Document:

Exhibit 10.3

 

	
   

  

 

 

TAX RECEIVABLE AGREEMENT

 

dated as of

 

July 14, 2010

 

	
   

  

 

 

Table of Contents

	
   

  	
  Page

  
	
   

  	
   

  
	
  ARTICLE I DEFINITIONS

  	
  2

  
	
   

  	
   

  
	
  Section 1.01  
  Definitions

  	
  2

  
	
   

  	
   

  
	
  ARTICLE II DETERMINATION OF REALIZED TAX BENEFIT

  	
  7

  
	
   

  	
   

  
	
  Section 2.01  
  Basis Adjustment

  	
  7

  
	
  Section 2.02  
  Exchange Basis Schedule

  	
  8

  
	
  Section 2.03   Tax
  Benefit Schedule

  	
  8

  
	
  Section 2.04  
  Procedures, Amendments

  	
  8

  
	
   

  	
   

  
	
  ARTICLE III TAX BENEFIT PAYMENTS

  	
  9

  
	
   

  	
   

  
	
  Section 3.01  
  Payments

  	
  9

  
	
  Section 3.02   No
  Duplicative Payments

  	
  10

  
	
  Section 3.03   Pro
  Rata Payments

  	
  10

  
	
   

  	
   

  
	
  ARTICLE IV TERMINATION

  	
  10

  
	
   

  	
   

  
	
  Section 4.01  
  Early Termination and Breach of Agreement

  	
  10

  
	
  Section 4.02  
  Early Termination Notice

  	
  11

  
	
  Section 4.03  
  Payment upon Early Termination

  	
  12

  
	
   

  	
   

  
	
  ARTICLE V SUBORDINATION AND LATE PAYMENTS

  	
  12

  
	
   

  	
   

  
	
  Section 5.01  
  Subordination

  	
  12

  
	
  Section 5.02  
  Late Payments by Corporate Holdco

  	
  12

  
	
   

  	
   

  
	
  ARTICLE VI NO DISPUTES; CONSISTENCY; COOPERATION

  	
  12

  
	
   

  	
   

  
	
  Section 6.01   KKR
  Holdings Participation in Corporate Holdco’s and Group Partnerships’ Tax
  Matters

  	
  12

  
	
  Section 6.02  
  Consistency

  	
  13

  
	
  Section 6.03  
  Cooperation

  	
  13

  
	
   

  	
   

  
	
  ARTICLE VII MISCELLANEOUS

  	
  13

  
	
   

  	
   

  
	
  Section 7.01  
  Notices

  	
  13

  
	
  Section 7.02  
  Counterparts

  	
  15

  
	
  Section 7.03  
  Entire Agreement; Third Party Beneficiaries

  	
  15

  
	
  Section 7.04  
  Governing Law

  	
  15

  
	
  Section 7.05  
  Severability

  	
  15

  
	
  Section 7.06  
  Successors; Assignment; Amendments; Waivers

  	
  16

  
	
  Section 7.07  
  Titles and Subtitles

  	
  16

  
	
  Section 7.08  
  Resolution of Disputes

  	
  17

  
	
  Section 7.09  
  Reconciliation

  	
  18

  
	
  Section 7.10  
  Withholding

  	
  18

  

 

i

 

	
  Section 7.11  
  Affiliated Corporations of Parent; Admission of Corporate Holdco into a
  Consolidated Group; Transfers of Corporate Assets

  	
  18

  
	
  Section 7.12  
  Confidentiality

  	
  19

  
	
  Section 7.13  
  Group Partnership Agreement

  	
  20

  
	
  Section 7.14  
  Group Partnerships

  	
  20

  
	
  Section 7.15  
  Headings

  	
  20

  

 

ii

 

This
TAX RECEIVABLE AGREEMENT (as amended from time to time, this “Agreement”),
dated as of July 14, 2010, is hereby entered into by and among KKR
Holdings L.P., a Cayman limited partnership (“KKR Holdings”), KKR
Management Holdings Corp., a Delaware corporation (“Management Holdings”),
KKR & Co. L.P., a Delaware limited partnership (“Parent”), KKR
Management Holdings, L.P., a Delaware limited partnership (“Group
Partnership I”), and together with all other Persons (as defined herein)
who execute and deliver a joinder contemplated in Section 7.14.

 

RECITALS

 

WHEREAS,
the Limited Partners (as defined herein) will hold Class A interests (“Group
Partnership Units”) in each of Group Partnerships (as defined below);

 

WHEREAS, Management
Holdings owns Class A interests of Group Partnership I;

 

WHEREAS,
KKR Holdings or a KKR Holdings
Affiliated Person (as defined herein)
shall be entitled to surrender Group Partnership Units held by KKR Holdings or
a KKR Holdings Affiliated Person
to the Group Partnerships in exchange for the delivery by the Group
Partnerships of Common Units of Parent (the “Common Units”), cash
or other consideration pursuant to the provisions of the Exchange Agreement (as
defined herein);

 

WHEREAS,
the Group Partnerships (other than Group Partnership II), and each of its
direct and indirect subsidiaries, may have in effect an election under Section 754
of the Internal Revenue Code of 1986, as amended (the “Code”), for each
Taxable Year in which an exchange of Group Partnership Units for Common Units
occurs pursuant to the provisions of the Exchange Agreement (as defined
herein), which elections are intended generally to result in an adjustment to
the tax basis of the assets owned by the Group Partnerships (with respect to
the Corporate Holdcos (as defined below)) at the time of an exchange of Group
Partnership Units for Common Units or any other acquisition of Group
Partnership Units for cash or other consideration (collectively, an “Exchange”)
(any such time, an “Exchange Date”) by reason of such Exchange and the
receipt of payments under this Agreement;

 

WHEREAS,
the income, gain, loss, expense and other Tax items of (i) the Group
Partnerships with respect to each Corporate Holdco may be affected by the Basis
Adjustment (defined below) and (ii) the Corporate Holdcos may be affected
by the Imputed Interest (as defined below);

 

WHEREAS,
the parties to this Agreement desire to make certain arrangements with respect
to the effect of the Basis Adjustment and Imputed Interest on the actual
liability for Taxes of the Corporate Holdcos;

 

NOW,
THEREFORE, in consideration of the foregoing and the respective covenants and
agreements set forth herein, and intending to be legally bound hereby, the
parties hereto agree as follows:

 

 

ARTICLE I

 

DEFINITIONS

 

Section 1.01  
Definitions.  As used in
this Agreement, the terms set forth in this Article I shall have the
following meanings (such meanings to be equally applicable to both the singular
and plural forms of the terms defined).

 

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

 

“Agreed
Rate” means LIBOR plus 100 basis points.

 

“Agreement”
is defined in the Preamble of this Agreement.

 

“Amended
Schedule” is defined in Section 2.04(b) of this Agreement.

 

“Basis
Adjustment” means the adjustment to the tax basis of an Exchange Date Asset
under Section 732 of the Code (in situations where, as a result of one or
more Exchanges, a Group Partnership becomes an entity that is disregarded as
separate from its owner for tax purposes), or Sections 1012, 734(b), 743(b) and
754 of the Code, where applicable, (in situations where, following an Exchange,
a Group Partnership remains in existence as an entity for tax purposes) and, in
each case, comparable sections of state, local and foreign tax laws as a result
of an Exchange and the payments made pursuant to this Agreement.
Notwithstanding any other provision of this Agreement, the amount of any Basis
Adjustment resulting from an Exchange of one or more Group Partnership Units
shall be determined without regard to any Pre-Exchange Transfer of such Group
Partnership Units and as if any such Pre-Exchange Transfer had not occurred.

 

“Business
Day” means Monday through Friday of each week, except that a legal holiday
recognized as such by the government of the United States of America or the
State of New York shall not be regarded as a Business Day.

 

“Change
of Control” means the occurrence of any Person, other than a Person
approved by the current Managing Partner (as defined below), becoming the
general partner of the Parent.

 

“Change in Tax Law”
is defined in Section 7.15 of this Agreement.

 

“Common
Units” is defined in the Recitals of this Agreement.

 

“Code”
is defined in the Recitals of this Agreement.

 

“Control”
means the possession, direct or indirect, of the power to direct or cause the
direction of the management and policies of a Person, whether through ownership
of voting securities, by contract or otherwise.

 

2

 

“Corporate
Holdco Return” means the federal, state, local and/or foreign Tax Return,
as applicable, of each of the Corporate Holdcos filed with respect to Taxes of
any Taxable Year.

 

“Corporate
Holdcos” means any direct or indirect subsidiary of Parent that is at any
time treated as a domestic corporation for United States federal income tax
purposes, including, but not limited to, Management Holdings, or Parent, if it
is at any time treated as a corporation for United States federal income tax
purposes.

 

“Default
Rate” means LIBOR plus 500 basis points.

 

“Determination”
shall have the meaning ascribed to such term in Section 1313(a) of
the Code or similar provision of state, local and foreign tax law, as
applicable, or any other event (including the execution of a Form 870-AD)
that finally and conclusively establishes the amount of any liability for Tax.

 

“Early
Termination Date” means the date of an Early Termination Notice for
purposes of determining the Early Termination Payment.

 

“Early
Termination Notice” is defined in Section 4.02 of this Agreement.

 

“Early
Termination Schedule” is defined in Section 4.02 of this Agreement.

 

“Early
Termination Payment” is defined in Section 4.03(b) of this
Agreement.

 

“Early
Termination Rate” means the lesser of (i) 6.5% and (ii) LIBOR
plus 100 basis points.

 

“Exchange”
is defined in the Recitals of this Agreement.

 

“Exchange
Agreement” means the Exchange Agreement, dated as of the date hereof, among
the Parent, the Group Partnerships and KKR Holdings.

 

“Exchange
Basis Schedule” is defined in Section 2.02 of this Agreement.

 

“Exchange
Date” is defined in the Recitals of this Agreement.

 

“Exchange
Date Assets” means (i) any assets owned by the Group Partnerships on
an Exchange Date and allocable to the interests in the Group Partnerships that
are Exchanged, and (ii) any asset whose tax basis is determined, in whole
or in part, by reference to the adjusted basis of any asset referred to in
clause (i).

 

“Exchange
Payment” is defined in Section 5.01.

 

“Expert”
is defined in Section 7.09 of this Agreement.

 

“Group
Partnership I” is defined in the Preamble of this Agreement.

 

3

 

“Group
Partnership II” means KKR Fund Holdings L.P., a Cayman limited partnership.

 

“Group
Partnership Agreements” means, collectively, the Amended and Restated
Limited Group Partnership Agreement of Group Partnership I and the Amended and
Restated Limited Group Partnership Agreement of Group Partnership II (and the
partnership agreement then in effect of any future partnership designated as a
Group Partnership), as they may each be amended, supplemented or restated from
time to time.

 

“Group Partnership Units” means limited partner
interests in the Group Partnerships.

 

“Group
Partnerships” means, collectively, Group Partnership I and Group
Partnership II (and any future partnership designated as a Group Partnership
hereunder).

 

“Holdings
Limited Partner” means KKR Holdings and its subsidiaries, or any successor
thereto, and each Limited Partner that is designated a Holdings Limited Partner
by KKR Holdings including, for the avoidance of doubt, any person to whom KKR
Holdings transfers Group Partnership Units.

 

“Imputed
Interest” shall mean any interest imputed under Section 1272, 1274 or
483 or other provision of the Code and any similar provision of state, local
and foreign tax law with respect to a Corporate Holdco’s payment obligations
under this Agreement.

 

“KKR
Holdings” is defined in the Preamble of this Agreement.

 

“KKR
Holdings Affiliated Person” means each Person that is as of the date of
this Agreement or becomes from time to time (i) a general partner or a
limited partner of KKR Holdings or (ii) a general partner or limited
partner of any Person included in clause (i) above.

 

“LIBOR”
means for each month (or portion thereof) during any period, an interest rate
per annum equal to the rate per annum reported, on the date two days prior to
the first day of such month, on the Telerate Page 3750 (or if such screen
shall cease to be publicly available, as reported on Reuters Screen page “LIBO”
or by any other publicly available source of such market rate) for London
interbank offered rates for U.S. dollar deposits for such month (or portion
thereof).

 

“Limited
Partner” means each Person that is as of the date of this Agreement or
becomes from time to time a limited partner of each of the Group Partnerships
pursuant to the terms of the Group Partnership Agreements.

 

“Management
Holdings” is defined in the Preamble of this Agreement.

 

“Managing
Partner” means KKR Management LLC, a Delaware limited liability company.

 

“Market
Value” shall mean the closing price of the Common Units on the applicable
Exchange Date on the national securities exchange or interdealer quotation
system on 

 

4

 

which
such Common Units are then traded or listed, as reported by the Wall Street
Journal; provided that if the closing price is not reported by the Wall Street
Journal for the applicable Exchange Date, then the Market Value shall mean the
closing price of the Common Units on the Business Day immediately preceding
such Exchange Date on the national securities exchange or interdealer quotation
system on which such Common Units are then traded or listed, as reported by the
Wall Street Journal; provided further, that if the Common Units are not then
listed on a national securities exchange or interdealer quotation system, “Market
Value” shall mean the cash consideration paid for Common Units, or the fair
market value of the other property delivered for Common Units, as determined by
the board of directors of the Managing Partner in good faith.

 

“Material
Objection Notice” has the meaning set forth in Section 4.02.

 

“Non-Stepped
Up Tax Basis” means, with respect to any asset at any time, the tax basis
that such asset would have had at such time if no Basis Adjustment had been
made.

 

“Non-Stepped
Up Tax Liability” means, with respect to any Taxable Year, the liability
for Taxes of (i) each of the Corporate Holdcos and (ii) without
duplication, any Group Partnership in which each of the Corporate Holdcos own
an interest, but only with respect to Taxes imposed on such Group Partnership
and allocable to the Corporate Holdco (including all members of their
consolidated groups), in each case using the same methods, elections,
conventions and similar practices used on the relevant Corporate Holdco Return,
but (i) using the Non-Stepped Up Tax Basis as reflected on the Exchange
Basis Schedule, including any amendments thereto, instead of the tax basis of
the Exchange Date Assets and (ii) excluding any deduction attributable to
the Imputed Interest.

 

“Objection
Notice” has the meaning set forth in Section 2.04(a).

 

“Parent”
is defined in the Preamble of this Agreement.

 

“Payment
Date” means any date on which a payment is required to be made pursuant to
this Agreement.

 

“Person”
means any individual, corporation, firm, partnership, joint venture, limited
liability company, estate, trust, business association, organization,
governmental entity or other entity.

 

“Pre-Exchange
Transfer” means any transfer (including upon the death of a Holdings
Limited Partner) of one or more Group Partnership Units (i) that occurs
prior to an Exchange of such Group Partnership Units, and (ii) to which Section 743(b) or
734(b) of the Code applies.

 

“Purchase
and Sale Agreement” means the purchase and sale agreement among the
Partnership, KPE and the other parties thereto, dated July 19, 2009.

 

“Realized
Tax Benefit” means, for a Taxable Year, the excess, if any, of the
Non-Stepped Up Tax Liability over the actual liability for Taxes of (i) each
of the Corporate Holdcos, and (ii) without duplication, any Group
Partnership in which such Corporate Holdco owns an interest, but only with
respect to Taxes imposed on such Group Partnership and allocable to such

 

5

 

Corporate
Holdco (including all members of its consolidated groups) for such Taxable
Year.  If all or a portion of the actual
tax liability for Taxes for the Taxable Year arises as a result of an audit by
a Taxing Authority of any Taxable Year, such liability shall not be included in
determining the Realized Tax Benefit unless and until there has been a
Determination.

 

“Realized
Tax Detriment” means, for a Taxable Year, the excess, if any, of the actual
liability for Taxes of (i) each of the Corporate Holdcos, and (ii) without
duplication, any Group Partnership in which such Corporate Holdco owns an
interest, but only with respect to Taxes imposed on such Group Partnership and
allocable to such Corporate Holdco (including all members of its consolidated
groups) for such Taxable Year over the Non-Stepped Up Tax Liability for such
Taxable Year.  If all or a portion of the
actual tax liability for Taxes for the Taxable Year arises as a result of an
audit by a Taxing Authority of any Taxable Year, such liability shall not be included
in determining the Realized Tax Detriment unless and until there has been a
Determination.

 

“Reconciliation
Dispute” has the meaning set forth in Section 7.09.

 

“Reconciliation
Procedures” shall mean those procedures set forth in Section 7.09 of
this Agreement.

 

“Schedule”
means any Exchange Basis Schedule, Tax Benefit Schedule and the Early
Termination Schedule.

 

“Subsidiaries”
means, with respect to any Person, as of any date of determination, any other
Person as to which such Person owns, directly or indirectly, or otherwise
controls more than 50% of the voting power or other similar interests or the
sole general partner interest or managing member or similar interest of such
Person.

 

“Tax
Benefit Payment” is defined in Section 3.01(b) of this Agreement.

 

“Tax
Benefit Schedule” is defined in Section 2.03 of this Agreement.

 

“Tax
Return” means any return, declaration, report or similar statement required
to be filed with respect to Taxes (including any attached schedules),
including, without limitation, any information return, claim for refund,
amended return and declaration of estimated Tax.

 

“Taxable
Year” means a taxable year as defined in Section 441(b) of the
Code or comparable section of state, local or foreign tax law, as applicable,
(and, therefore, for the avoidance of doubt, may include a period of less than
12 months for which a Tax Return is made) ending on or after an Exchange Date
in which there is a Basis Adjustment due to an Exchange.

 

“Taxes”
means any and all U.S. federal, state, local and foreign taxes, assessments or
similar charges measured with respect to net income or profits and any interest
related to such Tax.

 

6

 

“Taxing
Authority” shall mean any domestic, foreign, federal, national, state,
county or municipal or other local government, any subdivision, agency,
commission or authority thereof, or any quasi-governmental body exercising any
taxing authority or any other authority exercising Tax regulatory authority.

 

“Treasury
Regulations” means the final, temporary and proposed regulations under the
Code promulgated from time to time (including corresponding provisions and
succeeding provisions) as in effect for the relevant taxable period.

 

“Valuation
Assumptions” shall mean, as of an Early Termination Date, the assumptions
that (1) in each Taxable Year ending on or after such Early Termination
Date, each of the Corporate Holdcos will have taxable income sufficient to
fully utilize the deductions arising from the Basis Adjustment and the Imputed
Interest during such Taxable Year (including, for the avoidance of doubt, Basis
Adjustments and Imputed Interest that would result from future Tax Benefit
Payments that would be paid in accordance with the Valuation Assumptions), (2) the
federal income tax rates and state, local and foreign income tax rates that
will be in effect for each such Taxable Year will be those specified for each
such Taxable Year by the Code and other law as in effect on the Early
Termination Date, (3) any loss carryovers generated by the Basis Adjustment
or the Imputed Interest and available as of the date of the Early Termination
Schedule will be utilized by each of the Corporate Holdcos on a pro rata basis
from the date of the Early Termination Schedule through the scheduled
expiration date of such loss carryovers, (4) any non-amortizable assets
are deemed to be disposed of for cash at their fair market value (A) with
respect to private equity fund related assets, pro-rata over the number of
years remaining under the original fund agreement until expected liquidation
(without extensions) of the applicable fund under the terms of the applicable
fund agreement (or, if such expected liquidation date has passed, on the Early
Termination Date) and (B) with respect to all other assets, on the
fifteenth anniversary of the earlier of the applicable Basis Adjustment and the
Early Termination Date and (5) if as of an Early Termination Date, there
are Group Partnership Units that have not been Exchanged, then each such Group
Partnership Unit shall be deemed to be Exchanged for the Market Value of the
Common Units and cash that would be transferred if the Exchange occurred on the
Early Termination Date.

 

ARTICLE II

 

DETERMINATION
OF REALIZED TAX BENEFIT

 

Section 2.01  
Basis Adjustment Principles.  The Realized Tax Benefit or Realized Tax
Detriment for each Taxable Year is intended to measure the decrease or increase
in the actual liability for Taxes of the Corporate Holdcos for such Taxable
Year attributable to the Basis Adjustments and Imputed Interest, determined using
a “with and without” methodology. For the avoidance of doubt, the actual
liability for Taxes will take into account the deduction of the portion of the
Tax Benefit Payment that must be accounted for as interest under the Code based
upon the characterization of Tax Benefit Payments as additional consideration
payable by the Corporate Holdcos for the Group Partnership Units acquired in an
Exchange.  Carryovers or carrybacks of
any Tax item attributable to the Basis Adjustment and Imputed Interest shall be
considered to be subject to the rules of the Code and the Treasury
Regulations or the appropriate 

 

7

 

provisions
of U.S. state and local income and franchise tax law, as applicable, governing
the use, limitation and expiration of carryovers or carrybacks of the relevant
type.  If a carryover or carryback of any
Tax item includes a portion that is attributable to the Basis Adjustment or
Imputed Interest and another portion that is not, such portions shall be considered
to be used in accordance with the “with and without” methodology.  The parties agree that (i) all Tax
Benefit Payments attributable to the Basis Adjustments (other than amounts
accounted for as interest under the Code) will (A) be treated as subsequent
upward purchase price adjustments that give rise to further Basis Adjustments
to Exchange Date Assets for the Corporate Holdcos and (B) have the effect
of creating additional Basis Adjustments to Exchange Date Assets for the
Corporate Holdcos in the year of payment, and (ii) as a result, such
additional Basis Adjustments will be incorporated into the current year
calculation and into future year calculations, as appropriate.

 

Section 2.02  
Exchange Basis Schedule.  Within 90 calendar days after the filing of
the U.S. federal income tax return of each of the Corporate Holdco for each
Taxable Year in which any Exchange has been effected, each of the Corporate
Holdcos shall deliver to the applicable Holdings Limited Partner a schedule
(the “Exchange Basis Schedule”) that shows for purposes of Taxes, (i) the
actual unadjusted tax basis of the Exchange Date Assets as of each applicable
Exchange Date, (ii) the Basis Adjustment with respect to the Exchange Date
Assets as a result of the Exchanges effected in such Taxable Year, calculated
in the aggregate, (iii) the period or periods, if any, over which the
Exchange Date Assets are amortizable and/or depreciable and (iv) the
period or periods, if any, over which each Basis Adjustment is amortizable
and/or depreciable (which, for non-amortizable assets shall be based on the
Valuation Assumptions).

 

Section 2.03  
Tax Benefit Schedule. 
Within 90 calendar days after the filing of the U.S. federal income tax
return of the of each of the Corporate Holdcos for any Taxable Year in which
there is a Realized Tax Benefit or Realized Tax Detriment, each of the
Corporate Holdcos shall provide to the applicable Limited Partner a schedule
showing the calculation of the aggregate Realized Tax Benefit or Realized Tax
Detriment for such Taxable Year and the portion thereof allocable to the
applicable Holdings Limited Partner (a “Tax Benefit Schedule”).  The Schedule will become final as provided in
Section 2.04(a) and may be amended as provided in Section 2.04(b) (subject
to the procedures set forth in Section 2.04(b)).

 

Section 2.04  
Procedures, Amendments.

 

(a)           Procedure. Every time each of the Corporate Holdcos
delivers to the applicable Limited Partner an applicable Schedule under this
Agreement, including any Amended Schedule delivered pursuant to Section 2.04(b),
but excluding any Early Termination Schedule or amended Early Termination
Schedule, each of the Corporate Holdcos shall also (x) deliver to the
applicable Limited Partner schedules and work papers providing reasonable
detail regarding the preparation of the Schedule and (y) allow such
Limited Partner reasonable access at no cost to the appropriate representatives
at each of the Corporate Holdcos in connection with a review of such
Schedule.  The applicable Schedule shall
become final and binding on all parties unless the Limited Partner, within 30
calendar days after receiving an Exchange Basis Schedule or amendment thereto
or 30 calendar days after receiving a Tax Benefit Schedule or amendment
thereto, provides such Corporate Holdco with notice of a material objection to
such 

 

8

 

Schedule (“Objection Notice”) made in good
faith.  If the parties, for any reason,
are unable to successfully resolve the issues raised in such notice within 30
calendar days of receipt by such Corporate Holdco of an Objection Notice, if
with respect to an Exchange Basis Schedule, or 30 calendar days of receipt by
such Corporate Holdco of an Objection Notice, if with respect to a Tax Benefit
Schedule, after such Schedule was delivered to the applicable Limited Partner,
such Corporate Holdco and the applicable Limited Partner shall employ the
reconciliation procedures as described in Section 7.09 of this Agreement
(the “Reconciliation Procedures”).

 

(b)           Amended Schedule. 
The applicable Schedule for any Taxable Year may be amended from time to
time by each of the Corporate Holdcos (i) in connection with a
Determination affecting such Schedule, (ii) to correct material
inaccuracies in the Schedule identified as a result of the receipt of
additional factual information relating to a Taxable Year after the date the
Schedule was provided to the applicable Limited Partner, (iii) to comply
with the Expert’s determination under the Reconciliation Procedures, (iv) to
reflect a material change in the Realized Tax Benefit or Realized Tax Detriment
for such Taxable Year attributable to a carryback or carryforward of a loss or
other tax item to such Taxable Year, (v) to reflect a material change in
the Realized Tax Benefit or Realized Tax Detriment for such Taxable Year
attributable to an amended Tax Return filed for such Taxable Year, or (vi) to
adjust the Exchange Basis Schedule to take into account payments made pursuant
to this Agreement (such Schedule, an “Amended Schedule”).

 

ARTICLE III

 

TAX BENEFIT
PAYMENTS

 

Section 3.01  
Payments.

 

(a)           Payments. 
Within five (5) calendar days of a Tax Benefit Schedule delivered
to an applicable Limited Partner becoming final in accordance with Section 2.04(a),
each of the Corporate Holdcos shall pay to the applicable Limited Partner for
such Taxable Year the portion of the Tax Benefit Payment determined pursuant to
Section 3.01(b) that is allocable to such Limited Partner.  Each such payment shall be made by wire
transfer of immediately available funds to a bank account of the applicable
Limited Partner previously designated by such Limited Partner to each of the
Corporate Holdcos or as otherwise agreed by the Corporate Holdco and the
applicable Limited Partner.  For the
avoidance of doubt, no Tax Benefit Payment shall be made in respect of
estimated tax payments, including, without limitation, federal income tax
payments.

 

(b)           A “Tax Benefit Payment” means an amount, not less
than zero, equal to 85% of the sum of the Net Tax Benefit and the Interest
Amount. The “Net Tax Benefit” shall equal: (1) the Corporate Holdco’s
Realized Tax Benefit, if any, for a Taxable Year plus (2) the amount of
the excess Realized Tax Benefit reflected on an Amended Tax Benefit Schedule
for a previous Taxable Year over the Realized Tax Benefit (or Realized Tax
Detriment (expressed as a negative number)) reflected on the Tax Benefit
Schedule for such previous Taxable Year, minus (3) an amount equal to each
of the Corporate Holdco’s Realized Tax Detriment (if any) for the current or
any previous Taxable Year, minus (4) the amount of the excess Realized Tax
Benefit 

 

9

 

reflected on a Tax Benefit Schedule for a previous
Taxable Year over the Realized Tax Benefit (or Realized Tax Detriment
(expressed as a negative number)) reflected on the Amended Tax Benefit Schedule
for such previous Taxable Year; provided, however, that to the
extent of the amounts described in 3.01(b)(2), (3) and (4) were taken
into account in determining any Tax Benefit Payment in a preceding Taxable
Year, such amounts shall not be taken into account in determining a Tax Benefit
Payment attributable to any other Taxable Year; provided, further,
for the avoidance of doubt, no applicable Limited Partner shall be required to
return any portion of any previously made Tax Benefit Payment.  The “Interest Amount” shall equal the
interest on the Net Tax Benefit calculated at the Agreed Rate from the due date
(without extensions) for filing the Corporate Holdco Return with respect to
Taxes for such Taxable Year until the Payment Date.  Notwithstanding the foregoing, for each
Taxable Year ending on or after the date of a Change of Control, all Tax
Benefit Payments, whether paid with respect to Group Partnership Units that
were exchanged (i) prior to the date of such Change of Control or (ii) on
or after the date of such Change of Control, shall be calculated by utilizing
Valuation Assumptions (1), (3), and (4), substituting in each case the terms “the
closing date of a Change of Control” for an “Early Termination Date”.

 

Section 3.02  
No Duplicative Payments. It is intended that the
above provisions of this Agreement will not result in duplicative payment of
any amount (including interest) required under this Agreement.  It is also intended that the provisions of
this Agreement provide that 85% of each of the Corporate Holdcos’ Realized Tax
Benefit and Interest Amount is paid to the Limited Partners pursuant to this
Agreement.  The provisions of this
Agreement shall be construed in the appropriate manner as such intentions are
realized.

 

Section 3.03  
Pro Rata Payments.  For the
avoidance of doubt, to the extent each of the Corporate Holdcos’ deduction with
respect to the Basis Adjustment is limited in a particular Taxable Year or such
Corporate Holdco lacks sufficient funds to satisfy its obligations to make all
Tax Benefit Payments due in a particular taxable year, the limitation on the
deduction, or the Tax Benefit Payments that may be made, as the case may be,
shall be taken into account or made for each applicable Limited Partner on a
pro rata basis based upon the amount of deductions for such Taxable Year
arising out of the Basis Adjustment attributable to the Exchange by such
applicable Limited Partner relative to the total amount of deductions for such
Taxable Year arising out of the aggregate Basis Adjustments attributable to
Exchanges by all of the applicable Limited Partners.  Notwithstanding the foregoing, Section 3.03
shall not apply to any payment made by the Corporate Holdcos pursuant to Section 4.03.

 

ARTICLE IV

 

TERMINATION

 

Section 4.01  
Early Termination and Breach of Agreement.

 

(a)            Each of the Corporate Holdcos may terminate this
Agreement with respect to all of the Group Partnership Units held (or
previously held and exchanged) by all Limited Partners at any time by paying to
all of the applicable Limited Partners the Early Termination Payment; provided,
however, that this Agreement shall terminate only upon the 

 

10

 

receipt of the Early Termination Payment by all
Limited Partners, and provided, further, that each of the
Corporate Holdcos may withdraw any notice to execute its termination rights
under this Section 4.01(a) prior to the time at which any Early
Termination Payment has been paid.  Upon
payment of the Early Termination Payments by a Corporate Holdco, neither the
applicable Limited Partners nor the Corporate Holdco shall have any further
payment obligations under this Agreement in respect of such Limited Partners,
other than for any (a) Tax Benefit Payment agreed to by such Corporate
Holdco and the applicable Limited Partner as due and payable but unpaid as of
the Early Termination Notice and (b) Tax Benefit Payment due for the
Taxable Year ending with or including the date of the Early Termination Notice
(except to the extent that the amount described in clause (b) is included
in the Early Termination Payment).  If an
Exchange occurs after such Corporate Holdco exercises its termination rights
under this Section 4.01(a), such Corporate Holdco shall have no
obligations under this Agreement with respect to such Exchange.

 

(b)           In the event that a Corporate Holdco breaches any of its
material obligations under this Agreement, whether as a result of failure to
make any payment when due, failure to honor any other material obligation
required hereunder or by operation of law as a result of the rejection of this
Agreement in a case commenced under the Bankruptcy Code or otherwise, then all
obligations hereunder shall be accelerated and such obligations shall be
calculated as if an Early Termination Notice had been delivered on the date of
such breach and shall include, but not be limited to, (1) the Early
Termination Payment calculated as if an Early Termination Notice had been
delivered on the date of a breach, (2) any Tax Benefit Payment agreed to
by such Corporate Holdco and any Limited Partners as due and payable but unpaid
as of the date of a breach, and (3) any Tax Benefit Payment due for the
Taxable Year ending with or including the date of a breach. Notwithstanding the
foregoing, in the event that a Corporate Holdco breaches this Agreement, the
Limited Partners shall be entitled to elect to receive the amounts set forth in
(1), (2) and (3), above or to seek specific performance of the terms
hereof.  The parties agree that the
failure to make any payment due pursuant to this Agreement within three months
of the date such payment is due shall be deemed to be a breach of a material
obligation under this Agreement for all purposes of this Agreement, and that it
will not be considered to be a breach of a material obligation under this
Agreement to make a payment due pursuant to this Agreement within three months
of the date such payment is due.

 

(c)           The undersigned parties agree that the aggregate value of
the Tax Benefit Payments cannot be ascertained with any reasonable certainty
for U.S. federal income tax purposes.

 

Section 4.02  
Early Termination Notice.  If a Corporate Holdco chooses to exercise its
right of early termination under Section 4.01 above, such Corporate Holdco
shall deliver to the applicable Limited Partners notice of such intention to
exercise such right (“Early Termination Notice”) and a schedule (the “Early
Termination Schedule”) specifying such Corporate Holdco’s intention to
exercise such right and showing in reasonable detail the calculation of the
Early Termination Payment. The applicable Early Termination Schedule shall
become final and binding on all parties unless the Limited Partner, within 30
calendar days after receiving the Early Termination Schedule thereto provides
such Corporate Holdco with notice of a material objection to such Schedule made
in good faith (“Material Objection Notice”). If the parties, for any
reason, are unable to successfully resolve the issues raised in such notice
within 

 

11

 

30
calendar days after receipt by such Corporate Holdco of the Material Objection
Notice, such Corporate Holdco and the Limited Partner shall employ the
Reconciliation Procedures as described in Section 7.09 of this Agreement.

 

Section 4.03  
Payment upon Early Termination. (a)  Within three
calendar days after agreement between the applicable Limited Partner and a
Corporate Holdco of the Early Termination Schedule, such Corporate Holdco shall
pay to the applicable Limited Partner an amount equal to the Early Termination
Payment. Such payment shall be made by wire transfer of immediately available
funds to a bank account designated by the applicable Limited Partner or as
otherwise agreed by the Corporate Holdco and the applicable Limited Partner.

 

(b)           The “Early Termination Payment” as of the date of
the delivery of an Early Termination Schedule shall equal with respect to the
applicable Limited Partner the present value, discounted at the Early
Termination Rate as of such date, of all Tax Benefit Payments that would be
required to be paid by a Corporate Holdco to the applicable Limited Partner
beginning from the Early Termination Date assuming the Valuation Assumptions
are applied.

 

ARTICLE V

 

SUBORDINATION
AND LATE PAYMENTS

 

Section 5.01  
Subordination. 
Notwithstanding any other provision of this Agreement to the contrary,
any Tax Benefit Payment or Early Termination Payment required to be made by a
Corporate Holdco to the applicable Limited Partner under this Agreement (an “Exchange
Payment”) shall rank subordinate and junior in right of payment to any
principal, interest or other amounts due and payable in respect of any current
or future obligations in respect of indebtedness for borrowed money of such
Corporate Holdco and its Subsidiaries (“Senior Obligations”) and shall
rank pari passu with all current or future unsecured obligations of such
Corporate Holdco that are not Senior Obligations.

 

Section 5.02  
Late Payments by Corporate Holdco.  The amount of all or any portion of any Tax
Benefit Payment or Early Termination Payment not made to the applicable Limited
Partner when due under the terms of this Agreement shall be payable together
with any interest thereon, computed at the Default Rate and commencing from the
date on which such Exchange Payment or Early Termination Payment was due and
payable.

 

ARTICLE VI

 

NO
DISPUTES; CONSISTENCY; COOPERATION

 

Section 6.01  
KKR Holdings Participation in Corporate Holdco’s and Group Partnerships’ Tax
Matters.  Except as otherwise provided
herein, each of the Corporate Holdcos and the Group Partnerships shall have
full responsibility for, and sole discretion over, all Tax matters concerning
each of the Corporate Holdcos and the Group Partnerships, respectively,
including without limitation the preparation, filing or amending of any Tax
Return and

 

12

 

defending,
contesting or settling any issue pertaining to Taxes.  Notwithstanding the foregoing, each of the
Corporate Holdcos shall notify KKR Holdings of, and keep KKR Holdings
reasonably informed with respect to the portion of any audit of such Corporate
Holdco and the Group Partnerships by a Taxing Authority the outcome of which is
reasonably expected to KKR Holdings’ rights and obligations under this
Agreement, and shall provide to KKR Holdings reasonable opportunity to provide
information and other input to such Corporate Holdco, the Group Partnerships
and their respective advisors concerning the conduct of any such portion of
such audit; provided, however, that each of the Corporate Holdcos
and the Group Partnerships shall not be required to take any action that is
inconsistent with any provision of any of the Group Partnership Agreements.

 

Section 6.02  
Consistency.  Each of the
Corporate Holdcos and the applicable Limited Partner agree to report and cause
to be reported for all purposes, including federal, state, local and foreign
Tax purposes and financial reporting purposes, all Tax-related items (including
without limitation the Basis Adjustment and each Tax Benefit Payment) in a
manner consistent with that specified by each of the Corporate Holdcos in any
Schedule required to be provided by or on behalf of each of the Corporate
Holdcos under this Agreement.

 

Section 6.03  
Cooperation.  Each
Limited Partner will (a) furnish to each of the Corporate Holdcos in a
timely manner such information, documents and other materials as each such
Corporate Holdco may reasonably request for purposes of making any
determination or computation necessary or appropriate under this Agreement,
preparing any Tax Return or contesting or defending any audit, examination or
controversy with any Taxing Authority, (b) make itself available to each
of the Corporate Holdcos and its representatives to provide explanations of
documents and materials and such other information as each of the Corporate
Holdcos or its representatives may reasonably request in connection with any of
the matters described in clause (a) above, and (c) reasonably
cooperate in connection with any such matter, and each of the Corporate Holdcos
shall reimburse the applicable Limited Partner for any reasonable third-party
costs and expenses incurred pursuant to this Section.

 

ARTICLE VII

 

MISCELLANEOUS

 

Section 7.01  
Notices.  All
notices, requests, claims, demands and other communications hereunder shall be
in writing and shall be deemed duly given and received (a) on the date of
delivery if delivered personally, or by facsimile upon confirmation of
transmission by the sender’s fax machine if sent on a Business Day (or
otherwise on the next Business Day) or (b) on the first Business Day
following the date of dispatch if delivered by a recognized next-day courier
service.  All notices hereunder shall be
delivered as set forth below, or pursuant to such other instructions as may be
designated in writing by the party to receive such notice:

 

If
to the Parent:

 

KKR &
Co. L.P.

9 West 57th Street, Suite 4200

 

13

 

New
York, NY 10019

Attention: Chief Financial Officer

Fax: 212-750-0003

 

with
a copy to:

 

Simpson
Thacher & Bartlett LLP

425 Lexington Avenue

New York, New York 10017

Fax: 212-735-2502

Attention: Joseph H. Kaufman, Esq.

 

If
to a Corporate Holdco or either Group Partnership, to:

 

c/o
KKR & Co. L.P.

9 West 57th Street, Suite 4200

New York, NY 10019

Attention: Chief Financial Officer

Fax: 212-750-0003

 

with
a copy to:

 

Simpson
Thacher & Bartlett LLP

425 Lexington Avenue

New York, New York 10017

Fax: 212-735-2502

Attention: Joseph H. Kaufman, Esq.

 

If
to KKR Holdings:

 

KKR
Holdings L.P.

9 West 57th Street, Suite 4200

New York, NY 10019

Attention: Chief Financial Officer

Fax: 212-750-0003

 

with
a copy to:

 

Simpson
Thacher & Bartlett LLP

425 Lexington Avenue

New York, New York 10017

Fax: 212-735-2502

Attention: Joseph H. Kaufman, Esq.

 

If
to any Holdings Limited Partner, to the attention of such Holdings Limited
Partner at:

 

14

 

c/o
KKR Holdings L.P.

9 West 57th Street, Suite 4200

New York, NY 10019

Attention: Chief Financial Officer

Fax: 212-750-0003

 

with
a copy to:

 

Simpson
Thacher & Bartlett LLP

425 Lexington Avenue

New York, New York 10017

Fax: 212-735-2502

Attention: Joseph H. Kaufman, Esq.

 

Any
party may change its address or fax number by giving the other party written
notice of its new address or fax number in the manner set forth above.

 

Section 7.02  
Counterparts.  This
Agreement may be executed in one or more counterparts, all of which shall be
considered one and the same agreement and shall become effective when one or
more counterparts have been signed by each of the parties and delivered to the
other parties, it being understood that all parties need not sign the same
counterpart.  Delivery of an executed
signature page to this Agreement by facsimile transmission shall be as
effective as delivery of a manually signed counterpart of this Agreement.

 

Section 7.03  
Entire Agreement; Third Party Beneficiaries.  This Agreement constitutes the entire
agreement and supersedes all prior agreements and understandings, both written
and oral, among the parties with respect to the subject matter hereof.  This Agreement shall be binding upon and
inure solely to the benefit of each party hereto and their respective
successors and permitted assigns, except that each Limited Partner shall be
entitled to receive the benefits of this Agreement and shall be bound by the terms
and provisions of this Agreement by reason of such Limited Partner’s election
to participate in any Exchange.  Except
as provided in this Section 7.03, 
nothing in this Agreement, express or implied, is intended to or shall
confer upon any other Person any right, benefit or remedy of any nature
whatsoever under or by reason of this Agreement.

 

Section 7.04  
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 conflicts of laws principles
thereof that would mandate the application of the laws of another jurisdiction.

 

Section 7.05  
Severability.  If any term
or other provision of this Agreement is invalid, illegal or incapable of being
enforced by any law or public policy, all other terms and provisions of this
Agreement shall nevertheless remain in full force and effect so long as the
economic or legal substance of the transactions contemplated hereby is not
affected in any manner materially adverse to any party.  Upon such determination that any term or
other provision is invalid, illegal or incapable of being enforced, the parties
hereto shall negotiate in good faith to modify this Agreement so as to effect
the original intent of the parties as closely as 

 

15

 

possible
in an acceptable manner in order that the transactions contemplated hereby are
consummated as originally contemplated to the greatest extent possible.

 

Section 7.06  
Successors; Assignment; Amendments; Waivers.

 

(a)           Neither KKR Holdings nor any Limited Partner may assign
this Agreement to any person without the prior written consent of each of the
Corporate Holdcos; provided, however, (i) that, to the extent Group
Partnership Units are effectively transferred in accordance with the terms of
the Group Partnership Agreements or any other agreement the applicable Holdings
Limited Partner may have entered into with the Parent or are transferred to a
KKR Affiliate, the Managing Partner, the Corporate Holdco and/or either of the
Group  Partnerships, the transferring
Limited Partner or KKR Holdings shall assign to the transferee of such Group
Partnership Units the transferring Limited Partner’s or KKR Holdings’ rights
under this Agreement with respect to such transferred Group Partnership Units
and (ii) that, once an Exchange has occurred, any and all payments that
may become payable to a Holdings Limited Partner pursuant to this Agreement
with respect to such Exchange may be assigned to any Person or Persons, as long
as any such Person has executed and delivered, or, in connection with such
assignment, executes and delivers, a joinder to this Agreement, in form and
substance reasonably satisfactory to each Corporate Holdco, agreeing to be
bound by Section 7.12 and acknowledging specifically the last sentence of
the next paragraph. For the avoidance of doubt: (A) to the extent KKR
Holdings transfers Group Partnership Units to a KKR Holdings Affiliate pursuant
to the relevant Group Partnership Agreements, the KKR Holdings Affiliate
receiving such Group Partnership Units shall have all rights under this
Agreement with respect to such transferred Group Partnership Units as KKR
Holdings has, under this Agreement, with respect to the other Group Partnership
Units held by him; and (B) the requirement to execute and deliver a
joinder pursuant to this Section 7.06(a) shall not be construed as
requiring such execution and delivery prior to an assignment becoming
effective.

 

(b)           No provision of this Agreement may be amended unless such
amendment is approved in writing by each of the Corporate Holdcos, on behalf of
themselves and the respective Group Partnerships they Control, and by KKR
Holdings.  No provision of this Agreement
may be waived unless such waiver is in writing and signed by the party against
whom the waiver is to be effective.

 

(c)           All of the terms and provisions of this Agreement shall be
binding upon, shall inure to the benefit of and shall be enforceable by the
parties hereto, each Limited Partner and their respective successors, assigns,
heirs, executors, administrators and legal representatives.  Each of the Corporate Holdcos shall require
and cause any direct or indirect successor (whether by purchase, merger,
consolidation or otherwise) to all or substantially all of the business or
assets of such Corporate Holdco, by written agreement, expressly to assume and
agree to perform this Agreement in the same manner and to the same extent that
each Corporate Holdco would be required to perform if no such succession had
taken place.

 

Section 7.07  
Titles and Subtitles.  The
titles of the sections and subsections of this Agreement are for convenience of
reference only and are not to be considered in construing this Agreement.

 

16

 

Section 7.08  
Resolution of Disputes.

 

(a)           Any and all disputes which cannot be settled amicably,
including any ancillary claims of any party, arising out of, relating to or in
connection with the validity, negotiation, execution, interpretation,
performance or non-performance of this Agreement (including the validity, scope
and enforceability of this arbitration provision) shall be finally settled by
arbitration conducted by a single arbitrator in New York in accordance with the
then-existing Rules of Arbitration of the International Chamber of
Commerce. If the parties to the dispute fail to agree on the selection of an
arbitrator within thirty (30) days of the receipt of the request for
arbitration, the International Chamber of Commerce shall make the
appointment.  The arbitrator shall be a
lawyer and shall conduct the proceedings in the English language.

 

Performance
under this Agreement shall continue if reasonably possible during any
arbitration proceedings.

 

(b)           Notwithstanding the provisions of paragraph (a), each of
the Corporate Holdcos may bring an action or special proceeding in any court of
competent jurisdiction for the purpose of compelling a party to arbitrate,
seeking temporary or preliminary relief in aid of an arbitration hereunder,
and/or enforcing an arbitration award and, for the purposes of this paragraph
(b), each Limited Partner shall be deemed to (i) expressly consent to the
application of paragraph (c) of this Section 7.08 to any such action
or proceeding, (ii) agree that proof shall not be required that monetary
damages for breach of the provisions of this Agreement would be difficult to
calculate and that remedies at law would be inadequate, and (iii) irrevocably
appoint each of the Corporate Holdcos as such Limited Partner’s agent for
service of process in connection with any such action or proceeding and agrees
that service of process upon such agent, who shall promptly advise such Limited
Partner of any such service of process, shall be deemed in every respect
effective service of process upon the Limited Partner in any such action or
proceeding.

 

(c)           (i)  EACH LIMITED PARTNER IS HEREBY DEEMED TO
IRREVOCABLY SUBMIT TO THE JURISDICTION OF COURTS LOCATED IN NEW YORK, NEW YORK
FOR THE PURPOSE OF ANY JUDICIAL PROCEEDING BROUGHT IN ACCORDANCE WITH THE
PROVISIONS OF PARAGRAPH (B) OF THIS SECTION 7.08, OR ANY JUDICIAL
PROCEEDING ANCILLARY TO AN ARBITRATION OR CONTEMPLATED ARBITRATION ARISING OUT
OF OR RELATING TO OR CONCERNING THIS AGREEMENT. 
Such ancillary judicial proceedings include any suit, action or
proceeding to compel arbitration, to obtain temporary or preliminary judicial
relief in aid of arbitration, or to confirm an arbitration award.  The parties acknowledge that the fora designated
by this paragraph (c) have a reasonable relation to this Agreement, and to
the parties’ relationship with one another.

 

(d)           The parties hereby waive, to the fullest extent permitted
by applicable law, any objection which they now or hereafter may have to
personal jurisdiction or to the laying of venue of any such ancillary suit,
action or proceeding brought in any court referred to in paragraph (c) (i) of
this Section 7.08 and such parties agree not to plead or claim the same.

 

17

 

Section 7.09  
Reconciliation.  In the
event that a Corporate Holdco and KKR Holdings are unable to resolve a
disagreement with respect to the matters governed by Sections 2.04, 4.02 and
6.02 within the relevant period designated in this Agreement (“Reconciliation
Dispute”), the Reconciliation Dispute shall be submitted for determination
to a nationally recognized expert (the “Expert”) in the particular area
of disagreement mutually acceptable to both parties.  The Expert shall be a partner in a nationally
recognized accounting firm or a law firm, and the Expert shall not, and the
firm that employs the Expert shall not, have any material relationship with
such Corporate Holdco or Limited Partner or other actual or potential conflict
of interest. If the parties are unable to agree on an Expert within fifteen
(15) days of receipt by the respondent(s) of written notice of a
Reconciliation Dispute, the Expert shall be appointed by the International
Chamber of Commerce Centre for Expertise. 
The Expert shall resolve any matter relating to the Exchange Basis
Schedule or an amendment thereto or the Early Termination Schedule or an
amendment thereto within 30 calendar days and shall resolve any matter relating
to a Tax Benefit Schedule or an amendment thereto within 15 calendar days or as
soon thereafter as is reasonably practicable, in each case after the matter has
been submitted to the Expert for resolution. Notwithstanding the preceding
sentence, if the matter is not resolved before any payment that is the subject
of a disagreement is due or any Tax Return reflecting the subject of a
disagreement is due, such payment shall be made on the date prescribed by this
Agreement and such Tax Return may be filed as prepared by such Corporate
Holdco, subject to adjustment or amendment upon resolution.  The costs and expenses relating to the
engagement of such Expert or amending any Tax Return shall be borne by the
Corporate Holdco; except as provided in the next sentence. Each of the
Corporate Holdcos and each applicable Limited Partner shall bear their own
costs and expenses of such proceeding, unless the Limited Partner has a
prevailing position that is more than 10% of the payment at issue, in which
case the Corporate Holdco shall reimburse such Limited Partner for any
reasonable out-of-pocket costs and expenses in such proceeding. Any dispute as
to whether a dispute is a Reconciliation Dispute within the meaning of this Section 7.09
shall be decided by the Expert.  The
Expert shall finally determine any Reconciliation Dispute and the determinations
of the Expert pursuant to this Section 7.09 shall be binding on the
Corporate Holdco and the applicable Limited Partner and may be entered and
enforced in any court having jurisdiction.

 

Section 7.10  
Withholding.  Each
Corporate Holdco shall be entitled to deduct and withhold from any payment
payable pursuant to this Agreement such amounts as such Corporate Holdco is
required to deduct and withhold with respect to the making of such payment
under the Code, or any provision of state, local or foreign tax law.  To the extent that amounts are so withheld
and paid over to the appropriate Taxing Authority by such Corporate Holdco,
such withheld amounts shall be treated for all purposes of this Agreement as having
been paid to the applicable Holdings Limited Partner.

 

Section 7.11  
Affiliated Corporations of Parent; Admission of Corporate Holdco into a
Consolidated Group; Transfers of Corporate Assets.

 

(a)           The Parent Group Partnership shall cause each entity that
is a Corporate Holdco and that is not already a party to this Agreement to
execute and deliver a joinder to this Agreement providing that all provisions
of this Agreement shall correspondingly apply to such Corporate Holdco,
including the payment of Tax Benefit Payments by such Corporate Holdco 

 

18

 

with respect to any Realized Tax Benefit
attributable to Group Partnership interests that are part of an Exchange.

 

(b)            If any Group Partnership Interest was acquired in an
Exchange by an entity prior to such entity becoming a Corporate Holdco, such
Exchange shall be treated for purposes of this Agreement as having occurred
immediately after such entity became a Corporate Holdco at the Fair Market
Value in existence at the time of such prior Exchange, and the entity that is
now a Corporate Holdco shall be required to make the same Tax Benefit Payments
pursuant to the terms of this Agreement that it would have been required to
make had it been treated as a Corporate Holdco on the date of such Exchange;
provided, however, that such Tax Benefit Payments shall be payable only with
respect to (i) Exchange Date Assets that are still owned at the time such
entity becomes a Corporate Holdco, and (ii) taxable years of such entity
ending on or after it becomes a Corporate Holdco.

 

(c)           If a Corporate Holdco becomes a member of an affiliated or
consolidated group of corporations that files a consolidated income tax return
pursuant to Sections 1501 et seq. of the Code or any corresponding provisions
of state, local or foreign law, then: (i) the provisions of this Agreement
shall be applied with respect to the group as a whole; and (ii) Tax
Benefit Payments shall be computed with reference to the consolidated taxable
income and consolidated tax liability of the group as a whole.

 

(d)           If any entity that is obligated to make an Exchange
Payment hereunder transfers one or more assets to a corporation with which such
entity does not file a consolidated tax return pursuant to Section 1501 of
the Code, such entity, for purposes of calculating the amount of any Exchange
Payment (e.g., calculating the gross income of the entity and determining the
Realized Tax Benefit of such entity) due hereunder, shall be treated as having
disposed of such asset in a fully taxable transaction on the date of such
contribution.  The consideration deemed
to be received by such entity shall be equal to the Fair Market Value of the
contributed asset, plus (i) the amount of debt to which such asset is
subject, in the case of a contribution of an encumbered asset or (ii) the
amount of debt allocated to such asset, in the case of a contribution of a
partner interest.

 

Section 7.12  
Confidentiality.  Each
Limited Partner and assignee shall be deemed to acknowledge and agree that the
information of each Corporate Holdco is confidential and, except in the course
of performing any duties as necessary for such Corporate Holdco and its
Affiliates, as required by law or legal process or to enforce the terms of this
Agreement, it shall keep and retain in the strictest confidence and not to
disclose to any Person all confidential matters, acquired pursuant to this
Agreement, of such Corporate Holdco or any Person included within the Parent
and their respective Affiliates and successors and the other Limited Partners,
including, without limitation, the identity of the beneficial holders of
interests in any fund or account managed by the Parent or any of its
Subsidiaries, confidential information concerning the Parent, any Person
included within the Parent and their respective Affiliates and successors, the
other Limited Partners and any fund, account or investment managed by any
Person included within the Parent, including marketing, investment, performance
data, fund management, credit and financial information, and other business
affairs of such Corporate Holdco, any Person included within the Parent and
their respective Affiliates and successors, the other Limited Partners and any
fund, account or investment managed directly or indirectly by any Person 

 

19

 

included
within such Corporate Holdco learned by the Limited Partner heretofore or
hereafter.  This clause 7.12 shall not
apply to (i) any information that has been made publicly available by such
Corporate Holdco or any of its Affiliates, becomes public knowledge (except as
a result of an act of such Limited Partner in violation of this Agreement) or
is generally known to the business community and (ii) the disclosure of
information to the extent necessary for a Limited Partner to prepare and file
his or her tax returns, to respond to any inquiries regarding the same from any
taxing authority or to prosecute or defend any action, proceeding or audit by
any taxing authority with respect to such returns. Notwithstanding anything to
the contrary herein, each Limited Partner (and each employee, representative or
other agent of such Limited Partner) may disclose to any and all Persons,
without limitation of any kind, the tax treatment and tax structure of (x) each
Corporate Holdco and (y) any of its transactions, and all materials of any
kind (including opinions or other tax analyses) that are provided to the
Limited Partners relating to such tax treatment and tax structure.

 

If
a Limited Partner or assignee commits a breach, or threatens to commit a
breach, of any of the provisions of this Section 7.12, the Corporate
Holdco shall have the right and remedy to have the provisions of this Section 7.12
specifically enforced by injunctive relief or otherwise by any court of
competent jurisdiction without the need to post any bond or other security, it
being acknowledged and agreed that any such breach or threatened breach shall
cause irreparable injury to such Corporate Holdco or any of its Subsidiaries or
the other Limited Partners and the accounts and funds managed by such Corporate
Holdco and that money damages alone shall not provide an adequate remedy to
such Persons. Such rights and remedies shall be in addition to, and not in lieu
of, any other rights and remedies available at law or in equity.

 

Section 7.13  
Group Partnership Agreement.  This Agreement shall be treated as part of
the partnership agreement of each Group Partnership as described in Section 761(c) of
the Code, and Sections 1.704-1(b)(2)(ii)(h) and 1.761-1(c) of the
Treasury Regulations.

 

Section 7.14  
Group Partnerships. 
Management Holdings hereby agrees that, to the extent it acquires a
limited partner interest, general partner interest, managing member interest or
similar interest in any Person after the date hereof, it shall cause such
Person to execute and deliver a joinder to this Agreement and become a “Group
Partnership” for all purposes of this Agreement.

 

Section 7.15  
Change in Law.  Notwithstanding
anything herein to the contrary, if, in connection with an actual or proposed
change in law, KKR Holdings reasonably believes that the existence of this
Agreement could cause income (other than income arising from receipt of a
payment under this Agreement) recognized by any Holdings Limited Partner (or
direct or indirect equity holders in such Holdings Limited Partner) upon any
Exchange to be treated as ordinary income rather than capital gain (or
otherwise taxed at ordinary income rates) for United States federal income tax
purposes or would have other material adverse tax consequences to KKR Holdings
or any Holdings Limited Partner (a “Change in Tax Law”), then at the election
of KKR Holdings and to the extent specified by KKR Holdings, this Agreement (i) shall
cease to have further effect, (ii) shall not apply to an Exchange
occurring after a date specified by KKR Holdings, or (iii) shall otherwise
be amended in a manner determined by KKR Holdings, provided that such amendment
shall not result in an increase in payments under this Agreement 

 

20

 

as compared to payments
that would have been due in the absence of such amendment and shall not
otherwise have a material adverse effect on Parent or its limited partners as
compared to the Agreement in the absence of such amendment.

 

Section 7.16  
Effective Date.  This Agreement
shall be effective, and the provisions hereof shall become operative, upon the
occurrence of the Effective Time (as defined in the Purchase and Sale
Agreement) and no party shall be required to commence performance hereunder
until the Effective Time.

 

Section 7.18  
Headings.  The
headings in this Agreement are for convenience of reference only and shall not
limit or otherwise affect the meaning hereof.

 

[Signatures on following pages]

 

21

 

IN
WITNESS WHEREOF, Management Holdings and each Limited Partner have duly
executed this Agreement as of the date first written above.

 

	
   

  	
  KKR
  HOLDINGS L.P.

  
	
   

  	
   

  
	
   

  	
  By:
  KKR Holdings GP Limited, its general partner

  
	
   

  	
   

  
	
   

  	
  By:
  

  	
  /s/
  William J. Janetschek

  
	
   

  	
   

  	
  Name:
  William J. Janetschek

  
	
   

  	
   

  	
  Title:
  Director

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  KKR
  MANAGEMENT HOLDINGS CORP.

  
	
   

  	
   

  
	
   

  	
  By:
  

  	
  /s/
  William J. Janetschek

  
	
   

  	
   

  	
  Name:
  William J. Janetschek

  
	
   

  	
   

  	
  Title:
  Chief Financial Officer

  
	
   

  	
   

  
	
   

  	
  KKR &
  CO. L.P.

  
	
   

  	
   

  
	
   

  	
  By:
  KKR Management LLC, its general partner

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:
  

  	
  /s/
  William J. Janetschek

  
	
   

  	
   

  	
  Name:
  William J. Janetschek

  
	
   

  	
   

  	
  Title:
  Chief Financial Officer

  
	
   

  	
   

  
	
   

  	
  KKR
  MANAGEMENT HOLDINGS L.P.

  
	
   

  	
   

  
	
   

  	
  By:
  KKR Management Holdings Corp., its general partner

  
	
   

  	
   

  
	
   

  	
  By:
  

  	
  /s/
  William J. Janetschek

  
	
   

  	
   

  	
  Name:
  William J. Janetschek

  
	
   

  	
   

  	
  Title:
  Chief Financial OfficerExhibit 10.4

 

FORM OF

INDEMNIFICATION AGREEMENT

 

This Indemnification
Agreement is dated as of                  ,
2010 (this “Agreement”) and is by and
among KKR Management LLC, a Delaware limited liability company (the “Managing Partner”), KKR &
Co. L.P., a Delaware limited partnership (the “Partnership”),
and [Name of director]
(the “Indemnitee”).

 

Background

 

The Managing Partner
believes that in order to attract and retain highly competent persons to serve
as directors or in other capacities, it must provide such persons with adequate
protection through indemnification against the risks of claims and actions
against them arising out of their services to and activities on behalf of the
Managing Partner acting in its own right or as general partner of the Partnership
(or both).

 

The Managing Partner desires
and has requested the Indemnitee to serve as a director of the Managing Partner
and, in order to induce the Indemnitee to serve as a director of the Managing
Partner, the Managing Partner and the Partnership wish to grant and secure the
Indemnitee the indemnity provided for herein. 
The Indemnitee is willing to so serve on the basis that such indemnity
be provided.

 

In consideration of the
Indemnitee’s service to the Managing Partner and the Partnership and the
covenants and agreements set forth below, and for other good and valuable
consideration, the receipt and adequacy of which are hereby acknowledged, the
parties hereto, intending to be legally bound, hereby agree as follows.

 

Section 1. Indemnification.  To the fullest extent permitted by law but
subject to the limitations expressly provided in this Agreement, the Indemnitee
shall be indemnified and held harmless by the Managing Partner on an after tax
basis from and against any and all losses, claims, damages, liabilities, joint
or several, expenses (including legal fees and expenses), judgments, fines,
penalties, interest, settlements or other amounts arising from any and all
threatened, pending or completed claims, demands, actions, suits or proceedings,
whether civil, criminal, administrative or investigative, and whether formal or
informal and including appeals, in which the Indemnitee may be involved, or is
threatened to be involved, as a party or otherwise, by reason of being or
having been or having agreed to serve as a director of the Managing Partner, or
while serving as a director of the Managing Partner, being or having been
serving or having agreed to serve at the request of the Managing Partner as a
director, officer, employee or agent (which, for purposes hereof, shall include
a trustee, partner or manager or similar capacity) of another corporation,
limited liability company, partnership, joint venture, trust, employee benefit
plan or other enterprise, whether arising from acts or omissions to act
occurring on, before or after the date of this Agreement; provided that the
Indemnitee shall not be indemnified and held harmless if there has been a final
and non-appealable judgment entered by an arbitral tribunal or court of
competent jurisdiction determining that, in respect of the matter for which the
Indemnitee is seeking indemnification pursuant to this Agreement, the
Indemnitee acted in bad faith or engaged in fraud or willful misconduct.
Notwithstanding the preceding sentence, except as otherwise provided in Section 3(e) of
this Agreement, the Managing Partner shall be required to indemnify a person
described in such sentence in connection with any demand, action, suit, claim
or proceeding (or part thereof) commenced by such person only if the
commencement of such demand, action, suit, claim or proceeding (or part
thereof) by such person was authorized by the Managing Partner in its sole
discretion.

 

Section 2. Advance
Payment of Expenses.  To
the fullest extent permitted by law, expenses (including legal fees and
expenses) incurred by the Indemnitee who is indemnified pursuant to this
Agreement in appearing at, participating in or defending any claim, demand,
action, suit, claim or proceeding shall, from time to time, be advanced by the
Managing Partner prior to a final and non-appealable determination that the
Indemnitee is not entitled to be indemnified upon receipt by the Managing
Partner of an undertaking by or on behalf of the

 

 

Indemnitee to repay such
amount if it ultimately shall be determined that the Indemnitee is not entitled
to be indemnified as authorized in this Agreement.

 

Section 3. Procedure for
Indemnification; Notification and Defense of Claim.

 

(a) Promptly after
receipt by the Indemnitee of notice of the commencement of any action, suit,
claim or proceeding, the Indemnitee shall, if a claim in respect thereof is to
be made against the Managing Partner hereunder, notify the Managing Partner in
writing of the commencement thereof.  The
failure to promptly notify the Managing Partner of the commencement of the
action, suit, claim or proceeding, or the Indemnitee’s request for
indemnification, will not relieve the Managing Partner from any liability that
it may have to the Indemnitee hereunder, except to the extent the Managing
Partner is actually prejudiced in its defense of such action, suit, claim or
proceeding as a result of such failure. 
To obtain indemnification under this Agreement, the Indemnitee shall
submit to the Managing Partner a written request therefor including such
documentation and information as is reasonably available to the Indemnitee and
is reasonably necessary to enable the Managing Partner to determine whether and
to what extent the Indemnitee is entitled to indemnification.

 

(b) With respect to any
action, suit, claim or proceeding of which the Managing Partner is so notified,
as provided in this Agreement, the Managing Partner, if appropriate, shall be
entitled to assume and control the defense of such action, suit, claim or
proceeding, with counsel reasonably acceptable to the Indemnitee, upon the
delivery to the Indemnitee of written notice of its election to do so, and the
Indemnitee shall cooperate with the Managing Partner in such defense as
reasonably requested by the Managing Partner. 
After delivery of such notice (but subject to such approval of counsel
by the Indemnitee and the retention of such counsel by the Managing Partner),
the Managing Partner will not be liable to the Indemnitee under this Agreement
for any fees of counsel subsequently incurred by the Indemnitee with respect to
the same action, suit, claim or proceeding; provided  that (1) the Indemnitee shall have the right to employ
the Indemnitee’s own counsel in such action, suit, claim or proceeding at the
Indemnitee’s expense and (2) if (i) the employment of counsel by the
Indemnitee at the Managing Partner’s expense has been previously authorized in
writing by the Managing Partner, or (ii) counsel to the Indemnitee shall
have reasonably concluded (evidenced by written notice to the Managing Partner
setting forth the basis for and explanation of such conclusion) that there
likely exists a conflict of interest or position, or reasonably believes that
such a conflict is likely to arise, on any significant issue between the
Managing Partner and the Indemnitee in the conduct of any such defense, then
the fees and expenses of the Indemnitee’s separate counsel shall be at the
expense of the Managing Partner, except as otherwise expressly provided by Section
1 of this Agreement, and the Managing Partner shall not control the defense of
such action, suit, claim or proceeding to the extent of such conflict of
interest.  The Managing Partner shall not
be entitled, without the written consent of the Indemnitee, to assume the
defense of any claim brought by or in the right of the Managing Partner or as
to which counsel for the Indemnitee shall in accordance with clause (2)(ii) of
the proviso in the immediately preceding sentence have delivered requisite
notice regarding the conclusion referred to in such clause.

 

(c) To the fullest
extent permitted by law and subject to the other provisions of this Agreement,  the Managing Partner’s assumption of the defense of an
action, suit, claim or proceeding in accordance with Section 3(b) will
constitute an irrevocable acknowledgement by the Managing Partner that any loss
and liability suffered by the Indemnitee and expenses (including attorneys’
fees), judgments, fines and amounts paid in settlement by or for the account of
the Indemnitee actually and reasonably incurred in connection therewith are
indemnifiable by the Managing Partner under Section 1 of this Agreement.

 

(d) The determination
whether to grant the Indemnitee’s indemnification request shall be made
promptly and in any event within 30 days following the Managing Partner’s
receipt of a request for indemnification in accordance with Section 3(a).  If the Managing Partner determines that the
Indemnitee is entitled to such indemnification or the Managing Partner has
acknowledged such entitlement, the Managing Partner shall make payment to the
Indemnitee of the indemnifiable amount within such 30 day period.  If the Managing Partner has not so
acknowledged such entitlement or  the
Managing Partner’s determination of

 

2

 

whether to grant the
Indemnitee’s indemnification request has not been made within such 30 day
period, the requisite determination of entitlement to indemnification shall
nonetheless be deemed to have been made and the Indemnitee shall be entitled to
such indemnification, subject to Section 5, absent (i) a misstatement
by the Indemnitee of a material fact, or an omission of a material fact
necessary to make the Indemnitee’s statement not materially misleading, in
connection with the request for indemnification, or (ii) a prohibition of
such indemnification under law.

 

(e) In the event that (i) the
Managing Partner determines in accordance with this Section 3 that the
Indemnitee is not entitled to indemnification under this Agreement, (ii) the
Managing Partner denies a request for indemnification, in whole or in part, or
fails to respond or make a determination of entitlement to indemnification
within 30 days following receipt of a request for indemnification as described
above, (iii) payment of indemnification is not made within such 30 day
period, (iv) advancement of expenses is not timely made in accordance with
Section 2, or (v) the Managing Partner or any other person takes or
threatens to take any action to declare this Agreement void or unenforceable,
or institutes any litigation or other action or proceeding designed to deny, or
to recover from, the Indemnitee the benefits provided or intended to be
provided to the Indemnitee hereunder, the Indemnitee’s entitlement to such
indemnification or advancement of expenses shall be settled by arbitration in
accordance with Section 16.  The
Indemnitee’s expenses (including attorneys’ fees) incurred in connection with
successfully establishing the Indemnitee’s right to indemnification or
advancement of expenses, in whole or in part, in such arbitration shall also be
indemnified by the Managing Partner to the fullest extent permitted by law.

 

(f) The Indemnitee
shall be presumed to be entitled to indemnification and advancement of expenses
under this Agreement upon submission of a request therefor in accordance with Section 2
or Section 3 of this Agreement, as the case may be.  The Managing Partner shall have the burden of
proof in overcoming such presumption, and such presumption shall be used as a
basis for a determination of entitlement to indemnification and advancement of
expenses unless the Managing Partner overcomes such presumption by clear and
convincing evidence.

 

Section 4. Guarantee and
Insurance.

 

(a) The Partnership
unconditionally guarantees the fulfillment of all of the Managing Partner’s
obligations under this Agreement, and the Partnership agrees to be jointly and
severally liable with the Managing Partner with respect to such obligations to
the fullest extent as if references to the Managing Partner hereunder were
references to the Partnership.

 

(b) The indemnification
provided by this Agreement shall be in addition to any other rights to which
the Indemnitee may be entitled under any agreement, insurance, as a matter of
law, in equity or otherwise, both as to actions in the Indemnitee’s capacity as
an Indemnitee and as to actions in any other capacity, and shall continue as to
an Indemnitee who has ceased to serve in such capacity.

 

(c) The Managing
Partner and the Partnership may purchase and maintain insurance against any
liability that may be asserted against, or expense that may be incurred by, any
person in connection with the activities of the Managing Partner or the
Partnership or such person’s activities on behalf of the Managing Partner or
the Partnership, regardless of whether the Managing Partner or the Partnership
would have the power to indemnify such person against such liability under the
provisions of this Agreement.

 

Section 5. Limitation on
Indemnification.

 

(a) For purposes of
this Agreement (i) the Managing Partner shall be deemed to have requested
the Indemnitee to serve as fiduciary of an employee benefit plan whenever the
performance by it of its duties to the Managing Partner also imposes duties on,
or otherwise involves services by, it to the plan or participants or
beneficiaries of the plan; (ii) excise taxes assessed on the Indemnitee
with respect to an employee benefit plan pursuant to applicable law shall
constitute “fines” within the meaning of this Agreement; and (iii) any
action

 

3

 

taken or omitted by the
Indemnitee with respect to any employee benefit plan in the performance of its
duties for a purpose reasonably believed by it to be in the best interest of
the participants and beneficiaries of the plan shall be deemed to be for a
purpose that is in the best interests of the Managing Partner and the
Partnership.

 

(b) Any indemnification
pursuant to this Agreement shall be made on a joint and several basis and only
out of the assets of the Managing Partner and the Partnership. Each of the
limited partners of the Partnership and the members of the Managing Partner
shall not be personally liable for such indemnification and shall have no
obligation to contribute or loan any monies or property to the Managing Partner
or the Partnership to enable it to effectuate such indemnification. In no event
may the Indemnitee subject any limited partner of the Partnership or any member
of the Managing Partner to personal liability by reason of the indemnification
provisions set forth in this Agreement.

 

(c) The provisions of
this Agreement are for the benefit of the Indemnitee and his or her heirs,
successors, assigns, executors and administrators and shall not be deemed to
create any rights for the benefit of any other persons.

 

Section 6.  Certain Settlement Provisions.  The Managing Partner shall have no obligation
to indemnify the Indemnitee under this Agreement for any amounts paid in
settlement of any action, suit, claim or proceeding without  the Managing Partner’s prior written consent
(which may not be unreasonably withheld). 
The Managing Partner shall not settle any action, suit, claim or
proceeding in any manner that would impose any fine or other monetary
obligation on the Indemnitee that is not fully indemnified by the Managing
Partner or any equitable relief on the Indemnitee or includes an admission of
wrongdoing by the Indemnitee, in each case without the Indemnitee’s prior
written consent (which may not be unreasonably withheld).  To the extent the Managing Partner has
assumed and controls the defense of any action, suit, claim or proceeding in
accordance with this Agreement, the Indemnitee shall permit the Managing
Partner to assume and control the settlement, negotiation or compromise of such
action, suit, claim or proceeding, and the Indemnitee shall cooperate with the
Managing Partner as reasonably requested by the Managing Partner in such
settlement, negotiation or compromise. The Indemnitee shall not settle, negotiate
or compromise any action, suit, claim or proceeding indemnifiable under this
Agreement without  the Managing Partner’s
prior written consent (which may not be unreasonably withheld).

 

Section 7. Savings Clause. If any
provision or provisions (or portion thereof) of this Agreement shall be
invalidated on any ground by any arbitral tribunal or court of competent
jurisdiction, then the Managing Partner shall nevertheless indemnify the
Indemnitee if the Indemnitee was or is made or is threatened to be made a party
or is otherwise involved in any threatened, pending or completed action, suit,
claim or proceeding (brought in the right of the Managing Partner, the
Partnership or otherwise), whether civil, criminal, administrative or
investigative and whether formal or informal, including appeals, by reason of
the fact that the Indemnitee is or was or has agreed to serve as a director of
the Managing Partner, or while serving as a director of the Managing Partner,
is or was serving or has agreed to serve at the request of the Managing Partner
as a director, officer, employee or agent (which, for purposes hereof, shall
include a trustee, partner or manager or similar capacity) of another
corporation, limited liability company, partnership, joint venture, trust, employee
benefit plan or other enterprise, or by reason of any action alleged to have
been taken or omitted in such capacity, from and against all loss and liability
suffered and expenses (including attorneys’ fees), judgments, fines and amounts
paid in settlement reasonably incurred by or on behalf of the Indemnitee in
connection with such action, suit, claim or proceeding, including any appeals,
to the fullest extent permitted by any applicable portion of this Agreement
that shall not have been invalidated and to the fullest extent permitted by
law.

 

Section 8. Contribution.  In order to provide for just and equitable
contribution in circumstances in which the indemnification provided for herein
is finally settled by arbitration to be unavailable to the Indemnitee in whole
or in part, it is agreed that, in such event, the Managing Partner shall, to
the fullest extent permitted by law, contribute to the payment of all of the
Indemnitee’s loss and liability suffered and expenses (including attorneys’
fees), judgments, fines and amounts paid in settlement reasonably incurred by
or on behalf of the

 

4

 

Indemnitee in connection
with any action, suit, claim or proceeding, including any appeals, in an amount
that is just and equitable in the circumstances; provided, that, without
limiting the generality of the foregoing, such contribution shall not be
required where such arbitration settlement is due to any limitation on
indemnification set forth in Section 5 or 6 hereof.

 

Section 9. Form and
Delivery of Communications.  All notices, requests, demands and other
communications under this Agreement shall be in writing and shall be deemed to
have been duly given if delivered by hand, mailed by certified or registered
mail with postage prepaid, mailed for overnight delivery by reputable overnight
courier or (d) sent by email or facsimile transmission, upon receipt when
confirmed that such transmission has been received.  Notice to the Managing Partner shall be sent
to 9 West 57th Street, New York, New York  10019, Attention: General Counsel, facsimile:
212-750-0003, confirmation telephone number: 212-750-8300 (or at such other
address or means of contact that the Managing Partner shall notify the
Indemnitee in writing from time to time). 
Notice to the Indemnitee shall be sent to [·], email: [·] (or at such
other address or means of contact that the Indemnitee shall notify the Managing
Partner in writing from time to time).

 

Section 10. Nonexclusivity.  The provisions for indemnification and
advancement of expenses set forth in this Agreement shall not be deemed
exclusive of any other rights which the Indemnitee may have under any provision
of law, in any court in which a proceeding is brought, other agreements or
otherwise, and the Indemnitee’s rights hereunder shall inure to the benefit of
the heirs, executors and administrators of the Indemnitee.  No amendment or alteration of  the Managing Partner’s limited liability
company agreement or the Partnership’s limited partnership agreement or any
other agreement shall adversely affect the rights provided to the Indemnitee
under this Agreement.

 

Section 11. No
Construction as Employment Agreement.  Nothing contained herein shall be construed
as giving the Indemnitee any right to be retained as a director of the Managing
Partner or in the employ of the Managing Partner or its affiliates.  For the avoidance of doubt, the
indemnification and advancement of expenses provided under this Agreement shall
continue as to the Indemnitee even though he may have ceased to be a director,
officer, employee or agent of the Managing Partner.

 

Section 12. Interpretation
of Agreement.  It is
understood that the parties hereto intend this Agreement to be interpreted and
enforced so as to provide indemnification to the Indemnitee to the fullest
extent now or hereafter permitted by law.

 

Section 13. Entire
Agreement.  This
Agreement and the documents expressly referred to herein constitute the entire
agreement between the parties hereto with respect to the matters covered
hereby, and any other prior or contemporaneous oral or written understandings
or agreements with respect to the matters covered hereby are expressly
superseded by this Agreement.

 

Section 14. Modification
and Waiver.  No
supplement, modification, waiver or amendment of this Agreement shall be
binding unless executed in writing by all of the parties hereto.  No failure or delay by any party in
exercising any right, power or privilege hereunder (other than a failure or
delay beyond a period of time specified herein) shall operate as a waiver
thereof nor shall any single or partial exercise thereof preclude any other or
further exercise thereof or the exercise of any other right, power or
privilege. The rights and remedies herein provided shall be cumulative and not
exclusive of any rights or remedies provided by law.

 

Section 15. Successor and
Assigns.  All of the
terms and provisions of this Agreement shall be binding upon, shall inure to
the benefit of and shall be enforceable by the parties hereto and their
respective successors, assigns, heirs, executors, administrators and legal
representatives. The Managing Partner shall require and cause any direct or
indirect successor (whether by purchase, merger, consolidation or otherwise) to
all or substantially all of the business or assets of any indemnitor under this
Agreement, by written agreement in form and substance reasonably satisfactory
to the Indemnitee, expressly to assume and agree to perform this Agreement in
the same manner and to the same extent that the Managing Partner would be
required to perform if no such succession had taken place.

 

5

 

Section 16. Arbitration.

 

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

 

(b) Each party hereby, (i) irrevocably
agrees that any claims, suits, actions or proceedings arising out of or
relating in any way to this Agreement (including any claims, suits or actions
to interpret, apply or enforce this Section 16 or any judicial proceeding
ancillary to an arbitration or contemplated arbitration arising out of or relating
to or concerning this Agreement), shall be exclusively brought in the Court of
Chancery of the State of Delaware or, if such court does not have subject
matter jurisdiction thereof, any other court in the State of Delaware with
subject matter jurisdiction; (ii) irrevocably submits to the exclusive
jurisdiction of such courts in connection with any such claim, suit, action or
proceeding; (iii) irrevocably agrees not to, and waives any right to,
assert in any such claim, suit, action or proceeding that (A) it is not
personally subject to the jurisdiction of such courts or any other court to
which proceedings in such courts may be appealed, (B) such claim, suit,
action or proceeding is brought in an inconvenient forum, or (C) the venue
of such claim, suit, action or proceeding is improper; (iv) expressly
waives any requirement for the posting of a bond by a party bringing such
claim, suit, action or proceeding; (v) consents to process being served in
any such claim, suit, action or proceeding by mailing, certified mail, return
receipt requested, a copy thereof to such party at the address in effect for
notices hereunder, and agrees that such service shall constitute good and
sufficient service of process and notice thereof; provided,
that nothing in clause (v) hereof shall affect or limit any right to serve
process in any other manner permitted by law; and (vi) irrevocably waives
any and all right to trial by jury in any such claim, suit, action or
proceeding.

 

(c)  Notwithstanding
any provision of this Agreement to the contrary, this Section 16 shall be
construed to the maximum extent possible to comply with the laws of the State
of Delaware, including the Delaware Uniform Arbitration Act (10 Del. C. § 5701
et  seq.) (the “Delaware Arbitration
Act”).  If, nevertheless, it shall be
determined by a court of competent jurisdiction that any provision or wording
of this Section 16, including any rules of the International Chamber
of Commerce, shall be invalid or unenforceable under the Delaware Arbitration
Act, or other applicable law, such invalidity shall not invalidate all of this Section 16.  In that case, this Section 16 shall be
construed so as to limit any term or provision so as to make it valid or
enforceable within the requirements of the Delaware Arbitration Act or other
applicable law, and, in the event such term or provision cannot be so limited,
this Section 16 shall be construed to omit such invalid or unenforceable
provision.

 

Section 17. Governing Law.  This Agreement shall be governed by and construed
in accordance with the laws of the State of Delaware.

 

Section 18. Counterparts. This
Agreement may be executed in two or more counterparts, each of which shall be
deemed to be an original and all of which together shall be deemed to be one
and the same instrument, notwithstanding that both parties are not signatories
to the original or same counterpart.

 

6

 

Section 19.  Headings. The section
and subsection headings contained in this Agreement are for reference purposes
only and shall not affect in any way the meaning or interpretation of this
Agreement.

 

[Rest of page intentionally left blank]

 

7

 

This Agreement has been duly
executed and delivered to be effective as of the date first stated above.

 

 

	
   

  	
  KKR MANAGEMENT LLC

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By 

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  KKR & CO. L.P.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By 

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  INDEMNITEE:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Name:

  

 

8

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