Octagon Investment Partners IX, Ltd. JPMorgan - Irish Stock Exchange

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The "Subordinated Collateral Management Fee" is a fee that will accrue from the Closing Date and be payable to the Collateral Manager, if and to the extent funds are available for such purpose in accordance with the Priority of Payments, in arrears on each Distribution Date in an amount equal to the Subordinated Collateral Management Fee Rate per annum of the Principal Collateral Value measured as of the first day of the Due Period immediately preceding such Distribution Date; provided that the Subordinated Collateral Management Fee payable on the first Distribution Date will be equal to 0.375% per annum of the Principal Collateral Value measured as of the last day of the first Due Period. The Subordinated Collateral Management Fee will be calculated on the basis of a 360-day year and the actual number of days elapsed. The Collateral Manager may elect in its sole discretion, by notice to the Trustee not later than two Business Days after the related Determination Date, to defer all or a portion of the Subordinated Collateral Management Fee on any Distribution Date. The Collateral Manager will also be entitled to receive Subordinated Collateral Management Fee Interest, which is interest on any unpaid Subordinated Collateral Management Fee when due (whether as a result of the operation of the Priority of Payments or the Collateral Manager's voluntary deferral of receipt). Such unpaid Subordinated Collateral Management Fee will bear interest at the rate of three-month LIBOR plus the Subordinated Collateral Management Fee Rate per annum for the period from (and including) the date on which such Subordinated Collateral Management Fee is payable through (but excluding) the date of payment thereof. The Subordinated Collateral Management Fee Interest will be calculated on the basis of a 360-day year and the actual number of days elapsed. The Subordinated Collateral Management Fee and the Subordinated Collateral Management Fee Interest payable on any Distribution Date will be payable from Interest Proceeds remaining after payment of certain fees and expenses of the Issuer, the Base Collateral Management Fee, interest (and, if any of the Overcollateralization Tests or the Interest Coverage Test are not satisfied on the related Distribution Date or if an Effective Date Ratings Downgrade exists, principal) on the Notes and certain other amounts. To the extent Interest Proceeds are insufficient to pay any accrued and unpaid Subordinated Collateral Management Fee and the Subordinated Collateral Management Fee Interest payable on the Final Maturity Date, the Subordinated Collateral Management Fee and the Subordinated Collateral Management Fee Interest will be payable from Principal Proceeds available for such purpose as described under "Application of Funds—Priority of Payments." The "Collateral Management Incentive Fee" with respect to (and from and including) the Distribution Date on or immediately following the Distribution Date as of which the holders of the Preferred Shares have first received an Internal Rate of Return of at least 10% (after taking into account any distributions made or to be made on the Preferred Shares on such Distribution Date and on all prior Distribution Dates in accordance with and subject to the Priority of Payments), is a fee payable to the Collateral Manager (or any former Collateral Manager, as described below) equal to (i) 20% of the funds remaining, if any, after the payment on such Distribution Date of all amounts available for distribution pursuant to each of clause (19) under "Application of Fund—Priority of Payments— Distributions of Interest Proceeds" and clause (9) under "Application of Fund—Priority of Payments—Distributions of Principal Proceeds," plus (ii) any such amount not previously distributed as a Collateral Management Incentive Fee when due and payable on any prior Distribution Date (whether as the result of the operation of the Priority of Payments or the Collateral Manager's voluntary deferral of receipt thereof), plus (iii) interest (computed on the basis of a 360-day year and the actual number of days elapsed) on any Collateral Management Incentive Fees not paid when due (whether as the result of the operation of the Priority of Payments or the Collateral Manager's voluntary deferral of receipt thereof) at the rate equal to three-month LIBOR per annum for the period from (and including) the date on which such Collateral Management Incentive Fee was payable through (but excluding) the date of payment thereof. The Collateral Manager may elect in its sole discretion, by notice to the Trustee not later than two Business Days after the related Determination Date, to defer all or a portion of the Collateral Management Incentive Fee on any Distribution Date. If amounts distributable on any Distribution Date as described under "Application of Funds—Priority of Payments" are insufficient to pay the Base Collateral Management Fee or the Subordinated Collateral Management Fee, then the payment thereof will be deferred and will be payable with interest on subsequent Distribution Dates as described herein. The Collateral Manager may assign or grant a security interest in its right under the Collateral Management Agreement (including its right to receive all or a portion of the Base Collateral Management Fee, the Subordinated Collateral Management Fee or the Collateral Management Incentive Fee) without the consent of the Issuer or any holders of the Notes or Preferred Shares; provided that such assignment or grant will not release the Collateral Manager from its duty to perform its obligations thereunder. 117
If the Collateral Management Agreement is terminated for any reason or the entity then serving as Collateral Manager resigns or is removed, (a) all Base Collateral Management Fees and Subordinated Collateral Management Fees accrued but not paid prior to the date of such termination, removal, resignation or assignment, as the case may be (the "Exit Date"), will continue to be payable to the Collateral Manager on Distribution Dates occurring after the Exit Date and (b) the Specified Percentage (as defined below) of Collateral Management Incentive Fees payable on each Distribution Date occurring after the Exit Date will continue to be payable to the Collateral Manager on such Distribution Dates, in each case, in accordance with the Priority of Payments. As used herein, (i) "Specified Percentage" means with respect to each Distribution Date occurring after the Exit Date, the ratio, expressed as a percentage (but in no event to exceed 100%), of (x) the Internal Rate of Return of the Preferred Shares as of the Distribution Date occurring on or immediately preceding the Exit Date to (y) the Internal Rate of Return of the Preferred Shares as of such Distribution Date. Termination of the Collateral Management Agreement; Resignation or Removal of the Collateral Manager; Assignment and Delegation The Collateral Management Agreement will automatically terminate if the Collateral Manager determines in good faith that the Issuer, the Co-Issuer or the pool of Collateral becomes an investment company required to be registered under the 1940 Act and the Collateral Manager notifies the Issuer of such determination. The Collateral Manager may resign upon 90 days' written notice to the Issuer (or such shorter notice period as is acceptable to the Issuer). The Collateral Manager may be removed for cause upon ten days' prior written notice to the Collateral Manager at the direction of (a) the holders of at least 66-2/3% of the Preferred Shares (other than Preferred Shares owned by the Collateral Manager or any affiliate of the Collateral Manager) or (b) the holders of at least 66-2/3% of the Aggregate Outstanding Amount of each Class of Notes (excluding any Notes owned by the Collateral Manager or any affiliate of the Collateral Manager). For this purpose, "cause" means the following events: (i) the Collateral Manager willfully violates, or takes any action that it knows breaches, any material provision of the Collateral Management Agreement or the Indenture applicable to it; (ii) the Collateral Manager breaches in any respect any provision of the Collateral Management Agreement or the Indenture applicable to it (other than as specified in clause (i)) and (x) such breach has a material adverse effect on holders of Notes of any Class or on holders of Preferred Shares and (y) the Collateral Manager fails to cure such breach within 30 days of becoming aware of, or receiving notice from the Issuer or Trustee of, such breach or if such breach is remediable but is not capable of cure within 30 days, the Collateral Manager fails to cure such breach within the period in which a reasonably diligent person could cure such breach (but in no event longer than 60 days); (iii) any representation, warranty, certification or statement made or delivered by the Collateral Manager in or pursuant to the Collateral Management Agreement or the Indenture fails to be correct in any material respect when made and (x) such failure has a material adverse effect on the holders of Notes of any Class or on holders of Preferred Shares and (y) no correction of the underlying condition that caused such representation, warranty, certification or statement to be incorrect is made for a period of 30 days after the Collateral Manager becoming aware of, or receiving notice from the Issuer or the Trustee of, such failure or if such underlying condition is remediable but is not capable of correction within 30 days, the Collateral Manager fails to correct such underlying condition within the period in which a reasonably diligent person could correct such underlying condition (but in no event longer than 60 days); (iv) the Collateral Manager is wound up or dissolved or there is appointed over it or a substantial portion of its assets a receiver, administrator, administrative receiver, trustee or similar officer, or certain insolvency or bankruptcy related events occur with respect to the Collateral Manager (as specified in the Collateral Management Agreement); or (v) there occurs an act by the Collateral Manager that constitutes fraud or criminal activity in the performance of its obligations under the Collateral Management Agreement, or the Collateral Manager is indicted for a criminal offense materially related to its primary businesses. 118
Page 1 and 2:
Offering Subject Memorandum to Comp
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subsequent transferee will be requi
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ACCORDANCE WITH PART 6D.2 OF THE CO
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NOTICE TO RESIDENTS IN THE PROVINCE
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MUTUAL FUNDS, PORTFOLIO INVESTMENT
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THE OFFERED SECURITIES HAVE NOT BEE
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BENEFICIAL OWNERS OF SUCH OFFERED S
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Shares, the Issuer under the Prefer
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TABLE OF CONTENTS SUMMARY OF TERMS
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CAYMAN ISLANDS TAX CONSIDERATIONS..
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Issuer: ...........................
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Interest Reserve Account (to be app
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Counterparties as it may elect in i
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United States or any state thereof
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(iii) such calculation will not inc
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The "Reinvestment Overcollateraliza
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The foregoing descriptions are summ
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(z) Not more than the percentage of
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the proceeds of such sale may be re
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(v) the Weighted Average Rating Fac
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(6) to the payment of accrued and u
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(4) to the payment of the amounts r
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RISK FACTORS An investment in the O
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To the extent the requirements unde
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Preferred Shares. In the event of a
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Investments of the Issuer in securi
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Controlling Class are entitled to d
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the ability of the Co-Issuers to op
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Agency in rating the Notes or any r
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not directly benefit from the colla
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circumstances, the loaned Collatera
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Securities are entitled to vote, in
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As part of their regular business,
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Declaration of Trust). It is not an
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Carrie Bunton, Vice President Carri
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any Notes for any Interest Accrual
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Withholding Tax Obligations, in eac
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Payments on the Offered Securities
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state of the United States or any o
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payments except the portion thereof
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Intermediary; and (ii) all other ac
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Payment Sequence or (y) if, on the
Page 85 and 86: payment of all amounts due from the
Page 87 and 88: In order to ensure that the Issuer
Page 89 and 90: 3.0% Any of Greece, Italy or Portug
Page 91 and 92: assigning Selling Institution shoul
Page 93 and 94: The Class B Interest Coverage Test
Page 95 and 96: Minimum Diversity Score Maximum Wei
Page 97 and 98: Rating/Minimum Spread/Maximum WAL M
Page 99 and 100: Moody's Recovery Rate for All Other
Page 101 and 102: emaining for the payment of the Cla
Page 103 and 104: (b) the Overcollateralization Tests
Page 105 and 106: The "Required Sale Date" means, (a)
Page 107 and 108: Principal Collection Account All pr
Page 109 and 110: Agreement, or if any such Swap Agre
Page 111 and 112: Account will be utilized to purchas
Page 113 and 114: transfer of such amounts (except fo
Page 115 and 116: (y) replace itself under the relate
Page 117 and 118: denominated in the same Permitted C
Page 119 and 120: Lending Counterparty so that the Se
Page 121 and 122: agreed that if such purchaser is no
Page 123 and 124: or bad faith on its part, arising o
Page 125 and 126: and all other amounts payable under
Page 127 and 128: federal, state, local or foreign in
Page 129 and 130: elevant provisions of the Indenture
Page 131 and 132: Co-Issuers of all other amounts due
Page 133 and 134: holders of the Preferred Shares of,
Page 135: Zhen Tao, Associate. Prior to joini
Page 139 and 140: Manager, the resigning or removed C
Page 141 and 142: Manager certain reports, schedules
Page 143 and 144: A U.S. Holder generally will recogn
Page 145 and 146: CAYMAN ISLANDS TAX CONSIDERATIONS T
Page 147 and 148: The Issuer intends to limit purchas
Page 149 and 150: In the Placement Agreement, each of
Page 151 and 152: any of their respective affiliates
Page 153 and 154: Additional Restrictions No transfer
Page 155 and 156: EMPLOYEE BENEFIT PLAN SUBJECT TO TI
Page 157 and 158: AND IS NOT A QUALIFIED PURCHASER, A
Page 159 and 160: warehouse facility (including the l
Page 161 and 162: GLOSSARY "Accredited Investor" mean
Page 163 and 164: such Floating Rate Collateral Debt
Page 165 and 166: has decreased its spread over a Lon
Page 167 and 168: "Defaulted Obligation" means for an
Page 169 and 170: organized under the laws of the Uni
Page 171 and 172: provides services; provided that U.
Page 173 and 174: "Form-Approved Synthetic Security"
Page 175 and 176: that the Collateral Manager may bas
Page 177 and 178: affiliates have defaulted on any de
Page 179 and 180: "Principal Balance" means with resp
Page 181 and 182: disposition of Collateral Debt Obli
Page 183 and 184: "Sale Proceeds" means with respect
Page 185 and 186: ating if such rating is higher than
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Aa1 15% 20% Aa2 10% 20% Aa3 7.5% 15
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INDEX OF DEFINED TERMS $...........
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Issuer Par Amount .................
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USA PATRIOT Act....................
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equirement for written certificatio
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9. We understand that the Issuer, t
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ANNEX B FORM OF PREFERRED SHARE ERI
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(v) (vi) the proceeds of such sale,
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EXHIBIT A Aggregate Industry Unit S
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Standard & Poor's Industry Classifi
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Octagon Investment Partners IX, Ltd. JPMorgan - Irish Stock Exchange

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