Octagon Credit Investors LLC

Item 5 – Fees and Compensation

Compensation and Billing

CLOs
         As compensation for its service as the collateral manager of the CLOs, Octagon generally receives
a senior management fee, a subordinated management fee and a performance fee (collectively, the
“Collateral Management Fees”). The total of these fees are generally 50-75 basis points per annum. The
senior management fee has a higher priority in a CLO’s priority of payment waterfalls whereas the
subordinated management fee generally ranks below principal and interest payments to senior note holders
in the payment waterfalls. Octagon will generally earn a subordinated management fee if over-
collateralization and interest coverage tests have been satisfied for all senior CLO note holders. From time
to time, Octagon also receives an additional management fee at closing of a CLO, subject to the CLO’s
Governing Documents. The senior management fees and subordinated management fees are typically paid
by the CLO or its trustee quarterly in arrears, in accordance with its Governing Documents. Performance
fees are typically paid later in a CLO’s tenor by the CLO or its trustee in arrears if specific internal rates of
return thresholds are achieved.

Private Funds

        As compensation for its service as the investment manager of the Private Funds, Octagon generally
receives a management fee ranging from 0.25% to 1.0% per annum applied to the asset value of the fund.
For one or more Private Funds, Octagon offers a series of the fund for which Octagon’s compensation also
includes a performance-based fee of up to 15% if certain performance is achieved. Performance fees
generally reflect the capital appreciation of a Private Fund and typically include hurdle rates and/or high
water marks. The management fees are typically paid quarterly in arrears. For an additional discussion
regarding performance-based compensation, please refer to Item 6.

        Certain Private Funds that are permitted to invest in another Octagon-managed Private Fund pay
only the management fee of the underlying Private Fund, rather than an additional fund-level fee. Those
Fee structures are described in more detail in the Private Funds’ Governing Documents.

Registered Funds

        As compensation for its services as the investment sub-adviser to one or more Registered Funds,
an asset based advisory fee between 1.5% - 1.7% paid monthly in arrears is paid and shared between the
adviser of the Registered Funds and Octagon. Further information about a Registered Fund’s fees and
expenses is included in the Fund’s prospectus which is available publicly on the SEC’s EDGAR system.

Accounts

      As compensation for its service as the investment manager of the Accounts, Octagon receives a
management fee ranging from 0.17% to 0.85%. Management fees, as well as the timing and manner of

payment, are established on a case-by-case basis by Octagon and each client at the beginning of the client
relationship. In certain instances, Octagon may also receive a performance-based fee reflecting the capital
appreciation of investments that comprise an Account or a portion of an Account after meeting a hurdle
rate and/or high water mark.

         In no event will a Client pay fees six or more months in advance. To the extent fees are paid in
advance, the Client will receive a pro rata refund if Octagon is terminated as investment manager prior to
the end of a billing cycle. Octagon has the discretion to reduce or waive management and performance fees
for certain Funds and Accounts, with respect to certain investments.

Employee Funds

         Management fees and/or incentive allocation will not be paid by employees (or former employees)
of Octagon affiliates in connection with their direct investments in the Private Funds. However, employees
are responsible for any applicable interest expenses and their pro rata share of Other Fees and Expenses (as
further described below) incurred by the Client.

Other Fees and Expenses

          As provided in or consistent with a Client’s Governing Documents, Clients (as well as, indirectly,
any investors therein) bear, in addition to the fees described above, other fees and expenses, including
(1) costs and expenses with respect to any workout, restructuring, recapitalization, amendment, waiver or
consent of or with respect to certain investments and the protection or enforcement of rights thereunder;
(2) legal, custodial, accounting and related costs and expenses; (3) pricing service costs incurred in valuing
investments; (4) expenses incurred in obtaining credit ratings on investments; (5) out-of-pocket travel costs
and related expenses incurred in connection with the management of certain investments or Fund offerings
including, but not limited to, travel expenses in connection with attendance at Advisory Committee
meetings and annual meetings of general and limited partners of a Client; (6) all taxes imposed on a Client
(including interest and penalties) and all litigation expenses (and any judgments or settlements paid in
connection therewith) and other extraordinary expenses; (7) the costs of forming and maintaining any
alternative investment vehicle and (at the discretion of the general partner of a Client) the costs of
maintaining any other pooled investment vehicle through which to invest in the Client (e.g., feeder funds,
offshore funds and funds established for employees and former employees); (8) costs and expenses in
connection with the acquisition of insurance, such as director and officer insurance, errors and omissions
coverage and cyber and crime insurance; (9) interest and commitment fees payable in connection with credit
facilities made available to a Client; (10) fees of outside auditors and tax preparers and the costs of
preparation of the books and records and tax returns of a Client, including periodic reports to limited
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Item 7 – Types of Clients

         As discussed in Item 4, Octagon manages CLOs, Private Funds, Registered Funds and Accounts.
Certain Clients represent corporate pension plan assets regulated under the U.S. Employee Retirement
Income Security Act of 1974, as amended (“ERISA”). The terms and conditions of Client accounts vary
depending on the type of services provided or the type of Client and these terms and conditions also vary
from Client to Client. Each Client is required to execute a written investment advisory contract with
Octagon, except in certain sub-advisory arrangements wherein Octagon executes a sub-advisory agreement
with another adviser pursuant to that adviser’s agreement with the ultimate client. Investors in the Private
Funds and certain Accounts are required to execute a subscription agreement to allow Octagon to determine
that the investor meets certain financial and other eligibility requirements. Furthermore, the Private Funds
generally impose investment minimums for investors and is described in more detail in the Governing
Documents. However, in certain circumstances, including with respect to certain investments by Octagon
and Octagon’s or a related person’s personnel, Octagon or a Private Fund’s directors have the discretion to
reduce such investment minimums. Investment minimums for the Accounts are individually negotiated on
a case-by-case basis.