Exhibit 10.1


	
   

  



 


 


AMENDED
AND RESTATED LIMITED PARTNERSHIP AGREEMENT


 


OF


 


KKR
MANAGEMENT HOLDINGS L.P.


 


Dated
as of                , 2008


 


	
   

  



 


THE PARTNERSHIP UNITS OF KKR MANAGEMENT HOLDINGS L.P. HAVE NOT BEEN
REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED, THE SECURITIES
LAWS OF ANY STATE, PROVINCE OR ANY OTHER APPLICABLE SECURITIES LAWS AND ARE
BEING SOLD IN RELIANCE UPON EXEMPTIONS FROM THE REGISTRATION REQUIREMENTS OF
THE SECURITIES ACT AND SUCH LAWS. SUCH UNITS MUST BE ACQUIRED FOR INVESTMENT
ONLY AND MAY NOT BE OFFERED FOR SALE, PLEDGED, HYPOTHECATED, SOLD,
ASSIGNED OR TRANSFERRED AT ANY TIME EXCEPT IN COMPLIANCE WITH (I) THE
SECURITIES ACT, ANY APPLICABLE SECURITIES LAWS OF ANY STATE OR PROVINCE, AND
ANY OTHER APPLICABLE SECURITIES LAWS; AND (II) THE TERMS AND CONDITIONS OF
THIS AMENDED AND RESTATED LIMITED PARTNERSHIP AGREEMENT. THE UNITS MAY NOT
BE TRANSFERRED OF RECORD EXCEPT IN COMPLIANCE WITH SUCH LAWS AND THIS LIMITED
PARTNERSHIP AGREEMENT. THEREFORE, PURCHASERS AND OTHER TRANSFEREES OF SUCH
UNITS WILL BE REQUIRED TO BEAR THE RISK OF THEIR INVESTMENT OR ACQUISITION FOR
AN INDEFINITE PERIOD OF TIME.


 

















 


Table
of Contents


 


	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  
	
  ARTICLE I

  	
   

  
	
   

  	
   

  	
   

  
	
  DEFINITIONS

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 1.01.

  	
  Definitions

  	
  1

  
	
   

  	
   

  	
   

  
	
  ARTICLE II
  FORMATION, TERM, PURPOSE AND POWERS

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 2.01.

  	
  Formation

  	
  8

  
	
  SECTION 2.02.

  	
  Name

  	
  8

  
	
  SECTION 2.03.

  	
  Term

  	
  9

  
	
  SECTION 2.04.

  	
  Offices

  	
  9

  
	
  SECTION 2.05.

  	
  Agent for Service of Process

  	
  9

  
	
  SECTION 2.06.

  	
  Business Purpose

  	
  9

  
	
  SECTION 2.07.

  	
  Powers of the Partnership

  	
  9

  
	
  SECTION 2.08.

  	
  Partners; Admission of New and Substitute
  Partners

  	
  9

  
	
  SECTION 2.09.

  	
  Withdrawal

  	
  9

  
	
   

  	
   

  	
   

  
	
  ARTICLE III

  	
   

  
	
   

  	
   

  	
   

  
	
  MANAGEMENT

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 3.01.

  	
  General Partner

  	
  10

  
	
  SECTION 3.02.

  	
  Compensation

  	
  10

  
	
  SECTION 3.03.

  	
  Expenses

  	
  10

  
	
  SECTION 3.04.

  	
  Officers

  	
  11

  
	
  SECTION 3.05.

  	
  Authority of Partners

  	
  11

  
	
  SECTION 3.06.

  	
  Action by Written Consent or Ratification

  	
  11

  
	
   

  	
   

  	
   

  
	
  ARTICLE IV

  	
   

  
	
   

  	
   

  	
   

  
	
  DISTRIBUTIONS

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 4.01.

  	
  Distributions

  	
  12

  
	
  SECTION 4.02.

  	
  Liquidation Distribution

  	
  13

  
	
  SECTION 4.03.

  	
  Limitations on Distribution

  	
  13

  
	
   

  	
   

  	
   

  
	
  ARTICLE V

  	
   

  
	
   

  	
   

  	
   

  
	
  CAPITAL
  CONTRIBUTIONS; CAPITAL ACCOUNTS;

  	
   

  
	
  TAX
  ALLOCATIONS; TAX MATTERS

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 5.01.

  	
  Initial Capital Contributions

  	
  13

  
	
  SECTION 5.02.

  	
  No Additional Capital Contributions

  	
  14

  



 


i

















 


	
  SECTION 5.03.

  	
  Capital Accounts

  	
  14

  
	
  SECTION 5.04.

  	
  Allocations of Profits and Losses

  	
  14

  
	
  SECTION 5.05.

  	
  Special Allocations

  	
  15

  
	
  SECTION 5.06.

  	
  Tax Allocations

  	
  16

  
	
  SECTION 5.07.

  	
  Tax Advances

  	
  16

  
	
  SECTION 5.08.

  	
  Tax Matters

  	
  16

  
	
  SECTION 5.09.

  	
  Other Tax Provisions

  	
  17

  
	
   

  	
   

  	
   

  
	
  ARTICLE VI

  	
   

  
	
   

  	
   

  	
   

  
	
  BOOKS AND
  RECORDS; REPORTS

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 6.01.

  	
  Books and Records

  	
  17

  
	
   

  	
   

  	
   

  
	
  ARTICLE VII

  	
   

  
	
   

  	
   

  	
   

  
	
  PARTNERSHIP
  UNITS

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 7.01.

  	
  Units

  	
  18

  
	
  SECTION 7.02.

  	
  Register

  	
  18

  
	
  SECTION 7.03.

  	
  Registered Partners

  	
  18

  
	
  SECTION 7.04.

  	
  Exchange Transactions

  	
  18

  
	
  SECTION 7.05.

  	
  Transfers; Encumbrances

  	
  19

  
	
  SECTION 7.06.

  	
  Further Restrictions

  	
  19

  
	
  SECTION 7.07.

  	
  Rights of Assignees

  	
  20

  
	
  SECTION 7.08.

  	
  Admissions, Withdrawals and Removals

  	
  20

  
	
  SECTION 7.09.

  	
  Admission of Assignees as Substitute
  Limited Partners

  	
  20

  
	
  SECTION 7.10.

  	
  Withdrawal and Removal of Limited Partners

  	
  21

  
	
   

  	
   

  	
   

  
	
  ARTICLE VIII

  	
   

  
	
   

  	
   

  	
   

  
	
  DISSOLUTION,
  LIQUIDATION AND TERMINATION

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 8.01.

  	
  No Dissolution

  	
  21

  
	
  SECTION 8.02.

  	
  Events Causing Dissolution

  	
  21

  
	
  SECTION 8.03.

  	
  Distribution upon Dissolution

  	
  22

  
	
  SECTION 8.04.

  	
  Time for Liquidation

  	
  22

  
	
  SECTION 8.05.

  	
  Termination

  	
  22

  
	
  SECTION 8.06.

  	
  Claims of the Partners

  	
  22

  
	
  SECTION 8.07.

  	
  Survival of Certain Provisions

  	
  23

  
	
   

  	
   

  	
   

  
	
  ARTICLE IX

  	
   

  
	
   

  	
   

  	
   

  
	
  LIABILITY
  AND INDEMNIFICATION

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 9.01.

  	
  Liability of Partners

  	
  23

  
	
  SECTION 9.02.

  	
  Indemnification

  	
  24

  



 


ii

















 


	
  ARTICLE X

  	
   

  
	
   

  	
   

  	
   

  
	
  MISCELLANEOUS

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 10.01.

  	
  Severability

  	
  25

  
	
  SECTION 10.02.

  	
  Notices

  	
  26

  
	
  SECTION 10.03.

  	
  Cumulative Remedies

  	
  26

  
	
  SECTION 10.04.

  	
  Binding Effect

  	
  26

  
	
  SECTION 10.05.

  	
  Interpretation

  	
  26

  
	
  SECTION 10.06.

  	
  Counterparts

  	
  27

  
	
  SECTION 10.07.

  	
  Further Assurances

  	
  27

  
	
  SECTION 10.08.

  	
  Entire Agreement

  	
  27

  
	
  SECTION 10.09.

  	
  Governing Law

  	
  27

  
	
  SECTION 10.10.

  	
  Arbitration

  	
  27

  
	
  SECTION 10.11.

  	
  Expenses

  	
  28

  
	
  SECTION 10.12.

  	
  Amendments and Waivers

  	
  28

  
	
  SECTION 10.13.

  	
  No Third Party Beneficiaries

  	
  29

  
	
  SECTION 10.14.

  	
  Headings

  	
  30

  
	
  SECTION 10.15.

  	
  Construction

  	
  30

  
	
  SECTION 10.16.

  	
  Power of Attorney

  	
  30

  
	
  SECTION 10.17.

  	
  Schedules

  	
  30

  
	
  SECTION 10.18.

  	
  Partnership Status

  	
  31

  



 


iii

















 


AMENDED
AND RESTATED LIMITED PARTNERSHIP AGREEMENT


 


OF


 


KKR
MANAGEMENT HOLDINGS L.P.


 


This AMENDED AND RESTATED LIMITED PARTNERSHIP
AGREEMENT (this “Agreement”) of KKR Management Holdings L.P. (the “Partnership”)
is made as of the        day of            , 2008, by and among KKR Management
Holdings Corp., a corporation formed under the laws of the State of Delaware,
as general partner, and the Limited Partners (as defined herein) of the
Partnership.


 


WHEREAS, the Partnership was formed as a
limited partnership pursuant to the Act (as defined herein), by the filing of a
Certificate of Limited Partnership (the “Certificate”) with the Office
of the Secretary of State of the State of Delaware and the execution of the
Limited Partnership Agreement of the Partnership dated as of July 22, 2008
(the “Original Agreement”); and


 


WHEREAS, the parties hereto desire to enter
into this Amended and Restated Limited Partnership Agreement of the Partnership
and to permit the admission of the Limited Partners to the Partnership.


 


NOW, THEREFORE, in consideration of the
mutual promises and agreements herein made and intending to be legally bound
hereby, the parties hereto agree to amend and restate the Original Agreement in
its entirety to read as follows:


 


ARTICLE I


 


DEFINITIONS


 


SECTION 1.01.     Definitions.
Capitalized terms used herein without definition have the following meanings
(such meanings being equally applicable to both the singular and plural form of
the terms defined):


 


“Act”
means, the Delaware Revised Uniform Limited Partnership Act, 6 Del. C. Section 17-101,
et seq., as it may be amended from time to time.


 


“Additional
Credit Amount” has the meaning set forth in Section 4.01(b)(ii).


 


“Adjusted
Capital Account Balance” means, with respect to each Partner, the balance
in such Partner’s Capital Account adjusted (i) by taking into account the
adjustments, allocations and distributions described in Treasury Regulations
Sections  1.704-1(b)(2)(ii)(c)(4), (5) and
(6); and (ii) by adding to such balance such Partner’s share of
Partnership Minimum Gain and Partner Nonrecourse Debt Minimum Gain, determined
pursuant to Treasury Regulations Sections 1.704-2(g) and 1.704-2(i)(5),
and any amounts such Partner is obligated to restore pursuant to any provision
of this Agreement or by applicable Law. The foregoing definition of Adjusted
Capital Account Balance is intended


 


1

















 


to comply with the provisions of Treasury
Regulations Section 1.704-1(b)(2)(ii)(d) and shall be interpreted
consistently therewith.


 


“Affiliate”
means, with respect to a specified Person, any other Person that directly, or
indirectly through one or more intermediaries, Controls, is Controlled by, or
is under common Control with, such specified Person.


 


“Agreement”
has the meaning set forth in the preamble of this Agreement.


 


“Amended
Tax Amount” has the meaning set forth in Section 4.01(b)(ii).


 


“Assignee”
has the meaning set forth in Section 7.07.


 


“Assumed
Tax Rate” means the highest effective marginal combined U.S. federal, state
and local income tax rate for a Fiscal Year prescribed for an individual or
corporate resident in New York, New York (taking into account (a) the
nondeductiblity of expenses subject to the limitation described in Section 67(a) of
the Code and (b) the character (e.g., long-term or short-term capital gain
or ordinary or exempt income) of the applicable income, but not taking into
account the deductibility of state and local income taxes for U.S. federal
income tax purposes). For the avoidance of doubt, the Assumed Tax Rate will be
the same for all Partners.


 


 “Available Cash” means, with respect to
any fiscal period, the amount of cash on hand that the General Partner, in its
reasonable discretion, deems available for distribution to the Partners, taking
into account all debts, liabilities and obligations of the Partnership then due
and amounts that the General Partner, in its reasonable discretion, deems
necessary to expend or retain for working capital or to place into reserves for
customary and usual claims with respect to the Partnership’s operations.


 


 “Capital Account” means the separate
capital account maintained for each Partner in accordance with Section 5.03.


 


“Capital
Contribution” means, with respect to any Partner, the aggregate amount of
money contributed to the Partnership and the Carrying Value of any property
(other than money), net of any liabilities assumed by the Partnership upon
contribution or to which such property is subject, contributed to the
Partnership pursuant to Article V.


 


“Carrying
Value” means, with respect to any Partnership asset, the asset’s adjusted
basis for U.S. federal income tax purposes, except that the initial carrying
value of assets contributed to the Partnership shall be their respective gross
fair market values on the date of contribution as determined by the General
Partner, and the Carrying Values of all Partnership assets may be adjusted to
equal their respective fair market values, in accordance with the rules set
forth in Treasury Regulation Section 1.704-1(b)(2)(iv)(f), except as
otherwise provided herein, as of: (a) the date of the acquisition of any
additional Units by any new or existing Partner in exchange for more than a de
minimis Capital Contribution; (b) the date of the distribution of more
than a de minimis amount of Partnership assets to a Partner; (c) the date
a Unit is relinquished to the Partnership; or (d) any other date specified
in the Treasury Regulations; provided,
however, that adjustments


 


2

















 


pursuant to clauses (a), (b), (c) and (d) above
shall be made only if such adjustments are deemed necessary or appropriate by
the General Partner to reflect the relative economic interests of the Partners.
The Carrying Value of any Partnership asset distributed to any Partner shall be
adjusted immediately before such distribution to equal its fair market value.
In the case of any asset that has a Carrying Value that differs from its
adjusted tax basis, Carrying Value shall be adjusted by the amount of
depreciation calculated for purposes of the definition of “Profits (Losses)”
rather than the amount of depreciation determined for U.S. federal income tax
purposes, and depreciation shall be calculated by reference to Carrying Value
rather than tax basis once Carrying Value differs from tax basis.


 


“Certificate”
has the meaning set forth in the preamble of this Agreement.


 


“Class”
means the classes of Units into which the interests in the Partnership may be
classified or divided from time to time pursuant to the provisions of this
Agreement.


 


“Class A
Units” means the Units of partnership interest in the Partnership
designated as the “Class A Units” herein and having the rights pertaining
thereto as are set forth in this Agreement.


 


“Code”
means the U.S. Internal Revenue Code of 1986, as amended from time to time.


 


“Common
Units” means common units representing limited partner interests of the
Issuer.


 


“Contingencies”
has the meaning set forth in Section 8.03(a).


 


“Contributing
Sharing Percentage” means [ ]%(1),provided that if additional Group
Partnerships are formed the percentage shall be adjusted as appropriate to
reflect the relative values of the Group Partnerships at such time and as
agreed to in good faith by the Partners.


 


 “Control” (including the terms “Controlled
by” and “under common Control with”) means the possession, directly
or indirectly, of the power to direct or cause the direction of the management
and policies of a Person, whether through the ownership of voting securities,
as trustee or executor, by contract or otherwise, including, without
limitation, the ownership, directly or indirectly, of securities having the
power to elect a majority of the board of directors or similar body governing
the affairs of such Person.


 


“Credit
Amount” has the meaning set forth in Section 4.01(b)(ii).


 


“Creditable
Non-U.S. Tax” means a non-U.S. tax paid or accrued for U.S. federal income
tax purposes by the Partnership, in either case to the extent that such tax is
eligible for credit under Section 901(a) of the Code. A non-U.S. tax
is a Creditable Non-U.S. Tax


 






(1) To be fixed at closing
based on the relative value of the Partnership in comparison with KKR Fund
Holdings.


 


3

















 


for these purposes without regard to whether
a Partner receiving an allocation of such non-U.S. tax elects to claim a credit
for such amount. This definition is intended to be consistent with the
definition of “Creditable Non-U.S. Tax” in Treasury Regulations Section 1.704-1(b)(4)(viii)(b),
and shall be interpreted consistently therewith.


 


“CVI”
means a contingent value interest of the Issuer issued pursuant to the CVI
Agreement.


 


“CVI
Agreement” means the Contingent Value Interests Agreement, dated as of               , 2008 (as amended, supplemented
or otherwise modified from time to time), between the Issuer and The Bank of
New York, as trustee, providing for the issuance of CVIs.


 


“CVI Event of Default” shall have the
meaning assigned to the term Event of Default in the CVI Agreement.


 


“CVI
Maturity Date” shall have the meaning assigned to the term Maturity Date in
the CVI Agreement.


 


“CVI
Termination” means a CVI Event of Default or the CVI Maturity Date.


 


“Delaware
Arbitration Act” has the meaning set forth in Section 10.10(d) of
this Agreement.


 


“Disabling
Event” means the General Partner ceasing to be the general partner of the
Partnership pursuant to Section 17-402 of the Act.


 


“Dissolution
Event” has the meaning set forth in Section 8.02.


 


“Encumbrance”
means any mortgage, claim, lien, encumbrance, conditional sales or other title
retention agreement, right of first refusal, preemptive right, pledge, option,
charge, security interest or other similar interest, easement, judgment or
imperfection of title of any nature whatsoever.


 


“ERISA”
means the U.S. Employee Retirement Income Security Act of 1974, as amended.


 


“Exchange
Act” means the U.S. Securities Exchange Act of 1934, as amended, including
the rules and regulations promulgated thereunder.


 


“Exchange
Agreement” means the exchange agreement dated as of or about the date
hereof among the Issuer, KKR Holdings, the Partnership and KKR Fund Holdings,
as amended from time to time.


 


“Exchange
Transaction” means an exchange of Units for Common Units pursuant to, and in
accordance with, the Exchange Agreement or, if the Issuer and the exchanging
Limited Partner shall mutually agree, a Transfer of Units to the Issuer, the
Partnership or any of their subsidiaries for other consideration.


 


4

















 


“Final Tax
Amount” has the meaning set forth in Section 4.01(b)(ii).


 


“Fiscal
Year” means (i) the period commencing upon the formation of the
Partnership and ending on December 31, 2008 or (ii) any subsequent
twelve-month period commencing on January 1 and ending on December 31.


 


 “GAAP” means accounting principles
generally accepted in the United States of America as in effect from time to
time.


 


“General
Partner” means KKR Management Holdings Corp., a corporation formed under
the laws of the State of Delaware, or any successor general partner admitted to
the Partnership in accordance with the terms of this Agreement.


 


“Group
Partnerships”  means,
collectively,  the Partnership and
KKR Fund Holdings (and any future partnership designated as a Group Partnership
by the Issuer (it being understood that such designation may only be made if
such future partnership enters into a group partnership agreement substantially
the same as, and which provides for substantially the same obligations as, the group
partnership agreements then in existence)), and any successors thereto.


 


 “Incapacity” means, with respect to any
Person, the bankruptcy, dissolution, termination, entry of an order of
incompetence, or the insanity, permanent disability or death of such Person.


 


“Initial
Limited Partner” means each Limited Partner as of the date of this
Agreement.


 


 “Issuer” means KKR & Co. L.P.,
a Delaware limited partnership, or any successor thereto.


 


“Issuer
Partnership Agreement” means the Amended and Restated Limited Partnership
Agreement of the Issuer to be dated substantially concurrently with the
consummation of the KPE Transaction, as such limited partnership agreement may
be amended, supplemented or restated from time to time.


 


“KKR &
Co. LLC” means KKR & Co. L.L.C., a limited liability company
formed under the laws of Delaware, or any successor thereto or any transferee
of the Class A Units thereof.


 


“KKR Fund
Holdings” means KKR Fund Holdings L.P., a Cayman limited partnership, or
any successor thereto.


 


“KKR
Holdings” means KKR Holdings L.P., a Cayman limited partnership, or any
successor thereto.


 


“KPE”
means KKR Private Equity Investors, L.P., a Guernsey limited partnership, or
any successor thereto.


 


5














 


“KPE
Transaction” means the transaction contemplated in the Purchase and Sale
Agreement.


 


“Law”
means any statute, law, ordinance, regulation, rule, code, executive order,
injunction, judgment, decree or other order issued or promulgated by any
national, supranational, state, federal, provincial, local or municipal
government or any administrative or regulatory body with authority therefrom
with jurisdiction over the Partnership or any Partner, as the case may be, or
principles in equity.


 


“Limited
Partner” means each of the Persons from time to time listed as a limited
partner in the books and records of the Partnership.


 


“Liquidation
Agent” has the meaning set forth in Section 8.03.


 


“Net
Taxable Income” has the meaning set forth in Section 4.01(b)(i).


 


“Nonrecourse
Deductions” has the meaning set forth in Treasury Regulations Section 1.704-2(b).
The amount of Nonrecourse Deductions of the Partnership for a fiscal year
equals the net increase, if any, in the amount of Partnership Minimum Gain of
the Partnership during that fiscal year, determined according to the provisions
of Treasury Regulations Section 1.704-2(c).


 


“Original
Agreement” has the meaning set forth in the preamble of this Agreement.


 


“Partner
Nonrecourse Debt Minimum Gain” means an amount with respect to each partner
nonrecourse debt (as defined in Treasury Regulations Section 1.704-2(b)(4))
equal to the Partnership Minimum Gain that would result if such partner
nonrecourse debt were treated as a nonrecourse liability (as defined in
Treasury Regulations Section 1.752-1(a)(2)) determined in accordance with
Treasury Regulations Section 1.704-2(i)(3).


 


“Partner
Nonrecourse Deductions” has the meaning ascribed to the term “partner
nonrecourse deductions” set forth in Treasury Regulations Section 1.704-2(i)(2).


 


“Partners”
means, at any time, each person listed as a Partner (including the General
Partner) on the books and records of the Partnership, in each case for so long
as he, she or it remains a partner of the Partnership as provided hereunder.


 


“Partnership”
has the meaning set forth in the preamble of this Agreement.


 


“Partnership
Minimum Gain” has the meaning set forth in Treasury Regulations Sections
1.704-2(b)(2) and 1.704-2(d).


 


“Percentage
Interest” means, with respect to any Partner, the quotient obtained by
dividing the number of Units then owned by such Partner by the number of Units
then owned by all Partners.


 


6

















 


“Person”
or “person” means any individual, corporation, partnership, limited
partnership, limited liability company, limited company, joint venture, trust,
entity, unincorporated or governmental organization or any agency or political
subdivision thereof.


 


“Profits”
and “Losses” means, for each Fiscal Year or other period, the taxable
income or loss of the Partnership, or particular items thereof, determined in
accordance with the accounting method used by the Partnership for U.S. federal
income tax purposes with the following adjustments: (a) all items of
income, gain, loss or deduction allocated pursuant to Section 5.05 shall
not be taken into account in computing such taxable income or loss but shall be
computed in accordance with the principles of this definition; (b) any
income of the Partnership that is exempt from U.S. federal income taxation and
not otherwise taken into account in computing Profits and Losses shall be added
to such taxable income or loss; (c) if the Carrying Value of any asset
differs from its adjusted tax basis for U.S. federal income tax purposes, any gain
or loss resulting from a disposition of such asset shall be calculated with
reference to such Carrying Value; (d) upon an adjustment to the Carrying
Value (other than an adjustment in respect of depreciation) of any asset,
pursuant to the definition of Carrying Value, the amount of the adjustment
shall be included as gain or loss in computing such taxable income or loss; (e) if
the Carrying Value of any asset differs from its adjusted tax basis for U.S.
federal income tax purposes, the amount of depreciation, amortization or cost
recovery deductions with respect to such asset for purposes of determining
Profits and Losses, if any, shall be an amount which bears the same ratio to
such Carrying Value as the U.S. federal income tax depreciation, amortization
or other cost recovery deductions bears to such adjusted tax basis (provided
that if the U.S. federal income tax depreciation, amortization or other cost
recovery deduction is zero, the General Partner may use any reasonable method
for purposes of determining depreciation, amortization or other cost recovery
deductions in calculating Profits and Losses); and (f) except for items in
(a) above, any expenditures of the Partnership not deductible in computing
taxable income or loss, not properly capitalizable and not otherwise taken into
account in computing Profits and Losses pursuant to this definition shall be
treated as deductible items.


 


“Purchase
and Sale Agreement” means the purchase and sale agreement between the
Partnership, KPE and the other parties thereto, dated July 27, 2008


 


“Securities
Act” means the U.S. Securities Act of 1933, as amended, including the rules and
regulations promulgated thereunder.


 


“Similar
Law” means any law or regulation that could cause the underlying assets of
the Partnership to be treated as assets of the Limited Partner by virtue of its
limited partner interest in the Partnership and thereby subject the Partnership
and the General Partner (or other persons responsible for the investment and
operation of the Partnership’s assets) to Laws that are similar to the
fiduciary responsibility or prohibited transaction provisions contained in
Title I of ERISA or Section 4975 of the Code.


 


“Special
Allocations” means any allocations to Partners pursuant to Section 5.05.


 


“Tax
Advances” has the meaning set forth in Section 5.07.


 


7

















 


“Tax Amount”
has the meaning set forth in Section 4.01(b)(i).


 


“Tax
Distributions” has the meaning set forth in Section 4.01(b)(i).


 


“Tax
Matters Partner” has the meaning set forth in Section 5.08.


 


“Transfer”
means, in respect of any Unit, property or other asset, any sale, assignment,
transfer, distribution or other disposition thereof, whether voluntarily or by
operation of Law, including, without limitation, the exchange of any Unit for
any other security.


 


“Transferee”
means any Person that is a transferee of a Partner’s interest in the
Partnership, or part thereof.


 


“Treasury
Regulations” means the income tax regulations, including temporary
regulations, promulgated under the Code, as such regulations may be amended
from time to time (including corresponding provisions of succeeding
regulations).


 


“Units”
means the Class A Units and any other Class of Units authorized in
accordance with this Agreement, which shall constitute interests in the
Partnership as provided in this Agreement and under the Act, entitling the
holders thereof to the relative rights, title and interests in the profits,
losses, deductions and credits of the Partnership at any particular time as set
forth in this Agreement, and any and all other benefits to which a holder
thereof may be entitled as a Partner as provided in this Agreement, together
with the obligations of such Partner to comply with all terms and provisions of
this Agreement.


 


ARTICLE II


 


FORMATION, TERM, PURPOSE AND POWERS


 


SECTION 2.01.     Formation.
The Partnership was formed as a limited partnership under the provisions of the
Act by the filing on July 22, 2008 of the Certificate as provided in the
preamble of this Agreement and the execution of the Original Agreement. If
requested by the General Partner, the Limited Partners shall promptly execute
all certificates and other documents consistent with the terms of this
Agreement necessary for the General Partner to accomplish all filing,
recording, publishing and other acts as may be appropriate to comply with all
requirements for (a) the formation and operation of a limited partnership
under the laws of the State of Delaware, (b) if the General Partner deems
it advisable, the operation of the Partnership as a limited partnership, or
partnership in which the Limited Partners have limited liability, in all
jurisdictions where the Partnership proposes to operate and (c) all other
filings required to be made by the Partnership.


 


SECTION 2.02.     Name.
The name of the Partnership shall be, and the business of the Partnership shall
be conducted under the name of, KKR Management Holdings L.P.


 


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SECTION 2.03.     Term.
The term of the Partnership commenced on the date of the filing of the
Certificate, and the term shall continue until the dissolution of the
Partnership in accordance with Article VIII. The existence of the
Partnership shall continue until cancellation of the Certificate in the manner
required by the Act.


 


SECTION 2.04.     Offices.
The Partnership may have offices at such places either within or outside the
State of Delaware as the General Partner from time to time may select.


 


SECTION 2.05.     Agent
for Service of Process. The Partnership’s registered agent for service of
process in the State of Delaware shall be as set forth in the Certificate, as
the same may be amended by the General Partner from time to time.


 


SECTION 2.06.     Business
Purpose. The Partnership was formed for the object and purpose of, and the
nature and character of the business to be conducted by the Partnership is,
engaging in any lawful act or activity for which limited partnerships may be
formed under the Act.


 


SECTION 2.07.     Powers
of the Partnership. Subject to the limitations set forth in this Agreement,
the Partnership will possess and may exercise all of the powers and privileges
granted to it by the Act including, without limitation, the ownership and
operation of the assets contributed to the Partnership by the Partners, by any
other Law or this Agreement, together with all powers incidental thereto, so
far as such powers are necessary or convenient to the conduct, promotion or
attainment of the purpose of the Partnership set forth in Section 2.06.


 


SECTION 2.08.     Partners;
Admission of New and Substitute Partners. Each of the Persons listed as
Partners in the books and records of the Partnership, as the same may be
amended from time to time in accordance with this Agreement, by virtue of the
execution of this Agreement, are admitted as Partners of the Partnership. The
rights, duties and liabilities of the Partners shall be as provided in the Act,
except as is otherwise expressly provided herein, and the Partners consent to
the variation of such rights, duties and liabilities as provided herein. A
Person may be admitted from time to time as a new Limited Partner with the
approval of the General Partner, as a substitute Limited Partner in accordance
with Section 7.09 or as an additional General Partner or substitute
General Partner in accordance with Section 7.08; provided, however,
that (i) each new and substitute Limited Partner shall execute and deliver
to the General Partner a supplement to this Agreement in the form of Annex A
hereto (or in such other form as the General Partner may reasonably require)
and (ii) each additional General Partner or substitute General Partner, as
the case may be, shall execute and deliver to the General Partner an
appropriate supplement to this Agreement, in each case pursuant to which the
new Partner agrees to be bound by the terms and conditions of the Agreement, as
it may be amended from time to time.


 


SECTION 2.09.     Withdrawal.
No Partner shall have the right to withdraw as a Partner of the Partnership
other than following the Transfer of all Units owned by such Partner in
accordance with Article VIII.


 


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ARTICLE III


 


MANAGEMENT


 


SECTION 3.01.     General
Partner. (a)  The business, property and affairs of the Partnership
shall be managed under the sole, absolute and exclusive direction of the
General Partner, which may from time to time delegate authority to officers or
to others to act on behalf of the Partnership.


 


(b) Without limiting the foregoing
provisions of this Section 3.01, the General Partner shall have the
general power to manage or cause the management of the Partnership (which may
be delegated to officers of the Partnership), including, without limitation,
the following powers:


 


(i)        to develop and prepare a
business plan each year which will set forth the operating goals and plans for
the Partnership;


 


(ii)       to execute and deliver or
to authorize the execution and delivery of contracts, deeds, leases, licenses,
instruments of transfer and other documents on behalf of the Partnership;


 


(iii)      the making of any
expenditures, the lending or borrowing of money, the assumption or guarantee
of, or other contracting for, indebtedness and other liabilities, the issuance
of evidences of indebtedness and the incurring of any other obligations;


 


(iv)      to employ, retain, consult
with and dismiss personnel;


 


(v)       to establish and enforce
limits of authority and internal controls with respect to all personnel and
functions;


 


(vi)      to engage attorneys,
consultants and accountants for the Partnership;


 


(vii)     to develop or cause to be
developed accounting procedures for the maintenance of the Partnership’s books
of account; and


 


(viii)    to do all such other acts as
shall be authorized in this Agreement or by the Partners in writing from time
to time.


 


SECTION 3.02.     Compensation.
The General Partner shall not be entitled to any compensation for services
rendered to the Partnership in its capacity as General Partner.


 


SECTION 3.03.     Expenses.
The Partnership shall bear and/or reimburse the General Partner for any
expenses incurred by the General Partner in connection with serving as the
general partner of the Partnership.


 


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SECTION 3.04.     Officers.
Subject to the direction and oversight of the General Partner, the day-to-day
administration of the business of the Partnership may be carried out by natural
persons who may be designated as officers by the General Partner, with titles
including but not limited to “Chief Executive Officer” or “Co-Chief Executive
Officer,” “Chief Operating Officer,” “Chief Financial Officer,” “General
Counsel,” “Chief Administrative Officer,” “Chief Compliance Officer,” “Principal
Accounting Officer,” “President,” “Vice President,” “Treasurer,” “Assistant
Treasurer,” “Secretary,” “Assistant Secretary,” “General Manager,” “Senior
Managing Director,” “Managing Director,” “Director” and “Principal” as and to
the extent authorized by the General Partner. The officers of the Partnership
shall have such titles and powers and perform such duties as shall be
determined from time to time by the General Partner and otherwise as shall
customarily pertain to such offices. Any number of offices may be held by the
same person. All officers shall be subject to the supervision and direction of
the General Partner and may be removed from such office by the General Partner
and the authority, duties or responsibilities of any officer of the Partnership
may be suspended by the General Partner from time to time, in each case in the
sole discretion of the General Partner. The General Partner shall not cease to
be a general partner of the Partnership as a result of the delegation of any
duties hereunder. No officer of the Partnership, in its capacity as such, shall
be considered a general partner of the Partnership by agreement, estoppel, as a
result of the performance of its duties hereunder or otherwise.


 


SECTION 3.05.     Authority
of Partners. No Limited Partner, in its capacity as such, shall participate
in the conduct of the business of the Partnership or have any control over the
business of the Partnership. Except as expressly provided herein, the Units do
not confer any rights upon the Limited Partners to participate in the affairs
of the Partnership described in this Agreement. Except as expressly provided
herein, the Limited Partners shall have no right to vote on any matter
involving the Partnership, including with respect to any merger, consolidation,
combination or conversion of the Partnership. The conduct, control and
management of the Partnership shall be vested exclusively in the General
Partner. In all matters relating to or arising out of the conduct of the
operation of the Partnership, the decision of the General Partner shall be the
decision of the Partnership. Except as required or permitted by Law, or
expressly provided in the ultimate sentence of this Section 3.05 or by
separate agreement with the Partnership, no Partner who is not also a General
Partner (and acting in such capacity) shall take any part in the management,
conduct or control of the operation or business of the Partnership in its
capacity as a Partner, nor shall any Partner who is not also a General Partner
(and acting in such capacity) have any right, authority or power to act for or
on behalf of or bind the Partnership in his or its capacity as a Partner in any
respect or assume any obligation or responsibility of the Partnership or of any
other Partner. Notwithstanding the foregoing, the Partnership may employ one or
more Partners from time to time, and such Partners, in their capacity as
employees, officers or agents of the Partnership (and not, for clarity, in
their capacity as Limited Partners of the Partnership), may take part in the
control, conduct and management of the business of the Partnership to the
extent such authority and power to act for or on behalf of the Partnership has
been delegated to them by the General Partner.


 


SECTION 3.06.     Action
by Written Consent or Ratification. Any action required or permitted to be
taken by the Partners pursuant to this Agreement shall be taken if all Partners
whose consent or ratification is required consent thereto or provide a
ratification in writing.


 


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ARTICLE IV


 


DISTRIBUTIONS


 


SECTION 4.01.     Distributions.
(a) The General Partner, in its sole discretion, may authorize
distributions by the Partnership to the Partners, which distributions shall be
made pro rata in accordance with
the Partners’ respective Percentage Interests, provided that the amount of any
distribution made by the Partnership to KKR & Co. LLC shall be reduced
by the amount, if any, that KKR & Co. LLC elects in its sole
discretion not to receive from such distribution relating to compensation paid
by the Partnership or its subsidiaries to their respective employees or agents.


 


(b)(i)  If
the General Partner reasonably determines that the Partnership has taxable
income for a Fiscal Year (“Net Taxable Income”), the General Partner
shall cause the Partnership to distribute Available Cash, to the
extent that other distributions made by the Partnership for such year were
otherwise insufficient, in an amount equal to the General Partner’s estimate of
the allocable Net Taxable Income in accordance with Article V,
multiplied by the Assumed Tax Rate (the “Tax Amount”) to cover such tax
liabilities (the “Tax Distributions”). For purposes of computing the Tax
Amount, the effect of any benefit under Section 743(b) of the Code
will be ignored. Tax Distributions shall be made pro rata in accordance with
the Partners’ respective Percentage Interests.


 


(ii)  Tax Distributions shall be
calculated and paid no later than one day prior to each quarterly due date for
the payment by corporations on a calendar year of estimated taxes under the
Code in the following manner (A) for the first quarterly period, 25% of
the Tax Amount, (B) for the second quarterly period, 50% of the Tax
Amount, less the prior Tax Distributions for the Fiscal Year, (C) for the
third quarterly period, 75% of the Tax Amount, less the prior Tax Distributions
for the Fiscal Year and (D) for the fourth quarterly period, 100% of the
Tax Amount, less the prior Tax Distributions for the Fiscal Year. Following
each Fiscal Year, and no later than one day prior to the due date for the
payment by corporations of income taxes for such Fiscal Year, the General
Partner shall make an amended calculation of the Tax Amount for such Fiscal
Year (the “Amended Tax Amount”), and shall cause the Partnership to
distribute a Tax Distribution, out of Available Cash, to the extent that
the Amended Tax Amount so calculated exceeds the cumulative Tax Distributions
previously made by the Partnership in respect of such Fiscal Year. If the
Amended Tax Amount is less than the cumulative Tax Distributions previously
made by the Partnership in respect of the relevant Fiscal Year, then the
difference (the “Credit Amount”) shall be applied against, and shall
reduce, the amount of Tax Distributions made for subsequent Fiscal Years. Within
30 days following the date on which the Partnership files a U.S. tax return on Form 1065,
the General Partner shall make a final calculation of the Tax Amount of such
Fiscal Year (the “Final Tax Amount”) and shall cause the Partnership to
distribute a Tax Distribution, out of Available Cash, to the extent that
the Final Tax Amount so calculated exceeds the Amended Tax Amount. If the Final
Tax Amount is less than the Amended Tax Amount in respect of the relevant
Fiscal Year, then the difference (“Additional Credit Amount”) shall be
applied against, and shall reduce, the amount of Tax Distributions made for
subsequent Fiscal Years. Any Credit Amount and Additional Credit Amount applied
against future Tax Distributions shall be treated as an amount actually
distributed pursuant to this Section 4.01(b) for purposes of the
computations herein.


 


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SECTION 4.02.     Liquidation
Distribution. Distributions made upon dissolution of the Partnership shall
be made as provided in Section 8.03.


 


SECTION 4.03.     Limitations
on Distribution. Notwithstanding any provision to the contrary contained in
this Agreement, the General Partner shall not make a Partnership distribution
to any Partner if such distribution would violate Section 17-607 of the
Act or other applicable Law.


 


ARTICLE V


 


CAPITAL CONTRIBUTIONS; CAPITAL ACCOUNTS;

TAX ALLOCATIONS; TAX MATTERS


 


SECTION 5.01.     Initial
Capital Contributions. (a) The
Partners have made, on or prior to the date hereof, Capital Contributions and,
in exchange, the Partnership has issued to the Partners the number of Class A
Units as specified in the books and records of the Partnership.


 


(b)  Upon issuance by
the Partnership of Class A Units to the Partners, the interests in the
Partnership as provided in this Agreement and under the Act held by KKR
Management Holdings Limited Partner LLC will be cancelled.


 


(c)  Upon
the CVI Termination, as an adjustment to the consideration received in exchange
for the Capital Contributions, (i) if Common Units are to be issued to
holders of the CVIs in accordance with the terms of the CVI Agreement, the
Partnership shall issue to the General Partner a number of Class A Units
equal to the number of Common Units to be issued under the CVI Agreement, and
the Partnership shall cancel an equal number of the Class A Units held by
KKR & Co. LLC(2) at such time (adjusting the number of Class A
Units issued and cancelled if there is an event requiring an adjustment under Section 3.01
of the CVI Agreement or if there is any similar event with respect to the
Partnership) or (ii) if KKR & Co. LLC contributes cash to the
Partnership equal to the cash consideration deliverable by the Issuer to the
holders of CVIs pursuant to the CVI Agreement (taking into account any tax incurred
in connection with the distribution (or series of distributions) of such cash
from the Partnership to the Issuer) multiplied by the Contribution Sharing
Percentage, no Class A Units shall be issued or cancelled and the
Partnership shall distribute such cash to the General Partner (and the General
Partner shall so distribute such cash to the Issuer).


 


(d)  Prior
to the date that is 10 days before the applicable Averaging Period (as defined
in the CVI Agreement), KKR & Co. LLC shall give notice to the Partnership
and the Issuer if it intends to contribute cash to the Partnership in an amount
set forth in Section 5.01(c)(ii) above. Under no circumstances shall
the Partnership make any commitment to the General Partner (or shall the
General Partner make any commitment to the Issuer) to deliver the cash required
by the


 






(2) To the extent it is ultimately determined that KKR & Co. LLC
will not be the holder of the KKR Holdings indirect interest in the
Partnership, the provisions of this Section 5.01 will be modified to reflect
the appropriate entity.


 


13

















 


Issuer under the CVI Agreement
unless and until it has received such notice from KKR & Co. LLC
stating that it intends to contribute cash to the Partnership in the amount set
forth in Section 5.01(c)(ii) above. After delivery of such notice,
KKR & Co. LLC shall make such cash contribution to the Partnership
(and the Partnership and the General Partner shall effect the series of
distributions of such cash to the Issuer) on or before the applicable date on
which such payment is due under the CVI Agreement.


 


(e)  The Issuer shall be entitled to enforce the provisions
of this Section 5.01 against the parties hereto.


 


SECTION 5.02.     No
Additional Capital Contributions. Except as otherwise provided in this Article V,
no Partner shall be required to make additional Capital Contributions to the
Partnership without the consent of such Partner or permitted to make additional
capital contributions to the Partnership without the consent of the General
Partner.


 


SECTION 5.03.     Capital
Accounts. (a) A separate capital account (a “Capital Account”)
shall be established and maintained for each Partner in accordance with the
provisions of Treasury Regulations Section 1.704-1(b)(2)(iv). To the
extent consistent with such Treasury Regulations, the Capital Account of each
Partner shall be credited with such Partner’s Capital Contributions, if any,
all Profits allocated to such Partner pursuant to Section 5.04 and any
items of income or gain which are specially allocated pursuant to Section 5.05;
and shall be debited with all Losses allocated to such Partner pursuant to Section 5.04,
any items of loss or deduction of the Partnership specially allocated to such
Partner pursuant to Section 5.05, and all cash and the Carrying Value of
any property (net of liabilities assumed by such Partner and the liabilities to
which such property is subject) distributed by the Partnership to such Partner.
Any references in any section of this Agreement to the Capital Account of a
Partner shall be deemed to refer to such Capital Account as the same may be
credited or debited from time to time as set forth above. In the event of any
transfer of any interest in the Partnership in accordance with the terms of
this Agreement, the Transferee shall succeed to the Capital Account of the
transferor to the extent it relates to the transferred interest.


 


(b) Adjustments. To the extent
there is an adjustment made pursuant to Section 5.01(c), an appropriate
adjustment will be made to the Capital Account of each Partner and the Carrying
Value of any Partnership assets.


 


SECTION 5.04.     Allocations
of Profits and Losses. Except as otherwise provided in this Agreement,
Profits and Losses (and, to the extent necessary, individual items of income,
gain or loss or deduction of the Partnership) shall be allocated in a manner
such that the Capital Account of each Partner after giving effect to the
Special Allocations set forth in Section 5.05 is, as nearly as possible, equal
(proportionately) to (i) the distributions that would be made pursuant to Article IV
if the Partnership were dissolved, its affairs wound up and its assets sold for
cash equal to their Carrying Value, all Partnership liabilities were satisfied
(limited with respect to each non-recourse liability to the Carrying Value of
the assets securing such liability) and the net assets of the Partnership were
distributed to the Partners pursuant to this Agreement, minus (ii) such
Partner’s share of Partnership Minimum Gain and Partner Nonrecourse Debt
Minimum Gain, computed immediately prior to the hypothetical sale of assets.
Notwithstanding the foregoing, the General Partner shall make such adjustments
to Capital Accounts as it determines in its sole


 


14

















 


discretion to be appropriate to ensure allocations are made in
accordance with a Partner’s interest in the Partnership.


 


SECTION 5.05.     Special
Allocations. Notwithstanding any other provision in this Article V:


 


(a)  Minimum
Gain Chargeback. If there is a net decrease in Partnership Minimum Gain or
Partner Nonrecourse Debt Minimum Gain (determined in accordance with the
principles of Treasury Regulations Sections 1.704-2(d) and 1.704-2(i))
during any Partnership taxable year, the Partners shall be specially allocated
items of Partnership income and gain for such year (and, if necessary,
subsequent years) in an amount equal to their respective shares of such net
decrease during such year, determined pursuant to Treasury Regulations Sections
1.704-2(g) and 1.704-2(i)(5). The items to be so allocated shall be
determined in accordance with Treasury Regulations Section 1.704-2(f). This
Section 5.05(a) is intended to comply with the minimum gain
chargeback requirements in such Treasury Regulations Sections and shall be
interpreted consistently therewith; including that no chargeback shall be
required to the extent of the exceptions provided in Treasury Regulations
Sections 1.704-2(f) and 1.704-2(i)(4).


 


(b)  Qualified
Income Offset. If any Partner unexpectedly receives any adjustments,
allocations, or distributions described in Treasury Regulations Section 1.704-1(b)(2)(ii)(d)(4),
(5) or (6), items of Partnership income and gain shall be specially
allocated to such Partner in an amount and manner sufficient to eliminate the
deficit balance in such Partner’s Adjusted Capital Account Balance created by
such adjustments, allocations or distributions as promptly as possible;  provided that an allocation
pursuant to this Section 5.05(b) shall be made only to the extent
that a Partner would have a deficit Adjusted Capital Account Balance in excess
of such sum after all other allocations provided for in this Article V
have been tentatively made as if this Section 5.05(b) were not in
this Agreement. This Section 5.05(b) is intended to comply with the “qualified
income offset” requirement of the Code and shall be interpreted consistently
therewith.


 


(c)  Gross
Income Allocation. If any Partner has a deficit Capital Account at the end
of any Fiscal Year which is in excess of the sum of (i) the amount such
Partner is obligated to restore, if any, pursuant to any provision of this
Agreement, and (ii) the amount such Partner is deemed to be obligated to
restore pursuant to the penultimate sentences of Treasury Regulations Section 1.704-2(g)(1) and
1.704-2(i)(5), each such Partner shall be specially allocated items of
Partnership income and gain in the amount of such excess as quickly as
possible; provided that an allocation pursuant to this Section 5.05(c) shall
be made only if and to the extent that a Partner would have a deficit Capital
Account in excess of such sum after all other allocations provided for in this Article V
have been tentatively made as if Section 5.05(b) and this Section 5.05(c) were
not in this Agreement.


 


(d)  Nonrecourse
Deductions. Nonrecourse Deductions shall be allocated to the Partners in
accordance with their respective Percentage Interests.


 


(e)  Partner
Nonrecourse Deductions. Partner Nonrecourse Deductions for any taxable
period shall be allocated to the Partner who bears the economic risk of loss
with respect to the liability to which such Partner Nonrecourse Deductions are
attributable in accordance with Treasury Regulations Section 1.704-2(j).


 


15














 


(f) Creditable Non-U.S. Taxes. Creditable
Non-U.S. Taxes for any taxable period attributable to the Partnership, or an
entity owned directly or indirectly by the Partnership, shall be allocated to
the Partners in proportion to the partners’ distributive shares of income
(including income allocated pursuant to Section 704(c) of the Code)
to which the Creditable Non-U.S. Tax relates (under principles of Treasury
Regulations Section 1.904-6). The provisions of this Section 5.05(f) are
intended to comply with the provisions of Treasury Regulations Section 1.704-1
(b)(4)(viii), and shall be interpreted consistently therewith.


 


(g) Ameliorative Allocations. Any
special allocations of income or gain pursuant to Sections 5.05(b) or 5.05(c) shall
be taken into account in computing subsequent allocations pursuant to Section 5.04
and this Section 5.05(g), so that the net amount of any items so allocated
and all other items allocated to each Partner shall, to the extent possible, be
equal to the net amount that would have been allocated to each Partner if such
allocations pursuant to Sections 5.05(b) or 5.05(c) had not occurred.


 


SECTION 5.06.     Tax
Allocations. For income tax purposes, each item of income, gain, loss and
deduction of the Partnership shall be allocated among the Partners in the same
manner as the corresponding items of Profits and Losses and specially allocated
items are allocated for Capital Account purposes; provided that in the
case of any asset the Carrying Value of which differs from its adjusted tax
basis for U.S. federal income tax purposes, income, gain, loss and deduction
with respect to such asset shall be allocated solely for income tax purposes in
accordance with the principles of Section 704(c)(1)(A) of the Code
(using the traditional method as set forth in Treasury Regulation 1.704-3(b),
unless otherwise agreed to by the Limited Partners) so as to take account of
the difference between Carrying Value and adjusted basis of such asset. Notwithstanding
the foregoing, the General Partner may make such allocations as it deems
reasonably necessary to ensure allocations are made in accordance with a
Partner’s interest in the Partnership, taking into account such facts and
circumstances as it deems reasonably necessary for this purpose.


 


SECTION 5.07.     Tax
Advances. To the extent the General Partner reasonably believes that the
Partnership is required by Law to withhold or to make tax payments on behalf of
or with respect to any Partner or the Partnership is subjected to tax itself by
reason of the status of any Partner (“Tax Advances”), the General
Partner may withhold such amounts and make such tax payments as so required. All
Tax Advances made on behalf of a Partner shall be repaid by reducing the amount
of the current or next succeeding distribution or distributions which would
otherwise have been made to such Partner or, if such distributions are not
sufficient for that purpose, by so reducing the proceeds of liquidation
otherwise payable to such Partner. For all purposes of this Agreement such Partner
shall be treated as having received the amount of the distribution that is
equal to the Tax Advance. Each Partner hereby agrees to indemnify and hold
harmless the Partnership and the other Partners from and against any liability
(including, without limitation, any liability for taxes, penalties, additions
to tax or interest) imposed as a result of the Partnership’s failure to
withhold or make a tax payment on behalf of such Partner which withholding or
payment is required pursuant to applicable Law.


 


SECTION 5.08.     Tax
Matters. The General Partner shall be the initial “tax matters partner”
within the meaning of Section 6231(a)(7) of the Code (the “Tax
Matters Partner”). The Partnership shall file as a partnership for federal,
state, provincial and local income tax


 


16

















 


purposes, except where otherwise required by
Law. All elections required or permitted to be made by the Partnership, and all
other tax decisions and determinations relating to federal, state, provincial
or local tax matters of the Partnership, shall be made by the Tax Matters
Partner, in consultation with the Partnership’s attorneys and/or accountants.
Tax audits, controversies and litigations shall be conducted under the
direction of the Tax Matters Partner. The Tax Matters Partner shall keep the
other Partners reasonably informed as to any tax actions, examinations or
proceedings relating to the Partnership and shall submit to the other Partners,
for their review and comment, any settlement or compromise offer with respect
to any disputed item of income, gain, loss, deduction or credit of the
Partnership. As soon as reasonably practicable after the end of each Fiscal
Year, the Partnership shall send to each Partner a copy of U.S. Internal
Revenue Service Schedule K-1, and any comparable statements required by
applicable U.S. state or local income tax Law as a result of the Partnership’s
activities or investments, with respect to such Fiscal Year. The Partnership
also shall provide the Partners with such other information as may be
reasonably requested for purposes of allowing the Partners to prepare and file
their own tax returns.


 


SECTION 5.09.     Other
Tax Provisions. Certain of the foregoing provisions and the other
provisions of this Agreement relating to the maintenance of Capital Accounts
are intended to comply with Treasury Regulations Section 1.704-1(b) and
shall be interpreted and applied in a manner consistent with such regulations. Sections
5.03, 5.04 and 5.05 may be amended at any time by the General Partner if
necessary, in the opinion of qualified tax advisor to the Partnership, to
comply with such regulations or any other applicable Law, so long as any such
amendment does not materially change the relative economic interests of the
Partners. Any distribution of cash to the General Partner pursuant to Section 5.01(c) shall
be treated as having been made in respect of preformation capital expenditures
of the Partnership pursuant to Treasury Regulations Section 1.707-4(d) to
the extent of any such expenditure.


 


ARTICLE VI


 


BOOKS AND RECORDS; REPORTS


 


SECTION 6.01.     Books
and Records. (a) At all times during the continuance of the
Partnership, the Partnership shall prepare and maintain separate books of
account for the Partnership in accordance with GAAP.


 


(b) Except as limited by Section 6.01(c),
each Limited Partner shall have the right to receive, for a purpose reasonably
related to such Limited Partner’s interest as a Limited Partner in the
Partnership, upon reasonable written demand stating the purpose of such demand
and at such Limited Partner’s own expense:


 


(i)            a
copy of the Certificate and this Agreement and all amendments thereto, together
with a copy of the executed copies of all powers of attorney pursuant to which
the Certificate and this Agreement and all amendments thereto have been
executed; and


 


(ii)           promptly
after their becoming available, copies of the Partnership’s U.S. federal, state
and local income tax returns and reports, if any, for the three most recent
years.


 


17

















 


(c) The General Partner may keep
confidential from the Limited Partners, for such period of time as the General
Partner determines in its sole discretion, (i) any information that the
General Partner reasonably believes to be in the nature of trade secrets or (ii) other
information the disclosure of which the General Partner believes is not in the
best interests of the Partnership, could damage the Partnership or its business
or that the Partnership is required by Law or by agreement with any third party
to keep confidential.


 


ARTICLE VII


 


PARTNERSHIP UNITS


 


SECTION 7.01.     Units.
Interests in the Partnership shall be represented by Units. The Units initially
are comprised of one Class: Class A Units. The General Partner may
establish, from time to time in accordance with such procedures as the General
Partner shall determine from time to time, other Classes, one or more series of
any such Classes, or other Partnership securities with such designations,
preferences, rights, powers and duties (which may be senior to existing Classes
and series of Units or other Partnership securities), as shall be determined by
the General Partner, including (i) the right to share in Profits and
Losses or items thereof; (ii) the right to share in Partnership
distributions; (iii) the rights upon dissolution and liquidation of the
Partnership; (iv) whether, and the terms and conditions upon which, the
Partnership may or shall be required to redeem the Units or other Partnership
securities (including sinking fund provisions); (v) whether such Unit or
other Partnership security is issued with the privilege of conversion or
exchange and, if so, the terms and conditions of such conversion or exchange; (vi) the
terms and conditions upon which each Unit or other Partnership security will be
issued, evidenced by certificates and assigned or transferred; (vii) the
method for determining the Percentage Interest as to such Units or other
Partnership securities; and (viii) the right, if any, of the holder of
each such Unit or other Partnership security to vote on Partnership matters,
including matters relating to the relative designations, preferences, rights,
powers and duties of such Units or other Partnership securities. Except as
expressly provided in this Agreement to the contrary, any reference to “Units”
shall include the Class A Units and any other Classes that may be
established in accordance with this Agreement. All Units of a particular Class shall
have identical rights in all respects as all other Units of such Class, except
in each case as otherwise specified in this Agreement.


 


SECTION 7.02.     Register.
The register of the Partnership shall be the definitive record of ownership of
each Unit and all relevant information with respect to each Partner. Unless the
General Partner shall determine otherwise, Units shall be uncertificated and
recorded in the books and records of the Partnership.


 


SECTION 7.03.     Registered
Partners. The Partnership shall be entitled to recognize the exclusive
right of a Person registered on its records as the owner of Units for all
purposes and shall not be bound to recognize any equitable or other claim to or
interest in Units on the part of any other Person, whether or not it shall have
express or other notice thereof, except as otherwise provided by the Act or
other applicable Law.


 


SECTION 7.04.     Exchange
Transactions. Each Limited Partner may exchange all or a portion of the
Units owned by such Limited Partner for Common Units pursuant to, and in
accordance with, the Exchange Agreement.


 


18

















 


SECTION 7.05.     Transfers;
Encumbrances.


 


(a) No Limited Partner or
Assignee may Transfer all or any portion of its Units (or any beneficial
interest therein) unless the General Partner consents in writing thereto, which
consent may be given or withheld, or made subject to such conditions as are
determined by the General Partner, in the General Partner’s sole discretion.
Any purported Transfer that is not in accordance with this Agreement shall be,
to the fullest extent permitted by law, null and void.


 


(b) No Limited Partner or
Assignee may create an Encumbrance with respect to all or any portion of its
Units (or any beneficial interest therein) other than Encumbrances that run in
favor of the Limited Partner unless the General Partner consents in writing
thereto, which consent may be given or withheld, or made subject to such
conditions as are determined by the General Partner, in the General Partner’s
sole discretion. Consent of the General Partner shall be withheld until the
holder of the Encumbrance acknowledges the terms and conditions of this
Agreement. Any purported Encumbrance that is not in accordance with this
Agreement shall be, to the fullest extent permitted by Law, null and void.


 


SECTION 7.06.     Further
Restrictions. Notwithstanding any contrary provision in this Agreement, in
no event may any Transfer of a Unit be made by any Limited Partner or Assignee
if:


 


(a) such Transfer is made
to any Person who lacks the legal right, power or capacity to own such Unit;


 


(b) such Transfer would
require the registration of such transferred Unit or of any Class of Unit
pursuant to any applicable U.S. federal or state securities laws (including,
without limitation, the Securities Act or the Exchange Act) or other non-U.S
securities laws or would constitute a non-exempt distribution pursuant to
applicable provincial or state securities laws;


 


(c) such Transfer would
cause the Partnership to become a publicly traded partnership taxable as a
corporation for U.S. federal tax law purposes;


 


(d) such Transfer would
cause (i) all or any portion of the assets of the Partnership to (A) constitute
“plan assets” (under ERISA, the Code or any applicable Similar Law) of any
existing or contemplated Limited Partner, or (B) be subject to the
provisions of ERISA, Section 4975 of the Code or any applicable Similar
Law, or (ii) the General Partner to become a fiduciary with respect to any
existing or contemplated Limited Partner, pursuant to ERISA, any applicable
Similar Law, or otherwise;


 


(e) to the extent
requested by the General Partner, the Partnership does not receive such legal
or tax opinions and written instruments (including, without limitation, copies
of any instruments of Transfer and such Assignee’s consent to be bound by this
Agreement as an Assignee) that are in a form satisfactory to the General
Partner, as determined in the General Partner’s sole discretion.


 


19

















 


SECTION 7.07.     Rights
of Assignees. Subject to Section 7.09, the Transferee of any permitted
Transfer pursuant to this Article VII will be an assignee only (“Assignee”),
and only will receive, to the extent transferred, the distributions and allocations
of income, gain, loss, deduction, credit or similar item to which the Partner
which transferred its Units would be entitled, and such Assignee will not be
entitled or enabled to exercise any other rights or powers of a Partner, such
other rights, and all obligations relating to, or in connection with, such
Interest remaining with the transferring Partner. The transferring Partner will
remain a Partner even if it has transferred all of its Units to one or more
Assignees until such time as the Assignee(s) is admitted to the
Partnership as a Partner pursuant to Section 7.09.


 


SECTION 7.08.     Admissions,
Withdrawals and Removals. (a) The General Partner may not be removed.


 


(b) No Person may be admitted to the
Partnership as an additional General Partner or substitute General Partner
without the prior written consent or ratification of Partners whose Percentage
Interests exceed 50% of the Percentage Interests of all Partners in the
aggregate. A General Partner will not be entitled to Transfer all of its Units
or to withdraw from being a General Partner of the Partnership unless another
General Partner shall have been admitted hereunder (and not have previously
been removed or withdrawn).


 


(c) No Limited Partner will be removed
or entitled to withdraw from being a Partner of the Partnership except in
accordance with Section 7.10.


 


(d) Except as otherwise provided in Article VIII
or the Act, no admission, substitution, withdrawal or removal of a Partner will
cause the dissolution of the Partnership. To the fullest extent permitted by
law, any purported admission, withdrawal or removal that is not in accordance
with this Agreement shall be null and void.


 


SECTION 7.09.     Admission
of Assignees as Substitute Limited Partners. An Assignee will become a
substitute Limited Partner only if and when each of the following conditions is
satisfied:


 


(a) the General Partner
consents in writing to such admission, which consent may be given or withheld,
or made subject to such conditions as are determined by the General Partner, in
each case in the General Partner’s sole discretion;


 


(b) if required by the
General Partner, the General Partner receives written instruments (including,
without limitation, copies of any instruments of Transfer and such Assignee’s
consent to be bound by this Agreement as a substitute Limited Partner) that are
in a form satisfactory to the General Partner (as determined in its sole
discretion);


 


(c) if required by the
General Partner, the General Partner receives an opinion of counsel
satisfactory to the General Partner to the effect that such Transfer is in
compliance with this Agreement and all applicable Law; and


 


(d) if required by the
General Partner, the parties to the Transfer, or any one of them, pays all of
the Partnership’s reasonable expenses connected with such Transfer (including,
but not limited to, the reasonable legal and accounting fees of the
Partnership).


 


20

















 


SECTION 7.10.     Withdrawal
and Removal of Limited Partners. If a Limited Partner ceases to hold any
Units, then such Limited Partner shall withdraw from the Partnership and shall
cease to be a Limited Partner and to have the power to exercise any rights or
powers of a Limited Partner.


 


ARTICLE VIII


 


DISSOLUTION, LIQUIDATION AND TERMINATION


 


SECTION 8.01.     No
Dissolution. Except as required by the Act, the Partnership shall not be
dissolved by the admission of additional Partners or withdrawal of Partners in
accordance with the terms of this Agreement. The Partnership may be dissolved,
liquidated wound up and terminated only pursuant to the provisions of this Article VIII,
and the Partners hereby irrevocably waive any and all other rights they may
have to cause a dissolution of the Partnership or a sale or partition of any or
all of the Partnership assets.


 


SECTION 8.02.     Events
Causing Dissolution. The Partnership shall be dissolved and its affairs
shall be wound up upon the occurrence of any of the following events (each, a “Dissolution
Event”):


 


(a) the entry of a decree of
judicial dissolution of the Partnership under Section 17-802 of the Act
upon the finding by a court of competent jurisdiction that the General Partner (i) is
permanently incapable of performing its part of this Agreement, (ii) has
been guilty of conduct that is calculated to affect prejudicially the carrying
on of the business of the Partnership, (iii) willfully or persistently
commits a material breach of this Agreement or (iv) conducts itself in a
manner relating to the Partnership or its business such that it is not
reasonably practicable for the other Partners to carry on the business of the
Partnership with the General Partner;


 


(b) any event which makes
it unlawful for the business of the Partnership to be carried on by the
Partners;


 


(c) the written consent of
all Partners;


 


(d) any other event not
inconsistent with any provision hereof causing a dissolution of the Partnership
under the Act;


 


(e) the Incapacity or
removal of the General Partner or the occurrence of a Disabling Event with
respect to the General Partner; provided that  the Partnership will not be dissolved or required to be
wound up in connection with any of the events specified in this Section 8.02(e) if:
(i) at the time of the occurrence of such event there is at least one
other general partner of the Partnership who is hereby authorized to, and
elects to, carry on the business of the Partnership; or (ii) all Limited
Partners consent to or ratify the continuation of the business of the
Partnership and the appointment of another general partner of the Partnership,
effective as of the event that caused the General Partner to cease to be a
general partner of the Partnership, within 90 days following the occurrence of
any such event, which consent shall be deemed (and if requested each Limited
Partner shall provide a written consent or ratification) to have been given for
all Limited Partners if the


 


21

















 


holders of more than 50% of the Units then
outstanding agree in writing to so continue the business of the Partnership.


 


SECTION 8.03.     Distribution
upon Dissolution. Upon dissolution, the Partnership shall not be terminated
and shall continue until the winding up of the affairs of the Partnership is
completed. Upon the winding up of the Partnership, the General Partner, or any
other Person designated by the General Partner (the “Liquidation Agent”),
shall take full account of the assets and liabilities of the Partnership and
shall, unless the General Partner determines otherwise, liquidate the assets of
the Partnership as promptly as is consistent with obtaining the fair value
thereof. The proceeds of any liquidation shall be applied and distributed in
the following order:


 


(a) First, to the
satisfaction of debts and liabilities of the Partnership (including
satisfaction of all indebtedness to Partners and their Affiliates to the extent
otherwise permitted by Law) including the expenses of liquidation, and
including the establishment of any reserve which the Liquidation Agent shall
deem reasonably necessary for any contingent, conditional or unmatured
contractual liabilities or obligations of the Partnership (“Contingencies”).
Any such reserve may be paid over by the Liquidation Agent to any
attorney-at-law, or acceptable party, as escrow agent, to be held for
disbursement in payment of any Contingencies and, at the expiration of such
period as shall be deemed advisable by the Liquidation Agent for distribution
of the balance in the manner hereinafter provided in this Section 8.03;
and


 


(b) The balance, if any,
to the Partners, pro rata to each
of the Partners in accordance with their Percentage Interests.


 


SECTION 8.04.     Time
for Liquidation. A reasonable amount of time shall be allowed for the
orderly liquidation of the assets of the Partnership and the discharge of
liabilities to creditors so as to enable the Liquidation Agent to minimize the
losses attendant upon such liquidation.


 


SECTION 8.05.     Termination.
The Partnership shall terminate when all of the assets of the Partnership,
after payment of or due provision for all debts, liabilities and obligations of
the Partnership, shall have been distributed to the holders of Units in the
manner provided for in this Article VIII, and the Certificate shall have
been cancelled in the manner required by the Act.


 


SECTION 8.06.     Claims
of the Partners. The Partners shall look solely to the Partnership’s assets
for the return of their Capital Contributions and if the assets of the
Partnership remaining after payment of or due provision for all debts,
liabilities and obligations of the Partnership are insufficient to return such
Capital Contributions, the Partners shall have no recourse against the
Partnership or any other Partner or any other Person. No Partner with a
negative balance in such Partner’s Capital Account shall have any obligation to
the Partnership or to the other Partners or to any creditor or other Person to
restore such negative balance during the existence of the Partnership, upon
dissolution or termination of the Partnership or otherwise, except to the
extent required by the Act.


 


22

















 


SECTION 8.07.     Survival
of Certain Provisions. Notwithstanding anything to the contrary in this
Agreement, the provisions of Section 9.02 and Section 10.10 shall
survive the termination of the Partnership.


 


ARTICLE IX


 


LIABILITY AND INDEMNIFICATION


 


SECTION 9.01.     Liability
of Partners.


 


(a) No Limited Partner shall be liable
for any debt, obligation or liability of the Partnership or of any other
Partner or have any obligation to restore any deficit balance in its Capital
Account solely by reason of being a Partner of the Partnership, except to the
extent required by the Act.


 


(b) This Agreement is not intended to,
and does not, create or impose any fiduciary duty on any of the Partners
(including without limitation, the General Partner) hereto or on their
respective Affiliates. Further, the Partners hereby waive any and all fiduciary
duties that, absent such waiver, may exist at or be implied by Law, and in
doing so, recognize, acknowledge and agree that their duties and obligations to
one another and to the Partnership are only as expressly set forth in this
Agreement and those required by the Act.


 


(c) To the extent that, under Law, any
Partner (including without limitation, the General Partner) has duties
(including fiduciary duties) and liabilities relating thereto to the
Partnership or to another Partner, the Partners (including without limitation,
the General Partner) acting under this Agreement will not be liable to the
Partnership or to any such other Partner for their good faith reliance on the
provisions of this Agreement. The provisions of this Agreement, to the extent
that they restrict or eliminate the duties and liabilities relating thereto of
any Partner (including without limitation, the General Partner) otherwise
existing under Law, are agreed by the Partners to replace to that extent such
other duties and liabilities of the Partners relating thereto (including
without limitation, the General Partner).


 


(d) The General Partner may consult with
legal counsel, accountants and financial or other advisors and any act or
omission suffered or taken by the General Partner on behalf of the Partnership
or in furtherance of the interests of the Partnership in good faith in reliance
upon and in accordance with the advice of such counsel, accountants or
financial or other advisors will be full justification for any such act or
omission, and the General Partner will be fully protected in so acting or
omitting to act so long as such counsel or accountants or financial or other
advisors were selected with reasonable care.


 


(e) Notwithstanding any other provision
of this Agreement or otherwise applicable provision of Law, whenever in this
Agreement the General Partner is permitted or required to make a decision (i) in
its “sole discretion” or “discretion” or under a grant of similar authority or
latitude, such General Partner shall be entitled to consider only such
interests and factors as it desires, including its own interests, and shall, to
the fullest extent permitted by applicable Law, have no duty or obligation to
give any consideration to any interest of or factors affecting the Partnership
or the Limited Partners, or (ii) in its “good faith” or under another
expressed standard, such General


 


23

















 


Partner shall act under such express standard and shall not be subject
to any other or different standards.


 


SECTION 9.02.     Indemnification.


 


(a) Indemnification. To the
fullest extent permitted by law, the Partnership shall indemnify any person
(including such person’s heirs, executors or administrators) who was or is made
or is threatened to be made a party to or is otherwise involved in any
threatened, pending or completed action, suit, claim or proceeding (brought in
the right of the Partnership or otherwise), whether civil, criminal,
administrative or investigative, and whether formal or informal, including
appeals, by reason of the fact that such person, or a person for whom such
person was the legal representative, is or was a Partner (including without
limitation, the General Partner) or a director, officer, partner, trustee,
employee or agent of a Partner (including without limitation, the General Partner)
or the Partnership or, while a director, officer, partner, trustee, employee or
agent of a Partner (including without limitation, the General Partner) or the
Partnership, is or was serving at the request of the Partnership as a director,
officer, partner, trustee, employee or agent of another corporation,
partnership, joint venture, trust, limited liability company, nonprofit entity
or other enterprise or person, for and against all loss and liability suffered
and expenses (including attorneys’ fees), judgments, fines and amounts paid in
settlement reasonably incurred by such person in connection with such action,
suit, claim or proceeding, including appeals; provided
that such person shall not be entitled to indemnification hereunder only to the
extent such person’s conduct constituted fraud, bad faith or willful misconduct.
Notwithstanding the preceding sentence, except as otherwise provided in Section 9.02(c),
the Partnership shall be required to indemnify a person described in such
sentence in connection with any action, suit, claim or proceeding (or part
thereof) commenced by such person only if the commencement of such action,
suit, claim or proceeding (or part thereof) by such person was authorized by
the General Partner.


 


(b) Advancement of Expenses. To
the fullest extent permitted by Law, the Partnership shall promptly pay
expenses (including attorneys’ fees) incurred by any person described in Section 9.02(a) in
appearing at, participating in or defending any action, suit, claim or
proceeding in advance of the final disposition of such action, suit, claim or
proceeding, including appeals, upon presentation of an undertaking on behalf of
such person to repay such amount if it shall ultimately be determined that such
person is not entitled to be indemnified under this Section 9.02 or
otherwise. Notwithstanding the preceding sentence, except as otherwise provided
in Section 9.02(c), the Partnership shall be required to pay expenses of a
person described in such sentence in connection with any action, suit, claim or
proceeding (or part thereof) commenced by such person only if the commencement
of such action, suit, claim or proceeding (or part thereof) by such person was
authorized by the General Partner.


 


(c) Unpaid Claims. If a claim for
indemnification (following the final disposition of such action, suit, claim or
proceeding) or advancement of expenses under this Section 9.02 is not paid
in full within thirty (30) days after a written claim therefor by any person
described in Section 9.02(a) has been received by the Partnership,
such person may file proceedings to recover the unpaid amount of such claim
and, if successful in whole or in part, shall be entitled to be paid the
expense of prosecuting such claim. In any such action the Partnership shall have
the burden of proving that such person is not entitled to the requested
indemnification or advancement of expenses under applicable Law.


 


24














 


(d)  Insurance. To the
fullest extent permitted by law, the Partnership may purchase and maintain
insurance on behalf of any person described in Section 9.02(a) against
any liability asserted against such person, whether or not the Partnership
would have the power to indemnify such person against such liability under the
provisions of this Section 9.02 or otherwise.


 


(e)  Enforcement of Rights. The
provisions of this Section 9.02 shall be applicable to all actions,
claims, suits or proceedings made or commenced on or after the date of this
Agreement, whether arising from acts or omissions to act occurring on, before
or after its adoption. The provisions of this Section 9.02 shall be deemed
to be a contract between the Partnership and each person entitled to
indemnification under this Section 9.02 (or legal representative thereof)
who serves in such capacity at any time while this Section 9.02 and the
relevant provisions of applicable Law, if any, are in effect, and any
amendment, modification or repeal hereof shall not affect any rights or
obligations then existing with respect to any state of facts or any action,
suit, claim or proceeding then or theretofore existing, or any action, suit,
claim or proceeding thereafter brought or threatened based in whole or in part
on any such state of facts. If any provision of this Section 9.02  shall be found to be invalid or limited in
application by reason of any Law, it shall not affect the validity of the
remaining provisions hereof. The rights of indemnification provided in this Section 9.02
shall neither be exclusive of, nor be deemed in limitation of, any rights to
which any person may otherwise be or become entitled or permitted by contract,
this Agreement, insurance or as a matter of Law, both as to actions in such
person’s official capacity and actions in any other capacity, it being the
policy of the Partnership that indemnification of any person whom the
Partnership is obligated to indemnify pursuant to Section 9.02(a) shall
be made to the fullest extent permitted by Law.


 


(f)  Benefit Plans. For
purposes of this Section 9.02, references to “other enterprises” shall
include employee benefit plans; references to “fines” shall include any excise
taxes assessed on a person with respect to an employee benefit plan; and
references to “serving at the request of the Partnership” shall include any
service as a director, officer, employee or agent of the Partnership which
imposes duties on, or involves services by, such director, officer, employee,
or agent with respect to an employee benefit plan, its participants, or
beneficiaries.


 


(g)  Non-Exclusivity. This Section 9.02
shall not limit the right of the Partnership, to the extent and in the manner
permitted by law, to indemnify and to advance expenses to, and purchase and
maintain insurance on behalf of, persons other than persons described in Section 9.02(a).


 


ARTICLE X


 


MISCELLANEOUS


 


SECTION 10.01.     Severability.
If any term or other provision of this Agreement is held to be invalid, illegal
or incapable of being enforced by any rule of Law, or public policy, all
other conditions and provisions of this Agreement shall nevertheless remain in
full force and effect so long as the economic or legal substance of the
transactions is not affected in any manner materially adverse to any party.
Upon a determination that any term or other provision is invalid, illegal or
incapable of being enforced, the parties hereto shall negotiate in good faith
to modify this Agreement so as to effect the original intent of the parties as closely
as possible in a mutually


 


25

















 


acceptable manner in order that the transactions contemplated hereby be
consummated as originally contemplated to the fullest extent possible.


 


SECTION 10.02.     Notices.
All notices, requests, claims, demands and other communications hereunder shall
be in writing and shall be given (and shall be deemed to have been duly given
upon receipt) by delivery in person, by courier service, by fax, or by
registered or certified mail (postage prepaid, return receipt requested) to the
respective parties at the following addresses (or at such other address for a
party as shall be specified in a notice given in accordance with this Section 10.02):


 


(a)  If to the Partnership, to:


 


KKR Management Holdings L.P.


c/o KKR Management Holdings Corp.


9 West 57th Street, Suite 4200


New York, New York, 10019


Attention:
Chief Financial Officer


Fax: (212)
750-0003


 


(b)  If to any Partner, to:


 


c/o KKR Management Holdings Corp.


9 West 57th Street, Suite 4200


New York, New York, 10019


Attention:
Chief Financial Officer


Fax: (212)
750-0003


 


(c) If to the General Partner, to:


 


KKR Management Holdings Corp.


9 West 57th Street, Suite 4200


New York, New York, 10019


Attention:
Chief Financial Officer


Fax: (212)
750-0003


 


SECTION 10.03.     Cumulative
Remedies. The rights and remedies provided by this Agreement are cumulative
and the use of any one right or remedy by any party shall not preclude or waive
its right to use any or all other remedies. Said rights and remedies are given
in addition to any other rights the parties may have by Law.


 


SECTION 10.04.     Binding
Effect. This Agreement shall be binding upon and inure to the benefit of
all of the parties and, to the extent permitted by this Agreement, their
successors, executors, administrators, heirs, legal representatives and
assigns.


 


SECTION 10.05.     Interpretation.
Unless the context requires otherwise: (a) any pronoun used in this
Agreement shall include the corresponding masculine, feminine or neuter forms,
and the singular form of nouns, pronouns and verbs shall include the plural and
vice versa; (b) references to Articles and Sections refer to Articles and
Sections of this Agreement; and 


 


26

















 


(c)  the terms “include,” “includes,”
“including” or words of like import shall be deemed to be followed by the words
“without limitation;” and the terms “hereof,” “herein” or “hereunder” refer to
this Agreement as a whole and not to any particular provision of this
Agreement. The table of contents and headings contained in this Agreement are
for reference purposes only, and shall not affect in any way the meaning or
interpretation of this Agreement.


 


SECTION 10.06.     Counterparts.
This Agreement may be executed and delivered (including by facsimile
transmission) in one or more counterparts, and by the different parties hereto
in separate counterparts, each of which when executed and delivered shall be
deemed to be an original but all of which taken together shall constitute one
and the same agreement. Copies of executed counterparts transmitted by telecopy
or other electronic transmission service shall be considered original executed
counterparts for purposes of this Section 10.06.


 


SECTION 10.07.     Further
Assurances. Each Limited Partner shall perform all other acts and execute
and deliver all other documents as may be necessary or appropriate to carry out
the purposes and intent of this Agreement.


 


SECTION 10.08.     Entire
Agreement. This Agreement constitutes the entire agreement among the
parties hereto pertaining to the subject matter hereof and supersedes all prior
agreements and understandings pertaining thereto.


 


SECTION 10.09.     Governing
Law. This Agreement shall be governed by, and construed in accordance with,
the law of the State of Delaware.


 


SECTION 10.10.     Arbitration.


 


(a)  Any and all disputes which
cannot be settled amicably, including any ancillary claims of any party arising
out of, relating to or in connection with the validity, negotiation, execution,
interpretation, performance or non-performance of this Agreement (including
without limitation the validity, scope and enforceability of this arbitration
provision) shall be finally settled by arbitration conducted by a single arbitrator
in New York, New York in accordance with the then-existing Rules of
Arbitration of the International Chamber of Commerce; provided, however, that
KKR Holdings L.P., a Cayman limited partnership, in its capacity as a Limited
Partner, shall not be subject to this Section 10.10. If the parties to the
dispute fail to agree on the selection of an arbitrator within thirty (30) days
of the receipt of the request for arbitration, the International Chamber of
Commerce shall make the appointment. The arbitrator shall be a lawyer and shall
conduct the proceedings in the English language. Performance under this
Agreement shall continue if reasonably possible during any arbitration
proceedings. Except as required by law or as may be reasonably required in
connection with ancillary judicial proceedings to compel arbitration, to obtain
temporary or preliminary judicial relief in aid of arbitration, or to confirm
or challenge an arbitration award, the arbitration proceedings, including any
hearings, shall be confidential, and the parties shall not disclose any awards,
any materials in the proceedings created for the purpose of the arbitration, or
any documents produced by another party in the proceedings not otherwise in the
public domain.


 


(b)  Notwithstanding the provisions
of paragraph (a), the General Partner may bring, or may cause the Partnership
to bring, on behalf of the General Partner or the Partnership or on behalf of
one or more Partners, an action or special proceeding in any court of competent


 


27

















 


jurisdiction for the purpose of compelling a party to arbitrate,
seeking temporary or preliminary relief in aid of an arbitration hereunder, or
enforcing an arbitration award and, for the purposes of this paragraph (b),
each Partner (i) expressly consents to the application of paragraph (c) of
this Section 10.10 to any such action or proceeding, (ii) agrees that
proof shall not be required that monetary damages for breach of the provisions
of this Agreement would be difficult to calculate and that remedies at law
would be inadequate, and (iii) irrevocably appoints the General Partner as
such Partner’s agent for service of process in connection with any such action
or proceeding and agrees that service of process upon such agent, who shall
promptly advise such Partner of any such service of process, shall be deemed in
every respect effective service of process upon the Partner in any such action
or proceeding.


 


(c)  EACH PARTNER HEREBY
IRREVOCABLY SUBMITS TO THE JURISDICTION OF THE FEDERAL AND STATE COURTS LOCATED
IN NEW YORK, NEW YORK FOR THE PURPOSE OF ANY JUDICIAL PROCEEDING BROUGHT IN
ACCORDANCE WITH THE PROVISIONS OF THIS SECTION 10.10, OR ANY JUDICIAL
PROCEEDING ANCILLARY TO AN ARBITRATION OR CONTEMPLATED ARBITRATION ARISING OUT
OF OR RELATING TO OR CONCERNING THIS AGREEMENT. Such ancillary judicial
proceedings include any suit, action or proceeding to compel arbitration, to
obtain temporary or preliminary judicial relief in aid of arbitration, or to
confirm or challenge an arbitration award. The parties acknowledge that the
fora designated by this paragraph (c) have a reasonable relation to this
Agreement, the Partnership and to the parties’ relationship with one another.
The Partners and the Partnership hereby waive, to the fullest extent permitted
by applicable Law, any objection which they now or hereafter may have to
personal jurisdiction or to the laying of venue of any such ancillary suit,
action or proceeding referred to in this Section 10.10 brought in any court
referenced herein and such parties agree not to plead or claim the same.


 


(d)  Notwithstanding any provision
of this Agreement to the contrary, this Section 10.10 shall be construed
to the maximum extent possible to comply with the laws of the State of Delaware,
including the Delaware Uniform Arbitration Act (10 Del. C. § 5701 et  seq.) (the “Delaware Arbitration Act”).
If, nevertheless, it shall be determined by a court of competent jurisdiction
that any provision or wording of this Section 10.10, including any rules of
the International Chamber of Commerce, shall be invalid or unenforceable under
the Delaware Arbitration Act, or other applicable Law, such invalidity shall
not invalidate all of this Section 10.10. In that case, this Section 10.10
shall be construed so as to limit any term or provision so as to make it valid
or enforceable within the requirements of the Delaware Arbitration Act or other
applicable Law, and, in the event such term or provision cannot be so limited,
this Section 10.10 shall be construed to omit such invalid or
unenforceable provision.


 


SECTION 10.11.     Expenses.
Except as otherwise specified in this Agreement, the Partnership shall be
responsible for all costs and expenses, including, without limitation, fees and
disbursements of counsel, financial advisors and accountants, incurred in
connection with its operation.


 


SECTION 10.12.     Amendments
and Waivers. (a)  This Agreement (including the Annexes hereto) may be
amended, supplemented, waived or modified by the action of the General Partner
without the consent of any other Partner; provided that any amendment
that would have a material adverse effect on the rights or preferences of any Class of
Units in relation to other


 


28

















 


Classes of Units must be approved by the holders of not less than a
majority of the Percentage Interests of the Class affected; provided
further, that the General Partner may, without the written consent of
any Limited Partner or any other Person, amend, supplement, waive or modify any
provision of this Agreement and execute, swear to, acknowledge, deliver, file
and record whatever documents may be required in connection therewith, to
reflect: (i) any amendment, supplement, waiver or modification that the General
Partner determines to be necessary or appropriate in connection with the
creation, authorization or issuance of any class or series of equity interest
in the Partnership; (ii) the admission, substitution, withdrawal or
removal of Partners in accordance with this Agreement; (iii) a change in
the name of the Partnership, the location of the principal place of business of
the Partnership, the registered agent of the Partnership or the registered
office of the Partnership; (iv) any amendment, supplement, waiver or
modification that the General Partner determines in its sole discretion to be
necessary or appropriate to address changes in U.S. federal income tax
regulations, legislation or interpretation; and (v) a change in the Fiscal
Year or taxable year of the Partnership and any other changes that the General
Partner determines to be necessary or appropriate as a result of a change in
the Fiscal Year or taxable year of the Partnership including a change in the
dates on which distributions are to be made by the Partnership.


 


(b)  No failure or delay by any
party in exercising any right, power or privilege hereunder (other than a
failure or delay beyond a period of time specified herein) shall operate as a
waiver thereof nor shall any single or partial exercise thereof preclude any
other or further exercise thereof or the exercise of any other right, power or
privilege. The rights and remedies herein provided shall be cumulative and not
exclusive of any rights or remedies provided by Law.


 


(c)  The General Partner may, in
its sole discretion, unilaterally amend this Agreement on or before the
effective date of the final regulations to provide for (i) the election of
a safe harbor under proposed Treasury Regulation Section 1.83-3(l) (or
any similar provision) under which the fair market value of a partnership
interest that is transferred is treated as being equal to the liquidation value
of that interest, (ii) an agreement by the Partnership and each of its
Partners to comply with all of the requirements set forth in such regulations
and Notice 2005-43 (and any other guidance provided by the U.S. Internal
Revenue Service with respect to such election) with respect to all partnership
interests transferred in connection with the performance of services while the election
remains effective, (iii) the allocation of items of income, gains,
deductions and losses required by the final regulations similar to proposed
Treasury Regulation Section 1.704-1(b)(4)(xii)(b) and (c), and (iv) any
other related amendments.


 


(d)  Except as may be otherwise
required by law in connection with the winding-up, liquidation, or dissolution
of the Partnership, each Partner hereby irrevocably waives any and all rights
that it may have to maintain an action for judicial accounting or for partition
of any of the Partnership’s property.


 


SECTION 10.13.     No
Third Party Beneficiaries. This Agreement shall be binding upon and inure
solely to the benefit of the parties hereto and their permitted assigns and
successors and nothing herein, express or implied, is intended to or shall
confer upon any other Person or entity, any legal or equitable right, benefit
or remedy of any nature whatsoever under or by reason of this Agreement (other
than pursuant to Section 5.01(e) and Section 9.02).


 


29

















 


SECTION 10.14.     Headings.
The headings and subheadings in this Agreement are included for convenience and
identification only and are in no way intended to describe, interpret, define
or limit the scope, extent or intent of this Agreement or any provision hereof.


 


SECTION 10.15.     Construction.
Each party hereto acknowledges and agrees it has had the  opportunity to draft, review and edit the
language of this Agreement and that it is the intent of the parties hereto that
no presumption for or against any party arising out of drafting all or any part
of this Agreement will be applied in any dispute relating to, in connection
with or involving this Agreement. Accordingly, the parties hereby waive to the
fullest extent permitted by law the benefit of any rule of Law or any
legal decision that would require that in cases of uncertainty, the language of
a contract should be interpreted most strongly against the party who drafted
such language.


 


SECTION 10.16.     Power
of Attorney. (a) Each Limited Partner, by its execution hereof, hereby
irrevocably makes, constitutes and appoints the General Partner as its true and
lawful agent and attorney in fact, with full power of substitution and full
power and authority in its name, place and stead, to make, execute, sign,
acknowledge, swear to, record and file (i) this Agreement and any
amendment to this Agreement that has been adopted as herein provided; (ii) the
original certificate of limited partnership of the Partnership and all
amendments thereto required or permitted by law or the provisions of this
Agreement; (iii) all certificates and other instruments (including
consents and ratifications which the Limited Partners have agreed to provide
upon a matter receiving the agreed support of Limited Partners) deemed
advisable by the General Partner to carry out the provisions of this Agreement
(including the provisions of Section 7.04) and Law or to permit the
Partnership to become or to continue as a limited partnership or partnership
wherein the Limited Partners have limited liability in each jurisdiction where
the Partnership may be doing business; (iv) all instruments that the
General Partner deems appropriate to reflect a change or modification of this
Agreement or the Partnership in accordance with this Agreement, including,
without limitation, the admission of additional Limited Partners or substituted
Limited Partners pursuant to the provisions of this Agreement; (v) all
conveyances and other instruments or papers deemed advisable by the General
Partner to effect the liquidation and termination of the Partnership; and (vi) all
fictitious or assumed name certificates required or permitted (in light of the
Partnership’s activities) to be filed on behalf of the Partnership.


 


(b)  The appointment by all Limited
Partners of the General Partner as attorney-in-fact will be deemed to be a
power coupled with an interest, in recognition of the fact that each of the
Partners under this Agreement will be relying upon the power of the General
Partners to act as contemplated by this Agreement in any filing and other
action by it on behalf of the Partnership, will survive the disability or
Incapacity of any Person hereby giving such power, and the transfer or
assignment of all or any portion of the Units of such Person, and will not be
affected by the subsequent Incapacity of the principal. In the event of the
assignment by a Partner of all of its Units, the foregoing power of attorney of
an assignor Partner will survive such assignment until such Partner has
withdrawn from the Partnership pursuant to Section 7.10.


 


SECTION 10.17.     Schedules.
The General Partner may from time to time execute and deliver to the Limited
Partners schedules which set forth information contained in the books and
records of the Partnership and any other matters deemed appropriate by the
General


 


30

















 


Partner. Such schedules shall be for information purposes only and
shall not be deemed to be part of this Agreement for any purpose whatsoever.


 


SECTION 10.18.     Partnership
Status. The parties intend to treat the Partnership as a partnership for
U.S. federal income tax purposes, and no person shall take any action
inconsistent with such classification.


 


[Remainder of Page Intentionally
Left Blank]


 


31

















 


IN WITNESS WHEREOF, the parties hereto have
entered into this Agreement or have caused this Agreement to be duly executed
by their respective authorized officers, in each case as of the date first
above stated.


 


 


	
   

  	
  KKR MANAGEMENT HOLDINGS CORP., as

  General Partner

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  KKR & CO. L.L.C., as Limited
  Partner

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  



 


[Amended and Restated Limited Partnership
Agreement of KKR Management Holdings L.P.]


 


32

















 


ANNEX
A


 


KKR Management Holdings Corp.


9 West 57th Street, Suite 4200


New York, New York, 10014


 


[Date]


 


Dear [    ],


 


Reference herein is made to the Amended and
Restated Limited Partnership Agreement of KKR Management Holdings L.P. (the “Partnership”)
dated as of [    ], 2008 by and between KKR Management
Holdings Corp., as general partner, and KKR Holdings L.P., as limited partner,
as it may be amended from time to time (the “Agreement”). By signing below, you
acknowledge your admission to the Partnership as a new or substitute Limited
Partner pursuant to Sections 2.08 and 7.9 of the Agreement and you agree to be
bound by the terms and conditions in the Agreement.


 


 


	
   

  	
  Sincerely,

  
	
   

  	
   

  
	
   

  	
  KKR MANAGEMENT HOLDINGS CORP.,

  as General Partner of the Partnership

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By: 

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  



 


Agreed and Accepted as of the date first set forth above:


 


[    ]