Document:

Exhibit
10.6

RESTRICTED
SHARE AWARD AGREEMENT

(Non-Employee Director)

THIS AGREEMENT
(the “Agreement”) is made, effective as of the  <<DATE>>
(the “Date of Grant”), between KKR Financial Holdings LLC, a Delaware limited
liability company (hereinafter called the “Company”), and <<NAME>> (hereinafter called the “Participant”).

R
E  C  I  T  A  L  S:

WHEREAS, the
Company has adopted the 2007 Share Incentive Plan for KKR Financial Holdings
LLC (the “Plan”), which Plan is incorporated herein by reference and made a part
of this Agreement; capitalized terms not otherwise defined herein shall have
the same meanings as in the Plan; and

WHEREAS, the
Committee has determined that it would be in the best interests of the Company
and its Members to grant the restricted share award provided for herein to the
Participant pursuant to the Plan and the terms set forth herein.

NOW THEREFORE, in
consideration of the mutual covenants hereinafter set forth, the parties hereto
agree as follows:

1.             Grant
of the Restricted Shares.  Subject to the terms and conditions of the
Plan and the additional terms and conditions set forth in this Agreement, the
Company hereby grants to the Participant a restricted share award (the “Restricted
Share Award”) consisting of <<NUMBER>> Shares (hereinafter called the “Restricted
Shares”). The Restricted Shares shall vest and become nonforfeitable in
accordance with Section 2 hereof.

2.             Vesting.

(a)           Subject to the Participant’s
continued service with the Company, the Restricted Shares shall vest and become
nonforfeitable with respect to one-third of the Shares initially granted
hereunder on each of the first, second and third anniversaries of the Date of
Grant. Notwithstanding the foregoing, in the event the above vesting schedule
results in the vesting of any fractional Shares, such fractional Shares shall
not be deemed vested hereunder but shall vest and become nonforfeitable when
such fractional Shares aggregate whole Shares.

(b)           If the Participant’s service with the
Company terminates or is terminated for any reason, the Restricted Shares
shall, to the extent not then vested, be forfeited by the Participant without
consideration.

(c)           Notwithstanding any other provision
of this Agreement to the contrary, in the event a Change in Control occurs
during the period the Participant is providing services to the Company, the
Restricted Shares shall, to the extent not then vested and not previously
forfeited, immediately become fully vested, subject to
Section 9(b) of the Plan.

(d)           For purposes of this Agreement, “service”
means service provided by the Participant to the Company as a member of the
company’s board of directors.

3.             Certificates. 
Subject to Section 6 hereof, certificates evidencing the Restricted Shares
shall be issued by the Company and shall be registered in the Participant’s
name on the share transfer books of the Company promptly after the date hereof,
but shall remain in the physical custody of the Company or its designee at all
times prior to the vesting of such Restricted Shares pursuant to
Section 2.  As a condition to the receipt of this Restricted Share
Award, the Participant shall deliver to the Company a share power, duly
endorsed in blank, relating to the Restricted Shares. No certificates shall be
issued for fractional Shares.

4.             Rights
as a Member.  Subject to Section 6 hereof, the Participant shall be
the record owner of the Restricted Shares until or unless such Restricted
Shares are forfeited pursuant to Section 2 hereof, and as record owner
shall be entitled to all rights of a member of the Company, including, without
limitation, voting rights with respect to the Restricted Shares and the
Participant shall receive, when paid, any dividends or distributions on all of
the Restricted Shares granted hereunder as to which the Participant is the
record holder on the applicable record date; provided that the
Restricted Shares shall be subject to the limitations on transfer and
encumbrance set forth in Section 8. 
As soon as practicable following the vesting of any Restricted Shares
pursuant to Section 2, certificates for the Restricted Shares which shall
have vested shall be delivered to the Participant or to the Participant along
with the share powers relating thereto.

5.             Legend
on Certificates.  The certificates representing the vested Restricted
Shares delivered to the Participant shall be subject to such stop transfer
orders and other restrictions as the Committee may deem advisable under the
Plan or the rules, regulations, and other requirements of the Securities and
Exchange Commission, any stock exchange upon which such Shares are listed, and
any applicable Federal or state laws, and the Committee may cause a legend or
legends to be put on any such certificates to make appropriate reference to
such restrictions.

6.             Deferral
of Award.  Notwithstanding Sections 3
and 4 of this Agreement or any other provision herein, if the Participant has
elected to defer this Restricted Share Award pursuant to the terms of the KKR Financial Holdings LLC Non-Employee
Directors’ Deferred Compensation and Share Award Plan (the “Deferral Plan”),
then no Shares shall be issued to the Participant until the distribution date
prescribed by the terms of the Deferral Plan and the Participant’s election
thereunder; provided that the Participant’s right to receive such Shares shall
be subject to the vesting conditions set forth in Section 2 hereof.

7.             No
Right to Continued Service.  The granting of the Restricted Shares
evidenced by this Agreement shall impose no obligation on the Company or any
Affiliate to continue the service of the Participant and shall not lessen or
affect the Company’s or any Affiliate’s right to terminate the service of such
Participant.

8.             Transferability. 
The Restricted Shares may not, at any time prior to becoming vested pursuant to
Section 2, be assigned, alienated, pledged, attached, sold or otherwise
transferred or encumbered by the Participant and any such purported assignment,
alienation, pledge, attachment, sale, transfer or encumbrance shall be void and
unenforceable against the Company or any Affiliate.

                 2
 

9.             Withholding. 
The Participant may be required to pay to the Company and the Company shall
have the right and is hereby authorized to withhold, any applicable withholding
taxes in respect of the Restricted Shares, their grant or vesting or any
payment or transfer with respect to the Restricted Shares and to take such
action as may be necessary in the opinion of the Committee to satisfy all obligations
for the payment of such withholding taxes.  Without limiting the
generality of the foregoing, to the extent permitted by the
Committee, the Participant may satisfy, in whole or in part, the foregoing
withholding liability by delivery of Shares held by the Participant (which are
fully vested and not subject to any pledge or other security interest) or by
having the Company withhold from the number of Restricted Shares otherwise
deliverable to the Participant hereunder Restricted Shares with a Fair Market
Value not in excess of the statutory minimum withholding liability.

10.           Securities
Laws.  Upon the vesting of any Restricted Shares, the Participant will
make or enter into such written representations, warranties and agreements as
the Committee may reasonably request in order to comply with applicable
securities laws or with this Agreement.

11.           Notices. 
Any notice necessary under this Agreement shall be addressed to the Company in
care of its Secretary at the principal executive office of the Company and to
the Participant at the address appearing in the corporate records of the
Company for such Participant or to either party at such other address as either
party hereto may hereafter designate in writing to the other.  Any such
notice shall be deemed effective upon receipt thereof by the addressee.

12.           Choice
of Law.  THIS AGREEMENT SHALL BE
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK
WITHOUT REGARD TO CONFLICTS OF LAWS.

13.           Restricted
Share Award Subject to Plan.  By entering into this Agreement the
Participant agrees and acknowledges that the Participant has received and read
a copy of the Plan.  The Restricted Share Award and the Restricted Shares
granted hereunder are subject to the Plan.  The terms and provisions of the
Plan as it may be amended from time to time are hereby incorporated herein by
reference.  In the event of a conflict between any term or provision
contained herein and a term or provision of the Plan, the applicable terms and
provisions of the Plan will govern and prevail.

14.           Signature
in Counterparts.  This Agreement may be signed in counterparts, each
of which shall be an original, with the same effect as if the signatures
thereto and hereto were upon the same instrument.

                 3
 

IN
WITNESS WHEREOF, the parties hereto have executed this Agreement.

	
  

  	
  KKR FINANCIAL
  HOLDINGS LLC

  
	
   

  	
  By: 

  	
   

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  

 

 

Agreed and acknowledged as of the date first

above written:

____________________

Name:

                 4Exhibit
10.7

 

SECOND AMENDED AND RESTATED CREDIT AGREEMENT

Dated as of May 4,
2007

among

KKR FINANCIAL HOLDINGS LLC

and

THE SUBSIDIARIES OF

KKR FINANCIAL HOLDINGS LLC

PARTIES HERETO

as the Borrowers,

BANK OF
AMERICA, N.A.,

as Administrative Agent and Swingline Lender

and

The Other Lenders
Party Hereto

and

BANC OF
AMERICA SECURITIES LLC,

as

Sole Lead Arranger and Sole Book Manager

and

CITIGROUP
GLOBAL MARKETS INC.

and

JPMORGAN CHASE BANK, N.A.,

as Syndication Agents

 

TABLE OF CONTENTS

	
  Section

  	
   

  	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE I.

  	
   

  	
  DEFINITIONS AND ACCOUNTING TERMS

  	
   

  	
  1

  
	
  1.01

  	
   

  	
  Defined Terms

  	
   

  	
  1

  
	
  1.02

  	
   

  	
  Other Interpretive Provisions

  	
   

  	
  28

  
	
  1.03

  	
   

  	
  Accounting Terms

  	
   

  	
  29

  
	
  1.04

  	
   

  	
  Rounding

  	
   

  	
  29

  
	
  1.05

  	
   

  	
  Times of Day

  	
   

  	
  29

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE II.

  	
   

  	
  THE COMMITMENTS AND BORROWINGS

  	
   

  	
  29

  
	
  2.01

  	
   

  	
  Revolving Loans

  	
   

  	
  29

  
	
  2.02

  	
   

  	
  Borrowings, Conversions and Continuations of
  Revolving Loans

  	
   

  	
  30

  
	
  2.03

  	
   

  	
  Swingline Loans

  	
   

  	
  31

  
	
  2.04

  	
   

  	
  Prepayments

  	
   

  	
  33

  
	
  2.05

  	
   

  	
  Termination or Reduction of Commitments

  	
   

  	
  34

  
	
  2.06

  	
   

  	
  Repayment of Loans

  	
   

  	
  34

  
	
  2.07

  	
   

  	
  Interest

  	
   

  	
  35

  
	
  2.08

  	
   

  	
  Fees

  	
   

  	
  35

  
	
  2.09

  	
   

  	
  Computation of Interest and Fees

  	
   

  	
  36

  
	
  2.10

  	
   

  	
  Evidence of Debt

  	
   

  	
  36

  
	
  2.11

  	
   

  	
  Payments Generally; Administrative Agent’s Clawback

  	
   

  	
  36

  
	
  2.12

  	
   

  	
  Sharing of Payments by Lenders

  	
   

  	
  38

  
	
  2.13

  	
   

  	
  Increase in Commitments

  	
   

  	
  39

  
	
  2.14

  	
   

  	
  Concerning Joint and Several Liability of the
  Borrowers

  	
   

  	
  40

  
	
  2.15

  	
   

  	
  Contribution

  	
   

  	
  42

  
	
  2.16

  	
   

  	
  Collateral Security

  	
   

  	
  43

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE III.

  	
   

  	
  TAXES, YIELD PROTECTION AND ILLEGALITY

  	
   

  	
  43

  
	
  3.01

  	
   

  	
  Taxes

  	
   

  	
  43

  
	
  3.02

  	
   

  	
  Illegality

  	
   

  	
  45

  
	
  3.03

  	
   

  	
  Inability to Determine Rates

  	
   

  	
  45

  
	
  3.04

  	
   

  	
  Increased Costs; Reserves on Fixed Period Eurodollar
  Loans

  	
   

  	
  45

  
	
  3.05

  	
   

  	
  Compensation for Losses

  	
   

  	
  47

  
	
  3.06

  	
   

  	
  Mitigation Obligations

  	
   

  	
  47

  
	
  3.07

  	
   

  	
  Survival

  	
   

  	
  47

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE IV.

  	
   

  	
  CONDITIONS PRECEDENT TO BORROWINGS

  	
   

  	
  48

  
	
  4.01

  	
   

  	
  Conditions of Initial Borrowing

  	
   

  	
  48

  
	
  4.02

  	
   

  	
  Conditions to all Borrowings

  	
   

  	
  50

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE V.

  	
   

  	
  REPRESENTATIONS AND WARRANTIES

  	
   

  	
  51

  
	
  5.01

  	
   

  	
  Existence, Qualification and Power

  	
   

  	
  51

  
	
  5.02

  	
   

  	
  Authorization; No Contravention

  	
   

  	
  51

  
	
  5.03

  	
   

  	
  Governmental Authorization; Other Consents

  	
   

  	
  51

  
	
  5.04

  	
   

  	
  Binding Effect

  	
   

  	
  51

  
	
  5.05

  	
   

  	
  Financial Statements; No Material Adverse Effect

  	
   

  	
  52

  
	
  5.06

  	
   

  	
  Litigation

  	
   

  	
  52

  

 

 i
 

 

	
  5.07

  	
   

  	
  No Default

  	
   

  	
  52

  
	
  5.08

  	
   

  	
  Environmental Compliance

  	
   

  	
  52

  
	
  5.09

  	
   

  	
  Insurance

  	
   

  	
  52

  
	
  5.10

  	
   

  	
  Taxes

  	
   

  	
  53

  
	
  5.11

  	
   

  	
  ERISA Compliance

  	
   

  	
  53

  
	
  5.12

  	
   

  	
  Properties

  	
   

  	
  53

  
	
  5.13

  	
   

  	
  Investment Company Act; Public Utility Holding
  Company Act

  	
   

  	
  53

  
	
  5.14

  	
   

  	
  Disclosure

  	
   

  	
  53

  
	
  5.15

  	
   

  	
  Compliance with Laws

  	
   

  	
  53

  
	
  5.16

  	
   

  	
  Taxpayer Identification Number

  	
   

  	
  54

  
	
  5.17

  	
   

  	
  Solvency

  	
   

  	
  54

  
	
  5.18

  	
   

  	
  No Burdensome Restrictions

  	
   

  	
  54

  
	
  5.19

  	
   

  	
  Borrowing Base Report

  	
   

  	
  54

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE VI.

  	
   

  	
  AFFIRMATIVE COVENANTS

  	
   

  	
  54

  
	
  6.01

  	
   

  	
  Financial Statements

  	
   

  	
  54

  
	
  6.02

  	
   

  	
  Certificates; Other Information

  	
   

  	
  55

  
	
  6.03

  	
   

  	
  Notices

  	
   

  	
  57

  
	
  6.04

  	
   

  	
  Payment of Obligations

  	
   

  	
  57

  
	
  6.05

  	
   

  	
  Preservation of Existence, Etc

  	
   

  	
  57

  
	
  6.06

  	
   

  	
  Maintenance of Properties

  	
   

  	
  57

  
	
  6.07

  	
   

  	
  Maintenance of Insurance

  	
   

  	
  58

  
	
  6.08

  	
   

  	
  Compliance with Laws

  	
   

  	
  58

  
	
  6.09

  	
   

  	
  Books and Records

  	
   

  	
  58

  
	
  6.10

  	
   

  	
  Inspection Rights

  	
   

  	
  58

  
	
  6.11

  	
   

  	
  Use of Proceeds

  	
   

  	
  58

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE VII.

  	
   

  	
  NEGATIVE COVENANTS

  	
   

  	
  58

  
	
  7.01

  	
   

  	
  Liens

  	
   

  	
  58

  
	
  7.02

  	
   

  	
  Investments

  	
   

  	
  59

  
	
  7.03

  	
   

  	
  Indebtedness

  	
   

  	
  60

  
	
  7.04

  	
   

  	
  Fundamental Changes

  	
   

  	
  61

  
	
  7.05

  	
   

  	
  Dispositions

  	
   

  	
  61

  
	
  7.06

  	
   

  	
  Restricted Payments

  	
   

  	
  62

  
	
  7.07

  	
   

  	
  Transactions with Affiliates

  	
   

  	
  62

  
	
  7.08

  	
   

  	
  Burdensome Agreements

  	
   

  	
  62

  
	
  7.09

  	
   

  	
  Financial Covenants

  	
   

  	
  63

  
	
  7.10

  	
   

  	
  Management Fees; Compensation

  	
   

  	
  63

  
	
  7.11

  	
   

  	
  Fiscal Year

  	
   

  	
  63

  
	
  7.12

  	
   

  	
  Margin Regulations; Securities Laws

  	
   

  	
  63

  
	
  7.13

  	
   

  	
  Investment Policies

  	
   

  	
  63

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE VIII.

  	
   

  	
  EVENTS OF DEFAULT AND REMEDIES

  	
   

  	
  64

  
	
  8.01

  	
   

  	
  Events of Default

  	
   

  	
  64

  
	
  8.02

  	
   

  	
  Remedies Upon Event of Default

  	
   

  	
  65

  
	
  8.03

  	
   

  	
  Application of Funds

  	
   

  	
  66

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE IX.

  	
   

  	
  ADMINISTRATIVE AGENT

  	
   

  	
  66

  
	
  9.01

  	
   

  	
  Appointment and Authority

  	
   

  	
  66

  
	
  9.02

  	
   

  	
  Rights as a Lender

  	
   

  	
  67

  
	
  9.03

  	
   

  	
  Exculpatory Provisions

  	
   

  	
  67

  

 

 ii
 

 

	
  9.04

  	
   

  	
  Reliance by Administrative Agent

  	
   

  	
  67

  
	
  9.05

  	
   

  	
  Delegation of Duties

  	
   

  	
  68

  
	
  9.06

  	
   

  	
  Resignation of Administrative Agent

  	
   

  	
  68

  
	
  9.07

  	
   

  	
  Non-Reliance on Administrative Agent and Other
  Lenders

  	
   

  	
  69

  
	
  9.08

  	
   

  	
  No Other Duties, Etc

  	
   

  	
  69

  
	
  9.09

  	
   

  	
  Administrative Agent May File Proofs of Claim

  	
   

  	
  69

  
	
  9.10

  	
   

  	
  Collateral Matters

  	
   

  	
  70

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE X.

  	
   

  	
  MISCELLANEOUS

  	
   

  	
  70

  
	
  10.01

  	
   

  	
  Amendments, Etc

  	
   

  	
  70

  
	
  10.02

  	
   

  	
  Notices; Effectiveness; Electronic Communication

  	
   

  	
  71

  
	
  10.03

  	
   

  	
  No Waiver; Cumulative Remedies

  	
   

  	
  73

  
	
  10.04

  	
   

  	
  Expenses; Indemnity; Damage Waiver

  	
   

  	
  73

  
	
  10.05

  	
   

  	
  Payments Set Aside

  	
   

  	
  75

  
	
  10.06

  	
   

  	
  Successors and Assigns

  	
   

  	
  75

  
	
  10.07

  	
   

  	
  Treatment of Certain Information; Confidentiality

  	
   

  	
  78

  
	
  10.08

  	
   

  	
  Right of Setoff

  	
   

  	
  79

  
	
  10.09

  	
   

  	
  Interest Rate Limitation

  	
   

  	
  79

  
	
  10.10

  	
   

  	
  Counterparts; Integration; Effectiveness

  	
   

  	
  80

  
	
  10.11

  	
   

  	
  Survival of Representations and Warranties

  	
   

  	
  80

  
	
  10.12

  	
   

  	
  Severability

  	
   

  	
  80

  
	
  10.13

  	
   

  	
  Replacement of Lenders

  	
   

  	
  80

  
	
  10.14

  	
   

  	
  Governing Law; Jurisdiction; Etc.

  	
   

  	
  81

  
	
  10.15

  	
   

  	
  No Advisory or Fiduciary Responsibility

  	
   

  	
  82

  
	
  10.16

  	
   

  	
  USA PATRIOT Act Notice

  	
   

  	
  82

  
	
  10.17

  	
   

  	
  Entire Agreement

  	
   

  	
  82

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SIGNATURES

  	
   

  	
   

  	
   

  	
  S-1

  

 

 iii
 

 

	
  SCHEDULES

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  2.01

  	
   

  	
  Commitments and Applicable Percentages

  	
   

  	
   

  
	
  5.06

  	
   

  	
  Litigation

  	
   

  	
   

  
	
  5.09

  	
   

  	
  Environmental Matters

  	
   

  	
   

  
	
  7.01

  	
   

  	
  Existing Liens

  	
   

  	
   

  
	
  7.03

  	
   

  	
  Existing Indebtedness

  	
   

  	
   

  
	
  7.08

  	
   

  	
  Burdensome Agreements

  	
   

  	
   

  
	
  10.02

  	
   

  	
  Administrative Agent’s Office; Certain Addresses for
  Notices

  	
   

  	
   

  
	
  10.06

  	
   

  	
  Processing and Recordation Fees

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  EXHIBITS

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  A

  	
   

  	
  Form of Revolving Loan Notice

  	
   

  	
   

  
	
  B

  	
   

  	
  Form of Swingline Loan Notice

  	
   

  	
   

  
	
  C

  	
   

  	
  Form of Promissory Note

  	
   

  	
   

  
	
  D

  	
   

  	
  Form of Borrowing Base Report

  	
   

  	
   

  
	
  E

  	
   

  	
  Form of Compliance Certificate

  	
   

  	
   

  
	
  F

  	
   

  	
  Form of Assignment and Assumption

  	
   

  	
   

  
	
  G

  	
   

  	
  Form of Opinions

  	
   

  	
   

  

 

 iv

SECOND AMENDED AND RESTATED CREDIT AGREEMENT

This SECOND AMENDED AND RESTATED CREDIT AGREEMENT (“Agreement”)
is entered into as of May 4, 2007, among (i) KKR FINANCIAL HOLDINGS LLC, a
Delaware limited liability company (“KKR Financial”), KKR FINANCIAL CORP.,
a Maryland corporation (“KKR Financial Corp.”) KKR TRS HOLDINGS, INC., a
Delaware corporation (“KKR TRS”), KKR TRS HOLDINGS, LTD., a Cayman
Islands company (“KKR TRS LTD”), KKR FINANCIAL HOLDINGS II, LLC, a
Delaware limited liability company (“KKR Holdings II”), KKR FINANCIAL
HOLDINGS III, LLC, a Delaware limited liability company (“KKR Holdings III”),
KKR FINANCIAL HOLDINGS, INC., a Delaware corporation (“KKR Holdings”),
and KKR FINANCIAL HOLDINGS, LTD., a Cayman Islands company (“KKR Holdings
LTD,” and collectively with KKR Financial, KKR Financial Corp., KKR TRS,
KKR TRS LTD, KKR Holdings II, KKR Holdings III and KKR Holdings, the “Borrowers”
and each, individually, a “Borrower”), (ii) each lender from time to
time party hereto (collectively, the “Lenders” and individually, a “Lender”),
and (iii) BANK OF AMERICA, N.A., as Administrative Agent and Swingline Lender.

W I T N E S S E T H:

WHEREAS, KKR
Financial Corp., KKR TRS, KKR TRS LTD, certain of the Lenders and the
Administrative Agent entered into an Amended and Restated Credit Agreement
dated as of September 15, 2006 (the “Existing Credit Agreement”)
establishing a $800,000,000 revolving credit facility in favor of KKR Financial
Corp., KKR TRS and KKR TRS LTD.

WHEREAS, the Borrowers party to the Existing Credit
Agreement have requested and, subject to the terms and conditions of this
Agreement, the Lenders party to the Existing Credit Agreement and the
Administrative Agent have agreed to amend and restate the Existing Credit
Agreement to include KKR Financial, KKR Holdings II, KKR Holdings III, KKR
Holdings  and KKR Holdings LTD as
Borrowers and make certain additional changes to the Existing Credit Agreement
as set forth herein.

NOW, THEREFORE, in consideration of the premises
and the mutual covenants herein contained, the Borrowers, the Lenders, the
Administrative Agent and the Swingline Lender agree as follows:

ARTICLE I.

DEFINITIONS AND ACCOUNTING TERMS

1.01        Defined Terms.  As
used in this Agreement, the following terms shall have the meanings set forth
below:

“Administrative Agent” means Bank of America in
its capacity as administrative agent under any of the Loan Documents, or any
successor administrative agent.

“Administrative Agent’s Office” means the
Administrative Agent’s address and, as appropriate, account as set forth on Schedule
10.02, or such other address or account as the Administrative Agent may
from time to time notify to the Borrowers and the Lenders.

“Administrative Questionnaire” means an
Administrative Questionnaire in a form supplied by the Administrative Agent.

 1
 

 

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

“Agent Parties” has the meaning specified in Section 10.02(c).

“Aggregate Borrowing Availability” means, at
any time, the lesser of (a) the Aggregate Commitment Amount and (b) an amount
equal to the sum of (i) the Tranche A Borrowing Base plus (ii) the Tranche B
Borrowing Base, in each case at or as of such time.

“Aggregate Commitments” means, collectively,
all Commitments of all Lenders at any time outstanding.

“Aggregate Commitment Amount” means the
aggregate principal amount of the Aggregate Commitments from time to time.  On the date hereof, the Aggregate Commitment
Amount equals $800,000,000.  The
Aggregate Commitment Amount may be increased to an amount up to $900,000,000 in
accordance with Section 2.13.

“Agreement” means this Second Amended and
Restated Credit Agreement, as further amended, restated, extended, supplemented
or otherwise modified in writing from time to time.

“Allocable Amount” has the meaning specified in
Section 2.15.

“Applicable Percentage” means with respect to
any Lender at any time, the percentage (carried out to the ninth decimal place)
of the Aggregate Commitment Amount represented by such Lender’s Commitment at
such time.  If the commitment of each
Lender to make Loans has been terminated pursuant to Section 8.02
or if the Aggregate Commitments have expired, then the Applicable Percentage of
each Lender shall be determined based on the Applicable Percentage of such
Lender most recently in effect, giving effect to any subsequent
assignments.  The initial Applicable
Percentage of each Lender is set forth opposite the name of such Lender on Schedule 2.01
or in the Assignment and Assumption pursuant to which such Lender becomes a
party hereto, as applicable.

“Applicable Rate”
means a per annum rate equal to:

(a)           with respect to
Tranche A Loans, 0.50%;

(b)           with respect to
Tranche B Loans, 0.75%; and

(c)           with respect to the
Facility Fee, 0.15%.

“Applicable Sublimit” means the exclusion from
the Tranche B Borrowing Base of an amount (without duplication) attributable to
any Eligible Specified Financial Asset to the extent that the Net Value Amount
included in the Tranche B Borrowing Base would exceed the amount shown in the
chart below for the applicable Eligible Specified Financial Asset:

	
  Eligible Specified Financial Asset(*)

  	
   

  	
  Sublimits

  	
   

  
	
  Rule 144A private
  placed Debt Securities

  	
   

  	
   

  	
   

  
	
  a. NAIC 1 / AAA thru A-

  	
   

  	
   

  	
   

  
	
  b. NAIC 2 / BBB+ thru BBB-

  	
   

  	
   

  	
   

  
	
  c. NAIC 3 / BB+ thru BB

  	
   

  	
  Unlimited(1)

  	
   

  
	
  d. NAIC 4 / BB- thru B-

  	
   

  	
   

  	
   

  
	
  e. NAIC 5 / CCC+ thru CCC-

  	
   

  	
   

  	
   

  
	
  Investments
  Denominated in Foreign Currency (Euros, Pounds or Yen)

  	
   

  	
  $

  	
  100 million

  	
   

  
					

 

 2
 

 

	
  KKR Financial
  CLO/CBO/CDO Securitizations(2)

  	
   

  	
   

  	
   

  
	
  a. AAA thru A-

  	
   

  	
  $

  	
  200 million

  	
   

  
	
  b. BBB+ and BBB

  	
   

  	
  $

  	
  100 million

  	
   

  
	
  c. BBB-

  	
   

  	
  $

  	
  25 million

  	
   

  
	
  Mortgage-backed
  Debt Securities Interest Only Strips

  	
   

  	
   

  	
   

  
	
  a. Federal National Mortgage
  Association Fannie Mae (FNMA”) Interest Only Strips

  	
   

  	
  $

  	
  50 million

  	
   

  
	
  b. Non Agency Interest Only Strips

  	
   

  	
   

  	
   

  
	
  Senior Unsecured
  Bank Loans

  	
   

  	
   

  	
   

  
	
  a. CCC+ thru
  CCC-

  	
   

  	
  $

  	
  100 million

  	
   

  

(*) References to credit ratings are to the Debt Rating.

 

(1) Subject to there not being any restrictions on Bank of America’s
ability as Administrative Agent to sell any securities financed in the Senior
Credit Facility.  A sublimit of 15% of
the Aggregate Commitment Amount will apply to 144A privately placed debt
transactions that are less than $100 million in size and in which the
Borrowers, in the aggregate, own more than 33% of the total issuance.

 

(2) Amounts attributable to CLO/CBO/CDO Securitizations rated BBB or
better shall be excluded from the Tranche B Borrowing Base to the extent that
any such Eligible Specified Financial Assets have been included in such
Borrowing Base for more than 120 days.

 

“Approved Fund” means any Fund that is
administered or managed by (a) a Lender, (b) an Affiliate of a Lender or (c) an
entity or an Affiliate of an entity that administers or manages a Lender.

“Arranger” means Banc of America Securities LLC, in its capacity as
sole lead arranger and sole book manager.

“Assignee Group” means two or more Eligible
Assignees that are Affiliates of one another or two or more Approved Funds
managed by the same investment advisor.

“Assignment and Assumption” means an assignment
and assumption entered into by a Lender and an Eligible Assignee with the
consent of any party whose consent is required by Section 10.06(b),
and accepted by the Administrative Agent, in substantially the form of Exhibit
F or any other form approved by the Administrative Agent.

“Attributable Indebtedness” means, on any date,
(a) in respect of any capital lease of any Person, the capitalized amount
thereof that would appear on a balance sheet of such Person prepared as of such
date in accordance with GAAP, and (b) in respect of any Synthetic Lease
Obligation, the capitalized amount of the remaining lease payments under the
relevant lease that would appear on a balance sheet of such Person prepared as
of such date in accordance with GAAP if such lease were accounted for as a
capital lease.

“Audited Financial Statements” means the
audited consolidated balance sheet of KKR Financial Corp. and its Subsidiaries
for the fiscal year ended December 31,
2006, and the related consolidated statements of income or operations,
shareholders’ equity and cash flows for such fiscal year of KKR Financial Corp.
and its Subsidiaries, including the notes thereto.

“Availability Period” means the period from and
including the Closing Date to the earliest of (a) the Maturity Date, (b) the
date of termination of the Aggregate Commitments pursuant to Section 2.05,
and (c) the date of termination of the commitment of each Lender to make Loans
pursuant to Section 8.02.

“Bank” means a financial institution that (i)
has, or is part of a Consolidated Group that has, at least $2.0 billion in
capital, and is, or is an affiliate of another entity within such Consolidated
Group that is, regulated by the Office of the Comptroller of the Currency, the
Federal Reserve or the Office of Thrift Supervision; or (ii) is, or is an
affiliate of another entity within a Consolidated Group that is, a registered
broker/dealer under the Securities Exchange Act of 1934, and has, or is part of
a Consolidated Group that

 3
 

 

has, a senior unsecured
debt rating of at least A-/A3; provided,
that an institution that does not meet the criteria of clause (i) or
clause (ii) above may nonetheless be classified as a “Bank” on the following
conditions: (x) the Administrative Agent, in its sole discretion, exercised in
a commercially reasonable manner, which discretionary decision shall not be
unreasonably withheld or delayed, shall have expressly agreed to such classification,
and (y) the Value of all Eligible Specified Financial Assets that are Bank
Loans originated by such financial institution does not exceed $50 million (or
such greater amount as the Administrative Agent, in its sole discretion,
exercised in a commercially reasonable manner, may determine) at any time.

“Bank Loan” means either (i) a Delayed Draw
Loan or (ii) a fully funded term debt obligation (including, without
limitation, term loans, debtor-in-possession financings and synthetic letter of
credit facilities and other similar loans and investments including interim
loans and senior subordinated loans), which are generally under a syndicated
loan or credit facility provided or originated by a Bank or for which a Bank
has acted as underwriter or agent.

“Bank of America” means Bank of America, N.A.
and its successors.

“Base Rate” means for any day a fluctuating
rate per annum equal to the higher of (a) the Federal Funds Rate plus 1/2 of 1%
and (b) the rate of interest in effect for such day as publicly announced from
time to time by Bank of America as its “prime rate.”  The “prime rate” is a rate set by Bank of
America based upon various factors including Bank of America’s costs and
desired return, general economic conditions and other factors, and is used as a
reference point for pricing some loans, which may be priced at, above, or below
such announced rate.  Any change in such
rate announced by Bank of America shall take effect at the opening of business
on the day specified in the public announcement of such change.

“Base Rate Loan” means a Loan that bears interest at a per annum rate equal to the Base Rate .

“Borrowers” and “Borrower” have the
respective meaning specified in the introductory paragraph hereto.

“Borrowing” means (i) Revolving Loans of the
same Type and Tenor, made, converted or continued on the same date and, in the
case of Fixed Period Eurodollar Loans, as to which a single Interest Period is
in effect, or (ii) Swingline Loans of the same Tenor, as applicable.

“Borrowing Base” means the Tranche A Borrowing
Base or the Tranche B Borrowing Base.

“Borrowing Base Report” means a report signed
by a Responsible Officer of each of Borrowers, in substantially the form of
Exhibit D hereto, delivered to the Administrative Agent.

“Borrower Materials” has the meaning specified
in Section 6.02.

“Bridge Loan” means debt financing with an
original maturity of not more than one (1) year with an expected repayment from
a capital markets transaction.

“Business Day” means any day other than a
Saturday, Sunday or other day on which commercial banks are authorized to close
under the Laws of, or are in fact closed in, the state where the Administrative
Agent’s Office is located and, if such day relates to any Eurodollar Loan,
means any such day on which dealings in Dollar deposits are conducted by and
between banks in the London interbank eurodollar market.

 4
 

 

“Capital Lease Obligations” of any Person means
the obligations of such Person to pay rent or other amounts under any lease of
(or other arrangement conveying the right to use) real or personal property, or
a combination thereof, which obligations are required to be classified and
accounted for as capital leases on a balance sheet of such Person under GAAP,
and the amount of such obligations shall be the capitalized amount thereof
determined in accordance with GAAP.

“Change in Control” means (a) the acquisition
of ownership, directly or indirectly, beneficially or of record, by any Person
or group (within the meaning of the Securities Exchange Act of 1934 and the
rules of the Securities and Exchange Commission thereunder as in effect on the
date hereof), of Equity Interests representing more than 50% of the aggregate
ordinary voting power represented by the issued and outstanding Equity
Interests of KKR Financial; (b) occupation of a majority of the seats (other
than vacant seats) on the board of directors of KKR Financial by Persons who
were neither (i) nominated by the board of directors of KKR Financial nor (ii)
appointed by directors so nominated; or (c) the acquisition of direct or
indirect Control of any Borrower by any Person or group (within the meaning of
the Securities Exchange Act of 1934 and the rules of the Securities and
Exchange Commission thereunder as in effect on the date hereof) not in Control
of any such Borrower on the Restatement Closing Date (after giving effect to
the transactions set forth in Section 4.01(a)(xv) to be consummated at or
before the Merger Effective Time). It is understood and agreed that KKR
Financial LLC does not Control KKR Financial solely for purposes of this
definition.

“Change in Law” means the occurrence, after the
date of this Agreement, of any of the following: (a) the adoption or taking
effect of any law, rule, regulation or treaty, (b) any change in any law, rule,
regulation or treaty or in the administration, interpretation or application
thereof by any Governmental Authority or (c) the making or issuance of any
request, guideline or directive (whether or not having the force of law) by any
Governmental Authority.

“CLO/CBO/CDO Tranches” means collateralized
loan obligation (CLO), collateralized bond obligation (CBO) and collateralized
debt obligation (CDO) tranches rated BB+/Bal or lower (including non-rated) on
transactions managed by KKR Financial LLC or an Affiliate thereof.

“Closing Date” means June 23, 2006.

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

“Collateral” means all of the property, rights
and interests of the Borrowers and their respective Subsidiaries that are or
are intended to be subject to the Liens created by the Security Documents.

“Collateral Agreement” means the Second Amended
and Restated Collateral Agency Agreement dated as of May 4, 2007, among the
Borrowers, the Administrative Agent and the Custodian, as further amended,
restated, extended, supplemented or otherwise modified in writing from time to
time, or such other agreement (the terms of which will be substantially
consistent with the existing Collateral Agreement at such time, unless
otherwise agreed by the Borrowers) in replacement thereof as the Administrative
Agent may require, with the consent of the Borrowers, which consent shall not
be unreasonably withheld or delayed.

“Commitment” means, as to each Lender, its
obligation to (a) make Revolving Loans to the Borrowers pursuant to Section 2.01
and (b) purchase participations in Swingline Loans, in an aggregate principal
amount at any one time outstanding not to exceed the amount set forth opposite
such Lender’s name on Schedule 2.01 or in the Assignment and
Assumption pursuant to which such Lender becomes a party hereto, as applicable,
as such amount may be adjusted from time to time in accordance with this
Agreement.

 5
 

 

“Compliance Certificate” means a certificate
substantially in the form of Exhibit E.

“Concentration Limit” means (i) the exclusion
from the Tranche B Borrowing Base of an amount (without duplication)
attributable to any second lien Bank Loans, Mezzanine Obligations and Bridge
Loans considered in the aggregate (including without limitation any of the same
that are also Delayed Draw Loans), to the extent that the amount included in
such Borrowing Base would exceed 50% of the Aggregate Commitment Amount, (ii)
with respect to any single Eligible Specified Financial Asset (other than
CLO/CBO/CDO Tranches), the exclusion from the Tranche B Borrowing Base of an
amount attributable to such Eligible Specified Financial Asset, to the extent
that (a) the amount included in such Borrowing Base would exceed the applicable
maximum Net Value Amount for each category as specified in the chart below and
(b) the number of investments in any single Eligible Specified Financial Asset
exceeds the maximum number of investments for each category as specified in the
chart below, (iii) with respect to any Single Obligor of one or more Eligible
Specified Financial Assets (other than CLO/CBO/CDO Tranches), the exclusion
from the Tranche B Borrowing Base of an amount attributable to such Single
Obligor, to the extent that (a) the amount included in the Borrowing Base would
exceed the applicable maximum Net Value Amount for each category as specified
in the chart below and (b) the number of investments attributable to any Single
Obligor exceeds the maximum number of investments for each category as
specified in the chart below and (iv) with respect to any first lien Bank
Loans, second lien Bank Loans, Mezzanine Obligations, Bridge Loans and
mortgage-backed Debt Securities interest only strips, to the extent there is no
Debt Rating (each, an “Unrated Asset”), considered individually, with no
Debt Rating, the exclusion from the Tranche B Borrowing Base of an amount
attributable to such Eligible Specified Financial Asset, to the extent that (a)
the amount included in such Borrowing Base would exceed the applicable maximum
Net Value Amount for each category as specified in the chart below and (b) the
number of investments in any unrated Eligible Specified Financial Asset exceeds
the maximum number of investments for each category as specified in the chart
below and (v) the exclusion from the Tranche B Borrowing Base of an amount
attributable to CLO/CBO/CDO Tranches considered in the aggregate, to the extent
that the amount included in such Borrowing Base would exceed 50% of the
Aggregate Commitment Amount.

Limits
on Single Obligor / Single Asset / Unrated Asset Investments

 

	
  Category of
  Investments based on

  Net Value Amount ($Millions)*

  	
   

  	
  Maximum Number of

  Investments Allowed*

  	
   

  	
  Maximum Net Value Amount per Single

  Obligor/Asset ($Millions)

  
	
  > $75 but up to $100

  	
   

  	
  1

  	
   

  	
  100

  
	
  > $50 but up to $75

  	
   

  	
  1

  	
   

  	
  75

  
	
  > $25 but up to $50

  	
   

  	
  3

  	
   

  	
  50

  
	
  < or = $25

  	
   

  	
  Up to Aggregate Commitment

  Amount

  	
   

  	
  N/A

  

 

* If there are no Single Obligor, single Eligible Specified
Financial Asset or Unrated Asset investments in any particular category
specified in the left hand column of the chart (the “Unutilized Category of
Investments”), then the Tranche B Borrowing Base may include an increased
number of Single Obligor, single Eligible Specified Financial Asset or Unrated
Asset investments in a category specifying lower Net Value Amounts so long as
the aggregate Net Value of such investments does not exceed the Maximum Net
Value Amount per Single Obligor, single Eligible Specified Financial Asset or
Unrated Asset investment specified in the right hand column of the chart for
such Unutilized Category of Investments; provided, however, that
the Tranche B Borrowing Base shall not, at any time, include amounts
attributable to more than five (5) Single Obligor, single Eligible Specified
Financial Asset or Unrated Asset investments the Net Value Amount of which,
individually, exceeds $25.0 million.

“Consolidated Group” means the collective group
of affiliated entities that are required, in accordance with GAAP, to issue
consolidated financial statements.

 6
 

 

“Consolidated Net Income” means, for any
period, for KKR Financial and its Subsidiaries on a consolidated basis, the net
income of KKR Financial and its Subsidiaries (excluding extraordinary gains and
extraordinary losses) for that period in accordance with GAAP.

“Consolidated Net Worth” means, as of any date
of determination, the aggregate sum of all amounts which would be included on a
consolidated balance sheet of KKR Financial and its Consolidated Subsidiaries
under stockholders’ equity as of such date in accordance with GAAP.

“Consolidated Tangible Net Worth” means, as of
any date of determination, Consolidated Net Worth less the sum (without
duplication) of the following (in each case, to the extent included in
Consolidated Total Assets):

(a)           the total book value
of all assets of KKR Financial and its Subsidiaries properly classified as
intangible assets under GAAP, including such items as goodwill, the purchase
price of acquired assets in excess of the fair market value thereof,
trademarks, trade names, service marks, brand names, copyrights, patents and
licenses, and rights with respect to the foregoing; plus

(b)           all amounts
representing any write-up in the book value of any assets of KKR Financial or
its Subsidiaries resulting from a revaluation thereof subsequent to December
31, 2006, excluding adjustments to translate foreign assets and liabilities for
changes in foreign exchange rates made in accordance with Financial Accounting
Standards Board Statement No. 52.

“Consolidated Total Assets” means, as of any
date of determination, the sum of (a) all assets (“consolidated balance sheet assets”) of KKR Financial and its
Subsidiaries determined on a consolidated basis in accordance with GAAP, plus
(b) without duplication, all assets leased by KKR Financial or any Subsidiary
as lessee under any Synthetic Lease to the extent that such assets would have
been consolidated balance sheet assets had the Synthetic Lease been treated for
accounting purposes as a capital lease, plus (c) without duplication,
all proceeds of sold receivables in respect of sales of (i) accounts or general
intangibles for money due or to become due, (ii) chattel paper, instruments or
documents creating or evidencing a right to payment of money or (iii) other
receivables (collectively “receivables”), whether pursuant to a purchase
facility or otherwise, other than in connection with the disposition of the
business operations of such Persons relating thereto or a disposition of
defaulted receivables for collection and not as a financing arrangement, and
together with any obligation of such Persons to pay any discount, interest,
fees, indemnities, penalties, recourse, expenses or other amounts in connection
therewith, to the extent that such receivables would have been consolidated
balance sheet assets had they not been sold.

“Consolidated Total Liabilities” means, as of
any date of determination, all liabilities of KKR Financial and its
Subsidiaries determined on a consolidated basis in accordance with GAAP and
classified as such on the consolidated balance sheet of KKR Financial and its
Subsidiaries and, without duplication, all other Indebtedness of KKR Financial
and its Subsidiaries, whether or not so classified; provided, that for
purposes of this definition, in the case of a Trust Preferred Securities
Transaction of KKR Financial or any Subsidiary of KKR Financial, only the Trust
Preferred Indebtedness issued or incurred by KKR Financial or any Subsidiary of
KKR Financial in connection therewith, excluding Trust Preferred Indebtedness
relating solely to the common equity securities of the applicable Trust
Preferred Financing Vehicle, shall be included in determining the liabilities
and other Indebtedness of KKR Financial and its Subsidiaries.

“Contractual Obligation” means, as to any
Person, any provision of any security issued by such Person or of any
agreement, instrument or other undertaking to which such Person is a party or
by which it or any of its property is bound.

 7
 

 

“Control” means the possession, directly or
indirectly, of the power to direct or cause the direction of the management or
policies of a Person, whether through the ability to exercise voting power, by
contract or otherwise.  “Controlling”
and “Controlled” have meanings correlative thereto.

“Custodial Account” means the account
established and maintained pursuant to the Collateral Agreement in which
Collateral will be deposited by the Borrowers and pledged to the Administrative
Agent and any demand deposit account established and maintained in connection
therewith.

“Custodian” means The Bank of New York or
another institution selected by the Administrative Agent with the consent of
the Borrowers, which consent shall not be unreasonably withheld or delayed.

“Daily Floating Eurodollar Loan” means a Loan
that bears interest at a per annum rate equal to the Daily Floating Eurodollar
Rate plus the Applicable Rate.

“Daily Floating Eurodollar Rate” means, for any
day, a fluctuating rate per annum equal to the British Bankers Association
LIBOR Rate (“BBA LIBOR”), as published by Reuters (or other commercially
available source providing quotations of BBA LIBOR as designated by the
Administrative Agent from time to time) at approximately 11:00 a.m. (London
time) on such day (if such day is a Business Day) or the immediately preceding
Business Day (if such day is not a Business Day), for U.S. dollar deposits with
a term equivalent to one (1) month.  If
such rate is not available at such time for any reason, then the “Daily
Floating Eurodollar Rate” shall be the rate per annum determined by the
Administrative Agent to be the rate at which deposits in U.S. dollars in same
day funds in the approximate amount of the Daily Floating Eurodollar Loan being
made, continued or converted by Bank of America and with a term equivalent to
one (1) month would be offered by Bank of America’s London Branch to major
banks in the London interbank eurodollar market at their request at
approximately 11:00 a.m. (London time) on such day (if such day is a Business
Day) or the immediately preceding Business Day (if such day is not a Business
Day).

“Debt Rating” means, as of any date, the rating
that has been most recently assigned (either publicly or privately, and
including a “shadow” rating) by S&P, Moody’s or Fitch (or, if no such
rating is available with respect to 144A Debt Securities only, NAIC), as the
case may be, for either (i) any Eligible Specified Financial Asset or (ii) if
no such rating is available from any such rating agency with respect to senior
unsecured Bank Loans only, for a class of non-credit enhanced long-term senior
unsecured debt issued by the applicable obligor of such senior unsecured Bank
Loan.  For purposes of the foregoing, (a)
if only one of S&P, Moody’s or Fitch (or, if no such rating is available
with respect to 144A Debt Securities only, NAIC) shall have in effect a Debt
Rating, the Debt Rating for the purposes of this Agreement shall be determined
by reference to the available rating, (b) if more than one Debt Rating shall be
in effect, the Debt Rating for the purposes of this Agreement shall be
determined by reference to the lowest rating issued by S&P, Moody’s or
Fitch, (c) if any Debt Rating established by S&P, Moody’s or Fitch (or, if
no such rating is available with respect to 144A Debt Securities only, NAIC)
shall be changed after the date of initial determination thereof hereunder or
if any agency establishes a Debt Rating for any Eligible Specified Financial
Asset where, previously, there was no Debt Rating, such new Debt Rating shall
be effective, subject to clause (b) above, as of the date on which such change
is first announced publicly or privately by the rating agency making such
change or issuing such rating, as applicable, and (d) if S&P, Moody’s or
Fitch (or, for 144A Debt Securities, NAIC) shall change the basis on which Debt
Ratings are established, each reference to the Debt Rating assigned by S&P,
Moody’s or Fitch (or, for 144A Debt Securities, NAIC), as the case may be,
shall refer to the then equivalent rating by S&P, Moody’s or Fitch (or, for
144A Debt Securities, NAIC), as the case may be.

 8
 

 

“Debt Securities” as used in the other
definitions contained herein, means securities evidencing debt obligations,
including, without limitation, certificates representing an interest in a
trust, the principal assets of which consist of debt obligations.

“Debtor Relief Laws” means the Bankruptcy Code
of the United States, and all other liquidation, conservatorship, bankruptcy,
assignment for the benefit of creditors, moratorium, rearrangement,
receivership, insolvency, reorganization, or similar debtor relief Laws of the
United States or other applicable jurisdictions from time to time in effect and
affecting the rights of creditors generally.

“Default” means any event or condition that
constitutes an Event of Default or that, with the giving of any notice, the
passage of time, or both, would be an Event of Default.

“Default Rate” means, when used with respect to
Obligations, (i) with respect to Base Rate Loans, an interest rate equal to (A)
the Base Rate plus (B) 2% per annum; and (ii) with respect to a Eurodollar
Loan, an interest rate equal to (A) the interest rate (including any Applicable
Rate) otherwise applicable to such Eurodollar Loan plus (B) 2% per annum.

“Defaulting Lender” means any Lender that (a)
has failed to fund any portion of the Revolving Loans or participations in
Swingline Loans required to be funded by it hereunder within one Business Day
of the date required to be funded by it hereunder unless such failure has been
cured, (b) has otherwise failed to pay over to the Administrative Agent or any
other Lender any other amount required to be paid by it hereunder within one
Business Day of the date when due, unless the subject of a good faith dispute
or unless such failure has been cured or (c) has been deemed insolvent or
become the subject of a bankruptcy or insolvency proceeding.

“Delayed Draw Loan” means, as of any date, a
term loan that has not yet been fully funded.

“Delayed Draw Reserve” means, as of any date,
an amount equal to the aggregate amount of the respective Unfunded Delayed Draw
Amounts for each Delayed Draw Loan that is a Tranche B Specified Financial
Asset as of such date.

“Disposition” means the sale, transfer,
license, lease or other disposition (including any sale and leaseback
transaction) of any property by any Person, including any sale, assignment,
transfer or other disposal, with or without recourse, of any notes or accounts
receivable or any rights and claims associated therewith.

“Dollar” and “$” mean lawful money of
the United States.

“Eligible Assignee” means (a) any Person that
meets the requirements to be an assignee under Sections 10.06(b)(iii),
10.06(b)(v) and 10.06(b)(vi), (b) a commercial bank organized
under the laws of the United States, or any State thereof, having total assets
in excess of $500,000,000 or any commercial finance or asset based lending
affiliate of any such commercial bank, (c) a savings and loan association
or savings bank organized under the laws of the United States, or any State
thereof, having a net worth of at least $250,000,000 calculated in accordance
with GAAP, (d) any Lender (or any Affiliate of any Lender) listed on the
signature page of this Agreement and (e) other financial institutions with a
net worth of at least $250,000,000.

“Eligible Specified Financial Asset” means a
Tranche A Specified Financial Asset or a Tranche B Specified Financial Asset,
or a Participation Interest therein, of any Borrowers:

 9
 

 

(a)           in which, to secure
the Obligations, whether contingent or otherwise, the Administrative Agent has
a security interest (i) perfected by the Administrative Agent’s possession or
by “control” (as defined in §§ 8-106, 9-104, 9-105 and 9-106 of the Uniform
Commercial Code of the State of New York) in favor of the Administrative Agent
(with, if the Administrative Agent so elects and terminates the Collateral
Agreement, another Custodian or securities intermediary designated by the
Administrative Agent with the Borrowers’ consent, which consent shall not be
unreasonably withheld or delayed, for the purposes of obtaining control), or,
if in the reasonable opinion of the Administrative Agent it is not possible or
practicable to perfect the security interest by the Administrative Agent’s
possession or by “control” in favor of the Administrative Agent, is otherwise
perfected, and perfected in such a way as to be entitled to first priority, to
the reasonable satisfaction of the Administrative Agent and (ii) is capable of
being enforced by the Administrative Agent without the consent of any third
party (other than, in the case of a Specified Financial Asset that is a loan,
the customary requirement of the consent of the administrative agent or, unless
the loan is in default, borrower or material obligor of the loan) or resort to
judicial process;

(b)           which is not
otherwise subject to any equal or prior security interest, lien or encumbrance
other than liens in favor of the Administrative Agent for the benefit of the
Lenders;

(c)           which is not in
default as of the date on which such asset was acquired by the Borrowers;

(d)           which is not subject
to any right of recoupment or set-off;

(e)           for any Loan
Collateral (as defined in the Security Agreement) of any Borrower, in respect
of which, the Administrative Agent or the Custodian, on behalf of the
Administrative Agent, as directed by the Administrative Agent, has received an
original or copy of (1) a credit agreement indicating such Borrower as a lender
thereunder with respect to the loan or advance, (2) a promissory note
indicating such Borrower as a payee of the loan or advance, (3) an assignment
agreement indicating such Borrower as an assignee of the loan or advance or (4)
a participation agreement or participation certificate indicating such Borrower
as a participant in the loan or advance;

(f)            in respect of
which, unless under the “control” (as defined in §§ 8-106, 9-104, 9-105 and
9-106 of the Uniform Commercial Code of the State of New York) of the
Administrative Agent acting as a securities intermediary, such Borrower has
issued to the applicable issuer or material obligor (or, if payments are made
through an agent, to the applicable agent) an instruction directing all
payments of amounts payable to such Borrower in respect of such Specified
Financial Asset to the Custodial Account or another account approved by the
Administrative Agent over which the Administrative Agent has such “control”;

(g)           the Value of which
to be included, for purposes of the computation of the applicable Borrowing
Base at any time, has been determined, or, if required to be updated, has been
determined in response to the update requirement set forth in Section 6.02(d)
or (e), and to the extent such Value is not being disputed by the
Administrative Agent;

(h)           for which the
depositary bank, issuer or material obligor, as the case may be, excluding any
issuer of securities by a special purpose entity in a securitization, is
organized and has its chief executive office in (i) the United States of
America, or (ii) if approved by the Administrative Agent in its sole
discretion, which shall be exercised in a commercially reasonable manner,
Belgium, France, Italy, Luxembourg, Netherlands, Germany, Denmark, Ireland,
United Kingdom, Austria, Finland, Sweden or Japan;

(i)            which is
denominated in U.S. Dollars, Euros, British Pounds or Japanese Yen;

 

 10

 

(j)            is not “margin
stock” as defined in Regulation U of the Federal Reserve Board;

(k)           in the case of a
first or second lien Bank Loan, a Mezzanine Obligations or a Bridge Loan, that
is a term loan, and is either a Delayed Draw Loan or has been fully funded
(i.e., is not subject to an additional lending commitment) and is not in
default; and

(l)            in the case of a
Participation Interest, which the Administrative Agent is reasonably satisfied
is a “true” participating interest rather than being a financing and is
consistent with market norms for agreements between unaffiliated entities
dealing at arm’s length.

Notwithstanding the foregoing, the Borrowing Base on
any date may include an asset to be purchased by any Borrower with the proceeds
of a Loan to be made on that date so long as (i) the Administrative Agent has
been directed by such Borrower to pay the proceeds of such Loan directly to the
seller of the asset (to the extent of the purchase price thereof), and (ii) the
seller has been directed to deliver the asset to the Administrative Agent or
its nominee before or against payment by such Borrower, or, if such delivery is
not possible or practical, in such other manner as is reasonably acceptable to
the Administrative Agent to satisfy the requirements of clauses (a), (b) and
(c) of this definition of “Eligible Specified Financial Asset.”  In such instance, the requirements of clauses
(a), (b), (c) and (d) need not be met for the asset to qualify as an Eligible
Specified Financial Asset until the expiration of three Business Days following
the date of the Borrowing so long as during the three Business Day period, the
Administrative Agent has a first priority perfected security interest in the
asset, provided, however, that the Value of the asset does
not exceed $25,000,000.

“Environmental Laws” means any and all Federal,
state, local, and foreign statutes, laws, regulations, ordinances, rules,
judgments, orders, decrees, permits, concessions, grants, franchises, licenses,
agreements or governmental restrictions relating to pollution and the
protection of the environment or the release of any materials into the
environment, including those related to hazardous substances or wastes, air
emissions and discharges to waste or public systems.

“Environmental Liability” means any liability,
contingent or otherwise (including any liability for damages, costs of
environmental remediation, fines, penalties or indemnities), of KKR Financial
or any of its respective Subsidiaries directly or indirectly resulting from or
based upon (a) violation of any Environmental Law, (b) the generation, use,
handling, transportation, storage, treatment or disposal of any Hazardous
Materials, (c) exposure to any Hazardous Materials, (d) the release or
threatened release of any Hazardous Materials into the environment or (e) any
contract, agreement or other consensual arrangement pursuant to which liability
is assumed or imposed with respect to any of the foregoing.

“Equity Interests” means, with respect to any
Person, all of the shares of capital stock of (or other ownership or profit
interests in) such Person, all of the warrants, options or other rights for the
purchase or acquisition from such Person of shares of capital stock of (or
other ownership or profit interests in) such Person, all of the securities
convertible into or exchangeable for shares of capital stock of (or other
ownership or profit interests in) such Person or warrants, rights or options
for the purchase or acquisition from such Person of such shares (or such other
interests), and all of the other ownership or profit interests in such Person
(including partnership, member or trust interests therein), whether voting or
nonvoting, and whether or not such shares, warrants, options, rights or other
interests are outstanding on any date of determination.

“ERISA” means the Employee Retirement Income
Security Act of 1974.

 11
 

“ERISA Affiliate” means any trade or business
(whether or not incorporated) under common control with any Borrower within the
meaning of Section 414(b) or (c) of the Code (and Sections 414(m) and
(o) of the Code for purposes of provisions relating to Section 412 of the
Code).

“ERISA Event” means (a) a Reportable Event with
respect to a Pension Plan; (b) a withdrawal by any Borrower or any ERISA
Affiliate from a Pension Plan subject to Section 4063 of ERISA during a plan
year in which it was a substantial employer (as defined in Section 4001(a)(2)
of ERISA) or a cessation of operations that is treated as such a withdrawal
under Section 4062(e) of ERISA; (c) a complete or partial withdrawal by a any
Borrower or any ERISA Affiliate from a Multiemployer Plan or notification that
a Multiemployer Plan is in reorganization; (d) the filing of a notice of intent
to terminate, the treatment of a Plan amendment as a termination under Section
4041 or 4041A of ERISA, or the commencement of proceedings by the PBGC to
terminate a Pension Plan or Multiemployer Plan; (e) an event or condition which
constitutes grounds under Section 4042 of ERISA for the termination of, or the
appointment of a trustee to administer, any Pension Plan or Multiemployer Plan;
or (f) the imposition of any liability under Title IV of ERISA, other than for
PBGC premiums due but not delinquent under Section 4007 of ERISA, upon any
Borrower or any ERISA Affiliate.

“Eurodollar Loans” means Fixed Period
Eurodollar Loans or Daily Floating Eurodollar Loans.

“Eurodollar Rate” means the Fixed Period
Eurodollar Rate or the Daily Floating Eurodollar Rate.

“Event of Default” has the meaning specified in
Section 8.01.

“Excluded Taxes” means, with respect to the
Administrative Agent, any Lender or any other recipient of any payment to be
made by or on account of any obligation of any Borrower hereunder, (a) taxes
imposed on or measured by its overall gross or net income (however
denominated), and franchise taxes imposed on it (in lieu of net income taxes),
in each case, by the jurisdiction (or any political subdivision thereof
including, without limitation, a state of the United States and any political
subdivision of such state) under the laws of which such recipient is organized
(or political subdivision thereof) or in which its principal office is located
or, in the case of any Lender, in which its applicable Lending Office is
located, (b) any branch profits taxes imposed by the United States or any
similar tax imposed by any other jurisdiction (or political subdivision
thereof) in which any Borrower is located, (c) in the case of a Foreign Lender
(other than an assignee pursuant to a request by any Borrower under Section 10.13),
any and all Taxes (including withholding tax) that are imposed on amounts
payable to such Foreign Lender at the time such Foreign Lender becomes a party
hereto (or designates a new Lending Office) or are attributable to such Foreign
Lender’s failure or inability (other than as a result of a Change in Law) to
comply with Section 3.01(e), except to the extent that such Foreign
Lender (or its assignor, if any) was entitled, at the time of designation of a
new Lending Office (or assignment), to receive additional amounts from any
Borrower with respect to such withholding tax pursuant to Section 3.01(a),
and (d) any and all Taxes imposed on it as a result of a trade or business, a
permanent establishment, or a present or former connection between such Lender
or the Administrative Agent (as the case may be) and the jurisdiction of the
Governmental Authority imposing such tax or any taxing authority thereof or
therein (other than any connection resulting from being a Lender hereunder).

“Existing Credit Agreement” has the meaning
assigned to such term in the Recitals.

“Federal Funds Rate” means, for any day, the
rate per annum equal to the weighted average (rounded upwards, if necessary, to
a whole multiple of 1/100 of 1%) of the rates on overnight Federal funds
transactions with members of the Federal Reserve System arranged by Federal
funds brokers on such day, as published by the Federal Reserve Bank of New York
on the Business Day next succeeding such day; provided that (a) if such
day is not a Business Day, the Federal Funds Rate for such day shall be 

 12
 

such rate on such
transactions on the next preceding Business Day as so published on the next
succeeding Business Day, and (b) if no such rate is so published on such next
succeeding Business Day, the Federal Funds Rate for such day shall be the
average rate (rounded upward, if necessary, to a whole multiple of 1/100 of 1%)
charged to Bank of America on such day on such transactions as determined by
the Administrative Agent.

“Fee Letter” means the letter agreement, dated
June 16, 2006, among KKR Financial Corp., KKR TRS, the Administrative Agent and
the Arranger.

“Fee Letter Extension” means the letter
agreement, dated May 4, 2007, among the Borrowers, the Administrative Agent and
the Arranger.

“Financing SPE” means any bankruptcy-remote
special purpose Subsidiary formed by any Borrower or an Affiliate and which is,
or is established for the purpose of becoming, an issuer in a Securitization.

“Fitch” means Fitch, Inc.

“Fixed Period Eurodollar Loan” means any Revolving
Loan that bears interest at a per annum rate equal to the Fixed Period
Eurodollar Rate plus the Applicable Rate.

“Fixed Period Eurodollar Rate” means, for any
day, a fixed rate equal to BBA LIBOR, as published by Reuters (or other
commercially available source providing quotations of BBA LIBOR as designated
by the Administrative Agent from time to time) at approximately 11:00 a.m.,
London time, two Business Days prior to the commencement of such Interest
Period, for U.S. dollar deposits (for delivery on the first day of such
Interest Period) with a term equivalent to such Interest Period.  If such rate is not available at such time
for any reason, then the “Fixed Period Eurodollar Rate” for such Interest
Period shall be the rate per annum determined by the Administrative Agent to be
the rate at which deposits in U.S. dollars for delivery on the first day of
such Interest Period in same day funds in the approximate amount of the Fixed
Period Eurodollar Loan being made, continued or converted by Bank of America
and with a term equivalent to such Interest Period would be offered by Bank of
America’s London Branch to major banks in the London interbank eurodollar
market at their request at approximately 11:00 a.m. (London time) two Business
Days prior to the commencement of such Interest Period.

“Foreign Lender” means any Lender that is
organized under the laws of a jurisdiction other than that in which any
Borrower is resident for tax purposes. 
For purposes of this definition, the United States, each State thereof
and the District of Columbia shall be deemed to constitute a single
jurisdiction.

“FRB” means the Board of Governors of the
Federal Reserve System of the United States.

“Fund” means any Person (other than a natural
person) that is (or will be) engaged in making, purchasing, holding or
otherwise investing in commercial loans and similar extensions of credit in the
ordinary course of its business.

“GAAP” means generally accepted accounting
principles in the United States set forth in the opinions and pronouncements of
the Accounting Principles Board and the American Institute of Certified Public
Accountants and statements and pronouncements of the Financial Accounting
Standards Board or such other principles as may be approved by a significant
segment of the accounting profession in the United States, that are applicable
to the circumstances as of the date of determination, consistently applied.

 13
 

“Governmental Authority” means the government
of the United States or any other nation, or of any political subdivision
thereof, whether state or local, and any agency, authority, instrumentality,
regulatory body, court, central bank or other entity exercising executive,
legislative, judicial, taxing, regulatory or administrative powers or functions
of or pertaining to government (including any supra-national bodies such as the
European Union or the European Central Bank).

“Guarantee” means, as to any Person, (a) any
obligation, contingent or otherwise, of such Person guaranteeing or having the
economic effect of guaranteeing any Indebtedness or other obligation payable or
performable by another Person (the “primary obligor”) in any manner, whether
directly or indirectly, and including any obligation of such Person, direct or
indirect, (i) to purchase or pay (or advance or supply funds for the purchase
or payment of) such Indebtedness or other obligation, (ii) to purchase or lease
property, securities or services for the purpose of assuring the obligee in
respect of such Indebtedness or other obligation of the payment or performance
of such Indebtedness or other obligation, (iii) to maintain working capital,
equity capital or any other financial statement condition or liquidity or level
of income or cash flow of the primary obligor so as to enable the primary obligor
to pay such Indebtedness or other obligation, or (iv) entered into for the
purpose of assuring in any other manner the obligee in respect of such
Indebtedness or other obligation of the payment or performance thereof or to
protect such obligee against loss in respect thereof (in whole or in part), or
(b) any Lien on any assets of such Person securing any Indebtedness or other
obligation of any other Person, whether or not such Indebtedness or other
obligation is assumed by such Person (or any right, contingent or otherwise, of
any holder of such Indebtedness to obtain any such Lien); provided that
the term “Guarantee” shall not include endorsements for collection or deposit
in the ordinary course of business.  The
amount of any Guarantee shall be deemed to be an amount equal to the stated or
determinable amount of the related primary obligation, or portion thereof, in
respect of which such Guarantee is made or, if not stated or determinable, the
maximum reasonably anticipated liability in respect thereof as determined by
the guaranteeing Person in good faith. 
The term “Guarantee” as a verb has a corresponding meaning.

“Guarantor Payment” has the meaning specified
in Section 2.15.

“Hazardous Materials” means all explosive or
radioactive substances or wastes and all hazardous or toxic substances, wastes
or other pollutants, including petroleum or petroleum distillates, asbestos or
asbestos-containing materials, polychlorinated biphenyls, radon gas, infectious
or medical wastes and all other substances or wastes of any nature regulated
pursuant to any Environmental Law.

“Increase Effective Date” has the meaning
specified in Section 2.13.

“Indebtedness” means, as to any Person at a
particular time, without duplication, all of the following, whether or not
included as indebtedness or liabilities in accordance with GAAP:

(a)           all obligations of
such Person for borrowed money and all obligations of such Person evidenced by
bonds, debentures, notes, loan agreements or other similar instruments;

(b)           all direct or contingent
obligations of such Person arising under letters of credit (including standby
and commercial), bankers’ acceptances, bank guaranties, surety bonds and
similar instruments;

(c)           net obligations of
such Person under any Swap Contract;

(d)           all obligations of
such Person to pay the deferred purchase price of property or services (other
than trade accounts payable in the ordinary course of business and, in each
case, not past due for more than 60 days after the date on which such trade
account payable was created);

 14
 

(e)           indebtedness
(excluding prepaid interest thereon) secured by a Lien on property owned or
being purchased by such Person (including indebtedness arising under
conditional sales or other title retention agreements), whether or not such
indebtedness shall have been assumed by such Person or is limited in recourse;

(f)            Capital Lease
Obligations and Synthetic Lease Obligations;

(g)           all obligations of
such Person to purchase, redeem, retire, defease or otherwise make any payment
in respect of any Equity Interest in such Person or any other Person, valued,
in the case of a redeemable preferred interest, at the greater of its voluntary
or involuntary liquidation preference plus accrued and unpaid dividends;
and

(h)           all Guarantees of
such Person in respect of any of the foregoing.

For all purposes hereof, the Indebtedness of any
Person shall include the Indebtedness of any partnership, joint venture (other
than a joint venture that is itself a corporation or limited liability company)
or other business venture (collectively with a partnership and a joint venture,
referred to hereinafter as a “Venture”), but only to the extent that
such Person is directly or indirectly liable for such Indebtedness, whether by
reason of its status as general partner, joint venturer or otherwise, unless,
and only to the extent that, such Indebtedness is expressly made non-recourse
to such Person or Venture.  The amount of
any net obligation under any Swap Contract on any date shall be deemed to be
the Swap Termination Value thereof as of such date.  The amount of any Capital Lease Obligation or
Synthetic Lease Obligation as of any date shall be deemed to be the amount of
Attributable Indebtedness in respect thereof as of such date.

“Indemnified Taxes” means Taxes other than Excluded
Taxes.

“Indemnitees” has the meaning specified in Section 10.04(a)(b).

“Information” has the meaning specified in Section 10.07.

“Interest Payment Date” means, (a) as to any
Loan other than a Base Rate Loan or a Daily Floating Eurodollar Loan, the last
day of each Interest Period applicable to such Loan and the Maturity Date; provided,
however, that if any Interest Period for a Fixed Period Eurodollar Loan
exceeds three months, the respective dates that fall every three months after
the beginning of such Interest Period shall also be Interest Payment Dates; and
(b) as to any Base Rate Loan or a Daily Floating Eurodollar Loan (including a
Swingline Loan), the last Business Day of each March, June, September and December and the Maturity Date.

“Interest Period” means, as to each Fixed
Period Eurodollar Loan, the period commencing on the date such Fixed Period
Eurodollar Loan is disbursed or converted to or continued as a Fixed Period
Eurodollar Loan and ending on the date, one, two, three or six months thereafter,
as selected by any Borrower in its Loan Notice; provided that:

(a)           any Interest Period
that would otherwise end on a day that is not a Business Day shall be extended
to the next succeeding Business Day unless such Business Day falls in another
calendar month, in which case such Interest Period shall end on the next
preceding Business Day;

(b)           any Interest Period
that begins on the last Business Day of a calendar month (or on a day for which
there is no numerically corresponding day in the calendar month at the end of
such Interest Period) shall end on the last Business Day of the calendar month
at the end of such Interest Period; and

 15
 

(c)           no Interest Period
shall extend beyond the Maturity Date.

“Investment” means, as to any Person, any
direct or indirect acquisition or investment by such Person, whether by means
of (a) the purchase or other acquisition of capital stock or other securities
of another Person, (b) a loan, advance or capital contribution to, Guarantee or
assumption of debt of, or purchase or other acquisition of any other debt or
equity participation or interest in, another Person, including any partnership
or joint venture interest in such other Person and any arrangement pursuant to
which the investor Guarantees Indebtedness of such other Person, or (c) the
purchase or other acquisition (in one transaction or a series of transactions)
of assets of another Person that constitute a business unit.  For purposes of covenant compliance, the
amount of any Investment shall be the amount actually invested, without
adjustment for subsequent increases or decreases in the value of such
Investment.

“IRS” means the United States Internal Revenue
Service.

“KKR Financial” has the meaning specified in
the introductory paragraph hereto.

“KKR Financial Corp.” has the meaning specified
in the introductory paragraph hereto.

“KKR
Financial Corp. Form 10-K” means KKR Financial Corp.’s Form 10-K filed with
the Securities and Exchange Commission on March 29, 2006, as amended prior to
the date hereof.

“KKR
Financial Form S-4” means KKR Financial’s Form S-4 filed with the
Securities and Exchange Commission on April 2, 2007, as amended prior to the
date hereof.

“KKR Holdings” has the meaning specified in the
introductory paragraph hereto.

“KKR Holdings II” has the meaning specified in
the introductory paragraph hereto.

“KKR Holdings III” has the meaning specified in
the introductory paragraph hereto.

“KKR Holdings LTD” has the meaning specified in
the introductory paragraph hereto.

“KKR TRS” has the meaning specified in the
introductory paragraph hereto.

“KKR TRS LTD” has the meaning specified in the
introductory paragraph hereto.

“Laws” means, collectively, all international,
foreign, Federal, state and local statutes, treaties, rules, guidelines,
regulations, ordinances, codes and administrative or judicial precedents or
authorities, including the interpretation or administration thereof by any
Governmental Authority charged with the enforcement, interpretation or
administration thereof, and all applicable administrative orders, directed
duties, requests, licenses, authorizations and permits of, and agreements with,
any Governmental Authority, in each case whether or not having the force of
law.

“Lender” has the meaning specified in the
introductory paragraph hereto and, as the context requires, includes the
Swingline Lender.

“Lending Office” means, as to any Lender, the
office or offices of such Lender described as such in such Lender’s
Administrative Questionnaire, or such other office or offices as a Lender may
from time to time notify the Borrowers and the Administrative Agent.

“Letter of Credit Obligations” means
reimbursement obligations of either of the Borrowers in respect of letters of
credit issued for the benefit of either of the Borrowers or any of their respective

 16
 

Subsidiaries, which
reimbursement obligations may be unsecured or may be collateralized by means of
a deposit of cash with the issuer of any such letter of credit.

“Lien” means any mortgage, pledge,
hypothecation, assignment, deposit arrangement, encumbrance, lien (statutory or
other), charge, or preference, priority or other security interest or
preferential arrangement in the nature of a security interest of any kind or
nature whatsoever (including any conditional sale or other title retention agreement,
any easement, right of way or other encumbrance on title to real property, and
any financing lease having substantially the same economic effect as any of the
foregoing).

“Loan” means any Revolving Loan or Swingline
Loan.

“Loan Documents” means this Agreement, the
Collateral Agreement, the Security Documents, the Fee Letter and each Note, if
any, issued hereunder.

“Loan Notice” means either a Revolving Loan
Notice or a Swingline Loan Notice.

“Management Agreement” means that certain
Management Agreement dated as of August 12, 2004, between KKR Financial Corp.
and KKR Financial Advisors LLC, and upon its amendment and restatement as
contemplated by Section 6.12, following which KKR Financial shall be
substituted for KKR Financial Corp. as a party, such amended and restated
management agreement.

“Material Adverse Effect” means a material
adverse effect on (a) the business, assets, operations or condition, financial
or otherwise, of the Borrowers and their respective Subsidiaries taken as a
whole, (b) the ability of any Borrower to perform any of its obligations under
this Agreement or any other Loan Document or (c) the rights of or benefits
available to the Administrative Agent or the Lenders under this Agreement or
any other Loan Document.

“Material Indebtedness” means Indebtedness
(other than the Loans) of any one or more of each of the Borrowers and their
respective Subsidiaries in an aggregate principal amount exceeding
$25,000,000.  For purposes of determining
Material Indebtedness, the “principal amount” of the obligations of any
Borrower or any Subsidiary in respect of any Swap Contract or Repurchase
Agreement at any time shall be the maximum aggregate amount (giving effect to
any netting agreements) that such Borrower or such Subsidiary would be required
to pay if such Swap Contract or Repurchase Agreement were terminated at such
time.

“Maturity Date” means June 23, 2009, and, if such date is not a Business Day, the
Maturity Date shall be the next preceding Business Day.

“Maximum Rate” has the meaning specified in Section 10.09.

“Merger”
has the meaning specified in Section 4.01(a)(xv).

“Merger
Agreement” means the Agreement and Plan of Merger dated as of February 9,
2007, by and among KKR Financial Corp., KKR Financial and KKR Financial Merger
Corp.

“Merger
Effective Time” means the “Effective Time” as defined in the Merger
Agreement.

“Mezzanine Obligation” means a subordinate Loan
or Debt Security that is senior to all equity classes. For clarity, Mezzanine
Obligations shall not include any preferred stock or any equity security that
is mandatorily redeemable as defined by GAAP.

 17
 

“Moody’s” means Moody’s Investors Service, Inc.
and any successor thereto.

“Multiemployer Plan” means any employee benefit
plan of the type described in Section 4001(a)(3) of ERISA, to which any
Borrower or any ERISA Affiliate makes or is obligated to make contributions, or
during the preceding five plan years, has made or been obligated to make
contributions.

“Net Value Amount” means, in relation to an
Eligible Specified Financial Asset, the product of the Value of such Eligible
Specified Financial Asset and the relevant Specified Percentage applicable to
such Eligible Specified Financial Asset.

“Note” means a promissory note made by any
Borrower in favor of a Lender evidencing Loans made by such Lender,
substantially in the form of Exhibit C.

“Obligations” means all advances to, and debts,
liabilities, obligations, covenants and duties of, any Borrower arising under
any Loan Document or otherwise with respect to any Loan hereunder, whether
direct or indirect (including those acquired by assumption), absolute or
contingent, due or to become due, now existing or hereafter arising and
including interest and fees that accrue after the commencement by or against
any Borrower or any Affiliate thereof of any proceeding under any Debtor Relief
Laws naming such Person as the debtor in such proceeding, regardless of whether
such interest and fees are allowed claims in such proceeding.

“Organization Documents” means, (a) with
respect to any corporation, the certificate or articles of incorporation and
the bylaws (or equivalent or comparable constitutive documents with respect to
any non-U.S. jurisdiction); (b) with respect to any limited liability company,
the certificate or articles of formation or organization and operating
agreement; and (c) with respect to any partnership, joint venture, trust or
other form of business entity, the partnership, joint venture or other
applicable agreement of formation or organization and any agreement,
instrument, filing or notice with respect thereto filed in connection with its
formation or organization with the applicable Governmental Authority in the
jurisdiction of its formation or organization and, if applicable, any
certificate or articles of formation or organization of such entity.

“Other Taxes” means all present or future stamp
or documentary taxes or any other excise or property taxes, charges or similar
levies of the United States or any political subdivision thereof (including,
without limitation, any state in the United States and any political
subdivision of any such state) (including interest, fines, penalties and
additions to tax) arising from the execution, delivery, performance or
enforcement of, or otherwise with respect to, this Agreement or any other Loan
Document.

“Outstanding Amount” means with respect to all
Loans hereunder, on any date, the aggregate outstanding principal amount
thereof after giving effect to any borrowings and prepayments or repayments of
Loans occurring on such date.

“Participant” has the meaning specified in Section 10.06(d).

“Participation Interest” means any
participating interest in any Specified Financial Asset which is a
collateralized loan obligation, collateralized bond obligation, collateralized
debt obligation, first lien Bank Loan, second lien Bank Loan, Mezzanine
Obligation or Bridge Loan where the record holder of such interest is a
Financing SPE or a financial institution which has a Debt Rating equal to A+ by
S&P, or its equivalent from another rating agency, or higher.

“Patriot Act” has the meaning specified in Section 10.16.

 18
 

“PBGC” means the Pension Benefit Guaranty
Corporation or any successor entity performing similar functions.

“PCAOB” means the Public Company Accounting
Oversight Board.

“Pension Plan” means any “employee pension
benefit plan” (as such term is defined in Section 3(2) of ERISA), other
than a Multiemployer Plan, that is subject to Title IV of ERISA and is
sponsored or maintained by KKR Financial or any ERISA Affiliate or to which KKR
Financial or any ERISA Affiliate contributes or has an obligation to
contribute, or in the case of a multiple employer or other plan described in
Section 4064(a) of ERISA, has made contributions at any time during the
immediately preceding five plan years.

“Perfection Certificate” has the meaning set
forth in the Security Agreement.

“Permitted Encumbrances” means:

(a)           Liens imposed by law
for taxes that are not yet due or are being contested in good faith by the
Borrowers or a Subsidiary thereof and for which adequate reserves have been set
aside;

(b)           landlords’, carriers’,
warehousemen’s, mechanics’, materialmen’s, repairmen’s and other like Liens
imposed by law, arising in the ordinary course of business and securing
obligations that are not overdue by more than 30 days or are being contested in
good faith by the Borrowers or a Subsidiary thereof;

(c)           pledges and deposits
made in the ordinary course of business in compliance with workers’
compensation, unemployment insurance and other social security laws or
regulations and deposits securing liability to insurance carriers in relation
to the foregoing;

(d)           deposits to secure
the performance of bids, trade contracts, leases, statutory obligations, surety
and appeal bonds, performance bonds and other obligations of a like nature, in
each case in the ordinary course of business;

(e)           judgment liens in
respect of judgments that do not constitute an Event of Default; and

(f)            easements, zoning
restrictions, rights-of-way and similar encumbrances on real property imposed
by law or arising in the ordinary course of business that do not secure any
monetary obligations and do not materially interfere with the ordinary conduct
of business of any Borrower or any Subsidiary;

provided
that the term “Permitted Encumbrances” shall not include any Lien securing
Indebtedness.

“Permitted Investments” means:

(a)           direct obligations
of, or obligations the principal of and interest on which are unconditionally
guaranteed by, the United States of America (or by any agency thereof to the
extent such obligations are backed by the full faith and credit of the United
States of America), in each case maturing within one year from the date of
acquisition thereof;

(b)           investments in
commercial paper maturing within 270 days from the date of acquisition thereof
and having, at such date of acquisition, the highest credit rating obtainable
from S&P, Moody’s or Fitch;

 19
 

(c)           investments in
certificates of deposit, banker’s acceptances and time deposits maturing within
180 days from the date of acquisition thereof issued or guaranteed by or placed
with, and money market deposit accounts issued or offered by, any domestic
office of any commercial bank organized under the laws of the United States of
America or any State thereof which has a combined capital and surplus and
undivided profits of not less than $500,000,000;

(d)           fully collateralized
Repurchase Agreements with a term of not more than 30 days for securities
described in clause (a) above and entered into with a financial institution
satisfying the criteria described in clause (c) above; and

(e)           money market funds
that (i) comply with the criteria set forth in Securities and Exchange
Commission Rule 2a-7 under the Investment Company Act of 1940, (ii) have a Debt
Rating of AAA by S&P, or its equivalent from another rating agency, and
(iii) have portfolio assets of at least $5,000,000,000.

“Person” means any natural person, corporation,
limited liability company, trust, joint venture, association, company,
partnership, Governmental Authority or other entity.

“Plan” means any “employee benefit plan” (as
such term is defined in Section 3(3) of ERISA) established by any Borrower or,
with respect to any such plan that is subject to Section 412 of the Code or
Title IV of ERISA, any ERISA Affiliate.

“Platform” has the meaning specified in Section 6.02.

“Public Lender” has the meaning specified in Section 6.02.

“Register” has the meaning specified in Section 10.06(c).

“Registered Public Accounting Firm” has the
meaning specified in the Securities Laws and shall be independent of the
Borrowers as prescribed by the Securities Laws.

“REIT” means a domestic trust or corporation
that qualifies as a real estate investment trust under the provisions of
Sections 856, et seq., of the Code.

“Related Borrowing Base Information” means,
with respect to any “Specified Financial Asset” as defined herein, or
Participation Interest therein, included or to be included in the Borrowing
Base, (a) the category of the Specified Financial Asset as referred to in
clauses (a) through (k) of the definition and, if a Participation Interest is
applicable, the participating interest, (b) the identification of all primary
and secondary material obligors obligated on the Specified Financial Asset, (c)
the CUSIP number, if any, corresponding to such Eligible Specified Financial
Asset, (d) the principal amount of the loan, debt or other monetary obligation
in which any Borrower has an interest, (e) the scheduled maturity of the loan,
debt or other monetary obligation, (f) the type of collateral securing the
loan, debt or other monetary obligation and (g) the source of information used
in the determination of the Value.

“Related Parties” means, with respect to any
Person, such Person’s Affiliates and the partners, directors, officers,
employees, agents and advisors of such Person and of such Person’s Affiliates.

“Reportable Event” means any of the events set
forth in Section 4043(c) of ERISA, other than events for which the 30 day
notice period has been waived.

 

 20

 

“Repurchase Agreement” means any agreement
involving the sale or purchase of financial or other assets whereby the seller
of such assets agrees to repurchase such assets at an agreed upon price and at
a stated time.

“Request for Borrowing” means (a) with respect
to a Borrowing, conversion or continuation of Revolving Loans, a Revolving Loan
Notice and (b) with respect to a Swingline Loan, a Swingline Loan Notice.

“Required Lenders” means, as of any date of
determination, the Lenders having Commitments in the aggregate representing
more than 50% of the Aggregate Commitments at such time or, if the commitment
of each Lender to make Loans has been terminated pursuant to Section 8.02,
at least two Lenders holding in the aggregate more than 50% of the Total Outstandings
(with the aggregate amount of each Lender’s risk participation in Swingline
Loans being deemed “held” by such Lender for purposes of this definition); provided
that the Commitment of, and the portion of the Total Outstandings held or
deemed held by, any Defaulting Lender shall be excluded for purposes of making
a determination of Required Lenders.

“Responsible Officer” means the chief executive
officer, president, chief financial officer, treasurer, assistant treasurer or
controller of a Borrower and, solely for purposes of notices given pursuant to
Article II, any other officer of the applicable Borrower so designated by any
of the foregoing officers in a notice to the Administrative Agent.  Any document delivered hereunder that is
signed by a Responsible Officer of a Borrower shall be conclusively presumed to
have been authorized by all necessary corporate, partnership and/or other
action on the part of such Borrower and such Responsible Officer shall be
conclusively presumed to have acted on behalf of such Borrower.

“Restatement Closing Date” means the first date
all the conditions precedent in Section 4.01 are satisfied or
waived in accordance with Section 10.01.

“Restricted Payment” means any dividend or
other distribution (whether in cash, securities or other property) with respect
to any capital stock or other Equity Interest of the Borrowers or any
Subsidiary, or any payment (whether in cash, securities or other property),
including any sinking fund or similar deposit, on account of the purchase,
redemption, retirement, acquisition, cancellation or termination of any such
capital stock or other Equity Interest, or on account of any return of capital
to any Borrower’s stockholders, partners or members (or the equivalent Person
thereof).

“Revolving Credit Facility” means the credit
facility pursuant to which Revolving Loans are made available to the Borrowers
in accordance with this Agreement.

“Revolving Loan” means an extension of credit
made by a Lender to a Borrower pursuant to Section 2.01 of this
Agreement as a Tranche A Loan or a Tranche B Loan.

“Revolving Loan Notice” means a notice of (a) a
Borrowing of a Revolving Loan, (b) a conversion of Revolving Loans from one
Type to another, or (c) a continuation of Fixed Period Eurodollar Loans pursuant
to Section 2.02(a), which, if in writing, shall be substantially in
the form of Exhibit A.

“S&P” means Standard & Poor’s Ratings
Services, a division of The McGraw-Hill Companies, Inc. and any successor
thereto.

“Sarbanes-Oxley” means the Sarbanes-Oxley Act
of 2002.

 21
 

“SEC” means the Securities and Exchange
Commission, or any Governmental Authority succeeding to any of its principal
functions.

“Secured Indebtedness” means secured
Indebtedness incurred by any Borrower or any Subsidiary in the course of its
business as such business is described in the KKR Financial Corp. Form 10-K,
including any such Indebtedness incurred pursuant to or in connection with any
loan warehouse agreement, Repurchase Agreement, Swap Agreement, collateralized
bond obligation, collateralized loan obligation, collateralized debt obligation
or Securitization.

“Securitization” means the issuance by a
bankruptcy-remote special purpose entity of evidences of debt obligations or
equity interests to holders which are third party institutional investors and
which entitle the holders to receive payments that depend primarily on the cash
flow of accounts, chattel paper, instruments, investment property or payment
intangibles owned by the special purpose entity.

“Security Agreement” means the Second Amended
and Restated Security Agreement dated as of May 4, 2007, among the Borrowers
and the Administrative Agent, as further amended, amended and restated,
supplemented or otherwise modified from time to time.

“Security Documents” means the Security
Agreement and all other instruments and documents, including without
limitation, Uniform Commercial Code financing statements, which (a) are
required to be executed, delivered or filed pursuant to the Security Agreement
or any other Loan Document or (b) are necessary for the creation or perfection
of any Lien in favor of the Administrative Agent for the benefit of the Lenders
to secure any of the Obligations.

“Securities Laws” means the Securities Act of
1933, the Securities Exchange Act of 1934, Sarbanes-Oxley and the applicable
accounting and auditing principles, rules, standards and practices promulgated,
approved or incorporated by the SEC or the PCAOB.

“Single Obligor” means, collectively, all
obligors that are Affiliates.

“Solvent” means, with respect to any Person as
of a particular date, that, on such date (a) such Person is able to pay its
debts and other liabilities, contingent obligations and other commitments as
they mature in the normal course of business, (b) such Person does not intend
to, and does not believe that it will, incur debts or liabilities beyond such
Person’s ability to pay as such debts and liabilities mature in their ordinary
course, (c) such Person is not engaged in a business or a transaction, and is
not about to engage in a business or a transaction, for which such Person’s
assets would constitute unreasonably small capital after giving due
consideration to the prevailing practice in the industry in which such Person
is engaged or is to engage, (d) the fair value of the assets of such Person is
greater than the total amount of liabilities, including, without limitation,
contingent liabilities, of such Person, and (e) the present fair saleable value
of the assets of such Person is not less than the amount that will be required
to pay the probable liability of such Person on its debts as they become
absolute and matured. In computing the amount of contingent liabilities at any
time, it is intended that such liabilities will be computed at the amount
which, in light of all the facts and circumstances existing at such time,
represents the amount that can reasonably be expected to become an actual or
matured liability.

“Special Event” means, in connection with a
Trust Preferred Financing Vehicle, the receipt by a Borrower (or its Subsidiary)
of an opinion of counsel that as a result of certain changes in or
interpretations of the tax law or the Investment Company Act of 1940, as
amended (the “Investment Company Act”) or, in each case, regulations
thereunder, there is more than an insubstantial risk that the Trust Preferred
Vehicle will be considered an “investment company” under the Investment Company
Act or that the Trust Preferred Vehicle will be subject to United States
federal income tax or subject to more 

 22
 

than a de minimus amount
of other taxes or governmental charges or that interest payable by the maker of
the Trust Preferred Indebtedness will not be eligible as a tax deduction by
such maker.

“Specified Financial Asset” means a Tranche A
Specified Financial Asset or a Tranche B Specified Financial Asset.

“Specified Percentage” means, in relation to
any Eligible Specified Financial Asset, the percentage set forth in the table
below opposite such Eligible Specified Financial Asset:

	
  TRANCHE A

  
	
  Eligible
  Specified Financial Asset

  	
   

  	
  Specified Percentage

  
	
  Cash

  	
   

  	
  100%

  
	
  Certificates of
  deposit

  	
   

  	
  95%

  
	
  Commercial paper

  	
   

  	
  95%

  
	
  United States
  obligations consisting of interest rate strips or zero coupon obligations

  	
   

  	
  90%

  
	
  Other United
  States obligations maturing in 10 or more and up to 30 years

  	
   

  	
  95%

  
	
  Other United
  States obligations maturing in 2 or more but less than 10

  	
   

  	
  97%

  
	
  Other United
  States obligations maturing in less than 2 years

  	
   

  	
  98%

  
	
  MBS rated AAA
  and with a weighted average life of less than five years

  	
   

  	
  95%

  
	
  MBS rated AA to
  AA+ and with a weighted average life of less than five years

  	
   

  	
  90%

  
	
  MBS rated A to
  AA-and with a weighted average life of less than five years

  	
   

  	
  85%

  

 

	
  TRANCHE B

  
	
  Eligible Specified Financial Asset(*)

  	
   

  	
  Specified Percentage

  
	
  Publicly traded
  investment grade Debt Securities.

  	
   

  	
   

  
	
  a. BBB+ or higher

  	
   

  	
  90%

  
	
  b. BBB thru BBB-

  	
   

  	
  80%

  
	
  Rule 144A
  private placed Debt Securities

  	
   

  	
   

  
	
  a. NAIC 1 / AAA thru A-

  	
   

  	
  85%

  
	
  b. NAIC 2 / BBB+ thru BBB-

  	
   

  	
  80%

  
	
  c. NAIC 3 / BB+ thru BB

  	
   

  	
  75%

  
	
  d. NAIC 4 / BB- thru B-

  	
   

  	
  60%

  
	
  e. NAIC 5 / CCC+ thru CCC-

  	
   

  	
  50%

  
	
  Other Debt Securities, excluding MBS, rated BB+/Ba1
  through BB-/B3

  	
   

  	
  75%

  
	
  Other Debt
  Securities, excluding MBS, rated B+/B1 through B-/B3

  	
   

  	
  60%

  
	
  Other Debt Securities, excluding MBS, rated
  CCC+/Caa1 through CCC-/Caa3

  	
   

  	
  50%

  
	
  First lien Bank
  Loans

  	
   

  	
  85%

  
	
  Second lien Bank
  Loans

  	
   

  	
  70%

  
	
  Real estate
  related Mezzanine Obligations

  	
   

  	
  60%

  
	
  Mezzanine Obligations (other than real estate
  related Mezzanine Obligations)

  	
   

  	
  50%

  
	
  Bridge Loans

  	
   

  	
  50%

  
	
  MBS rated BBB- to A- and with a weighted average
  life of less than five years

  	
   

  	
  75%

  
	
  MBS rated BB- to BB+ and with a weighted average
  life of less than five years

  	
   

  	
  50%

  
	
  CLO/CBO/CDO Tranches rated BB+/Ba1 or lower
  (including non-rated) on transactions managed by KKR Financial LLC or an
  Affiliate thereof

  	
   

  	
  40%

  
	
  Investments Denominated in Foreign Currency (Euros,
  Pounds or Yen)

  	
   

  	
  Mimic rates on US currency denominated assets if
  micro hedged for FX risk and, if not,an additional decrease of 5%(1)

  
	
  KKR Financial
  CLO/CBO/CDO Securitizations

  	
   

  	
   

  
	
  a. AAA thru A-

  	
   

  	
  90%

  
	
  b. BBB+ and BBB

  	
   

  	
  80%

  
	
  c. BBB-

  	
   

  	
  75%

  
	
  Mortgage-backed
  Debt Securities Interest Only Strips

  	
   

  	
   

  
	
  a. FNMA Interest Only Strips

  	
   

  	
  50%

  
	
  b. Non Agency Interest Only Strips

  	
   

  	
  40%

  
	
  Senior Unsecured
  Bank Loans

  	
   

  	
   

  
	
  a. BBB- or higher

  	
   

  	
  80%

  
	
  b. BB+ thru BB-

  	
   

  	
  75%

  
	
  c. B+ thru B-

  	
   

  	
  70%

  
	
  d. CCC+ thru CCC-

  	
   

  	
  50%

  

*                    References
to credit ratings are to the Debt Rating.

(1)             Subject
to confirmation of Administrative Agent’s first lien on foreign exchange
hedges.

 

 23
 

“Subsidiary” of a Person means a corporation,
partnership, joint venture, limited liability company or other business entity
of which a majority of the shares of securities or other interests having
ordinary voting power for the election of directors or other governing body
(other than securities or interests having such power only by reason of the
happening of a contingency) are at the time beneficially owned, or the
management of which is otherwise controlled, directly, or indirectly through
one or more intermediaries, or both, by such Person; provided, that KKR
TRS LTD shall be considered a Subsidiary of KKR Financial so long as KKR
Financial owns (directly or indirectly through other Subsidiaries) a majority
of the preferred shares of KKR TRS LTD. 
Unless otherwise specified, all references herein to a “Subsidiary” or
to “Subsidiaries” shall refer to a Subsidiary or Subsidiaries of KKR Financial.

“Swap Contract” means (a) any and all rate swap
transactions, basis swaps, credit derivative transactions, forward rate
transactions, commodity swaps, commodity options, forward commodity contracts,
equity or equity index swaps or options, bond or bond price or bond index swaps
or options or forward bond or forward bond price or forward bond index
transactions, interest rate options, forward foreign exchange transactions, cap
transactions, floor transactions, collar transactions, currency swap
transactions, cross-currency rate swap transactions, currency options, spot
contracts, or any other similar transactions or any combination of any of the
foregoing (including any options to enter into any of the foregoing), whether or
not any such transaction is governed by or subject to any master agreement, and
(b) any and all transactions of any kind, and the related confirmations, which
are subject to the terms and conditions of, or governed by, any form of master
agreement published by the International Swaps and Derivatives Association,
Inc., any International Foreign Exchange Master Agreement, or any other master
agreement (any such master agreement, together with any related schedules, a “Master
Agreement”), including any such obligations or liabilities under any Master
Agreement.

“Swap Termination Value” means, in respect of
any one or more Swap Contracts, after taking into account the effect of any
legally enforceable netting agreement relating to such Swap Contracts, (a) for
any date on or after the date such Swap Contracts have been closed out and
termination value(s) determined in accordance therewith, such termination
value(s), and (b) for any date prior to the date referenced in clause (a), the
amount(s) determined as the mark-to-market value(s) for such Swap Contracts, as
determined based upon one or more mid-market or other readily available
quotations provided by any recognized dealer in such Swap Contracts (which may
include a Lender or any Affiliate of a Lender).

“Swingline Facility” means that portion of the
Revolving Credit Facility made available by the Swingline Lender pursuant to Section 2.03.

“Swingline Borrowing” means a borrowing of a
Swingline Loan pursuant to Section 2.03.

“Swingline Lender” means Bank of America in its
capacity as provider of Swingline Loans, or any successor swingline lender
hereunder.

“Swingline Loan” has the meaning specified in Section 2.03(a).

“Swingline Loan Notice” means a notice of a
Swingline Borrowing pursuant to Section 2.03(b), which, if in
writing, shall be substantially in the form of Exhibit B.

“Swingline Sublimit” means, at any time, an
amount equal to the lesser of (a) $75,000,000 and (b) the Aggregate Commitment
Amount.  The Swingline Sublimit is part
of, and not in addition to, the Aggregate Commitment Amount.

 24
 

“Syndication Agents” means, collectively,
JPMorgan Chase Bank, N.A. and Citigroup Global Markets Inc.

“Synthetic Lease” means any lease of goods or
other property, whether real or personal, which is treated as an operating
lease under GAAP and as a loan or financing for U.S. income tax purposes.

“Synthetic Lease Obligation” means the monetary
obligation of a Person under a Synthetic Lease.

“Taxes” means all present or future taxes,
levies, imposts, duties, deductions, withholdings, assessments, fees or other
charges imposed by any Governmental Authority, including any interest,
additions to tax or penalties applicable thereto.

“Tenor” means, with respect to any Loan, its
characterization as a Tranche A Loan or a Tranche B Loan.

“Total Outstandings” means, at any time, the
aggregate Outstanding Amount of all Loans under this Agreement or any of the
other Loan Documents as of such time.

“Tranche” means either Tranche A or Tranche B.

“Tranche A” means that portion of the Revolving
Credit Facility pursuant to which Tranche A Loans are made.

“Tranche B” means that portion of the Revolving
Credit Facility pursuant to which Tranche B Loans are made.

“Tranche A Availability” means, at any time,
the lesser of (a) an amount not less than zero and otherwise equal to (i) the
Aggregate Commitment Amount minus (ii) Total Outstandings and (b) an
amount not less than zero and otherwise equal to (i) the Tranche A Borrowing
Base minus (ii) the Outstanding Amount of Tranche A Loans, in each case as of
such time.

“Tranche A Borrowing Base” means an amount, as
of any date, equal to the sum of each and all Tranche A Specified Financial
Asset Value Amounts as of such date.

“Tranche A Loans” means any Loan made with
reference to Tranche A Availability.

“Tranche A Specified Financial Asset” means any
financial asset described in one of the following categories that also satisfies the
applicable requirements of an “Eligible Specified Asset”:

(a)           cash on deposit in,
or certificates of deposit maturing in less than 90 days on the date of
acquisition and issued by, a bank with at least $2,000,000,000 in capital and
rated A1/P1;

(b)           commercial paper
maturing in less than 90 days from the date of acquisition and rated A2/P2 or
higher;

(c)           direct obligations
of, or obligations the principal and interest on which are unconditionally
guaranteed by, the United States of America (or by any agency thereof to the
extent backed by the full faith and credit of the United States of America), in
each case maturing within 30 years from the date of acquisition thereof; or

 

 25

 

(d)           residential
or commercial mortgage-backed Debt Securities having a Debt Rating and weighted
average life indicated in the Tranche A table for Specified Percentages
relating to mortgage-backed Debt Securities.

“Tranche A Specified Financial Asset Value Amount”
means, for each Tranche A Specified Financial Asset which is an Eligible
Specified Financial Asset, as of any date, the product of the Value of such
Tranche A Specified Financial Asset as of the most recent date such Value is
required to be determined pursuant to Section 6.02 and the
Specified Percentage applicable to such Tranche A Specified Financial Asset,
and subtracting from such product, in each case, any amount secured by a prior
Lien.

“Tranche B Availability” means, at any time,
the lesser of (a) an amount not less than zero and otherwise equal to (i) the
Aggregate Commitment Amount minus (ii) Total Outstandings and (b) an
amount not less than zero and otherwise equal to (i) the Tranche B Borrowing
Base minus (ii) the Outstanding Amount of Tranche B Loans, in each case as of
such time.

“Tranche B Borrowing Base” means an amount, as
of any date, equal to (a) the sum of each and all Tranche B Specified Financial
Asset Value Amounts as of such date minus (b) the amount of the Delayed
Draw Reserve as of such date.

“Tranche B Loans” means any Loan made with
reference to Tranche B Availability.

“Tranche B Specified Financial Asset” means any
financial asset described in one of the following categories that also satisfies the
applicable requirements of an “Eligible Specified Asset”:

(a)           publicly
traded investment grade Debt Securities rated BBB-/Baa3 or higher;

(b)           Debt
Securities placed privately under SEC Rule 144A and rated CCC-/Caa3 or higher
or NAIC 5 or higher;

(c)           other
Debt Securities (including, in the case of CLO/CBO/CDO Tranches, non-rated
securities, whether or not treated as debt for tax purposes), excluding
mortgage-backed securities having the Debt Ratings indicated in the table for
Specified Percentages;

(d)           first
lien Bank Loans (i.e., Bank Loans secured by a first priority security interest
in and lien on substantially all of the material obligors’ assets);

(e)           second
lien Bank Loans (i.e., Bank Loans secured by a second priority security
interest in and lien on substantially all of the material obligors’ assets);

(f)            Mezzanine
Obligations;

(g)           Bridge
Loans;

(h)           senior
unsecured debt having a Debt Rating indicated in the Tranche B table for
Specified Percentages;

(i)            for
all Specified Financial Assets defined in items (a) through (h), (j) and (k)
under this definition, investments denominated in U.S. Dollars, Euros, British
Pounds or Japanese Yen;

(j)            mortgage-backed
Debt Securities interest-only strips; or

 26
 

 

(k)           residential
or commercial mortgage-backed Debt Securities having a Debt Rating and weighted
average life indicated in the Tranche B table for Specified Percentages
relating to mortgage-backed Debt Securities.

“Tranche B Specified Financial Asset Value Amount”
means, for each Tranche B Specified Financial Asset which is an Eligible
Specified Financial Asset as of any date, the product of the Value of each such
Tranche B Specified Financial Asset as of the most recent date such Value is
required to be determined under Section 6.02 and the Specified
Percentage applicable to such Tranche B Specified Financial Asset, subject to
any Applicable Sublimit and, to the extent applicable, a Concentration Limit.

“Trust Preferred Financing Vehicle” has the
meaning assigned to such term in the definition of Trust Preferred Securities
Transaction.

“Trust Preferred Securities Transaction” means
a transaction pursuant to which (i) a Borrower (or any Subsidiary of a
Borrower) issues unsecured, subordinated, Debt Securities to, or borrows on an
unsecured, subordinated basis from, any trust or other entity that, as its
primary purpose, provides financing to a Borrower (or any Subsidiary of a
Borrower) (a “Trust Preferred Financing Vehicle”; such indebtedness of a
Borrower or any of its Subsidiaries owing to a Trust Preferred Financing
Vehicle, “Trust Preferred Indebtedness”) and (ii) the Trust Preferred
Financing Vehicle funds such financing of such Borrower (or such Subsidiary of
a Borrower) by issuing and selling preferred securities having a mandatory
redemption date no earlier than 30 years and not subject to redemption in less
than 5 years from the date of their issuance (other than at the option of a
Borrower or applicable Subsidiary upon the occurrence of a Special Event) (“Trust
Preferred Securities”), which securities may be guaranteed on an unsecured,
subordinated basis by such Borrower or such Subsidiary to the extent that the
trustee has failed to make distributions from payments received from such
Borrower or such Subsidiary (each such guaranty, a “Trust Preferred Guaranty”,
collectively, “Trust Preferred Guarantees”).

“Type” means, with respect to a Loan, its
character as a Base Rate Loan, Daily Floating Eurodollar Loan or a Fixed Period
Eurodollar Loan.

“Unfunded Delayed Draw Amount” means, as of any
date, and for any Delayed Draw Loan that is a Tranche B Specified Financial
Asset as of such date, an amount equal to the maximum unfunded portion of such
Delayed Draw Loan that could be required to be funded by a Borrower as of or
after such date.

“Unfunded Pension Liability” means the excess
of a Pension Plan’s benefit liabilities under Section 4001(a)(16) of ERISA,
over the current value of that Pension Plan’s assets, determined in accordance
with the assumptions used for funding the Pension Plan pursuant to Section 412
of the Code for the applicable plan year.

“United States” and “U.S.” mean the
United States of America.

“Unsecured Indebtedness” means unsecured
Indebtedness incurred by any Borrower or any Subsidiary in the course of its
business as such business is described in the KKR Financial Corp. Form 10-K.

“Value” means, on any date, in relation to an
Eligible Specified Financial Asset, the fair market value of the Eligible
Specified Financial Asset, determined, where applicable on a settlement basis,
in the following order of priority:

 27
 

 

(a)           If
the Eligible Specified Financial Asset is of a type sold on a recognized
exchange, the closing price on the exchange as of such date;

(b)           If
the Eligible Specified Financial Asset is of a type for which sales quotations
are provided by IDC, Loan X, Loan Pricing Corporation or any other pricing
service approved by the Administrative Agent, in its sole discretion, which
shall be exercised in a commercially reasonable manner, the sales price
provided by the pricing service as of such date;

(c)           If
the Eligible Specified Financial Asset is of a type for which sales quotations
are available from Bank of America, Bear Stearns, Citigroup, Credit Suisse,
Deutsche Bank, Goldman Sachs, JPMorgan, Lehman Brothers, Merrill Lynch, UBS, or
any of their respective Affiliates or any other dealers approved by the
Administrative Agent, in its sole discretion, which shall be exercised in a
commercially reasonable manner, the average of the bid prices as of such date
provided by at least two of such dealers; and

(d)           In
all other cases, the Value is the amount agreed to in writing (as of or for any
date(s) set forth therein) by the Administrative Agent and the Borrowers or, in
the absence of agreement, the amount appraised by an unaffiliated and
disinterested nationally recognized third party appraiser, experienced in
valuing financial assets of that type, selected by the Borrowers or the amount
determined by the Administrative Agent based upon its own internal valuation,
whichever is lower, in each case as of such date.

1.02        Other Interpretive Provisions.  With reference to this Agreement and each
other Loan Document, unless otherwise specified herein or in such other Loan
Document:

(a)           The
definitions of terms herein shall apply equally to the singular and plural
forms of the terms defined.  Whenever the
context may require, any pronoun shall include the corresponding masculine,
feminine and neuter forms.  The words “include,”
“includes” and “including” shall be deemed to be followed by the
phrase “without limitation.”  The word “will”
shall be construed to have the same meaning and effect as the word “shall.”  Unless the context requires otherwise, (i)
any definition of or reference to any agreement, instrument or other document
(including any Organization Document) shall be construed as referring to such
agreement, instrument or other document as from time to time amended,
supplemented or otherwise modified (subject to any restrictions on such
amendments, supplements or modifications set forth herein or in any other Loan
Document), (ii) any reference herein to any Person shall be construed to
include such Person’s successors and assigns, (iii) the words “herein,” “hereof”
and “hereunder,” and words of similar import when used in any Loan
Document, shall be construed to refer to such Loan Document in its entirety and
not to any particular provision thereof, (iv) all references in a Loan Document
to Articles, Sections, Exhibits and Schedules shall be construed to refer to
Articles and Sections of, and Exhibits and Schedules to, the Loan Document in
which such references appear, (v) any reference to any law shall include all
statutory and regulatory provisions consolidating, amending, replacing or
interpreting such law and any reference to any law or regulation shall, unless
otherwise specified, refer to such law or regulation as amended, modified or
supplemented from time to time, and (vi) the words “asset” and “property”
shall be construed to have the same meaning and effect and to refer to any and
all tangible and intangible assets and properties, including cash, securities,
accounts and contract rights.

(b)           In
the computation of periods of time from a specified date to a later specified
date, the word “from” means “from and including;” the words “to”
and “until” each mean “to but excluding;” and the word “through”
means “to and including.”

 28
 

 

(c)           Section
headings herein and in the other Loan Documents are included for convenience of
reference only and shall not affect the interpretation of this Agreement or any
other Loan Document.

1.03        Accounting Terms. 
(a)  Generally.  All accounting terms not specifically or
completely defined herein shall be construed in conformity with, and all
financial data (including financial ratios and other financial calculations)
required to be submitted pursuant to this Agreement shall be prepared in
conformity with, GAAP applied on a consistent basis, as in effect from time to
time, applied in a manner consistent with that used in preparing the Audited
Financial Statements, except as otherwise specifically prescribed
herein.

(b)           Changes
in GAAP.  KKR Financial shall provide
a written summary of material changes in GAAP or in the consistent application
thereof in accordance with Section 6.02(a).  If at any time any change in GAAP would
affect the computation of any financial ratio or requirement set forth in any
Loan Document, and either the Borrowers or the Required Lenders shall so
request, the Administrative Agent, the Lenders and the Borrowers shall
negotiate in good faith to amend such ratio or requirement to preserve the
original intent thereof in light of such change in GAAP (subject to the
approval of the Required Lenders); provided that, until so amended, (i)
such ratio or requirement shall continue to be computed in accordance with GAAP
prior to such change therein and (ii) the Borrowers shall provide to the
Administrative Agent and the Lenders financial statements and other documents
required under this Agreement or as reasonably requested hereunder setting
forth a reconciliation between calculations of such ratio or requirement made
before and after giving effect to such change in GAAP.

(c)           Consolidation
of Variable Interest Entities.  All
references herein to consolidated financial statements of KKR Financial and its
Subsidiaries or to the determination of any amount for KKR Financial and its
Subsidiaries on a consolidated basis or any similar reference shall, in each
case, be deemed to include each variable interest entity that KKR Financial is
required to consolidate pursuant to FASB Interpretation No. 46 — Consolidation
of Variable Interest Entities: an interpretation of ARB No. 51 (January 2003)
as if such variable interest entity were a Subsidiary as defined herein.

1.04        Rounding.  Any
financial ratios required to be maintained by KKR Financial pursuant to this
Agreement shall be calculated by dividing the appropriate component by the
other component, carrying the result to one place more than the number of
places by which such ratio is expressed herein and rounding the result up or
down to the nearest number (with a rounding-up if there is no nearest number).

1.05        Times of Day.  Unless
otherwise specified, all references herein to times of day shall be references
to Eastern time (daylight or
standard, as applicable).

ARTICLE II.

THE COMMITMENTS AND BORROWINGS

2.01        Revolving Loans. 
Subject to the terms and conditions set forth herein, each Lender
severally agrees to make Tranche A Loans and Tranche B Loans to the Borrowers
from time to time, on any Business Day during the Availability Period, in an
aggregate amount not to exceed at any time outstanding the amount of such
Lender’s Commitment; provided that, after giving effect to any Revolving
Loan, (i) the Outstanding Amount of the Loans in the applicable Tranche does
not exceed (A) in the case of Tranche A Loans, Tranche A Availability and (B)
in the case of Tranche B Loans, Tranche B Availability, (ii) the Total
Outstandings do not exceed the Aggregate Borrowing Availability, and (iii) the
aggregate Outstanding Amount of the Revolving Loans of any Lender, plus
such Lender’s Applicable Percentage of the Outstanding Amount of all Swingline
Loans do not exceed such Lender’s Commitment. 
Within the limits of each Lender’s Commitment, and subject to the other
terms and conditions hereof, the

 29
 

 

Borrowers may borrow under this Section 2.01, prepay under Section 2.04,
and reborrow under this Section 2.01.  Revolving Loans may be Base Rate Loans, Fixed
Period Eurodollar Loans or Daily Floating Eurodollar Loans, as
further provided herein.

2.02        Borrowings, Conversions and Continuations of Revolving Loans.

(a)           Each
Revolving Loan, each conversion of Revolving Loans from one Type to another,
and each continuation of Fixed Period Eurodollar Loans shall be made upon a
Borrower’s irrevocable notice to the Administrative Agent, which may be given
by telephone.  Each such notice must be
received by the Administrative Agent not later than 11:00 a.m. (i) three
Business Days prior to the requested date of any Borrowing of, conversion to or
continuation of Fixed Period Eurodollar Loans or of any conversion of Fixed
Period Eurodollar Loans to Base Rate Loans, (ii) one Business Day prior to the
requested date of any Borrowing of, conversion to or continuation of Daily
Floating Eurodollar Loans or of any conversion of Daily Floating Eurodollar Loans to
Base Rate Loans and (iii) on the requested date of any Borrowing of Base Rate
Loans.  Each telephonic notice by any
Borrower pursuant to this Section 2.02(a) must be confirmed
promptly by delivery to the Administrative Agent of a written Revolving Loan
Notice, appropriately completed and signed by a Responsible Officer of the
requesting Borrower.  Each Borrowing of,
conversion to or continuation of Fixed Period Eurodollar Loans or Daily Floating Eurodollar Loan shall
be in a principal amount of $5,000,000 or a whole multiple of $1,000,000 in
excess thereof.  Except as provided in Section 2.03(c),
each Borrowing of or conversion to Base Rate Loans shall be in a principal
amount of $500,000 or a whole multiple of $100,000 in excess thereof.  Each Revolving Loan Notice (whether
telephonic or written) shall specify (i) whether such Borrower is requesting a
Revolving Loan, a conversion of Revolving Loans from one Type to the other, or
a continuation of Fixed Period Eurodollar Loans, (ii) the requested date of the
Revolving Loan, conversion or continuation, as the case may be (which shall be
a Business Day), (iii) the principal amount of Revolving Loans to be borrowed,
converted or continued, (iv) the Type of Revolving Loans to be borrowed or to
which existing Revolving Loans are to be converted, (v) the Tenor of the
Revolving Loans to be borrowed and (vi) if applicable, the duration of the
Interest Period with respect thereto.  If
the applicable Borrower fails to specify a Type of Revolving Loan in a
Revolving Loan Notice or if such Borrower fails to give a timely notice
requesting a conversion or continuation, then the applicable Revolving Loans
shall be made as, or converted to, Base Rate Loans.  Any such automatic conversion to Base Rate
Loans shall be effective as of the last day of the Interest Period then in
effect with respect to the applicable Fixed Period Eurodollar Loans.  If the applicable Borrower requests a
Revolving Loan of, conversion to, or continuation of Fixed Period Eurodollar
Loans in any such Revolving Loan Notice, but fails to specify an Interest
Period, it will be deemed to have specified an Interest Period of one month.

(b)           Following
receipt of a Revolving Loan Notice, the Administrative Agent shall promptly
notify each Lender of the amount of its Applicable Percentage of the applicable
Revolving Loans, and if no timely notice of a conversion or continuation is
provided by the Borrowers, the Administrative Agent shall promptly notify each
Lender of the details of any automatic conversion to Base Rate Loans described
in the preceding subsection.  In the case
of a Revolving Loan, each Lender shall make the amount of its Revolving Loan
available to the Administrative Agent in immediately available funds at the
Administrative Agent’s Office not later than 1:00 p.m. on the Business Day
specified in the applicable Revolving Loan Notice.  Upon satisfaction of the applicable
conditions set forth in Section 4.02 (and, if such Borrowing is the
initial Borrowing, Section 4.01), the Administrative Agent shall
make all funds so received available to the Borrowers in like funds as received
by the Administrative Agent by wire transfer of such funds to the account
specified by the applicable Borrower.

(c)           Except
as otherwise provided herein, a Fixed Period Eurodollar Loan may be continued
or converted only on the last day of an Interest Period for such Loan.  During the existence of a Default,

 30
 

 

no Loans may be requested as, converted to or
continued as Fixed Period Eurodollar Loans or Daily Floating Eurodollar Loans
without the consent of the Required Lenders.

(d)           The
Administrative Agent shall promptly notify the Borrowers and the Lenders of the
interest rate applicable to any Daily Floating Eurodollar Loans
or any Interest Period for Fixed Period Eurodollar Loans upon determination of
such interest rate.  At any time that
Base Rate Loans are outstanding, the Administrative Agent shall notify the
Borrowers and the Lenders of any change in Bank of America’s prime rate used in
determining the Base Rate promptly following the public announcement of such
change.

(e)           After
giving effect to all Revolving Loans, all conversions of Revolving Loans from
one Type to the other, and all continuations of Revolving Loans as the same
Type, there shall not be more than ten (10) Interest Periods in effect with respect to Revolving
Loans.

2.03        Swingline Loans.

(a)           The
Swingline.  Subject to the terms and
conditions set forth herein, the Swingline Lender agrees, in reliance upon the
agreements of the other Lenders set forth in this Section 2.03, to
make Tranche A Loans and Tranche B Loans (each such loan, a “Swingline Loan”)
to the Borrowers from time to time on any Business Day during the Availability
Period in an aggregate amount not to exceed at any time outstanding the amount
of the Swingline Sublimit, notwithstanding the fact that such Swingline Loans,
when aggregated with the Applicable Percentage of the Outstanding Amount of
Revolving Loans of the Lender acting as Swingline Lender, may exceed the amount
of such Lender’s Commitment; provided, however, that after giving
effect to any Swingline Loan, (i) the Outstanding Amount of the Loans in the
applicable Tranche does not exceed (A) in the case of Tranche A Loans, Tranche
A Availability and (B) in the case of Tranche B Loans, Tranche B Availability,
(ii) the Total Outstandings do not exceed the Aggregate Borrowing Availability,
and (iii) the aggregate Outstanding Amount of the Revolving Loans of any
Lender, plus such Lender’s Applicable Percentage of the Outstanding
Amount of all Swingline Loans shall not exceed such Lender’s Commitment, and provided,
further, that the applicable Borrower shall not use the proceeds of any
Swingline Loan to refinance any outstanding Swingline Loan.  Within the foregoing limits, and subject to
the other terms and conditions hereof, the Borrowers may borrow under this Section 2.03,
prepay under Section 2.04, and reborrow under this Section 2.03.  Each Swingline Loan shall be either a Base
Rate Loan or a Daily Floating Eurodollar Loan as selected by the applicable
Borrower.  Immediately upon the making of
a Swingline Loan, each Lender shall be deemed to, and hereby irrevocably and
unconditionally agrees to, purchase from the Swingline Lender a risk
participation in such Swingline Loan in an amount equal to the product of such
Lender’s Applicable Percentage times the amount of such Swingline
Loan.  Notwithstanding the foregoing and
subject to subsection (c) below, no Lender hereunder, other than the Swingline
Lender, shall be required to make a Daily Floating Eurodollar Loan.

(b)           Borrowing
Procedures.  Each Swingline Borrowing
shall be made upon the applicable Borrower’s irrevocable notice to the
Swingline Lender and the Administrative Agent, which may be given by
telephone.  Each such notice must be
received by the Swingline Lender and the Administrative Agent not later than
3:00 p.m. on the requested borrowing date, and shall specify (i) the amount to
be borrowed, which shall be a minimum of $1,000,000, and (ii) the requested
borrowing date, which shall be a Business Day. 
Each such telephonic notice must be confirmed promptly by delivery to
the Swingline Lender and the Administrative Agent of a written Swingline Loan
Notice, which shall specify (i) the requested date of the Swingline Borrowing,
(ii) the principal amount of Swingline Loan, (iii) the Tenor of the Swingline
Loan to be borrowed and (iv) the duration with respect thereto.  Promptly after receipt by the Swingline
Lender of any telephonic Swingline Loan Notice, the Swingline Lender will
confirm with the Administrative Agent (by telephone or in writing) that the
Administrative Agent has also received

 31
 

 

such Swingline Loan Notice and, if not, the
Swingline Lender will notify the Administrative Agent (by telephone or in
writing) of the contents thereof.  Unless
the Swingline Lender has received notice (by telephone or in writing) from the
Administrative Agent (including at the request of any Lender) prior to 4:00
p.m. on the date of the proposed Swingline Borrowing (A) directing the
Swingline Lender not to make such Swingline Loan as a result of the limitations
set forth in the proviso to the first sentence of Section 2.03(a),
or (B) that one or more of the applicable conditions specified in Article IV
is not then satisfied, then, subject to the terms and conditions hereof, the
Swingline Lender will, not later than 4:00 p.m. on the borrowing date specified
in such Swingline Loan Notice, make the amount of its Swingline Loan available
to the applicable Borrower at its office by wire transfer to the account
specified by the applicable Borrower.

(c)           Refinancing
of Swingline Loans.

(i)            The Swingline
Lender, at any time in its sole and absolute discretion, may request, on behalf
of the Borrowers (each of which hereby irrevocably authorizes the Swingline
Lender to so request on its behalf), that each Lender make a Base Rate Loan or
Fixed Period Eurodollar Loan, as applicable, in an amount equal to such Lender’s
Applicable Percentage of the amount of Swingline Loans then outstanding.  Such request shall be made in writing (which
written request shall be deemed to be a Revolving Loan Notice for purposes
hereof) and in accordance with the requirements of Section 2.02,
without regard to the minimum and multiples specified therein for the principal
amount of Base Rate Loans or Fixed Period Eurodollar Loans, but subject to the
unutilized portion of the Aggregate Commitments and the conditions set forth in
Section 4.02.  The Swingline
Lender shall furnish the applicable Borrower with a copy of the applicable
Revolving Loan Notice promptly after delivering such notice to the
Administrative Agent.  Each Lender shall
make an amount equal to its Applicable Percentage of the amount specified in
such Revolving Loan Notice available to the Administrative Agent in immediately
available funds for the account of the Swingline Lender at the Administrative
Agent’s Office not later than 1:00 p.m. on the day specified in such Revolving
Loan Notice, whereupon, subject to Section 2.03(c)(ii), each Lender
that so makes funds available shall be deemed to have made a Base Rate Loan or
Fixed Period Eurodollar Loan, as applicable, to the applicable Borrower in such
amount.  The Administrative Agent shall
remit the funds so received to the Swingline Lender.

(ii)           If for any reason
any Swingline Loan cannot be refinanced by such a Revolving Loan in accordance
with Section 2.03(c)(i), the request for Base Rate Loans or Fixed
Period Eurodollar Loans, as applicable, submitted by the Swingline Lender as
set forth herein shall be deemed to be a request by the Swingline Lender that
each of the Lenders fund its risk participation in the relevant Swingline Loan
and each Lender’s payment to the Administrative Agent for the account of the
Swingline Lender pursuant to Section 2.03(c)(i) shall be deemed
payment in respect of such participation.

(iii)          If any Lender fails
to make available to the Administrative Agent for the account of the Swingline
Lender any amount required to be paid by such Lender pursuant to the foregoing
provisions of this Section 2.03(c) by the time specified in Section 2.03(c)(i),
the Swingline Lender shall be entitled to recover from such Lender (acting
through the Administrative Agent), on demand, such amount with interest thereon
for the period from the date such payment is required to the date on which such
payment is immediately available to the Swingline Lender at a rate per annum
equal to the greater of the Federal Funds Rate and a rate determined by the
Swingline Lender in accordance with banking industry rules on interbank
compensation, plus any administrative, processing or similar fees customarily
charged by the Swingline Lender in connection with the foregoing.  If such Lender pays such amount (with
interest and fees as

 32
 

 

aforesaid),
the amount so paid shall constitute such Lender’s Revolving Loan included in
the relevant Borrowing or funded participation in the relevant Swingline Loan,
as the case may be.  A certificate of the
Swingline Lender submitted to any Lender (through the Administrative Agent)
with respect to any amounts owing under this clause (iii) shall be conclusive
absent manifest error.

(iv)          Each Lender’s
obligation to make Revolving Loans or to purchase and fund risk participations
in Swingline Loans pursuant to this Section 2.03(c) shall be absolute
and unconditional and shall not be affected by any circumstance, including (A)
any setoff, counterclaim, recoupment, defense or other right which such Lender
may have against the Swingline Lender, the Borrowers or any other Person for
any reason whatsoever, (B) the occurrence or continuance of a Default, or (C)
any other occurrence, event or condition, whether or not similar to any of the
foregoing; provided, however, that each Lender’s obligation to
make Revolving Loans pursuant to this Section 2.03(c) is subject to
the conditions set forth in Section 4.02.  No such funding of risk participations shall
relieve or otherwise impair the obligation of the Borrowers to repay Swingline
Loans, together with interest as provided herein.

(d)           Repayment
of Participations.

(i)            At any time after
any Lender has purchased and funded a risk participation in a Swingline Loan,
if the Swingline Lender receives any payment on account of such Swingline Loan,
the Swingline Lender will distribute to such Lender its Applicable Percentage
thereof in the same funds as those received by the Swingline Lender.

(ii)           If any payment
received by the Swingline Lender in respect of principal or interest on any
Swingline Loan is required to be returned by the Swingline Lender under any of
the circumstances described in Section 10.05 (including pursuant to
any settlement entered into by the Swingline Lender in its discretion), each
Lender shall pay to the Swingline Lender its Applicable Percentage thereof on
demand of the Administrative Agent, plus interest thereon from the date of such
demand to the date such amount is returned, at a rate per annum equal to the
Federal Funds Rate.  The Administrative
Agent will make such demand upon the request of the Swingline Lender.  The obligations of the Lenders under this
clause shall survive the payment in full of the Obligations and the termination
of this Agreement.

(e)           Interest
for Account of Swingline Lender.  The
Swingline Lender shall be responsible for invoicing the Borrowers for interest
on the Swingline Loans.  Until each
Lender funds its Base Rate Loan or Fixed Period Eurodollar Loan, as applicable,
or risk participation pursuant to this Section 2.03 to refinance
such Lender’s Applicable Percentage of any Swingline Loan, interest in respect
of such Applicable Percentage shall be solely for the account of the Swingline
Lender.

2.04        Prepayments.

(a)           The
Borrowers may, upon notice to the Administrative Agent, at any time or from
time to time voluntarily prepay Revolving Loans in whole or in part without
premium or penalty; provided that (i) such notice must be received by
the Administrative Agent not later than 11:00 a.m. (A) three Business Days
prior to any date of prepayment of Fixed Period Eurodollar Loans, (B) one
Business Day prior to any date of prepayment of Daily Floating
Eurodollar Loans and (C) on the date of prepayment of Base Rate Loans;
(ii) any prepayment of Fixed Period Eurodollar Loans and Daily Floating Eurodollar Loans shall
be in a principal amount of $5,000,000 or a whole multiple of $1,000,000 in
excess thereof; and (iii) any prepayment of Base Rate Loans shall be in a
principal amount of $500,000 or a whole multiple of $100,000 in excess thereof
or, in each case, if less, the entire principal amount thereof then
outstanding.

 33
 

 

Each such notice shall specify the date and
amount of such prepayment and the Type and Tenor of Revolving Loans to be
prepaid and, if Fixed Period Eurodollar Loans are to be prepaid, the Interest
Period(s) of such Loans.  The
Administrative Agent will promptly notify each Lender of its receipt of each
such notice, and of the amount of such Lender’s Applicable Percentage of such
prepayment.  If such notice is given by
any Borrower, such Borrower shall make such prepayment and the payment amount
specified in such notice shall be due and payable on the date specified
therein.  Any prepayment of a Fixed
Period Eurodollar Loan or a Daily Floating Eurodollar Loan shall
be accompanied by all accrued interest on the amount prepaid, together with any
additional amounts required pursuant to Section 3.05.  Each such prepayment shall be applied to the
Revolving Loans of the Lenders in accordance with their respective Applicable
Percentages.

(b)           The
Borrowers may, upon notice to the Swingline Lender (with a copy to the Administrative
Agent), at any time or from time to time, voluntarily prepay Swingline Loans in
whole or in part without premium or penalty; provided that (i) such
notice must be received by the Swingline Lender and the Administrative Agent
not later than 1:00 p.m. on the date of the prepayment, and (ii) any such
prepayment shall be in a minimum principal amount of $1,000,000.  Each such notice shall specify the date and
amount of such prepayment.  If such
notice is given by any Borrower, such Borrower shall make such prepayment and
the payment amount specified in such notice shall be due and payable on the
date specified therein.

(c)           If
for any reason, at any time, (i) the Total Outstandings exceed the Aggregate
Borrowing Availability at such time, (ii) the outstanding Tranche A Loans
exceed the Tranche A Borrowing Base, or (iii) the outstanding Tranche B Loans
exceed the Tranche B Borrowing Base, the Borrowers shall immediately prepay the
applicable Loans in an aggregate amount of such excess, as applicable.

2.05        Termination or Reduction of Commitments.  The Borrowers may, upon notice to the
Administrative Agent, terminate the Commitments hereunder, and, from time to
time, permanently reduce the Aggregate Commitment Amount; provided that
(i) any such notice shall be received by the Administrative Agent not later
than 11:00 a.m. five (5) Business Days prior to the date of termination or
reduction, (ii) any such partial reduction shall be in an aggregate amount of
$5,000,000 or any whole multiple of $1,000,000 in excess thereof, (iii) the
Borrowers shall not terminate or reduce the Aggregate Commitments if, after
giving effect thereto and to any concurrent prepayments hereunder, the Total
Outstandings would exceed the Aggregate Commitment Amount, (iv) if, after giving
effect to any reduction of the Aggregate Commitments, the Swingline Sublimit
exceeds the Aggregate Commitment Amount, such Sublimit shall be automatically
reduced by the amount of such excess and (v) in the case of a partial
termination or reduction of the Commitments, the Aggregate Commitment Amount
shall not be less than $50,000,000.  The
Administrative Agent will promptly notify the Lenders of any such notice of
termination or reduction of the Aggregate Commitments.  Any reduction of the Aggregate Commitment
Amount shall be applied to the Commitment of each Lender according to its
Applicable Percentage.  All fees accrued
until the effective date of any termination of the Aggregate Commitments shall
be paid on the effective date of such termination.

2.06        Repayment
of Loans.

(a)           The
Borrowers shall repay to the Lenders on the Maturity Date the aggregate
principal amount of Revolving Loans outstanding on such date.

(b)           The
Borrowers shall repay each Swingline Loan on the earliest to occur of (i) the
Maturity Date or (ii) the date requested by the Swingline Lender which shall
not be earlier than the Business Day in which the Borrowers may request Base
Rate Loans pursuant to Section 2.02.

 34
 

 

2.07        Interest.

(a)           Subject
to the provisions of subsection (b) below, (i) each Fixed Period Eurodollar
Loan shall bear interest on the outstanding principal amount thereof for each
Interest Period at a rate per annum equal to the Fixed Period Eurodollar Rate
for such Interest Period plus the Applicable Rate for the applicable
Tranche, (ii) each Daily Floating Eurodollar Loan shall bear
interest on the outstanding principal amount thereof from the applicable
borrowing date to the date of payment thereof at a rate per annum equal to the Daily Floating Eurodollar Rate plus
the Applicable Rate for the applicable Tranche, (iii) each Base Rate Loan shall
bear interest on the outstanding principal amount thereof for each Interest
Period at a rate per annum equal to the Base Rate; and (iv) each Swingline Loan
shall bear interest on the outstanding principal amount thereof from the
applicable borrowing date to the date of payment thereof at a rate per annum
equal to, at the election of the Borrowers, (A) the Base Rate or (B) the Daily
Floating Eurodollar Rate plus the Applicable Rate for the applicable
Tranche.

(b)           (i)            If any amount of principal of any
Loan is not paid when due (without regard to any applicable grace periods),
whether at stated maturity, by acceleration or otherwise, such amount shall
thereafter bear interest at a fluctuating interest rate per annum at all times
equal to the Default Rate to the fullest extent permitted by applicable Laws.

(ii)           If any amount
(other than principal of any Loan) payable by the Borrowers under any Loan
Document is not paid when due (without regard to any applicable grace periods),
whether at stated maturity, by acceleration or otherwise, then upon the request
of the Required Lenders, such amount shall thereafter bear interest at a
fluctuating interest rate per annum at all times equal to the Default Rate to
the fullest extent permitted by applicable Laws.

(iii)          Upon the request of the Required Lenders,
while any Event of Default exists, the Borrowers shall pay interest on
the principal amount of all outstanding Obligations hereunder at a fluctuating
interest rate per annum at all times equal to the Default Rate to the fullest
extent permitted by applicable Laws.

(iv)          Accrued and unpaid
interest on past due amounts (including interest on past due interest) shall be
due and payable upon demand.

(c)           Interest
on each Loan shall be due and payable in arrears on each Interest Payment Date
applicable thereto and at such other times as may be specified herein.  Interest hereunder shall be due and payable
in accordance with the terms hereof before and after judgment, and before and
after the commencement of any proceeding under any Debtor Relief Law.

2.08        Fees.

(a)           Facility
Fee.  The Borrowers shall pay to the
Administrative Agent for the account of each Lender in accordance with its
Applicable Percentage, a facility fee equal to the Applicable Rate times
the actual daily Aggregate Commitment Amount (or, if the Aggregate Commitments
have terminated, on the Outstanding Amount of all Revolving Loans and Swingline
Loans), regardless of usage.  The
facility fee shall accrue at all times during the Availability Period (and
thereafter so long as any Revolving Loans or Swingline Loans remain
outstanding), including at any time during which one or more of the conditions
in Article IV is not met, and shall be due and payable quarterly in
arrears on the last Business Day of each March, June, September and December,
commencing with the first such date to occur after the Restatement Closing
Date, and on the last day of the Availability Period (and, if applicable, thereafter
on demand).  The facility fee shall be
calculated quarterly in arrears, and if there is any change in the Applicable
Rate during any quarter, the actual daily amount shall be computed and

 35

 

multiplied by the Applicable Rate separately
for each period during such quarter that such Applicable Rate was in effect.

(b)           Other
Fees. 
(i)  The Borrowers shall pay to the
Arranger and the Administrative Agent for their own respective accounts fees in
the amounts and at the times specified in the Fee Letter, as amended, modified
or supplemented by the Fee Letter Extension. 
Such fees shall be fully earned when paid and shall not be refundable
for any reason whatsoever.

(ii)           The Borrowers shall
pay to the Lenders such fees as shall have been separately agreed upon in
writing in the amounts and at the times so specified.  Such fees shall be fully earned when paid and
shall not be refundable for any reason whatsoever.

2.09        Computation of Interest and Fees.  All computations of interest for Base Rate
Loans or Daily Floating Eurodollar Loans shall be made on the basis of a year
of 365 or 366 days, as the case may be, and actual days elapsed.  All other computations of fees and interest
shall be made on the basis of a 360-day year and actual days elapsed (which
results in more fees or interest, as applicable, being paid than if computed on
the basis of a 365-day year).  Interest
shall accrue on each Loan for the day on which the Loan is made, and shall not
accrue on a Loan, or any portion thereof, for the day on which the Loan or such
portion is paid, provided that any Loan that is repaid on the same day
on which it is made shall, subject to Section 2.11(a), bear
interest for one day.  Each determination
by the Administrative Agent of an interest rate or fee hereunder shall be
conclusive and binding for all purposes, absent manifest error.

2.10        Evidence
of Debt.

(a)           The
Loans made by each Lender shall be evidenced by one or more accounts or records
maintained by such Lender and by the Administrative Agent in the ordinary
course of business.  The accounts or
records maintained by the Administrative Agent and each Lender shall be
conclusive absent manifest error of the amount of the Loans made by the Lenders
to the Borrowers and the interest and payments thereon.  Any failure to so record or any error in
doing so shall not, however, limit or otherwise affect the obligation of the
Borrowers hereunder to pay any amount owing with respect to the
Obligations.  In the event of any
conflict between the accounts and records maintained by any Lender and the
accounts and records of the Administrative Agent in respect of such matters,
the accounts and records of the Administrative Agent shall control in the
absence of manifest error.  Upon the
request of any Lender made through the Administrative Agent, the Borrowers
shall execute and deliver to such Lender (through the Administrative Agent) a
Note, which shall evidence such Lender’s Loans in addition to such accounts or
records.  Each Lender may attach
schedules to its Note and endorse thereon the date, Type (if applicable),
Tenor, amount and maturity of its Loans and payments with respect thereto.

(b)           In
addition to the accounts and records referred to in subsection (a), each
Lender and the Administrative Agent shall maintain in accordance with its usual
practice accounts or records evidencing the purchases and sales by such Lender
of participations in Swingline Loans.  In
the event of any conflict between the accounts and records maintained by the
Administrative Agent and the accounts and records of any Lender in respect of
such matters, the accounts and records of the Administrative Agent shall
control in the absence of manifest error.

2.11        Payments
Generally; Administrative Agent’s Clawback.

(a)           General.  All payments to be made by any Borrower shall
be made without condition or deduction for any counterclaim, defense,
recoupment or setoff.  Except as
otherwise expressly provided herein, all payments by any Borrower hereunder shall
be made to the Administrative Agent, for the account of the respective Lenders
to which such payment is owed, at the Administrative Agent’s Office in

 36
 

 

Dollars and in immediately available funds
not later than 2:00 p.m. on the date specified herein.  The Administrative Agent will promptly
distribute to each Lender its Applicable Percentage (or other applicable share
as provided herein) of such payment in like funds as received by wire transfer
to such Lender’s Lending Office.  All
payments received by the Administrative Agent after 2:00 p.m. shall be deemed
received on the next succeeding Business Day and any applicable interest or fee
shall continue to accrue.  If any payment
to be made by any Borrower shall come due on a day other than a Business Day, payment
shall be made on the next following Business Day, and such extension of time
shall be reflected in computing interest or fees, as the case may be.

(b)           (i)  Funding by Lenders; Presumption by
Administrative Agent.  Unless the
Administrative Agent shall have received notice from a Lender prior to the
proposed date of any Revolving Loan of Fixed Period Eurodollar Loans (or, in
the case of any Revolving Loan of Base Rate Loans, prior to 12:00 noon on the
date of such Revolving Loan) that such Lender will not make available to the
Administrative Agent such Lender’s share of such Revolving Loan, the
Administrative Agent may assume that such Lender has made such share available
on such date in accordance with Section 2.02 (or, in the case of a
Revolving Loan of Base Rate Loans, that such Lender has made such share
available in accordance with and at the time required by Section 2.02)
and may, in reliance upon such assumption, make available to the Borrowers a
corresponding amount.  In such event, if
a Lender has not in fact made its share of the applicable Revolving Loan
available to the Administrative Agent, then the applicable Lender and the
Borrowers severally agree to pay to the Administrative Agent forthwith on
demand such corresponding amount in immediately available funds with interest
thereon, for each day from and including the date such amount is made available
to the Borrowers to, but excluding, the date of payment to the Administrative
Agent, at (A) in the case of a payment to be made by such Lender, the greater
of the Federal Funds Rate and a rate determined by the Administrative Agent in
accordance with banking industry rules on interbank compensation, plus any
administrative, processing or similar fees customarily charged by the
Administrative Agent in connection with the foregoing, and (B) in the case of a
payment to be made by the Borrowers, the interest rate applicable to Base Rate
Loans.  If the Borrowers and such Lender
shall pay such interest to the Administrative Agent for the same or an overlapping
period, the Administrative Agent shall promptly remit to the Borrowers the
amount of such interest paid by the Borrowers for such period.  If such Lender pays its share of the
applicable Revolving Loan to the Administrative Agent, then the amount so paid
shall constitute such Lender’s Revolving Loan included in such Borrowing.  Any payment by the Borrowers shall be without
prejudice to any claim the Borrowers may have against a Lender that shall have
failed to make such payment to the Administrative Agent.

(ii)           Payments by
Borrowers; Presumptions by Administrative Agent.  Unless the Administrative Agent shall have
received notice from the Borrowers prior to the date on which any payment is
due to the Administrative Agent for the account of the Lenders hereunder that
the Borrowers will not make such payment, the Administrative Agent may assume
that the Borrowers has made such payment on such date in accordance herewith
and may, in reliance upon such assumption, distribute to the Lenders, as the
case may be, the amount due.  In such
event, if the Borrowers have not in fact made such payment, then each of the
Lenders, as the case may be, severally agrees to repay to the Administrative
Agent forthwith on demand the amount so distributed to such Lender, in
immediately available funds with interest thereon, for each day from and
including the date such amount is distributed to it to but excluding the date
of payment to the Administrative Agent, at the greater of the Federal Funds
Rate and a rate determined by the Administrative Agent in accordance with
banking industry rules on interbank compensation.

A notice of the Administrative Agent to any Lender or
the Borrowers with respect to any amount owing under this subsection (b)
shall be conclusive, absent manifest error.

 37
 

 

(c)           Failure
to Satisfy Conditions Precedent.  If
any Lender makes available to the Administrative Agent funds for any Loan to be
made by such Lender as provided in the foregoing provisions of this Article
II, and such funds are not made available to the Borrowers by the
Administrative Agent because the conditions to the applicable Borrowing set
forth in Article IV are not satisfied or waived in accordance with the
terms hereof, the Administrative Agent shall promptly return such funds (in
like funds as received from such Lender) to such Lender, without interest.

(d)           Obligations
of Lenders Several.  All obligations
of the Lenders pursuant to this Agreement (including obligations to make
Revolving Loans, to fund participations in Swingline Loans and to make payments
pursuant to Section 10.04(c)) are several and not joint.  The failure of any Lender to make any
Revolving Loan, to fund any such participation or to make any payment under Section 10.04(c)
on any date required hereunder shall not relieve any other Lender of its
corresponding obligation to do so on such date, and no Lender shall be
responsible for the failure of any other Lender to so make its Revolving Loan,
to purchase its participation or to make its payment under Section 10.04(c).

(e)           Funding
Source.  Nothing herein shall be
deemed to obligate any Lender to obtain the funds for any Loan in any
particular place or manner or to constitute a representation by any Lender that
it has obtained or will obtain the funds for any Loan in any particular place
or manner.

2.12        Sharing of Payments by Lenders.  If any Lender shall, by exercising any right
of setoff or counterclaim or otherwise, obtain payment in respect of any
principal of or interest on any of the Revolving Loans made by it, or the participations
in Swingline Loans held by it resulting in such Lender’s receiving payment of a
proportion of the aggregate amount of such Revolving Loans or participations
and accrued interest thereon greater than its pro  rata share
thereof as provided herein, then the Lender receiving such greater proportion
shall (a) notify the Administrative Agent of such fact, and (b) purchase (for
cash at face value) participations in the Revolving Loans and subparticipations
in Swingline Loans of the other Lenders, or make such other adjustments as
shall be equitable, so that the benefit of all such payments shall be shared by
the Lenders ratably in accordance with the aggregate amount of principal of and
accrued interest on their respective Revolving Loans and other amounts owing
them, provided that:

(i)            if any such
participations or subparticipations are purchased and all or any portion of the
payment giving rise thereto is recovered, such participations or
subparticipations shall be rescinded and the purchase price restored to the
extent of such recovery, without interest; and

(ii)           the provisions of
this Section shall not be construed to apply to (x) any payment made by the
Borrowers pursuant to and in accordance with the express terms of this
Agreement or (y) any payment obtained by a Lender as consideration for the
assignment of or sale of a participation in any of its Revolving Loans or
subparticipations in Swingline Loans to any assignee or participant, other than
to the Borrowers or any Subsidiary thereof (as to which the provisions of this
Section shall apply).

Each Borrower consents to the foregoing and agrees, to
the extent it may effectively do so under applicable law, that any Lender
acquiring a participation pursuant to the foregoing arrangements may exercise
against such Borrower rights of setoff and counterclaim with respect to such
participation as fully as if such Lender were a direct creditor of such
Borrower in the amount of such participation.

 38
 

 

2.13        Increase in Commitments.

(a)           Request
for Increase.  Provided there exists
no Default, upon notice to the Administrative Agent (which shall promptly
notify the Lenders), the Borrowers may from time to time, request an increase
in the Aggregate Commitment Amount by an amount (for all such requests) not
exceeding $100,000,000; provided that (i) any such request for an
increase shall be in a minimum amount of $25,000,000 and integral multiples of
$5,000,000 in excess thereof, and (ii) the Borrowers may make a maximum of four
(4) such requests in any 12 month period. 
At the time of sending such notice, the Borrowers (in consultation with
the Administrative Agent) shall specify the time period within which each
Lender is requested to respond (which shall in no event be less than ten (10)
Business Days from the date of delivery of such notice to the Lenders).

(b)           Lender
Elections to Increase.  Each Lender
shall notify the Administrative Agent within such time period whether or not it
agrees to increase its Commitment and, if so, whether by an amount equal to,
greater than, or less than its Applicable Percentage of such requested
increase.  Any Lender not responding
within such time period shall be deemed to have declined to increase its
Commitment.  No Lender shall be obligated
to increase its Commitment hereunder.

(c)           Notification
by Administrative Agent; Additional Lenders.  The Administrative Agent shall notify the
Borrowers and each Lender of the Lenders’ responses to each request made
hereunder.  To achieve the full amount of
a requested increase and subject to the approval of the Administrative Agent
and the Swingline Lender (which approvals shall not be unreasonably withheld),
the Borrowers may also invite additional Eligible Assignees to become Lenders
pursuant to a joinder agreement in form and substance satisfactory to the
Administrative Agent and its counsel.

(d)           Effective
Date and Allocations.  If the
Aggregate Commitments are increased in accordance with this Section, the
Administrative Agent and the Borrowers shall determine the effective date (the “Increase
Effective Date”) and the final allocation of such increase.  The Administrative Agent shall promptly
notify the Borrowers and the Lenders of the final allocation of such increase
and the Increase Effective Date.

(e)           Conditions
to Effectiveness of Increase.  As a
condition precedent to such increase, the Borrowers shall deliver to the
Administrative Agent a certificate of each Borrower dated as of the Increase
Effective Date (in sufficient copies for each Lender) signed by a Responsible
Officer of such Borrower (i) certifying and attaching the resolutions adopted
by such Borrower approving or consenting to such increase, and (ii) certifying
that, before and after giving effect to such increase, (A) the representations
and warranties contained in Article V and the other Loan Documents are
true and correct on and as of the Increase Effective Date, except to the extent
that such representations and warranties specifically refer to an earlier date,
in which case they are true and correct as of such earlier date, and except
that for purposes of this Section 2.13, the representations and
warranties contained in subsections (a) and (b) of Section 5.05
shall be deemed to refer to the most recent statements furnished pursuant to
clauses (a) and (b), respectively, of Section 6.01, and (B) no
Default exists.

(f)            Loans;
Reallocation of Outstanding Amounts.

(i)            Except as set forth
in subsection (ii) of this subsection (f), if any Eligible Assignee becomes a
Lender hereunder or any Lender’s Commitment is increased pursuant to this
Section, Loans made on or after the applicable Increase Effective Date shall be
made in accordance with the Applicable Percentages of each Lender in effect on
and after such Increase Effective Date (except to the extent that any such Loan
would result in any Lender making an aggregate principal amount of Loans in
excess of its Commitment, in which case such excess

 39
 

 

amount will be
allocated to and made by, any new Lenders and Lenders with increased
Commitments pursuant to subsection (b) above, in each case, in accordance with
their Applicable Percentages).

(ii)           Upon any increase
in the Aggregate Commitment Amount pursuant to this Section 2.13
that is not pro rata among all Lenders, within 5 Business Days, in the case of
any Base Rate Loans outstanding on the Increase Effective Date, and at the end
of the then current Interest Period with respect thereto in the case of any
Fixed Period Eurodollar Loans then outstanding, the applicable Borrower shall
prepay such Loans in their entirety and, to the extent such Borrower elects to
do so and subject to the conditions specified in Article IV, the Borrowers
shall reborrow such Loans from the Lenders in proportion to their Applicable
Percentages after giving effect to such increase, until such time as all outstanding
Revolving Loans are held by the Lenders in such proportion.

(g)           Conflicting
Provisions.  This Section shall
supersede any provisions in Section 2.12 or 10.01 to the contrary.

2.14        Concerning Joint and Several Liability
of the Borrowers.

(a)           Each
of the Borrowers is accepting joint and several liability hereunder and under
the other Loan Documents in consideration of the financial accommodations to be
provided by the Lenders and the Administrative Agent under this Credit
Agreement, for the mutual benefit, directly and indirectly, of each of the
Borrowers and in consideration of the undertakings of each other Borrower to
accept joint and several liability for the Obligations.

(b)           Each
of the Borrowers, jointly and severally, hereby irrevocably and unconditionally
accepts, not merely as a surety but also as a primary obligor and co-debtor,
joint and several liability with each other Borrower, with respect to the
payment and performance of all of the Obligations (including, without
limitation, any Obligations arising under this Section 2.14), it
being the intention of the parties hereto that all the Obligations shall be the
joint and several obligations of each of the Borrowers without preferences or
distinction among them.

(c)           If
and to the extent that any of the Borrowers shall fail to make any payment with
respect to any of the Obligations as and when due or to perform any of the
Obligations in accordance with the terms thereof, then, in each such event, the
other Borrowers will make such payment with respect to, or perform, such
Obligation.

(d)           The
Obligations of each of the Borrowers under the provisions of this Section 2.14
constitute the full recourse Obligations of each of the Borrowers enforceable
against each such Person to the full extent of its properties and assets,
irrespective of the validity, regularity or enforceability of this Credit
Agreement or the other Loan Documents or any other circumstance whatsoever.

(e)           Except
as otherwise expressly provided herein, each Borrower hereby waives promptness,
diligence, presentment, demand, protest, notice of acceptance of its joint and
several liability, notice of any and all advances of the Loans made under this
Credit Agreement and any promissory note issued hereunder, notice of occurrence
of any Default or Event of Default (except to the extent notice is expressly
required to be given pursuant to the terms of this Credit Agreement or any of
the other Loan Documents), or of any demand for any payment under this Credit
Agreement, notice of any action at any time taken or omitted by the
Administrative Agent or the Lenders under or in respect of any of the
Obligations hereunder, any requirement of diligence and, generally, all
demands, notices and other formalities of every kind in connection with this Credit
Agreement and the other Loan Documents. 
Each

 40
 

 

Borrower hereby waives all defenses which may
be available by virtue of any valuation, stay, moratorium law or other similar
law now or hereafter in effect, any right to require the marshaling of assets
of the Borrowers and any other entity or Person primarily or secondarily liable
with respect to any of the Obligations, and all surety ship defenses
generally.  Each Borrower hereby assents
to, and waives notice of, any extension or postponement of the time for the
payment, or place or manner for payment, compromise, refinancing, consolidation
or renewals of any of the Obligations hereunder, the acceptance of any partial
payment thereon, any waiver, consent or other action or acquiescence by the
Administrative Agent and the Lenders at any time or times in respect of any
default by any Borrower in the performance or satisfaction of any term,
covenant, condition or provision of this Credit Agreement and the other Loan
Documents, any and all other indulgences whatsoever by the Administrative Agent
and the Lenders in respect of any of the Obligations hereunder, and the taking,
addition, substitution or release, in whole or in part, at any time or times,
of any security for any of such Obligations or the addition, substitution or
release, in whole or in part, of any Borrower or any other entity or Person
primarily or secondarily liable for any Obligation. Such Borrower further
agrees that its Obligations shall not be released or discharged, in whole or in
part, or otherwise affected by the adequacy of any rights which the
Administrative Agent or any Lender may have against any collateral security or
other means of obtaining repayment of any of the Obligations, the impairment of
any collateral security securing the Obligations, including, without
limitation, the failure to protect or preserve any rights which any
Administrative Agent or any Lender may have in such collateral security or the
substitution, exchange, surrender, release, loss or destruction of any such collateral
security, any other act or omission which might in any manner or to any extent
vary the risk of such Borrower, or otherwise operate as a release or discharge
of such Borrower, all of which may be done without notice to such Borrower.  If for any reason any other Borrower has no
legal existence or is under no legal obligation to discharge any of the
Obligations, or if any of the Obligations have become irrecoverable from any
other Borrower by reason of such other Borrower’s insolvency, bankruptcy or reorganization
or by other operation of law or for any reason, this Credit Agreement and the
other Loan Documents to which it is a party shall nevertheless be binding on
such Borrower to the same extent as if such Borrower at all times had been the
sole obligor on such Obligations. Without limiting the generality of the
foregoing, each Borrower assents to any other action or delay in acting or
failure to act on the part of the Administrative Agent and the Lenders,
including, without limitation, any failure strictly or diligently to assert any
right or to pursue any remedy or to comply fully with applicable laws or
regulations thereunder which might, but for the provisions of this Section 2.14,
afford grounds for terminating, discharging or relieving such Borrower, in
whole or in part, from any of its obligations under this Section 2.14,
it being the intention of each Borrower that, so long as any of the Obligations
hereunder remain unsatisfied, the obligations of such Borrower under this Section 2.14
shall not be discharged except by performance and then only to the extent of
such performance. The Obligations of each Borrower under this Section 2.14
shall not be diminished or rendered unenforceable by any winding up,
reorganization, arrangement, liquidation, reconstruction or similar proceeding
with respect to any reconstruction or similar proceeding with respect to any
other Borrower, or any of the Lenders. 
The joint and several liability of the Borrowers hereunder shall
continue in full force and effect notwithstanding any absorption, merger,
amalgamation or any other change whatsoever in the name, ownership, membership,
constitution or place of formation of any Borrower or the Lenders.  Each of the Borrowers acknowledges and
confirms that it has itself established its own adequate means of obtaining
from the other Borrowers on a continuing basis all information desired by such
Borrower concerning the financial condition of the other Borrowers and that
each such Borrower will look to the other Borrowers and not to the
Administrative Agent or any Lender in order for such Borrower to keep
adequately informed of changes in the other Borrowers’ respective financial
conditions.

(f)            The
provisions of this Section 2.14 are made for the benefit of the
Lenders and the Administrative Agent and their respective permitted successors
and assigns, and may be enforced by it or them from time to time against any or
all of the Borrowers as often as occasion therefor may arise and without
requirement on the part of the Lenders, the Administrative Agent or such
successor or assign first

 41
 

 

to marshal any of its or their claims or to
exercise any of its or their rights against the other Borrowers or to exhaust
any remedies available to it or them against any other Borrower or to resort to
any other source or means of obtaining payment of any of the Obligations
hereunder or to elect any other remedy. 
The provisions of this Section 2.14 shall remain in effect
until all of the Obligations shall have been paid in full or otherwise fully satisfied.  If at any time, any payment, or any part
thereof; made in respect of any of the Obligations, is rescinded or must
otherwise be restored or returned by any Lender or any Administrative Agent
upon the insolvency, bankruptcy or reorganization of any of the Borrowers, or
otherwise, the provisions of this Section 2.14 will forthwith be
reinstated in effect, as though such payment had not been made.

(g)           Each
of the Borrowers hereby agrees that it will not enforce any of its rights of
reimbursement, contribution, subrogation or the like against any other Borrower
with respect to any liability incurred by it hereunder or under any of the
other Loan Documents, any payments made by it to any of the Lenders or the
Administrative Agent with respect to any of the Obligations or any collateral
security therefor until such time as all of the Obligations have been
indefeasibly paid in full in cash.  Any
claim which any Borrower may have against any other Borrower with respect to
any payments to the Lenders or the Administrative Agent hereunder or under any
other Loan Documents are hereby expressly made subordinate and junior in right
of payment, without limitation as to any increases in the Obligations arising
hereunder or thereunder, to the prior payment in full of the Obligations and,
in the event of any insolvency, bankruptcy, receivership, liquidation,
reorganization or other similar proceeding under the laws of any jurisdiction
relating to any Borrower, its debts or its assets, whether voluntary or
involuntary, all such Obligations shall be paid in full before any payment or
distribution of any character, whether in cash, securities or other property,
shall be made to any other Borrower therefore.

(h)           Each
of the Borrowers hereby agrees that the payment of any amounts due with respect
to the indebtedness owing by any Borrower to any other Borrower is hereby
subordinated to the prior payment in full in cash of the Obligations.  Each Borrower hereby agrees that after the
occurrence and during the continuance of any Default or Event of Default, such
Borrower will not demand, sue for or otherwise attempt to collect any
indebtedness of any other Borrower owing to such Borrower until the Obligations
shall have been paid in full in cash. 
If, notwithstanding the foregoing sentence, such Borrower shall collect,
enforce or receive any amounts in respect of such indebtedness, such amounts
shall be collected, enforced and received by such Borrower as trustee for the
Administrative Agent and be paid over to the Administrative Agent for the pro
rata accounts of the Lenders to be applied to repay the Obligations.

2.15        Contribution.

(a)           To
the extent that any Borrower shall make a payment under Section 2.14
of all or any of the Obligations (other than Loans made to that Borrower for
which it is primarily liable) (a “Guarantor Payment”) that, taking into
account all other Guarantor Payments then previously or concurrently made by
any other Borrower, exceeds the amount that such Borrower would otherwise have
paid if each Borrower had paid the aggregate Obligations satisfied by such
Guarantor Payment in the same portion that such Borrower’s “Allocable Amount”
(as defined below) (as determined immediately prior to such Guarantor Payment)
bore to the aggregate Allocable Amounts of each of the Borrowers as determined
immediately prior to the making of such Guarantor Payment, then, following
indefeasible payment in full in cash of the Obligations and termination of the
Commitments, such Borrower shall be entitled to receive contribution and
indemnification payments from, and be reimbursed by, the other Borrowers for
the net amount of such excess, pro rata based upon their respective Allocable
Amounts in effect immediately prior to such Guarantor Payment.

 42
 

 

(b)           As
of any date of determination, the “Allocable Amount” of any Borrower
shall be equal to the maximum amount of the claim that could then be recovered
from such Borrower under Section 2.15 without rendering such claim
voidable or avoidable under Section 548 of Chapter 11 of the Bankruptcy Code or
under any applicable state Uniform Fraudulent Transfer Act, Uniform Fraudulent
Conveyance Act or similar statute or common law.

(c)           This
Section 2.15 is intended only to define the relative rights of
Borrowers and nothing set forth in this Section 2.15 is intended or
shall impair the obligations of the Borrowers, jointly and severally, to pay
any amounts as and when the same shall become due and payable in accordance
with the terms of this Credit Agreement, including Section 2.14.  Nothing contained in this Section 2.15
shall limit the liability of any Borrower to pay the Loans made directly or
indirectly to that Borrower and accrued interest, fees and expenses with
respect thereto for which such Borrower shall be primarily liable.

(d)           The
parties hereto acknowledge that the rights of contribution and indemnification
of any Borrower under this Section 2.15 shall constitute assets of
such Borrower.

(e)           The
rights of an indemnifying Borrower against the other Borrowers under this
Section shall be exercisable upon the full and indefeasible payment of the
Obligations and the termination of Commitments.

2.16        Collateral Security. 
The Obligations shall be secured by a perfected first priority security
interest in all of the Borrowers’ interest in the Collateral, whether now owned
or hereafter acquired, as described in the Security Documents to which any of
the Borrowers is a party.

ARTICLE III.

TAXES, YIELD PROTECTION AND ILLEGALITY

3.01        Taxes.

(a)           Payments
Free of Taxes.  Any and all payments
by or on account of any obligation of the Borrowers hereunder or under any
other Loan Document shall be made free and clear of and without reduction or
withholding for any Indemnified Taxes, provided that if the Borrowers
shall be required by applicable law to deduct any Indemnified Taxes from such
payments, then (i) the sum payable shall be increased as necessary so that
after making all required deductions (including deductions applicable to
additional sums payable under this Section) the Administrative Agent or Lender,
as the case may be, receives an amount equal to the sum it would have received
had no such deductions been made, (ii) the Borrowers shall make such deductions
or withholdings and (iii) the Borrowers shall timely pay the full amount
deducted to the relevant Governmental Authority in accordance with applicable
law.

(b)           Payment
of Other Taxes by the Borrowers. 
Without limiting the provisions of subsection (a) above, the Borrowers
shall timely pay any Other Taxes to the relevant Governmental Authority in accordance
with applicable law.

(c)           Indemnification
by the Borrowers.  The Borrowers
shall indemnify the Administrative Agent and each Lender, within 10 days after
written demand therefor, for the full amount of any Indemnified Taxes or Other
Taxes (including Indemnified Taxes or Other Taxes imposed or asserted on or
attributable to amounts payable under this Section) paid by the Administrative
Agent or any such Lender, as the case may be, and any penalties, interest and
reasonable expenses arising therefrom or with respect thereto, whether or not
such Indemnified Taxes or Other Taxes were correctly or legally imposed or
asserted by the relevant Governmental Authority.  A certificate as to the amount of such
payment or liability delivered to the Borrowers by a Lender (with a copy to the
Administrative Agent), or by the

 43
 

 

Administrative Agent on its own behalf or on
behalf of a Lender, shall be conclusive absent manifest error.

(d)           Evidence
of Payments.  As soon as practicable
after any payment of Indemnified Taxes or Other Taxes by the Borrowers to a
Governmental Authority, the Borrowers shall deliver to the Administrative Agent
the original or a certified copy of a receipt issued by such Governmental
Authority evidencing such payment, a copy of the return reporting such payment
or other evidence of such payment reasonably satisfactory to the Administrative
Agent.

(e)           Status
of Lenders.  Any Foreign Lender that
is entitled to an exemption from or reduction of withholding tax under the law
of the jurisdiction in which any Borrower is resident for tax purposes, or any
treaty to which such jurisdiction is a party, with respect to payments
hereunder or under any other Loan Document shall deliver to the Borrowers (with
a copy to the Administrative Agent), at the time or times prescribed by
applicable law or reasonably requested by the Borrowers or the Administrative
Agent, such properly completed and executed documentation prescribed by
applicable law as will permit such payments to be made without withholding or
at a reduced rate of withholding.  In
addition, any Lender, if requested by the Borrowers or the Administrative
Agent, shall deliver such other documentation prescribed by applicable law or
reasonably requested by the Borrowers or the Administrative Agent as will
enable the Borrowers or the Administrative Agent to determine whether or not
such Lender is subject to backup withholding or information reporting
requirements.

Any Foreign Lender shall deliver to the Borrowers and
the Administrative Agent (in such number of copies as shall be requested by the
recipient) on or prior to the date on which such Foreign Lender becomes a
Lender under this Agreement (and from time to time thereafter upon the request
of the Borrowers or the Administrative Agent, but only if such Foreign Lender
is legally entitled to do so), whichever of the following is applicable:

(i)            duly completed
copies of Internal Revenue Service Form W-8BEN claiming eligibility for
benefits of an income tax treaty to which the United States is a party,

(ii)           duly completed
copies of Internal Revenue Service Form W-8ECI,

(iii)          in the case of a
Foreign Lender claiming the benefits of the exemption for portfolio interest
under section 881(c) of the Code, (x) a certificate to the effect that such
Foreign Lender is not (A) a “bank” within the meaning of section 881(c)(3)(A)
of the Code, (B) a “10 percent shareholder” of any Borrower within the meaning
of section 881(c)(3)(B) of the Code, or (C) a “controlled foreign corporation”
described in section 881(c)(3)(C) of the Code and (y) duly completed copies
of  Internal Revenue Service Form W-8BEN,
or

(iv)          any other form
prescribed by applicable law as a basis for claiming exemption from or a
reduction in United States Federal withholding tax duly completed together with
such supplementary documentation as may be prescribed by applicable law to
permit the Borrowers to determine the withholding or deduction required to be
made.

(f)            Treatment
of Certain Refunds.  If the
Administrative Agent or any Lender determines, in its sole discretion, which shall be exercised in
a commercially reasonable manner, that it has received a refund of any
Taxes or Other Taxes as to which it has been indemnified by the Borrowers or
with respect to which any Borrower has paid additional amounts pursuant to this
Section, it shall pay to such Borrower an amount equal to such refund (but only
to the extent of indemnity payments made, or additional amounts paid, by the
Borrowers under this Section with respect to the Taxes or Other Taxes giving rise
to such refund), net of all out-of-pocket expenses of the Administrative Agent
or such Lender, as the case

 44
 

 

may be, and without interest (other than any
interest paid by the relevant Governmental Authority with respect to such
refund), provided that each Borrower, upon the request of the
Administrative Agent or such Lender, agrees to repay the amount paid over to
such Borrower (plus any penalties, interest or other charges imposed by the
relevant Governmental Authority) to the Administrative Agent or such Lender in
the event the Administrative Agent or such Lender is required to repay such
refund to such Governmental Authority. 
This subsection shall not be construed to require the Administrative
Agent or any Lender to make available its tax returns (or any other information
relating to its taxes that it deems confidential) to the Borrowers or any other
Person.

3.02        Illegality.  If any
Lender determines that any Law has made it unlawful, or that any Governmental
Authority has asserted that it is unlawful, for any Lender or its applicable
Lending Office to make, maintain or fund Fixed Period Eurodollar Loans or Daily Floating Eurodollar Loans, or to
determine or charge interest rates based upon the Fixed Period Eurodollar Rate
or the Daily Floating Eurodollar Rate,
or any Governmental Authority has imposed material restrictions on the
authority of such Lender to purchase or sell, or to take deposits of, Dollars
in the London interbank market, then, on notice thereof by such Lender to the
Borrowers through the Administrative Agent, any obligation of such Lender to
make or continue Fixed Period Eurodollar Loans or Daily Floating Eurodollar Loans or to convert Base Rate Loans to
Fixed Period Eurodollar Loans or Daily
Floating Eurodollar Loans shall be suspended until such Lender notifies
the Administrative Agent and the Borrowers that the circumstances giving rise
to such determination no longer exist. 
Upon receipt of such notice, the Borrowers shall, upon demand from such Lender
(with a copy to the Administrative Agent), prepay or, if applicable, convert
all Fixed Period Eurodollar Loans or Daily
Floating Eurodollar Loans of such Lender to Base Rate Loans, either on
the last day of the Interest Period therefor, if such Lender may lawfully
continue to maintain such Loans to such day, or immediately, if such Lender may
not lawfully continue to maintain such Loans. 
Upon any such prepayment or conversion, the Borrowers shall also pay
accrued interest on the amount so prepaid or converted.

3.03        Inability to Determine Rates.  If the Administrative Agent or the Required
Lenders determine that for any reason in connection with any request for a
Fixed Period Eurodollar Loan or a Daily Floating Eurodollar Loan, as
applicable, or a conversion to or continuation thereof that (a) Dollar
deposits are not being offered to banks in the London interbank eurodollar
market for the applicable amount and Interest Period of such Fixed Period
Eurodollar Loan or Daily Floating Eurodollar Loan, (b) adequate and
reasonable means do not exist for determining the Fixed Period Eurodollar Rate
or Daily Floating Eurodollar Rate, as applicable, for any requested Interest
Period with respect to a proposed Fixed Period Eurodollar Loan or Daily
Floating Eurodollar Loan, as applicable, or (c) the Fixed Period
Eurodollar Rate or Daily Floating Eurodollar Rate for any requested Interest
Period with respect to a proposed Fixed Period Eurodollar Loan or Daily
Floating Eurodollar Loan does not adequately and fairly reflect the cost of
funding such Loan, the Administrative Agent will promptly so notify the
Borrowers and each Lender.  Thereafter,
the obligation of the Lenders to make or maintain Fixed Period Eurodollar Loans
or Daily Floating Eurodollar Loans shall be suspended until the Administrative
Agent (upon the instruction of the Required Lenders) revokes such notice.  Upon receipt of such notice, the Borrowers
may revoke any pending Request for Borrowing of, conversion to or continuation
of Fixed Period Eurodollar Loans or Daily Floating Eurodollar Loans, as
applicable, or, failing that, will be deemed to have converted such request
into a request for a Base Rate Loan in the amount specified therein.

3.04        Increased
Costs; Reserves on Eurodollar Loans.

(a)           Increased
Costs Generally.  If any Change in
Law shall:

(i)            impose, modify or
deem applicable any reserve, special deposit, compulsory loan, insurance charge
or similar requirement against assets of, deposits with or for the account

 

 45

of, or credit
extended or participated in by, any Lender (except any reserve requirement
reflected contemplated by Section 3.04(e));

(ii)           impose on any
Lender or the London interbank market any other condition, cost or expense
affecting this Agreement or Eurodollar Loans made by such Lender;

and the result of any of the foregoing shall be to increase the cost to
such Lender of making or maintaining any Eurodollar Loan (or of maintaining its
obligation to make any such Loan), or to reduce the amount of any sum received
or receivable by such Lender (whether of principal, interest or any other
amount) then, upon request of such Lender, the Borrowers will pay to such
Lender, as the case may be, such additional amount or amounts as will
compensate such Lender, as the case may be, for such additional costs incurred
or reduction suffered.

(b)           Capital
Requirements.  If any Lender
determines that any Change in Law affecting such Lender or any Lending Office
of such Lender or such Lender’s holding company, if any, regarding capital
requirements has or would have the effect of reducing the rate of return on
such Lender’s capital or on the capital of such Lender’s holding company, if
any, as a consequence of this Agreement, the Commitments of such Lender or the
Loans made by, such Lender, to a level below that which such Lender or such
Lender’s holding company could have achieved but for such Change in Law (taking
into consideration such Lender’s policies and the policies of such Lender’s
holding company with respect to capital adequacy), then from time to time the
Borrowers will pay to such Lender, as the case may be, such additional amount
or amounts as will compensate such Lender or such Lender’s holding company for
any such reduction suffered.

(c)           Certificates
for Reimbursement.  A certificate of
a Lender setting forth the amount or amounts necessary to compensate such
Lender or its holding company, as the case may be, as specified in subsection
(a) or (b) of this Section and delivered to the Borrowers shall be conclusive
absent manifest error.  The Borrowers
shall pay such Lender, as the case may be, the amount shown as due on any such
certificate within 10 days after receipt thereof.

(d)           Delay
in Requests.  Failure or delay on the
part of any Lender to demand compensation pursuant to the foregoing provisions
of this Section shall not constitute a waiver of such Lender’s right to demand
such compensation, provided that the Borrowers shall not be required to
compensate a Lender pursuant to the foregoing provisions of this Section for
any increased costs incurred or reductions suffered more than 180 days prior to
the date that such Lender, as the case may be, notifies the Borrowers of the
Change in Law giving rise to such increased costs or reductions and of such
Lender’s intention to claim compensation therefor (except that, if the Change
in Law giving rise to such increased costs or reductions is retroactive, then
the 180 days period referred to above shall be extended to include the period
of retroactive effect thereof).

(e)           Reserves
on Eurodollar Loans.  The Borrowers
shall pay to each Lender, as long as such Lender shall be required to maintain
reserves with respect to liabilities or assets consisting of or including
Eurocurrency funds or deposits (currently known as “Eurocurrency liabilities”),
additional interest on the unpaid principal amount of each Eurodollar Loan
equal to the actual costs of such reserves allocated to such Loan by such
Lender (as determined by such Lender in good faith, which determination shall
be conclusive), which shall be due and payable on each date on which interest
is payable on such Loan, provided the Borrowers shall have received at
least 10 days’ prior notice (with a copy to the Administrative Agent) of such
additional interest from such Lender.  If
a Lender fails to give notice 10 days prior to the relevant Interest Payment
Date, such additional interest shall be due and payable 10 days from receipt of
such notice.

 46
 

3.05        Compensation for Losses. 
Upon demand of any Lender (with a copy to the Administrative Agent) from
time to time, the Borrowers shall promptly compensate such Lender for and hold
such Lender harmless from any loss, cost or expense incurred by it as a result
of:

(a)           any
continuation, conversion, payment or prepayment of any Loan other than a Base
Rate Loan or a Daily Floating Eurodollar Loan on a day other than the last day
of the Interest Period for such Loan (whether voluntary, mandatory, automatic,
by reason of acceleration, or otherwise);

(b)           any failure by the
Borrowers (for a reason other than the failure of such Lender to make a Loan)
to prepay, borrow, continue or convert any Loan other than a Base Rate Loan or
a Daily Floating Eurodollar Loan on the date or in the amount notified by the
Borrowers; or

(c)           any
assignment of a Fixed Period Eurodollar Loan on a day other than the last day
of the Interest Period therefor as a result of a request by the Borrowers
pursuant to Section 10.13;

including any loss of anticipated profits and any loss or expense
arising from the liquidation or reemployment of funds obtained by it to
maintain such Loan or from fees payable to terminate the deposits from which
such funds were obtained.  The Borrowers
shall also pay any customary administrative fees charged by such Lender in
connection with the foregoing. 
Notwithstanding the foregoing, if, during the 120 day period following
the Closing Date, the Administrative Agent incurs any breakage costs on account
of the syndication of the credit facility established hereunder, the Borrowers
shall immediately reimburse the Administrative Agent for any such breakage
costs.

For purposes of calculating amounts payable by the
Borrowers to the Lenders under this Section 3.05, each Lender shall
be deemed to have funded each Fixed Period Eurodollar Loan made by it at the
Fixed Period Eurodollar Rate used in determining the Fixed Period Eurodollar
Rate for such Loan by a matching deposit or other borrowing in the London
interbank eurodollar market for a comparable amount and for a comparable
period, whether or not such Fixed Period Eurodollar Loan was in fact so funded.

3.06        Mitigation Obligations. 
If any Lender requests compensation under Section 3.04, or
any Borrower is required to pay any additional amount to any Lender or any
Governmental Authority for the account of any Lender pursuant to Section 3.01,
or if any Lender gives a notice pursuant to Section 3.02, then such
Lender shall use reasonable efforts to designate a different Lending Office for
funding or booking its Loans hereunder or to assign its rights and obligations
hereunder to another of its offices, branches or affiliates, if, in the
judgment of such Lender, such designation or assignment (i) would eliminate or
reduce amounts payable pursuant to Section 3.01 or 3.04, as
the case may be, in the future, or eliminate the need for the notice pursuant
to Section 3.02, as applicable, and (ii) in each case, would not
subject such Lender to any unreimbursed cost or expense and would not otherwise
be disadvantageous to such Lender.  Each
Borrower hereby agrees to pay all reasonable costs and expenses incurred by any
Lender in connection with any such designation or assignment.

3.07        Survival.  All of the
Borrowers’ obligations under this Article III shall survive termination
of the Aggregate Commitments and repayment of all other Obligations hereunder.

 47
 

ARTICLE IV.

CONDITIONS PRECEDENT TO BORROWINGS

4.01        Conditions of Initial Borrowing.  The obligation of each Lender to make its
initial Borrowing hereunder is
subject to satisfaction of the following conditions precedent:

(a)           The
Administrative Agent’s receipt of the following, each of which shall be
originals or telecopies (followed promptly by originals) unless otherwise
specified, properly executed by a Responsible Officer of the signing Borrower,
or other appropriate party, as applicable, and each in form and substance
satisfactory to the Administrative Agent and each of the Lenders, or to the
Administrative Agent on behalf of the Lenders, as noted below:

(i)            executed
counterparts of this Agreement, sufficient in number for distribution to the
Administrative Agent, each Lender and the Borrowers;

(ii)           executed
counterparts of the Collateral Agreement and Security Agreement, sufficient in
number for distribution to the Administrative Agent and the Custodian;

(iii)          a Note executed by
the Borrowers in favor of each Lender requesting a Note;

(iv)          such certificates of
resolutions or other action, incumbency certificates and/or other certificates
of Responsible Officers of each Borrower as the Administrative Agent may
require evidencing the identity, authority and capacity of each Responsible
Officer thereof authorized to act as a Responsible Officer in connection with
this Agreement and the other Loan Documents to which such Borrower is a party;

(v)           such documents and
certifications as the Administrative Agent may reasonably require to evidence
that each Borrower is duly organized or formed, and that each of the Borrowers
is validly existing, in good standing and qualified to engage in business in
each jurisdiction where such Borrowers’ ownership, lease or operation of
properties or the conduct of its business requires such qualification, except
to the extent that failure to do so could not reasonably be expected to have a
Material Adverse Effect;

(vi)          a favorable written
opinion (addressed to the Administrative Agent and the Lenders and dated as of
the effective date of this Agreement) of each of (i) the in-house general
counsel for the Borrowers, substantially in the form of Exhibit G-1
hereto (ii) Sidley Austin LLP, counsel for the Borrowers, substantially in the
form of Exhibit G-2 hereto, (iii) Maples and Calder, counsel for the
Borrowers that are Cayman Islands companies, with respect to matters of Cayman
Islands law substantially in the form of Exhibit G-3 and (iv) Hunton
& Williams LLP, counsel for KKR Financial Corp., substantially in the form
of Exhibit G-4 hereto, and in each case, covering such other matters
relating to the Borrowers, this Agreement, the other Loan Documents or the
transaction contemplated hereby or thereby as the Administrative Agent shall
reasonably request. The Borrowers hereby request such counsel to deliver such
opinions;

(vii)         a certificate signed
by a Responsible Officer of each Borrower, in a form satisfactory to the
Administrative Agent, either (A) attaching copies of all consents, licenses and
approvals required in connection with the execution, delivery and performance
by such Borrower and the validity against such Borrower of the Loan Documents
to which it is a party, and such consents, licenses and approvals shall be in
full force and effect, or (B) stating that no such consents, licenses or
approvals are so required;

(viii)        a certificate signed
by a Responsible Officer of each Borrower, in a form satisfactory to the
Administrative Agent, certifying (A) that the conditions specified in Sections 4.02(a)
and 4.02(b) have been satisfied and (B) that there has been no event or
circumstance since the date of the Audited Financial Statements that has had or
could be reasonably expected to have, either individually or in the aggregate,
a Material Adverse Effect;

 48
 

(ix)           a certificate
signed by a Responsible Officer of each Borrower, in a form satisfactory to the
Administrative Agent, stating that (i) no action, suit, investigation or
proceeding is pending or threatened in any court or before any arbitrator or
governmental instrumentality that purports to affect any Borrower or any
Subsidiary thereof or any transaction contemplated by the Loan Documents, if
such action, suit, investigation or proceeding could have a Material Adverse
Effect, (ii) immediately prior to and following the transactions contemplated
herein, each of the Borrowers shall be Solvent, and (iii) immediately after the
execution of this Credit Agreement and the other Loan Documents, (A) no Default
or Event of Default exists and (B) all representations and warranties contained
herein and in the other Loan Documents are true and correct;

(x)            a duly completed
Compliance Certificate as of the last day of the fiscal quarter of KKR Financial
Corp. ended on March 31, 2007, signed by a Responsible Officer;

(xi)           evidence, in form
and substance reasonably satisfactory to the Administrative Agent, that the
Security Documents are effective to create in favor of the Administrative Agent
a legal, valid and enforceable first Lien and security interest in or on each
item of Collateral in existence and owned or controlled by the Borrowers as of
the Closing Date (in the case of KKR Financial Corp. and KKR TRS), as of
the date of the Existing Credit Agreement (in the case of KKR TRS LTD) or
the date hereof (in the case of the other Borrowers). All filings, recordings,
deliveries of instruments and other actions necessary or desirable in the
opinion of the Administrative Agent to protect and preserve such security
interests shall have been duly effected;

(xii)          a completed and
fully executed Perfection Certificate from the Borrowers and the results of
Uniform Commercial Code searches (and the equivalent thereof in all applicable
foreign jurisdictions) with respect to the Collateral, indicating no Liens
other than Liens permitted by Section 7.01(a) and otherwise in form
and substance reasonably satisfactory to the Administrative Agent on behalf of
the Lenders;

(xiii)         satisfactory
financial statements of the type described in Section 6.01(b) for
the fiscal quarter of KKR Financial Corp. ended March 31, 2007;

(xiv)        evidence, in form and
substance reasonably satisfactory to the Administrative Agent, that all
governmental and third party approvals necessary in connection with the
financing contemplated by this Agreement and the continuing operations of each
of Borrowers and each of their Subsidiaries shall have been obtained and be in
full force and effect;

(xv)         satisfactory evidence
that each of the following transactions shall have been consummated as
described in the KKR Financial Form S-4: 
(a) pursuant to the Merger Agreement, KKR Financial Merger Corp.
shall have been merged with and into KKR Financial Corp., with KKR Financial
Corp. being the surviving entity (the “Merger”), and the Merger Effective Time shall have occurred,
(b) pursuant to the Merger Agreement, each outstanding share of common
stock of KKR Financial Corp. shall have been converted into one common share of
KKR Financial, and (c) each other material transaction described on pages
64 through 68 in the KKR Financial Form S-4 as being consummated before or
substantially simultaneously with the Merger, other than those described in
clauses (i) through (iii) of Section 6.12, but excluding, for the
avoidance of doubt, any transaction described as being consummated immediately
after, or at any other time after, the Merger.

 49
 

(xvi)        such other
assurances, certificates, documents, consents or opinions as the Administrative
Agent, the Swingline Lender or the Required Lenders reasonably may require.

(b)           Any
fees required to be paid on or before the Restatement Closing Date under the
Fee Letter or any other Loan Document shall have been paid, and the Fee Letter
Extension shall have been executed and delivered by all parties thereto.

(c)           Unless
waived by the Administrative Agent, the Borrowers shall have paid all fees,
charges and disbursements of counsel to the Administrative Agent (directly to
such counsel if requested by the Administrative Agent) to the extent invoiced
prior to or on the Restatement Closing Date, plus such additional amounts of
such fees, charges and disbursements as shall constitute its reasonable
estimate of such fees, charges and disbursements incurred or to be incurred by
it through the closing proceedings (provided that such estimate shall not
thereafter preclude a final settling of accounts between the Borrowers and the
Administrative Agent).

Without limiting the generality of the provisions of Section 9.04,
for purposes of determining compliance with the conditions specified in this Section 4.01,
each Lender that has signed this Agreement shall be deemed to have consented
to, approved or accepted or to be satisfied with, each document or other matter
required thereunder to be consented to or approved by or acceptable or
satisfactory to a Lender unless the Administrative Agent shall have received
notice from such Lender prior to the proposed Restatement Closing Date
specifying its objection thereto.

4.02        Conditions to all Borrowings.  The obligation of each Lender to honor any
Request for Borrowing (other
than a Revolving Loan Notice requesting only a conversion of Revolving Loans to
the other Type, or a continuation of Fixed Period Eurodollar Loans) is subject
to the following conditions precedent:

(a)           The
representations and warranties of the Borrowers contained in Article V
and any other Loan Document, and which are contained in any document furnished
at any time under or in connection herewith or therewith, shall, after taking
into account any materiality or other qualification contained therein, be true
and correct on and as of the date of such Borrowing, except to the extent that
such representations and warranties specifically refer to an earlier date, in
which case they shall be true and correct as of such earlier date, and except
that for purposes of this Section 4.02, the representations and
warranties contained in subsections (a) and (b) of Section 5.05
shall be deemed to refer to the most recent statements furnished pursuant to clauses
(a) and (b), respectively, of Section 6.01.

(b)           No
Default shall exist, or would result from such proposed Borrowing or from the
application of the proceeds thereof.

(c)           The
Administrative Agent shall have received a current Borrowing Base Report dated
within three (3) Business Days of the drawdown date of such Loan or such more
recent Borrowing Base Report as the Administrative Agent or any Lender shall
reasonably request.

(d)           In
the event that an asset to be purchased with the proceeds of a Borrowing made
on the date of the Borrowing is to be included in the Borrowing Base as of the
date of the Borrowing, the Administrative Agent shall have received evidence
reasonably satisfactory to it that the conditions referred to in clauses (i),
(ii) and (iii) of Section 2.01, as applicable, have been satisfied.

(e)           The
Administrative Agent and, if applicable, the Swingline Lender shall have
received a Request for Borrowing in accordance with the requirements hereof.

 50
 

Each Request for Borrowing (other than a Revolving
Loan Notice requesting only a conversion of Revolving Loans to the other Type
or a continuation of Fixed Period Eurodollar Loans) submitted by the Borrowers
shall be deemed to be a representation and warranty that the conditions
specified in Sections 4.02(a) and 4.02(b) have been
satisfied on and as of the date of the applicable Borrowing.

ARTICLE V.

REPRESENTATIONS AND WARRANTIES

The Borrowers represent and warrant to the Administrative
Agent and the Lenders that:

5.01        Existence, Qualification and Power.  Each Borrower (a) is duly organized or
formed, validly existing and, as applicable, in good standing under the Laws of
the jurisdiction of its incorporation or organization, (b) has all requisite
power and authority and all requisite governmental licenses, authorizations,
consents and approvals to (i) own or lease its assets and carry on its business
and (ii) execute, deliver and perform its obligations under the Loan Documents
to which it is a party, and (c) is duly qualified and is licensed and, as
applicable, in good standing under the Laws of each jurisdiction where its
ownership, lease or operation of properties or the conduct of its business
requires such qualification or license; except in each case referred to in
clause (b)(i) or (c), to the extent that failure to do so could not reasonably
be expected to have a Material Adverse Effect.

5.02        Authorization; No Contravention.  The execution, delivery and performance by
each Borrower of each Loan Document to which such Person is party, have been
duly authorized by all necessary corporate or other organizational action, and
do not and will not (a) contravene the terms of any of such Person’s
Organization Documents; (b) conflict with or result in any breach or
contravention of, or require any payment to be made under (i) any Contractual
Obligation to which such Person is a party or affecting such Person or the
properties of such Person or any of its Subsidiaries or (ii) any order, injunction,
writ or decree of any Governmental Authority or any arbitral award to which
such Person or its property is subject; (c) violate any Law; except, in each
case referred to in clause (b) or (c) to the extent such conflict, breach,
contravention, payment or violation would not reasonably be expected to have a
Material Adverse Effect or (d) result in the creation or imposition of any Lien
on any asset of any of the Borrowers or any of their Subsidiaries other than
the Liens created pursuant to the Loan Documents.

5.03        Governmental Authorization; Other Consents.  No approval, consent, exemption,
authorization, or other action by, or notice to, or filing with, any
Governmental Authority or any other Person is necessary or required in
connection with the execution, delivery or performance by, or enforcement
against, any Borrower of this Agreement or any other Loan Document except (i)
for the filing of UCC financing statements and (ii) such approvals, consents,
exemptions, authorizations or other actions, notices or filings as have been
obtained or made and are in full force and effect or where the failure to
obtain or make such approvals, consents, exemptions, authorizations or other
actions, notices or filings would not have a Material Adverse Effect.

5.04        Binding Effect.  This
Agreement has been, and each other Loan Document, when delivered hereunder,
will have been, duly executed and delivered by each Borrower that is a party
thereto.  This Agreement constitutes, and
each other Loan Document when so delivered will constitute, a legal, valid and
binding obligation of such Borrower, enforceable against each Borrower that is
party thereto in accordance with its terms, subject to applicable bankruptcy,
insolvency, reorganization, moratorium or other laws affecting creditors’
rights generally and subject to general principles of equity, regardless of
whether considered in a proceeding in equity or at law.

 51
 

5.05        Financial
Statements; No Material Adverse Effect.

(a)           The
Audited Financial Statements (i) were prepared in accordance with GAAP
consistently applied throughout the period covered thereby, except as otherwise
expressly noted therein; and (ii) fairly present the financial condition of KKR
Financial Corp. and its consolidated Subsidiaries as of the date thereof and
their results of operations for the period covered thereby in accordance with
GAAP consistently applied throughout the period covered thereby, except as
otherwise expressly noted therein.

(b)           The
unaudited consolidated balance sheet of KKR Financial Corp. and its
consolidated Subsidiaries dated March 31, 2007, and the related consolidated
statements of income or operations, shareholders’ equity and cash flows for the
fiscal quarter ended on that date (i) were prepared in accordance with GAAP
consistently applied throughout the period covered thereby, except as otherwise
expressly noted therein, and (ii) fairly present the financial condition of KKR
Financial Corp. and its Subsidiaries as of the date thereof and their results
of operations for the period covered thereby, subject, in the case of clauses
(i) and (ii), to the absence of footnotes and to normal year-end audit
adjustments.

(c)           Since
the date of the Audited Financial Statements, there has been no event or
circumstance, either individually or in the aggregate, that has had or could
reasonably be expected to have a Material Adverse Effect; provided,
however, that each of the parties hereto agrees that the conversion and restructuring
transactions described on pages 64 through 68 in the KKR Financial Form S-4 and
to be consummated on or before the Merger Effective Time, and the post-closing
transactions described in Section 6.12, shall not constitute a Material
Adverse Effect.

5.06        Litigation. 
There are no actions, suits, proceedings, formal investigations,
claims or disputes pending or, to the knowledge of the Borrowers after due and
diligent investigation, threatened or contemplated, at law, in equity, in
arbitration or before any Governmental Authority, by or against any Borrower or
any of its Subsidiaries or against any of their properties or revenues that (a)
purport to affect or pertain to this Agreement or any other Loan Document, or
any of the transactions contemplated hereby, or (b) either individually or in the aggregate, could reasonably be expected
to have a Material Adverse Effect.

5.07        No Default.  Neither
any Borrower nor any Subsidiary thereof is in default under or with respect to
any Contractual Obligation that could, either individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect.  No Default has occurred and is continuing or
would result from the consummation of the transactions contemplated by this
Agreement or any other Loan Document.

5.08        Environmental Compliance. 
Except with respect to any matters that, individually or in the
aggregate, could not reasonably be expected to result in a Material Adverse
Effect, none of the Borrowers nor any of their Subsidiaries (i) has failed to
comply with any Environmental Law or to obtain, maintain or comply with any
permit, license or other approval required under any Environmental Law, (ii)
has become subject to any Environmental Liability, (iii) has received notice of
any claim with respect to any Environmental Liability or (iv) knows of any
basis that could reasonably be expected to result in any Environmental
Liability.

5.09        Insurance.  The
properties of the Borrowers and their Subsidiaries are insured with financially
sound and reputable insurance companies not Affiliates of the Borrowers, in
such amounts, with such deductibles and covering such risks as are customarily
carried by companies engaged in similar businesses and owning similar
properties in localities where the Borrowers or the applicable Subsidiary
operates.

 52
 

5.10        Taxes.  Each Borrower
and its Subsidiaries have filed all Federal, state and other material tax
returns and reports required to be filed, and have paid all Federal, state and
other material taxes, assessments, fees and other governmental charges levied
or imposed upon them or their properties, income or assets otherwise due and
payable, except (i) those which are being contested in good faith by
appropriate proceedings diligently conducted and for which adequate reserves
have been provided in accordance with GAAP and (ii) to the extent that the
failure to do so could not reasonably be expected to  have a Material Adverse Effect.

5.11        ERISA Compliance.  No
ERISA Event has occurred or is reasonably expected to occur that, when taken
together with all other such ERISA Events for which liability is reasonably
expected to occur, could reasonably be expected to result in a Material Adverse
Effect.  The present value of all
accumulated benefit obligations under each Plan (based on the assumptions used
for purposes of Statement of Financial Accounting Standards No. 87) did not, as
of the date of the most recent financial statements reflecting such amounts,
exceed by more than $25,000,000 the fair market value of the assets of such
Plan, and the present value of all accumulated benefit obligations of all
underfunded Plans (based on the assumptions used for purposes of Statement of
Financial Accounting Standards No. 87) did not, as of the date of the most
recent financial statements reflecting such amounts, exceed by more than
$25,000,000 the fair market value of the assets of all such underfunded Plans.

5.12        Properties.  (i) Each of the Borrowers and each of their
Subsidiaries has good title to, or valid leasehold, easement or other property
interests in, all its real and personal property necessary to its business,
except for minor defects in title that do not interfere with its ability to
conduct its business as currently conducted or to utilize such properties for
their intended purposes and except where the failure to have such title would
not have a Material Adverse Effect.

(ii)           Each of the
Borrowers and each of their Subsidiaries owns, or is licensed to use, all
trademarks, tradenames, copyrights, patents and other intellectual property
necessary to its business, and the use thereof by such Person does not infringe
upon the rights of any other Person, except for any such infringements that,
individually or in the aggregate, could not reasonably be expected to result in
a Material Adverse Effect.

5.13        Investment Company Act.  None
of the Borrower, any Person Controlling the Borrower, or any Subsidiary is or
is required to be registered as an “investment company” under the Investment
Company Act of 1940.

5.14        Disclosure.  The
Borrowers have disclosed to the Administrative Agent and the Lenders all agreements,
instruments and corporate or other restrictions to which it or any of its
Subsidiaries is subject, and all other matters known to it, that, individually
or in the aggregate, could reasonably be expected to result in a Material
Adverse Effect.  No report, financial
statement, certificate or other written information furnished by or on behalf
of any Borrower to the Administrative Agent or any Lender in connection with
the transactions contemplated hereby and the negotiation of this Agreement or
delivered hereunder or under any other Loan Document (in each case, as modified
or supplemented by other information so furnished) contains any material
misstatement of fact or omits to state any material fact necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading as of the date furnished; provided that, with
respect to projected financial information, the Borrowers represent only that
such information was prepared in good faith based upon assumptions believed to
be reasonable at the time.

5.15        Compliance with Laws. 
Each Borrower and each Subsidiary thereof is in compliance in all
material respects with the requirements of all Laws and all orders, writs,
injunctions and decrees applicable to it or to its properties, except in such
instances in which (a) such requirement of Law or 

 53
 

order, writ, injunction or decree is being contested in good faith by
appropriate proceedings diligently conducted or (b) the failure to comply
therewith, either individually or in the aggregate, could not reasonably be
expected to have a Material Adverse Effect.

5.16        Taxpayer Identification Number.  The Borrowers’ true and correct U.S. taxpayer
identification numbers are set forth on Schedule 10.02.

5.17        Solvency.  Each of the Borrowers is and, after
consummation of the transactions contemplated by the Loan Documents, will be
Solvent.

5.18        No
Burdensome Restrictions.  None of the Borrowers is a party to any
agreement or instrument or subject to any other obligation or any charter or
corporate restriction or any provision of any applicable law, rule or
regulation which, individually or in the aggregate, would have or would be
reasonably expected to have a Material Adverse Effect.

5.19        Borrowing
Base Report. 
The most recent Borrowing Base Report delivered by the Borrowers
accurately reflects the Borrowing Base and the Value of all Eligible Specified
Financial Assets included therein on and as of the date of such Borrowing Base
Report (or, in the case of Values, as of the most recent date that such Values
are required to be determined under Section 6.02) and all Related
Borrowing Base Information set forth therein and the Value of all Eligible
Specified Financial Assets is true and correct in all material respects on and
as of the date of such Borrowing Base Report (or, in the case of Values, as of
the most recent date that such Values are required to be determined under
Section 6.02).

ARTICLE VI.

AFFIRMATIVE COVENANTS

So long as any Lender shall have any Commitment
hereunder, any Loan or other Obligation hereunder shall remain unpaid or
unsatisfied, the Borrowers shall, and shall (except in the case of the
covenants set forth in Sections 6.01, 6.02, and 6.03) cause
each Subsidiary to:

6.01        Financial Statements. 
Deliver to the Administrative Agent and each Lender:

(a)           as
soon as available, but in any event within 90 days after the end of each fiscal
year of KKR Financial, a consolidated balance sheet of KKR Financial and its
Subsidiaries as at the end of such fiscal year, and the related consolidated
statements of income or operations, shareholders’ equity and cash flows for
such fiscal year, setting forth, in each case, in comparative form the figures
for the previous fiscal year, all in reasonable detail and prepared in accordance
with GAAP, audited and accompanied by a report and opinion of Deloitte &
Touche LLP or another Registered Public Accounting Firm of nationally
recognized standing, which report and opinion shall be prepared in accordance
with generally accepted auditing standards and applicable Securities Laws and
shall not be subject to any “going concern” or like qualification or exception
or any qualification or exception as to the scope of such audit or with respect
to the absence of any material misstatement; and

(b)           as
soon as available, but in any event within 45 days after the end of each of the
first three fiscal quarters of each fiscal year of KKR Financial, a
consolidated balance sheet of KKR Financial and its Subsidiaries as at the end
of such fiscal quarter, and the related consolidated statements of income or
operations, shareholders’ equity and cash flows for such fiscal quarter and for
the portion of KKR Financial’s fiscal year then ended, setting forth in each
case in comparative form the figures for the corresponding fiscal quarter of
the previous fiscal year and the corresponding portion of the previous fiscal
year, all in reasonable detail, certified by the chief executive officer, chief
financial officer, 

 54
 

treasurer or controller of KKR Financial as
fairly presenting the financial condition, results of operations, shareholders’
equity and cash flows of KKR Financial and its Subsidiaries in accordance with
GAAP, subject only to normal year-end audit adjustments and the absence of
footnotes.

As to any information contained in materials furnished
pursuant to Section 6.02(d),
the Borrowers shall not be separately required to furnish such information
under clause (a) or (b) above, but the foregoing shall not be in derogation of
the obligation of the Borrowers to furnish the information and materials
described in clauses (a) and (b) above at the times specified therein.

6.02        Certificates; Other Information.  Deliver to the Administrative Agent and each
Lender, in form and detail reasonably satisfactory to the Administrative Agent:

(a)           concurrently
with the delivery of the financial statements referred to in Section 6.01(a),
(i) a certificate of the Registered Public Accounting Firm certifying such
financial statements and stating that in making the examination necessary
therefor no knowledge was obtained of any Default or, if any such Default shall exist,
stating the nature and status of such event (which certificate may be limited
to the extent required by accounting rules, guidelines or practices), (ii)
setting forth reasonably detailed calculations demonstrating compliance with
the financial covenants contained in Section 7.09 and (iii) stating
whether any change in GAAP or in the application thereof which is material in
any respect to KKR Financial’s financial statements has occurred since the date
of the Audited Financial Statements and, if any such change has occurred,
specifying the effect of such change on the financial statements accompanying
such certificate;

(b)           concurrently
with the delivery of the financial statements referred to in Sections 6.01(a)
and 6.01(b), a duly
completed Compliance Certificate signed by the chief executive officer, chief
financial officer, treasurer or controller of the Borrowers;

(c)           promptly
after the same are available, copies of each annual report, proxy or financial
statement or other report or communication sent to the stockholders of KKR
Financial, and copies of all annual, regular, periodic and special reports and
registration statements which KKR Financial may file or be required to file
with the SEC under Section 13 or 15(d) of the Securities Exchange Act of
1934, and not otherwise required to be delivered to the Administrative Agent
pursuant hereto;

(d)           on
a weekly basis, an update as to the Value of all publicly quoted Eligible
Specified Financial Assets contained in the Borrowing Base (such update to
include any events of which any of the Borrowers is aware, based upon facts and
circumstances known to it, that affect the Value of any such Eligible Specified
Financial Assets in any material respect);

(e)           on
a monthly basis or as otherwise approved by the Administrative Agent, an update
as to the Value of all Eligible Specified Financial Assets contained in the
Borrowing Base, the Value for which could only be determined based on
valuations provided by a third party appraiser reasonably satisfactory to the
Administrative Agent (such update to include any events of which any of the
Borrowers is aware, based upon facts and circumstances known to it, that affect
the Value of any such Eligible Specified Financial Assets in any material
respect);

(f)            promptly,
but, in any event, within five (5) Business Days, upon the Borrowers obtaining
knowledge, based upon facts and circumstances known to it, of an event which
may result in a material adverse effect on the Value of any Eligible Specified
Financial Asset, an update as to the Value of such Eligible Specified Financial
Assets, except with respect to such Eligible Specified Financial Assets
requiring an appraisal for the determination of Value which shall be due within
thirty (30) days, and a

 55

description of the nature of such event and
the effect of the material adverse effect on the Value of such Eligible
Specified Financial Asset;

(g)           simultaneously
with the initial inclusion of any Eligible Specified Financial Asset in the
Borrowing Base in connection with a Loan hereunder, a Borrowing Base Report
containing all of the Related Borrowing Base Information in respect of such
Eligible Specified Financial Asset;

(h)           promptly,
and in any event within five (5) Business Days after receipt thereof by KKR
Financial or any Subsidiary thereof, copies of each notice or other
correspondence received from the SEC (or comparable agency in any applicable
non-U.S. jurisdiction) concerning any investigation or possible investigation
or other inquiry by such agency regarding financial or other operational
results of KKR Financial or any Subsidiary thereof; and

(i)            promptly
following any request therefor, such other information regarding the
operations, business affairs and financial condition of any of the Borrowers or
any of their Subsidiaries, or compliance with the terms of this Agreement, as
the Administrative Agent or any Lender may reasonably request.

Documents required to be delivered pursuant to Section 6.01(a)
or 6.01(b) or Section 6.02(c) (to the extent any such
documents are included in materials otherwise filed with the SEC) may be
delivered electronically and if so delivered, shall be deemed to have been
delivered on the date (i) on which KKR Financial posts such documents, or
provides a link thereto on KKR Financial’s website on the Internet at the
website address listed on Schedule 10.02; or (ii) on which such
documents are posted on KKR Financial’s behalf on an Internet or intranet
website, if any, to which each Lender and the Administrative Agent have access
(whether a commercial, third-party website or whether sponsored by the
Administrative Agent); provided that (i) the Borrowers shall deliver
paper copies of such documents to the Administrative Agent or any Lender that
requests the Borrowers to deliver such paper copies until a written request to
cease delivering paper copies is given by the Administrative Agent or such
Lender and (ii) the Borrowers shall notify the Administrative Agent and each
Lender (by telecopier or electronic mail) of the posting of any such documents
and provide to the Administrative Agent by electronic mail electronic versions
(i.e., soft copies) of such documents. 
Notwithstanding anything contained herein, in every instance KKR Financial
shall be required to provide paper copies of the Compliance Certificates
required by Section 6.02(b) to the Administrative Agent.  Except for such Compliance Certificates, the
Administrative Agent shall have no obligation to request the delivery or to
maintain copies of the documents referred to above, and in any event shall have
no responsibility to monitor compliance by the Borrowers with any such request
for delivery, and each Lender shall be solely responsible for requesting
delivery to it or maintaining its copies of such documents.

The Borrowers hereby acknowledge that (a) the
Administrative Agent and/or the Arranger will make available to the Lenders
materials and/or information provided by or on behalf of the Borrowers
hereunder (collectively, “Borrower Materials”) by posting the Borrower
Materials on IntraLinks or another similar electronic system (the “Platform”)
and (b) certain of the Lenders may be “public-side” Lenders (i.e., Lenders that do not wish to receive
material non-public information with respect to KKR Financial or its securities)
(each, a “Public Lender”).  Each
of the Borrowers hereby agrees that (w) all Borrower Materials that are to be
made available to Public Lenders shall be clearly and conspicuously marked “PUBLIC”
which, at a minimum, shall mean that the word “PUBLIC” shall appear prominently
on the first page thereof; (x) by marking Borrower Materials “PUBLIC,” the
Borrowers shall be deemed to have authorized the Administrative Agent, the
Arranger and the Lenders to treat such Borrower Materials as not containing any
material non-public information with respect to the Borrowers or any securities
for purposes of United States Federal and state securities laws (provided,
however, that to the extent such Borrower Materials constitute
Information, they shall be treated as set forth in Section 10.07); 

 56
 

(y) all Borrower
Materials marked “PUBLIC” are permitted to be made available through a portion
of the Platform designated “Public Investor;” and (z) the Administrative Agent
and the Arranger shall be entitled to treat any Borrower Materials that are not
marked “PUBLIC” as being suitable only for posting on a portion of the Platform
other than that which is designated “Public Investor.”

6.03        Notices.  Promptly
notify the Administrative Agent and each Lender upon a Responsible Officer of a
Borrower obtaining knowledge thereof:

(a)           of
the occurrence of any Default;

(b)           of
the occurrence of any ERISA Event that, alone or together with any other ERISA
Events that have occurred, could reasonably be expected to result in liability of
the Borrowers and their Subsidiaries in an aggregate amount exceeding
$25,000,000; and

(c)           any
other development that results in, or could reasonably be expected to result
in, a Material Adverse Effect; including (i) breach or non-performance of, or
any default under, a Contractual Obligation of either of the Borrowers or any
Subsidiary; (ii) any dispute, litigation, investigation, proceeding or
suspension between either of the Borrowers or any Subsidiary and any
Governmental Authority; or (iii) the filing or commencement of, or any material
development in, any litigation or proceeding affecting the either of the
Borrowers or any Subsidiary, including pursuant to any applicable Environmental
Laws;

Each notice pursuant to this Section 6.03
shall be accompanied by a statement of a Responsible Officer of the applicable
Borrower setting forth details of the occurrence referred to therein and
stating what action such Borrower has taken and proposes to take with respect
thereto.  Each notice pursuant to Section 6.03(a)
shall describe with particularity any and all provisions of this Agreement and
any other Loan Document that have been breached.

6.04        Payment of Obligations. 
Pay and discharge its obligations, including Tax liabilities, that, if
not paid, could result in a Material Adverse Effect before the same shall
become delinquent or in default, except where (a) the validity or amount
thereof is being contested in good faith by appropriate proceedings, (b) such
Borrower or such Subsidiary has set aside on its books adequate reserves with
respect thereto in accordance with GAAP and (c) the failure to make payment
pending such contest could not reasonably be expected to result in a Material
Adverse Effect.

6.05        Preservation of Existence, Etc.  (a) Preserve, renew and maintain in full force
and effect its legal existence and good standing under the Laws of the
jurisdiction of its organization except in a transaction permitted by Section 7.04
or 7.05; and (b) take all reasonable action to maintain all rights,
privileges, permits, licenses and franchises necessary in the normal conduct of
its business, except to the extent that failure to do so could not reasonably
be expected to have a Material Adverse Effect. 
Without limiting the generality of the foregoing, KKR Financial Corp.
will do all things necessary to maintain its status as a REIT; provided,
however, that Borrowers may permit KKR Financial Corp. to cease to
qualify as a REIT, so long as no Default or Event of Default has occurred and
is continuing or would be caused thereby.

6.06        Maintenance of Properties. 
(a) Maintain, preserve and protect all of its material properties and
equipment necessary in the operation of its business in good working order and
condition, ordinary wear and tear excepted; and (b) make all necessary repairs thereto and renewals and
replacements thereof except where the failure to do so could not reasonably be
expected to have a Material Adverse Effect.

 57
 

6.07        Maintenance
of Insurance. 
Maintain with financially sound and reputable insurance companies,
insurance with respect to its properties and business against loss or damage of
the kinds customarily insured against by Persons engaged in the same or similar
business, of such types and in such amounts as are customarily carried under
similar circumstances by such other Persons.

6.08        Compliance with Laws. 
Comply in all material respects with the requirements of all Laws and
all orders, writs, injunctions and decrees applicable to it or to its business
or property, except in such instances in which (a) such requirement of Law or
order, writ, injunction or decree is being contested in good faith by
appropriate proceedings diligently conducted; or (b) the failure to comply
therewith could not reasonably be expected to have a Material Adverse Effect.

6.09        Books
and Records. 
Maintain proper books of record and account, in conformity with GAAP
consistently applied.

6.10        Inspection Rights. 
Permit representatives and independent contractors of the Administrative
Agent and each Lender to visit and inspect any of its properties, to examine
its corporate, financial and operating records, and make copies thereof or
abstracts therefrom, and to discuss its affairs, finances and accounts with its
directors, officers, and independent public accountants, all at such reasonable times during normal business
hours and as often as may be reasonably desired, upon reasonable advance notice
to the Borrowers (subject to reasonable requirements of confidentiality); provided,
however, that when an Event of Default exists the Administrative Agent
or any Lender (or any of their respective representatives or independent
contractors) may do any of the foregoing at the expense of the Borrowers at any
time during normal business hours and without advance notice.

6.11        Use of Proceeds.  Use
the proceeds of the Loans only for working capital requirements and other
general corporate purposes consistent with KKR Financial Corp.’s Form
10-K.  No part of the proceeds of any
Loan will be used, whether directly or indirectly, for any purpose that entails
a violation of any of the Regulations of the FRB, including Regulations T, U
and X.

6.12        KKR Financial Transactions. 
Not later than sixty (60) days after the Closing Date: (i) KKR
Financial Corp. shall have issued a minimum of 100 shares of redeemable
preferred stock with a par value of $5,000 per share to at least 100
unaffiliated accredited investors, (ii) KKR Financial shall have assumed
all obligations of KKR Financial Corp. under its stock incentive plan, and
(iii) KKR Financial shall have entered into the Management Agreement with
KKR Financial Advisors LLC, which agreement shall be in full force and
effect.  Borrowers shall provide to the
Administrative Agent, promptly upon the occurrence thereof, evidence reasonably
satisfactory to the Administrative Agent of the satisfaction of each of the
foregoing covenants.

ARTICLE VII.

NEGATIVE COVENANTS

So long as any Lender shall have any Commitment
hereunder, any Loan or other Obligation hereunder shall remain unpaid or
unsatisfied, the Borrowers shall not, nor shall it permit any Subsidiary to,
directly or indirectly:

7.01        Liens.  Create, incur,
assume or suffer to exist any Lien upon any of its property, assets or
revenues, whether now owned or hereafter acquired, other than the following:

(a)           as
to Collateral only, Liens pursuant to or as contemplated in any Loan Document
and Permitted Encumbrances (only with respect to clauses (a) and (e) of the
definition thereof) subordinate to such Liens; and

 58
 

(b)           as
to all other assets and properties of the Borrowers and their Subsidiaries
other than Collateral:

(i)            Permitted
Encumbrances;

(ii)           Liens pursuant to
or as contemplated in any Loan Document;

(iii)          Liens existing on
the date hereof and listed on Schedule 7.01 and any renewals or
extensions thereof, provided that (i) the property or asset covered
thereby is not changed, (ii) the amount secured or benefited thereby is not
increased except as contemplated by Section 7.03(b), (iii) the
direct or any contingent obligor with respect thereto is not changed, and (iv)
any renewal or extension of the obligations secured or benefited thereby is
permitted by Section 7.03(b);

(iv)          Liens securing
Indebtedness permitted under Section 7.03(k);

(v)           Liens on cash
deposits with issuers of letters of credit in support of Letter of Credit
Obligations permitted under Section 7.03(j);

(vi)          any Lien existing on
any property or asset prior to the acquisition thereof by any of the Borrowers
or any Subsidiary or existing on any property or asset of any Person that
becomes a Subsidiary after the date hereof prior to the time such Person
becomes a Subsidiary; provided that (i) such Lien is not created in
contemplation of or in connection with such acquisition or such Person becoming
a Subsidiary, as the case may be, (ii) such Lien shall not apply to any other
property or assets of any of the Borrowers or any Subsidiary and (iii) such
Lien shall secure only those obligations which it secures on the date of such
acquisition or the date such Person becomes a Subsidiary, as the case may be;
and

(vii)         Liens on any
property or asset that secures any Swap Contract (including any total rate of
return Swap Contract) or any other Secured Indebtedness or any related
obligation incurred in connection with the transactions contemplated thereby.

(viii)        For the avoidance of
doubt, except to the extent that the Borrowers grant a Lien to the trustee of
any 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.

7.02        Investments.  Make any
Investments, except:

(a)           Permitted
Investments;

(b)           Investments by any
Borrower or any Subsidiary existing as of the Restatement Closing Date;

(c)           Investments
of the Borrowers in any Subsidiary and Investments of any Subsidiary in the
either of the Borrowers or in another Subsidiary;

(d)           Guarantees
of Letter of Credit Obligations permitted by Section 7.03;

(e)           Investments
in any Financing SPE or Trust Preferred Financing Vehicle, including any
Financing SPE or Trust Preferred Financing Vehicle established after the date
hereof, for the purpose of facilitating a Securitization or Trust Preferred
Securities Transaction; and

 59
 

(f)            other
Investments (including total rate of return Swap Contracts and other Swap
Contacts) made by any Borrower or any Subsidiary in the course of such Borrower’s
or such Subsidiary’s business and consistent with the description of business
in the KKR Financial Corp. Form 10-K.

7.03        Indebtedness.  Create,
incur, assume or suffer to exist any Indebtedness, except:

(a)           Indebtedness
under the Loan Documents;

(b)           Indebtedness
outstanding on the date hereof and listed on Schedule 7.03 and any
refinancings, refundings, renewals or extensions thereof; provided that
(i) the terms and conditions of such extensions, renewals or refinancings of
such Indebtedness do not, in the Administrative Agent’s reasonable judgment,
materially impair the prospects of repayment of the Obligations by the
Borrowers or impair any Borrower’s creditworthiness and (ii) such extensions,
renewals or refinancings of such Indebtedness do not result in an increase in
the principal amount of such Indebtedness so extended, renewed or refinanced or
add any Borrower as liable with respect thereto if such Borrower was not liable
with respect to the original Indebtedness;

(c)           Indebtedness
of any Borrower to any Subsidiary and of any Subsidiary to any Borrower or any
other Subsidiary;

(d)           Guarantees
of the Borrowers or any Subsidiary in respect of Indebtedness otherwise
permitted hereunder of the Borrowers or any consolidated Subsidiary;

(e)           obligations
(contingent or otherwise) of the Borrowers or any Subsidiary existing or
arising under any Swap Contract (including any total rate of return Swap
Contract);

(f)            Indebtedness
owed to (including obligations in respect of letters of credit for the benefit
of) any person providing workers’ compensation, health, disability or other
employee benefits or property, casualty or liability insurance to any Borrower
or any Subsidiary, pursuant to reimbursement or indemnification obligations to
such person;

(g)           Indebtedness
in respect of performance bonds, bid bonds, appeal bonds, surety bonds and
completion guarantees and similar obligations, in each case, provided in the
course of ordinary business, including those incurred to secure health, safety
and environmental obligations in the ordinary course of business;

(h)           Unsecured
Indebtedness;

(i)            Letter
of Credit Obligations, up to a maximum amount outstanding at any time not
greater than $10,000,000;

(j)            Indebtedness
arising from the occasional honoring by a bank or other financial institution
of a check, draft or similar instrument drawn against insufficient funds in the
ordinary course of business and not from an overdraft credit facility granted
by the bank or other financial institution;

(k)           other
Secured Indebtedness; and

(l)            Trust
Preferred Indebtedness and related Trust Preferred Guarantees and Trust
Preferred Securities incurred, executed or issued respectively, as part of a
Trust Preferred Securities Transaction.

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7.04        Fundamental Changes. 
Merge, dissolve, liquidate, consolidate with or into another Person, or
Dispose of (whether in one transaction or in a series of transactions) all or
substantially all of its assets (whether now owned or hereafter acquired) to or
in favor of any Person, except that, so long as no Default exists or would
result therefrom:

(a)           any
Subsidiary may merge with (i) a Borrower, provided that such Borrower
shall be the continuing or surviving Person, or (ii) any one or more other
Subsidiaries; provided that any such merger involving a Person that is
not a wholly owned Subsidiary immediately prior to such merger shall not be
permitted unless also permitted by Section 7.02

(b)           any Subsidiary may
Dispose of all or substantially all of its assets (upon voluntary liquidation
or otherwise) to a Borrower or to another Subsidiary;

(c)           any
Subsidiary may liquidate or dissolve if the Borrower which is the parent of
such Subsidiary determines in good faith that such liquidation or dissolution
is in the best interests of such Borrower and is not materially disadvantageous
to the Lenders;

(d)           any
Borrower may effect a Disposition permitted by Section 7.05; and

(e)           any
Financing SPE may sell, transfer, lease or otherwise dispose of (in one
transaction or in a series of related transactions) all or substantially all of
its assets in connection with a Securitization, provided that the
proceeds of such Securitization in excess of the amount such Financing SPE is
required to pay to any holder of any debt obligation or equity interests issued
by such Financing SPE pursuant to the terms of such Securitization are paid to
a Borrower promptly thereafter.

Notwithstanding the foregoing, none of the Borrowers
will, nor will permit any of its Subsidiaries to, engage to any material extent
in any business other than businesses of the type conducted by such Borrower
and its Subsidiaries on the date of execution of this Agreement, businesses
reasonably related thereto or that is a reasonable extension, development or
expansion thereof.  It is understood that
a Trust Preferred Securities Transaction consummated for purposes of financing
the type of business of such Borrower or Subsidiary as of the date of execution
of this Agreement shall not be deemed to violate the foregoing restriction.

For the avoidance of doubt, the transfer of legal
ownership of any Trust Preferred Indebtedness permitted under this Agreement to
a trustee pursuant to a Trust Preferred Securities Transaction shall not be
deemed to be a sale, transfer, lease or other disposition of any assets to such
trustee.

7.05        Dispositions.  Make
any Disposition or enter into any agreement to make any Disposition, except:

(a)           Dispositions
of obsolete or worn out property, whether now owned or hereafter acquired, in
the ordinary course of business;

(b)           Dispositions
of up to $4.0 billion (on a cumulative basis) of residential real estate assets
of the Borrowers (including, without limitation, the Disposition of mortgage-backed
securities), so long as no Default or Event of Default has occurred and
is continuing or would be caused thereby; provided, however that,
to the extent any such residential real estate assets constitute Collateral,
Borrowers shall comply with the Security Documents with respect to any
Dispositions thereof;

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(c)           Dispositions
of assets other than Collateral in the course of any Borrower’s or any
Subsidiary’s business and consistent with the description of business in the
KKR Financial Corp. Form 10-K;

(d)           Dispositions
of equipment or real property to the extent that (i) such property is exchanged
for credit against the purchase price of similar replacement property or (ii)
the proceeds of such Disposition are reasonably promptly applied to the purchase
price of such replacement property;

(e)           Dispositions
of property by any Subsidiary to a Borrower or to a consolidated Subsidiary;

(f)            Dispositions
of Collateral to the extent permitted by the Security Documents; and

(g)           Dispositions
permitted by Section 7.04.

For the avoidance of doubt, the transfer of legal ownership of any
Trust Preferred Indebtedness permitted under this Agreement to a trustee
pursuant to a Trust Preferred Securities Transaction shall not be deemed to be
a sale, transfer, lease or other disposition of any assets to said trustee.

7.06        Restricted Payments. 
Declare or make, directly or indirectly, any Restricted Payment, or
incur any obligation (contingent or otherwise) to do so, except that:

(a)           so
long as (i) no event constituting a Default under Sections 8.01(a), 8.01(f)
or 8.01(h) or shall have occurred and be continuing, and (ii) no Event
of Default shall have occurred and be continuing, in each case, at the time of
or would result therefrom, KKR Financial may declare and make Restricted
Payments in cash to any Person that owns an Equity Interest in KKR Financial,
ratably according to their respective holdings of the type of Equity Interest
of the applicable class or series in respect of which such Restricted Payment
is being made;

(b)           each
Subsidiary (including, without limitation, the Subsidiaries of KKR Financial
party hereto as Borrowers) may declare and make Restricted Payments to the
Borrowers, and to any other Person that owns an Equity Interest in such
Subsidiary, ratably according to their respective holdings of the type of
Equity Interest of the applicable class or series in respect of which such
Restricted Payment is being made;

(c)           the
Borrowers and each Subsidiary may declare and make dividend payments or other
distributions payable solely in the common stock or other common Equity
Interests of such Person; and

(d)           any
Borrower may make Restricted Payments pursuant to and in accordance with stock
option plans or other benefit plans for management or employees of such Borrower
and its Subsidiaries.

7.07        Transactions
with Affiliates. 
Enter into any transaction of any kind with any Affiliate of any
Borrower except (a) in the ordinary course of business at prices and on terms
and conditions not less favorable to such Borrower or such Subsidiary than
could be obtained on an arm’s-length basis from unrelated third parties, (b)
transactions between or among any Borrower and its wholly owned Subsidiaries
not involving any other Affiliate, (c) transactions for which KKR Financial or such
Subsidiary is obligated under the Management Agreement and (d) any Restricted
Payment permitted by Section 7.06.

7.08        Burdensome Agreements. 
Enter into any Contractual Obligation (other than this Agreement or any
other Loan Document) that restricts or imposes any condition upon (i) the
ability of any Borrower or any Subsidiary to create, incur or permit to exist
any Lien upon any of its property or 

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assets, or (ii) the ability of any Subsidiary to pay dividends or other
distributions with respect to any shares of its capital stock or to make or
repay loans or advances to any Borrower or any other Subsidiary or to Guarantee
Indebtedness of any Borrower or any other Subsidiary; provided that (A)
the foregoing shall not apply to restrictions and conditions imposed by law or
by this Agreement or any other Loan Document or upon any Financing SPE by any
lender thereto or investor therein or upon any Trust Preferred Financing
Vehicle in respect of its common securities issued to a Borrower or any Subsidiary
of a Borrower, (B) the foregoing shall not apply to restrictions and conditions
existing on the date hereof identified on Schedule 7.08 (but shall apply
to any extension or renewal of, or any amendment or modification expanding the
scope of, any such restriction or condition), (C) the foregoing shall not apply
to customary restrictions and conditions contained in agreements relating to
the sale of a Subsidiary pending such sale, provided such restrictions and
conditions apply only to the Subsidiary that is to be sold and such sale is
permitted hereunder, (D) clause (i) of the foregoing shall not apply to
restrictions or conditions imposed by any agreement relating to secured
Indebtedness permitted by this Agreement if such restrictions or conditions
apply only to the property or assets securing such Indebtedness and (E) clause
(i) of the foregoing shall not apply to customary provisions in leases and
other contracts restricting the assignment thereof.

For the avoidance of doubt, except to the extent that
the Borrowers grant a Lien to the trustee of any 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 $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 

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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 any covenant contained in Section 6.02
(Certificates; Other Information) (other than the proviso in the first sentence
of the penultimate paragraph thereof) and such failure continues for five (5)
Business Days after notice thereof from the Administrative Agent; or

(c)           Other
Defaults.  Any Borrower fails to
perform or observe any other covenant or agreement (not specified in subsection
(a) or (b) above) contained in any Loan Document on its part to be performed or
observed and such failure continues for 30 days after notice thereof from the
Administrative Agent to the Borrowers (which notice may be given at the option
of the Administrative Agent, and will be given at the request of the Required
Lenders); or

(d)           Representations
and Warranties.  Any representation
or warranty made or deemed made by or on behalf of any Borrower in or in
connection with this Agreement or any other Loan Document or any amendment or
modification hereof or thereof or waiver hereunder or thereunder, or in any
report, certificate, financial statement or other document furnished pursuant
to or in connection with this Agreement, any other Loan Document or any
amendment or modification hereof or thereof or waiver hereunder or thereunder,
shall, after taking into account any materiality or other qualification
contained therein, prove to have been incorrect when made or deemed made; or

(e)           Cross-Default.  Any Borrower (i) fails to make any payment
(whether of principal or interest and regardless of amount) in respect of any
Material Indebtedness, when and as the same shall become due and payable (with
all applicable grace periods having expired), or (ii) any event or condition
occurs that results in any Material Indebtedness becoming due prior to its
scheduled maturity or that enables or permits (with or without the giving of
notice, the lapse of time or both, but after all applicable grace periods have
expired) the holder or holders of any Material Indebtedness or any trustee or
agent on its or their behalf to cause any Material Indebtedness to become due,
or to require the prepayment, repurchase, redemption or defeasance thereof,
prior to its scheduled maturity; provided that this Section
8.01(e)(ii) shall not apply to secured Indebtedness that becomes due as a
result of the voluntary sale or transfer of the property or assets securing
such Indebtedness; or

(f)            Insolvency
Proceedings, Etc.  (i) Any Borrower
or any Subsidiary (A) voluntarily commences any proceeding or files any
petition seeking liquidation, reorganization or other relief under any Federal,
state or foreign bankruptcy, insolvency, receivership or similar law now or
hereafter in effect, (B) consents to the institution of, or fails to contest in
a timely and appropriate manner, any 

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proceeding or petition described in sub-part
(ii) of this Section 8.01(f), (C) applies for or consents to the
appointment of a receiver, trustee, custodian, sequestrator, conservator or
similar official for any Borrower or any Subsidiary or for a substantial part
of its assets, (D) files an answer admitting the material allegations of a
petition filed against it in any such proceeding, (E) makes a general
assignment for the benefit of creditors or (F) takes any action for the purpose
of effecting any of the foregoing, or (ii) an involuntary proceeding is
commenced or an involuntary petition is filed seeking (A) liquidation,
reorganization or other relief in respect of any Borrower or any Subsidiary or
its debts, or of a substantial part of its assets, under any Federal, state or
foreign bankruptcy, insolvency, receivership or similar law now or hereafter in
effect or (B) the appointment of a receiver, trustee, custodian, sequestrator,
conservator or similar official for any Borrower or any Subsidiary or for a
substantial part of its assets, and, in any such case, such proceeding or
petition shall continue undismissed for 60 days or an order or decree approving
or ordering any of the foregoing shall be entered; or

(g)           Inability
to Pay Debts; Attachment.  Any
Borrower or any Subsidiary becomes unable, admits in writing its inability or
fails generally to pay its debts as they become due; or

(h)           Judgments.
 One or more judgments for the payment of
money in an aggregate amount in excess of $25,000,000 is rendered against any
Borrower, any Subsidiary or any combination thereof and the same shall remain
undischarged for a period of 30 consecutive days during which execution shall
not be effectively stayed, or any action is legally taken by a judgment
creditor to attach or levy upon any assets of any Borrower or any Subsidiary to
enforce any such judgment; or

(i)            ERISA.  An ERISA Event occurs that, in the opinion of
the Required Lenders, when taken together with all other ERISA Events that have
occurred, could reasonably be expected to result in a Material Adverse Effect;
or

(j)            Management.  KKR Financial Advisors LLC shall cease to (i)
serve as manager and adviser to the Borrowers or (ii) be an Affiliate of
Kohlberg Kravis Roberts & Co. L.P.; or

(k)           Invalidity
of Loan Documents.  Any Loan Document
shall cease to be valid and binding on, or enforceable against, any Borrower,
or any Borrower shall so assert in writing. or

(l)            Change
of Control.  There occurs any Change
of Control.

8.02        Remedies Upon Event of Default.  If any Event of Default occurs and is
continuing (other than an event with respect to a Borrower described in Section
8.01(f)), and at any time thereafter during the continuance of such event,
the Administrative Agent may, and at the request of the Required Lenders shall,
by notice to the Borrowers, take either or both of the following actions, at
the same or different times:

(a)           terminate
the Commitments, and thereupon the Commitments shall terminate immediately,
and;

(b)           declare
the Loans then outstanding to be due and payable in whole (or in part, in which
case any principal not so declared to be due and payable may thereafter be
declared to be due and payable), and thereupon the principal of the Loans so
declared to be due and payable, together with accrued interest thereon and all
fees and other obligations of the Borrowers accrued hereunder, shall become due
and payable immediately, without presentment, demand, protest or other notice
of any kind, all of which are hereby waived by each of the Borrowers;

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provided, however, that in
case of any event with respect to a Borrower described in Section 8.01(f),
the Commitments shall automatically terminate and the principal of the Loans
then outstanding, together with accrued interest thereon and all fees and other
Obligations, shall automatically become due and payable, without presentment,
demand, protest or other notice of any kind, all of which are hereby waived by
each of the Borrowers.

8.03        Application of Funds. 
In the event that, following the occurrence or during the continuance of
any Event of Default, the Administrative Agent or any Lender, as the case may
be, receives any monies in connection the exercise of remedies provided for in Section 8.02
(or after the Loans have automatically become immediately due and payable),
such monies shall be distributed for application as follows:

First, to the payment of, or (as the
case may be) the reimbursement of, the Administrative Agent for or in respect
of all reasonable costs, expenses, disbursements and losses which shall have
been incurred or sustained by the Administrative Agent in connection with the
collection of such monies by the Administrative Agent, for the exercise,
protection or enforcement by the Administrative Agent of all or any of the
rights, remedies, powers and privileges of the Administrative Agent under this
Agreement or any of the other Loan Documents or in respect of the Collateral or
in support of any provision of adequate indemnity to the Administrative Agent
against any taxes or liens which by law shall have, or may have, priority over
the rights of the Administrative Agent to such monies;

Second, to all other Obligations in
such order or preference as the Required Lenders may determine; provided,
however, that (i) distributions shall be made (A) pari  passu
among Obligations with respect to any fees payable to the Administrative Agent
and all other Obligations and (B) with respect to each type of Obligation owing
to the Lenders, such as interest, principal, fees and expenses, among the
Lenders pro  rata, and (ii) the Administrative Agent may in its
discretion make proper allowance to take into account any Obligations not then
due and payable;

Third, upon payment and satisfaction
in full or other provisions for payment in full satisfactory to the Lenders and
the Administrative Agent of all of the Obligations, to the payment of any
obligations required to be paid pursuant to §9-608(a)(1)(C) or 9-615(a)(3) of
the Uniform Commercial Code of the State of New York;

Fourth, the excess, if any, shall be
returned to the Borrowers or to such other Persons as are entitled thereto;

Notwithstanding the foregoing, any payment of the
Obligations hereunder shall be apportioned, within each category above, first,
to Obligations in respect of Tranche A Loans and, second, to Obligations
in respect of Tranche B Loans.

ARTICLE IX.

ADMINISTRATIVE AGENT

9.01        Appointment and Authority. 
Each of the Lenders hereby irrevocably appoints Bank of America to act
on its behalf as the Administrative Agent hereunder and under the other Loan
Documents and authorizes the Administrative Agent to take such actions on its
behalf and to exercise such powers as are delegated to the Administrative Agent
by the terms hereof or thereof, together with such actions and powers as are
reasonably incidental thereto.  The
provisions of this Article are solely for the benefit of the Administrative
Agent.  No Lender or Borrower shall have rights as a
third party beneficiary of any of such provisions.

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9.02        Rights as a Lender. 
The Person serving as the Administrative Agent hereunder shall have the
same rights and powers in its capacity as a Lender as any other Lender and may
exercise the same as though it were not the Administrative Agent and the term “Lender”
or “Lenders” shall, unless otherwise expressly indicated or unless the context
otherwise requires, include the Person serving as the Administrative Agent
hereunder in its individual capacity. 
Such Person and its Affiliates may accept deposits from, lend money to,
act as the financial advisor or in any other advisory capacity for and
generally engage in any kind of business with the Borrowers or any Subsidiary
or other Affiliate thereof as if such Person were not the Administrative Agent
hereunder and without any duty to account therefor to the Lenders.

9.03        Exculpatory Provisions. 
The Administrative Agent shall not have any duties or obligations except
those expressly set forth herein and in the other Loan Documents.  Without limiting the generality of the
foregoing, the Administrative Agent:

(a)           shall
not be subject to any fiduciary or other implied duties, regardless of whether
a Default has occurred and is continuing;

(b)           shall
not have any duty to take any discretionary action or exercise any
discretionary powers, except discretionary rights and powers expressly
contemplated hereby or by the other Loan Documents that the Administrative
Agent is required to exercise as directed in writing by the Required Lenders
(or such other number or percentage of the Lenders as shall be expressly
provided for herein or in the other Loan Documents), provided that the
Administrative Agent shall not be required to take any action that, in its
opinion or the opinion of its counsel, may expose the Administrative Agent to
liability or that is contrary to any Loan Document or applicable law; and

(c)           shall
not, except as expressly set forth herein and in the other Loan Documents, have
any duty to disclose, and shall not be liable for the failure to disclose, any
information relating to any Borrower or any of its Affiliates that is
communicated to or obtained by the Person serving as the Administrative Agent
or any of its Affiliates in any capacity.

The Administrative Agent shall not be liable for any
action taken or not taken by it (i) with the consent or at the request of the
Required Lenders (or such other number or percentage of the Lenders as shall be
necessary, or as the Administrative Agent shall believe in good faith shall be
necessary, under the circumstances as provided in Sections 10.01
and 8.02) or (ii) in the absence of its own gross negligence or willful
misconduct.  The Administrative Agent
shall be deemed not to have knowledge of any Default unless and until notice
describing such Default is given to the Administrative Agent by any Borrower or
a Lender.

The Administrative Agent shall not be responsible for
or have any duty to ascertain or inquire into (i) any statement, warranty or
representation made in or in connection with this Agreement or any other Loan
Document, (ii) the contents of any certificate, report or other document
delivered hereunder or thereunder or in connection herewith or therewith,
(iii) the performance or observance of any of the covenants, agreements or
other terms or conditions set forth herein or therein or the occurrence of any
Default, (iv) the validity, enforceability, effectiveness or genuineness of
this Agreement, any other Loan Document or any other agreement, instrument or
document or (v) the satisfaction of any condition set forth in Article IV
or elsewhere herein, other than to confirm receipt of items expressly required
to be delivered to the Administrative Agent.

9.04        Reliance
by Administrative Agent.

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(a)           The
Administrative Agent shall be entitled to rely upon, and shall not incur any
liability for relying upon, any notice, request, certificate, consent,
statement, instrument, document or other writing (including any electronic
message, Internet or intranet website posting or other distribution) believed
by it to be genuine and to have been signed, sent or otherwise authenticated by
the proper Person.  The Administrative
Agent also may rely upon any statement made to it orally or by telephone and
believed by it to have been made by the proper Person, and shall not incur any
liability for relying thereon.  In
determining compliance with any condition hereunder to the making of a Loan,
that by its terms must be fulfilled to the satisfaction of a Lender or the
Administrative Agent may presume that such condition is satisfactory to such
Lender unless the Administrative Agent shall have received notice to the
contrary from such Lender prior to the making of such Loan.  The Administrative Agent may consult with
legal counsel (who may be counsel for any Borrower), independent accountants
and other experts selected by it, and shall not be liable for any action taken
or not taken by it in accordance with the advice of any such counsel,
accountants or experts.

(b)           For
purposes of determining compliance with the conditions specified in Section
4.01, each Lender that has signed this Credit Agreement shall be deemed to
have consented to, approved or accepted or to be satisfied with, each document
or other matter required thereunder to be consented to or approved by or
acceptable or satisfactory to a Lender unless the Administrative Agent shall
have received notice from such Lender prior to the proposed Restatement Closing
Date specifying its objection thereto.

9.05        Delegation of Duties. 
The Administrative Agent may perform any and all of its duties and
exercise its rights and powers hereunder or under any other Loan Document by or
through any one or more sub-agents appointed by the Administrative Agent.
The Administrative Agent and any such sub-agent may perform any and all
of its duties and exercise its rights and powers by or through their respective
Related Parties.  The exculpatory
provisions of this Article shall apply to any such sub-agent and to the
Related Parties of the Administrative Agent and any such sub-agent, and
shall apply to their respective activities in connection with the syndication
of the credit facilities provided for herein as well as activities as
Administrative Agent.

9.06        Resignation of Administrative Agent.  The Administrative Agent may at any time give
notice of its resignation to the Lenders and the Borrowers.  Upon receipt of any such notice of
resignation, the Required Lenders shall have the right, in consultation with
the Borrowers, to appoint a successor, which shall be a bank with an office in
the United States, or an Affiliate of any such bank with an office in the
United States.  If no such successor
shall have been so appointed by the Required Lenders and shall have accepted
such appointment within 30 days after the retiring Administrative Agent
gives notice of its resignation, then the retiring Administrative Agent may on
behalf of the Lenders, appoint a successor Administrative Agent meeting the
qualifications set forth above; provided that if the Administrative
Agent shall notify the Borrowers and the Lenders that no qualifying Person has
accepted such appointment, then such resignation shall nonetheless become
effective in accordance with such notice and (1) the retiring
Administrative Agent shall be discharged from its duties and obligations
hereunder and under the other Loan Documents (except that in the case of any
collateral security held by the Administrative Agent on behalf of the Lenders
under any of the Loan Documents, the retiring Administrative Agent shall
continue to hold such collateral security until such time as a successor
Administrative Agent is appointed) and (2) all payments, communications
and determinations provided to be made by, to or through the Administrative
Agent shall instead be made by or to each Lender directly, until such time as
the Required Lenders appoint a successor Administrative Agent as provided for
above in this Section.  Upon the
acceptance of a successor’s appointment as Administrative Agent hereunder, such
successor shall succeed to and become vested with all of the rights, powers,
privileges and duties of the retiring (or retired) Administrative Agent, and
the retiring Administrative Agent shall be discharged from all of its duties
and obligations hereunder or under the other Loan Documents (if not already
discharged therefrom as provided above in this Section).  The fees payable by the Borrowers to a

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successor Administrative Agent shall be the same as those payable to
its predecessor unless otherwise agreed between the Borrowers and such
successor.  After the retiring
Administrative Agent’s resignation hereunder and under the other Loan
Documents, the provisions of this Article and Section 10.04 shall
continue in effect for the benefit of such retiring Administrative Agent, its
sub-agents and their respective Related Parties in respect of any actions
taken or omitted to be taken by any of them while the retiring Administrative
Agent was acting as Administrative Agent.

Any resignation by Bank of America as Administrative
Agent pursuant to this Section shall also constitute its resignation as
Swingline Lender.  Upon the acceptance of
a successor’s appointment as Administrative Agent hereunder, (a) such successor
shall succeed to and become vested with all of the rights, powers, privileges
and duties of the retiring Swingline Lender and (b) the retiring Swingline
Lender shall be discharged from all of their respective duties and obligations
hereunder or under the other Loan Documents.

9.07        Non-Reliance on Administrative Agent and Other Lenders.  Each Lender acknowledges that it has,
independently and without reliance upon the Administrative Agent or any other
Lender or any of their Related Parties and based on such documents and
information as it has deemed appropriate, made its own credit analysis and
decision to enter into this Agreement. 
Each Lender also acknowledges that it will, independently and without
reliance upon the Administrative Agent or any other Lender or any of their
Related Parties and based on such documents and information as it shall from
time to time deem appropriate, continue to make its own decisions in taking or
not taking action under or based upon this Agreement, any other Loan Document
or any related agreement or any document furnished hereunder or thereunder.

9.08        No
Other Duties, Etc. 
Anything herein to the contrary notwithstanding, the Syndication Agents
and the Arranger listed on the cover page hereof shall not have any powers,
duties or responsibilities under this Agreement or any of the other Loan
Documents, except in its capacity, as applicable, as the Administrative Agent
or a Lender hereunder.

9.09        Administrative Agent May File Proofs of Claim.  In case of the pendency of any proceeding
under any Debtor Relief Law or any other judicial proceeding relative to any
Borrower, the Administrative Agent (irrespective of whether the principal of
any Loan shall then be due and payable as herein expressed or by declaration or
otherwise and irrespective of whether the Administrative Agent shall have made
any demand on the Borrowers) shall be entitled and empowered, by intervention
in such proceeding or otherwise

(a)           to
file and prove a claim for the whole amount of the principal and interest owing
and unpaid in respect of the Loans and all other Obligations that are owing and
unpaid and to file such other documents as may be necessary or advisable in order
to have the claims of the Lenders and the Administrative Agent (including any
claim for the reasonable compensation, expenses, disbursements and advances of
the Lenders and the Administrative Agent and their respective agents and
counsel and all other amounts due the Lenders and the Administrative Agent
under Sections  2.08 and 10.05) allowed in such judicial
proceeding; and

(b)           to
collect and receive any monies or other property payable or deliverable on any
such claims and to distribute the same;

and any custodian, receiver, assignee, trustee, liquidator,
sequestrator or other similar official in any such judicial proceeding is
hereby authorized by each Lender to make such payments to the Administrative
Agent and, in the event that the Administrative Agent shall consent to the
making of such payments directly to the Lenders to pay to the Administrative
Agent any amount due for the reasonable

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compensation, expenses, disbursements and advances of the
Administrative Agent and its agents and counsel, and any other amounts due the
Administrative Agent under Sections 2.08 and 10.04.

Nothing contained herein shall be deemed to authorize
the Administrative Agent to authorize or consent to or accept or adopt on
behalf of any Lender any plan of reorganization, arrangement, adjustment or
composition affecting the Obligations or the rights of any Lender to authorize
the Administrative Agent to vote in respect of the claim of any Lender in any
such proceeding.

9.10        Collateral Matters. 
The Lenders irrevocably authorize the Administrative Agent, at its
option and in its discretion, to release any Lien on any property granted to or
held by the Administrative Agent under any Loan Document (i) upon termination
of the Aggregate Commitments and payment in full of all Obligations (other than
contingent indemnification obligations), (ii) that is sold or to be sold as
part of or in connection with any sale permitted hereunder or under any other
Loan Document or where the Borrowers are permitted to obtain such release
pursuant to the terms of the Security Documents, or (iii) subject to Section 10.01,
if approved, authorized or ratified in writing by the Required Lenders.

Upon request by the Administrative Agent at any time,
the Required Lenders will confirm in writing the Administrative Agent’s
authority to release or subordinate its interest in particular types or items
of property.

ARTICLE X.

MISCELLANEOUS

10.01      Amendments, Etc.  No
amendment or waiver of any provision of this Agreement or any other Loan
Document, and no consent to any departure by any Borrower therefrom, shall be
effective unless in writing signed by the Required Lenders and applicable
Borrower, as the case may be, and acknowledged by the Administrative Agent, and
each such waiver or consent shall be effective only in the specific instance
and for the specific purpose for which given; provided, however,
that no such amendment, waiver or consent shall:

(a)           waive
any condition set forth in Section 4.01(a) without the written
consent of each Lender;

(b)           extend
or increase the Commitment of any Lender (or reinstate any Commitment
terminated pursuant to Section 8.02) without the written consent of
such Lender;

(c)           postpone
any date fixed by this Agreement or any other Loan Document for any payment or
mandatory prepayment of principal, interest, fees or other amounts due to the
Lenders (or any of them) hereunder or under any other Loan Document without the
written consent of each Lender directly affected thereby;

(d)           reduce
the principal of, or the rate of interest specified herein on, any Loan or
(subject to clause (iii) of the second proviso to this Section 10.01)
any fees or other amounts payable hereunder or under any other Loan Document
without the written consent of each Lender directly affected thereby; provided,
however, that only the consent of the Required Lenders shall be
necessary (i) to amend the definition of “Default Rate” or to waive any
obligation of the Borrowers to pay interest at the Default Rate or (ii) to
amend any financial covenants hereunder (or any defined term used therein);

(e)           change
any components of the definitions of Eligible Specified Financial Asset,
Tranche A Specified Financial Asset, Tranche B Specified Financial Asset or
Specified Percentage, without the written consent of the Required Lenders; provided
that (i) the addition of any new type of Tranche A

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Specified Financial Asset or Tranche B
Specified Financial Asset and (ii) any increase in any Specified Percentage
shall require the written consent of each Lender;

(f)            change
Section 2.12 or Section 8.03 in a manner that would
alter the pro rata sharing of payments required thereby , or change any
provision relating to the pro rata disbursement of funds to the Lenders, in
each case, without the written consent of each Lender;

(g)           change
any provision of this Section or the definition of “Required Lenders” or any
other provision hereof specifying the number or percentage of Lenders required
to amend, waive or otherwise modify any rights hereunder or make any
determination or grant any consent hereunder without the written consent of
each Lender;

(h)           amend, modify or waive the provisions of
Section 2.04(c) without the written consent of each Lender or

(i)            release all or substantially all of the
Collateral and terminate the Security Agreement without the written consent of
each Lender.

and, provided  further, that (i) no amendment, waiver or
consent shall, unless in writing and signed by the Swingline Lender in addition
to the Lenders required above, affect the rights or duties of the Swingline
Lender under this Agreement; (ii) no amendment, waiver or consent shall, unless
in writing and signed by the Administrative Agent in addition to the Lenders
required above, affect the rights or duties of the Administrative Agent under
this Agreement or any other Loan Document; and (iii) the Fee Letter may be
amended, or rights or privileges thereunder waived, in a writing executed only
by the parties thereto.  Notwithstanding
anything to the contrary herein, no Defaulting Lender shall have any right to
approve or disapprove any amendment, waiver or consent hereunder, except that
the Commitment of such Lender may not be increased or extended without the
consent of such Lender.

10.02      Notices;
Effectiveness; Electronic Communication.

(a)           Notices
Generally.  Except in the case of
notices and other communications expressly permitted to be given by telephone
(and except as provided in subsection (b) below), all notices and other
communications provided for herein shall be in writing and shall be delivered
by hand or overnight courier service, mailed by certified or registered mail or
sent by telecopier as follows, and all notices and other communications
expressly permitted hereunder to be given by telephone shall be made to the
applicable telephone number, as follows:

(i)            if to the
Borrowers, the Administrative Agent or the Swingline Lender, to the address,
telecopier number, electronic mail address or telephone number specified for
such Person on Schedule 10.02; and

(ii)           if to any other
Lender, to the address, telecopier number, electronic mail address or telephone
number specified in its Administrative Questionnaire.

Notices sent by hand or overnight courier service, or mailed by
certified or registered mail, shall be deemed to have been given when received;
notices sent by telecopier shall be deemed to have been given when sent (except
that, if not given during normal business hours for the recipient, shall be
deemed to have been given at the opening of business on the next business day
for the recipient).  Notices delivered
through electronic communications to the extent provided in subsection (b)
below, shall be effective as provided in such subsection (b).

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(b)           Electronic
Communications.  Notices and other
communications to the Lenders may be delivered or furnished by electronic
communication (including e-mail and Internet or intranet websites)
pursuant to procedures approved by the Administrative Agent, provided
that the foregoing shall not apply to service of process notices pursuant to
Section 10.14, notices that are prohibited from being so delivered under
applicable law, and notices to any Lender pursuant to Article II if such
Lender, as applicable, has notified the Administrative Agent that it is
incapable of receiving notices under such Article by electronic
communication.  The Administrative Agent
or any Borrower may, in its discretion, agree to accept notices and other
communications to it hereunder by electronic communications pursuant to
procedures approved by it, provided that approval of such procedures may
be limited to particular notices or communications.

Unless the Administrative Agent otherwise prescribes,
(i) notices and other communications sent to an e-mail address shall be
deemed received upon the sender’s receipt of an acknowledgement from the
intended recipient (such as by the “return receipt requested” function, as
available, return e-mail or other written acknowledgement), provided
that if such notice or other communication is not sent during the normal
business hours of the recipient, such notice or communication shall be deemed
to have been sent at the opening of business on the next business day for the
recipient, and (ii) notices or communications posted to an Internet or
intranet website shall be deemed received upon the deemed receipt by the
intended recipient at its e-mail address as described in the foregoing
clause (i) of notification that such notice or communication is available
and identifying the website address therefor.

(c)           The
Platform.  THE PLATFORM IS PROVIDED “AS
IS” AND “AS AVAILABLE.”  THE AGENT
PARTIES (AS DEFINED BELOW) DO NOT WARRANT THE ACCURACY OR COMPLETENESS OF THE
BORROWER MATERIALS OR THE ADEQUACY OF THE PLATFORM, AND EXPRESSLY DISCLAIM
LIABILITY FOR ERRORS IN OR OMISSIONS FROM THE BORROWER MATERIALS.  NO WARRANTY OF ANY KIND, EXPRESS, IMPLIED OR
STATUTORY, INCLUDING ANY WARRANTY OF MERCHANTABILITY, FITNESS FOR A PARTICULAR
PURPOSE, NON-INFRINGEMENT OF THIRD PARTY RIGHTS OR FREEDOM FROM VIRUSES OR
OTHER CODE DEFECTS, IS MADE BY ANY AGENT PARTY IN CONNECTION WITH THE BORROWER
MATERIALS OR THE PLATFORM.  In no event
shall the Administrative Agent or any of its Related Parties (collectively, the
“Agent Parties”) have any liability to the Borrowers, any Lender or any
other Person for losses, claims, damages, liabilities or expenses of any kind
(whether in tort, contract or otherwise) arising out of the Borrowers’ or the
Administrative Agent’s transmission of Borrower Materials through the Internet,
except to the extent that such losses, claims, damages, liabilities or expenses
are determined by a court of competent jurisdiction by a final and
nonappealable judgment to have resulted from the gross negligence or willful
misconduct of such Agent Party; provided, however, that in no
event shall any Agent Party have any liability to the Borrowers, any Lender or
any other Person for indirect, special, incidental, consequential or punitive
damages (as opposed to direct or actual damages).

(d)           Change
of Address, Etc.  Each of the
Borrowers, the Administrative Agent and the Swingline Lender may change its
address, telecopier or telephone number for notices and other communications
hereunder by notice to the other parties hereto.  Each other Lender may change its address,
telecopier or telephone number for notices and other communications hereunder
by notice to the Borrowers, the Administrative Agent and the Swingline
Lender.  In addition, each Lender agrees
to notify the Administrative Agent from time to time to ensure that the
Administrative Agent has on record (i) an effective address, contact name,
telephone number, telecopier number and electronic mail address to which
notices and other communications may be sent and (ii) accurate wire
instructions for such Lender.

(e)           Reliance
by Administrative Agent and Lenders.  The Administrative Agent and the
Lenders shall be entitled to rely and act upon any notices (including
telephonic Revolving Loan Notices and Swingline Loan Notices) purportedly given
by or on behalf of the Borrowers even if (i) such notices

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were not made in a manner specified herein,
were incomplete or were not preceded or followed by any other form of notice
specified herein, or (ii) the terms thereof, as understood by the recipient,
varied from any confirmation thereof. 
The Borrowers shall jointly and severally indemnify the Administrative
Agent, each Lender and the Related Parties of each of them from all losses,
costs, expenses and liabilities resulting from the reliance by such Person on
each notice purportedly given by or on behalf of the Borrowers.  All telephonic notices to and other
telephonic communications with the Administrative Agent may be recorded by the
Administrative Agent, and each of the parties hereto hereby consents to such
recording.

10.03      No Waiver; Cumulative Remedies.  No failure by any Lender or the
Administrative Agent to exercise, and no delay by any such Person in
exercising, any right, remedy, power or privilege hereunder shall operate as a
waiver thereof; nor shall any single or partial exercise of any right, remedy,
power or privilege hereunder preclude any other or further exercise thereof or
the exercise of any other right, remedy, power or privilege.  The rights, remedies, powers and privileges
herein provided are cumulative and not exclusive of any rights, remedies,
powers and privileges provided by law.

10.04      Expenses;
Indemnity; Damage Waiver.

(a)           Costs
and Expenses.  The Borrowers shall
pay (i) all reasonable out-of-pocket expenses incurred by the
Administrative Agent and its Affiliates (including the reasonable fees, charges
and disbursements of counsel for the Administrative Agent), in connection with
the syndication of the credit facilities provided for herein, the preparation,
negotiation, execution, delivery and administration of this Agreement and the
other Loan Documents or any amendments, modifications or waivers of the
provisions hereof or thereof (whether or not the transactions contemplated
hereby or thereby shall be consummated), and (ii) all out-of-pocket
expenses incurred by the Administrative Agent or any Lender (including the
fees, charges and disbursements of any counsel for the Administrative Agent and
any Lender), in connection with the enforcement or protection of its rights
(A) in connection with this Agreement and the other Loan Documents,
including its rights under this Section, or (B) in connection with the
Loans made hereunder, including all such out-of-pocket expenses incurred during
any workout, restructuring or negotiations in respect of such Loans.

(b)           Indemnification
by the Borrowers.  The Borrowers
shall indemnify the Administrative Agent (and any sub-agent thereof), each
Lender, and each Related Party of any of the foregoing Persons (each such
Person being called an “Indemnitee”) against, and hold each Indemnitee
harmless from, any and all losses, claims, damages, liabilities and related
expenses (including the fees, charges and disbursements of any counsel for any
Indemnitee), and shall indemnify and hold harmless each Indemnitee from all
fees and time charges and disbursements for attorneys who may be employees of
any Indemnitee, incurred by any Indemnitee or asserted against any Indemnitee
by any third party or by any of the Borrowers arising out of, in connection
with, or as a result of (i) the execution or delivery of this Agreement,
any other Loan Document or any agreement or instrument contemplated hereby or
thereby, the performance by the parties hereto of their respective obligations
hereunder or thereunder, the consummation of the transactions contemplated
hereby or thereby, or, in the case of the Administrative Agent (and any
sub-agent thereof) and its Related Parties only, the administration of this
Agreement and the other Loan Documents, (ii) any Loan or the use or
proposed use of the proceeds therefrom, (iii) any actual or alleged
presence or release of Hazardous Materials on or from any property owned or
operated by any of the Borrowers or any of their Subsidiaries, or any
Environmental Liability related in any way to such Borrower or any such
Subsidiaries, or (iv) any actual or prospective claim, litigation,
investigation or proceeding relating to any of the foregoing, whether based on
contract, tort or any other theory, whether brought by a third party or by any
of the Borrowers, and regardless of whether any Indemnitee is a party

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thereto, in all cases, whether or not caused
by or arising, in whole or in part, out of the comparative, contributory or
sole negligence of the Indemnitee; provided that such indemnity shall
not, as to any Indemnitee, be available to the extent that such losses, claims,
damages, liabilities or related expenses (x) are determined by a court of
competent jurisdiction by final and nonappealable judgment to have resulted
from the gross negligence or willful misconduct of such Indemnitee or
(y) result from a claim brought by any of the Borrowers against an
Indemnitee for breach in bad faith of such Indemnitee’s obligations hereunder
or under any other Loan Document, if any Borrower has obtained a final and
nonappealable judgment in its favor on such claim as determined by a court of
competent jurisdiction.  Unless an Event
of Default shall have occurred and be continuing, the Borrowers shall be
entitled to assume the defense of any action for which indemnification is
sought hereunder with counsel of its choice at its expense (in which case the
Borrowers shall not thereafter be responsible for the fees and expenses of any
separate counsel retained by an Indemnitee except as set forth below); provided,
however, that such counsel shall be reasonably satisfactory to each such
Indemnitee.  Notwithstanding the
Borrowers’ election to assume the defense of such action, each Indemnitee shall
have the right to employ separate counsel and to participate in the defense of
such action, and the Borrowers shall bear the reasonable fees, costs and
expenses of such separate counsel if (i) the use of counsel chosen by the
Borrowers to represent such Indemnitee would present such counsel with a
conflict of interest; (ii) the actual or potential defendants in, or targets
of, any such action include the Borrowers and such Indemnitee and such
Indemnitee shall have reasonably concluded that there may be legal defenses
available to it that are different from or additional to those available to the
Borrowers; (iii) the Borrowers shall not have employed counsel reasonably
satisfactory to such Indemnitee to represent it within a reasonable time after
notice of the institution of such action; or (iv) the Borrowers shall authorize
such Indemnitee to employ separate counsel at the Borrowers’ expense.  The Borrowers will not be liable under this
Agreement for any amount paid by an Indemnitee to settle any claims or actions
if the settlement is entered into without the Borrowers’ consent, which consent
may not be unreasonably withheld or delayed.

(c)           Reimbursement
by Lenders.  To the extent that any
Borrower for any reason fails to indefeasibly pay any amount required under
subsection (a) or (b) of this Section to be paid by it to the
Administrative Agent (or any sub-agent thereof) or any Related Party of any of
the foregoing, each Lender severally agrees to pay to the Administrative Agent
(or any such sub-agent) or such Related Party, as the case may be, such Lender’s
Applicable Percentage (determined as of the time that the applicable
unreimbursed expense or indemnity payment is sought) of such unpaid amount, provided
that the unreimbursed expense or indemnified loss, claim, damage, liability or
related expense, as the case may be, was incurred by or asserted against the
Administrative Agent (or any such sub-agent) in its capacity as such, or
against any Related Party of any of the foregoing acting for the Administrative
Agent (or any such sub-agent) in connection with such capacity. The obligations
of the Lenders under this subsection (c) are subject to the provisions of Section 2.11(d).

(d)           Waiver
of Consequential Damages, Etc.  To
the fullest extent permitted by applicable law, the Borrowers shall not assert,
and hereby waive, any claim against any Indemnitee, on any theory of liability,
for special, indirect, consequential or punitive damages (as opposed to direct
or actual damages) arising out of, in connection with, or as a result of, this
Agreement, any other Loan Document or any agreement or instrument contemplated
hereby, the transactions contemplated hereby or thereby, any Loan or the use of
the proceeds thereof.  No Indemnitee
referred to in subsection (b) above shall be liable for any damages arising
from the use by unintended recipients of any information or other materials
distributed to such unintended recipients by such Indemnitee through
telecommunications, electronic or other information transmission systems in
connection with this Agreement or the other Loan Documents or the transactions
contemplated hereby or thereby other than for direct or actual damages
resulting from the gross negligence or willful misconduct of such Indemnitee as
determined by a final and nonappealable judgment of a court of competent
jurisdiction.

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(e)           Payments.  All amounts due under this Section shall be
payable not later than ten (10) Business Days after demand therefor.

(f)            Survival.  The agreements in this Section shall survive
the resignation of the Administrative Agent and the Swingline Lender, the
replacement of any Lender, the termination of the Aggregate Commitments and the
repayment, satisfaction or discharge of all the other Obligations.

10.05      Payments Set Aside. 
To the extent that any payment by or on behalf of the Borrowers is made
to the Administrative Agent or any Lender, or the Administrative Agent or any
Lender exercises its right of setoff, and such payment or the proceeds of such
setoff or any part thereof is subsequently invalidated, declared to be
fraudulent or preferential, set aside or required (including pursuant to any
settlement entered into by the Administrative Agent or such Lender in its
discretion) to be repaid to a trustee, receiver or any other party, in
connection with any proceeding under any Debtor Relief Law or otherwise, then
(a) to the extent of such recovery, the obligation or part thereof originally
intended to be satisfied shall be revived and continued in full force and
effect as if such payment had not been made or such setoff had not occurred,
and (b) each Lender severally agrees to pay to the Administrative Agent upon
demand its applicable share (without duplication) of any amount so recovered
from or repaid by the Administrative Agent, plus interest thereon from the date
of such demand to the date such payment is made at a rate per annum equal to
the Federal Funds Rate from time to time in effect.  The obligations of the Lenders under clause
(b) of the preceding sentence shall survive the payment in full of the
Obligations and the termination of this Agreement.

10.06      Successors
and Assigns.

(a)           Successors
and Assigns Generally.  The
provisions of this Agreement shall be binding upon and inure to the benefit of
the parties hereto and their respective successors and assigns permitted
hereby, except that none of the Borrowers may assign or otherwise transfer any
of its rights or obligations hereunder without the prior written consent of the
Administrative Agent and each Lender and no Lender may assign or otherwise
transfer any of its rights or obligations hereunder except (i) to an assignee
in accordance with the provisions of subsection (b) of this Section, (ii)
by way of participation in accordance with the provisions of subsection (d)
of this Section, or (iii) by way of pledge or assignment of a security interest
subject to the restrictions of subsection (f) of this Section (and any
other attempted assignment or transfer by any party hereto shall be null and
void).  Nothing in this Agreement,
expressed or implied, shall be construed to confer upon any Person (other than
the parties hereto, their respective successors and assigns permitted hereby,
Participants to the extent provided in subsection (d) of this Section and,
to the extent expressly contemplated hereby, the Related Parties of each of the
Administrative Agent and the Lenders) any legal or equitable right, remedy or
claim under or by reason of this Agreement.

(b)           Assignments
by Lenders.  Any Lender may at any
time assign to one or more Eligible Assignees all or a portion of its rights
and obligations under this Agreement (including all or a portion of its
Commitment and the Loans (including for purposes of this subsection (b),
participations in Swingline Loans) at the time owing to it); provided
that any such assignment shall be subject to the following conditions:

(i)            Minimum Amounts.

(A)          in the case of an
assignment of the entire remaining amount of the assigning Lender’s Commitment
and the Loans at the time owing to it or in the case of an assignment to a
Lender, an Affiliate of a Lender or an Approved Fund, no minimum amount need be
assigned; and

 75

(B)           in any case not described in
subsection 10.06(b)(i)(A) of this Section, the aggregate amount of the
Commitment (which for this purpose includes Loans outstanding thereunder) or,
if the Commitment is not then in effect, the principal outstanding balance of
the Loans of the assigning Lender subject to each such assignment, determined
as of the date the Assignment and Assumption with respect to such assignment is
delivered to the Administrative Agent or, if “Trade Date” is specified in the
Assignment and Assumption, as of the Trade Date, shall not be less than
$5,000,000  unless each of the
Administrative Agent and, so long as no Event of Default has occurred and is
continuing, each Borrower otherwise consents (each such consent not to be
unreasonably withheld or delayed); provided, however, that
concurrent assignments to members of an Assignee Group and concurrent
assignments from members of an Assignee Group to a single assignee (or to an
assignee and members of its Assignee Group) will be treated as a single
assignment for purposes of determining whether such minimum amount has been
met.

(ii)           Proportionate Amounts.  Each partial assignment shall be made as an
assignment of a proportionate part of all the assigning Lender’s rights and
obligations under this Agreement with respect to the Loans or the Commitment
assigned, except that this clause (ii) shall not apply to the Swingline Lender’s
rights and obligations in respect of Swingline Loans;

(iii)          Required Consents.  No consent shall be required for any assignment
except to the extent required by subsection 10.06(b)(i)(B) of this Section
and, in addition:

(A)          the consent of each Borrower (such
consent not to be unreasonably withheld or delayed) shall be required unless
(1) an Event of Default has occurred and is continuing at the time of such
assignment or (2) such assignment is to a Lender, an Affiliate of a Lender or
an Approved Fund;

(B)           the consent of the Administrative
Agent (such consent not to be unreasonably withheld or delayed) shall be
required if such assignment is to a Person that is not a Lender, an Affiliate
of such Lender or an Approved Fund with respect to such Lender; and

(C)           the consent of the Swingline Lender
(such consent not to be unreasonably withheld or delayed) shall be required if
such assignment is to a Person that is not a Lender, an Affiliate of such
Lender or an Approved Fund with respect to such Lender.

(iv)          Assignment and Assumption.  The parties to each assignment shall execute
and deliver to the Administrative Agent an Assignment and Assumption, together
with a processing and recordation fee in the amount, if any, required as set
forth in Schedule 10.06; provided, however, that the
Administrative Agent may, in its sole discretion, elect to waive such
processing and recordation fee in the case of any assignment.  The assignee, if it is not a Lender, shall
deliver to the Administrative Agent an Administrative Questionnaire.

(v)           No Assignment to Borrowers.  No such assignment shall be made to the
Borrowers or any of the Borrowers’ Affiliates or Subsidiaries.

(vi)          No Assignment to Natural Persons.  No such assignment shall be made to a natural
person.

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Subject to acceptance and recording thereof by the
Administrative Agent pursuant to subsection (c) of this Section, from and after
the effective date specified in each Assignment and Assumption, the assignee
thereunder shall be a party to this Agreement and, to the extent of the
interest assigned by such Assignment and Assumption, have the rights and
obligations of a Lender under this Agreement, and the assigning Lender
thereunder shall, to the extent of the interest assigned by such Assignment and
Assumption, be released from its obligations under this Agreement (and, in the
case of an Assignment and Assumption covering all of the assigning Lender’s
rights and obligations under this Agreement, such Lender shall cease to be a
party hereto) but shall continue to be entitled to the benefits of Sections 3.01,
3.04, 3.05, and 10.04 with respect to facts and
circumstances occurring prior to the effective date of such assignment.  Upon request, each Borrower (at its expense)
shall execute and deliver a Note to the assignee Lender.  Any assignment or transfer by a Lender of
rights or obligations under this Agreement that does not comply with this subsection
shall be treated for purposes of this Agreement as a sale by such Lender of a
participation in such rights and obligations in accordance with
subsection (d) of this Section.

(c)           Register.  The Administrative Agent, acting solely for
this purpose as an agent of the Borrowers, shall maintain at the Administrative
Agent’s Office a copy of each Assignment and Assumption delivered to it and a
register for the recordation of the names and addresses of the Lenders, and the
Commitments of, and principal amounts of the Loans owing to, each Lender
pursuant to the terms hereof from time to time (the “Register”).  The entries in the Register shall be
conclusive, and the Borrowers, the Administrative Agent and the Lenders may
treat each Person whose name is recorded in the Register pursuant to the terms
hereof as a Lender hereunder for all purposes of this Agreement,
notwithstanding notice to the contrary and the transfer of any Loan shall not
be recognized except to the extent reflected on the Register.  The Register shall be available for
inspection by the Borrowers and any Lender, at any reasonable time and from
time to time upon reasonable prior notice. 
This Section 10.06 is intended to cause the Loans to be treated as being
in registered form within the meaning of U.S. Treasury Regulation Section
103-1(c) and will be interpreted in accordance with that intention.

(d)           Participations.  Any Lender may at any time, without the
consent of, or notice to, the Borrowers or the Administrative Agent, sell
participations to any Person (other than a natural person or the Borrowers or
any of the Borrowers’ Affiliates or Subsidiaries) (each, a “Participant”)
in all or a portion of such Lender’s rights and/or obligations under this
Agreement (including all or a portion of its Commitment and/or the Loans
(including such Lender’s participations in Swingline Loans) owing to it); provided
that (i) such Lender’s obligations under this Agreement shall remain
unchanged, (ii) such Lender shall remain solely responsible to the other parties
hereto for the performance of such obligations and (iii) the Borrowers,
the Administrative Agent and the Lenders shall continue to deal solely and
directly with such Lender in connection with such Lender’s rights and
obligations under this Agreement.

Any agreement or instrument pursuant to which a Lender
sells such a participation shall provide that such Lender shall retain the sole
right to enforce this Agreement and to approve any amendment, modification or
waiver of any  provision of this Agreement;
provided that such agreement or instrument may provide that such Lender
will not, without the consent of the Participant, agree to any amendment,
waiver or other modification described in the first proviso to Section 10.01
that affects such Participant.  Subject
to subsection (e) of this Section, each Borrower agrees that each
Participant shall be entitled to the benefits of Sections 3.01, 3.04
and 3.05 to the same extent as if it were a Lender and had acquired its
interest by assignment pursuant to subsection (b) of this Section.  To the extent permitted by law, each
Participant also shall be entitled to the benefits of Section 10.08  as though it were a Lender, provided such
Participant agrees to be subject to Section 2.12 as though it were
a Lender.

(e)           Limitations upon
Participant Rights.  A Participant
shall not be entitled to receive any greater payment under Section 3.01 or
3.04  than the applicable Lender would have
been entitled to receive with respect to the participation sold to such
Participant, unless the sale of the participation to 

 77
 

such Participant is made with the Borrowers’ prior written
consent.  A Participant that would be a
Foreign Lender if it were a Lender shall not be entitled to the benefits of
Section 3.01 unless the Borrowers are notified of the participation sold
to such Participant and such Participant agrees, for the benefit of the
Borrowers, to comply with Section 3.01(e) as though it were a Lender.

(f)            Certain Pledges.  Any Lender may at any time pledge or assign a
security interest in all or any portion of its rights under this Agreement
(including under its Note, if any) to secure obligations of such Lender,
including any pledge or assignment to secure obligations to a Federal Reserve
Bank; provided that no such pledge or assignment shall release such
Lender from any of its obligations hereunder or substitute any such pledgee or
assignee for such Lender as a party hereto.

(g)           Electronic
Execution of Assignments.  The words “execution,”
“signed,” “signature,” and words of like import in any Assignment and
Assumption shall be deemed to include electronic signatures or the keeping of
records in electronic form, each of which shall be of the same legal effect,
validity or enforceability as a manually executed signature or the use of a
paper-based recordkeeping system, as the case may be, to the extent and as
provided for in any applicable law, including the Federal Electronic Signatures
in Global and National Commerce Act, the New York State Electronic Signatures
and Records Act, or any other similar state laws based on the Uniform
Electronic Transactions Act.

(h)           Resignation as
Swingline Lender after Assignment. 
Notwithstanding anything to the contrary contained herein, if at any
time Bank of America assigns all of its Commitment and Loans pursuant to
subsection (b) above, Bank of America may upon 30 days’ notice to the Borrowers,
resign as Swingline Lender.  In the event
of any such resignation as Swingline Lender, the Borrowers shall be
entitled to appoint from among the Lenders a successor Swingline Lender
hereunder; provided, however, that no failure by the Borrowers to
appoint any such successor shall affect the resignation of Bank of America as
Swingline Lender, as the case may be.  If
Bank of America resigns as Swingline Lender, it shall retain all the rights of
the Swingline Lender provided for hereunder with respect to Swingline Loans
made by it and outstanding as of the effective date of such resignation,
including the right to require the Lenders to make Base Rate Loans, Daily
Floating Eurodollar Loans or fund risk participations in outstanding Swingline
Loans.  Upon the appointment of a
successor Swingline Lender, such successor shall succeed to and become vested
with all of the rights, powers, privileges and duties of the retiring Swingline
Lender, as the case may be.

10.07      Treatment of Certain Information; Confidentiality.  Each of the Administrative Agent and the
Lenders agrees to maintain the confidentiality of the Information (as defined
below), except that Information may be disclosed (a) to its Affiliates and to
its and its Affiliates’ respective partners, directors, officers, employees,
agents, advisors and representatives, in each case, who have a need to know
such Information in connection with the performance of their respective duties
hereunder (it being understood that the Persons to whom such disclosure is made
will be informed of the confidential nature of such Information and instructed
to keep such Information confidential), (b) to the extent requested by any regulatory
authority purporting to have jurisdiction over it (including any
self-regulatory authority, such as the National Association of Insurance
Commissioners), (c) to the extent required by applicable laws or regulations or
by any subpoena or similar legal process, (d) to any other party hereto, (e) in
connection with the exercise of any remedies hereunder or under any other Loan
Document or any action or proceeding relating to this Agreement or any other
Loan Document or the enforcement of rights hereunder or thereunder, (f) subject
to an agreement executed and delivered to and for the benefit of the Borrowers
containing provisions substantially the same as those of this Section, to (i)
any assignee of or Participant in, or any prospective assignee of or
Participant in, any of its rights or obligations under this Agreement or (ii)
any actual or prospective counterparty (or its advisors) to any swap or
derivative transaction relating to any Borrower and its obligations, (g) with
the consent of the Borrowers or (h) to the extent such Information (x) becomes
publicly available other than as a result of a breach of this 

 78
 

Section or (y)
becomes available to the Administrative Agent, any Lender or any of their
respective Affiliates on a nonconfidential basis from a source other than the
Borrowers.

For purposes of this Section, “Information”
means all information received from the Borrowers or any Subsidiary relating to
the Borrowers or any Subsidiary (whether before or after the Restatement
Closing Date) or any of their respective businesses, other than any such
information that is available to the Administrative Agent or any Lender on a
nonconfidential basis prior to disclosure by the Borrowers or any Subsidiary, provided
that, in the case of information received from the Borrowers or any Subsidiary
after the date hereof, such information either is clearly identified at the
time of delivery as confidential or is material non-public information.  Any Person required to maintain the
confidentiality of Information as provided in this Section shall be considered
to have complied with its obligation to do so if such Person has exercised the
same degree of care to maintain the confidentiality of such Information as such
Person would accord to its own confidential information.

Each of the Administrative Agent and the Lenders
acknowledges that (a) the Information may include material non-public
information concerning the Borrowers or a Subsidiary, as the case may be, (b)
it has developed compliance procedures regarding the use of material non-public
information, (c) it will handle such material non-public information in
accordance with applicable Law, including Federal and state securities Laws and
(d) the confidentiality provisions
contained herein, in so far as such provisions relate to material proprietary
Information, shall survive for 12 months following the Maturity Date and, in so
far as such provisions relate to material non-public information, shall survive
in accordance with applicable law.

10.08      Right of Setoff.  If
an Event of Default shall have occurred and be continuing, each Lender and each
of their respective Affiliates is hereby authorized at any time and from time
to time, after providing prior written notice to the Administrative Agent, to
the fullest extent permitted by applicable law, to set off and apply any and
all deposits (general or special, time or demand, provisional or final, in
whatever currency) at any time held and other obligations (in whatever
currency) at any time owing by such Lender or any such Affiliate to or for the
credit or the account of the applicable Borrower  against any and all of the obligations of the
applicable Borrower now or hereafter existing under this Agreement or any other
Loan Document to such Lender, irrespective of whether or not such Lender shall
have made any demand under this Agreement or any other Loan Document and
although such obligations of such Borrower may be contingent or unmatured or
are owed to a branch or office of such Lender different from the branch or office
holding such deposit or obligated on such indebtedness.  The rights of each Lender and their
respective Affiliates under this Section are in addition to other rights and
remedies (including other rights of setoff) that such Lender or their
respective Affiliates may have.  Each
Lender agrees to notify the Borrowers and the Administrative Agent promptly
after any such setoff and application, provided that the failure to give
such notice shall not affect the validity of such setoff and application.

10.09      Interest Rate Limitation. 
Notwithstanding anything to the contrary contained in any Loan Document,
the interest paid or agreed to be paid under the Loan Documents shall not
exceed the maximum rate of non-usurious interest permitted by applicable Law
(the “Maximum Rate”).  If the
Administrative Agent or any Lender shall receive interest in an amount that
exceeds the Maximum Rate, the excess interest shall be applied to the principal
of the Loans or, if it exceeds such unpaid principal, refunded to the Borrowers.  In determining whether the interest
contracted for, charged, or received by the Administrative Agent or a Lender
exceeds the Maximum Rate, such Person may, to the extent permitted by
applicable Law, (a) characterize any payment that is not principal as an
expense, fee, or premium rather than interest, (b) exclude voluntary
prepayments and the effects thereof, and (c) amortize, prorate, allocate, and
spread in equal or unequal parts the total amount of interest throughout the
contemplated term of the Obligations hereunder.

 79
 

10.10      Counterparts; Integration; Effectiveness.  This Agreement may be executed in
counterparts (and by different parties hereto in different counterparts), each
of which shall constitute an original, but all of which when taken together
shall constitute a single contract.  This
Agreement and the other Loan Documents constitute the entire contract among the
parties relating to the subject matter hereof and supersede any and all
previous agreements and understandings, oral or written, relating to the
subject matter hereof.  Except as
provided in Section 4.01, this Agreement shall become effective
when it shall have been executed by the Administrative Agent and when the
Administrative Agent shall have received counterparts hereof that, when taken
together, bear the signatures of each of the other parties hereto.  Delivery of an executed counterpart of a
signature page of this Agreement by telecopy shall be effective as delivery of
a manually executed counterpart of this Agreement.

10.11      Survival of Representations and Warranties.  All representations and warranties made
hereunder and in any other Loan Document or other document delivered pursuant
hereto or thereto or in connection herewith or therewith shall survive the
execution and delivery hereof and thereof. 
Such representations and warranties have been or will be relied upon by
the Administrative Agent and each Lender, regardless of any investigation made
by the Administrative Agent or any Lender or on their behalf and notwithstanding
that the Administrative Agent or any Lender may have had notice or knowledge of
any Default at the time of any Borrowing, and shall continue in full force and
effect as long as any Loan or any other Obligation hereunder shall remain
unpaid or unsatisfied.

10.12      Severability.  If any
provision of this Agreement or the other Loan Documents is held to be illegal,
invalid or unenforceable, (a) the legality, validity and enforceability of the
remaining provisions of this Agreement and the other Loan Documents shall not
be affected or impaired thereby and (b) the parties shall endeavor in good
faith negotiations to replace the illegal, invalid or unenforceable provisions
with valid provisions the economic effect of which comes as close as possible
to that of the illegal, invalid or unenforceable provisions.  The invalidity of a provision in a particular
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction.

10.13      Replacement of Lenders. 
If any Lender requests compensation under Section 3.04, or
if any Borrower is required to pay any additional amount to any Lender or any
Governmental Authority for the account of any Lender pursuant to Section 3.01,
if any Lender gives a notice pursuant to Section 3.02 or if any Lender is a
Defaulting Lender or if any other circumstance exists hereunder that gives any
Borrower the right to replace a Lender as a party hereto, then such Borrower
may, at its sole expense and effort, upon notice to such Lender and the
Administrative Agent, require such Lender to assign and delegate, without
recourse (in accordance with and subject to the restrictions contained in, and
consents required by, Section 10.06), all of its interests, rights
and obligations under this Agreement and the related Loan Documents to an
assignee that shall assume such obligations (which assignee may be another
Lender, if a Lender accepts such assignment), provided that:

(a)           such Lender shall
have received payment of an amount equal to the outstanding principal of its
Loans, accrued interest thereon, accrued fees and all other amounts payable to
it hereunder and under the other Loan Documents (including any amounts under Section 3.05)
from the assignee (to the extent of such outstanding principal and accrued
interest and fees) or the Borrowers (in the case of all other amounts);

(b)           in the case of any
such assignment resulting from a claim for compensation under Section 3.04
or payments required to be made pursuant to Section 3.01, such
assignment will result in a reduction in such compensation or payments
thereafter;

(c)           such assignment does
not conflict with applicable Laws; and

 80
 

(d)           such assignment is
made in accordance with Section 10.06(b)(iii)(B).

(e)           A Lender shall not
be required to make any such assignment or delegation if, prior thereto, as a
result of a waiver by such Lender or otherwise, the circumstances entitling the
Borrowers to require such assignment and delegation cease to apply.

10.14      Governing Law;
Jurisdiction; Etc.

(a)           GOVERNING LAW.  THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK, WITHOUT REGARD
TO THE CHOICE OF LAW PROVISIONS THEREOF OTHER THAN SECTION 5-1401 OF THE NEW
YORK GENERAL OBLIGATIONS LAW.

(b)           SUBMISSION TO
JURISDICTION.  EACH OF THE BORROWERS
IRREVOCABLY AND UNCONDITIONALLY SUBMITS, FOR ITSELF AND ITS PROPERTY, TO THE
NONEXCLUSIVE JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK SITTING IN NEW
YORK COUNTY AND OF THE UNITED STATES DISTRICT COURT OF THE SOUTHERN DISTRICT OF
NEW YORK, AND ANY APPELLATE COURT FROM ANY THEREOF, IN ANY ACTION OR PROCEEDING
ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT, OR FOR
RECOGNITION OR ENFORCEMENT OF ANY JUDGMENT, AND EACH OF THE PARTIES HERETO
IRREVOCABLY AND UNCONDITIONALLY AGREES THAT ALL CLAIMS IN RESPECT OF ANY SUCH
ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN SUCH NEW YORK STATE COURT
OR, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, IN SUCH FEDERAL
COURT.  EACH OF THE PARTIES HERETO AGREES
THAT A FINAL JUDGMENT IN ANY SUCH ACTION OR PROCEEDING SHALL BE CONCLUSIVE AND
MAY BE ENFORCED IN OTHER JURISDICTIONS BY SUIT ON THE JUDGMENT OR IN ANY OTHER
MANNER PROVIDED BY LAW.  NOTHING IN THIS
AGREEMENT OR IN ANY OTHER LOAN DOCUMENT SHALL AFFECT ANY RIGHT THAT THE
ADMINISTRATIVE AGENT, ANY LENDER MAY OTHERWISE HAVE TO BRING ANY ACTION OR
PROCEEDING RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT AGAINST ANY
BORROWER OR ITS PROPERTIES IN THE COURTS OF ANY JURISDICTION.

(c)           WAIVER OF VENUE.  EACH OF THE BORROWERS IRREVOCABLY AND
UNCONDITIONALLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY
OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY
ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER
LOAN DOCUMENT IN ANY COURT REFERRED TO IN PARAGRAPH (b) OF THIS
SECTION.  EACH OF THE PARTIES HERETO
HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW,
THE DEFENSE OF AN INCONVENIENT FORUM TO THE MAINTENANCE OF SUCH ACTION OR
PROCEEDING IN ANY SUCH COURT.

(d)           SERVICE OF
PROCESS.  EACH PARTY HERETO
IRREVOCABLY CONSENTS TO SERVICE OF PROCESS IN THE MANNER PROVIDED FOR NOTICES
IN SECTION 10.02.  NOTHING IN
THIS AGREEMENT WILL AFFECT THE RIGHT OF ANY PARTY HERETO TO SERVE PROCESS IN
ANY OTHER MANNER PERMITTED BY APPLICABLE LAW.

(e)           WAIVER OF JURY
TRIAL.  EACH PARTY HERETO HEREBY
IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY
RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR
INDIRECTLY 

 81
 

ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT
OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY (WHETHER BASED ON CONTRACT,
TORT OR ANY OTHER THEORY).  EACH PARTY
HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY
OTHER PERSON HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PERSON
WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND
(B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO
ENTER INTO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS BY, AMONG OTHER THINGS,
THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.

10.15      No Advisory or Fiduciary Responsibility.  In connection with all aspects of each
transaction contemplated hereby, each of the Borrowers acknowledges and agrees,
and acknowledges its Affiliates’ understanding, that: (i) the credit facility
provided for hereunder and any related arranging or other services in
connection therewith (including in connection with any amendment, waiver or
other modification hereof or of any other Loan Document) are an arm’s-length
commercial transaction between the Borrowers and their respective Affiliates,
on the one hand, and the Administrative Agent and the Arranger, on the other
hand, and each of the Borrowers is capable of evaluating and understanding and
understands and accepts the terms, risks and conditions of the transactions
contemplated hereby and by the other Loan Documents (including any amendment,
waiver or other modification hereof or thereof); (ii) in connection with the
process leading to such transaction, the Administrative Agent and the Arranger
each is and has been acting solely as a principal and is not the financial
advisor, agent or fiduciary, for the Borrowers or any of their respective
Affiliates, stockholders, creditors or employees or any other Person; (iii)
neither the Administrative Agent nor the Arranger has assumed or will assume an
advisory, agency or fiduciary responsibility in favor of the Borrowers with
respect to any of the transactions contemplated hereby or the process leading
thereto, including with respect to any amendment, waiver or other modification
hereof or of any other Loan Document (irrespective of whether the
Administrative Agent or the Arranger has advised or is currently advising the
Borrowers or any of their respective Affiliates on other matters) and neither
the Administrative Agent nor the Arranger has any obligation to the
Borrowers  or any of their respective
Affiliates with respect to the transactions contemplated hereby except those
obligations expressly set forth herein and in the other Loan Documents; (iv)
the Administrative Agent and the Arranger and their respective Affiliates may
be engaged in a broad range of transactions that involve interests that differ
from those of the Borrowers and their respective Affiliates, and neither the
Administrative Agent nor the Arranger has any obligation to disclose any of
such interests by virtue of any advisory, agency or fiduciary relationship; and
(v) the Administrative Agent and the Arranger have not provided and will not
provide any legal, accounting, regulatory or tax advice with respect to any of
the transactions contemplated hereby (including any amendment, waiver or other
modification hereof or of any other Loan Document) and each of the Borrowers
has consulted its own legal, accounting, regulatory and tax advisors to the
extent it has deemed appropriate.  Each
of the Borrowers hereby waives and releases, to the fullest extent permitted by
law, any claims that it may have against the Administrative Agent and the
Arranger with respect to any breach or alleged breach of agency or fiduciary
duty.

10.16      USA PATRIOT Act Notice. 
Each Lender that is subject to the Patriot Act (as hereinafter defined)
and the Administrative Agent (for itself and not on behalf of any Lender)
hereby notifies the Borrowers that pursuant to the requirements of the USA
PATRIOT Act (Title III of Pub. L. 107-56 (signed into law October 26, 2001))
(the “Patriot Act”), it is required to obtain, verify and record information
that identifies the Borrowers, which information includes the name and address
of the Borrowers and other information that will allow such Lender or the
Administrative Agent, as applicable, to identify the Borrowers in accordance
with the Patriot Act.

10.17      Consent to Conversion and
Restructuring Transactions.  Subject to the occurrence of the Merger
Effective Time and the satisfaction of the conditions precedent to the initial
funding of the 

 82
 

Loans described in Section 4.01
hereof, each of the parties
hereto hereby acknowledges and consents to the conversion
and restructuring transactions described on pages 64 through 68 in the KKR
Financial Form S-4 and to be consummated on or before the Merger Effective
Time, and the post-closing transactions described in Section 6.12.

10.18      Entire Agreement.  Effective as of the Merger Effective Time and
upon the satisfaction of the conditions precedent in Section 4.01, this
Agreement amends, restates and supersedes in its entirety, without interruption
or novation, the Existing Credit Agreement and all “Loans” outstanding
under and as defined in the Existing Credit Agreement shall be deemed to be
Loans made pursuant to the terms hereof and outstanding hereunder; provided,
however, that, if the Merger Effective Time has not occurred on or before May
31, 2007, then this Agreement shall cease to be of any force or effect.  This Agreement and the other Loan Documents
represent the final agreement among the parties and may not be contradicted by
evidence of prior, contemporaneous, or subsequent oral agreements of the
parties.  There are no unwritten oral
agreements among the parties.

 83

IN WITNESS WHEREOF, the parties
hereto have caused this Agreement to be duly executed as of the date first
above written.

	
  

  	
  KKR FINANCIAL HOLDINGS LLC

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Andrew J. Sossen

  
	
   

  	
   

  	
  Name:

  	
  Andrew J.
  Sossen

  
	
   

  	
   

  	
  Title:

  	
  Authorized
  Signatory

  
	
   

  	
   

  
	
   

  	
  KKR FINANCIAL HOLDINGS II, LLC

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Andrew J. Sossen

  
	
   

  	
   

  	
  Name:

  	
  Andrew J.
  Sossen

  
	
   

  	
   

  	
  Title:

  	
  Authorized
  Signatory

  
	
   

  	
   

  
	
   

  	
  KKR FINANCIAL HOLDINGS III, LLC

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Andrew J. Sossen

  
	
   

  	
   

  	
  Name:

  	
  Andrew J.
  Sossen

  
	
   

  	
   

  	
  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 FINANCIAL CORP.

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Jeffery L. Power

  
	
   

  	
   

  	
  Name:

  	
  Jeffery
  L. Power

  
	
   

  	
   

  	
  Title:

  	
  Authorized
  Signatory

  

 

 S-1
 

 

	
  

  	
  KKR TRS HOLDINGS, INC.

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Jeffery L. Power

  
	
   

  	
   

  	
  Name:

  	
  Jeffery
  L. Power

  
	
   

  	
   

  	
  Title:

  	
  Authorized
  Signatory

  
	
   

  	
   

  
	
   

  	
  KKR TRS HOLDINGS, LTD.

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Jeffery L. Power

  
	
   

  	
   

  	
  Name:

  	
  Jeffery
  L. Power

  
	
   

  	
   

  	
  Title:

  	
  Authorized
  Signatory

  

 

 S-2
 

 

	
  

  	
  BANK OF AMERICA, N.A., as

  Administrative Agent

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Elizabeth Kurilecz

  
	
   

  	
  Name:

  	
  Elizabeth Kurilecz

  
	
   

  	
  Title:

  	
  Senior Vice President

  
					

 

 S-3
 

 

	
  

  	
  BANK OF AMERICA, N.A., as a
  Lender,

  and Swingline Lender

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Elizabeth Kurilecz

  
	
   

  	
  Name:

  	
  Elizabeth Kurilecz

  
	
   

  	
  Title:

  	
  Senior Vice President

  
					

 

 S-4
 

 

	
  

  	
  CITIGROUP GLOBAL MARKETS INC.,
  as a 

  Syndication Agent

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Alex Duka

  
	
   

  	
  Name:

  	
  Alex Duka

  
	
   

  	
  Title:

  	
  Managing Director

  
					

 

 S-5
 

 

	
  

  	
  CITICORP NORTH AMERICA, INC.,
  as a

  Lender

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Alex Duka

  
	
   

  	
  Name:

  	
  Alex Duka

  
	
   

  	
  Title:

  	
  Managing Director

  
					

 

 S-6
 

 

	
  

  	
  JPMORGAN CHASE BANK, N.A., as
  a

  Syndication Agent and a Lender

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Richard J. Poworoznek

  
	
   

  	
  Name:

  	
  Richard J. Poworoznek

  
	
   

  	
  Title:

  	
  Executive Director

  
					

 

 S-7
 

 

	
  

  	
  BANK OF NOVA SCOTIA, as a
  Lender

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Todd Meller

  
	
   

  	
  Name:

  	
  Todd Meller

  
	
   

  	
  Title:

  	
  Managing Director

  
					

 

 S-8
 

 

	
  

  	
  CREDIT SUISSE, CAYMAN ISLANDS 

  BRANCH, as a Lender

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Ian Nalitt

  
	
   

  	
  Name:

  	
  Ian Nalitt

  
	
   

  	
  Title:

  	
  Vice President

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ James Neira

  
	
   

  	
  Name:

  	
  James Neira

  
	
   

  	
  Title:

  	
  Associate

  
					

 

 S-9
 

 

	
  

  	
  GOLDMAN SACHS & CO. INC.,
  as a Lender

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Mark Walton

  
	
   

  	
  Name:

  	
  Mark Walton

  
	
   

  	
  Title:

  	
  Vice President

  
					

 

 S-10

 

	
   

  	
  ROYAL BANK OF CANADA, as a Lender

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Howard Lee

  
	
   

  	
  Name:

  	
  Howard Lee

  
	
   

  	
  Title:

  	
  Authorized Signatory

  

 

 S-1
 

 

	
  

  	
  COMMERZBANK AKTIENGESELLSCHAFT, as a Lender

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Michelle Woessner-Larkin

  
	
   

  	
  Name:

  	
  Michelle Woessner-Larkin

  
	
   

  	
  Title:

  	
  Assistant Vice President

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Gerard A. Araw

  
	
   

  	
  Name:

  	
  Gerard A. Araw

  
	
   

  	
  Title:

  	
  Assistant Vice President

  

 

 S-2
 

 

	
  

  	
  FORTIS CAPITAL CORP., as a Lender

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Alan Krouk

  
	
   

  	
  Name:

  	
  Alan Krouk

  
	
   

  	
  Title:

  	
  Managing Director

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Barry Chung

  
	
   

  	
  Name:

  	
  Barry Chung

  
	
   

  	
  Title:

  	
  Senior Vice President

  

 

 S-3
 

 

	
  

  	
  MIZUHO CORPORATE BANK, LTD., as a Lender

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ James R. Fayen

  
	
   

  	
  Name:

  	
  James R. Fayen

  
	
   

  	
  Title:

  	
  Deputy General Manager

  

 

 S-4
 

 

	
  

  	
  MORGAN STANLEY BANK, as a Lender

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Daniel Twenge

  
	
   

  	
  Name:

  	
  Daniel Twenge

  
	
   

  	
  Title:

  	
  Authorized Signatory

  

 

 S-5
 

 

	
  

  	
  WACHOVIA BANK, NATIONAL ASSOCIATION, as a Lender

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Karen Hanke

  
	
   

  	
  Name:

  	
  Karen Hanke

  
	
   

  	
  Title:

  	
  Director

  

 

 S-6
 

 

	
  

  	
  SUMITOMO MITSUI BANKING, as a Lender

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Leo E. Pagarigan

  
	
   

  	
  Name:

  	
  Leo E. Pagarigan

  
	
   

  	
  Title:

  	
  General Manager

  

 

 S-7
 

 

	
  

  	
  FIRST COMMERCIAL BANK, LOS ANGELES BRANCH, as a Lender

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Larry-Jen Yu Lai

  
	
   

  	
  Name:

  	
  Larry-Jen Yu Lai

  
	
   

  	
  Title:

  	
  SAVP & Deputy General Manager

  

 

 S-8

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00122-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00122-of-00352.parquet"}]]