Document:

Exhibit 10.5

 

FORM OF EXCHANGE AGREEMENT

 

EXCHANGE
AGREEMENT (the “Agreement”), dated as of
                     ,
2008, among KKR & Co. L.P., KKR Management Holdings L.P., KKR Fund Holdings
L.P. and KKR Holdings L.P.(1)

 

WHEREAS, this
Agreement governs the terms and conditions for the exchange of certain Group
Partnership Units for Common Units, on the terms and subject to the conditions
set forth herein;

 

WHEREAS, the
right to exchange Group Partnership Units set forth in Section 2.1(a) below,
once exercised, represents a several, and not a joint and several, obligation
of the Group Partnerships (on a pro rata
basis), and no Group Partnership shall have any obligation or right to acquire
Group Partnership Units issued by another Group Partnership;

 

NOW, THEREFORE,
in consideration of the mutual covenants and undertakings contained herein and
for good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto hereby agree as follows:

 

ARTICLE
I.

DEFINITIONS

 

Section 1.1                                      Definitions.

 

The following
definitions shall be for all purposes, unless otherwise clearly indicated to
the contrary, applied to the terms used in this Agreement.

 

“Agreement”
has the meaning set forth in the preamble of this Agreement.

 

“Business
Day” means each day that is not a Saturday, Sunday or other day on which
banking institutions in the Cayman Islands and New York, New York are
authorized or required by law to close.

 

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

 

“Common
Unit” means a partnership interest in the Issuer representing a fractional
part of the partnership interests in the Issuer of all limited partners of the
Issuer having

 

(1)     To the extent that it is
ultimately determined that KKR Holdings L.P. will not hold a direct interest in
the Issuer, this agreement will be modified to reflect the appropriate entity.

 

 

the rights and obligations
specified with respect to Common Units in the Issuer Partnership Agreement.

 

“Exchange”
has the meaning set forth in Section 2.1(a) of this Agreement.

 

“Exchange
Rate” means the number of Common Units for which a Group Partnership Unit
is entitled to be exchanged.  On the date of this Agreement, the Exchange
Rate shall be 1 for 1, which Exchange Rate shall be subject to modification as
provided in Section 2.4.

 

“Group Partnership I” means KKR Management Holdings L.P., a
Delaware limited partnership, and any successor thereto.

 

 “Group Partnership I General
Partner” means KKR Management Holdings Corp., a Delaware corporation and
the general partner of Group Partnership I, and any successor thereto.

 

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

 

“Group Partnership II General Partners” means the Issuer and KKR
Fund Holdings GP Limited, a Cayman limited company, as general partners of
Group Partnership II, and any successor thereto.

 

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

 

“Group Partnership General Partners” means, collectively, Group
Partnership I General Partner and Group Partnership II General Partners (and
the general partner of any future partnership designated as a Group
Partnership).

 

“Group Partnership Unit” means, collectively, one partnership
unit in each of Group Partnership I and Group Partnership II (and any future
partnership designated as a Group Partnership) issued under its respective
Group Partnership Agreement.

 

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

 

“Issuer”
means KKR & Co. L.P., a limited partnership formed under the laws of the
State of Delaware, and any successor thereto.

 

“Issuer
General Partner” means KKR Management LLC, a limited liability company
formed under the laws of the State of Delaware, and any successor thereto.

 

2

 

“Insider
Trading Policy” means the Insider Trading Policy of the Issuer applicable
to the directors and executive officers of its general partner, as such insider
trading policy may be amended, supplemented or restated from time to time.

 

“Issuer
Partnership Agreement” means the Amended and Restated Agreement of Limited Partnership
of the Issuer to be dated substantially concurrently with the consummation of
the KPE Transaction, as such agreement of limited partnership may be amended,
supplemented or restated from time to time.

 

“KKR
Holdings” means KKR Holdings L.P., a limited partnership formed under the
laws of the Cayman Islands, and any successor thereto.

 

“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 pursuant to the terms of the KKR Holdings Partnership
Agreement or (ii) a general partner, limited partner or holder of any other
type of equity interest of any Person included in clause (i) above.

 

“KKR
Holdings Partnership Agreement” means the Amended and Restated Limited
Partnership Agreement of KKR Holdings, as amended, supplemented or restated
from time to time.

 

“KPE”
means KKR Private Equity Investors, L.P., a Guernsey limited partnership.

 

“KPE Transaction”
means the transaction contemplated in the Purchase and Sale Agreement.

 

“Person”
means an individual, corporation, limited liability company, partnership, joint
venture, trust, estate, unincorporated organization, association (including any
group, organization, co-tenanacy, plan, board, council or committee),
government (including a country, state, county, or any other governmental or
political subdivision, agency or instrumentality thereof) or other entity (or
series thereof).

 

“Purchase and Sale Agreement” means the purchase and sale agreement among the
Partnership, KPE and the other parties thereto, dated July 27, 2008.

 

 “Quarter” means, unless the context
requires otherwise, a fiscal quarter of the Issuer.

 

“Quarterly
Exchange Date” means, unless the Issuer cancels such Quarterly Exchange
Date pursuant to Section 2.9 hereof, the date that is the later to occur of
either: (1) the second Business Day after the date on which the Issuer makes a
public news release of its quarterly earnings for the prior Quarter or (2) the
first day of each Quarter that directors and executive officers of the Issuer’s
general partner are permitted to trade under the Insider Trading Policy.

 

“Sale
Transaction” has the meaning set forth in Section 2.9 of this Agreement.

 

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“Transfer
Agent” means such bank, trust company or other Person as shall be appointed
from time to time by the Issuer pursuant to the Issuer Partnership Agreement to
act as registrar and transfer agent for the Common Units.

 

ARTICLE
II.

EXCHANGE OF GROUP PARTNERSHIP UNITS

 

Section 2.1                                      Exchange
of Group Partnership Units.

 

(a)                                  Subject to adjustment as provided in this
Article II, to the provisions of the Group Partnership Agreements and the
Issuer Partnership Agreement and to the provisions of Section 2.2 hereof, KKR
Holdings or a KKR Holdings Affiliated Person shall be entitled on any Quarterly Exchange Date to surrender Group
Partnership Units held by KKR Holdings or a KKR Holdings Affiliated
Person to the Group Partnerships in
exchange for either (at the option of the Group Partnerships) (i) the delivery
by the Group Partnerships of a number of Common Units equal to the product of
the number of Group Partnership Units surrendered multiplied by the
Exchange Rate or (ii) cash in an amount equal to the fair market value of
Common Units KKR Holdings or a KKR Holdings Affiliated Person would receive pursuant to (i) above (any
such exchange, an “Exchange”); provided that any such exchange is for a
minimum of the lesser of [1,000] Group Partnership Units or all of the Group
Partnership Units held by KKR Holdings. Simultaneous with any such Exchange
pursuant to clause (i) above (without duplication of any units otherwise issued
in connection with contributions under the partnership agreements of the Group
Partnership not being conducted under this Exchange Agreement), each Group
Partnership shall issue a number of its Group Partnership Units to its
respective Group Partnership General Partner equal to the product of the number
of Group Partnership Units surrendered to such Group Partnership multiplied by
the Exchange Rate. Any election by the Group Partnerships to deliver cash to
KKR Holdings or a KKR Holdings Affiliated Person, as the case may be, pursuant to (ii) above, shall be subject
to the prior approval of the conflicts committee of the board of directors of
the Issuer General Partner.

 

(b)                                 Where KKR Holdings or a KKR Holdings
Affiliated Person has exercised its
right to surrender its Group Partnership Units to the Group Partnerships for an
Exchange, the Group Partnership General Partners shall have a superseding right
to acquire such interests for an amount of cash or Common Units (at the option
of the Group Partnership General Partners) equal to the amount of cash or
Common Units that would be received pursuant to an Exchange.

 

(c)                                  On the date Group Partnership Units are
surrendered for Exchange, all rights of KKR Holdings or a KKR Holdings
Affiliated Person as holder of such
Group Partnership Units shall cease, and KKR Holdings or such KKR Holdings
Affiliated Person shall be treated
for all purposes as having become the Record Holder (as defined in the Issuer
Partnership Agreement) of such Common Units and shall be admitted as a Limited
Partner (as defined in the Issuer Partnership Agreement) of the Issuer in
accordance and upon compliance with Section 10.2 of the Issuer Partnership
Agreement.

 

(d)                                 At the time Group Partnership Units are
surrendered for Exchange, KKR Holdings shall assign its rights together
with its obligations hereunder in connection with an

 

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Exchange to each KKR Holdings
Affiliated Person beneficially owning such Group Partnership Units.

 

(e)                                  For the avoidance of doubt, any Exchange of
Group Partnership Units shall be subject to the provisions of the Group
Partnership Agreements.

 

Section 2.2                                      Exchange
Procedures.

 

(a)                                  KKR
Holdings or a KKR Holdings
Affiliated Person may exercise
the right to Exchange Group Partnership Units set forth in Section 2.1(a) above
by providing to each Group Partnership General Partner and the Issuer a written
notice of Exchange, substantially in the form of Exhibit A hereto, at least
sixty (60) days prior to the applicable Quarterly Exchange Date or within such
shorter period of time as may be agreed by the parties hereto. Such notice
shall be duly executed by such holder or such holder’s duly authorized attorney
in respect of the Group Partnership Units to be Exchanged and delivered during
normal business hours at the principal executive offices of the Group
Partnership General Partners and the Issuer.

 

(b)                                 Each KKR Holdings Affiliated Person beneficially owning the Group Partnership
Units that are subject to Exchange pursuant to Section 2.1(a) above shall
execute a written assignment and acceptance agreement with respect to such
Group Partnership Units, substantially in the form of Exhibit B hereto,
prior to such Exchange, which
assignment and acceptance agreement shall be delivered during normal
business hours at the principal executive offices of KKR Holdings.

 

(c)                                  As promptly as practicable following the
surrender for Exchange of Group Partnership Units in the manner provided in
this Article II, the Group Partnerships shall deliver or cause to be delivered
at the principal executive offices of the Issuer or at the office of the
Transfer Agent the number of Common Units issuable upon such Exchange, issued
in the name of KKR Holdings or its designee.

 

(d)                                 The Group Partnerships may adopt reasonable
procedures for the implementation of the exchange provisions set forth in this
Article II, including, without limitation, procedures for the giving of notice
of an election for Exchange.

 

Section 2.3                                      Blackout
Periods and Ownership Restrictions. Notwithstanding anything to the
contrary, KKR Holdings or a KKR
Holdings Affiliated Person shall
not be entitled to Exchange Group Partnership Units, and the Issuer and the
Group Partnerships shall have the right to refuse to honor any request for
Exchange of Group Partnership Units, (i) at any time or during any period if
the Issuer or the Group Partnerships shall determine, based on the advice of
counsel (which may be inside counsel), that there may be material non-public
information that may affect the trading price per Common Unit at such time or
during such period or (ii) if such Exchange would be prohibited under
applicable law or regulation.

 

Section 2.4                                      Splits,
Distributions and Reclassifications.  The Exchange Rate shall be
adjusted accordingly if there is: (1) any subdivision (by split, distribution,
reclassification, recapitalization or otherwise) or combination (by reverse
split, reclassification, recapitalization or otherwise) of the Group
Partnership Units that is not accompanied by an identical subdivision or
combination of the Common Units; or (2) any subdivision (by split,

 

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distribution, reclassification,
recapitalization or otherwise) or combination (by reverse split,
reclassification, recapitalization or otherwise) of the Common Units that is
not accompanied by an identical subdivision or combination of the Group
Partnership Units. In the event of a reclassification or other similar
transaction as a result of which the Common Units are converted into another
security, then KKR Holdings shall be entitled to receive upon Exchange the
amount of such security that KKR Holdings would have received if such Exchange
had occurred immediately prior to the effective date of such reclassification
or other similar transaction. Except as may be required in the immediately preceding
sentence, no adjustments in respect of distributions shall be made upon the
Exchange of any Group Partnership Unit.

 

Section 2.5                                      Common
Units to be Issued.  The Issuer covenants that if any Common Units
require registration with or approval of any governmental authority under any
U.S. federal or state law before such Common Units may be issued upon Exchange
pursuant to this Article II, the Issuer shall use commercially reasonable
efforts to cause such Common Units to be duly registered or approved, as the
case may be. The Issuer shall use commercially reasonable efforts to list the
Common Units required to be delivered upon Exchange prior to such delivery upon
each national securities exchange or inter-dealer quotation system upon which
the outstanding Common Units may be listed or traded at the time of such
delivery. Nothing contained herein shall be construed to preclude the Issuer or
the Group Partnerships from satisfying their obligations in respect of the
Exchange of the Group Partnership Units by delivery of Common Units which are
held in the treasury of the Issuer or the Group Partnerships or any of their
subsidiaries.

 

Section 2.6                                      Taxes. 
The delivery of Common Units upon Exchange of Group Partnership Units shall be
made without charge to KKR Holdings or
a KKR Holdings Affiliated Person for any stamp or other similar tax in respect of such issuance.

 

Section 2.7                                      Restrictions.
The provisions of Section 7.06 of the Group Partnership Agreements shall apply,
mutatis mutandis, to any Common Units issued upon Exchange of Group Partnership
Units; and the provisions of Section 7.04 of the Group Partnership Agreements
shall permit Transfers of Common Units issued upon Exchange of Group
Partnership Units to the same extent as Exchange Transactions (as defined in
the Group Partnership Agreements) with respect to Group Partnership Units may
be permitted under such provisions. In each case, the provisions of Sections 7.04
and 7.06 of the Group Partnership Agreements shall apply in the aggregate to
Group Partnership Units and Common Units received in Exchange for Group
Partnership Units held by KKR Holdings
or a KKR Holdings Affiliated Person or Limited Partner (as defined in
the Issuer Partnership Agreement) of the Issuer.

 

Section 2.8                                      Disposition
of Common Units Issued.   KKR Holdings
covenants to cause any KKR Holdings Affiliated Person receiving Common Units as
a result of an Exchange under this Agreement (i) to use reasonable best efforts
to sell or otherwise dispose of any Common Units received in such an Exchange
within ten (10) days of the receipt thereof or any specified shorter period as
the general partner of the Issuer determines to be in the best interests of the
Issuer, (ii) to use reasonable best efforts to ensure that neither such KKR
Holdings Affiliated Person’s spouse nor any grantor trust which is treated as
owned by such KKR Holdings Affiliated Person or his or her spouse owns any
Common Units and (iii) that no other Common Units will be acquired or held by
such KKR Holdings Affiliated Person during such

 

6

 

period other than through a
Qualifying Entity. Any KKR Holdings Affiliated Person who receives Common Units
as a result of an Exchange under this Agreement and who holds any such Common
Units on the last day of the ten (10) day or shorter period referred to above
shall agree to cause all such Common Units to be transferred immediately to a
Qualifying Entity. For the purposes of this Agreement, a “Qualifying Entity”
means a partnership, trust or other entity (other than an entity disregarded as
an entity separate from its owner for United States federal income tax
purposes). For the avoidance of doubt, nothing contained herein shall prohibit
any KKR Holdings Affiliated Person from owning an interest in a Qualifying
Entity that owns Common Units.

 

Section 2.9                                      Subsequent
Offerings. The Issuer may from time to time provide the opportunity for KKR
Holdings to sell its Group Partnership Units to the Issuer, the Group
Partnerships or any of their subsidiaries (a “Sale Transaction”);
provided that no Sale Transaction shall occur unless the Issuer cancels the
nearest Quarterly Exchange Date scheduled to occur in the same fiscal year of
the Issuer as such Sale Transaction.  In connection with a Sale Transaction,
KKR Holdings must provide notice to Issuer at least thirty (30) days prior to
the cash settlement of such Sale Transaction in respect of the Group
Partnership Units to be sold or within such shorter period of time as
may be agreed by the parties hereto. Such notice shall be delivered during
normal business hours at the principal executive offices of the Issuer. 
For the avoidance of doubt, the total aggregate number of Quarterly Exchange
Dates and Sale Transactions occurring during any fiscal year of the Issuer
shall not exceed four (4).

 

ARTICLE
III.

GENERAL PROVISIONS

 

Section 3.1                                      Amendment.
The provisions of this Agreement may be amended by the affirmative vote or
written consent of each of the Issuer, the Group Partnerships and KKR Holdings.

 

Section 3.2                                      Addresses
and Notices.  All notices, requests, claims, demands and other
communications hereunder shall be in writing and shall be given (and shall be
deemed to have been duly given upon receipt) by delivery in person, by courier
service, by fax, by electronic mail (delivery receipt requested) or by
registered or certified mail (postage prepaid, return receipt requested) to the
respective parties at the following addresses (or at such other address for a
party as shall be as specified in a notice given in accordance with this
Section 3.2):

 

(a)  If
to the Group Partnership I General Partner or the Group Partnership II General
Partners, to:

 

	
   

  	
  9 West 57th Street, Suite 4200

  
	
   

  	
  New York, NY 10019

  
	
   

  	
  Attention: Chief Financial Officer

  
	
   

  	
  Fax: 212-750-0003

  
	
   

  	
  Phone: 212-750-8300

  

 

(b)  If
to Group Partnership I or Group Partnership II to:

 

7

 

	
   

  	
  9 West 57th Street, Suite 4200

  
	
   

  	
  New York, NY 10019

  
	
   

  	
  Attention: Chief Financial Officer

  
	
   

  	
  Fax: 212-750-0003

  
	
   

  	
  Phone: 212-750-8300

  

 

(c)  If to KKR Holdings, to:

 

	
   

  	
  9 West 57th Street, Suite 4200

  
	
   

  	
  New York, NY 10019

  
	
   

  	
  Attention: Chief Financial Officer

  
	
   

  	
  Fax: 212-750-0003

  
	
   

  	
  Phone: 212-750-8300

  

 

(c)  If to the Issuer, to:

 

	
   

  	
  9 West 57th Street, Suite 4200

  
	
   

  	
  New York, NY 10019

  
	
   

  	
  Attention: Chief Financial Officer

  
	
   

  	
  Fax: 212-750-0003

  
	
   

  	
  Phone: 212-750-8300

  

 

Section 3.3                                      Further
Action. The parties shall execute and deliver all documents, provide all
information and take or refrain from taking action as may be necessary or
appropriate to achieve the purposes of this Agreement.

 

Section 3.4                                      Binding
Effect. This Agreement shall be binding upon and inure to the benefit of
all of the parties and, to the extent permitted by this Agreement, their
successors, executors, administrators, heirs, legal representatives and assigns.
KKR Holdings may enforce the terms of this agreement in the name of or on
behalf of any KKR Holdings Affiliated Person. Other than as expressly provided
herein, nothing in this Agreement will be construed to give any person other
than the parties to this Agreement any legal or equitable right, remedy, or
claim under or with respect to this Agreement or any provision of this
Agreement.

 

Section 3.5                                      Severability. 
If any term or other provision of this Agreement is held to be invalid, illegal
or incapable of being enforced by any rule of law, or public policy, all other
conditions and provisions of this Agreement shall nevertheless remain in full
force and effect so long as the economic or legal substance of the transactions
is not affected in any manner materially adverse to any party. Upon a
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
possible in a mutually acceptable manner in order that the transactions
contemplated hereby be consummated as originally contemplated to the fullest
extent possible.

 

Section 3.6                                      Integration.
This Agreement constitutes the entire agreement among the parties hereto
pertaining to the subject matter hereof and supersedes all prior agreements and
understandings pertaining thereto.

 

8

 

Section 3.7                                      Waiver.
No failure by any party to insist upon the strict performance of any covenant,
duty, agreement or condition of this Agreement or to exercise any right or
remedy consequent upon a breach thereof shall constitute waiver of any such
breach of any other covenant, duty, agreement or condition.

 

Section 3.8                                      Submission
to Jurisdiction; Waiver of Jury Trial.

 

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

 

(b)                                 Notwithstanding the provisions of Section
3.8(a), KKR Holdings may cause any Group Partnership to bring, on behalf of the
Issuer or such Group Partnership or on behalf of any KKR Holdings Affiliated
Person, 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.

 

(c)                                  Notwithstanding any provision of this
Agreement to the contrary, this Section 3.8 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
3.8, 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
3.8.  In that case, this Section 3.8 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 3.8 shall be construed to
omit such invalid or unenforceable provision.

 

Section 3.9                                      Counterparts.
This Agreement may be executed and delivered (including by facsimile
transmission) in one or more counterparts, and by the different parties hereto
in separate counterparts, each of which when executed and delivered shall be
deemed to be an original but all of which taken together shall constitute one
and the same agreement. Copies of executed counterparts transmitted by telecopy
or other electronic transmission service shall be considered original executed
counterparts for purposes of this Section 3.9.

 

Section 3.10                                Tax
Treatment. To the extent this Agreement imposes obligations upon a
particular Group Partnership or either Group Partnership General Partner, this
Agreement shall be treated as part of the relevant Group Partnership Agreement
as described in Section 

 

9

 

761(c) of the Code and Sections
1.704-1(b)(2)(ii)(h) and 1.761-1(c) of the Treasury Regulations. The parties
shall report any Exchange consummated hereunder (pursuant to which Common Units
are delivered pursuant to Section 2.1(a)(i) or Section 2.1(b) hereof), in the
case of Group Partnership I, as a taxable sale of Group Partnership Units
by a KKR Holdings Affiliated Person to Group Partnership I General Partner and,
in the case of Group Partnership II, as a contribution to the Issuer described
in Section 721(a) of the Code, and no party shall take a contrary position on
any income tax return, amendment thereof or communication with a taxing
authority.

 

Section 3.11                                Applicable
Law. This Agreement shall be governed by, and construed in accordance with,
the law of the State of Delaware.

 

IN WITNESS WHEREOF,
the parties have caused this Agreement to be duly executed and delivered, all
as of the date first set forth above.

 

[Signature Page Follows]

 

10

 

	
   

  	
  KKR & CO. L.P.

  
	
   

  	
   

  	
   

  
	
   

  	
  By: 

  	
  KKR Management LLC, its general partner

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  KKR MANAGEMENT HOLDINGS L.P.

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  KKR Management Holdings Corp., its

  
	
   

  	
   

  	
  general partner

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  KKR FUND HOLDINGS L.P.

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  KKR & Co. L.P., its general partner

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  KKR HOLDINGS L.P.

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  KKR Holdings GP Limited, its general 

  
	
   

  	
   

  	
  partner

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  

 

 

EXHIBIT A

 

FORM OF

NOTICE OF EXCHANGE

 

KKR Management Holdings L.P.

KKR Fund Holdings L.P.

KKR & Co. L.P.

9 West 57th Street, Suite 4200

New York, NY 10019

Attention: Chief Financial Officer

Fax: 212-750-0003

 

Reference is
hereby made to the Exchange Agreement, dated as of
                        ,
2008 (the “Exchange Agreement”), among KKR & Co. L.P.,  KKR Management Holdings L.P., KKR Fund
Holdings L.P., and KKR Holdings L.P., as amended from time to time. 
Capitalized terms used but not defined herein shall have the meanings given to
them in the Exchange Agreement.

 

KKR Holdings
desires to Exchange the number of Group Partnership Units set forth below.

 

Number of Group Partnership Units to be Exchanged:
                                           

 

KKR Holdings (1) hereby represents that the Group Partnership Units set
forth above are owned by KKR Holdings, (2) hereby gives notice of its desire to
Exchange such Group Partnership Units for Common Units as set forth in the
Exchange Agreement, (3) hereby irrevocably constitutes and appoints any officer
of the Group Partnerships, either Group Partnership General Partner or the
Issuer General Partner as its attorney, with full power of substitution, to
Exchange said Group Partnership Units on the books of the Group Partnerships
for Common Units on the books of the Issuer, with full power of substitution in
the premises.

 

KKR Holdings covenants to cause any KKR Holdings Affiliated Person
receiving Common Units as a result of an Exchange under the Exchange Agreement
(i) to use reasonable best efforts to sell or otherwise dispose of any Common
Units received in such an Exchange within ten (10) days of the receipt thereof
or any specified shorter period as the general partner of the Issuer determines
to be in the best interests of the Issuer, (ii) to use reasonable best efforts
to ensure that neither such KKR Holdings Affiliated Person’s spouse nor any
grantor trust which is treated as owned by such KKR Holdings Affiliated Person
or his or her spouse owns any Common Units and (iii) that no other Common Units
will be acquired or held by such KKR Holdings Affiliated Person during such
period other than through a Qualifying Entity. Any KKR Holdings Affiliated
Person who receives Common Units as a result of an Exchange under this
Agreement and who holds any such Common Units on the last day of the ten (10)
day or shorter period referred to above shall agree to cause all such Common
Units to be transferred immediately to a Qualifying Entity. For the purposes of
this Agreement, a “Qualifying Entity” means a partnership, trust or other
entity (other than an entity disregarded as an entity separate from its owner
for United

 

 

States federal income tax purposes). For the avoidance of doubt,
nothing contained herein shall prohibit any KKR Holdings Affiliated Person from
owning an interest in a Qualifying Entity that owns Common Units.

 

IN WITNESS
WHEREOF the undersigned, by authority duly given, has caused this Notice of
Exchange to be executed and delivered by the undersigned or by its duly
authorized attorney.

 

	
   

  	
  KKR HOLDINGS L.P.

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  KKR Holdings GP Limited, its general 

  
	
   

  	
   

  	
  partner

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Dated:Exhibit 10.7

 

KKR & CO.
L.P.

FORM OF 2008 EQUITY INCENTIVE PLAN

 

1.                                      Purpose of
the Plan

 

KKR & Co.
L.P. 2008 Equity Incentive Plan (the “Plan”) is designed to promote the
long term financial interests and growth of KKR & Co. L.P., a Delaware
limited partnership (the “Partnership”), and its Affiliates by (i)
attracting and retaining senior managing directors, employees and consultants
of the Partnership or any of its Affiliates, including directors of the Partnership’s
general partner, KKR Management LLC (the “General Partner”), and (ii)
aligning the interests of such individuals with those of the Partnership and
its Affiliates by providing them with equity-based awards based on the common
units of limited partner interest in the Partnership (the “Common Units”).

 

2.                                      Definitions

 

The following
capitalized terms used in the Plan have the respective meanings set forth in
this Section:

 

(a)                                  Act:  The Securities Exchange Act of 1934, as
amended, or any successor thereto.

 

(b)                                 Administrator:
The Board, or the committee or subcommittee thereof to whom authority to
administer the Plan has been delegated pursuant to Section 4 hereof.

 

(c)                                  Affiliate:  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 the Person in question. As used herein, the term “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.

 

(d)                                 Award:  Individually
or collectively, any Option, Unit Appreciation Right, or Other Unit-Based
Awards based on or relating to the Common Units issuable under the Plan.

 

(e)                                  Beneficial
Owner:  A “beneficial owner”, as such
term is defined in Rule 13d-3 under the Act (or any successor rule thereto).

 

(f)                                    Board:  The board of directors of the General
Partner.

 

(g)                                 Change
in Control:  Except as otherwise set
forth in any applicable Award agreement, the occurrence of any Person, other
than a Person approved by the General Partner, becoming the general partner of
the Partnership.

 

(h)                                 Code:  The Internal Revenue Code of 1986, as
amended, or any successor thereto.

 

(i)                                     Common
Units:  The common units representing
limited partner interests of the Partnership.

 

(j)                                     Disability:  The term “Disability” shall have the meaning
as provided under Section 409A(a)(2)(C)(i) of the Code. Notwithstanding the
foregoing or any other provision of this Plan, the definition of Disability (or
any analogous term) in an Award agreement shall

 

 

supersede the foregoing
definition; provided, however, that if no definition of Disability or any
analogous term is set forth in such agreement, the foregoing definition shall
apply.

 

(k)                                  Effective
Date:  The date on which the Board
adopts the Plan, or such later date as is designated by the Board.

 

(l)                                     Employment:  The term “Employment” as used herein shall be
deemed to refer to (i) a Participant’s employment if the Participant is an employee
of the Partnership or any of its Affiliates, (ii) a Participant’s services as a
consultant or partner, if the Participant is consultant to, or partner of, the Partnership
or of any of its Affiliates, and (iii) a Participant’s services as an non-employee
director, if the Participant is a non-employee member of the Board.

 

(m)                               Fair
Market Value:  Of a Unit on any given
date means (i) the closing sale price per Unit on the New York Stock
Exchange on that date (or, if no closing sale price is reported, the last
reported sale price), (ii) if the Units are not listed for trading on the New
York Stock Exchange, the closing sale price (or, if no closing sale price is
reported, the last reported sale price) as reported on that date in composite
transactions for the principal national securities exchange registered pursuant
to Section 6(g) of the Act on which the Units are listed, (iii) if the Units
are not so listed on a national securities exchange, the last quoted bid price
for the Units on that date in the over-the-counter market as reported by Pink
Sheets LLC or a similar organization, or (iv) if the Units are not so quoted by
Pink Sheets LLC or a similar organization, the average of the mid-point of the
last bid and ask prices for the Units on that date from a nationally recognized
independent investment banking firm selected by the General Partner for this
purpose.

 

(n)                                 General Partner:  KKR
Management LLC

 

(o)                                 KPE Transaction: The transactions contemplated in the
purchase and sale agreement between Colt, KKR Private Equity Investors, L.P.
and the other parties thereto, dated July 27, 2008.

 

(p)                                 Option:  An option to purchase Units granted pursuant
to Section 6 of the Plan.

 

(q)                                 Option
Price:  The purchase price per Unit
of an Option, as determined pursuant to Section 6(a) of the Plan.

 

(r)                                    Other
Unit-Based Awards:  Awards granted
pursuant to Section 8 of the Plan.

 

(s)                                  Partnership:  KKR & Co. L.P., a Delaware limited
partnership.

 

(t)                                    Participant:  A senior managing director, other employee,
consultant, director or other service provider of the Partnership or of any of
its Affiliates, including any director of the General Partner, who is selected
by the Administrator to participate in the Plan.

 

(u)                                 Person:  A “person”, as such term is used for purposes
of Section 13(d) or 14(d) of the Act (or any successor section thereto).

 

(v)                                 Plan:  KKR & Co. L.P. 2008 Equity Incentive
Plan.

 

(w)                               Units:  Common Units which are issued or may be
issued under the Plan.

 

2

 

(x)                                   Unit
Appreciation Right:  A unit
appreciation right granted pursuant to Section 7 of the Plan.

 

3.                                      Units
Subject to the Plan

 

Subject to Section 9 hereof,
the total number of Units which may be issued under the Plan shall be [2% of
the Common Units outstanding on a fully converted and diluted basis] (the “Initial
Plan Amount”), of which all or any portion may be issued as Common Units. Notwithstanding
the foregoing, beginning in 2009, the aggregate number of Common Units covered
by the Plan will be increased on the first day of each fiscal year during its
term to an amount equal to the Initial Plan Amount multiplied by a fraction,
the numerator of which is the total number of Common Units outstanding on the
last day of the immediately preceding fiscal year and the denominator of which
is the number of Common Units outstanding at the closing of the KPE Transaction,
unless the Administrator should decide to increase the number of Common Units
covered by the Plan by a lesser amount on any such date. The issuance of
Units or the payment of cash upon the exercise of an Award or in consideration
of the cancellation or termination of an Award shall reduce the total number of
Units available under the Plan, as applicable. Units which are subject to
Awards which are cancelled, terminate or otherwise expire by their terms
without the payment of consideration, and Units which are used to pay the
exercise price of any Award, may be granted again subject to Awards under the
Plan.

 

For purposes of
this Section 3, a Common Unit will be considered to be “covered by” the Plan if
(i) if it is available for issuance pursuant to the Plan but is not subject to
an outstanding award or (ii) it is subject to an outstanding Award. For
purposes of this Section 3, (A) an Option or Unit Appreciation Right that has
been granted under the Plan will be considered to be an “outstanding” Award
until is it exercised or otherwise terminates or expires by its terms, (B) a
Common Unit that has been granted as an Award under the Plan that is subject to
vesting conditions will be considered an “outstanding” Award until the vesting
conditions have been satisfied or the Award otherwise terminates or expires
unvested by its terms and (C) any Award other than an Option, Unit Appreciation
Right or Common Unit that is subject to vesting conditions will be considered
to be an “outstanding” award until it has been settled.

 

4.                                      Administration

 

(a)                                  Administration
and Delegation. The Plan shall be administered by the Administrator. The
Administrator may delegate the authority to grant Awards under the Plan to any
employee or group of employees of the Partnership or of any Affiliate of the Partnership;
provided  that such delegation and grants are consistent with
applicable law and guidelines established by the Board from time to time.

 

(b)                                 Substitution
of Prior Awards. Awards may, in the discretion of the Administrator, be
made under the Plan in assumption of, or in substitution for, outstanding
awards previously granted by the Partnership, any Affiliate of the Partnership
or any entity acquired by the Partnership or with which the Partnership
combines. The number of Units underlying such substitute awards shall be
counted against the aggregate number of Units available for Awards under the
Plan.

 

(c)                                  Interpretation;
Final and Binding Decisions. The Administrator is authorized to interpret
the Plan, to establish, amend and rescind any rules and regulations relating to
the Plan, and to make any other determinations that it deems necessary or
desirable for the administration of the Plan. The Administrator may correct any
defect or supply any omission or reconcile any

 

3

 

inconsistency in the Plan in
the manner and to the extent the Administrator deems necessary or desirable. Any
decision of the Administrator in the interpretation and administration of the
Plan, as described herein, shall lie within its sole and absolute discretion
and shall be final, conclusive and binding on all parties concerned (including,
but not limited to, Participants and their beneficiaries or successors).

 

(d)                                 Establishment
of Award Terms. The Administrator shall have the full power and authority
to establish the terms and conditions of any Award consistent with the
provisions of the Plan and to waive any such terms and conditions at any time
(including, without limitation, accelerating or waiving any vesting
conditions).

 

(e)                                  Payment
of Taxes Due. The Administrator shall require payment of any amount it may
determine to be necessary to withhold for federal, state, local or other taxes
as a result of the exercise, grant or vesting of an Award. The Administrator
shall establish the manner in which any such amounts may be paid by the
Participant.

 

5.                                      Limitations

 

No Award may
be granted under the Plan after the tenth anniversary of the Effective Date,
but Awards theretofore granted may extend beyond that date.

 

6.                                      Terms and
Conditions of Options

 

Options
granted under the Plan shall be non-qualified options for federal income tax
purposes, and shall be subject to the foregoing and the following terms and
conditions and to such other terms and conditions, not inconsistent therewith,
as the Administrator shall determine:

 

(a)                                  Option
Price. The Option Price per Unit shall be determined by the Administrator,
provided that, solely for the purposes of an Option granted under the Plan to a
Participant who is a U.S. taxpayer, in no event will the Option Price be less
than 100% of the Fair Market Value on the date an Option is granted.

 

(b)                                 Exercisability.
Options granted under the Plan shall be exercisable at such time and upon such
terms and conditions as may be determined by the Administrator, but in no event
shall an Option be exercisable more than ten years after the date it is
granted.

 

(c)                                  Exercise
of Options.

 

(i)             Except as otherwise provided in the Plan
or in an Award agreement, an Option may be exercised for all, or from time to
time any part, of the Units for which it is then exercisable. For purposes of
Section 6 of the Plan, the exercise date of an Option shall be the later of the
date a notice of exercise is received by the Partnership and, if applicable,
the date payment is received by the Partnership pursuant to clauses (A), (B), (C)
or (D) in the following sentence.

 

(ii)          The Option Price for the Units as to which an
Option is exercised shall be paid to the Partnership, and in the manner
designated by the Administrator, pursuant to one or more of the following
methods: (A) in cash or its equivalent (e.g., by personal check); (B) in
Units having a Fair Market Value equal to the aggregate Option Price for the
Units being purchased and satisfying such other requirements as may be imposed
by

 

4

 

the
Administrator; provided  that such Units have been held by the Participant
for no less than six months (or such other period as established from time to
time by the Administrator in order to avoid adverse accounting treatment
applying generally accepted accounting principles); (C) partly in cash and
partly in such Units; (D) if there is a public market for the Units at
such time, through the delivery of irrevocable instructions to a broker to sell
Units obtained upon the exercise of the Option and to deliver promptly to the Partnership
an amount out of the proceeds of such Sale equal to the aggregate Option Price
for the Units being purchased, or (E) to the extent permitted by the
Administrator, through net settlement in Units.

 

(iii)       No Participant shall have any rights to distributions
or other rights of a holder with respect to Units subject to an Option until
the Participant has given written notice of exercise of the Option, paid in
full for such Units and, if applicable, has satisfied any other conditions
imposed by the Administrator pursuant to the Plan.

 

(d)                                 Attestation.
Wherever in this Plan or any agreement evidencing an Award a Participant is
permitted to pay the Option Price of an Option or taxes relating to the
exercise of an Option by delivering Units, the Participant may, subject to
procedures satisfactory to the Administrator, satisfy such delivery requirement
by presenting proof of beneficial ownership of such Units, in which case the Partnership
shall treat the Option as exercised without further payment and/or shall
withhold such number of Units from the Units acquired by the exercise of the
Option, as appropriate.

 

7.                                      Terms and
Conditions of Unit Appreciation Rights

 

(a)                                  Grants.
The Administrator may grant (i) a Unit Appreciation Right independent of
an Option or (ii) a Unit Appreciation Right in connection with an Option,
or a portion thereof. A Unit Appreciation Right granted pursuant to
clause (ii) of the preceding sentence (A) may be granted at the time
the related Option is granted or at any time prior to the exercise or
cancellation of the related Option, (B) shall cover the same number of
Units covered by an Option (or such lesser number of Units as the Administrator
may determine) and (C) shall be subject to the same terms and conditions
as such Option except for such additional limitations as are contemplated by
this Section 7 (or such additional limitations as may be included in an Award
agreement).

 

(b)                                 Terms.
The exercise price per Unit of a Unit Appreciation Right shall be an amount
determined by the Administrator; provided, however, that in the
case of a Unit Appreciation Right granted in conjunction with an Option, or a
portion thereof, the exercise price may not be less than the Option Price of
the related Option; provided further that, solely for the purposes of a Unit
Appreciation Right granted under the Plan to a Participant who is a U.S.
taxpayer,  in the case of a Unit
Appreciation Right that was not granted in conjunction with an Option, the
exercise price per Unit shall not be less than 100% of the Fair Market Value on
the date the Unit Appreciation Right is granted. Each Unit Appreciation Right
granted independent of an Option shall entitle a Participant upon exercise to
an amount equal to (i) the excess of (A) the Fair Market Value on the
exercise date of one Unit over (B) the exercise price per Unit, times
(ii) the number of Units covered by the Unit Appreciation Right. Each Unit
Appreciation Right granted in conjunction with an Option, or a portion thereof,
shall entitle a Participant to surrender to the Partnership the unexercised Option,
or any portion thereof, and to receive from the Partnership in exchange
therefore an amount equal to (i) the excess of (A) the Fair Market
Value on the exercise date of one Unit over (B) the Option Price per Unit,
times (ii) the number

 

5

 

of Units covered by the Option,
or portion thereof, which is surrendered. Payment shall be made in Units or in
cash, or partly in Units and partly in cash (any such Units valued at such Fair
Market Value), all as shall be determined by the Administrator. Unit
Appreciation Rights may be exercised from time to time upon actual receipt by
the Partnership of written notice of exercise stating the number of Units with
respect to which the Unit Appreciation Right is being exercised. The date a
notice of exercise is received by the Partnership shall be the exercise date. The
Administrator, in its sole discretion, may determine that no fractional Units
will be issued in payment for Unit Appreciation Rights, but instead cash will
be paid for a fraction or the number of Units will be rounded downward to the
next whole Unit.

 

(c)                                  Limitations.
The Administrator may impose, in its discretion, such conditions upon the
exercisability of Unit Appreciation Rights as it may deem fit, but in no event
shall a Unit Appreciation Right be exercisable more than ten years after the
date it is granted.

 

8.                                      Other
Unit-Based Awards

 

The
Administrator, in its sole discretion, may grant or sell Awards of Units,
restricted Units,
restricted Common Units, deferred restricted Common Units, phantom restricted
Common Units or other Unit-Based awards based in whole or in part on the Fair
Market Value of the Common Units (“Other Unit-Based Awards”). Such Other
Unit-Based Awards shall be in such form, and dependent on such conditions, as
the Administrator shall determine, including, without limitation, the right to
receive, or vest with respect to, one or more Units (or the equivalent cash
value of such Units) upon the completion of a specified period of service, the
occurrence of an event and/or the attainment of performance objectives. Other
Unit-Based Awards may be granted alone or in addition to any other Awards
granted under the Plan. Subject to the provisions of the Plan, the
Administrator shall determine to whom and when Other Unit-Based Awards will be
made, the number of Units to be awarded under (or otherwise related to) such
Other Unit-Based Awards; whether such Other Unit-Based Awards shall be settled
in cash, Units or a combination of cash and Units; and all other terms and
conditions of such Awards (including, without limitation, the vesting
provisions thereof and provisions ensuring that all Units so awarded and issued
shall be fully paid and non-assessable).

 

9.                                      Adjustments
Upon Certain Events

 

Notwithstanding
any other provisions in the Plan to the contrary, the following provisions
shall apply to all Awards granted under the Plan:

 

(a)                                  Equity
Restructurings. In the event of any change in the outstanding Units after
the Effective Date by reason of any extraordinary Unit distribution or split,
recapitalization, rights offering, split-up or spin-off or any other event that
constitutes an “equity restructuring” within the meaning of Statement of
Financial Accounting Standards No. 123R with respect to Units, the
Administrator shall, in the manner determined appropriate or desirable by the
Administrator and without liability to any person, adjust any or all of (i) the
number of Units or other securities of the Partnership (or number and kind of
other securities or property) with respect to which Awards may be granted under
the Plan, and (ii) the terms of outstanding Awards, including (A) the number of
Units or other securities of the Partnership (or number and kind of other
securities or property) subject to outstanding Awards or to which outstanding
Awards relate and (B) the Option Price or exercise price of any Option or Unit
Appreciation Right.

 

6

 

(b)                                 Mergers,
Reorganizations and Other Corporate Transactions. In the event of any
change in the outstanding Units after the Effective Date by reason of any
reorganization, merger, consolidation, combination, repurchase or exchange of
Units or other securities of the Partnership, issuance of warrants or other
rights to purchase Units or other securities of the Partnership, or other
similar corporate transaction or event that affects the Units such that an
adjustment is determined by the Administrator in its discretion to be
appropriate or desirable, the Administrator in its sole discretion and without
liability to any person may make such substitution or adjustment, if any, as it
deems to be equitable as to (i) the number of Units or other securities of the
Partnership (or number and kind of other securities or property) with respect
to which Awards may be granted under the Plan, and (ii) the terms of any
outstanding Award, including (A) the number of Units or other securities of the
Partnership (or number and kind of other securities or property) subject to
outstanding Awards or to which outstanding Awards relate and (B) the Option
Price or exercise price of any Option or Unit Appreciation Right.

 

(c)                                  Change
in Control. In the event of a Change in Control after the Effective Date,
(i) if determined by the Administrator in the applicable Award agreement or
otherwise, any outstanding Awards then held by Participants which are
unexercisable or otherwise unvested or subject to lapse restrictions shall
automatically be deemed exercisable or otherwise vested or no longer subject to
lapse restrictions, as the case may be, as of immediately prior to such Change
of Control and (ii) the Administrator may (subject to Section 17), but shall
not be obligated to, (A) accelerate, vest or cause the restrictions to lapse
with respect to all or any portion of an Award, (B) cancel such Awards for fair
value (as determined in the sole discretion of the Administrator) which, in the
case of Options and Unit Appreciation Rights, may equal the excess, if any, of
value of the consideration to be paid in the Change in Control transaction to
holders of the same number of Units subject to such Options or Unit
Appreciation Rights (or, if no consideration is paid in any such transaction,
the Fair Market Value of the Units subject to such Options or Unit Appreciation
Rights) over the aggregate exercise price of such Options or Unit Appreciation
Rights, (C) provide for the issuance of substitute Awards that will
substantially preserve the otherwise applicable terms of any affected Awards
previously granted hereunder as determined by the Administrator in its sole
discretion or (D) provide that for a period of at least 15 days prior to the
Change in Control, such Options shall be exercisable as to all shares subject
thereto and that upon the occurrence of the Change in Control, such Options
shall terminate and be of no further force and effect.

 

10.                               No Right to
Employment or Awards

 

The granting
of an Award under the Plan shall impose no obligation on the Partnership or any
Affiliate to continue the Employment of a Participant and shall not lessen or
affect the Partnership’s or Affiliate’s right to terminate the Employment of
such Participant. No Participant or other Person shall have any claim to be
granted any Award, and there is no obligation for uniformity of treatment of
Participants, or holders or beneficiaries of Awards. The terms and conditions
of Awards and the Administrator’s determinations and interpretations with
respect thereto need not be the same with respect to each Participant (whether
or not such Participants are similarly situated).

 

11.                               Successors
and Assigns

 

The Plan shall
be binding on all successors and assigns of the Partnership and a Participant,
including without limitation, the estate of such Participant and the executor,

 

7

 

administrator or trustee of
such estate, or any receiver or trustee in bankruptcy or representative of the
Participant’s creditors.

 

12.                               Nontransferability
of Awards

 

Unless
otherwise determined or approved by the Administrator, an Award shall not be
transferable or assignable by the Participant otherwise than by will or by the
laws of descent and distribution. An Award exercisable after the death of a
Participant may be exercised by the legatees, personal representatives or
distributees of the Participant.

 

13.                               Amendments
or Termination

 

(a)                                  The
Board may amend, alter or discontinue the Plan, but no amendment, alteration or
discontinuation shall be made, without the consent of a Participant, if such
action would diminish any of the rights of the Participant under any Award
theretofore granted to such Participant under the Plan; provided, however,
that the Administrator may (a) amend the Plan in such manner as it deems
necessary to permit the granting of Awards meeting the requirements of the Code
or other applicable laws (including, without limitation, to avoid adverse tax
consequences to the Partnership or to Participants), and (b) amend any
outstanding Awards in a manner that is not adverse (other than in a de minimis manner) to a Participant, except as otherwise may
be permitted pursuant to Section 9 hereof or as is otherwise contemplated
pursuant to the terms of the Award, without the Participant’s consent.

 

(b)                                 Notwithstanding
any provision of the Plan to the contrary, in the event that the Administrator
determines that any amounts payable hereunder will be taxable to a Participant
under Section 409A of the Code and related Department of Treasury guidance
prior to payment to such Participant of such amount, the Partnership may (a)
adopt such amendments to the Plan and Awards and appropriate policies and
procedures, including amendments and policies with retroactive effect, that the
Administrator determines necessary or appropriate to preserve the intended tax
treatment of the benefits provided by the Plan and Awards hereunder and/or (b)
take such other actions as the Administrator determines necessary or
appropriate to avoid the imposition of an additional tax under Section 409A of
the Code.

 

14.                               International
Participants

 

With respect
to Participants who reside or work outside the United States of America, the
Administrator may, in its sole discretion, amend the terms of the Plan or
Awards with respect to such Participants in order to conform such terms with
the requirements of local law or to obtain more favorable tax or other
treatment for a Participant, the Partnership or an Affiliate.

 

15.                               Choice of
Law

 

The Plan shall
be governed by and construed in accordance with the law of the State of New
York.

 

16.                               Other Laws;
Restrictions on Transfer of Units

 

The
Administrator may refuse to issue or transfer any Units or other consideration
under an Award if, acting in its sole discretion, it determines that the
issuance or transfer of such Units or such other consideration might violate
any applicable law or regulation or entitle the

 

8

 

Partnership to recover the same
under Section 16(b) of the Act, as amended, and any payment tendered to the
Partnership by a Participant, other holder or beneficiary in connection with
the exercise of such Award shall be promptly refunded to the relevant
Participant, holder or beneficiary. Without limiting the generality of the
foregoing, no Award granted hereunder shall be construed as an offer to sell
securities of the Partnership, and no such offer shall be outstanding, unless
and until the Administrator in its sole discretion has determined that any such
offer, if made, would be in compliance with all applicable requirements of the
United States federal and any other applicable securities laws.

 

17.                               Effectiveness
of the Plan

 

The Plan shall
be effective as of the Effective Date.

 

18.                               Section 409A

 

To the extent
applicable, this Plan and Awards issued hereunder shall be interpreted in
accordance with Section 409A of the Code and Department of Treasury regulations
and other interpretative guidance issued thereunder, including without
limitation any such regulations or other guidance that may be issued after the
Effective Date. Notwithstanding other provisions of the Plan or any Award agreements
thereunder, no Award shall be granted, deferred, accelerated, extended, paid
out or modified under this Plan in a manner that would result in the imposition
of an additional tax under Section 409A of the Code upon a Participant. In the
event that it is reasonably determined by the Administrator that, as a result
of Section 409A of the Code, payments in respect of any Award under the Plan
may not be made at the time contemplated by the terms of the Plan or the
relevant Award agreement, as the case may be, without causing the Participant
holding such Award to be subject to taxation under Section 409A of the Code,
the Partnership may take whatever actions the Administrator determines
necessary or appropriate to comply with, or exempt the Plan and Award agreement
from the requirements of Section 409A of the Code and related Department of
Treasury guidance and other interpretive materials as may be issued after the
Effective Date, which action may include, but is not limited to, delaying
payment to a Participant who is a “specified employee” within the meaning of
Section 409A of the Code until the first day following the six-month period
beginning on the date of the Participant’s termination of Employment. The Partnership
shall use commercially reasonable efforts to implement the provisions of this
Section 18 in good faith; provided that neither the Partnership, the
Administrator nor any employee, director or representative of the Partnership
or of any of its Affiliates shall have any liability to Participants with
respect to this Section 18.

 

9

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