meaning set forth in Section 9.03. 2.47. “Vesting Date” means a Cash Award Vesting Date or a Partnership Award Vesting Date, as applicable. In this Plan, references to (i) employees shall not, for the avoidance of doubt, include any individual who is a member or partner in a Local Partnership and (ii) partners shall include members of a limited liability partnership. 5 ARTICLE III. ELIGIBILITY AND PARTICIPATION 3.01. Participation in the Plan is limited to Eligible Persons who (a) are selected by the Plan Administrator, and (b) execute an agreement with a Grantor (an “Award Agreement”) reflecting the terms of such Eligible Person’s Award (any such individual, a “Participant”). In the event of a conflict among (i) the Plan, (ii) an Award Agreement, (iii) any other agreement entered into between a Participant and any Oaktree Group Member, or (iv) in the case of a Partnership Award, a limited partnership agreement, limited liability partnership agreement or limited liability company agreement governing the terms of the Partnership Award, the documents shall control in the following order unless the applicable Award Agreement specifically provides otherwise: the Award Agreement, such other agreement entered into between the Participant and an Oaktree Group Member, the applicable limited partnership agreement, limited liability partnership agreement or limited liability company agreement (to the extent that any such agreement applies to the terms of the Award) and, finally, the Plan. 3.02. With respect to each Fiscal Year, any Eligible Person whose total annual compensation is above the Compensation Threshold and whose name is set forth on the Annual Award Approval List shall participate in the Plan (each, an “Annual Participant”). For purposes of the preceding sentence, total annual compensation takes into account, as applicable, salary, annual cash bonus, profit allocations or other cash amounts and any Award under the Plan, but not including amounts vesting under previous Awards or awards previously granted under the Oaktree Capital Group, LLC 2011 Equity Incentive Plan. If any portion of an Eligible Person’s compensation is denominated in a currency other than U.S. dollars, British pounds sterling or euros, such compensation shall be converted into U.S. dollars using such conversion method as the Plan Administrator determines in its discretion in order to determine whether the Eligible Person’s total annual compensation exceeds the Compensation Threshold. For the avoidance of doubt, the Plan is not intended to and shall not give any employee any automatic right to an annual bonus or an Award under the Plan, or any partner any automatic right to a share of profits (to the extent that the Oaktree Group retains discretion as to allocation of such profits), and the Oaktree Group and the Plan Administrator, as applicable, will continue to have the authority to determine whether any such amounts have been earned, are payable or are to be allocated (as applicable) and whether any Award under the Plan shall be granted. ARTICLE IV. AWARDS 4.01. The Plan Administrator may from time to time grant, or procure the grant of, as the case may be, Awards under the Plan to Eligible Persons. 4.02. In General. dollars or any other currency as determined by the Plan Administrator (which determination need not (a) Cash Awards. Each Cash Award shall be an amount, denominated in U.S. 6 be uniform among similarly situated Participants), and shall reflect a notional investment, and not an actual investment, of such amount in the Designated Fund, but with respect to which the effective returns on such notional investment are calculated as if no management fee were charged thereon. Cash Awards shall vest as set forth in Section 4.04, and be paid as set forth in Section 4.05. (b) Partnership Awards. A Partnership Award comprises the grant of certain rights by a Local Partnership to a particular partner in that Local Partnership, to be allocated certain amounts (denominated in British pounds sterling, unless otherwise determined by the Plan Administrator) from the profits of that Local Partnership in a Fiscal Year, in each case, as set out in the applicable Award Agreement. Each such amount set out in the Award Agreement shall be adjusted to reflect a notional investment, and not an actual investment, of such amount in the Designated Fund, but with respect to which the effective returns on such notional investment are calculated as if no management fee were charged thereon. Amounts of profit allocable in respect of each Partnership Award (as adjusted in accordance with the above) shall vest as set forth in Section 4.04, and be distributed as set forth in Section 4.05. For the avoidance of doubt, an Award Agreement may grant several Partnership Awards, in respect of several Fiscal Years. (c) Notwithstanding the foregoing or any other provisions in this Plan to the contrary, unless prohibited by applicable Law, the Plan Administrator shall have the authority to select one or more Alternative Notional Investments and to provide Eligible Persons with the right but not the obligation to make an election as to the notional investment of an Award from among the Designated Fund or one or more Alternative Notional Investments, and shall have the authority to determine the rules and processes required in connection with any such elections. The Plan Administrator shall have the authority to determine the dates on which each Award’s deemed notional investment shall commence and terminate (i.e., the period over which the effective returns on the notional investment shall be measured), which dates may or may not coincide with the Award’s grant date or vesting dates. Any Award shall continue to be deemed notionally invested in the Designated Fund or Alternative Notional Investment, as applicable, until it is vested and paid out or allocated as provided below, and Participants shall not have the right to change any such notional investment of an Award after it is awarded. shall terminate or liquidate at any (d) In the event that the Designated Fund or any Alternative Notional Investment 7 point while an Award (or any part of such Award) remains outstanding, the Plan Administrator shall have the sole discretion and authority to select a new Alternative Notional Investment as a successor or replacement thereto, in which the relevant Award shall be deemed invested. 4.03. Annual Participants. Awards under the Plan shall include (but shall not be limited to) Annual Awards. For the avoidance of doubt, each Annual Award shall retain the same notional investment (whether in the Designated Fund or in an Alternative Notional Investment) until it is vested and paid out or allocated, as provided below. 4.04. Vesting of Awards. (a) Cash Awards. Each Cash Award shall be subject to a vesting schedule, which schedule may include service or performance-based vesting conditions, and shall only vest if such Participant’s employment or service with the Oaktree Group continues through the applicable vesting date (each, a “Cash Award Vesting Date”). The vesting conditions and Cash Award Vesting Dates shall be as determined by the Plan Administrator and set forth in a Participant’s Award Agreement. With respect to any Award that is an Annual Award, unless an individual Award Agreement provides otherwise, the Annual Award shall vest in installments of 25%, and each Cash Award Vesting Date shall be on the annual anniversary of the date on which the Award was first granted, subject to the Participant remaining employed by, or providing services to the Oaktree Group on each such Cash Award Vesting Date. The Plan Administrator shall have the authority to accelerate the vesting of any or all Cash Awards, or portions or installments thereof, at any time in its sole discretion; provided, that, in the case of any accelerated vesting for a Cash Award that is not an Annual Award and that is authorized in connection with the termination of a Participant’s employment or service, as applicable, such acceleration may be approved in writing by any duly appointed officer of OCG who is delegated the authority by the Plan Administrator to make this determination, or by any duly appointed officer of the Grantor at the direction of such an officer of OCG, in each case as long as such officer is not the Participant whose Cash Award is being accelerated. (b) Vesting of Allocations Pursuant to Partnership Awards. The rights to allocations from the profits of a Local Partnership under each Partnership Award will be conditional on (i) the individual remaining a partner of the Local Partnership on the applicable vesting date of the applicable Partnership Award (each, a “Partnership Award Vesting Date”) as set out in the Award 8 Agreement, and (ii) there being, notwithstanding the calculations to be made under sections 4.02(b) and 5.02, sufficient profits of that Local Partnership (or an expectation of such profits, in accordance with section 5.02) in the relevant Fiscal Year (and may also be subject to performance-based conditions). The Plan Administrator shall have the authority to procure that vesting of any or all Partnership Awards, or portions or installments thereof, be accelerated at any time in its sole discretion; provided, that, in the case of any accelerated vesting that is authorized in connection with the termination of a Participant’s employment or service, as applicable, such acceleration may be approved in writing by any duly appointed officer of OCG who is delegated the authority by the Plan Administrator to make this determination, or by any duly appointed officer of the Grantor at the direction of such an officer of OCG, in each case as long as such officer is not the Participant whose Partnership Award is being accelerated. 4.05. Settlement of Awards. (a) Cash Awards – Date of Settlement. With respect to each Cash Award, each installment will be paid within 60 days following the applicable Vesting Date (such 60 day or, if such 60 day is not a Business Day, the next occurring Business Day, the “Settlement Expiration Date” and the actual date of settlement, a “Cash Award Settlement Date”). th th (b) Partnership Awards – Date of Settlement. With respect to each Partnership Award, distribution of any amount of profit allocated will be made no later than the Settlement Expiration Date, subject always to section 4.04(b)(ii) (such actual date of distribution, a “Partnership Award Settlement Date”). (c) Valuation of Each Installment. For any Participant (a “Multiple Currency Participant”) whose Cash Award or Partnership Award is denominated in U.S. dollars but whose compensation for services to the Oaktree Group is normally paid in, or whose distributions from the Local Partnership are normally made in, a currency other than U.S. dollars (the “Participant’s Local Currency”), each installment payment or distribution under the Award shall be converted from U.S. dollars into the Participant’s Local Currency using a rate determined by the Plan Administrator in its sole discretion. Plan Administrator may offer to any (d) Currency Hedging Adjustment. If permitted under applicable local Laws, the 9 Multiple Currency Participant the right to elect a “currency hedging adjustment” to the amount of each installment payment or distribution under the Participant’s Award. The currency hedging adjustment shall be calculated by the Plan Administrator or OCG in its sole discretion, applying the following guidelines: (i) assuming that the Participant entered into a hedge transaction upon the grant of the Award (or such other date as the Plan Administrator or OCG may determine), to protect against unexpected changes in the relative values of the U.S. dollar and the Participant’s Local Currency, (ii) substantially reflecting, to the extent practicable, for each Award a reasonably consistent and commercial approach to hedging for such Award through its final vesting date, including with respect to the duration of each hypothetical hedge applied to such Award, and (iii) basing the relevant calculations on data available from third-party sources on hedges offered by actual currency market participants, to the extent such information is reasonably available. The procedures pursuant to which Participants may elect to receive the currency hedging adjustment shall be determined by the Plan Administrator in its sole discretion. Participants who elect a “currency hedging adjustment” will be deemed to acknowledge and agree that the installment payments or distributions received pursuant to their Awards may be higher or lower than the actual return on the amount deemed invested in the Designated Fund or Alternative Notional Investment. 4.06. Bookkeeping. Unless alternative arrangements have been made by the Oaktree Group, the Plan Administrator shall establish a bookkeeping account (an “Account”) for each Participant. The amount of each Award, along with all earnings thereon, shall be set out in such Participant’s Account. The Account is for bookkeeping purposes only, and no Participant shall have any access to any amounts in such Participant’s Account. All such Accounts are notional, and for internal information purposes only. In particular, nothing in the above shall prejudice Sections 4.02 to 4.05 (inclusive). Participant, whether or not Participants are similarly situated. 4.07. The terms of Awards need not be uniform among Participants or among Awards to the same QUARTERLY DISTRIBUTION EQUIVALENTS ARTICLE V. 5.01. Quarterly Distribution Equivalents – Cash Awards. If, during any period when a Participant’s Cash Award is notionally invested in a Designated Fund that pays quarterly cash distributions (“Quarterly Distributions”) to the limited partners or shareholders in the Designated Fund, Quarterly Distributions are actually made to the limited partners or shareholders in the Designated Fund, the Participant shall receive in respect of any Cash Award held by the Participant, a cash payment equal to the value of the Quarterly Distributions (a “Quarterly Distribution Equivalent Payment”) that the Participant would have been entitled to 10 with respect to the Award had such Award constituted an actual investment in the Designated Fund (rather than a notional investment) and had such Participant elected to receive Quarterly Distributions from the Designated Fund, subject to the Participant’s continued employment or service with the Oaktree Group on the date on which the Quarterly Distribution for investors in the Designated Fund is paid or such other date (which may be a later date) as selected by the Plan Administrator (the “Distribution Date”). Each Quarterly Distribution Equivalent Payment is fully vested upon payment to the Participant and shall be made no later than 60 days after the date on which the Quarterly Distribution to investors in the Designated Fund is paid (or, if the 60 day is not a Business Day, the next occurring Business Day). For the avoidance of doubt, (i) if an Award is not notionally invested in a Designated Fund that pays Quarterly Distributions to its limited partners or shareholders, then no Quarterly Distribution Equivalent Payments shall be payable in respect of such Award and (ii) if an Award is notionally invested in a Designated Fund that pays Quarterly Distributions to its limited partners or shareholders but no Quarterly Distributions are made to limited partners or shareholders in the Designated Fund for a particular quarter, then no Quarterly Distribution Equivalent Payments shall be due in respect of the Award for that quarter. th 5.02. Quarterly Distribution Equivalents – Partnership Awards. If, during any period when a Participant has a Partnership Award allocations under which are notionally linked to returns on a Designated Fund that pays Quarterly Distributions to its limited partners or shareholders, Quarterly Distributions are made to the limited partners or shareholders in the Designated Fund, the relevant Participant shall be entitled to be allocated, from the profits of the relevant Local Partnership in respect of which the applicable Partnership Award was granted, an amount equal to the value of such Quarterly Distributions that the Participant would have been entitled to with respect to that Partnership Award had such Partnership Award constituted an actual investment in the Designated Fund (rather than a notional investment) and had such Participant elected to receive Quarterly Distributions from the Designated Fund (a “Quarterly Distribution Equivalent Profit Allocation”). The relevant Local Partnership shall, subject to the availability of profits for the applicable Fiscal Year, advance an amount to that Participant on account of an entitlement to Quarterly Distribution Equivalent Profit Allocation which the Participant would have received as set out above, subject always to the Participant remaining a partner in the relevant Local Partnership on the Distribution Date. Each Quarterly Distribution Equivalent Profit Allocation is fully vested upon payment to the Participant and shall (subject always to Section 4.04(b)(ii)) be made within 60 days following the date on which the Quarterly Distribution to investors in the Designated Fund is paid (or, if the 60 day is not a Business Day, the next occurring Business Day). For the avoidance of doubt, (i) if an Award is not notionally invested in a Designated Fund that pays Quarterly Distributions to its limited partners or shareholders, then no Quarterly Distribution Equivalent Profit Allocations shall be made in respect of such Award, and (ii) if an Award is notionally invested in a Designated Fund that pays Quarterly Distributions to its limited partners or shareholders but no Quarterly Distributions are made to such limited partners or shareholders in the Designated Fund for a particular quarter, then no Quarterly Distribution Equivalent Profit Allocations shall be made in respect of the Award for that quarter. th 11 5.03. The amount of a Cash Award that is considered notionally invested in the Designated Fund for the purposes of calculating the right to the Quarterly Distribution Equivalent Payments shall be the full portion of the Cash Award that has not been paid, even if it is not vested on the Distribution Date. The amount of a Partnership Award that is considered notionally invested in the Designated Fund for the purposes of calculating the right to the Quarterly Distribution Equivalent Profit Allocations shall be the full portion of the Partnership Award that has not yet been allocated by the Local Partnership, even if it is not vested on the Distribution Date. Notwithstanding the immediately preceding two sentences, if the Distribution Date occurs between a Vesting Date and the Settlement Date applicable to such Vesting Date, then the amount to be paid or allocated on such Settlement Date shall not be included in the portion of the Award that shall be deemed invested in the Designated Fund for purposes of calculating the right to the Quarterly Distribution Equivalent Payment or Quarterly Distribution Equivalent Profit Allocation. 5.04. A Participant’s right to receive any Quarterly Distribution Equivalent Payment or Quarterly Distribution Equivalent Profit Allocation (as applicable) with respect to any Award shall cease upon the forfeiture or payment of the Award. Quarterly Distribution Equivalent Payment or Quarterly Distribution Equivalent Profit Allocation. 5.05. The provisions of Sections 4.05(c) and (d) of the Plan, above, shall apply mutatis mutandis to any payable or allocable on any Award deemed invested in an Alternative Notional Investment until such Award vests. 5.06. Unless otherwise determined by the Plan Administrator, no amounts (quarterly or otherwise) will be TERMINATION OF PARTNERSHIP RELATIONSHIP ARTICLE VI. 6.01. Annual Awards – Certain Accelerated Vesting. With respect to any Annual Award, unless otherwise provided in a Participant’s Award Agreement, upon the involuntary termination of a Participant’s employment or service with the Oaktree Group, or, for a Participant holding an Annual Award that is a Partnership Award, an involuntary termination of such Participant’s partnership with a Local Partnership, in any case, without Cause or due to death or Disability before an applicable Vesting Date (under a Cash Award) or an allocation (under a Partnership Award), such Participant will be fully vested in the unvested installments or allocations, as applicable, of the Annual Award, which installments will (subject in the case of Partnership Awards to section 4.04(b)(ii)) be paid or allocations will be made, as applicable, within 60 days after termination, subject in the case of an involuntary termination of a Participant’s employment or service with the Oaktree Group without Cause to the Participant’s execution of an effective general release of claims in a form to be provided by the Oaktree Group. termination of employment or service with the Oaktree Group, or, for 6.02. Unless otherwise provided in an Award Agreement or in Section 6.01 above, upon a Participant’s 12 a Participant holding a Partnership Award, such Participant’s termination as a partner in the Local Partnership, for any reason, any unvested portion of the Award will be immediately and automatically forfeited. 6.03. Any determination whether a Participant has experienced a termination of employment or service with the Oaktree Group or partnership with a Local Partnership, the date of such termination and whether such termination is for Cause or due to the Participant’s Disability, will be made by the Plan Administrator, in its sole discretion. ARTICLE VII. ADMINISTRATION 7.01. The Plan shall be administered by the Plan Administrator. The Plan Administrator shall have the sole and plenary authority to (i) designate Participants from among Eligible Persons, (ii) determine the amount of any Award to be granted to any Participant, (iii) determine the terms and conditions of any Award, including the vesting schedule, impact of termination of employment or service with the Oaktree Group or partnership with a Local Partnership, and any Alternative Notional Investments associated therewith, (iv) approve the forms of Award Agreement for use under the Plan, (v) interpret the Plan, and (vi) make all legal and factual determinations and determine all questions arising in the administration of the Plan, including without limitation the reconciliation of any inconsistent provisions, the resolution of ambiguities, the correction of any defects and the supplying of omissions. Each interpretation, determination or other action made or taken pursuant to the Plan by the Plan Administrator shall be final and binding on all applicable Persons. Interpretations, determinations and actions by the Plan Administrator under the Plan need not be uniformly applied to all Participants. 7.02. The Plan Administrator may delegate to one or more officers of the Oaktree Group the authority to act on behalf of the Plan Administrator with respect to any matter, right, obligation or election that is the responsibility of or authorized to be taken by the Plan Administrator herein and that may be so delegated as a matter of Law. 7.03. The Plan Administrator may, in its sole discretion, establish different rules or sub-plans under the Plan with respect to Participants based outside of the United States. Such alternate rules or sub-plans may include, without limitation, different treatment with respect to timing of vesting and settlement of Awards, including Annual Awards, under the Plan. 7.04. Neither the Plan Administrator nor its delegates shall be liable to any Participant for any action or determination. The Plan Administrator and its delegates shall be indemnified by the Oaktree Group against any liabilities, costs, and expenses (including, without limitation, reasonable attorneys’ fees) incurred by the Plan Administrator or such delegates as a result of actions taken or not taken in connection with the Plan. 13 ARTICLE VIII. AMENDMENTS AND TERMINATION 8.01 The Board may alter, amend, modify, suspend or terminate the Plan at any time in its sole discretion. No further Awards may be made or Annual Awards effected under the Plan after the effective date of any such suspension or termination. Following any such suspension or termination, each Award will continue to vest and be paid or allocated, or be forfeited, as otherwise provided herein. Notwithstanding the foregoing, no alteration, amendment or modification of the Plan shall adversely affect the rights of a Participant in any amounts accrued by or credited to such Participant prior to such action without such Participant’s written consent unless the Board determines, in its sole discretion, that such alteration, modification or amendment is necessary for the Plan to comply with the requirements of any Law. ARTICLE IX. GENERAL PROVISIONS 9.01. Unfunded Status of the Plan. The Plan is unfunded. With respect to holders of Cash Awards, (i) each Participant’s rights under the Plan (if any) shall represent at all times an unfunded and unsecured contractual obligation of OCG, (ii) each Participant and the Participant’s estate or beneficiaries (if any) will be unsecured creditors of OCG with respect to any obligations owed to such Participant, estate or beneficiaries under the Plan, and (iii) amounts payable under the Plan will be satisfied solely out of the general assets of OCG subject to the claims of its creditors. None of a Participant, the Participant’s estate, the Participant’s beneficiaries (if any) nor any other Person shall have any right to receive any payment under the Plan except as, and to the extent, expressly provided in the Plan. OCG will not segregate any funds or assets to provide for any payment under the Plan or issue any notes or security for any such payment. Any reserve or other asset that OCG may establish or acquire to assure itself of the funds to provide payments required under the Plan shall not serve in any way as security to any Participant or the estate or beneficiary of a Participant for the performance of OCG under the Plan. With respect to holders of Partnership Awards, (i) the Participant’s rights to receive payments are owed by the relevant Local Partnership only and, notwithstanding any other term hereof, not by OCG and (ii) the Participant’s rights in respect of such Partnership Awards are contingent upon there being sufficient profits (or an expectation of sufficient profits, as the case may be) of that Local Partnership available to pay distributions of the relevant amounts to the Participant. Notwithstanding that any Award is valued by reference to the returns of the Designated Fund or any Alternative Notional Investment for purposes of calculating the amounts due under the Plan, that is a purely notional calculation. The Participant shall have no rights in or against the Designated Fund or any Alternative Notional Investment (or against any general partner, manager or administrator thereof), shall not actually be invested in the Designated Fund or the Alternative Notional Investment, and thus shall have no interest in the Designated Fund or Alternative Notional Investment. 14 9.02 Non-transferability. No benefit under the Plan shall be subject in any manner to alienation, sale, transfer, assignment, pledge or encumbrance, other than by will or the Laws of descent and distribution. Any attempt to violate the foregoing prohibition shall be void. 9.03 Securities Laws Matters. By accepting any Award under the Plan, a Participant will be deemed to represent that either (i) (a) the Participant is not a person described in Rule 902(k) of Regulation S of the Securities Act (or any successor rule or provision), which generally defines a U.S. Person as any natural person resident in the United States, any estate of which any executor or administrator is a U.S. Person or any trust of which any trustee is a U.S. Person (a “U.S. Person”) and (b) not acquiring the Award on behalf, or for the account or benefit, of a U.S. Person, or (ii) if the Participant is a U.S. Person, that the Participant is an “accredited investor” within the meaning of Rule 501 of Regulation D under the Securities Act. 9.04. No Right to Continued Employment or Membership. Neither the Plan nor any action taken or omitted to be taken pursuant to or in connection with the Plan shall be deemed to (i) create or confer on a Participant any right to be retained in the employ or service of the Oaktree Group or as a partner of any Local Partnership, (ii) interfere with or to limit in any way the Oaktree Group’s right to terminate a Participant’s employment or service with the Oaktree Group or a Participant’s partnership in a Local Partnership, (iii) confer on a Participant any right or entitlement to compensation in any amount for any future Fiscal Year or (iv) affect, supersede, amend or change any employment agreement or other agreement between the Participant and any Oaktree Group Member. In addition, without limiting the foregoing, the participation of an Annual Participant for a given Fiscal Year in the Plan shall not be deemed to create or confer on the Annual Participant any right to participate in the Plan, or in any similar plan or program that may be established by the Oaktree Group, in respect of any future Fiscal Year. 9.05. Certain Tax Issues. Unless otherwise provided in an Award Agreement, the Grantor or other applicable Oaktree Group Member may take such steps as it may deem necessary to (i) withhold from payments due to the Participant pursuant to Awards or require the Participant or its beneficiary, as the case may be, to pay, any Taxes which an Oaktree Group Member considers that it is required to withhold, either by Law or pursuant to an agreement with the relevant Tax authority, (ii) pay such Taxes to the relevant Tax authority or (iii) report such payments or other aspects of this Plan or Awards to any relevant Tax Authority. 9.06. Designation of Beneficiaries. A Participant who is a natural person may designate in writing, on forms prescribed by and filed with OCG, one or more beneficiaries to receive any distributions and payments to which such Participant is entitled under the Plan and any Award and that are payable after such Participant’s death; provided, that such beneficiary shall not be substituted for such Participant as a limited partner of any Local Partnership and no transfer of Awards giving rise to such distributions and payments shall be deemed to have occurred until such Participant’s death. Any Participant may at any time amend or revoke in writing any beneficiary designation made by such Participant; provided, that, if such Participant is married and designates a person other than the Participant’s spouse as a beneficiary, then the Participant’s spouse must sign a statement specifically approving such designation. Any 15 distributions and payments to which a Participant would be entitled by virtue of this Plan and any Award while alive will be distributed and paid, following the death of such Participant, to the Participant’s designated beneficiary under this Section 9.06. If no beneficiary designation under this Section 9.06 is in effect at the time of death, or in the absence of a spouse’s approval as provided in this Section 9.06, distributions and payments to which a Participant is entitled hereunder shall be made to such Participant’s personal representative. California in the United States of America. 9.07. Governing Law. The Plan shall be subject to and construed in accordance with the laws of the state of 9.08. Severability. In the event any provision of the Plan shall be held illegal or invalid for any reason, such illegality or invalidity shall not affect the remaining provisions of the Plan. The Plan shall be construed and enforced as if such illegal or invalid provision had never been contained herein. 9.09. Construction. The headings in the Plan have been inserted for convenience of reference only and are to be ignored in any construction of any provision hereof. Unless the context clearly indicates otherwise: (i) a term has the meaning assigned to it; (ii) “or” is not exclusive; (iii) provisions apply to successive events and transactions; (iv) each definition herein includes the singular and the plural; (v) each reference herein to any gender includes the masculine, feminine, and neuter where appropriate; (vi) the word “including” when used herein means “including, but not limited to,” and the word “include” when used herein means “include, without limitation”; and (vii) references herein to specified paragraph, article or section numbers refer to the specified paragraph, article or section of this Plan. The words “hereof,” “herein,” “hereto,” “hereby,” “hereunder,” and derivative or similar words refer to this Plan as a whole and not to any particular provision of this Plan. The abbreviation “U.S.” refers to the United States of America. All monetary amounts expressed herein by the use of the words “U.S. dollar” or “U.S. dollars” or the symbol “$” are expressed in the lawful currency of the United States of America. 16 AWARD AGREEMENT Under The Oaktree Capital Group, LLC Long-Term Incentive Plan Exhibit 10.21 This Award Agreement (as may be amended, modified, supplemented or restated from time to time, this “Agreement”) is effective as of March 23, 2020 (the “Grant Date”), by and between Oaktree Capital Group, LLC, a Delaware limited liability company (the “Company”) and you (the “Participant”). Capitalized terms used but not otherwise defined herein shall have the meanings ascribed to them in the Oaktree Capital Group, LLC Long-Term Incentive Plan (as amended, modified, supplemented or restated from time to time, the “Plan”). This Agreement shall be deemed executed, accepted and agreed to by all parties hereto upon the Participant’s acceptance of this Agreement via DocuSign. Recitals Whereas, the Plan was adopted for the purposes of assisting the Oaktree Group to retain key employees, directors, consultants other service providers, partners and members of any Oaktree Group Member; and Whereas, the Plan Administrator has approved the grant of the Award to the Participant pursuant to the Plan, subject to the terms and conditions of the Grant Documents (as defined below). Now, Therefore, in consideration of the premises and the mutual agreements herein contained, the parties hereto, intending to be legally bound, hereby agree as follows: Agreement 1. Grant of Award. Subject to the terms and conditions of this Agreement, the Plan and the other Grant Documents (as defined below): (a) the Company hereby grants to the Participant, on the Grant Date, and the Participant hereby accepts and receives from the Company, an Award in the amount specified for the Participant (the “Award”) on the “LTI Recurring Supplemental Award Value Statement” for this Award delivered to the Participant on the Grant Date (the “Award Statement”); (b) the Award shall be a “Cash Award” for all purposes of the Plan; (c) the Award shall be notionally invested in the Designated Fund or the Alternative Notional Investment, as indicated by the Participant on Attachment A to this Agreement (if no election is made by the Participant on Attachment A, or if this Agreement has not been accepted by the Participant by March 30, 2020, the Participant will be deemed to have elected the Designated Fund), commencing on April 1, 2020 and ending on December 31, 2020 for purposes of determining the value of the Award that is payable upon the First Vesting Date (as defined below), and ending on December 31 of each subsequent year for purposes of determining the value of the Award that is payable on each subsequent Vesting Date (as defined below); provided, that the period over which the Award is notionally invested may be shortened in connection with any cessation of the Participant’s service as a member of the Board of Directors of the Company as provided in the Plan and determined by the Company or the Plan Administrator; (d) the Participant hereby acknowledges that the Participant has received and has reviewed carefully a copy of (i) the Plan, (ii) this Agreement, (iii) the Award Statement and (iv) each other agreement, instrument or document required by the Company to be executed and delivered by the Participant in connection with the transactions contemplated by this Agreement (collectively, including this Agreement and the Plan, as each such document may be amended, modified, supplemented or restated in accordance with its respective terms from time to time, the “Grant Documents”); and (e) notwithstanding anything in the Plan or this Agreement to the contrary, the Plan Administrator may, in its discretion and without the Participant’s consent, provide at any time for (i) the assumption of the Award by any Affiliate of the Company, or (ii) an acceleration of the vesting provisions applicable to the Award. 2. Vesting; Forfeiture; Payment. (a) Vesting. The Award shall be unvested as of the Grant Date. Subject to the Participant’s continued provision of services as a member of the Board of Directors of the Company, twenty-five percent (25%) of the Award shall vest on February 15, 2021 (the “First Vesting Date”), and an additional twenty-five percent (25%) of the Award shall vest on each of (i) February 15, 2022, (ii) February 15, 2023, and (iii) February 15, 2024 (each such date, a “Vesting Date”), in each case, unless forfeited pursuant to Paragraph 2(b) below or accelerated pursuant to Paragraph 2(c) below. (b) Forfeiture. Except as otherwise determined by the Company, and subject to Paragraph 2(c) below, if the Participant ceases to serve as a member of the Board of Directors of the Company for any reason or for no reason at all (including termination of such services by the Company without Cause), then all unvested portions of the Award shall be immediately and automatically cancelled on the date as of which the Participant ceases to serve as a member of the Board of Directors of the Company without any further action by any parties hereto, and shall cease thereafter to be outstanding. (c) Acceleration of Vesting. Notwithstanding Paragraph 2(a) above: 2 (i) (ii) for the avoidance of doubt, the Company may at any time accelerate the vesting of any Award; if the Participant ceases to serve as a member of the Board of Directors of the Company as a result of the Participant’s death or Disability, the Award shall vest immediately and automatically, effective upon the Participant’s death or Disability; (iii) if (A) the Participant ceases to serve as a member of the Board of Directors of the Company due to the termination by the Company of such services, (B) the Participant has not engaged in Cause, (C) the Participant has delivered to the Company, within ten calendar days (or such longer period permitted by the Company) after such cessation, an executed general release in form and substance reasonably determined by the Company, fully and finally releasing all Oaktree Group Members and all Oaktree Related Persons (as defined below) from all claims and other liabilities whatsoever, and (D) the Participant does not subsequently seek to revoke or otherwise repudiate or evade any of the provisions of such general release (whether pursuant to any statutory revocation right or otherwise), then the Award shall vest effective upon such permanent cessation. (d) Payment. All amounts payable pursuant to the Award shall be determined as set forth in the Plan, and each installment due under the Award will be paid on the dates set forth in the Plan, in all cases, subject to the terms and conditions thereof. 3. Accounts. The Plan Administrator shall establish a bookkeeping account (the “Account”) for the Participant, which shall set out the amount of the Award, along with all earnings thereon. The Account is notional and for internal information only. The Participant shall not be permitted with withdraw any amounts from the Account. 4. Participant’s Obligation to Pay Taxes. The Participant shall be responsible for any and all Taxes relating to the Award. The Participant hereby agrees that the Company has the right (a) to require reimbursement from the Participant of any such Taxes that are paid by the Company or any other Oaktree Group Member and (b) to deduct any such taxes (i) from any payment of any kind otherwise due to the Participant, including as necessary, appropriate, advisable or convenient to satisfy any U.S. federal, state or local or non-U.S. withholding tax requirements, and (ii) from payments owed to the Participant under the Grant Documents. 5. Certain Representations, Warranties, Covenants and Agreements. As an essential inducement to the Company to grant and issue the Award to the Participant, the Participant hereby represents and warrants to the Oaktree Group as follows: 3 (a) Authority and Capacity. The Participant has the legal capacity to (i) agree to and, if applicable, execute and deliver each Grant Document and (ii) perform all of the Participant’s obligations thereunder. The Participant shall be deemed to have duly executed and delivered this Agreement upon accepting its terms via DocuSign, and each Grant Document constitutes the legal, valid and binding obligation of the Participant, enforceable against the Participant in accordance with its respective terms. (b) No Conflict. Neither the execution, acceptance and delivery by the Participant of any Grant Document, nor the performance by the Participant of the Participant’s obligations thereunder, violates, conflicts with or constitutes a default or breach under, or will violate, conflict with or constitute a default or breach under any applicable law or any contract, indenture, agreement, instrument or mortgage binding on the Participant or any of the Participant’s properties. To the best knowledge of the Participant, the grant of the Award to the Participant: (i) (ii) (iii) (iv) would not reasonably be expected to result in the violation by the Company or any other Oaktree Related Person of any applicable law, including any applicable U.S. federal or state securities laws; would not reasonably be expected to terminate the existence or qualification of the Company or any other Oaktree Related Person under the laws of any jurisdiction; would not reasonably be expected to cause the Company to be treated as an association taxable as a corporation or otherwise to be taxed as an entity for U.S. federal income tax purposes (to the extent not already so treated or taxed); and would not reasonably be expected to subject the Company or any other Oaktree Related Person to any material regulatory requirement to which it, he or she otherwise would not be subject, including any requirement that the Company register as an investment company under the Investment Company Act or as a result of all or any portion of the Company’s assets becoming or being deemed to be “plan assets” for purposes of the U.S. Employee Retirement Income Security Act of 1974, as amended. (c) Suitability. The Participant meets all suitability standards or eligibility requirements imposed by the jurisdiction of the Participant’s residence for the Participant’s receipt of the Award pursuant to the Grant Documents. (d) Independent Decision. The Participant is relying on the Participant’s own independent investigation and the information contained in the Grant Documents, and the Participant is not relying on any Person (other than the Participant’s own legal, tax, financial and other advisors) or any representation or warranty made by any Oaktree 4 Related Person, in each case, in deciding to accept the Award or in making any election in Attachment A. Without limiting the foregoing, no representation or warranty has been made to the Participant by any Oaktree Related Person as to the expected future performance of the Designated Fund or the Alternative Notional Investment. (e) Understanding of Grant Documents. The Participant understands each provision of each Grant Document and the terms and conditions of the Award. Without limiting the foregoing, the Participant understands that amounts paid to the Participant in respect of the Award are subject to withholding as provided in Paragraph 4 hereof and in Section 9.05 of the Plan. The Participant has given careful consideration to all of the provisions of the Grant Documents. If the Participant becomes aware that any representation or warranty made by the Participant in any Grant Document would be incorrect in any material respect if such representation or warranty were to be made as of any subsequent date, or that the Participant is unable fulfill or perform in any material respect any of the Participant’s covenants or agreements in any Grant Document, the Participant shall promptly notify the Company of such inaccuracy or inability. 6. Incorporation of the Plan. The provisions of the Plan are hereby incorporated herein by reference and shall apply to this Agreement. Without limiting the foregoing, this Agreement may be amended, modified or waived with the written consent of the Company; provided that if any such amendment, modification or waiver would adversely affect the Participant in any material the Participant; provided further that, for the avoidance of doubt, the Plan may be amended, modified or waived pursuant to Article VIII of the Plan, and any such amendment, modification and waiver of the Plan shall be effective with respect to the Award (and shall not be deemed to be an amendment, modification or waiver of this Agreement for purposes of the immediately preceding proviso or otherwise). such amendment, modification or waiver the written consent of shall also respect, require 7. Arbitration of Disputes. (a) Any and all disputes, claims or controversies arising out of or relating to this Agreement, including any and all disputes, claims or controversies arising out of or relating to (i) the Participant’s rights and obligations hereunder, (ii) the validity or scope of any provision of this Agreement, (iii) except as expressly limited below by Paragraph 7(c), whether a particular dispute, claim or controversy is subject to arbitration under this Paragraph 7, and (iv) the power and authority of any arbitrator selected hereunder, that are not resolved by mutual agreement shall be submitted to final and binding arbitration before Judicial Arbitration and Mediation Services, Inc. (“JAMS”) pursuant to the Federal Arbitration Act, 9 U.S.C. Section 1 et seq. Either the Company or the Participant may commence the arbitration process by filing a written demand for arbitration with JAMS and delivering a copy of such demand to the other party or parties to the arbitration in accordance with the notice procedures set forth in Paragraph 14 below. The arbitration shall take place in Los Angeles, California, and shall be conducted in accordance with the provisions of JAMS Streamlined Arbitration Rules and Procedures 5 in effect at the time of filing of the demand for arbitration. The parties to the arbitration shall cooperate with JAMS and each other in selecting an arbitrator from JAMS’ panel of neutrals and in scheduling the arbitration proceedings. The arbitrator selected shall be neutral and a former California state court judge or a former U.S. federal judge with experience in adjudicating matters under the law of the State of California; provided that if no such person is both willing and able to undertake such a role, the parties to the arbitration shall cooperate with each other and JAMS in good faith to select such other person as may be available from a JAMS panel of neutrals with experience in adjudicating matters under the law of the State of California. The parties to the arbitration shall participate in the arbitration in good faith. The Company shall pay those costs, if any, of arbitration that it must pay to cause this Paragraph 7 to be enforceable, and all other costs of arbitration shall be shared equally between the parties to the arbitration. (b) Adequate discovery shall be permitted by the arbitrator consistent with applicable law and the objectives of arbitration. The award of the arbitrator, which shall be in writing summarizing the basis for the decision, shall be final and binding upon the parties (subject only to limited review as required by law) and may be entered as a judgment in any court having competent jurisdiction, and the parties hereby consent to the jurisdiction of the courts of the State of California. The arbitrator shall have the power to award any appropriate remedy allowed by applicable law, but shall not have power to modify the provisions of this Paragraph 7 or to make an award or impose a remedy that is not available to a court of general jurisdiction sitting in the County of Los Angeles, California, and the jurisdiction of the arbitrator is limited accordingly. To the extent permitted by law, except as provided in Paragraph 7(c) below the arbitrator shall have the power to order injunctive relief, and shall expeditiously act on any petition for such relief. (c) The provisions of this Paragraph 7 may be enforced by any court of competent jurisdiction, and, to the extent permitted by law, the party seeking enforcement shall be entitled to an award of all costs, fees and expenses, including attorneys’ fees, to be paid by the party against which enforcement is ordered. Notwithstanding any provision of this Agreement to the contrary, nothing in this Agreement shall limit or restrict any party’s ability to seek or obtain a temporary restraining order, preliminary injunction or other provisional remedy then available in any court of competent jurisdiction to prevent any violation of the provisions of this Agreement pending a final determination on the merits by the arbitrator, and each party hereby consents that any such temporary restraining order, preliminary injunction or other provisional remedy may be granted without the necessity of posting any bond. The question of whether any particular application or request for relief is for a provisional remedy not subject to arbitration under this Paragraph 7 may only be decided by a court, and the arbitrator shall not have the power or authority to decide any such question. (d) The details of any arbitration pursuant to this Paragraph 7, including the existence or outcome of such arbitration and any information obtained in connection with 6 any such arbitration, shall be kept strictly confidential and shall not be disclosed or discussed with any person not a party to the arbitration; provided that a party may make such disclosures as are required by applicable law or legal process; provided further that a party may make such disclosures to such party’s attorneys, accountants or other agents and representatives (including, in the case of the Company, the officers, directors and employees of any Oaktree Group Member) who reasonably need to know the disclosed information in connection with any arbitration pursuant to this Paragraph 7 and who are obligated to keep such information confidential to the same extent as such party. If a party to an arbitration receives a subpoena or other request for information from a third party that seeks disclosure of any information that is required to be kept confidential pursuant to the prior sentence, or otherwise believes that such party may be required to disclose any such information, such party shall (i) promptly notify the other party to the arbitration and (ii) reasonably cooperate with such other party in taking any legal or otherwise appropriate actions, including the seeking of a protective order, to prevent the disclosure, or otherwise protect the confidentiality, of such information. (e) For the avoidance of doubt, (i) any arbitration pursuant to this Paragraph 7 shall not include any disputes, claims or controversies that do not arise out of or relate to this Agreement and (ii) any arbitration pursuant to this Paragraph 7 of disputes, claims or controversies arising out of or relating to this Agreement is intended to be a separate and distinct proceeding from any arbitration or other adjudication of disputes, claims or controversies between any Oaktree Group Member and the Participant that do not arise out of or relate to this Agreement. 8. No Right to Continued Service on the Board of Directors. The granting of the Award as evidenced by this Agreement shall impose no obligation on the Company to maintain the Participant on its Board of Directors and shall not lessen or affect the Company’s right to terminate the Participant’s service on its Board of Directors. 9. Entire Agreement. The Grant Documents and any plan, agreement or policy with which any of the Grant Documents require the Participant to comply, constitute the entire agreement among the parties hereto with respect to this Award, and supersede any prior agreement or understanding among them with respect to such matter; provided that in the event of any conflict among (i) the Plan, (ii) this Agreement or (iii) any other agreement entered into between the Participant and any Oaktree Group Member, the documents shall control in the following order: this Agreement, such other agreement entered into between the Participant and an Oaktree Group Member and, finally, the Plan. 10. Interpretation and Certain Definitions. (a) All ambiguities shall be resolved without reference to which party may have drafted this Agreement. All article, paragraph or section headings or other captions in this Agreement are for convenience only, and they shall not be deemed part of this Agreement and in no way define, limit, extend or describe the scope or intent of any provisions hereof. Unless the context clearly indicates otherwise: (i) a term has the 7 meaning assigned to it; (ii) “or” is not exclusive; (iii) provisions apply to successive events and transactions; (iv) each definition herein includes the singular and the plural; (v) each reference herein to any gender includes the masculine, feminine, and neuter where appropriate; (vi) the word “including” when used herein means “including, but not limited to,” and the word “include” when used herein means “include, without limitation”; and (vii) references herein to specified paragraph numbers refer to the specified paragraph of this Agreement. The words “hereof,” “herein,” “hereto,” “hereby,” “hereunder,” and derivative or similar words refer to this Agreement as a whole and not to any particular provision of this Agreement. The words “applicable law” and any other similar references to the law include all applicable statutes, laws (including common law), treaties, orders, rules, regulations, determinations, orders, judgments, and decrees of any governmental authority. The abbreviation “U.S.” refers to the United States of America. All monetary amounts expressed herein by the use of the words “U.S. dollar” or “U.S. dollars” or the symbol “$” are expressed in the lawful currency of the United States of America. The words “foreign” and “domestic” shall be interpreted by reference to the United States of America. (b) “Cause” means the occurrence of any of the following events during the period in which the Participant serves on the Board of Directors of the Company (regardless whether the occurrence is discovered before or after the cessation of the Participant’s services to the Company): (i) gross negligence or misconduct detrimental to an Oaktree Group Member, (ii) material breach of this Agreement, the Company’s operating agreement, Atlas OCM Holdings, LLC’s operating agreement or any other agreement between the Participant and an Oaktree Group Member, or written policies of any Oaktree Group Member applicable to the Participant, (iii) violation of any applicable regulatory rule or regulation, (iv) conviction of, or entry of a guilty plea or of no contest to, a felony (other than a motor-vehicle-related felony for which no custodial penalty is imposed), (v) entry of an order issued by any court or regulatory agency removing the Participant as a director of the Company or of Atlas OCM Holdings, LLC or prohibiting the Participant from participation in the conduct of the affairs of an Oaktree Group Member or (vi) fraud, theft, misappropriation or dishonesty by the Participant relating to an Oaktree Group Member, including any theft of funds. (c) “Control” means the possession, direct or indirect, of the power to direct or cause the direction of the management and policies of a Person, whether through ownership of voting securities, by contract or otherwise. 8 (d) “Oaktree Business” means the business and operations of the Oaktree Group, including the organization, investment objectives, expenses, operational structure, management structure and other material details of the Oaktree Group. (e) “Oaktree Group” means, collectively, Atlas OCM Holdings, LLC and its direct and indirect Subsidiaries and the Company and its direct and indirect Subsidiaries, and each such entity individually, an “Oaktree Group Member”. (f) “Oaktree Related Person” means (i) any Oaktree Group Member, (ii) the current and former senior executives, officers, directors, employees and duly authorized agents and representatives of any Oaktree Group Member, and (iii) the current and former direct and indirect shareholders, partners, members and equityholders of any Oaktree Group Member (other than the current and former holders of publicly traded preferred or common equity securities of the Company, except to the extent such holders either (A) are also described in clauses (i) or (ii) above or (B) have directly or indirectly held common equity securities of the Company on or after October 1, 2019). (g) “Person” means an individual, a general partnership, a limited partnership, a limited liability company, an association, a joint venture, a corporation, a business, a trust, an unincorporated organization, any other entity or a government or any department, agency, authority, instrumentality or political subdivision thereof. (h) “Subsidiary” means, with respect to any Person, any Entity of which (i) a majority of the total voting power of shares of stock or equivalent ownership interests entitled (without regard to the occurrence of any contingency) to vote in the election of directors, managers, trustees, or other members of the applicable governing body thereof, is at the time owned or controlled, directly or indirectly, by that Person or one or more of the other Subsidiaries of that Person or a combination thereof, or (ii) if no such governing body exists at such entity, or in relation to an entity which is a partnership or limited liability partnership (or equivalent), a majority of the total voting power of shares of stock or equivalent ownership interests of the entity is at the time owned or Controlled, directly or indirectly, by that Person or one or more Subsidiaries of that Person or a combination thereof. For purposes hereof, a Person or Persons shall be deemed to have a majority ownership interest in a limited liability company, partnership, association or other business entity if such Person or Persons shall be allocated a majority of limited liability company, partnership, association or other business entity gains or losses or shall be or control the manager, managing member or general partner of such limited liability company, partnership, association or other business entity. 11. Further Assurances. The Participant and the Participant’s beneficiaries shall take all actions that may be reasonably requested by the Company from time to time, including by executing and delivering all agreements, instruments and documents that may be reasonably requested by the Company, to carry out the purposes of the Grant Documents. 12. Transferability. The Participant may not assign, sell, convey, dispose, pledge, hypothecate or otherwise transfer the Award (each, a “Disposition”), in whole or in part. To the 9 fullest extent permitted by applicable law, any Disposition or purported Disposition of the Award shall be null and void. 13. Survival. The obligations and covenants of the Participant under this Agreement shall survive indefinitely pursuant to their terms. The Participant agrees to remain bound by such obligations and covenants notwithstanding any vesting, forfeiture or payment (whether pursuant to Paragraph 2 or otherwise) of the Award. 14. Notices. Any notice that is required or permitted hereunder to be given to the Participant shall be in writing and shall be delivered to the Participant at the principal office of the Company or at such other place where the Participant may be found. Any notice to the Participant which is delivered to the principal office of the Company when the Participant is absent from the office shall, if reasonable efforts have been made to deliver it to the Participant elsewhere, be deemed delivered to the Participant on the next succeeding business day, if the Participant does not actually receive such notice earlier. Any notice to the Company required or permitted hereunder to be given to the Company shall be in writing and shall be delivered to the Company at the principal office of the Company, addressed to the attention of the Company’s General Counsel. A written notice may be delivered by electronic mail or other electronic transmission. [THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK.] 10 IN WITNESS WHEREOF, the Participant has executed or electronically accepted this Agreement as of the Grant Date intending to be legally bound by all of the terms hereof and to make the election set forth in Attachment A. PARTICIPANT _________________________________ Name: Date: [Long-Term Incentive Award Agreement] Attachment A – Fund Election The Company is not making any recommendation as to which election the Participant should make. The election is to be made in the Participant’s sole discretion and the Participant assumes all risks of such elections. The Company makes no promise or guarantee that the effective returns on the notional investment will be positive. Past performance is no guarantee of future results. Each investment option involves risks that should be carefully considered by the Participant before an election is made. Fund Election {Oaktree Global Credit Fund} / {Vanguard Federal Money Market Fund} Please indicate the Participant’s notional investment election for the Award using the dropdown box. Once an election is made and the Agreement is accepted by the Participant, the election cannot be changed. If the Participant receives additional awards under the Plan, the Participant can make a different fund election for such additional awards, but those other elections will not affect this Award. As described in the Plan, all investments will be on a purely notional basis for the purpose of valuing the Account. The Participant will not have any actual interest in the selected fund or its assets. Oaktree Global Credit Fund (the “Designated Fund” under the Plan) Information about the Oaktree Global Credit Fund, including recent performance data and a description of important risks associated with the fund, is available on Oaktree Central. Please refer to such information before making your election. If the Oaktree Global Credit Fund makes an income distribution to its limited partners in any quarter, the Participant will receive an equivalent income payment in respect of the unvested portion of the Award and the remaining value of the Award will be adjusted to reflect such payment, as further described in the Plan. Any such income payments will be fully vested upon receipt. Vanguard Federal Money Market Fund (the “Alternative Notional Investment” under the Plan) Information about the Vanguard Federal Money Market Fund, including recent performance data, is available on Vanguard’s website. The Oaktree Group has no involvement with the management of this fund. If the Participant selects this fund, payments will be made only in connection with vesting events. No income distributions will be paid between vesting events. List of Subsidiaries Name Arbour CLO Capital Funding Designated Activity Company Arbour CLO Designated Activity Company Arbour CLO II Designated Activity Company Arbour CLO III Designated Activity Company Arbour CLO IV Designated Activity Company Arbour CLO V Designated Activity Company Arbour CLO VI Designated Activity Company Arbour CLO VII Designated Activity Company Arbour CLO VIII Designated Activity Company Highstar Capital Fund III (Alternative), L.P. Highstar Capital Fund III, L.P. Highstar Capital III Designated Partners Fund, L.P. Highstar Capital III Prism Fund (Alternative), L.P. Highstar Capital III Prism Fund I-A (Alternative), L.P. Highstar Capital III Prism Fund I-A, L.P. Highstar Capital III Prism Fund, L.P. Highstar GP III Prism Fund, L.P. Highstar GP III, L.P. Highstar Management III, LLC LFE European Asset Management S.à r.l. Oaktree (Beijing) Investment Management Co., Ltd. Oaktree Absolute Return Income Fund GP Ltd. Oaktree Absolute Return Income Fund GP, L.P. Oaktree Absolute Return Income Fund Holdings (Delaware), L.P. Oaktree Absolute Return Income Fund, L.P. Oaktree Acquisition Corp. II Oaktree Acquisition Holdings GP Ltd. Oaktree Acquisition Holdings II GP, Ltd. Oaktree Acquisition Holdings II, L.P. Oaktree Acquisition Holdings, L.P. Oaktree Alpha Credit Fund Feeder, L.P. Oaktree Alpha Credit Fund GP Ltd. Oaktree Alpha Credit Fund GP, L.P. Oaktree Alpha Credit Fund, L.P. Oaktree Asia Performing Debt Opportunities Holdings (Cayman), L.P. Oaktree Avalon Co-Investment Fund II, L.P. Oaktree BAA Emerging Market Opportunities Fund (Feeder), L.P. Oaktree BAA Emerging Market Opportunities Fund, L.P. Oaktree Boulder Investment Fund (Feeder), L.P. Oaktree Boulder Investment Fund GP, L.P. Oaktree Boulder Investment Fund, L.P. Exhibit 21.1 Jurisdiction of Incorporation or Organization Ireland Ireland Ireland Ireland Ireland Ireland Ireland Ireland Ireland Delaware Delaware Delaware Delaware Delaware Cayman Islands Cayman Islands Cayman Islands Delaware Cayman Islands Luxembourg China Cayman Islands Cayman Islands Delaware Cayman Islands Cayman Islands Cayman Islands Cayman Islands Cayman Islands Cayman Islands Cayman Islands Cayman Islands Cayman Islands Cayman Islands Cayman Islands Cayman Islands Cayman Islands Cayman Islands Cayman Islands Delaware Delaware Name Oaktree Capital (Australia) Pty Limited Oaktree Capital (Beijing) Ltd. Oaktree Capital (Hong Kong) Limited Oaktree Capital (Seoul) Limited Oaktree Capital (Singapore) Fund Services GP, Ltd. Oaktree Capital (Singapore) Fund Services Pte. Ltd. Oaktree Capital (Singapore) Fund Services, L.P. Oaktree Capital I, L.P. Oaktree Capital Management (Cayman), L.P. Oaktree Capital Management (Dubai) Limited Oaktree Capital Management (Europe) LLP Oaktree Capital Management (International) Limited Oaktree Capital Management (UK) LLP Oaktree Capital Management Fund (Europe) Oaktree Capital Management Limited Oaktree Capital Management Pte. Ltd. Oaktree Capital UK Limited Oaktree Cascade Investment Fund I GP, L.P. Oaktree Cascade Investment Fund I, L.P. Oaktree Cascade Investment Fund II GP, L.P. Oaktree Cascade Investment Fund II, L.P. Oaktree Cascade Investment Fund III GP, L.P. Oaktree Cascade Investment Fund III, L.P. Oaktree CLO 2014-1 Blocker Ltd. Oaktree CLO 2014-1 LLC Oaktree CLO 2014-1 Ltd. Oaktree CLO 2014-2 Blocker Ltd. Oaktree CLO 2014-2 Ltd. Oaktree CLO 2015-1 Blocker Ltd. Oaktree CLO 2015-1 Ltd. Oaktree CLO 2018-1 LLC Oaktree CLO 2018-1 Ltd. Oaktree CLO 2019-1 Ltd. Oaktree CLO 2019-2 Ltd. Oaktree CLO 2019-3, Ltd. Oaktree CLO 2019-4, Ltd. Oaktree CLO RR Holder, LLC Oaktree Desert Sky Investment Fund GP, L.P. Oaktree Desert Sky Investment Fund II GP, L.P. Oaktree Desert Sky Investment Fund II, L.P. Oaktree Desert Sky Investment Fund, L.P. Oaktree Emerging Market Debt Fund GP, L.P. Oaktree Emerging Market Debt Fund GP, Ltd. Oaktree Emerging Market Debt Fund, L.P. Jurisdiction of Incorporation or Organization Australia China Hong Kong South Korea Cayman Islands Singapore Cayman Islands Delaware Cayman Islands United Arab Emirates United Kingdom United Kingdom United Kingdom Luxembourg United Kingdom Singapore United Kingdom Delaware Delaware Delaware Delaware Delaware Delaware Cayman Islands Delaware Cayman Islands Cayman Islands Cayman Islands Cayman Islands Cayman Islands Delaware Cayman Islands Cayman Islands Cayman Islands Cayman Islands Cayman Islands Delaware Delaware Delaware Delaware Delaware Cayman Islands Cayman Islands Cayman Islands Name Oaktree Emerging Market Opportunities Fund (Feeder) GP, L.P. Oaktree Emerging Market Opportunities Fund (Feeder), L.P. Oaktree Emerging Market Opportunities Fund GP, L.P. Oaktree Emerging Market Opportunities Fund GP, Ltd. Oaktree Emerging Market Opportunities Fund, L.P. Oaktree Emerging Markets Absolute Return (Cayman) Fund, Ltd. Oaktree Emerging Markets Absolute Return Fund GP, L.P. Oaktree Emerging Markets Absolute Return Fund, L.P. Oaktree Emerging Markets Debt Total Return Fund Corporate Feeder (Cayman), L.P. Oaktree Emerging Markets Debt Total Return Fund GP Ltd. Oaktree Emerging Markets Debt Total Return Fund GP, L.P. Oaktree Emerging Markets Debt Total Return Fund Partnership Feeder (Cayman), L.P. Oaktree Emerging Markets Debt Total Return Fund, L.P. Oaktree Emerging Markets Equity Fund (Cayman), L.P. Oaktree Emerging Markets Equity Fund (Delaware), L.P. Oaktree Emerging Markets Equity Fund (Feeder) GP, L.P. Oaktree Emerging Markets Equity Fund GP Ltd. Oaktree Emerging Markets Equity Fund GP, L.P. Oaktree Emerging Markets Equity Fund, L.P. Oaktree Emerging Markets Opportunities Fund II (Feeder), L.P. Oaktree Emerging Markets Opportunities Fund II GP Ltd. Oaktree Emerging Markets Opportunities Fund II GP, L.P. Oaktree Emerging Markets Opportunities Fund II, L.P. Oaktree Employee Investment Fund (Cayman), L.P. Oaktree Europe GP, Limited Oaktree European Capital Solutions Fund (Parallel), L.P. Oaktree European Capital Solutions Fund Feeder (U.S.), L.P. Oaktree European Capital Solutions Fund Feeder 2, L.P. Oaktree European Capital Solutions Fund GP, L.P. Oaktree European Capital Solutions Fund GP, Ltd. Oaktree European Capital Solutions Fund II Feeder (Lux USDH), SCSp Oaktree European Capital Solutions Fund II Feeder (USD), L.P. Oaktree European Capital Solutions Fund II Feeder (USDH), L.P. Oaktree European Capital Solutions Fund II GP Ltd. Oaktree European Capital Solutions Fund II GP, L.P. Oaktree European Capital Solutions Fund II, L.P. Oaktree European Capital Solutions Fund II, SCSp Oaktree European Capital Solutions Fund II, SCSp-RAIF Oaktree European Capital Solutions Fund, L.P. Oaktree European CLO Capital Fund Limited Oaktree European Dislocation Fund (U.S.), L.P. Oaktree European Dislocation Fund GP Ltd. Oaktree European Dislocation Fund GP, L.P. Oaktree European Dislocation Fund, L.P. Jurisdiction of Incorporation or Organization Cayman Islands Cayman Islands Cayman Islands Cayman Islands Cayman Islands Cayman Islands Delaware Delaware Cayman Islands Cayman Islands Cayman Islands Cayman Islands Cayman Islands Cayman Islands Delaware Cayman Islands Cayman Islands Cayman Islands Cayman Islands Cayman Islands Cayman Islands Cayman Islands Cayman Islands Cayman Islands Cayman Islands Delaware Cayman Islands Cayman Islands Cayman Islands Cayman Islands Luxembourg Cayman Islands Cayman Islands Cayman Islands Cayman Islands Cayman Islands Luxembourg Luxembourg Cayman Islands Guernsey Cayman Islands Cayman Islands Cayman Islands Cayman Islands Name Oaktree European Holdings, LLC Oaktree European Principal Fund III (Cayman), L.P. Oaktree European Principal Fund III (Feeder) GP, L.P. Oaktree European Principal Fund III (Parallel) Feeder, L.P. Oaktree European Principal Fund III (Parallel), L.P. Oaktree European Principal Fund III (U.S.), L.P. Oaktree European Principal Fund III GP Ltd. Oaktree European Principal Fund III GP, L.P. Oaktree European Principal Fund III Ltd. Oaktree European Principal Fund III, L.P. Oaktree European Principal Fund IV Feeder (Cayman), L.P. Oaktree European Principal Fund IV Feeder (U.S.), L.P. Oaktree European Principal Fund IV Feeder, S.C.S. Oaktree European Principal Fund IV GP Ltd. Oaktree European Principal Fund IV GP S.à r.l. Oaktree European Principal Fund IV GP, L.P. Oaktree European Principal Fund IV, L.P. Oaktree European Principal Fund IV, Ltd. Oaktree European Principal Fund IV, S.C.S. Oaktree European Principal Fund V Feeder (Cayman), L.P. Oaktree European Principal Fund V Feeder (U.S.), L.P. Oaktree European Principal Fund V Feeder (USDH), L.P. Oaktree European Principal Fund V GP Ltd. Oaktree European Principal Fund V GP, L.P. Oaktree European Principal Fund V, L.P. Oaktree European Principal Fund V, SCSp Oaktree European Senior Loan S.à r.l Oaktree European Special Situations Fund GP, L.P. Oaktree European Special Situations Fund GP, Ltd. Oaktree European Special Situations Fund, L.P. Oaktree FF Emerging Markets Opportunities Fund (Feeder), L.P. Oaktree FF Emerging Markets Opportunities Fund GP Ltd. Oaktree FF Emerging Markets Opportunities Fund GP, L.P. Oaktree FF Emerging Markets Opportunities Fund, L.P. Oaktree FF Investment Fund AIF (Delaware), L.P. Oaktree FF Investment Fund GP Ltd. Oaktree FF Investment Fund GP, L.P. Oaktree FF Investment Fund, L.P. Oaktree France S.A.S. Oaktree Fund GP 1A, Ltd. Oaktree Fund GP I, L.P. Oaktree Fund GP, LLC Oaktree GC Super Fund GP, L.P. Oaktree GC Super Fund, L.P. Jurisdiction of Incorporation or Organization Delaware Cayman Islands Cayman Islands Cayman Islands Cayman Islands Cayman Islands Cayman Islands Cayman Islands Cayman Islands Cayman Islands Cayman Islands Cayman Islands Luxembourg Cayman Islands Luxembourg Cayman Islands Cayman Islands Cayman Islands Luxembourg Cayman Islands Cayman Islands Cayman Islands Cayman Islands Cayman Islands Cayman Islands Luxembourg Luxembourg Cayman Islands Cayman Islands Cayman Islands Cayman Islands Cayman Islands Cayman Islands Cayman Islands Delaware Cayman Islands Cayman Islands Cayman Islands France Cayman Islands Delaware Delaware Delaware Delaware Name Oaktree Gilead Investment Fund AIF (Delaware), L.P. Oaktree Gilead Investment Fund GP, L.P. Oaktree Gilead Investment Fund, L.P. Oaktree Glacier Holdings GP, Ltd. Oaktree Glacier Holdings, L.P. Oaktree Glacier Investment Fund (Feeder), L.P. Oaktree Glacier Investment Fund II (Feeder) GP S.à r.l. Oaktree Glacier Investment Fund II (Feeder), S.C.Sp. Oaktree Glacier Investment Fund II, L.P. Oaktree Glacier Investment Fund, L.P. Oaktree Glendora Investment Fund GP, L.P. Oaktree Glendora Investment Fund, L.P. Oaktree Global Credit Feeder (Cayman), L.P. Oaktree Global Credit Fund GP Ltd. Oaktree Global Credit Fund GP, L.P. Oaktree Global Credit Fund, L.P. Oaktree Global Credit Plus Fund, L.P. Oaktree Global Credit S.à r.l. Oaktree GmbH Oaktree Holdings, LLC OAKTREE HOLDINGS, LTD. Oaktree HS III GP Ltd. Oaktree HS III GP, L.P. Oaktree Huntington Investment Fund AIF (Delaware), L.P. Oaktree Huntington Investment Fund GP Ltd. Oaktree Huntington Investment Fund GP, L.P. Oaktree Huntington Investment Fund II AIF (Delaware), L.P. Oaktree Huntington Investment Fund II GP, L.P. Oaktree Huntington Investment Fund II, L.P. Oaktree Huntington Investment Fund, L.P. Oaktree Huntington-GCF Investment Fund GP, L.P. Oaktree Huntington-GCF Investment Fund GP, LLC Oaktree Huntington-GCF Investment Fund, L.P. Oaktree Huntington-GCF Investment Holdings (Cayman), L.P. Oaktree International Holdings, LLC Oaktree Japan, Inc. Oaktree Latigo Investment Fund GP, L.P. Oaktree Latigo Investment Fund, L.P. Oaktree Luxembourg CoopSA Oaktree Mercury Investment Fund GP Ltd. Oaktree Mercury Investment Fund GP, L.P. Oaktree Mercury Investment Fund, L.P. Oaktree Moraine Co-Investment Fund (Feeder), S.C.Sp. Oaktree Moraine Co-Investment Fund, L.P. Jurisdiction of Incorporation or Organization Delaware Delaware Delaware Cayman Islands Cayman Islands Cayman Islands Luxembourg Luxembourg Cayman Islands Cayman Islands Cayman Islands Cayman Islands Cayman Islands Cayman Islands Cayman Islands Cayman Islands Delaware Luxembourg Germany Delaware Cayman Islands Cayman Islands Cayman Islands Delaware Cayman Islands Cayman Islands Delaware Delaware Delaware Cayman Islands Delaware Delaware Delaware Cayman Islands Delaware Japan Delaware Delaware Luxembourg Cayman Islands Cayman Islands Cayman Islands Luxembourg Cayman Islands Name Oaktree Oasis Investment Fund AIV, L.P. Oaktree Oasis Investment Fund GP Ltd. Oaktree Oasis Investment Fund GP, L.P. Oaktree Oasis Investment Fund Holdings, L.P. Oaktree Oasis Investment Fund, L.P. Oaktree Opportunities (Singapore) GP Pte. Ltd. Oaktree Opportunities Fund IX (Cayman), L.P. Oaktree Opportunities Fund IX (Feeder) GP, L.P. Oaktree Opportunities Fund IX (Parallel 2) AIF (Cayman), L.P. Oaktree Opportunities Fund IX (Parallel 2) AIF (Delaware), L.P. Oaktree Opportunities Fund IX (Parallel 2), L.P. Oaktree Opportunities Fund IX (Parallel) AIF (Cayman), L.P. Oaktree Opportunities Fund IX (Parallel) AIF (Delaware), L.P. Oaktree Opportunities Fund IX (Parallel), L.P. Oaktree Opportunities Fund IX AIF (Cayman), L.P. Oaktree Opportunities Fund IX AIF (Delaware), L.P. Oaktree Opportunities Fund IX Delaware, L.P. Oaktree Opportunities Fund IX GP Ltd. Oaktree Opportunities Fund IX GP, L.P. Oaktree Opportunities Fund IX, L.P. Oaktree Opportunities Fund VIII (Cayman) Ltd. Oaktree Opportunities Fund VIII (Parallel 2) AIF (Delaware), L.P. Oaktree Opportunities Fund VIII (Parallel 2), L.P. Oaktree Opportunities Fund VIII (Parallel) AIF (Cayman), L.P. Oaktree Opportunities Fund VIII (Parallel) AIF (Delaware), L.P. Oaktree Opportunities Fund VIII (Parallel), L.P. Oaktree Opportunities Fund VIII AIF (Cayman), L.P. Oaktree Opportunities Fund VIII AIF (Delaware), L.P. Oaktree Opportunities Fund VIII Delaware, L.P. Oaktree Opportunities Fund VIII GP Ltd. Oaktree Opportunities Fund VIII GP, L.P. Oaktree Opportunities Fund VIII, L.P. Oaktree Opportunities Fund VIIIb (Cayman) Ltd. Oaktree Opportunities Fund VIIIb (Parallel) AIF (Cayman), L.P. Oaktree Opportunities Fund VIIIB (Parallel) AIF (Delaware), L.P. Oaktree Opportunities Fund VIIIb (Parallel), L.P. Oaktree Opportunities Fund VIIIb AIF (Cayman), L.P. Oaktree Opportunities Fund VIIIB AIF (Delaware), L.P. Oaktree Opportunities Fund VIIIb Delaware, L.P. Oaktree Opportunities Fund VIIIb GP Ltd. Oaktree Opportunities Fund VIIIb GP, L.P. Oaktree Opportunities Fund VIIIb, L.P. Oaktree Opportunities Fund X (Feeder) GP, L.P. Oaktree Opportunities Fund X (Parallel 2) AIF (Cayman), L.P. Jurisdiction of Incorporation or Organization Cayman Islands Cayman Islands Cayman Islands Cayman Islands Cayman Islands Singapore Cayman Islands Cayman Islands Cayman Islands Delaware Cayman Islands Cayman Islands Delaware Cayman Islands Cayman Islands Delaware Delaware Cayman Islands Cayman Islands Cayman Islands Cayman Islands Delaware Cayman Islands Cayman Islands Delaware Cayman Islands Cayman Islands Delaware Delaware Cayman Islands Cayman Islands Cayman Islands Cayman Islands Cayman Islands Delaware Cayman Islands Cayman Islands Delaware Delaware Cayman Islands Cayman Islands Cayman Islands Cayman Islands Cayman Islands Name Oaktree Opportunities Fund X (Parallel 2) AIF (Delaware), L.P. Oaktree Opportunities Fund X (Parallel 2), L.P. Oaktree Opportunities Fund X (Parallel) AIF (Cayman), L.P. Oaktree Opportunities Fund X (Parallel) AIF (Delaware), L.P. Oaktree Opportunities Fund X (Parallel), L.P. Oaktree Opportunities Fund X AIF (Cayman), L.P. Oaktree Opportunities Fund X AIF (Delaware), L.P. Oaktree Opportunities Fund X Feeder (Cayman), L.P. Oaktree Opportunities Fund X GP Ltd. Oaktree Opportunities Fund X GP, L.P. Oaktree Opportunities Fund X, L.P. Oaktree Opportunities Fund Xb (Feeder) GP, L.P. Oaktree Opportunities Fund Xb (Parallel 2) AIF (Cayman), L.P. Oaktree Opportunities Fund Xb (Parallel 2) AIF (Delaware), L.P. Oaktree Opportunities Fund Xb (Parallel 2), L.P. Oaktree Opportunities Fund Xb (Parallel) AIF (Cayman), L.P. Oaktree Opportunities Fund Xb (Parallel) AIF (Delaware), L.P. Oaktree Opportunities Fund Xb (Parallel), L.P. Oaktree Opportunities Fund Xb AIF (Cayman), L.P. Oaktree Opportunities Fund Xb AIF (Delaware), L.P. Oaktree Opportunities Fund Xb Delaware AIF Holdings, L.P. Oaktree Opportunities Fund Xb Feeder (Cayman), L.P. Oaktree Opportunities Fund Xb GP Ltd. Oaktree Opportunities Fund Xb GP, L.P. Oaktree Opportunities Fund Xb, L.P. Oaktree Opportunities Fund XI (Parallel 3) AIV (Cayman), L.P. Oaktree Opportunities Fund XI (Parallel 3), L.P. Oaktree Opportunities Fund XI (Parallel) AIV (Cayman), L.P. Oaktree Opportunities Fund XI (Parallel), L.P. Oaktree Opportunities Fund XI AIV (Cayman), L.P. Oaktree Opportunities Fund XI Feeder (Cayman), L.P. Oaktree Opportunities Fund XI Feeder 2 (Cayman), L.P. Oaktree Opportunities Fund XI GP Ltd. Oaktree Opportunities Fund XI GP, L.P. Oaktree Opportunities Fund XI GP, S.à.r.l. Oaktree Opportunities Fund XI Holdings (Cayman), L.P. Oaktree Opportunities Fund XI Holdings (Delaware), L.P. Oaktree Opportunities Fund XI Holdings 2 (Delaware), L.P. Oaktree Opportunities Fund XI Master Holdings (Delaware), L.P. Oaktree Opportunities Fund XI Master Holdings Parallel (Delaware), L.P. Oaktree Opportunities Fund XI Master Holdings Parallel 2 (Delaware), L.P. Oaktree Opportunities Fund XI Master Holdings Parallel 3 (Delaware), L.P. Oaktree Opportunities Fund XI Parallel Holdings, L.P. Oaktree Opportunities Fund XI, L.P. Jurisdiction of Incorporation or Organization Delaware Delaware Cayman Islands Delaware Cayman Islands Cayman Islands Delaware Cayman Islands Cayman Islands Cayman Islands Cayman Islands Cayman Islands Cayman Islands Delaware Delaware Cayman Islands Delaware Cayman Islands Cayman Islands Delaware Delaware Cayman Islands Cayman Islands Cayman Islands Cayman Islands Cayman Islands Cayman Islands Cayman Islands Cayman Islands Cayman Islands Cayman Islands Cayman Islands Cayman Islands Cayman Islands Luxembourg Cayman Islands Delaware Delaware Delaware Delaware Delaware Delaware Cayman Islands Cayman Islands Name Oaktree Opps XI Holdco, Ltd. Oaktree Overseas Investment Fund Management (Shanghai) Co., Ltd. Oaktree Phoenix Investment Fund AIF (Delaware), L.P. Oaktree Phoenix Investment Fund Feeder, L.P. Oaktree Phoenix Investment Fund GP, L.P. Oaktree Phoenix Investment Fund, L.P. Oaktree Ports America Fund (HS III), L.P. Oaktree Ports America Fund Feeder (Cayman) HS III, L.P. Oaktree Ports America Fund Feeder, L.P. Oaktree Ports America Fund GP, L.P. Oaktree Ports America Fund GP, Ltd. Oaktree Ports America Fund, L.P. Oaktree Power Opportunities Fund III (Cayman) GP Ltd. Oaktree Power Opportunities Fund III (Cayman), L.P. Oaktree Power Opportunities Fund III (Parallel), L.P. Oaktree Power Opportunities Fund III AIF (Delaware), L.P. Oaktree Power Opportunities Fund III Delaware, L.P. Oaktree Power Opportunities Fund III GP, L.P. Oaktree Power Opportunities Fund III, L.P. Oaktree Power Opportunities Fund IV (Cayman) GP Ltd. Oaktree Power Opportunities Fund IV (Parallel), L.P. Oaktree Power Opportunities Fund IV Feeder (Cayman), L.P. Oaktree Power Opportunities Fund IV GP, L.P. Oaktree Power Opportunities Fund IV, L.P. Oaktree Power Opportunities Fund V (Parallel), L.P. Oaktree Power Opportunities Fund V Feeder, L.P. Oaktree Power Opportunities Fund V GP, L.P. Oaktree Power Opportunities Fund V GP, Ltd. Oaktree Power Opportunities Fund V, L.P. Oaktree Principal Advisors (Europe) Limited Oaktree Principal Fund V (Cayman) Ltd. Oaktree Principal Fund V (Delaware), L.P. Oaktree Principal Fund V (Parallel) AIF (Cayman), L.P. Oaktree Principal Fund V (Parallel) AIF (Delaware), L.P. Oaktree Principal Fund V (Parallel), L.P. Oaktree Principal Fund V AIF (Cayman), L.P. Oaktree Principal Fund V AIF (Delaware), L.P. Oaktree Principal Fund V GP Ltd. Oaktree Principal Fund V GP, L.P. Oaktree Principal Fund V, L.P. Oaktree Principal V Continuation Fund (Parallel 2) AIF (Delaware), L.P. Oaktree Principal V Continuation Fund (Parallel 2), L.P. Oaktree Principal V Continuation Fund (Parallel) AIF (Delaware), L.P. Oaktree Principal V Continuation Fund (Parallel), L.P. Jurisdiction of Incorporation or Organization Cayman Islands China Delaware Cayman Islands Cayman Islands Cayman Islands Delaware Cayman Islands Cayman Islands Cayman Islands Cayman Islands Delaware Cayman Islands Cayman Islands Delaware Delaware Delaware Delaware Delaware Cayman Islands Delaware Cayman Islands Delaware Delaware Delaware Cayman Islands Cayman Islands Cayman Islands Cayman Islands United Kingdom Cayman Islands Delaware Cayman Islands Delaware Cayman Islands Cayman Islands Delaware Cayman Islands Cayman Islands Cayman Islands Delaware Cayman Islands Delaware Cayman Islands Name Oaktree Principal V Continuation Fund AIF (Delaware), L.P. Oaktree Principal V Continuation Fund GP Ltd. Oaktree Principal V Continuation Fund GP, L.P. Oaktree Principal V Continuation Fund, L.P. Oaktree Real Estate Debt Fund (Parallel), L.P. Oaktree Real Estate Debt Fund GP, L.P. Oaktree Real Estate Debt Fund II (Parallel), L.P. Oaktree Real Estate Debt Fund II Feeder (Cayman), L.P. Oaktree Real Estate Debt Fund II Feeder HK Limited Oaktree Real Estate Debt Fund II GP Ltd. Oaktree Real Estate Debt Fund II GP, L.P. Oaktree Real Estate Debt Fund II, L.P. Oaktree Real Estate Debt Fund III (EEA Holdings), L.P. Oaktree Real Estate Debt Fund III (Lux), SCSp Oaktree Real Estate Debt Fund III Feeder (Cayman) I, L.P. Oaktree Real Estate Debt Fund III Feeder (Cayman) II, L.P. Oaktree Real Estate Debt Fund III Feeder (Cayman) III, L.P. Oaktree Real Estate Debt Fund III Feeder (Cayman) IV, L.P. Oaktree Real Estate Debt Fund III Feeder (Cayman) V, L.P. Oaktree Real Estate Debt Fund III Feeder (Lux) I, SCSp Oaktree Real Estate Debt Fund III Feeder (Lux) II, SCSp Oaktree Real Estate Debt Fund III Feeder (Lux) III, SCSp Oaktree Real Estate Debt Fund III GP Ltd. Oaktree Real Estate Debt Fund III GP, L.P. Oaktree Real Estate Debt Fund III GP, S.à r.l. Oaktree Real Estate Debt Fund III Sub, L.P. Oaktree Real Estate Debt Fund III, L.P. Oaktree Real Estate Debt Fund, L.P. Oaktree Real Estate Finance III (Non-EURRC), LLC Oaktree Real Estate Finance III, LLC Oaktree Real Estate Income Trust, Inc. Oaktree Real Estate Opportunities Fund VIII GP, S.à r.l. Oaktree Special Situations (Singapore) GP Pte. Ltd. Oaktree Special Situations (Singapore), LP Oaktree Special Situations Fund (Feeder) GP, L.P. Oaktree Special Situations Fund (Feeder), L.P. Oaktree Special Situations Fund AIF (Cayman), L.P. Oaktree Special Situations Fund AIF (Delaware), L.P. Oaktree Special Situations Fund AIF Sub-Fund, L.P. Oaktree Special Situations Fund GP Ltd. Oaktree Special Situations Fund GP, L.P. Oaktree Special Situations Fund II (Feeder), L.P. Oaktree Special Situations Fund II GP Ltd. Oaktree Special Situations Fund II GP, L.P. Jurisdiction of Incorporation or Organization Delaware Cayman Islands Cayman Islands Cayman Islands Delaware Delaware Delaware Cayman Islands Hong Kong Cayman Islands Cayman Islands Cayman Islands Delaware Luxembourg Cayman Islands Cayman Islands Cayman Islands Cayman Islands Cayman Islands Luxembourg Luxembourg Luxembourg Cayman Islands Cayman Islands Luxembourg Delaware Cayman Islands Delaware Delaware Delaware Delaware Luxembourg Singapore Singapore Cayman Islands Cayman Islands Cayman Islands Delaware Delaware Cayman Islands Cayman Islands Cayman Islands Cayman Islands Cayman Islands Name Oaktree Special Situations Fund II, L.P. Oaktree Special Situations Fund, L.P. Oaktree Star Investment Fund II AIF (Delaware), L.P. Oaktree Star Investment Fund II, L.P. Oaktree Structured Credit Income Fund Feeder, L.P. Oaktree Structured Credit Income Fund GP Ltd. Oaktree Structured Credit Income Fund GP, L.P. Oaktree Structured Credit Income Fund, L.P. Oaktree Transportation Infrastructure Fund (Parallel 3), L.P. Oaktree TX Emerging Market Opportunities Fund, L.P. Oaktree Value Equity Fund (Cayman), L.P. Oaktree Value Equity Fund (Delaware), L.P. Oaktree Value Equity Fund (Feeder) GP, L.P. Oaktree Value Equity Fund GP Ltd. Oaktree Value Equity Fund GP, L.P. Oaktree Value Equity Fund, L.P. Oaktree Value Opportunities (Cayman) Fund, Ltd. Oaktree Value Opportunities Feeder Fund, L.P. Oaktree Value Opportunities Fund AIF (Delaware), L.P. Oaktree Value Opportunities Fund GP Ltd. Oaktree Value Opportunities Fund GP, L.P. Oaktree Value Opportunities Fund, L.P. OCGH ExchangeCo, L.P. OCM Asia Principal Opportunities Fund GP Ltd. OCM Asia Principal Opportunities Fund GP, L.P. OCM Asia Principal Opportunities Fund, L.P. OCM European Principal Opportunities Fund II (Delaware), L.P. OCM European Principal Opportunities Fund II (U.S.), L.P. OCM European Principal Opportunities Fund II AIF (Cayman), L.P. OCM European Principal Opportunities Fund II GP Ltd. OCM European Principal Opportunities Fund II GP, L.P. OCM European Principal Opportunities Fund II, L.P. OCM Holdings I, LLC OCM Luxembourg OPPS Xb S.à r.l. OCM Opportunities Fund V (Cayman) Ltd. OCM Opportunities Fund V Feeder, L.P. OCM Opportunities Fund V GP, L.P. OCM Opportunities Fund V, L.P. OCM OPPORTUNITIES FUND VI (CAYMAN) LTD. OCM Opportunities Fund VI AIF (Cayman), L.P. OCM Opportunities Fund VI AIF (Delaware), L.P. OCM Opportunities Fund VI GP, L.P. OCM Opportunities Fund VI, L.P. OCM Opportunities Fund VII (Cayman) Ltd. Jurisdiction of Incorporation or Organization Cayman Islands Cayman Islands Delaware Cayman Islands Cayman Islands Cayman Islands Cayman Islands Cayman Islands Cayman Islands Cayman Islands Cayman Islands Delaware Cayman Islands Cayman Islands Cayman Islands Cayman Islands Cayman Islands Delaware Delaware Cayman Islands Cayman Islands Cayman Islands Delaware Cayman Islands Cayman Islands Cayman Islands Delaware Cayman Islands Cayman Islands Cayman Islands Cayman Islands Cayman Islands Delaware Luxembourg Cayman Islands Delaware Delaware Delaware Cayman Islands Cayman Islands Delaware Delaware Delaware Cayman Islands Name OCM Opportunities Fund VII AIF (Delaware), L.P. OCM Opportunities Fund VII Delaware GP Inc. OCM Opportunities Fund VII Delaware, L.P. OCM Opportunities Fund VII GP Ltd. OCM Opportunities Fund VII GP, L.P. OCM Opportunities Fund VII, L.P. OCM Opportunities Fund VIIb (Cayman) Ltd. OCM Opportunities Fund VIIb (Parallel) AIF (Cayman), L.P. OCM Opportunities Fund VIIb (Parallel) AIF (Delaware), L.P. OCM Opportunities Fund VIIb (Parallel), L.P. OCM Opportunities Fund VIIb AIF (Cayman), L.P. OCM Opportunities Fund VIIb AIF (Delaware), L.P. OCM Opportunities Fund VIIb Delaware, L.P. OCM Opportunities Fund VIIb GP Ltd. OCM Opportunities Fund VIIb GP, L.P. OCM Opportunities Fund VIIb, L.P. OCM Opps XI AIV Holdings (Delaware), L.P. OCM Power Opportunities Fund II GP (Cayman) Ltd. OCM Power Opportunities Fund II GP, L.P. OCM Principal Opportunities Fund IV (Cayman) Ltd. OCM Principal Opportunities Fund IV AIF (Delaware) GP, L.P. OCM Principal Opportunities Fund IV AIF (Delaware), L.P. OCM Principal Opportunities Fund IV Delaware GP Inc. OCM Principal Opportunities Fund IV Delaware, L.P. OCM Principal Opportunities Fund IV GP Ltd. OCM Principal Opportunities Fund IV GP, L.P. OCM Principal Opportunities Fund IV, L.P. OCM/GFI Power Opportunities Fund II (Cayman), L.P. OCM/GFI Power Opportunities Fund II (Delaware), LLC OCM/GFI Power Opportunities Fund II Feeder, L.P. OCM/GFI Power Opportunities Fund II, L.P. Pangaea Capital Management L.P. Pangaea Holdings Ltd. Shanghai Oaktree I Overseas Investment Fund, L.P. Shanghai Oaktree II Overseas Private Investment Fund Jurisdiction of Incorporation or Organization Delaware Delaware Delaware Cayman Islands Cayman Islands Cayman Islands Cayman Islands Cayman Islands Delaware Cayman Islands Cayman Islands Delaware Delaware Cayman Islands Cayman Islands Cayman Islands Delaware Cayman Islands Delaware Cayman Islands Delaware Delaware Delaware Delaware Cayman Islands Cayman Islands Cayman Islands Cayman Islands Delaware Delaware Delaware Cayman Islands Cayman Islands China China Consent of Independent Registered Public Accounting Firm We consent to the incorporation by reference in the Registration Statement (Form S-3 No.333-211371) of Oaktree Capital Group, LLC and in the related Prospectus of our report dated February 26, 2021 with respect to the consolidated financial statements of Oaktree Capital Group, LLC, included in this Annual Report (Form 10-K) for the year ended December 31, 2020. Exhibit 23.1 /s/ Ernst & Young LLP Los Angeles, California February 26, 2021 Exhibit 31.1 I, Jay S. Wintrob, certify that: CERTIFICATION 1. I have reviewed this Annual Report on Form 10-K for the year ended December 31, 2020 of Oaktree Capital Group, LLC; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; 4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: (a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; (b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; (c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and (d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and 5. The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): (a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and (b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. Date: February 26, 2021 /s/ Jay S. Wintrob Jay S. Wintrob Chief Executive Officer (Principal Executive Officer) Exhibit 31.2 I, Daniel D. Levin, certify that: CERTIFICATION 1. I have reviewed this Annual Report on Form 10-K for the year ended December 31, 2020 of Oaktree Capital Group, LLC; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; 4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: (a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; (b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; (c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and (d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and 5. The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): (a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and (b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. Date: February 26, 2021 /s/ Daniel D. Levin Daniel D. Levin Chief Financial Officer (Principal Financial Officer) Certification Pursuant to 18 U.S.C. Section 1350, As Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 Exhibit 32.1 In connection with the Annual Report on Form 10-K of Oaktree Capital Group, LLC (the “Company”) for the year ended December 31, 2020 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Jay S. Wintrob, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that: (1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and (2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company at the dates and for the periods presented. Date: February 26, 2021 /s/ Jay S. Wintrob Jay S. Wintrob Chief Executive Officer (Principal Executive Officer) A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request. This Certification is not deemed filed with the Securities and Exchange Commission and is not to be incorporated by reference into any filing of the Company under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended (whether made before or after the date of the Report), irrespective of any general incorporation language contained in such filing. Certification Pursuant to 18 U.S.C. Section 1350, As Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 Exhibit 32.2 In connection with the Annual Report on Form 10-K of Oaktree Capital Group, LLC (the “Company”) for the year ended December 31, 2020 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Daniel D. Levin, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that: (1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and (2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company at the dates and for the periods presented. Date: February 26, 2021 /s/ Daniel D. Levin Daniel D. Levin Chief Financial Officer (Principal Financial Officer) A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request. This Certification is not deemed filed with the Securities and Exchange Commission and is not to be incorporated by reference into any filing of the Company under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended (whether made before or after the date of the Report), irrespective of any general incorporation language contained in such filing. 

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