Octagon Finance LLC

ITEM 5: FEES AND COMPENSATION

Item 5.A.

As of the end of each calendar month, each Master Fund pays to Octagon, in arrears, a management fee
(the “Management Fee”) as specified in the applicable Fund’s governing documents. With respect to
Octagon Credit Partners LP, the Management Fee is calculated based on net asset value. With respect to
Octagon Credit Partners II LP (the “OCP II Master Fund”), the Management Fee is calculated based on
committed capital during the Fund’s investment period and, following the investment period, based on
invested capital or outstanding investments, including outstanding loan balances, in each case as set forth
in the Fund’s governing documents.

No management fees will be paid by the Offshore Fund, Octagon Inc., or any special purpose entity or
other subsidiary through which the Master Fund may make investments other than the management fee
as described.

Octagon Credit Partners LP

As of each fiscal year-end, Octagon will generally be entitled to a profit allocation (“Profit Allocation”)
from each investor’s capital account in Octagon Credit Partners LP, or attributable capital account if
investing through Octagon Inc. or the Offshore Fund (a “Capital Account”), if the net capital appreciation
of such Capital Account for the fiscal year, minus any losses attributed to the Capital Account carried
forward in accordance with the Funds’ offering documents (the “Loss Recovery Account”), is greater than
a 6.0% per annum rate of return on the Capital Account (the “Hurdle”).

The Profit Allocation, if earned, will be an amount equal to the lesser of: (1) 120% of the positive amount
of the difference between the net capital appreciation of such Capital Account for such fiscal year, if any,
minus the balance of any Loss Recovery Account as of the previous fiscal year-end for such Capital
Account; or (2) the amount by which the net capital appreciation of such Capital Account or for such fiscal
year, if any, minus the balance of any Loss Recovery Account as of the previous fiscal year-end for such
Capital Account, exceeds the Hurdle applicable to such Capital Account. The intended effect of (1) and (2)
above is that the Profit Allocation will be reduced to the extent that it reduces the return earned on an
investor’s capital below the Hurdle.

OCP II Master Fund

With respect to Octagon Credit Partners II LP (the “OCP II Master Fund”), as of each fiscal year-end,
Octagon will generally be entitled to a Profit Allocation from each investor’s capital account OCP II Master
Fund ,(, or attributable capital account if investing through Octagon Inc. or the Offshore Fund (a “Capital
Account”), if the net capital appreciation of such Capital Account for the fiscal year, minus any losses
attributed to the Capital Account carried forward in accordance with the Funds’ offering documents (the
“Loss Recovery Account”), is greater than a 8.0% per annum rate of return on the Capital Account (the
“Hurdle”).

The Profit Allocation, if earned, will be an amount equal to the lesser of: (1) 100% of the positive amount
of the difference between the net capital appreciation of such Capital Account for such fiscal year, if any,
minus the balance of any Loss Recovery Account as of the previous fiscal year-end for such Capital
Account; or (2) the amount by which the net capital appreciation of such Capital Account or for such fiscal
year, if any, minus the balance of any Loss Recovery Account as of the previous fiscal year-end for such
Capital Account, exceeds the Hurdle applicable to such Capital Account. The intended effect of (1) and (2)
above is that the Profit Allocation will be reduced to the extent that it reduces the return earned on an
investor’s capital below the Hurdle.

If an investor makes a withdrawal or receives a special distribution or otherwise receives a return of capital
from its Capital Account (other than a regular distribution as anticipated by the Funds’ offering
documents), other than as of the calendar year-end, the Profit Allocation will be calculated with respect
to the amount withdrawn, distributed or otherwise returned amounts as of the relevant date as if it had
been the calendar year-end.

The terms and amounts of the Funds’ Management Fee and Profit Allocation may be subject to change or
adjustment according to the terms of the Fund’s offering documents and organizational agreements.
Octagon may, in its sole discretion, waive all or a portion of any Profit Allocation from a Capital Account
of any related party or any other investor. A more detailed discussion of the calculation of the Profit
Allocation is provided to investors in the Funds’ offering documents.

Octagon accrues a management fee and profit allocation from the special purpose vehicles which it
advises. The amount of the management fee and profit allocation is based on the amount funded by any
participating lenders, other than the Master Funds, and is negotiated according to the terms of the
participation agreement with the participating lender. The Firm may also receive management fees and/or
performance-based compensation from special purpose vehicles or participation structures, which are
negotiated with participating lenders and may differ from those applicable to the Master Funds, including
where the Firm or its affiliates may receive additional compensation in connection with such structures.

Item 5.B.

Octagon deducts the Management Fee and Performance Allocation from each Master Fund’s account by
instructing the Master Funds’ custodian at the frequency discussed above in response to Item 5.A. Fees
and profit allocations that accrue on loans and investments in the special purpose vehicles are paid from
the proceeds of the investment when recognized.

Item 5.C.

Each Master Fund, the Offshore Fund and OCP II Feeder Fund are responsible for, and Octagon is entitled
to reimbursement from the Funds for all costs and expenses actually incurred in connection with the
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ITEM 7: TYPES OF CLIENTS

Octagon provides discretionary investment management services to pooled investment vehicles and co-
investment vehicles, as described in Item 4.B.