**Exhibit 10.1**
|   |   |   |
|--------|--------|--------|
|   |   |   |

AMENDMENT NO. 1

 

dated as of August 5,2009

 

to

 

CREDIT AGREEMENT

 

and

 

SECURITY AGREEMENT

 

dated as of November 10,2008
|   |   |   |
|--------|--------|--------|
|   |   |   |

----

 

**TABLE OF CONTENTS**

** **
| ** **      | ** **                                 | **Page** |
|-----------------|--------------------------------------------|----------|
|            |                                       |     |
| Section 1  | Defined Terms                              | 2        |
|            |                                       |     |
| Section 2  | Effectiveness of this Amendment No. 1 | 2        |
|            |                                       |     |
| Section 3  | Amendments                                 | 2        |
|            |                                       |     |
| Section 4  | Addition of KKR CLO 2009-1 as Borrower     | 15       |
|            |                                       |     |
| Section 5  | Conditions to Amendment No. 1         | 16       |
|            |                                       |     |
| Section 6  | Representations and Warranties             | 17       |
|            |                                       |     |
| Section 7  | Counterparts.                              | 19       |
|            |                                       |     |
| Section 8  | Relation to the Credit Agreement           | 19       |
|            |                                       |     |
| Section 9  | Continued Effectiveness                    | 19       |
|            |                                       |     |
| Section 10 | Waivers                                    | 19       |
|            |                                       |     |
| Section 11 | Survival of Representations and Warranties | 19       |
|            |                                       |     |
| Section 12 | Further  Miscellaneous Provisions          | 19       |

 

----

 

**AMENDMENT NO. 1 TO CREDIT AGREEMENT**

** **

This AMENDMENT NO. 1 (this “Amendment No. 1”),dated as of August 5, 2009, to the Original Credit Agreement referencedbelow and the Original Security Agreement referenced below, is entered into byand among (i) KKR FINANCIAL HOLDINGS LLC, a Delaware limited liabilitycompany (“KKR Financial”), KKR TRS HOLDINGS, LTD., a Cayman Islandscompany (“KKR TRS LTD”), KKR FINANCIAL HOLDINGS II, LLC, a Delawarelimited liability company (“KKR Holdings II”), KKR FINANCIAL HOLDINGSIII, LLC, a Delaware limited liability company (“KKR Holdings III”), KKRFINANCIAL HOLDINGS, INC., a Delaware corporation (“KKR Holdings”), KKRFINANCIAL HOLDINGS, LTD., a Cayman Islands company (“KKR Holdings LTD”),and**KKR FINANCIAL CLO 2009-1, LTD., aCayman Islands company (“KKR CLO 2009-1”, and collectively with KKRFinancial, KKR TRS LTD, KKR Holdings II, KKR Holdings III, KKR Holdings and KKRHoldings LTD, the “KKR Entities” and each, individually, a “KKREntity”), as Borrowers, (ii) BANK OF AMERICA, N.A., a national bankingassociation (together with its successors in interest, “BofA”), asAdministrative Agent and a Lender, and (iii) CITICORP NORTH AMERICA INC.,a Delaware corporation (together with its successors in interest, “Citicorp”),as a Lender.

 

**RECITALS**

** **

WHEREAS, the KKR Entities(other than KKR CLO 2009-1), BofA, Citicorp, Banc of America Securities LLC andCitigroup Global Markets Inc. entered into that certain Credit Agreement datedas of November 10, 2008 (the “Original Credit Agreement”, and asamended by this Amendment No. 1 and as the same may be further amended,supplemented or otherwise modified from time to time in accordance with itsterms, the “Credit Agreement”);

 

WHEREAS, the KKR Entities(other than KKR CLO 2009-1) and BofA, as Administrative Agent on behalf ofitself and the other Lenders, entered into that certain Security Agreementdated as of November 17, 2008 (the “Original Security Agreement”,and as amended by this Amendment No. 1 and as the same may be furtheramended, supplemented or otherwise modified from time to time in accordancewith its terms, the “Security Agreement”);

 

WHEREAS, the parties heretowish to amend the Original Credit Agreement and the Original Security Agreementwith respect to certain matters set forth herein;

 

WHEREAS, pursuant to Section 10.01thereof, no amendment or waiver of any provision of the Original CreditAgreement or any other Loan Document, and no consent to any departure by anyBorrower therefrom, shall be effective unless in writing signed by the RequiredLenders and the applicable Borrower, as the case may be, and acknowledged bythe Administrative Agent, and each such waiver or consent shall be effectiveonly in the specific instance and for the specific purpose for which given; providedthat no such amendment, waiver or consent may have the effects set forth in thefirst proviso to Section 10.01 of the Original Credit Agreement withoutthe written consent of each Lender or each affected Lender, as applicable; and provided,further, that no such amendment, waiver or consent shall, unless inwriting and signed by the Administrative Agent in addition to the Lendersrequired above, affect the rights or duties of the Administrative Agent underthe Original Credit Agreement or any other Loan Document;

 

WHEREAS, BofA is, as of thedate hereof, the Administrative Agent under the Original Credit Agreement;

 

WHEREAS, BofA and Citicorpconstitute, as of the date hereof, all of the Lenders under the Original CreditAgreement; and

 

----

 

WHEREAS, the KKR Entities(excluding KKR CLO 2009-1) constitute, as of the date hereof, all of theBorrowers under the Original Credit Agreement, and KKR CLO 2009-1 shall becomea Borrower under the Credit Agreement upon the effectiveness of this Amendment No. 1;

 

NOW THEREFORE, inconsideration of the premises and for other good and valuable consideration,the parties agree as follows:

 

**Section 1**                                            **DefinedTerms**.  Except asotherwise specified herein or as the context may otherwise require, capitalizedterms used but not otherwise defined in this Amendment No. 1 (including inthe recitals hereto) have the respective meanings set forth in the OriginalCredit Agreement.

 

**Section 2**                                            **Effectivenessof this Amendment No. 1**.  This Amendment No. 1 will be effectiveas of the date hereof (the “Effective Date”).

** **

**Section 3**                                            **Amendments**.  From and after the Effective Date, theOriginal Credit Agreement and the Security Agreement shall be amended asfollows:

 

## (a)           The words “KKR Financial CLO 2009-1,Ltd.,” are added to the introductory paragraph of the Original Credit Agreementafter the words “and collectively with” and before the words “KKR Financial,KKR TRS LTD.”

##  

## (b)           The following definitions shall beadded to Section 1.01 of the Original Credit Agreement in alphabeticalorder relative to the other words, terms and phrases defined therein:

##  

(i)                                    “AdditionalFinancial Assets” has the meaning specified in Section 6.13.

 

(ii)                                 “AmendmentEffective Date” means the “Effective Date” under (and as defined in)Amendment No. 1.

 

(iii)                              “AmendmentEffective Date Collateral” means all assets described on Schedule I toAmendment No. 1.

 

(iv)                             “Amendment No. 1”means Amendment No. 1 dated as of August 5, 2009 to this Agreement

 

(v)                                “CashEquivalents” means Investments that, as of any date of determination, areshort-term highly liquid investments that (i) are (or, without regard toany applicable rating requirements, are in the nature of) PermittedInvestments, (ii) are readily convertible into cash, and (iii) havean original maturity of three months or less.

 

(vi)                             “CLO Entity”means any of the following:  (a) KKRFinancial CLO 2005-1, Ltd., a Cayman Islands company, (b) KKR FinancialCLO 2005-2, Ltd., a Cayman Islands company, (c) KKR Financial CLO 2006-1,Ltd., a Cayman Islands company, (d) KKR Financial CLO 2007-1, Ltd., aCayman Islands company, (e) KKR Financial CLO 2007-A, Ltd., a CaymanIslands company and (f) KKR CLO 2009-1.

 

(vii)                          “KKR CLO2009-1” means KKR Financial CLO 2009-1, Ltd., a Cayman Islands company.

 

2

----

 

(viii)                      “KKRRevolving Credit Agreement” means that certain Revolving Credit Agreementdated November 10, 2008, by and between the lenders identified therein,including KKR Financial Advisors LLC and Kohlberg Kravis Roberts & Co.(Fixed Income) LLC, and the borrowers identified therein, including theBorrowers (other than KKR CLO 2009-1).

 

(ix)                              “Qualified Institutional Buyer” means a “qualifiedinstitutional buyer” as defined in Rule 144A under the Securities Act of1933, as amended.

 

(x)                                 “Reporting Date” means the third Business Day of eachcalendar week.

 

(xi)                              “Commitment Step-Down Date” means each of theInitial Commitment Step-Down Date, the Second Commitment Step-Down Date, theThird Commitment Step-Down Date, the Fourth Commitment Step-Down Date and theCommitment Adjustment Date.

 

(xii)                           “InitialCommitment Step-Down Date” means the date of Amendment No. 1.

 

(xiii)                        “SecondCommitment Step-Down Date” means September 30, 2009 or, if such day isnot a Business Day, the next succeeding Business Day.

 

(xiv)        “Third CommitmentStep-Down Date” means December 31, 2009 or, if such day is not aBusiness Day, the next succeeding Business Day.

 

(xv)         “Fourth CommitmentStep-Down Date” means March 31, 2010 or, if such day is not a BusinessDay, the next succeeding Business Day.

 

(xvi)        “Securities Account”has the meaning specified in the Uniform Commercial Code of the relevantjurisdiction.

 

(xvii)       “Subordination and Standstill Agreement” means anintercreditor, subordination, subordination and standstill or similar agreementexecuted by and between the Lenders (or the Administrative Agent on theirbehalf) and the other holder(s) of Liens on the Collateral, providing, ata minimum, that all such Liens on the Collateral are subordinate in theirentirety to the Lien of the Security Agreement, that such other holder(s) willnot exercise any rights against the Collateral or the obligors thereunder for aperiod reasonably acceptable to the Lenders following payment in full of theObligations, that such other holder(s) waive all rights in a bankruptcy orinsolvency of any related party, together with other customary provisionsreasonably requested by the Lenders.

 

## (c)           The definitions of “AdjustedCommitment”, “KKR Structured Finance Transaction” and “KKR Structured FinanceVehicle” in Section 1.01 of the Original Credit Agreement shall be deletedin their entirety without replacement.

##  

## (d)           The definition of “Audited FinancialStatements” shall be amended by deleting “2007” and replacing it with “2008.”

##  

## 3

## 

##  

## (e)           The definition of “Commitment” in Section 1.01of the Original Credit Agreement shall be deleted in its entirety and replacedwith the following:

##  

““Commitment”means, as to each Lender, its obligation to make Loans to the Borrowerspursuant to Section 2.01, in an aggregate principal amount at anyone time outstanding (expressed in Dollars) not to exceed:  (1) with respect to each Initial Lender,(a) prior to the Initial Commitment Step-Down Date, an amount equal to$150,000,000, (b) on and after the Initial Commitment Step-Down Date andprior to the Second Commitment Step-Down Date, an amount equal to $100,000,000,(c) on and after the Second Commitment Step-Down Date and prior to theThird Commitment Step-Down Date, an amount equal to the lesser of (i) theproduct of (A) such Lender’s Applicable Percentage immediately prior tothe Second Commitment Step-Down Date, multiplied by (B) $187,500,000, and (ii) suchLender’s Commitment immediately prior to the Second Commitment Step-Down Date, (d) onand after the Third Commitment Step-Down Date and prior to the FourthCommitment Step-Down Date, an amount equal to the lesser of (i) theproduct of (A) such Lender’s Applicable Percentage immediately prior tothe Third Commitment Step-Down Date, multiplied by (B) $175,000,000, and (ii) suchLender’s Commitment immediately prior to the Third Commitment Step-Down Date, (e) onand after the Fourth Commitment Step-Down Date and prior to the CommitmentAdjustment Date, the lesser of (i) the product of (A) such Lender’sApplicable Percentage immediately prior to the Fourth Commitment Step-DownDate, multiplied by (B) $162,500,000, and (ii) such Lender’sCommitment immediately prior to the Fourth Commitment Step-Down Date, and (f) onand after the Commitment Adjustment Date, an amount equal to the lesser of (i) theproduct of (A) such Lender’s Applicable Percentage immediately prior tothe Commitment Adjustment Date, multiplied by (B) $150,000,000 and (ii) suchLender’s Commitment immediately prior to the Commitment Adjustment Date; and (2) withrespect to each other Lender, an amount set forth in the Assignment andAssumption pursuant to which such Lender becomes a party hereto; providedthat each such amount set forth in clauses (1) and (2),respectively, of this definition shall be adjusted from time to time inaccordance with this Agreement including in connection with a termination orreduction contemplated by Section 2.05 or a transfer or assignmentcontemplated by Section 10.06.”

 

## (f)            The definition of “CommitmentAdjustment Date” in Section 1.01 of the Original Credit Agreement shall bedeleted in its entirety and replaced with the following:

##  

““Commitment AdjustmentDate” means June 30, 2010 or, if such date is not a Business Day, thenext succeeding Business Day.”

 

## (g)           The definition of “Commitment Excess”in Section 1.01 of the Original Credit Agreement shall be deleted in itsentirety and replaced with the following:

##  

““Commitment Excess”means, with respect to each Initial Lender, as of any date of determination, anamount equal to the excess (if any) of (a) the Outstanding Amount of suchInitial Lender’s Loans as of such date of determination, over (b) suchInitial Lender’s Commitment as of such date of determination after givingeffect to any reduction therein pursuant to the definition of “Commitment.”

 

4

----

 

## (h)           The definition of “Control Agreement”in Section 1.01 of the Original Credit Agreement shall be deleted in itsentirety and replaced with the following:

##  

““Control Agreement”means, with respect to (i) each Pledged Account that constitutes a DepositAccount, a deposit account control agreement which complies with Article IXof the Uniform Commercial Code as in effect in the relevant jurisdiction, and (ii) eachPledged Account that constitutes a Securities Account, a securities accountcontrol agreement which complies with Article VIII of the UniformCommercial Code as in effect in the relevant jurisdiction, in each case enteredinto by the bank at which such Pledged Account is located, each Borrower withrespect to such Pledged Account and the Administrative Agent on behalf ofitself and the Lenders, in form and substance reasonably acceptable to theAdministrative Agent.”

 

## (i)            The definition of “Fee Letter” in Section 1.01of the Original Credit Agreement shall be deleted in its entirety and replacedwith the following:

##  

““Fee Letter” means,together, (i) the letter agreement, dated November 10, 2008, betweenKKR Financial, the Administrative Agent and the Arrangers, and (ii) theletter agreement, dated August 5, 2009, between KKR Financial, theAdministrative Agent and the Arrangers.”

 

## (j)            The definition of “Financing SPE” inSection 1.01 of the Original Credit Agreement shall be amended to add thefollowing at the end of such definition:

##  

“It is understood and agreedthat KKR CLO 2009-1 is a Financing SPE for purposes of this Agreement.”

 

## (k)           The definition of “KKR Financial Form 10-K”in Section 1.01 of the Original Credit Agreement shall be deleted in itsentirety and replaced with the following:

##  

““KKR Financial Form 10-K”means KKR Financial’s AnnualReport on Form 10-K filed with the SEC on March 2, 2009, as amendedprior to the date of Amendment No.1.”

 

## (l)            The definition of “Maturity Date” inSection 1.01 of the Original Credit Agreement shall be deleted in itsentirety and replaced with the following:

##  

““Maturity Date”means November 10, 2011, and, if such date is not a Business Day, theMaturity Date shall be the next preceding Business Day.”

 

## (m)          The definition of “Non-U.S. Borrower”in Section 1.01 of the Original Credit Agreement shall be deleted in itsentirety and replaced with the following:

##  

““Non-U.S. Borrower”means any of KKR TRS LTD, KKR Holdings LTD or KKR CLO 2009-1.”

 

## (n)           The definition of “Pledged Accounts”shall be deleted in its entirety and replaced with the following:

 

5

----

 

““Pledged Accounts”means all operating Deposit Accounts and Securities Accounts owned by or onbehalf of any Borrower or any Subsidiary (excluding any such Securities Accountthat will be closed within 30 days of the Amendment Effective Date, providedthat all funds deposited therein are transferred to a Pledged Account withinone Business Day of such deposit), which accounts in existence as of theClosing Date and as of the Amendment Effective Date are identified on ScheduleII hereto.”

 

## (o)           The definition of “SpecifiedFinancial Assets” in Section 1.01 of the Original Credit Agreement shallbe amended by (i) deleting “or” at the end of clause (j); (ii) replacing“.” with “; or” at the end of clause (k), and (iii) adding the followingafter clause (k):

##  

“(l)          the Amendment Effective DateCollateral and the Additional Financial Assets.”

 

## (p)           The definition of “Subsidiary” in Section 1.01of the Original Credit Agreement shall be deleted in its entirety and replacedwith the following:

##  

““Subsidiary” of aPerson means a corporation, partnership, joint venture, limited liabilitycompany or other business entity of which a majority of the shares ofsecurities or other interests having ordinary voting power for the election ofdirectors or other governing body (other than securities or interests havingsuch power only by reason of the happening of a contingency) are at the timebeneficially owned, or the management of which is otherwise controlled,directly, or indirectly through one or more intermediaries, or both, by suchPerson; provided that each Non-U.S. Borrower shall be considered aSubsidiary of KKR Financial so long as KKR Financial owns (directly orindirectly through other Subsidiaries) a majority of the preferred shares ofsuch Non-U.S. Borrower; and providedfurther that none of the CLOEntities (other than KKR CLO 2009-1) shall be considered a Subsidiary of anyBorrower for so long as any Person other than KKR Financial or a Subsidiary orany affiliate thereof holds any Indebtedness of such CLO Entity.  Unless otherwise specified, all referencesherein to a “Subsidiary” or to “Subsidiaries” shall refer to a Subsidiary orSubsidiaries of KKR Financial.”

 

## (q)           The first sentence of Section 2.01is deleted in its entirety and replaced with the following:

##  

“Subject to the terms andconditions set forth herein, each Lender severally agrees to make Loans in anyApproved Currency to the Borrowers from time to time, on any Business Dayduring the Availability Period, in an aggregate amount not to exceed at anytime outstanding the amount of such Lender’s Commitment; provided thatonly Fixed Period Eurodollar Loans may be denominated in an Alternate Currency;and provided, further, that immediately after giving effect toany Loan, (i) there does not exist a Borrowing Base Deficiency greaterthan zero, and (ii) the aggregate Outstanding Amount of the Loans of anyLender does not exceed such Lender’s Commitment.”

 

## (r)            Section 2.04(b) of theOriginal Credit Agreement is deleted in its entirety and replaced with thefollowing:

##  

“(b)         [Reserved]”

 

6

----

 

## (s)           Section 2.04(c) of theOriginal Credit Agreement is deleted in its entirety and replaced with thefollowing:

##  

“(c)         If for any reason, at any time, there exists a BorrowingBase Deficiency greater than zero, then the Borrowers shall immediately prepaythe applicable Loans in an aggregate amount equal to such Borrowing BaseDeficiency.”

 

## (t)            Section 2.06(b) of theOriginal Credit Agreement is deleted in its entirety and replaced with thefollowing:

##  

“(b)         On each Commitment Step-Down Date, the Borrowers shall repayto each Initial Lender the principal amount of the Commitment Excess then ineffect for such Initial Lender on such date.”

 

## (u)           Section 5.23 of the OriginalCredit Agreement is deleted in its entirety and replaced with the following:

##  

**“5.23      Pledged Accounts. **The accounts identified on ScheduleII hereto constitute all of the Pledged Accounts in existence on theClosing Date and on the Amendment Effective Date, and such Pledged Accountsconstitute Collateral and are subject to the Lien of the Security Agreement.”

 

## (v)           The following Sections 5.24 and 5.25,respectively, shall be added at the end of Article V of the OriginalCredit Agreement:

##  

**“5.24.  Amendment Effective Date Collateral. **The Amendment Effective DateCollateral constitutes any and all loans, bonds, instruments, securities, andfinancial assets (excluding cash and Cash Equivalents that have been depositedinto a Pledged Account) directly or indirectly, legally or beneficially ownedby or held for the benefit of one or more Borrowers or their respectiveSubsidiaries as of the Amendment Effective Date, and such Amendment EffectiveDate Collateral is subject to the Lien of the Security Agreement**.**  For purposes of theforegoing, the assets described on Schedule 5.24 (collectively, the “SCFAssets”) are not legally or beneficially owned by or held for the benefitof any Borrower or Subsidiary and therefore are not part of the AmendmentEffective Date Collateral (notwithstanding the fact that the transfer of suchassets has not yet been settled unless the physical transfer of such assets hasnot occurred within 60 days of the date of Amendment No. 1).

 

**5.25.  KKR CLO 2009-1**.  All Indebtedness of and Equity Interests inKKR CLO 2009-1 are beneficially owned and, except to the extent they constituteCollateral, legally owned and controlled by one or more Borrowers and/orconsolidated Subsidiaries thereof.  Anyand all Liens on and Indebtedness secured by any Collateral owned, held orcontrolled by, or constituting collateral pledged by, KKR CLO 2009-1 are and shallremain subject and subordinate to the Lien of the Security Agreement withrespect to such Collateral, and the holder(s) of any such liens orindebtedness have agreed, pursuant to a market subordination and standstill orsimilar agreement, to subordination and standstill provisions reasonablyacceptable to the Lenders including, at a minimum, that such holder(s) shallnot exercise any rights with respect to such Collateral or otherwise until 90days after payment in full of the Obligations and that such liens would notadversely affect the security interest and Lien of the Lenders in suchCollateral or interfere with any

 

7

----

 

claim of the Lenders withrespect to such Collateral, including in the event of the bankruptcy orinsolvency of any party.”

 

## (w)          Sections 6.02(d) and (e) ofthe Original Credit Agreement shall be amended to delete the words “on a weeklybasis” in each place where such words appear and to substitute therefor thewords “on each Reporting Date” in each such place.

##  

## (x)            Section 6.02(f) of theOriginal Credit Agreement shall be deleted in its entirety and replaced withthe following:

##  

“(f)          [Reserved]”

 

## (y)           Section 6.12(a) of theOriginal Credit Agreement is deleted in its entirety and replaced with thefollowing:

##  

“              (a) Prior to the Commitment Adjustment Date,deposit or cause to be deposited into a Pledged Account that constitutesCollateral and is subject to the Lien of the Security Agreement, all of thefollowing: (i) all funds received with respect to the ownership andoperation of the business of any Borrower and/or any Subsidiary or any otheroperating cash flow, and all payments on and proceeds of the Collateral, ineach case in the possession of, held on behalf of or under the control of, anyBorrower and/or any Subsidiary; and (ii) all Sales Proceeds.”

 

## (z)            Section 6.12(c) of theOriginal Credit Agreement shall be amended (i) to delete the words “Within45 days of the date of this Agreement” and to substitute therefor the words “Within30 days of the Amendment Effective Date “ and (ii) to delete the words “onsuch date and on the Closing Date” and to substitute therefor the words “onsuch date, on the Closing Date and on the Amendment Effective Date”.

##  

## (aa)         Section 6.13 of the OriginalCredit Agreement is deleted in its entirety and replaced with the following:

##  

“**6.13      Additional Collateral.**

 

(a)           Promptly following (or, in the caseof Amendment Effective Date Collateral, by) the later of (i) the AmendmentEffective Date and (ii) the date of the acquisition or transfer thereof,grant a first priority perfected security interest to the Administrative Agentin the following, as additional Collateral subject to the Lien created by theSecurity Documents, and execute and deliver any documents reasonably requestedby the Administrative Agent and the Collateral Agent in connection therewith: (y) anyand all loans, bonds, instruments, securities, and financial assets (excludingcash and Cash Equivalents that have been deposited into a Pledged Account)directly or indirectly acquired by or otherwise transferred to or for thebenefit of one or more Borrowers or their respective Subsidiaries following theAmendment Effective Date (any such loans, bonds, instruments or securities,other than the foregoing cash and Cash Equivalents, being “AdditionalFinancial Assets”); and (z) the Amendment Effective DateCollateral.  Promptly following (and inany event within 30 days of) such grant, take all actions necessary on its partto otherwise deliver possession, record ownership and control of suchCollateral to the Administrative Agent (or the Collateral Agent on its behalf)to the extent required by, and in accordance with the provisions of, theSecurity Documents and the Collateral Agreement, provided, that, for theavoidance of doubt, the Liens on such 

 

8

----

 

Collateral are required toconstitute fully perfected first priority Liens in favor of the AdministrativeAgent in accordance with, and on the date required under, the precedingsentence.

 

(b)           With respect toany Collateral (including the Amendment Effective Date Collateral and theAdditional Financial Assets) acquired after the Closing Date that is requiredto be subject to the Lien created by any of the Security Documents but is notso subject, promptly (and in any event within 20 days after the acquisitionthereof or, with respect to the Amendment Effective Date Collateral, on orprior to the Amendment Effective Date) (i) execute and deliver to theAdministrative Agent and the Collateral Agent such amendments or supplements tothe relevant Security Documents or such other documents as the AdministrativeAgent or the Collateral Agent shall deem necessary or advisable to grant to theCollateral Agent, for its benefit and for the benefit of the Secured Party, aLien on such property which is not otherwise subject to any equal or priorsecurity interest, lien or encumbrance other than liens in favor of theAdministrative Agent for the benefit of the Lenders, and (ii) take allactions necessary to cause such Lien to be duly perfected to the extentrequired by such Security Document in accordance with all applicable law, includingthe filing of financing statements in such jurisdictions as may be reasonablyrequested by the Administrative Agent. Borrower shall otherwise take such actions and execute and/or deliver tothe Collateral Agent such documents as the Administrative Agent or the CollateralAgent shall require to confirm the validity, perfection and priority of theLien of the Security Documents on such after-acquired properties.”

 

## (bb)        The following Section 6.14 shall beadded at the end of Article VI of the Original Credit Agreement:

##  

“**6.14      KKR CLO 2009-1**.  With respect to any Indebtedness of KKR CLO2009-1 owned, held or controlled by any Borrower or Subsidiary (such Borroweror Subsidiary, for purposes of this Section 6.14, the “DebtHolder”), which Indebtedness is purportedly covered by a Subordination andStandstill Agreement entered into on behalf of the Debt Holder by a trustee,agent or other representative, comply or cause the Debt Holder to comply, asapplicable, with such Subordination and Standstill Agreement as if such DebtHolder was a direct signatory thereof.”

 

## (cc)         Section 7.01(a) of theOriginal Credit Agreement is deleted in its entirety and replaced with thefollowing:

##  

“(a)         as to Collateral only, (i) Liens created pursuant toany Loan Document, (ii) Permitted Encumbrances (only with respect to clauses(a) and (e) of the definition thereof) and (iii) Lienssecuring Secured Indebtedness permitted under Section 7.03(k), ineach case which are subordinate to the Lien of the Administrative Agent on suchCollateral and, in the case of Liens described in clause (iii) ofthis Section 7.01(a) and/or in Section 7.01(b)(iii),which are subject to a Subordination and Standstill Agreement reasonablyacceptable to the Administrative Agent;”.

 

## (dd)        Section 7.01(b)(iii) of theOriginal Credit Agreement is deleted in its entirety and replaced with thefollowing:

##  

“              (iii)                               Liens existingon the date hereof (or, in the case of KKR CLO 2009-1, on the AmendmentEffective Date) and listed on Schedule 7.01, and any renewals or 

 

9

----

 

extensions thereof, providedthat (A) the property or asset covered thereby is not changed, (B) theamount secured or benefited thereby is not increased except as contemplated by Section 7.03(b) (C) thedirect or any contingent obligor with respect thereto is not changed, (D) anyrenewal or extension of the obligations secured or benefited thereby ispermitted by Section 7.03(b), and (E) any relatedintercreditor, subordination and standstill or similar agreement is not changedwithout the prior consent of the Administrative Agent;”

 

## (ee)         Sections 7.02(c), 7.02(f) and 7.03(c) ofthe Original Credit Agreement are each amended to delete the phrase “, subjectto Section 7.15”.

##  

## (ff)          Sections 7.03(a) and 7.03(b) ofthe Original Credit Agreement are deleted in their entirety and replaced withthe following:

##  

“                                          (a)                                  Indebtednesscreated pursuant to the Loan Documents;

 

(b)           Indebtedness outstanding on the datehereof (or, in the case of KKR CLO 2009-1, on the Amendment Effective Date)listed on Schedule 7.03, and any refinancings, refundings, renewals orextensions thereof; provided that (i) the terms and conditions ofsuch extensions, renewals or refinancings of such Indebtedness do not, in theAdministrative Agent’s reasonable judgment, materially impair the prospects ofrepayment of the Obligations by the Borrowers or impair any Borrower’screditworthiness, (ii) such extensions, renewals or refinancings of suchIndebtedness do not result in an increase in the principal amount of suchIndebtedness so extended, renewed or refinanced or add any Borrower as liablewith respect thereto if such Borrower was not liable with respect to theoriginal Indebtedness, and (iii) the holders of such Indebtedness aresubject to a Subordination and Standstill Agreement reasonably acceptable tothe Administrative Agent and the provisions thereof are not changed without theprior consent of the Administrative Agent;”

 

## (gg)        Section 7.03(k) of theOriginal Credit Agreement is deleted in its entirety and replaced with thefollowing:

##  

“(k)         Secured Indebtedness having (i) no scheduled principalpayments due thereon prior to maturity and (ii) a maturity no earlier than90 days following the Maturity Date; provided any Lien on Collateral securingsuch Secured Indebtedness is subordinate to the Lien of the AdministrativeAgent on such Collateral and is subject to a Subordination and StandstillAgreement reasonably acceptable to the Administrative Agent;”.

 

## (hh)        Section 7.03 of the Original CreditAgreement is further amended to add “; and” at the end of clause (l) andto add the following new clause (m) immediately after clause (l):

##  

“(m)        Indebtedness under the KKR Revolving Credit Agreement.”

 

## (ii)           Section 7.03 of the OriginalCredit Agreement is further amended to add the following at the end of suchSection:

##  

“Notwithstanding theforegoing, in no event shall any Borrower Guarantee the Indebtedness of any CLOEntity.”

 

10

----

 

## (jj)           Section 7.05(e) of theOriginal Credit Agreement is deleted in its entirety and replaced with thefollowing:

##  

“(e)         Dispositions of property by a Subsidiary to a Borrower or toa consolidated Subsidiary including, but not limited to, any Disposition by KKRCLO 2009-1 to KKR Financial or to a consolidated Subsidiary thereof.”

 

## (kk)         Section 7.06(a) of theOriginal Credit Agreement is deleted in its entirety and replaced with thefollowing:

##  

“(a)         so long as (i) no event constituting a Default under Sections8.01(a), 8.01(f) or 8.01(h) shall have occurred andbe continuing, and (ii) no Event of Default shall have occurred and becontinuing, in each case, at the time of or would result therefrom, KKRFinancial may, subject to Section 7.09(c), (A) declare andmake Restricted Payments in cash to any Person that owns an Equity Interest inKKR Financial, and (B) declare and make Restricted Payments in cash to anyPerson that owns, and in order to effect a repurchase of, notes convertibleinto Equity Interests of KKR Financial or any Trust Preferred Indebtedness, providedthat such Restricted Payment under this sub-clause (B) (excluding ratabledistributions made to the holders of such convertible notes or Trust PreferredIndebtedness constituting scheduled payments made in accordance with the termsof the related governing documents) may not be made unless (x) aftergiving effect thereto, the aggregate amount of all such Restricted Paymentsmade since the Amendment Effective Date would not exceed $50,000,000, and (y) noBorrowing Base Deficiency exists;”.

 

## (ll)           Section 7.07 of the OriginalCredit Agreement is amended to add the words “and sales permitted by Section 9.10”at the end of clause (d) thereof.

##  

## (mm)       The reference to “$1,000,000,000” in Section 7.09(a) ofthe Original Credit Agreement is hereby deleted and replaced with “$700,000,000”.

##  

## (nn)         Section 7.08 of the OriginalCredit Agreement is amended to add the following words at the end of clause (D) thereof,before the words “, and”: “; provided, that such Indebtedness does notrestrict the ability of any Borrower to grant a first Lien on any Collateralpursuant to the Security Agreement.”

##  

## (oo)         Section 7.09(c) of theOriginal Credit Agreement is deleted in its entirety and replaced with thefollowing:

##  

“(c)         Dividends. Make any distributions to their respective shareholders (other any suchshareholder that is itself a Borrower or a Subsidiary) in respect of anytaxable year in an aggregate amount (as to all such shareholders) in excess of50% of KKR Financial’s estimated taxable income in respect of such taxable year as reasonably determined by KKRFinancial (determined without regard to gains and losses recognized on thedisposition of investments, which are generally determined on apartner-by-partner basis with reference to each partner’s tax basis in theirpartnership interest); provided, that no suchdistributions shall be made unless, before and after giving effect thereto, noBorrowing Base Deficiency exists or would exist; and provided, further,that notwithstandingthe limitation on distributions (and in addition to the amount of permitteddistributions) set forth above in this Section 7.09(c), any Borrower orSubsidiary that is a real estate investment trust for tax purposes may makedistributions to 

 

11

----

 

the preferred shareholdersof such real estate investment trust in respect of any taxable year in anamount that is not in excess of an amount equal to the lesser of (A) theamount necessary to be distributed by such real estate investment trust inorder to maintain its status as a real estate investment trust for taxpurposes, and (B) $50,000;”

 

## (pp)        Section 7.15 of the Original CreditAgreement is deleted in its entirety and replaced with the following:

##  

“**7.15      KKR CLO 2009-1. **Permit KKR CLO 2009-1 to issue orotherwise incur Indebtedness or issue Equity Interests to any Person other thanKKR Financial or its consolidated Subsidiaries; or effect a Disposition of anyIndebtedness of, or Equity Interests in, KKR CLO 2009-1 to any Person otherthan KKR Financial or its consolidated Subsidiaries; take or fail to take anyaction that would breach, violate, conflict with, or contravene anySubordination and Standstill Agreement governing or relating to KKR CLO 2009-1and the Collateral held, owned or controlled thereby; or file or commence (orcause any Person to file or commence) any claim with respect to, or commence(or cause any Person to commence) any proceeding relating to, the involuntarybankruptcy, insolvency, receivership, liquidation, reorganization or similarproceeding of KKR CLO 2009-1.”

 

## (qq)        Section 8.01(b) of theOriginal Credit Agreement is deleted in its entirety and replaced with thefollowing:

##  

“                                          (b)                                 SpecificCovenants.  AnyBorrower fails to perform or observe any term, covenant or agreement containedin any of Section 6.03 (Notices), 6.05(a) (Preservation ofExistence), or 6.11 (Use of Proceeds) or Article VII (NegativeCovenants). Any Borrower fails to perform or observe any covenant contained in Section 6.02(Certificates; Other Information) (other than the proviso in the first sentenceof the penultimate paragraph thereof), Section 6.13 (AdditionalCollateral), and Section 6.14 (KKR CLO 2009-1) and such failurecontinues for five (5) Business Days after notice thereof from theAdministrative Agent; or”

 

## (rr)          Section 9.10(b) of theOriginal Credit Agreement shall be deleted in its entirety and the followingsubstituted therefor:

##  

“                                          (b)                                 The Borrowersat any time may effect a sale or exchange of any Specified Financial Asset constitutingCollateral and, as contemplated by Section 9.10(a), obtain arelease of any Lien thereon granted to or held by the Administrative Agentunder any Loan Document; provided, that (i) the Borrowers shalldeposit any Sales Proceeds received in connection with the sale or exchange ofsuch Specified Financial Asset into a Pledged Account that constitutesCollateral, (ii) the Borrowing Base Deficiency would be zero after givingeffect to the subject sale or exchange, and (iii) the conditions set forthin Section 2.3(a) of the Security Agreement are satisfied inconnection with such release; and provided, further, that,notwithstanding anything herein to the contrary, the Borrowers may at any timesurrender notes or other securities of a CLO Entity, or exchange any such notesor securities for other notes or securities, or cancel any convertible notes orTrust Preferred Indebtedness of any Borrower or Subsidiary thereof that havebeen repurchased by a Borrower or any such Subsidiary, and obtain a release ofthe Administrative Agent’s Lien on the notes or securities so disposed of orcancelled, if (x) the conditions set forth in Section 2.3(a) ofthe Security Agreement are satisfied in connection with such release and (y) theBorrowing Base Deficiency would be zero after 

 

12

----

 

giving effect to suchsurrender, exchange or cancellation; and provided, further, thatreferences to “exchange” in this Section 9.10(b) shall mean anexchange effected in connection with a convertible notes exchange offer,conversion privilege, reorganization, recapitalization, tender offer, exchangeoffer or similar right reasonably acceptable to the Administrative Agent,represented by a Specified Financial Asset in accordance with the termsthereof.

 

## (ss)         Clause (B) of Section 10.06(a) ofthe Original Credit Agreement is deleted in its entirety and replace with thefollowing:

##  

“(B) in any event, onlyif the assignee, participant or pledgee is a Qualified Purchaser and aQualified Institutional Buyer; provided that (in the absence of actualknowledge to the contrary) no existing Lender takes any responsibility fordetermining whether any assignee, participant or pledgee is a QualifiedPurchaser or a Qualified Institutional Buyer other than to obtain acertification therefrom to that effect or to have a reasonable belief that suchassignee, participant or pledgee is a Qualified Purchaser or a QualifiedInstitutional Buyer, as applicable.”

 

## (tt)          Section 10.06(h) of theOriginal Credit Agreement is deleted in its entirety and replace with thefollowing:

##  

“                                          (h)                                 Each InitialLender hereby represents that, as of the date of this Agreement, it is aQualified Purchaser and a Qualified Institutional Buyer.”

 

## (uu)        Section 10.20 of the OriginalCredit Agreement is amended to add the following at the end of such Section:

##  

“In the event there is morethan one Pledged Account, such excess shall be allocated among the PledgedAccounts in accordance with the written instructions of KKR Financial.”

 

## (vv)        Schedule II of the Original CreditAgreement is hereby amended to reflect the addition of the information setforth on Exhibit 3A attached hereto.

##  

## (ww)       The reference to “3.0%” in the definitionof “Applicable Rate” in the Glossary on Schedule III to the Original CreditAgreement is hereby deleted and replaced with “4.0%”.

##  

## (xx)         Schedule 5.06 of the Original CreditAgreement is amended to add the additional disclosures set forth on Exhibit 3Bhereto.

##  

## (yy)        Schedule 5.24 is hereby added to theOriginal Credit Agreement, in the form and including the information set forthon Exhibit 3C attached hereto.

##  

## (zz)         Schedules 7.01 and 7.03 of the OriginalCredit Agreement are hereby amended to reflect the addition of the informationrelating to KKR CLO 2009-1 set forth on Exhibits 3C and 3D attached hereto,respectively.

##  

## (aaa)       Schedule 10.02 of the Original CreditAgreement is deleted in its entirety and replaced by a new Schedule 10.02 inthe form and including the information set forth on Exhibit 3E attachedhereto.

 

13

----

 

## (bbb)      Exhibit A (form of Loan Notice), Exhibit C(form of Promissory Note), Exhibit D (form of Borrowing Base Report), Exhibit E(form of Compliance Certificate), and Exhibit F (form of Assignment andAssumption) to the Original Credit Agreement shall be amended to add the nameof KKR CLO 2009-1 as party thereto in the capacity of Borrower wherever thenames of the other Borrowers appear.

##  

## (ccc)       Exhibit E to the Original CreditAgreement (the form of Compliance Certificate) shall be further amended bydeleting the Dollar amount appearing opposite the term “Minimum RequiredConsolidated Tangible Net Worth” in Line I.B of Schedule 2 thereof and tosubstitute therefor the Dollar  amount “$700,000,000”.

##  

## (ddd)      Annex I to Exhibit F to the OriginalCredit Agreement is amended to add the words “and a Qualified InstitutionalBuyer” following the words “Qualified Purchaser”.

##  

## (eee)       The Security Agreement is amended byadding the words “KKR Financial CLO 2009-1, Ltd.,” to the introductoryparagraph of the Security Agreement after the words “and together with” andbefore the words “KKR Financial, KKR TRS LTD.”

##  

## (fff)         Section 2.1 of the SecurityAgreement is amended to add the words “, all Amendment Effective Date Collateraland all Additional Financial Assets” at the end of clause (a) immediatelybefore the semi-colon.

##  

## (ggg)      Section 2.3(a) of the SecurityAgreement is deleted in its entirety and replaced by the following:

##  

## “(a) As soonas reasonably practicable following the written request of any Company for therelease of the Administrative Agent’s security interest in any portion of theCollateral, the Administrative Agent, on behalf of the Lenders, hereby agreesto provide for the release of such Collateral:

##  

## (i)            upon termination ofthe Aggregate Commitments and payment in full of all Obligations (other thancontingent indemnification obligations);

##  

## (ii)           where the CreditAgreement is otherwise terminated in accordance with its terms;

##  

## (iii)          in the event of asale or exchange of a Specified Financial Asset constituting Collateral aspermitted under the Credit Agreement or under any other Loan Document; or

##  

## (iv)         in connection withany other action to be taken by such Company with respect to such Collateral tothe extent not expressly prohibited under the Credit Agreement or any otherLoan Document; provided that the Company shall have complied with therequirements of Section 9.10 of the Credit Agreement, if applicable;

##  

provided that (A) theAdministrative Agent shall have received from the Companies contemporaneouslywith such written request (1) an updated Borrowing Base Report reflectingthe Borrowing Base both immediately before and immediately after giving effectto the release and (2) a certificate that no Default or Event of Defaulthas occurred 

 

14

----

 

and is continuing or wouldexist or occur after giving effect to the release, (B) no Default or Eventof Default has occurred and is continuing or would otherwise exist or occurafter giving effect to the release, (C) no amounts are due and owing tothe Administrative Agent under the Control Agreement, and (D) theBorrowing Base Deficiency is zero and will continue to be zero after givingeffect to the release.”

 

## (hhh)      Section 2.3(b) of the SecurityAgreement is hereby amended (i) by deleting the words “conditions setforth in Section 2.3(a)” and replacing them with the words “conditions setforth in the last proviso of Section 2.3(a)” and (ii) deleting thereference to “clauses (B) and (C)” and replacing it with a reference to “clauses(B), (C) and (D)”.

##  

## (iii)          Section 5.2 of the SecurityAgreement is deleted and the following substituted therefor:

##  

## “**5.2**        **Pledged Accounts****.**  The Companies shall promptly notify theAdministrative Agent in writing of any operating deposit account and/oroperating securities account referred to in Section 2.1(d) thatis opened by or on behalf of any Company or a Subsidiary thereof after the dateof the Original Credit Agreement.  Foreach such operating account that any Company or any Subsidiary thereofcurrently maintains (excluding any such Securities Account that will beclosed within 30 days of the Amendment Effective Date, provided that all fundsdeposited therein are transferred to a Pledged Account within one Business Dayof such deposit), orat any time hereafter opens and maintains, such Company shall under anagreement in form and substance satisfactory to the Administrative Agent(acting reasonably) cause (or cause such Subsidiary to cause) the depositarybank to agree to comply, without further consent of the Company (or suchSubsidiary), at any time with instructions from the Administrative Agent tosuch depositary bank directing the disposition of funds from time to timecredited to such account.”

##  

## (jjj)          The second sentence of Section 18of the Security Agreement is amended by deleting such sentence in its entiretyand replacing it with the following:

##  

## “After deductingall of said expenses, the residue of any proceeds of collection or sale orother disposition of Collateral shall, to the extent actually received in cash,be applied to the payment of the Obligations in such order or preference as isprovided in the Credit Agreement, reasonable allowance and provision being madefor any Obligations not then due, and any excess remaining thereafter shall bedistributed to the Pledged Accounts in accordance with Section 10.20 ofthe Credit Agreement.”

##  

## (kkk)       Section 24 of the Security Agreementis amended to delete the words “Each of KKR TRS Ltd. and KKR Holdings Ltd.” andto substitute therefor the words “Each Non-U.S. Borrower”.

##  

## (lll)          Exhibit A of the SecurityAgreement is deleted in its entirety and replaced by a new Exhibit A inthe form set forth on Exhibit 4 attached hereto.

##  

**Section 4**                                           **Additionof KKR CLO 2009-1 as Borrower****.**  On the Effective Date, KKR CLO 2009-1 shallbecome a party to the Credit Agreement, the Security Agreement, the CollateralAgreement and the Fee Letter, as a Borrower, a Company, a Pledgor and anaddressee, respectively, thereunder and shall have the rights and obligationsof a “Borrower” under the Credit Agreement, of a “Company” under the SecurityAgreement, of a “Pledgor” under the Collateral Agreement, and of an 

 

15

----

 

addresseeunder the Fee Letter.  As of theEffective Date, (i) the Collateral Agreement is deemed amended by addingthe words “KKR Financial CLO 2009-1, Ltd.,” to the introductory paragraph ofthe Collateral Agreement after the words “and together with” and before thewords “KKR Financial, KKR TRS LTD” and (ii) the Fee Letter is deemedamended by adding “KKR Financial CLO 2009-1, Ltd.” as an addressee followingthe words “KKR Financial Holdings, Ltd.” In connection therewith, KKR CLO 2009-1 confirms and agrees that it hasgranted, and it hereby does grant, to the Administrative Agent, for the benefitof the Lenders and the Administrative Agent, to secure the payment andperformance in full of all of the Obligations, a security interest in, andpledges and assigns to the Administrative Agent for the benefit of the Lendersand the Administrative Agent, all of its right, title and interest in, to andunder the Collateral, whether now existing or hereafter acquired, arising orcreated, and any and all proceeds thereof. In addition, the Collateral Agent hereby acknowledges that, with respectto  any Collateral delivered by or onbehalf of KKR CLO 2009-1 from and after the Effective Date, upon obtainingpossession or control thereof, it shall hold such Collateral as therepresentative of any applicable second lien secured parties solely forpurposes of Lien perfection (as their interests may appear in any relatedSubordination and Standstill Agreement); provided that the CollateralAgent shall not have any duty or liability to protect or preserve any rights ofsuch second lien secured parties pertaining to any of such Collateral.

 

**Section 5**                                             **Conditionsto Amendment No. 1****.**  In connection with their execution anddelivery of this Amendment No. 1, the KKR Entities shall, on or prior tothe Effective Date:

 

## (a)           pay to each Lender,by wire transfer of immediately available funds on the Effective Date to anaccount designated by such Lender, any fees required to be paid under the FeeLetter dated the date hereof or any other Loan Document;

##  

## (b)           comply with theprovisions of Section 6.13 of the Credit Agreement with respect to theAmendment Effective Date Collateral;

##  

## (c)           deliver to theAdministrative Agent and the Lenders:

##  

### (i)            suchcertificates of resolutions or other action, incumbency certificates and/orother certificates of Responsible Officers of each Borrower as theAdministrative Agent may require evidencing the identity, authority andcapacity of each Responsible Officer thereof authorized to act as a ResponsibleOfficer in connection with this Amendment No. 1;

###  

### (ii)           suchdocuments and certifications as the Administrative Agent may reasonably requireto evidence that each Borrower is duly organized or formed, and that each ofthe Borrowers is validly existing, in good standing and qualified to engage inbusiness in each jurisdiction where such Borrowers’ ownership, lease oroperation of properties or the conduct of its business requires suchqualification, except to the extent that failure to do so could not reasonablybe expected to have a Material Adverse Effect;

###  

### (iii)          afavorable written opinion (addressed to the Administrative Agent and theInitial Lenders and dated the Amendment Effective Date) of each of (A) thein-house general counsel for the Borrowers, (B) Sidley Austin LLP, counselfor the Borrowers, and (C) Maples and Calder, counsel for the Borrowersthat are Cayman Islands companies, with respect to matters of Cayman Islandslaw, respectively, and in each case, covering such matters relating to theBorrowers, this Amendment No. 1, the Credit Agreement, the other LoanDocuments or the transactions contemplated hereby or

 

16

----

###  

### therebyas the Administrative Agent shall reasonably request (and the Borrowers herebyrequest such counsel to deliver such opinions);

###  

### (iv)          acertificate signed by a Responsible Officer of each Borrower, in a formsatisfactory to the Administrative Agent, either (A) attaching copies ofall consents, licenses and approvals required in connection with the execution,delivery and performance by such Borrower and the validity against suchBorrower of this Amendment No. 1 and of the Original Credit Agreement, asamended by this Amendment No. 1, and such consents, licenses and approvalsshall be in full force and effect, or (B) stating that no such consents,licenses or approvals are so required;

###  

### (v)           acertificate signed by a Responsible Officer of each Borrower, in a formsatisfactory to the Administrative Agent, certifying, together with evidence,in form and substance reasonably satisfactory to the Administrative Agent, thatthe Security Documents continue to be effective to create in favor of theAdministrative Agent a legal, valid and enforceable first Lien and securityinterest in or on each item of Collateral (including, without limitation, allSpecified Financial Assets identified on Schedule I hereto) in existence andowned or controlled by the Borrowers as of the date hereof and that allfilings, recordings, deliveries of instruments and other actions necessary ordesirable in the opinion of the Administrative Agent to protect and preservesuch security interests shall have been duly effected;

###  

### (vi)          theresults of Uniform Commercial Code searches (and the equivalent thereof in allapplicable foreign jurisdictions) with respect to the Collateral, indicating noLiens on the Collateral other than Liens permitted by Section 7.01(a) ofthe Credit Agreement, and otherwise in form and substance reasonablysatisfactory to the Administrative Agent on behalf of the Initial Lenders; and

###  

### (vii)         suchother assurances, certificates, documents, consents or opinions as theAdministrative Agent or the Required Lenders reasonably may require.

###  

**Section 6**                                             **Representationsand Warranties**.  The KKREntities hereby represent and warrant that:

 

## (a)           No Default or Eventof Default currently exists under the Original Credit Agreement.

##  

## (b)           All representationsand warranties contained in the Credit Agreement and the Security Agreement aretrue and correct as of the date hereof and as if made on the date hereof(except that, to the extent that such representations and warrantiesspecifically refer to an earlier date, they shall be true and correct as ofsuch earlier date, and except that, for purposes of this Section 6(b),the representations and warranties contained in subsections (a) and (b) ofSection 5.05 of the Credit Agreement shall be deemed to refer to the mostrecent statements furnished pursuant to subsections (a) and (b),respectively, of Section 6.01 of the Credit Agreement).

##  

## (c)           Each Borrower (i) isduly organized or formed, validly existing and, as applicable, in good standingunder the Laws of the jurisdiction of its incorporation or organization, (ii) hasall requisite power and authority and all requisite governmental licenses,authorizations, consents and approvals to (A) own or lease its assets andcarry on its business and (B) execute, deliver and perform its obligationsunder this Amendment No. 1 and the Original 

 

17

----

 

## Credit Agreement,as amended by this Amendment No. 1, and (iii) is duly qualified andis licensed and, as applicable, in good standing under the Laws of eachjurisdiction where its ownership, lease or operation of properties or theconduct of its business requires such qualification or license; except in eachcase referred to in clause (c)(ii)(A) or (c)(iii), to theextent that failure to do so could not reasonably be expected to have aMaterial Adverse Effect.

##  

## (d)           The execution,delivery and performance by each Borrower of this Amendment No. 1 and theOriginal Credit Agreement, as amended by this Amendment No. 1, have beenduly authorized by all necessary corporate or other organizational action, anddo not and will not: (i) contravene the terms of any of such Person’sOrganization Documents; (ii) conflict with or result in any breach orcontravention of, or require any payment to be made under (A) any ContractualObligation to which such Person is a party or affecting such Person or theproperties of such Person or any of its Subsidiaries or (B) any order,injunction, writ or decree of any Governmental Authority or any arbitral awardto which such Person or its property is subject; (iii) violate any Law;except, in each case referred to in clause (d)(ii) or (d)(iii),to the extent such conflict, breach, contravention, payment or violation wouldnot reasonably be expected to have a Material Adverse Effect; or (iv) resultin the creation or imposition of any Lien on any asset of any of the Borrowersor any of their Subsidiaries other than the Liens created pursuant to the LoanDocuments.

##  

## (e)           No approval,consent, exemption, authorization, or other action by, or notice to, or filingwith, any Governmental Authority or any other Person is necessary or requiredin connection with the execution, delivery or performance by, or enforcementagainst, any Borrower of this Amendment No. 1 or the Original CreditAgreement, as amended by this Amendment No. 1, except (i) for thefiling of Uniform Commercial Code financing statements and (ii) suchapprovals, consents, exemptions, authorizations or other actions, notices orfilings as have been obtained or made and are in full force and effect or wherethe failure to obtain or make such approvals, consents, exemptions,authorizations or other actions, notices or filings would not have a MaterialAdverse Effect.

##  

## (f)            This Amendment No. 1has been duly executed and delivered by each Borrower.  This Amendment No. 1, and the OriginalCredit Agreement, as amended by this Amendment No. 1, each constitutes alegal, valid and binding obligation of each Borrower that is party thereto,enforceable against each such Borrower in accordance with its terms, subject toapplicable bankruptcy, insolvency, reorganization, moratorium or other lawsaffecting creditors’ rights generally and subject to general principles ofequity, regardless of whether considered in a proceeding in equity or at law.

##  

## (g)           Except as disclosedin Schedule 5.06 of the Credit Agreement, no action, suit, investigation orproceeding is pending or threatened in any court or before any arbitrator orgovernmental instrumentality that purports to affect any Borrower or any Subsidiarythereof or any transaction contemplated by the Loan Documents, if such action,suit, investigation or proceeding could have a Material Adverse Effect.(1)

##  

## (h)           Immediately prior toand following the transactions contemplated herein, each of the Borrowers shallbe Solvent.

 

----

## (1) KKR to confirm that no further disclosures are requiredregarding litigation.

 

18

----

 

**Section 7**               **Counterparts. ** This Amendment No. 1may be executed in any number of counterparts, all of which taken togethershall constitute one and the same instrument, and any of the parties hereto mayexecute this Amendment No. 1 by signing any such counterpart.

 

**Section 8**               **Relation to the Credit Agreement**.  Upon its becoming effective in accordancewith Section 2 hereof, this Amendment No. 1 shall constitute anintegral part of the Credit Agreement.

 

**Section 9**               **Continued Effectiveness**.  From and after the Effective Date, eachreference in the Original Credit Agreement to “this Agreement”, or any likeexpression referring to the Original Credit Agreement, shall be deemed to referto the Original Credit Agreement as amended by this Amendment No. 1.   The Original Credit Agreement, other than asamended hereby, shall remain unchanged and in full force and effect.   Each of the parties hereto, by its executionand delivery of this Amendment No. 1, confirms that all of its obligationsunder the Original Credit Agreement, as amended hereby, remain unchanged and infull force and effect.  Each of theparties hereto agrees to execute and deliver all such further agreements ordocuments, if any, as shall be necessary to give effect to the provisions ofthis Amendment No. 1.

 

**Section 10**             **Waivers**.  The Lenders and the Administrative Agenthereby waive any Default or Event of Default that may have occurred solely byreason of the failure of the Borrower to deliver a Control Agreement under Section 6.12(b)(iv) of,and within the timeframes required under Section 6.12(c) of,the Original Credit Agreement with respect to the Pledged Account referenced onSchedule II to the Original Credit Agreement maintained at JPMorgan Chase Bank,N.A. This Amendment No. 1 is limited solely to the matters expressly setforth herein and is specific in time and in intent and, except as providedherein, does not constitute, nor should it be construed as, a waiver oramendment of any other term or condition, right, power or privilege under theOriginal Credit Agreement or under any agreement, contract, indenture, documentor instrument mentioned therein; nor does it preclude or prejudice any rightsof the parties thereunder, or any exercise thereof or the exercise of any otherright, power or privilege, nor shall it (except as contemplated hereby) requireany of the parties hereto to agree to an amendment, waiver or consent for asimilar transaction or on a future occasion, nor shall any future waiver of anyright, power, privilege or default hereunder, or under any agreement, contract,indenture, document or instrument mentioned in the Original Credit Agreement,constitute a waiver of any other right, power, privilege or default of the sameor of any other term or provision.

 

**Section 11**             **Survival of Representations and Warranties**.  All representations and warranties madehereunder or under any document delivered pursuant hereto or in connectionherewith shall survive the execution and delivery hereof.  Such representations and warranties have beenor will be relied upon by the Administrative Agent and each Lender, regardlessof any investigation made by the Administrative Agent or any Lender or on theirbehalf, and shall continue in full force and effect as long as any Loan or anyother Obligation under the Credit Agreement shall remain unpaid or unsatisfiedor any Lender shall have a Commitment under the Credit Agreement.

 

**Section 12**             **Further Miscellaneous Provisions**.  Unless stated otherwise herein, (a) headings and captions shall not be construed in interpreting provisions of thisAmendment No. 1, and (b) if any part of this Amendment No. 1 isfor any reason found to be unenforceable, all other portions of it shallnevertheless remain enforceable.  Section 10.14of the Original Credit Agreement is incorporated herein by reference and made apart hereof as if set forth herein in full, except that references to “thisAgreement” or to “this Agreement or any other Loan Document” set forth in suchsections as incorporated herein shall be deemed to mean “this Amendment No. 1.”

 

[SIGNATURE PAGES FOLLOW]

 

19

----

 

*IN WITNESS WHEREOF,*the parties hereto have caused this Amendment No. 1to the Original Credit Agreement to be duly executed as of the date first abovewritten.

 
| ** ** | **KKR FINANCIAL HOLDINGS LLC**      |
|------------|-------------------------------------|
| ** ** | ** **                          | ** ** |
|       | By:                                 | /s/ Jeffrey B. Van Horn |
|       |                                | Name:  Jeffrey B. Van Horn |
|       |                                | Title:   Authorized Signatory |
|       |                                |   |
| ** ** | **KKR FINANCIAL HOLDINGS II, LLC**  |
| ** ** | ** **                          | ** ** |
|       | By:                                 | /s/ Jeffrey B. Van Horn |
|       |                                | Name:  Jeffrey B. Van Horn |
|       |                                | Title:   Authorized Signatory |
|       |                                |   |
| ** ** | **KKR FINANCIAL HOLDINGS III, LLC** |
| ** ** | ** **                          | ** ** |
|       | By:                                 | /s/ Jeffrey B. Van Horn |
|       |                                | Name:  Jeffrey B. Van Horn |
|       |                                | Title:   Authorized Signatory |
|       |                                |   |
| ** ** | **KKR FINANCIAL HOLDINGS, INC.**    |
| ** ** | ** **                          | ** ** |
|       | By:                                 | /s/ Jeffrey B. Van Horn |
|       |                                | Name:  Jeffrey B. Van Horn |
|       |                                | Title:   Authorized Signatory |
|       |                                |   |
| ** ** | **KKR FINANCIAL HOLDINGS, LTD.**    |
| ** ** | ** **                          | ** ** |
|       | By:                                 | /s/ Jeffrey B. Van Horn |
|       |                                | Name:  Jeffrey B. Van Horn |
|       |                                | Title:   Authorized Signatory |
|       |                                |   |
| ** ** | **KKR TRS HOLDINGS, LTD.**          |
| ** ** | ** **                          | ** ** |
|       | By:                                 | /s/ Jeffrey B. Van Horn |
|       |                                | Name:  Jeffrey B. Van Horn |
|       |                                | Title:   Authorized Signatory |
|       |                                |   |
| ** ** | **KKR FINANCIAL CLO 2009-1, LTD.**  |
| ** ** | ** **                          | ** ** |
|       | By:                                 | /s/ Jeffrey B. Van Horn |
|       |                                | Name:  Jeffrey B. Van Horn |
|       |                                | Title:   Authorized Signatory |

 

1

----

 
| ** ** | **BANK****OF****AMERICA,  N.A.,**       |
|------------|-----------------------------------------|
|       | as Administrative Agent and as a Lender |
|       |                                    |   |
|       |                                    |   |
|       | By:                                     | /s/ Laura Werner |
|       |                                    | Name: | Laura Werner |
|       |                                    | Title: | Vice President |

 

2

----

 
| ** ** | **CITICORP  NORTH AMERICA, INC.,** |
|------------|------------------------------------|
|       | as a Lender                        |
|       |                               |   |
|       |                               |   |
|       | By:                                | /s/ Maureen R. Mauroney |
|       |                               | Name: | Maureen R. Mauroney |
|       |                               | Title: | Vice President |

 

3

----

 

Acknowledged and Agreed solely with respect to Section 4 ofAmendment No. 1:

 

 

**THE BANK OF NEW YORKMELLON**, as Collateral Agent****

** **
| By:    | /s/ Joseph Ciacciarelli |                |   |
|--------|-------------------------|---------------------|--------|
|   | Name:                   | Joseph Ciacciarelli |   |   |
|   | Title:                  | Managing Director   |   |   |

 

4

----