GoldenTree Loan Opportunities III, Limited - Irish Stock Exchange

GoldenTree Loan Opportunities III, Limited
GoldenTree Loan Opportunities III, Corp.
U.S.$100,000,000 Class A-1A-S Senior Secured Revolving Floating Rate Notes due 2022
U.S.$25,000,000 Class A-1A-J Senior Secured Floating Rate Notes due 2022
U.S.$354,500,000 Class A-1B-S Senior Secured Floating Rate Notes due 2022
U.S.$39,500,000 Class A-1B-J Senior Secured Floating Rate Notes due 2022
U.S.$34,500,000 Class A-2 Senior Secured Floating Rate Notes due 2022
U.S.$43,500,000 Class B Senior Secured Deferrable Floating Rate Notes due 2022
U.S.$52,500,000 Class C Senior Secured Deferrable Floating Rate Notes due 2022
U.S.$25,500,000 Class D Secured Deferrable Floating Rate Notes due 2022
U.S.$3,000,000 Type I Composite Notes due 2022
U.S.$7,800,000 Type II Composite Notes due 2022
U.S.$10,000,000 Type III Composite Notes due 2022
U.S.$75,000,000 Subordinated Notes due 2022
The Issuer’s investment portfolio consists primarily of debt obligations (including, but not limited to, interests in bank loans acquired by way of a
sale or assignment and high-yield debt securities), Participation Interests, Synthetic Securities and Structured Finance Obligations. The portfolio will
be managed by GoldenTree Asset Management LP.
The Offered Securities will be sold at negotiated prices determined at the time of sale. See "Plan of distribution" beginning on page 143.
See "Risk factors" beginning on page 30 for a discussion of certain risks that you should consider in connection with an investment in the
Offered Securities.
No Offered Securities will be issued unless upon issuance (i) the Class A-1A-S Notes and the Class A-1B-S Notes are rated "Aaa" by Moody's and
"AAA" by S&P, (ii) the Class A-1A-J Notes and the Class A-1B-J Notes are rated "Aa1" by Moody's and "AAA" by S&P, (iii) the Class A-2 Notes
be rated at least "Aa2" by Moody's and at least "AA" by S&P, (iv) the Class B Notes be rated at least "A2" by Moody's and at least "A" by S&P, (v)
the Class C Notes be rated at least "Baa2" by Moody's and at least "BBB" by S&P, (vi) the Class D Notes be rated at least "Ba2" by Moody's and at
least "BB" by S&P, (vii) the Type I Composite Notes be rated at least "Baa3" by Moody's with respect to the Rated Balance thereof and (viii) each of
the Type II Composite Notes and the Type III Composite Notes be rated at least "Ba2" by Moody's with respect to the Rated Balance thereof. The
Subordinated Notes will not be rated. See "Ratings of the Secured Notes and the Composite Notes" beginning on page 77.
This Offering Circular constitutes the Prospectus (the "Prospectus") for the purposes of Directive 2003/71/EC (the "Prospectus Directive").
Application has been made to the Irish Financial Services Regulatory Authority (the "Financial Regulator"), as competent authority under the
Prospectus Directive for the Prospectus to be approved. Any foreign language text that is included within this document is for convenience purposes
only and does not form part of the Prospectus. Application has been made to the Irish Stock Exchange for the Offered Securities to be admitted to
the Official List and to trading on its regulated market.
The Offered Securities have not been registered under the Securities Act, and neither Co-Issuer has been registered under the Investment Company
Act. The Offered Securities are being offered only (I) to non-U.S. persons outside the United States in reliance on Regulation S and (II) to, or for the
account or benefit of, U.S. persons that are (A) (i) Qualified Institutional Buyers, (ii) solely in the case of Offered Securities issued as Certificated
Secured Notes or Certificated Subordinated Notes, Institutional Accredited Investors or (iii) solely in the case of the Subordinated Notes, Accredited
Investors who, if not Institutional Accredited Investors, are also Knowledgeable Employees or entities owned exclusively by Knowledgeable
Employees and also (B) (i) Qualified Purchasers or (ii) solely in the case of the Subordinated Notes, Knowledgeable Employees with respect to the
Issuer or an entity owned exclusively by Qualified Purchasers and/or Knowledgeable Employees. For a description of certain restrictions on transfer,
see "Transfer restrictions" beginning on page 145.
The Offered Securities are expected to be delivered to investors in book-entry form through The Depository Trust Company (and, in the case of
Certificated Secured Notes and Certificated Subordinated Notes, physical form) and its participants and indirect participants, including, without
limitation, Euroclear and Clearstream, on or about March 21, 2007.
Initial Purchaser of the Secured Notes (other than the Class A-1A-S Notes) and
Placement Agent of the Class A-1A-S Notes, the Composite Notes and the Subordinated Notes
May 25, 2007
JPMorgan

Table of contents
Summary of terms.........................................................1
Principal terms of the Offered Securities ..............1
Risk Factors ..................................................................30
Relating to the Offered Securities.........................30
Relating to the Portfolio Manager.........................40
Relating to the Collateral Obligations...................40
Relating to certain conflicts of interest .................48
Description of the Offered Securities............................52
The Indenture and the Secured Notes ...................52
Status and security ................................................52
Interest ..................................................................53
Principal................................................................55
Optional Redemption............................................56
Mandatory Redemption ........................................58
Special Redemption ..............................................59
Cancellation ..........................................................59
Class A-1A-S Notes Borrowings ..........................59
Reduction of Commitments ..................................60
Entitlement to payments .......................................61
Priority of payments..............................................62
The Indenture........................................................62
Form, denomination and registration of the
Offered Securities .........................................70
The Subordinated Notes........................................74
The Composite Notes....................................................75
Ratings of the Secured Notes and the Composite Notes77
The Secured Notes................................................77
The Composite Notes............................................77
Security for the Secured Notes .....................................78
Collateral Obligations ...........................................78
The Concentration Limitations .............................79
The Collateral Quality Test...................................79
Collateral Assumptions.........................................86
The Coverage Tests and the Reinvestment
Overcollateralization Test .............................89
Sales of Collateral Obligations; Additional
Collateral Obligations and Investment
Criteria ..........................................................89
The Collection and Payment Accounts .................93
The Ramp-Up Account.........................................94
The Custodial Account .........................................94
The Revolver Funding Account............................94
The Synthetic Security Counterparty Accounts ....95
The Synthetic Security Issuer Accounts................96
The Expense Reserve Account .............................96
The Interest Reserve Account...............................97
The Securities Lending Account...........................97
Hedge Agreements................................................98
Securities lending..................................................99
Use of proceeds.............................................................101
General..................................................................101
Ramp-Up Period ...................................................101
The Portfolio Manager..................................................102
General..................................................................102
GoldenTree Professionals .....................................103
The Portfolio Management Agreement.........................117
The Co-Issuers..............................................................122
General..................................................................122
Capitalization of the Issuer................................... 123
Business of the Co-Issuers.................................... 124
Income tax considerations............................................ 125
Introduction.......................................................... 125
U.S. federal income tax consequences to the
issuer ............................................................ 126
U.S. classification and U.S. tax treatment of the
Secured Notes............................................... 128
Alternative characterization of the Secured
Notes ............................................................ 129
Non-U.S. Holders of the Secured Notes............... 130
Treatment of U.S. Holders of the Composite
Notes ............................................................ 130
Treatment of U.S. Holders of the Subordinated
Notes ............................................................ 130
Taxation of Non-U.S. Holders of Subordinated
Notes ............................................................ 135
Transfer and other reporting requirements ........... 135
Tax-exempt investors ........................................... 135
Information reporting and backup withholding .... 136
Circular 230.......................................................... 136
Cayman Islands taxation ...................................... 137
ERISA and legal investment considerations................. 138
The Secured Notes (other than the Class D
Notes) ........................................................... 139
The Class D Notes and the Subordinated Notes ... 140
The Composite Notes ........................................... 142
Further considerations .......................................... 142
Legal investment considerations .......................... 143
Plan of distribution....................................................... 143
Transfer restrictions...................................................... 145
Global Secured Notes, Global Composite Notes
and Regulation S Global Subordinated
Notes ............................................................ 146
Certificated Secured Notes................................... 148
Certificated Subordinated Notes........................... 148
Class A-1A-S Notes ............................................. 148
Additional restrictions .......................................... 148
Legends ................................................................ 149
Non-Permitted Holder/Non-Permitted ERISA
Holder........................................................... 159
Cayman Islands placement provisions.................. 160
Listing and general information ................................... 160
Legal matters................................................................ 162
Glossary of defined terms............................................. 163
Index of defined terms
Annex A-1 – Form of purchaser representation letter
for Subordinated Notes............................................... A-1-1
Annex A-2 – Form of Subordinated Note ERISA and
affected bank certificate ............................................. A-2-1
Annex A-3 – Form of purchaser representation letter
for Certificated Secured Notes ................................... A-3-1
Annex A-4 – Form of Class D Note and Composite
Note ERISA and affected bank certificate.................. A-4-1
Annex B – Moody's Rating definitions .........................B-1
Annex C – S&P Rating definition and S&P
Recovery Rate Tables.....................................................C-1

IMPORTANT INFORMATION REGARDING THIS OFFERING CIRCULAR AND THE
OFFERED SECURITIES
In making your decision to invest in the Offered Securities, you should rely only on the information
contained in this offering circular. No person has been authorized to give you any information or
to make any representation other than as contained in this offering circular. If you receive any
other information, you should not rely on it.
You should not assume that the information contained in this offering circular is accurate as of any
date other than the date of this offering circular.
The Offered Securities are being offered and sold only in places where offers and sales are
permitted.
The Co-Issuers and JPMorgan reserve the right, for any reason, to reject any offer to purchase in
whole or in part, to allot to you less than the full amount of Offered Securities sought by you or to
sell less than the stated initial principal amount of any Class of Offered Securities.
The Offered Securities do not represent interests in or obligations of, and are not insured or
guaranteed by, JPMorgan, the Portfolio Manager, the Trustee, any Hedge Counterparty or any of
their respective affiliates.
The Offered Securities are subject to restrictions on resale and transfer as described under
"Description of the Offered Securities," "Plan of distribution" and "Transfer restrictions." By
purchasing any Offered Securities, you will be deemed to have made certain acknowledgments,
representations and agreements as described in "Transfer restrictions." You may be required to
bear the financial risks of investing in the Offered Securities for an indefinite period of time.
As used in this offering circular, "JPMorgan" means J.P. Morgan Securities Inc., in its capacity as
Initial Purchaser of the Secured Notes (other than the Class A-1A-S Notes) and Placement Agent of
the Class A-1A-S Notes, the Subordinated Notes and the Composite Notes, as the context requires.
____________________
This offering circular is being provided only to prospective purchasers of the Offered Securities. You
should read this offering circular before making a decision whether to purchase any Offered Securities.
You must not:
• use this offering circular for any other purpose;
• make copies of any part of this offering circular or give a copy of it to any other person; or
• disclose any information in this offering circular to any other person.
Regardless of the foregoing, however, you (and your employees, representatives and agents) may disclose
to any and all persons, without limitation of any kind, the United States federal income "tax treatment"
and "tax structure" (in each case, within the meaning of Treasury Regulation Section 1.6011-4 and
applicable U.S. State and local law) of the transactions described in this offering circular and all materials
of any kind related to such tax treatment or tax structure (including opinions or other tax analyses) that are
provided to you (or your employees, representative or agents).
i

____________________
The Co-Issuers have prepared this offering circular solely for use in connection with the offering of the
Offered Securities and for listing purposes. The Co-Issuers accept responsibility for the information in
this offering circular (other than the information contained under the headings "Risk factors—Relating to
certain conflicts of interest—The Issuer will be subject to various conflicts of interest involving the
Portfolio Manager" and "The Portfolio Manager"). To the best knowledge and belief of the Co-Issuers
the information contained in this offering circular (other than the information contained under the
headings "Risk factors—Relating to certain conflicts of interest—The Issuer will be subject to various
conflicts of interest involving the Portfolio Manager" and "The Portfolio Manager") is in accordance with
the facts and does not omit anything likely to affect the import of such information.
The Portfolio Manager accepts responsibility for the information contained under the headings "Risk
factors—Relating to certain conflicts of interest—The Issuer will be subject to various conflicts of interest
involving the Portfolio Manager" and "The Portfolio Manager". To the best knowledge and belief of the
Portfolio Manager the information contained under the headings "Risk factors—Relating to certain
conflicts of interest—The Issuer will be subject to various conflicts of interest involving the Portfolio
Manager" and "The Portfolio Manager" is in accordance with the facts and does not omit anything likely
to affect the import of such information.
____________________
You are responsible for making your own examination of the Co-Issuers and the Portfolio Manager and
your own assessment of the merits and risks of investing in the Offered Securities. By purchasing any
Offered Securities, you will be deemed to have acknowledged that:
• you have reviewed this offering circular;
• you have had an opportunity to request any additional information that you need from the Co-Issuers
and the Portfolio Manager; and
• none of JPMorgan, the Trustee or (except with respect to the information contained under the
headings "Risk factors—Relating to certain conflicts of interest—The Issuer will be subject to various
conflicts of interest involving the Portfolio Manager" and "The Portfolio Manager") the Portfolio
Manager is making any representation to you concerning the accuracy or completeness of this
offering circular or the future performance of the Co-Issuers.
None of the Co-Issuers, the Portfolio Manager, JPMorgan or the Trustee is providing you with any legal,
business, tax or other advice in this offering circular. You should consult with your own advisors as
needed to assist you in making an investment decision and to advise you as to whether you are legally
permitted to purchase the Offered Securities.
The Offered Securities have not been recommended by any federal, state or other regulatory authority,
nor has any such authority determined that this offering circular is accurate or complete. Any
representation to the contrary is a criminal offense.
____________________
You must comply with all laws that apply to you in any place where you buy, offer or sell any Offered
Securities or possess this offering circular. You must also obtain any consents or approvals that you need
ii

in order to purchase any Offered Securities. None of the Co-Issuers, the Portfolio Manager, JPMorgan or
the Trustee is responsible for your compliance with these legal requirements.
You are hereby notified that a seller of the Offered Securities may rely on an exemption from the
registration requirements of Section 5 of the Securities Act provided by Rule 144A or by Section 4(2) of
the Securities Act. These exemptions apply to offers and sales of securities that do not involve a public
offering.
Important information regarding offers and sales of the Offered
Securities
The Offered Securities, and the assets backing them, are subject to modification or revision and are
offered on a "when, as and if issued" basis. You understand that, when you are considering the purchase
of the Offered Securities, a binding contract of sale will not exist prior to the time that the relevant class
has been priced and JPMorgan has confirmed the allocation of such securities to be made to you; prior to
that time any "indications of interest" expressed by you, and any "soft circles" generated by JPMorgan
will not create binding contractual obligations for you or JPMorgan and may be withdrawn at any time.
You may commit to purchase one or more Classes of Offered Securities that have characteristics that may
change, and you are advised that all or a portion of the Offered Securities may not be issued with the
characteristics described in this offering circular. JPMorgan's obligation to sell or place such Offered
Securities to you is conditioned on the securities having the characteristics described in this offering
circular. If JPMorgan determines that condition is not satisfied in any material respect, you will be
notified, and none of the Issuer, the Co-Issuer or JPMorgan will have any obligation to you to deliver any
portion of the Offered Securities that you have committed to purchase, and there will be no liability
among the Issuers, JPMorgan, their respective affiliates and you as a consequence of the non-delivery.
The information contained in this offering circular supersedes any previous such information delivered to
you and may be superseded by information delivered to you prior to the time of contract of sale.
Notice to New Hampshire residents
NEITHER THE FACT THAT A REGISTRATION STATEMENT OR AN APPLICATION FOR
A LICENSE HAS BEEN FILED UNDER CHAPTER 421-B OF THE NEW HAMPSHIRE
REVISED STATUTES WITH THE STATE OF NEW HAMPSHIRE NOR THE FACT THAT A
SECURITY IS EFFECTIVELY REGISTERED OR A PERSON IS LICENSED IN THE STATE
OF NEW HAMPSHIRE CONSTITUTES A FINDING BY THE SECRETARY OF STATE OF
NEW HAMPSHIRE THAT ANY DOCUMENT FILED UNDER RSA 421-B IS TRUE,
COMPLETE AND NOT MISLEADING. NEITHER ANY SUCH FACT NOR THE FACT THAT
AN EXEMPTION OR EXCEPTION IS AVAILABLE FOR A SECURITY OR A TRANSACTION
MEANS THAT THE SECRETARY OF STATE HAS PASSED IN ANY WAY UPON THE
MERITS OR QUALIFICATIONS OF, OR RECOMMENDED OR GIVEN APPROVAL TO, ANY
PERSON, SECURITY, OR TRANSACTION. IT IS UNLAWFUL TO MAKE, OR CAUSE TO BE
MADE, TO ANY PROSPECTIVE PURCHASER, CUSTOMER, OR CLIENT ANY
REPRESENTATION INCONSISTENT WITH THE PROVISIONS OF THIS PARAGRAPH.
iii

Notice to Florida residents
The Offered Securities are offered pursuant to a claim of exemption under section 517.061 of the
Florida securities act and have not been registered under said act in the state of Florida. All
Florida residents who are not institutional investors described in section 517.061(7) of the Florida
securities act have the right to void their purchase of the Offered Securities, without penalty, within
three (3) days after the first tender of consideration.
Notice to Georgia residents
The Offered Securities will be issued or sold in reliance on paragraph (13) of code section 10-5-9 of the
Georgia Securities Act of 1973, and may not be sold or transferred except in a transaction which is
exempt under such act or pursuant to an effective registration under such act.
Notice to residents of the Cayman Islands
No invitation may be made to the public in the Cayman Islands to subscribe for the Offered Securities,
and this document may not be issued or passed to any such person.
Notice to residents of the European Economic Area
In relation to each Member State of the European Economic Area which has implemented the Prospectus
Directive (each, a "Relevant Member State"), JPMorgan has represented and agreed that with effect
from and including the date on which the Prospectus Directive is implemented in that Relevant Member
State (the "Relevant Implementation Date") it has not made and will not make an offer of Offered
Securities to the public in that Relevant Member State prior to the publication of a prospectus in relation
to the Offered Securities which has been approved by the competent authority in that Relevant Member
State or, where appropriate, approved in another Relevant Member State and notified to the competent
authority in that Relevant Member State, all in accordance with the Prospectus Directive, except that it
may, with effect from and including the Relevant Implementation Date, make an offer of Offered
Securities to the public in that Relevant Member State at any time:
to legal entities which are authorised or regulated to operate in the financial markets or, if not so
authorised or regulated, whose corporate purpose is solely to invest in securities;
to any legal entity which has two or more of (1) an average of at least 250 employees during the last
financial year; (2) a total balance sheet of more than EUR 43,000,000 and (3) an annual net turnover
of more than EUR 50,000,000, as shown in its last annual or consolidated accounts; or
in any other circumstances which do not require the publication by the Issuer of a prospectus pursuant
to Article 3 of the Prospectus Directive.
For the purposes of this provision, the expression an "offer of Offered Securities to the public" in relation
to any Offered Securities in any Relevant Member State means the communication in any form and by
any means of sufficient information on the terms of the offer and the Offered Securities to be offered so
as to enable an investor to decide to purchase or subscribe the Offered Securities, as the same may be
varied in that Member State by any measure implementing the Prospectus Directive in that Member State
and the expression "Prospectus Directive" means Directive 2003/71/EC and includes any relevant
implementing measure in each Relevant Member State.
iv

Notice to residents of the United Kingdom
JPMorgan has represented and agreed that:
It has only communicated or caused to be communicated and will only communicate or cause to be
communicated an invitation or inducement to engage in investment activity (within the meaning of
Section 21 of the Financial Services and Markets Act 2000 ("FSMA") received by it in connection
with the issue or sale of the Offered Securities in circumstances in which Section 21(1) of the FSMA
does not apply to the Co-Issuers; and
It has complied and will comply with all applicable provisions of the FSMA with respect to anything
done by it in relation to the Offered Securities in, from or otherwise involving the United Kingdom.
Forward-looking statements
This offering circular contains forward-looking statements, which can be identified by words like
"anticipate," "believe," "plan," "hope," "goal," "initiative," "expect," "future," "intend," "will," "could,"
and "should" and by similar expressions. You should not place undue reliance on forward-looking
statements. Actual results could differ materially from those referred to in forward-looking statements for
many reasons, including the risks described in "Risk factors." Forward-looking statements are necessarily
speculative in nature, and some of or all the assumptions underlying any forward-looking statements may
not materialize or may vary significantly from actual results. Variations between assumptions and results
may be material.
Without limiting the generality of the foregoing, you should not regard the inclusion of forward-looking
statements in this offering circular as a representation by the Co-Issuers, the Portfolio Manager,
JPMorgan, the Trustee or any of their respective affiliates or any other person of the results that will
actually be achieved by the Issuer or the Offered Securities. None of the foregoing persons has any
obligation to update or otherwise revise any forward-looking statements, including any revisions to reflect
changes in any circumstances arising after the date of this offering circular relating to any assumptions or
otherwise.
Certain definitions and related matters
Unless otherwise indicated, (i) references in this offering circular to "U.S. Dollars," "Dollars" and "U.S.$"
will be to United States dollars; (ii) references to the term "holder" will mean the person in whose name a
security is registered; except where the context otherwise requires, holder will include the beneficial
owner of such security; and (iii) references to "U.S." and "United States" will be to the United States of
America, its territories and its possessions.
Summaries of documents
This offering circular summarizes certain provisions of the Offered Securities, the Indenture, the Portfolio
Management Agreement and other transactions and documents. The summaries do not purport to be
complete and (whether or not so stated in this offering circular) are subject to, are qualified in their
entirety by reference to, and incorporate by reference, the provisions of the actual documents (including
definitions of terms). However, no documents incorporated by reference are part of this offering circular
for purposes of the admission of the Offered Securities to trading on the regulated market of the Irish
Stock Exchange.
v

You should direct any requests and inquiries regarding this offering circular and such documents to the
Issuer in care of JPMorgan at the following address: J.P. Morgan Securities Inc., 270 Park Avenue, 8th
Floor, New York, New York 10017, Attention: Structured Credit Products.
Available information
To permit compliance with Rule 144A under the Securities Act in connection with sales of the Offered
Securities, the Co-Issuers (or, in the case of the Class D Notes, the Composite Notes and the Subordinated
Notes, the Issuer) under the Indenture referred to under "Description of the Offered Securities" will be
required to furnish upon request of a holder of Offered Securities, to such holder and a prospective
purchaser designated by such holder the information required to be delivered under Rule 144A(d)(4)
under the Securities Act if at the time of the request the Co-Issuers are not reporting companies under
Section 13 or 15(d) of the Exchange Act of 1934, or exempt from reporting pursuant to Rule 12g3-2(b)
under the Exchange Act. Such information may be obtained directly from the Issuer at the address set
forth on the final page of this offering circular.
vi

Summary of terms
The following summary does not purport to be complete and is qualified in its entirety by reference to the detailed information appearing elsewhere in this offering
circular and related documents referred to herein. An index of defined terms appears at the back of this offering circular.
Principal terms of the Offered Securities
Designation 1
Type
Class A-1A--S
Notes
Senior Secured
Revolving Floating
Rate
Class A-1A-J
Notes
Senior Secured
Floating Rate
Class A-1B-S
Notes
Senior Secured
Floating Rate
Class A-1B-J
Notes Class A-2 Notes Class B Notes Class C Notes
Senior Secured
Floating Rate
Senior Secured
Floating Rate
Senior Secured
Deferrable Floating
Rate
Senior Secured
Deferrable Floating
Rate
Issuer(s) Co-Issuers Co-Issuers Co-Issuers Co-Issuers Co-Issuers Co-Issuers Co-Issuers
Initial Principal
Amount / Face Amount
(U.S.$)
Expected Moody's
Initial Rating
Expected S&P Initial
Rating
$100,000,000 2 $25,000,000 $354,500,000 $39,500,000 $34,500,000 $43,500,000 $52,500,000
"Aaa" "Aa1" "Aaa" "Aa1" "Aa2" "A2" "Baa2"
"AAA" "AAA" "AAA" "AAA" "AA" "A" "BBB"
Interest Rate LIBOR 3 + 0.215% LIBOR 3 + 0.26% LIBOR 3 + 0.22% LIBOR 3 + 0.28% LIBOR 3 + 0.33% LIBOR 3 + 0.65% LIBOR 3 + 1.25%
Stated Maturity May 1, 2022 May 1, 2022 May 1, 2022 May 1, 2022 May 1, 2022 May 1, 2022 May 1, 2022
Minimum
Denominations (U.S.$)
(Integral Multiples)
Ranking of the
Securities:
$250,000
($1,000)
$250,000
($1,000)
$250,000
($1,000)
$250,000
($1,000)
$250,000
($1,000)
$250,000
($1,000)
$250,000
($1,000)
Priority Class(es) None 4 A-1A-S 4 None 4 A-1B-S 4 A-1 A-1, A-2 A-1, A-2, B
Junior Class(es)
A-1A-J, A-2, B, C, A-2, B, C, D, A-1B-J, A-2, B, C, A-2, B, C, D,
B, C, D,
D, Subordinated Subordinated D, Subordinated Subordinated
Notes 4 Notes 4 Notes 4 Notes 4 Subordinated Notes
C, D,
Subordinated Notes
D, Subordinated
Notes
Deferred Interest Notes No No No No No Yes Yes

Designation 1
Type
Class D Notes
Secured
Deferrable
Floating Rate
Subordinated
Notes
Type I Composite
Notes 5
Type II Composite
Notes 5
Type III Composite
Notes 5
Issuer(s) Issuer Issuer Issuer Issuer Issuer
Initial Principal
Amount / Face
Amount (U.S.$)
Expected Moody's
Initial Rating
Expected S&P
Initial Rating
$25,500,000 $75,000,000 $3,000,000 6 $7,800,000 6 $10,000,000 6
"Ba2" N/A "Baa3" 7 "Ba2" 7 "Ba2" 7
"BB" N/A N/A N/A N/A
Interest Rate LIBOR 3 + 3.20% N/A N/A N/A N/A
Stated Maturity May 1, 2022 May 1, 2022 N/A N/A N/A
Minimum
Denominations
(U.S.$) (Integral
Multiples)
Ranking of the
Securities:
$250,000
($1,000)
$100,000
($1,000)
$375,000
($1)
$560,000
($1)
$525,000
($1)
Priority Class(es) A-1, A-2, B, C A-1, A-2, B, C, D N/A N/A N/A
Junior Class(es)
Subordinated
Notes
None N/A N/A N/A
Deferred Interest
Notes
Yes N/A N/A N/A N/A

1
2
3
4
5
6
7
Each Class of Offered Securities is referred to in this Offering Circular using the respective term set
forth under the heading "Designation" in the table above. The Class A-1A-S Notes and the Class A-
1A-J Notes are collectively referred to herein as the "Class A-1A Notes". The Class A-1B-S Notes
and the Class A-1B-J Notes are collectively referred to herein as the "Class A-1B Notes". The Class
A-1A-S Notes, the Class A-1A-J Notes, the Class A-1B-S Notes and the Class A-1B-J Notes are
collectively referred to herein as the "Class A-1 Notes" or the "Senior Class A Notes". The Class A-
1 Notes and the Class A-2 Notes are collectively referred to herein as the "Class A Notes." The
Subordinated Notes described above are referred to herein as the "Subordinated Notes." The Class
A Notes, the Class B Notes and the Class C Notes are collectively referred to herein as the "Senior
Notes". The Senior Notes together with the Class D Notes are referred to herein collectively as the
"Secured Notes" and together with the Subordinated Notes are referred to herein collectively as the
"Notes". The Type I Composite Notes, the Type II Composite Notes and the Type III Composite
Notes are referred to herein collectively as the "Composite Notes" and, together with the Notes are
referred to herein collectively as the "Offered Securities."
The "Initial Principal Amount" of the Class A-1A-S Notes includes unfunded Commitments. On the
Closing Date, there will be no Borrowings under the Class A-1A-S Notes.
Three-Month LIBOR is as calculated as set forth under "Description of the Offered Securities—
Interest."
Among the Senior Class A Notes, funds available for interest and principal are allocated pro rata to
the Class A-1A-S Notes and the Class A-1A-J (considered as one subclass) and the Class A-1B-S
Notes and the Class A-1B-J Notes (considered together as a second subclass) based, in the case of
interest, on the accrued and unpaid interest on each of such Classes and the Commitment Fee Amount
and, in the case of principal, on the Class A-1A-S Committed Amount and the aggregate outstanding
principal amount of the Class A-1A-J Notes, the Class A-1B-S Notes and the Class A-1B-J Notes.
Principal and interest will be allocated between the Class A-1A-S Notes and the Class A-1A-J Notes,
sequentially, first to the Class A-1A-S Notes and second to the Class A-1A-J Notes, and thus the
Class A-1A-J Notes will be a Junior Class to the Class A-1A-S Notes and the Class A-1A-S Notes
will be a Priority Class with respect to the Class A-1A-J Notes. Principal and interest will be
allocated between the Class A-1B-S Notes and the Class A-1B-J Notes, sequentially, first to the Class
A-1B-S Notes and second to the Class A-1B-J Notes, and thus the Class A-1B-J Notes will be a
Junior Class to the Class A-1B-S Notes and the Class A-1B-S Notes will be a Priority Class with
respect to the Class A-1B-J Notes.
The Type I Composite Notes will consist of the Class C Note Component and the Type I
Subordinated Note Component. The Type II Composite Notes will consist of the Type II Class D
Note Component and the Type II Subordinated Note Component. The Type III Composite Notes will
consist of the Type III Class D Note Component and the Type III Subordinated Note Component.
The initial face amount of each Component of the Composite Notes is included in the principal
amount of the related Class of Notes and is not issued in addition thereto.
The Type I Composite Notes, the Type II Composite Notes and the Type III Composite Notes are
rated only as to the ultimate payment of the applicable Rated Balance.
3

Issuer:
Co-Issuer:
Portfolio Manager:
Trustee:
Initial Purchaser and
Placement Agent:
Eligible Purchasers:
Payments on the Notes:
Payment Dates
GoldenTree Loan Opportunities III, Limited, an exempted company
with limited liability incorporated in the Cayman Islands (the "Issuer").
GoldenTree Loan Opportunities III, Corp., a Delaware corporation (the
"Co-Issuer" and, together with the Issuer, the "Co-Issuers").
GoldenTree Asset Management LP (the "Portfolio Manager" or
"GoldenTree").
The Bank of New York Trust Company, National Association (the
"Trustee").
J.P. Morgan Securities Inc. ("JPMorgan" and, in such capacities, the
"Initial Purchaser" and the "Placement Agent").
The Offered Securities are being offered hereby (i) to non-U.S. persons
in offshore transactions in reliance on Regulation S ("Regulation S")
under the Securities Act of 1933, as amended (the "Securities Act") and
(ii) in the United States to persons that are either (A) Qualified
Purchasers (as defined in Section 2(a)(51) of the Investment Company
Act of 1940, as amended (the "Investment Company Act"))
("Qualified Purchasers") or (B) (in the case of the Subordinated Notes
only) Knowledgeable Employees (as defined in Rule 3c-5 under the
Investment Company Act) ("Knowledgeable Employees") with respect
to the Issuer or entities owned exclusively by Knowledgeable
Employees or Qualified Purchasers that in the case of (A) and (B) are
either (1) qualified institutional buyers ("Qualified Institutional
Buyers") within the meaning of Rule 144A under the Securities Act
("Rule 144A"), (2) Accredited Investors (in the case of the Subordinated
Notes only) meeting the requirements of Rule 501(a) under the
Securities Act ("Accredited Investor") who are also Knowledgeable
Employees or (3) institutional accredited investors (each an "IAI" or an
"Institutional Accredited Investor") (solely in the case of Offered
Securities that are issued in the form of Certificated Secured Notes or
Certificated Subordinated Notes) meeting the requirements of Rule
501(a)(1), (2), (3) or (7) under the Securities Act. See "Description of
the Offered Securities—Form, denomination and registration of the
Notes" and "Transfer Restrictions."
The 1st day of February, May, August and November of each year (or,
if such day is not a Business Day, then the next succeeding Business
Day) commencing in November 2007 (each, a "Payment Date");
provided that, following the redemption or repayment in full of the
Secured Notes, holders of Subordinated Notes may receive payments
(including in respect of an optional redemption of the Subordinated
Notes) on any dates designated by the Portfolio Manager (which dates
may or may not be the dates stated above) upon five Business Days
prior written notice to the Trustee (which notice the Trustee shall
promptly forward to the holders of the Subordinated Notes) and such
dates shall thereafter constitute "Payment Dates."
4

Stated Note interest
Deferral of interest
Distributions on Subordinated
Notes
Interest on the Secured Notes is payable quarterly in arrears on each
Payment Date in accordance with the priority of payments described
herein.
So long as any more senior Class of Secured Notes is outstanding, to the
extent interest is not paid on the Class B Notes, the Class C Notes or the
Class D Notes on any Payment Date, such amounts will be deferred and
added to the principal balance of the applicable Class of Secured Notes
and will bear interest at the Interest Rate applicable to such Secured
Notes, and the failure to pay such amounts prior to the maturity of the
Notes will not be an Event of Default under the Indenture, dated as of
March 21, 2007 (the "Indenture"), among the Issuer, the Co-Issuer and
the Trustee. See "Description of the Offered Securities—Interest."
The Subordinated Notes will not bear a stated rate of interest but will be
entitled to receive distributions on each Payment Date if and to the
extent funds are available for such purpose. Such payments will be
made on the Subordinated Notes only pursuant to the priority of
payments. See "—Priority of payments" below and "Description of the
Offered Securities—The Subordinated Notes—Distributions on the
Subordinated Notes."
Optional Redemption:
Non-Call Period
Redemption after Non-Call
Period
During the period from March 21, 2007 (the "Closing Date") to but
excluding the Payment Date in May 2010 (such period, the "Non-Call
Period") the Secured Notes and the Subordinated Notes are not subject
to Optional Redemption. See "Description of the Offered Securities—
Optional Redemption."
The Secured Notes will be redeemed by the Co-Issuers or the Issuer, as
the case may be, at the written direction of a Supermajority of the
Subordinated Notes as follows: (i) based upon such written direction,
the Secured Notes will be redeemed in whole but not in part on any
Payment Date after the end of the Non-Call Period from the proceeds of
the liquidation of the Assets and/or from Refinancing Proceeds pursuant
to the Indenture; or (ii) based upon such written direction, the Secured
Notes may be redeemed in part by Class from Refinancing Proceeds
only on any Payment Date after the end of the Non-Call Period as long
as the Class of Secured Notes to be redeemed represents not less than
the entire Class of such Secured Notes.
Upon any redemption in whole of the Secured Notes, the Portfolio
Manager will (unless Refinancing Proceeds are available) direct the sale
of Assets in order to make payments as described under "Description of
the Offered Securities—Optional Redemption." "Sale Proceeds" are all
proceeds (excluding accrued interest, if any) received with respect to
Assets as a result of sales of such Assets in accordance with the
restrictions described in "Security for the Secured Notes—Sales of
Collateral Obligations; Additional Collateral Obligations and Investment
Criteria," less any reasonable expenses incurred by the Portfolio
5

Manager or the Trustee (other than amounts payable as Administrative
Expenses) in connection with such sales.
The Subordinated Notes may be redeemed, in whole but not in part, on
any Payment Date on or after the Optional Redemption or repayment of
the Secured Notes in full, at the direction of a Supermajority of the
Subordinated Notes.
There are certain other restrictions on the ability of the Co-Issuers to
effect an Optional Redemption. See "Description of the Offered
Securities—Optional Redemption."
Redemption by Refinancing
Redemption Prices
In addition to (or in lieu of) a sale of Collateral Obligations and/or
Eligible Investments, any Class or Classes of Secured Notes may be
redeemed from Refinancing Proceeds if a Supermajority of the
Subordinated Notes direct the Co-Issuers or the Issuer, as applicable, to
redeem any Class or Classes of the Secured Notes by obtaining a loan or
an issuance of replacement securities, the terms of which loan or
issuance will be negotiated by the Portfolio Manager on behalf of the
Issuer, from one or more financial institutions or purchasers (a
refinancing provided pursuant to such loan or issuance, a
"Refinancing") and to the extent and subject to the restrictions
described herein. See "Description of the Offered Securities—Optional
Redemption."
The redemption price of each Class of Secured Notes (the "Redemption
Price" for such Secured Notes) will be (a) 100% of the outstanding
principal amount of the Secured Notes to be redeemed plus (b) accrued
and unpaid interest thereon (including interest on any accrued and
unpaid Deferred Interest with respect to such Secured Notes) to the day
of redemption plus (c) (in the case of the Class A-1A-S Notes) any
accrued and unpaid Commitment Fee Amount to the day of redemption.
The Redemption Price for each Subordinated Note will be its
proportional share (based on the outstanding principal amount of such
Notes) of the amount of the proceeds of the Assets remaining after
giving effect to the Optional Redemption of the Secured Notes and
payment in full of (and/or creation of a reserve for) all expenses of the
Co-Issuers.
Revolving Advances:
Pursuant to a Note Purchase Agreement to be entered into among the
Issuer, the Co-Issuer, the Class A-1A-S Note Agent and the holders of
the Class A-1A-S Notes (the "Note Purchase Agreement"), the holders
of the Class A-1A-S Notes will commit to make advances to the Issuer
during the Draw Period, subject to compliance with certain borrowing
conditions specified therein, in an aggregate outstanding principal
amount at any one time up to $100,000,000. The Bank of New York
Trust Company, National Association, will serve as "Class A-1A-S
Note Agent" under the Note Purchase Agreement. See "Description of
the Offered Securities—The Indenture and the Secured Notes—Class
A-1A-S Notes Borrowings."
6

The Class A-1A-S Notes may be prepaid (in whole or in part) on any
date that is a Business Day during the Draw Period, (other than a date
from the day immediately following the Determination Date to but
excluding the next succeeding Payment Date), at the option of the Issuer
(at the direction of the Portfolio Manager) from Principal Proceeds;
provided that, if such prepayment occurs on a Payment Date, such
prepayment may only be made to the extent Principal Proceeds are
available for such application pursuant to clause (C)(1) of "—Priority of
Payments—Application of Principal Proceeds" and, if any such
prepayment occurs on a date other than a Payment Date, the conditions
described under "—Priority of Payments—Application of Principal
Proceeds to Class A-1A-S Notes" must be satisfied. Any prepayment
will be made by the Issuer pro rata according to the aggregate
outstanding principal amount of the Class A-1A-S Notes. Such
prepayments will not result in a reduction of Commitments. Except
with respect to any prepayment required to be made on the last day of
the Draw Period, the aggregate outstanding principal amount of any
prepayment of the Class A-1A-S Notes (taken as a whole) shall be an
integral multiple of $1,000 and at least $500,000.
Subject to compliance with certain borrowing conditions specified in the
Note Purchase Agreement, amounts may be borrowed or prepaid in
accordance with the preceding paragraph and reborrowed during the
Draw Period.
Each purchaser of Class A-1A-S Notes will be required to satisfy the
Class A-1A-S Purchaser Rating Criteria. If, at any time during the
Draw Period, any holder of Class A-1A-S Notes or any conduit
purchaser (or its related conduit agent or liquidity provider, if
applicable) does not satisfy the Class A-1A-S Purchaser Rating Criteria
or, with respect to any conduit purchaser, the related liquidity facility is
scheduled to expire within 30 days and has not been renewed, then such
holder or conduit purchaser is required to replace itself with another
entity that meets such ratings requirement (by transferring all of its
rights and obligations in respect of the Class A-1A-S Notes to the
transferee entity). If any such holder or conduit purchaser fails to take
the actions described in the preceding sentence within 30 days following
the commencement of such failure, the Issuer may require such holder
or conduit purchaser to transfer its Class A-1A-S Notes to a qualifying
purchaser identified by the Issuer.
Commitment Fee on the Class
A-1A-S Notes:
A commitment fee (the "Commitment Fee") will accrue on the
Aggregate Undrawn Amount of the Class A-1A-S Notes as of the close
of business on each day during the Draw Period, at a rate per annum
equal to 0.17% (the "Commitment Fee Rate"). The Commitment Fee
will be payable quarterly in arrears on each Payment Date and will rank
pari passu with the payment of interest on the Class A-1A-S Notes.
Interest at the Class A-1A-S Note Interest Rate will accrue on any
accrued and unpaid Commitment Fees that are not paid when due. No
Class of Notes, other than the Class A-1A-S Notes, will be entitled to a
commitment fee.
7

"Commitment Fee Amount" means, with respect to the Class A-1A-S
Notes as of any Payment Date, the sum of (i) the aggregate amount of
Commitment Fee accrued during the Interest Accrual Period for such
Payment Date plus (ii) interest accrued for the Interest Accrual Period
for such Payment Date at the Class A-1A-S Note Interest Rate on any
accrued and unpaid Commitment Fees that became payable on any prior
Payment Date. The Commitment Fee Amount will be computed on the
basis of a 360-day year and the actual number of days elapsed in the
applicable Interest Accrual Period.
"Aggregate Undrawn Amount" means, at any time with respect to the
Class A-1A-S Notes, the excess, if any, of (i) the aggregate amount of
the Commitments in respect of all Class A-1A-S Notes over (ii) the
aggregate principal amount of the Class A-1A-S Notes funded on the
Closing Date (if any) or by one or more Borrowings after the Closing
Date and not repaid under the Indenture.
Special Redemption:
Redemption during the
Reinvestment Period
Redemption after the Ramp-Up
Period
During the Reinvestment Period, the Secured Notes will be subject to
redemption in part by the Co-Issuers or the Issuer, as applicable, on any
Payment Date occurring during such period if the Portfolio Manager at
its sole discretion notifies the Trustee that it has been unable, for a
period of at least thirty (30) consecutive Business Days, to identify
additional Collateral Obligations that are deemed appropriate by the
Portfolio Manager in its sole discretion and which would meet the
criteria for reinvestment described under "Security for the Secured
Notes—Sales of Collateral Obligations; Additional Collateral
Obligations and Investment Criteria" in sufficient amounts to permit the
investment or reinvestment of all or a portion of the funds then in the
Collection Account that are to be invested in additional Collateral
Obligations. See "Description of the Offered Securities—Special
Redemption."
After the Ramp-Up Period, the Secured Notes will be subject to
redemption in part by the Co-Issuers or the Issuer, as applicable, on any
Payment Date occurring after such period if the Portfolio Manager
notifies the Trustee that a redemption is required in order to obtain from
each Rating Agency its written confirmation of its initial ratings of the
Secured Notes. See "Description of the Offered Securities—Special
Redemption."
There are certain other conditions required to be complied with by the
Co-Issuers or the Issuer, as applicable, to effect a Special Redemption.
See "Description of the Offered Securities—Special Redemption."
Special Redemption Amount
The amount payable in connection with a Special Redemption in respect
of each Class of Secured Notes subject to such Special Redemption (the
"Special Redemption Amount") will be equal to the amount in the
Collection Account representing Principal Proceeds which (1) the
Portfolio Manager has determined cannot be reinvested in additional
8

Collateral Obligations or (2) must be applied to redeem the Notes in
order to obtain confirmation from each of the Rating Agencies of the
initial ratings of the Secured Notes, as the case may be. See "—Priority
of payments" below and "Description of the Offered Securities—
Special Redemption."
Priority of payments:
Application of Interest Proceeds
On each Payment Date, Interest Proceeds on deposit in the Collection
Account, to the extent received on or before the related Determination
Date (or if such Determination Date is not a Business Day, the next
succeeding Business Day) and that are transferred into the Payment
Account, and, in the case of any Hedge Agreements, payments received
on or before such Payment Date, and borrowings on such Payment Date
under the Financed Amount Note will be applied in the following order
of priority:
(A) to the payment of the Financed Amount Periodic Payment Amount
to the holder of the Financed Amount Note; provided that such amounts
paid on any Payment Date pursuant to this clause (A) may not exceed
the Financed Amount Threshold for such Payment Date;
(B) (1) first, to the payment of taxes and governmental fees owing by
the Issuer or the Co-Issuer, if any and (2) second, to the payment of the
accrued and unpaid Administrative Expenses up to the Administrative
Expense Cap;
(C) to the payment of the Base Management Fee to the Portfolio
Manager except to the extent the Portfolio Manager elects to treat such
Base Management Fee as Deferred Base Management Fee;
(D) to the payment of any amounts due to any Hedge Counterparty
under any Hedge Agreement other than amounts due as a result of the
termination (or partial termination) of such Hedge Agreement;
(E) to the payment of accrued and unpaid interest on the Senior Class A
Notes and the Commitment Fee Amount pro rata to the Class A-1A
Notes and the Class A-1B Notes (with the Class A-1A-S Notes and the
Class A-1A-J Notes considered as one subclass and the Class A-1B-S
Notes and the Class A-1B-J Notes considered as a second subclass)
based on the amounts of accrued and unpaid interest on each such
subclass and the Commitment Fee Amount, and within the subclasses as
follows:
In the case of the Class A-1A-S Notes and the Class A-1A-J Notes:
(1) to the payment of accrued and unpaid interest on the Class A-
1A-S Notes and the Commitment Fee Amount; and then
(2) to the payment of accrued and unpaid interest on the Class A-
1A-J Notes; and
9

In the case of the Class A-1B-S Notes and the Class A-1B-J Notes:
(1) to the payment of accrued and unpaid interest on the Class A-
1B-S Notes; and then
(2) to the payment of accrued and unpaid interest on the Class A-
1B-J Notes;
(F) to the payment of accrued and unpaid interest on the Class A-2
Notes;
(G) (1) first, to the deposit into the Interest Collection Subaccount an
amount equal to the Liquidity Reserve Amount and (2) second, to the
payment of any amounts due to any Hedge Counterparty or under any
Hedge Agreement pursuant to an early termination (or partial
termination) of any Hedge Agreement as a result of a Priority Hedge
Termination Event;
(H) if either of the Class A Coverage Tests is not satisfied on the
related Determination Date, to make payments in accordance with the
Note Payment Sequence to the extent necessary to cause both Class A
Coverage Tests to be met as of the related Determination Date on a pro
forma basis after giving effect to any payments made through this
clause (H);
(I) to the payment of accrued and unpaid interest on the Class B Notes;
(J) to the payment of any Deferred Interest on the Class B Notes;
(K) if either of the Class B Coverage Tests is not satisfied on the
related Determination Date, to make payments in accordance with the
Note Payment Sequence to the extent necessary to cause both Class B
Coverage Tests to be met as of the related Determination Date on a pro
forma basis after giving effect to any payments made through this
clause (K);
(L) to the payment of accrued and unpaid interest on the Class C Notes;
(M) to the payment of any Deferred Interest on the Class C Notes;
(N) if either of the Class C Coverage Tests is not satisfied on the
related Determination Date, to make payments in accordance with the
Note Payment Sequence to the extent necessary to cause both Class C
Coverage Tests to be met as of the related Determination Date on a pro
forma basis after giving effect to any payments made through this
clause (N);
(O) to the payment of accrued and unpaid interest on the Class D
Notes;
(P) to the payment of any Deferred Interest on the Class D Notes;
10

(Q) if either of the Class D Coverage Tests is not satisfied on the
related Determination Date, to make payments in accordance with the
Note Payment Sequence to the extent necessary to cause both Class D
Coverage Tests to be met as of the related Determination Date on a pro
forma basis after giving effect to any payments made through this
clause (Q);
(R) during the Reinvestment Period, if the Reinvestment
Overcollateralization Test is not satisfied on the related Determination
Date, for deposit to the Collection Account as Principal Proceeds the
lesser of (i) 50% of the remaining Interest Proceeds after application of
Interest Proceeds pursuant to (A) through (Q) above and (ii) the amount
necessary to cause the Reinvestment Overcollateralization Test to be
satisfied as of such Determination Date, after application of Principal
Proceeds as described under "—Application of Principal Proceeds"
below on the current Payment Date;
(S) to the payment (in the priority stated therein) of (1) any
Administrative Expenses not paid pursuant to clause (B)(2) above due
to the limitation contained therein and (2) any amounts due to any
Hedge Counterparty under any Hedge Agreement pursuant to an early
termination (or partial termination) of any Hedge Agreement not
otherwise paid pursuant to clause (G)(2) above;
(T) (1) first, to the payment of the accrued and unpaid Subordinated
Management Fee to the Portfolio Manager, except to the extent the
Portfolio Manager elects to treat such Subordinated Management Fee as
Deferred Subordinated Management Fee, (2) second, to the payment of
any unpaid Base Management Fee that the Portfolio Manager elected to
treat as Deferred Base Management Fee with respect to prior Payment
Dates which the Portfolio Manager elects to be paid on such Payment
Date and (3) third, to the payment of any unpaid Subordinated
Management Fee that the Portfolio Manager elected to treat as Deferred
Subordinated Management Fee with respect to prior Payment Dates
which the Portfolio Manager elects to be paid on such Payment Date;
(U) to the payment of any accrued and unpaid Class A-1A-S Additional
Costs and Class A-1A-S Tax Gross-up Amounts; and
(V) any remaining Interest Proceeds shall be paid to the holders of the
Subordinated Notes; provided, that (1) with respect to any Payment
Date occurring prior to the end of the Ramp-Up Period, if (x) any
amounts otherwise distributable pursuant to this clause (V) exceed
$7,500,000 (in the aggregate, together with amounts so distributed on
any prior Payment Date), such excess shall instead be deposited back
into the Interest Collection Subaccount for application as Interest
Proceeds on the succeeding Payment Date and (y) if the Collateral
Quality Test or any Overcollateralization Ratio Test is not satisfied as of
the related Determination Date, amounts available for distribution
pursuant to this clause (V) shall instead be deposited back into the
Interest Collection Subaccount for application as Interest Proceeds on
the succeeding Payment Date or (2) if, with respect to the Payment Date
11

following the end of the Ramp-Up Period occurring prior to the date on
which Moody’s and S&P confirms satisfaction of the Moody’s Rating
Condition and the S&P Rating Condition, respectively, under the
Indenture as described under “Use of Proceeds—Ramp-Up Period”, the
Overcollateralization Ratio Tests, the Target Initial Par Condition or the
Collateral Quality Test is not satisfied as of the related Determination
Date, amounts available for distribution pursuant to this clause (V) shall
instead be used for application as Principal Proceeds pursuant to “—
Application of Principal Proceeds” below on such Payment Date in an
amount sufficient to obtain Moody’s and S&P written confirmation of
the Moody’s Rating Condition and the S&P Rating Condition,
respectively.
Application of Principal
Proceeds
On each Payment Date, Principal Proceeds on deposit in the Collection
Account that are received on or before the related Determination Date,
and that are transferred to the Payment Account, shall be applied, except
for any Principal Proceeds that will be used to settle binding
commitments (entered into prior to the Determination Date) for the
purchase of Collateral Obligations, in the following order of priority:
(A) to pay the amounts referred to in clauses (A) through (Q) of "—
Application of Interest Proceeds" above in the priority stated therein,
excluding clause (G)(1) of "—Application of Interest Proceeds" above
(but, in the case of payments of interest and Deferred Interest pursuant
to clauses (I), (J), (L), (M), (O) and (P) of "—Application of Interest
Proceeds" above, only to the extent that all Coverage Tests would be
met on a pro forma basis after giving effect to any such payments), but
only to the extent not paid in full thereunder;
(B) (1) if such Payment Date is a Redemption Date, to make payments
in accordance with the Note Payment Sequence, and (2) on any other
Payment Date, to make payments in the amount of the Special
Redemption Amount, if any, at the election of the Portfolio Manager,
either (x) in accordance with the Note Payment Sequence or (y) if, on
the related Determination Date, the Pro Rata Special Redemption
Conditions are satisfied, (A) first, to the payment of the aggregate
outstanding principal amounts of each Class of Secured Notes on a pro
rata basis according to the respective aggregate outstanding principal
amounts thereof, until the aggregate outstanding principal amount of the
Class A-1B-S Notes is reduced to U.S.$212,700,000, and (B) second, in
accordance with the Note Payment
Sequence thereafter;
(C) (1) during the Reinvestment Period, at the sole discretion of the
Portfolio Manager, (a) to the Collection Account as Principal Proceeds
to invest in Eligible Investments and/or to the purchase of additional
Collateral Obligations or (b) to prepayments of the Class A-1A-S Notes
and (2) after the Reinvestment Period, to invest Principal Proceeds
received with respect to a Prepaid Collateral Obligation, a Credit
Improved Obligation or a Credit Risk Obligation, in accordance with
the requirements described under "Security for the Secured Notes—
12

Sales of Collateral Obligations; Additional Collateral Obligations and
Investment Criteria";
(D) after the Reinvestment Period, to make payments in accordance
with the Note Payment Sequence;
(E) after the Reinvestment Period, to pay the amounts referred to in
clauses (S), (T) and (U) of "—Application of Interest Proceeds" above
(and in the same manner and order of priority stated therein), but only to
the extent not paid in full thereunder; and
(F) after the Reinvestment Period, any remaining Principal Proceeds
shall be paid to the holders of the Subordinated Notes.
Application of Principal
Proceeds to Class A-1A-S
Notes
Note Payment Sequence
On each Business Day prior to the end of the Draw Period (other than a
date from the date immediately following a Determination Date to but
excluding the next succeeding Payment Date), without applying "—
Priority of Payments—Application of Principal Proceeds" (provided
that (x) the Portfolio Manager, on behalf of the Issuer, using its
commercially reasonable judgment, believes on the date of prepayment
that Interest Proceeds will be sufficient to pay the amounts set forth in
clauses (A) through (F) of "—Priority of Payments—Application of
Interest Proceeds" (calculated on a pro forma basis) on the succeeding
Payment Date and (y) the Class A Coverage Tests are satisfied prior to
and after giving effect to such prepayment (and, if any such condition is
not satisfied, such prepayment may only occur on the next succeeding
Payment Date if all conditions therefor are satisfied as of such Payment
Date)), Principal Proceeds may be applied to the payment of principal
of the Class A-1A-S Notes (in an amount determined by the Portfolio
Manager) for so long as the conditions specified under "—Revolving
Advances" are satisfied. For the avoidance of doubt, if such Business
Day falls on a Payment Date, this provision shall not apply but principal
on the Class A-1A-S Notes will be repaid as provided under "—Priority
of Payments—Application of Principal Proceeds." Any associated
Class A-1A-S Additional Costs will be payable on the next succeeding
Payment Date in accordance with "—Priority of Payments—
Application of Interest Proceeds" or "—Priority of Payments—
Application of Principal Proceeds," respectively.
The "Note Payment Sequence" shall be the application, in accordance
with the priority of payments described above, of Interest Proceeds or
Principal Proceeds, as applicable, in the following order:
(i) to the payment of principal of the Class A-1A-J Notes, the Class A-
1B-S Notes and the Class A-1B-J Notes and the Class A-1A-S
Committed Amount in accordance with the Note Payment Sequence—
Senior Class A, until such amount has been paid in full;
(ii) to the payment of principal of the Class A-2 Notes until such
amount has been paid in full;
13

(iii) to the payment of accrued and unpaid interest and any Deferred
Interest on the Class B Notes until such amounts have been paid in full;
(iv) to the payment of principal of the Class B Notes until such amount
has been paid in full;
(v) to the payment of accrued and unpaid interest and any Deferred
Interest on the Class C Notes until such amounts have been paid in full;
(vi) to the payment of principal of the Class C Notes until such amount
has been paid in full;
(vii) to the payment of accrued and unpaid interest and any Deferred
Interest on the Class D Notes until such amounts have been paid in full;
and
(viii) to the payment of principal of the Class D Notes until such
amount has been paid in full.
Note Payment Sequence—Senior
Class A
The "Note Payment Sequence—Senior Class A" shall be the
application, in accordance with the priority of payments, of Interest
Proceeds or Principal Proceeds, as applicable, pro rata to the Class A-
1A Notes and the Class A-1B Notes (with the Class A-1A-S Notes and
the Class A-1A-J considered as one subclass and the Class A-1B-S
Notes and the Class A-1B-J Notes considered together as a second
subclass) based on the aggregate outstanding principal amounts of such
Classes (other than the Class A-1A-S Notes) and the Class A-1A-S
Committed Amount, and within the subclasses as follows:
In the case of the Class A-1A-S Notes and the Class A-1A-J Notes:
(i) to the payment of the Class A-1A-S Committed Amount until
such amount has been paid in full; and then
(ii) to the payment of principal of the Class A-1A-J Notes until
such amount has been paid in full; and
In the case of the Class A-1B-S Notes and the Class A-1B-J Notes:
(i) to the payment of the principal of the Class A-1B-S Notes
until such amount has been paid in full; and then
(ii) to the payment of principal of the Class A-1B-J Notes until
such amount has been paid in full
Management Fees:
The Management Fee consists of, on each Payment Date:
(i) a Base Management Fee in the amount of 0.25% per annum of the
Fee Basis Amount; and
(ii) a Subordinated Management Fee in the amount of 0.50% per
annum of the Fee Basis Amount;
14

in each case as calculated and subject to the limitations described under
"The Portfolio Management Agreement" and is payable as described
above under "—Priority of Payments."
Security for the Secured Notes:
General
The Secured Notes will be secured by the Assets, which include the
various accounts pledged under the Indenture. In purchasing and selling
Collateral Obligations, the Issuer will generally be required to meet the
Collateral Quality Test described under the "—Collateral Quality Test"
and "Security for the Secured Notes—The Collateral Quality Test," the
Coverage Tests described under "—The Coverage Tests and the
Reinvestment Overcollateralization Test" and "Security for the Secured
Notes—The Coverage Tests and the Reinvestment Overcollateralization
Test" and various other criteria described under "Security for the
Secured Notes—Sales of Collateral Obligations; Additional Collateral
Obligations and Investment Criteria." The Issuer will not be required to
meet the requirements imposed by the Concentration Limitations
described under "—Concentration Limitations" and "Security for the
Secured Notes—The Concentration Limitations" (except that the
Specified Concentration Limitations must be satisfied (or maintained or
improved) in connection with the acquisition of Collateral Obligations
as set forth in the Investment Criteria), but Collateral Obligations that
exceed any such limitation (other than the Specified Concentration
Limitations) when purchased will be excluded from the calculation of
the Adjusted Collateral Principal Amount and, as a result, will not be
included in calculating the Overcollateralization Ratio Tests and the
Reinvestment Overcollateralization Test. Substantially all of the
Collateral Obligations will be rated below investment grade and
accordingly will have greater credit and liquidity risk than investment
grade corporate obligations. See "Risk factors—Relating to Collateral
Obligations—Below investment-grade Assets involve particular risks."
The initial portfolio of Collateral Obligations will be purchased and/or
refinanced through the application of the net proceeds of the sale of the
Offered Securities. See "Security for the Secured Notes—Collateral
Obligations." During the Ramp-Up Period, pending investment in such
Collateral Obligations, a portion of such net proceeds will be invested in
Eligible Investments.
The Issuer will be permitted to lend Collateral Obligations pursuant to
one or more Securities Lending Agreements and in such cases the
Secured Notes will be secured by the Issuer's rights under the related
Securities Lending Agreement and not by the Collateral Obligations
loaned pursuant to such Securities Lending Agreement. See "Risk
factors—Relating to the Collateral Obligations—The Issuer Has the
Right to Engage in Securities Lending, which Involves Counterparty
Risks and Other Risks."
Collateral Obligations
An obligation meeting the standards set forth below, whether pledged to
the Trustee on the Closing Date, during the Ramp-Up Period or
thereafter, will constitute a "Collateral Obligation."
15

An obligation will be eligible for purchase by the Issuer and will be
eligible to be pledged by the Issuer to the Trustee as a Collateral
Obligation if it is a debt obligation (including, but not limited to, highyield
debt securities and interests in bank loans acquired by way of a
purchase or assignment), Participation Interest, Synthetic Security or
Structured Finance Obligation that as of the date of acquisition by the
Issuer (or the date the Issuer commits to acquire):
(i) is U.S. Dollar denominated and is not convertible by the issuer
thereof into any other currency;
(ii) is not a Defaulted Obligation (other than a Permitted Purchased
Defaulted Obligation) or a Credit Risk Obligation;
(iii) is not a lease;
(iv) if a Deferrable Security, is not currently deferring payment of any
accrued and unpaid interest which would have otherwise been due and
continues to remain unpaid; provided if such Deferrable Security is a
Partial Deferrable Security, a default has not occurred and is continuing
with respect to the portion of the interest due thereon to be paid in cash
on each payment date with respect thereto;
(v) provides for a fixed amount of principal payable on scheduled
payment dates and/or at maturity (or a fixed notional amount in the case
of a Synthetic Security) and does not by its terms provide for earlier
amortization or prepayment at a price of less than par;
(vi) does not constitute Margin Stock;
(vii) has payments that do not subject the Issuer to withholding tax
unless the related obligor is required to make "gross-up" payments that
cover the full amount of any such withholding tax on an after tax basis
(for the avoidance of doubt, this clause shall not apply to commitment
fees, letter of credit fees which the Issuer is permitted to receive or fees
that by their nature are commitment fees);
(viii) has a Moody's Rating and an S&P Rating;
(ix) is not a debt obligation whose repayment is subject to substantial
non-credit related risk as determined by the Portfolio Manager;
(x) is not acquired for the purpose of accommodating a request from a
Securities Lending Counterparty to borrow such Collateral Obligation;
(xi) except for Delayed Drawdown Collateral Obligations and
Revolving Collateral Obligations, is not an obligation pursuant to which
any future advances or payments, other than Excepted Advances, to the
borrower or the obligor thereof may be required to be made by the
Issuer;
(xii) does not have an "r", "p", "pi", "q" or "t" subscript assigned by
S&P;
16

(xiii) is not a Related Obligation;
(xiv) will not require the Issuer, the Co-Issuer or the pool of Assets to
be registered as an investment company under the Investment Company
Act;
(xv) is not a debt obligation (other than a Zero-Coupon Security) that
pays scheduled interest less frequently than annually; and
(xvi) is not subject to a tender offer, voluntary redemption, exchange
offer, conversion or other similar action for a price less than its par
amount plus all accrued and unpaid interest.
Hedge Agreements
Portfolio Management:
Use of proceeds:
Purchase of Collateral
Obligations;
Ramp-Up Period:
The Issuer does not expect to enter into any Hedge Agreements on the
Closing Date. However, subject to certain restrictions, the Issuer is
permitted to enter into one or more interest rate Hedge Agreements after
the Closing Date, with any one or more institutions entering into or
guaranteeing a Hedge Agreement with the Issuer that satisfies the
Required Hedge Counterparty Rating (each, a "Hedge Counterparty").
See "Security for the Secured Notes—Hedge Agreements."
Management of the Assets will be conducted by the Portfolio Manager
pursuant to a portfolio management agreement to be entered into
between the Issuer and the Portfolio Manager (the "Portfolio
Management Agreement"). Under the Portfolio Management
Agreement, and subject to the limitations of the Indenture, the Portfolio
Manager will manage the selection, acquisition, reinvestment and
disposition of the Assets, including exercising rights and remedies
associated with the Assets, disposing of the Assets and certain related
functions.
The net cash proceeds of the offering of the Offered Securities (which
does not include the unfunded Commitments of the Class A-1A-S Notes
which total $100,000,000) will be applied by the Issuer to repay debt
incurred to one or more affiliates of the Initial Purchaser to finance the
Issuer's purchase of Collateral Obligations prior to the Closing Date and
to purchase additional Collateral Obligations on and after the Closing
Date, all of which will be pledged under the Indenture by the Issuer to
the Trustee. See "Use of proceeds."
The Issuer will use its commercially reasonable efforts to have
purchased or to have entered into binding agreements to purchase, by
the earlier of (a) 365 days after the Closing Date and (b) the date
selected by the Portfolio Manager in it sole discretion and upon which
the Target Initial Par Condition has been satisfied (the period from the
Closing Date to such date being the "Ramp-Up Period").
The Issuer will be subject to an Interim Target during the Ramp-Up
Period, as described under "Use of Proceeds—Ramp-Up Period."
17

If, following the end of the Ramp-Up Period, either (x) the additional
Collateral Obligations, together with the Collateral Obligations
purchased on or before the Closing Date and still held as Collateral
Obligations and amounts on deposit in the Principal Collection
Subaccount and the Ramp-Up Account, fail to satisfy the Collateral
Quality Test, the Overcollateralization Ratio Tests or the Target Initial
Par Condition as of the end of the Ramp-Up Period (a "Ramp-Up
Failure"), then (A) the Portfolio Manager shall request Moody's to
confirm, within sixty (60) Business Days following the end of the
Ramp-Up Period, that Moody's will not reduce or withdraw its ratings
assigned to the Secured Notes on the Closing Date and (B) if, by the
60th Business Day following the end of the Ramp-Up Period, Moody's
has not provided the confirmation described in the preceding clause
(x)(A), the Portfolio Manager will, if the Ramp-Up Failure is still
continuing, instruct the Trustee to transfer amounts from the Interest
Collection Subaccount to the Principal Collection Subaccount (and with
such funds the Issuer will purchase additional Collateral Obligations) in
an amount sufficient to obtain from Moody's written confirmation of its
ratings assigned to the Secured Notes on the Closing Date or to cause
the Collateral Obligations to satisfy the Collateral Quality Test, the
Overcollateralization Ratio Tests and the Target Initial Par Condition
(provided that the amount of such transfer would not result in deferral
of interest with respect to any Class of Notes); provided that, in lieu of
this clause (x), the Portfolio Manager on behalf of the Issuer may take
such other action, including but not limited to, a Special Redemption
and/or transferring amounts from the Interest Collection Subaccount to
the Principal Collection Subaccount as Principal Proceeds (for use in a
Special Redemption), sufficient to obtain from Moody's written
confirmation of its initial rating of the Notes) or (y) S&P provides the
Issuer written notice, within sixty (60) Business Days following the end
of the Ramp-Up Period, that it has or will imminently reduce or
withdraw its ratings assigned to the Notes on the Closing Date (an
"S&P Rating Notice"), then (A) the Portfolio Manager will instruct the
Trustee to transfer amounts from the Interest Collection Subaccount to
the Principal Collection Subaccount and use such funds on behalf of the
Issuer for the purchase of additional Collateral Obligations during the
sixty (60) Business Day period following receipt of an S&P Rating
Notice (provided that the amount of such transfer would not result in
deferral of interest with respect to any Class of Notes) and (B) after the
expiration of the sixty (60) Business Day period described in the
immediately preceding clause (A), instruct the Trustee to use Interest
Proceeds and Principal Proceeds pursuant to the Priority of Payments to
effect a Special Redemption of the Notes until such time as S&P has
provided written confirmation of its initial rating of the Notes (it being
understood that, if the events specified in both of clauses (x) and (y)
occur, the Issuer will be required to satisfy the requirements of both
clause (x) and clause (y)); provided, that in the case of each of the
foregoing clauses (x) and (y), amounts may not be transferred from the
Interest Collection Subaccount to the Principal Collection Subaccount
if, after giving effect to such transfer, the amounts available pursuant to
the Priority of Payments on the next succeeding Payment Date would be
18

insufficient to pay the full amount of the accrued and unpaid interest on
the Class A Notes on such Payment Date. It is expected, but there can
be no assurance, that (i) the Overcollateralization Ratio Test applicable
to each Class of Secured Notes and the Reinvestment
Overcollateralization Test described herein will be satisfied on the
Closing Date, (ii) that the Concentration Limitations and the Collateral
Quality Test described herein will be satisfied not later than the end of
the Ramp-Up Period and (iii) and the Interest Coverage Test applicable
to each Class of Secured Notes described herein will be satisfied as of
any date of determination at, or subsequent to, the later of the
Determination Date immediately preceding the second Payment Date
and the Measurement Date occurring on the last day of the Ramp-Up
Period.
Reinvestment Period
Collateral Quality Test:
The "Reinvestment Period" will be the period from and including the
Closing Date to and including the earliest of (i) the Payment Date in
May 2014, (ii) the date on which the maturity of any Class of Secured
Notes is accelerated due to an Event of Default as described under
"Description of the Offered Securities—The Indenture" or (iii) the date
on which the Portfolio Manager reasonably determines and notifies the
Issuer, the Rating Agencies and the Trustee that it can no longer
reinvest in additional Collateral Obligations in accordance with the
Indenture or the Portfolio Management Agreement. See "Security for
the Secured Notes—Sales of Collateral Obligations; Additional
Collateral Obligations and Investment Criteria."
The "Collateral Quality Test" will be satisfied if, as of any date of
determination at, or subsequent to, the end of the Ramp-Up Period, in
the aggregate, the Collateral Obligations owned (or in relation to a
proposed purchase of a Collateral Obligation, proposed to be owned) by
the Issuer satisfy each of the tests set forth below (or, unless otherwise
explicitly provided for in the Indenture, if any such test is not satisfied,
the results of such test are maintained or improved) (see "Security for
the Secured Notes—The Collateral Quality Test"):
the Minimum Fixed Coupon Test;
the Minimum Floating Spread Test;
the Maximum Moody's Rating Factor Test;
the Moody's Diversity Test;
the S&P CDO Monitor Test;
the Minimum Weighted Average Moody's Recovery Rate Test;
the Minimum Weighted Average S&P Recovery Rate Test; and
the Weighted Average Maturity Test.
19

The "Minimum Fixed Coupon Test" will be satisfied on any date of
determination if the Weighted Average Fixed Coupon equals or exceeds
the Minimum Fixed Coupon.
The "Minimum Floating Spread Test" will be satisfied on any date of
determination if the Weighted Average Floating Spread equals or
exceeds the Minimum Floating Spread.
"Minimum Fixed Coupon" as of any date of determination means
7.5%.
"Minimum Floating Spread" means the number set forth in the
column entitled "Minimum Weighted Average Spread" in the Minimum
Diversity/Maximum Rating/Minimum Spread Matrix set forth below
based upon the applicable "row/column combination" chosen by the
Portfolio Manager (or the interpolating between two adjacent rows
and/or two adjacent columns, as applicable) in accordance with the
Indenture.
The "Maximum Moody's Rating Factor Test" will be satisfied on
any date of determination if the Weighted Average Moody's Rating
Factor (determined as described herein) of the Collateral Obligations is
less than or equal to the sum of (i) the number set forth in the column
entitled "Maximum Weighted Average Moody's Rating Factor" in the
Minimum Diversity/Maximum Rating/Minimum Spread Matrix set
forth below based upon the applicable "row/column combination"
chosen by the Portfolio Manager (or the interpolating between two
adjacent rows and/or two adjacent columns, as applicable) in
accordance with the Indenture plus (ii) the Rating Factor Adjustment.
"Rating Factor Adjustment" means, as of any date of determination,
the greater of:
(a) zero; and
(b) the product of (i) (x) the Weighted Average Moody's Recovery Rate
as of such date of determination multiplied by 100, minus (y) 45 and (ii)
60; provided, however, if the Weighted Average Moody's Recovery
Rate for purposes of determining the Rating Factor Adjustment is
greater than 60%, then such Weighted Average Moody's Recovery Rate
shall equal 60% for such purposes unless the Moody's Rating Condition
is satisfied.
The "Moody's Diversity Test" will be satisfied on any date of
determination if the Diversity Score (rounded to the nearest whole
number) equals or exceeds the number set forth in the column entitled
"Minimum Diversity Score" in the Minimum Diversity/Maximum
Rating/Minimum Spread Matrix set forth below based upon the
applicable "row/column combination" chosen by the Portfolio Manager
(or the interpolating between two adjacent rows and/or two adjacent
columns, as applicable) in accordance with the Indenture.
20

The "Minimum Diversity/Maximum Rating/Minimum Spread
Matrix" means the following chart used to determine which of the
"row/column combinations" are applicable for purposes of determining
compliance with the Moody's Diversity Test, the Maximum Moody's
Rating Factor Test and the Minimum Floating Spread Test:
Minimum Diversity Score
Minimum Weighted Average
Spread
35 40 45 50 55 60
2.000% 2295 2355 2410 2455 2505 2535
2.125% 2375 2440 2495 2550 2595 2635
2.250% 2460 2520 2580 2635 2685 2725
2.375% 2535 2595 2655 2715 2765 2810
2.500% 2605 2650 2725 2790 2840 2885
2.625% 2655 2725 2800 2865 2925 2965
2.750% 2725 2810 2885 2955 3005 3045
2.875% 2770 2855 2935 3005 3070 3115
3.000% 2860 2925 2990 3070 3135 3175
3.125% 2880 2960 3040 3115 3170 3225
3.250% 2920 3005 3095 3160 3220 3265
3.375% 2970 3060 3140 3200 3260 3315
3.500% 3020 3100 3175 3245 3310 3360
Maximum Weighted Average Moody's Rating Factor
The "S&P CDO Monitor Test" will be satisfied on any date of
determination following receipt by the Issuer of the applicable S&P
CDO Monitor if, after giving effect to the sale of a Collateral
Obligation or the purchase of an additional Collateral Obligation,
each Class Default Differential of the Proposed Portfolio is positive.
The S&P CDO Monitor Test will be considered to be improved if
each Class Default Differential of the Proposed Portfolio is greater
than the corresponding Class Default Differential of the Current
Portfolio.
21

The "Minimum Weighted Average Moody's Recovery Rate Test"
will be satisfied on any date of determination if the Weighted
Average Moody's Recovery Rate equals or exceeds 45.0%.
The "Minimum Weighted Average S&P Recovery Rate Test"
will be satisfied on any date of determination if the Weighted
Average S&P Recovery Rate for each Class of Secured Notes
outstanding equals or exceeds the Weighted Average S&P Recovery
Rate for such Class selected by the Portfolio Manager in connection
with the S&P CDO Monitor Test.
The "Weighted Average Maturity Test" will be satisfied on any
date of determination if the Portfolio Weighted Average Maturity on
such date is on or before March 21, 2018.
Concentration Limitations;
Specified Concentration
Limitations:
Emerging Market Obligors
Domicile of Obligor
The "Concentration Limitations" will be satisfied if, as of any date
of determination at or subsequent to the end of the Ramp-Up Period,
in the aggregate, the Collateral Obligations owned (or in relation to a
proposed purchase of a Collateral Obligation, proposed to be owned)
by the Issuer comply with all of the requirements set forth below (or,
if not in compliance, the relevant requirements are maintained or
improved). The Issuer will not be required to meet (or otherwise
maintain or improve) the requirements imposed by the
Concentration Limitations (except that clauses (iii), (xiv) and (xx),
which constitute the Specified Concentration Limitations, must be
satisfied (or maintained or improved) in connection with the
acquisition of Collateral Obligations as set forth in the Investment
Criteria), but Collateral Obligations that exceed any Concentration
Limitation (other than the Specified Concentration Limitations)
upon purchase will constitute Excess Concentration Obligations and
will be excluded from the calculation of the Adjusted Collateral
Principal Amount and, as a result, will not be included in calculating
the Overcollateralization Ratio Tests and the Reinvestment
Overcollateralization Test.
(i) no more than 5.0% of the Collateral Principal Amount may
consist of Collateral Obligations issued by Emerging Market
Obligors;
(ii) no more than the percentage listed below of the Collateral
Principal Amount may be issued by obligors Domiciled in the
country or countries set forth opposite such percentage:
% Limit Country or Countries
20.0% All countries (in the aggregate) other than the
United States;
10.0% Any individual Group I Country;
22

7.5% All Group II Countries in the aggregate;
5.0% Any individual Group II Country;
5.0% All Group III Countries in the aggregate;
3.0% Greece, Italy and Portugal in the aggregate; and
3.0% Any individual country other than the United
States, the United Kingdom, Canada, the
Netherlands, any Group II Country or any Group
III Country;
Delayed Drawdown/Revolving
Collateral Obligations
Moody's Counterparty Criteria
Senior Secured Collateral
Obligations
Floating rate Collateral
Obligations
Synthetic Securities and
Participation Interests
Debt Securities
Deferrable Securities
DIP Collateral Obligations
Limitation on Maturity
(iii) unfunded commitments under Delayed Drawdown Collateral
Obligations and unfunded and funded commitments under
Revolving Collateral Obligations may not be more than 15.0% of
the Collateral Principal Amount;
(iv) the Moody's Counterparty Criteria are met;
(v) not less than 85.0% of the Collateral Principal Amount shall
consist of Senior Secured Loans and Senior Secured Notes that, in
each case, are secured by a valid first priority security interest in
collateral (and that by its terms is not permitted to become
subordinate in right of payment to any other obligation of the
obligor);
(vi) not less than 95.0% of the Collateral Principal Amount shall
consist of floating rate Collateral Obligations;
(vii) not more than 20.0% of the Collateral Principal Amount may
consist of Synthetic Securities and Participation Interests;
(viii) not more than 5.0% of the Collateral Principal Amount may
consist of Collateral Obligations that are debt securities in a form
other than bank loans, Senior Secured Notes, or Participation
Interests or Synthetic Securities the Reference Obligation of which
is a bank loan, Senior Secured Note or Participation Interest;
(ix) not more than 5.0% of the Collateral Principal Amount may
consist of Deferrable Securities;
(x) not more than 5.0% of the Collateral Principal Amount may
consist of DIP Collateral Obligations and not more than 1.5% of the
Collateral Principal Amount may consist of DIP Collateral
Obligations issued by a single obligor;
(xi) not more than 3.0% of the Collateral Principal Amount may
consist of obligations which mature after the Stated Maturity of the
Notes, and no Collateral Obligations may mature more than 365
days after the Stated Maturity of the Notes (unless, in each case, any
such Collateral Obligations include a "put" option to the obligor at a
price of at least par prior to the Stated Maturity of the Notes);
23

Single Obligor
Rating of "Caa1"/"CCC+" and
below
Third Party Credit Exposure
S&P Rating derived from a
Moody's Rating
Moody's Rating derived from an
S&P Rating
Interest less frequently than
quarterly; semi-annually
Zero-Coupon Securities
Structured Finance Obligations
Permitted Purchased Defaulted
Obligations
(xii) not more than 2.0% of the Collateral Principal Amount may
consist of obligations issued by a single obligor, except that (x)
obligations issued by up to five obligors may each constitute up to
3.0% of the Collateral Principal Amount and (y) obligations issued
by a single obligor in respect of a Structured Finance Obligation
may constitute no more than 2.0% of the Collateral Principal
Amount;
(xiii) not more than 15.0% of the Collateral Principal Amount may
consist of, without duplication, Collateral Obligations with a
Moody's Rating of "Caa1" or below or an S&P Rating of "CCC+" or
below;
(xiv) the Third Party Credit Exposure may not exceed 20.0% of the
Collateral Principal Amount and the Third Party Credit Exposure
Limits may not be exceeded;
(xv) not more than 10.0% of the Collateral Principal Amount may
have an S&P Rating derived from a Moody's Rating as set forth in
clause (iii)(a) of the definition of the term "S&P Rating";
(xvi) not more than 10.0% of the Collateral Principal Amount may
consist of Collateral Obligations with a Moody's Rating derived
from an S&P Rating as provided in clauses (iv)(A)(1) or (2) of the
definition of the term "Moody's Derived Rating";
(xvii) not more than 15.0% of the Collateral Principal Amount may
consist of Collateral Obligations that pay interest less frequently
than quarterly and not more than 3.0% of the Collateral Principal
Amount may consist of Collateral Obligations that pay interest less
frequently than semi-annually;
(xviii) not more than 3.0% of the Collateral Principal Amount may
consist of Zero-Coupon Securities;
(xix) not more than 5.0% of the Collateral Principal Amount may
consist of Structured Finance Obligations and not more than 2.0% of
the Collateral Principal Amount may consist of collateralized loan
obligations; and
(xx) not more than 3.0% of the Collateral Principal Amount may
consist of Permitted Purchased Defaulted Obligations.
"Group I Country" means The Netherlands and the United
Kingdom (or such other countries as may be notified by Moody's to
the Portfolio Manager from time to time).
"Group II Country" means Germany, Ireland, Sweden and
Switzerland (or such other countries as may be notified by Moody's
to the Portfolio Manager from time to time).
"Group III Country" means Austria, Belgium, Denmark, Finland,
France, Iceland, Liechtenstein, Luxembourg, Norway and Spain (or
24

such other countries as may be notified by Moody's to the Portfolio
Manager from time to time).
"Collateral Principal Amount" means, as of any date of
determination, the sum of (a) the aggregate principal balance of the
Collateral Obligations (other than Defaulted Obligations (except to
the extent set forth below)), (b) without duplication, the amounts on
deposit in the Collection Account and the Ramp-Up Account
(including Eligible Investments therein) representing Principal
Proceeds and, from and after a default under a Securities Lending
Agreement, the amounts on deposit in the related Securities Lending
Account (including Eligible Investments therein) and (c) without
duplication, the Aggregate Undrawn Amount of the Class A-1A-S
Notes. For purposes of determining compliance with clause (xx) of
the Concentration Limitations, the Collateral Principal Amount will
include the principal balance of all Permitted Purchased Defaulted
Obligations.
Coverage Tests and the
Reinvestment Overcollateralization
Test:
The Coverage Tests will be used primarily to determine whether
principal and interest may be paid on the Secured Notes and
distributions may be made on the Subordinated Notes or whether
funds which would otherwise be used to pay interest on the Secured
Notes other than the Class A Notes and to make distributions on the
Subordinated Notes must instead be used to pay principal on one or
more Classes of Secured Notes according to the priorities referred to
in "Summary of Terms—Priority of Payments." The "Coverage
Tests" will consist of the Overcollateralization Ratio Test and the
Interest Coverage Test applied respectively to the Class A Notes
(together, the "Class A Coverage Tests"), the Class B Notes
(together, the "Class B Coverage Tests"), the Class C Notes
(together, the "Class C Coverage Tests") and the Class D Notes
(the "Class D Coverage Tests"). Measurement of the degree of
compliance with the Overcollateralization Ratio Tests will be
required as of the Closing Date and each Measurement Date
thereafter. Measurement of the degree of compliance with the
Interest Coverage Tests will be required as of the later of the
Determination Date immediately preceding the second Payment
Date and the Measurement Date occurring on the last day of the
Ramp-Up Period and each subsequent Measurement Date. In
addition, the Reinvestment Overcollateralization Test, which is not a
Coverage Test, will apply as described herein.
The "Overcollateralization Ratio Test" and "Interest Coverage
Test" applicable to the indicated Class or Classes of Secured Notes
will be satisfied as of any applicable date of determination if the
applicable Overcollateralization Ratio or Interest Coverage Ratio, as
the case may be, is at least equal to the applicable ratio indicated
below or such Class or Classes of Secured Notes is no longer
outstanding. If the Coverage Tests are not satisfied on any
applicable date of determination, the Issuer will be required to apply
available amounts in the Payment Account on the related Payment
Date to make payments in accordance with the Note Payment
25

Sequence (without payment of any make-whole amount) to the
extent necessary to achieve compliance with such Coverage Tests.
Required Overcollateralization
Class
Ratio
A 118.8%
B 112.8%
C 105.1%
D 102.6%
Required Interest Coverage
Class
Ratio
A 120.0%
B 115.0%
C 110.0%
D 105.5%
The "Overcollateralization Ratio" is, with respect to any specified
Class or Classes of Secured Notes as of the Closing Date or any
Measurement Date thereafter, the percentage derived from:
a) the Adjusted Collateral Principal Amount; divided by
b) the aggregate outstanding principal amounts of the Secured Notes
of such Class or Classes, each priority class of Secured Notes and
each pari passu Class of Secured Notes;
provided, that for purposes of determining the Overcollateralization
Ratio, the aggregate outstanding principal amount of the Class A-
1A-S Notes will include an amount (in addition to the amount
thereof) equal to all unfunded commitments that have not been
irrevocably reduced in respect of all Delayed Drawdown Collateral
Obligations and Revolving Collateral Obligations less amounts on
deposit in the Revolver Funding Account.
26

The "Interest Coverage Ratio" for any designated Class or Classes
of Secured Notes, as of any date of determination, is the percentage
derived from:
The Collateral
Interest Amount as
of such date of
determination
minus
Amounts payable
(or expected as of
the date of
determination to be
payable) on the
following Payment
Date as set forth in
clauses (A), (B) and
(C) and, with respect
to the Interest
Coverage Ratio for
the Class B Notes,
the Class C Notes
and the Class D
Notes, as set forth in
clause (G)(1) under
"Summary of
Terms—Priority of
Payments—
Application of
Interest Proceeds"
divided by
Amounts payable
(or expected as of
the date of
determination to be
payable) on the
following Payment
Date as set forth in
clause (D) under
"Summary of
Terms—Priority of
Payments—
Application of
Interest Proceeds"
plus
Interest (and with
respect to the Class
A-1A-S Notes,
Commitment Fee
Amount) due and
payable on the
Secured Notes of
such Class or
Classes and each
Class of Secured
Notes that rank
senior to or pari
passu with such
Class or Classes
(excluding Deferred
Interest but
including any
interest on Deferred
Interest with respect
to any such Class or
Classes) on such
Payment Date
27

The "Reinvestment Overcollateralization Test" is a test that will
be satisfied as of any Measurement Date during the Reinvestment
Period on which Class D Notes remain outstanding, if the
Overcollateralization Ratio with respect to the Class D Notes as of
such Measurement Date is at least equal to 104.6%.
Other information:
Minimum denominations
Listing, trading and form of
Notes
Governing law
Tax matters
The Notes will be issued in minimum denominations ("Minimum
Denominations") of $250,000 and integral multiples of $1,000 in
excess thereof (except that Subordinated Notes will be issued in
Minimum Denominations of $100,000 and integral multiples of
$1,000 in excess thereof) and the Composite Notes will be issued in
the following minimum denominations (and, in each case, integral
multiples of $1): (i) in the case of the Type I Composite Notes,
$375,000, (ii) in the case of the Type II Composite Notes, $560,000
and (iii) in the case of the Type III Composite Notes, $525,000.
Application has been made to the Irish Stock Exchange for the
Offered Securities to be admitted to the Official List and to trading
on its regulated market. See "Listing and general information."
There is currently no market for any Class of Offered Securities and
there can be no assurance that such a market will develop. See
"Risk factors—Relating to the Offered Securities—The Offered
Securities will have limited liquidity; the Offered Securities are
subject to substantial transfer restrictions." All Class A-1A-S Notes
will be issued in definitive, fully registered form without interest
coupons. The Secured Notes (other than the Class A-1A-S Notes)
and the Composite Notes sold to persons who are Qualified
Purchasers in reliance on Rule 144A under the Securities Act will be
represented by global notes in fully registered form without interest
coupons to be deposited with a custodian for and registered in the
name of a nominee of The Depository Trust Company ("DTC").
The Secured Notes (other than the Class A-1A-S Notes) sold to
persons who are Qualified Purchasers and IAIs in reliance on an
exemption from the Securities Act will be issued in definitive, fully
registered form without interest coupons. The Secured Notes, the
Composite Notes and, at the option of the Issuer (with the written
consent of the Portfolio Manager), certain Subordinated Notes, sold
to non-U.S. persons in offshore transactions in reliance on
Regulation S under the Securities Act will be represented by global
notes or certificates, as applicable, in fully registered form without
interest coupons to be deposited with a custodian for and registered
in the name of a nominee of DTC for the accounts of Euroclear or
Clearstream. All other Subordinated Notes will be issued in
definitive, fully registered form without interest coupons.
The Offered Securities and the Indenture will be governed by, and
construed in accordance with, the laws of the State of New York.
See "Income tax considerations."
28

ERISA
Additional issuance
See "ERISA and legal investment considerations."
At any time during the Reinvestment Period, the Co-Issuers may
issue and sell additional Notes of any one or more Classes and/or
additional notes of one or more new classes and use the net
proceeds to purchase additional Collateral Obligations or for other
purposes permitted under the Indenture if the conditions for such
additional issuance described under "Description of the Offered
Securities—The Indenture—Additional Issuance" are met.
29

Risk Factors
An investment in the Offered Securities involves certain risks. Prospective investors should carefully
consider the following factors, in addition to the matters set forth elsewhere in this offering circular, prior
to investing in the Offered Securities.
Relating to the Offered Securities
The Offered Securities will have limited Liquidity; the Offered Securities are subject to substantial
transfer restrictions.
Currently, no market exists for the Offered Securities. Neither the Initial Purchaser nor the Placement
Agent is under any obligation to make a market for the Offered Securities. There can be no assurance that
any secondary market for any of the Offered Securities will develop, or if a secondary market does
develop, that it will provide the holders of the Notes with liquidity of investment or will continue for the
life of the Offered Securities. Consequently, a purchaser of Offered Securities must be prepared to hold
the Offered Securities until their Stated Maturity. In addition, the Offered Securities are subject to certain
transfer restrictions and can only be transferred to certain transferees as described herein under "Transfer
Restrictions." As described herein, the Issuer may, in the future, impose additional restrictions to comply
with changes in applicable law. Such restrictions on the transfer of the Offered Securities may further
limit their liquidity. The Offered Securities will not be registered under the Securities Act or any state
securities laws, and the Co-Issuers have no plans, and are under no obligation, to register the Offered
Securities under the Securities Act. The Class A-1A-S Notes are also subject to additional transfer
restrictions as described in "Transfer Restrictions⎯Class A-1A-S Notes."
An investor in the Composite Notes may exchange its Composite Notes for the Notes to which its
Components relate. However, after such exchange, such Notes would be subject to the liquidity risks
with respect to the underlying Classes of Notes described above.
Neither the Initial Purchaser nor the Placement Agent will have ongoing responsibility for the
Assets or the actions of the Portfolio Manager or the Issuer.
The Initial Purchaser and the Placement Agent will have no obligation to monitor the performance of the
Assets or the actions of the Portfolio Manager or the Issuer and will have no authority to advise the
Portfolio Manager or the Issuer or to direct their actions, which will be solely the responsibility of the
Portfolio Manager and /or the Issuer, as the case may be. If either or both of the Initial Purchaser or the
Placement Agent acts as Hedge Counterparty, Synthetic Security Counterparty or Securities Lending
Counterparty or owns Notes or Composite Notes, it will have no responsibility to consider the interests of
any holders of Notes or Composite Notes in actions it takes in such capacities. While the Initial
Purchaser or the Placement Agent may own Offered Securities at any time, they have no obligation to
make any investment in any Offered Securities and may sell at any time any Offered Securities they do
purchase.
The Notes are limited recourse obligations of the Issuer; investors must rely on available collections
from the Collateral Obligations and will have no other source for payment.
The Notes and the Composite Notes are limited recourse obligations of the Issuer and the Senior Notes
are non-recourse obligations of the Co-Issuer; therefore, the Offered Securities are payable solely from
the Collateral Obligations and all other Assets pledged by the Co-Issuers pursuant to the Indenture. None
of the Trustee, the Collateral Administrator, the Portfolio Manager, the Initial Purchaser, the Placement
Agent or any of their respective affiliates or the Co-Issuers' affiliates or any other person or entity will be
30

obligated to make payments on the Offered Securities. Consequently, holders of the Offered Securities
must rely solely on distributions on the Assets for payments on the Offered Securities. If distributions on
such Assets are insufficient to make payments on the Offered Securities, no other assets (in particular, no
assets of the Portfolio Manager, the holders of the Offered Securities, the Initial Purchaser, the Placement
Agent, the Trustee, or any affiliates of any of the foregoing) will be available for payment of the
deficiency and all obligations of the Co-Issuers and any claims against the Co-Issuers in respect of the
Offered Securities will be extinguished and will not revive.
The Subordinated Notes are unsecured obligations of the Issuer.
The Subordinated Notes are limited recourse obligations of the Issuer. The Subordinated Notes
(including the Subordinated Note Components of the Composite Notes) will not be secured by any of the
Assets, and will not generally be entitled to exercise remedies under the Indenture and, while the Secured
Notes are outstanding, the Trustee will have no obligation to act on behalf of the holders of Subordinated
Notes. Distributions to holders of the Subordinated Notes will be made solely from distributions on the
Assets after all other payments have been made pursuant to the priority of payments described herein.
There can be no assurance that the distributions on the Assets will be sufficient to make distributions to
holders of the Subordinated Notes after making payments that rank senior to payments on the
Subordinated Notes. The Issuer's ability to make distributions to the holders of the Subordinated Notes
will be limited by the terms of the Indenture. If distributions on the Assets are insufficient to make
distributions on the Subordinated Notes, no other assets will be available for any such distributions. See
"Description of the Offered Securities—The Subordinated Notes."
The subordination of the Class A-1 Notes, the Class A-2 Notes, the Class B Notes, the Class C Notes,
the Class D Notes and the Subordinated Notes will affect their right to payment.
The Senior Class A Notes are subordinated to certain amounts payable by the Issuer to other parties as set
forth in the priority of payments (including taxes, amounts owing to the holder of the Financed Amount
Note, Administrative Expenses, Base Management Fees and certain payments under the Hedge
Agreements); the Class A-1A-S Notes and the Class A-1A-J Notes are pari passu in right of payment to
the Class A-1B-S Notes and the Class A-1B-J Notes (treating the Class A-1A-S Notes and the Class A-
1A-J Notes together as a single subclass for this purpose and the Class A-1B-S Notes and the Class A-1B-
J Notes together as a single subclass for this purpose), as between the Class A-1A-S Notes and the Class
A-1A-J Notes, the Class A-1B-J Notes are subordinated on each Payment Date to the Class A-1A-S Notes
and as between the Class A-1B-S Notes and the Class A-1B-J Notes, the Class A-1B-J Notes are
subordinated on each Payment Date to the Class A-1B-S Notes; the Class A-2 Notes are subordinated on
each Payment Date to certain amounts payable by the Issuer to other parties as set forth in the priority of
payments (including taxes, amounts owing to the holder of the Financed Amount Note, Administrative
Expenses, Base Management Fees and certain payments under the Hedge Agreements) and the Senior
Class A Notes; the Class B Notes are subordinated on each Payment Date to certain amounts payable by
the Issuer to other parties as set forth in the priority of payments (including taxes, amounts owing to the
holder of the Financed Amount Note, Administrative Expenses, Base Management Fees and certain
payments under the Hedge Agreements) and the Class A Notes; the Class C Notes are subordinated on
each Payment Date to certain amounts payable by the Issuer to other parties as set forth in the priority of
payments (including taxes, amounts owing to the holder of the Financed Amount Note, Administrative
Expenses, Base Management Fees and certain payments under the Hedge Agreements), the Class A Notes
and the Class B Notes; the Class D Notes are subordinated on each Payment Date to certain amounts
payable by the Issuer to other parties as set forth in the priority of payments (including taxes, amounts
owing to the holder of the Financed Amount Note, Administrative Expenses, Base Management Fees and
certain payments under the Hedge Agreements), the Class A Notes, the Class B Notes and the Class C
Notes; and the Subordinated Notes are subordinated on each Payment Date to certain amounts payable by
31

the Issuer to other parties as set forth in the priority of payments (including taxes, amounts owing to the
holder of the Financed Amount Note, Administrative Expenses, Base Management Fees and certain
payments under the Hedge Agreements), the Secured Notes and certain fees and expenses (including, but
not limited to, the diversion of Interest Proceeds to purchase additional Collateral Obligations if the
Reinvestment Overcollateralization Test is not satisfied, unpaid Administrative Expenses and certain
Management Fees), in each case to the extent described herein. No payments of interest or distributions
from Interest Proceeds will be made on any such Class of Offered Securities on any Payment Date until
interest on the Notes of each Class to which it is subordinated has been paid, and no payments of principal
(other than Deferred Interest with respect to the Class B Notes, the Class C Notes or the Class D Notes, as
applicable) or distributions from Principal Proceeds will be made on any such Class of Offered Securities
on any Payment Date until principal on the Notes of each Class to which it is subordinated has been paid
in full. Therefore, to the extent that any losses are suffered by any of the holders of any Offered
Securities, such losses will be borne in the first instance by holders of the Subordinated Notes, then by the
holders of the Class D Notes, then by the holders of the Class C Notes, then by the holders of the Class B
Notes, then by the holders of the Class A-2 Notes and last by the holders of the Class A-1 Notes.
Furthermore, payments on the Class B Notes, the Class C Notes and the Class D Notes are subject to
diversion to pay more senior Classes of Notes pursuant to the priority of payments if certain Coverage
Tests are not met, as described herein, and failure to make such payments will not be a default under the
Indenture. In addition, if an Event of Default occurs, the holders of the Controlling Class of Notes (which
will be the most senior Class or Classes then outstanding) will be entitled to determine the remedies to be
exercised under the Indenture. See "Description of the Offered Securities—The Indenture—Events of
Default." Remedies pursued by the Controlling Class could be adverse to the interests of the holders of
the Offered Securities that are subordinated to the Notes held by the Controlling Class, and the
Controlling Class will have no obligation to consider any possible adverse effect on such other interests.
Furthermore, the Collateral Obligations may be sold and liquidated only if, among other things, (i) the
Trustee determines that the anticipated proceeds of a sale or liquidation of the Assets (after deducting the
reasonable expenses of such sale or liquidation) would be sufficient to discharge in full the amounts then
due (or, in the case of interest, accrued) and unpaid on the Secured Notes for principal and interest
(including Deferred Interest) and all amounts payable prior to payment of principal on such Secured
Notes (including amounts due and owing as Administrative Expenses and amounts payable to any Hedge
Counterparty upon liquidation of the Assets and all amounts owing under the Financed Amount Note) and
a Majority of the Controlling Class agrees with such determination; or (ii) a Supermajority of each Class
of the Secured Notes (for which purpose, the Senior Class A Notes shall constitute and vote together as a
single Class) direct, subject to the provisions of the Indenture, such sale and liquidation.
For purposes of subordination, the Composite Notes will not be treated as a separate class of Offered
Securities, but each Component will be treated as a part of the applicable class of Offered Securities.
Holders of the Class A-1A-S Notes have ongoing obligations under certain circumstances.
Holders of the Class A-1A-S Notes will be obligated, subject to compliance by the Issuer with certain
borrowing conditions, to advance funds to the Issuer during the Draw Period so long as the aggregate
principal amount of advances under the Class A-1A-S Notes at any one time outstanding does not exceed
the aggregate amount of Commitments to make advances under the Class A-1A-S Notes.
A failure by the holders of the Class A-1A-S Notes to comply with ongoing obligations may
adversely affect the Issuer.
In order for the holders of the Class A-1A-S Notes to fund Borrowings thereunder, the Issuer is required
to meet certain conditions described under "Description of the Offered Securities—The Indenture and the
Secured Notes—Class A-1A-S Note Borrowings." If a holder of a Class A-1A-S Note should fail to
32

advance funds to the Issuer as required under the Note Purchase Agreement, the Issuer may be forced to
obtain substitute sources of liquidity by finding a replacement holder of the Class A-1A-S Notes
satisfying the Class A-1A-S Purchaser Rating Criteria or selling Collateral Obligations (to the extent
permitted by the Indenture) to meet the Issuer's obligations to fund Delayed Drawdown Collateral
Obligations, Revolving Collateral Obligations and/or previously incurred commitments on transactions
for which trades have been entered into but not yet settled. Delayed Drawdown Collateral Obligations
and Revolving Collateral Obligations may constitute up to 15% of the Collateral Principal Amount and
the Issuer and the Portfolio Manager will generally have no ability to control the timing of funding
requests thereunder. Forced sales of Collateral Obligations by the Issuer caused by a failure of a holder of
a Class A-1A-S Note to advance funds under the Note Purchase Agreement may be at disadvantageous
prices to the Issuer. In addition, if the Issuer is unable to obtain substitute sources of liquidity, the Issuer
may default on its obligations to fund Delayed Drawdown Collateral Obligations, Revolving Collateral
Obligations and/or previously incurred commitments on transactions for which trades have been entered
into but not yet settled. In addition, without limitation to the foregoing, the Issuer may be required to
seek an advance of funds under the Note Purchase Agreement on short notice, which may increase the
chance that a holder of a Class A-1A-S Note fails to advance funds in a timely manner.
The Subordinated Notes are highly leveraged, which increases risks to investors in that class.
The Subordinated Notes represent a highly leveraged investment in the Assets. Therefore, the market
value of the Subordinated Notes would be anticipated to be significantly affected by, among other things,
changes in the market value of the Assets, changes in the distributions on the Assets, defaults and
recoveries on the Assets, capital gains and losses on the Assets, prepayments on Assets and the
availability, prices and interest rates of Assets and other risks associated with the Assets as described in
"—Relating to the Collateral Obligations" below. Accordingly, the Subordinated Notes may not be paid
in full and may be subject to up to 100% loss. Furthermore, the leveraged nature of each subordinated
class of Offered Securities may magnify the adverse impact on each such class of changes in the market
value of the Assets, changes in the distributions on the Assets, defaults and recoveries on the Assets,
capital gains and losses on the Assets, prepayments on Assets and availability, prices and interest rates of
Assets.
The Assets may be insufficient to redeem the Offered Securities in an Event of Default.
It is anticipated that the proceeds received by the Issuer on the Closing Date from the issuance of the
Offered Securities, net of certain fees and expenses, will be less than the aggregate amount of Notes.
Consequently, it is anticipated that on the Closing Date the Assets would be insufficient to redeem the
Secured Notes and Subordinated Notes in the event of an Event of Default under the Indenture.
The Indenture may require Mandatory Redemption of the Secured Notes for failure to satisfy
Coverage Tests.
If the Coverage Tests with respect to any Class or Classes of Secured Notes are not met, Interest Proceeds
that otherwise would have been paid or distributed to the holders of the Offered Securities of each Class
that is subordinated to such Class or Classes and (during the Reinvestment Period) Principal Proceeds that
would otherwise have been reinvested in Collateral Obligations will instead be used to redeem the
Secured Notes of the most senior Class or Classes then outstanding to the extent necessary to satisfy the
applicable Coverage Tests, as described under "Summary of Terms—Priority of Payments." This could
result in an elimination, deferral or reduction in the payments of Interest Proceeds to the holders of the
Class B Notes, the Class C Notes, the Class D Notes and/or the Subordinated Notes, as the case may be.
In addition, this could also result in an increase in the average weighted interest rate payable by the Issuer
on the Secured Notes, which would adversely affect the Issuer.
33

The Indenture may require Mandatory Redemption of the Secured Notes upon rating confirmation
failure.
After the Ramp-Up Period, a redemption of the Secured Notes may result from a failure to obtain from
each Rating Agency its written confirmation of its initial ratings of the Secured Notes. See "Description
of the Offered Securities—Special Redemption." In the event of an early redemption, the holders of the
Secured Notes will be repaid prior to the respective Stated Maturity dates of such Secured Notes. Interest
Proceeds or Principal Proceeds diverted for this purpose would not be available to make distributions in
respect of the Subordinated Notes. In addition, a Mandatory Redemption of Secured Notes could require
the Portfolio Manager to liquidate positions more rapidly than would otherwise be desirable, which could
adversely affect the realized value of the Collateral Obligations sold.
The Notes are subject to Optional Redemption in whole or in part by Class.
A Supermajority of the Subordinated Notes may cause the Secured Notes to be redeemed in whole or in
part by Class and a Supermajority of the Subordinated Notes may cause the Subordinated Notes to be
redeemed in whole as described under "Description of the Offered Securities—Optional Redemption" and
"Description of the Offered Securities—The Subordinated Notes—Optional Redemption". Any such
optional redemption of the Notes may occur on any Payment Date after the expiration of the Non-Call
Period. In the event of an early redemption, the holders of the Secured Notes and the Subordinated Notes
will be repaid prior to the respective Stated Maturity dates of such Notes. There can be no assurance that,
upon any such redemption, the Sale Proceeds realized and other available funds would permit any
distribution on the Subordinated Notes after all required payments are made to the holders of the Secured
Notes. In addition (unless Refinancing Proceeds are available), an optional redemption of Notes could
require the Portfolio Manager to liquidate positions more rapidly than would otherwise be desirable,
which could adversely affect the realized value of the Collateral Obligations sold.
As described herein under "Description of the Offered Securities—Optional Redemption", Refinancing
Proceeds may be used in connection with either a redemption in whole of the Secured Notes or a
redemption in part of the Secured Notes by Class. In the case of a Refinancing upon a redemption of the
Secured Notes in part by Class, the Issuer shall obtain a Refinancing only if, among other conditions: (i)
the Global Rating Agency Condition has been satisfied with respect to any remaining Secured Notes that
were not the subject of the Refinancing, (ii) the Refinancing Proceeds will be at least sufficient to pay the
aggregate Redemption Price of the Class or Classes of Secured Notes subject to Refinancing, (iii) the
aggregate principal amount of any obligations providing the Refinancing is no greater than the aggregate
principal amount of the Secured Notes being redeemed with the proceeds of such obligations plus an
amount equal to the reasonable fees, costs, charges and expenses incurred in connection with such
Refinancing, (iv) the stated maturity of each class of obligations providing the Refinancing is no earlier
than the corresponding Stated Maturity of each Class of Secured Notes being refinanced, (v) the
Refinancing Proceeds are used (to the extent necessary) to make such redemption, (vi) the agreements
relating to the Refinancing contain limited recourse and non-petition provisions equivalent (mutatis
mutandis) to those contained in the Indenture and (vii) the reasonable fees, costs, charges and expenses
incurred in connection with such Refinancing have been paid or will be adequately provided for from the
Refinancing Proceeds (except for expenses owed to persons that the Portfolio Manager informs the
Trustee will be paid solely as Administrative Expenses payable in accordance with the Indenture). The
Indenture provides that the holders of the Subordinated Notes will not have any cause of action against
any of the Co-Issuers, the Portfolio Manager or the Trustee for any failure to obtain a Refinancing. In the
event that a Refinancing is obtained meeting the requirements of the Indenture, the Issuer and, at the
direction of the Portfolio Manager, the Trustee will amend the Indenture to the extent necessary to reflect
the terms of the Refinancing and no consent for such amendments shall be required from the holders of
any Class of Notes, other than the Supermajority of the Subordinated Notes directing the redemption. No
34

assurance can be given that any such amendments to the Indenture or the terms of any Refinancing will
not adversely affect the holders of any Class or Classes of Notes not subject to redemption (or, in the case
of the Subordinated Notes, the holders of the Subordinated Notes who do not form a part of the
Supermajority of the Subordinated Notes directing such redemption).
The Secured Notes are subject to Special Redemption at the option of the Portfolio Manager.
The Secured Notes will be subject to redemption in part by the Co-Issuers or the Issuer, as applicable, on
any Payment Date during the Reinvestment Period if the Portfolio Manager at its sole discretion notifies
the Trustee that it has been unable, for a period of at least thirty (30) consecutive Business Days, to
identify additional Collateral Obligations that are deemed appropriate by the Portfolio Manager in its sole
discretion and which would meet the criteria for reinvestment described under "Security for the Secured
Notes—Sales of Collateral Obligations; Additional Collateral Obligations and Investment Criteria" in
sufficient amounts to permit the investment or reinvestment of all or a portion of the funds then in the
Collection Account that are to be invested in additional Collateral Obligations. On the Special
Redemption Date, in accordance with the Indenture, the Special Redemption Amount will be applied as
described under "Summary of Terms—Priority of Payments—Application of Principal Proceeds" to pay
the principal of the Secured Notes. The application of funds in that manner could result in an elimination,
deferral, or reduction of amounts available to make payments on Classes of the Notes subordinate in
priority to the Class or Classes of Secured Notes being amortized. See "Summary of terms—Priority of
payments—Application of Principal Proceeds" and "Description of the Offered Securities—Special
Redemption."
The Reinvestment Period may terminate earlier than expected.
Although the Reinvestment Period is expected to terminate on the Payment Date occurring in May 2014,
the Reinvestment Period may terminate prior to such date if (i) the maturity of any Class of Secured Notes
is accelerated due to an Event of Default as described under "Description of the Offered Securities—The
Indenture" or (ii) the Portfolio Manager notifies the Issuer, the Rating Agencies and the Trustee that it can
no longer make investments in additional Collateral Obligations in accordance with the Indenture or the
Portfolio Management Agreement. Such early termination of the Reinvestment Period may shorten the
expected lives of the Notes.
Additional issuance of Notes may have different terms.
At any time during the Reinvestment Period, the Co-Issuers may issue and sell additional Notes of any
one or more Classes and/or additional Notes of one or more new classes and use the net proceeds to
purchase additional Collateral Obligations or for other purposes permitted under the Indenture if the
conditions for such additional issuance described under "Description of the Offered Securities—The
Indenture—Additional Issuance" are met. Any such additional issuance will be made only with the
consent of the Portfolio Manager and if approved by a Majority of the Subordinated Notes, but does not
otherwise require the approval or consent of the holders of any other Class of the Offered Securities.
Among other conditions that must be satisfied in connection with an additional issuance of notes, is that
the terms of the Notes to be issued must be identical to the respective terms of previously issued Notes of
the applicable Class (except that the interest due on additional Secured Notes will accrue from the issue
date of such additional Secured Notes and the interest rate and price of such Notes do not have to be
identical to those of the initial Notes of that Class) and (unless only additional Subordinated Notes are
being issued) the Global Rating Agency Condition shall have been satisfied with respect to such
additional issuance. No assurance can be given that the issuance of additional notes having different
interest rates than existing Classes of Secured Notes may not adversely affect the holders of any Class of
Offered Securities.
35

The Offered Securities may be affected by interest rate risks, including mismatches between the
notes and the Collateral Obligations.
The aggregate outstanding principal balance of Secured Notes may be different than the aggregate
principal balance of the floating rate Collateral Obligations. In addition, any payments of principal of or
interest on Collateral Obligations received during a Collection Period occurring during the Reinvestment
Period and not reinvested in Collateral Obligations during such Collection Period will be reinvested in
Eligible Investments maturing not later than the Business Day immediately preceding the next Payment
Date. There is no requirement that such Eligible Investments bear interest at a floating rate, and the
interest rates available for such Eligible Investments are inherently uncertain. As a result of such
mismatches, changes in the level of LIBOR or any other applicable floating rate index could adversely
affect the ability of the Co-Issuers or the Issuer, as applicable, to make payments on the Notes. To the
extent described herein, the Issuer may enter into Hedge Agreements to reduce the effect of any such
interest rate mismatch. However, there can be no assurance that the Issuer will enter into such Hedge
Agreements or that, if entered into, such Hedge Agreements will significantly reduce the effect of such
interest rate mismatch. The Subordinated Notes will be subordinated to the payment of interest on the
Secured Notes. There can be no assurance that the Collateral Obligations and the Eligible Investments
will in all circumstances generate sufficient Interest Proceeds to make timely payments of interest on the
Secured Notes and to make distributions to the holders of the Subordinated Notes, nor that the Hedge
Agreements will ensure any particular return on such Offered Securities.
A Hedge Counterparty may terminate the applicable Hedge Agreements if any withholding tax is imposed
on payments thereunder by such Hedge Counterparty, and any amounts that would be required to be paid
by the Issuer to enter into replacement Hedge Agreements will reduce amounts available for payments to
holders of Notes. A Hedge Counterparty may also terminate the applicable Hedge Agreements upon the
occurrence of certain events of default or termination events thereunder with respect to the Issuer
(including, but not limited to, bankruptcy, a change in law making the performance of the obligations
under such Hedge Agreement unlawful, or the determination to sell or liquidate the Assets upon the
occurrence of an Event of Default under the Indenture), and in the case of such early termination of any
Hedge Agreement, the Issuer may be required to make a payment to the related Hedge Counterparty.
Any amounts that would be required to be paid by the Issuer to enter into replacement Hedge Agreements
will reduce amounts available for payments to holders of Notes. In either case, there can be no assurance
that the remaining payments on the Assets would be sufficient to make payments of interest and principal
on the Secured Notes and distributions with respect to the Subordinated Notes.
The Weighted Average Lives of the Notes may vary.
The Stated Maturity of the Notes is May 1, 2022. The average life of each Class of Notes is expected to
be shorter than the number of years until its respective Stated Maturity. Each such average life may vary
due to various factors affecting the early retirement of Collateral Obligations, the timing and amount of
sales of such Collateral Obligations, the ability of the Portfolio Manager to invest collections and
proceeds in additional Collateral Obligations, and the occurrence of any Mandatory Redemption, Optional
Redemption or Special Redemption. Retirement of the Collateral Obligations prior to their respective
final maturities will depend, among other things, on the financial condition of the issuers of the
underlying Collateral Obligations and the respective characteristics of such Collateral Obligations,
including the existence and frequency of exercise of any optional redemption, mandatory redemption or
sinking fund features, the prevailing level of interest rates, the redemption prices, the actual default rates
and the actual amount collected on any Defaulted Obligations and the frequency of tender or exchange
offers for such Collateral Obligations. In particular, loans are generally prepayable at par, and a high
proportion of loans could be prepaid. The ability of the Issuer to reinvest proceeds in securities with
comparable interest rates that satisfy the reinvestment criteria specified herein may affect the timing and
36

amount of payments received by the holders of Notes and the yield to maturity of the Notes. See
"Security for the Secured Notes—Sales of Collateral Obligations; Additional Collateral Obligations and
Investment Criteria."
An Amendment Buy-Out may result in a shorter holding period than expected.
Any Non-Consenting Holder of Offered Securities with respect to an amendment of the Indenture (which
includes holders that fail to respond to a consent solicitation within the applicable period) may be forced
to sell its applicable Offered Securities to the Amendment Buy-Out Purchaser at the Amendment Buy-Out
Purchase Price, resulting in a shorter holding period than expected at the time of investment in the
Offered Securities. In the case of the Subordinated Notes, the Indenture provides that the Amendment
Buy-Out Purchase Price will be zero for Non-Consenting Holders that have received a Subordinated Note
Internal Rate of Return equal to or in excess of 17% as of the Amendment Buy-Out Date. See
"Description of the Offered Securities—The Indenture and the Secured Notes—Amendment Buy-Out."
A holder's ability to vote against an amendment or affect or influence the amendment process with respect
to the Indenture may thus be limited. The Amendment Buy-Out Option may also increase the ability of
the Portfolio Manager to affect or influence the amendment process.
Changes in tax law could result in the imposition of withholding taxes with respect to payments on
the Offered Securities and interest and other payments on the Collateral Obligations, and Issuer
will not gross-up payments to holders of Offered Securities.
The Issuer expects to conduct its affairs so that its net income will not be subject to United States federal
income tax. There can be no assurance, however, that its net income will not become subject to United
States federal income tax as the result of activities by the Issuer, changes in law, and contrary conclusions
by United States tax authorities or other causes.
Payments on the Collateral Obligations (other than commitment fees) are required not to be subject to
withholding tax when the Collateral Obligations are acquired by the Issuer unless the obligor thereof is
required to make "gross-up" payments that cover the full amount of such withholding tax on an after-tax
basis. In the case of debt obligations issued by U.S. obligors after July 18, 1984, interest payments
thereon are generally exempt under current United States tax law from the imposition of United States
federal income withholding tax. See "Income tax considerations—United States federal income
taxation—Tax treatment of the Issuer—United States withholding taxes."
With respect to Collateral Obligations that are not subject to withholding tax at the time of acquisition by
the Issuer, however, there can be no assurance that the payments on such Collateral Obligations will not
become subject to U.S. or other withholding tax as a result of a change in any applicable law, treaty, rule
or regulation or interpretation thereof or other causes, possibly with retroactive effect. If any withholding
tax is or becomes applicable to payments on the Collateral Obligations and such tax is not fully offset by
"gross-up" payments, such withholding tax will reduce the amounts available to make payments on the
Offered Securities. There can be no assurance that the remaining payments on the Collateral Obligations
would be sufficient to make payments on the Offered Securities.
Withholding tax is not currently imposed by the Cayman Islands on payments of interest or principal on
the Secured Notes or distributions on the Subordinated Notes. There can be no assurance, however, that
the law will not change. In the event that any withholding tax is imposed on payments of interest or
principal on any of the Secured Notes or distributions on the Subordinated Notes, the holders of the
Offered Securities, other than holders of the Class A-1A-S Notes with respect to an Indemnifiable Tax,
will not be entitled to receive grossed-up amounts to compensate for such withholding tax.
37

Each of the Issuer and the Co-Issuer is recently formed, has no significant operating history, has no
assets other than the Assets and is limited in its permitted activities.
Each of the Issuer and the Co-Issuer is a recently incorporated or organized entity and has no prior
operating history or track record other than in connection with the accumulation of Assets for the CLO
transaction. Accordingly, neither the Issuer nor the Co-Issuer has a performance history for a prospective
investor to consider in making its decision to invest in the Offered Securities.
The Offered Securities are not guaranteed by the Co-Issuers, the Initial Purchaser, the Placement
Agent, the Portfolio Manager, any Hedge Counterparty or the Trustee.
None of the Co-Issuers, the Initial Purchaser, the Placement Agent, the Portfolio Manager, any Hedge
Counterparty, the Collateral Administrator or the Trustee or any affiliate thereof makes any assurance,
guarantee or representation whatsoever as to the expected or projected success, profitability, return,
performance result, effect, consequence or benefit (including legal, regulatory, tax, financial, accounting
or otherwise) to investors of ownership of the Offered Securities and no purchaser may rely on any such
party for a determination of expected or projected success, profitability, return, performance result, effect,
consequence or benefit (including legal, regulatory, tax, financial, accounting or otherwise) to such
purchaser of ownership of the Offered Securities. Each purchaser of any Class of the Offered Securities
(other than the Class A-1A-S Notes), by its acceptance thereof, will be deemed, and each purchaser of the
Certificated Subordinated Notes and the Class A-1A-S Notes, by its acceptance thereof, will be required,
to represent to the Issuer and the Initial Purchaser or the Placement Agent, as applicable, among other
things, that such purchaser has consulted with its own legal, regulatory, tax, business, investment,
financial, and accounting advisors regarding investment in the Offered Securities as such purchaser has
deemed necessary and that the investment by such purchaser is within its powers and authority, is
permissible under applicable laws governing such purchase, has been duly authorized by it and complies
with applicable securities laws and other laws.
Non-Compliance with Restrictions on Ownership of the Offered Securities and the United States
Investment Company Act of 1940 Could Adversely Affect the Issuer
Neither the Issuer nor the Co-Issuer has registered with the United States Securities and Exchange
Commission ("SEC") as an investment company pursuant to the Investment Company Act, in reliance on
an exception under Section 3(c)(7) of the Investment Company Act for investment companies (a) whose
outstanding securities are beneficially owned only by "qualified purchasers" and "knowledgeable
employees" and certain transferees thereof identified in Rules 3c-5 and 3c-6 under the Investment
Company Act and (b) which do not make a public offering of their securities in the United States.
If the SEC or a court of competent jurisdiction were to find that the Issuer or the Co-Issuer is required, but
in violation of the Investment Company Act had failed, to register as an investment company, possible
consequences include, but are not limited to, the following: (i) the SEC could apply to a district court to
enjoin the violation; (ii) investors in the Issuer and the Co-Issuer could sue the Issuer and the Co-Issuer
and recover any damages caused by the violation; and (iii) any contract to which the Issuer and/or the Co-
Issuer is party that is made in violation of the Investment Company Act or whose performance involves
such violation would be unenforceable by any party to the contract unless a court were to find that under
the circumstances enforcement would produce a more equitable result than non-enforcement and would
not be inconsistent with the purposes of the Investment Company Act. In addition, such a finding would
constitute an Event of Default under the Indenture. Should the Issuer or the Co-Issuer be subjected to any
or all of the foregoing, the Issuer and the Co-Issuer would be materially and adversely affected.
38

Book-Entry holders are not considered holders under the Indenture.
Holders of beneficial interests in any Offered Securities held in global form will not be considered holders
of such Offered Securities under the Indenture. After payment of any interest, principal or other amount
to DTC, neither the Issuer nor the Co-Issuer will have any responsibility or liability for the payment of
such amount by DTC or to any holder of a beneficial interest in an Offered Security. DTC or its nominee
will be the sole holder for any Offered Securities held in global form, and therefore each person owning a
beneficial interest in an Offered Security held in global form must rely on the procedures of DTC (and if
such person is not a participant in DTC on the procedures of the participant through which such person
holds such interest) with respect to the exercise of any rights of a holder of an Offered Security under the
Indenture.
German taxation of Holders under the German Investment Tax Act
There is currently legal uncertainty in the Federal Republic of Germany as to whether the German
Investment Tax Act (Investmentsteuergesetz) would apply to certain classes of CDO notes and similar
instruments. In particular, although the German Federal Ministry of Finance issued a decree relating to
the German Investment Tax Act on 2nd June 2005 (the "Decree"), which should largely exclude CDO
notes and similar instruments from the scope of the German Investment Tax Act provided that the tests
set out in the Decree are met, there is a residual risk as to the interpretation of such tests. If the German
Investment Tax Act should apply to any classes of Offered Securities, this could have an adverse impact
on the tax position of any German tax resident holders unless the Issuer complies with minimum statutory
reporting and publication requirements of the German Investment Tax Act (the "Minimum Reporting
Requirements"). The Issuer has made no arrangements to comply with the Minimum Reporting
Requirements. Prospective holders of Offered Securities who are German tax residents are urged to
consult their tax advisers on this matter as to (i) whether the Offered Securities are within the scope of the
German Investment Tax Act, in particular whether the Offered Securities are exempt under the Decree,
and (ii) the legal and tax consequences that may arise from the possible application of the German
Investment Tax Act to the Offered Securities.
The Issuer will, with respect to any Class of Offered Securities, upon request of a holder of Offered
Securities of such Class, use commercially reasonable efforts to comply with the Minimum Reporting
Requirements, provided that the holder making such request agrees (or, if there is more than one holder of
such Class of Offered Securities making such request, such holders jointly agree) to pay all fees, costs and
expenses of the Trustee relating thereto as they become due and to reimburse the Issuer for any cost
properly incurred in connection with the reporting for such holder(s) and compliance with the Minimum
Reporting Requirements is not unduly burdensome for the Issuer or the Trustee. For the avoidance of
doubt, such reporting does not include reporting with regard to Zwischengewinn (interim profit), so that
the special lump-sum taxation regarding Zwischengewinn under the German Investment Tax Act would
apply, and such reporting does not include reporting regarding Aktiengewinn (equity gain). The Issuer
shall have no liability whatsoever for any information provided under the Minimum Reporting
Requirements, and the Issuer shall have no liability in relation to whether the German tax authorities
accept such reporting and with respect to any tax consequences to any holder of Offered Securities or
other party. Investments of the Issuer which might themselves be qualified as units in a foreign
investment fund within the meaning of the German Investment Tax Act would have to be reported by the
Issuer as being subject to the lump-sum taxation within the meaning of the German Investment Tax Act.
39

Relating to the Portfolio Manager
Performance history of the Portfolio Manager may not be indicative of future results.
The past performance of the principals and affiliates of the Portfolio Manager in other portfolios or
investment vehicles may not be indicative of the results that the Portfolio Manager may be able to achieve
with the Collateral Obligations. Similarly, the past performance of the Portfolio Manager over a
particular period may not necessarily be indicative of the results that may be expected in future periods.
Furthermore, the nature of, and risks associated with, the Issuer's investments may differ substantially
from those investments and strategies undertaken historically by the principals and affiliates of the
Portfolio Manager. There can be no assurance that the Issuer's investments will perform as well as past
investments of the Portfolio Manager, that the Issuer will be able to avoid losses or that the Issuer will be
able to make investments similar to the past investments of the principals or any other person described
herein. In addition, such past investments may have been made utilizing a leveraged capital structure, an
asset mix and fee arrangements that are different from the anticipated capital structure, asset mix and fee
arrangements of the Issuer. Moreover, because the investment criteria that govern investments in the
Issuer's portfolio do not govern the Portfolio Manager's investments and investment strategies generally,
such investments conducted in accordance with such criteria, and the results they yield, are not directly
comparable with, and may differ substantially from other investments undertaken by the Portfolio
Manager.
The Issuer will depend on the managerial expertise available to the Portfolio Manager and its key
personnel.
The performance of the Issuer's portfolio depends heavily on the skills of the Portfolio Manager in
analyzing, selecting and managing the Collateral Obligations. As a result, the Co-Issuers will be highly
dependent on the financial and managerial experience of certain investment professionals associated with
the Portfolio Manager, none of whom is under any contractual obligation to the Issuer to continue to be
associated with the Portfolio Manager for the term of this transaction. The loss of one or more of these
individuals could have a material adverse effect on the performance of the Co-Issuers. Moreover, the
Portfolio Management Agreement may be terminated under certain circumstances. See "The Portfolio
Management Agreement" and "The Portfolio Manager."
The Investment Professionals of the Portfolio Manager Will Attend to Matters Unrelated to the
Investment Activities of the Issuer
The Portfolio Manager has informed the Issuer that the investment professionals associated with the
Portfolio Manager are actively involved in other investment activities not concerning the Issuer and will
not be able to devote all of their time to the Issuer's business and affairs. In addition, individuals not
currently associated with the Portfolio Manager may become associated with the Portfolio Manager and
the performance of the Collateral Obligations may also depend on the financial and managerial
experience of such individuals. See "The Portfolio Management Agreement" and "The Portfolio
Manager."
Relating to the Collateral Obligations
Below investment-grade Assets involve particular risks.
The Assets will consist primarily of non-investment grade loans or interests in non-investment grade
loans and high-yield debt securities, which are subject to liquidity, market value, credit, interest rate,
reinvestment and certain other risks. It is anticipated that the Assets generally will be subject to greater
40

isks than investment grade corporate obligations. These risks could be exacerbated to the extent that the
portfolio is concentrated in one or more particular types of Collateral Obligations.
Prices of the Assets may be volatile, and will generally fluctuate due to a variety of factors that are
inherently difficult to predict, including but not limited to changes in interest rates, prevailing credit
spreads, general economic conditions, financial market conditions, domestic and international economic
or political events, developments or trends in any particular industry, and the financial condition of the
obligors of the Assets. Additionally, loans and interests in loans have significant liquidity and market
value risks since they are not generally traded in organized exchange markets but are traded by banks and
other institutional investors engaged in loan syndications. Because loans are privately syndicated and
loan agreements are privately negotiated and customized, loans are not purchased or sold as easily as
publicly traded securities. In addition, historically the trading volume in the loan market has been small
relative to the high-yield debt securities market.
The market for high-yield debt securities, in particular, has experienced periods of volatility and reduced
liquidity. High-yield debt securities are generally unsecured, may be subordinated to other obligations of
the issuer and generally have greater credit, insolvency and liquidity risk than is typically associated with
investment grade obligations. Depending upon market conditions, there may be a very limited market for
high-yield debt securities. High-yield debt securities are often issued in connection with leveraged
acquisitions or recapitalizations in which the issuers incur a substantially higher amount of indebtedness
than the level at which they had previously operated. The lower rating of high-yield debt securities
reflects a greater possibility that adverse changes in the financial condition of the obligor or general
economic conditions (including, for example, a substantial period of rising interest rates or declining
earnings or disruptions in the financial markets) or both may impair the ability of the obligor to make
payments of principal and interest.
High-yield debt securities and leveraged loans have historically experienced greater default rates than has
been the case for investment grade securities. There can be no assurance as to the levels of defaults
and/or recoveries that may be experienced on the Collateral Obligations. In addition, up to 3% of the
Collateral Principal Amount may consist of Permitted Purchased Defaulted Obligations (which are
Defaulted Obligations that are not Current Pay Obligations or DIP Collateral Obligations).
A non-investment grade loan or debt obligation or an interest in a non-investment grade loan is generally
considered speculative in nature and may become a Defaulted Obligation for a variety of reasons. Upon
any Collateral Obligation becoming a Defaulted Obligation (which, in the case of a Permitted Purchased
Defaulted Obligation, is prior to the time that it is purchased by the Issuer), such Defaulted Obligation
may become subject to either substantial workout negotiations or restructuring, which may entail, among
other things, a substantial reduction in the interest rate, a substantial write-down of principal, and a
substantial change in the terms, conditions and covenants with respect to such Defaulted Obligation. In
addition, such negotiations or restructuring may be quite extensive and protracted over time, and therefore
may result in substantial uncertainty with respect to the ultimate recovery on such Defaulted Obligation.
The liquidity for Defaulted Obligations may be limited, and to the extent that Defaulted Obligations are
sold, it is highly unlikely that the proceeds from such sale will be equal to the amount of unpaid principal
and interest thereon. Furthermore, there can be no assurance that the ultimate recovery on any Defaulted
Obligation will be at least equal to either the minimum recovery rate assumed by either Rating Agency in
rating the Secured Notes and the Composite Notes or any recovery rate used in connection with any
analysis of the Offered Securities that may have been prepared by the Initial Purchaser or the Placement
Agent for or at the direction of holders of any Offered Securities.
41

Acquisition of Collateral Obligations prior to closing date; there is limited disclosure about the
Collateral Obligations in this offering circular.
The Issuer's purchase of Collateral Obligations prior to the Closing Date was financed through (i) loans
made by JPMCB to the Issuer and (ii) the purchase by an affiliate of JPMCB of certain subordinated
notes of the Issuer, in each case pursuant to a warehousing agreement. Any gains or losses realized by the
Issuer in respect of Collateral Obligations that are sold or otherwise disposed of prior to the Closing Date
will be for the Issuer's account. Collateral Obligations owned by the Issuer on the Closing Date were
purchased in the open market, and the purchase price paid by the Issuer for such Collateral Obligations is
the prevailing price at the time such Collateral Obligations were purchased. Because the purchase price
of Collateral Obligations owned by the Issuer on the Closing Date is determined prior to such date, the
prevailing market price of such Collateral Obligations on the Closing Date may be higher or lower than
such purchase price. Accordingly, any unrealized losses or gains experienced by the Issuer in respect of
the Collateral Obligations acquired by the Issuer prior to, and owned by the Issuer on, the Closing Date
will be for the Issuer's account.
The Issuer and the Portfolio Manager will not be required to provide the holders of the Offered Securities
or the Trustee with financial or other information (which may include material non-public information) it
receives pursuant to the Collateral Obligations and related documents. The Portfolio Manager also will
not disclose to any of these parties the contents of any notice it receives pursuant to the Collateral
Obligations or related documents. In particular, the Portfolio Manager will not have any obligation to
keep any of these parties informed as to matters arising in relation to any Collateral Obligations, except
with respect to: (i) the receipt or non-receipt, on an aggregate basis, of principal, interest, or other
amounts of collections or recoveries; (ii) the cancellation of any Collateral Obligations; (iii) default
amounts in respect of the Collateral Obligations; and (iv) certain other information required to be reported
under the Portfolio Management Agreement and the Indenture.
The holders of the Offered Securities and the Trustee will not have any right to inspect any records
relating to the Collateral Obligations, and the Portfolio Manager will not be obligated to disclose any
further information or evidence regarding the existence or terms of, or the identity of any obligor on, any
Collateral Obligations, unless (i) specifically required by the Portfolio Management Agreement or (ii)
following its receipt of a written request from the Trustee, the Portfolio Manager in its sole discretion
determines that the disclosure of such further information or evidence regarding the existence or terms of,
or the identity of any obligor on, any Collateral Obligation to the Trustee would not be prohibited by
applicable law or the underlying instruments relating to such Collateral Obligation, in which case the
Portfolio Manager will disclose such further information or evidence to the Trustee; provided, the Trustee
will not disclose such further information or evidence to any third party. Furthermore, the Portfolio
Manager may demand that any persons requesting that information execute confidentiality agreements
before being provided with the information.
Lender liability considerations and equitable subordination can affect the Issuer's rights with
respect to Collateral Obligations.
A number of judicial decisions have upheld judgments of borrowers against lending institutions on the
basis of various evolving legal theories, collectively termed "lender liability." Generally, lender liability
is founded on the premise that a lender has violated a duty (whether implied or contractual) of good faith,
commercial reasonableness and fair dealing, or a similar duty owed to the borrower or has assumed an
excessive degree of control over the borrower resulting in the creation of a fiduciary duty owed to the
borrower or its other creditors or shareholders. Because of the nature of the Assets, the Issuer may be
subject to allegations of lender liability.
42

In addition, under common law principles that in some cases form the basis for lender liability claims, if a
lender or bondholder (a) intentionally takes an action that results in the undercapitalization of a borrower
to the detriment of other creditors of such borrower, (b) engages in other inequitable conduct to the
detriment of such other creditors, (c) engages in fraud with respect to, or makes misrepresentations to,
such other creditors or (d) uses its influence as a stockholder to dominate or control a borrower to the
detriment of other creditors of such borrower, a court may elect to subordinate the claim of the offending
lender or bondholder to the claims of the disadvantaged creditor or creditors, a remedy called "equitable
subordination." Because of the nature of the Assets, the Assets may be subject to claims of equitable
subordination.
Because affiliates of, or persons related to, the Portfolio Manager may hold equity or other interests in
obligors of Collateral Obligations, the Issuer could be exposed to claims for equitable subordination or
lender liability or both based on such equity or other holdings.
The preceding discussion is based upon principles of United States federal and state laws. Insofar as
Collateral Obligations that are obligations of non-United States obligors are concerned, the laws of certain
foreign jurisdictions may impose liability upon lenders or bondholders under factual circumstances
similar to those described above, with consequences that may or may not be analogous to those described
above under United States federal and state laws.
Loan prepayments may affect the ability of the issuer to invest and reinvest available funds in
appropriate Assets.
Loans are generally prepayable in whole or in part at any time at the option of the obligor thereof at par
plus accrued unpaid interest thereon. Prepayments on loans may be caused by a variety of factors which
are often difficult to predict. Consequently, there exists a risk that loans purchased at a price greater than
par may experience a capital loss as a result of such a prepayment. In addition, principal proceeds
received upon such a prepayment are subject to reinvestment risk during the Reinvestment Period. Any
inability of the Issuer to reinvest payments or other proceeds in Assets with comparable interest rates that
satisfy the Investment Criteria specified herein may adversely affect the timing and amount of payments
received by the holders of Offered Securities and the yield to maturity of the Notes and the distributions
on the Subordinated Notes. There is no assurance that the Issuer will be able to reinvest proceeds in
assets with comparable interest rates that satisfy the Investment Criteria or (if it is able to make such
reinvestments) as to the length of any delays before such investments are made.
The Issuer may not be able to acquire Collateral Obligations that satisfy the Investment Criteria.
A portion of the initial Collateral Obligations is expected to be purchased after the Closing Date as
described herein. The ability of the Issuer to acquire an initial portfolio of Collateral Obligations that
satisfies the Investment Criteria at the projected prices, ratings, rates of interest and any other applicable
characteristics will be subject to market conditions and availability of such Collateral Obligations. Any
inability of the Issuer to acquire Collateral Obligations that satisfy the Investment Criteria specified herein
may adversely affect the timing and amount of payments received by the holders of Offered Securities
and the yield to maturity of the Secured Notes and the distributions on the Subordinated Notes. There is
no assurance that the Issuer will be able to acquire Collateral Obligations that satisfy the Investment
Criteria.
Investing in loans involves particular risks.
The Issuer may acquire interests in loans either directly (by way of assignment from the selling
institution) or indirectly (by purchasing a Participation Interest from the selling institution or through the
43

acquisition of Synthetic Securities). As described in more detail below, holders of Participation Interests
and Synthetic Securities are subject to additional risks not applicable to a holder of a direct interest in a
loan.
Participations by the Issuer in a selling institution's portion of a loan typically result in a contractual
relationship only with such selling institution, not with the borrower. In the case of a Participation
Interest, the Issuer will generally have the right to receive payments of principal, interest and any fees to
which it is entitled only from the institution selling the participation and only upon receipt by such selling
institution of such payments from the borrower. By holding a Participation Interest in a loan, the Issuer
generally will have no right to enforce compliance by the borrower with the terms of the loan agreement,
nor any rights of set off against the borrower, and the Issuer may not directly benefit from the collateral
supporting the loan in which it has purchased the participation. As a result, the Issuer will assume the
credit risk of both the borrower and the institution selling the participation, which will remain the legal
owner of record of the applicable loan. In the event of the insolvency of the selling institution, the Issuer,
by owning a Participation Interest, may be treated as a general unsecured creditor of the selling
institution, and may not benefit from any set off between the selling institution and the borrower. In
addition, the Issuer may purchase a participation from a selling institution that does not itself retain any
portion of the applicable loan and, therefore, may have limited interest in monitoring the terms of the loan
agreement and the continuing creditworthiness of the borrower. When the Issuer holds a Participation
Interest in a loan it will not have the right to vote under the applicable loan agreement with respect to
every matter that arises thereunder, and it is expected that each selling institution will reserve the right to
administer the loan sold by it as it sees fit and to amend the documentation evidencing such loan in all
respects. Selling institutions voting in connection with such matters may have interests different from
those of the Issuer and may fail to consider the interests of the Issuer in connection with their votes.
Certain of the loans or Participation Interests may be governed by the law of a jurisdiction other than a
United States jurisdiction. The Issuer is unable to provide any information with respect to the risks
associated with purchasing a loan or a Participation Interest under an agreement governed by the laws of a
jurisdiction other than a United States jurisdiction, including characterization under such laws of such
Participation Interest or sub-Participation Interest in the event of the insolvency of the institution from
whom the Issuer purchases such Participation Interest or sub-Participation Interest or the insolvency of
the institution from whom the grantor of the sub-Participation Interest purchased its Participation Interest.
The purchaser of an assignment of an interest in a loan typically succeeds to all the rights and obligations
of the assigning selling institution and becomes a lender under the loan agreement with respect to that
loan. As a purchaser of an assignment, the Issuer generally will have the same voting rights as other
lenders under the applicable loan agreement, including the right to vote to waive enforcement of breaches
of covenants or to enforce compliance by the borrower with the terms of the loan agreement, and the right
to set off claims against the borrower and to have recourse to collateral supporting the loan. Assignments
are, however, arranged through private negotiations between assignees and assignors, and in certain cases
the rights and obligations acquired by the purchaser of an assignment may differ from, and be more
limited than, those held by the assigning selling institution.
Assignments and participations are sold strictly without recourse to the selling institutions, and the selling
institutions will generally make no representations or warranties about the underlying loan, the borrowers,
the documentation of the loans or any collateral securing the loans. In addition, the Issuer will be bound
by provisions of the underlying loan agreements, if any, that require the preservation of the confidentiality
of information provided by the borrower. Because of certain factors including confidentiality provisions,
the unique and customized nature of the loan agreement, and the private syndication of the loan, loans are
not purchased or sold as easily as are publicly traded securities.
44

Investing in Structured Finance Obligations involves particular risks.
A portion of the Collateral Obligations may consist of Structured Finance Obligations. Structured
Finance Obligations may present risks similar to those of the other types of Collateral Obligations in
which the Issuer may invest and, in fact, the risks may be of greater significance in the case of Structured
Finance Obligations. Moreover, investing in Structured Finance Obligations may entail a variety of
unique risks. Among other risks, Structured Finance Obligations may be subject to prepayment risk,
credit risk, liquidity risk, market risk, structural risk, legal risk and interest rate risk (which may be
exacerbated if the interest rate payable on a Structured Finance Obligation changes based on multiples of
changes in interest rates or inversely to changes in interest rates). In addition, certain Structured Finance
Obligations (particularly subordinated collateralized bond obligations) may provide that non-payment of
interest is not an event of default in certain circumstances and the holders of the securities will therefore
not have available to them any associated default remedies. During the period of non-payment, unpaid
interest will generally be capitalized and added to the outstanding principal balance of the related security.
Furthermore, the performance of a Structured Finance Obligation will be affected by a variety of factors,
including its priority in the capital structure of its issuer, the availability of any credit enhancement, the
level and timing of payments and recoveries on and the characteristics of the underlying receivables,
loans, or other assets that are being securitized, bankruptcy remoteness of those assets from the originator
or transferor, the adequacy of and ability to realize on any related collateral, and the skill of the manager
of the Structured Finance Obligation in managing securitized assets. The price of a Structured Finance
Obligation, if required to be sold, may be subject to certain market and liquidity risks for securities of its
type at the time of sale. In addition, Structured Finance Obligations 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 Assets may consist of Synthetic Securities the Reference Obligations of which may be
leveraged loans, high-yield debt securities or similar securities. Investments in such types of assets
through the purchase of Synthetic Securities present risks in addition to those resulting from direct
purchases of such Collateral 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 Secured Notes or Composite 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 Secured Notes or Composite Notes.
Before any Synthetic Security (other than a Form Approved Synthetic Security) may be included in the
Assets, each Rating Agency must confirm prior to the date of such purchase that such Synthetic Security
may be included as a Collateral Obligation without causing the reduction or withdrawal of its then-current
rating, if any, of any Class of Secured Notes.
45

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, payment dates, interest rates, interest rate references, credit exposures, or other credit or noncredit
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 Initial Purchaser and 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 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 Secured
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 Obligations. However, in the event that a borrower of
loaned Collateral Obligations defaults in its obligation to return such loaned Collateral 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 Obligation (less expenses) is less than the amount required to purchase such
Collateral 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 Obligations arising
from limited liquidity or availability of the loaned Collateral Obligations, and in extreme circumstances,
the loaned Collateral Obligations being unavailable at any price. One or both of the Rating Agencies may
downgrade one or more Classes of the Secured Notes or Composite Notes if a borrower of a Collateral
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 Obligation with the terms of such
Collateral Obligation, will not have any voting or other contractual rights of ownership with respect to
such Collateral Obligation and will not have the benefit of the remedies that would normally be available
to a holder of such Collateral Obligation. One or more of the Initial Purchaser and Placement Agent
and/or one or more of their affiliates may borrow Collateral Obligations, which may create certain
conflicts of interest. See "—Relating to certain conflicts of interest."
The Issuer is not required to satisfy the Concentration Limitations (other than the Specified
Concentration Limitations).
Under the Indenture, the Issuer will not be required to satisfy (or maintain or improve) the Concentration
Limitations, except that the Specified Concentration Limitations must be satisfied (or maintained or
46

improved) in connection with the acquisition of Collateral Obligations as set forth in the Investment
Criteria. Excess Concentration Obligations will be given no value in the calculation of the Adjusted
Collateral Principal Amount and, consequently, will not be included in the calculation of the
Overcollateralization Ratio Tests and the Reinvestment Overcollateralization Test. Therefore, if an
investor requires or expects one or more asset allocations included in the Concentration Limitations,
neither the Issuer nor the Portfolio Manager on its behalf will be required to take any action that will
ensure that such asset allocation is achieved or maintained.
Insolvency considerations with respect to issuers of Collateral Obligations may affect the Issuer's
rights.
Various laws enacted for the protection of creditors may apply to the Collateral Obligations. The
information in this and the following paragraph is applicable with respect to U.S. issuers. Insolvency
considerations will differ with respect to non-U.S. issuers. If a court in a lawsuit brought by an unpaid
creditor or representative of creditors of an issuer of a Collateral 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 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 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 Obligation, payments made on such Collateral 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 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 "—The Subordination of the
Class A-1 Notes, the Class A-2 Notes, the Class B Notes, the Class C Notes, the Class D Notes and the
Subordinated 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.
47

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 activity of the
Portfolio Manager, its clients and its affiliates and the Initial Purchaser and the Placement Agent and their
affiliates. The following briefly summarizes some of these conflicts, but is not intended to be an
exhaustive list of all such conflicts.
The Issuer will be subject to various conflicts of interest involving the Portfolio Manager.
The Issuer may be subject to various conflicts of interest involving the Portfolio Manager, its personnel,
its affiliates, or their personnel (collectively, "Portfolio Manager Affiliates."), and the Portfolio
Manager's Other Accounts.
The Portfolio Manager and Portfolio Manager Affiliates provide investment management and advisory
services to other collateralized debt obligation transactions, investment funds and accounts ("Other
Accounts"), in which the Issuer has no interest. Other Accounts may have investment objectives,
programs, strategies and positions that are similar or dissimilar to or may conflict with those of the Issuer.
Also, Other Accounts may invest in businesses that compete with, have interests adverse to, or are
affiliated with the issuers of securities held by the Issuer, which could adversely affect the performance of
the Issuer. In addition, the fees payable to the Portfolio Manager or Portfolio Manager Affiliates and
other terms of Other Accounts may differ from those of the Issuer. There is no assurance that an Other
Account with investment objectives, programs or strategies similar to those of the Issuer will hold the
same positions or perform in a substantially similar manner as the Issuer. The Portfolio Manager and
Portfolio Manager Affiliates may give advice or take action with respect to the investments of the Other
Accounts which may differ from the advice given or the timing or nature of any action taken with respect
to investments of the Issuer. As a result of such advice or actions, the prices and availability of securities
and other financial instruments in which the Issuer invests or may seek to invest, and the performance of
the Issuer, may be adversely affected.
The Portfolio Manager, the Portfolio Manager Affiliates and their respective clients and employees may
invest, or have already invested, in securities or other financial instruments that are senior or junior to or
pari passu with securities or financial instruments of the same issuer that are held by Other Accounts (e.g.,
an Other Account may acquire senior debt while the Issuer may acquire subordinated debt). In addition,
the Portfolio Manager or any of the Portfolio Manager Affiliates may serve as a general partner, adviser,
officer, director, sponsor or manager of partnerships or companies organized to issue collateralized bond
or loan obligations secured by non-investment grade bank loans. In such instances the Portfolio Manager
and Portfolio Manager Affiliates may give advice or take action with respect to such securities or
investments which may differ from the advice given or the timing or nature of any action taken with
respect to the investments of the Issuer. As a result of such advice or actions, the prices and availability of
securities and other financial investments in which the Issuer invests or may seek to invest, and the
performance of the Issuer, may be adversely affected.
The Portfolio Manager and Portfolio Manager Affiliates may also have or establish relationships with
companies whose equity securities or debt obligations are Collateral Obligations of the Issuer, or may be
considered for the Issuer or Other Accounts, and may now or in the future own or seek to acquire equity
securities or debt obligations issued by issuers of Collateral Obligations, and such debt obligations may
have interests different from or adverse to the securities that are Collateral Obligations. The Portfolio
Manager and its personnel will devote as much time to the management of the Issuer as the Portfolio
Manager deems appropriate. The investment policies, fee arrangements and other circumstances
48

applicable to such other parties may vary from those applicable to the Issuer. The Portfolio Manager
and/or its Portfolio Manager Affiliates may buy, sell, or hold securities or other instruments for Other
Accounts while making different investment decisions, where applicable, for the Issuer.
The Portfolio Manager and/or Portfolio Manager Affiliates may also provide investment banking services
or other advisory services for a negotiated fee to issuers whose debt obligations or other securities are
Collateral Obligations, and neither the holders of Offered Securities, nor the Co-Issuers shall have any
right to such fees. In connection with the foregoing activities, the Portfolio Manager and its affiliates may
from time to time come into possession of material nonpublic information that limits the ability of the
Portfolio Manager to effect a transaction for the Issuer, and the Issuer's investments may be constrained as
a consequence of the Portfolio Manager's inability to use such information for advisory purposes or
otherwise to effect transactions that otherwise may have been initiated on behalf of its clients, including
the Issuer.
As of the date of this Offering Circular, the Portfolio Manager and the Portfolio Manager Affiliates serve
as the portfolio manager for 7 collateralized debt obligation transactions, consisting of 3 transactions that
have closed, the present GoldenTree Loan Opportunities III, Limited transaction and 3 other transactions
in the warehousing stage. The Portfolio Manager and one or more of the Portfolio Manager Affiliates
may also serve as investment managers of other CDOs and Other Accounts in the future. Such CDOs and
Other Accounts may be organized to issue notes or certificates, similar to the Offered Securities, which
are secured by high-yield debt securities, loans and other investments, or may manage third party
accounts which invest in high-yield debt securities, loans and other investments. The Portfolio Manager
is expected to allocate investment opportunities to the Issuer and to Other Accounts it manages
(collectively, "Accounts") fairly and equitably, to the extent practicable, over a period of time. To the
extent that any Other Accounts are in warehousing or ramp-up periods (whether or not the Issuer is also in
a ramp-up period), the Portfolio Manager may allocate investment opportunities to such Other Accounts
on a preferential basis, which could be adverse to the Issuer. The Portfolio Manager will have no
obligation to purchase, sell or exchange any security or financial instrument for the Issuer which the
Portfolio Manager may purchase, sell or exchange for its Other Accounts. There is no assurance that any
collateralized debt obligation or other client with strategies or investment objectives similar to the Issuer
will hold the same assets or perform in a similar manner.
If the Portfolio Manager determines that the purchase or sale of the same security is in the best interest of
more than one Account, the Portfolio Manager may, but is not obligated to, aggregate orders placed
simultaneously in order to obtain best execution and reduce transaction costs to the extent permitted by
applicable law.
The Portfolio Manager may, on behalf of the Issuer, for liquidity, trade allocation or other reasons,
purchase securities from, sell securities to or enter into any arrangement or agreement with Other
Accounts ("cross transactions"). The terms of any such cross transactions will be commercially
reasonable and will not be materially less favorable to the Issuer than those available from the existing
market. The Portfolio Manager will receive no compensation in connection with cross transactions. To
the extent that a cross transaction may be viewed as a principal transaction due to the ownership interest
in an Account by the Portfolio Manager or its Portfolio Manager Affiliates, the Portfolio Manager will
comply with the requirements of Section 206(3) of the Investment Advisers Act, including that the
Portfolio Manager will notify the client in writing of the transaction and obtain the client's consent.
The Portfolio Manager and its personnel may not trade for the Issuer, Other Accounts or for their own
benefit, or recommend trading in securities of a company while it or its personnel are in possession of
material, non-public information ("Inside Information") concerning such company, or disclose such
Inside Information to any person not entitled to receive it. As a distressed or special situations investor,
49

the Portfolio Manager may have access to Inside Information. Accordingly, there may be certain cases
where the Portfolio Manager may be restricted from effecting purchases and/or sales of assets on behalf
of Accounts, including the Issuer. The Portfolio Manager seeks to minimize those cases whenever
practicable, consistent with applicable law and its policies, but there can be no assurance that it will not
receive Inside Information and that such restrictions will not occur. At times, the Portfolio Manager, in
an effort to avoid restriction for the Issuer or its Other Accounts, may elect not to receive Inside
Information that other market participants are eligible to receive or have received , which could adversely
affect the price at which it purchases or sells a particular investment for the Issuer or its ability to
administer such investment.
Affiliates of the Portfolio Manager may be Securities Lending Counterparties. See "Security for the
Secured Notes—Securities lending."
A Portfolio Manager Affiliate is expected to purchase $2,000,000 aggregate principal amount of the
Subordinated Notes issued on the Closing Date and the Portfolio Manager and/or Portfolio Manager
Affiliates may, but are not obligated to, purchase additional Offered Securities in the future. The
Portfolio Manager Affiliate acquiring Subordinated Notes on the Closing Date expects to borrow funds
from a JPMorgan Company for the purchase of such Subordinated Notes. It will pledge all such
Subordinated Notes (including rights to the distributions thereon) and the Portfolio Manager will pledge
the Portfolio Manager's right to the Management Fee as collateral for a non-recourse purchase money
loan. The reliance by the Portfolio Manager and its Portfolio Manager Affiliate on distributions on the
Subordinated Notes and the Subordinated Management Fee for repayment of such loan, as well as the
non-recourse nature of such loan from such JPMorgan Company, could create a conflict of interest with
respect to the performance of the Portfolio Manager's obligations.
Offered Securities held by the Portfolio Manager and its affiliates will have no voting rights with respect
to any vote in connection with the removal or replacement of the Portfolio Manager or the appointment of
a successor Portfolio Manager and will be deemed not to be outstanding in connection with any such vote.
See "The Portfolio Management Agreement." However, Offered Securities held by the Portfolio
Manager and its affiliates will have voting rights with respect to other matters as to which the holders of
Offered Securities are entitled to vote including, without limitation, any vote to direct an Optional
Redemption.
Other present and future activities of the Portfolio Manager and/or Portfolio Manager Affiliates may give
rise to additional conflicts of interest.
The Issuer will be subject to various conflicts of interest involving the Initial Purchaser.
Various potential and actual conflicts of interest may arise as a result of the investment banking,
commercial banking, asset management, financing and financial advisory services and products provided
by JPMorgan Chase & Co. and its Affiliates (including JPMorgan, JPMorgan Chase Bank, National
Association ("JPMCB") and their Affiliates (together, the "JPMorgan Companies")), to the Issuer, the
Trustee, the Portfolio Manager, the issuers of the Collateral Obligations and others, as well as in
connection with the investment, trading and brokerage activities of the JPMorgan Companies. The
following briefly summarizes some of these conflicts, but is not intended to be an exhaustive list of all
such conflicts.
JPMorgan will serve as Initial Purchaser for the Secured Notes (other than the Class A-1A-S Notes) and
as Placement Agent for the Class A-1A-S Notes, the Composite Notes and the Subordinated Notes and
will be paid fees and commissions for such service by the Issuer from the proceeds of the issuance of the
Offered Securities. One or more of the JPMorgan Companies may from time to time hold Offered
50

Securities for investment, trading or other purposes. A JPMorgan Company is expected to make a nonrecourse
loan to a Portfolio Manager Affiliate to acquire certain Subordinated Notes on the Closing Date
and will acquire a security interest in such Subordinated Notes and the Portfolio Manager's rights to
receive the Management Fee in connection with such loan. The Issuer's purchase of Collateral
Obligations that are loans prior to the Closing Date was financed through (i) loans made by JPMCB to the
Issuer and (ii) the purchase by an affiliate of JPMCB of certain subordinated notes of the Issuer (which
will be redeemed on the Closing Date), in each case pursuant to a warehousing agreement. A portion of
the proceeds of the offering of the Offered Securities will be paid to (i) JPMCB to repay such loans and
(ii) an affiliate of JPMCB to redeem such subordinated notes. The Issuer may have purchased and sold
prior to the Closing Date, and may purchase or sell after the Closing Date, Collateral Obligations from, to
or through, and purchase Synthetic Securities and enter into Hedge Agreements or Securities Lending
Agreements with, one or more of the JPMorgan Companies. Certain Eligible Investments may be issued,
managed or underwritten by one or more of the JPMorgan Companies. One or more of the JPMorgan
Companies may provide investment banking, commercial banking, asset management, financing and
financial advisory services and products to the Portfolio Manager, its affiliates, and funds managed by the
Portfolio Manager and its affiliates, and purchase, hold and sell, both for their respective accounts or for
the account of their respective clients, on a principal or agency basis, loans, securities, and other
obligations and financial instruments of the Portfolio Manager, its affiliates, and funds managed by the
Portfolio Manager and its affiliates. As a result of such transactions or arrangements, one or more of the
JPMorgan Companies may have interests adverse to those of the Issuer and holders of the Notes.
One or more of the JPMorgan Companies may:
• have placed or underwritten, or acted as a financial arranger, structuring agent or advisor in
connection with the original issuance of, or may act as a broker or dealer with respect to, certain of
the Collateral Obligations;
• act as trustee, paying agent and in other capacities in connection with certain of the Collateral
Obligations or other classes of securities issued by an issuer of a Collateral Obligation or an affiliate
thereof;
• be a counterparty to issuers of certain of the Collateral Obligations under swap or other derivative
agreements;
• lend to certain of the issuers of Collateral Obligations or their respective affiliates or receive
guarantees from the issuers of those Collateral Obligations or their respective affiliates;
• provide other investment banking, asset management, commercial banking, financing or financial
advisory services to the issuers of Collateral Obligations or their respective affiliates; or
• have an equity interest, which may be a substantial equity interest, in certain issuers of the Collateral
Obligations or their respective affiliates.
When acting as a trustee, paying agent or in other service capacities with respect to a Collateral
Obligation, the JPMorgan Companies will be entitled to fees and expenses senior in priority to payments
to such Collateral Obligation. When acting as a trustee for other classes of securities issued by the issuer
of a Collateral Obligation or an affiliate thereof, the JPMorgan Companies will owe fiduciary duties to the
holders of such other classes of securities, which classes of securities may have differing interests from
the holders of the class of securities of which the Collateral Obligation is a part, and may take actions that
are adverse to the holders (including the Issuer) of the class of securities of which the Collateral
Obligation is a part. As a counterparty under swaps and other derivative agreements, the JPMorgan
51

Companies might take actions adverse to the interests of the Issuer, including, but not limited to,
demanding collateralization of its exposure under such agreements (if provided for thereunder) or
terminating such swaps or agreements in accordance with the terms thereof. In making and administering
loans and other obligations, the JPMorgan Companies might take actions including, but not limited to,
restructuring a loan, foreclosing on or exercising other remedies with respect to a loan, requiring
additional collateral or other credit enhancement, charging significant fees and interest, placing the
obligor in bankruptcy or demanding payment on a loan guarantee or under other credit enhancement. The
Issuer's purchase, holding and sale of Collateral Obligations may enhance the profitability or value of
investments made by the JPMorgan Companies in the issuers thereof. As a result of all such transactions
or arrangements between the JPMorgan Companies and issuers of Collateral Obligations or their
respective affiliates, JP Morgan Chase & Co. may have interests that are contrary to the interests of the
Issuer and the holders of the Notes.
As part of their regular business, the JPMorgan Companies may also provide investment banking,
commercial banking, asset management, financing and financial advisory services and products to, and
purchase, hold and sell, both for their respective accounts or for the account of their respective clients, on
a principal or agency basis, loans, securities, and other obligations and financial instruments and engage
in private equity investment activities. The JPMorgan Companies will not be restricted in their
performance of any such services or in the types of debt or equity investments, which they may make. In
conducting the foregoing activities, the JPMorgan Companies will be acting for their own account or the
account of their customers and will have no obligation to act in the interest of the Issuer.
The JPMorgan Companies may, by virtue of the relationships described above or otherwise, at the date
hereof or at any time hereafter, be in possession of information regarding certain of the issuers of
Collateral Obligations and their respective affiliates, that is or may be material in the context of the
Offered Securities and that is or may not be known to the general public. None of the JPMorgan
Companies has any obligation, and the offering of the Offered Securities will not create any obligation on
their part, to disclose to any purchaser of the Offered Securities any such relationship or information,
whether or not confidential.
The Indenture and the Secured Notes
Description of the Offered Securities
All of the Offered Securities will be issued pursuant to the Indenture. However, only the Secured Notes
(including the Secured Note Components of the Composite Notes) will be secured obligations of the
Issuer. The following summary describes certain provisions of the Secured Notes and the Indenture and,
to a limited extent, the Subordinated Notes. The summary does not purport to be complete and is subject
to, and qualified in its entirety by reference to, the provisions of the Indenture. Additional information
regarding the Subordinated Notes appears under "—The Subordinated Notes."
Status and security
The Notes and the Composite Notes will be limited recourse obligations of the Issuer and the Senior
Notes will be non-recourse obligations of the Co-Issuer, secured (in the case of the Secured Notes) as
described below, and will rank in priority with respect to each other as described herein. Under the terms
of the Indenture, the Issuer will grant to the Trustee a security interest in the Assets to secure the Issuer's
obligations under the Indenture and the Secured Notes. See "Security for the Secured Notes."
Payments of interest and principal on the Secured Notes will be made from the proceeds of the Assets, in
accordance with the priorities described under "Summary of Terms—Priority of Payments" herein. The
52

aggregate amount that will be available from the Assets for payment on the Secured Notes and of certain
expenses of the Co-Issuers on any Payment Date will be (i) the sum of Interest Proceeds and Principal
Proceeds for the period (a "Collection Period") commencing immediately following the prior Collection
Period (or on the Closing Date, in the case of the Collection Period relating to the first Payment Date) and
ending on the 10 th Business Day prior to such Payment Date or, in the case of (x) the final Collection
Period preceding the latest Stated Maturity of any Class of Notes or (y) the final Collection Period
preceding an Optional Redemption in whole of the Notes, ending on the day preceding such Stated
Maturity or the Redemption Date, respectively, plus (ii) any payments received on or before such
Payment Date on any Hedge Agreement and borrowings on such Payment Date under the Financed
Amount Note. To the extent these amounts are insufficient to meet payments due in respect of the
Secured Notes and expenses following liquidation of the Assets, the Co-Issuers will have no obligation to
pay such deficiency.
Interest
The Secured Notes will bear stated interest from the Closing Date and such interest will be payable
quarterly in arrears on each Payment Date (x) in the case of the Secured Notes other than the Class A-1A-
S Notes, on the aggregate outstanding principal amount thereof on the first day of the related Interest
Accrual Period (after giving effect to payments of principal thereof on such date) and (y) in the case of
each Borrowing under the Class A-1A-S Notes, on the average daily balance of such Borrowing during
the related Interest Accrual Period. The period from and including the Closing Date to but excluding the
first Payment Date (or, with respect to any Borrowing made under the Class A-1A-S Notes, the period
from, and including, the date of such Borrowing to, but excluding, the earlier to occur of the Payment
Date immediately following the Interest Accrual Period in which such Borrowing is made and the date on
which such Borrowing is repaid in accordance with the Indenture), and each succeeding period from and
including each Payment Date to but excluding the following Payment Date (or, with respect to any
Borrowing made under the Class A-1A-S Notes, the date on which such Borrowing is repaid in
accordance with the Indenture) until the principal of the Secured Notes is paid or made available for
payment, is an "Interest Accrual Period."
The per annum stated interest rate payable on the Secured Notes of each Class (the "Interest Rate" for
such Class) with respect to each Interest Accrual Period will be the rate indicated under "Summary of
Terms—Principal Terms of the Offered Securities." As used herein, "Class" means, in the case of (x) the
Secured Notes, all of the Secured Notes having the same Interest Rate, Stated Maturity and designation,
(y) the Composite Notes, each of the Type I Composite Notes, the Type II Composite Notes and the Type
III Composite Notes and (z) the Subordinated Notes, all of the Subordinated Notes.
So long as any more senior Class of Secured Notes is outstanding, to the extent that funds are not
available on any Payment Date to pay the full amount of interest on the Class B Notes, the Class C Notes
or the Class D Notes or if such interest is not paid in order to satisfy the Coverage Tests, such amounts
("Deferred Interest") will not be due and payable on such Payment Date, but will be deferred and added
to the principal balance of such Classes and, thereafter, will bear interest at the Interest Rate for such
Classes until paid, and the failure to pay such Deferred Interest on such Payment Date will not be an
Event of Default under the Indenture; provided, however, that any such Deferred Interest must, in any
case, be paid no later than the earlier of the Redemption Date or Stated Maturity of the relevant Class of
the Secured Notes. See "—The Indenture—Events of Default." Interest may be deferred (i) on the Class
B Notes as long as any Class A Note is outstanding, (ii) on the Class C Notes as long as any Class A
Notes or Class B Notes are outstanding and (iii) on the Class D Notes as long as any Class A Notes, Class
B Notes or Class C Notes are outstanding.
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If any interest due and payable in respect of any Class A Note (or, if there are no Class A Notes
outstanding, any Class B Note or, if there are no Class B Notes outstanding, any Class C Note, or, if there
are no Class C Notes outstanding, any Class D Note) is not punctually paid or duly provided for on the
applicable Payment Date or at the applicable Stated Maturity and such default continues for five (5)
Business Days, an Event of Default will occur. To the extent lawful and enforceable, interest on such
defaulted interest will accrue at a per annum rate equal to the Interest Rate applicable to such Notes from
time to time in each case until paid.
Interest on the Secured Notes will be calculated on the basis of the actual number of days elapsed in the
applicable Interest Accrual Period divided by 360.
The Issuer shall initially appoint the Trustee as calculation agent (the "Calculation Agent") for purposes
of determining LIBOR for each Interest Accrual Period. The Calculation Agent will determine LIBOR
for each Interest Accrual Period on the second London Banking Day preceding the first day of each
Interest Accrual Period (or, in the case of a Borrowing under the Class A-1A-S Notes, on the date of such
Borrowing) (each, an "Interest Determination Date").
"LIBOR" with respect to the Secured Notes, for any Interest Accrual Period will equal (a) the rate
appearing on the Telerate Screen for deposits with a term of three months; provided, that LIBOR for the
first Interest Accrual Period shall be determined by interpolating linearly between (i) the rate appearing
on the Telerate Screen for deposits with a term of seven months and (ii) the rate appearing on the Telerate
Screen for deposits with a term of eight months; provided, further, that LIBOR for the first Interest
Accrual Period with respect to any Borrowing under the Class A-1A-S Notes that is not made on a
Payment Date will equal the rate appearing on the Telerate Screen with a term equal to the period from
and including the date of such Borrowing to but excluding the next succeeding Payment Date or, if such
period does not equal a period appearing on the Telerate Screen shall be determined by interpolating
linearly between (i) the rate for the period appearing on the Telerate Screen that is closest to and greater
than the length of such period and (ii) the rate for the period appearing on the Telerate Screen that is
closest to and less than the length of such period or (b) if such rate is unavailable at the time LIBOR is to
be determined, LIBOR shall be determined on the basis of the rates at which deposits in U.S. Dollars are
offered by four major banks in the London market selected by the Calculation Agent after consultation
with the Portfolio Manager (the "Reference Banks") at approximately 11:00 a.m., London time, on the
Interest Determination Date to prime banks in the London interbank market for a period approximately
equal to the Interest Accrual Period and an amount approximately equal to the amount of the aggregate
outstanding principal amount of the Secured Notes (or, in the case of a Borrowing under the Class A-1A-
S Notes, the principal amount of such Borrowing). The Calculation Agent will request the principal
London office of each Reference Bank to provide a quotation of its rate. If at least two such quotations
are provided, LIBOR shall be the arithmetic mean of such quotations (rounded upward to the next higher
1/100). If fewer than two quotations are provided as requested, LIBOR with respect to such Interest
Accrual Period will be the arithmetic mean of the rates quoted by three major banks in New York, New
York selected by the Calculation Agent after consultation with the Portfolio Manager at approximately
11:00 a.m., New York Time, on such Interest Determination Date for loans in U.S. Dollars to leading
European banks for a term approximately equal to such Interest Accrual Period and an amount
approximately equal to the aggregate outstanding principal amount of the Secured Notes (or, in the case
of a Borrowing under the Class A-1A-S Notes, the principal amount of such Borrowing). If the
Calculation Agent is required but is unable to determine a rate in accordance with at least one of the
procedures described above, LIBOR will be LIBOR as determined on the previous Interest Determination
Date. "LIBOR", when used with respect to a Collateral Obligation, means the "libor" rate determined in
accordance with the terms of such Collateral Obligation.
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"London Banking Day" means a day on which commercial banks are open for business (including
dealings in foreign exchange and foreign currency deposits) in London, England.
"Telerate Screen" means the rates for deposits in dollars which appear on Page 3750 of the Dow Jones
Telerate Service (or such other page that may replace that page on such service for the purpose of
displaying comparable rates) as reported by Bloomberg Financial Markets Commodities News as of
11:00 a.m., London time, on the Interest Determination Date.
As soon as possible after 11:00 a.m. London time on each Interest Determination Date, but in no event
later than 11:00 a.m. London time on the London Banking Day immediately following each Interest
Determination Date, the Calculation Agent will calculate the Interest Rate for each Class of Secured
Notes for the next Interest Accrual Period and the amount of interest payable in respect of each $100,000
outstanding principal amount of each Class of Secured Notes (the "Note Interest Amount" with respect
thereto) (in each case, rounded to the nearest cent, with half a cent being rounded upward) on the related
Payment Date to be given to the Co-Issuers, the Trustee, the Paying Agents (as defined herein), the holder
of the Financed Amount Note, Euroclear, Clearstream, the Portfolio Manager and, so long as any Secured
Notes are listed thereon, the Irish Stock Exchange. The Calculation Agent will also specify to the Co-
Issuers the quotations upon which the Interest Rate for each Class of Secured Notes are based, and in any
event the Calculation Agent shall notify the Co-Issuers before 5:00 p.m. (London time) on every Interest
Determination Date that either: (i) it has determined or is in the process of determining the Interest Rate
and Note Interest Amount for each Class of Secured Notes or (ii) it has not determined and is not in the
process of determining any such Interest Rate or Note Interest Amount, together with its reasons therefor.
The Issuer will agree that for so long as any Secured Notes remain outstanding there will at all times be a
Calculation Agent which shall not control, be controlled by or be under common control with the Issuer
or its affiliates or the Portfolio Manager or its affiliates. The Calculation Agent may be removed by the
Issuer or the Portfolio Manager, on behalf of the Issuer, at any time. If the Calculation Agent is unable or
unwilling to act as such or is removed by the Issuer or the Portfolio Manager, on behalf of the Issuer, or if
the Calculation Agent fails to determine any of the information required to be released through the
Companies Announcements Office of the Irish Stock Exchange, the Issuer or the Portfolio Manager, on
behalf of the Issuer, will be required to appoint promptly a replacement Calculation Agent which does not
control and is not controlled by or under common control with the Issuer, the Portfolio Manager or their
respective affiliates. In addition, for so long as any Offered Securities are listed on the Irish Stock
Exchange and the guidelines of such exchange so require, notice of the appointment of any replacement
Calculation Agent an announcement will be released through the Companies Announcements Office of
the Irish Stock Exchange.
Principal
The Secured Notes of each Class will mature at par on the Payment Date on May 1, 2022 (the "Stated
Maturity" for each Class of Secured Notes), unless previously redeemed or repaid prior thereto as
described herein. During the Reinvestment Period, principal will not be payable on the Secured Notes
except with respect to Deferred Interest, prepayments with respect to the Class A-1A-S Notes and in the
limited circumstances described under "—Optional Redemption," "—Mandatory Redemption," "—
Special Redemption," and "Summary of Terms—Priority of Payments—Application of Principal
Proceeds." On each Payment Date after the Reinvestment Period, Principal Proceeds will be payable on
the Secured Notes in accordance with the priorities set forth under "Summary of Terms—Priority of
Payments—Application of Principal Proceeds."
At any time during which the Coverage Tests are not met, principal payments on the Secured Notes will
be made as described under "—Mandatory Redemption."
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The average life of each class of Secured Notes is expected to be less than the number of years until the
Stated Maturity of such Secured Notes. See "Risk factors—Relating to the Offered Securities—The
Weighted Average Lives of the Notes may vary."
Any payment of principal on a Class of Secured Notes will be made by the Trustee on a pro rata basis
among the holders of such Class of Notes according to the respective unpaid principal amounts thereof
outstanding immediately prior to such payment.
Optional Redemption
General—Redemption of Notes. The Secured Notes will be redeemed by the Co-Issuers or the Issuer, as
the case may be, at the written direction of a Supermajority of the Subordinated Notes as follows: (i)
based upon such written direction, the Secured Notes will be redeemed in whole but not in part on any
Payment Date after the end of the Non-Call Period from the proceeds of the liquidation of the Assets
and/or from Refinancing Proceeds pursuant to the Indenture; or (ii) based upon such written direction, the
Secured Notes may be redeemed in part by Class from Refinancing Proceeds only on any Payment Date
after the end of the Non-Call Period as long as the Class of Secured Notes to be redeemed represents not
less than the entire Class of such Secured Notes. The date of any optional redemption of Notes as
described above is an "Optional Redemption Date." In connection with any such redemption, the
Secured Notes shall be redeemed at the applicable Redemption Price and the requisite percentage of
Subordinated Notes must provide the above described written direction to the Issuer, the Trustee and the
Portfolio Manager not later than sixty (60) days prior to the Payment Date on which such redemption is to
be made.
Upon receipt of a notice of redemption of the Secured Notes, the Portfolio Manager in its sole discretion
will (unless a Refinancing shall occur pursuant to the Indenture) direct the sale of all or part of the
Collateral Obligations and other Assets in an amount sufficient that the proceeds from such sale and all
other funds available for such purpose in the Collection Account and the Payment Account will be at least
sufficient to pay the Redemption Price on all of the Secured Notes to be redeemed and to pay all
administrative and other fees and expenses payable under "Summary of Terms—Priority of Payments—
Application of Interest Proceeds" (including, without limitation, any amounts due to the Hedge
Counterparties and all amounts owing under the Financed Amount Note). If such proceeds of such sale
and all other funds available for such purpose in the Collection Account and the Payment Account would
not be sufficient to redeem the Secured Notes subject to redemption and to pay such fees and expenses,
the Secured Notes may not be redeemed. The Portfolio Manager, in its sole discretion, may effect the
sale of all or any part of the Collateral Obligations or other Assets through the direct sale of such
Collateral Obligations or other Assets or by participation or other arrangement.
The Subordinated Notes may be redeemed, in whole but not in part, on any Payment Date on or after the
redemption or repayment of the Secured Notes, at the direction of a Supermajority of the Subordinated
Notes.
In addition to (or in lieu of) a sale of Collateral Obligations and/or Eligible Investments in the manner
provided above, any Class or Classes of Secured Notes may be redeemed from Refinancing Proceeds if a
Supermajority of the Subordinated Notes direct the Trustee to direct the Co-Issuers or the Issuer, as the
case may be, to redeem any Class or Classes of the Secured Notes by obtaining a loan or an issuance of
replacement securities, the terms of which loan or issuance will be negotiated by the Portfolio Manager
on behalf of the Issuer, from one or more financial institutions or purchasers (a refinancing provided
pursuant to such loan or issuance, a "Refinancing"); provided, that the terms of such Refinancing and any
financial institutions acting as lenders thereunder or purchasers thereof must be acceptable to the Portfolio
Manager and a Supermajority of the Subordinated Notes and such Refinancing otherwise satisfies the
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conditions described below. Prior to effecting any Refinancing, the Issuer shall satisfy the Global Rating
Agency Condition in relation to such Refinancing.
In the case of a Refinancing upon a redemption of the Secured Notes in whole but not in part as described
above, the Issuer shall obtain a Refinancing only if (i) the cash proceeds from the Refinancing (the
"Refinancing Proceeds"), all Disposition Proceeds from the sale of Collateral Obligations and Eligible
Investments in accordance with the procedures set forth in the Indenture, any Refinancing Proceeds and
all other available funds will be at least sufficient to redeem simultaneously the Secured Notes, in whole
but not in part, and to pay the other amounts included in the aggregate Redemption Price and all accrued
and unpaid Administrative Expenses (regardless of the Administrative Expense Cap), including the
reasonable fees, costs, charges and expenses incurred by the Trustee (including reasonable attorneys' fees
and expenses) in connection with such Refinancing, (ii) the Disposition Proceeds, Refinancing Proceeds
and other available funds are used (to the extent necessary) to make such redemption and (iii) the
agreements relating to the Refinancing contain limited recourse and non-petition provisions equivalent
(mutatis mutandis) to those contained in the Indenture.
In the case of a Refinancing upon a redemption of the Secured Notes in part by Class as described above,
the Issuer shall obtain a Refinancing only if (i) the Global Rating Agency Condition has been satisfied
with respect to any remaining Secured Notes that were not the subject of the Refinancing, (ii) the
Refinancing Proceeds will be at least sufficient to pay the aggregate Redemption Price of the Class or
Classes of Secured Notes subject to Refinancing, (iii) the aggregate principal amount of any obligations
providing the Refinancing is no greater than the aggregate principal amount of the Secured Notes being
redeemed with the proceeds of such obligations plus an amount equal to the reasonable fees, costs,
charges and expenses incurred in connection with such Refinancing, (iv) the stated maturity of each class
of obligations providing the Refinancing is no earlier than the corresponding Stated Maturity of each
Class of Secured Notes being refinanced, (v) the Refinancing Proceeds are used (to the extent necessary)
to make such redemption, (vi) the agreements relating to the Refinancing contain limited recourse and
non-petition provisions equivalent (mutatis mutandis) to those contained in the Indenture and (vii) the
reasonable fees, costs, charges and expenses incurred in connection with such Refinancing have been paid
or will be adequately provided for from the Refinancing Proceeds (except for expenses owed to persons
that the Portfolio Manager informs the Trustee will be paid solely as Administrative Expenses payable in
accordance with the Indenture).
The holders of the Subordinated Notes will not have any cause of action against any of the Co-Issuers, the
Portfolio Manager or the Trustee for any failure to obtain a Refinancing. In the event that a Refinancing
is obtained meeting the requirements specified above as certified by the Portfolio Manager, the Issuer and
the Trustee shall amend the Indenture to the extent necessary to reflect the terms of the Refinancing and
no further consent for such amendments shall be required from the holders of Notes other than the
Supermajority of the Subordinated Notes directing the redemption.
Redemption Procedures. Notice of optional redemption will be given by first-class mail, postage prepaid,
mailed not later than ten (10) Business Days prior to the applicable Optional Redemption Date to each
holder of Secured Notes at such holder's address in the register maintained by the registrar under the
Indenture. In addition, for so long as any Offered Securities are listed on the Irish Stock Exchange and so
long as the guidelines of such exchange so require, notice of Optional Redemption to the holders of such
Offered Securities shall also be released through the Companies Announcements Office of the Irish Stock
Exchange. Secured Notes called for redemption must be surrendered at the office of any paying agent
(each, a "Paying Agent") (other than the Irish Paying Agent) appointed under the Indenture in order to
receive the Redemption Price. The initial Paying Agents for the Secured Notes will be the Trustee and, so
long as any Offered Securities are listed on the Irish Stock Exchange, Maples Finance Dublin (the "Irish
Paying Agent").
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The Co-Issuers will have the option to withdraw any such notice of redemption up to and including the
day on which the Portfolio Manager is required to deliver to the Trustee the sale agreement or agreements
or certifications as described in the following paragraph. Any withdrawal of such notice of redemption
will be made by written notice to the Trustee and the Portfolio Manager and will be made only if the
Portfolio Manager is unable to deliver the sale agreement or agreements or certifications as described in
the following paragraph in form satisfactory to the Trustee. If the Co-Issuers so withdraw any notice of
redemption or are otherwise unable to complete redemption of the Secured Notes, the proceeds received
from the sale of any Collateral Obligations and other Assets sold in contemplation of such redemption
may during the Reinvestment Period, at the Portfolio Manager's sole discretion, be reinvested in
accordance with the Investment Criteria described herein. In addition, a Supermajority of the
Subordinated Notes shall have the option to withdraw any such notice of Redemption up to and including
the day that is eleven (11) Business Days prior to such Redemption Date.
Unless Refinancing Proceeds are being used to redeem the Secured Notes in whole, no Secured Notes
may be optionally redeemed unless (i) at least ten (10) Business Days before the scheduled Optional
Redemption Date the Portfolio Manager shall have furnished to the Trustee evidence, in form satisfactory
to the Trustee, that the Portfolio Manager on behalf of the Issuer has entered into a binding agreement or
agreements with a financial or other institution or institutions whose short-term unsecured debt
obligations (other than such obligations whose rating is based on the credit of a person other than such
institution) are rated (or whose obligations are supported by a financial or other institution whose shortterm
unsecured debt obligations are rated) at least "A-1+" by S&P and at least "P-1" by Moody's to
purchase (directly or by participation or other arrangement), not later than the Business Day immediately
preceding the scheduled Optional Redemption Date in immediately available funds, all or part of the
Collateral Obligations and/or any Hedge Agreements at a purchase price at least equal to an amount
sufficient, together with the Eligible Investments maturing (or putable to the issuer thereof at par) on or
prior to the scheduled Optional Redemption Date, Eligible Investments redeemed by the Issuer and any
payments to be received in respect of any Hedge Agreements, to pay all administrative and other fees and
expenses payable in accordance with the priority of payments and to redeem all of the Notes on the
scheduled Optional Redemption Date at the applicable Redemption Price, or (ii) prior to selling any
Collateral Obligations and/or Eligible Investments, the Portfolio Manager shall certify to the Trustee that,
in its judgment, the aggregate sum of (A) expected proceeds from Hedge Agreements and the sale of
Eligible Investments, and (B) for each Collateral Obligation, the product of its principal balance and its
market value (expressed as a percentage of its principal balance) and its Applicable Advance Rate, shall
exceed the sum of (X) the aggregate Redemption Prices of the outstanding Secured Notes and (Y) all
administrative and other fees and expenses payable pursuant to the priority of payments. Any
certification delivered by the Portfolio Manager as described above shall include (1) the prices of, and
expected proceeds from, the sale (directly or by participation or other arrangement) of any Collateral
Obligations, Eligible Investments and/or Hedge Agreements and (2) all calculations required as described
above.
Notice of redemption shall be given by the Co-Issuers or, upon an issuer order, by the Trustee in the name
and at the expense of the Co-Issuers. Failure to give notice of redemption, or any defect therein, to any
holder of any Note selected for redemption shall not impair or affect the validity of the redemption of any
other Notes.
Mandatory Redemption
If a Coverage Test (as described under "Security for the Secured Notes—The Coverage Tests") is not met
on any Determination Date on which such Coverage Test is applicable, the Issuer will be required to
apply available amounts in the Payment Account on the related Payment Date to make payments in
accordance with the Note Payment Sequence (a "Mandatory Redemption") to the extent necessary to
58

achieve compliance with such Coverage Tests, as described under "Summary of Terms—Priority of
Payments."
Special Redemption
The Secured Notes will be subject to redemption in part by the Co-Issuers or the Issuer, as applicable, on
any Payment Date (i) during the Reinvestment Period if the Portfolio Manager at its sole discretion
notifies the Trustee that it has been unable, for a period of at least thirty (30) consecutive Business Days,
to identify additional Collateral Obligations that are deemed appropriate by the Portfolio Manager in its
sole discretion and which would meet the criteria for reinvestment described under "Security for the
Secured Notes—Sales of Collateral Obligations; Additional Collateral Obligations and Investment
Criteria" in sufficient amounts to permit the investment or reinvestment of all or a portion of the funds
then in the Collection Account that are to be invested in additional Collateral Obligations or (ii) after the
Ramp-Up Period if the Portfolio Manager notifies the Trustee that a redemption is required in order to
obtain from each Rating Agency its written confirmation of its initial ratings of the Secured Notes (in
either case, a "Special Redemption"). On the first Payment Date following the Collection Period in
which such notice is given (a "Special Redemption Date"), the amount in the Collection Account
representing Principal Proceeds which (1) the Portfolio Manager has determined cannot be reinvested in
additional Collateral Obligations or (2) must be applied to redeem the Secured Notes in order to obtain
confirmation from each of the Rating Agencies of the initial ratings of the Secured Notes (such amount,
the "Special Redemption Amount"), as the case may be, will be applied as described under "Summary
of Terms—Priority of Payments—Application of Principal Proceeds." Notice of Special Redemption will
be given by the Trustee by first class mail, postage prepaid, mailed not less than three (3) Business Days
prior to the applicable Special Redemption Date to each holder of Secured Notes affected thereby at such
holder's address in the register maintained by the applicable registrar under the Indenture. In addition, for
so long as any Offered Securities are listed on the Irish Stock Exchange and so long as the guidelines of
such exchange so require, notice of Special Redemption to the holders of such Offered Securities shall
also be released through the Companies Announcements Office of the Irish Stock Exchange.
Cancellation
All Notes that are redeemed or paid in full and surrendered for cancellation as described herein will
forthwith be canceled and may not be reissued or resold.
Class A-1A-S Notes Borrowings
On any Business Day (not more frequently than once per calendar week and subject to the provisions of
the Note Purchase Agreement) during the Draw Period, at the election of the Issuer (as directed by the
Portfolio Manager), amounts may be borrowed by the Issuer (at the direction of the Portfolio Manager)
under the Class A-1A-S Notes (each a "Borrowing" and the date of any such Borrowing, a "Borrowing
Date"); provided, that (i) at the time of, and immediately after giving effect to, such Borrowing, no Event
of Default shall have occurred and be continuing, (ii) the Class A-1A-S Note Agent has received a
borrowing request in accordance with the Note Purchase Agreement and (iii) the Borrowing will not
cause the Commitments to be exceeded.
Notwithstanding the failure to satisfy any of the foregoing conditions and except under certain
circumstances specified in the Note Purchase Agreement, the holders of the Class A-1A-S Notes will be
obligated to make advances to the Issuer (1) if the proceeds of the related Borrowing are to be used by the
Issuer to advance funds in respect of the unfunded amounts of any Revolving Collateral Obligation or
Delayed Drawdown Collateral Obligation and (2) in connection with an advance of the Class A-1 Pro
Rata Adjustment Amount.
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The aggregate principal amount of any Borrowing (other than the Borrowing made pursuant to the
immediately following paragraph) (taken as a whole) shall be an integral multiple of $1,000 and at least
$500,000. Except as otherwise provided by the Note Purchase Agreement, any Borrowing shall be made
pro rata according to the unused Commitments in respect of the Class A-1A-S Notes.
On the last day of the Draw Period, the Issuer (at the direction of the Portfolio Manager) shall make a
Borrowing under the Class A-1A-S Notes in an aggregate amount equal to the sum of the Funding
Advance and the Class A-1 Pro Rata Adjustment Amount, subject to the limitation that the aggregate
amount of Borrowings under the Class A-1A-S Notes may not in any event exceed the aggregate amount
of Commitments to make advances in respect of the Class A-1A-S Notes. The Funding Advance will be
deposited by the Trustee (at the direction of the Portfolio Manager) in the Revolver Funding Account
upon receipt and an amount equal to the Class A-1 Pro Rata Adjustment Amount will be deposited by the
Trustee upon receipt (at the direction of the Portfolio Manager) into the Principal Collection Subaccount
to be applied as a payment of principal on the Senior Class A Notes (other than the Class A-1A-S Notes)
(pro rata based on aggregate outstanding principal amount) on the Payment Date on which it is received
(or, if such amount is not received on a Payment Date, on the next Payment Date).
Holders of Class A-1A-S Notes are permitted under the terms of the Note Purchase Agreement to obtain
funding for their obligations as a holder of the Class A-1A-S Notes by entering into a liquidity agreement
(which agreement, if the holder of Class A-1A-S Notes is a conduit purchaser, is satisfactory to the
Issuer) with a financing provider that satisfies the Class A-1A-S Purchaser Rating Criteria.
If any holder of Class A-1A-S Notes shall fail to satisfy the Class A-1A-S Purchaser Rating Criteria at
any time during the Draw Period, then the Issuer will, under the Note Purchase Agreement, be entitled to
cause such holder to transfer its rights and obligations in respect of the Class A-1A-S Notes to a person
that satisfies such Class A-1A-S Purchaser Rating Criteria. If any such holder or conduit purchaser fails
to take the actions described in the preceding sentence within 30 days following the commencement of
such failure, the Issuer may require such holder or conduit purchaser to transfer its Class A-1A-S Notes to
a qualifying purchaser identified by the Issuer. In addition, if any holder of Class A-1A-S Notes fails to
satisfy its funding obligations under the Note Purchase Agreement, the Issuer may, under certain
circumstances specified in the Note Purchase Agreement, require such holder to transfer its rights and
obligations in respect of the Class A-1A-S Notes to a person that satisfies such Class A-1A-S Purchaser
Rating Criteria.
Reduction of Commitments
At the end of the Ramp-Up Period, the Commitments in respect of the Class A-1A-S Notes may be
reduced by an amount equal to the amount of any redemptions of Class A-1A-S Notes made in
connection with each Rating Agency's written confirmation of its initial rating of the Secured Notes. The
Commitments in respect of the Class A-1A-S Notes will also be reduced on each Payment Date after the
Ramp-Up Period by an amount equal to the amount of mandatory redemptions of the Class A-1A-S
Notes, special redemptions of the Class A-1A-S Notes and payments of the Class A-1A-S Notes pursuant
to clause (A) of "Summary of Terms—Priority of Payments—Application of Principal Proceeds." In
addition, (x) on any Payment Date on which payments are made as a result of a mandatory or special
redemption of the Class A-1A-S Notes, the Commitments in respect of the Class A-1A-S Notes will be
reduced by the amounts paid to the Revolver Funding Account pursuant to clause (i) of the Note Payment
Sequence and (y) on any Payment Date on which the aggregate outstanding principal amount of the Class
A-1B-S Notes is reduced to zero, all remaining Commitments will be terminated. Any such reduction of
Commitments in respect of the Class A-1A-S Notes will be applied to the respective Commitments of
each holder of the Class A-1A-S Notes pro rata according to the respective amounts thereof.
Prepayments of the Class A-1A-S Notes pursuant to clause (C)(1) of "Summary of Terms—Priority of
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Payments—Application of Principal Proceeds" or "Summary of Terms—Priority of Payments—
Application of Principal Proceeds to Class A-1A-S Notes" will not result in a reduction of Commitments.
After the end of the Draw Period the Commitments in respect of the Class A-1A-S Notes will be reduced
to zero. The Issuer or the Class A-1A-S Note Agent will provide the holders of the Class A-1A-S Notes
with no less than one day's prior written notice of any reduction in the Commitments.
Entitlement to payments
Payments in respect of principal and interest on the Notes will be made to the person in whose name the
Note is registered fifteen days prior to the applicable Payment Date (the "Record Date"). Payments on
certificated notes will be made in U.S. Dollars by wire transfer, as directed by the investor, in
immediately available funds to the investor; provided, that wiring instructions have been provided to the
Trustee on or before the related Record Date and provided, further, that if appropriate instructions for any
such wire transfer are not received by the Record Date, then such payment shall be made by check drawn
on a U.S. bank mailed to such holder of a Note at such holder's address specified in the applicable register
maintained by the Trustee. Final payments in respect of principal on the Notes will be made only against
surrender of the Notes at the office of any Paying Agent appointed under the Indenture.
Payments in respect of the principal and interest of any Global Secured Notes, Global Composite Notes or
Regulation S Global Subordinated Notes will be made to DTC or its nominee, as the registered owner
thereof. Neither the Co-Issuers, the Portfolio Manager, the Trustee nor any Paying Agent will have any
responsibility or liability for any aspect of the records relating to or payments made on account of
beneficial ownership interests in Global Secured Notes, Global Composite Notes or Regulation S Global
Subordinated Notes or for maintaining, supervising or reviewing any records relating to the beneficial
ownership interests. The Co-Issuers expect that DTC or its nominee, upon receipt of any payment of
principal or interest in respect of a Global Secured Note, Global Composite Note or Regulation S Global
Subordinated Note representing a Class of Offered Securities held by it or its nominee, will immediately
credit participants' accounts (through which, in the case of Regulation S Global Secured Notes,
Regulation S Global Composite Notes or Regulation S Global Subordinated Notes, Euroclear and
Clearstream hold their respective interests) with payments in amounts proportionate to their respective
beneficial interests in the stated original principal amount of a Global Secured Note, Global Composite
Note or Regulation S Global Subordinated Note for a Class of Offered Securities, as shown on the records
of DTC or its nominee. The Co-Issuers also expect that payments by participants to owners of beneficial
interests in a Global Secured Note, Global Composite Note or Regulation S Global Subordinated Note
held through the participants will be governed by standing instructions and customary practices, as is now
the case with securities held for the accounts of customers registered in the names of nominees for the
customers. The payments will be the responsibility of the participants.
Prescription. Except as otherwise required by applicable law, claims by holders of Notes in respect of
principal and interest must be made to the Trustee or any Paying Agent (other than the Irish Paying
Agent) if made within two years of such principal or interest becoming due and payable. Any funds
deposited with the Trustee or any such Paying Agent in trust for the payment of principal or interest
remaining unclaimed for two years after such principal or interest has become due and payable shall be
paid to the Issuer and, if applicable, the Co-Issuer, pursuant to the Indenture; and the holder of a Note
shall thereafter, as an unsecured general creditor, look only to the Issuer and, if applicable, the Co-Issuer,
for payment of such amounts and all liability of the Trustee and any such Paying Agent with respect to
such trust funds shall thereupon cease.
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Priority of payments
On each Payment Date, Interest Proceeds will be applied in the order of priority described under
"Summary of Terms—Priority of Payments—Application of Interest Proceeds."
On each Payment Date, Principal Proceeds will be applied in the order of priority described under
"Summary of Terms—Priority of Payments—Application of Principal Proceeds."
For so long as any Class of Offered Securities is listed on the Irish Stock Exchange, the Trustee at the
direction of the Issuer will render an accounting in the form specified in the Indenture to the Irish Stock
Exchange prior to the related Payment Date which will contain the aggregate outstanding principal
amount of the Offered Securities of each such Class at the beginning of the Interest Accrual Period and
such amount as a percentage of the original aggregate outstanding principal amount of the Secured Notes
of such Class, the amount of principal payments to be made on the Secured Notes of such Class on the
next Payment Date, the amount of any Deferred Interest on any such Class of Secured Notes, and the
aggregate outstanding principal amount of the Secured Notes of such Class after giving effect to the
principal payments, if any, on the next Payment Date and such amount as a percentage of the original
aggregate outstanding principal amount of the Secured Notes of such Class.
The Indenture
The following summary describes certain provisions of the Indenture among the Co-Issuers and the
Trustee to be dated as of the Closing Date. The summary does not purport to be complete and is subject
to, and qualified in its entirety by reference to, the provisions of the Indenture.
Events of Default. An "Event of Default" is defined in the Indenture as:
(a) a default in the payment, when due and payable, of (i) any Commitment Fee on any Class A-1A-
S Notes, (ii) any interest on any Class A Note or, if there are no Class A Notes outstanding, any Class B
Note or, if there are no Class A Notes or Class B Notes outstanding, any Class C Note or, if there are no
Class A Notes, Class B Notes or Class C Notes outstanding, any Class D Note and the continuation of any
such default, in the case of clauses (i) and (ii), for five (5) Business Days, or (iii) any principal, interest, or
Deferred Interest on, or any Redemption Price in respect of, any Secured Note at its Stated Maturity or
any Redemption Date;
(b) the failure on any Payment Date to disburse amounts available in the Payment Account in
accordance with the priority of payments set forth in the Indenture and continuation of such failure for a
period of five (5) Business Days;
(c) either of the Co-Issuers or the Assets becomes an investment company required to be registered
under the Investment Company Act;
(d) except as otherwise provided in this definition of "Event of Default", a default in the
performance, or breach, of any other covenant or other agreement of the Issuer or the Co-Issuer in the
Indenture (it being understood, without limiting the generality of the foregoing, that any failure to meet
any Concentration Limitation, Collateral Quality Test or Coverage Test is not an Event of Default), or the
failure of any representation or warranty of the Issuer or the Co-Issuer made in the Indenture or in any
certificate or other writing delivered pursuant thereto or in connection therewith to be correct in all
material respects when the same shall have been made, and the continuation of such default, breach or
failure for a period of thirty (30) days after notice to the Issuer or the Co-Issuer, as applicable, and the
Portfolio Manager by registered or certified mail or overnight courier, by the Trustee, the Issuer, the Co-
62

Issuer or the Portfolio Manager or to the Co-Issuers, the Portfolio Manager and the Trustee by a Majority
of the Controlling Class, specifying such default, breach or failure and requiring it to be remedied and
stating that such notice is a "Notice of Default" under the Indenture;
(e) certain events of bankruptcy, insolvency, receivership or reorganization of either of the Co-
Issuers; or
(f) on any Measurement Date, failure of the quotient of (i) the sum of the Collateral Principal
Amount plus the aggregate of the Market Values of all Defaulted Obligations minus the Excess CCC/Caa
Adjustment Amount, divided by (ii) the aggregate outstanding principal amount of the Senior Class A
Notes, to equal or exceed 102%; provided, that for purposes of the foregoing, the aggregate outstanding
principal amount of the Class A-1A-S Notes will include an amount (in addition to the amount thereof)
equal to all unfunded commitments that have not been irrevocably reduced in respect of all Delayed
Drawdown Collateral Obligations and Revolving Collateral Obligations less amounts on deposit in the
Revolver Funding Account.
If an Event of Default occurs and is continuing (other than an Event of Default referred to in clause (e)
above), the Trustee may, and shall, upon the written direction of a Majority of the Notes of the
Controlling Class by notice to the applicable Co-Issuers and each Rating Agency, declare the principal of
and accrued interest on the Secured Notes to be immediately due and payable. If an Event of Default
described in clause (e) above occurs, such an acceleration will occur automatically. The "Controlling
Class" will be the Senior Class A Notes (voting together as a single Class) so long as any Senior Class A
Notes are outstanding; then the Class A-2 Notes so long as any Class A-2 Notes are outstanding; then the
Class B Notes, so long as any Class B Notes are outstanding; then the Class C Notes so long as any Class
C Notes are outstanding; then the Class D Notes, so long as any Class D Notes are outstanding; and then
the Subordinated Notes.
If an Event of Default has occurred and is continuing, the Trustee will retain the Assets intact and collect
all payments in respect of the Assets unless either (i) the Trustee determines that the anticipated proceeds
of a sale or liquidation of the Assets (after deducting the reasonable expenses of such sale or liquidation)
would be sufficient to discharge in full the amounts then due (or, in the case of interest, accrued) and
unpaid on the Secured Notes for principal and interest (including Deferred Interest) and Commitment
Fees and all amounts payable prior to payment of principal on such Secured Notes (including amounts
due and owing as Administrative Expenses and amounts payable to any Hedge Counterparty upon
liquidation of the Assets and all amounts owing under the Financed Amount Note) and a Majority of the
Controlling Class agrees with such determination; or (ii) a Supermajority of each of (a) the Senior Class
A Notes (voting together as a single Class), (b) the Class A-2 Notes, (c) the Class B Notes, (d) the Class
C Notes and (e) the Class D Notes, direct the sale and liquidation of the Assets.
A Majority of the Controlling Class will have the right following the occurrence, and during the
continuance of, an Event of Default to cause the institution of and direct the time, method and place of
conducting any proceeding for any remedy available to the Trustee; provided, that (a) such direction shall
not conflict with any rule of law or with any express provision of the Indenture, (b) the Trustee may take
any other action deemed proper by the Trustee that is not inconsistent with such direction, (c) the Trustee
shall have been provided with indemnity reasonably satisfactory to it, and (d) notwithstanding the
foregoing, any direction to the Trustee to undertake a sale of Assets may be given only in accordance with
the preceding paragraph and the applicable provisions of the Indenture.
Subject to the provisions of the Indenture relating to the duties of the Trustee, the Trustee will be under no
obligation to exercise the rights or powers vested in it under the Indenture in respect of an Event of
Default, at the request or direction of the holders of any Notes unless such holders have provided to the
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Trustee security or indemnity reasonably satisfactory to the Trustee. A Majority of the Controlling Class
may, in certain cases, waive any default with respect to such Notes, except a default (a) in the payment of
the principal of any Secured Note or any payment of Commitment Fees, Class A-1A-S Additional Costs
and Class A-1A-S Tax Gross-Up Amounts (which may be waived, in the case of a default in the payment
of principal of any Secured Note, with the consent of each holder of such Note, and in the case of a
default in the payment of the Commitment Fees, Class A-1A-S Additional Costs and Class A-1A-S Tax
Gross-Up Amounts, with the consent of each holder of the Class A-1A-S Notes), (b) in the payment of
interest on the Notes of the Controlling Class (which may be waived with the consent of the holders of
100% of the Controlling Class) or (c) in respect of a provision of the Indenture that cannot be modified or
amended without the waiver or consent of the holder of each such outstanding Note adversely affected
thereby (which may be waived with the consent of each such holder).
No holder of a Note will have the right to institute any proceeding with respect to the Indenture unless (i)
such holder previously has given to the Trustee written notice of an Event of Default, (ii) the holders of
not less than 25% in aggregate outstanding principal amount of the Notes of the Controlling Class have
made a written request upon the Trustee to institute such proceedings in its own name as Trustee and such
holders have provided the Trustee indemnity reasonably satisfactory to the Trustee, (iii) the Trustee, for
thirty (30) days after its receipt of such notice, request and provision of such indemnity to the Trustee, has
failed to institute any such proceeding and (iv) no direction inconsistent with such written request has
been given to the Trustee during such 30-day period by a Majority of the Controlling Class.
In determining whether the holders of the requisite aggregate outstanding principal amount have given
any request, demand, authorization, direction, notice, consent or waiver under the Indenture, (a) Notes
owned by the Issuer, the Co–Issuer, or (only in the case of a vote to remove or replace the Portfolio
Manager) the Portfolio Manager or any affiliate of the Portfolio Manager, or any other obligor upon the
Notes or any affiliate thereof shall be disregarded and deemed not to be outstanding, except that, in
determining whether the Trustee shall be protected in relying upon any such request, demand,
authorization, direction, notice, consent or waiver, only Notes that the Trustee knows to be so owned shall
be so disregarded, (b) Notes so owned that have been pledged in good faith may be regarded as
outstanding if the pledgee establishes to the satisfaction of the Trustee the pledgee's right so to act with
respect to such Notes and that the pledgee is not the Issuer, the Co–Issuer, the Portfolio Manager or any
other obligor upon the Notes or any affiliate of the Issuer, the Co–Issuer, the Portfolio Manager or such
other obligor and (c) during the Draw Period, the Aggregate Undrawn Amount of the Class A-1A-S Notes
shall be deemed to be outstanding.
Notices. Notices to the holders of the Notes shall be given by first class mail, postage prepaid, to
registered holders of Notes at each such holder's address appearing in the register maintained by the
Trustee. In addition, for so long as the Offered Securities are listed on the Irish Stock Exchange and so
long as the guidelines of such exchange so require, notices to the holders of such Offered Securities shall
also be released through the Companies Announcements Office of the Irish Stock Exchange.
Modification of Indenture. With the consent of a Majority of the Secured Notes of each Class materially
and adversely affected thereby (for which purpose, the Senior Class A Notes will constitute and vote
together as a single Class) and the consent of a Majority of the Subordinated Notes (if the Subordinated
Notes are materially and adversely affected thereby), the Trustee and the Co-Issuers may execute one or
more supplemental indentures to add provisions to, or change in any manner or eliminate any provisions
of, the Indenture or modify in any manner the rights of the holders of the Notes of such Class. The
Trustee shall be entitled to conclusively rely on an opinion of counsel as to whether or not the holders of
Notes would be materially and adversely affected by such change. Such determination shall be
conclusive and binding on all present and future holders. However, the Issuer shall not enter into any
such supplemental indenture if any Hedge Counterparty would be materially and adversely affected by
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such supplemental indenture and notifies the Issuer and the Trustee thereof without the prior written
consent of such Hedge Counterparty, and the Issuer shall not enter into any such supplemental indenture
if the holder of the Financed Amount Note would be materially and adversely affected by such
supplemental indenture and notifies the Issuer and the Trustee thereof without the prior written consent of
the holder of the Financed Amount Note.
Without the consent of the holders of each outstanding Note materially and adversely affected thereby,
however, no such supplemental indenture described above may:
(i)
(ii)
(iii)
(iv)
(v)
(vi)
(vii)
(viii)
(ix)
change the Stated Maturity of the principal of or the due date of any installment of interest on any
Secured Note, reduce the principal amount thereof or the rate of interest thereon or the
Redemption Price or the Commitment Fee Rate with respect to any Offered Security, or change
the earliest date on which Notes of any Class may be redeemed, change the provisions of the
Indenture relating to the application of proceeds of any Assets to the payment of principal of or
interest on Secured Notes or distributions on the Subordinated Notes or change any place where,
or the coin or currency in which, Notes or the principal thereof or interest thereon is payable, or
impair the right to institute suit for the enforcement of any such payment on or after the Stated
Maturity thereof (or, in the case of redemption, on or after the applicable Redemption Date);
reduce the percentage of the aggregate outstanding principal amount of holders of Notes of each
Class whose consent is required for the authorization of any such supplemental indenture or for
any waiver of compliance with certain provisions of the Indenture or certain defaults thereunder
or their consequences provided for in the Indenture;
impair or adversely affect the Assets except as otherwise permitted in the Indenture;
except as otherwise permitted by the Indenture, permit the creation of any lien ranking prior to or
on a parity with the lien of the Indenture with respect to any part of the Assets or terminate such
lien on any property at any time subject thereto or deprive the holder of any Secured Note of the
security afforded by the lien of the Indenture;
reduce the percentage of the aggregate outstanding principal amount of holders of Secured Notes
of each Class whose consent is required to request the Trustee to preserve the Assets or rescind
the Trustee's election to preserve the Assets or to sell or liquidate the Assets pursuant to the
Indenture;
modify any of the provisions of the Indenture with respect to supplemental indentures, except to
increase the percentage of outstanding Notes the consent of the holders of which is required for
any such action or to provide that certain other provisions of the Indenture cannot be modified or
waived without the consent of the holder of each Note outstanding and affected thereby;
modify the definition of the term "outstanding" or the priority of payments set forth in the
Indenture;
modify any of the provisions of the Indenture in such a manner as to affect the calculation of the
amount of any payment of interest or principal on any Secured Note, or any amount available for
distribution to the Subordinated Notes or to affect the rights of the holders of Secured Notes to
the benefit of any provisions for the redemption of such Secured Notes contained therein;
modify the restrictions on and procedures for resales and other transfers of Offered Securities
(except as provided in clause (vi) of the second succeeding paragraph below); or
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(x)
modify any of the provisions of the Indenture in such a manner as to impose any liability on a
holder of Notes to any third party (other than Class A-1A-S Notes or any liabilities set forth in the
Indenture on the Closing Date);
provided that nothing in clauses (i) through (x) above is intended to apply to a supplemental indenture
that is otherwise permitted by the Indenture that may indirectly affect the amount available for application
under "Summary of Terms—Priority of Payments—Application of Interest Proceeds" or "—Application
of Principal Proceeds."
Not later than 15 Business Days prior to the execution of any proposed supplemental indenture pursuant
to the above provision, the Trustee, at the expense of the Co-Issuers, will mail to the holders of the
Offered Securities, the Portfolio Manager and each Rating Agency (so long as any rated Notes are
outstanding) a copy of such proposed supplemental indenture and will request any required consent from
the applicable holders of Offered Securities to be given within 15 Business Days and request that each
Rating Agency notify the Trustee and the Issuer as to whether such supplemental indenture will result in
the reduction or withdrawal of its then-current ratings of any Class of Notes or Composite Notes. The
Trustee (at the expense of the Co-Issuers) notify the Noteholders and the Portfolio Manager of each
response received by a Rating Agency. Any consent given to a proposed supplemental indenture by the
holder of any Offered Securities will be irrevocable and binding on all future holders or beneficial owners
of that Offered Security, irrespective of the execution date of the supplemental indenture. If the holders
of less than the required percentage of the aggregate outstanding amount of the relevant Offered
Securities consent to a proposed supplemental indenture within 15 Business Days, on the first Business
Day following such period, the Trustee will provide consents received to the Issuer and the Portfolio
Manager so that they may determine which holders of Offered Securities have consented to the proposed
supplemental indenture and, which holders of Offered Securities (and, to the extent such information is
reasonably available to the Trustee, which beneficial owners) have not consented to the proposed
supplemental indenture. If it intends to exercise its Amendment Buy-Out Option, the Amendment Buy-
Out Purchaser must so notify the Trustee (which notice will designate a date for the Amendment Buy-Out
to occur no earlier than 10 Business Days after the date of such notice) no later than five Business Days
after the Portfolio Manager is so notified by the Trustee and the Trustee will promptly mail such notice to
all holders of the Offered Securities. Any Non-Consenting Holder may give consent to the related
proposed supplemental indenture until the 5th Business Day prior to the date of the Amendment Buy-Out
designated by the Amendment Buy-Out Purchaser, and in such case will cease to be a Non-Consenting
Holder for purposes of the Amendment Buy-Out. If the Amendment Buy-Out Purchaser exercises its
Amendment Buy-Out Option and purchases the applicable Offered Securities, the Amendment Buy-Out
Purchaser, as holder or beneficial owner of the applicable Offered Securities, may consent to the related
proposed supplemental indenture within five Business Days of the Amendment Buy-Out.
The Co-Issuers and the Trustee may also enter into supplemental indentures, without obtaining the
consent of holders of the Offered Securities or the holder of the Financed Amount Note or any Hedge
Counterparty (except as expressly noted below), at any time and from time to time, subject to certain
requirements described in the Indenture:
(i)
(ii)
to evidence the succession of another person to the Issuer or the Co-Issuer and the assumption by
any such successor person of the covenants of the Issuer or the Co–Issuer in the Indenture and in
the Notes;
to add to the covenants of the Co-Issuers or the Trustee for the benefit of the Secured Parties or to
surrender any right or power conferred upon the Co-Issuers by the Indenture;
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(iii)
(iv)
(v)
(vi)
(vii)
(viii)
(ix)
(x)
(xi)
(xii)
(xiii)
(xiv)
to convey, transfer, assign, mortgage or pledge any property to or with the Trustee for the benefit
of the Secured Parties;
to evidence and provide for the acceptance of appointment under the Indenture by a successor
Trustee and to add to or change any of the provisions of the Indenture as shall be necessary to
facilitate the administration of the trusts under the Indenture by more than one Trustee, pursuant
to the requirements of the Indenture;
to correct or amplify the description of any property at any time subject to the lien of the
Indenture, or to better assure, convey and confirm unto the Trustee any property subject or
required to be subjected to the lien of the Indenture (including, without limitation, any and all
actions necessary or desirable as a result of changes in law or regulations) or to subject to the lien
of the Indenture any additional property;
to modify the restrictions on and procedures for resales and other transfers of Notes to reflect any
changes in applicable law or regulation (or the interpretation thereof) or to enable the Co-Issuers
to rely upon any exemption from registration under the Securities Act or the Investment Company
Act or to remove restrictions on resale and transfer to the extent not required by the Indenture;
to make such changes as shall be necessary or advisable in order for the listed Notes or
Composite Notes to be listed or de-listed on an exchange, including the Irish Stock Exchange;
at any time within the Reinvestment Period, subject to the approval of a Majority of the
Subordinated Notes, to make such changes as shall be necessary to permit the Co-Issuers to issue
additional notes of any one or more new classes;
otherwise to correct any inconsistency or cure any ambiguity, omission or errors in the Indenture
or to conform the provisions of the Indenture to this Offering Circular;
to accommodate, modify or amend existing and/or replacement Hedge Agreements;
to take any action advisable to prevent the Issuer from becoming subject to withholding or other
taxes (other than taxes with respect to the Issuer otherwise permitted under the Indenture), fees or
assessments or to prevent the Issuer from being treated as engaged in a United States trade or
business or otherwise being subject to United States federal, state or local income tax on a net
income basis;
to enter into any additional agreements not expressly prohibited by the Indenture as well as any
amendment, modification or waiver if the Issuer determines that such amendment, modification
or waiver would not, upon or after becoming effective, materially and adversely affect the rights
or interest of holders of any Class of Notes;
to evidence any waiver by any Rating Agency as to any requirement or condition, as applicable,
of such Rating Agency set forth herein;
with the consent of the Portfolio Manager, to modify the definitions of "Credit Improved
Obligation", "Credit Risk Obligation", "Defaulted Obligation" or "Equity Security", the
restrictions on the sales of Collateral Obligations or the Investment Criteria set forth under
"Security for the Secured Notes—Sales of Collateral Obligations; Additional Collateral
Obligations and Investment Criteria" (other than the calculation of the Concentration Limitations
and the Collateral Quality Test) in a manner not material and adverse to holders of any Class of
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the Notes as evidenced by an opinion of counsel (which may be supported as to factual (including
financial and capital markets) matters by any relevant certificates and other documents necessary
or advisable in the judgment of counsel delivering such opinion of counsel) to the effect that such
modification would not be materially adverse to the holders of any Class of Notes;
(xv)
(xvi)
(xvii)
to amend, modify, enter into or accommodate the execution of any contract relating to a Synthetic
Security;
to amend or modify the Indenture in order to enter into or otherwise accommodate the execution
of any Securities Lending Agreement;
with the consent of the holders of a Majority of the aggregate outstanding principal amount of the
Class A-1A-S Notes, to amend any provision in the Indenture relating solely to the manner,
timing and conditions of Borrowings; or
(xviii) to make any change that does not materially and adversely affect the rights of the holders of the
Offered Securities.
The Portfolio Manager will be bound to follow any amendment or supplement to the Indenture if the
Portfolio Manager has received a copy of the amendment or supplement from the Issuer or the Trustee
prior to the execution thereof in accordance with the notice requirements of the Indenture; provided,
however, that with respect to any amendment or supplement to the Indenture which would (i) increase the
duties or liabilities of, or adversely change the economic consequences (including the payment of any fees
to the Portfolio Manager) to, the Portfolio Manager, (ii) modify the restrictions on the purchases or sales
of Collateral Obligations under the Indenture or the Investment Criteria described under "Security for the
Secured Notes—Sales of Collateral Obligations; Additional Collateral Obligations and Investment
Criteria" or constitute an amendment under clause (xiv) of the immediately preceding paragraph,
(iii) expand or restrict the Portfolio Manager's discretion or (iv) adversely affect the Portfolio Manager,
the Portfolio Manager will not be bound thereby unless the Portfolio Manager has consented thereto in
writing, such consent to not be unreasonably withheld or delayed; provided, further, that the Portfolio
Manager may withhold its consent for any reason if such amendment affects the amount, timing or
priority of payment of the Portfolio Manager's fees or increases or adds to the obligations of the Portfolio
Manager and the Issuer will not enter into any such amendment or supplement unless the Portfolio
Manager has given its prior written consent.
For so long as any Offered Securities are listed on the Irish Stock Exchange and the guidelines of such
exchange shall so require, the Issuer will notify the Irish Stock Exchange of any material modification of
the Indenture. Except as described below, and as described in clause (vii) of the second preceding
paragraph, no supplemental indenture, or other modification or amendment of the Indenture not requiring
consent of the holders of the Offered Securities, may become effective unless such supplemental
indenture, modification or amendment does not alter the characterization of the outstanding Senior Notes
as debt for United States federal income tax purposes and each of the Rating Agencies has notified in
writing the Trustee and the Co-Issuers that such supplemental indenture, modification or amendment will
not result in a reduction or withdrawal of its then current rating of any Class of Secured Notes. The
Trustee will have no obligation to request such a determination from either Rating Agency and shall have
no liability for failure to request such a determination unless the Trustee is requested in writing to do so
by or on behalf of the Issuer or by a holder or beneficial owner of the Notes. The Trustee may rely upon
an opinion of counsel as to whether the interests of any holder of Notes would be materially adversely
affected by any supplemental indenture or other modification or amendment of the Indenture.
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Notwithstanding anything herein to the contrary, the Issuer and the Trustee may also enter into one or
more supplemental indentures, without the consent of the holders of Offered Securities, whether or not
adversely affected thereby, but with the prior written consent of the Portfolio Manager and with
satisfaction of the Global Rating Agency Condition after ten (10) days prior notice to the Rating Agencies
for any of the following purposes: (i) to change any of the components of the Minimum
Diversity/Maximum Rating/Minimum Spread Matrix; or (ii) to change the Minimum Weighted Average
Moody's Recovery Rate Test, the Minimum Weighted Average S&P Recovery Rate Test or the Weighted
Average Maturity Test or (iii) to reflect the criteria of the Rating Agencies with respect to CDO
transactions; provided however, that the Global Rating Agency Condition shall only be satisfied in
respect of a Rating Agency if the purpose of such supplemental indenture is to modify a Collateral
Quality Test or other rating criteria that the Issuer determines (based on a certificate of the Portfolio
Manager) is applicable to the Issuer based on the requirements of such Rating Agency
Additional issuance. The Indenture will provide that, at any time during the Reinvestment Period, the Co-
Issuers may issue and sell additional Notes of any one or more existing Classes and use the proceeds to
purchase additional Collateral Obligations or as otherwise permitted under the Indenture; provided, that
the following conditions are met: (a) the Portfolio Manager consents to such issuance and such issuance
is approved by a Majority of the Subordinated Notes; (b) such issuance may not exceed 100% of the
respective original outstanding amount of the Subordinated Notes or the applicable Class or Classes of
Secured Notes; (c) the terms of the Notes issued must be identical to the respective terms of previously
issued Notes of the applicable Class (except that the interest due on additional Secured Notes will accrue
from the issue date of such additional Secured Notes and the interest rate and price of such Notes do not
have to be identical to those of the initial Notes of that Class); (d) unless only additional Subordinated
Notes are being issued, the Global Rating Agency Condition shall have been satisfied; (e) the proceeds of
any additional Notes (net of fees and expenses incurred in connection with such issuance) are used to
purchase additional Collateral Obligations or as otherwise permitted under the Indenture and (f) an
opinion of tax counsel of nationally recognized standing in the United States experienced in such matters
shall be delivered to the Trustee to the effect that (i) such additional issuance will not result in the Issuer
becoming subject to United States federal income taxation with respect to its net income, (ii) such
issuance would not cause the holders or beneficial owners of Notes previously issued to be deemed to
have sold or exchanged such Secured Notes under Section 1001 of the United States Internal Revenue
Code of 1986, as amended (the "Code") and (iii) any additional Class A Notes, Class B Notes or Class C
Notes will, and any additional Class D Notes should, be debt for United States federal income tax
purposes. Such additional Notes may be offered at prices that differ from the applicable initial offering
price.
Amendment Buy-Out. In the case of any supplemental indenture that requires the consent of one or more
holders of Offered Securities, the Amendment Buy-Out Purchaser shall have the right, but not the
obligation, to purchase from Non-Consenting Holders all Offered Securities held by such holders of the
Class of Offered Securities whose consent was solicited with respect to such supplemental indenture (the
"Amendment Buy-Out Option"), in each case, for the applicable Amendment Buy-Out Purchase Price;
provided, however, that the Amendment Buy-Out Purchaser may not exercise the Amendment Buy-Out
Option during the Non-Call Period in connection with a proposed amendment to reduce the rate of
interest on any Offered Securities or to change the earliest date on which any Class of Offered Securities
may be redeemed at the option of the Issuer. If such option is exercised, the Amendment Buy-Out
Purchaser must purchase all such Offered Securities of Non-Consenting Holders for the applicable
Amendment Buy-Out Purchase Price, regardless of the applicable percentage of the aggregate outstanding
amount of the Offered Securities the consent of whose holders is required for such supplemental
indenture (an "Amendment Buy-Out"). By its acceptance of its Offered Securities under the Indenture,
each holder of Offered Securities agrees that if the Amendment Buy-Out Option is exercised, any Non-
Consenting Holder will be required to sell its applicable Offered Securities to the Amendment Buy-Out
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Purchaser. Neither the Amendment Buy-Out Purchaser nor any other Person shall have any liability to
any holder or beneficial owner of Offered Securities as a result of an election by the Amendment Buy-Out
Purchaser not to exercise the Amendment Buy-Out Option. All purchases made pursuant to an
Amendment Buy-Out Option individually and in the aggregate must comply with the applicable transfer
restrictions for the relevant Offered Securities set forth herein in "Transfer Restrictions," and all
applicable laws, rules and regulations (including, without limitation, any rules, regulations and procedures
of any securities exchange, self-regulatory organization or clearing agency).
Consolidation, merger or transfer of assets. Except under the limited circumstances set forth in the
Indenture, neither the Issuer nor the Co-Issuer may consolidate with, merge into, or transfer or convey all
or substantially all of its assets to, any other corporation, partnership, trust or other person or entity.
Petitions for bankruptcy. The Indenture will provide that the holders of the Notes may not seek to
commence a bankruptcy proceeding against or cause the Issuer or Co-Issuer to petition for bankruptcy
until the payment in full of the Notes and not before one year and a day, or if longer, the applicable
preference period then in effect, has elapsed since such payment.
Satisfaction and discharge of the Indenture. The Indenture will be discharged with respect to the Assets
securing the Secured Notes upon (i) delivery to the Trustee for cancellation of all of the Notes, or, with
certain exceptions (including the obligation to pay principal and interest), upon deposit with the Trustee
of funds sufficient for the payment or redemption thereof and (ii) the payment by the Co-Issuers of all
other amounts due under the Indenture.
Trustee. The Bank of New York Trust Company, National Association will be the Trustee under the
Indenture for the Notes. The payment of the fees and expenses of the Trustee relating to the Notes is
solely the obligation of the Co-Issuers and solely payable out of the Assets. The Trustee and/or its
affiliates may receive compensation in connection with the Trustee's investment of trust assets in certain
Eligible Investments as provided in the Indenture. Eligible Investments may include investments for
which the Trustee or an affiliate of the Trustee provides services. The Co-Issuers, the Portfolio Manager
and their affiliates may maintain other banking relationships in the ordinary course of business with the
Trustee or its affiliates.
The Indenture contains provisions for the indemnification of the Trustee by the Issuer, payable solely out
of the Assets, for any loss, liability or expense incurred without negligence, willful misconduct or bad
faith on its part, arising out of or in connection with the acceptance or administration of the trust. The
Trustee may resign at any time by providing thirty (30) days' notice. The Trustee may be removed at any
time by a Majority of each Class of Secured Notes (for which purpose, the Senior Class A Notes will
constitute and vote together as a single Class, the Class A-2 Notes will constitute and vote together as a
single Class, the Class B Notes will constitute and vote together as a single Class, the Class C Notes will
constitute and vote together as a single Class and the Class D Notes will constitute and vote together as a
single Class) or, at any time when an Event of Default shall have occurred and be continuing, by a
Majority of the Controlling Class as set forth in the Indenture. No resignation or removal of the Trustee
will become effective until the acceptance of the appointment of the successor Trustee.
Form, denomination and registration of the Offered Securities
The Secured Notes will be sold only to (i) non-U.S. persons in offshore transactions in reliance on
Regulation S under the Securities Act and (ii) persons that are Qualified Purchasers and either (x)
Qualified Institutional Buyers or (y) IAIs. Each Secured Note, other than a Class A-1A-S Note, sold to a
person that, at the time of the acquisition, purported acquisition or proposed acquisition of any such
Secured Note is both a Qualified Institutional Buyer and a Qualified Purchaser, will be issued in the form
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of one or more permanent global notes in definitive, fully registered form without interest coupons (the
"Rule 144A Global Secured Notes"). The Secured Notes sold to a person that, at the time of the
acquisition, purported acquisition or proposed acquisition of any such Secured Note is a Qualified
Purchaser and an IAI shall be issued in the form of one or more definitive, fully registered notes without
coupons (each, a "Certificated Secured Note"). The Secured Notes, other than Class A-1A-S Notes,
sold to non-U.S. persons in offshore transactions in reliance on Regulation S will be issued in the form of
one or more permanent global notes in definitive, fully registered form without interest coupons (the
"Regulation S Global Secured Notes"). The Rule 144A Global Secured Notes and the Regulation S
Global Secured Notes are referred to herein collectively as the "Global Secured Notes". All Class A-1A-
S Notes will be issued only in definitive, fully registered form without interest coupons.
Each initial investor and subsequent transferee of a Certificated Secured Note will be required to provide
a purchaser representation letter in which it will be required to certify, among other matters, as to its
status under the Securities Act, the Investment Company Act and ERISA.
The Subordinated Notes are being initially offered, and may subsequently be transferred, only (a) to
persons in the United States that are either (A) Qualified Purchasers or (B) Knowledgeable Employees
with respect to the Issuer or entities owned exclusively by Knowledgeable Employees or Qualified
Purchasers that in the case of (A) and (B) are either (1) Qualified Institutional Buyers or (2) Accredited
Investors who are also Knowledgeable Employees and (b) to certain non-U.S. persons in offshore
transactions in reliance on Regulation S under the Securities Act.
All Subordinated Notes sold to U.S. purchasers and at the election of the Issuer, Subordinated Notes sold
to certain non-U.S. purchasers in offshore transactions in reliance on Regulation S, will be evidenced by
notes in definitive, fully registered form without interest coupons ("Certificated Subordinated Notes").
At the option of the Issuer (with the written consent of the Portfolio Manager), certain Subordinated
Notes sold to non-U.S. Persons in offshore transactions in reliance on Regulation S will each be
represented by one or more permanent global notes in definitive, fully registered form without interest
coupons (the "Regulation S Global Subordinated Notes"). Each initial investor and each subsequent
transferee of a Subordinated Note, other than a subsequent transferee of a Regulation S Global
Subordinated Note, will be required to provide a purchaser representation letter in which it will be
required to certify, among other matters, as to its status under the Securities Act, the Investment Company
Act and ERISA.
The Composite Notes will be sold only to (i) non-U.S. persons in offshore transactions in reliance on
Regulation S under the Securities Act and (ii) persons that are Qualified Purchasers and Qualified
Institutional Buyers. Each Composite Note sold to a person that, at the time of the acquisition, purported
acquisition or proposed acquisition of any such Composite Note is both a Qualified Institutional Buyer
and a Qualified Purchaser, will be issued in the form of one or more permanent global notes in definitive,
fully registered form without interest coupons (the "Rule 144A Global Composite Notes"). The
Composite Notes sold to non-U.S. persons in offshore transactions in reliance on Regulation S will be
issued in the form of one or more permanent global notes in definitive, fully registered form without
interest coupons (the "Regulation S Global Composite Notes"). The Rule 144A Global Composite
Notes and the Regulation S Global Composite Notes are referred to herein collectively as the "Global
Composite Notes".
As used above, "U.S. person" and "offshore transaction" shall have the meanings assigned to such terms
in Regulation S under the Securities Act.
The Global Secured Notes, the Global Composite Notes and the Regulation S Global Subordinated Notes
will be deposited with the Trustee as custodian for, and registered in the name of, a nominee of DTC and,
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in the case of the Regulation S Global Secured Notes, the Regulation S Global Composite Notes and the
Regulation S Global Subordinated Notes, for the respective accounts of Euroclear Bank S.A./N.V., as
operator of the Euroclear System ("Euroclear") and Clearstream Banking, société anonyme
("Clearstream").
A beneficial interest in a Regulation S Global Secured Note or a Regulation S Global Composite Note
may be transferred to a person who takes delivery in the form of an interest in the corresponding Rule
144A Global Secured Note, Certificated Secured Note or Rule 144A Global Composite Note only upon
receipt by the Trustee of (i) a written certification from the transferor in the form required by the
Indenture to the effect that such transfer is being made to a person whom the transferor reasonably
believes is a Qualified Institutional Buyer in a transaction meeting the requirements of Rule 144A under
the Securities Act and in accordance with any applicable securities laws of any state of the United States
or any other jurisdiction (or, solely in the case of a transfer to a person who takes delivery in the form of a
Certificated Secured Note, an IAI in a transaction exempt from registration under the Securities Act and
in accordance with any applicable securities laws of any state of the United States or any other
jurisdiction) and (ii) a written certification from the transferee in the form required by the Indenture to the
effect, among other things, that such transferee is either (x) a Qualified Institutional Buyer or (y) solely in
the case of a Certificated Secured Note, an IAI, and (z) a Qualified Purchaser. Beneficial interests in a
Rule 144A Global Secured Note, a Rule 144A Global Composite Note or a Certificated Secured Note
may be transferred to a person who takes delivery in the form of an interest in the corresponding
Regulation S Global Secured Note, Regulation S Global Composite Note or Certificated Secured Note
only upon receipt by the Trustee of (i) in the case of a transfer to a person who takes delivery in the form
of an interest in the corresponding Regulation S Global Secured Note or Regulation S Global Composite
Note, a written certification from the transferor in the form required by the Indenture to the effect that
such transfer is being made in accordance with Regulation S under the Securities Act and a written
certification from the transferee in the form required by the Indenture to the effect, among other things,
that such transferee is a non-U.S. person purchasing such Note in an offshore transaction pursuant to
Regulation S and (ii) in the case of a transfer to a person who takes delivery in the form of an interest in a
Certificated Secured Note, a written certification from the transferee in the form required by the Indenture
to the effect, among other things, that such transferee is an IAI and a Qualified Purchaser. Any beneficial
interest in one of the Global Secured Notes or the Global Composite Notes that is transferred to a person
who takes delivery in the form of an interest in another Global Secured Note or Global Composite Note
will, upon transfer, cease to be an interest in such Global Secured Note or Global Composite Note, and
become an interest in such other Global Secured Note or Global Composite Note, and accordingly, will
thereafter be subject to all transfer restrictions and other procedures applicable to beneficial interests in
such other Global Secured Notes or Global Composite Notes for as long as it remains such an interest.
A beneficial interest in a Regulation S Global Subordinated Note may be transferred to a person who
takes delivery in the form of a Certificated Subordinated Note only upon receipt by the Issuer and the
Trustee of certificates substantially in the form of Annex A-1 and Annex A-2 attached hereto executed by
the transferee. A Certificated Subordinated Note may be transferred to a person who takes delivery in the
form of an interest in a Regulation S Global Subordinated Note only upon receipt by the Issuer and the
Trustee of (A) the transferor's Subordinated Note together with an interest transfer form in the form
prescribed by the Indenture executed by the transferor and (B) certificates substantially in the form of
Annex A-1 and Annex A-2 attached hereto executed by the transferee. A Certificated Subordinated Note
may be transferred to a person who takes delivery in the form of an interest in a Certificated Subordinated
Note only upon receipt by the Issuer and the Trustee of (A) the transferor's Subordinated Note together
with an interest transfer form in the form prescribed by the Indenture executed by the transferor and (B)
certificates substantially in the form of Annex A-1 and Annex A-2 attached hereto executed by the
transferee. A beneficial interest in a Regulation S Global Subordinated Note may be transferred to a
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person who takes delivery in the form of an interest in such Regulation S Global Subordinated Note
without the provision of any transferor or transferee certifications.
No service charge will be made for any registration of transfer or exchange of Offered Securities but the
Trustee may require payment of a sum sufficient to cover any transfer, tax or other governmental charge
payable in connection therewith.
The registered owner of the relevant Global Secured Note, Global Composite Note or Regulation S
Global Subordinated Note will be the only person entitled to receive payments in respect of the Offered
Securities represented thereby, and the Co-Issuers will be discharged by payment to, or to the order of, the
registered owner of such Global Secured Note, Global Composite Note or Regulation S Global
Subordinated Note in respect of each amount so paid. No person other than the registered owner of the
relevant Global Secured Note, Global Composite Note or Regulation S Global Subordinated Note will
have any claim against the Co-Issuers in respect of any payment due on that Global Secured Note, Global
Composite Note or Regulation S Global Subordinated Note. Account holders or participants in Euroclear
and Clearstream shall have no rights under the Indenture with respect to Global Secured Notes, Global
Composite Note or Regulation S Global Subordinated Notes held on their behalf by the Trustee as
custodian for DTC, and DTC may be treated by the Co-Issuers, the Trustee and any agent of the Co-
Issuers or the Trustee as the holder of Global Secured Notes, Global Composite Notes or Regulation S
Global Subordinated Notes for all purposes whatsoever.
Except in the limited circumstances described below, owners of beneficial interests in the Global Secured
Notes, Global Composite Notes or Regulation S Global Subordinated Notes will not be entitled to have
Notes or Composite Notes registered in their names, will not receive or be entitled to receive definitive
physical Notes or Composite Notes and will not be considered "holders" of Notes or Composite Notes
under the Indenture or the Notes or Composite Notes, as applicable. If DTC notifies the Co-Issuers that it
is unwilling or unable to continue as depositary for Global Secured Notes or Global Composite Notes of
any Class or Classes or ceases to be a "clearing agency" registered under the Exchange Act and a
successor depositary or custodian is not appointed by the Co-Issuers within ninety (90) days after
receiving such notice (a "Depository Event"), the Issuer will issue or cause to be issued, Notes or
Composite Notes of such Class or Classes in the form of definitive physical certificates in exchange for
the applicable Global Secured Notes or Global Composite Notes to the beneficial owners of such Global
Secured Notes or Global Composite Notes in the manner set forth in the Indenture. In addition, the owner
of a beneficial interest in a Global Secured Note or Global Composite Note will be entitled to receive a
definitive physical Note or Composite Note, as applicable, in exchange for such interest if an Event of
Default has occurred and is continuing. In the event that definitive physical Notes or Composite Notes
are not so issued by the Issuer to such beneficial owners of interests in Global Secured Notes or Global
Composite Notes, the Issuer expressly acknowledges that such beneficial owners shall be entitled to
pursue any remedy that the holders of a Global Secured Note or Global Composite Note would be entitled
to pursue in accordance with the Indenture (but only to the extent of such beneficial owner's interest in the
Global Secured Note or Global Composite Note) as if definitive physical Notes or Composite Notes had
been issued. In the event that definitive physical Notes or Composite Notes are issued in exchange for
Global Secured Notes or Global Composite Notes as described above, the applicable Global Secured
Note or Global Composite Note will be surrendered to the Trustee by DTC and the Issuer or the Co-
Issuers, as applicable, will execute and the Trustee will authenticate and deliver an equal aggregate
outstanding principal amount of definitive physical Notes or Composite Notes.
Owners of beneficial interests in Regulation S Global Subordinated Notes will receive definitive
Subordinated Notes registered in their names in connection with a Depository Event, and may also
exchange such beneficial interests for Certificated Subordinated Notes in accordance with the procedures
described under "Transfer Restrictions."
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For so long as any Offered Securities are listed on the Irish Stock Exchange and the guidelines of such
exchange shall so require, the Issuer or the Co-Issuers, as applicable, will have a paying agent (which
shall be the Irish Paying Agent) for such Offered Securities in Ireland. In the event that the Irish Paying
Agent is replaced at any time during such period, notice of the appointment of any replacement shall be
released through the Companies Announcements Office of the Irish Stock Exchange.
The Offered Securities in certificated and global form will be subject to certain restrictions on transfer set
forth therein and in the Indenture and the Notes will bear the restrictive legend set forth under "Transfer
Restrictions."
The Notes will be issued in minimum denominations of $250,000 and integral multiples of $1,000 in
excess thereof; provided, that Subordinated Notes will be issued in minimum denominations of $100,000
and integral multiples of $1,000 in excess thereof. The Composite Notes will be issued in the following
minimum denominations (and, in each case, integral multiples of $1): (i) in the case of the Type I
Composite Notes, $375,000, (ii) in the case of the Type II Composite Notes, $560,000 and (iii) in the case
of the Type III Composite Notes, $525,000.
The Subordinated Notes
The Subordinated Notes will be issued pursuant to the Indenture, but will not be secured obligations
thereunder. The following summary, together with the preceding summary of certain principal terms of
the Indenture, describes certain provisions of the Subordinated Notes, but does not purport to be complete
and is subject to, and qualified in its entirety by reference to, the provisions of the Indenture.
Status and ranking. The Subordinated Notes will be fully subordinated to the Secured Notes and to the
payment of all other amounts payable in accordance with the priority of payments. The Subordinated
Notes will not be secured by the Assets or any pledge of the Assets but, under the terms of the Indenture,
the Trustee will pay to the holders of the Subordinated Notes amounts available pursuant to the priority of
payments. To the extent that following realization of the Assets, these amounts are insufficient to repay
the principal amount of the Subordinated Notes or distributions thereon, no other funds will be available
to make such payments.
Distributions on the Subordinated Notes. The Stated Maturity of the Subordinated Notes will be the
Payment Date on May 1, 2022. To the extent funds are available for such purpose under the Indenture as
described above, payments will be made to the holders of the Subordinated Notes on each Payment Date,
commencing in November 2007 and in connection with any redemption of the Subordinated Notes.
Payments on the Subordinated Notes will be made to the person in whose name the Subordinated Note is
registered on the applicable Record Date in the same manner as payments are made to the holders of the
Secured Notes as described under "—The Indenture and the Secured Notes—Entitlement to Payments"
and any unclaimed payments will be subject to the terms described under "—The Indenture and the
Secured Notes—Entitlement to Payments—Prescription."
Mandatory Redemption. The Subordinated Notes will be fully redeemed on the Stated Maturity indicated
in "Summary of Terms—Principal Terms of the Offered Securities" unless previously redeemed as
described herein. The average life of the Subordinated Notes is expected to be less than the number of
years until their Stated Maturity. See "Risk Factors—Relating to the Offered Securities—The Weighted
Average Lives of the Notes may vary."
Optional Redemption. The Subordinated Notes will be redeemed by the Issuer, in whole but not in part,
on any Payment Date on or after the date on which all of the Secured Notes have been redeemed or
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epaid, from the proceeds of the Assets remaining after giving effect to redemption or repayment of the
Secured Notes and payment in full of all expenses of the Co-Issuers, at the direction of the holders of the
requisite percentage of the aggregate outstanding principal amount of the Subordinated Notes (which
direction may be given in connection with a direction to redeem the Secured Notes or at any time after the
Secured Notes have been redeemed or repaid in full). The Redemption Price payable to each holder of
the Subordinated Notes will be its proportionate share of the proceeds of the Assets remaining after the
payments described above.
Voting. Holders of the Subordinated Notes will have no voting rights except as set forth in the Indenture,
the Portfolio Management Agreement or the other transaction documents, as described herein. The
holders of the requisite percentage of the aggregate outstanding principal amount of the Subordinated
Notes will be able to direct a redemption of the Secured Notes and/or the Subordinated Notes pursuant to
the Indenture, and, at any time during the Reinvestment Period, to direct the issuance of additional Notes
of any Class and/or additional notes of one of more new classes, as described herein. See "—The
Indenture and the Secured Notes—The Indenture—Subordinated Notes—Optional Redemption" above.
Cancellation. All Subordinated Notes that are redeemed and surrendered for cancellation will forthwith
be canceled and may not be reissued or resold. The Issuer will not reissue or resell any such Subordinated
Notes.
The Composite Notes
General. Concurrently with the issuance of the Notes, the Issuer will issue the Composite Notes. All
references to any Class of Notes in this Offering Circular relating to payments (including redemptions) to
be made with respect to, or amounts to be deferred with respect to, or to votes or consents to be given by
the holders of, such Class of Notes include a reference to a proportional amount of such payments,
distributions, amounts, votes or consents, as applicable, with respect to the related Component(s)
(whether or not explicitly mentioned).
Status and ranking. The Composite Notes are limited recourse obligations of the Issuer. For purposes of
subordination, the Composite Notes shall not be treated as a separate Class; rather, a Component will be
treated as part of the underlying Class of Notes related to such Component. The Secured Note
Components of the Composite Notes will be secured by the Assets of the Issuer. The Subordinated Note
Components of the Composite Notes will not be secured obligations of the Issuer. See "Security for the
Secured Notes."
Payments on the Composite Notes. On each Payment Date on which payments, whether from Principal
Proceeds or Interest Proceeds or upon redemption or other payments, are made on any Class of Notes to
which the Components relate, a portion of such payment will be allocated to each related Component of
the Composite Notes in the proportion that the principal amount of such Component bears to the principal
amount of the underlying Class of Notes as a whole (including the related Component). If and to the
extent that such payments are in repayment of the principal amount of the underlying Class of Secured
Notes, the principal amount of the related Secured Note Component of the Composite Notes shall be
deemed to have been repaid to the extent of any such payment. No other payments will be made on the
Composite Notes.
Exchange of Components. The Components of the Composite Notes are not separately transferable.
However, a holder of a beneficial interest in a Composite Note may exchange all or a proportionate
amount of each Component of such interest for proportional interests in the underlying Class of Notes by
exchanging such interest for proportional interests in the Global Secured Note or Regulation S Global
Subordinated Notes representing the underlying Class of Notes (or for Certificated Subordinated Notes or
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Certificated Secured Notes, as applicable), subject to the minimum denomination requirements applicable
to such Class and in accordance with the procedures set forth in the Indenture. Any holder of any Class
of Notes (including a holder that received such Note upon exchange of a Composite Note) will not have
the right to exchange such Notes for a Composite Note.
Redemption of the Composite Notes. The Composite Notes will be subject to mandatory redemption,
Special Redemption and Optional Redemption to the extent the underlying Classes of Notes are so
redeemed. Upon any such redemption of the underlying Classes of Notes, the related Components of the
Composite Notes will be redeemed by allocation of payments in respect of the underlying Classes of
Notes to the related Components.
Voting. The holders of Composite Notes are not entitled to any rights to vote as a single Class, but are
entitled to voting rights in the underlying Classes of Notes in the proportion that the Components bear to
the principal amount of the underlying Classes of Notes (including the related Components). The holders
of the Composite Notes, like any investors who hold securities of multiple Classes, may be influenced in
their vote cast in one class of securities by their interest in another class of securities.
Type III Composite Notes Account.
The Trustee will deposit all payments made by the Issuer in respect of any Component of the Type III
Composite Notes into a single, segregated, non-interest bearing account established for the benefit of the
holders of the Type III Composite Notes. On each Payment Date, the Trustee will apply amounts in such
account in the following order: (i) to the payment of, first, the Type III Periodic Notional Interest Amount
and, then, the Type III Periodic Notional Interest Shortfall Amount, if any, to the holders of the Type III
Composite Notes; (ii) to the payment in reduction of the face amount of the Type III Composite Notes
until such face amount has been reduced to $10,000; (iii) prior to the maturity of the Type III Composite
Notes, to the payment of all the remaining funds to the holders of the Type III Composite Notes as excess
cash flow ("Type III Excess Cash Flow"); and (iv) on the maturity date of the Type III Composite
Notes, to the payment in reduction of the face amount of the Type III Composite Notes until such face
amount has been reduced to zero and then all remaining funds to the holders of the Type III Composite
Notes as Type III Excess Cash Flow.
As used above, "Type III Periodic Notional Interest Amount" means, with respect to each Payment
Date, an amount of notional interest at a per annum rate of 2.0% on the face amount of the Type III
Composite Notes as of the end of the related Interest Accrual Period, after giving effect to any payments
made to the Holders of the Type III Composite Notes pursuant to clauses (ii) and (iv) above on the
immediately preceding Payment Date, calculated on the basis of a 360-day year consisting of twelve 30-
day months and "Type III Periodic Notional Interest Shortfall Amount" means, with respect to any
Payment Date, any shortfall or shortfalls in the payment of the Type III Periodic Notional Interest
Amount with respect to any preceding Payment Date or Payment Dates, together with interest accrued on
such shortfall(s) at a per annum rate of 2.0%.
The Issuer is not required to make payments in respect of the Type III Composite Notes except with
respect to amounts due and payable on the Components of the Type III Composite Notes as described
under "—Payments on the Composite Notes". The failure to pay any amount described in the second
preceding paragraph above will not constitute a default under the Indenture or a breach of any obligation
of the Issuer thereunder. The Trustee will have no fiduciary duties with respect to the application of the
payments described in the second preceding paragraph above beyond its obligations with respect to the
distribution of amounts paid in respect of the Components of the Type III Composite Notes.
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The Secured Notes
Ratings of the Secured Notes and the Composite Notes
It is a condition of the issuance of the Offered Securities that the Secured Notes of each Class receive
from each of Moody's and S&P (each, a "Rating Agency") the minimum rating indicated under
"Summary of Terms—Principal Terms of the Offered Securities." A security rating is not a
recommendation to buy, sell or hold securities and is subject to withdrawal at any time. There is no
assurance that a rating will remain for any given period of time or that a rating will not be lowered or
withdrawn entirely by the assigning Rating Agency if in its judgment circumstances in the future so
warrant.
The ratings of the Secured Notes address the likelihood of full and ultimate payment to holders of the
Secured Notes of all distributions of stated interest (or, in the case of the S&P ratings of the Class A-1
Notes and the Class A-2 Notes, timely payment of stated interest) and the ultimate payment in full of the
principal amount of each such Class not later than its respective Stated Maturity date. The ratings
assigned to the Secured Notes of each Class by each Rating Agency are based upon its assessment of the
probability that the Collateral Obligations will provide sufficient funds to pay the Secured Notes of such
Class (based upon the Interest Rate and principal balance or face amount, as applicable, of such Class),
based largely upon such Rating Agency's statistical analysis of historical default rates on debt securities
with various ratings, the terms of the Indenture, the asset and interest coverage required for the Secured
Notes (which is achieved through the subordination of the Subordinated Notes and certain Classes of
Secured Notes as described herein), the Collateral Quality Test, each component of which must be
satisfied, maintained or improved in order to reinvest in additional Collateral Obligations, and the
Concentration Limitations.
In addition to their respective quantitative tests, the ratings of each Rating Agency take into account
qualitative features of a transaction, including the legal structure and the risks associated with such
structure, such Rating Agency's view as to the quality of the participants in the transaction and other
factors that it deems relevant.
The Composite Notes
It is a condition to the issuance of the Composite Notes that (i) the Type I Composite Notes be rated at
least "Baa3" by Moody's solely with respect to the ultimate receipt of payments equal to the Rated
Balance of the Type I Composite Notes, (ii) the Type II Composite Notes be rated at least "Ba2" by
Moody's solely with respect to the ultimate receipt of payments equal to the Rated Balance of the Type II
Composite Notes and (iii) the Type III Composite Notes be rated at least "Ba2" by Moody's solely with
respect to the ultimate receipt of payments equal to the Rated Balance of the Type III Composite Notes.
A security rating is not a recommendation to buy, sell or hold securities and is subject to withdrawal at
any time. There is no assurance that a rating will remain for any given period of time or that a rating will
not be lowered or withdrawn entirely by Moody's if in its judgment circumstances in the future so
warrant.
The ratings assigned to the Composite Notes of each Class by Moody's are based largely upon Moody's
statistical analysis of historical default rates on debt securities with various ratings, the terms of the
Indenture, the asset and interest coverage required for the Secured Notes (which is achieved through the
subordination of the Subordinated Notes and certain Classes of Secured Notes as described in this
Offering Circular), the Collateral Quality Test, each of which must be satisfied, maintained or improved
in order to reinvest in additional Collateral Obligations, and the Concentration Limitations. In addition to
its quantitative tests, the ratings of Moody's take into account qualitative features of a transaction,
77

including the legal structure and the risks associated with such structure, Moody's view as to the quality
of the participants in the transaction and other factors that it deems relevant.
"Rated Balance" means, with respect to the Moody's rating of each of the Type I Composite Notes, the
Type II Composite Notes and the Type III Composite Notes on any date of determination, the greater of
(x) 0 and (y) an amount equal to the initial face amount of such Class of Composite Notes, reduced by the
aggregate amount, if any, of all distributions of interest, principal or other amounts paid to the holders of
such Class of Composite Notes in respect of its Components.
Security for the Secured Notes
The "Assets" will consist of, and the Issuer will grant to the Trustee a perfected security interest for the
benefit of the Secured Parties in:
(a)
(b)
(c)
(d)
(e)
(f)
(g)
the Collateral Obligations that the Issuer causes to be delivered to the Trustee (directly or through
an intermediary or bailee) pursuant to the Indenture and all payments thereon or with respect
thereto, and all Collateral Obligations which are delivered to the Trustee in the future pursuant to
the terms of the Indenture and all payments thereon or with respect thereto;
the Issuer's interest in (i) the Payment Account, (ii) the Collection Account, (iii) the Ramp-Up
Account, (iv) the Revolver Funding Account, (v) each Synthetic Security Issuer Account and
Synthetic Security Counterparty Account (to the extent permitted under the related Synthetic
Security), (vi) the Expense Reserve Account, (vii) the Interest Reserve Account, (viii) the
Custodial Account and (ix) each Securities Lending Account (subject to any senior liens created
by the related Securities Lending Agreement), any Eligible Investments purchased with funds on
deposit therein, and all income from the investment of funds therein;
the Issuer's rights under the Portfolio Management Agreement, the Hedge Agreements (provided,
that there is no such grant to the Trustee on behalf of any Hedge Counterparty in respect of its
related Hedge Agreement), the Collateral Administration Agreement, the Note Purchase
Agreement, the Securities Lending Agreements and any documentation related to a Synthetic
Security (to the extent permitted under the related Synthetic Security);
all cash or money delivered to the Trustee (or its bailee);
all accounts, chattel paper, deposit accounts, financial assets, general intangibles, instruments,
investment property, letter-of-credit rights and other supporting obligations relating to the
foregoing;
any other property otherwise delivered to the Trustee by or on behalf of the Issuer (whether or not
constituting Collateral Obligations or Eligible Investments); and
all proceeds with respect to the foregoing; provided, that such grants shall not include the
Excepted Property.
Collateral Obligations
It is anticipated that the Issuer will have completed the purchase (or commitment to purchase) of at least
60% (by principal amount) of the initial portfolio of Collateral Obligations on the Closing Date. It is
expected (but there can be no assurance) that the Concentration Limitations, the Collateral Quality Test
and all of the Coverage Tests will be satisfied not later than the end of the Ramp-Up Period.
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The composition of the Collateral Obligations will change over time as a result of (i) the acquisition of
additional Collateral Obligations during the Ramp-Up Period, (ii) scheduled and unscheduled principal
payments on the Collateral Obligations and (iii) sales of Assets and reinvestment of Sale Proceeds and
other Principal Proceeds during the Reinvestment Period, subject to the limitations described under "—
Sales of Collateral Obligations; Additional Collateral Obligations and Investment Criteria" below.
The Concentration Limitations
By the end of the Ramp-Up Period, the Collateral Obligations in the aggregate are expected to comply
with all of the requirements of the Concentration Limitations set forth under "Summary of Terms—
Concentration Limitations." However, the Issuer will not be required to meet (or otherwise maintain or
improve) the requirements imposed by the Concentration Limitations (except that the Specified
Concentration Limitations must be satisfied (or maintained or improved) in connection with the
acquisition of Collateral Obligations as set forth in the Investment Criteria), but Collateral Obligations
that exceed any Concentration Limitation (other than a Specified Concentration Limitation) when
purchased will constitute Excess Concentration Obligations and will be excluded from the calculation of
the Adjusted Collateral Principal Amount and, as a result, will not be included in calculating the
Overcollateralization Ratio Tests and the Reinvestment Overcollateralization Test.
Measurement of the degree of compliance with the Concentration Limitations will be required on (i) any
day on which the Issuer purchases or sells, or enters into a commitment to purchase or sell, a Collateral
Obligation or a default of a Collateral Obligation occurs, (ii) any Determination Date, (iii) the date as of
which the information in any monthly report prepared under the Indenture is calculated, (iv) with five (5)
Business Days prior notice, any Business Day requested by either Rating Agency, (v) each date on which
a principal payment is received on a Collateral Obligation that constitutes (in whole or in part) an Excess
Concentration Obligation and (vi) the last day of the Ramp-Up Period; provided that, in the case of (i)
through (vi), no "Measurement Date" can occur prior to the last day of the Ramp-Up Period (each such
date, a "Measurement Date"). See "—Collateral Assumptions" below for a description of the
assumptions applicable to the determination of satisfaction of the Concentration Limitations.
The Collateral Quality Test
By the end of the Ramp-Up Period, and in connection with any reinvestment in additional Collateral
Obligations thereafter, the Collateral Obligations in the aggregate are expected to comply with all of the
requirements of the Collateral Quality Test set forth under "Summary of Terms—Collateral Quality Test"
or, unless otherwise explicitly provided for in the Indenture, if not in compliance at the time of
reinvestment, the relevant requirements must be maintained or improved. Measurement of the degree of
compliance with the Collateral Quality Test will be required on every Measurement Date. See "—
Collateral Assumptions" below for a description of the assumptions applicable to the determination of
satisfaction of the Collateral Quality Test.
Minimum Fixed Coupon Test. This test will be satisfied on any date of determination if the Weighted
Average Fixed Coupon equals or exceeds the Minimum Fixed Coupon.
"Weighted Average Fixed Coupon" means, as of any Measurement Date, an amount equal to the
number, expressed as a percentage, obtained by dividing:
(a)
the sum of (i) in the case of each fixed rate Collateral Obligation (excluding any Deferring
Security and any Partial Deferrable Security to the extent of any non-cash interest), the stated
interest coupon on such Collateral Obligation times the principal balance of such Collateral
Obligation (excluding the unfunded portion of any Delayed Drawdown Collateral Obligation or
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Revolving Collateral Obligation); plus (ii) to the extent that the amount obtained in clause (a) is
insufficient to satisfy the Minimum Fixed Coupon Test, the Excess Weighted Average Floating
Spread (if any); by
(b)
an amount equal to the lesser of (i) the product of (A) the Target Initial Par Amount and (B) a
fraction, the numerator of which is equal to the aggregate principal balance of fixed rate
Collateral Obligations and the denominator of which is equal to the aggregate principal balance of
all Collateral Obligations as of such Measurement Date (in each case excluding (1) any Deferring
Security or Partial Deferrable Security to the extent of any non-cash interest and (2) the unfunded
portion of any Delayed Drawdown Collateral Obligation or Revolving Collateral Obligation that
are fixed rate Collateral Obligations) and (ii) the aggregate principal balance of the fixed rate
Collateral Obligations as of such Measurement Date (excluding (1) any Deferring Security or
Partial Deferrable Security to the extent of any non-cash interest and (2) the unfunded portion of
any Delayed Drawdown Collateral Obligation or Revolving Collateral Obligation that are fixed
rate Collateral Obligations).
"Excess Weighted Average Floating Spread" means, as of any Measurement Date, means, as of any
Measurement Date, an amount equal to the product obtained by multiplying (a) the excess, if any, of the
Weighted Average Floating Spread over the Minimum Floating Spread by (b) the principal balance of all
floating rate Collateral Obligations (excluding any Deferring Security or Partial Deferrable Security to the
extent of any non-cash interest).
Minimum Floating Spread Test. This test will be satisfied on any date of determination if the Weighted
Average Floating Spread equals or exceeds the Minimum Floating Spread.
"Weighted Average Floating Spread" as of any Measurement Date, the number obtained by dividing:
(a)
(b)
the amount equal to (A) the Aggregate Funded Spread, plus (B) the Aggregate Unfunded Spread,
plus (C) the Aggregate Excess Funded Spread plus (D) to the extent that the sum of the amounts
in the foregoing clauses (A), (B) and (C) are insufficient to satisfy the Minimum Floating Spread
Test, the Excess Weighted Average Fixed Coupon (if any); by
an amount equal to the lesser of (i) the product of (A) the Target Initial Par Amount and (B) a
fraction, the numerator of which is equal to the aggregate principal balance of floating rate
Collateral Obligations and the denominator of which is equal to the aggregate principal balance of
all Collateral Obligations as of such Measurement Date and (ii) the aggregate principal balance of
all floating rate Collateral Obligations as of such Measurement Date, in each case, excluding any
Deferring Security and any Partial Deferrable Security to the extent of any non-cash interest;
provided that, for purposes of this clause (b), the Target Initial Par Amount and the aggregate
principal balance of the floating rate Collateral Obligations and the Collateral Obligations will
exclude any unfunded commitment with respect to a Revolving Collateral Obligation or Delayed
Drawdown Collateral Obligation to the extent that a deposit against such unfunded commitment
has not been deposited in the Revolver Funding Account.
"Aggregate Funded Spread": means, as of any Measurement Date, the sum of:
(a)
in the case of each floating rate Collateral Obligation (excluding any Deferring Security and any
Partial Deferrable Security to the extent of any non-cash interest and the unfunded portion of any
Delayed Drawdown Collateral Obligation and Revolving Collateral Obligation) that bears interest
at a spread over a London interbank offered rate based index, (i) the stated interest rate spread on
such Collateral Obligation above such index times (ii) the principal balance of such Collateral
80

Obligation (excluding the unfunded portion of any Delayed Drawdown Collateral Obligation or
Revolving Collateral Obligation); and
(b)
in the case of each floating rate Collateral Obligation (excluding any Deferring Security and any
Partial Deferrable Security to the extent of any non-cash interest and the unfunded portion of any
Delayed Drawdown Collateral Obligation and Revolving Collateral Obligation) that bears interest
at a spread over an index other than a London interbank offered rate based index, (i) the excess of
the sum of such spread and such index over LIBOR as of the immediately preceding Interest
Determination Date (which spread or excess may be expressed as a negative percentage) times
(ii) the principal balance of each such Collateral Obligation (excluding the unfunded portion of
any Delayed Drawdown Collateral Obligation or Revolving Collateral Obligation).
"Aggregate Unfunded Spread": means, as of any Measurement Date, the sum of the products obtained
by multiplying (i) for each Delayed Drawdown Collateral Obligation and Revolving Collateral Obligation
(other than Defaulted Obligations), the related commitment fee then in effect as of such date and (ii) the
undrawn commitments of each such Delayed Drawdown Collateral Obligation and Revolving Collateral
Obligation as of such date (but only to the extent that a deposit against such unfunded commitment has
been deposited in the Revolver Funding Account).
"Aggregate Excess Funded Spread": means. as of any Measurement Date, the amount obtained by
multiplying:
(a)
(b)
the amount equal to LIBOR applicable to the Secured Notes during the Interest Accrual Period in
which such Measurement Date occurs; by
the amount (not less than zero) equal to (i) the aggregate principal balance of the Collateral
Obligations (excluding any Deferring Security and any Partial Deferrable Security to the extent of
any non-cash interest) as of such Measurement Date minus (ii) the Target Initial Par Amount.
"Excess Weighted Average Fixed Coupon" means, as of any Measurement Date, an amount equal to the
product obtained by multiplying (a) the excess, if any, of the Weighted Average Fixed Coupon over the
Minimum Fixed Coupon by (b) the aggregate principal balance of all fixed rate Collateral Obligations.
Maximum Moody's Rating Factor Test. This test will be satisfied on any date of determination if the
Weighted Average Moody's Rating Factor of the Collateral Obligations is less than or equal to the sum of
(i) the number set forth in the column entitled "Maximum Weighted Average Moody's Rating Factor" in
the Minimum Diversity/Maximum Rating/Minimum Spread Matrix set forth below based upon the
applicable "row/column combination" chosen by the Portfolio Manager (or the interpolating between two
adjacent rows and/or two adjacent columns, as applicable) in accordance with the Indenture plus (ii) the
Rating Factor Adjustment.
The "Weighted Average Moody's Rating Factor" is the number (rounded up to the nearest whole
number) determined by:
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The principal balance of each Collateral
Obligation (excluding Equity Securities)
X
The Moody's Rating Factor of such
Collateral Obligation (or in the case of
Collateral Obligations that are
Structured Finance Obligations, its
Adjusted Moody’s Rating Factor) (as
described below)
divided by
The outstanding principal balance of all such Collateral Obligations
The "Moody's Rating Factor" relating to any Collateral Obligation is the number set forth in the table
below opposite the Moody's Default Probability Rating (as described above) of such Collateral
Obligation.
Moody's Default
Probability Rating Moody's Rating Factor
Moody's Default
Probability Rating Moody's Rating Factor
Aaa 1 Ba1 940
Aa1 10 Ba2 1,350
Aa2 20 Ba3 1,766
Aa3 40 B1 2,220
A1 70 B2 2,720
A2 120 B3 3,490
A3 180 Caa1 4,770
Baa1 260 Caa2 6,500
Baa2 360 Caa3 8,070
Baa3 610 Ca or lower 10,000
For purposes of the Maximum Moody's Rating Factor Test, any Collateral Obligation issued or
guaranteed by the United States government or any agency or instrumentality thereof is assigned a
Moody's Rating Factor of 1.
"Adjusted Moody's Rating Factor" means for any Structured Finance Obligation, as of any
Measurement Date, the amount obtained by dividing:
(a)
(b)
(1) the Moody's Rating Factor for such Structured Finance Obligation multiplied by (2) 0.55; by
(1) one minus (2) the Moody's Recovery Rate for such Structured Finance Obligation.
Moody's Diversity Test. This test will be satisfied on any date of determination if the Diversity Score
(rounded to the nearest whole number) equals or exceeds the number set forth in the column entitled
"Minimum Diversity Score" in the Minimum Diversity/Maximum Rating/Minimum Spread Matrix set
forth below based upon the applicable "row/column combination" chosen by the Portfolio Manager (or
the interpolating between two adjacent rows and/or two adjacent columns, as applicable) in accordance
with the Indenture.
For purposes of the "Moody's Diversity Test", the Diversity Score (the "Diversity Score") is a single
number that indicates collateral concentration in terms of both issuer and industry concentration. A
higher Diversity Score reflects a more diverse portfolio in terms of issuer and industry concentration. The
Diversity Score is calculated as follows:
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(i)
(ii)
(iii)
(iv)
(v)
An "Issuer Par Amount" is calculated for each issuer of a Collateral Obligation, and is equal to
the aggregate outstanding principal balance of all Collateral Obligations issued by that issuer and
all affiliates.
An "Average Par Amount" is calculated by summing the Issuer Par Amounts for all issuers, and
dividing by the number of issuers.
An "Equivalent Unit Score" is calculated for each issuer, and is equal to the lesser of (x) one and
(y) the Issuer Par Amount for such issuer divided by the Average Par Amount.
An "Aggregate Industry Equivalent Unit Score" is then calculated for each of the Moody's
industry classification groups (as defined in the Indenture) and is equal to the sum of the
Equivalent Unit Scores for each issuer in such industry classification group.
An "Industry Diversity Score" is then established for each Moody's industry classification group
by reference to the following table for the related Aggregate Industry Equivalent Unit Score;
provided, that if any Aggregate Industry Equivalent Unit Score falls between any two such
scores, the applicable Industry Diversity Score will be the lower of the two Industry Diversity
Scores:
Aggregate Aggregate Aggregate Aggregate
Industry Industry Industry Industry Industry Industry Industry Industry
Equivalent Diversity Equivalent Diversity Equivalent Diversity Equivalent Diversity
Unit Score Score Unit Score Score Unit Score Score Unit Score Score
0.0000 0.0000 5.0500 2.7000 10.1500 4.0200 15.2500 4.5300
0.0500 0.1000 5.1500 2.7333 10.2500 4.0300 15.3500 4.5400
0.1500 0.2000 5.2500 2.7667 10.3500 4.0400 15.4500 4.5500
0.2500 0.3000 5.3500 2.8000 10.4500 4.0500 15.5500 4.5600
0.3500 0.4000 5.4500 2.8333 10.5500 4.0600 15.6500 4.5700
0.4500 0.5000 5.5500 2.8667 10.6500 4.0700 15.7500 4.5800
0.5500 0.6000 5.6500 2.9000 10.7500 4.0800 15.8500 4.5900
0.6500 0.7000 5.7500 2.9333 10.8500 4.0900 15.9500 4.6000
0.7500 0.8000 5.8500 2.9667 10.9500 4.1000 16.0500 4.6100
0.8500 0.9000 5.9500 3.0000 11.0500 4.1100 16.1500 4.6200
0.9500 1.0000 6.0500 3.0250 11.1500 4.1200 16.2500 4.6300
1.0500 1.0500 6.1500 3.0500 11.2500 4.1300 16.3500 4.6400
1.1500 1.1000 6.2500 3.0750 11.3500 4.1400 16.4500 4.6500
1.2500 1.1500 6.3500 3.1000 11.4500 4.1500 16.5500 4.6600
1.3500 1.2000 6.4500 3.1250 11.5500 4.1600 16.6500 4.6700
1.4500 1.2500 6.5500 3.1500 11.6500 4.1700 16.7500 4.6800
1.5500 1.3000 6.6500 3.1750 11.7500 4.1800 16.8500 4.6900
1.6500 1.3500 6.7500 3.2000 11.8500 4.1900 16.9500 4.7000
1.7500 1.4000 6.8500 3.2250 11.9500 4.2000 17.0500 4.7100
1.8500 1.4500 6.9500 3.2500 12.0500 4.2100 17.1500 4.7200
1.9500 1.5000 7.0500 3.2750 12.1500 4.2200 17.2500 4.7300
2.0500 1.5500 7.1500 3.3000 12.2500 4.2300 17.3500 4.7400
2.1500 1.6000 7.2500 3.3250 12.3500 4.2400 17.4500 4.7500
2.2500 1.6500 7.3500 3.3500 12.4500 4.2500 17.5500 4.7600
2.3500 1.7000 7.4500 3.3750 12.5500 4.2600 17.6500 4.7700
2.4500 1.7500 7.5500 3.4000 12.6500 4.2700 17.7500 4.7800
2.5500 1.8000 7.6500 3.4250 12.7500 4.2800 17.8500 4.7900
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Aggregate Aggregate Aggregate Aggregate
Industry Industry Industry Industry Industry Industry Industry Industry
Equivalent Diversity Equivalent Diversity Equivalent Diversity Equivalent Diversity
Unit Score Score Unit Score Score Unit Score Score Unit Score Score
2.6500 1.8500 7.7500 3.4500 12.8500 4.2900 17.9500 4.8000
2.7500 1.9000 7.8500 3.4750 12.9500 4.3000 18.0500 4.8100
2.8500 1.9500 7.9500 3.5000 13.0500 4.3100 18.1500 4.8200
2.9500 2.0000 8.0500 3.5250 13.1500 4.3200 18.2500 4.8300
3.0500 2.0333 8.1500 3.5500 13.2500 4.3300 18.3500 4.8400
3.1500 2.0667 8.2500 3.5750 13.3500 4.3400 18.4500 4.8500
3.2500 2.1000 8.3500 3.6000 13.4500 4.3500 18.5500 4.8600
3.3500 2.1333 8.4500 3.6250 13.5500 4.3600 18.6500 4.8700
3.4500 2.1667 8.5500 3.6500 13.6500 4.3700 18.7500 4.8800
3.5500 2.2000 8.6500 3.6750 13.7500 4.3800 18.8500 4.8900
3.6500 2.2333 8.7500 3.7000 13.8500 4.3900 18.9500 4.9000
3.7500 2.2667 8.8500 3.7250 13.9500 4.4000 19.0500 4.9100
3.8500 2.3000 8.9500 3.7500 14.0500 4.4100 19.1500 4.9200
3.9500 2.3333 9.0500 3.7750 14.1500 4.4200 19.2500 4.9300
4.0500 2.3667 9.1500 3.8000 14.2500 4.4300 19.3500 4.9400
4.1500 2.4000 9.2500 3.8250 14.3500 4.4400 19.4500 4.9500
4.2500 2.4333 9.3500 3.8500 14.4500 4.4500 19.5500 4.9600
4.3500 2.4667 9.4500 3.8750 14.5500 4.4600 19.6500 4.9700
4.4500 2.5000 9.5500 3.9000 14.6500 4.4700 19.7500 4.9800
4.5500 2.5333 9.6500 3.9250 14.7500 4.4800 19.8500 4.9900
4.6500 2.5667 9.7500 3.9500 14.8500 4.4900 19.9500 5.0000
4.7500 2.6000 9.8500 3.9750 14.9500 4.5000
4.8500 2.6333 9.9500 4.0000 15.0500 4.5100
4.9500 2.6667 10.0500 4.0100 15.1500 4.5200
(vi)
The Diversity Score is then calculated by summing each of the Industry Diversity Scores for each
Moody's industry classification group.
For purposes of calculating the Diversity Score, affiliated issuers in the same industry are deemed to be a
single issuer, except as otherwise agreed to by Moody's and collateralized loan obligations will not be
included.
S&P CDO Monitor Test. The S&P CDO Monitor Test will be satisfied on any date of determination if,
after giving effect to the sale of a Collateral Obligation or the purchase of an additional Collateral
Obligation, each Class Default Differential of the Proposed Portfolio is positive. The S&P CDO Monitor
Test will be considered to be improved if each Class Default Differential of the Proposed Portfolio is
greater than the corresponding Class Default Differential of the Current Portfolio.
Compliance with the S&P CDO Monitor Test will be measured by the Portfolio Manager on each
Measurement Date.
There can be no assurance that actual defaults of the Collateral Obligations will not exceed those assumed
in the application of the S&P CDO Monitor or that recovery rates with respect thereto will not differ from
those assumed in the S&P CDO Monitor. None of the Portfolio Manager, the Initial Purchaser, the
Placement Agent, the Co-Issuers, the Trustee or the Collateral Administrator makes any representation as
to the expected rate of defaults of the Collateral Obligations or the timing of defaults or as to the expected
recovery rate or the timing of recoveries.
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Minimum Weighted Average Moody's Recovery Rate Test. This test will be satisfied on any date of
determination if the Weighted Average Moody's Recovery Rate equals or exceeds 45.0%.
"Weighted Average Moody's Recovery Rate" means, as of any date of determination, the number,
expressed as a percentage, obtained by summing the product of the Moody's Recovery Rate on such
Measurement Date of each Collateral Obligation and the principal balance of such Collateral Obligation,
dividing such sum by the aggregate principal balance of all such Collateral Obligations and rounding up
to the first decimal place.
"Moody's Recovery Rate" means, with respect to any loan, Bond or Synthetic Security, as of any date of
determination, the recovery rate determined in accordance with the following, in the following order of
priority:
(a)
(b)
if the loan, Bond (including, for the avoidance of doubt, a Structured Finance Obligation) or
Synthetic Security has been specifically assigned a recovery rate by Moody's (for example, in
connection with the assignment by Moody's of an estimated rating), such recovery rate;
if the preceding clause does not apply to the Bond or loan, as the case may be, and the loan is a
Moody's Senior Secured Loan or a Moody's Non-Senior Secured Loan or a Bond (in each case
other than a Structured Finance Obligation, a DIP Collateral Obligation or an obligation of an
Emerging Market Obligor), the rate determined pursuant to the table below based on the number
of rating subcategories difference between the Bond's or loan's Moody's Rating and its Moody's
Default Probability Rating (for purposes of clarification, if the Moody's Rating is higher than the
Moody's Default Probability Rating, the rating subcategories difference will be positive and if it
is lower, negative):
Number of Moody's Ratings
Subcategories Difference
Between the Moody's Rating
and the Moody's Default
Probability Rating
Moody's
Non-Senior
Secured
Loans
Moody's Senior
Secured Loans
Bonds*
+2 or more 60.0% 45.0% 40.0%
+1 50.0% 42.5% 35.0%
0 45.0% 40.0% 30.0%
-1 40.0% 30.0% 15.0%
-2 30.0% 15.0% 10.0%
-3 or less 20.0% 10.0% 2.0%
* The recovery rate for a subordinated Bond will be 15% if its Moody's Rating has been determined with reference
to the definition of "Moody's Derived Rating."
(c)
(d)
(e)
if the loan is a DIP Collateral Obligation (other than a DIP Collateral Obligation which has been
specifically assigned a recovery rate by Moody's), 50%;
if the Bond is a Structured Finance Obligation (other than a Structured Finance Obligation which
has been specifically assigned a recovery rate by Moody's), the rate determined in accordance
with the Indenture; or
if the loan or Bond is an obligation of an Emerging Market Obligor (unless it has been
specifically assigned a recovery rate by Moody's), 15%
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Minimum Weighted Average S&P Recovery Rate Test. This test will be satisfied on any date of
determination if the Weighted Average S&P Recovery Rate for each Class of Secured Notes outstanding
equals or exceeds the Weighted Average S&P Recovery Rate for such Class selected by the Portfolio
Manager in connection with the S&P CDO Monitor Test.
"Weighted Average S&P Recovery Rate" means, as of any date of determination, the number,
expressed as a percentage and determined separately for each Class of Secured Notes, obtained by
summing the products obtained by multiplying the outstanding principal balance of each Collateral
Obligation by its corresponding recovery rate as determined in accordance with Section 1 of Annex C
hereto, dividing such sum by the aggregate principal balance of all Collateral Obligations, and rounding
to the nearest tenth of a percent.
Weighted Average Maturity Test.
This test will be satisfied on any date of determination if the Portfolio Weighted Average Maturity on
such date is on or before March 21, 2018.
The "Portfolio Weighted Average Maturity" is, as of any date of determination, the date calculated by
adding to the Closing Date the weighted average maturity of the Collateral Obligations (expressed as a
number of months from the Closing Date):
each of (A) the principal balance (or portion
thereof) of each Collateral Obligation that is
then held (or in relation to a proposed
purchase of a Collateral Obligation, proposed
to be held) by the Issuer and that matures or
amortizes on any date subsequent to such date
of determination and (B) if the outstanding
aggregate principal balance of the Collateral
Obligations on such date of determination is
less than the initial aggregate principal
balance of the Collateral Obligations at the
end of the Initial Investment Period, the
difference between such initial aggregate
principal balance and such outstanding
aggregate principal balance
X
the number of months from the
Closing Date to the date of such
maturity or amortization (in the
case of clause (A)) or to such date
of determination (in the case of
clause (B))
the aggregate principal balance used in (A) above
Collateral Assumptions
Unless otherwise specified, the assumptions described below will be applied to the determination of the
Concentration Limitations, the Collateral Quality Test and the Coverage Tests.
For the purposes of calculating the Weighted Average Moody's Rating Factor, any Collateral Obligation
that is a Current Pay Obligation will be included in such calculation at the then-current rating by Moody's
of such Collateral Obligation; provided, however, if the rating by Moody's of any Collateral Obligation
that is a Current Pay Obligation has been withdrawn, the last rating by Moody's of such Collateral
Obligation shall be used for purposes of this paragraph.
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For purposes of calculating all Concentration Limitations (other than clause (xx) thereof), in both the
numerator and the denominator of any component of the Concentration Limitations, Defaulted
Obligations will be treated as having a principal balance equal to zero. Except as otherwise specified
herein, Defaulted Obligations will not be included in the calculation of the Collateral Quality Test.
For all purposes (including calculation of the Coverage Tests), the principal balance of a Revolving
Collateral Obligation or a Delayed Drawdown Collateral Obligation will include all unfunded
commitments that have not been irrevocably reduced or withdrawn; provided that, for purposes of clause
(b) of the definition of "Weighted Average Floating Spread", the Target Initial Par Amount and the
aggregate principal balance of the floating rate Collateral Obligations and the Collateral Obligations will
exclude any unfunded commitment with respect to a Revolving Collateral Obligation or Delayed
Drawdown Collateral Obligation to the extent that a deposit against such unfunded commitment has not
been deposited in the Revolver Funding Account.
For purposes of calculating the sale proceeds of a Collateral Obligation in sale transactions, sale proceeds
will include any Principal Financed Accrued Interest received in respect of such sale.
For purposes of calculating the Coverage Tests, except as otherwise specified in the Coverage Tests, such
calculations will not include scheduled interest and principal payments on Defaulted Obligations and, for
purposes of calculating the Overcollateralization Ratio Tests, such calculations will not include scheduled
principal payments on Excess Concentration Obligations.
For each Collection Period and as of any date of determination, the scheduled payment of principal and/or
interest on any Asset (other than a Defaulted Obligation, which, except as otherwise provided herein,
shall be assumed to have scheduled distributions of zero) shall be the sum of (i) the total amount of
payments and collections to be received during such Collection Period in respect of such Asset (including
the proceeds of the sale of such Asset received and, in the case of sales which have not yet settled, to be
received during the Collection Period and not reinvested in additional Collateral Obligations or Eligible
Investments or retained in the Collection Account for subsequent reinvestment) that, if paid as scheduled,
will be available in the Collection Account at the end of the Collection Period and (ii) any such amounts
received by the Issuer in prior Collection Periods that were not disbursed on a previous Payment Date.
Each scheduled payment of principal and/or interest receivable with respect to a Collateral Obligation
shall be assumed to be received on the applicable due date thereof, and each such scheduled payment of
principal and/or interest shall be assumed to be immediately deposited in the Collection Account to earn
interest at an assumed reinvestment rate. All such funds shall be assumed to continue to earn interest
until the date on which they are required to be available in the Collection Account for application, in
accordance with the terms of the Indenture, to payments of principal of or interest on the Notes or other
amounts payable pursuant to the Indenture.
For all purposes under the Indenture, a Synthetic Security (i) will be treated as having the S&P industry
classification, Moody's industry classification and geographic location of the issuer of the Reference
Obligation; (ii) will be treated as being an obligation of the issuer of the Reference Obligation for
purposes of clause (xii) of the definition of "Concentration Limitations"; (iii) (a) in the case of Moody's
and any Form Approved Synthetic Security, will be treated as having (x) a Moody's Rating Factor equal
to the sum of the Moody's Rating Factor of the related Reference Obligation and the Moody's Rating
Factor associated with the senior unsecured rating of the related Synthetic Security Counterparty, unless
otherwise determined by Moody's and (y) the Moody's Recovery Rate assigned to the related Reference
Obligation, unless otherwise determined by Moody's, (b) in the case of Moody's and any other type of
Synthetic Security, will be treated as having a Moody's Rating Factor and a Moody's Recovery Rate as
determined by Moody's and (c) in the case of S&P, will be treated as having an S&P Recovery Rate equal
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to that of the related Reference Obligation unless otherwise determined by S&P and, in the case of a Form
Approved Synthetic Security, will be treated as having a S&P Rating equal to the lower of the S&P
Rating of the related Reference Obligation and the rating assigned by S&P to the Synthetic Security
Counterparty; (iv) will be treated as having the interest rate and other payment characteristics, Stated
Maturity and tax characteristics of such Synthetic Security (and, if the Synthetic Security provides for (x)
a fixed periodic amount payable to the Issuer under the terms thereof and (y) collateralization by the
Issuer under the terms thereof by deposit of collateral into a Synthetic Security Counterparty Account and
investment of such collateral in stated floating rate investments, such Synthetic Security shall be deemed
to have the interest rate and payment characteristics of a floating rate Collateral Obligation based upon the
aggregate of the amounts described in the preceding clauses (x) and (y)); (v) will be treated as having a
Moody's Rating and Moody's Default Probability Rating equal to the rating in the "Moody's Default
Probability Rating" column included in the definition of "Moody's Rating Factor" opposite the Moody's
Rating Factor of such Synthetic Security determined in accordance with clause (iii)(b) above (for such
purpose, such Moody's Rating Factor shall be rounded to the nearest whole number included in the
"Moody's Rating Factor" column); and (vi) will be treated as a bank loan for the purposes of the definition
of "Discount Obligation" if its Moody's Recovery Rate is greater than or equal to 40%.
If a Collateral Obligation included in the Assets would be deemed a Current Pay Obligation but for the
applicable percentage limitation in the definition thereof, the Portfolio Manager may determine in its sole
discretion which such Current Pay Obligations will be deemed Defaulted Obligations. Each such
Defaulted Obligation will be treated as a Defaulted Obligation for all purposes until such time as the
aggregate principal balance of Current Pay Obligations would not exceed, on a pro forma basis including
such Defaulted Obligation, the applicable percentage of the Collateral Principal Amount.
References under "Summary of Terms—Priority of Payments" to calculations made on a "pro forma
basis" shall mean such calculations after giving effect to all payments, in accordance with the priority of
payments described herein, that precede (in priority of payment) or include the clause in which such
calculation is made.
Except as otherwise provided herein, Defaulted Obligations will not be included in the calculation of the
Collateral Quality Test.
For purposes of calculating the Collateral Quality Test, DIP Collateral Obligations will be treated as
having an S&P Recovery Rate equal to the S&P Recovery Rate for Senior Secured Loans.
For purposes of calculating compliance with the Investment Criteria, at the election of the Portfolio
Manager in its sole discretion, any proposed investment (whether a single Collateral Obligation or a group
of Collateral Obligations identified by the Portfolio Manager as such at the time when compliance with
the Investment Criteria is required to be calculated) may be evaluated after giving effect to all sales and
reinvestments proposed to be entered into within the three (3) Business Days following the date of
determination of such compliance.
For purposes of calculating clause (v) of the Concentration Limitations, without duplication, the amounts
on deposit in the Collection Account and the Ramp-Up Account (including Eligible Investments therein)
representing Principal Proceeds and, from and after a default under a Securities Lending Agreement,
amounts on deposit in the related Securities Lending Account (including Eligible Investments therein)
and the Aggregate Undrawn Amount of the Class A-1A-S Notes shall each be deemed to be a floating
rate Collateral Obligation that is a Senior Secured Loan.
For all purposes of the Indenture, a Collateral Obligation lent pursuant to a Securities Lending Agreement
will be treated as a Collateral Obligation, including for purposes of determining the Fee Basis Amount,
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compliance with the Concentration Limitations, the Collateral Quality Test and the Coverage Tests and
for purposes of the definitions of Interest Proceeds and Principal Proceeds, unless and until a default
occurs and is continuing under the applicable Securities Lending Agreement. Upon a default under the
related Securities Lending Agreement, such Collateral Obligation will cease to be treated as a Collateral
Obligation and in lieu thereof, amounts held in the applicable Securities Lending Account will be treated
as Eligible Investments (whether or not such amounts satisfy the definition of "Eligible Investment"),
characterized as Principal Proceeds for all purposes unless and until such loaned Collateral Obligation is
delivered to the Issuer.
If one or more Collateral Obligations causes one or more of the Concentration Limitations (other than a
Specified Concentration Limitation) to be exceeded and causes one or more Collateral Obligations to be
treated as Excess Concentration Obligations, the Portfolio Manager may determine in its sole discretion
which such Collateral Obligation(s) (or portions thereof) will be deemed to be Excess Concentration
Obligations.
For all purposes of the Indenture, (i) a Senior Secured Note shall be deemed to be a Moody's Senior
Secured Loan if such Senior Secured Note, if it were a loan, would meet the definition of Moody's Senior
Secured Loan and (ii) a Senior Secured Note shall be deemed to be a Moody's Non-Senior Secured Loan
if such Senior Secured Note, if it were a loan, would meet the definition of Moody's Non-Senior Secured
Loan.
All monetary calculations under the Indenture will be in U.S. dollars.
The Coverage Tests and the Reinvestment Overcollateralization Test
See "—Collateral Assumptions" above for a description of the assumptions applicable to the
determination of satisfaction of the Coverage Tests.
Overcollateralization Ratio. See "Summary of Terms—Coverage Tests and the Reinvestment
Overcollateralization Test" for a description of the calculation of the Overcollateralization Ratio.
Measurement of the degree of compliance with the Overcollateralization Tests will be required as of the
Closing Date and each Measurement Date thereafter.
Interest Coverage Ratio. See "Summary of Terms—Coverage Tests and the Reinvestment
Overcollateralization Test" for a description of the calculation of the Interest Coverage Ratio.
Measurement of the degree of compliance with the Interest Coverage Tests will be required as of any date
of determination at, or subsequent to, the later of the Determination Date immediately preceding the
second Payment Date and the Measurement Date occurring on the last day of the Ramp-Up Period.
Reinvestment Overcollateralization Test. See "Summary of Terms—Coverage Tests and the
Reinvestment Overcollateralization Test" for a description of the Reinvestment Overcollateralization
Test. Measurement of the degree of compliance with the Reinvestment Overcollateralization Test will be
required as of each Measurement Date during the Reinvestment Period.
Sales of Collateral Obligations; Additional Collateral Obligations and Investment Criteria
Subject to the other requirements set forth in the Indenture and provided that no Event of Default has
occurred and is continuing (except for a sale pursuant to clauses (a), (c), (d) and (g) below), the Portfolio
Manager on behalf of the Issuer may in writing direct the Trustee to sell and the Trustee shall sell in the
manner directed by the Portfolio Manager any Collateral Obligation or Equity Security if, as certified by
the Portfolio Manager, such sale meets any one of the following requirements (provided, however, if an
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Event of Default under clause (f) of the definition thereof has occurred and is continuing for a period of
three consecutive months without an acceleration of the Notes, then such Event of Default shall not be
deemed to be continuing for purposes of this provision):
(a)
(b)
The Portfolio Manager may direct the Trustee to sell any Credit Risk Obligation or Excess
Concentration Obligation at any time without restriction;
The Portfolio Manager may direct the Trustee to sell any Credit Improved Obligation either:
(i)
(ii)
at any time if (A) the Sale Proceeds from such sale are at least equal to the Investment
Criteria Adjusted Balance of such Credit Improved Obligation, or (B) the Reinvestment
Overcollateralization Test is satisfied; or
during the Reinvestment Period if the Portfolio Manager reasonably believes prior to
such sale that either (A) after such sale and subsequent reinvestment of the proceeds of
such sale, the Reinvestment Overcollateralization Test will be satisfied, or (B) it will be
able to enter into binding commitments to reinvest all or a portion of the proceeds of such
sale, in compliance with the Investment Criteria, in one or more additional Collateral
Obligations with an aggregate principal balance at least equal to the Investment Criteria
Adjusted Balance of such Credit Improved Obligation within twenty (20) Business Days
of such sale;
(c)
(d)
(e)
(f)
The Portfolio Manager may direct the Trustee to sell any Defaulted Obligation at any time during
or after the Reinvestment Period without restriction;
The Portfolio Manager may direct the Trustee to sell any Equity Security at any time during or
after the Reinvestment Period without restriction;
After the Issuer has notified the Trustee of an optional redemption of the Notes and all
requirements set forth in the Indenture are met, the Portfolio Manager shall direct the Trustee to
sell (which sale may be through participation or other arrangement) all or a portion of the
Collateral Obligations;
The Portfolio Manager may direct the Trustee to sell any Collateral Obligation at any time other
than a Restricted Trading Period if (i) after giving effect to such sale, the aggregate principal
balance of all Collateral Obligations sold as described in this paragraph during the same calendar
year is not greater than 20% of the Collateral Principal Amount as of the beginning of such
calendar year (or, in the case of the year 2007, $110,000,000); and (ii) either:
(A)
(B)
at any time (A) the Sale Proceeds from such sale are at least equal to the Investment
Criteria Adjusted Balance of such Collateral Obligation, or (B) the Reinvestment
Overcollateralization Test is satisfied, or
during the Reinvestment Period, the Portfolio Manager reasonably believes prior to such
sale that it will be able to enter into binding commitments to reinvest all or a portion of
the proceeds of such sale, in compliance with the Investment Criteria, in one or more
additional Collateral Obligations with an aggregate principal balance at least equal to the
Investment Criteria Adjusted Balance of such Collateral Obligation within twenty (20)
Business Days of such sale; or
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(g)
The Portfolio Manager shall use its commercially reasonable efforts to effect the sale of any
Collateral Obligation (other than Defaulted Obligations) that no longer meets the criteria
described in clause (viii) of the definition of "Collateral Obligation", within 18 months of the
failure of such Collateral Obligation to meet any such criteria (unless (i) the Moody's Rating
Condition or S&P Rating Condition, as the case may be, is satisfied or (ii) the Portfolio Manager
determines such sale would not be in the best interests of the holders of the Offered Securities).
Notwithstanding the other requirements set forth in the Indenture and described above, the Issuer shall
have the right to effect the sale of any pledged obligation or purchase of any Collateral Obligation
(provided, in the case of a purchase of a Collateral Obligation, such purchase must comply with the
applicable tax requirements set forth in the Indenture) (x) that has been consented to by holders of Notes
evidencing at least 75% of the aggregate outstanding principal amount of each Class of Notes and (y) of
which each Rating Agency and the Trustee has been notified.
Investment Criteria. On any date during the Reinvestment Period (and after the Reinvestment Period,
subject to certain limitations described below, with respect to Principal Proceeds received from Prepaid
Collateral Obligations and purchases made with Principal Proceeds received pursuant to clause (R) of
"Summary of Terms—Priority of Payments—Application of Interest Proceeds" on the last Payment Date
of the Reinvestment Period), pursuant to and subject to the other requirements of the Indenture the
Portfolio Manager may, but will not be required to, direct the Trustee to invest Principal Proceeds
(together with accrued interest received with respect to any Collateral Obligations). Such proceeds may
be used to purchase additional Collateral Obligations subject to the requirement that each of the following
conditions are satisfied as of the date the Portfolio Manager commits on behalf of the Issuer to make such
purchase or on the date of such purchase, in each case after giving effect to such purchase and all other
sales or purchases previously or simultaneously committed to; provided, that the conditions set forth in
clauses (iv) and (v) below need only be satisfied with respect to purchases of Collateral Obligations
occurring after the end of the Ramp-Up Period (the "Investment Criteria"):
(i)
(ii)
(iii)
(iv)
such obligation is a Collateral Obligation;
such obligation is not convertible into or exchangeable for Equity Securities, or attached with a
warrant to purchase Equity Securities, unless (A) the value of such conversion option, exchange
option or warrant is not, in the reasonable commercial judgment of the Portfolio Manager, a
significant portion of the purchase price (it being understood that the value of such conversion
option, exchange option or warrant exceeding 2% of the purchase price will be deemed to be a
significant portion, unless such portion that exceeds 2% of the purchase price is acquired using
Interest Proceeds reasonably expected by the Portfolio Manager to remain after all interest
payments have been made on the Notes in accordance with the priority of payments on the
succeeding Payment Date) and (B) such obligation is convertible into or exchangeable for Equity
Securities only at the option of the Issuer, unless such exchange is an exchange of a unit security;
(A) each Coverage Test will be satisfied, or if not satisfied, such Coverage Test will be
maintained or improved and (B) if each Coverage Test is not satisfied, the Principal Proceeds
received in respect of any Defaulted Obligation or the proceeds of any sale of a Defaulted
Obligation will not be reinvested in additional Collateral Obligations;
(A) in the case of an additional Collateral Obligation purchased with the proceeds from the sale of
a Credit Risk Obligation or a Defaulted Obligation, after giving effect to such purchase either (1)
the aggregate principal balance of all additional Collateral Obligations purchased with the
proceeds from such sale will at least equal the Sale Proceeds from such sale, (2) the aggregate
principal balance of the Collateral Obligations will be maintained or increased, or (3) the
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Reinvestment Overcollateralization Test is satisfied and (B) in the case of any other purchase of
additional Collateral Obligations, after giving effect to such purchase either (1) the aggregate
principal balance of the Collateral Obligations will be maintained or increased, or (2) the
Reinvestment Overcollateralization Test is satisfied; and
(v)
either (A) each requirement or test, as the case may be, of the Specified Concentration
Limitations and the Collateral Quality Test (except, in the case of an additional Collateral
Obligation purchased with the proceeds from the sale of a Credit Risk Obligation or a Defaulted
Obligation, the S&P CDO Monitor Test) will be satisfied or (B) if any such requirement or test
was not satisfied immediately prior to such reinvestment, such requirement or test will be
maintained or improved after giving effect to the reinvestment; provided, that the Minimum
Floating Spread Test need not be satisfied, maintained or improved in the case of a reinvestment
of Principal Proceeds received on a Collateral Obligation (a "Paid Down Collateral
Obligation") within five (5) Business Days of the Issuer's receipt of such Principal Proceeds in
another Collateral Obligation that has (1) the same obligor as such Paid Down Collateral
Obligation, (2) the same or higher S&P Rating and Moody's Rating than such Paid Down
Collateral Obligation, (3) the same or an earlier maturity than such Paid Down Collateral
Obligation, (4) the same or higher level of priority and security than such Paid Down Collateral
Obligation and (5) a lower spread than the spread on such Paid Down Collateral Obligation, so
long as Moody's shall have upgraded its rating of the Paid Down Collateral Obligation within
sixty (60) days prior to receipt of such Principal Proceeds.
Following the sale of any Credit Improved Obligation or any discretionary sale of a Collateral Obligation,
the Portfolio Manager shall use its reasonable efforts to purchase additional Collateral Obligations within
thirty (30) Business Days after such sale or reserve the proceeds of such sale to be used to prepay the
Class A-1A-S Notes on the next Payment Date; provided that on any Measurement Date on which the
Overcollateralization Ratio Test with respect to the Class A Notes is not satisfied on a pro forma basis,
after giving effect to the payment of the purchase price for any additional Collateral Obligation, the
amount of Principal Proceeds in the Principal Collection Subaccount is at least equal to an amount that
would be necessary to cure such failure on the next succeeding Payment Date in the Portfolio Manager's
commercially reasonable judgment after giving effect to distributions of Interest Proceeds and Principal
Proceeds in accordance with the priority of payments.
Investment after the Reinvestment Period. After the Reinvestment Period, the Portfolio Manager may, but
shall not be required to, invest Principal Proceeds within twenty (20) days of the Issuer's receipt thereof
that were received with respect to: (1) a Prepaid Collateral Obligation or a Credit Improved Obligation
and (2) a Credit Risk Obligation; provided, that in the case of the foregoing clause (1), such Principal
Proceeds are invested in Collateral Obligations having a par value at least equal to the par value of the
applicable Prepaid Collateral Obligation or Credit Improved Obligation, and in the case of each of the
foregoing clauses (1) and (2), the Portfolio Manager may not reinvest such Principal Proceeds unless the
Portfolio Manager reasonably believes that, after giving effect to any such reinvestment (i) the Collateral
Quality Test (other than the S&P CDO Monitor Test) will be satisfied (i.e., not just maintained or
improved), (ii) the Coverage Tests will be satisfied (i.e., not just maintained or improved), (iii) the
additional Collateral Obligations purchased will have (x) if the S&P CDO Monitor Test is not satisfied,
the same or higher S&P Ratings and (y) the same or earlier maturity, as such Prepaid Collateral
Obligation, Credit Improved Obligation or Credit Risk Obligation, as applicable, (iv) the Moody’s ratings
of the Class A-1 Notes or the Class A-2 Notes have not been downgraded below their respective Initial
Ratings and the Moody’s ratings of the Class B Notes, the Class C Notes and the Class D Notes have not
been downgraded more than one sub-category and (v) not more than 15.0% of the Collateral Principal
Amount may consist of Collateral Obligations with a Moody’s Rating of “Caa1” or below.
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The Collection and Payment Accounts
All distributions on the Collateral Obligations and any proceeds received from the disposition of any
Collateral Obligations will be remitted to one of two, segregated non-interest bearing trust subaccounts to
the account designated as the "Collection Account" and held in the name of the Issuer and subject to the
lien of the Trustee for the benefit of the Secured Parties. One such subaccount will be designated the
"Interest Collection Subaccount" and one such subaccount will be designated the "Principal Collection
Subaccount". Amounts on deposit in the Collection Account will be available, together with
reinvestment earnings thereon, for application to the payment of the amounts set forth under "Summary of
Terms—Priority of Payments" and for the acquisition of additional Collateral Obligations under the
circumstances and pursuant to the requirements described herein and in the Indenture. All Interest
Proceeds received by the Trustee after the Closing Date (except for income earned on amounts deposited
in the Revolver Funding Account) will be deposited in the Interest Collection Subaccount. All other
amounts remitted to the Collection Account will be deposited in the Principal Collection Subaccount.
The Portfolio Manager on behalf of the Issuer may direct the Trustee to pay from amounts on deposit in
the Collection Account on any Business Day during any Interest Accrual Period (i) any amount required
to exercise a warrant or right to acquire securities held in the Assets in accordance with the requirements
of and subject to the limitations described under "Security for the Secured Notes—Sales of Collateral
Obligations; Additional Collateral Obligations and Investment Criteria" and (ii) from Interest Proceeds
only, any Administrative Expenses; provided, that the aggregate Administrative Expenses paid during any
Collection Period shall not exceed the Administrative Expense Cap for the related Payment Date. In
addition, the Portfolio Manager on behalf of the Issuer may direct the Trustee to pay from the Principal
Collection Subaccount amounts required to meet funding requirements with respect to Delayed
Drawdown Collateral Obligations and Revolving Collateral Obligations.
Amounts received in the Collection Account during a Collection Period will be invested in Eligible
Investments with stated maturities no later than the Business Day prior to the Payment Date next
succeeding the acquisition of such securities or instruments. All proceeds from the Eligible Investments
will be retained in the Collection Account unless used to purchase additional Collateral Obligations in
accordance with the Investment Criteria, or used as otherwise permitted under the Indenture. See "—
Sales of Collateral Obligations; Additional Collateral Obligations and Investment Criteria" and
"Summary of Terms—Priority of payments."
On the Business Day preceding each Payment Date, the Trustee will deposit into a segregated non-interest
bearing trust account held in the name of the Issuer (the "Payment Account") and subject to the lien of
the Trustee for the benefit of the Secured Parties all funds in the Collection Account (other than amounts
that the Issuer is entitled to reinvest in accordance with the Investment Criteria described herein, which
may be retained in the Collection Account for subsequent reinvestment) required for payments to holders
of the Secured Notes and distributions on the Subordinated Notes and payments of fees and expenses in
accordance with the priorities described under "Summary of Terms—Priority of Payments." The
Portfolio Manager on behalf of the Issuer shall direct the Trustee in writing to, and upon receipt of such
written instructions, the Trustee shall, cause the transfer to the Payment Account, for application as
described under "Summary of Terms—Priority of Payments—Application of Principal Proceeds to Class
A-1A-S Notes," on the Business Day preceding each date of payment of principal of the Class A-1A-S
Notes that does not fall on a Payment Date, from the Collection Account an amount equal to the principal
amount of Class A-1A-S Notes that will be repaid on such date.
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The Ramp-Up Account
The net proceeds of the issuance of the Offered Securities remaining after payment of fees and expenses
will be deposited on the Closing Date into a segregated non-interest bearing trust account held in the
name of the Issuer (the "Ramp-Up Account") and subject to the lien of the Trustee for the benefit of the
Secured Parties. Of the proceeds of the issuance of the Offered Securities which are not applied to pay
for the purchase of Collateral Obligations purchased by the Issuer on or before the Closing Date
(including, without limitation, repayment of any amounts borrowed by the Issuer in connection with the
purchase of Collateral Obligations prior to the Closing Date) approximately $180.6 million representing
proceeds of the issuance of the Notes will be deposited in the Ramp-Up Account on the Closing Date. On
behalf of the Issuer, the Portfolio Manager will direct the Trustee to, from time to time during the Ramp-
Up Period, purchase additional Collateral Obligations and invest in Eligible Investments any amounts not
used to purchase such additional Collateral Obligations. On the first day after the end of the Ramp-Up
Period or upon the occurrence of an Event of Default (and excluding any proceeds that will be used to
settle binding commitments entered into prior to that date), the Trustee will deposit any remaining
amounts in the Ramp-Up Account into the Collection Account as Interest Proceeds and/or Principal
Proceeds (in the respective amounts directed by the Portfolio Manager in its sole discretion). Any income
earned on amounts deposited in the Ramp-Up Account will be deposited in the Collection Account as
Interest Proceeds.
The Custodial Account
The Issuer will, on or prior to the Closing Date, establish a segregated non-interest bearing trust account
in the name of the Issuer and subject to the lien of the Trustee for the benefit of the Secured Parties which
will be designated as the "Custodial Account". The only permitted withdrawals from the Custodial
Account shall be in accordance with the provisions of the Indenture. The Co-Issuers shall not have any
legal, equitable or beneficial interest in the Custodial Account other than in accordance with the Indenture
and the priority of payments.
The Revolver Funding Account
Upon the purchase of any Delayed Drawdown Collateral Obligation or Revolving Collateral Obligation,
funds in the amounts described below shall be withdrawn first from the Ramp-up Account and then from
the Collection Account and deposited in a single, segregated non-interest bearing trust account established
in the name of the Issuer (the "Revolver Funding Account") and subject to the lien of the Trustee for the
benefit of the Secured Parties. Upon initial purchase, funds deposited in the Revolver Funding Account
in respect of any Delayed Drawdown Collateral Obligation or Revolving Collateral Obligation will be
treated as part of the purchase price therefor. Amounts on deposit in the Revolver Funding Account will
be invested in overnight funds that are Eligible Investments and earnings from all such investments will
be deposited in the Interest Collection Subaccount as Interest Proceeds.
Upon the purchase of any Delayed Drawdown Collateral Obligation or Revolving Collateral Obligation,
funds will be deposited in the Revolver Funding Account such that the sum of the amount of funds on
deposit in such account and the amount of undrawn Commitments shall be equal to or greater than the
sum of the unfunded funding obligations under all such Delayed Drawdown Collateral Obligations and
Revolving Collateral Obligations then included in the Assets.
Any funds in the Revolver Funding Account (other than earnings from Eligible Investments therein) will
be available solely to cover any drawdowns on the Delayed Drawdown Collateral Obligations and
Revolving Collateral Obligations. Upon (a) the sale or maturity of a Delayed Drawdown Collateral
Obligation or Revolving Collateral Obligation or (b) the occurrence of an event of default with respect to
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any such Delayed Drawdown Collateral Obligation or Revolving Collateral Obligation or any other event
or circumstance which results in the irrevocable reduction of the undrawn commitments under such
Delayed Drawdown Collateral Obligation or Revolving Collateral Obligation (the occurrence of which
the Portfolio Manager shall notify the Trustee) any excess of (A) the amounts on deposit in the Revolver
Funding Account plus the amount of undrawn Commitments over (B) the sum of the unfunded amounts
of all Delayed Drawdown Collateral Obligations and Revolving Collateral Obligations included in the
Assets will be transferred by the Trustee (at the direction of the Portfolio Manager) as Principal Proceeds
to the Principal Collection Subaccount.
The Synthetic Security Counterparty Accounts
If and to the extent that any Synthetic Security requires the Issuer to secure its obligations to the Synthetic
Security Counterparty, the Portfolio Manager on behalf of the Issuer shall either (x) direct the Trustee and
the Trustee shall establish a segregated non-interest bearing trust account in respect of each such
Synthetic Security which shall be held in trust for the benefit of the related Synthetic Security
Counterparty and over which the Trustee as agent for the related Synthetic Security Counterparty or the
related Synthetic Security Counterparty shall have exclusive control and the sole right of withdrawal in
accordance with the applicable Synthetic Security and the Indenture or (y) cause the establishment of a
segregated non-interest bearing trust account in respect of any Synthetic Security at an organization or
entity (other than the Trustee) organized and doing business under the laws of the United States of
America or of any state thereof, authorized under such laws to exercise corporate trust powers, having a
combined capital and surplus of at least $200,000,000, subject to supervision or examination by federal or
state authority, having a rating of at least "Baa1" by Moody's and at least "BBB+" by S&P and having an
office within the United States (each such account, a "Synthetic Security Counterparty Account").
With respect to any such account set forth in clause (y), the related Synthetic Security Counterparty shall
have exclusive control over, and the sole right of withdrawal from, such account in accordance with the
applicable Synthetic Security. However, the Issuer may, in lieu of establishing a Synthetic Security
Counterparty Account, provide cash or Synthetic Security Collateral to the Synthetic Security
Counterparty to be held and distributed in accordance with the applicable Synthetic Security. As directed
by the Portfolio Manager, on any date during the Reinvestment Period, the Trustee will be required to
deposit into each Synthetic Security Counterparty Account or provide to the Synthetic Security
Counterparty all amounts or Synthetic Security Collateral which are required to secure the obligations of
the Issuer in accordance with the terms of the related Synthetic Security.
As directed by the Portfolio Manager in writing and in accordance with the applicable Synthetic Security,
amounts on deposit in a Synthetic Security Counterparty Account will be invested in Eligible Investments
or Synthetic Security Collateral. Income received on amounts or Synthetic Security Collateral on deposit
in each Synthetic Security Counterparty Account will be applied, as directed by the Portfolio Manager, to
the payment of any periodic amounts owed by the Issuer to such Synthetic Security Counterparty on the
date any such amounts are due. After application of any such amounts, any income then contained in
such Synthetic Security Counterparty Account will (to the extent permitted by the applicable Synthetic
Security) be withdrawn from such account and deposited in the Collection Account as Interest Proceeds.
Upon the occurrence of any "credit event", "event of default" or "termination event" (each as defined in
the applicable Synthetic Security) under the related Synthetic Security, amounts contained in the related
Synthetic Security Counterparty Account shall, as directed in writing by the Portfolio Manager, be
withdrawn by the Trustee (or the related Synthetic Security Counterparty, as applicable) and applied
toward the payment of any amounts payable by the Issuer to the related Synthetic Security Counterparty
in accordance with the terms of such Synthetic Security. Any excess amounts held in a Synthetic Security
Counterparty Account after payment of all amounts owing from the Issuer to the related Synthetic
Security Counterparty in accordance with the terms of the related Synthetic Security will be withdrawn
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from such Synthetic Security Counterparty Account and deposited in the Collection Account as Principal
Proceeds. In the event that the Issuer provides cash or Synthetic Security Collateral directly to the
Synthetic Security Counterparty, the related Synthetic Security shall provide that such cash or Synthetic
Security Collateral shall be applied to amounts owing to the Synthetic Security Counterparty and that the
remainder shall be returned to the Issuer. Upon receipt thereof, the Issuer shall place any such amounts or
Synthetic Security Collateral in the Collection Account for distribution as Principal Proceeds.
Amounts contained in any Synthetic Security Counterparty Account or provided to a Synthetic Security
Counterparty shall not be considered to be an asset of the Issuer for purposes of any of the Investment
Criteria or the Coverage Tests, but the Synthetic Security which relates to such Synthetic Security
Counterparty Account shall be an asset of the Issuer for such purposes.
The Synthetic Security Issuer Accounts
If and to the extent that any Synthetic Security requires the Synthetic Security Counterparty to secure its
obligations to the Issuer with respect to such Synthetic Security, the Issuer (at the direction of the
Portfolio Manager) will be required to establish a segregated, non-interest bearing trust account (each
such account, a "Synthetic Security Issuer Account"). The Trustee (as directed by the Portfolio
Manager on behalf of the Issuer) will be required to deposit into each Synthetic Security Issuer Account
all amounts or Synthetic Security Collateral which are required to secure the obligations of the Synthetic
Security Counterparty in accordance with the terms of the related Synthetic Security. Amounts or
Synthetic Security Collateral in any Synthetic Security Issuer Account will be released to the Issuer or the
related Synthetic Security Counterparty only in accordance with the Indenture, the applicable Synthetic
Security and applicable law.
As directed by the Portfolio Manager in writing and in accordance with the applicable Synthetic Security,
amounts on deposit in a Synthetic Security Issuer Account shall be invested in Eligible Investments or
Synthetic Security Collateral. Income received on amounts or Synthetic Security Collateral on deposit in
each Synthetic Security Issuer Account shall be applied, as directed by the Portfolio Manager, to the
payment of any periodic amounts owed by such Synthetic Security Counterparty to the Issuer on the date
any such amounts are due. After application of any such amounts, any income then contained in such
Synthetic Security Issuer Account shall be withdrawn from such account and paid to the related Synthetic
Security Counterparty in accordance with the applicable Synthetic Security as directed by the Portfolio
Manager on behalf of the Issuer.
Upon the occurrence of any "credit event", "event of default", or "termination event" (each as defined in
the applicable Synthetic Security) under the related Synthetic Security, amounts contained in the related
Synthetic Security Issuer Account shall, as directed by the Portfolio Manager in writing, be withdrawn by
the Trustee and applied toward the payment of any amounts payable by the related Synthetic Security
Counterparty to the Issuer in accordance with the terms of such Synthetic Security. Any excess amounts
held in a Synthetic Security Issuer Account after payment of all amounts owing from the related Synthetic
Security Counterparty to the Issuer shall be withdrawn from such Synthetic Security Issuer Account and
paid to the related Synthetic Security Counterparty in accordance with the applicable Synthetic Security,
as directed by the Portfolio Manager on behalf of the Issuer.
The Expense Reserve Account
The Trustee will, prior to the Closing Date, establish a segregated non-interest bearing trust account held
in the name of the Issuer which will be designated as the "Expense Reserve Account" and will be subject
to the lien of the Trustee for the benefit of the Secured Parties. Approximately $2.5 million will be
deposited in the Expense Reserve Account as Interest Proceeds on the Closing Date for the payment of
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certain expenses of the Issuer incurred in connection with the issuance of the Offered Securities. On any
Business Day from the Closing Date to and including the Determination Date relating to the third
Payment Date, the Trustee will apply funds from the Expense Reserve Account, as directed by the
Portfolio Manager, to pay expenses of the Co-Issuers incurred in connection with the establishment of the
Co-Issuers, the structuring and consummation of the offering and the issuance of the Offered Securities or
to the Collection Account as Principal Proceeds. By the Determination Date relating to the third Payment
Date following the Closing Date, all funds in the Expense Reserve Account (after deducting any expenses
paid on such Determination Date) will be deposited in the Collection Account as Interest Proceeds and/or
Principal Proceeds (in the respective amounts directed by the Portfolio Manager in its sole discretion) and
the Expense Reserve Account will be closed. Any income earned on amounts deposited in the Expense
Reserve Account will be deposited in the Interest Collection Subaccount as Interest Proceeds as it is paid.
The Interest Reserve Account
The Trustee will, prior to the Closing Date, establish a segregated non-interest bearing trust account held
in the name of the Issuer which will be designated as the "Interest Reserve Account" and will be subject
to the lien of the Trustee for the benefit of the Secured Parties. Approximately $3.2 million will be
deposited into the Interest Reserve Account on the Closing Date. On any date prior to the Determination
Date relating to the Payment Date occurring on February 2008, the Issuer, at the direction of the Portfolio
Manager, may direct that all or any portion of funds in the Interest Reserve Account may be deposited in
the Collection Account as Interest Proceeds and/or Principal Proceeds (in the respective amounts directed
by the Portfolio Manager in its sole discretion) as long as, after giving effect to such deposits, the
Portfolio Manager determines that the Issuer will have sufficient funds to satisfy its obligations on the
November 2007 and February 2008 Payment Dates referred to in clauses (A) through (Q) of "Summary of
Terms—Priority of Payments—Application of Interest Proceeds"; provided, that if any funds remain in
the Interest Reserve Account on the Determination Date relating to the Payment Date occurring February
2008, all funds in the Interest Reserve Account (after deducting any amounts on deposit therein required
to be applied on such related Payment Date) will be deposited in the Collection Account as Interest
Proceeds and/or Principal Proceeds (in the respective amounts directed by the Portfolio Manager in its
sole discretion) and the Interest Reserve Account will be closed. Any income earned on amounts
deposited in the Interest Reserve Account will be deposited in the Interest Collection Subaccount as
Interest Proceeds as it is paid.
The Securities Lending Account
At the time any Securities Lending Agreement is entered into, the Issuer will cause the establishment of a
segregated non-interest bearing trust or custodial account with a securities intermediary in the name of the
Securities Lending Counterparty, for the benefit of such Securities Lending Counterparty, as pledgor,
subject to the lien of the Trustee for the benefit of the Secured Parties (each, a "Securities Lending
Account"). Securities Lending Collateral pledged pursuant to a Securities Lending Agreement shall be
deposited into the related Securities Lending Account to secure the related Securities Lending
Counterparty's obligations under such Securities Lending Agreement. At all times, each Securities
Lending Account shall remain at an institution with a combined capital and surplus equal to or in excess
of $100,000,000 and having a long-term debt rating of at least "Baa2" by Moody's and a short-term debt
rating of at least "A-1" by S&P. Upon any default by any Securities Lending Counterparty under the
related Securities Lending Agreement, the Issuer's remedies under such Securities Lending Agreement,
including liquidating the related Securities Lending Collateral, shall be exercised by the Issuer or the
Trustee, acting at the written direction of the Portfolio Manager. Proceeds of any such liquidation shall
be deposited in the Principal Collection Subaccount as Principal Proceeds. The Issuer shall not have any
right to cause the Trustee to withdraw money from any of the Securities Lending Accounts other than in
accordance with the Indenture, the applicable Securities Lending Agreement and applicable law.
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Hedge Agreements
The Issuer is permitted to enter into any interest rate swap, floor and/or cap agreements, including without
limitation one or more interest rate basis swap agreements (each, a "Hedge Agreement" and collectively,
the "Hedge Agreements"). Each Hedge Agreement will be documented as one or more confirmations
under a master swap agreement in the form published by the International Swaps and Derivatives
Association, Inc. Each Hedge Agreement will be governed by New York law (or, at the option of the
Issuer, English law).
The Issuer will not enter into any Hedge Agreement on the Closing Date. Any Hedge Agreement entered
into by the Issuer after the Closing Date will satisfy the Global Rating Agency Condition.
Under the terms of the Hedge Agreements, upon the failure of the related Hedge Counterparty to have the
minimum debt or counterparty rating specified in the Hedge Agreement, the related Hedge Counterparty
(at its own expense) will be required to transfer, within the lesser of the minimum time periods specified
in such Hedge Agreement all of its rights and obligations to a replacement Hedge Counterparty that has
the minimum debt or counterparty rating specified in such Hedge Agreement. In the event the related
Hedge Counterparty is not able to transfer all of its rights and obligations to a replacement Hedge
Counterparty within such specified time period, for the period beginning on the first business day after the
end of the specified time period and until the related Hedge Counterparty has transferred all of its rights
and obligations to a replacement Hedge Counterparty, the related Hedge Counterparty will be required to
post eligible collateral in an amount equal to greater of the minimum of such amount as will be specified
in the applicable Hedge Agreements.
The failure by any Hedge Counterparty to comply with the requirements described in the preceding
paragraph will be an "additional termination event" under the related Hedge Agreement.
The Indenture requires that if at any time any Hedge Agreement becomes subject to early termination due
to the occurrence of an event of default or a termination event, the Issuer and the Trustee shall notify each
Rating Agency and take such actions (following the expiration of any applicable grace period) to enforce
the rights of the Issuer and the Trustee under such Hedge Agreement as may be permitted by the terms of
such Hedge Agreement and consistent with the terms hereof, and shall apply the proceeds of any such
actions (including, without limitation, the proceeds of the liquidation of any collateral pledged by the
Hedge Counterparty thereunder) to enter into a replacement Hedge Agreement on such terms as satisfy
the Global Rating Agency Condition (unless such early termination is due to an additional termination
event caused by an Optional Redemption). Any costs attributable to entering into a replacement Hedge
Agreement which exceed the sum of the proceeds of the liquidation of any such Hedge Agreement shall
be borne solely by the Hedge Counterparty; provided that such liquidation is not the result of a Priority
Hedge Termination Event.
The Trustee will agree to any reduction in the notional amount of any Hedge Agreement proposed by the
related Hedge Counterparty and agreed to by the Portfolio Manager, or any termination, replacement
and/or other modification of any such Hedge Agreement or any additional Hedge Agreement proposed by
the Portfolio Manager; provided, that (x) the Global Rating Agency Condition shall have been satisfied
and (y), in the case of any such replaced Hedge Agreement, modified Hedge Agreement or additional
Hedge Agreement to be entered into that is not an interest rate swap, floor and/or cap agreement,
including without limitation an interest rate basis swap agreement, such Hedge Agreement does not
impose any increased duties, obligations or liabilities on the Trustee.
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Securities lending
Unless an Event of Default has occurred and is continuing, the Issuer (at the direction of the Portfolio
Manager) may from time to time lend Collateral Obligations (other than any Synthetic Security that is not
a "security" within the meaning of Section 1236(c) of the Code) to a Securities Lending Counterparty
pursuant to a Securities Lending Agreement; provided, that the requirements set forth in the Indenture are
satisfied. Such Securities Lending Counterparties may be affiliates of the Initial Purchaser and Placement
Agent and/or affiliates of the Portfolio Manager, notwithstanding conflicts of interest.
Each Securities Lending Agreement shall be entered into subject to receipt by the Trustee of written
certification from the Issuer or the Portfolio Manager on behalf of the Issuer that the following conditions
have been satisfied:
(i)
(ii)
(iii)
the duration of loans pursuant to the Securities Lending Agreement shall not exceed the Stated
Maturity of the Notes;
no more than 20% of the Collateral Principal Amount has been (or may be) loaned pursuant to
Securities Lending Agreements regardless of duration; and
no more than 10% of the Collateral Principal Amount has been (or may be) loaned pursuant to
Securities Lending Agreements, the duration of which exceeds two years.
Each Securities Lending Agreement shall be on market terms as determined by the Portfolio Manager in
good faith (except as required below) and shall:
(i)
(ii)
(iii)
(iv)
(v)
(vi)
require that the Securities Lending Counterparty return to the Issuer debt obligations that are
identical (in terms of issue and class) to the loaned Collateral Obligations;
(A) require that the Securities Lending Counterparty pay to the Issuer such amounts as are
equivalent to all interest and other payments that the owner of the loaned Collateral Obligation is
entitled to for the period during which the Collateral Obligation is loaned, and (B) require that
such payments (other than any payments that are a substitute for commitment fees payable on the
loaned Collateral Obligation) not be subject to withholding tax imposed by any jurisdiction unless
the Securities Lending Counterparty is required under the Securities Lending Agreement to make
"gross-up" payments to the Issuer that cover the full amount of such withholding on an after-tax
basis;
satisfy any other requirements of Section 1058 of the Code and Treasury Regulations
promulgated thereunder;
require that the Global Rating Agency Condition be satisfied as a condition of the effectiveness of
such Securities Lending Agreement (unless the Global Rating Agency Condition is satisfied
independently with respect to such Securities Lending Agreement);
be governed by the laws of the State of New York; and
permit the Issuer to assign its rights thereunder to the Trustee pursuant to the Indenture;
provided, that clause (iii) above shall not apply if the Issuer and the Trustee shall have received an
opinion of tax counsel of nationally recognized standing in the United States experienced in such matters
to the effect that the absence of such requirement in such Securities Lending Agreement will not cause the
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Issuer to be engaged, or deemed to be engaged, in a trade or business in the United States for United
States federal income tax purposes or otherwise to be subject to United States federal income tax on a net
basis.
Each Securities Lending Agreement shall provide that (A) the Issuer may terminate such Securities
Lending Agreement if (i) the credit ratings of the Securities Lending Counterparty are withdrawn or
downgraded below the requirements relating to the credit ratings of such Securities Lending Counterparty
set forth in such Securities Lending Agreement, (ii) an Optional Redemption occurs, (iii) the Securities
Lending Counterparty is the subject of an insolvency or similar proceeding or (iv) the Securities Lending
Counterparty defaults in the performance of any of its obligations under the related Securities Lending
Agreement and/or (B) the Issuer may terminate such Securities Lending Agreement upon prior written
notice.
Each Securities Lending Counterparty shall be required to post Securities Lending Collateral with the
Trustee or a Securities Intermediary to secure its obligation to return the loaned Collateral Obligations.
Such Securities Lending Collateral shall be maintained at all times with the Trustee or such Securities
Intermediary in an amount equal to at least 102% of the current market value (determined daily in
accordance with standard market practice and monitored by the Portfolio Manager) of the loaned
Collateral Obligations. The Issuer (at the direction of the Portfolio Manager) is expected to negotiate
with the related Securities Lending Counterparty a rate for the loan fee to be paid to the Issuer for lending
the loaned Collateral Obligations. For the avoidance of doubt, no loan fee paid to the Issuer for lending
the loaned Collateral Obligations shall be subject to the withholding tax requirement contained in clause
(ii)(B) above. If a Securities Lending Counterparty deposits cash as collateral in the related Securities
Lending Account, unless an Event of Default has occurred and is continuing, the Trustee (as directed by
the Portfolio Manager) may invest such cash collateral in Eligible Investments to the extent permitted by
the applicable Securities Lending Agreement and, if required by the terms of the applicable Securities
Lending Agreement, the Issuer may be responsible to the related Securities Lending Counterparty for any
related investment losses. Collateral deposited in a Securities Lending Account will not constitute
Collateral Obligations for purposes of the Indenture and will not be available to make payments on the
Notes unless the related Securities Lending Counterparty defaults on its obligations under the related
Securities Lending Agreement, including its obligation to return the loaned Collateral Obligations to the
Issuer.
If either of the Rating Agencies downgrades a Securities Lending Counterparty so that each Securities
Lending Agreement to which the Securities Lending Counterparty is a party is no longer in compliance
with the requirements relating to credit ratings of the Securities Lending Counterparties, then the Issuer
shall (at the direction of the Portfolio Manager), or in the case of clause (ii) below, the Securities Lending
Counterparty shall, within ten days thereof:
(i)
(ii)
(iii)
(iv)
terminate any Securities Lending Agreement with such Securities Lending Counterparty;
obtain a guarantor that has the ratings required of a Securities Lending Counterparty to guarantee
the Securities Lending Counterparty's obligations under the applicable Securities Lending
Agreement;
reduce the percentage of the Collateral Obligations loaned to such downgraded Securities
Lending Counterparty so that the applicable Securities Lending Agreement are in compliance
with the requirements relating to the credit ratings of Securities Lending Counterparties; or
take such other steps as the Rating Agencies may require to cause such Securities Lending
Counterparty's obligations under the applicable Securities Lending Agreement to be treated by
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General
the Rating Agencies as if such obligations were those of a counterparty having the ratings
required of a Securities Lending Counterparty.
Use of proceeds
The net proceeds from the issuance of the Offered Securities, after payment of applicable fees and
expenses in connection with the structuring and placement of the Offered Securities (including by making
a deposit to the Expense Reserve Account of funds to be used to pay expenses following the Closing
Date), are expected to be approximately $638.3 million.
Prior to the Closing Date, affiliates of the Initial Purchaser provided a warehouse facility to the Issuer to
finance the acquisition of certain Collateral Obligations. Approximately $454.5 million will be used to
repay debt incurred to such affiliates of the Initial Purchaser to finance the Issuer's purchase of Collateral
Obligations prior to the Closing Date, to purchase additional Collateral Obligations on and after the
Closing Date and to pay for Principal Financed Accrued Interest on any of the foregoing Collateral
Obligations, all of which Collateral Obligations will be pledged under the Indenture by the Issuer to the
Trustee. See "Risk factors—Relating to the Collateral Obligations—Acquisition of Collateral Obligations
prior to Closing Date; there is limited disclosure about the Collateral Obligations in this offering circular."
Approximately $180.6 million will be deposited into the Ramp-Up Account on the Closing Date for the
purchase of additional Collateral Obligations during the Ramp-Up Period and for deposit into the
Collection Account as described herein upon completion of the Ramp-Up Period, approximately $2.5
million will be deposited into the Expense Reserve Account on the Closing Date for use as described
herein and approximately $3.2 million will be deposited into the Interest Reserve Account on the Closing
Date for use as described herein.
Ramp-Up Period
The additional Collateral Obligations referred to in the preceding paragraph, together with the Collateral
Obligations purchased on or before the Closing Date, must satisfy, as of the end of the Ramp-Up Period,
the Collateral Quality Test, the Specified Concentration Limitations and the Coverage Tests. If the
expected Collateral Obligations are purchased by the end of the Ramp-Up Period, any excess funds
reserved for that purpose will be available for investment in additional Collateral Obligations during the
Reinvestment Period.
Provided that the Ramp-up Period has not ended, within 15 Business Days after the 90th calendar day
following the Closing Date (the "Interim Report Date"), the Issuer (or the Portfolio Manager on its
behalf) will obtain and deliver to the Trustee and each Rating Agency a report, determined as of the
Interim Report Date, calculating the tests included in the Interim Target. If, as of the Interim Report Date,
the Interim Target is not satisfied, the Portfolio Manager will submit a plan to each Rating Agency as to
how the Issuer will satisfy the Interim Target. "Interim Target" means target levels of the Minimum
Diversity Score, Minimum Floating Spread and Weighted Average Moody's Rating Factor set forth in the
Indenture established for the Interim Report Date.
If, following the end of the Ramp-Up Period, (i) the additional Collateral Obligations, together with the
Collateral Obligations purchased on or before the Closing Date and still held as Collateral Obligations
and amounts in the Issuer's accounts, fail to satisfy the Collateral Quality Test, the Overcollateralization
Ratio Tests or the Target Initial Par Amount as of the end of the Ramp-Up Period, then (A) the Portfolio
Manager shall request Moody's to confirm, within sixty (60) Business Days following the end of the
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Ramp-Up Period, that Moody's will not reduce or withdraw its initial ratings of the Secured Notes and (B)
if, by the 60th Business Day following the end of the Ramp-Up Period, Moody's has not provided the
confirmation described in the preceding clause (A) of this paragraph, the Portfolio Manager will, if the
Ramp-Up Failure is still continuing, instruct the Trustee to transfer amounts from the Interest Collection
Subaccount to the Principal Collection Subaccount (and with such funds the Issuer will purchase
additional Collateral Obligations) in an amount sufficient to obtain from Moody's written confirmation of
its initial rating of the Secured Notes or to cause the Collateral Obligations to satisfy the Collateral
Quality Test, the Overcollateralization Ratio Tests and the Target Initial Par Amount (provided, that the
amount of such transfer would not result in deferral of interest with respect to any Class of Notes);
provided that, in lieu of this clause (i), the Portfolio Manager on behalf of the Issuer may take such other
action, including but not limited to, a Special Redemption and/or transferring amounts from the Interest
Collection Subaccount to the Principal Collection Subaccount as Principal Proceeds (for use in a Special
Redemption), sufficient to obtain from Moody's written confirmation of its initial rating of the Notes or
(y) if S&P provides the Issuer written notice during the sixty (60) Business Day period following the end
of the Ramp-Up Period, that it has or will imminently reduce or withdraw its initial ratings of the Notes
(an "S&P Rating Notice"), then (A) the Portfolio Manager will instruct the Trustee to transfer amounts
from the Interest Collection Subaccount to the Principal Collection Subaccount and use such funds on
behalf of the Issuer for the purchase of additional Collateral Obligations during the sixty (60) Business
Day period following receipt of an S&P Rating Notice (provided that the amount of such transfer would
not result in deferral of interest with respect to any Class of Notes) and (B) after the expiration of the sixty
(60) Business Day period described in the immediately preceding clause (A), instruct the Trustee to use
Interest Proceeds and Principal Proceeds pursuant to the Priority of Payments to effect a Special
Redemption of the Notes until such time as S&P has provided written confirmation of its initial rating of
the Notes (it being understood that, if the events specified in both of clauses (x) and (y) occur, the Issuer
will be required to satisfy the requirements of both clause (x) and clause (y)); provided, that in the case of
each of the foregoing clauses (x) and (y), amounts may not be transferred from the Interest Collection
Subaccount to the Principal Collection Subaccount if, after giving effect to such transfer, the amounts
available pursuant to the Priority of Payments on the next succeeding Payment Date would be insufficient
to pay the full amount of the accrued and unpaid interest on the Class A Notes on such Payment Date.
The Portfolio Manager
GoldenTree Asset Management LP as Portfolio Manager accepts responsibility for the information
appearing in this section and has not been independently verified by the Co-Issuers or the Initial
Purchaser and Placement Agent. GoldenTree Asset Management LP as Portfolio Manager has taken
reasonable care to ensure that facts stated in this section are true and accurate in all material respects and
that there have not been omitted material facts the omission of which would make misleading in any
material respect any statements of fact or opinion herein. Accordingly, notwithstanding anything to the
contrary herein, the Co-Issuers, the Initial Purchaser and the Placement Agent do not assume any
responsibility for the accuracy, completeness or applicability of such information.
General
The Portfolio Manager of the Issuer will be GoldenTree Asset Management LP. The Portfolio Manager
is an employee-owned private investment management firm with approximately $8.5 billion in assets
under management (including undrawn investment commitments), consisting of approximately $6.8
billion in absolute return strategies (non including borrowed amounts), approximately $1.1 billion of
actively managed structured products, approximately $304 million of long-only separate accounts, and
approximately $348 million of real estate assets as of March 1, 2007. The Portfolio Manager's principal
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place of business is New York, New York. The Portfolio Manager also has affiliated offices in Los
Angeles and London, United Kingdom.
The Portfolio Manager serves as investment advisor of the Issuer pursuant to the terms and provisions of
the Portfolio Management Agreement. As described under "The Portfolio Management Agreement", the
Portfolio Manager is entitled to exculpation and indemnification under the provisions of the Portfolio
Management Agreement. A copy of Part II of GoldenTree Asset Management LP's Form ADV will be
provided by the Portfolio Manager to potential investors upon request.
GoldenTree Professionals
The Portfolio Manager has assembled a team of 140 professionals, including 44 investment professionals
with extensive experience analyzing, managing and trading below investment-grade assets. The senior
investment team consists of Steven Tananbaum, Leon Wagner, Robert Matza, David Allen, Eduardo
Cabral, Jonathan Ezrow, Treacy Gaffney, Frederick Haddad, Michael Meyers, Thomas O’Shea, Lucy
Panter, Michael Ranson, Thomas Shandell, Steven Shapiro, Thomas Shapiro and Adam Tuckman.
Steven A. Tananbaum
CEO & Chief Investment Officer
Steve Tananbaum is the Senior Managing Member and Founding Partner of GoldenTree Asset
Management, and heads its Investment Committee as CEO and Chief Investment Officer. GoldenTree is
an investment management firm which currently manages a variety of absolute return strategies which
invest in bank debt, high yield bonds, distressed debt, middle market loans, equities and real estate. Prior
to forming GoldenTree, Mr. Tananbaum joined MacKay Shields as an investment specialist in 1989 and
became head of their high yield group in 1991. In 1997, Mr. Tananbaum formed and was lead portfolio
manager for its hedge fund area. MacKay Shields’ high yield mutual funds were rated by Lipper in the
top 5% of all high yield mutual funds during the period June 1, 1991 through December 31, 1999. Prior
to joining MacKay Shields, Mr. Tananbaum worked primarily on high yield and merger and acquisition
transactions in the corporate finance department of Kidder, Peabody & Co. Mr. Tananbaum is a graduate
of Vassar College (B.A. in Economics) and is a CFA charterholder.
Leon M. Wagner
Chairman
Leon M. Wagner is GoldenTree's Chairman, as well as a Managing Member, Founding Partner and a
member of its Investment Committee. Mr. Wagner was Co-Head of High Yield Sales and Trading at
CIBC World Markets from 1995 through April 2000 and at The Argosy Group L.P. from 1993 until its
acquisition by CIBC in 1995. At these institutions, Mr. Wagner's primary responsibility was to direct all
public and private placement marketing and structuring for high yield issuance. CIBC’s High Yield
franchise was often recognized for structuring value added, innovative transactions. At CIBC World
Markets, Mr. Wagner was a member of the Investment Committee of Caravelle Portfolio Managers, LLC,
the investment Portfolio Manager of Caravelle Investment Fund, LLC, a $1.3 billion Collateralized Bond
fund. From 1990 until 1993, Mr. Wagner was a partner in the Los Angeles based high yield boutique
Dabney/Resnick and Wagner. From 1986 to 1990, Mr. Wagner was a Senior Vice President in the High
Yield Department of Drexel Burnham Lambert where he participated in many of the firm's most
innovative financings. From 1977 until 1986, Mr. Wagner was a Senior Vice President in the Fixed
Income Division of Shearson Lehman Brothers. Mr. Wagner received a B.A. from Lafayette College in
1975 and an M.B.A. from the University of Chicago Graduate School of Business in 1977. In 2003, Mr.
Wagner was presented with 'The Gustave L. Levy Award' of the Wall Street Division of the UJA-
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Federation of New York. The award, the division's highest, was given in recognition of Mr. Wagner's
many years of community service, philanthropy and leadership.
Robert Matza
President
Robert Matza is GoldenTree’s President, a Partner and a member of its Investment Committee. Mr.
Matza was President and Chief Operating Officer of Neuberger Berman, Inc., as well as a member of the
Firm’s Executive Committee, Lehman Brothers’ Management and Investment Committees until
November 2005. He joined Neuberger Berman in April 1999 as a Principal. Mr. Matza, along with the
CEO of the company, led the team that successfully completed the IPO of Neuberger Berman in
November 1999 with a market capitalization of approximately $1.5 billion. As Chief Operating Officer
he presided over a significant overhaul of the company’s infrastructure, investment talent and process
while transitioning the company from a successful partnership to an asset manager that was poised for
growth. He negotiated and completed six acquisitions between 2000 and 2003. In 2003, Mr. Matza
negotiated the very successful merger of the company with Lehman Brothers for $3.0 billion. Assets
under management grew from approximately $68 billion to over $100 billion in the two year period
subsequent to the closing on October 31, 2003. Mr. Matza’s previous industry experience includes 16
years with Lehman Brothers and its predecessor companies, where he last served as Managing Director,
Chief Financial Officer and a member of the Operating and Investment Committees. In 1996 he joined
Travelers Group as its Treasurer and became Deputy Treasurer of Citigroup after Travelers and Citicorp
merged. While at Citigroup, he was on the Finance, Investment and Merger & Acquisition Committees.
Born in 1956, Mr. Matza earned his bachelor’s degree from the State University of New York at Albany,
and his MBA in finance from New York University. He started his career at Coopers and Lybrand in
1977. He is a member of the Dean’s Portfolio Managery Board and the Board of the Center for
Institutional Investment Management of the University at Albany’s School of Business. He is also a
Certified Public Accountant.
David H. Allen
Portfolio Manager
David Allen is a Partner and runs GoldenTree’s London office, where he is responsible for European
investments. Additionally, he is a member of GoldenTree's Investment Committee. Prior to joining
GoldenTree, Mr. Allen was at Morgan Stanley for 11 years, most recently as an Executive Director
covering companies in the cable, media and entertainment industries. Mr. Allen was a member of the
Institutional Investor All-America Fixed Income Research Team several times from 1999-2002. In 2002,
he occupied both the #1 position in Broadcasting & Publishing and the #3 position in Cable & Satellite.
Mr. Allen was also Associate Director of High Yield Research from 2001-2002. While at Morgan
Stanley, he was involved in approximately $30BN in financings for companies including Amazon.Com,
Bresnan Comm., Cablevision, Canal Digital, Chancellor Media, Charter, Cinemark, Earthwatch, Falcon
Cable, Fox/Kids, Insight Comm., Key3Media, Knology, LIN TV, Marvel, NTL, PRIMEDIA, RCN,
Regal Cinemas, Renaissance Media, SFX, Telewest, TVN, UPC, V2 Music, World Color Press and Ziff-
Davis. Mr. Allen also worked in Morgan Stanley's M & A department from 1992 to 1994 and then as an
investment banker in their Hong Kong office from 1994 to 1995. Mr. Allen received a B.A. from the
University of California, Berkeley with a major in Economics in 1992. While there, he was a member of
the varsity crew team for three years, an All-Conference selection in 1992 and rowed for the US National
Team Development Camp in Washington DC in the summer of 1991.
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Julia Balanova
Research Analyst
Prior to joining GoldenTree, Ms. Balanova was a senior healthcare analyst at Argus Partners, LLC, a
dedicated healthcare fund. Ms. Balanova focused on US large-cap, specialty and generic pharmaceuticals
as well as international pharmaceutical companies. From 2001-2005 Ms. Balanova was a senior
healthcare analyst/PM at Sierra Global, a European hedge fund, where she ran a healthcare sector fund
focusing on European pharma, biotech and medtech names. Ms. Balanova received an BA in Economics
and an MBA from Moscow Lomonosov University.
Jeffrey Brown
Research Analyst
Prior to joining GoldenTree, Mr. Brown was a Vice President at Credit Suisse and spent six years in the
Leveraged Finance Research group, where he was responsible for the Technology, Leisure and Lodging
sectors. During that time, Mr. Brown was an Institutional Investor ranked analyst in the technology
sector. Prior to that, he worked in the debt capital markets group at Credit Suisse covering the automotive
and general industrial sectors. Mr. Brown holds a B.A. in government from Cornell and is a CFA
charterholder.
Jeffrey Burke
Research Analyst
Prior to joining GoldenTree, Mr. Burke worked in equity research for Credit Suisse and Wachovia
Securities from 2003 through June 2006, covering the Exploration and Production and Coal sectors and
for asset manager Loomis Sayles covering the energy and basic materials sectors from 2000 through
2003. Mr. Burke graduated from Georgetown University with a BS in Finance and is a CFA
charterholder.
Eduardo Cabral
Portfolio Manager
Prior to joining GoldenTree, Mr. Cabral was as an Associate at Bear Stearns Merchant Banking Partners
II L.P., a private equity fund with $1.5 billion of capital under management. From 1998 to 1999, Mr.
Cabral worked as a Financial Analyst in the Emerging Markets Department in Investment Banking at
Bear, Stearns & Co. Inc. Mr. Cabral holds a BS in Business Administration from the Haas School of
Business of the University of California, Berkeley.
Noah Charney
Research Analyst
Prior to joining GoldenTree, Mr. Charney was a Vice President in the Fixed Income department of Bear
Stearns from 2002-2004. At Bear Stearns, Mr. Charney worked as an analyst on the distressed debt
research and trading desks. From 1999-2001, Mr. Charney was an investment banker in the Media and
Telecom group of Credit Suisse First Boston (now Credit Suisse Group). Mr. Charney received an MBA
from the Harvard Business School and an Honours Bachelor of Arts from Queen’s University in Canada.
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Jason Chen
Research Analyst
Prior to joining GoldenTree, Mr. Chen was an Investment Associate within the Corporate Finance group
of CapitalSource where he structured and executed debt investments in middle market companies.
Previously, he worked as an Associate at McCown De Leeuw, a middle market private equity firm. From
1997 to 1999, Mr. Chen was a financial analyst in the Mergers and Acquisitions group at Salomon Smith
Barney. Mr. Chen received his MBA from the Stanford Graduate School of Business and his AB in
Economics, magna cum laude, from Harvard College.
Jeffrey Craitenberger
Research Analyst
Prior to joining GoldenTree, Mr. Craitenberger was a Vice President at Credit Suisse, where he was
responsible for risk managing a portion of the firm’s multi-billion bank debt portfolio through the use of
credit default swaps and secondary market sales. He also spent some time on Credit Suisse’s High Yield
Research Desk, covering the Technology sector for a Senior Analyst who was a member of Institutional
Investor’s All-American Fixed-Income Research Team. Before joining Credit Suisse, Mr. Craitenberger
worked as a Consultant in Deloitte & Touche’s Transfer Pricing Unit and as an Analyst in the Economist
Department at CS First Boston. Mr. Craitenberger holds a B.A. in Economics from the University of
Pennsylvania and an M.B.A. with honors from the University of Chicago.
Jonathan Ezrow
Portfolio Manager
Jonathan Ezrow is a Partner, a member of GoldenTree's Investment Committee, and is part of the Capital
Solutions Group. Prior to joining GoldenTree in July of 2003, Mr. Ezrow spent the vast majority of his
career in high yield capital markets, where he was responsible for the origination, structuring and
marketing of high yield new issues. Mr. Ezrow was a Managing Director and Co-head of U.S. High
Yield Capital Markets at Credit Suisse First Boston from 2000 until 2003. From 1998 though 2000, Mr.
Ezrow was located in London and headed Donaldson, Lufkin & Jenrette's European high yield capital
markets department. For one year prior to relocating to London, Mr. Ezrow was a Managing Director in
high yield capital markets for Donaldson, Lufkin & Jenrette based in New York. During each of his years
at DLJ and CSFB, his employer was the number one global underwriter of high yield bonds. From 1992
through 1997, Mr. Ezrow worked at Bear, Stearns & Co. Inc. in high yield capital markets. Prior to 1992,
Mr. Ezrow was employed in the investment banking department at PaineWebber Incorporated. Mr.
Ezrow received an A.B. from Dartmouth College in Economics with Honors.
Cameron S. Fleming
Director of Sourcing
Cameron Fleming is a Director of Sourcing in the Capital Solutions Group and is responsible for
introducing investment opportunities to the group. Prior to joining GoldenTree, Mr. Fleming was a
Senior Vice President at Highbridge Capital/D.B. Zwirn & Co. and was responsible for general
transaction origination as well as investing in Media/Broadcasting, Aircraft and other sectors. After 9/11,
Mr. Fleming worked for the U.S. Department of the Treasury, where he was Senior Vice President of the
Air Transportation Stabilization Board, which is responsible for managing the $10 billion federal airline
loan fund. Previously, Mr. Fleming was employed by Donaldson, Lufkin & Jenrette, most recently as
Vice President in the Bridge Finance Group and member of the DLJ Credit Committee. Prior to DLJ, Mr.
Fleming was an analyst and subsequently an associate in the Merchant Banking Group of Chase
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Manhattan Bank. Mr. Fleming received an M.B.A. from the Harvard Business School in 1994 and a B.A.
in Religion, magna cum laude, from Dartmouth College in 1988.
Treacy Gaffney
Portfolio Manager
Treacy Gaffney is a Partner and a member of GoldenTree's Investment Committee. Prior to joining
GoldenTree in 2001, Ms. Gaffney was a Managing Director at Credit Suisse First Boston, where she
covered companies in the healthcare industry for the High Yield Research Group for two years. Prior to
joining Credit Suisse First Boston, she was a Managing Director at Salomon Smith Barney, where she
had similar responsibilities from 1994 to 1999. Ms. Gaffney was a member of the Institutional Investor
All-American Fixed Income Research team for five consecutive years from 1996 to 2000, including three
years on the First Team. Prior to becoming a high yield analyst, Ms. Gaffney held corporate finance
positions at Nomura Securities International and Drexel Burnham Lambert. Ms. Gaffney holds an
M.B.A. from The Wharton School of the University of Pennsylvania and a B.S. from Marquette
University.
Matthew Grimes
Senior Business Development Officer
Prior to joining GoldenTree, Mr. Grimes was a Director at Tennenbaum Capital Partners, LLC (“TCP”),
where his responsibilities included sourcing, analyzing, structuring, pricing, negotiating, and documenting
$25MM - $150MM investments. The firm, which managed $4 billion of capital, invested in multiple
layers of the capital structure – debt and equity – in a variety of industries, including business services,
airlines, technology, telecommunications, transportation, logistics, manufacturing, construction, energy,
and retail. Prior to TCP, he spent eight years at Congress Financial Corporation (now known as
“Wachovia Capital”) where, as a First Vice President, he concentrated on sourcing, structuring and
negotiating $10 million - $200 million asset-based senior credit facilities. Before Congress, he was an
Underwriter at Barclays Business Credit and an auditor at Price Waterhouse. Mr. Grimes earned his
Masters of Business Administration from the University of Southern California with a concentration in
finance and his Bachelor of Arts from the University of California at Berkeley. He earned his Certified
Public Accountant license in California.
Frederick S. Haddad
Portfolio Manager
Fred Haddad is a Partner and a member of GoldenTree's Investment Committee. Prior to joining
GoldenTree, Mr. Haddad was a Managing Director at the Royal Bank of Canada from 1997 to 1999,
where he established and managed Royal Bank's US leveraged finance business, which included an $800
million portfolio of high yield bank loans. From 1990 to 1997, Mr. Haddad was a Senior Vice President
with Credit Lyonnais, USA, where he managed the Leveraged Finance, Loan Trading, Loan Syndication,
and Asset Recovery groups. He was responsible for broadly diversified, sub-investment grade loan
portfolios of up to $2 billion, as well as numerous private equity investments. Mr. Haddad began his
banking career in 1974 with the Irving Trust Company (which merged with the Bank of New York in
1989). At Irving Trust Company, he was involved in international banking and US corporate banking and
founded Irving's Corporate Finance Department, which he ran until 1990. Mr. Haddad received an AB
degree in Economics and English from Lafayette College and an MBA degree from the University of
Michigan's Graduate School of Business.
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Stefan Harpaintner
Research Analyst
Prior to joining GoldenTree, Mr. Harpaintner worked on the London fixed income trading floor of
Lehman Brothers from 2004-2006. At Lehman Brothers, Mr. Harpaintner worked as a desk based high
yield credit analyst, covering a broad portfolio of names with a focus on German performing, stressed and
distressed situations. Mr. Harpaintner graduated from Karlsruhe University and during his studies he cofounded
and worked as a proxy for Smarthouse Media GmbH, a market leader in hosting financial
websites and now a subsidiary of Axel Springer Verlag AG.
J.R. Herlihy
Associate, GoldenTree InSite Partners
J.R. Herlihy is an Associate at GoldenTree InSite Partners. Mr. Herlihy previously worked as an
Associate in Secondary Loan Sales & Trading for GMAC Commercial Mortgage, where his
responsibilities included the acquisition and disposition of distressed and non-performing commercial
mortgages. Prior to GMAC, Mr. Herlihy worked on equity and debt financings in the Capital Markets
Group of Jones Lang LaSalle. Mr. Herlihy received a B.A. in Economics and History from Dartmouth
College and studied at University College London.
Brian Joseph
Research Analyst
Prior to joining GoldenTree, Mr. Joseph worked in the investment banking department of Dresdner
Kleinwort Wasserstein from 2001 through 2003. At Wasserstein, Mr. Joseph worked in the financial
sponsors and technology, media and telecom groups. Mr. Joseph graduated cum laude from Harvard
University with an A.B. in Economics.
Mark Loigman, M.D.
Senior Healthcare Analyst
From 2004 to October 2006, Dr. Loigman served as Senior Healthcare Analyst at Trivium Capital
Management where he worked closely with Michael Meyers and focused his efforts on the biotechnology
and specialty pharmaceutical sub sectors of Healthcare. From 2002 to 2004, Dr. Loigman served as a
Healthcare Analyst at Gilder Gagnon Howe & Co. LLC, where he covered the various healthcare sub
sectors. Prior to joining Gilder Gagnon Howe & Co LLC, Dr. Loigman was in clinical practice as a
psychopharmacologist and pharmaceutical researcher. Dr. Loigman maintains attending status with Mt.
Sinai Hospital in New York in the Department of Psychiatry. He holds a BA in Psychology from the
University of Pennsylvania, Doctor of Medicine degree from Albert Einstein College of Medicine in NY,
and an MBA in Healthcare Administration from Baruch College in NY.
Omar Mallick
Research Analyst
Prior to joining GoldenTree, Mr. Mallick was an Associate at The Cypress Group, a private equity firm
with over $3.5 billion of capital under management. From 1999 to 2002, Mr. Mallick worked as an
Analyst at Bear Stearns Merchant Banking. Mr. Mallick received his MBA from The Wharton School
and holds an A.B. in Economics from Princeton University.
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Michael Meyers
Portfolio Manager
Michael Meyers is a Partner and a member of GoldenTree's Investment Committee. From 2002 to
September 2006, Mr. Meyers served as a Managing Partner, Portfolio Manager and Sector Head of
Healthcare at Trivium Capital Management, a multi-sector long-short firm. From 2000 to 2003, Mr.
Meyers served as a Managing Director and Partner of Global Biomedical Partners, a life sciences venture
firm located in Zurich and New York. Prior to joining Global Biomedical Partners, Mr. Meyers was
Director, Life Sciences Investment Banking at Merrill Lynch & Co., from 1997-1999, and formerly was
Vice President, Health Care Investment Banking at Cowen & Company, from 1993-1997, in New York.
Mr. Meyers was Special Assistant to the CEO of St. Barnabas Hospital and he began his career as a
Research Associate in Biotechnology and Medical Device research with Hambrecht & Quist in New
York. Mr. Meyers earned his AB in Biology from Brandeis University and an M.P.H. in Health Policy
and Management from Columbia University.
Jeffrey Nemanick
Research Analyst
Prior to joining GoldenTree, Jeff Nemanick was a Vice President at SPP Capital Partners, a middle
market investment bank, where he execute debt and equity transactions for middle market companies.
While at SPP Capital, Mr. Nemanick executed over $1.8 billion in transactions for 29 companies. Mr.
Nemanick received a B.S. in Business Administration, magna cum laude, from Georgetown University.
Rael Nurick
Research Analyst
Prior to joining GoldenTree, Mr. Nurick was as an Associate at Vestar Capital Partners, a private equity
fund with over $4.0 billion of capital under management. From 1999 to 2001, Mr. Nurick worked as a
Financial Analyst in the Leveraged Finance Group at Credit Suisse First Boston. Mr. Nurick received his
MBA from Harvard Business School and holds a Bachelor of Commerce degree and a Finance Honors
degree from the University of the Witwatersrand in Johannesburg, South Africa.
Tom O’Shea
Portfolio Manager
Tom O'Shea is a Partner and a member of GoldenTree's Investment Committee. Before joining
GoldenTree, Mr. O'Shea spent three years as an equity analyst in Value Line's research department. He
began his career in 1995 at Institutional Investor, where Mr. O'Shea was the Managing Editor of Bank
Letter (n/k/a Loan Market Week). He founded the publication's coverage of the trading of bank debt and
wrote extensively on the emergence of bank loans as a viable asset class for institutional investors. Mr.
O'Shea was an Echols Scholar at The University of Virginia College of Arts and Sciences, where he
earned a B.A. in Interdisciplinary Studies. Mr. O'Shea received his MBA in Finance from New York
University's Leonard N. Stern School of Business.
Lucy Panter
Portfolio Manager
Lucy Panter is a Portfolio Manager based in London. Prior to joining GoldenTree, Ms. Panter was a vice
president at P. Schoenfeld Asset Management, where she covered European credit opportunities. From
2000-2003 Ms. Panter worked in Equity Capital Markets at Goldman Sachs in New York working on
equity and equity linked financings specialising in the energy and power sector. Ms. Panter received her
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M.A. in International Relations and Economics from SAIS, John Hopkins University and her B.A. in
Italian and Finance from University College London.
Nilesh Parikh
Research Analyst
Prior to joining GoldenTree, Nilesh Parikh was an Associate at American Capital Strategies (NASDAQ:
ACAS) where he invested debt and equity in middle market companies. While at ACAS, Mr. Parikh
invested $190MM in nine companies and served as a Director or Board Observer for two. From 2001 to
2003, Mr. Parikh was a Financial Analyst at Lazard Frères & Company and Gleacher Partners where he
advised clients on over $2.0 billion of mergers, acquisitions and balance sheet restructurings. Mr. Parikh
received a B.S. in Economics, magna cum laude, from the Wharton School at the University of
Pennsylvania.
Joshua H. Pristaw
Managing Director, GoldenTree InSite Partners
Josh Pristaw is a Managing Director at GoldenTree InSite Partners with responsibilities including
acquisitions, dispositions, financing and asset management. Prior to joining GoldenTree, Mr. Pristaw was
a Principal and Co-Head of Acquisitions for Coventry Real Estate Portfolio Managers. After joining
Coventry in 1999, Mr. Pristaw was responsible for identifying investment opportunities, conducting due
diligence, structuring transactions, negotiating with sellers and managing dispositions. Mr. Pristaw was
also a member of Coventry’s Investment Committee. Prior to joining Coventry, Mr. Pristaw was a
Financial Analyst at Lehman Brothers in Real Estate Investment Banking where he worked on a variety
of transactions, including commercial real estate acquisitions, corporate mergers and acquisitions and
equity and debt financings. Mr. Pristaw received an A.B. in Government from Dartmouth College.
Michael Ranson
Portfolio Manager
Prior to joining GoldenTree, Mr. Ranson was a Vice President at American Capital Strategies (NASDAQ:
ACAS) where he invested debt and equity in middle market companies. While at ACAS, Mr. Ranson
invested roughly $200MM in approximately ten leveraged buyouts and financings and served as a
Director of six portfolio companies. Mr. Ranson began his investing career as a Financial Analyst in the
Acquisition Finance Group at Chase Manhattan where he provided debt financing for large leveraged
buyout transactions. While at Chase Manhattan, Mr. Ranson structured and raised over $3.0 billion of
senior debt, subordinated debt and private equity in connection with leveraged buyouts, mergers and
acquisitions, and recapitalizations. Mr. Ranson received his Bachelor of Arts in Art History from Duke
University. Mr. Ranson was a recipient of the Duke Energy Scholastic Excellence Award, providing him
with a full scholarship to attend Duke University. While at Duke University, Mr. Ranson was a recipient
of a Beneson Award, which provided him with a grant to conduct a post-graduate, independent study of
music in Marrakech, Morocco.
Matthew Ross
Associate, GoldenTree InSite Partners
Matthew Ross is an Associate at GoldenTree InSite Partners. Prior to joining GoldenTree, Mr. Ross was
a member of the Acquisitions group at Sterling American Property, where he was responsible for
analyzing investment opportunities and conducting due diligence. Prior to joining Sterling American, Mr.
Ross was an Associate at IBM Global Consulting and a Financial Analyst at UBS Warburg. Mr. Ross
received a B.B.A. from Emory University and an M.B.A. from Columbia Business School.
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Eric Seeve
Research Analyst
Prior to joining GoldenTree, Mr. Seeve worked in the corporate finance department of Bear, Stearns &
Co. Inc. from 1998 through 2001. During his tenure at Bear Stearns, Mr. Seeve worked on merger and
acquisition Portfolio Managery assignments as well as debt and equity financings for a diverse group of
companies in the natural resources sector, including Devon Energy and Reliance Steel & Aluminum. Mr.
Seeve received a B.A. in economics with high distinction from the University of Michigan.
Tom Shandell
Portfolio Manager
Tom Shandell is a Founding Partner, a member of GoldenTree's Investment Committee, and is part of the
Capital Solutions Group. Prior to joining GoldenTree, Mr. Shandell was at Bear Stearns & Co. Inc. for
16 years, most recently as a Senior Managing Director covering companies in the gaming, hotel,
restaurant and leisure industries. Mr. Shandell was a member of the Institutional Investor All-America
Fixed-Income Research Poll team of gaming analysts for the five years prior to his joining GoldenTree,
most recently occupying the Second Team position. Mr. Shandell spent eight years in the Corporate
Finance Department before joining the High Yield Bond Department in 1992. As an investment banker,
Mr. Shandell worked on a number of transactions for gaming/leisure companies, including Bally
Entertainment, Bally's Park Place, the Trump Organization and Carnival Cruise Lines. Mr. Shandell also
completed numerous debt and equity financings and served as an Portfolio Manager for merger and
acquisition transactions for a diverse group of manufacturing and service companies. Mr. Shandell
received a B.S. from The Wharton School of the University of Pennsylvania and an MBA from Columbia
University.
Steve Shapiro
Portfolio Manager
Steve Shapiro is a Founding Partner and a member of GoldenTree's Investment Committee. Prior to
joining GoldenTree, Mr. Shapiro was a Managing Director in the High Yield Group at CIBC World
Markets, where he was most recently Head of Media and Telecommunications Research. While at CIBC,
Mr. Shapiro was involved with numerous financings for media and communications companies, including
ACME Television, Paxson Communications, Pegasus Communications, Outdoor Systems, Spanish
Broadcasting Systems, Hollinger, Inc., Muzak, Radio Unica, Petersen Publishing, TransWestern
Publishing, and TDL InfoMedia, among others. Prior to its acquisition by CIBC in 1995, Mr. Shapiro
was a research analyst with The Argosy Group L.P., a high yield investment-banking boutique in New
York. Before joining Argosy, Mr. Shapiro was a bankruptcy attorney with Stroock & Stroock & Lavan in
New York where he represented bondholder committees and reorganizing companies in Chapter 11
proceedings and out-of-court restructurings. Mr. Shapiro is a graduate of The University of Pennsylvania
Law School, where he served as Senior Editor of the Labor Law Journal. He graduated with Honors from
the University of Pennsylvania College of Arts & Sciences with a major in modern diplomatic history and
was a member of the History Honor Society.
Thomas M. Shapiro
President, GoldenTree InSite Partners
GoldenTree has a joint venture with Tom Shapiro to invest in global real estate equity and debt
opportunities. Prior to starting this venture, Mr. Shapiro was a Senior Managing Director at Tishman
Speyer. He sat on the firm's Investment and Management Committees. He was responsible for Tishman
Speyer's global equity capital markets and dispositions groups. Previously, Mr. Shapiro ran GTS
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Properties, an acquisitions joint venture between Tishman Speyer and Goldman Sachs. Since joining
Tishman Speyer in 1988, he worked in the acquisitions, leasing, asset management and development
areas. Mr. Shapiro is on the Board of Overseers of the University of Pennsylvania's School of Social
Policy and Practice. Mr. Shapiro received a Bachelor of Science from the University of Pennsylvania’s
Wharton School.
Adam Tuckman
Portfolio Manager
Adam Tuckman is a Partner and a member of GoldenTree's Investment Committee. Prior to joining
GoldenTree, Mr. Tuckman was as an Associate at Bear Stearns Merchant Capital II L.P., a private equity
fund with $1.5 billion of capital under management. From 1996 to 1999, Mr. Tuckman worked in the
Investment Banking Department at Bear, Stearns & Co. Inc. Mr. Tuckman holds a BS Economics, cum
laude, from the Wharton School of the University of Pennsylvania.
Robert Vahradian
Managing Director, GoldenTree InSite Partners
Robert Vahradian is a Managing Director of GoldenTree InSite Partners, responsible for new investments
and asset management. Prior to joining GoldenTree InSite, Mr. Vahradian was President of Allied
Partners, responsible for investments and development projects. Mr. Vahradian also served as Chief
Operating Officer and Principal of The Athena Group, a residential investment and development
company. At Athena Mr. Vahradian invested in over $700 million of projects. Prior to The Athena
Group, Mr. Vahradian spent several years with Credit Suisse First Boston in the real estate investment
banking and principal group where he managed debt and public and private equity offerings. Mr.
Vahradian received a B.S. in Engineering, summa cum laude, from Tufts University and holds a M.B.A.
from The Wharton School, University of Pennsylvania.
Harvey Wun
Research Analyst
Prior to joining GoldenTree, Mr. Wun worked in the investment banking department of Morgan Stanley
from 2002-2005. At Morgan Stanley, Mr. Wun executed M&A and financing assignments for the energy
and utilities group and worked in the New York, Hong Kong and London offices respectively. Mr. Wun
graduated cum laude from Harvard College with an A.B. in Computer Science and Economics.
Corey Geis
Head of Loan Trading
Corey Geis is a part of the Trading group at GoldenTree. Prior to joining GoldenTree, Mr. Geis was a
Vice-President of TD Securities High Yield Loan Sales and Trading Desk. Mr. Geis' responsibilities
included the sales and trading of HY Bank Debt in the primary and secondary market, as well as the
distribution and marketing of TD Securities' structured products including credit derivatives and CDO's.
He joined TD Securities in 1996 and held various roles working as a credit analyst in their Corporate
Finance Group, as well as structuring credit derivatives and synthetic CLO's with TD Securities' Credit
Derivatives Group. Prior to joining TD Securities, Mr. Geis was formally credit-trained at NatWest Bank
N.A. and worked as a credit analyst. Mr. Geis holds a B.S. in Finance and English from Rutgers
College and is a CFA charterholder.
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Linda Grillo
Head of European Trading
Linda Grillo is Head of European Trading at GoldenTree. Prior to joining GoldenTree, Ms. Grillo was at
MacKay Shields for 13 years. At MacKay, she was the head trader in their High Yield Division, a
division that managed 10 billion dollars in firm assets. Before joining MacKay Shields in 1989, she was
with Shearson Lehman Ark Management as an equity trading assistant for three years. Ms. Grillo has 18
years of industry experience. She holds a B.A. in Economics from Brooklyn College and has attended the
N.Y. Institute of Finance.
Joshua Press
Head Trader
Joshua Press is a Partner and Head Trader of GoldenTree. Prior to joining GoldenTree, Mr. Press was
Vice President/High Yield Trader at First Dominion Capital, LLC. At First Dominion, he supervised the
high yield bond trading for three Collateralized Debt Obligations totaling $2.5 billion in assets. Mr. Press
was also a proprietary trader for Bernard L. Madoff Investment Securities, where he traded a wide range
of products including convertible arbitrage, advanced options strategies, spread trading and both straight
NYSE and NASDAQ equities. Prior to Madoff, he was an assistant trader on the Mortgage Back
Securities Desk at Credit Suisse First Boston. Mr. Press holds a B.A. from the University of
Pennsylvania.
Frank Jordan
Co-Head of Marketing & Client Service
Frank Jordan is a Partner and a member of GoldenTree's Investment Committee. Prior to joining
GoldenTree, Mr. Jordan was a Managing Director of High Yield Sales at Wasserstein Perella
(Grantchester Securities, Inc.) with coverage responsibilities for various mutual funds, insurance
companies, hedge funds, and other institutional asset managers for high yield products. Mr. Jordan was
named Bond Week Institutional Investor Fixed Income Sales Executive of the Year in 1998. From 1989
to 1991, he was a Vice President of High Yield Sales at Citicorp. From 1982 to1989, Mr. Jordan was a
Vice President at Salomon Brothers and was the Product Manager of the Preferred Stock Department for
the last three of those years. As Preferred Stock Product Manager, his responsibilities included
underwriting, pricing and structuring all preferred stock new issuance as well as the management of
Salomon's sales force. Mr. Jordan received a B.A. in Finance from the University of Alabama in 1979
and was awarded the Wall Street Journal Award. In 1982, Mr. Jordan received his MBA from Tulane
University's AB Freeman School of Business, where he received the Mary S. Faulk award.
Oliver E. Wriedt
Head of Marketing & Structured Products
Oliver Wriedt is a Partner and a member of GoldenTree’s Investment Committee. Prior to joining
GoldenTree, Mr. Wriedt was a Managing Director at Deutsche Bank. In his six years at Deutsche Bank,
Mr. Wriedt held several sales management positions in London and New York, focusing on structured
product sales in Northern Europe and running the Alternative Asset Solutions effort in North America.
From 1993 to 1998, Mr. Wriedt worked at NORD/LB in Hannover, Singapore and New York. Mr.
Wriedt holds a B.A. degree with Honors in Economics and History from Duke University.
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William G. Cisneros
Director, Marketing
Bill Cisneros joined GoldenTree as a Director in 2006. Prior to joining GoldenTree, Mr. Cisneros was a
Managing Director at Lyster Watson & Company, where he researched hedge fund strategies and advised
investors on their allocations to hedge fund managers. From 1999 to 2002, Mr. Cisneros was a Board
member and the Executive Vice President at Vencast, an Internet based company focused on the
institutional alternative investment markets, where he researched private equity and hedge fund strategies
and managers. From 1996 to 1999, Mr. Cisneros was a partner and portfolio manager at Croesus Capital
Management, a hedge fund management company dedicated to emerging markets. Before joining
Croesus and since his graduation from the London School of Economics in 1987, Mr. Cisneros was a
proprietary investor focused on emerging markets debt at Security Pacific Merchant Bank, The Bank of
Tokyo and Banco Internacional. Mr. Cisneros received his B.A. with Honors in Economics from Colgate
University in 1985 and continued his education at the London School of Economics, where he received a
Diploma in Economics and an M.Sc. in Finance. He later received an M.A. in Politics from New York
University, and in 1995 he became a Chartered Financial Analyst (CFA).
Laurie Katz
Director, Marketing
Laurie Katz is a Marketing Director. Ms. Katz, one of GoldenTree’s first employees, joined the firm in
2000 as part of the Trading Team. In 2002, Ms. Katz joined the Management Team, where she structured
and managed the Operations Group(s) within GoldenTree, focusing on system implementations,
developing brokerage relationships, staffing, and implementing policies & procedures. Prior to joining
GoldenTree, Ms. Katz was an Associate/ Assistant Trader at First Dominion, where she was responsible
for the Operations of three collateralized debt obligations, including issues related to closing structured
products, developing relationships with underwriters and portfolio valuations. Prior to First Dominion,
Ms. Katz held a similar position within the Capital Markets division of CIBC. Ms. Katz holds a B.A.
from New York University.
Brooke Simpson
Senior Manager of Investor Relations
Brooke Simpson is the Senior Manager in the Investor Relations Department of GoldenTree. She is
responsible for overseeing the Client Service team in an effort to provide exceptional support for our
diverse investor base. Prior to joining GoldenTree, Ms. Simpson worked on the sales team at Mellon
Private Wealth Management, where she was responsible for analyzing prospective client portfolios using
various asset allocation strategies and marketing to high net worth individuals. Prior to Mellon, Ms.
Simpson worked as a Financial Officer in Business Development for U.S. Trust Company. Ms. Simpson
holds a B.A. from The Pennsylvania State University.
William D. Christian
Chief Operating Officer
William D. Christian is a Partner and Chief Operating Officer of GoldenTree. Prior to joining
GoldenTree, Mr. Christian was a Director at MacKay Shields LLC, serving as their Director of
Investment Operations and Information Technology. Mr. Christian was responsible for MacKay's
operational delivery and the identification and deployment of technology solutions to support a multiproduct
investment management firm. He also managed MacKay's outsourcing relationships. From 1995
to 1999, Mr. Christian was head of North America investment operations at AIG Global Investment
Group. Additionally, he was part of a team at AIG that developed a global strategy to support and
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implement consistent investment systems and operational procedures worldwide. Prior to this role, Mr.
Christian was a Vice President at Bankers Trust in its Corporate Trust Department. His role there was
product manager for UIT product delivery and client service. Before his tenure at Bankers Trust, Mr.
Christian held various management positions at Chase Manhattan Bank. He started his career at Chase
Manhattan Bank in 1986 in their Operations and Technology management-training program. This
program lasted 21 months and involved rotation assignments, internal and external seminars as well as
quarterly presentations to senior management. Mr. Christian graduated from Iona College with a B.S. in
Business Administration. He also received an M.B.A. from Iona College.
Patrick J. Goulding
Chief Financial Officer, GoldenTree InSite Partners
Patrick Goulding is the Chief Financial Officer and Director of GoldenTree InSite Partners, responsible
for financing, treasury management, taxation, accounting and reporting activities. Prior to joining
GoldenTree InSite Partners, Patrick was a Director and Head of Portfolio Finance for ING Clarion. He
also served as CFO of its flagship real estate fund – Clarion Lion Properties Fund. Prior to ING Clarion,
he spent 7 years in the Lend Lease organization where he served in various roles in real estate investment
and development in the US and Asia Pacific. He commenced his real estate career with the Schroders
Banking Group and worked in both the European and Australian fund management businesses. Patrick
has a Bachelor’s degree in Business Studies and is a member of the Institute of Chartered Accountants in
Ireland (CPA equivalent).
Keri McGinness
Chief Financial Officer
Prior to joining GoldenTree, Ms. McGinness worked in the Alternative Asset Management Group at
PricewaterhouseCoopers LLP. While at PricewaterhouseCoopers, she conducted and supervised audits
and provided consulting services for various asset management firms, where she specialized in hedge
funds and collateralized debt obligations. She holds a B.B.A. in Accounting from Loyola College in
Maryland and is a Certified Public Accountant in the State of New York.
Barry Ritholz
General Counsel
Prior to joining GoldenTree, Mr. Ritholz was Associate General Counsel and Director of Compliance for
Dresdner Kleinwort Wasserstein - North America. During his tenure at that firm, Mr. Ritholz supervised
a staff of 10 individuals and was responsible for their regulatory compliance activities. Before joining
this firm, Mr. Ritholz was Legal Counsel and Compliance Officer to Deutsche Bank's Capital Markets
Group in Baltimore, Maryland. He was also a Senior Attorney at the United States Securities and
Exchange Commission in Washington, D.C. Mr. Ritholz is a graduate of The George Washington
University Law School where he graduated with Honors. He received a B.A. in History (Dean's List)
from Emory University. Mr. Ritholz is a member of the New York and District of Columbia Bars.
George Travers
Chief Compliance Officer
Prior to joining GoldenTree in April, 2005, Mr. Travers was the Director of Compliance at Perry Capital
LLC. Prior to that, he was the Director of Compliance at Credit Suisse Asset Management, LLC from
1997 to 2003. Mr. Travers also held compliance positions at Prudential Insurance Company of America
and Credit Suisse First Boston. Mr. Travers began his career in compliance as a Securities Compliance
Examiner with the US Securities and Exchange Commission from 1987 to 1989. He received a JD from
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Brooklyn Law School in 1992 and a BBA in finance from Baruch College in 1987. Mr. Travers is a
member of the New York and New Jersey Bars.
Jim Casey
Director of Human Resources
Prior to joining GoldenTree, Jim was at JPMorganChase & Co. for 11 years, most recently as Head of
Human Resources for JPMorgan Asset Management’s U.S. business. He was primarily responsible for
talent acquisition and development, performance management, succession planning, leadership
development, executive coaching and compensation for the 3,100 employee, $850 billion AUM firm. Jim
successfully led all HR due diligence for the firm’s acquisition and divestitures, including the purchase of
the Retirement Plan Solutions business from American Century, the creation of a strategic partnership
with Highbridge Capital Management, as well as the recent sale of the Brown & Co. active trader
business to E*TRADE. Jim holds a cum laude BA degree from Marist College and an MBA from the
Lubin School of Business at Pace University.
Thomas Gengler
Tax Director
Prior to joining GoldenTree, Tom was a Senior Vice President and Tax Director at Neuberger Berman.
Prior to joining Neuberger Berman in 1999, Tom worked as Tax Director of Long Term Capital
Management (after the restructuring), Tax Director of Greenwich Capital Markets and as a Managing
Director at Lehman Brothers. Tom was a member of the Audit Staff and Tax Department at Coopers &
Lybrand (now PriceWaterhouseCoopers). Tom was an intern for two years at the Internal Revenue
Service. Tom received a B.B.A., in Accounting from Pace University and an M.B.A. in Tax from New
York University. Tom is a past President of the Wall Street Tax Association (WSTA). Tom is currently
the chairman of the New York State Society of Certified Public Accoutants (NYSSCPA) Investment
Management committee.
Brian Teitelbaum
Director, Performance Analytics
Prior to joining GoldenTree, Mr. Teitelbaum worked at Deutsche Asset Management where he managed
the performance analytics department covering portfolios totaling over $10 billion. Prior to joining
Deutsche Asset Management, Mr. Teitelbaum was employed at Lazard Asset Management where he was
responsible for portfolio analytics for actively managed accounts. Mr. Teitelbaum holds a B.S. in
Accounting from Rutgers University.
Karen Weber
Manager, Bank Debt Operations
Prior to joining GoldenTree in July, 2002, Ms. Weber worked at RBC Capital Markets from 1990 to 2002
in various positions. She most recently coordinated the convergence of the Loan Trading and Sales
settlement department into the Global Credit Products Group. Prior to that position, she held the position
of Manager of Bank Debt Settlements in Global Syndications. Ms. Weber also held the position of
Manager of the Administrative Agency Services department consisting of 60 RBC-agented Bank Debt
facilities prior to her Bank Debt settlement experience.
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Michael Winderman
Director, Structured Products
Prior to joining GoldenTree, Mr. Winderman was an Associate at UBS Warburg in the Structured
Products Group responsible for marketing and structuring CBOs and CLOs. Before joining UBS
Warburg, Mr. Winderman was an Associate in the corporate department at the law firm of Latham &
Watkins where he represented underwriters and issuers in public and private offerings of debt and equity
securities. Mr. Winderman is a graduate of The Fordham University School of Law. He received a B.S.
in Economics from Cornell University. Mr. Winderman is a member of the New York Bar.
The Portfolio Management Agreement
The Issuer and the Portfolio Manager will enter into the Portfolio Management Agreement pursuant to
which the Portfolio Manager will perform certain administrative and advisory functions with respect to
the Assets. Pursuant to the terms of the Portfolio Management Agreement, and in accordance with the
requirements set forth in the Indenture, the Portfolio Manager will select all the Collateral Obligations and
Eligible Investments and will instruct the Trustee with respect to any acquisition, management,
disposition or sale of a Collateral Obligation, Eligible Investment or other Asset. The Portfolio Manager
will, among other things, have the right, on behalf of the Issuer, to vote or refrain from voting any
Collateral Obligation and to exercise any other rights or remedies with respect thereto consistent with the
terms of the Indenture. None of the Initial Purchaser and Placement Agent nor any affiliate thereof will
select any of the Collateral Obligations.
Pursuant to the terms of the Portfolio Management Agreement, the Portfolio Manager will monitor the
Assets and provide the Issuer with certain information with respect to the composition and characteristics
of the Collateral Obligations, any disposition or tender of a Collateral Obligation, the reinvestment of the
proceeds of any such disposition in Eligible Investments and with respect to the retention of the proceeds
of any such disposition or the application thereof toward the purchase of an additional Collateral
Obligation.
As compensation for the performance of its obligations as Portfolio Manager, the Portfolio Manager will
be entitled to receive a fee, which will accrue quarterly in arrears on each Payment Date (prorated for the
related Interest Accrual Period), in an amount equal to the sum of (i) 0.25% per annum (calculated on the
basis of a 360-day year consisting of twelve 30-day months) of the Fee Basis Amount at the beginning of
the Collection Period relating to such Payment Date (the "Base Management Fee") and (ii) 0.50% per
annum (calculated on the basis of a 360-day year consisting of twelve 30-day months) of the Fee Basis
Amount at the beginning of the Collection Period relating to such Payment Date (the "Subordinated
Management Fee" and, together with the Base Management Fee, the "Management Fee"). The Base
Management Fee and the Subordinated Management Fee are payable on each Payment Date only to the
extent that sufficient Interest Proceeds or Principal Proceeds are available after making distributions on
such Payment Date, and, to the extent any such fee is not paid on any Payment Date for any reason, it will
be deferred.
The Portfolio Manager may in its sole discretion elect to defer or waive payment of all or a portion of the
Base Management Fee or the Subordinated Management Fee on any Payment Date by providing written
notice to the Trustee of such election at least five (5) Business Days prior to such Payment Date (such
amount of the Base Management Fee, together with (i) any amounts of the Base Management Fee so
deferred on prior Payment Dates that remain unpaid and (ii) interest on the amounts so deferred on each
Payment Date that remain unpaid at a per annum rate equal to LIBOR for the related Interest Accrual
Period (calculated on the basis of a 360-day year consisting of twelve 30-day months), the "Deferred
Base Management Fee"; and such amount of the Subordinated Management Fee, together with (i) any
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portion of the Subordinated Management Fee so deferred on prior Payment Dates that remain unpaid and
(ii) interest on the amounts so deferred on each Payment Date that remain unpaid at a per annum rate
equal to LIBOR for the related Interest Accrual Period (calculated on the basis of a 360-day year
consisting of twelve 30-day months), the "Deferred Subordinated Management Fee"). The Portfolio
Manager may elect to receive payment of all or any portion of the Deferred Base Management Fee and/or
the Deferred Subordinated Management Fee on any Payment Date to the extent of funds available to pay
such amounts as described in "Summary of Terms—Priority of Payments" by providing notice to the
Trustee of such election and the amount of such fees to be paid on or before three (3) Business Days
preceding such Payment Date.
The Portfolio Manager will also be entitled to be reimbursed by the Issuer for its expenses incurred in
connection with its obligations under the Portfolio Management Agreement and the Indenture, as and to
the extent set forth in the Portfolio Management Agreement. Such amounts will be payable as
Administrative Expenses to the extent of available funds in accordance with the Priority of Payments.
"Fee Basis Amount" means, as of any date of determination, the sum of (a) the Collateral Principal
Amount and (b) the aggregate principal amount of all Defaulted Obligations.
The Portfolio Manager will perform its duties and functions under the Portfolio Management Agreement
and the Indenture with reasonable care, using a degree of skill not less than that which the Portfolio
Manager exercises (and in any event not less than the degree of care and skill exercised by other
investment managers of recognized standing) with respect to comparable assets that it manages for itself
and others having similar investment objectives and restrictions. In no event shall the Portfolio Manager
be (i) liable or responsible for the performance of the Assets (other than as provided in the next
succeeding sentence), (ii) obligated to perform any other duties other than as specified in the Portfolio
Management Agreement or in the Indenture or (iii) obligated to pursue any particular investment strategy
or opportunity with respect to Assets. Notwithstanding anything to the contrary contained in the Portfolio
Management Agreement, in the Indenture or in any other agreement or instrument executed in connection
therewith (collectively, the "Transaction Documents"), the Portfolio Manager and its affiliates and their
respective directors, managers, officers, stockholders, members, partners, employees, agents or affiliates
will not be liable to the Issuer, the Trustee or the holders of the Notes or any beneficial interest therein for
any Liability (as defined below) that arises out of or in connection with the Transaction Documents,
including the performance by the Portfolio Manager of its duties under the Portfolio Management
Agreement and the Indenture, except by reason of a Portfolio Manager Breach; provided, that nothing in
the Portfolio Management Agreement shall constitute a waiver of any rights which the Issuer may have
under applicable United States federal securities laws. The Portfolio Manager will be entitled to
indemnification by the Issuer under certain circumstances (as described more fully below) in accordance
with the Portfolio Management Agreement.
Pursuant to the terms of the Portfolio Management Agreement, the Issuer will indemnify and hold
harmless the Portfolio Manager and its affiliates and their respective directors, managers, officers,
stockholders, members, partners, agents and employees (each, an "Indemnified Party") from and against
any and all losses, claims, damages, judgments, assessments, costs or other liabilities (other than losses in
the value of a Collateral Obligation or Eligible Investment incurred by the Portfolio Manager or its
affiliates in connection with a transaction in which it elects to acquire a Collateral Obligation or an
Eligible Investment directly from the Issuer as principal) (collectively, "Liabilities"), and will promptly
reimburse each such Indemnified Party for all reasonable fees and expenses (including reasonable fees
and expenses of counsel) as such fees and expenses (collectively, the "Expenses") are incurred in
investigating, preparing, pursuing or defending any claim, action, proceeding or investigation with respect
to any pending or threatened litigation (collectively, the "Actions"), caused by, or arising out of or in
connection with (i) the issuance of the Offered Securities, (ii) the Assets or business of the Issuer or (iii)
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any action taken by, or any failure to act by, any Indemnified Party in respect of its obligations under the
Portfolio Management Agreement or the Indenture that has not been determined in a final judicial
proceeding to constitute bad faith, willful misconduct, gross negligence or willful breach of fiduciary duty
in the performance, or reckless disregard of its obligations under the Portfolio Management Agreement or
the Indenture; provided, however, such person shall not be indemnified for any Liabilities or Expenses (x)
it incurs as a result of any acts or omissions by any such person constituting bad faith, willful misconduct,
gross negligence or willful breach of fiduciary duty in the performance, or reckless disregard, of the
obligations of the Portfolio Manager under the Portfolio Management Agreement or the Indenture, or (y)
it incurs with respect to the information concerning the Portfolio Manager included herein under the
headings, "The Portfolio Manager" and "Risk factors—Relating to Certain Conflicts of Interest—The
Issuer Will be Subject to Various Conflicts of Interest Involving the Portfolio Manager" that contains any
untrue statement of a material fact or omits to state a material fact necessary in order to make the
statements herein, in light of the circumstances under which they were made, not misleading (the matters
referred to in clauses (x) and (y) collectively, "Portfolio Manager Breaches"). The obligations of the
Issuer to indemnify any Indemnified Party for any Liabilities and Expenses shall be payable solely out of
the Assets in accordance with the priority of payments. The Indemnified Parties are not required to
consult with, or obtain the consent of, the Issuer with respect to any settlement, negotiation or other act of
the Indemnified Parties in connection with any Action.
Pursuant to the terms of the Portfolio Management Agreement, the Portfolio Manager will indemnify and
hold harmless the Issuer, the Co-Issuer, the Trustee, the Initial Purchaser, the Placement Agent and their
respective affiliates, and each of their directors, managers, officers, stockholders, members, partners,
agents and employees (each, an Indemnified Party) from and against any and all Liabilities, and will
promptly reimburse each such person for all Expenses as such Expenses are incurred in investigating,
preparing, pursuing or defending any Actions, caused by, or arising out of or in connection with a
Portfolio Manager Breach. The Indemnified Parties are not required to consult with, or obtain the consent
of, the Portfolio Manager with respect to any settlement, negotiation or other act of the Indemnified
Parties in connection with any Action.
The Portfolio Management Agreement may not be amended other than by an agreement in writing by the
parties to the Portfolio Management Agreement and except in certain limited circumstances, without (i)
the consent of the requisite percentage of each Class of Notes whose consent would be required for such
an amendment if it were being made to the Indenture and (ii) the written confirmation of each Rating
Agency that such amendment will not cause the reduction or withdrawal of their ratings of any Class of
Secured Notes.
The Indenture places significant restrictions on the Portfolio Manager's ability to buy and sell Assets, and
the Portfolio Manager is required to comply with these restrictions contained in the Indenture.
Accordingly, during certain periods or in certain specified circumstances, the Portfolio Manager may be
unable to buy or sell securities or to take other actions which it might consider in the best interest of the
Issuer and the holders of Notes, as a result of the restrictions set forth in the Indenture.
The Portfolio Management Agreement provides that the Portfolio Manager shall not direct the Trustee (a)
to acquire an obligation to be included in the Assets from the Portfolio Manager as principal, any affiliate
of the Portfolio Manager or any account or portfolio for which the Portfolio Manager or any of its
affiliates serves as investment advisor or (b) to sell an obligation to the Portfolio Manager as principal,
any affiliate of the Portfolio Manager or any account or portfolio for which the Portfolio Manager or any
of its affiliates serves as investment advisor, unless (i) the terms and conditions thereof are no less
favorable to the Issuer as the terms it would obtain in a comparable arm's length transaction with a person
that is not the Portfolio Manager, any affiliate of the Portfolio Manager or any account or portfolio for
which the Portfolio Manager or any of its affiliates serve as an investment adviser and (ii) the transactions
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are effected in accordance with all applicable laws (including, without limitation, the Investment Advisers
Act of 1940, as amended (the "Investment Advisers Act")). See "Risk factors—Relating to certain
conflicts of interest—The Issuer will be subject to various conflicts of interest involving the Portfolio
Manager."
The Portfolio Manager may employ third parties (including affiliates) to render advice (including
investment advice) and assistance to the Issuer and to perform any of its duties under the Portfolio
Management Agreement; provided, however, that the Portfolio Manager shall not be relieved of any of its
duties under the Portfolio Management Agreement regardless of the performance of any services by third
parties.
The Portfolio Manager may be removed for cause upon thirty (30) days' prior written notice by the Issuer
or the Trustee, at the direction of (i) a Supermajority of the Controlling Class and (ii) a Supermajority of
the Subordinated Notes (voting separately by Class); provided, that removal pursuant to clause (3) of the
definition of "cause" below will be automatic without notice required from the Issuer, the Trustee or any
other person. Notice of such removal for cause will be given by or on behalf of the Issuer to the holders
of each Class of Offered Securities. For purposes of determining whether the holders of the required
percentage of the aggregate outstanding principal amount of the Notes have given notice of removal of
the Portfolio Manager for cause, Notes owned by the Portfolio Manager or any affiliate thereof will be
disregarded and deemed to be not outstanding. No such removal will be effective until the date as of
which a successor Portfolio Manager has agreed in writing to assume all of the Portfolio Manager's duties
and obligations pursuant to the Portfolio Management Agreement and as specified in the Indenture. Any
such successor Portfolio Manager will be appointed as described below. For purposes of determining
"cause" with respect to any such removal of the Portfolio Manager, such term means any one of the
following events:
(1) the Portfolio Manager willfully violates, or takes any action that the Portfolio Manager knows
breaches, any provision of the Portfolio Management Agreement or the Indenture applicable to
the Portfolio Manager;
(2) the Portfolio Manager breaches in any material respect any provision of the Portfolio
Management Agreement or any terms of the Indenture applicable to the Portfolio Manager (other
than as covered by clause (1) and it being understood that failure to meet any Coverage Test, any
Concentration Limitation or the Collateral Quality Test is not such a violation) (which breach has
a material adverse effect on any holder of the Notes) and the Portfolio Manager fails to cure such
breach within thirty (30) days of its becoming aware of, or its receiving notice from, the Trustee
of, such breach;
(3) certain events of bankruptcy or insolvency with respect to the Portfolio Manager;
(4) the occurrence and continuance of an Event of Default under the Indenture that consists of a
default in the payment of principal or interest on the Secured Notes when due and payable, unless
such default is due to the negligence or willful misconduct of the Trustee; or
(5) the occurrence of an act by the Portfolio Manager that constitutes fraud or criminal activity in the
performance of its obligations under the Portfolio Management Agreement, or the Portfolio
Manager or any of its senior executive officers (in the performance of his or her investment
management duties) being convicted of a felony offense related to its primary business.
The Portfolio Manager may not be removed other than for "cause." If any of the events specified in the
definition of "cause" shall occur, the Portfolio Manager shall give prompt written notice thereof to the
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Issuer, each Rating Agency, each holder of Notes and the Trustee upon the Portfolio Manager's becoming
aware of the occurrence of such event.
The Portfolio Manager may not assign its rights or responsibilities under the Portfolio Management
Agreement without the written consent of the Issuer (acting at the direction of a Majority of the
Subordinated Notes) and a Majority of the Notes of the Controlling Class provided, that notwithstanding
the foregoing, the Portfolio Manager will be permitted to assign any or all of its rights and delegate any or
all of its obligations under the Portfolio Management Agreement to an affiliate so long as such an
assignment does not constitute an "assignment" for purposes of Section 205(a)(2) of the Investment
Advisers Act and such affiliate (i) has demonstrated an ability to professionally and competently perform
duties similar to those imposed upon the Portfolio Manager under the Portfolio Management Agreement
and the Indenture or that employs principal personnel performing the duties under the Portfolio
Management Agreement who are the same individuals who would have performed such duties (or
individuals equally qualified who would be able to perform such duties) had the assignment not occurred,
(ii) is legally qualified and has the capacity to act as Portfolio Manager under the Portfolio Management
Agreement and (iii) performs its obligations under the Portfolio Management Agreement using
substantially the same team of individuals that would have performed such obligations had the
assignment not occurred and would not otherwise give rise to the removal of the Portfolio Manager
pursuant to the provisions of the Portfolio Management Agreement described in the third preceding
paragraph above. The Portfolio Manager may resign upon 90 days' written notice to the Issuer. No such
resignation will be effective until the date as of which a successor Portfolio Manager has agreed in
writing to assume all of the Portfolio Manager's duties and obligations pursuant to the Portfolio
Management Agreement and as specified in the Indenture.
The Portfolio Management Agreement expressly provides that holders of Offered Securities are not third
party beneficiaries of the Portfolio Management Agreement.
Within 60 days of the resignation or removal of the Portfolio Manager while any of the Offered Securities
are outstanding, a Majority of the Subordinated Notes will propose a replacement portfolio manager that
satisfies the criteria set forth in the following paragraph by delivering notice thereof to the Portfolio
Manager and the holders of the Controlling Class. A Majority of the Controlling Class will have thirty
(30) days from receipt of such notice to object to such replacement portfolio manager by delivery of
notice of such objection to the Trustee (for purposes of determining whether the holders of the required
percentage of aggregate outstanding principal amount of the Controlling Class have objected to such
replacement portfolio manager, Notes owned by the Portfolio Manager or any affiliate thereof will be
disregarded and deemed to be not outstanding). If no notice of objection is received by the Trustee within
such time period, such proposed replacement portfolio manager shall be appointed successor Portfolio
Manager. Within thirty (30) days of receipt of notice of such objection, a Majority of the Subordinated
Notes or a Majority of the Controlling Class may propose (the Class of Notes making such proposal being
the "Proposing Class") a replacement portfolio manager that satisfies the criteria set forth in the
following paragraph by written notice to the Trustee, the Issuer and the Class of holders not comprising
the Proposing Class, and a Majority of the Class of holders not comprising the Proposing Class will have
thirty (30) days from receipt of such notice to deliver notice of objection thereto. If no notice of objection
is received by the Proposing Class, the Issuer or the Trustee within such time period such proposed
replacement portfolio manager shall be appointed successor Portfolio Manager. If a notice of objection is
received within thirty (30) days, then either group of holders may again propose a replacement portfolio
manager in accordance with the foregoing but, notwithstanding the above, 150 days following the date of
resignation or removal of the Portfolio Manager, (i) the resigning or removed portfolio manager, (ii) a
Majority of the Controlling Class or (iii) a Majority of Subordinated Notes may petition any court of
competent jurisdiction for the appointment of a replacement portfolio manager, which appointment will
not require the consent of, or be subject to the disapproval of, the Issuer or any holder of any of the
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Offered Securities so long as such replacement portfolio manager (x) is not a person that was previously
objected to by a Majority of the Controlling Class and (y) meets the criteria set forth in the following
paragraph.
Any replacement portfolio manager shall be an institution that (i) has demonstrated an ability to
professionally and competently perform duties similar to those imposed upon the Portfolio Manager or
that employs principal personnel performing the duties under the Portfolio Management Agreement who
are the same individuals who would have performed such duties (or individuals equally qualified who
would be able to perform such duties) had the removal or resignation not occurred, (ii) is legally qualified
and has the capacity to act as portfolio manager and assume all of the responsibilities, duties and
obligations of the Portfolio Manager under the Portfolio Management Agreement and under the
applicable terms of the Indenture, (iii) by its appointment, will not cause or result in the Issuer, the Co-
Issuer or any portion of the Assets being required to register or be registered under the provisions of the
Investment Company Act and (iv) has accepted its appointment in writing. Notwithstanding the
foregoing, no successor Portfolio Manager may assume the duties of the Portfolio Manager unless the
Global Rating Agency Condition has been satisfied as to the appointment of such successor Portfolio
Manager. Upon expiration of the applicable notice period with respect to termination specified in the
Portfolio Management Agreement, and upon the acceptance by the successor Portfolio Manager of such
appointment, all authority and power of the Portfolio Manager under the Portfolio Management
Agreement and the Indenture, whether with respect to the Assets or otherwise, will automatically and
without further action by any person or entity pass to and be vested in the successor Portfolio Manager
upon the appointment thereof.
Pursuant to the terms of the Indenture, the Issuer will retain The Bank of New York Trust Company,
National Association to prepare certain reports and other information with respect to the Collateral
Obligations. The compensation paid to The Bank of New York Trust Company, National Association by
the Issuer for such services will be in addition to the fees paid to the Portfolio Manager and to The Bank
of New York Trust Company, National Association in its capacity as Trustee, and will be treated as an
Administrative Expense of the Issuer under the Indenture and will be subject to the priorities set forth
under "Summary of Terms—Priority of Payments."
General
The Co-Issuers
GoldenTree Loan Opportunities III, Limited is an exempted company incorporated with limited liability
and organized as a special purpose vehicle under the Companies Law (2004 Revision) of the Cayman
Islands for the sole purpose of acquiring the Collateral Obligations, issuing the Offered Securities and
engaging in certain related transactions. The Issuer was incorporated on March 24, 2006 in the Cayman
Islands with registered number 164926 and has an indefinite existence. The Issuer's registered office is at
the offices of c/o Maples Finance Limited, PO Box 1093GT, Queensgate House, South Church Street,
George Town, Grand Cayman, Cayman Islands, telephone number (345) 745-7099. The directors of the
Issuer are Helen Allen and Christopher Watler. The principal outside function of the directors of the
Issuer consists of serving as officers for Maples Finance Limited, a licensed trust company incorporated
in the Cayman Islands, and they may be contacted at the offices of Maples Finance Limited. The
directors of the Issuer serve as directors of and provide services to other special purpose entities that issue
collateralized obligations and perform other duties for the Administrator. The Issuer has no prior
operating history other than the accumulation of Assets for the CLO transaction. The Issuer does not
publish any financial statements.
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Subject to the contracting restrictions imposed upon the Issuer by the Indenture, the directors of the Issuer
have the power to borrow on behalf of the Issuer. A director of the Issuer is not required to own any
shares in the Issuer in order to qualify as a director.
A director of the Issuer (or his alternate director in his absence) is at liberty to vote in respect of any
contract or transaction in which he is interested; provided, that the nature of the interest of any director or
alternate director in any such contract or transaction is disclosed by him or the alternate director appointed
by him at or prior to its consideration and any vote on it.
The directors (and their alternates) are not currently entitled to any remuneration. Any director may act
by himself or his firm in a professional capacity for the Issuer and he or his firm is entitled to
remuneration for professional services as if he were not a director. A director is at liberty to vote in
respect of any matter relating to his remuneration; provided, that the nature of his interest is disclosed
prior to the matter being considered and voted upon by the board of directors.
As of the Closing Date, the authorized share capital of the Issuer will consist of 50,000 ordinary voting
shares, $1.00 par value per share (the "Issuer Ordinary Shares"). 250 of the Issuer Ordinary Shares of
the Issuer have been issued and are held by Maples Finance Limited (in such capacity, the "Share
Trustee"), under the terms of a declaration of trust in favor of charitable purposes. The Issuer will not
have any material assets other than the Collateral Obligations and certain other eligible assets. The
Collateral Obligations and such other eligible assets will be pledged to the Trustee as security for the
Issuer's obligations under the Secured Notes and the Transaction Documents.
GoldenTree Loan Opportunities III, Corp. was incorporated as a special purpose vehicle under the
General Corporation Law of the State of Delaware for the sole purpose of co-issuing the Senior Notes.
The Co-Issuer was incorporated on February 12, 2007 in the State of Delaware with registered number
4300290 and has an indefinite existence. The Co-Issuer's registered office is at 850 Library Avenue,
Newark, Delaware (Newcastle County) 19711, telephone number (302) 738-6680. The Co-Issuer has no
substantial assets and will not pledge any assets to secure the Notes.
The sole director and officer of the Co-Issuer is Donald J. Puglisi. The principal outside function of
Donald J. Puglisi consists of being a finance professor emeritus at the University of Delaware and serving
as a corporate director for a variety of entities. Donald J. Puglisi may be contacted at the office of the Co-
Issuer. The Co-Issuer has no prior operating history. Unless otherwise required pursuant to the
Indenture, the Co-Issuer will not publish any financial statements.
The Co-Issuer's authorized common stock consists of 1,000 shares of common stock, $0.01 par value (the
"Co-Issuer Common Stock"). All of the Co-Issuer Common Stock is, or will be on the Closing Date,
held by the Issuer.
The Offered Securities are not obligations of the Trustee, the Portfolio Manager, the Initial Purchaser, the
Placement Agent or any of their respective affiliates, the Administrator, the Share Trustee or any directors
or officers of the Co-Issuers.
Both the Issuer and the Co-Issuer have been established as a special purpose vehicle for the purpose of
issuing the Notes.
Capitalization of the Issuer
The Issuer's initial proposed capitalization and indebtedness as of the Closing Date after giving effect to
the issuance of the Offered Securities and the Issuer Ordinary Shares (before deducting expenses of the
offering) is set forth below:
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Amount 1
Class A-1A-S Notes.............................................. $100,000,000 2
Class A-1A-J Notes .............................................. $25,000,000
Class A-1B-S Notes.............................................. $354,500,000
Class A-1B-J Notes............................................... $39,500,000
Class A-2 Notes .................................................... $34,500,000
Class B Notes........................................................ $43,500,000
Class C Notes........................................................ $52,500,000
Class D Notes ....................................................... $25,500,000
Subordinated Notes............................................... $75,000,000
Total Debt ................................................ $750,000,000
Issuer Ordinary Shares.......................................... 250
Retained Earnings
Total Equity ............................................. $250
Total Capitalization.................................. $750,000,500 3
1 Includes the face amount of each Component of the Composite Notes
2
Includes all unfunded Commitments
3 Unaudited.
The Co-Issuer has no other liabilities other than the Senior Notes.
Business of the Co-Issuers
The Issuer's Memorandum of Association describes the objects of the Issuer, which are unrestricted and
therefore include the business to be carried out by the Issuer in connection with the Offered Securities.
The Co-Issuer's certificate of incorporation describes the objects of the Co-Issuer, which include the
business to be carried out by the Co-Issuer in connection with the Notes. The Co-Issuers have not issued
securities, other than common shares, Issuer Ordinary Shares and notes issued in connection with the
financing of the Assets, as applicable, prior to the date of Offering Circular and have not listed any
securities on any exchange. The Co-Issuers will not undertake any business other than the issuance of the
Senior Notes and, in the case of the Issuer, the issuance of the Class D Notes, Composite Notes and
Subordinated Notes and the management of the Assets and other related transactions. The Co-Issuer will
not have any subsidiaries. In general, subject to the credit quality and diversity of the Collateral
Obligations and general market conditions and the need (in the judgment of the Portfolio Manager) to
satisfy the Coverage Tests, the Specified Concentration Limitations and the Collateral Quality Test or to
obtain funds for the redemption or payment of the Offered Securities, the Issuer will own the Assets and
will receive payments of interest and principal on the Collateral Obligations and Eligible Investments as
the principal source of its income. The ability to purchase additional Collateral Obligations and sell
Collateral Obligations prior to maturity is subject to significant restrictions under the Indenture. See
"Security for the Secured Notes—Sales of Collateral Obligations; Additional Collateral Obligations and
Investment Criteria."
Maples Finance Limited (the "Administrator"), a Cayman Islands licensed trust company, will act as the
administrator of the Issuer. The office of the Administrator will serve as the general business office of the
Issuer. Through this office and pursuant to the terms of an agreement between the Administrator and the
Issuer (the "Administration Agreement"), the Administrator will perform various administrative
functions on behalf of the Issuer, including communications with shareholders and the general public, and
the provision of certain clerical, administrative and other services in the Cayman Islands until termination
of the Administration Agreement. In consideration of the foregoing, the Administrator will receive
various fees and other charges payable by the Issuer at rates agreed upon from time to time plus expenses.
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The activities of the Administrator under the Administration Agreement will be subject to the overview of
the Issuer's board of directors. The Administration Agreement may be terminated by either the Issuer or
the Administrator upon three months' written notice, in which case a replacement Administrator will be
appointed. The Administrator's principal office is PO Box 1093GT, Queensgate House, South Church
Street, George Town, Grand Cayman, Cayman Islands.
Introduction
Income tax considerations
The following is a summary of certain of the United States federal income tax and Cayman Islands tax
consequences of an investment in the Offered Securities by purchasers that acquire their Offered
Securities in the initial offering. The discussion and the opinions referenced below are based upon laws,
regulations, rulings, and decisions currently in effect, all of which are subject to change, possibly with
retroactive effect. Prospective investors should note that no rulings have been, or are expected to be,
sought from the United States Internal Revenue Service (the "IRS") with respect to any of the United
States federal income tax consequences discussed below, and no assurance can be given that the IRS will
not take contrary positions. Further, the following summary does not address all United States federal
income tax consequences applicable to any given investor, nor does it address the United States federal
income tax considerations (except, in some circumstances, in very general terms) applicable to all
categories of investors, some of which may be subject to special rules, such as Non-U.S. Holders (as such
term is defined below), banks, REITs, RICs, insurance companies, tax-exempt organizations, dealers in
securities or currencies, electing large partnerships, natural persons, cash method taxpayers, S
corporations, estates and trusts, investors that hold their Offered Securities as part of a hedge, straddle, or
an integrated or conversion transaction, or investors whose "functional currency" is not the U.S. dollar.
Furthermore, it does not address alternative minimum tax consequences, or the indirect effects on
investors of equity interests in either a U.S. Holder (as such term is defined below) or a Non-U.S. Holder.
In addition, this summary is generally limited to investors that will hold their Offered Securities as
"capital assets" within the meaning of Section 1221 of the Code. Investors should consult their own tax
advisors to determine the Cayman Islands, United States federal, state, local, and other tax consequences
of the purchase, ownership, and disposition of the Offered Securities.
For purposes of this summary, the Composite Notes will not be treated as single units, but rather each of
the Secured Note Components and Subordinated Note Components of the Composite Notes will be
treated as part of the Class of Offered Securities to which they relate. Therefore, in the following
discussions, any reference in the summary applicable to the Secured Notes and the Subordinated Notes
also applies to the Secured Note Components and the Subordinated Note Components, respectively.
As used herein, "U.S. Holder" or "Holder" means a beneficial holder of an Offered Security that is an
individual citizen or resident of the United States for United States federal income tax purposes, a
corporation or other entity taxable as a corporation created or organized in, or under the laws of, the
United States or any state thereof (including the District of Columbia), an estate, the income of which is
subject to United States federal income taxation regardless of its source, or a trust for which a court
within the United States is able to exercise primary supervision over its administration and for which one
or more United States persons (as defined in the Code) have the authority to control all of its substantial
decisions or a trust that has made a valid election under U.S. Treasury Regulations to be treated as a
domestic trust. If a partnership (or other pass-through entity) holds Offered Securities, the tax treatment
of a partner (or other equity holder) will generally depend upon the status of the partner (or other equity
holder) and upon the activities of the partnership (or other pass-through entity). Partners of partnerships
(or equity holders of other pass-thru entities) holding Offered Securities should consult their own tax
advisors.
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"Non-U.S. Holder" means any holder (or beneficial holder) of an Offered Security that is not a U.S.
Holder.
U.S. federal income tax consequences to the issuer
The Code and the U.S. Department of Treasury regulations promulgated thereunder ("Treasury
Regulations") provide a specific exemption from net income-based U.S. federal income tax to non-U.S.
corporations that restrict their activities in the United States to trading in stocks and securities (and any
other activity closely related thereto) for their own account, whether such trading (or such other activity)
is conducted by the corporation or its employees or through a resident broker, commission agent,
custodian or other agent. This particular exemption does not apply to non-U.S. corporations that are
engaged in activities in the United States other than trading in stocks and securities (and any other activity
closely related thereto) for their own accounts or that are dealers in stocks and securities.
The Issuer intends to rely on the above exemption and does not intend to operate so as to be subject to
U.S. federal income taxes on its net income.
Upon the issuance of the Notes, McKee Nelson LLP, special U.S. tax counsel to the Issuer, will deliver an
opinion generally to the effect that, under current law, and assuming compliance with the Indenture (and
certain other documents), and based on certain factual representations made by the Issuer and/or the
Portfolio Manager, and without regard to actions of the Issuer based on opinions of counsel other than
special U.S. tax counsel, although the matter is not free from doubt, the Issuer will not be engaged in the
conduct of a trade or business in the United States. Accordingly, the Issuer does not expect to be subject
to net income taxation in the United States. Prospective investors should be aware that opinions of
counsel are not binding on the IRS and there can be no absolute assurance that the IRS will not seek to
treat the Issuer as engaged in a U.S. trade or business. For example, the Treasury and the IRS recently
announced that they are considering taxpayer requests for specific guidance on, among other things,
whether a foreign person may be treated as engaged in a trade or business in the United States by virtue of
being the credit protection seller of credit default swaps. Thus, it is also possible that the IRS could treat
the Issuer as engaged in a trade or business in the United States by reason of the Issuer's selling credit
protection under a Synthetic Security if the Issuer were deemed to be guaranteeing obligations from
within the United States or insuring risks from within the United States.
If the IRS were to successfully characterize the Issuer as engaged in a United States trade or business,
among other consequences, the Issuer would be subject to net income taxation in the United States on its
income that was effectively connected with such business (as well as the branch profits tax). The levying
of such taxes could materially affect the Issuer's financial ability to make payments on the Notes.
Legislation recently proposed in the U.S. Senate would, for tax years beginning at least two years after its
enactment, tax a corporation as a U.S. corporation if the equity of that corporation is regularly traded on
an established securities market and the management and control of the corporation occurs primarily
within the United States. It is unknown whether this proposal will be enacted in its current form and,
whether if enacted, the Issuer would be subject to its provisions. However, upon enactment of this or
similar legislation, the Issuer will be permitted, with an opinion of counsel, to take such action as it deems
advisable to prevent the Issuer from being subject to such legislation. These actions could include
removing some classes of Offered Securities from listing on the Irish Stock Exchange.
With respect to Cayman Islands taxation, see the discussion below in "—Cayman Islands taxation".
Although, based on the foregoing, the Issuer is not expected to be subject to U.S. federal income tax on a
net income basis, income derived by the Issuer may be subject to withholding taxes imposed by the
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United States or other countries. Generally, U.S. source interest income received by a foreign corporation
not engaged in a trade or business within the United States is subject to U.S. withholding tax at the rate of
30% of the amount thereof. The Code provides an exemption (the "portfolio interest exemption") from
such withholding tax for interest paid with respect to certain debt obligations issued after July 18, 1984,
unless the interest constitutes a certain type of contingent interest or is paid to a 10% shareholder of the
payor, to a controlled foreign corporation related to the payor, or to a bank with respect to a loan entered
into in the ordinary course of its business. In this regard, the Issuer is permitted to acquire a particular
Collateral Obligation only if the payments thereon are exempt from U.S. withholding taxes at the time of
purchase or commitment to purchase (with the exception of commitment fees associated with Collateral
Obligations constituting Revolving Collateral Obligations or Delayed Drawdown Collateral Obligations)
or the obligor is required to make "gross-up" payments that offset fully any such tax on any such
payments. It is also anticipated that the Issuer will acquire Collateral Obligations that consist of
obligations of non-U.S. issuers. In this regard, the Issuer may only acquire a particular Collateral
Obligation if either the payments thereon are not subject to foreign withholding tax or the obligor of the
Collateral Obligation is required to make "gross-up" payments. The Issuer will not, however, make any
independent investigation of the circumstances surrounding the issuance of the individual assets
comprising the Collateral Obligations and, thus, there can be no absolute assurance that in every case,
payments will be received free of withholding tax. Prospective investors should be aware that there can
be no absolute assurance that the IRS will not seek to treat payments made to the Issuer from a synthetic
obligation counterparty as subject to withholding. For example, the Treasury and the IRS recently
announced that they are considering taxpayer requests for specific guidance on, among other things,
whether amounts paid in respect of credit default swaps by a U.S. protection buyer to a foreign protection
seller constitute income that is subject to withholding. Further, if the Issuer is a CFC (as such term is
defined below), the Issuer would incur United States withholding tax on interest received from a related
U.S. person. In addition, distributions on Equity Securities will likely, and distributions on Defaulted
Obligations and securities rated below investment grade could possibly, be subject to withholding. It is
not expected, however, that the Issuer will derive material amounts of any other items of income that will
be subject to United States or foreign withholding taxes. Accordingly, assuming compliance with the
foregoing restrictions and subject to the foregoing qualifications, income derived by the Issuer will be free
of or fully "grossed up" for any material amount of U.S. withholding tax. However, there can be no
assurance that income derived by the Issuer will not generally become subject to U.S. withholding tax as
a result of a change in U.S. tax law or administrative practice, procedure, or interpretations thereof.
Prospective investors should be aware that, under certain Treasury Regulations, the IRS may disregard the
participation of an intermediary in a "conduit" financing arrangement and the conclusions reached in the
immediately preceding paragraph assume that such Treasury Regulations do not apply. Those Treasury
Regulations could require withholding of U.S. federal income tax from payments to the Issuer of interest
on a Collateral Obligation. In order to prevent "conduit" classification, each holder and beneficial owner
of a Class A-1A-S Notes, a Class D Note (other than a subsequent transferee of an interest in a Class D
Note in the form of an interest in a Global Secured Note) or a Subordinated Note (other than a subsequent
transferee of an interest in a Subordinated Note in the form of an interest in a Regulation S Subordinated
Global Note) that is not a "United States person" (as defined in Section 7701(a)(30) of the Code) will
provide a written certification as to whether it is an Affected Bank by delivery of a certificate in a form
attached to the Indenture. Each subsequent transferee of an interest in a Class D Note (in the form of an
interest in a Global Secured Note) or a Subordinated Note (in the form of an interest in a Regulation S
Global Subordinated Note) and each initial investor in and subsequent transferee of a beneficial interest in
a Composite Note will be deemed to represent to the Issuer and to the Trustee that it is not an Affected
Bank. No transfer of any Class A-1A-S Notes, Class D Note or Subordinated Note to an Affected Bank
will be effective, and the Trustee will not recognize any such transfer, unless such transfer is specifically
authorized by the Issuer in writing; provided, however, that the Issuer shall authorize any such transfer if
(x) such transfer would not cause more than 33⅓% of the aggregate outstanding principal amount of the
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Class A-1A-S Notes, the Class D Notes or the Subordinated Notes, as applicable, to be owned by
Affected Banks or (y) the transferor is an Affected Bank previously approved by the Issuer, as notified to
the Note Registrar. "Affected Bank" means a "bank" for purposes of Section 881 of the Code or an
entity affiliated with such a bank that neither (x) meets the definition of a U.S. Holder nor (y) is entitled to
the benefits of an income tax treaty with the United States under which withholding taxes on interest
payments made by obligors resident in the United States to such bank are reduced to 0%.
If withholding or deduction of any taxes from payments is required by law in any jurisdiction, the Issuer
will be under no obligation to make any additional payments to any holder in respect of such withholding
or deduction.
Notwithstanding any of the foregoing, any commitment fee, facility fee or similar fee that the Issuer earns
may be subject to a 30% withholding tax and any lending fees received under a securities lending
agreement may also be subject to withholding tax.
U.S. classification and U.S. tax treatment of the Secured Notes
The Issuer has agreed and, by its acceptance of a Secured Note, each Holder will be deemed to have
agreed, to treat the Secured Notes as debt of the Issuer for United States federal income tax purposes,
except (x) as otherwise required by applicable law, (y) to the extent a Holder makes a protective QEF
election (described below), or (z) to the extent that the holder files certain Unites States tax information
returns required of only certain equity owners with respect to various reporting requirements under the
Code (as described below under "Transfer and Other Reporting Requirements"). Upon the issuance of the
Secured Notes, special U.S. tax counsel will deliver an opinion generally to the effect that, assuming
compliance with the Indenture (and certain other documents), and based on certain factual representations
made by the Issuer and/or the Portfolio Manager and certain assumptions, the Class A Notes, Class B
Notes, and the Class C Notes will, and the Class D Notes should, be characterized as debt of the Issuer for
United States federal income tax purposes. The determination of whether an Offered Senior Note will be
treated as debt for United States federal income tax purposes is based on the applicable law and facts and
circumstances existing at the time the Offered Senior Note is issued (which, in the case of the Class A-
1A-S Notes, would include the time of each draw on such Notes). However, the opinion of Special U.S.
Tax Counsel is based on current law and certain representations and assumptions (which, in the case of
the Class A-1A-S Notes, includes the assumption that, at the time of any draw, repayment of such Class
A-1A-S Notes will not be speculative) and is not binding on the IRS or the courts, and no ruling will be
sought from the IRS regarding this, or any other, aspect of the U.S. federal income tax treatment of the
Offered Senior Notes. Accordingly, there can be no assurance that the IRS will not contend, and that a
court will not ultimately hold, that one or more Classes of the Offered Senior Notes are properly treated
as equity in the Issuer for U.S. federal income tax purposes. Further, recharacterization of a Class of
Notes, particularly the Class D Notes because of their place in the capital structure, may be more likely if
a single investor or a group of investors that holds all of the Subordinated Notes (including the
Subordinated Note Components of the Composite Notes) also holds all of the more senior Class of Notes
in the same proportion as the Subordinated Notes (including the Subordinated Note Components of the
Composite Notes) are held. In that case, the U.S. federal income tax consequences to U.S. Holders of
such Secured Notes would be substantially the same as those set forth under "Tax Treatment of U.S
Holders of Subordinated Notes" and there might be adverse U.S. federal income tax consequences to a
U.S. Holder of Secured Notes upon the sale, redemption, retirement or other disposition of, or the receipt
of certain types of distributions on, the Secured Notes. Except as provided under "—Alternative
Characterization of the Secured Notes" below, the balance of this discussion assumes that the Secured
Notes will be characterized as debt of the Issuer for United States federal income tax purposes.
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For United States federal income tax purposes, the Issuer of the Secured Notes, and not the Co-Issuer,
will be treated as the issuer of the Secured Notes.
Subject to the following paragraph, U.S. Holders of the Secured Notes will include payments of stated
interest received on the Notes in income in accordance with their normal method of tax accounting as
ordinary interest income from sources outside the United States. The Commitment Fee Amount should
also be included in income in accordance with the holder's normal method of accounting, although it is
not interest income.
While not absolutely certain, it appears that the Class B Notes, Class C Notes, and the Class D Notes will
be issued with original issue discount ("OID" and each of the Class B Notes, the Class C Notes, and the
Class D Notes is sometimes referred to herein as an "OID Note") because interest payments on such
Notes ("OID interest payments") may not be considered to be unconditionally payable (a requisite for
interest to not constitute OID) since they may be deferred in certain events. A U.S. Holder of an OID
Note will be required to include OID in gross income as it accrues under a constant yield method, based
on the original yield to maturity of the Note. Thus, the U.S. Holder of an OID Note will be required to
include original issue discount in income as it accrues, prior to the receipt of the cash attributable to such
income. U.S. Holders, however, would be entitled to claim a loss upon maturity or other disposition of an
OID Note with respect to interest amounts accrued and included in gross income for which cash is not
received. Such a loss generally would be a capital loss.
Although there can be no assurance, the Secured Notes should not be "contingent payment debt
instruments" ("CPDIs") within the meaning of Treasury Regulation Section 1.1275-4. If the Class D
Notes (or any other Class of the Notes) were considered to be CPDIs, among other consequences, any
gain on the sale of such Notes that might otherwise be a capital gain would be ordinary income.
Prospective investors should consult their own tax advisors regarding the possible characterization of the
Secured Notes as CPDIs.
The Secured Notes may be debt instruments described in Section 1272(a)(6) of the Code (debt
instruments that may be accelerated by reason of the prepayment of other debt obligations securing such
debt instruments). Special tax rules principally relating to the accrual of OID, market discount, and bond
premium apply to debt instruments described in Section 1272(a)(6). Further, those debt instruments may
not be part of an integrated transaction with a related hedge under Treasury Regulation Section 1.1275-6.
Prospective investors should consult with their own tax advisors regarding the effects of Section
1272(a)(6).
In general, a U.S. Holder of a Secured Note will have a basis in such Note equal to the cost of such Note
increased by any OID and any market discount includible in income by such U.S. Holder and reduced by
any amortized premium and any principal payments and any OID interest payments. Upon a sale,
exchange or other disposition of a Secured Note, a U.S. Holder will generally recognize gain or loss equal
to the difference between the amount realized on the sale, exchange or other disposition (less any accrued
and unpaid interest, which would be taxable as such) and the U.S. Holder's tax basis in such Note. Such
gain or loss generally will be long term capital gain or loss if the U.S. Holder held the Secured Note for
more than one year at the time of disposition. In certain circumstances, U.S. Holders that are individuals
may be entitled to preferential treatment for net long term capital gains; however, the ability of U.S.
Holders to offset capital losses against ordinary income is limited.
Alternative characterization of the Secured Notes
Notwithstanding special U.S. tax counsel's opinion, U.S. Holders should recognize that there is some
uncertainty regarding the appropriate classification of instruments such as the Secured Notes. It is
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possible, for example, that the IRS may contend that a class of Secured Notes should be treated as equity
interests (or as part debt, part equity) in the Issuer. Such a recharacterization might result in material
adverse tax consequences to U.S. Holders. If U.S. Holders of a Class of the Secured Notes were treated
as owning equity interests in the Issuer, the U.S. federal income tax consequences to U.S. Holders of such
recharacterized Notes would be as described under "—Treatment of U.S. Holders of the Subordinated
Notes" and "Transfer and Other Reporting Requirements." In addition, in order to avoid one application
of the PFIC rules, each U.S. Holder of a Secured Note should consider making a qualified electing fund
election (the "QEF election") provided in Section 1295 of the Code on a "protective" basis (although
such protective election may not be respected by the IRS because current regulations do not specifically
authorize that particular election). See "—Treatment of U.S. Holders of the Subordinated Notes—Status
of the Issuer as a PFIC—QEF Election." Further, U.S. Holders of any Class of Secured Notes that may
be recharacterized as equity in the Issuer should consult with their own tax advisors with respect to
whether, if they owned equity in the Issuer, they would be required to file information returns in
accordance with Sections 6038, 6038B, and 6046 of the Code (and, if so, whether they should file such
returns on a protective basis).
Non-U.S. Holders of the Secured Notes
Assuming that the Notes are either respected as debt or treated as equity in a non-United States
corporation, a Non-U.S. Holder of a Secured Note that has no connection with the United States and is
not related, directly or indirectly, with the Issuer or the holders of the Issuer's equity or the Subordinated
Notes will not be subject to U.S. withholding tax on interest payments. The Issuer does not currently
intend to require Non-U.S. Holders to make certain tax representations regarding the identity of the
beneficial owner of the Secured Notes in order to receive payments free of withholding, but Non-U.S.
Holders of Secured Notes may be required to provide such certification in order to receive payments free
of backup withholding.
Treatment of U.S. Holders of the Composite Notes
Although each Composite Note will be evidenced as a single instrument, under U.S. federal income tax
principles, a strong likelihood exists that a U.S. Holder of Composite Notes will be treated as if it directly
owned the Class of Secured Notes and Subordinated Notes corresponding to the Components of such
Composite Notes. The Issuer will treat, and each U.S. Holder and beneficial owner of Composite Notes
(by acquiring such Composite Notes or interests therein) will agree to treat, the Composite Notes as
consisting of a separate Class of Secured Notes and Subordinated Notes corresponding to the
Components of such Composite Notes for U.S. federal income tax purposes. In accordance with such
treatment of the Composite Notes, in calculating its tax basis in the Components comprising a Composite
Note, a U.S. Holder will allocate the purchase price paid for such Composite Notes among the
Components in proportion to their relative fair market values at the time of purchase. A similar principle
will apply in determining the amount allocable to the Components upon a sale of a Composite Note. The
exchange of Composite Notes for the separate Classes of Notes corresponding to the Components of the
Composite Notes should not be a taxable event. A U.S. Holder of Composite Notes should review the
applicable discussion in this Offering Circular with respect to the Class of Secured Notes and
Subordinated Notes relating to the U.S. federal income tax consequences of the purchase, ownership and
disposition of such Classes of Notes.
Treatment of U.S. Holders of the Subordinated Notes
General
Prospective investors should not rely on this summary and should consult their own tax advisors
regarding alternative characterizations of the Subordinated Notes and the consequences of their acquiring,
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holding or disposing of the Subordinated Notes. For purposes of this section "—Treatment of U.S.
Holders of the Subordinated Notes," the term "U.S. Holder" refers to a U.S. Holder of a Subordinated
Note.
The Subordinated Notes will be characterized as equity (which would likely be considered voting equity)
of the Issuer for U.S. federal income tax purposes.
Distributions on the Subordinated Notes
Subject to the anti-deferral rules discussed below, any payment on the Subordinated Notes that is
distributed by the Issuer to a U.S. Holder that is subject to United States federal income tax will be
taxable to such U.S. Holder as a dividend to the extent of the current and accumulated earnings and
profits (determined under United States federal income tax principles) of the Issuer. Such payments will
not be eligible for the dividends received deduction allowable to corporations and likely will not be
eligible for the preferential income tax rate on qualified dividend income. Distributions in excess of
earnings and profits will be non-taxable to the extent of, and will be applied against and reduce, the U.S.
Holder's adjusted tax basis in the Subordinated Notes. Distributions in excess of earnings and profits and
basis will be taxable as gain from the sale or exchange of property, as described below.
Sale, exchange or other disposition of the Subordinated Notes
In general, a U.S. Holder of the Subordinated Notes will recognize gain or loss upon the sale, exchange or
other disposition of the Subordinated Notes in an amount equal to the difference between the amount
realized and such U.S. Holder's adjusted tax basis in the Subordinated Notes. The character of such gain
or loss (as ordinary or capital) generally will depend on whether the U.S. Holder either has made a QEF
election or is subject to the CFC rules (as each is described below). Initially, the tax basis of a U.S.
Holder should equal the amount paid for the Subordinated Notes. Such basis will be (i) increased by
amounts taxable to such U.S. Holders by virtue of a QEF election or by virtue of the CFC rules, and (ii)
decreased by actual distributions from the Issuer that are deemed to consist of previously taxed amounts
or to represent the return of capital.
Anti-deferral rules
Prospective investors should be aware that certain of the procedural rules for "PFICs" and "QEF"
elections (as both of such terms are defined below) are complex and should consult their own tax advisors
regarding such rules.
The tax consequences discussed above are likely to be materially modified by the anti-deferral rules
discussed below. In general, each U.S. Holder's investment in the Issuer will be taxed as an investment in
a "passive foreign investment company" ("PFIC") or a controlled foreign corporation ("CFC"),
depending (in part) upon the percentage of the Issuer's equity that is acquired and held by certain U.S.
Holders. If applicable, the rules pertaining to CFCs generally override those pertaining to PFICs
(although, in certain circumstances, more than one set of rules may be applicable simultaneously).
Prospective investors should be aware that in determining what percentage of the equity of the Issuer is
held by various categories of investors (for example, for purposes of the CFC and information reporting
rules described below), the Subordinated Notes will be treated as equity (and likely voting equity) and the
Portfolio Manager's interest in certain portions of its fee and certain other classes of Notes may be
considered equity (and might be considered voting equity).
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Prospective investors should be aware that the Issuer's income that is allocated to holders (under the QEF
rules as well as under the CFC rules discussed below) will not necessarily bear any particular relationship
in any year to the amount of cash that is distributed on the Subordinated Notes and, in any given year,
may be substantially greater. Such an excess will arise, among other circumstances, when Collateral is
purchased at a discount, interest or other income on the Collateral (which is included in gross income) is
used to acquire other items of Collateral or to repay principal on the Secured Notes (which does not give
rise to a deduction), or any portion of the Secured Notes is not ultimately paid upon maturity and the
Issuer recognizes cancellation of indebtedness income without any corresponding offsetting losses (due to
tax character differences or otherwise). In addition, such an excess could arise due to the amortization of
the upfront payment (if any) on the Interest Rate Hedge Agreements, since any such payment may have to
be taken into income over the term of the applicable hedge agreement in a manner that reflects the
economic substance of the contract.
Status of the Issuer as a PFIC
The Issuer will be treated as a "PFIC" for U.S. federal income tax purposes. U.S. Holders in PFICs, other
than U.S. Holders that make a timely "qualified electing fund" or "QEF" election described below, are
subject to special rules for the taxation of "excess distributions" (which include both certain distributions
by a PFIC and any gain recognized on a disposition of PFIC stock). In general, Section 1291 of the Code
provides that the amount of any "excess distribution" will be allocated to each day of the U.S. Holder's
holding period for its PFIC stock. The amount allocated to the current year will be included in the U.S.
Holder's gross income for the current year as ordinary income. With respect to amounts allocated to prior
years, the tax imposed for the current year will be increased by the "deferred tax amount" (an amount
calculated with respect to each prior year by multiplying the amount allocated to such year by the highest
rate of tax in effect for such year, together with an interest charge, as though the amounts of tax were
overdue).
An excess distribution is the amount by which distributions for a taxable year exceed 125% of the average
distribution in respect of the Subordinated Notes during the three preceding taxable years (or, if shorter,
the investor's holding period for the Subordinated Notes). As indicated above, any gain recognized upon
disposition (or deemed disposition) of the Subordinated Notes will be treated as an excess distribution and
taxed as described above (i.e., not be taxable as capital gain). For this purpose, a U.S. Holder that uses a
Subordinated Note as security for an obligation will be treated as having disposed of the Subordinated
Note.
Special rules apply to certain regulated investment companies that own interests in PFICs and any such
investor should consult with its own tax advisors regarding the consequences to it of acquiring
Subordinated Notes.
QEF election
If a U.S. Holder (including certain U.S. Holders indirectly owning Subordinated Notes) makes the
qualified electing fund election (the "QEF election") provided in Section 1295 of the Code, the U.S.
Holder will be required to include its pro rata share (unreduced by any prior year losses) of the Issuer's
ordinary income and net capital gains (as ordinary income and long term capital gain, respectively) for
each taxable year and pay tax thereon even if such income and gain is not distributed to the U.S. Holder
by the Issuer. In addition, any losses of the Issuer (which may include losses (which may be substantial)
arising from credit event payments made by the Issuer under any Synthetic Security), will not be
deductible by such U.S. Holder. Rather, any tax benefit from such losses is effectively only available
when a U.S. Holder sells or disposes of its shares.
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A U.S. Holder that makes the QEF election may (in general) elect to defer the payment of tax on
undistributed income (until such income is distributed or the Subordinated Note is transferred); provided
that it agrees to pay interest on such deferred tax liability. For this purpose, a U.S. Holder that uses a
Subordinated Note as security for an obligation will be treated as having disposed of the Subordinated
Note. If the Issuer later distributes the income or gain on which the U.S. Holder has already paid taxes,
amounts so distributed to the U.S. Holder will not be further taxable to the U.S. Holder. A U.S. Holder's
tax basis in the Subordinated Notes will be increased by the amount included in such U.S. Holder's
income and decreased by the amount of nontaxable distributions. In general, a U.S. Holder making the
QEF Election will recognize, on the disposition of the Subordinated Notes, capital gain or loss equal to
the difference, if any, between the amount realized upon such disposition (including redemption or
retirement) and its adjusted tax basis in such Subordinated Notes. Such gain or loss generally will be long
term capital gain or loss if the U.S. Holder held the Subordinated Note for more than one year at the time
of disposition. In certain circumstances, U.S. Holders that are individuals may be entitled to preferential
treatment for net long term capital gains. However, the ability of U.S. Holders to offset capital losses
against ordinary income is limited.
If the Issuer holds equity of other PFICs (an "equity PFIC"), a U.S. Holder of Subordinated Notes that
wanted to avoid the application of the excess distribution rules (described above) with respect to its
indirect interest in such equity PFIC, would have to make a separate QEF election with respect to such
equity PFIC. In such case, the Issuer will provide, to the extent it receives it, the information needed for
U.S. Holders to make such a QEF election. U.S. holders should consult their own tax advisors with
respect to the tax consequences of such a situation.
In general, a QEF election should be made on or before the due date for filing a U.S. Holder's federal
income tax return for the first taxable year for which it held a Subordinated Note. The QEF election is
effective only if certain required information is made available by the Issuer to the IRS. The Issuer will
undertake to comply with the IRS information requirements necessary to be a QEF, which will permit
U.S. Holders to make the QEF election. Nonetheless, there can be no absolute assurance that such
information will always be available or presented.
Where a QEF election is not timely made by a U.S. Holder for the year in which it acquired its
Subordinated Notes, but is made for a later year, the excess distribution rules can be avoided by making
an election to recognize gain from a deemed sale of the Subordinated Notes at the time when the QEF
election becomes effective.
A U.S. Holder should consult its own tax advisors regarding whether it should make a QEF election (and,
if it failed to make an initial election, whether it should make an election in a subsequent taxable year).
Status of the Issuer as a CFC
U.S. tax law also contains special provisions dealing with CFCs. A U.S. Holder (or any other holder of
an interest treated as voting equity in a foreign corporation that would meet the definition of U.S. Holder
but for the fact that such holder does not hold Subordinated Notes) that owns (directly or indirectly) at
least 10% of the voting stock of a foreign corporation, is considered a "U.S. Shareholder" with respect to
the foreign corporation. If U.S. Shareholders in the aggregate own (directly or indirectly) more than 50%
of the voting power or value of the stock of such corporation, the foreign corporation will be classified as
a CFC. Complex attribution rules apply for purposes of determining ownership of stock in a foreign
corporation such as the Issuer.
If the Issuer is classified as a CFC, a U.S. Shareholder (and possibly any U.S. Holder that is a direct or
indirect holder of a grantor trust that is considered to be a U.S. Shareholder) that is a shareholder of the
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Issuer as of the end of the Issuer's taxable year generally would be subject to current U.S. tax on the
income of the Issuer, regardless of cash distributions from the Issuer. Earnings subject to tax generally
will not be taxed again when they are distributed to the U.S. Holder. In addition, income that would
otherwise be characterized as capital gain and gain on the sale of the CFC's stock by a U.S. Shareholder
(during the period that the corporation is a CFC and thereafter for a five-year period) would be classified
in whole or in part as dividend income.
Certain income generated by a corporation conducting a banking, financing, insurance, or other similar
business would not be includible in a holder's income under the CFC rules. However, each U.S. Holder
of a Subordinated Note will agree not to take the position that the Issuer is engaged in such a business.
Accordingly, if the CFC rules apply, a U.S. Shareholder would generally be subject to tax on its share of
all of the Issuer's income.
Indirect interests in PFICs and CFCs
If the Issuer owns a Collateral Obligation or an Equity Security issued by a non-U.S. corporation that is
treated as equity for U.S. federal income tax purposes, U.S. Holders of Subordinated Notes could be
treated as owning an indirect equity interest in a PFIC or a CFC and could be subject to certain adverse
tax consequences.
In particular, if the Issuer owns equity interests in PFICs ("Lower-Tier PFICs"), a U.S. Holder of
Subordinated Notes would be treated as owning directly the U.S. Holder's proportionate amount (by
value) of the Issuer's equity interests in the Lower-Tier PFICs. A U.S. Holder's QEF election with respect
to the Issuer would not be effective with respect to such Lower-Tier PFICs. However, a U.S. Holder
would be able to make QEF elections with respect to such Lower-Tier PFICs if the Lower-Tier PFICs
provide certain information and documentation to the Issuer in accordance with applicable Treasury
Regulations. However, there can be no assurance that the Issuer would be able to obtain such information
and documentation from any Lower-Tier PFIC, and thus there can be no assurance that a U.S. Holder
would be able to make or maintain a QEF election with respect to any Lower-Tier PFIC. If a U.S. Holder
does not have a QEF election in effect with respect to a Lower-Tier PFIC, as a general matter, the U.S.
Holder would be subject to the adverse consequences described above under "—Investment in a Passive
Foreign Investment Company" with respect to any excess distributions made by such Lower-Tier PFIC to
the Issuer, any gain on the disposition by the Issuer of its equity interest in such Lower-Tier PFIC treated
as indirectly realized by such U.S. Holder, and any gain treated as indirectly realized by such U.S. Holder
on the disposition of its equity in the Issuer (which may arise even if the U.S. Holder realizes a loss on
such disposition). Such amount would not be reduced by expenses or losses of the Issuer, but any income
recognized may increase a U.S. Holder's tax basis in its Subordinated Notes. Moreover, if the U.S.
Holder has a QEF election in effect with respect to a Lower-Tier PFIC, the U.S. Holder would be required
to include in income the U.S. Holder's pro rata share of the Lower-Tier PFIC's ordinary earnings and net
capital gain as if the U.S. Holder's indirect equity interest in the Lower-Tier PFIC were directly owned,
and it appears that the U.S. Holder would not be permitted to use any losses or other expenses of the
Issuer to offset such ordinary earnings and/or net capital gains, but recognition of such income may
increase a U.S. Holder's tax basis in its Subordinated Notes.
Accordingly, if any of the Collateral Obligations or Equity Securities are treated as equity interests in a
PFIC, such U.S. Holders could experience significant amounts of phantom income with respect to such
interests. Other adverse tax consequences may arise for such U.S. Holders that are treated as owning
indirect interests in CFCs. U.S. Holders should consult their own tax advisors regarding the tax issues
associated with such investments in light of their own individual circumstances.
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Taxation of Non-U.S. Holders of Subordinated Notes
Payments on, and gain from the sale, exchange or redemption of, Subordinated Notes generally should
not be subject to United States federal income tax in the hands of a Non-U.S. Holder that has no
connection with the United States other than the holding of the Subordinated Notes.
Transfer and other reporting requirements
In general, U.S. Holders who acquire any Subordinated Notes (or any Class of Notes that is
recharacterized as equity in the Issuer) for cash may be required to file a Form 926 with the IRS and to
supply certain additional information to the IRS if (i) such U.S. Holder owns (directly or indirectly)
immediately after the transfer, at least 10% by vote or value of the Issuer or (ii) the transfer when
aggregated with all related transfers under applicable regulations, exceeds U.S. $100,000. In the event a
U.S. Holder that is required to file such form, fails to file such form, the U.S. Holder could be subject to a
penalty of up to U.S. $100,000 (computed as 10% of the gross amount paid for the Subordinated Notes)
or more if the failure to file was due to intentional disregard of its obligation. Other important
information reporting requirements apply to persons that acquire 10% or more of a foreign corporation's
equity (here, the Subordinated Notes and any Class of Notes or portion of the Portfolio Manager's fee that
is recharacterized as equity).
In addition, A U.S. Holder of Subordinated Notes that owns (actually or constructively) at least 10% by
vote or value of the Issuer (and each officer or director of the Issuer that is a U.S. citizen or resident) may
be required to file an information return on IRS Form 5471. A U.S. Holder of Subordinated Notes
generally is required to provide additional information regarding the Issuer annually on IRS Form 5471 if
it owns (actually or constructively) more than 50% by vote or value of the Issuer. U.S. Holders should
consult their own tax advisors regarding whether they are required to file IRS Form 5471. In the event a
U.S. Holder that is required to file such form, fails to file such form, the U.S. Holder could be subject to a
penalty of $10,000 for each such failure to file (in addition to other consequences).
Prospective investors of Subordinated Notes should consult with their own tax advisors regarding whether
they are required to file IRS Form 8886 in respect of this transaction. Such filing would generally be
required if such investors recognized a loss in excess of a specified threshold, and significant penalties
would be imposed on taxpayers that fail to properly file the form. Such filing would also generally be
required by a U.S. Holder Subordinated Notes if both the Issuer participates in certain types of
transactions that could be treated as "reportable transactions" (such as a transaction in which its loss
exceeds a specified threshold) and (x) either such U.S. Holder owns 10% or more of the Subordinated
Notes and makes a QEF election with respect to the Issuer or (y) the Issuer is treated as a CFC and such
U.S. Holder is a "U.S. Shareholder" (as defined above) of the Issuer. If the Issuer does participate in a
reportable transaction, it will make reasonable efforts to make such information available.
Tax-exempt investors
Special considerations apply to pension plans and other investors ("Tax-Exempt Investors") that are
subject to tax only on their "unrelated business taxable income" ("UBTI"). A Tax-Exempt Investor's
income from an investment in the Issuer generally should not be treated as resulting in UBTI under
current law, so long as such investor's acquisition of the Notes is not debt-financed, and such investor
does not own more than 50% of the Issuer's equity (here, the Subordinated Notes and any Class of Notes
(if any) or portion of the Portfolio Manager's fee that is recharacterized as equity).
Tax-Exempt Investors should consult their own tax advisors regarding an investment in the Issuer.
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Information reporting and backup withholding
Under certain circumstances, the Code requires "information reporting", and may require "backup
withholding", with respect to certain payments made on the Offered Securities and the payment of the
proceeds from the disposition of the Offered Securities. Backup withholding generally will not apply to
corporations, tax-exempt organizations, qualified pension and profit sharing trusts, and individual
retirement accounts. Backup withholding will apply to a U.S. Holder if the U.S. Holder fails to provide
certain identifying information (such as the U.S. Holder's taxpayer identification number) or otherwise
comply with the applicable requirements of the backup withholding rules. The application for exemption
from backup withholding for a U.S. Holder is available by providing a properly completed IRS Form W-
9.
A Non-U.S. Holder of the Offered Securities generally will not be subject to these information reporting
requirements or backup withholding with respect to payments of interest or distributions on the Offered
Securities if (a) it certifies to the Trustee its status as a Non-U.S. Holder under penalties of perjury on the
appropriate IRS Form W-8, and (b) in the case of a Non-U.S. Holder that is a "nonwithholding foreign
partnership", "foreign simple trust" or "foreign grantor trust" as defined in the applicable U.S. Treasury
Regulations under the Code, the beneficial owners of such Non-U.S. Holder also certify their status as
Non-U.S. Holders under penalties of perjury on the appropriate IRS Form W-8.
The payments of the proceeds from the disposition of an Offered Security by a Non-U.S. Holder to or
through the U.S. office of a broker generally will not be subject to information reporting and backup
withholding if the Non-U.S. Holder certifies its status as a Non-U.S. Holder (and, if applicable, its
beneficial owners also certify their status as Non-U.S. Holders) under penalties of perjury on the
appropriate IRS Form W-8, satisfies certain documentary evidence requirements for establishing that it is
a Non-U.S. Holder, or otherwise establishes an exemption. The payment of the proceeds from the
disposition of an Offered Security by a Non-U.S. Holder to or through a non-U.S. office of a non-U.S.
broker will not be subject to backup withholding or information reporting unless the non-U.S. broker has
certain specific types of relationships to the United States, in which case the treatment of such payment
for such purposes will be as described in the following sentence. The payment of proceeds from the
disposition of an Offered Security by a Non-U.S. Holder to or through a non-U.S. office of a U.S. broker
or to or through a non-U.S. broker with certain specific types of relationships to the United States
generally will not be subject to backup withholding but will be subject to information reporting unless the
Non-U.S. Holder certifies its status as a Non-U.S. Holder (and, if applicable, its beneficial owners also
certify their status as Non-U.S. Holders) under penalties of perjury or the broker has certain documentary
evidence in its files as to the Non-U.S. Holder's foreign status and the broker has no actual knowledge to
the contrary.
Backup withholding is not an additional tax and may be credited against the U.S. Holder's or Non-U.S.
Holder's U.S. federal income tax liability, and then refunded to the extent of any excess thereon; provided
that certain required information is furnished to the IRS. The information reporting requirements may
apply regardless of whether withholding is required.
Circular 230
Under 31 C.F.R. part 10, the regulations governing practice before the Internal Revenue Service (Circular
230), we and our tax advisors are (or may be) required to inform you that:
• Any advice contained herein, including any opinions of counsel referred to herein, is not intended or
written to be used, and cannot be used by any taxpayer, for the purpose of avoiding penalties that may
be imposed on the taxpayer;
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• Any such advice is written to support the promotion or marketing of the Offered Securities and the
transactions described herein (or in such opinion or other advice); and
• Each taxpayer should seek advice based on the taxpayer's particular circumstances from an
independent tax advisor.
Cayman Islands taxation
The following is a discussion of certain Cayman Islands tax consequences of an investment in the Offered
Securities. The discussion is a general summary of present law, which is subject to prospective and
retroactive change. It is not intended as tax advice, does not consider any investor's particular
circumstances, and does not consider tax consequences other than those arising under Cayman Islands
law.
Under existing Cayman Islands laws:
(i)
(ii)
(iii)
payments of interest, principal and other amounts on the Secured Notes and amounts in respect of
the Subordinated Notes will not be subject to taxation in the Cayman Islands and no withholding
will be required on the payment of interest and principal and other amounts on the Secured Notes
or a distribution to any holder of the Subordinated Notes, nor will gains derived from the disposal
of the Offered Securities be subject to Cayman Islands income or corporation tax. The Cayman
Islands currently have no income, corporation or capital gains tax and no estate duty, inheritance
tax or gift tax;
no stamp duty is payable in respect of the issue or transfer of the Offered Securities although duty
may be payable if Offered Securities are executed in or brought into the Cayman Islands; and
certificates evidencing the Offered Securities, in registered form, to which title is not transferable
by delivery, should not attract Cayman Islands stamp duty. However, an instrument transferring
title to an Offered Security, if brought to or executed in the Cayman Islands, would be subject to
Cayman Islands stamp duty.
The Issuer has been incorporated with limited liability under the laws of the Cayman Islands as an
exempted company and, as such, obtained on April 4, 2006, an undertaking from the Governor in Cabinet
of the Cayman Islands in the following form:
"The Tax Concessions Law
1999 Revision
Undertaking As To Tax Concessions
In accordance with the provision of Section 6 of The Tax Concession Law (1999 Revision), the Governor
in Cabinet undertakes with:
GoldenTree Loan Opportunities III, Limited, "the Company"
(a)
(b)
that no law which is hereafter enacted in the Islands imposing any tax to be
levied on profits, income, gains or appreciations shall apply to the Company or
its operations; and
in addition, that no tax to be levied on profits, income, gains or appreciations or
which is in the nature of estate duty or inheritance tax shall be payable:
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(i)
(ii)
on or in respect of the shares, debentures or other obligations of the
Company; or
by way of the withholding in whole or part, of any relevant payment as
defined in Section 6(3) of the Tax Concessions Law (1999 Revision).
These concessions shall be for a period of twenty years from the 4th day of April, 2006.
GOVERNOR IN CABINET"
The Cayman Islands does not have an income tax treaty arrangement with the United States or any other
country; however, the Cayman Islands has entered into a tax disclosure agreement with the United States.
ERISA and legal investment considerations
The advice below was not written and is not intended to be used and cannot be used by any taxpayer for
purposes of avoiding United States federal income tax penalties that may be imposed. The advice is
written to support the promotion or marketing of the transaction. Each taxpayer should seek advice
based on the taxpayer's particular circumstances from an independent tax advisor.
The foregoing disclaimer is provided to satisfy obligations under Circular 230 governing standards of
practice before the Internal Revenue Service.
The United States Employee Retirement Income Security Act of 1974, as amended ("ERISA") imposes
certain requirements on "employee benefit plans" (as defined in Section 3(3) of ERISA) which are subject
to Title I of ERISA, including entities such as collective investment funds and separate accounts whose
underlying assets include the assets of such plans (collectively, "ERISA Plans") and on those persons
who are fiduciaries with respect to ERISA Plans. Investments by ERISA Plans are subject to ERISA's
general fiduciary requirements, including the requirement of investment prudence and diversification and
the requirement that an ERISA Plan's investments be made in accordance with the documents governing
the ERISA Plan. The prudence of a particular investment must be determined by the responsible
fiduciary of an ERISA Plan by taking into account the ERISA Plan's particular circumstances and all of
the facts and circumstances of the investment including, but not limited to, the matters discussed above
under "Risk factors" and the fact that in the future there may be no market in which such fiduciary will be
able to sell or otherwise dispose of the Notes.
Section 406 of ERISA and Section 4975 of the Code prohibit certain transactions involving the assets of
an ERISA Plan (as well as those plans that are not subject to ERISA but which are subject to Section
4975 of the Code, such as individual retirement accounts (together with ERISA Plans, "Plans")) and
certain persons (referred to as "parties in interest" or "disqualified persons") having certain relationships
to such Plans, unless a statutory or administrative exemption is applicable to the transaction. A party in
interest or disqualified person who engages in a prohibited transaction may be subject to excise taxes and
other penalties and liabilities under ERISA and Section 4975 of the Code.
The U.S. Department of Labor has promulgated regulations 29 C.F.R. Section 2510.3-101 (the "Plan
Asset Regulations"), describing what constitutes the assets of a Plan with respect to the Plan's investment
in an entity for purposes of certain provisions of ERISA and Section 4975 of the Code, including the
fiduciary responsibility provisions of Title I of ERISA and Section 4975 of the Code. Under the Plan
Asset Regulations, if a Plan invests in an "equity interest" of an entity that is neither a "publicly offered
security" nor a security issued by an investment company registered under the Investment Company Act,
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the Plan's assets include both the equity interest and an undivided interest in each of the entity's
underlying assets, unless it is established that the entity is an "operating company" or, as further discussed
below, that equity participation in the entity by "benefit plan investors" is not "significant."
Prohibited transactions within the meaning of Section 406 of ERISA or Section 4975 of the Code may
arise if Notes are acquired with the assets of a Plan with respect to which the Issuer, the Initial Purchaser,
the Trustee, the Portfolio Manager, any seller of Collateral Obligations to the Issuer or any of their
respective Affiliates, is a party in interest or a disqualified person. Certain exemptions from the
prohibited transaction provisions of Section 406 of ERISA and Section 4975 of the Code may be
applicable, however, depending in part on the type of Plan fiduciary making the decision to acquire a
Note and the circumstances under which such decision is made. Included among these exemptions are
Prohibited Transaction Class Exemption ("PTCE") 91-38 (relating to investments by bank collective
investment funds), PTCE 84-14 (relating to transactions effected by a "qualified professional asset
manager"), PTCE 90-1 (relating to investments by insurance company pooled separate accounts), PTCE
95-60 (relating to investments by insurance company general accounts), and PTCE 96-23 (relating to
transactions effected by in-house asset managers), ("Investor-Based Exemptions"). There is also a
statutory exemption that may be available under Section 408(b)(17) of ERISA and Section 4975(d)(20) of
the Code to a party in interest that is a service provider to a Plan investing in the Notes for adequate
consideration, provided such service provider is not (i) the fiduciary with respect to the Plan's assets used
to acquire the Notes or an affiliate of such fiduciary or (ii) an affiliate of the employer sponsoring the Plan
(the "Service Provider Exemption"). Adequate consideration means fair market as determined in good
faith by the Plan fiduciary pursuant to regulations to be promulgated by the Department of Labor. There
can be no assurance that any of these Investor-Based Exemptions or the Service Provider Exemption or
any other administrative or statutory exemption will be available with respect to any particular transaction
involving the Offered Securities.
Governmental plans and certain church plans, while not subject to the fiduciary responsibility provisions
of ERISA or the provisions of Section 4975 of the Code, may nevertheless be subject to state, local or
other federal laws that are substantially similar to the foregoing provisions of ERISA and the Code.
Fiduciaries of any such plans should consult with their counsel before acquiring any Offered Securities.
Any insurance company proposing to invest assets of its general account in Offered Securities should
consider the extent to which such investment would be subject to the requirements of Title I of ERISA
and Section 4975 of the Code in light of the U.S. Supreme Court's decision in John Hancock Mutual Life
Insurance Co. v. Harris Trust and Savings Bank, 510 U.S. 86 (1993), and the enactment of Section 401(c)
of ERISA on August 20, 1996. In particular, such an insurance company should consider (i) the
exemptive relief granted by the U.S. Department of Labor for transactions involving insurance company
general accounts in PTCE 95-60 and (ii) if such exemptive relief is not available, whether its acquisition
of Offered Securities will be permissible under the final regulations issued under Section 401(c) of
ERISA. The final regulations provide guidance on which assets held by an insurance company constitute
"plan assets" for purposes of the fiduciary responsibility provisions of ERISA and Section 4975 of the
Code. The regulations do not exempt the assets of insurance company general accounts from treatment as
"plan assets" to the extent they support certain participating annuities issued to Plans after December 31,
1998.
The Secured Notes (other than the Class D Notes)
The Plan Asset Regulations define an "equity interest" as any interest in an entity other than an instrument
that is treated as indebtedness under applicable local law and which has no substantial equity features. As
noted above in Income Tax Considerations, it is the opinion of tax counsel to the Issuer that the Class A
Notes, the Class B Notes and the Class C Notes will be treated as debt for U.S. federal income tax
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purposes. Because of this, and the traditional debt features of the Secured Notes (other than the Class D
Notes), as well as the absence of conversion rights, warrants and other typical equity features, the Secured
Notes (other than the Class D Notes) should not be considered to be "equity interests" in the Issuer.
Nevertheless, without regard to whether the Secured Notes (other than the Class D Notes) are considered
equity interests, prohibited transactions within the meaning of Section 406 of ERISA or Section 4975 of
the Code may arise if such Notes are acquired with the assets of an ERISA Plan with respect to which the
Issuer, the Initial Purchaser or the Trustee or in certain circumstances, any of their respective affiliates, is
a party in interest or a disqualified person. The Investor-Based Exemptions or the Service Provider
Exemption may be available to cover such prohibited transactions.
By its acquisition of any Secured Notes (other than the Class D Notes), each purchaser and subsequent
transferee thereof will be deemed to have represented and warranted (or, in the case of an acquisition of
such Secured Notes in the form of Certificated Secured Notes, will represent and warrant), on each day
from the date on which such beneficial owner acquires its interest in such Class A Notes, Class B Notes,
or Class C Notes through and including the date on which such beneficial owner disposes of its interest in
such Class A Notes, Class B Notes or Class C Notes, either that (a) it is neither a Plan nor any entity
whose underlying assets include "plan assets" by reason of such Plan's investment in the entity, nor a
governmental, church, non-U.S. or other plan which is subject to any federal, state, local or non-U.S. law
that is substantially similar to the provisions of Section 406 of ERISA or Section 4975 of the Code or (b)
its acquisition, holding and disposition of a Class A Note, a Class B Note or a Class C Note will not
constitute or result in a non-exempt prohibited transaction under Section 406 of ERISA or Section 4975
of the Code (or, in the case of a governmental, church, non-U.S. or other plan, a non-exempt violation
under any substantially similar law).
The Class D Notes and the Subordinated Notes
Equity participation in an issuer of Notes by "benefit plan investors" is "significant" and will cause the
assets of the Issuer to be deemed the assets of an investing Plan (in the absence of another applicable Plan
Asset Regulations exception) if 25 percent or more of the value of any class of equity interest in the Issuer
is held by "benefit plan investors" as calculated under the Plan Asset Regulations. Recently, the Pension
Protection Act of 2006 effectively amended, by statute, the definition of "benefit plan investors" in the
Plan Asset Regulations. Employee benefit plans that are not subject to Title I of ERISA and plans that are
not subject to Section 4975 of the Code, such as U.S. governmental and church plans or non-U.S. plans,
are no longer considered "benefit plan investors." Accordingly, only employee benefit plans or plans
subject to Title I of ERISA or Section 4975 of the Code or an entity whose underlying assets include plan
assets by reason of such employee benefit plan's or plan's investment in the entity are considered in
determining whether investment by "benefit plan investors" represents 25% or more of any class of equity
of the Issuer. Therefore, the term "benefit plan investor" includes (a) an employee benefit plan (as
defined in Section 3(3) of Title I of ERISA) that is subject to the fiduciary responsibilities provisions of
ERISA, (b) a plan as defined in Section 4975(e)(1) of the Code that is subject to Section 4975 of the
Code, (c) any entity whose underlying assets include "plan assets" (within the meaning of the Plan Asset
Regulations for purposes of ERISA or Section 4975 of the Code) by reason of any such employee benefit
plan's or plan's investment in the entity or (d) as such term is otherwise defined in any regulations
promulgated by the U.S. Department of Labor under Section 3(42) of ERISA (collectively "Benefit Plan
Investors"). For purposes of making the 25% determination, the value of any equity interests held by a
person (other than a Benefit Plan Investor) who has discretionary authority or control with respect to the
assets of the Co-Issuers or any person who provides investment advice for a fee (direct or indirect) with
respect to such assets, or any affiliate of such a person (a "Controlling Person"), is disregarded. Under
the Plan Asset Regulation, an "affiliate" of a person includes any person, directly or indirectly through
one or more intermediaries, controlling, controlled by or under common control with the person, and
"control" with respect to a person other than an individual, means the power to exercise a controlling
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influence over the management or policies of such person. The Class D Notes and the Subordinated
Notes will likely be considered equity investments for the purposes of applying Title I of ERISA and
Section 4975 of the Code. Accordingly: (i) by its acquisition of a Class D Note, each purchaser and
subsequent transferee thereof will be deemed to have represented and warranted (or, in the case of an
acquisition of such Class D Notes in the form of Certificated Secured Notes or in the form of Global
Secured Notes purchased from the Initial Purchaser, will represent and warrant), on each day from the
date on which such beneficial owner acquires its interest in such Class D Notes through and including the
date on which such beneficial owner disposes of its interest in such Class D Notes, that (1) such purchaser
or subsequent transferee, as applicable, is not a Benefit Plan Investor and (2) if it is a governmental,
church, non-U.S. or other plan that is subject to any federal, state, local or non-U.S. law that is
substantially similar to the provisions of Title I of ERISA or Section 4975 of the Code, its acquisition,
holding and disposition of such Class D Notes will not constitute or result in a non-exempt violation
under any such substantially similar law and (ii) acquisitions of the Subordinated Notes by Benefit Plan
Investors will be limited to less than 25% of the value of all outstanding Subordinated Notes by requiring
each such purchaser or subsequent transferee, as applicable, to make certain representations (or, in the
case of a subsequent transferee of Regulation S Global Subordinated Notes from persons other than the
Issuer, deemed representations) and/or to agree to certain transfer restrictions regarding their status as
Benefit Plan Investors. Class D Notes and Subordinated Notes (i) held as principal by the Portfolio
Manager, the Initial Purchaser, the Placement Agent, the Trustee, any of their respective affiliates,
employees of the Portfolio Manager, the Initial Purchaser, the Placement Agent, the Trustee or any of
their affiliates and any charitable foundation of any such employees (other than any of such interests held
as a Benefit Plan Investor) or (ii) held by persons that have represented that they are Controlling Persons
will be disregarded (to the extent that such a Controlling Person is not a Benefit Plan Investor) and will
not be treated as outstanding for purposes of determining compliance with such 25% limitation.
With respect to the Class D Notes in the form of Certificated Secured Notes and the Class D Notes in the
form of Global Secured Notes acquired from the Initial Purchaser on the Closing Date, a purchaser or
subsequent transferee, as applicable, will be required to represent and warrant and with respect to Class D
Notes in the form of Global Secured Notes acquired from persons other than the Initial Purchaser, a
purchaser or subsequent transferee, as applicable, will be deemed to have represented and warranted, on
each day from the date on which such beneficial owner acquires its interest in such Class D Notes through
and including the date on which such beneficial owner disposes of its interest in such Class D Notes, that
(1) such purchaser or subsequent transferee, as applicable, is not a Benefit Plan Investor and (2) if it is a
governmental, church, non-U.S. or other plan that is subject to any federal, state, local or non-U.S. law
that is substantially similar to the provisions of Title I of ERISA or Section 4975 of the Code, its
acquisition, holding and disposition of such Class D Notes will not constitute or result in a non-exempt
violation under any such substantially similar law.
With respect to the Certificated Subordinated Notes and with respect to Regulation S Global Subordinated
Notes acquired from the Issuer on the Closing Date, a purchaser or subsequent transferee, as applicable,
will be required to represent and warrant (1) whether or not the purchaser or subsequent transferee, as
applicable, is a Benefit Plan Investor, (2) whether or not the purchaser or subsequent transferee, as
applicable, is a Controlling Person and (3) (a) if it is a Benefit Plan Investor, its acquisition, holding and
disposition of such Subordinated Notes will not constitute or result in a non-exempt prohibited transaction
under Section 406 of ERISA or Section 4975 of the Code or (b) if it is a governmental, church, non-U.S.
or other plan which is subject to any federal, state, local or non-U.S. law that is substantially similar to the
provisions of Title I of ERISA or Section 4975 of the Code, its acquisition, holding and disposition of
such Subordinated Notes will not constitute or result in non-exempt violation under any such substantially
similar law. No Certificated Subordinated Notes (or Regulation S Global Subordinated Notes purchased
from the Issuer) may be acquired by Benefit Plan Investors or Controlling Persons if it would cause the
above 25% limitation to be exceeded. Each purchaser or subsequent transferee, as applicable, of
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Regulation S Global Subordinated Notes from persons other than from the Issuer on the Closing Date will
be deemed to have represented and agreed, on each day from the date on which such beneficial owner
acquires its interest in such Subordinated Notes through and including the date on which such beneficial
owner disposes of its interest in such Subordinated Notes, that (1) such purchaser or subsequent
transferee, as applicable, is not a Benefit Plan Investor or Controlling Person and (2) if it is a
governmental, church, non-U.S. or other plan that is subject to any federal, state, local or non-U.S. law
that is substantially similar to the provisions of Title I of ERISA or Section 4975 of the Code, its
acquisition, holding and disposition of such Subordinated Notes will not constitute or result in a nonexempt
violation under any such substantially similar law.
The Composite Notes
In order to maintain the ownership of the Class D Notes and the Subordinated Notes by Benefit Plan
Investors to less than 25% of the value of all outstanding Subordinated Notes, neither Benefit Plan
Investors nor Controlling Persons will be permitted to acquire Composite Notes. However, in the event
the Holder of a beneficial interest in a Composite Note exchanges the Components thereof for a
proportionate interest in the underlying Class of Secured Notes and Subordinated Notes, the transfer
restrictions applicable to such underlying Class of Secured Notes and Subordinated Notes as described
herein will be applicable. Each purchaser and subsequent transferee of a Composite Note will be required
to represent and warrant and will be deemed to have represented and warranted that it is (a) neither a
Benefit Plan Investor nor a Controlling Person and (b)(x) is not a governmental, church or other plan
which is subject to any federal, state, local or foreign law that is substantially similar to the provisions of
Title I of ERISA or Section 4975 of the Code or (y) its purchase, holding and disposition of Composite
Notes will not constitute or result in a non-exempt prohibited transaction under any such substantially
similar law.
Further considerations
There can be no assurance that, despite the transfer restrictions relating to acquisitions by Benefit Plan
Investors and Controlling Persons and the procedures to be employed by the Issuer to attempt to limit
ownership by Benefit Plan Investors of the Class D Notes and the Subordinated Notes to less than 25%,
Benefit Plan Investors will not in actuality own 25% or more of the outstanding Class D Notes or
Subordinated Notes (or any other Class of Notes characterized as equity for purposes of ERISA or any
other class of equity interests in the Issuer).
If for any reason the assets of the Issuer are deemed to be "plan assets" of a Plan because one or more
Plans is an owner of Class D Notes or Subordinated Notes, certain transactions that the Issuer might enter
into, or may have entered into, in the ordinary course of its business might constitute non-exempt
"prohibited transactions" under Section 406 of ERISA or Section 4975 of the Code and might have to be
rescinded at significant cost to the Issuer. The Portfolio Manager, as an ERISA fiduciary, may be
prevented from engaging in certain investments (as not being deemed consistent with the ERISA prudent
investment standards) or engaging in certain transactions or fee arrangements because they might be
deemed to cause non-exempt prohibited transactions. It also is not clear that Section 403(a) of ERISA,
which generally requires that all of the assets of an ERISA Plan be held in trust and limits delegation of
investment management responsibilities by fiduciaries of ERISA Plans, would be satisfied. In addition, it
is unclear whether Section 404(b) of ERISA, which generally provides that no fiduciary may maintain the
indicia of ownership of any assets of a plan outside the jurisdiction of the district courts of the United
States, would be satisfied or any of the exceptions to the requirement set forth in 29 C.F.R. Section
2550.404b-1 would be available.
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Any Plan fiduciary or other person who proposes to use assets of any Plan to acquire any Notes should
consult with its counsel regarding the applicability of the fiduciary responsibility and prohibited
transaction provisions of ERISA and Section 4975 of the Code to such an investment, and to confirm that
such investment will not constitute or result in a non-exempt prohibited transaction or any other violation
of an applicable requirement of ERISA.
The sale of any Notes to a Plan, or to a person using assets of any Plan to effect its acquisition of any
Notes, is in no respect a representation by the Issuer, the Initial Purchaser or the Portfolio Manager that
such an investment meets all relevant legal requirements with respect to investments by Plans generally or
any particular Plan, or that such an investment is appropriate for Plans generally or any particular Plan.
Legal investment considerations
Investors whose investment activities are subject to regulation by federal, state or local law or
governmental authorities should review the applicable laws and/or rules, policies and guidelines adopted
from time to time by such authorities before purchasing any Subordinated Notes or any Class of Secured
Notes. No representation is made as to the proper characterization of the Offered Securities for legal
investment or other purposes or as to the ability of particular investors to purchase any Subordinated
Notes or any Class of Secured Notes under applicable law or other legal investment restrictions.
Accordingly, all investors whose investment activities are subject to such laws and/or regulations,
regulatory capital requirements or review by regulatory authorities should consult their own legal advisors
in determining whether and to what extent the Offered Securities constitute a legal investment or are
subject to investment, capital or other restrictions.
None of the Issuer, the Co-Issuer, the Portfolio Manager, the Initial Purchaser, the Trustee or the
Collateral Administrator make any representation as to the proper characterization of the Offered
Securities for legal investment or other purposes, as to the ability of particular investors to purchase the
Offered Securities for legal investment or other purposes or as to the ability of particular investors to
purchase the Offered Securities under applicable investment restrictions. All institutions the activities of
which are subject to legal investment laws and regulations, regulatory capital requirements or review by
regulatory authorities should consult their own legal advisors in determining whether and to what extent
the Offered Securities are subject to investment, capital or other restrictions. Without limiting the
generality of the foregoing, none of the Issuer, the Co-Issuer, the Portfolio Manager, the Placement Agent
and the Initial Purchaser makes any representation as to the characterization of the Offered Securities as a
U.S.-domestic or foreign (non-U.S.) investment under any state insurance code or related regulations, and
they are not aware of any published precedent that addresses such characterization. Although they are not
making any such representation, the Co-Issuers understand that the New York State Insurance
Department, in response to a request for guidance, has been considering the characterization (as U.S.-
domestic or foreign (non-U.S.)) of certain collateralized debt obligation securities co-issued by a non-U.S.
issuer and a U.S. co-issuer. There can be no assurance as to the nature of any advice or other action that
may result from such consideration. The uncertainties described above (and any unfavorable future
determinations concerning legal investment or financial institution regulatory characteristics of the
Offered Securities) may affect the liquidity of the Offered Securities.
Plan of distribution
Subject to the terms and conditions contained in a purchase and placement agreement (the "Purchase and
Placement Agreement") to be entered into among the Co-Issuers and JPMorgan, as both Initial
Purchaser for the Secured Notes (other than the Class A-1A-S Notes) and as Placement Agent for the
Class A-1A-S Notes, the Composite Notes and the Subordinated Notes, the Co-Issuers will agree to sell,
and JPMorgan will agree to purchase, the Secured Notes (other than the Class A-1A-S Notes). The Class
143

A-1A-S Notes, the Composite Notes and the Subordinated Notes will be placed in privately negotiated
transactions.
The Secured Notes (other than the Class A-1A-S Notes) will be offered by the Initial Purchaser from time
to time for sale to investors in negotiated transactions at varying prices to be determined in each case at
the time of sale. The Class A-1A-S Notes, the Composite Notes and the Subordinated Notes as described
above will be offered by the Placement Agent on behalf of the Issuer from time to time in negotiated
transactions at varying prices to be determined in each case at the time of sale.
The Purchase and Placement Agreement will provide that (i) the obligations of the Initial Purchaser to pay
for and accept delivery of the Secured Notes (other than the Class A-1A-S Notes) thereunder are subject
to certain conditions and (ii) the obligation of the Placement Agent to act as placement agent of the Issuer
thereunder is subject to certain conditions.
In the Purchase and Placement Agreement, each of the Issuer and the Co-Issuer will agree to indemnify
the Initial Purchaser against certain liabilities under the Securities Act or to contribute to payments the
Initial Purchaser may be required to make in respect thereof. In addition, the Issuer will agree to
reimburse the Initial Purchaser for certain of its expenses incurred in connection with the closing of the
transactions contemplated hereby.
In the Purchase and Placement Agreement, the Issuer will agree to indemnify the Placement Agent
against certain liabilities under the Securities Act or to contribute to payments the Placement Agent may
be required to make in respect thereof. In addition, the Issuer will agree to reimburse the Placement
Agent for certain of its expenses incurred in connection with the closing of the transactions contemplated
hereby.
The offering of the Offered Securities has not been and will not be registered under the Securities Act and
may not be offered or sold in non-offshore transactions except pursuant to an exemption from, or in a
transaction not subject to, the registration requirements of the Securities Act.
No action has been taken or is being contemplated by the Issuer that would permit a public offering of the
Offered Securities or possession or distribution of this Offering Circular or any amendment thereof, or
supplement thereto or any other offering material relating to the Offered Securities in any jurisdiction
(other than Ireland) where, or in any other circumstances in which, action for those purposes is required.
No offers, sales or deliveries of any Offered Securities, or distribution of this Offering Circular or any
other offering material relating to the Offered Securities, may be made in or from any jurisdiction except
in circumstances that will result in compliance with any applicable laws and regulations and will not
impose any obligations on the Issuer, the Initial Purchaser or the Placement Agent. Because of the
restrictions contained in the front of this Offering Circular, purchasers are advised to consult legal counsel
prior to making any offer, resale, pledge or transfer of the Offered Securities.
In the Purchase and Placement Agreement, the Initial Purchaser will agree that it or one or more of its
Affiliates will sell the Secured Notes (other than the Class A-1A-S Notes) only to or with, and the
Placement Agent will agree that it or one or more of their Affiliates will place the Class A-1A-S Notes,
the Composite Notes and the Subordinated Notes only to or with, in each case, (a) purchasers it
reasonably believes to be (i) (x) Qualified Institutional Buyers or (y) with respect to Certificated Secured
Notes and Certificated Subordinated Notes only, IAIs, and (ii) Qualified Purchasers and (b) non-U.S.
persons in offshore transactions pursuant to Regulation S. In the Purchase and Placement Agreement
JPMorgan, in its respective capacities as Initial Purchaser and the Placement Agent will also agree that it
will send to each other dealer to which it sells Offered Securities pursuant to Regulation S during the
distribution compliance period a confirmation or other notice setting forth the restrictions on offers and
144

Global Secured Notes, Global Composite Notes and Regulation S Global Subordinated Notes
Each initial purchaser and each transferee of Secured Notes, Composite Notes or Subordinated Notes
represented by an interest in a Global Secured Note, a Global Composite Note or a Regulation S Global
Subordinated Note will be deemed to have represented and agreed as follows (except as may be expressly
agreed in writing between the Co-Issuers and any initial purchasers):
(i)
(ii)
In connection with the purchase of such Offered Securities: (A) none of the Co-Issuers, the
Portfolio Manager, the Initial Purchaser, the Placement Agent, the Trustee, the Collateral
Administrator or any of their respective affiliates is acting as a fiduciary or financial or
investment advisor for such beneficial owner; (B) such beneficial owner is not relying (for
purposes of making any investment decision or otherwise) upon any advice, counsel or
representations (whether written or oral) of the Co-Issuers, the Portfolio Manager, the Trustee, the
Collateral Administrator, the Initial Purchaser, the Placement Agent or any of their respective
affiliates other than any statements in the final offering circular for such Offered Securities, and
such beneficial owner has read and understands such final offering circular; (C) such beneficial
owner has consulted with its own legal, regulatory, tax, business, investment, financial and
accounting advisors to the extent it has deemed necessary and has made its own investment
decisions (including decisions regarding the suitability of any transaction pursuant to the
Indenture) based upon its own judgment and upon any advice from such advisors as it has
deemed necessary and not upon any view expressed by the Co-Issuers, the Portfolio Manager, the
Trustee, the Collateral Administrator, the Initial Purchaser the Placement Agent or any of their
respective affiliates; (D) such beneficial owner is either (1) (in the case of a beneficial owner of
an interest in a Rule 144A Global Secured Note or a Rule 144A Global Composite Note) both (a)
a "qualified institutional buyer" (as defined under Rule 144A under the Securities Act) that is not
a broker-dealer which owns and invests on a discretionary basis less than U.S.$25 million in
securities of issuers that are not affiliated persons of the dealer and is not a plan referred to in
paragraph (a)(1)(d) or (a)(1)(e) of Rule 144A under the Securities Act or a trust fund referred to
in paragraph (a)(1)(f) of Rule 144A under the Securities Act that holds the assets of such a plan,
if investment decisions with respect to the plan are made by beneficiaries of the plan and (b) a
"qualified purchaser" for purposes of Section 3(c)(7) of the Investment Company Act or (2) not a
"U.S. person" as defined in Regulation S and is acquiring the Offered Securities in an offshore
transaction (as defined in Regulation S) in reliance on the exemption from registration provided
by Regulation S; (E) such beneficial owner is acquiring its interest in such Offered Securities for
its own account; (F) such beneficial owner was not formed for the purpose of investing in such
Offered Securities; (G) such beneficial owner understands that the Issuer may receive a list of
participants holding interests in the Offered Securities from one or more book-entry depositories,
(H) such beneficial owner will hold and transfer at least the minimum denomination of such
Offered Securities, (I) (in the case of the Subordinated Notes) such beneficial owner is a
sophisticated investor and is purchasing the Offered Securities with a full understanding of all of
the terms, conditions and risks thereof, and is capable of and willing to assume those risks and (J)
such beneficial owner will provide notice of the relevant transfer restrictions to subsequent
transferees.
(x) in the case of the Class A Notes, the Class B Notes and the Class C Notes, on each day from
the date on which such beneficial owner acquires its interest in such Notes through and including
the date on which such beneficial owner disposes of its interest in such Notes, either that (A) it is
neither a Plan nor any entity whose underlying assets include "plan assets" by reason of such
Plan's investment in the entity, nor a governmental, church, non-U.S. or other plan which is
subject to any federal, state, local or non-U.S. law that is substantially similar to the provisions of
Section 406 of ERISA or Section 4975 of the Code or (B) its acquisition, holding and disposition
146

of such Note will not constitute or result in a non-exempt prohibited transaction under Section
406 of ERISA or Section 4975 of the Code (or, in the case of a governmental, church, non-U.S.
or other plan, a non-exempt violation under any substantially similar law);
(y) in the case of Class D Notes and the Composite Notes, on each day from the date on which
such beneficial owner acquires its interest in such Class D Notes or Composite Notes through and
including the date on which such beneficial owner disposes of its interest in such Class D Notes
or Composite Notes, that (1) such beneficial owner is not a Benefit Plan Investor (or, in the case
of the Composite Notes, a Controlling Person) and (2) if it is a governmental, church, non-U.S. or
other plan that is subject to any federal, state, local or non-U.S. law that is substantially similar to
the provisions of Title I of ERISA or Section 4975 of the Code, its acquisition, holding and
disposition of such Class D Notes or Composite Notes will not constitute or result in a nonexempt
violation under any such substantially similar law;
(z) in the case of the Regulation S Global Subordinated Notes, (1) each Person who purchases an
interest in a Regulation S Global Subordinated Note from the Issuer on the Closing Date will be
required to represent and warrant (a) whether or not the purchaser is a Benefit Plan Investor, (b)
whether or not the purchaser is a Controlling Person and (c) (i) if it is a Benefit Plan Investor, its
purchase, holding and disposition of such Subordinated Notes will not constitute or result in a
non-exempt prohibited transaction under Section 406 of ERISA or Section 4975 of the Code or
(ii) if it is a governmental, church, non-U.S. or other plan which is subject to any federal, state,
local or non-U.S. law that is substantially similar to the provisions of Title I of ERISA or Section
4975 of the Code, its purchase, holding and disposition of such Subordinated Notes will not
constitute or result in non-exempt violation under any such substantially similar law and (2) each
purchaser or subsequent transferee, as applicable, of an interest in a Regulation S Global
Subordinated Note from Persons other than from the Issuer on the Closing Date, on each day
from the date on which such beneficial owner acquires its interest in such Subordinated Notes
through and including the date on which such beneficial owner disposes of its interest in such
Subordinated Notes, will be deemed to have represented and agreed that (a) such purchaser or
subsequent transferee, as applicable, is not a Benefit Plan Investor or Controlling Person and (b)
if it is a governmental, church, non-U.S. or other plan that is subject to any federal, state, local or
non-U.S. law that is substantially similar to the provisions of Title I of ERISA or Section 4975 of
the Code, its acquisition, holding and disposition of such Subordinated Notes will not constitute
or result in a non-exempt violation under any such substantially similar law.
(iii)
(iv)
Such beneficial owner understands that such Offered Securities are being offered only in a
transaction not involving any public offering in the United States within the meaning of the
Securities Act, such Offered Securities have not been and will not be registered under the
Securities Act, and, if in the future such beneficial owner decides to offer, resell, pledge or
otherwise transfer such Offered Securities, such Offered Securities may be offered, resold,
pledged or otherwise transferred only in accordance with the provisions of the Indenture and the
legend on such Offered Securities. Such beneficial owner acknowledges that no representation
has been made as to the availability of any exemption under the Securities Act or any state
securities laws for resale of such Offered Securities. Such beneficial owner understands that
neither of the Co-Issuers has been registered under the Investment Company Act, and that the Co-
Issuers are exempt from registration as such by virtue of Section 3(c)(7) of the Investment
Company Act.
It is aware that, except as otherwise provided in the Indenture, any Offered Securities being sold
to it in reliance on Regulation S will be represented by one or more Regulation S Global Secured
Notes, Regulation S Global Composite Notes or Regulation S Global Subordinated Notes, as
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applicable, and that in each case beneficial interests therein may be held only through DTC for
the respective accounts of Euroclear or Clearstream.
(v)
(vi)
It will provide notice to each person to whom it proposes to transfer any interest in the Offered
Securities of the transfer restrictions and representations set forth in the Indenture.
It understands that in the case of any supplemental indenture to the Indenture that requires
consent of one or more holders of the Offered Securities, the Indenture permits the Amendment
Buy-Out Purchaser to purchase Offered Securities from any Non-Consenting Holder thereof at
the applicable Amendment Buy-Out Purchase Price, and such Non-Consenting Holder will be
required to sell such Offered Securities to the Amendment Buy-Out Purchaser at such price.
In addition, each Person who purchases an interest in a Regulation S Global Subordinated Note, a Class D
Note in the form of a Global Secured Note or a Composite Note from the Issuer or Initial Purchaser, as
applicable, on the Closing Date will be required to provide the Trustee with a certificate in the form of
Annex A-2 or Annex A-4, respectively, hereto and each Person who purchases an interest in a Regulation
S Global Subordinated Note or a Composite Note from the Issuer on the Closing Date will be required to
provide the Trustee with a certificate to the effect that the deemed representations above are true and
correct.
Certificated Secured Notes
No purchase or transfer of a Certificated Secured Note (including a transfer of an interest in a Global
Secured Note to a transferee acquiring a Certificated Secured Note) will be recorded or otherwise
recognized unless the purchaser or transferee thereof has provided the Trustee with a certificate
substantially in the form of Annex A-3 and, in the case of a Certificated Secured Note representing the
Class D Notes, Annex A-4 hereto.
Certificated Subordinated Notes
No purchase or transfer of a Subordinated Note in certificated form (including a transfer of an interest in a
Regulation S Global Subordinated Note to a transferee acquiring a Subordinated Note in certificated
form) will be recorded or otherwise recognized unless the purchaser or transferee thereof has provided the
Trustee with certificates substantially in the form of Annex A-1 (which, in the case of initial purchasers of
the Subordinated Notes, will be delivered in the form of a representation letter containing substantially the
representations set forth in Annex A-1) and Annex A-2 hereto.
Class A-1A-S Notes
No purchase or transfer of a Class A-1A-S Note will be recorded or otherwise recognized unless the
purchaser thereof has executed a Note Purchase Agreement or an assignment and assumption in the form
provided therein containing representations and warranties substantially similar to the representations and
warranties which the holders of other Classes of Secured Notes are deemed to have made.
Additional restrictions
No transfer of any Class D Note, Subordinated Note or Composite Note will be effective, and the Trustee
will not recognize any such transfer, if it may result in 25% or more of the value of such Class of Notes
being held by Benefit Plan Investors (the "25% Limitation"). For purposes of this determination, the
value of equity interests held by the Initial Purchaser, the Placement Agent, the Trustee, the Portfolio
Manager and certain of their affiliates (other than those interests held by a Benefit Plan Investor) or a
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person (other than a Benefit Plan Investor) or a Controlling Person is disregarded. No Benefit Plan
Investors or Controlling Persons may acquire Class D Notes, Composite Notes or Regulation S Global
Subordinated Notes (other than Regulation S Global Subordinated Notes purchased from the Issuer on the
Closing Date). See "ERISA and legal investment considerations."
Each purchaser or subsequent transferee of Class A-1A-S Notes and Certificated Subordinated Notes and
each purchaser of Regulation S Global Subordinated Notes purchased from the Issuer on the Closing Date
will be required to provide the Issuer and the Trustee written certification by the delivery of a certificate
in the form of Annex A-2 hereto as to whether it is an Affected Bank.
No transfer of any Class A-1A-S Note, Class D Note or Subordinated Note to an Affected Bank will be
effective, and the Trustee will not recognize any such transfer, unless such transfer is specifically
authorized by the Issuer in writing; provided, however, that the Issuer shall authorize any such transfer if
(x) such transfer would not cause more than 33 1/3% of the Aggregate Outstanding Amount of such Class
of Offered Securities to be owned by Affected Banks or (y) the transferor is an Affected Bank previously
approved by the Issuer. Each purchaser and subsequent transferee, as applicable, of Class D Notes in the
form of Global Secured Notes and Regulation S Global Subordinated Notes from persons other than the
Initial Purchaser or the Issuer, as applicable, and each purchaser and transferee of Composite Notes will
be deemed to have represented and agreed that such purchaser and subsequent transferee, as applicable, is
not an Affected Bank.
Each purchaser of Class D Notes and Composite Notes from the Initial Purchaser, and each subsequent
transferee of Class D Notes issued as Certificated Secured Notes, will be required to provide the Initial
Purchaser with written certification in the form of Annex A-4 (i) as to whether it is an Affected Bank
(provided that a purchaser of Composite Notes may not be an Affected Bank and is required to so certify),
(ii) that, on each day from the date on which such purchaser or subsequent transferee, as applicable,
acquires its interest in such Class D Notes or Composite Notes through and including the date on which
such purchaser or subsequent transferee, as applicable, disposes of its interest in such Class D Notes or
Composite Notes, it is not a Benefit Plan Investor (or, in the case of the Composite Notes, a Controlling
Person) and (iii) if it is a governmental, church, non-U.S. or other plan that is subject to any federal, state,
local or non-U.S. law that is substantially similar to the provisions of Title I of ERISA or Section 4975 of
the Code, its acquisition, holding and disposition of such Class D Notes or Composite Notes will not
constitute or result in a non-exempt violation under any such substantially similar law.
To the extent required by the Issuer, as determined by the Issuer or the Portfolio Manager on behalf of the
Issuer, the Issuer may, upon notice to the Trustee, impose additional transfer restrictions on the
Subordinated Notes to comply with the Uniting and Strengthening America by Providing Appropriate
Tools Required to Intercept and Obstruct Terrorism Act of 2001 and other similar laws or regulations,
including, without limitation, requiring each transferee of a Subordinated Note, as applicable, to make
representations to the Issuer in connection with such compliance.
Legends
The Class A-1A-J Notes, the Class A-1B-S Notes, the Class A-1B-J Notes, the Class A-2 Notes, the Class
B Notes, the Class C Notes and the Class D Notes will bear a legend substantially to the following effect
unless the Issuer determines otherwise in compliance with applicable law:
This Note has not been and will not be registered under the Securities Act of
1933, as amended (the "Securities Act") or the securities laws of any state of
the United States, and may be reoffered, resold, pledged or otherwise
transferred only (a) to a "qualified purchaser" (as defined for purposes of
149

Section 3(c)(7) of the Investment Company Act) that is either (1) a "qualified
institutional buyer" (as defined in Rule 144A under the Securities Act) in
reliance on the exemption from Securities Act registration provided by such
rule that is not a broker-dealer which owns and invests on a discretionary
basis less than U.S.$25 million in securities of issuers that are not affiliated
persons of the dealer and is not a plan referred to in paragraph (a)(1)(d) or
(a)(1)(e) of Rule 144A or a trust fund referred to in paragraph (a)(1)(f) of
Rule 144A that holds the assets of such a plan, if investment decisions with
respect to the plan are made by the beneficiaries of the plan or (2) an
institutional "accredited investor" (as defined in Rule 501(a)(1), (2), (3) or
(7) of Regulation D of the Securities Act) or (b) to a person that is not a
"U.S. person" (as defined in Regulation S under the Securities Act) and is
acquiring this Note in reliance on the exemption from Securities Act
registration provided by such regulation, and in each case in compliance
with the certification and other requirements specified in the Indenture
referred to herein and in compliance with any applicable securities law of
any applicable jurisdiction. The Issuer has the right, under the Indenture,
to compel any beneficial owner of an interest in a Global Note (as defined in
the Indenture) that is a U.S. person and is not a qualified purchaser and a
qualified institutional buyer to sell its interest in the Notes, or may sell such
interest on behalf of such owner.
[The acquisition of this Note by, or on behalf of, or with the assets of any
employee benefit plan that is defined in Section 3(3) of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"), and
subject to Title I of ERISA, any plan that is defined in Section 4975(e)(1) of
the Internal Revenue Code of 1986, as amended (the “Code”), that is subject
to Section 4975 of the Code,, or any entity whose underlying assets include
"plan assets" within the meaning of the U.S. Department of Labor
Regulations set forth at 29 C.F.R. Section 2510.3-101 by reason of such
employee benefit plan's or plan's investment in the entity, or any
governmental, church, non-U.S. or other plan subject to federal, state, local
or non-U.S. law substantially similar to Section 406 of ERISA or Section
4975 of the Code is prohibited unless such acquisition, holding and
subsequent disposition would not result in any non-exempt prohibited
transaction under Section 406 of ERISA or Section 4975 of the Code (or in
the case of a governmental, church, non-U.S. or other plan, a non-exempt
violation under any substantially similar federal, state, local or non-U.S.
law). Each beneficial owner of this Note will be deemed to have made the
representations and agreements set forth in Section 2.6 of the Indenture.
Any purported transfer of the Notes in violation of the requirements set
forth in this paragraph shall be null and void ab initio.] 1
[Each purchaser in the initial offering will be required to represent and
warrant and each subsequent transferee of this Note will be deemed to have
represented and warranted, at the time of its acquisition and throughout the
period that it holds such Note or any interest herein, that (1) it is not an
"employee benefit plan" (as defined in Section 3(3) of Title I of the
Employee Retirement Income Security Act of 1974, as amended ("ERISA"))
1 Applicable to Class A Notes, Class B Notes and Class C Notes.
150

that is subject to the fiduciary responsibilities provisions of ERISA, a "plan"
as defined in Section 4975(e)(1) of the Internal Revenue Code of 1986, as
amended (the “Code”), that is subject to Section 4975 of the Code, or any
entity whose underlying assets include "plan assets" by reason of such
employee benefit plan's or plan's investment in the entity or a “benefit plan
investor” as such term is otherwise defined in any regulations promulgated
by the U.S. Department of Labor under Section 3(42) of ERISA (collectively,
"benefit plan investors") and (2) if it is a governmental, church, non-U.S. or
other plan that is subject to any federal, state, local or non-U.S. law that is
substantially similar to the provisions of Title I of ERISA or Section 4975 of
the Code, its acquisition, holding and disposition of this Note will not
constitute or result in a non-exempt violation under any such substantially
similar law. Each beneficial owner of this Note will be deemed to have made
the representations and agreements set forth in Section 2.6 of the Indenture.
Any purported transfer of the Notes in violation of the requirements set
forth in this paragraph shall be null and void ab initio.] 2
[Any transfer, pledge or other use of this Note for value or otherwise by or
to any person is wrongful since the registered owner hereof, Cede & Co., has
an interest herein, unless this Note is presented by an authorized
representative of the Depository Trust Company ("DTC"), New York, New
York, to the Co-Issuers or their agent for registration of transfer, exchange
or payment and any Note issued is registered in the name of Cede & Co. or
of such other entity as is requested by an authorized representative of DTC
(and any payment hereon is made to Cede & Co.).
Transfers of this Note shall be limited to transfers in whole, but not in part,
to nominees of DTC or to a successor thereof or such successor's nominee
and transfers of portions of this Note shall be limited to transfers made in
accordance with the restrictions set forth in the Indenture referred to
herein.] 3
Principal of this Note is payable as set forth herein. Accordingly, the
outstanding principal of this Note at any time may be less than the amount
shown on the face hereof. Any person acquiring this Note may ascertain its
current principal amount by inquiry of the Trustee.
The failure to provide the Issuer, the Trustee and any paying agent with the
applicable U.S. Federal income tax certifications (generally, an Internal
Revenue Service Form W-9 (or successor applicable form) in the case of a
person that is a "United States person" within the meaning of Section
7701(a)(30) of the Internal Revenue Code of 1986 (the "Code") or an
appropriate Internal Revenue Service Form W-8 (or successor applicable
form) in the case of a person that is not a "United States person" within the
meaning of Section 7701(a)(30) of the Code) may result in the imposition of
U.S. Federal back-up withholding upon payments to the holder in respect of
this Note.
2 Applicable to Class D Notes.
3 Applicable to Secured Notes issued in the form of a Global Secured Note.
151

The Subordinated Notes in the form of a Regulation S Global Subordinated Note will bear a legend
substantially to the following effect unless the Issuer determines otherwise in compliance with applicable
law:
This Subordinated Note has not been and will not be registered under the
Securities Act of 1933, as amended (the "Securities Act") or the securities
laws of any state of the United States, and may be reoffered, resold, pledged
or otherwise transferred only (a) (1) to a "qualified purchaser", a
"Knowledgeable Employee" with respect to the Issuer or a corporation,
partnership, limited liability company or other entity (other than a trust)
each shareholder, partner, member or other equity owner of which is either
a Knowledgeable Employee or a Qualified Purchaser (in each case, as
defined for purposes of Section 3(c)(7) of the Investment Company Act) that
is (2) (x) a "qualified institutional buyer" (as defined in Rule 144A under the
Securities Act) in reliance on the exemption from Securities Act registration
provided by such rule that is not a broker-dealer which owns and invests on
a discretionary basis less than U.S.$25 million in securities of issuers that are
not affiliated persons of the dealer and is not a plan referred to in paragraph
(a)(1)(d) or (a)(1)(e) of Rule 144A or a trust fund referred to in paragraph
(a)(1)(f) of Rule 144A that holds the assets of such a plan, if investment
decisions with respect to the plan are made by the beneficiaries of the plan
or (y) an "accredited investor" (as defined in Rule 501(a) under the
Securities Act) who is also a "Knowledgeable Employee" or (b) to a person
that is not a "U.S. person" (as defined in Regulation S under the Securities
Act) and is acquiring this Subordinated Note in reliance on the exemption
from Securities Act registration provided by such regulation, and in each
case in compliance with the certification and other requirements specified in
the Indenture referred to herein and in compliance with any applicable
securities law of any applicable jurisdiction.
Each purchaser of this Note acquiring such Note from the Issuer will be
required to represent and warrant, with respect to each day it holds such
Note or any beneficial interest herein, (1) whether or not it is (a) an
"employee benefit plan" (as defined in Section 3(3) of Title I of the
Employee Retirement Income Security Act of 1974, as amended ("ERISA"))
that is subject to the fiduciary responsibilities provisions of ERISA, a "plan"
as defined in Section 4975(e)(1) of the Internal Revenue Code of 1986, as
amended (the “Code”), that is subject to Section 4975 of the Code, any entity
whose underlying assets include "plan assets" by reason of such employee
benefit plan's or plan's investment in the entity or a “benefit plan investor”
as such term is otherwise defined in any regulations promulgated by the U.S.
Department of Labor under Section 3(42) of ERISA (collectively, "benefit
plan investors") or (b) a person (other than a benefit plan investor) who has
discretionary authority or control with respect to the assets of the Issuer or
any person who provides investment advice for a fee (direct or indirect) with
respect to such assets, or any affiliate of such a person (a "controlling
person") and (2) (a) if it is a benefit plan investor, its purchase, holding and
disposition of Subordinated Notes will not constitute or result in a nonexempt
prohibited transaction under Section 406 of ERISA or Section 4975
of the Code or (b) if it is a governmental, church, non-U.S. or other plan
which is subject to any federal, state, local or non-U.S. law that is
152

substantially similar to the provisions of Title I of ERISA or Section 4975 of
the Code, its purchase, holding and disposition of Subordinated Notes will
not constitute or result in a non-exempt violation under any such
substantially similar law. Each purchaser from the Issuer of Subordinated
Notes will be required to complete a benefit plan investor certificate
identifying its status as a benefit plan investor or a controlling person. No
transfer of any interest in this Subordinated Note will be effective, and the
Trustee will not recognize any such transfer if it would result in 25% or
more of the value of the Subordinated Notes being held by benefit plan
investors. Other than with respect to the Subordinated Notes purchased
from the Issuer, no benefit plan investor and no controlling person may
acquire or hold the Subordinated Notes represented hereby or any interest
therein. Each purchaser or subsequent transferee, as applicable, of this
Subordinated Note from persons other than the Issuer will be deemed to
have represented and warranted, at the time of its acquisition and
throughout the period that it holds such Subordinated Note or any interest
herein, that (1) it is not a benefit plan investor or a controlling person and
(2) if it is a governmental, church, non-U.S. or other plan that is subject to
any federal, state, local or non-U.S. law that is substantially similar to the
provisions of Title I of ERISA or Section 4975 of the Code, its acquisition,
holding and disposition of this Subordinated Note will not constitute or
result in a non-exempt violation under any such substantially similar law.
Any purported transfer of the Subordinated Notes in violation of the
requirements set forth in this paragraph shall be null and void ab initio.
The Issuer has the right, under the Indenture, to compel any beneficial
owner of an interest in a Subordinated Note that is a U.S. person and is not a
Qualified Purchaser, a Knowledgeable Employee with respect to the Issuer
or a corporation, partnership, limited liability company or other entity
(other than a trust) each shareholder, partner, member or other equity
owner of which is either a Knowledgeable Employee or a Qualified
Purchaser and a qualified institutional buyer or an accredited investor to
sell its interest in the Subordinated Notes, or may sell such interest on behalf
of such owner.
Any transfer, pledge or other use of this Subordinated Note for value or
otherwise by or to any person is wrongful since the registered owner hereof,
Cede & Co., has an interest herein, unless this Subordinated Note is
presented by an authorized representative of the Depository Trust Company
("DTC"), New York, New York, to the Issuer or its agent for registration of
transfer, exchange or payment and any Subordinated Note issued is
registered in the name of Cede & Co. or of such other entity as is requested
by an authorized representative of DTC (and any payment hereon is made
to Cede & Co.).
Transfers of this Subordinated Note shall be limited to transfers made in
accordance with the restrictions set forth in the Indenture referred to
herein.
Distributions of principal proceeds and interest proceeds to the holder of the
Subordinated Notes represented hereby are subordinate to the payment on
153

each payment date of principal of and interest on the Secured Notes of the
Issuer and the payment of certain other amounts, to the extent and as
described in the Indenture governing such Secured Notes.
The failure to provide the Issuer, the Trustee and any paying agent with the
applicable U.S. Federal income tax certifications (generally, an Internal
Revenue Service Form W-9 (or successor applicable form) in the case of a
person that is a "United States person" within the meaning of Section
7701(a)(30) of the Code or an appropriate Internal Revenue Service Form
W-8 (or successor applicable form) in the case of a person that is not a
"United States person" within the meaning of Section 7701(a)(30) of the
Code) may result in the imposition of U.S. Federal back-up withholding
upon payments to the holder in respect of this Subordinated Note.
The Composite Notes will bear a legend substantially to the following effect unless the Issuer determines
otherwise in compliance with applicable law:
This Composite Note has not been and will not be registered under the
Securities Act of 1933, as amended (the "Securities Act") or the securities
laws of any state of the United States, and may be reoffered, resold, pledged
or otherwise transferred only (a) to a "qualified purchaser" (as defined for
purposes of Section 3(c)(7) of the Investment Company Act) that is a
"qualified institutional buyer" (as defined in Rule 144A under the Securities
Act) in reliance on the exemption from Securities Act registration provided
by such rule that is not a broker-dealer which owns and invests on a
discretionary basis less than U.S.$25 million in securities of issuers that are
not affiliated persons of the dealer and is not a plan referred to in paragraph
(a)(1)(d) or (a)(1)(e) of Rule 144A or a trust fund referred to in paragraph
(a)(1)(f) of Rule 144A that holds the assets of such a plan, if investment
decisions with respect to the plan are made by the beneficiaries of the plan
or (b) to a person that is not a "U.S. person" (as defined in Regulation S
under the Securities Act) and is acquiring this Composite Note in reliance on
the exemption from Securities Act registration provided by such regulation,
and in each case in compliance with the certification and other requirements
specified in the Indenture referred to herein and in compliance with any
applicable securities law of any applicable jurisdiction. The Issuer has the
right, under the Indenture, to compel any beneficial owner of an interest in a
Global Composite Note (as defined in the Indenture) that is a U.S. person
and is not a qualified purchaser and a qualified institutional buyer to sell its
interest in the Composite Notes, or may sell such interest on behalf of such
owner.
Each purchaser and subsequent transferee of this Composite Note will be
deemed to have represented and warranted, at the time of its acquisition and
throughout the period that it holds such Composite Note or any interest
herein, that (1) it is not (a) an "employee benefit plan" (as defined in Section
3(3) of Title I of the Employee Retirement Income Security Act of 1974, as
amended ("ERISA")) that is subject to the fiduciary responsibilities
provisions of ERISA, a "plan" as defined in Section 4975(e)(1) of the
Internal Revenue Code of 1986, as amended (the “Code”), that is subject to
Section 4975 of the Code, or any entity whose underlying assets include
154

"plan assets" by reason of such employee benefit plan's or plan's investment
in the entity or a “benefit plan investor” as such term is otherwise defined in
any regulations promulgated by the U.S. Department of Labor under
Section 3(42) of ERISA (collectively, "benefit plan investors") or (b) a
person (other than a benefit plan investor) who has discretionary authority
or control with respect to the assets of the Issuer or any person who provides
investment advice for a fee (direct or indirect) with respect to such assets, or
any affiliate of such a person (a "controlling person") and (2) if it is a
governmental, church, non-U.S. or other plan that is subject to any federal,
state, local or non-U.S. law that is substantially similar to the provisions of
Title I of ERISA or Section 4975 of the Code, its acquisition, holding and
disposition of this Composite Note will not constitute or result in a nonexempt
violation under any such substantially similar law. Each beneficial
owner of this Composite Note will be deemed to have made the
representations and agreements set forth in Section 2.6 of the Indenture.
Any purported transfer of the Composite Notes in violation of the
requirements set forth in this paragraph shall be null and void ab initio.
Any transfer, pledge or other use of this Composite Note for value or
otherwise by or to any person is wrongful since the registered owner hereof,
Cede & Co., has an interest herein, unless this Composite Note is presented
by an authorized representative of the Depository Trust Company ("DTC"),
New York, New York, to the Co-Issuers or their agent for registration of
transfer, exchange or payment and any Composite Note issued is registered
in the name of Cede & Co. or of such other entity as is requested by an
authorized representative of DTC (and any payment hereon is made to Cede
& Co.).
Transfers of this Composite Note shall be limited to transfers in whole, but
not in part, to nominees of DTC or to a successor thereof or such successor's
nominee and transfers of portions of this Composite Note shall be limited to
transfers made in accordance with the restrictions set forth in the Indenture
referred to herein.
The failure to provide the Issuer, the Trustee and any paying agent with the
applicable U.S. Federal income tax certifications (generally, an Internal
Revenue Service Form W-9 (or successor applicable form) in the case of a
person that is a "United States person" within the meaning of Section
7701(a)(30) of the Internal Revenue Code of 1986 (the "Code") or an
appropriate Internal Revenue Service Form W-8 (or successor applicable
form) in the case of a person that is not a "United States person" within the
meaning of Section 7701(a)(30) of the Code) may result in the imposition of
U.S. Federal back-up withholding upon payments to the holder in respect of
this Composite Note.
The Class A-1A-S Notes will bear a legend substantially to the following effect unless the Issuer
determines otherwise in compliance with applicable law:
This Note has not been and will not be registered under the Securities Act of
1933, as amended (the "Securities Act") or the securities laws of any state of
the United States, and may be reoffered, resold, pledged or otherwise
155

transferred only (a) to a "qualified purchaser" (as defined for purposes of
Section 3(c)(7) of the Investment Company Act) that is a "qualified
institutional buyer" (as defined in Rule 144A under the Securities Act) in
reliance on the exemption from Securities Act registration provided by such
rule that is not a broker-dealer which owns and invests on a discretionary
basis less than U.S.$25 million in securities of Issuers that are not affiliated
persons of the dealer and is not a plan referred to in paragraph (a)(1)(d) or
(a)(1)(e) of Rule 144A or a trust fund referred to in paragraph (a)(1)(f) of
Rule 144A that holds the assets of such a plan, if investment decisions with
respect to the plan are made by the beneficiaries of the plan or (b) to a
person that is not a "U.S. person" (as defined in Regulation S under the
Securities Act) and is acquiring this Note in reliance on the exemption from
Securities Act registration provided by such Regulation, and in each case in
compliance with the certification and other requirements specified in the
Indenture referred to herein and in compliance with any applicable
securities law of any applicable jurisdiction.
The acquisition of the Notes by, or on behalf of, or with the assets of any
employee benefit plan that is defined in Section 3(3) of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"), and
subject to Title I of ERISA, any plan that is defined in Section 4975(e)(1) of
the Internal Revenue Code of 1986, as amended (the “Code”), that is subject
to Section 4975 of the Code, or any entity whose underlying assets include
"plan assets" within the meaning of the U.S. Department of Labor
Regulations set forth at 29 C.F.R. Section 2510.3-101 by reason of such
employee benefit plan's or plan's investment in the entity, or any
governmental, church, non-U.S. or other plan subject to federal, state, local
or non-U.S. law substantially similar to Section 406 of ERISA or Section
4975 of the Code is prohibited unless such purchase, holding and subsequent
disposition of the Notes would not result in any non-exempt prohibited
transaction under Section 406 of ERISA or under Section 4975 of the Code
(or in the case of a governmental, church, non-U.S. or other plan, a nonexempt
violation under any substantially similar federal, state, local or non-
U.S. law). Each beneficial owner of this Note will be deemed to have made
the representations and agreements set forth in Section 2.6 of the Indenture.
Any purported transfer of the Notes in violation of the requirements set
forth in this paragraph shall be null and void ab initio.
The Issuer has the right, under the Indenture, to compel any beneficial
owner of an interest in a Note (as defined in the Indenture) that is a U.S.
person and is not a Qualified Purchaser and a qualified institutional buyer
to sell its interest in the Notes, or may sell such interest on behalf of such
owner.
Transfers of portions of this Note shall be limited to transfers made in
accordance with the restrictions set forth in the Note purchase agreement
and the Indenture referred to herein.
Principal of this Note is payable as set forth herein. Accordingly, the
outstanding principal of this Note at any time may be less than the amount
156

shown on the face hereof. Any person acquiring this Note may ascertain its
current principal amount by inquiry of the Trustee.
The failure to provide the Issuer, the Trustee and any paying agent with the
applicable U.S. Federal income tax certifications (generally, an Internal
Revenue Service Form W-9 (or successor applicable form) in the case of a
person that is a "United States person" within the meaning of Section
7701(a)(30) of the Code or an appropriate Internal Revenue Service Form
W-8 (or successor applicable form) in the case of a person that is not a
"United States person" within the meaning of Section 7701(a)(30) of the
Code) may result in the imposition of U.S. Federal back-up withholding
upon payments to the holder in respect of this Note.
The Subordinated Notes in the form of a Certificated Subordinated Note will bear a legend substantially
to the following effect unless the Issuer determines otherwise in compliance with applicable law:
This Subordinated Note has not been and will not be registered under the
Securities Act of 1933, as amended (the "Securities Act") or the securities
laws of any state of the United States, and may be reoffered, resold, pledged
or otherwise transferred only (a) (1) to a "qualified purchaser", a
"Knowledgeable Employee" with respect to the Issuer or a corporation,
partnership, limited liability company or other entity (other than a trust)
each shareholder, partner, member or other equity owner of which is either
a Knowledgeable Employee or a Qualified Purchaser (in each case, as
defined for purposes of Section 3(c)(7) of the Investment Company Act) that
is (2) (x) a "qualified institutional buyer" (as defined in Rule 144A under the
Securities Act) in reliance on the exemption from Securities Act registration
provided by such rule that is not a broker-dealer which owns and invests on
a discretionary basis less than U.S.$25 million in securities of Issuers that
are not affiliated persons of the dealer and is not a plan referred to in
paragraph (a)(1)(d) or (a)(1)(e) of Rule 144A or a trust fund referred to in
paragraph (a)(1)(f) of Rule 144A that holds the assets of such a plan, if
investment decisions with respect to the plan are made by the beneficiaries
of the plan or (y) an "accredited investor" (as defined in Rule 501(a) under
the Securities Act) who is also a "Knowledgeable Employee" or (b) to a
person that is not a "U.S. person" (as defined in Regulation S under the
Securities Act) and is acquiring this Subordinated Note in reliance on the
exemption from Securities Act registration provided by such regulation, and
in each case in compliance with the certification and other requirements
specified in the Indenture referred to herein and in compliance with any
applicable securities law of any applicable jurisdiction.
Each purchaser of this Note acquiring such Note from the Issuer, and each
purchaser or subsequent transferee, as applicable, acquiring a beneficial
interest in this Note in the form of a Certificated Note, will be required to
represent and warrant, with respect to each day it holds such Note or any
beneficial interest herein, (1) whether or not it is (a) an "employee benefit
plan" (as defined in Section 3(3) of Title I of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA")) that is subject to the
fiduciary responsibilities provisions of ERISA, a "plan" as defined in
Section 4975(e)(1) of the Internal Revenue Code of 1986, as amended (the
157

“Code”), that is subject to Section 4975 of the Code, any entity whose
underlying assets include "plan assets" by reason of such employee benefit
plan's or plan's investment in the entity or a “benefit plan investor” as such
term is otherwise defined in any regulations promulgated by the U.S.
Department of Labor under Section 3(42) of ERISA (collectively, "benefit
plan investors") or (b) a person (other than a benefit plan investor) who has
discretionary authority or control with respect to the assets of the Issuer or
any person who provides investment advice for a fee (direct or indirect) with
respect to such assets, or any affiliate of such a person (a "controlling
person") and (2) (a) if it is a benefit plan investor, its acquisition, holding
and disposition of Subordinated Notes will not constitute or result in a nonexempt
prohibited transaction under Section 406 of ERISA or Section 4975
of the Code or (b) if it is a governmental, church, non-U.S. or other plan
which is subject to any federal, state, local or non-U.S. law that is
substantially similar to the provisions of Title I of ERISA or Section 4975 of
the Code, its acquisition, holding and disposition of Subordinated Notes will
not constitute or result in a non-exempt violation under any such
substantially similar law. Each purchaser or subsequent transferee, as
applicable, of Subordinated Notes in the form of a Certificated Note will be
required to complete a benefit plan investor certificate identifying its status
as a benefit plan investor or a controlling person. No transfer of any interest
in this Subordinated Note will be effective, and the Trustee will not
recognize any such transfer if it would result in 25% or more of the value of
the Subordinated Notes being held by benefit plan investors. Each beneficial
owner of this Subordinated Note will be required to make the
representations and agreements set forth in the Indenture. Any purported
transfer of the Subordinated Notes in violation of the requirements set forth
in this paragraph shall be null and void ab initio.
The Issuer has the right, under the Indenture, to compel any beneficial
owner of an interest in a Subordinated Note that is a U.S. person and is not a
Qualified Purchaser, a Knowledgeable Employee with respect to the Issuer
or a corporation, partnership, limited liability company or other entity
(other than a trust) each shareholder, partner, member or other equity
owner of which is either a Knowledgeable Employee or a Qualified
Purchaser and a qualified institutional buyer or an accredited investor to
sell its interest in the Subordinated Notes, or may sell such interest on behalf
of such owner.
Distributions of principal proceeds and interest proceeds to the holder of the
Subordinated Notes represented hereby are subordinate to the payment on
each payment date of principal of and interest on the Secured Notes of the
Issuer and the payment of certain other amounts, to the extent and as
described in the Indenture governing such Secured Notes.
The failure to provide the Issuer, the Trustee and any paying agent with the
applicable U.S. Federal income tax certifications (generally, an Internal
Revenue Service Form W-9 (or successor applicable form) in the case of a
person that is a "United States person" within the meaning of Section
7701(a)(30) of the Code or an appropriate Internal Revenue Service Form
W-8 (or successor applicable form) in the case of a person that is not a
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"United States person" within the meaning of Section 7701(a)(30) of the
Code) may result in the imposition of U.S. Federal back-up withholding
upon payments to the holder in respect of this Subordinated Note.
Non-Permitted Holder/Non-Permitted ERISA Holder
If (x) any U.S. person that is not a Qualified Institutional Buyer and a Qualified Purchaser (in the case of
a Rule 144A Global Secured Note or a Rule 144A Global Composite Note) shall become the beneficial
owner of an interest in any Secured Note or Composite Note, (y) any U.S. person that is not a Qualified
Purchaser, a Knowledgeable Employee or a corporation, partnership, limited liability company or other
entity (other than a trust) each shareholder, partner, member or other equity owner of which is either a
Knowledgeable Employee or a Qualified Purchaser or that does not have an exemption available under
the Securities Act and the Investment Company Act shall become the holder or beneficial owner of a
Subordinated Note, or (z) any U.S. person that is not an IAI and a Qualified Purchaser (in the case of a
Certificated Secured Note) shall become the beneficial owner of an interest in a Certificated Secured Note
(any such person a "Non-Permitted Holder"), the Issuer shall, promptly after discovery that such person
is a Non-Permitted Holder by the Issuer (or upon notice to the Issuer from the Trustee if it obtains actual
knowledge or by the Co-Issuer if it makes the discovery (who, in each case, agree to notify the Issuer of
such discovery, if any)), send notice to such Non-Permitted Holder demanding that such Non-Permitted
Holder transfer its interest to a person that is not a Non-Permitted Holder within thirty (30) days of the
date of such notice. If such Non-Permitted Holder fails to so transfer its Offered Securities, the Issuer
shall have the right, without further notice to the Non-Permitted Holder, to sell such Offered Securities or
interest in such Offered Securities to a purchaser selected by the Issuer that is not a Non-Permitted Holder
on such terms as the Issuer may choose. The Issuer, or at the direction of the Issuer, the Trustee through
an investment bank selected by the Trustee (and approved by the Portfolio Manager) acting on behalf of
the Issuer, may select the purchaser by soliciting one or more bids from one or more brokers or other
market professionals that regularly deal in securities similar to the Offered Securities and selling such
Offered Securities to the highest such bidder. However, the Issuer may select a purchaser by any other
means determined by it in its sole discretion. The holder of each Offered Security, the Non-Permitted
Holder and each other person in the chain of title from the holder to the Non-Permitted Holder, by its
acceptance of an interest in the Offered Securities agrees to cooperate with the Issuer and the Trustee to
effect such transfers. The proceeds of such sale, net of any commissions, expenses and taxes due in
connection with such sale shall be remitted to the Non-Permitted Holder. The terms and conditions of
any sale shall be determined in the sole discretion of the Issuer, and the Issuer shall not be liable to any
person having an interest in the Offered Securities sold as a result of any such sale or the exercise of such
discretion.
If any person shall become the beneficial owner of an interest in a Class D Note, a Composite Note or a
Subordinated Note who has made or is deemed to have made a Benefit Plan Investor or Controlling
Person representation or deemed representation that is subsequently shown to be false or misleading or
whose beneficial ownership otherwise causes a violation of the 25% Limitation (any such person a "Non-
Permitted ERISA Holder"), the Issuer shall, promptly after discovery that such person is a Non-
Permitted ERISA Holder by the Issuer (or upon notice to the Issuer from the Trustee if it obtains actual
knowledge or the Co-Issuer if it makes the discovery), send notice to such Non-Permitted ERISA Holder
demanding that such Non-Permitted ERISA Holder transfer its interest to a person that is not a Non-
Permitted ERISA Holder within 14 days of the date of such notice. If such Non-Permitted ERISA Holder
fails to so transfer its Class D Notes, Composite Notes or Subordinated Notes, as applicable, the Issuer
shall have the right, without further notice to the Non-Permitted ERISA Holder, to sell such Class D
Notes, Composite Notes or Subordinated Notes, as applicable, or interest in such Class D Notes,
Composite Notes or Subordinated Notes, as applicable, to a purchaser selected by the Issuer that is not a
Non-Permitted ERISA Holder on such terms as the Issuer may choose. The Issuer may select the
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purchaser by soliciting one or more bids from one or more brokers or other market professionals that
regularly deal in securities similar to the Class D Notes, the Composite Notes or the Subordinated Notes,
as applicable, and selling such Class D Notes, Composite Notes or Subordinated Notes, as applicable, to
the highest such bidder. However, the Issuer may select a purchaser by any other means determined by it
in its sole discretion. The holder of each Class D Note, Composite Note or Subordinated Note, as
applicable, the Non-Permitted ERISA Holder and each other person in the chain of title from the holder to
the Non-Permitted ERISA Holder, by its acceptance of an interest in the Class D Notes, the Composite
Notes or Subordinated Notes, as applicable, agrees to cooperate with the Issuer to effect such transfers.
The proceeds of such sale, net of any commissions, expenses and taxes due in connection with such sale
shall be remitted to the Non-Permitted ERISA Holder. The terms and conditions of any sale under this
subsection shall be determined in the sole discretion of the Issuer, and the Issuer shall not be liable to any
person having an interest in the Class D Notes, the Composite Notes or the Subordinated Notes, as
applicable, sold as a result of any such sale or the exercise of such discretion.
Cayman Islands placement provisions
The Initial Purchaser and the Placement Agent have agreed that they have not made and will not make
any invitation to the public in the Cayman Islands to subscribe for the Offered Securities.
Listing and general information
1. Application has been made to the Irish Stock Exchange for the Offered Securities to be
admitted to the Daily Official List, and traded on its regulated market. There can be no assurance that
such listings will be granted or, if granted, will be maintained. It is expected that the total expenses
relating to the application for admission of the Offered Securities to the Official List of the Irish Stock
Exchange and to trading on its regulated market will be approximately €7,190.
2. For the term of the Offered Securities, copies of the Memorandum and Articles of
Association of the Issuer, the Certificate of Incorporation and By-laws of the Co-Issuer and the Indenture
will be available for inspection in electronic form at the office of the Trustee.
3. Since incorporation, neither the Issuer nor the Co-Issuer has commenced trading,
published annual reports or accounts, established any accounts or declared any dividends, except for the
transactions described herein.
4. Neither of the Co-Issuers is, or has since incorporation been, involved in any
governmental, litigation or arbitration proceedings relating to claims in amounts which may have or have
had a significant effect on the financial positions of the Co-Issuers in the context of the issue of the
Offered Securities, nor, so far as either Co-Issuer is aware, is any such governmental, litigation or
arbitration proceedings involving it pending or threatened.
5. The issuance by the Issuer of the Offered Securities is expected to be authorized by the
board of directors of the Issuer by resolutions to be passed prior to the Closing Date and the issuance by
the Co-Issuer of the Class A Notes, the Class B Notes and the Class C Notes is expected to be authorized
by the board of directors of the Co-Issuer by resolutions to be passed prior to the Closing Date.
6. The Issuer is not required by Cayman Islands law, and the Issuer does not intend, to
publish annual reports and accounts. The Co-Issuer is not required by Delaware State law, and the Co-
Issuer does not intend, to publish annual reports and accounts. The Indenture, however, requires the Issuer
to provide the Trustee with written confirmation, on an annual basis, that to the best of its knowledge
following review of the activities of the prior year, no Event of Default has occurred and in continuing or,
if one has, specifying the same.
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7. Maples and Calder Listing Services Limited, as the Irish Listing Agent, is acting solely in
its capacity as listing agent for the Issuer in connection with the Offered Securities and is not itself
seeking admission of the Offered Securities to the official list of the Irish Stock Exchange or to trading on
the Irish Stock Exchange for the purposes of the Prospectus Directive.
8. The Offered Securities sold in offshore transactions in reliance on Regulation S under the
Securities Act and represented by the Regulation S Global Secured Notes, the Regulation S Global
Composite Notes or the Regulation S Global Subordinated Notes, as applicable, have been accepted for
clearance through Clearstream and Euroclear. The Offered Securities sold to persons that are Qualified
Institutional Buyers and Qualified Purchasers in reliance on Rule 144A under the Securities Act and
represented by Rule 144A Global Secured Notes and Rule 144A Global Composite Notes have been
accepted for clearance through DTC. The CUSIP Numbers, Common Codes and International Securities
Identification Numbers (ISIN) for the Secured Notes and the Composite Notes represented by Regulation
S Global Secured Notes, Rule 144A Global Secured Notes, Regulation S Global Composite Notes and
Rule 144A Global Composite Notes and the Subordinated Notes represented by the Regulation S Global
Subordinated Notes are as indicated below, as applicable.
Rule 144A Global
Regulation S Global
CUSIP
ISIN
Common
Code CUSIP ISIN
Class A-1A-J Notes 38136BAC6 US38136BAC63 029158541 G39602AB6 USG39602AB66
Class A-1B-S Notes 38136BAE2 US38136BAE20 029158819 G39602AC4 USG39602AC40
Class A-1B-J Notes 38136BAG7 US38136BAG77 029158991 G39602AD2 USG39602AD23
Class A-2 Notes 38136BAJ1 US38136BAJ17 029159327 G39602AE0 USG39602AE06
Class B Notes 38136BAL6 US38136BAL62 029159726 G39602AF7 USG39602AF70
Class C Notes 38136BAQ5 US38136BAQ59 029159955 G39602AH3 USG39602AH37
Class D Notes 38136AAA2 US38136AAA25 029160481 G39601AA0 USG39601AA01
Type I Composite
Notes
38136AAE4 US38136AAE47 029233152 G39601AC6 USG39601AC66
Type II Composite
Notes
38136AAG9 US38136AAG94 029233349 G39601AD4 USG39601AD40
Type III Composite
Notes
38136AAJ3 US38136AAJ34 029233543 G39601AE2 USG39601AE23
Subordinated Notes N/A N/A 029160481 G39601AG7 USG39601AG70
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9. The Secured Notes in certificated form will also bear the following identification
numbers:
Certificated Secured Notes
Certificated Secured Notes:
CUSIP
ISIN
Class A-1A-J Notes 38136BAD4 US38136BAD47
Class A-1B-S Notes 38136BAF9 US38136BAF94
Class A-1B-J Notes 38136BAH5 US38136BAH50
Class A-2 Notes 38136BAK8 US38136BAK89
Class B Notes 38136BAM4 US38136BAM46
Class C Notes 38136BAR3 US38136BAR33
Class D Notes 38136AAB0 US38136AAB08
10. The Class A-1A-S Notes and the Subordinated Notes in certificated form will also bear
the following identification numbers:
Rule 144A
Accredited Investor
CUSIP ISIN CUSIP ISIN
Class A-1A-S Notes 38136BAA0 US38136BAA08 38136BAB8 US38136BAB80
Subordinated Notes 38136AAN4 US38136AAN46 38136AAP9 US38136AAP93
11. For each calendar month, except a month in which a Payment Date occurs, commencing
in June 2007, the Issuer shall compile and provide (or cause to be compiled and provided) (including, at
the election of the Issuer, via appropriate electronic means acceptable to the recipient) to any holder in the
register maintained by the registrar under the Indenture upon written request a monthly report (each a
"Monthly Report"). The Monthly Report will set out, among other things, information relating to
Collateral Obligations and Eligible Investments included in the Assets and certain tests (based, in part, on
information provided by the Portfolio Manager). Furthermore, the Issuer shall (or shall cause the Trustee
to) render an accounting (each a "Distribution Report"), determined as of the close of business on each
Determination Date preceding a Payment Date, and shall deliver such Distribution Report (including, at
the election of the Issuer, via appropriate electronic means acceptable to the recipient), to any holder on
the register maintained by the registrar under the Indenture upon written request information including,
among other things, information relating to the Note balances.
Legal matters
Certain legal matters with respect to the Notes will be passed upon for the Co-Issuers and the Initial
Purchaser and the Placement Agent by McKee Nelson LLP, New York, New York. Certain matters with
respect to Cayman Islands law will be passed upon for the Issuer by Maples and Calder, Cayman Islands.
Certain legal matters with respect to the Portfolio Manager will be passed upon by Schulte Roth & Zabel
LLP, New York, New York.
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Glossary of defined terms
"Adjusted Collateral Principal Amount" means as of any date of determination:
(a) the aggregate principal balance of the Collateral Obligations (other than Defaulted Obligations,
Deferring Securities, Excess Concentration Obligations and Discount Obligations); plus
(b) without duplication, the amounts on deposit in the Collection Account and the Ramp-Up Account
(including Eligible Investments therein) representing Principal Proceeds and, from and after a default
under a Securities Lending Agreement, the amounts on deposit in the related Securities Lending Account
(including Eligible Investments therein); plus
(c) the lesser of the (i) S&P Collateral Value of all Defaulted Obligations and all Deferring Securities
and (ii) Moody's Collateral Value of all Defaulted Obligations and all Deferring Securities; plus
(d) the aggregate for each Discount Obligation of the purchase price, excluding accrued interest,
expressed as a dollar amount, for such Discount Obligation; minus
(e)
the Excess CCC/Caa Adjustment Amount;
provided, that with respect to any Collateral Obligation that satisfies more than one of the definitions of
Defaulted Obligation, Deferring Security, Excess Concentration Obligation or Discount Obligation, such
Collateral Obligation shall, for the purposes of this definition, be treated as belonging to the category of
Collateral Obligations which results in the lowest Adjusted Collateral Principal Amount on any date of
determination.
"Administrative Expense Cap" means, an amount equal on any Payment Date (when taken together
with any Administrative Expenses paid during the period since the preceding Payment Date or, in the case
of the first Payment Date, the Closing Date) to the sum of (a) 0.05% per annum (prorated for the related
Interest Accrual Period on the basis of a 360-day year consisting of twelve 30-day months) of the Fee
Basis Amount on the related Determination Date and (b) $250,000 per annum (prorated for the related
Interest Accrual Period on the basis of a 360-day year consisting of twelve 30-day months); provided,
however, that if the amount of Administrative Expenses paid under the Administrative Expense Cap
(including any excess applied in accordance with this proviso) on the three immediately preceding
Payment Dates or during the related Collection Periods is less than the stated Administrative Expense Cap
(without regard to any excess applied in accordance with this proviso) in the aggregate for such three
preceding Payment Dates, the excess may be applied to the Administrative Expense Cap with respect to
the then-current Payment Date; provided, further, that in respect of the first three Payment Dates from the
Closing Date, such excess amount shall be calculated based on the Payment Dates preceding such
Payment Date.
"Administrative Expenses" include fees, expenses (including indemnities) and other amounts due or
accrued with respect to any Payment Date and payable in the following order by the Issuer or the Co-
Issuer first, to the Trustee pursuant to the Indenture, second, to the Collateral Administrator pursuant to
the Collateral Administration Agreement, and then third, on a pro rata basis to:
(i) the independent accountants, agents (other than the Portfolio Manager) and counsel of the Issuer
for fees and expenses;
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(ii) the Rating Agencies for fees and expenses (including surveillance fees) in connection with any
rating of the Secured Notes and the Composite Notes or in connection with the rating of (or provision of
credit estimates in respect of) any Collateral Obligations;
(iii) the Portfolio Manager under the Indenture and the Portfolio Management Agreement, including
without limitation reasonable expenses of the Portfolio Manager (including fees for its accountants,
agents and counsel) incurred in connection with the purchase or sale of any Collateral Obligations, any
other expenses incurred in connection with the Collateral Obligations and amounts payable pursuant to
the Portfolio Management Agreement but excluding the Management Fee;
(iv)
the Administrator pursuant to the Administration Agreement;
(v) any person in respect of fees, costs or expenses incurred in connection with any Securities
Lending Agreement;
(vi) the Class A-1A-S Note Agent for the Class A-1A-S Note Agent's fees and expenses pursuant to
the Note Purchase Agreement; and
(vii) any other person in respect of any other fees or expenses permitted under the Indenture and the
documents delivered pursuant to or in connection with the Indenture (including the payment of facility
rating fees and all legal and other fees and expenses incurred in connection with the purchase or sale of
any Collateral Obligations and any other expenses incurred in connection with the Collateral Obligations)
and the Offered Securities, including but not limited to, amounts owed to the Co-Issuer pursuant to the
Indenture and any amounts due in respect of the listing of the Offered Securities on any stock exchange or
trading system, any costs associated with producing definitive Offered Securities;
provided, that (x) amounts due in respect of actions taken on or before the Closing Date shall not be
payable as Administrative Expenses but shall be payable only from the Expense Reserve Account
pursuant to the Indenture and (y) for the avoidance of doubt, amounts that are expressly payable to any
person under the Priority of Payments in respect of an amount that is stated to be payable as an amount
other than as Administrative Expenses (including, without limitation, interest and principal in respect of
the Notes and amounts owing to Hedge Counterparties) shall not constitute Administrative Expenses.
"Affiliate" means, with respect to a person, (a) any other person who, directly or indirectly, is in control
of, or controlled by, or is under common control with, such person or (b) any other person who is a
director, officer or employee (i) of such person, (ii) of any subsidiary or parent company of such person or
(iii) of any person described in clause (a) of this sentence. For the purposes of this definition, control of a
person means the power, direct or indirect, (x) to vote more than 50% of the securities having ordinary
voting power for the election of directors of such person or (y) to direct or cause the direction of the
management and policies of such person whether by contract or otherwise. For purposes of this
definition, the management of an account by one person for the benefit of any other person shall not
constitute "control" of such other person and no entity shall be deemed an Affiliate of the Issuer or the
Co-Issuer solely because the Administrator or its Affiliates acts as administrator or share trustee for such
entity.
"Amendment Buy-Out Purchase Price" means, the purchase price payable by the Amendment Buy-Out
Purchaser for Offered Securities purchased in an Amendment Buy-Out, if any, in an amount equal to (i)
in the case of the Secured Notes, the aggregate outstanding amount thereof, plus accrued and unpaid
interest (including Deferred Interest, if any) and (if applicable) Commitment Fees as of the date of
purchase payable to the Non-Consenting Holder (giving effect to any amounts paid to the holder on such
date) and (ii) in the case of the Subordinated Notes, an amount that, when taken together with all
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payments and distributions made in respect of such Subordinated Notes since the Closing Date (and any
amounts payable, if any, to the Non-Consenting Holder on the next succeeding Payment Date) would
cause such Subordinated Notes to have received (as of the date of purchase thereof) a Subordinated Note
Internal Rate of Return of 17% (assuming such purchase date was a Payment Date); provided, however,
that in any Amendment Buy-Out from and after the date on which the Non-Consenting Holders of
Subordinated Notes have received a Subordinated Note Internal Rate of Return equal to or in excess of
17%, the Amendment Buy-Out Purchase Price for such Subordinated Notes shall be zero.
"Amendment Buy-Out Purchaser" means the Portfolio Manager (or any of its Affiliates acting as
principal or agent); provided that in the event that the Portfolio Manager elects not to purchase Offered
Securities from holders pursuant to "Description of the Offered Securities—The Indenture and the
Secured Notes—Amendment Buy-Out," "Amendment Buy-Out Purchaser" shall mean one or more
qualifying purchasers (which may include the Initial Purchaser and Placement Agent or its Affiliates
acting as principal or agent) designated by the Portfolio Manager; provided, however, none of the
Portfolio Manager, the Initial Purchaser, the Placement Agent or any of their respective Affiliates shall
have any duty to act as an Amendment Buy-Out Purchaser.
"Applicable Advance Rate" means, for each Collateral Obligation and for the applicable number of
Business Days between the certification date for a sale or participation as described in "Description of the
Offered Securities—Optional Redemption—Redemption Procedures" and the expected date of such sale
or participation, the percentage specified below:
Senior Secured Loans with a Market Value of:
Same Day 1-2 days 3-5 days 6-15 days
90% or more 100% 93% 92% 88%
below 90% 100% 80% 73% 60%
Other Collateral Obligations with a Moody's Rating
of at least "B3" and a Market Value of 90% or more
100% 89% 85% 75%
All other Collateral Obligations 100% 75% 65% 45%
"Bond" means a debt security (that is not a loan) that is issued by a corporation, limited liability
company, partnership or trust.
"Bond Yield Change" means the change in implied yield spread to an index based upon a nationally
recognized index as calculated by the Portfolio Manager in its reasonable commercial judgment.
"Business Day" means any day other than (i) a Saturday or a Sunday or (ii) a day on which commercial
banks are authorized or required by applicable law, regulation or executive order to close in New York,
New York or in the city in which the principal corporate trust office of the Trustee is located or, for any
final payment of principal, in the relevant place of presentation.
"CCC/Caa Collateral Obligation" means a Collateral Obligation (other than a Defaulted Obligation, a
Discount Obligation or a Deferring Security) with an S&P Rating of "CCC+" or lower or a Moody's
Rating of "Caa1" or lower.
"CCC/Caa Excess" means the excess, if any, by which:
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(i)
(ii)
the aggregate principal balance of all CCC/Caa Collateral Obligations exceeds
10.0% of the Collateral Principal Amount as of the current Determination Date;
provided, that in determining which of the CCC/Caa Collateral Obligations shall be included in the
CCC/Caa Excess, the CCC/Caa Collateral Obligations with the lowest Market Value shall be deemed to
constitute such CCC/Caa Excess.
"Class A-1 Pro Rata Adjustment Amount" means the product (determined as of the last day of the
Draw Period after giving effect to any Funding Advance to be made on such day) of the Aggregate
Undrawn Amount of the Class A-1A-S Notes multiplied by the ratio, the numerator of which is the
aggregate outstanding principal amount of the Class A-1B Notes and the denominator of which is the
aggregate outstanding principal amount of the Class A-1 Notes and the Aggregate Undrawn Amount of
the Class A-1A-S Notes.
"Class A-1A-S Additional Costs" means, with respect to any Payment Date, the amount (other than any
other amount that is a tax, or a stamp, registration, documentation or similar tax), as set forth in a
certificate of a holder of a Class A-1A-S Note or any liquidity provider to such holder in accordance with
the Note Purchase Agreement (a "Funding Entity") delivered to the Class A-1A-S Note Agent, who shall
forward such certificate to the Trustee on or prior to the related Determination Date, necessary to
compensate such holder or Funding Entity, for (a) any increase in the cost to (or imposing a cost on) a
Funding Entity of funding, making or maintaining any loan under the Note Purchase Agreement or such
Funding Entity's liquidity facility (or of maintaining its obligation to make any such loan) resulting from a
change in law applicable to such Funding Entity, (b) any reduction in the amount of any sum received or
to be received by such Funding Entity under the Note Purchase Agreement or such Funding Entity's
liquidity facility deemed by such Funding Entity to be material resulting from a change in law applicable
to such Funding Entity, (c) any reduction in the rate of return on the capital of a Funding Entity or its
bank holding company resulting from a change in law applicable to such Funding Entity or bank holding
company to a level below that which such Funding Entity or bank holding company could have achieved
but for such change in law (taking into consideration policies of such Funding Entity or bank holding
company with respect to capital adequacy), (d) any loss or expense (other than lost profit or margin)
(including any loss or expense incurred by reason of the liquidation or reemployment of deposits or other
funds acquired by such Funding Entity to make or maintain its obligation to make any such loan) as a
result of: (i) any repayment with respect to principal of, or interest on, any Class A-1A-S Note bearing
interest based upon LIBOR on a day other than a Payment Date or (ii) any advance not being made as a
result of the Issuer canceling a draw request previously made by it (provided that the aggregate amount
paid under this clause (d) with respect to any event described in subclause (i) or (ii) hereof shall not
exceed a rate of 0.10% per annum on the amount of the applicable repayment of failed advance), or (e) to
the extent resulting from a change in law, additional costs (i) based upon or measured by the excess above
a specified level of the amount of a category of deposits, or other liabilities of the Funding Entity that
includes deposits, by reference to which LIBOR is determined, or a category of extensions of credit or
other assets of the Funding Entity that includes the advances that bear interest based upon LIBOR or (ii)
incurred due to restrictions on the amount of such a category of Eurodollar liabilities or assets.
"Class A-1A-S Committed Amount" means the sum of (x) the aggregate outstanding principal amount
of the Class A-1A-S Notes plus (y) an amount equal to the payment of the Required Reserve Amount, if
any, payable sequentially first to clause (x) above and second to clause (y) above.
"Class A-1A-S Purchaser Rating Criteria" will be satisfied with respect to any person as of any
specified date if the short-term debt, deposit or similar obligations of such person are on such date rated at
least (x) "P-1" by Moody's and (y) "A-1" by S&P; provided, however, that if such person is a conduit
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purchaser and is rated "A-1" by S&P, such person's obligations must be supported by a guarantor or
liquidity provider who is rated at least "A-1" by S&P.
"Class A-1A-S Tax Gross-Up Amount" means the additional amount necessary to ensure that the net
amount received by the holder of a Class A-1A-S Note after deduction or withholding of an Indemnifiable
Tax equals the full amount the affected holder would have received had no such deduction or withholding
been required.
"Class Break-even Default Rate" means, with respect to each of the Class A-1 Notes, the Class A-2
Notes, the Class B Notes, the Class C Notes and the Class D Notes, the maximum percentage of defaults,
at any time, that the Current Portfolio or the Proposed Portfolio, as applicable, can sustain, as determined
by S&P, through application of the applicable S&P CDO Monitor chosen by the Portfolio Manager in
accordance with the Indenture that is applicable to the portfolio of Collateral Obligations, which, after
giving effect to S&P's assumptions on recoveries, defaults and timing and to the Priority of Payments,
will result in sufficient funds remaining for the payment of such Class or Classes of Notes in full. Not
later than the end of the Ramp-Up Period, S&P will provide the Portfolio Manager with the Class Breakeven
Default Rates for each S&P CDO Monitor based upon the Weighted Average Floating Spread and
the Weighted Average S&P Recovery Rate to be associated with such S&P CDO Monitor as selected by
the Portfolio Manager from Section 2 of Annex C or any other Weighted Average Floating Spread and
Weighted Average S&P Recovery Rate selected by the Portfolio Manager from time to time.
"Class C Note Component" means the Component of the Type I Composite Notes representing
$2,000,000 original principal amount of the Class C Notes.
"Class Default Differential" means, with respect to each of the Class A-1 Notes, the Class A-2 Notes,
the Class B Notes, the Class C Notes and the Class D Notes, at any time, the rate calculated by
subtracting the Class Scenario Default Rate for such Class or Classes of Notes at such time from the Class
Break-even Default Rate for such Class or Classes of Notes at such time.
"Class Scenario Default Rate" means, with respect to each of the Class A-1 Notes, the Class A-2 Notes,
the Class B Notes, the Class C Notes and the Class D Notes, at any time, an estimate of the cumulative
default rate for the Current Portfolio or the Proposed Portfolio, as applicable, consistent with S&P's initial
rating of such Class or Classes of Notes, determined by application by the Portfolio Manager and the
Collateral Administrator of the S&P CDO Monitor at such time.
"Collateral Administration Agreement" means an agreement dated as of the Closing Date relating to
the administration of the Assets among the Issuer, the Portfolio Manager and the Collateral
Administrator, as amended from time to time.
"Collateral Administrator" means The Bank of New York Trust Company, National Association in its
capacity as such under the Collateral Administration Agreement, and any successor thereto.
"Collateral Interest Amount" means, as of any date of determination, without duplication, the aggregate
amount of Interest Proceeds that has been received or that is expected to be received (other than Interest
Proceeds expected to be received from Defaulted Obligations and Deferring Securities, but including (x)
Interest Proceeds actually received from Defaulted Obligations (in accordance with the definition of
"Interest Proceeds") and Deferring Securities and (y) Interest Proceeds expected to be received of the type
described in clause (i) of the definition of "Partial Deferrable Security"), in each case during the
Collection Period (and, if such Collection Period does not end on a Business Day, the next succeeding
Business Day) in which such date of determination occurs (or after such Collection Period but on or prior
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to the related Payment Date of such Interest Proceeds would be treated as Interest Proceeds with respect
to such Collection Period).
"Collateralized Synthetic Security" means a Synthetic Security (x) that requires the Synthetic Security
Counterparty to deposit into the Synthetic Security Issuer Account an amount equal to the principal
balance of such Synthetic Security or (y) (i) that is in the form of a credit default swap, (ii) with respect to
which the Issuer has caused an amount equal to the notional amount of such Synthetic Security to be
deposited into a Synthetic Security Counterparty Account and (iii) pursuant to which no scheduled
periodic payments are required to be made by the Issuer to the Synthetic Security Counterparty.
"Commitment" means, in respect of the Class A-1A-S Notes at any time, the maximum aggregate
outstanding principal amount of advances (whether at the time funded or unfunded) that the holders of the
Class A-1A-S Notes are obligated to make to the Issuer from time to time under the Note Purchase
Agreement.
"Components" means the Secured Note Components and the Subordinated Note Components,
collectively.
"Credit Improved Criteria" means, the criteria that will be met if:
(i) in the case of a loan, either (A) the Loan Pricing Change since the date of purchase by the Issuer
has been a percentage point increase of 0.50% or more or (B) the Market Value of such loan has increased
by at least 1.00% from the Market Value of such loan as of its date of acquisition, as determined by the
Portfolio Manager (provided that this subclause (i)(B) will be deemed satisfied if the Market Value
increases to 101% of par); and
(ii) in the case of a Bond, either (A) the Bond Yield Change since the date of purchase by the Issuer
has been a percentage point decrease of 0.50% or more, (B) the Market Value of such Bond has changed
since its date of acquisition by a percentage more positive than the percentage change in the Merrill
Lynch US High Yield Master II Constrained Index, Bloomberg ticker HUC0 (or such other index as the
Portfolio Manager selects and provides notice of to the Rating Agencies) plus 3.00%, over the same
period or (C) the Market Value of such Bond has increased by at least 4.00% from the Market Value of
such Bond as of its date of acquisition, as determined by the Portfolio Manager.
"Credit Improved Obligation" means any Collateral Obligation which, in the Portfolio Manager's
reasonable commercial judgment, has significantly improved in credit quality after it was acquired by the
Issuer, which improvement may (but need not) be evidenced by one of the following: (a) such Collateral
Obligation satisfies the Credit Improved Criteria, (b) such Collateral Obligation has been upgraded at
least one rating sub-category by either Rating Agency or has been placed and remains on credit watch
with positive implication by either Rating Agency, (c) the issuer of such Collateral Obligation has raised
equity capital or other capital subordinated to the Collateral Obligation or (d) the issuer of such Collateral
Obligation has, in the Portfolio Manager's reasonable commercial judgment, shown improved results or
possesses less credit risk, in each case since such Collateral Obligation was acquired by the Issuer;
provided, however, that during a Restricted Trading Period, a Collateral Obligation will qualify as a
Credit Improved Obligation only if, in the Portfolio Manager's reasonable commercial judgment, such
Collateral Obligation has significantly improved in credit quality after it was acquired by the Issuer and
(i) it has been upgraded by any Rating Agency at least one rating sub-category or has been placed and
remains on a credit watch with positive implication by Moody's or S&P since it was acquired by the
Issuer, (ii) the Credit Improved Criteria are satisfied with respect to such Collateral Obligation or (iii) a
Majority of the Controlling Class vote to treat such Collateral Obligation as a Credit Improved
Obligation.
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"Credit Risk Criteria" means:
(i) in the case of a loan, either (A) the Loan Pricing Change since the date of purchase by the Issuer
has been a percentage point decrease of 0.50% or more or (B) the Market Value of such loan has
decreased by at least 1.00% from the Market Value of such loan as of its date of acquisition, as
determined by the Portfolio Manager; and
(ii) in the case of a Bond, either (A) the Bond Yield Change since the date of purchase by the Issuer
has been a percentage point increase of 0.50% or more, (B) the Market Value of such Bond has changed
since its date of acquisition by a percentage more negative than the percentage change in the Merrill
Lynch US High Yield Master II Constrained Index, Bloomberg ticker HUC0 (or such other index as the
Portfolio Manager selects and provides notice of to the Rating Agencies) plus 3.00%, over the same
period or (C) the Market Value of such Bond has decreased by at least 4.00% from the Market Value of
such Bond as of its date of acquisition, as determined by the Portfolio Manager.
"Credit Risk Obligation" means any Collateral Obligation that, in the Portfolio Manager's reasonable
commercial judgment, has a significant risk of declining in credit quality or price unrelated to general
market conditions; provided, however, that during a Restricted Trading Period, a Collateral Obligation
will qualify as a Credit Risk Obligation for purposes of sales of Collateral Obligations only if, in addition
to the foregoing, (i) such Collateral Obligation has been downgraded by any Rating Agency at least one
rating sub-category or has been placed and remains on a credit watch with negative implication by
Moody's or S&P since it was acquired by the Issuer, (ii) the Credit Risk Criteria are satisfied with respect
to such Collateral Obligation or (iii) a Majority of the Controlling Class vote to treat such Collateral
Obligation as a Credit Risk Obligation.
"Current Market Value" means, on any date of determination, the sum of (a) the aggregate for all
Collateral Obligations of the product of (x) the Market Value of each Collateral Obligation and (y) the
principal balance thereof, (b) the amounts on deposit in the Collection Account and the Ramp-Up
Account (including Eligible Investments therein), in each case representing Principal Proceeds and (c) the
undrawn amount of the Class A-1A-S Notes; provided that, for purposes of clause (a) above, if the
Market Value of Collateral Obligations constituting more than 10% of the Collateral Principal Amount is
determined pursuant to clause (iii)(y)(B) of the definition thereof, the Market Value of each Collateral
Obligation in excess of such 10% limitation shall be 85% of the Market Value determined pursuant to
clause (iii)(y)(B) (it being understood that the Portfolio Manager shall determine in its discretion which
Collateral Obligations exceed the 10% limitation above).
"Current Pay Obligation" means any Collateral Obligation that would otherwise be a Defaulted
Obligation as to which the following conditions are satisfied:
(i) if the issuer of such Collateral Obligation is not subject to a bankruptcy proceeding, all prior cash
interest and principal payments due were paid in cash and the Portfolio Manager reasonably expects that
the next interest and principal payment due will be paid in cash;
(ii) (A) if the rating by Moody's of the Collateral Obligation is at least "Caa1" (and not on credit
watch with negative implications) or is "Caa2" (and on credit watch with positive implications), the
Market Value of the Collateral Obligation is at least equal to 80% of its principal balance or (B) if the
rating by Moody's of the Collateral Obligation is less than "Caa1" (or is "Caa1" and on credit watch with
negative implications), the Market Value of the Collateral Obligation is at least equal to 85% of its
principal balance or (C) the rating by Moody's of the Collateral Obligation is at least "B3"; provided,
however, in the case of the foregoing clauses (ii)(A) and (B), if the rating by Moody's of the Collateral
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Obligation has been withdrawn, the last rating by Moody's of the Collateral Obligation shall be used for
purposes of such clauses (ii)(A) and (B);
(iii) if the rating by S&P of such Collateral Obligation is less than "CCC+", the Market Value of the
Collateral Obligation is at least equal to 80% of the principal balance thereof; provided, however, if the
rating by S&P of the Collateral Obligation has been withdrawn, the last rating by S&P of the Collateral
Obligation shall be used for purposes of this clause (iii);
(iv) if the issuer of such Collateral Obligation is subject to a bankruptcy proceeding, a bankruptcy
court has authorized the payment of interest due and payable on such Collateral Obligation; and
(v) no payments of principal the payment of which has been authorized by a court of competent
jurisdiction as due and payable remain unpaid;
provided, that the aggregate principal balance of all Collateral Obligations which constitute "Current Pay
Obligations" may not exceed 7.5% of the Collateral Principal Amount.
"Current Portfolio" means, at any time, the portfolio of Collateral Obligations and Eligible Investments,
representing Principal Proceeds (determined in accordance with certain assumptions included in the
Indenture), then held by the Issuer.
"Defaulted Obligation" means any Collateral Obligation included in the Assets as to which:
(a) a default as to the payment of principal and/or interest has occurred and is continuing with respect
to such debt obligation (without regard to any grace period applicable thereto, or waiver thereof, after the
passage (in the case of a default that in the Portfolio Manager's judgment, as certified to the Trustee in
writing, is not due to credit-related causes) of a three (3) Business Day grace period);
(b) a default as to the payment of principal and/or interest has occurred and is continuing on another
debt obligation of the same issuer which is senior or pari passu in right of payment to such debt
obligation (provided, that both debt obligations are full recourse obligations);
(c) the issuer or others have instituted proceedings to have the issuer adjudicated as bankrupt or
insolvent or placed into receivership and such proceedings have not been stayed or dismissed or such
issuer has filed for protection under Chapter 11 of the United States Bankruptcy Code;
(d) such Collateral Obligation has an S&P Rating of "D" or "SD" or a Moody's Rating of "D" or,
with respect to a Structured Finance Obligation, has a Moody's Rating of "Ca" or below or an S&P Rating
of "CC" or below or had such ratings at one point by S&P or Moody's, but subsequently such rating was
withdrawn;
(e) such Collateral Obligation is pari passu in right of payment as to the payment of principal and/or
interest to another debt obligation of the same issuer which has an S&P Rating of "D" or "SD" or a
Moody's Rating of "D" (provided, that both the Collateral Obligation and such other debt obligation are
full recourse obligations of the applicable issuer);
(f) such Collateral Obligation is a Synthetic Security referencing a Reference Obligation that would,
if such Reference Obligation were a Collateral Obligation, constitute a "Defaulted Obligation" (other than
under this clause (f)) or with respect to which the Synthetic Security Counterparty has a S&P Rating of
"D" or "SD" or a Moody's Rating of "D" or had such rating before such rating was withdrawn (a
"Defaulted Synthetic Security");
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(g) such Collateral Obligation is a Synthetic Security (other than a Defaulted Synthetic Security) with
respect to which the Synthetic Security Counterparty has defaulted in any material respect in the
performance of any of its payment obligations under the Synthetic Security;
(h) a default with respect to which the Portfolio Manager has received written notice or has actual
knowledge that a default has occurred under the underlying instruments and any applicable grace period
has expired and the holders of such Collateral Obligation have accelerated the repayment of the Collateral
Obligation (but only until such acceleration has been rescinded) in the manner provided in the underlying
instrument;
(i) the Portfolio Manager has in its reasonable commercial judgment otherwise declared such debt
obligation to be a "Defaulted Obligation";
(j) such Collateral Obligation is a Participation Interest with respect to which the Selling Institution
has defaulted in any material respect in the performance of any of its payment obligations under the
Participation Interest; or
(k) such Collateral Obligation is a Participation Interest in a loan that would, if such loan were a
Collateral Obligation, constitute a "Defaulted Obligation" (other than under this clause (k)) or with
respect to which the Selling Institution has an S&P Rating of "D" or "SD" or a Moody's Rating of "D" or
had such rating before such rating was withdrawn;
provided, that a Collateral Obligation shall not constitute a Defaulted Obligation pursuant to clauses (a)
through (f) above if: (x) in the case of clauses (a), (b), (c), (d) and (e), such Collateral Obligation is a
Current Pay Obligation, (y) in the case of clauses (b), (c) and (e), such Collateral Obligation is a DIP
Collateral Obligation or (z) in the case of clause (f) such Reference Obligation is a Current Pay
Obligation or DIP Collateral Obligation.
"Deferrable Security" means a Collateral Obligation (including a Partial Deferrable Security) which by
its terms permits the deferral or capitalization of payment of accrued, unpaid interest.
"Deferring Security" means a Deferrable Security that is deferring the payment of interest due thereon
and has been so deferring the payment of interest due thereon (i) with respect to Collateral Obligations
that have a Moody's Rating of at least "Baa3", for the shorter of two consecutive accrual periods or one
year, and (ii) with respect to Collateral Obligations that have a Moody's Rating of "Ba1" or below, for the
shorter of one accrual period or six consecutive months, which deferred capitalized interest has not, as of
the date of determination, been paid in cash.
"Delayed Drawdown Collateral Obligation" means any Collateral Obligation that (a) requires the Issuer
to make one or more future advances to the borrower under the underlying instruments relating thereto,
(b) specifies a maximum amount that can be borrowed on one or more fixed borrowing dates, and (c)
does not permit the re-borrowing of any amount previously repaid by the borrower thereunder; but any
such Collateral Obligation will be a Delayed Drawdown Collateral Obligation only until all commitments
by the Issuer to make advances to the borrower expire or are terminated or reduced to zero.
"Determination Date" means the last day of each Collection Period.
"DIP Collateral Obligation" means any interest in a loan or financing facility that has a public or private
facility rating from Moody's and is purchased directly or by way of assignment (a) which is an obligation
of (i) a debtor-in-possession as described in §1107 of the Bankruptcy Code or (ii) a trustee if appointment
of such trustee has been ordered pursuant to §1104 of the Bankruptcy Code (in either such case, a
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"Debtor") organized under the laws of the United States or any state therein, or (b) on which the related
obligor is required to pay interest on a current basis and, with respect to either clause (a) or (b) above, the
terms of which have been approved by an order of the United States Bankruptcy Court, the United States
District Court, or any other court of competent jurisdiction, the enforceability of which order is not
subject to any pending contested matter or proceeding (as such terms are defined in the Federal Rules of
Bankruptcy Procedure) and which order provides that: (i) (A) such DIP Collateral Obligation is fully
secured by liens on the Debtor's otherwise unencumbered assets pursuant to §364(c)(2) of the Bankruptcy
Code or (B) such DIP Obligation is secured by liens of equal or senior priority on property of the Debtor's
estate that is otherwise subject to a lien pursuant to §364(d) of the Bankruptcy Code and (ii) such DIP
Obligation is fully secured based upon a current valuation or appraisal report. Notwithstanding the
foregoing, such a loan will not be deemed to be a DIP Obligation following the emergence of the related
debtor-in-possession from bankruptcy protection under Chapter 11 of the Bankruptcy Code.
"Discount Obligation" means any Collateral Obligation that:
(i) in the case of a Collateral Obligation that is an interest in a bank loan or a Participation Interest, is
acquired by the Issuer for a purchase price of less than 85% of the principal balance of such Collateral
Obligation; provided, that such Collateral Obligation shall cease to be a Discount Obligation at such time
as the average Market Value of such Collateral Obligation, as determined daily for any period of thirty
(30) consecutive days since the acquisition by the Issuer of such Collateral Obligation, equals or exceeds
90% of the principal balance of such Collateral Obligation;
(ii) in the case of a Collateral Obligation that is a Structured Finance Obligation, is acquired by the
Issuer for a purchase price of less than 75% of the principal balance of such Collateral Obligation;
provided, that such Collateral Obligation shall cease to be a Discount Obligation at such time as the
average Market Value of such Collateral Obligation, as determined daily for any period of 60 consecutive
days since the acquisition by the Issuer of such Collateral Obligation, equals or exceeds 85% of the
principal balance of such Collateral Obligation; and
(iii) in the case of a Collateral Obligation that is not a Structured Finance Obligation or an interest in a
bank loan or a Participation Interest, is acquired by the Issuer for a purchase price of less than 80% of the
principal balance of such Collateral Obligation; provided, that such Collateral Obligation shall cease to be
a Discount Obligation at such time as the average Market Value of such Collateral Obligation, as
determined daily for any period of thirty (30) consecutive days since the acquisition by the Issuer of such
Collateral Obligation, equals or exceeds 90% of the principal balance of such Collateral Obligation.
Discount Obligation shall not include a security that is a Zero-Coupon Security.
For the purpose of calculating the average Market Value above, the Market Value on any day that is not a
Business Day shall be deemed to the Market Value on the immediately preceding Business Day.
"Disposition Proceeds" means proceeds received with respect to sales of Collateral Obligations, Eligible
Investments and Equity Securities and the termination of any Hedge Agreement, in each case, net of
reasonable out-of-pocket expenses and disposition costs in connection with such sales.
"Distressed Exchange" means, in connection with any Collateral Obligation, a distressed exchange or
other debt restructuring has occurred, as reasonably determined by the Portfolio Manager, pursuant to
which the issuer or obligor of such Collateral Obligation has issued to the holders of such Collateral
Obligation a new security or package of securities or obligations that, in the sole judgment of the Portfolio
Manager, amounts to a diminished financial obligation or has the purpose of helping the issuer of such
Collateral Obligation avoid default; provided, that no Distressed Exchange shall be deemed to have
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occurred if the securities or obligations received by the Issuer in connection with such exchange or
restructuring meet the definition of "Collateral Obligation".
"Domicile" or "Domiciled" means with respect to any issuer of, or obligor with respect to, a Collateral
Obligation, either (i) its country of organization or (ii) if it is organized in one of the tax advantaged
jurisdictions of the Cayman Islands, Bermuda, the Netherlands Antilles, the Channel Islands, the British
Virgin Islands or any other tax advantaged jurisdiction for which the Global Rating Agency Condition has
been satisfied, the country in which a substantial portion of its operations are located or from which a
substantial portion of its revenue is derived, in each case directly or through subsidiaries
"Draw Period" means, the period from and including the Closing Date to the date on which the
Reinvestment Period terminates (or, if the Reinvestment Period terminates on a day other than a Payment
Date, to the immediately succeeding Payment Date) or, if earlier, the date on which the Commitments
terminate.
"Eligible Investment Required Ratings" are short-term credit ratings of "P-1" from Moody's and
"A-1+" from S&P or, in the case of any Eligible Investment with a maturity of longer than 91 days, longterm
credit ratings of at least "Aa2" from Moody's and "AAA" from S&P.
"Eligible Investments" means any United States dollar investment that, at the time it is delivered to the
Trustee (directly or through an intermediary or bailee), is one or more of the following obligations or
securities:
(i) direct obligations of, and obligations the timely payment of principal and interest on which is
fully and expressly guaranteed by, the United States of America or any agency or instrumentality of the
United States of America the obligations of which are expressly backed by the full faith and credit of the
United States of America;
(ii) demand and time deposits in, certificates of deposit of, trust accounts with, bankers' acceptances
issued by, or federal funds sold by any depository institution or trust company incorporated under the
laws of the United States of America (including The Bank of New York Trust Company, National
Association) or any state thereof and subject to supervision and examination by federal and/or state
banking authorities, in each case payable within 183 days of issuance, so long as the commercial paper
and/or the debt obligations of such depository institution or trust company (or, in the case of the principal
depository institution in a holding company system, the commercial paper or debt obligations of such
holding company) at the time of such investment or contractual commitment providing for such
investment have the Eligible Investment Required Ratings;
(iii) unleveraged repurchase obligations with respect to (a) any security described in clause (i) above
or (b) any other security issued or guaranteed by an agency or instrumentality of the United States of
America, in either case entered into with a depository institution or trust company (acting as principal)
described in clause (ii) above or entered into with an entity (acting as principal) with, or whose parent
company has, the Eligible Investment Required Ratings;
(iv) securities bearing interest or sold at a discount issued by any entity formed under the laws of the
United States of America or any State thereof that have a credit rating of "Aaa" from Moody's and "AAA"
from S&P at the time of such investment or contractual commitment providing for such investment;
(v) commercial paper or other short-term obligations with the Eligible Investment Required Ratings
and that either bear interest or are sold at a discount from the face amount thereof and have a maturity of
not more than 183 days from their date of issuance;
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(vi) a Reinvestment Agreement issued by any bank (if treated as a deposit by such bank), or a
Reinvestment Agreement issued by any insurance company or other corporation or entity, in each case
with the Eligible Investment Required Ratings and which satisfies the S&P Rating Condition; and
(vii) money market funds domiciled outside of the United States which funds have, at all times, credit
ratings of "Aaa" and "MR1+" by Moody's and "AAAm" or "AAAm-G" by S&P, respectively;
provided, however, that Eligible Investments purchased with funds in the Collection Account shall be
held until maturity except as otherwise specifically provided herein and shall include only such
obligations or securities, other than those referred to in clause (vii) above, as mature (or are putable at par
to the issuer thereof) no later than the Business Day prior to the next Payment Date, unless such Eligible
Investments are issued by the Trustee in its capacity as a banking institution, in which event such Eligible
Investments may mature on such Payment Date; and provided, further, that none of the foregoing
obligations or securities shall constitute Eligible Investments if (a) such obligation or security has an "r",
"p", "pi", "q" or "t" subscript assigned by S&P, (b) all, or substantially all, of the remaining amounts
payable thereunder consist of interest and not principal payments, (c) such obligation or security is subject
to U.S. withholding tax, (d) such obligation or security is subject to foreign withholding tax unless the
issuer of the security is required to make "gross-up" payments for the full amount of such foreign
withholding tax, (e) such obligation or security is secured by real property, (f) such obligation or security
is purchased at a price greater than 100% of the principal or face amount thereof or (g) in the Portfolio
Manager's sole judgment, such obligation or security is subject to material non-credit related risks.
Eligible Investments may include, without limitation, those investments for which the Trustee or an
Affiliate of the Trustee provides services.
"Eligible Premium" means, for any Collection Period during the Reinvestment Period (without
duplication), any amount received during such Collection Period on the sale, redemption or tender of, or
exchange or conversion of, or as a prepayment premium for, a Collateral Obligation (other than accrued
interest) in excess of the original purchase price paid (not including accrued interest) by the Issuer in
respect of such Collateral Obligation (or portion thereof) sold, redeemed, tendered, exchanged, converted
or prepaid.
"Eligible Premium Distribution Amount" equals, for any Collection Period after one calendar year after
the end of the Ramp-Up Period, but prior to the end of the Reinvestment Period, the lowest of (i) zero if
(a) the Notes of any Class have been downgraded below their initial ratings by either Rating Agency and
such initial ratings have not been restored or the Notes of any Class have been placed on credit watch or
similar status by either Rating Agency with negative implications, (b) the Collateral Quality Test is not
satisfied as of the last day of such Collection Period, (c) Collateral Obligations with a rating of "Caa1" or
lower represent more than 15% of the Adjusted Collateral Principal Amount or (d) the
Overcollateralization Ratio with respect to the Class D Notes is less than or equal to 108.39%, (ii) the
amount of any Eligible Premium for such Collection Period that, if it were treated as Interest Proceeds,
would not cause the Overcollateralization Ratio with respect to the Class D Notes as of the end of such
Collection Period to be less than 108.39%, and (iii) the Excess Market Value.
"Emerging Market Obligor" means any obligor Domiciled in a country that (a) is not Bermuda, the
British Virgin Islands, the Cayman Islands, the Channel Islands or the Netherland Antilles, or (b) is not
any other country, the foreign currency issuer credit rating of which is rated, at the time of acquisition of
the relevant Collateral Obligation, at least “AA-” by S&P, and the foreign currency country ceiling rating
of which is rated, at the time of acquisition of the relevant Collateral Obligation, at least “Aa2” by
Moody’s.
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"Equity Security" means any security or debt obligation which at the time of acquisition, conversion or
exchange does not satisfy the requirements of a Collateral Obligation and is not an Eligible Investment.
"Excepted Advances" means customary advances made to protect or preserve rights against the borrower
of or obligor under a Collateral Obligation or to indemnify an agent or representative for lenders pursuant
to the underlying instrument.
"Excepted Property" means (i) the transaction fee paid to the Issuer for issuing the Notes (not to exceed
US$250), (ii) the proceeds of the issue and allotment of the Issuer's ordinary shares, (iii) the common
stock of the Co-Issuer and (iv) the bank account in the Cayman Islands in which the funds referred to in
items of (i) and (ii) above are credited and deposited and any interest thereon.
"Excess CCC/Caa Adjustment Amount" means, as of any date of determination, an amount equal to the
excess, if any, of:
(a) the aggregate principal balance of all Collateral Obligations included in the CCC/Caa
Excess; over
(b) the sum of the Market Values of all Collateral Obligations included in the CCC/Caa
Excess.
"Excess Concentration Obligation" means, for each Concentration Limitation (other than the Specified
Concentration Limitations) and any Measurement Date, each Collateral Obligation or portion thereof
(without duplication) that causes, as of the date that it is acquired by the Issuer, such Concentration
Limitation to be exceeded, in each case as designated by the Portfolio Manager to the Trustee in writing
(or, if the Portfolio Manager does not so designate, the applicable Collateral Obligation(s) or portion(s)
thereof (without duplication) with the lowest Moody's Ratings and S&P Ratings); provided that any such
Collateral Obligation or portion thereof shall cease to be an Excess Concentration Limitation on any
Measurement Date following its acquisition if the applicable Concentration Limitation is satisfied as of
such subsequent Measurement Date.
"Excess Market Value" means, on any date of determination, the greater of (i) zero and (ii) the excess of
the Current Market Value over the Initial Market Value.
"Financed Amount" means, at any time, the outstanding Financed Amount Balance at such time (if any)
together with interest accrued thereon (and on any unpaid interest) as provided in the Financed Amount
Note.
"Financed Amount Balance" means, on the Closing Date, $2,000,000 and, thereafter, the principal
amount outstanding from time-to-time under the Financed Amount Note.
"Financed Amount Note" means the revolving promissory note issued by the Issuer on the Closing Date
to the holder identified therein (the "Financed Amount Noteholder") under which the Financed Amount
Noteholder will be obligated (subject to certain conditions) to advance funds to the Issuer from time to
time up to an aggregate outstanding principal amount not at any time exceeding 1% of the principal
amount of the Notes issued on the Closing Date plus the principal amount of Notes issued in connection
with any additional issuance described under "Description of the Offered Securities—The Indenture—
Additional Issuance" (the “Issuance Limit”); provided, that (i) the Financed Amount Balance may not be
in excess of the Issuance Limit unless the Global Rating Agency Condition is satisfied and a Majority of
each Class of Notes consents in writing to such increase, and (ii) unless otherwise approved in writing by
a Majority of each Class of Notes, the Financed Amount Noteholder shall be JPMorgan or an Affiliate
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thereof. Under the Financed Amount Note, the Portfolio Manager may (if in its sole discretion it elects to
do so) cause the Issuer to borrow under the Financed Amount Note on any Payment Date during the
Reinvestment Period, subject to compliance with the borrowing conditions specified therein, provided
that (a) the Portfolio Manager shall give notice of such borrowing in writing to the Trustee and the holder
of the Financed Amount Note no later than the Determination Date prior to such Payment Date and (b)
the amount borrowed on any Payment Date shall not exceed the remaining amount available to be
borrowed under the Financed Amount Note at such time. Subject to the terms and conditions in the
Indenture and in the Financed Amount Note, during the Reinvestment Period the Issuer may borrow,
prepay and reborrow amounts under the Financed Amount Note. The Financed Amount Note will
evidence the Issuer's obligations to repay the Financed Amount.
Under the Financed Amount Note, interest will accrue on the Financed Amount Balance (and on any
accrued interest not paid on prior Payment Dates) during each Interest Accrual Period until the date paid
at a per annum rate set forth therein, calculated on the basis of the actual number of days elapsed in the
applicable Interest Accrual Period divided by 360. The interest accrued and payable on any Payment
Date is referred to herein as the "Financed Amount Interest Payment Amount" for such Payment Date.
"Financed Amount Periodic Payment Amount" means with respect to any Payment Date, the sum of
(a) the Financed Amount Interest Payment Amount for such Payment Date (together with the Financed
Amount Interest Payment Amounts for all prior Payment Dates to the extent not yet paid) and (b) the
Financed Amount Principal Payment Amount for such Payment Date. Amounts applied to the Financed
Amount under the Priority of Payments on any Payment Date (to the extent insufficient to pay the
Financed Amount Periodic Payment Amount for such Payment Date in full) will be applied first to
amounts referred to in clause (a) above and then to the Financed Amount Balance.
"Financed Amount Principal Payment Amount" means with respect to any Payment Date:
(a) during the Reinvestment Period, the amount (if any) specified by the Portfolio Manager in its sole
discretion for such Payment Date; provided that, if an Event of Default has occurred and is continuing,
the maturity of the Secured Notes has been accelerated in accordance with the Indenture, or if such
Payment Date is an optional Redemption Date, then the Financed Amount Principal Payment Amount for
such Payment Date shall be the entire Financed Amount Balance as of such Payment Date; and
(b)
after the Reinvestment Period, the entire Financed Amount Balance.
"Financed Amount Threshold" means with respect to any Payment Date, the greatest amount that, if
applied to the Financed Amount, will not result in (a) the non-payment of interest (including Deferred
Interest, if any) in respect of the Secured Notes on such Payment Date or (b) any Interest Coverage Test
to fail to be satisfied on a pro forma basis after giving effect to such payment (which amount will be zero
if any Interest Coverage Test will not be satisfied without giving effect to the payment of any Financed
Amount on such Payment Date). Notwithstanding the foregoing, if on any Payment Date an Event of
Default has occurred and is continuing, the maturity of the Secured Notes has been accelerated in
accordance with the Indenture, or such Payment Date is a Redemption Date for an Optional Redemption,
then the Financed Amount shall automatically be accelerated without the giving of notice and become due
and payable in its entirety and the Financed Amount Threshold shall be deemed to be the entire Financed
Amount. In addition, if the Financed Amount is not paid in full prior to the Payment Date set forth
therein as the maturity date of the Financed Amount Note, the Financed Amount Threshold on such
Payment Date will be the Financed Amount as of such Payment Date.
"Financial Regulator" means the Irish Financial Services Regulatory Authority.
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"Form Approved Synthetic Security" means a Synthetic Security (a) (i) the Reference Obligation of
which, on the date that the Issuer acquires or commits to acquire such Synthetic Security, if it were a
Collateral Obligation, could be purchased by the Issuer without any required action by the Rating
Agencies or with respect to which the Global Rating Agency Condition has been satisfied or (ii) the
Reference Obligation of which would satisfy clause (i) but for the currency in which it is payable and
such Synthetic Security is payable in U.S. Dollars and does not expose the Issuer to currency risk, (b) the
documentation of which conforms (but for the amount and timing of periodic payments, the name of the
Reference Obligation, the notional amount, the effective date, the termination date and other similarly
necessary changes) to a form previously approved by the Rating Agencies and (c) for which the Issuer has
provided S&P and Moody's notice of the purchase of such Synthetic Security and a copy of the
documentation therefor within five (5) Business Days after such purchase, and each of S&P and Moody's
(in the case of Moody's, in writing signed by an authorized officer of Moody's) has responded within ten
(10) Business Days from the date of such notice, which response shall include the S&P Recovery Rate or
the Moody's Recovery Rate, as applicable, for such Synthetic Security; provided, however, that either
Moody's or S&P may, prior to the settlement or the purchase of such Synthetic Security, revoke its
consent to the documentation underlying a Form Approved Synthetic Security upon prior notice (and
such revocation shall be effective upon receipt of such notice by the Portfolio Manager and the Trustee).
"Funding Advance" equals the excess, if any, of (A) the aggregate amount of all unfunded portions of all
Collateral Obligations that are either Delayed Drawdown Collateral Obligations or Revolving Collateral
Obligations that are denominated in U.S. dollars over (B) the amount on deposit in the Revolver Funding
Account.
"Global Rating Agency Condition" means, with respect to any action taken or to be taken by or on
behalf of the Issuer, satisfaction of both the Moody's Rating Condition and the S&P Rating Condition.
"Indemnifiable Tax" means, any tax (other than a stamp, registration, documentation or similar taxes)
imposed by any governmental authority of the Cayman Islands by withholding or deduction from a
payment under a Class A-1A-S Note other than (a) a tax that would not have been imposed but for (i) a
present or former connection between the Cayman Islands and the holder of the Class A-1A-S Note, any
person holding an interest in the Class A-1A-S Note through a partnership, trust, financial intermediary or
otherwise or any person related to the holder or person holding an interest in the Class A-1A-S Note
(other than a connection arising solely from having received a payment under, or enforced, a Class A-1A-
S Note) or (ii) presentation of a Class A-1A-S Note for payment (where presentation is required) on a day
more than 30 business days after the date on which such payment became due except to the extent that
additional amounts would have been payable on account of the withholding or deduction of taxes (other
than a stamp, registration, documentation or similar taxes) had presentation been made on such 30th
business day, (b) any tax imposed on account of the location of the paying agent, (c) any estate,
inheritance, gift, sales, transfer, personal property, wealth or similar tax, (d) any tax imposed due to the
inability or the failure of the affected holder or person to deliver, to the Issuer and Trustee or to such
governmental authority as the Issuer may direct, any document, form or certification required or
reasonably requested in writing in order to allow the Issuer to make a payment without any deduction or
withholding for or on account of any tax, (e) any tax imposed with respect to a payment to a holder that is
not the beneficial owner of the Class A-1A-S Note that would not have been imposed had the beneficial
owner directly held such Class A-1A-S Notes, (f) any tax which is collectible other than by withholding
or deduction from payments of principal, interest, redemption amount or Commitment Fee Amount or (g)
any combination of (a), (b), (c), (d), (e) and (f) above.
"Initial Market Value" means, on the last day of the Ramp-Up Period, the sum of (a) the aggregate of
initial purchase prices of all Collateral Obligations, (b) the amounts on deposit in the Collection Account
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and the Ramp-Up Account (including Eligible Investments therein), in each case representing Principal
Proceeds and (c) the undrawn amount of the Class A-1A-S Notes.
"Interest Proceeds" means, with respect to any Collection Period or Determination Date includes,
without duplication, the sum of:
(i) all payments of interest and other income received (other than any interest due on any Partial
Deferrable Security that has been deferred or capitalized prior to its acquisition) by the Issuer during the
related Collection Period on the Collateral Obligations and Eligible Investments including the accrued
interest received in connection with a sale thereof during the related Collection Period, less any such
amount that represents Principal Financed Accrued Interest (other than any Principal Financed Accrued
Interest described in clause (i) of the definition thereof that the Portfolio Manager elects to treat as
Interest Proceeds as long as the Portfolio Manager reasonably believes that the Target Initial Par
Condition will be satisfied as of the end of the Ramp-Up Period); provided, however, that any amounts
received in respect of a Zero-Coupon Security will constitute Principal Proceeds;
(ii) all principal and interest payments received by the Issuer during the related Collection Period on
Eligible Investments purchased with Interest Proceeds;
(iii) all amendment and waiver fees, late payment fees and other fees received by the Issuer during the
related Collection Period, except for those in connection with (a) the lengthening of the maturity of the
related Collateral Obligation or (b) the reduction of the par of the related Collateral Obligation;
(iv) commitment fees and other similar fees received by the Issuer during such Collection Period in
respect of Revolving Collateral Obligations and Delayed Drawdown Collateral Obligations;
(v) any payment received with respect to (a) any Hedge Agreement other than an upfront payment
received upon entering into such Hedge Agreement or (b) a payment received as a result of the
termination of any Hedge Agreement to the extent not used by the Issuer to enter into a new or
replacement Hedge Agreement (for purposes of this subclause (v), any such payment received or to be
received on or before a Payment Date in respect of such Payment Date will be deemed received in respect
of the preceding Collection Period and included in the calculation of Interest Proceeds received in such
Collection Period);
(vi)
Date;
any Liquidity Reserve Amount deposited in the Collection Account on the preceding Payment
(vii) all fees received by the Issuer during the related Collection Period pursuant to a Securities
Lending Agreement (net of related administration fees paid in connection with securities lending) and all
payments received by the Issuer during the related Collection Period from a Securities Lending
Counterparty that relate to a loaned Collateral Obligation, if such payments would have constituted
Interest Proceeds if made directly by the related obligor to the Issuer;
(viii) at the discretion of the Portfolio Manager, all or a specified portion of the amount borrowed by
the Issuer (if any) under the Financed Amount Note on the Payment Date immediately following such
Determination Date;
(ix) at the discretion of the Portfolio Manager, all or a specified portion of any Eligible Premium
Distribution Amount for such Collection Period; and
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(x) any amounts deposited in the Collection Account from the Expense Reserve Account and, in the
sole discretion of the Portfolio Manager, the Interest Reserve Account pursuant to the Indenture in respect
of the related Determination Date;
provided any amounts received in respect of any Defaulted Obligation will constitute Principal Proceeds
(and not Interest Proceeds) until the aggregate of all collections in respect of such Defaulted Obligation
since it became a Defaulted Obligation equals the outstanding principal balance of such Collateral
Obligation when it became a Defaulted Obligation; provided, further, that amounts that would otherwise
constitute Interest Proceeds may be designated as Principal Proceeds pursuant to the last proviso under
"Use of Proceeds—Ramp-Up Period". Notwithstanding the foregoing, in the Portfolio Manager's sole
discretion, on any date after the second Payment Date, Interest Proceeds in any Collection Period may be
deemed to be Principal Proceeds solely for the purpose of purchasing accrued interest on a Collateral
Obligation. Under no circumstances shall Interest Proceeds include the Excepted Property or any interest
earned thereon.
"Investment Criteria Adjusted Balance" means, with respect to any Asset, the principal balance of such
Asset; provided, that for all purposes the Investment Criteria Adjusted Balance of any:
(i) Deferring Security shall be the lesser of (x) the S&P Collateral Value of such Deferring Security
and (y) the Moody's Collateral Value of such Deferring Security;
(ii)
Discount Obligation shall be the purchase price of such Discount Obligation;
(iii) CCC/Caa Collateral Obligation shall be the Market Value of such CCC/Caa Collateral Obligation
if the Excess CCC/Caa Adjustment Amount is greater than 0; and
(iv)
Excess Concentration Obligation shall be equal to zero.
"Junior Class" means, respect to a particular Class of Notes, each Class of Notes that is subordinated to
such Class, as indicated in "Summary of Terms—Principal Terms of the Offered Securities."
"Liquidity Reserve Amount" with respect to both the Payment Date in November 2007 and the final
Payment Date, means $0 and, with respect to any Payment Date thereafter, means an amount equal to the
excess, if any, of:
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the sum of all payments of interest received during the related Collection Period (and, if such
Collection Period does not end on a Business Day, the next succeeding Business Day) on floating
rate Collateral Obligations and fixed rate Collateral Obligations (net of purchased accrued interest
acquired with Interest Proceeds) which pay interest less frequently than quarterly
0.25 X
The actual
number of days in
the related
Collection Period
360
X
minus
The Weighted Average Fixed
Coupon on fixed rate Collateral
Obligations which pay interest less
frequently than quarterly as of the
immediately preceding
Determination Date
plus
The sum of (I) LIBOR applicable
to the related Interest Accrual
Period beginning on the previous
Payment Date and (II) the
Weighted Average Floating
Spread on floating rate Collateral
Obligations which pay interest less
frequently than quarterly as of the
preceding Determination Date
X
X
The aggregate principal
balance of fixed rate
Collateral Obligations
which pay interest less
frequently than quarterly
as of the immediately
preceding Determination
Date
The aggregate principal
balance of floating rate
Collateral Obligations
which pay interest less
frequently than quarterly
as of the preceding
Determination Date
"Loan Pricing Change" means, with respect to a loan, the change in price of such loan (expressed as a
percentage of par) relative to a nationally recognized index as calculated by the Portfolio Manager in its
reasonable commercial judgment.
"Majority" means, with respect to any Class of Notes, the holders of more than 50% of the aggregate
outstanding principal amount of the Notes of such Class.
"Margin Stock" means "Margin Stock" as defined under Regulation U issued by the Federal Reserve
Board, including any debt security which is by its terms convertible into "Margin Stock."
"Market Value" means, with respect to any loans or other assets, the amount (determined by the
Portfolio Manager) equal to the product of the principal amount thereof and the price determined in the
following manner:
(i) the average of the bid-side quotes determined by three independent broker-dealers active in the
trading of such asset; or
(A)
or
(B)
if only two such bids can be obtained, the lower of the bid-side quotes of such two bids;
if only one such bid can be obtained, such bid; or
(ii) (x) in the case of a loan only, the bid-side quote determined by the Loan Pricing Corporation,
MarkIt Partners, Mergent, Inc., IDC, Houlihan Lokey or any other nationally recognized loan pricing
service selected by the Portfolio Manager and approved by S&P and Moody's and (y) in the case of a
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Bond, the bid-side quote determined by FT Interactive Data, IDC or any other nationally recognized bond
pricing service selected by the Portfolio Manager and approved by S&P and Moody's; or
(iii) if such bid described in clause (i) or (ii) is not available, then the Market Value of an asset will be
the lower of (x) such asset's S&P Recovery Rate and (y) lower of (A) 70% of the notional amount of such
asset and (B) the price at which the Portfolio Manager reasonably believes such asset could be sold in the
market within 30 days, as certified by the Portfolio Manager to the Trustee and determined by the
Portfolio Manager consistent with the manner in which it would determine the market value of an asset
for purposes of other funds or accounts managed by it; provided, however, that, if the Portfolio Manager
is not a registered investment adviser under the Investment Advisers Act, the Market Value of any such
asset may not be determined in accordance with this clause (iii) for more than thirty days; or
(iv) if the Market Value of an asset is not determined in accordance with clause (i), (ii) or (iii) above,
then the Market Value shall be deemed to be zero until such determination is made in accordance with
clause (i) or (ii) above;
provided, that solely for purposes of the definitions of "Credit Improved Criteria" and "Credit Risk
Criteria," the term "Market Value" shall exclude the foregoing clause (iii).
"Moody's" means Moody’s Investors Service, Inc. and any successor thereto.
"Moody's Collateral Value" means, of any date of determination, with respect to any Defaulted
Obligation or Deferring Security, the lesser of (i) the Moody's Recovery Amount of such Defaulted
Obligation or Deferring Security as of such date and (ii) the Market Value of such Defaulted Obligation
or Deferring Security as of such date.
"Moody's Counterparty Criteria" are, with respect to any Participation Interest or Synthetic Security
(other than any Collateralized Synthetic Security) proposed to be acquired by the Issuer, criteria that will
be met if immediately after giving effect to such acquisition, (x) the percentage of the Collateral Principal
Amount that consists in the aggregate of Participation Interests with Selling Institutions that have the
same or a lower Moody's credit rating and Synthetic Securities with Synthetic Security Counterparties
that have the same or a lower Moody's credit rating does not exceed the "Aggregate Percentage Limit"
set forth below for such Moody's credit rating and (y) the percentage of the Collateral Principal Amount
that consists in the aggregate of Participation Interests with any single Selling Institution that has the
Moody's credit rating set forth under "Individual Percentage Limit" below or a lower credit rating and
Synthetic Securities with any single Synthetic Security Counterparty that has the Moody's credit rating set
forth under "Individual Percentage Limit" below or a lower credit rating does not exceed the "Individual
Percentage Limit" set forth below for such Moody's credit rating:
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Moody's credit rating of Selling Institution or Aggregate Percentage Individual Percentage
Synthetic Security Counterparty (at or below)
Limit
Limit
Aaa 20.0% 20.0%
Aa1 20.0% 20.0%
Aa2 20.0% 20.0%
Aa3 20.0% 15.0%
A1 and "P-1" 12.5% 10.0%
A2* and "P-1"
* and not on watch for possible downgrade.
7.5% 5.0%
"Moody's Non-Senior Secured Loan" means any assignment of or Participation Interest in or other
interest (including a Synthetic Security) in a loan that is not a Moody's Senior Secured Loan.
"Moody's Rating Condition" means, with respect to any action taken or to be taken by or on behalf of
the Issuer, a condition that is satisfied if Moody's has confirmed in writing to the Issuer, the Trustee and
the Portfolio Manager that no immediate withdrawal or reduction with respect to its then-current rating by
Moody's of any Class of Secured Notes will occur as a result of such action; provided, that the Moody's
Rating Condition will be deemed to be satisfied if no Class of Secured Notes outstanding is rated by
Moody's.
"Moody's Recovery Amount" means, with respect to any Collateral Obligation, an amount equal to the
product of:
(a)
(b)
the applicable Moody's Recovery Rate; multiplied by
the principal balance of such Collateral Obligation.
"Moody's Senior Secured Loan" means:
(a)
a loan that:
(i) is not (and cannot by its terms become) subordinate in right of payment to any other debt
obligation of the obligor of the loan;
(ii) is secured by a valid first priority perfected security interest or lien in, to or on specified
collateral securing the obligor's obligations under the loan; and
(iii) the value of the collateral securing the loan together with other attributes of the obligor
(including, without limitation, its general financial condition, ability to generate cash flow
available for debt service and other demands for that cash flow) is adequate (in the commercially
reasonable judgment of the Portfolio Manager) to repay the loan in accordance with its terms and
to repay all other loans of equal seniority secured by a first lien or security interest in the same
collateral; or
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(b)
a loan that:
(i) is not (and cannot by its terms become) subordinate in right of payment to any other debt
obligation of the obligor of the loan, except that such loan can be subordinate with respect to the
liquidation of such obligor or the collateral for such loan;
(ii) with respect to such liquidation, is secured by a valid perfected security interest or lien
that is not a first priority in, to or on specified collateral securing the obligor's obligations under
the loan; and
(iii) the value of the collateral securing the loan together with other attributes of the obligor
(including, without limitation, its general financial condition, ability to generate cash flow
available for debt service and other demands for that cash flow) is adequate (in the commercially
reasonable judgment of the Portfolio Manager) to repay the loan in accordance with its terms and
to repay all other loans of equal or higher seniority secured in the same collateral; and
(iv) the loan has a Moody's Rating determined pursuant to clause (i) of the definition thereof,
and such Moody's Rating is not lower than the loan's Moody's corporate family rating; and
(c)
the loan is not:
(i)
a DIP Collateral Obligation; or
(ii) a loan for which the security interest or lien (or the validity or effectiveness thereof) in
substantially all of its collateral attaches, becomes effective, or otherwise "springs" into existence
after the origination thereof.
"Non-Consenting Holder" means with respect to any supplemental indenture pursuant to the Indenture
that requires the consent of one or more holders of Offered Securities, any holder or, in the case of
Offered Securities represented by Global Notes, any beneficial owner, that either (i) has delivered to the
Trustee a written notice that it will not consent to such supplemental indenture or (ii) had not consented to
such supplemental indenture within the applicable consent period.
"Partial Deferrable Security" means any Collateral Obligation with respect to which under the related
underlying instruments (i) a portion of the interest due thereon is required to be paid in cash on each
payment date therefor and is not permitted to be deferred or capitalized (which portion shall at least equal
to LIBOR or the applicable index with respect to which interest on such Collateral Obligation is
calculated (or, in the case of a fixed rate Collateral Obligation, at least equal to the forward swap rate for a
designated maturity equal to the scheduled maturity of such Collateral Obligation), except that Collateral
Obligations with an aggregate principal balance up to 1.5% of the Collateral Principal Amount may be
required to pay a lesser portion of interest in cash if designated by the Portfolio Manager as Partial
Deferrable Securities at the time of acquisition) and (ii) the issuer thereof or obligor thereon (or, in the
case of a Synthetic Security, the related reference obligor) may defer or capitalize the remaining portion
of the interest due thereon.
"Participation Interest" means a participation interest in a loan that at the time of acquisition or the
Issuer's commitment to acquire the same is represented by a contractual obligation of a Selling Institution
that has at the time of such acquisition or the Issuer's commitment to acquire the same at least a shortterm
rating of "A-1" (or a long-term rating of "A") by S&P; provided, that the foregoing minimum credit
rating criteria shall not apply to a Participation Interest acquired on the Closing Date in the obligation set
forth on a schedule to the Indenture.
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"Permitted Purchased Defaulted Obligations" means Collateral Obligations that constitute Defaulted
Obligations at the time they are purchased by the Issuer; provided, however, that a Defaulted Obligation
shall only constitute a Permitted Purchased Defaulted Obligation if (i) clause (xx) of the Concentration
Limitations is satisfied immediately prior to and after giving effect to such purchase by the Issuer; (ii) the
Coverage Tests are satisfied prior to and after giving effect to such purchase by the Issuer; (iii) the
purchase price of the Defaulted Obligation equals or exceeds 44% of par; (iv) as of the date of such
purchase, the sum of (x) aggregate amount that has been recovered from the sale of any previously
purchased Permitted Purchased Defaulted Obligations plus (y) an amount equal to 0.5% of the Target
Initial Par Amount exceeds the aggregate of the purchase prices of such Permitted Purchased Defaulted
Obligations and (v) as of the date of such purchase, the Moody's rating of any of the Class A Notes has
not been reduced below their respective ratings on the Closing Date, the Moody's rating of any of the
Class B Notes, the Class C Notes or the Class D Notes has not been reduced by two or more subcategories
below their respective rating on the Closing Date and the Moody's rating of any Class of
Secured Notes has not been withdrawn.
"Prepaid Collateral Obligation" means a Collateral Obligation which has prepaid, whether by tender,
redemption prior to the stated maturity thereof, exchange or other prepayment (other than an exchange in
connection with a Distressed Exchange).
"Principal Financed Accrued Interest" means, with respect to (i) any Collateral Obligation owned or
purchased by the Issuer on the Closing Date, an amount equal to the unpaid interest on such Collateral
Obligation that accrued prior to the Closing Date that is owing to the Issuer and remains unpaid as of the
Closing Date and (ii) any Collateral Obligation purchased after the Closing Date, the amount of Principal
Proceeds, if any, applied towards the purchase of accrued interest on such Collateral Obligation;
provided, however, in the case of this clause (ii), Principal Financed Accrued Interest shall not include
any accrued interest purchased with Interest Proceeds deemed to be Principal Proceeds in the last
sentence of the definition of "Interest Proceeds".
"Principal Proceeds" means, with respect to any Collection Period or Determination Date includes all
amounts received by the Issuer during the related Collection Period that do not constitute Interest
Proceeds; provided, that, for the avoidance of doubt, Principal Proceeds shall not include the Excepted
Property.
"Priority Category" means, with respect to any Collateral Obligation, the applicable category listed in
the tables appearing in Section 2 of Annex C under the heading "Priority Category."
"Priority Class" means, respect to any specified Class of Notes, each Class of Notes that ranks senior to
such Class, as indicated in "Summary of Terms—Principal Terms of the Offered Securities."
"Priority Hedge Termination Event" means the occurrence of (i) the Issuer's failure to make required
payments or deliveries pursuant to a Hedge Agreement, (ii) the occurrence of certain events of
bankruptcy, dissolution or insolvency with respect to the Issuer, (iii) the merger of the Issuer with or into
another entity where such surviving entity fails to assume all obligations of the Issuer, (iv) the liquidation
of the Assets due to an Event of Default under the Indenture, (v) a change in law after the Closing Date
which makes it unlawful for either the Issuer or a Hedge Counterparty to perform its obligations under a
Hedge Agreement or (vi) any termination of a Hedge Agreement as a result of actions taken by the
Trustee in response to a reduction in the Collateral Principal Amount.
"Pro Rata Special Redemption Conditions" means the conditions relating to a Special Redemption that
will be satisfied with respect to any Payment Date if, on the related Determination Date, (A) the Rating
Agencies have not reduced or withdrawn the ratings assigned by them on the Closing Date to any of the
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Notes, (B) the Moody's Diversity Test is passing, (C) clause (xiii) under the definition of Concentration
Limitations is passing, (D) the Overcollateralization Ratio with respect to the Class D Notes is at least
108.39% and (E) the aggregate principal balance of the Assets is not less than 50% of the Target Initial
Par Amount.
"Proposed Portfolio" means the portfolio of Collateral Obligations and Eligible Investments resulting
from the proposed purchase, sale, maturity or other disposition of a Collateral Obligation or a proposed
reinvestment in an additional Collateral Obligation, as the case may be.
"Prospectus Directive" means Directive 2003/71/EC.
"Qualified Equity Security" means any obligation that at the time of acquisition, conversion, or
exchange does not satisfy the requirements of a Collateral Obligation that is stock or evidence of an
interest in or a right to buy stock, or any obligation that at the time of acquisition, conversion, or exchange
does not satisfy the requirements of a Collateral Obligation but whose acquisition otherwise is a
transaction in stocks or securities within the meaning of Section 864(b)(2)(A)(ii) of the Code and the
regulations under the Code. Qualified Equity Securities do not include any obligation that at the time of
acquisition, conversion, or exchange does not satisfy the requirements of a Collateral Obligation and that
will cause the Issuer to be treated as engaged in or having income from a United States trade or business
for United States federal income tax purposes by virtue of its ownership or disposition of the obligation
(without regard to the Issuer's other activities).
"Redemption Date" means any Optional Redemption Date.
"Reference Obligation" means a debt security or other obligation upon which a Synthetic Security is
based, which debt security or other obligation (a) is not itself either (x) a Synthetic Security or (y) a
structured finance security, asset-backed security or similar security, (b) in the reasonable commercial
judgment of the Portfolio Manager, satisfies (and, if owned by the Issuer, would satisfy) the definition of
"Collateral Obligation" (other than clauses (i) and (vii) of the definition of "Collateral Obligation") and
(c) could be acquired directly by the Issuer under the Investment Criteria (without giving effect to clauses
(i) and (vii) of the definition of "Collateral Obligation").
"Reinvestment Agreement" means a guaranteed reinvestment agreement from a bank, insurance
company or other corporation or entity; provided, however, that such agreement provides that it is
terminable by the purchaser, without penalty, in the event that the rating assigned to such agreement by
either Rating Agency is at any time lower than such agreement's Eligible Investment Required Rating.
"Related Obligation" means an obligation issued by the Portfolio Manager, any of its Affiliates that are
investment funds or any other person that is an investment fund whose investments are primarily
managed by the Portfolio Manager or any such Affiliate.
"Required Hedge Counterparty Rating" means, in respect of a counterparty or entity guaranteeing the
obligations of such counterparty, (i) a long-term debt rating by Moody's of "Aa3" (which rating of "Aa3"
is not on credit watch for possible downgrade) or higher if the Hedge Counterparty or guarantor has only
a long-term debt rating; or a long-term debt rating by Moody's of "A1" (which rating of "A1" is not on
credit watch for possible downgrade) or higher and a short-term debt rating by Moody's of "P-1" (which
rating of "P-1" is not on credit watch for possible downgrade) if the Hedge Counterparty or guarantor has
both long-term and short-term debt ratings and (ii) a short-term debt rating by S&P of not less than "A-1"
or, if no short-term rating exists, a long-term debt rating of not lower than "A+".
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"Required Reserve Amount" means, with respect to any Payment Date on which payments are made as
a result of a Mandatory Redemption or Special Redemption of the Class A-1A-S Notes, the excess, if any,
of:
(a) all unfunded commitments in respect of all Delayed Drawdown Collateral Obligations and
Revolving Collateral Obligations that have not been irrevocably reduced; minus
(b)
amounts on deposit in the Revolver Funding Account.
"Restricted Trading Period" means each day during which (a) the Moody's rating of any of the Class A
Notes is one or more sub-categories below its rating on the Closing Date, (b) the Moody's rating of any of
the Class B Notes or the Class C Notes is two or more sub-categories below their respective rating on the
Closing Date or (c) the Moody's rating of any Class A Notes, Class B Notes or Class C Notes (in each
case then outstanding) has been withdrawn and not reinstated; provided, that such period will not be a
Restricted Trading Period (so long as the Moody's rating of any of the Class A Notes, the Class B Notes
or the Class C Notes has not been further downgraded, withdrawn or put on watch) upon the direction of a
Majority of (A) the Class A-1 Notes (voting together as a single Class), (B) the Class A-2 Notes, (C) the
Class B Notes and (D) the Class C Notes.
"Revolving Collateral Obligation" means any Collateral Obligation (other than a Delayed Drawdown
Collateral Obligation) that is a loan (including, without limitation, revolving loans, including funded and
unfunded portions of revolving credit lines and letter of credit facilities, unfunded commitments under
specific facilities and other similar loans and investments) that by its terms may require one or more
future advances to be made to the borrower by the Issuer; provided, that any such Collateral Obligation
will be a Revolving Collateral Obligation only until all commitments to make advances to the borrower
expire or are terminated or irrevocably reduced to zero.
"S&P" means Standard & Poor’s Rating Services, a division of The McGraw-Hill Companies, Inc., and
any successor thereto.
"S&P CDO Monitor" means, each dynamic, analytical computer model developed by S&P used to
calculate the default frequency in terms of the amount of debt assumed to default as a percentage of the
original principal amount of the Collateral Obligations consistent with a specified benchmark rating level
based upon certain assumptions (including the applicable Weighted Average S&P Recovery Rate) and
S&P's proprietary corporate default studies, as may be amended by S&P from time to time upon notice to
the Issuer and the Trustee. Each S&P CDO Monitor shall be chosen by the Portfolio Manager and
associated with either (x) a Weighted Average S&P Recovery Rate and a Weighted Average Floating
Spread from Section 2 of Annex C or (y) a Weighted Average S&P Recovery Rate and a Weighted
Average Floating Spread confirmed by S&P.
"S&P Collateral Value" means, with respect to any Defaulted Obligation or Deferring Security, the
lesser of (i) the S&P Recovery Amount of such Defaulted Obligation or Deferring Security as of the
relevant Measurement Date and (ii) the Market Value of such Defaulted Obligation or Deferring Security
as of the relevant Measurement Date.
"S&P Rating Condition" means, with respect to any action taken or to be taken by or on behalf of the
Issuer, a condition that is satisfied if S&P has confirmed in writing to the Issuer, the Trustee and the
Portfolio Manager that no immediate withdrawal or reduction with respect to its then-current rating by
S&P of any Class of Secured Notes will occur as a result of such action; provided, that the S&P Rating
Condition will be deemed to be satisfied if no Class of Secured Notes outstanding is rated by S&P.
186

"S&P Recovery Amount" means with respect to any Collateral Obligation, an amount equal to:
(a)
(b)
the applicable S&P Recovery Rate; multiplied by
the principal balance of such Collateral Obligation;
provided, that the "S&P Recovery Amount" of any Synthetic Security which is a Defaulted Obligation or
a Deferring Security will be the amount determined by S&P.
"S&P Recovery Rate" means, with respect to a Collateral Obligation, the recovery rate set forth in
Section 1 of Annex C using the current rating of the most senior Class of Secured Notes outstanding at
the time of determination.
"Second Lien Loan" means any assignment of or Participation Interest in or other interest (including a
Synthetic Security) in a loan that (i) is not (and that by its terms is not permitted to become) subordinate
in right of payment to any other obligation of the obligor of the loan other than a Senior Secured Loan
with respect to the liquidation of such obligor or the collateral for such loan and (ii) is secured by a valid
second priority perfected security interest or lien to or on specified collateral securing the obligor's
obligations under the loan, which security interest or lien is not subordinate to the security interest or lien
securing any other debt for borrowed money other than a Senior Secured Loan on such specified
collateral.
"Secured Note Components" means the Class C Note Component, the Type II Class D Note
Component and the Type III Class D Note Component.
"Secured Parties" means collectively the holders of the Secured Notes (including the Secured Note
Components of the Secured Notes), each Hedge Counterparty and the Trustee.
"Securities Intermediary" is as defined in Section 8-102(a)(14) of the UCC.
"Securities Lending Agreement" means an agreement pursuant to which the Issuer agrees to loan any
Securities Lending Counterparty one or more Collateral Obligations and such Securities Lending
Counterparty agrees to post Securities Lending Collateral with the Trustee or a Securities Intermediary to
secure its obligation to return such Collateral Obligations to the Issuer.
"Securities Lending Collateral" means any cash or direct registered debt obligations of the United States
of America that have a maturity of five years or less and that are pledged by a Securities Lending
Counterparty as collateral pursuant to a Securities Lending Agreement.
"Securities Lending Counterparty" means any bank, insurance company, broker-dealer or other
financial institution that has (i) in the case of a loan with a term of 90 days or less, short-term senior
unsecured debt ratings or a guarantor with such ratings of "P-1" from Moody's and "A-1" from S&P, (ii)
in the case of a loan with a term of longer than 90 days but less than a year, (a) either (x) a long-term
senior unsecured debt rating of at least "A1" by Moody's or (y) both a long-term senior unsecured debt
rating of "A2" by Moody's and a short-term rating of "P-1" by Moody's and (b) either (x) a long-term
senior unsecured debt rating of at least "A+" by S&P or (y) both a long-term senior unsecured debt rating
of "A" by S&P and a short-term rating of "A-1" by S&P, and (iii) in the case of a loan for a one-year or
more (but less than two-year) term and a loan for a two-year term or more, a long-term senior unsecured
debt rating that, individually and together with all other Securities Lending Counterparties with the same
rating, is consistent with the percentage of the Collateral Principal Amount loaned to Securities Lending
Counterparties with such ratings as set forth in the table below:
187

Long-Term Senior Unsecured
Debt Rating of Securities
Lending Counterparty***
Individual Securities
Lending Counterparty
Percentage
Aggregate Securities
Lending Counterparty
Percentage
Moody's S&P 1 year 2 year 1 year 2 year
Aaa AAA 10.0% 10.0% 20.0% 10.0%
Aa1 AA+ 10.0% 10.0% 10.0% 10.0%
Aa2 AA 10.0% 10.0% 10.0% 10.0%
Aa3 AA- 10.0% **** 10.0% 7.5%
A1 A+ 5.0% **** 5.0% 5.0%
A2* A** 5.0% **** 5.0% 2.5%
* Applies only so long as Moody's short-term unsecured debt rating is "P-1".
** Applies only so long as the S&P short-term unsecured debt rating is "A-1".
*** For purposes of determining compliance with this credit rating requirement, if the actively-monitored
Moody's or S&P long-term senior unsecured debt rating of a Securities Lending Counterparty has been put
on a watch list for possible downgrade, such credit rating shall be one sub-category below its then current
Moody's or S&P rating or, if such credit rating has been put on a watch list for possible upgrade, one subcategory
above its then current Moody's or S&P rating; provided, that the Issuer may enter into a Securities
Lending Agreement with a Securities Lending Counterparty having, at such time, a long-term senior
unsecured debt rating below "A2" by Moody's and "A" by S&P, so long as each of the Moody's Rating
Condition and S&P Rating Condition has been satisfied.
**** Global Rating Agency Condition must be satisfied.
"Selling Institution" means the entity obligated to make payments to the Issuer under the terms of a
Participation Interest.
"Senior Secured Note" means any assignment of or Participation Interest in or other interest (including a
Synthetic Security) in a senior secured note issued pursuant to an indenture or equivalent document by a
corporation, partnership, limited liability company, trust or other person that is secured by either a first or
second priority perfected security interest or lien in or on specified collateral securing the issuer's
obligations under such note.
"Senior Secured Loan" means any assignment of or Participation Interest in or other interest (including a
Synthetic Security) in a loan that is secured by the pledge of collateral and which has the most senior prepetition
priority (including pari passu with other obligations of the obligor) in any bankruptcy,
reorganization, arrangement, insolvency, moratorium or liquidation proceedings.
"Senior Unsecured Loan" means any assignment of or Participation Interest in or other interest
(including a Synthetic Security) in a unsecured loan that is not subordinated to any other unsecured
indebtedness of the obligor.
"Specified Concentration Limitations" means limitations that will be satisfied if, as of any date of
determination at or subsequent to the end of the Ramp-Up Period, in the aggregate, the Collateral
Obligations owned (or, in relation to a proposed purchase of a Collateral Obligation, proposed to be
owned) by the Issuer comply with all of the requirements set forth below (or, if not in compliance, to the
extent compliance is maintained or improved), calculated, in each case, in accordance with Section 1.2
hereof (as applicable):
(a) the Concentration Limitation set forth in clause (iii) of the definition thereof (relating to Delayed
Drawdown Collateral Obligations and Revolving Obligations);
188

(b) the Concentration Limitation set forth in clause (xiv) of the definition thereof (relating to Third
Party Credit Exposure); and
(c) the Concentration Limitation set forth in clause (xx) of the definition thereof (relating to
Permitted Purchased Defaulted Obligations).
"Structured Finance Obligation" means any obligation:
(i) secured directly by, referenced to, or representing ownership of, a pool of receivables or other
assets of U.S. obligors, or obligors organized or incorporated in Group I Countries, Group II Countries or
Group III Countries, including collateralized debt obligations, but excludes:
(A)
(B)
(C)
(D)
(E)
residential mortgage-backed securities;
collateralized debt obligations primarily backed by asset-backed securities;
market value collateralized debt obligations;
securities backed by "future flow" receivables (i.e., 20% or more);
net interest margin securitizations;
(F) collateralized debt obligations primarily backed by other collateralized debt obligations
or primarily backed by synthetic securities or other "synthetic exposure" to assets;
(G) collateralized debt obligations a significant portion (i.e., 30% or more) of which are
backed by bonds; and
(H) synthetic collateralized debt obligations secured by or referenced to one or more portfolio
credit default swaps;
(ii) that has an S&P Rating and a priority category recovery rate assigned in accordance with the
Indenture;
(iii)
that has a Moody's Rating and a recovery rate assigned in accordance with the Indenture; and
(iv) whose ownership or disposition (without regard to the Issuer's other activities) by the Issuer will
not cause the Issuer to be treated as engaged in a U.S. trade or business for United States federal income
tax purposes or otherwise subject the Issuer to net income taxes.
"Subordinated Note Components" means the Type I Subordinated Note Component, the Type II
Subordinated Note Component and the Type III Subordinated Note Component, collectively.
"Subordinated Note Internal Rate of Return" means an annualized internal rate of return (computed
using the "XIRR" function in Microsoft® Excel 2002 or an equivalent function in another software
package), stated on a per annum basis, for the following cash flows, assuming all Subordinated Notes
were purchased on the Closing Date at par:
(i) each distribution of Interest Proceeds made to the holders of the Subordinated Notes on any prior
Payment Date and, to the extent necessary to reach the applicable Subordinated Note Internal Rate of
Return, the current Payment Date; and
189

(ii) each distribution of Principal Proceeds made to the holders of the Subordinated Notes on any
prior Payment Date and, to the extent necessary to reach the applicable Subordinated Note Internal Rate
of Return, the current Payment Date.
"Supermajority" means, with respect to any Class of Notes, the holders of at least 66 2/3% of the
aggregate outstanding principal amount of the Notes of such Class.
"Synthetic Security" means a security or swap transaction, other than a Participation Interest, (i) that has
payments associated with either payments of interest and/or principal on a Reference Obligation or the
credit performance of a Reference Obligation, (ii) with respect to which (unless such security is a Form
Approved Synthetic Security) the Global Rating Agency Condition has been satisfied, (iii) with respect to
which (unless such security is a Form Approved Synthetic Security) Moody's has assigned a Moody's
Recovery Rate and Moody's Rating Factor, (iv) that is not prohibited from inclusion as a Collateral
Obligation by any applicable law, (v) that for U.S. federal income tax purposes is either treated as debt, as
a notional principal contract or as an option, and (vi) that is payable in U.S. Dollars and does not expose
the Issuer to currency risk, provided, that in the event that such Synthetic Security is not a Form
Approved Synthetic Security and (a) Moody's has been provided with notice of a proposed Synthetic
Security, (b) Moody's has acknowledged in a written confirmation signed by an authorized officer of
Moody's that Moody's has received the information necessary for it to make a determination with respect
to such proposed Synthetic Security and (c) Moody's has not indicated within ten (10) Business Days of
the confirmed receipt of the most recently revised drafts of the documents (or copies of executed
documents, if applicable) that the inclusion of such proposed Synthetic Security will, at that time, cause it
to downgrade, withdraw or qualify any of its then-current ratings of any of the Secured Notes, Moody's
will be deemed to have confirmed in writing that the inclusion of such Synthetic Security will not, at that
time, cause it to downgrade, withdraw or qualify any of its then-current ratings of any of the Secured
Notes if, but only if, the Reference Obligation with respect to such Synthetic Security satisfies the
definition of "Collateral Obligation" (other than clauses (i) and (vii) of such definition), or would satisfy
the definition of "Collateral Obligation" (other than clauses (i) and (vii) of such definition), but for the
rating, payment frequency or currency of such Reference Obligation; provided, further, in the case of
S&P, such Synthetic Security will be treated as having an S&P Recovery Rate equal to that of the related
Reference Obligation unless otherwise determined by S&P and, in the case of a Form Approved Synthetic
Security, will be treated as having an S&P Rating equal to the lower of the S&P Rating of the related
Reference Obligation and the rating assigned by S&P to the Synthetic Security Counterparty; provided,
further, that (x) if a Synthetic Security provides for physical settlement, delivery of any deliverable
obligation thereunder to the Issuer and transfer of such deliverable obligation by the Issuer to a third party
will not require or cause the Issuer to assume, and will not subject the Issuer to, any obligation or liability
(other than immaterial, nonpayment obligations and any assignment or transfer fee in respect of loans or,
in the case of a deliverable obligation that constitutes a Revolving Collateral Obligation or a Delayed
Drawdown Collateral Obligation, the obligation to make future advances pursuant to the terms thereof)
and (y) each Synthetic Security shall contain appropriate limited recourse and non-petition provisions (to
the extent that the Issuer has contractual payment or other obligations to the Synthetic Security
Counterparty) substantially equivalent to those contained in the Indenture.
"Synthetic Security Collateral" means, with respect to a Synthetic Security, collateral of a type meeting
the definition of Eligible Investments or, in connection with satisfaction of the Global Agency Rating
Condition, any other collateral permitted by such Synthetic Security's related documentation.
"Synthetic Security Counterparty" means an entity (other than the Issuer) required to make payments
on a Synthetic Security (including any guarantor), which entity or guarantor has a long-term senior
unsecured debt rating (or a rating of its secured debt if such entity or guarantor is a trust and its debt is
secured by a Reference Obligation) of at least "A+" by S&P, or the short-term debt rating of such entity
190

or guarantor is at least "A-1" by S&P, in each such case, at the date of the Issuer's commitment to
purchase or execute of the related Synthetic Security documentation.
"Target Initial Par Amount" equals $731,625,000, less any undrawn portion of the Class A-1A-S Notes.
"Target Initial Par Condition" means a condition satisfied as of the end of the Ramp-Up Period if the
Issuer has purchased, or entered into binding commitments to purchase, Collateral Obligations, including
Collateral Obligations acquired by the Issuer on or prior to the Closing Date, having an aggregate
principal balance that in the aggregate equal or exceed the Target Initial Par Amount, without regard to
prepayments, maturities, redemptions or sales.
"Third Party Credit Exposure" as of any date of determination means the sum (without duplication) of
(a) the principal balance (or such lesser amount as may be determined by S&P) of any Synthetic Security
that is not a Collateralized Synthetic Security plus (b) the principal balance of all Collateral Obligations
issued by a non-sovereign or sovereign issuer located in a country whose foreign currency issuer credit
rating by S&P is below "AA" (other than the United States) plus (c) the principal balance of each
Collateral Obligation that consists of a Participation Interest plus (d) the principal balance of each
Collateral Obligation under a Securities Lending Agreement with a term of one year or longer; provided,
however, that such term shall not include the principal balance of any Synthetic Security or Participation
Interest if the counterparty or seller thereof, as applicable, has a short-term credit rating by S&P of
"A-1+".
"Third Party Credit Exposure Limits" means limits that shall be satisfied if the Third Party Credit
Exposure with counterparties having the ratings below from S&P do not exceed the percentage of the
Collateral Principal Amount specified below:
S&P's credit rating of
Selling Institution or
Synthetic Security
Counterparty or Securities
Lending Counterparty
under Securities Lending
Agreement with a term of 1
year or longer
(at or below)
Aggregate
Percentage
Limit
Individual
Percentage
Limit
AAA 20% 20%
AA+ 10% 10%
AA 10% 10%
AA- 10% 10%
A+ 5% 5%
A 5% 5%
"Type I Subordinated Note Component" means the Component of the Type I Composite Notes
representing $1,000,000 original principal amount of the Subordinated Notes.
"Type II Class D Note Component" means the Component of the Type II Composite Notes representing
$3,500,000 original principal amount of the Class D Notes.
"Type II Subordinated Note Component" means the Component of the Type II Composite Notes
representing $4,300,000 original principal amount of the Subordinated Notes.
191

"Type III Class D Note Component" means the Component of the Type III Composite Notes
representing $4,800,000 original principal amount of the Class D Notes.
"Type III Subordinated Note Component" means the Component of the Type III Composite Notes
representing $5,200,000 original principal amount of the Subordinated Notes.
"Zero-Coupon Security" means any Collateral Obligation that at the time of purchase does not by its
terms provide for the payment of cash interest; provided, that if, after such purchase such Collateral
Obligation provides for the payment of cash interest, it shall cease to be a Zero-Coupon Security.
192

Index of defined terms
Following is an index of defined terms used in this Offering Circular and the page number where
each definition appears.
25% Limitation .........................................................................................................................................148
Accounts .....................................................................................................................................................49
Accredited Investor.......................................................................................................................................4
Actions ......................................................................................................................................................118
Adjusted Collateral Principal Amount......................................................................................................163
Adjusted Moody's Rating Factor ................................................................................................................82
Administration Agreement........................................................................................................................124
Administrative Expense Cap.....................................................................................................................163
Administrative Expenses ..........................................................................................................................163
Administrator ............................................................................................................................................124
Affected Bank ...........................................................................................................................................128
Affiliate.....................................................................................................................................................164
Aggregate Excess Funded Spread...............................................................................................................81
Aggregate Funded Spread...........................................................................................................................80
Aggregate Industry Equivalent Unit Score .................................................................................................83
Aggregate Percentage Limit .....................................................................................................................181
Aggregate Undrawn Amount........................................................................................................................8
Aggregate Unfunded Spread.......................................................................................................................81
Amendment Buy-Out..................................................................................................................................69
Amendment Buy-Out Option......................................................................................................................69
Amendment Buy-Out Purchase Price .......................................................................................................164
Amendment Buy-Out Purchaser ...............................................................................................................165
Applicable Advance Rate .........................................................................................................................165
Assets ..........................................................................................................................................................78
Average Par Amount...................................................................................................................................83
Base Management Fee ..............................................................................................................................117
Benefit Plan Investors...............................................................................................................................140
Bond..........................................................................................................................................................165
Bond Yield Change...................................................................................................................................165
Borrowing ...................................................................................................................................................59
Borrowing Date...........................................................................................................................................59
Business Day.............................................................................................................................................165
Calculation Agent .......................................................................................................................................54
CCC/Caa Collateral Obligation ................................................................................................................165
CCC/Caa Excess .......................................................................................................................................165
Certificated Secured Note ...........................................................................................................................71
Certificated Subordinated Notes .................................................................................................................71
CFC...........................................................................................................................................................131
Class............................................................................................................................................................53
Class A Coverage Tests ..............................................................................................................................25
Class A Notes................................................................................................................................................3
Class A-1 Notes ............................................................................................................................................3
Class A-1 Pro Rata Adjustment Amount ..................................................................................................166
Class A-1A Notes .........................................................................................................................................3
I-1

Class A-1A-J Notes.......................................................................................................................................1
Class A-1A-S Additional Costs ................................................................................................................166
Class A-1A-S Committed Amount ...........................................................................................................166
Class A-1A-S Note Agent.............................................................................................................................6
Class A-1A-S Notes......................................................................................................................................1
Class A-1A-S Purchaser Rating Criteria...................................................................................................166
Class A-1A-S Tax Gross-Up Amount ......................................................................................................167
Class A-1B Notes..........................................................................................................................................3
Class A-1B-J Notes.......................................................................................................................................1
Class A-1B-S Notes ......................................................................................................................................1
Class A-2 Notes ............................................................................................................................................1
Class B Coverage Tests ..............................................................................................................................25
Class B Notes................................................................................................................................................1
Class Break-even Default Rate .................................................................................................................167
Class C Coverage Tests ..............................................................................................................................25
Class C Note Component..........................................................................................................................167
Class C Notes................................................................................................................................................1
Class D Coverage Tests ..............................................................................................................................25
Class D Notes............................................................................................................................................2, 3
Class Default Differential .........................................................................................................................167
Class Scenario Default Rate......................................................................................................................167
Clearstream .................................................................................................................................................72
Closing Date..................................................................................................................................................5
Code............................................................................................................................................................69
Co-Issuer.......................................................................................................................................................4
Co-Issuer Common Stock .........................................................................................................................123
Co-Issuers .....................................................................................................................................................4
Collateral Administration Agreement.......................................................................................................167
Collateral Administrator ...........................................................................................................................167
Collateral Interest Amount........................................................................................................................167
Collateral Obligation...................................................................................................................................15
Collateral Principal Amount .......................................................................................................................25
Collateral Quality Test................................................................................................................................19
Collateralized Synthetic Security..............................................................................................................168
Collection Account .....................................................................................................................................93
Collection Period ........................................................................................................................................53
Commitment .............................................................................................................................................168
Commitment Fee...........................................................................................................................................7
Commitment Fee Amount.............................................................................................................................8
Commitment Fee Rate ..................................................................................................................................7
Components ..............................................................................................................................................168
Composite Notes...........................................................................................................................................3
Concentration Limitations ..........................................................................................................................22
Controlling Class ........................................................................................................................................63
Controlling Person ....................................................................................................................................140
Coverage Tests............................................................................................................................................25
CPDIs........................................................................................................................................................129
Credit Improved Criteria...........................................................................................................................168
Credit Improved Obligation......................................................................................................................168
Credit Risk Criteria...................................................................................................................................169
Credit Risk Obligation ..............................................................................................................................169
I-2

cross transactions ........................................................................................................................................49
Current Market Value ...............................................................................................................................169
Current Pay Obligation .............................................................................................................................169
Current Portfolio .......................................................................................................................................170
Custodial Account.......................................................................................................................................94
Decree .........................................................................................................................................................39
Defaulted Obligation.................................................................................................................................170
Defaulted Synthetic Security ....................................................................................................................170
Deferrable Security ...................................................................................................................................171
Deferred Base Management Fee...............................................................................................................117
Deferred Interest .........................................................................................................................................53
Deferred Subordinated Management Fee .................................................................................................118
Deferring Security.....................................................................................................................................171
Delayed Drawdown Collateral Obligation................................................................................................171
Depository Event ........................................................................................................................................73
Determination Date...................................................................................................................................171
DIP Collateral Obligation .........................................................................................................................171
Discount Obligation..................................................................................................................................172
Disposition Proceeds.................................................................................................................................172
Distressed Exchange .................................................................................................................................172
Distribution Report ...................................................................................................................................162
Diversity Score............................................................................................................................................82
Domicile....................................................................................................................................................173
Domiciled..................................................................................................................................................173
Draw Period ..............................................................................................................................................173
DTC ............................................................................................................................................................28
Eligible Investment Required Ratings ......................................................................................................173
Eligible Investments..................................................................................................................................173
Eligible Premium ......................................................................................................................................174
Eligible Premium Distribution Amount....................................................................................................174
Emerging Market Obligor.........................................................................................................................174
equitable subordination...............................................................................................................................43
equity PFIC ...............................................................................................................................................133
Equity Security..........................................................................................................................................175
Equivalent Unit Score.................................................................................................................................83
ERISA.......................................................................................................................................................138
ERISA Plans .............................................................................................................................................138
Euroclear.....................................................................................................................................................72
Event of Default..........................................................................................................................................62
Excepted Advances...................................................................................................................................175
Excepted Property.....................................................................................................................................175
Excess CCC/Caa Adjustment Amount .....................................................................................................175
Excess Concentration Obligation..............................................................................................................175
Excess Market Value ................................................................................................................................175
Excess Weighted Average Fixed Coupon...................................................................................................81
Excess Weighted Average Floating Spread ................................................................................................80
Expense Reserve Account...........................................................................................................................96
Expenses ...................................................................................................................................................118
Fee Basis Amount.....................................................................................................................................118
Financed Amount......................................................................................................................................175
Financed Amount Balance........................................................................................................................175
I-3

Financed Amount Interest Payment Amount............................................................................................176
Financed Amount Note.............................................................................................................................175
Financed Amount Noteholder...................................................................................................................175
Financed Amount Periodic Payment Amount ..........................................................................................176
Financed Amount Principal Payment Amount .........................................................................................176
Financed Amount Threshold.....................................................................................................................176
Financial Regulator...................................................................................................................................176
Form Approved Synthetic Security...........................................................................................................177
FSMA............................................................................................................................................................v
Funding Advance......................................................................................................................................177
Funding Entity ..........................................................................................................................................166
Global Composite Notes .............................................................................................................................71
Global Rating Agency Condition..............................................................................................................177
Global Secured Notes .................................................................................................................................71
GoldenTree ...................................................................................................................................................4
Group I Country..........................................................................................................................................24
Group II Country.........................................................................................................................................24
Group III Country .......................................................................................................................................24
Hedge Agreement .......................................................................................................................................98
Hedge Agreements......................................................................................................................................98
Hedge Counterparty ....................................................................................................................................17
Holder .......................................................................................................................................................125
IAI.................................................................................................................................................................4
Indemnifiable Tax.....................................................................................................................................177
Indemnified Party......................................................................................................................................118
Indenture .......................................................................................................................................................5
Industry Diversity Score .............................................................................................................................83
Initial Market Value..................................................................................................................................177
Initial Purchaser ............................................................................................................................................4
Inside Information.......................................................................................................................................49
Institutional Accredited Investor...................................................................................................................4
Interest Accrual Period ...............................................................................................................................53
Interest Collection Subaccount ...................................................................................................................93
Interest Coverage Ratio...............................................................................................................................27
Interest Coverage Test ................................................................................................................................25
Interest Determination Date........................................................................................................................54
Interest Proceeds .......................................................................................................................................178
Interest Rate ................................................................................................................................................53
Interest Reserve Account ............................................................................................................................97
Interim Report Date ..................................................................................................................................101
Interim Target ...........................................................................................................................................101
Investment Advisers Act...........................................................................................................................120
Investment Company Act .............................................................................................................................4
Investment Criteria......................................................................................................................................91
Investment Criteria Adjusted Balance ......................................................................................................179
Investor-Based Exemptions ......................................................................................................................139
Irish Paying Agent ......................................................................................................................................57
IRS ............................................................................................................................................................125
Issuance Limit...........................................................................................................................................175
Issuer.............................................................................................................................................................4
Issuer Ordinary Shares..............................................................................................................................123
I-4

Issuer Par Amount.......................................................................................................................................83
JPMCB........................................................................................................................................................50
JPMorgan ......................................................................................................................................................4
JPMorgan Companies .................................................................................................................................50
Junior Class...............................................................................................................................................179
Knowledgeable Employees...........................................................................................................................4
lender liability .............................................................................................................................................42
Liabilities ..................................................................................................................................................118
LIBOR ........................................................................................................................................................54
Liquidity Reserve Amount........................................................................................................................179
Loan Pricing Change.................................................................................................................................180
London Banking Day..................................................................................................................................55
Lower-Tier PFICs .....................................................................................................................................134
Majority ....................................................................................................................................................180
Management Fee.......................................................................................................................................117
Mandatory Redemption ..............................................................................................................................58
Margin Stock.............................................................................................................................................180
Market Value ............................................................................................................................................180
Maximum Moody's Rating Factor Test ......................................................................................................20
Measurement Date ......................................................................................................................................79
Minimum Denominations ...........................................................................................................................28
Minimum Diversity/Maximum Rating/Minimum Spread Matrix ..............................................................21
Minimum Fixed Coupon.............................................................................................................................20
Minimum Fixed Coupon Test.....................................................................................................................20
Minimum Floating Spread ..........................................................................................................................20
Minimum Floating Spread Test ..................................................................................................................20
Minimum Reporting Requirements ............................................................................................................39
Minimum Weighted Average Moody's Recovery Rate Test ......................................................................22
Minimum Weighted Average S&P Recovery Rate Test.............................................................................22
Monthly Report.........................................................................................................................................162
Moody's.....................................................................................................................................................181
Moody's Collateral Value .........................................................................................................................181
Moody's Counterparty Criteria .................................................................................................................181
Moody's Default Probability Rating ......................................................................................................... B-1
Moody's Derived Rating ........................................................................................................................... B-1
Moody's Diversity Test...............................................................................................................................20
Moody's Non-Senior Secured Loan ..........................................................................................................182
Moody's Rating ......................................................................................................................................... B-3
Moody's Rating Condition ........................................................................................................................182
Moody's Rating Factor................................................................................................................................82
Moody's Recovery Amount ......................................................................................................................182
Moody's Recovery Rate ..............................................................................................................................85
Moody's Senior Secured Loan ..................................................................................................................182
Non-Call Period ............................................................................................................................................5
Non-Consenting Holder............................................................................................................................183
Non-Permitted ERISA Holder ..................................................................................................................159
Non-Permitted Holder...............................................................................................................................159
Non-U.S. Holder .......................................................................................................................................126
Note Interest Amount..................................................................................................................................55
Note Payment Sequence .............................................................................................................................13
Note Payment Sequence—Senior Class A..................................................................................................14
I-5

Note Purchase Agreement.............................................................................................................................6
Notes .............................................................................................................................................................3
Offered Securities .........................................................................................................................................3
offshore transaction.....................................................................................................................................71
OID ...........................................................................................................................................................129
OID interest payments ..............................................................................................................................129
OID Note...................................................................................................................................................129
Optional Redemption....................................................................................................................................5
Optional Redemption Date .........................................................................................................................56
Other Accounts ...........................................................................................................................................48
Overcollateralization Ratio .........................................................................................................................26
Overcollateralization Ratio Test .................................................................................................................25
Paid Down Collateral Obligation................................................................................................................92
Partial Deferrable Security........................................................................................................................183
Participation Interest .................................................................................................................................183
Paying Agent...............................................................................................................................................57
Payment Account........................................................................................................................................93
Payment Date................................................................................................................................................4
Permitted Purchased Defaulted Obligations .............................................................................................184
PFIC..........................................................................................................................................................131
Placement Agent ...........................................................................................................................................4
Plan Asset Regulations .............................................................................................................................138
Plans..........................................................................................................................................................138
Portfolio Management Agreement..............................................................................................................17
Portfolio Manager .........................................................................................................................................4
Portfolio Manager Affiliates .......................................................................................................................48
Portfolio Manager Breaches .....................................................................................................................119
Portfolio Weighted Average Maturity ........................................................................................................86
Prepaid Collateral Obligation....................................................................................................................184
Principal Collection Subaccount.................................................................................................................93
Principal Financed Accrued Interest .........................................................................................................184
Principal Proceeds.....................................................................................................................................184
Priority Category.......................................................................................................................................184
Priority Class.............................................................................................................................................184
Priority Hedge Termination Event............................................................................................................184
Priority of payments......................................................................................................................................9
Pro Rata Special Redemption Conditions.................................................................................................184
Proposed Portfolio ....................................................................................................................................185
Proposing Class.........................................................................................................................................121
Prospectus Directive .................................................................................................................................185
PTCE.........................................................................................................................................................139
Purchase and Placement Agreement .........................................................................................................143
QEF election ..................................................................................................................................... 130, 132
Qualified Equity Security .........................................................................................................................185
Qualified Institutional Buyers.......................................................................................................................4
Qualified Purchasers .....................................................................................................................................4
Ramp-Up Account ......................................................................................................................................94
Ramp-Up Failure ........................................................................................................................................18
Ramp-Up Period .........................................................................................................................................17
Rated Balance .............................................................................................................................................78
Rating Agency ............................................................................................................................................77
I-6

Rating Factor Adjustment ...........................................................................................................................20
Record Date ................................................................................................................................................61
Redemption Date ......................................................................................................................................185
Redemption Price..........................................................................................................................................6
Reference Banks .........................................................................................................................................54
Reference Obligation ................................................................................................................................185
Refinancing.............................................................................................................................................6, 56
Refinancing Proceeds..................................................................................................................................57
Regulation S..................................................................................................................................................4
Regulation S Global Composite Notes .......................................................................................................71
Regulation S Global Secured Notes............................................................................................................71
Regulation S Global Subordinated Notes ...................................................................................................71
Reinvestment Agreement..........................................................................................................................185
Reinvestment Overcollateralization Test ....................................................................................................28
Reinvestment Period ...................................................................................................................................19
Related Obligation ....................................................................................................................................185
Relevant Implementation Date.....................................................................................................................iv
Relevant Member State................................................................................................................................iv
Required Hedge Counterparty Rating.......................................................................................................185
Required Reserve Amount........................................................................................................................186
Restricted Trading Period .........................................................................................................................186
Revolver Funding Account .........................................................................................................................94
Revolving Collateral Obligation ...............................................................................................................186
Rule 144A .....................................................................................................................................................4
Rule 144A Global Composite Notes...........................................................................................................71
Rule 144A Global Secured Notes ...............................................................................................................71
S&P...........................................................................................................................................................186
S&P CDO Monitor ...................................................................................................................................186
S&P CDO Monitor Test..............................................................................................................................21
S&P Collateral Value................................................................................................................................186
S&P Rating ............................................................................................................................................... C-1
S&P Rating Condition ..............................................................................................................................186
S&P Rating Notice.............................................................................................................................. 18, 102
S&P Recovery Amount.............................................................................................................................187
S&P Recovery Rate ..................................................................................................................................187
Sale Proceeds ................................................................................................................................................5
SEC .............................................................................................................................................................38
Second Lien Loan .....................................................................................................................................187
Secured Note Components........................................................................................................................187
Secured Notes ...............................................................................................................................................3
Secured Parties..........................................................................................................................................187
Securities Act................................................................................................................................................4
Securities Intermediary .............................................................................................................................187
Securities Lending Account........................................................................................................................97
Securities Lending Agreement..................................................................................................................187
Securities Lending Collateral....................................................................................................................187
Securities Lending Counterparty ..............................................................................................................187
Selling Institution......................................................................................................................................188
Senior Class A Notes ....................................................................................................................................3
Senior Notes..................................................................................................................................................3
Senior Secured Debt Instrument ...............................................................................................................2, 3
I-7

Senior Secured Loan.................................................................................................................................188
Senior Secured Note .................................................................................................................................188
Senior Unsecured Loan.............................................................................................................................188
Service Provider Exemption .....................................................................................................................139
Share Trustee ............................................................................................................................................123
Special Redemption ....................................................................................................................................59
Special Redemption Amount ..................................................................................................................8, 59
Special Redemption Date............................................................................................................................59
Specified Concentration Limitations ........................................................................................................188
Stated Maturity............................................................................................................................................55
Structured Finance Obligation ..................................................................................................................189
Subordinated Management Fee.................................................................................................................117
Subordinated Note Components ...............................................................................................................189
Subordinated Note Internal Rate of Return...............................................................................................189
Subordinated Notes...................................................................................................................................2, 3
Supermajority............................................................................................................................................190
Synthetic Security .....................................................................................................................................190
Synthetic Security Collateral ....................................................................................................................190
Synthetic Security Counterparty ...............................................................................................................190
Synthetic Security Counterparty Account...................................................................................................95
Synthetic Security Issuer Account ..............................................................................................................96
Target Initial Par Amount .........................................................................................................................191
Target Initial Par Condition ......................................................................................................................191
Tax-Exempt Investors...............................................................................................................................135
Telerate Screen............................................................................................................................................55
Third Party Credit Exposure .....................................................................................................................191
Third Party Credit Exposure Limits..........................................................................................................191
Transaction Documents ............................................................................................................................118
Treasury Regulations ................................................................................................................................126
Trustee ..........................................................................................................................................................4
Type I Composite Notes ...............................................................................................................................2
Type I Subordinated Note Component .....................................................................................................191
Type II Class D Note Component.............................................................................................................191
Type II Composite Notes ..............................................................................................................................2
Type II Subordinated Note Component ....................................................................................................191
Type III Class D Note Component ...........................................................................................................192
Type III Composite Notes.............................................................................................................................2
Type III Excess Cash Flow .........................................................................................................................76
Type III Periodic Notional Interest Amount ...............................................................................................76
Type III Periodic Notional Interest Shortfall Amount ................................................................................76
Type III Subordinated Note Component...................................................................................................192
U.S. Holder ...............................................................................................................................................125
U.S. person..................................................................................................................................................71
U.S. Shareholder .......................................................................................................................................133
UBTI .........................................................................................................................................................135
Weighted Average Fixed Coupon...............................................................................................................79
Weighted Average Floating Spread ............................................................................................................80
Weighted Average Maturity Test................................................................................................................22
Weighted Average Moody's Rating Factor.................................................................................................81
Weighted Average Moody's Recovery Rate ...............................................................................................85
Weighted Average S&P Recovery Rate .....................................................................................................86
I-8

Zero-Coupon Security...............................................................................................................................192
I-9

Annex A-1
Form of purchaser representation letter for Subordinated Notes
[DATE]
The Bank of New York Trust Company, National Association
601 Travis Street, 16 th Floor
Houston, Texas 77002
Attention: Global Corporate Trust—GoldenTree Loan Opportunities III, Limited
Re:
GoldenTree Loan Opportunities III, Limited (the "Issuer"); Subordinated Notes
Reference is hereby made to the Indenture, dated as of March 21, 2007, among the Issuer, GoldenTree
Loan Opportunities III, Corp., as Co-Issuer, and The Bank of New York Trust Company, National
Association, as Trustee (the "Indenture"). Capitalized terms not defined in this Certificate shall have the
meanings ascribed to them in the final offering circular of the Issuer or the Indenture.
This letter relates to $___________ aggregate outstanding principal amount of Subordinated Notes (the
"Subordinated Notes"), which are held in the form of [one or more certificated] [a beneficial interest in a
Regulation S Global] Subordinated Notes in the name of ______________ (the "Transferor") to effect the
transfer of the Subordinated Notes to ______________ (the "Transferee").
In connection with such request, and in respect of such Subordinated Notes, the Transferee does hereby
certify that the Subordinated Notes are being transferred (i) in accordance with the transfer restrictions set
forth in the Indenture and (ii) pursuant to an exemption from registration under the United States
Securities Act of 1933, as amended (the "Securities Act") and in accordance with any applicable
securities laws of any state of the United States or any other jurisdiction.
In addition, the Transferee hereby represents, warrants and covenants for the benefit of the Issuer and its
counsel that we are:
(a)
(PLEASE CHECK ONLY ONE)
_____ a "qualified institutional buyer" as defined in Rule 144A under the Securities Act, and are
acquiring the Subordinated Notes in reliance on the exemption from Securities Act registration
provided by Rule 144A thereunder;
_____ an institutional "accredited investor" as defined in Rule 501(a)(1), (2), (3) or (7) under the
Securities Act;
_____ an individual "accredited investor" as defined in Rule 501(a)(5), (6) or (8) under the Securities
Act who is also a "Knowledgeable Employee"; or
_____ a person that is not a "U.S. person" as defined in Regulation S under the Securities Act, and are
acquiring the Subordinated Notes in an offshore transaction (as defined in Regulation S) in
reliance on the exemption from Securities Act registration provided by Regulation S; and
A-1-1

(b) acquiring the Subordinated Notes for our own account (and not for the account of
any other person) in a minimum denomination of $100,000 and in integral multiples of $1,000 in excess
thereof.
The Transferee further represents and warrants as follows:
1. It understands that the Subordinated Notes have not been and will not be registered under
the Securities Act, and, if in the future it decides to offer, resell, pledge or otherwise transfer the
Subordinated Notes, such Subordinated Notes may be offered, resold, pledged or otherwise transferred
only in accordance with the provisions of the Indenture and the legends on such Subordinated Notes,
including the requirement for written certifications. In particular, it understands that the Subordinated
Notes may be transferred only to a person that is either (a) a "qualified purchaser" (as defined in the
Investment Company Act of 1940, as amended (the "Investment Company Act")), (b) a
"Knowledgeable Employee," as defined in Rule 3c-5 promulgated under the Investment Company Act, of
the Issuer, (c) a corporation, partnership, limited liability company or other entity (other than a trust) each
shareholder, partner, member or other equity owner of which is either a Knowledgeable Employee or a
Qualified Purchaser; and in the case of (a), (b) and (c) above that is either (i) a "qualified institutional
buyer" as defined in Rule 144A under the Securities Act who purchases such Subordinated Notes in
reliance on the exemption from Securities Act registration provided by Rule 144A thereunder or (ii) an
"accredited investor" as defined in Rule 501(a)(1), (2), (3), (5), (6), (7) or (8) under the Securities Act
who, if an individual "accredited investor" is also a "Knowledgeable Employee" or (d) a person that is not
a "U.S. person" as defined in Regulation S under the Securities Act, and is acquiring the Subordinated
Notes in an offshore transaction (as defined in Regulation S thereunder) in reliance on the exemption
from registration provided by Regulation S thereunder. It acknowledges that no representation is made as
to the availability of any exemption under the Securities Act or any state securities laws for resale of the
Subordinated Notes.
2. In connection with its purchase of the Subordinated Notes: (i) none of the Co-Issuers, the
Initial Purchaser, the Placement Agent, the Portfolio Manager, the Trustee, the Collateral Administrator
or any of their respective affiliates is acting as a fiduciary or financial or investment adviser for it; (ii) it is
not relying (for purposes of making any investment decision or otherwise) upon any written or oral
advice, counsel or representations of the Co-Issuers, the Initial Purchaser, the Placement Agent, the
Portfolio Manager, the Trustee, the Collateral Administrator or any of their respective affiliates other than
any statements in the final offering circular for such Subordinated Notes; (iii) it has read and understands
the final offering circular for such Subordinated Notes (including, without limitation, the descriptions
therein of the structure of the transaction in which the Subordinated Notes are being issued and the risks
to purchasers of the Subordinated Notes); (iv) it has consulted with its own legal, regulatory, tax,
business, investment, financial and accounting advisers to the extent it has deemed necessary, and has
made its own investment decisions (including decisions regarding the suitability of any transaction
pursuant to the Indenture) based upon its own judgment and upon any advice from such advisers as it has
deemed necessary and not upon any view expressed by the Co-Issuers, the Initial Purchaser, the
Placement Agent, the Portfolio Manager, the Trustee, the Collateral Administrator or any of their
respective affiliates; (v) it will hold and transfer at least the minimum denomination of such Subordinated
Notes; (vi) it was not formed for the purpose of investing in the Subordinated Notes; and (vii) it is a
sophisticated investor and is purchasing the Subordinated Notes with a full understanding of all of the
terms, conditions and risks thereof, and it is capable of assuming and willing to assume those risks.
3. (i) It is either (A) a "qualified purchaser" for purposes of Section 3(c)(7) of the
Investment Company Act, (B) a "Knowledgeable Employee" with respect to the Issuer for purposes of
Rule 3c-5 of the Investment Company Act, (C) a corporation, partnership, limited liability company or
other entity (other than a trust) each shareholder, partner, member or other equity owner of which is either
A-1-2

a Knowledgeable Employee or a Qualified Purchaser and in the case of (A), (B) and (C) above that is
either (x) a "qualified institutional buyer" as defined in Rule 144A under the Securities Act who
purchases such Subordinated Notes in reliance on the exemption from Securities Act registration provided
by Rule 144A thereunder or (y) an "accredited investor" as defined in Rule 501(a)(1), (2), (3), (5), (6), (7)
or (8) under the Securities Act who, if an individual "accredited investor," is also a "Knowledgeable
Employee" or (D) not a "U.S. person" as defined in Regulation S under the Securities Act and is acquiring
the Subordinated Notes in an offshore transaction (as defined in Regulation S thereunder) in reliance on
the exemption from registration provided by Regulation S thereunder; (ii) it is acquiring the Subordinated
Notes as principal solely for its own account for investment and not with a view to the resale, distribution
or other disposition thereof in violation of the Securities Act; (iii) it is not a (A) partnership, (B) common
trust fund, or (C) special trust, pension, profit sharing or other retirement trust fund or plan in which the
partners, beneficiaries or participants may designate the particular investments to be made; (iv) it agrees
that it shall not hold any Subordinated Notes for the benefit of any other person, that it shall at all times
be the sole beneficial owner thereof for purposes of the Investment Company Act and all other purposes
and that it shall not sell participation interests in the Subordinated Notes or enter into any other
arrangement pursuant to which any other person shall be entitled to a beneficial interest in the
distributions on the Subordinated Notes; (v) it is acquiring its interest in the Subordinated Notes for its
own account; and (vi) it will hold and transfer at least the minimum denomination of the Subordinated
Notes and provide notice of the relevant transfer restrictions to subsequent transferees.
4. It acknowledges and agrees that all of the assurances given by it in certifications required
by the Indenture as to its status under ERISA or as to its status as an Affected Bank are correct and are for
the benefit of the Issuer, the Trustee, the Initial Purchaser, the Placement Agent and the Portfolio
Manager. It agrees and acknowledges that none of Issuer or the Trustee will recognize any transfer of the
Subordinated Notes if such transfer may result in 25% or more of the value of the Subordinated Notes
being held by Benefit Plan Investors. For purposes of this determination, the value of equity interests
held a Controlling Person (other than those interests held by a Benefit Plan Investor) is disregarded. It
further agrees and acknowledges that no subsequent transfer of a Regulation S Global Subordinated Note
to a Benefit Plan Investor or a Controlling Person will be effective and the Trustee will not recognize any
such subsequent transfer. It further agrees and acknowledges that no transfer of a Subordinated Note to
an Affected Bank will be effective and the Trustee will not recognize any such transfer, unless such
transfer is specifically authorized by the Issuer in writing; provided, however, that the Issuer shall
authorize any such transfer if (x) such transfer would not cause more than 33 1/3% of the Aggregate
Outstanding Amount of such Subordinated Notes to be owned by Affected Banks or (y) the transferor is
an Affected Bank previously approved by the Issuer. No purchaser or subsequent transferee, as
applicable, of Regulation S Global Subordinated Notes from persons other than the Issuer may be an
Affected Bank.
5. It will treat its Subordinated Notes as equity of the Issuer for United States federal
income tax purposes.
6. It is ______ (check if applicable) a "United States person" within the meaning of Section
7701(a)(30) of the Code, and a properly completed and signed Internal Revenue Service Form W-9 (or
applicable successor form) is attached hereto; or ______ (check if applicable) not a "United States
person" within the meaning of Section 7701(a)(30) of the Code, and a properly completed and signed
applicable Internal Revenue Service Form W-8 (or applicable successor form) is attached hereto. It
understands and acknowledges that failure to provide the Issuer or the Trustee with the applicable United
States federal income tax certifications (generally, an Internal Revenue Service Form W-9 (or successor
applicable form) in the case of a person that is a "United States person" within the meaning of Section
7701(a)(30) of the Code or an appropriate Internal Revenue Service Form W-8 (or successor applicable
form) in the case of a person that is not a "United States person" within the meaning of Section
A-1-3

7701(a)(30) of the Code) may result in United States federal back-up withholding from payments to it in
respect of the Subordinated Notes.
7. It agrees not to seek to commence in respect of the Issuer or the Co-Issuer, or cause the
Issuer or Co-Issuer to commence, a bankruptcy proceeding before a year and a day has elapsed since the
payment in full to the holders of the Notes issued pursuant to the Indenture or, if longer, the applicable
preference period then in effect.
8. To the extent required by the Issuer, as determined by the Issuer or the Portfolio Manager
on behalf of the Issuer, the Issuer may, upon notice to the Trustee, impose additional transfer restrictions
on the Subordinated Notes to comply with the Uniting and Strengthening America by Providing
Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001 (the "USA Patriot Act") and
other similar laws or regulations, including, without limitation, requiring each transferee of a
Subordinated Note to make representations to the Issuer in connection with such compliance.
9. It understands that in the case of any supplemental indenture to the Indenture that
requires consent of one or more holders of the Subordinated Notes, the Indenture permits the Amendment
Buy-Out Purchaser to purchase Subordinated Notes from any Non-Consenting Holder thereof at the
applicable Amendment Buy-Out Purchase Price, and such Non-Consenting Holder will be required to sell
such Subordinated Notes to the Amendment Buy-Out Purchaser at such price.
10. It understands that the Issuer, the Trustee, the Initial Purchaser, the Placement Agent and
their respective counsel will rely upon the accuracy and truth of the foregoing representations, and it
hereby consents to such reliance.
[The remainder of this page has been intentionally left blank.]
A-1-4

Name of Purchaser:
Dated:
By:
Name:
Title:
Outstanding principal amount of Subordinated Notes: $__________
Taxpayer identification number:
Address for notices:
Wire transfer information for payments:
Bank:
Address:
Bank ABA#:
Account #:
Telephone:
Facsimile:
FAO:
Attention:
Attention:
Denominations of certificates (if more than one):
Registered name:
cc:
GoldenTree Loan Opportunities III, Limited
c/o Maples Finance Limited
PO Box 1093GT
Queensgate House, South Church Street
George Town, Grand Cayman
Cayman Islands
A-1-5

Annex A-2
Form of Subordinated Note ERISA and affected bank certificate
The purpose of this Benefit Plan Investor Certificate (this "Certificate") is, among other things, to (i)
endeavor to ensure that less than 25% of the value of the Subordinated Notes issued by GoldenTree Loan
Opportunities III, Limited (the "Issuer") is held by "Benefit Plan Investors" as contemplated and defined
under the U.S. Department of Labor's regulations set forth at 29 C.F.R. Section 2510.3-101 (the "Plan
Asset Regulations") so that the Issuer will not be subject to the U.S. federal pension laws contained in
ERISA and Section 4975 of the Code, (ii) endeavor to ensure that no Affected Bank, directly or in
conjunction with its affiliates, owns more than 33⅓% of the outstanding Subordinated Notes, (iii) obtain
from you certain representations and agreements and (iv) provide you with certain related information
with respect to your acquisition, holding or disposition of the Subordinated Notes. By signing this
Certificate, you agree to be bound by its terms.
Please be aware that the information contained in this Certificate is not intended to constitute
advice and the examples given below are not intended to be, and are not, comprehensive. You
should contact your own counsel if you have any questions in completing this Certificate.
Capitalized terms not defined in this Certificate shall have the meanings ascribed to them in the
final offering circular of the Issuer or the Indenture.
Please review the information in this Certificate and check the box(es) that are applicable to you.
If a box is not checked, you are agreeing that the applicable Section does not, and will not, apply to
you.
1. Employee Benefit Plans Subject to ERISA or the Code. We, or the entity on whose
behalf we are acting, are an "employee benefit plan" within the meaning of Section 3(3) of
ERISA that is subject to the fiduciary responsibility provisions of ERISA or a "plan" within the
meaning of Section 4975(e)(i) of the Code that is subject to Section 4975 of the Code.
Examples: (i) tax qualified retirement plans such as pension, profit sharing and section 401(k)
plans, (ii) welfare benefit plans such as accident, life and medical plans, (iii) individual
retirement accounts or "IRAs" and "Keogh" plans and (iv) certain tax-qualified educational and
savings trusts.
2. Entity Holding Plan Assets by Reason of Plan Asset Regulations. We, or the entity
on whose behalf we are acting, are an entity or fund whose underlying assets include "plan
assets" by reason of a Benefit Plan Investor's investment in such entity.
Examples: (i) a hedge fund or other private investment vehicle where 25% or more of the value
of any class of its equity is held by Benefit Plan Investors, (ii) an insurance company separate
account and (iii) a bank collective trust fund.
ERISA and the regulations promulgated thereunder are technical. Accordingly, if you have any question
regarding whether you may be an entity described in this Section 2, you should consult with your counsel.
3. Insurance Company General Account. We, or the entity on whose behalf we are
acting, are an insurance company purchasing the Subordinated Notes with funds from our or their
A-2-1

general account (i.e., the insurance company's corporate investment portfolio), the assets of
which, in whole or in part, constitute "plan assets" for purposes of the Plan Asset Regulations.
If you check Box 3, please also check either Box A or Box B.
A. We are not able to determine an exact percentage of the general account that
constitutes "plan assets" but the maximum percentage of the general account that
constitutes (or will constitute) "plan assets" for purposes of the Plan Asset
Regulations is less than 25%.
B. The maximum percentage of the insurance company general account that will
constitute "plan assets" for purposes of conducting the 25% test under the Plan
Asset Regulations is: ____%. IF YOU CHECK THIS BOX B BUT DO NOT
INCLUDE ANY PERCENTAGE IN THE BLANK SPACE, YOU WILL BE
COUNTED AS IF YOU FILLED IN 100% IN THE BLANK SPACE.
4. None of Sections (1) Through (3) Above Apply. We, or the entity on whose behalf we
are acting, are a person that does not fall into any of the categories described in Sections (1)
through (3) above.
5. No Prohibited Transaction. If we checked any of the boxes in Sections (1) through (3) above,
we represent, warrant and agree that our acquisition, holding and disposition of the Subordinated Notes
do not and will not constitute or give rise to a non-exempt prohibited transaction under ERISA or Section
4975 of the Code.
6. No Violation of Similar Law. If we are a governmental, church, non-U.S. or other plan subject
to any law substantially similar to Title I of ERISA or Section 4975 of the Code, we represent, warrant
and agree that our acquisition, holding and disposition of the Subordinated Notes do not and will not
constitute or give rise to a non-exempt violation of any such similar federal, state, local or non-U.S. law.
7. Controlling Person. We are, or we are acting on behalf of any of: (i) the Trustee, (ii)
the Portfolio Manager, (iii) any person that has discretionary authority or control with respect to
the assets of the Issuer, (iv) any person who provides investment advice for a fee (direct or
indirect) with respect to such assets or (v) any "affiliate" of any of the above persons. "Affiliate"
shall have the meaning set forth in the Plan Asset Regulations. Any of the persons described in
the first sentence of this Section (7) is referred to in this Certificate as a "Controlling Person."
Note: We understand that, for purposes of determining whether Benefit Plan Investors hold less than
25% of the value of the Subordinated Notes, the value of any Subordinated Notes held by Controlling
Persons (other than Benefit Plan Investors) are required to be disregarded.
8. Compelled Disposition. We acknowledge and agree that:
(i) if any representation that we made hereunder is subsequently shown to be false or
misleading or our beneficial ownership otherwise causes a violation of the 25% Limitation, the Issuer
shall, promptly after such discovery (or upon notice from the Trustee if the Trustee makes the discovery
(who, in each case, agree to notify the Issuer of such discovery, if any)), send notice to us demanding that
A-2-2

we transfer our interest to a person that is not a Non-Permitted ERISA Holder within 30 days of the date
of such notice;
(ii) if we fail to transfer our Subordinated Notes, the Issuer shall have the right, without
further notice to us, to sell our Subordinated Notes or our interest in the Subordinated Notes, to a
purchaser selected by the Issuer that is not a Non-Permitted ERISA Holder on such terms as the Issuer
may choose;
(iii) the Issuer may select the purchaser by soliciting one or more bids from one or more
brokers or other market professionals that regularly deal in securities similar to the Subordinated Notes
and selling such securities to the highest such bidder. However, the Issuer may select a purchaser by any
other means determined by it in its sole discretion;
(iv) by our acceptance of an interest in the Subordinated Notes, we agree to cooperate with
the Issuer to affect such transfers;
(v) the proceeds of such sale, net of any commissions, expenses and taxes due in connection
with such sale shall be remitted to us; and
(vi) the terms and conditions of any sale under this subsection shall be determined in the sole
discretion of the Issuer, and the Issuer shall not be liable to us, as applicable, sold as a result of any such
sale or the exercise of such discretion.
9. Required Notification. We hereby agree that we (a) will inform the Trustee (i) of any proposed
transfer by us of all or a specified portion of the Subordinated Notes owned by us to a transferee who
would be deemed to be a Benefit Plan Investor or a Controlling Person or (ii) of any proposed change in
our status under ERISA which would result in all or a portion of the Subordinated Notes owned by us and
not previously so characterized being deemed to be held by a Benefit Plan Investor or a Controlling
Person and (b) will not permit any such transfer or change of status that would cause the 25% Limitation
to be exceeded to become effective. A change in status under ERISA includes (i) any change in the
percentage of the assets of an insurance company general account constituting plan assets (if such
percentage, after any change, exceeds 25%) or (ii) in the percentage of the value of any class of equity of
a hedge fund or other private investment vehicle being held by Benefit Plan Investors (if prior to such
change, such percentage was less than 25%, and after such change, such percentage is 25% or greater).
We hereby agree and acknowledge that after the Trustee effects any permitted transfer of Subordinated
Notes owned by us to a Benefit Plan Investor or a Controlling Person or receives notice of any such
permitted change of status, the Trustee shall include such Subordinated Notes in future calculations of the
25% Limitation made pursuant hereto unless subsequently notified that such Subordinated Notes (or such
portion), as applicable, would no longer be deemed to be held by Benefit Plan Investors or Controlling
Persons.
10. Affected Bank. We, or the entity on whose behalf we are acting, are a "bank" for
purposes of Section 881 of the Code or an entity affiliated with such a bank that is neither (x) a
U.S. Person (within the meaning of Section 7701(a)(30) of the Code) or (y) entitled to the
benefits of an income tax treaty with the United States under which withholding taxes on interest
payments made by obligors resident in the United States to such bank are reduced to 0%.
Note: We understand that, if we checked the box in Section 8, the Trustee will not register the transfer
of the Subordinated Notes to us unless such transfer is specifically authorized by the Issuer in writing;
provided, however, that the Issuer shall authorize any such transfer if (x) such transfer would not cause
A-2-3

more than 33 1/3% of the Aggregate Outstanding Amount of such Subordinated Notes to be owned by
Affected Banks or (y) the transferor is an Affected Bank previously approved by the Issuer.
11. Continuing Representation; Reliance. We acknowledge and agree that the representations
contained in this Certificate shall be deemed made on each day from the date we make such
representations through and including the date on which we dispose of our interests in the Subordinated
Notes. We understand and agree that the information supplied in this Certificate will be used and relied
upon by the Issuer, the Trustee to determine that (i) Benefit Plan Investors own or hold less than 25% of
the value of the Subordinated Notes upon any subsequent transfer of the Subordinated Notes in
accordance with the Indenture and (ii) no Affected Bank, directly or in conjunction with its affiliates,
owns or holds more than 33⅓% of the Subordinated Notes at any time.
12. Further Acknowledgement. We acknowledge and agree that (i) all of the assurances contained
in this Certificate are for the benefit of the Issuer, the Trustee, the Initial Purchaser, the Placement Agent
and the Portfolio Manager as third-party beneficiaries hereof, (ii) copies of this Certificate and any
information contained herein may be provided to the Issuer, the Trustee, the Initial Purchaser, the
Placement Agent, the Portfolio Manager, affiliates of any of the foregoing parties and to each of the
foregoing parties' respective counsel for purposes of making the determinations described above and (iii)
any acquisition or transfer of the Subordinated Notes by us that is not in accordance with the provisions
of this Certificate shall be null and void from the beginning, and of no legal effect.
[The remainder of this page has been intentionally left blank.]
A-2-4

13. Future Transfer Requirements.
Transferee Letter and its Delivery. We acknowledge and agree that we may not transfer any
Subordinated Notes to any person unless the Trustee has received a certificate substantially in the form of
this Certificate. Any attempt to transfer in violation of this section will be null and void from the
beginning, and of no legal effect.
Note: Unless you are notified otherwise, the name and address of the Trustee is as follows:
The Bank of New York Trust Company, National Association
601 Travis Street, 16 th Floor
Houston, Texas 77002
Attention: Global Corporate Trust—GoldenTree Loan Opportunities III, Limited
IN WITNESS WHEREOF, the undersigned has duly executed and delivered this Certificate.
________________________ [Insert Purchaser's Name]
By:
Name:
Title:
Dated:
This Certificate relates to $_________ of Subordinated Notes
A-2-5

Annex A-3
Form of Purchaser representation letter for Certificated Secured
Notes
[DATE]
The Bank of New York Trust Company, National Association
601 Travis Street, 16 th Floor
Houston, Texas 77002
Attention: Global Corporate Trust—GoldenTree Loan Opportunities III, Limited
Re:
GoldenTree Loan Opportunities III, Limited (the "Issuer")[, GoldenTree Loan
Opportunities III, Corp. (the "Co-Issuer" and together with the Issuer, the "Co-
Issuers")]; Class [A-1A-J][A-1B-S][A-1B-J][B][C][D] Notes
Reference is hereby made to the Indenture, dated as of March 21, 2007, among the Issuer, GoldenTree
Loan Opportunities III, Corp., as Co-Issuer, and The Bank of New York Trust Company, National
Association, as Trustee (the "Indenture"). Capitalized terms not defined in this Certificate shall have
the meanings ascribed to them in the final offering circular of the Issuer or the Indenture.
This letter relates to $___________ aggregate outstanding principal amount of Class [A-1A-J][A-1B-
S][A-1B-J][B][C][D] Notes (the "Notes"), which are held in the form of [one or more certificated] [a
beneficial interest in a Regulation S Global] Notes in the name of ______________ (the "Transferor") to
effect the transfer of the Notes to ______________ (the "Transferee").
In connection with such request, and in respect of such Notes, the Transferee does hereby certify that the
Notes are being transferred (i) in accordance with the transfer restrictions set forth in the Indenture and
(ii) pursuant to an exemption from registration under the United States Securities Act of 1933, as
amended (the "Securities Act") and in accordance with any applicable securities laws of any state of the
United States or any other jurisdiction.
In addition, the Transferee hereby represents, warrants and covenants for the benefit of the Co-Issuers and
their counsel that we are:
(a)
(PLEASE CHECK ONLY ONE)
_____ a "qualified institutional buyer" as defined in Rule 144A under the Securities Act, and are
acquiring the Notes in reliance on the exemption from Securities Act registration provided by
Rule 144A thereunder; or
_____ an institutional "accredited investor" as defined in Rule 501(a)(1), (2), (3) or (7) under the
Securities Act; and
(b) acquiring the Notes for our own account (and not for the account of any other
Person) in a minimum denomination of $250,000 and in integral multiples of $1,000 in excess thereof.
A-3-1

The Transferee further represents and warrants as follows:
1. It understands that the Notes have not been and will not be registered under the Securities
Act, and, if in the future it decides to offer, resell, pledge or otherwise transfer the Notes, such Notes may
be offered, resold, pledged or otherwise transferred only in accordance with the provisions of the
Indenture and the legends on such Notes, including the requirement for written certifications. In
particular, it understands that the Notes may be transferred only to a person that is either (a) a "qualified
purchaser" (as defined in the Investment Company Act of 1940, as amended (the "Investment Company
Act")) that is either (i) a "qualified institutional buyer" as defined in Rule 144A under the Securities Act
who purchases such Notes in reliance on the exemption from Securities Act registration provided by Rule
144A thereunder or (ii) solely in the case of Notes that are issued in the form of Certificated Secured
Notes, an institutional "accredited investor" as defined in Rule 501(a)(1), (2), (3) or (7) under the
Securities Act or (b) a person that is not a "U.S. person" as defined in Regulation S under the Securities
Act, and is acquiring the Notes in an offshore transaction (as defined in Regulation S thereunder) in
reliance on the exemption from registration provided by Regulation S thereunder. It acknowledges that
no representation is made as to the availability of any exemption under the Securities Act or any state
securities laws for resale of the Notes.
2. In connection with its purchase of the Notes: (i) none of the Co-Issuers, the Initial
Purchaser, the Placement Agent, the Portfolio Manager, the Trustee, the Collateral Administrator or any
of their respective affiliates is acting as a fiduciary or financial or investment adviser for it; (ii) it is not
relying (for purposes of making any investment decision or otherwise) upon any written or oral advice,
counsel or representations of the Co-Issuers, the Initial Purchaser, the Placement Agent, the Portfolio
Manager, the Trustee, the Collateral Administrator or any of their respective affiliates other than any
statements in the final offering circular for such Notes; (iii) it has read and understands the final offering
circular for such Notes (including, without limitation, the descriptions therein of the structure of the
transaction in which the Notes are being issued and the risks to purchasers of the Notes); (iv) it has
consulted with its own legal, regulatory, tax, business, investment, financial and accounting advisers to
the extent it has deemed necessary, and has made its own investment decisions (including decisions
regarding the suitability of any transaction pursuant to the Indenture) based upon its own judgment and
upon any advice from such advisers as it has deemed necessary and not upon any view expressed by the
Co-Issuers, the Initial Purchaser, the Placement Agent, the Portfolio Manager, the Trustee, the Collateral
Administrator or any of their respective affiliates; (v) it will hold and transfer at least the minimum
denomination of such Notes; (vi) it was not formed for the purpose of investing in the Notes; and (vii) it
is a sophisticated investor and is purchasing the Notes with a full understanding of all of the terms,
conditions and risks thereof, and it is capable of assuming and willing to assume those risks.
3. (i) It is a "qualified purchaser" for purposes of Section 3(c)(7) of the Investment
Company Act that is either (x) a "qualified institutional buyer" as defined in Rule 144A under the
Securities Act who purchases such Notes in reliance on the exemption from Securities Act registration
provided by Rule 144A thereunder or (y) an institutional "accredited investor" as defined in Rule
501(a)(1), (2), (3) or (7) under the Securities Act; (ii) it is acquiring the Notes as principal solely for its
own account for investment and not with a view to the resale, distribution or other disposition thereof in
violation of the Securities Act; (iii) it is not a (A) partnership, (B) common trust fund, or (C) special trust,
pension, profit sharing or other retirement trust fund or plan in which the partners, beneficiaries or
participants may designate the particular investments to be made; (iv) it agrees that it shall not hold any
Notes for the benefit of any other person, that it shall at all times be the sole beneficial owner thereof for
purposes of the Investment Company Act and all other purposes and that it shall not sell participation
interests in the Notes or enter into any other arrangement pursuant to which any other person shall be
entitled to a beneficial interest in the distributions on the Notes; (v) it is acquiring its interest in the Notes
A-3-2

for its own account; and (vi) it will hold and transfer at least the minimum denomination of the Notes and
provide notice of the relevant transfer restrictions to subsequent transferees.
4. In the case of the Class A Notes, the Class B Notes and the Class C Notes, it
acknowledges and agrees that on each day from the date on which it acquires its interest in such Notes
through and including the date on which it disposes of its interest in such Notes either that (A) it is neither
a Plan nor any entity whose underlying assets include "plan assets" by reason of such Plan's investment in
the entity, nor a governmental, church or other plan which is subject to any federal, state, local or foreign
law that is substantially similar to the provisions of Section 406 of ERISA or Section 4975 of the Code or
(B) its purchase, holding and disposition of a Note will not constitute or result in a non-exempt prohibited
transaction under Section 406 of ERISA or Section 4975 of the Code (or, in the case of a governmental,
church or other plan, a non-exempt violation under any substantially similar law).
5. In the case of the Class D Notes, it acknowledges and agrees that all of the assurances
given by it in certifications required by the Indenture as to its status under ERISA or as to its status as an
Affected Bank are correct and are for the benefit of the Issuer, the Trustee, the Initial Purchaser, the
Placement Agent and the Portfolio Manager. It agrees and acknowledges that none of Issuer or the
Trustee will recognize any transfer of the Notes if such transfer may result in Notes being held by Benefit
Plan Investors. In addition, it agrees and acknowledges that if it is a governmental, church, non-U.S. or
other plan that is subject to any federal, state, local or non-U.S. law that is substantially similar to the
provisions of Title I of ERISA or Section 4975 of the Code, its acquisition, holding and disposition of
such Class D Notes will not constitute or result in a non-exempt violation under any such substantially
similar law. It further agrees and acknowledges that no transfer of a Note, as applicable, to an Affected
Bank will be effective and the Trustee will not recognize any such transfer, unless such transfer is
specifically authorized by the Issuer in writing; provided, however, that the Issuer shall authorize any
such transfer if (x) such transfer would not cause an Affected Bank, directly or in conjunction with its
affiliates, to own more than 33-1/3% of the aggregate outstanding principal amount of the Class D Notes
or (y) the transferor of the Notes to us is an Affected Bank previously approved by the Issuer.
6. It is ______ (check if applicable) a "United States person" within the meaning of Section
7701(a)(30) of the Code, and a properly completed and signed Internal Revenue Service Form W-9 (or
applicable successor form) is attached hereto; or ______ (check if applicable) not a "United States
person" within the meaning of Section 7701(a)(30) of the Code, and a properly completed and signed
applicable Internal Revenue Service Form W-8 (or applicable successor form) is attached hereto. It
understands and acknowledges that failure to provide the Issuer or the Trustee with the applicable United
States federal income tax certifications (generally, an Internal Revenue Service Form W-9 (or successor
applicable form) in the case of a person that is a "United States person" within the meaning of Section
7701(a)(30) of the Code or an appropriate Internal Revenue Service Form W-8 (or successor applicable
form) in the case of a person that is not a "United States person" within the meaning of Section
7701(a)(30) of the Code) may result in United States federal back-up withholding from payments to it in
respect of the Notes.
7. It agrees not to seek to commence in respect of the Issuer or the Co-Issuer, or cause the
Issuer or Co-Issuer to commence, a bankruptcy proceeding before a year and a day has elapsed since the
payment in full to the holders of the Notes issued pursuant to the Indenture or, if longer, the applicable
preference period then in effect.
8. To the extent required by the Issuer, as determined by the Issuer or the Portfolio Manager
on behalf of the Issuer, the Issuer may, upon notice to the Trustee, impose additional transfer restrictions
on the Notes to comply with the Uniting and Strengthening America by Providing Appropriate Tools
Required to Intercept and Obstruct Terrorism Act of 2001 (the "USA Patriot Act") and other similar laws
A-3-3

or regulations, including, without limitation, requiring each transferee of a Note to make representations
to the Issuer in connection with such compliance.
9. It understands that in the case of any supplemental indenture to the Indenture that
requires consent of one or more holders of the Secured Notes, the Indenture permits the Amendment Buy-
Out Purchaser to purchase Secured Notes from any Non-Consenting Holder thereof at the applicable
Amendment Buy-Out Purchase Price, and such Non-Consenting Holder will be required to sell such
Secured Notes to the Amendment Buy-Out Purchaser at such price.
10. It understands that the Issuer, the Trustee, the Initial Purchaser, the Placement Agent and
their respective counsel will rely upon the accuracy and truth of the foregoing representations, and it
hereby consents to such reliance.
[The remainder of this page has been intentionally left blank.]
A-3-4

Name of Purchaser:
Dated:
By:
Name:
Title:
Outstanding principal amount of Class [A-1A-J][A-1B-S][A-1B-J][B][C][D] Notes: $
Taxpayer identification number:
Address for notices:
Wire transfer information for payments:
Bank:
Address:
Bank ABA#:
Account #:
Telephone:
Facsimile:
FAO:
Attention:
Attention:
Denominations of certificates (if more than one):
Registered name:
cc:
GoldenTree Loan Opportunities III, Limited
c/o Maples Finance Limited
Queensgate House, South Church Street
PO Box 1093GT
George Town, Grand Cayman
Cayman Islands
GoldenTree Loan Opportunities III, Corp.
c/o Puglisi & Associates
850 Library Avenue, Ste. 204
Newark, Delaware 19711
A-3-5

Annex A-4
Form of Class D Note and Composite Note ERISA and affected
bank certificate
The purpose of this certificate (this "Certificate") is, among other things, to (i) endeavor to
ensure that none of the value of the Class D Notes or the Composite Notes issued by GoldenTree Loan
Opportunities III, Limited (the "Issuer") is held by "Benefit Plan Investors" as contemplated and defined
under the U.S. Department of Labor's regulations set forth at 29 C.F.R. Section 2510.3-101 (the "Plan
Asset Regulations") so that the Issuer will not be subject to the U.S. federal pension laws contained in
the Employee Retirement Income Security Act of 1974, as amended ("ERISA"), and Section 4975 of the
Internal Revenue Code of 1986, as amended (the "Code"), (ii) obtain from you certain representations
and agreements and (iii) provide you with certain related information with respect to your acquisition,
holding or disposition of the Class D Notes or the Composite Notes. By signing this Certificate, you
are agreeing to be bound by its terms.
Please be aware that the information contained in this Certificate is not intended to constitute
advice and the examples given below are not intended to be, and are not, comprehensive. You
should contact your own counsel if you have any questions in completing this Certificate.
Capitalized terms not defined in this Certificate shall have the meanings ascribed to them in the
final offering circular of the Issuer or the Indenture.
We, or the entity on whose behalf we are acting, acknowledge and agree as follows:
1. We are not acquiring the Class D Notes or the Composite Notes directly or indirectly, for, on
behalf of or using the assets of, a Benefit Plan Investor.
A Benefit Plan Investor includes:
(i)
an "employee benefit plan" within the meaning of Section 3(3) of ERISA that is subject
to the fiduciary responsibility provisions of ERISA or a "plan" within the meaning of
Section 4975(e)(1) of the Code that is subject to Section 4975 of the Code;
Examples: (i) tax qualified retirement plans such as pension, profit sharing and section
401(k) plans, (ii) welfare benefit plans such as accident, life and medical plans, (iii)
individual retirement accounts or "IRAs" and "Keogh" plans and (iv) certain tax-qualified
educational and savings trusts.
(ii)
an entity or fund whose underlying assets include "plan assets" of any Benefit Plan
Investor, by reason of a Benefit Plan Investor's investment in such entity; or
Examples: (i) a hedge fund or other private investment vehicle where 25% or more of
the value of any class of its equity is held by Benefit Plan Investors, (ii) an insurance
company separate account and (iii) a bank collective trust fund.
(iii)
certain insurance company general accounts (i.e., such insurance company's corporate
investment portfolio).
A-4-1

ERISA AND THE REGULATIONS PROMULGATED THEREUNDER ARE TECHNICAL.
ACCORDINGLY, IF YOU HAVE ANY QUESTIONS ABOUT THE DEFINITION OF "BENEFIT
PLAN INVESTOR," YOU SHOULD CONSULT WITH YOUR COUNSEL.
2. No Violation of Similar Law. If we are a governmental, church, non-U.S. or other plan subject
to any law substantially similar to Title I of ERISA or Section 4975 of the Code, we represent, warrant
and agree that our acquisition, holding and disposition of the Class D Notes or the Composite Notes do
not and will not constitute or give rise to a non-exempt violation of any such similar federal, state, local or
non-U.S. law.
3. (i) The representations contained in this Certificate shall be deemed made on each day from the
date we make such representations through and including the date on which we dispose of our interests in
the Class D Notes or the Composite Notes and (ii) the information supplied in this Certificate will be used
and relied upon by the Issuer and the Trustee to determine that Benefit Plan Investors own or hold none of
the value of the Class D Notes or the Composite Notes at any time.
4. (i) All of the assurances contained in this Certificate are for the benefit of the Issuer, the Trustee,
the Initial Purchaser, the Placement Agent and the Portfolio Manager as third-party beneficiaries hereof,
(ii) copies of this Certificate and any information contained herein may be provided to the Issuer, the
Initial Purchaser, the Placement Agent, the Portfolio Manager, affiliates of any of the foregoing parties,
and to each of the foregoing parties' respective counsel and (iii) any transfer of the Class D Notes or the
Composite Notes by us that is not in accordance with the provisions of this Certificate shall be null and
void from the beginning, and of no legal effect.
5. We will transfer any Class D Notes or Composite Notes only to a person that is not (and has
appropriately represented that it is not) a Benefit Plan Investor and any attempted transfer in violation of
this Section will be null and void from the beginning and of no legal effect.
6. We acknowledge and agree that we may not transfer any Class D Notes to any person acquiring
an interest in Class D Notes in the form of Certificated Secured Notes unless the Trustee has received a
certificate substantially in the form of this Certificate. Any attempt to transfer in violation of this section
will be null and void from the beginning, and of no legal effect.
Note: Unless you are notified otherwise, the name and address of the Trustee is as follows: The Bank of
New York Trust Company, National Association,
601 Travis Street, 16 th Floor
Houston, Texas 77002
Attention: Global Corporate Trust—GoldenTree Loan Opportunities III, Limited
7. Affected Bank. (Check the box below if applicable) We, or the entity on whose behalf
we are acting, are a "bank" for purposes of Section 881 of the Code or an entity affiliated with
such a bank that is neither (x) a U.S. Person (within the meaning of Section 7701(a)(30) of the
Code) or (y) entitled to the benefits of an income tax treaty with the United States under which
withholding taxes on interest payments made by obligors resident in the United States to such
bank are reduced to 0%.
Note: We understand that, if we checked the box in this Section 7, the Trustee will not register the
transfer of the Composite Notes to us and will not register the Class D Notes to us unless such transfer is
specifically authorized by the Issuer in writing; provided, however, that the Issuer shall authorize any
such transfer if (x) such transfer would not cause more than 33 1/3% of the Aggregate Outstanding
A-4-2

Amount of such Class D Notes to be owned by Affected Banks or (y) the transferor is an Affected Bank
previously approved by the Issuer.
8. Controlling Person. In the case of the Composite Notes only, we neither are, or are acting on
behalf of any of: (i) the Trustee, (ii) the Portfolio Manager, (iii) any person that has discretionary
authority or control with respect to the assets of the Issuer, (iv) any person who provides investment
advice for a fee (direct or indirect) with respect to such assets or (v) any "affiliate" of any of the above
persons. "Affiliate" shall have the meaning set forth in the Plan Asset Regulations. Any of the persons
described in the first sentence of this Section (8) is referred to in this Certificate as a "Controlling
Person."
[The remainder of this page has been intentionally left blank.]
A-4-3

IN WITNESS WHEREOF, the undersigned has duly executed and delivered this Transferee
Certificate.
________________________ (insert Purchaser's Name)
By:
Name:
Title:
Dated:
This Certificate relates to $_________ of [Class D Notes][Type I Composite Notes][Type II Composite
Notes][Type III Composite Notes]
A-4-4

Annex B
Moody's Rating definitions
"Moody's Default Probability Rating" means, with respect to any Collateral Obligation, as of any date
of determination, the rating determined in accordance with the following methodology:
(i)
(ii)
(iii)
(iv)
(v)
With respect to a Collateral Obligation that is a Moody's Senior Secured Loan or Participation
Interest in a Moody's Senior Secured Loan, if the obligor of such Collateral Obligation has a
corporate family rating by Moody's, then such corporate family rating;
With respect to a Collateral Obligation that is a Moody's Senior Secured Loan or Participation
Interest in a Moody's Senior Secured Loan, if not determined pursuant to clause (i) above, or a
Structured Finance Obligation, if such Collateral Obligation (A) is publicly rated by Moody's,
such public rating, or (B) is not publicly rated by Moody's but for which a rating or rating
estimate has been assigned by Moody's upon the request of the Issuer or the Portfolio Manager,
such rating or the corporate family rating estimate, as applicable;
With respect to a Collateral Obligation other than a Synthetic Security or a Structured Finance
Obligation, if not determined pursuant to clause (i) or (ii) above, (A) if the obligor of such
Collateral Obligation has one or more senior unsecured obligations publicly rated by Moody's,
then the Moody's public rating on any such obligation (or, if such Collateral Obligation is a
Moody's Senior Secured Loan, the Moody's rating that is one subcategory higher than the
Moody's public rating on any such senior unsecured obligation) as selected by the Portfolio
Manager in its sole discretion or, if no such rating is available, (B) if such Collateral Obligation is
publicly rated by Moody's, such public rating or, if no such rating is available, (C) if a rating or
rating estimate has been assigned to such Collateral Obligation by Moody's upon the request of
the Issuer, the Portfolio Manager or an affiliate of the Portfolio Manager, such rating or, in the
case of a rating estimate, the applicable rating estimate for such obligation or (D) if such
Collateral Obligation is a DIP Collateral Obligation, the Moody's Derived Rating set forth in
clause (iv)(F) in the definition thereof;
With respect to a Collateral Obligation other than a Synthetic Security or a Structured Finance
Obligation, if not determined pursuant to clause (i), (ii) or (iii) above, the Moody's Derived
Rating; and
With respect to a Synthetic Security, as determined as set forth in "Security for the Secured
Notes—Collateral Assumptions."
For purposes of calculating a Moody's Default Probability Rating, each applicable rating on credit watch
by Moody's with positive or negative implication at the time of calculation will be treated as having been
upgraded or downgraded by one rating subcategory, as the case may be.
"Moody's Derived Rating" means, with respect to a Collateral Obligation (other than a Structured
Finance Obligation or a Synthetic Security) whose Moody's Rating or Moody's Default Probability Rating
cannot otherwise be determined pursuant to the definitions thereof, such Moody's Rating or Moody's
Default Probability Rating shall be determined as set forth below:
(i)
If the obligor of such Collateral Obligation has a long-term issuer rating by Moody's, then such
long-term issuer rating;
B-1

(ii)
If not determined pursuant to clause (i) above, if another obligation of the obligor is rated by
Moody's, then by adjusting the rating of the related Moody's rated obligations of the related
obligor by the number of rating sub-categories according to the table below:
Obligation Category of
Rated Obligation
Rating of
Rated Obligation
Number of Subcategories
Relative to Rated Obligation
Rating
Senior secured obligation greater than or equal to B2 -1
Senior secured obligation less than B2 -2
Subordinated obligation greater than or equal to B3 +1
Subordinated obligation less than B3 0
(iii)
(iv)
If not determined pursuant to clause (i) or (ii) above, if the obligor of such Collateral Obligation
has a corporate family rating by Moody's, then one subcategory below such corporate family
rating;
If not determined pursuant to clause (i), (ii) or (iii) above, then by using any one of the methods
provided below:
(A) (1)
Type of Collateral
Obligation
Not Structured
Finance Obligation
S&P Rating
>BBB-
Collateral Obligation Rated
by S&P
Not a Loan or Participation
Interest in Loan
Number of Subcategories
Relative to Moody's
Equivalent of S&P
Rating
-1
Not Structured
Finance Obligation

(B)
(C)
(D)
(E)
(F)
if such Collateral Obligation is not rated by Moody's or S&P and no other security or obligation
of the issuer of such Collateral Obligation is rated by Moody's or S&P, and if Moody's has been
requested by the Issuer, Portfolio Manager or the issuer of such Collateral Obligation to assign a
rating or rating estimate with respect to such Collateral Obligation but such rating or rating
estimate has not been received, pending receipt of such estimate, (1) "B3" if the Portfolio
Manager certifies to the Trustee that the Portfolio Manager believes that such estimate will be at
least "B3" and if the aggregate principal balance of Collateral Obligations determined pursuant to
this clause (B) does not exceed 5% of the Collateral Principal Amount of all Collateral
Obligations or (2) otherwise, "Caa1";
if the obligor of such Collateral Obligation is a U.S. obligor and if such Collateral Obligation is a
senior secured obligation of the obligor and (1) neither the obligor nor any of its Affiliates is
subject to reorganization or bankruptcy proceedings, (2) no debt securities or obligations of the
obligor are in default, (3) neither the obligor nor any of its Affiliates have defaulted on any debt
during the past two years, (4) the obligor has been in existence for the past five years, (5) the
obligor is current on any cumulative dividends, (6) the fixed-charge ratio for the obligor exceeds
125% for each of the past two fiscal years and for the most recent quarter, (7) the obligor had a
net profit before tax in the past fiscal year and the most recent quarter and (8) the annual financial
statements of the obligor are unqualified and certified by a firm of independent certified public
accountants of national reputation, and quarterly statements are unaudited but signed by a
corporate officer, "Caa1";
if the obligor of such Collateral Obligation is a U.S. obligor and if such Collateral Obligation is a
senior secured or senior unsecured obligation of the obligor and (1) neither the obligor nor any of
its Affiliates is subject to reorganization or bankruptcy proceedings and (2) no debt security or
obligation of the obligor has been in default during the past two years, "Caa3";
if a debt security or obligation of the obligor has been in default during the past two years, "Ca";
or
with respect to any DIP Collateral Obligation, one subcategory below the facility rating (whether
public or private) of such DIP Collateral Obligation rated by Moody's.
For purposes of calculating a Moody's Derived Rating, each applicable rating on credit watch by Moody's
with positive or negative implication at the time of calculation will be treated as having been upgraded or
downgraded by one rating subcategory, as the case may be.
"Moody's Rating" means, with respect to any Collateral Obligation, as of any date of determination, the
rating determined in accordance with the following methodology:
(i)
(ii)
With respect to a Collateral Obligation (including a Structured Finance Obligation) that (A) is
publicly rated by Moody's, such public rating, or (B) is not publicly rated by Moody's but for
which a rating or rating estimate has been assigned by Moody's upon the request of the Issuer or
the Portfolio Manager, such rating or, in the case of a rating estimate, the applicable rating
estimate for such obligation;
With respect to a Collateral Obligation that is a Moody's Senior Secured Loan or Participation
Interest in a Moody's Senior Secured Loan, if not determined pursuant to clause (i) above, if the
obligor of such Collateral Obligation has a corporate family rating by Moody's, then such
corporate family rating;
B-3

(iii)
(iv)
(v)
With respect to a Collateral Obligation other than a Synthetic Security or a Structured Finance
Obligation, if not determined pursuant to clause (i) or (ii) above, if the obligor of such Collateral
Obligation has one or more senior unsecured obligations publicly rated by Moody's, then the
Moody's public rating on any such obligation (or, if such Collateral Obligation is a Moody's
Senior Secured Loan, the Moody's rating that is one subcategory higher than the Moody's public
rating on any such senior unsecured obligation) as selected by the Portfolio Manager in its sole
discretion;
With respect to a Collateral Obligation (other than a Synthetic Security or a Structured Finance
Obligation), if not determined pursuant to clause (i), (ii) or (iii) above, the Moody's Derived
Rating; and
With respect to a Synthetic Security, as determined as set forth in "Security for the Secured
Notes—Collateral Assumptions."
For purposes of calculating a Moody's Rating, each applicable rating on credit watch by Moody's with
positive or negative implication at the time of calculation will be treated as having been upgraded or
downgraded by one rating subcategory, as the case may be.
B-4

Annex C
S&P Rating definition and S&P Recovery Rate tables
"S&P Rating" means, with respect to any Collateral Obligation, as of any date of determination, the
rating determined in accordance with the following methodology:
(i)
(a) if there is an issuer credit rating of the issuer of such Collateral Obligation by S&P as
published by S&P, or the guarantor which unconditionally and irrevocably guarantees such
Collateral Obligation then the S&P Rating shall be such rating (regardless of whether there is a
published rating by S&P on the Collateral Obligations of such issuer held by the Issuer) or (b) if
there is no issuer credit rating of the issuer by S&P but (i) if there is a senior unsecured rating on
any obligation or security of the issuer, the S&P Rating of such Collateral Obligation shall equal
such rating; (ii) if there is a senior secured rating on any obligation or security of the issuer, then
the S&P Rating of such Collateral Obligation shall be one sub-category below such rating; and
(iii) if there is a subordinated rating on any obligation or security of the issuer, then the S&P
Rating of such Collateral Obligation shall be one sub-category above such rating if such rating is
higher than "BB+", and shall be two sub-categories above such rating if such rating is "BB+" or
lower;
(ii) (a) with respect to any Collateral Obligation that is a Synthetic Security, the S&P Rating
shall be the rating assigned thereto by S&P in connection with the acquisition thereof by the
Issuer upon request of the Issuer or the Portfolio Manager (or, in the case of a Form Approved
Synthetic Security, shall be the lower of the S&P Rating of the related Reference Obligation and
the rating assigned by S&P to the Synthetic Security Counterparty); and
(b)
with respect to any Collateral Obligation that is a DIP Collateral Obligation or a
Structured Finance Obligation, the S&P Rating thereof shall be the credit rating assigned
to such issue by S&P;
(iii)
if there is not a rating by S&P on the issuer or on an obligation of the issuer, then the S&P Rating
may be determined pursuant to clauses (a) through (c) below:
(a)
(b)
if an obligation of the issuer is not a DIP Collateral Obligation and is publicly rated by
Moody's, then the S&P Rating will be determined in accordance with the methodologies
for establishing the Moody's Rating set forth above except that the S&P Rating of such
obligation will be (1) one sub-category below the S&P equivalent of the Moody's Rating
if such Moody's Rating is "Baa3" or higher and (2) two sub-categories below the S&P
equivalent of the Moody's Rating if such Moody's Rating is "Ba1" or lower;
the Issuer, the Portfolio Manager on behalf of the Issuer or the issuer of such Collateral
Obligation may apply to S&P for a credit estimate which shall be its S&P Rating;
provided, that for a period of up to ninety (90) days from the date of such application
pending receipt from S&P of such estimate, such Collateral Obligation shall have an S&P
Rating equal to the Portfolio Manager's expected estimate (as certified by the Portfolio
Manager to the Trustee); provided, further, that, if the Portfolio Manager does not
provide S&P with the information required by S&P to provide such credit estimate, such
Collateral Obligation will, after such ninety (90) day period described above, have an
S&P Rating of "NR" pursuant to this clause (b) unless and until a credit estimate is
provided by S&P; or
C-1

(c)
with respect to a Collateral Obligation that is not a Defaulted Obligation, the S&P Rating
of such Collateral Obligation will at the election of the Issuer (at the direction of the
Portfolio Manager) be "CCC-"; or
(iv)
with respect to a DIP Collateral Obligation that has no issue rating by S&P or a Current Pay
Obligation that is rated "D" or "SD" by S&P, the S&P Rating of such DIP Collateral Obligation
or Current Pay Obligation, as applicable, will be, at the election of the Issuer (at the direction of
the Portfolio Manager), "CCC-" or the S&P Rating determined pursuant to clause (iii)(b) above;
provided, that for purposes of the determination of the S&P Rating, (x) if the applicable rating assigned
by S&P to an obligor or its obligations is on "credit watch positive" by S&P, such rating will be treated as
being one sub-category above such assigned rating and (y) if the applicable rating assigned by S&P to an
obligor or its obligations is on "credit watch negative" by S&P, such rating will be treated as being one
sub-category below such assigned rating.
Section 1.
S&P RECOVERY RATE TABLES
(a) (i) If a Collateral Obligation has an S&P Recovery Rating, the S&P Recovery Rate for such
Collateral Obligation shall be determined as follows:
S&P Recovery Rating of
Liability Rating
a Collateral Obligation
"AAA" "AA" "A" "BBB" "BB" "B" and below
1+ 100% 100% 100% 100% 100% 100%
1 92% 93% 94% 96% 98% 100%
2 84% 86% 88% 90% 92% 94%
3 60% 63% 65% 69% 72% 74%
4 40% 42% 44% 46% 48% 48%
5 16% 17% 19% 21% 23% 24%
Recovery rate
(ii) If (x) a Collateral Obligation does not have an S&P Recovery Rating and such Collateral
Obligation is a Senior Unsecured Loan, Second Lien Loan or senior unsecured bond and (y) the
issuer of such Collateral Obligation has issued another debt instrument that is outstanding and
senior to such Collateral Obligation that is a Senior Secured Loan, Senior Secured Note or senior
secured bond (a "Senior Secured Debt Instrument") that has an S&P Recovery Rating, the S&P
Recovery Rate for such Collateral Obligation shall be determined as follows:
S&P Recovery Rating of
Liability Rating
the Senior Secured Debt
Instrument
"AAA" "AA" "A" "BBB" "BB" "B" and below
1+ 53% 55% 57% 59% 61% 61%
1 48% 50% 52% 54% 56% 56%
2 43% 45% 47% 49% 51% 51%
3 39% 41% 43% 45% 47% 47%
4 20% 20% 20% 20% 20% 20%
5 10% 10% 10% 10% 10% 10%
Recovery rate
C-2

(iii) If (x) a Collateral Obligation does not have an S&P Recovery Rating and such Collateral
Obligation is a subordinated loan or subordinated bond and (y) the issuer of such Collateral
Obligation has issued another debt instrument that is outstanding and senior to such Collateral
Obligation that is a Senior Secured Loan or Senior Secured Note (a "Senior Secured Debt
Instrument") that has an S&P Recovery Rating, the S&P Recovery Rate for such Collateral
Obligation shall be determined as follows:
S&P Recovery Rating of
Liability Rating
the Senior Secured Debt
Instrument
"AAA" "AA" "A" "BBB" "BB" "B" and below
1+ 25% 25% 25% 25% 25% 25%
1 22% 22% 22% 22% 22% 22%
2 20% 20% 20% 20% 20% 20%
3 20% 20% 20% 20% 20% 20%
4 10% 10% 10% 10% 10% 10%
5 5% 5% 5% 5% 5% 5%
Recovery rate
(b) If a recovery rate cannot be determined using clause (a), the recovery rate shall be determined
using the applicable table in this clause (b).
(i) Recovery rates for obligors domiciled in the United States and Canada:
Priority Category
Liability rating
"AAA" "AA" "A" "BBB" "BB" "B" and "CCC"
Senior Secured Loans 56% 60% 64% 67% 70% 70%
Senior Unsecured Loans and 40% 42% 44% 46% 48% 48%
Second Lien Loans
Subordinated loans 22% 22% 22% 22% 22% 22%
Senior Secured Notes and 48% 49% 50% 51% 52% 52%
senior secured bonds
Unsecured bonds 38% 41% 42% 44% 45% 45%
Subordinated bonds 19% 19% 19% 19% 19% 19%
Recovery rate
(ii) Recovery rates for obligors Domiciled in Europe:
Priority Category
Liability rating
"AAA" "AA" "A" "BBB" "BB"
"B" and
"CCC"
Senior Secured Loans
Group A 68% 73% 78% 81% 85% 85%
Group B 56% 60% 64% 67% 70% 70%
Group C 48% 51% 55% 57% 60% 60%
Senior Unsecured Loans
and Second Lien Loans
Group A 45% 47% 50% 52% 54% 54%
Group B 40% 42% 44% 46% 48% 48%
Group C 35% 37% 39% 40% 42% 42%
Subordinated loans
Group A 20% 20% 20% 20% 20% 20%
Group B 20% 20% 20% 20% 20% 20%
C-3

Group C 17% 17% 17% 17% 17% 17%
Senior Secured Notes and
senior secured bonds
Group A 60% 61% 62% 63% 64% 64%
Group B 48% 49% 50% 51% 52% 52%
Group C 43% 44% 45% 46% 47% 47%
Senior unsecured bonds
Group A 40% 42% 44% 46% 48% 48%
Group B 38% 41% 42% 44% 45% 45%
Group C 32% 35% 36% 38% 39% 40%
Subordinated bonds
Group A 18% 18% 18% 18% 18% 18%
Group B 18% 18% 18% 18% 18% 18%
Group C 15% 15% 15% 15% 15% 15%
Recovery rate
Group A: U.K., Ireland, South Africa, and The Netherlands. Group B: Belgium, Germany, Austria, Spain,
Portugal, Luxembourg, Denmark, Sweden, Norway, and Finland. Group C: France, Italy, Greece, and Switzerland
(iii) Recovery rates for other Collateral Obligations:
Liability
Rating
Priority Category Recovery rate 1
Synthetic Securities
2
Finance Leases
2
Structured Finance Obligations
1 Or, at the option of the Portfolio Manager, such higher rates as provided by S&P.
2 As determined by S&P on a case by case basis, except as otherwise provided in Section 1.2(e) (Assumptions as to Pledged Obligations) or
unless published by S&P.
3. As determined in accordance with Section 3.
Notwithstanding anything in the Indenture or this Annex C to the contrary, for all purposes under this
Annex C, the term "Senior Secured Loan" shall only include loans secured by a valid first lien perfected
pledge of collateral.
Section 2. S&P CDO Monitor
Weighted Average S&P Recovery Rate
"AAA" 47.6 49.6 51.6 53.6 55.6 57.6 60.8 68.8 74.7 78.4
"AA" 51.3 53.3 55.3 57.3 59.3 61.3 63.0 71.4 77.0 80.6
"A" 55.0 57.0 59.0 61.0 63.0 65.0 65.1 73.5 79.2 82.7
"BBB" 57.9 59.9 61.9 63.9 65.9 67.9 67.4 76.6 81.7 85.0
"BB" 60.7 62.7 64.7 66.7 68.7 70.7 69.6 79.2 84.1 87.2
"B" 60.7 62.7 64.7 66.7 68.7 70.7 70.5 80.9 85.5 88.9
"CCC" 60.7 62.7 64.7 66.7 68.7 70.7 70.5 80.9 85.5 88.9
3
C-4

Weighted Average Spread
2.000%, 2.125%, 2.250%, 2.375%, 2.500%, 2.625%, 2.750%, 2.875%, 3.000%, 3.125%, 3.250%,
3.375%, 3.500%
Section 3. S&P Structured Finance Obligation Recovery Rates*
The S&P Priority Category Recovery Rate for a Structured Finance Obligation will be the applicable rate
set forth below based on the appropriate asset class as categorized by S&P and the current rating of the most
senior liability outstanding at the time of determination:
Senior Asset Class
Liability rating
AAA AA A BBB BB B CCC
AAA 80.0% 85.0% 90.0% 90.0% 90.0% 90.0% 90.0%
AA 70.0% 75.0% 85.0% 90.0% 90.0% 90.0% 90.0%
A 60.0% 65.0% 75.0% 85.0% 90.0% 90.0% 90.0%
BBB 50.0% 55.0% 65.0% 75.0% 85.0% 85.0% 85.0%
Junior Asset Class
Liability rating
AAA AA A BBB BB B CCC
AAA 65.0% 70.0% 80.0% 85.0% 85.0% 85.0% 85.0%
AA 55.0% 65.0% 75.0% 80.0% 80.0% 80.0% 80.0%
A 40.0% 45.0% 55.0% 65.0% 80.0% 80.0% 80.0%
BBB 30.0% 35.0% 40.0% 45.0% 50.0% 60.0% 70.0%
BB 10.0% 10.0% 10.0% 25.0% 35.0% 40.0% 50.0%
B 2.5% 5.0% 5.0% 10.0% 10.0% 20.0% 25.0%
CCC 0.0% 0.0% 0.0% 0.0% 2.5% 5.0% 5.0%
* This table shall not apply to project finance, future flows, synthetics, CDO repacks of ABS or
CDOs, guaranteed ABS, distressed debt CDOs, synthetic CDOs, emerging market CDOs or REIT debt
securities. Recovery rates for such Structured Finance Obligations will be assigned by S&P on a case-bycase
basis, except that REIT debt securities that are categorized as a "Senior Tranche" shall be 40%
C-5

PRINCIPAL OFFICE OF ISSUER
GoldenTree Loan Opportunities III, Limited
c/o Maples Finance Limited
PO Box 1093GT
Queensgate House, South Church Street
George Town, Grand Cayman
Cayman Islands
PRINCIPAL OFFICE OF CO-ISSUER
GoldenTree Loan Opportunities III, Corp.
c/o Puglisi & Associates
850 Library Avenue, Ste. 204
Newark, Delaware 19711
TRUSTEE
AND PAYING AGENT
The Bank of New York Trust Company, National Association
601 Travis Street, 16 th Floor
Houston, Texas 77002
PORTFOLIO MANAGER
GoldenTree Asset Management LP
300 Park Avenue, 20 th Floor
New York, New York 10022
IRISH PAYING AGENT AND IRISH LISTING AGENT
IRISH PAYING AGENT
Maples Finance Dublin
75 St. Stephens Green
Dublin 2
Ireland
IRISH LISTING AGENT
Maples and Calder Listing Services Limited
75 St. Stephens Green
Dublin 2
Ireland
LEGAL ADVISORS
To the Co-Issuers, the Initial Purchaser and the
Placement Agent
as to United States law
McKee Nelson LLP
One Battery Park Plaza
New York, New York 10004
To the Issuer as to
Cayman Islands law
Maples and Calder
PO Box 309GT
Ugland House, South Church Street
George Town, Grand Cayman
Cayman Islands
To the Portfolio Manager
as to United States law
To the Trustee and Collateral Administrator
as to United States law
Schulte Roth & Zabel LLP
Gardere Wynne Sewell LLP
919 Third Avenue 1000 Louisiana, Suite 3400
New York, New York 10022 Houston, Texas 77002