Trust Preferred Financing Vehicle, the parties agree that
the rights of such trustee in respect of any Trust Preferred Indebtedness
permitted under this Agreement shall not be deemed a Lien hereunder.
7.09
FINANCIAL COVENANTS.
(A)
CONSOLIDATED TANGIBLE NET WORTH. PERMIT
CONSOLIDATED TANGIBLE NET WORTH, AT ANY TIME, TO BE LESS THAN THE GREATER OF
(I) $1,425,000,000 OR (II) AN AMOUNT EQUAL TO 85% OF KKR FINANCIAL'S
CONSOLIDATED TANGIBLE NET WORTH AS AT MARCH 31, 2006, IN EITHER CASE, PLUS AN
AMOUNT EQUAL TO 85% OF THE NET PROCEEDS RECEIVED FROM THE ISSUANCE AND SALE,
AFTER THE DATE HEREOF, OF EQUITY INTERESTS OF KKR FINANCIAL OR ANY SUBSIDIARY
(OTHER THAN ISSUANCES TO ANY BORROWER OR A WHOLLY-OWNED SUBSIDIARY), INCLUDING
UPON ANY CONVERSION OF DEBT SECURITIES OF KKR FINANCIAL INTO SUCH EQUITY
INTERESTS.
(B)
LEVERAGE RATIO. PERMIT THE RATIO OF
CONSOLIDATED TOTAL LIABILITIES TO CONSOLIDATED TANGIBLE NET WORTH, AT ANY TIME,
TO EXCEED THE RATIO OF 12.50 TO 1.00.
(C)
POSITIVE NET INCOME. PERMIT ITS
CONSOLIDATED NET INCOME TO BE LESS THAN $1.00 FOR ANY FISCAL QUARTER.
7.10
MANAGEMENT FEES; COMPENSATION. PAY MANAGEMENT FEES,
INCENTIVE FEES OR OTHERWISE INCREASE THE COMPENSATION PAYABLE TO KKR FINANCIAL
ADVISORS LLC PURSUANT TO THE MANAGEMENT AGREEMENT, IN EXCESS OF THOSE FEES AND
COMPENSATION LEVELS IN EFFECT AS OF THE CLOSING DATE, WITHOUT THE PRIOR WRITTEN
CONSENT OF THE ADMINISTRATIVE AGENT (NOT TO BE UNREASONABLY WITHHELD).
7.11
FISCAL YEAR. CHANGE ITS FISCAL YEAR FOR ACCOUNTING
PURPOSES FROM A PERIOD CONSISTING OF THE 12-MONTH PERIOD ENDING ON DECEMBER 31
OF EACH CALENDAR YEAR.
7.12
MARGIN REGULATIONS; SECURITIES LAWS. USE ALL OR ANY
PORTION OF THE PROCEEDS OF ANY CREDIT EXTENDED UNDER THIS AGREEMENT TO PURCHASE
OR CARRY MARGIN STOCK.
7.13
INVESTMENT POLICIES. MATERIALLY ALTER THE POLICIES
CONTAINED IN THE AMENDED AND RESTATED POLICES ADOPTED BY THE BOARD OF DIRECTORS
OF KKR FINANCIAL CORP. ON APRIL 5, 2005 AND AMENDED BY SUCH DIRECTORS ON
FEBRUARY 1, 2006 WITHOUT OBTAINING THE PRIOR WRITTEN CONSENT OF THE
ADMINISTRATIVE AGENT, WHICH, SHALL NOT BE UNREASONABLY WITHHELD OR DELAYED;
PROVIDED THAT IF THE ADMINISTRATIVE AGENT HAS NOT RESPONDED WITHIN 10 BUSINESS
DAYS AFTER WRITTEN REQUEST FOR A CONSENT BY THE BORROWERS, IT SHALL BE DEEMED TO
HAVE CONSENTED.
62
ARTICLE VIII.
EVENTS OF DEFAULT AND REMEDIES
8.01
EVENTS OF DEFAULT. ANY OF THE FOLLOWING SHALL
CONSTITUTE AN EVENT OF DEFAULT:
(A)
NON-PAYMENT. ANY BORROWER FAILS TO PAY
(I) WHEN DUE OR AS REQUIRED TO BE PAID HEREIN, ANY AMOUNT OF PRINCIPAL OF ANY
LOAN, OR (II) WITHIN THREE BUSINESS DAYS AFTER THE SAME BECOMES DUE, ANY
INTEREST ON ANY LOAN, OR ANY FEE DUE HEREUNDER, OR ANY OTHER AMOUNT PAYABLE
HEREUNDER OR UNDER ANY OTHER LOAN DOCUMENT; OR
(B)
SPECIFIC COVENANTS. ANY BORROWER FAILS TO
PERFORM OR OBSERVE ANY TERM, COVENANT OR AGREEMENT CONTAINED IN ANY OF
SECTION 6.03 (NOTICES), 6.05(A) (PRESERVATION OF EXISTENCE), OR 6.11 (USE OF
PROCEEDS) OR ARTICLE VII (NEGATIVE COVENANTS). ANY BORROWER FAILS TO PERFORM OR
OBSERVE ANY COVENANT CONTAINED IN SECTION 6.02 (CERTIFICATES; OTHER INFORMATION)
(OTHER THAN