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 $1,448,000,000, PLUS AN AMOUNT EQUAL TO 85%
OF THE NET PROCEEDS RECEIVED FROM THE ISSUANCE AND SALE, ON OR AT ANY TIME AFTER
DECEMBER 31, 2006, 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 KKR FINANCIAL'S 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); PROVIDED, THAT THE
SUBSTITUTION OF KKR FINANCIAL FOR KKR FINANCIAL CORP. AS A PARTY TO THE
MANAGEMENT AGREEMENT SHALL NOT BE DEEMED A BREACH OF THIS SECTION 7.10.
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
AS IN EFFECT ON THE RESTATEMENT CLOSING DATE (WHICH SHALL BE THE SAME IN ALL
SUBSTANTIVE REGARDS AS THOSE POLICIES ADOPTED BY KKR FINANCIAL CORP. ON
63
JANUARY 17, 2007), 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.
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