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

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certain market and liquidity risks for securities of its type at the time of sale. In addition, Structured Finance Securities may involve initial and ongoing expenses above the costs associated with the related direct investments. Investing in Synthetic Securities Involves Particular Risks A portion of the Collateral may consist of Synthetic Securities the Reference Obligations of which may be leveraged loans, high-yield debt securities or similar securities. <strong>Investment</strong>s in such types of assets through the purchase of Synthetic Securities present risks in addition to those resulting from direct purchases of such Collateral Debt Obligations. With respect to each Synthetic Security, the Issuer will usually have a contractual relationship only with the counterparty of such Synthetic Security, and not the reference obligor on the Reference Obligation. The Issuer generally will have no right directly to enforce compliance by the reference obligor with the terms of the Reference Obligation nor any rights of set-off against the reference obligor, may be subject to set-off rights exercised by the reference obligor against the counterparty or another person or entity, and generally will not have any voting or other contractual rights of ownership with respect to the Reference Obligation. The Issuer will not directly benefit from any collateral supporting the Reference Obligation and will not have the benefit of the remedies that would normally be available to a holder of such Reference Obligation. In addition, in the event of the insolvency of the counterparty, the Issuer will be treated as a general creditor of such counterparty, and will not have any claim with respect to the Reference Obligation. Consequently, the Issuer will be subject to the credit risk of the counterparty as well as that of the reference obligor. As a result, concentrations of Synthetic Securities entered into with any one counterparty will subject the Offered Securities to an additional degree of risk with respect to defaults by such counterparty as well as by the reference obligor. Moody's or S&P may downgrade any Class of Notes then rated by it if a counterparty to a material portion of the Synthetic Securities held by the Issuer has been downgraded by Moody's or S&P, respectively, below the then-current rating of such Notes. Before any Synthetic Security (other than a Form Approved Synthetic Security) may be included in the Collateral, each Rating Agency must confirm prior to the date of such purchase that such Synthetic Security may be included as a Collateral Debt Obligation without causing the reduction or withdrawal of its then-current rating, if any, of any Class of Notes. Additionally, while the Issuer expects that the returns on a Synthetic Security will generally reflect those of the related Reference Obligation, as a result of the terms of the Synthetic Security and the assumption of the credit risk of the Synthetic Security Counterparty, a Synthetic Security may have a different expected return, a different (and potentially greater) probability of default and expected loss characteristics following a default, and a different expected recovery following default. Additionally, when compared to the Reference Obligation, the terms of a Synthetic Security may provide for different maturities, Distribution Dates, interest rates, interest rate references, credit exposures, or other credit or non-credit related characteristics. Upon maturity, default, acceleration or any other termination (including a put or call) other than pursuant to a credit event (as defined therein) of the Synthetic Security, the terms of the Synthetic Security may permit or require the issuer of such Synthetic Security to satisfy its obligations under the Synthetic Security by delivering to the Issuer securities other than the Reference Obligation or an amount different than the then current market value of the Reference Obligation. One or more of the Placement Agent and/or one or more of their affiliates may act as a Synthetic Security Counterparty, which may create certain conflicts of interest. See "—Relating to Certain Conflicts of Interest." The Issuer Has the Right to Engage in Securities Lending, which Involves Counterparty Risks and Other Risks The Collateral Debt Obligations may be loaned to banks, broker-dealers or other financial institutions that have, or are guaranteed by entities that have, the required ratings set forth under "Security for the Notes—Securities Lending." Such loans will be required to be secured by cash or direct registered debt obligations of the United States that have a maturity of five years or less, in an amount equal to at least 102% of the market value of the loaned Collateral Debt Obligations. However, in the event that a borrower of loaned Collateral Debt Obligations defaults on its obligation to return such loaned Collateral Debt Obligations, whether because of insolvency or otherwise, the Issuer could experience delays and costs in gaining access to the collateral posted by the borrower (and in extreme circumstances could be restricted from selling the collateral). Additionally, in such an event, the holders of the Offered Securities could suffer a loss to the extent the realized value of the cash or securities securing the obligation of the borrower to return the loaned Collateral Debt Obligation (less expenses) is less than the amount required to purchase such Collateral Debt Obligation in the open market. This shortfall could be due to, among other things, discrepancies between the mark-to-market and actual transaction prices for the loaned Collateral Debt Obligations arising from limited liquidity or availability of the loaned Collateral Debt Obligations, and in extreme 41
circumstances, the loaned Collateral Debt Obligations being unavailable at any price. One or both of the Rating Agencies may downgrade one or more Classes of the Notes if a borrower of a Collateral Debt Obligation, or, if applicable, the entity guaranteeing the performance of such borrower, has been downgraded by such Rating Agency such that the Issuer is no longer in compliance with the requirements relating to credit ratings of Securities Lending Counterparties. Generally, the Issuer will have no right to directly enforce compliance by the obligor of a loaned Collateral Debt Obligation with the terms of such Collateral Debt Obligation, will not have any voting or other contractual rights of ownership with respect to such Collateral Debt Obligation and will not have the benefit of the remedies that would normally be available to a holder of such Collateral Debt Obligation. One or more of the Placement Agent and/or one or more of their affiliates may borrow Collateral Debt Obligations, which may create certain conflicts of interest. See "—Relating to Certain Conflicts of Interest." Insolvency Considerations With Respect to Issuers of Collateral Debt Obligations May Affect the Issuer's Rights Various laws enacted for the protection of creditors may apply to the Collateral Debt Obligations. The information in this and the following paragraph is applicable with respect to U.S. obligors and issuers. Insolvency considerations will differ with respect to non-U.S. obligors and issuers. If a court in a lawsuit brought by an unpaid creditor or representative of creditors of an issuer of a Collateral Debt Obligation, such as a trustee in bankruptcy, were to find that the issuer did not receive fair consideration or reasonably equivalent value for incurring the indebtedness constituting such Collateral Debt Obligation and, after giving effect to such indebtedness, the issuer (i) was insolvent, (ii) was engaged in a business for which the remaining assets of such issuer constituted unreasonably small capital or (iii) intended to incur, or believed that it would incur, debts beyond its ability to pay such debts as they mature, such court could determine to invalidate, in whole or in part, such indebtedness as a fraudulent conveyance, to subordinate such indebtedness to existing or future creditors of the issuer or to recover amounts previously paid by the issuer in satisfaction of such indebtedness. The measure of insolvency for purposes of the foregoing will vary. Generally, an issuer would be considered insolvent at a particular time if the sum of its debts were then greater than all of its property at a fair valuation or if the present fair salable value of its assets were then less than the amount that would be required to pay its probable liabilities on its existing debts as they became absolute and matured. There can be no assurance as to what standard a court would apply in order to determine whether the issuer was "insolvent" after giving effect to the incurrence of the indebtedness constituting the Collateral Debt Obligations or that, regardless of the method of valuation, a court would not determine that the issuer was "insolvent" upon giving effect to such incurrence. In addition, in the event of the insolvency of an issuer of a Collateral Debt Obligation, payments made on such Collateral Debt Obligations could be subject to avoidance as a "preference" if made within a certain period of time (which may be as long as one year under federal bankruptcy law or even longer under state laws) before insolvency. In general, if payments on Collateral Debt Obligations are avoidable, whether as fraudulent conveyances or preferences, such payments can be recaptured either from the initial recipient (such as the Issuer) or from subsequent transferees of such payments (such as the holders of the Offered Securities). To the extent that any such payments are recaptured from the Issuer, the resulting loss will be borne by the holders of the Offered Securities in inverse order of seniority as described above under "—Relating to the Offered Securities—The Subordination of the Class A-1 Notes, the Class A-2 Notes, the Class B Notes and the Class C Notes Will Affect Their Right to Payment." However, a court in a bankruptcy or insolvency proceeding would be able to direct the recapture of any such payment from a holder of Offered Securities only to the extent that such court has jurisdiction over such holder or its assets. Moreover, it is likely that avoidable payments could not be recaptured directly from a holder that has given value in exchange for its Offered Security, in good faith and without knowledge that the payments were avoidable. Nevertheless, since there is no judicial precedent relating to a structured transaction such as the Offered Securities, there can be no assurance that a holder of Offered Securities will be able to avoid recapture on this or any other basis. Relating to Certain Conflicts of Interest In General, the Transaction Will Involve Various Potential and Actual Conflicts of Interest Various potential and actual conflicts of interest may arise from the overall investment activities of the Collateral Manager, its clients and its affiliates and of the Placement Agent and its affiliates. The following briefly summarizes some of these conflicts, but is not intended to be an exhaustive list of all such conflicts. 42
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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
Page 9 and 10: MUTUAL FUNDS, PORTFOLIO INVESTMENT
Page 11 and 12: THE OFFERED SECURITIES HAVE NOT BEE
Page 13 and 14: BENEFICIAL OWNERS OF SUCH OFFERED S
Page 15 and 16: Shares, the Issuer under the Prefer
Page 17 and 18: TABLE OF CONTENTS SUMMARY OF TERMS
Page 19 and 20: CAYMAN ISLANDS TAX CONSIDERATIONS..
Page 21 and 22: Issuer: ...........................
Page 23 and 24: Interest Reserve Account (to be app
Page 25 and 26: Counterparties as it may elect in i
Page 27 and 28: United States or any state thereof
Page 29 and 30: (iii) such calculation will not inc
Page 31 and 32: The "Reinvestment Overcollateraliza
Page 33 and 34: The foregoing descriptions are summ
Page 35 and 36: (z) Not more than the percentage of
Page 37 and 38: the proceeds of such sale may be re
Page 39 and 40: (v) the Weighted Average Rating Fac
Page 41 and 42: (6) to the payment of accrued and u
Page 43 and 44: (4) to the payment of the amounts r
Page 45 and 46: RISK FACTORS An investment in the O
Page 47 and 48: To the extent the requirements unde
Page 49 and 50: Preferred Shares. In the event of a
Page 51 and 52: Investments of the Issuer in securi
Page 53 and 54: Controlling Class are entitled to d
Page 55 and 56: the ability of the Co-Issuers to op
Page 57 and 58: Agency in rating the Notes or any r
Page 59: not directly benefit from the colla
Page 63 and 64: Securities are entitled to vote, in
Page 65 and 66: As part of their regular business,
Page 67 and 68: Declaration of Trust). It is not an
Page 69 and 70: Carrie Bunton, Vice President Carri
Page 71 and 72: any Notes for any Interest Accrual
Page 73 and 74: Withholding Tax Obligations, in eac
Page 75 and 76: Payments on the Offered Securities
Page 77 and 78: state of the United States or any o
Page 79 and 80: payments except the portion thereof
Page 81 and 82: Intermediary; and (ii) all other ac
Page 83 and 84: 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
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Account will be utilized to purchas
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transfer of such amounts (except fo
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(y) replace itself under the relate
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denominated in the same Permitted C
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Lending Counterparty so that the Se
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agreed that if such purchaser is no
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or bad faith on its part, arising o
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and all other amounts payable under
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federal, state, local or foreign in
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elevant provisions of the Indenture
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Co-Issuers of all other amounts due
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holders of the Preferred Shares of,
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Zhen Tao, Associate. Prior to joini
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If the Collateral Management Agreem
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Manager, the resigning or removed C
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Manager certain reports, schedules
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A U.S. Holder generally will recogn
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CAYMAN ISLANDS TAX CONSIDERATIONS T
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The Issuer intends to limit purchas
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In the Placement Agreement, each of
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any of their respective affiliates
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Additional Restrictions No transfer
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EMPLOYEE BENEFIT PLAN SUBJECT TO TI
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AND IS NOT A QUALIFIED PURCHASER, A
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warehouse facility (including the l
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GLOSSARY "Accredited Investor" mean
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such Floating Rate Collateral Debt
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has decreased its spread over a Lon
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"Defaulted Obligation" means for an
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organized under the laws of the Uni
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provides services; provided that U.
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"Form-Approved Synthetic Security"
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that the Collateral Manager may bas
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affiliates have defaulted on any de
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"Principal Balance" means with resp
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disposition of Collateral Debt Obli
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"Sale Proceeds" means with respect
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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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