Document:

Exhibit 10.4

 

AMENDED AND RESTATED
INVESTMENT AGREEMENT

 

by and among

 

KKR & CO. L.P.,

 

KKR PRIVATE EQUITY
INVESTORS, L.P.,

 

KKR HOLDINGS L.P.,

 

(solely for purposes of Section 4.7
and Section 8.12),

 

KKR MANAGEMENT HOLDINGS
L.P.,

 

(solely for purposes of Section 5
and Section 8.2),

 

and

 

KKR FUND HOLDINGS L.P.

 

(solely for purposes of Section 5
and Section 8.2)

 

Dated
as of October 1, 2009

 

 

TABLE
OF CONTENTS

 

	
   

  	
   

  	
   

  	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  1.

  	
   

  	
  THE
  RIGHT TO EFFECT A US LISTING

  	
   

  	
  1

  
	
   

  	
   

  	
  1.1

  	
  Right
  to Effect a US Listing

  	
   

  	
  1

  
	
   

  	
   

  	
  1.2

  	
  Closing

  	
   

  	
  2

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  2.

  	
   

  	
  REPRESENTATIONS
  AND WARRANTIES OF KPE

  	
   

  	
  2

  
	
   

  	
   

  	
  2.1

  	
  Organization

  	
   

  	
  2

  
	
   

  	
   

  	
  2.2

  	
  Authority

  	
   

  	
  2

  
	
   

  	
   

  	
  2.3

  	
  No
  Conflicts

  	
   

  	
  3

  
	
   

  	
   

  	
  2.4

  	
  Consents
  and Approvals

  	
   

  	
  3

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  3.

  	
   

  	
  REPRESENTATIONS
  AND WARRANTIES OF THE CONTROLLING PARTNERSHIP

  	
   

  	
  3

  
	
   

  	
   

  	
  3.1

  	
  Organization

  	
   

  	
  3

  
	
   

  	
   

  	
  3.2

  	
  Authority

  	
   

  	
  3

  
	
   

  	
   

  	
  3.3

  	
  No
  Conflicts

  	
   

  	
  4

  
	
   

  	
   

  	
  3.4

  	
  Consents
  and Approvals

  	
   

  	
  4

  
	
   

  	
   

  	
  3.5

  	
  Due
  Authorization and Validity

  	
   

  	
  4

  
	
   

  	
   

  	
  3.6

  	
  Activities

  	
   

  	
  5

  
	
   

  	
   

  	
  3.7

  	
  Other
  Agreements

  	
   

  	
  5

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  4.

  	
   

  	
  ADDITIONAL
  AGREEMENTS

  	
   

  	
  6

  
	
   

  	
   

  	
  4.1

  	
  Contribution
  of Purchaser Common Units; Restrictions; Affirmation of Assumption of
  Liabilities

  	
   

  	
  6

  
	
   

  	
   

  	
  4.2

  	
  Registration
  Statement.

  	
   

  	
  7

  
	
   

  	
   

  	
  4.3

  	
  Reasonable
  Best Efforts

  	
   

  	
  8

  
	
   

  	
   

  	
  4.4

  	
  Dissolution
  Transactions

  	
   

  	
  9

  
	
   

  	
   

  	
  4.5

  	
  Stock
  Exchange Listing

  	
   

  	
  9

  
	
   

  	
   

  	
  4.6

  	
  Insurance

  	
   

  	
  9

  
	
   

  	
   

  	
  4.7

  	
  Execution
  of Additional Agreements

  	
   

  	
  10

  
	
   

  	
   

  	
  4.8

  	
  Delivery
  of Letters

  	
   

  	
  10

  
	
   

  	
   

  	
  4.9

  	
  Resignation
  of Independent Directors

  	
   

  	
  11

  
	
   

  	
   

  	
  4.10

  	
  Consent
  Rights

  	
   

  	
  11

  
	
   

  	
   

  	
  4.11

  	
  Ongoing
  Reporting Obligations

  	
   

  	
  13

  
	
   

  	
   

  	
  4.12

  	
  Equity
  Incentive Plans

  	
   

  	
  13

  
	
   

  	
   

  	
  4.13

  	
  Treatment
  of Seller Unit Appreciation Rights

  	
   

  	
  14

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  5.

  	
   

  	
  INDEMNIFICATION

  	
   

  	
  14

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  6.

  	
   

  	
  CONDITIONS
  PRECEDENT

  	
   

  	
  17

  
	
   

  	
   

  	
  6.1

  	
  Conditions

  	
   

  	
  17

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  7.

  	
   

  	
  TERMINATION

  	
   

  	
  18

  
	
   

  	
   

  	
  7.1

  	
  Termination

  	
   

  	
  18

  
	
   

  	
   

  	
  7.2

  	
  Effect
  of Termination

  	
   

  	
  18

  

 

 

	
  8.

  	
   

  	
  GENERAL
  PROVISIONS

  	
   

  	
  18

  
	
   

  	
   

  	
  8.1

  	
  Nonsurvival
  of Representations, Warranties and Agreements

  	
   

  	
  18

  
	
   

  	
   

  	
  8.2

  	
  Expenses

  	
   

  	
  18

  
	
   

  	
   

  	
  8.3

  	
  Change
  in Law

  	
   

  	
  18

  
	
   

  	
   

  	
  8.4

  	
  Notices

  	
   

  	
  19

  
	
   

  	
   

  	
  8.5

  	
  Interpretation

  	
   

  	
  20

  
	
   

  	
   

  	
  8.6

  	
  Amendment;
  Waiver

  	
   

  	
  21

  
	
   

  	
   

  	
  8.7

  	
  Counterparts

  	
   

  	
  21

  
	
   

  	
   

  	
  8.8

  	
  Entire
  Agreement

  	
   

  	
  21

  
	
   

  	
   

  	
  8.9

  	
  Severability

  	
   

  	
  21

  
	
   

  	
   

  	
  8.10

  	
  Assignment.

  	
   

  	
  21

  
	
   

  	
   

  	
  8.11

  	
  Third
  Party Beneficiaries

  	
   

  	
  22

  
	
   

  	
   

  	
  8.12

  	
  Further
  Assurances

  	
   

  	
  22

  
	
   

  	
   

  	
  8.13

  	
  Actions
  of KPE

  	
   

  	
  22

  
	
   

  	
   

  	
  8.14

  	
  Actions
  of the Controlling Partnership

  	
   

  	
  22

  
	
   

  	
   

  	
  8.15

  	
  Governing
  Law

  	
   

  	
  22

  
	
   

  	
   

  	
  8.16

  	
  Submission
  to Jurisdiction

  	
   

  	
  23

  
	
   

  	
   

  	
  8.17

  	
  Enforcement

  	
   

  	
  23

  
	
   

  	
   

  	
  8.18

  	
  WAIVER
  OF JURY TRIAL

  	
   

  	
  23

  
	
   

  	
   

  	
  8.19

  	
  Effectiveness

  	
   

  	
  23

  

 

Exhibits

 

Exhibit A
—  Form of Exchange Agreement

Exhibit B
—  Form of Tax Receivables Agreement

Exhibit C
—  Form of Amended and Restated
Limited Partnership Agreement of the Controlling Partnership

Exhibit D
— Form of Amended and Restated Limited Liability Company Agreement of the Controlling
Partnership GP

Exhibit E
— Form of Amendment to KPE Limited Partnership Agreement

Exhibit F
— Form of Pre-Listing Equity Incentive Plan

Exhibit G
— Form of Post-Listing Equity Incentive Plan

 

ii

 

INDEX
OF DEFINED TERMS

 

	
  Adjusted
  UARs

  	
   

  	
  14

  
	
  affiliate

  	
   

  	
  20

  
	
  Agreement

  	
   

  	
  1

  
	
  Associates
  Holdings

  	
   

  	
  12

  
	
  Business
  Day

  	
   

  	
  2

  
	
  Class A
  Units

  	
   

  	
  6

  
	
  Closing

  	
   

  	
  2

  
	
  Closing
  Date

  	
   

  	
  2

  
	
  Confidential
  Controlling Partnership Disclosure Schedules

  	
   

  	
  5

  
	
  Consent
  Period

  	
   

  	
  10

  
	
  Contribution
  and Indemnification Agreement

  	
   

  	
  12

  
	
  Contribution
  Transactions

  	
   

  	
  6

  
	
  Controlling
  Partnership

  	
   

  	
  1

  
	
  Controlling
  Partnership GP Agreement

  	
   

  	
  10

  
	
  Controlling
  Partnership LPA

  	
   

  	
  10

  
	
  Controlling
  Partnership Units

  	
   

  	
  5

  
	
  Covered
  Agreement

  	
   

  	
  11

  
	
  Dissolution
  Date

  	
   

  	
  9

  
	
  Dissolution
  Transactions

  	
   

  	
  9

  
	
  Distribution

  	
   

  	
  9

  
	
  Election
  Notice

  	
   

  	
  1

  
	
  Exchange
  Act

  	
   

  	
  6

  
	
  Exchange
  Agent

  	
   

  	
  9

  
	
  Exchange
  Agreement

  	
   

  	
  10

  
	
  Fund

  	
   

  	
  12

  
	
  Governmental
  Entity

  	
   

  	
  3

  
	
  Group
  Partnerships

  	
   

  	
  1

  
	
  Holdings

  	
   

  	
  1

  
	
  Independent
  Directors

  	
   

  	
  7

  
	
  KPE

  	
   

  	
  1

  
	
  KPE
  Common Units

  	
   

  	
  5

  
	
  KPE
  GP

  	
   

  	
  1

  
	
  KPE
  Limited Partnership Agreement

  	
   

  	
  2

  
	
  KPE
  UAR

  	
   

  	
  14

  
	
  Listing
  Right

  	
   

  	
  1

  
	
  Losses

  	
   

  	
  14

  
	
  Management
  Holdings

  	
   

  	
  1

  
	
  Original
  Investment Agreement

  	
   

  	
  1

  
	
  person

  	
   

  	
  20

  
	
  Post-Listing
  Incentive Plan

  	
   

  	
  13

  
	
  Pre-Listing
  Incentive Plan

  	
   

  	
  13

  
	
  Proceedings

  	
   

  	
  14

  
	
  Purchase
  Agreement

  	
   

  	
  1

  
	
  Purchaser

  	
   

  	
  1

  
	
  Purchaser
  Common Units

  	
   

  	
  1

  
	
  Purchaser GP

  	
   

  	
  5

  
	
  Registration
  Statement

  	
   

  	
  6

  
	
  Related
  Person

  	
   

  	
  11

  
	
  SEC

  	
   

  	
  4

  
	
  Securities
  Act

  	
   

  	
  6

  
	
  Specified
  Information

  	
   

  	
  8

  
	
  Tax
  Receivables Agreement

  	
   

  	
  10

  
	
  Transfer

  	
   

  	
  6

  
	
  Ultimate
  Owners

  	
   

  	
  6

  
	
  US Listing

  	
   

  	
  1

  

 

iii

 

 

INVESTMENT AGREEMENT

 

This AMENDED AND RESTATED INVESTMENT AGREEMENT,
dated as of October 1, 2009 (as amended, supplemented or otherwise
modified from time to time, this “Agreement”), is entered into by and
among (1) KKR & Co. L.P., a Delaware limited partnership (the “Controlling
Partnership”), (2) KKR Private Equity Investors, L.P., a Guernsey
limited partnership (“KPE”), acting through KKR Guernsey GP Limited, a
Guernsey company limited by shares (the “KPE GP”) in its capacity as the
general partner of KPE, (3) KKR Management Holdings L.P. (“Management
Holdings”), a Delaware limited partnership, acting through KKR Management
Holdings Corp. in its capacity as the general partner of Management Holdings, (4) KKR
Fund Holdings L.P., a Cayman Islands exempted limited partnership, acting
through KKR Management LLC in its capacity as the indirect general partner of
KKR Fund Holdings L.P. (Management Holdings and KKR Fund Holdings L.P. are
sometimes collectively referred to herein as the “Group Partnerships”)
and (5) KKR Holdings L.P., a Cayman Islands exempted limited partnership (“Holdings”),
acting through KKR Holdings GP Limited in its capacity as general partner of
Holdings (solely for purposes of Section 4.7 and Section 8.12).

 

WHEREAS, pursuant to the Amended and Restated
Purchase and Sale Agreement dated as of July 19, 2009 (the “Purchase
Agreement”), among the Controlling Partnership, KPE, KKR Group Holdings
L.P. (the “Purchaser”) and the other parties thereto, the Purchaser has
agreed to issue and deliver to KPE a number of units representing limited
partner interests in the Purchaser (the “Purchaser Common Units”); and

 

WHEREAS,
the original Investment Agreement by and among the Controlling Partnership,
KPE, the Group Partnerships and Holdings was executed as of August 4, 2009
(the “Original Investment Agreement”) in order to provide the
parties with certain rights and obligations with respect to the Purchaser
Common Units that will be issued to KPE pursuant to the Purchase Agreement; and

 

WHEREAS, the parties to the Original Investment Agreement now desire to
enter into this Agreement to amend and restate the Original Investment Agreement in its entirety
as more fully set forth below.

 

NOW, THEREFORE, in consideration of the mutual
covenants, representations, warranties and agreements contained herein, and
intending to be legally bound hereby, the parties agree as follows:

 

1.                                       THE RIGHT TO EFFECT A US LISTING

 

1.1                                 Right to Effect a US Listing. 
Subject to the terms and conditions of this Agreement, each of KPE and
the Controlling Partnership shall have the right (the “Listing Right”)
to require that the other use its reasonable best efforts to cause the
Contribution Transactions to occur and, in connection therewith, the
Controlling Partnership Units to be listed and traded on the New York Stock
Exchange or The NASDAQ Stock Market (the “US Listing”) by delivering to
the other party a written notice informing such party of its exercise of the
Listing Right (such notice, an “Election Notice”).  The Controlling Partnership shall only be
permitted to deliver an Election Notice following the 6 month anniversary of
the Satisfaction Date (as defined

 

 

in the Purchase Agreement) and KPE shall only be permitted to
deliver an Election Notice following the 12 month anniversary of the
Satisfaction Date (as defined in the Purchase Agreement).  If an Election Notice is delivered by either
KPE or the Controlling Partnership, subject to Section 4.2 the Controlling
Partnership shall, after promptly advising and consulting with KPE (it being
understood that the decision to take any action shall be in the sole
determination of the Controlling Partnership) be entitled to take any and all
actions that it deems necessary or appropriate in order to effectuate the US
Listing and any transactions ancillary thereto, including selecting the
national stock exchange on which to effect the US Listing and determining
whether to appoint one or more dealer managers or information agents in
connection therewith and whether to effectuate a separate primary offering of
its units (on an underwritten basis or otherwise) simultaneously therewith.

 

1.2                                 Closing.  Subject to
the terms and conditions of this Agreement, if an Election Notice is delivered
in accordance with Section 1.1, the closing of the US Listing (the “Closing”)
shall take place at the offices of Simpson Thacher & Bartlett LLP, 425
Lexington Avenue, New York, New York 10017 at 9:00 a.m. eastern time on
the date that is the fifth Business Day after the satisfaction or waiver
(subject to applicable law) of the conditions set forth in Section 6 of
this Agreement (other than conditions which by their terms are to be satisfied
at Closing but subject to the satisfaction or waiver of those conditions), or
such other place, date or time as the parties may mutually agree (the “Closing
Date”).  For purposes of this
Agreement, a “Business Day” shall mean any day that is not a Saturday, a
Sunday or other day on which banks are required or authorized by law to close
in the City of New York, Amsterdam, Netherlands, the Island of Guernsey or the
Cayman Islands.

 

2.                                       REPRESENTATIONS AND WARRANTIES OF KPE

 

KPE GP acting as the general partner of KPE hereby
represents and warrants to the Controlling Partnership as follows:

 

2.1                                 Organization. 
KPE is a limited partnership duly organized, validly existing and in
good standing under the laws of the Island of Guernsey.

 

2.2                                 Authority.  KPE (acting
through the KPE GP) has the requisite power and authority to execute and
deliver this Agreement and to perform its obligations hereunder and consummate
the transactions contemplated hereby. 
The execution, delivery and performance of this Agreement and the
consummation of the transactions contemplated hereby have been, or will be, duly
authorized by all necessary action on the part of KPE and the KPE GP and,
except as contemplated by Section 2.4, no other action is necessary on the
part of KPE or the KPE GP for the execution, delivery and performance by KPE
(acting through the KPE GP) of this Agreement and the consummation of the
transactions contemplated hereby.  This
Agreement has been duly executed and delivered by the KPE GP acting as the
general partner of KPE and, assuming due authorization, execution and delivery
by the Controlling Partnership and the Group Partnerships constitutes a valid
and binding obligation of KPE enforceable against KPE in accordance with its
terms, except to the extent that enforceability may be limited by bankruptcy,
insolvency, reorganization, moratorium or other laws relating to or affecting
creditors’ rights generally and by general equity principles.

 

2

 

2.3                                 No Conflicts. 
Neither the execution and delivery of this Agreement by KPE nor the
consummation by KPE of the transactions contemplated hereby nor compliance by
KPE with any of the terms or provisions hereof, will (i) upon execution of
the amendment to the KPE Limited Partnership Agreement substantially in the
form attached hereto as Exhibit E, violate any provision of the amended
and restated limited partnership agreement of KPE, dated as of May 2, 2007
(as amended, supplemented or otherwise modified from time to time, the “KPE
Limited Partnership Agreement”) and (ii) assuming that the consents,
approvals and filings referred to in Section 2.4 are duly obtained or made
violate any statute, code, ordinance, rule or regulation applicable to
KPE.

 

2.4                                 Consents and Approvals.  No order,
permission, consent, approval, license, authorization, registration, or
validation of, or filing with, or notice to, or exemption by, any court,
administrative agency or commission or other governmental authority or
instrumentality, legislative body or self-regulatory organization (each a “Governmental
Entity”) by KPE is necessary in connection with the execution, delivery and
performance of this Agreement by KPE and the consummation by KPE of the
transactions contemplated hereby, except (i) for the giving of written
notice by the KPE GP to the Guernsey Financial Services Commission, (ii) for
the giving of notice by KPE to the Authority for the Financial Markets in The
Netherlands, (iii) for consultation with Euronext Amsterdam with respect
to the amendment to the Seller Limited Partnership Agreement substantially in
the form attached hereto as Exhibit E and for filing of the draft
amendment with the Authority for the Financial Markets in the Netherlands and
Euronext Amsterdam, (iv) for any consent, authorization, order or approval
by the Authority for the Financial Markets in the Netherlands in connection
with the Distribution, (v) the consent of Euronext Amsterdam N.V. for the
delisting of KPE Common Units from Euronext Amsterdam by NYSE Euronext, the
regulated market of Euronext Amsterdam N.V., and (vi) for the KPE GP
filing notice of the dissolution of KPE with Her Majesty’s Greffier in Guernsey
and publishing such notice in La Gazette Officielle, and for the KPE GP
preparing and providing all limited partners of KPE with a copy of an account
of the winding up of KPE.

 

3.                                       REPRESENTATIONS AND WARRANTIES OF THE CONTROLLING
PARTNERSHIP

 

The Controlling Partnership GP acting as the general
partner of the Controlling Partnership hereby represents and warrants to KPE as
follows:

 

3.1                                 Organization. 
The Controlling Partnership is a limited partnership duly organized, validly
existing and in good standing under the laws of the jurisdiction in which it is
organized.

 

3.2                                 Authority.  The
Controlling Partnership (acting through the Controlling Partnership GP) and the
Group Partnerships have the requisite power and authority to execute and
deliver this Agreement, to perform their obligations hereunder and to
consummate the transactions contemplated hereby.  The execution, delivery and performance of
this Agreement have been and the consummation of the transactions contemplated
hereby have been, or will be, duly authorized by all necessary action on the
part of the Controlling Partnership and the Group Partnerships and no other
action will be necessary on the part of the Controlling Partnership, the
Controlling Partnership GP and the Group Partnerships for the execution,
delivery and

 

3

 

performance by the
Controlling Partnership (acting through the Controlling Partnership GP) and the
Group Partnerships of this Agreement and the consummation of the transactions
contemplated hereby.  This Agreement has
been duly executed and delivered by the Controlling Partnership and the Group
Partnerships and, assuming due authorization, execution and delivery by KPE,
constitutes a valid and binding obligation of the Controlling Partnership and
the Group Partnerships, enforceable against the Controlling Partnership and the
Group Partnerships in accordance with its terms, except to the extent that
enforceability may be limited by bankruptcy, insolvency, reorganization,
moratorium or other laws relating to or affecting creditors’ rights generally
and by general equity principles.

 

3.3                                 No Conflicts. 
Neither the execution and delivery of this Agreement by the Controlling
Partnership and the Group Partnerships nor the consummation by the Controlling
Partnership and the Group Partnerships of the transactions contemplated hereby,
nor compliance by the Controlling Partnership and the Group Partnerships with
any of the terms or provisions hereof, will (i) violate any provision of
the certificate of formation or limited partnership agreement of the
Controlling Partnership or the Group Partnerships or (ii) except as would
not reasonably be expected to prevent or materially impede or delay the
consummation of the transactions contemplated hereby (x)  assuming that
the consents, approvals and filings referred to in Section 3.4 are duly
obtained or made violate any statute, code, ordinance, rule or regulation
applicable to the Controlling Partnership or the Group Partnerships or (y) violate,
conflict with, result in a breach of any provision or constitute a default (or
an event which, with notice or lapse of time, or both, would constitute a
default) under any of the terms, conditions or provisions of any note, bond,
mortgage, indenture, deed of trust, license, lease, agreement or other
instrument or obligation to which the Controlling Partnership or any of the
Group Partnerships is a party, or by which any of them or any of their
respective properties or assets may be bound or affected.

 

3.4                                 Consents and Approvals. 
No order, permission, consent, approval, license, authorization,
registration, or validation of, or filing with, or notice to, or exemption by,
any Governmental Entity by the Controlling Partnership or the Group
Partnerships is necessary in connection with the execution, delivery and
performance of this Agreement by the Controlling Partnership or the Group
Partnerships and the consummation by the Controlling Partnership or the Group
Partnerships of the transactions contemplated hereby, except (i) the
approval of the listing of the Controlling Partnership Units to be issued
pursuant to Section 4.1 on the New York Stock Exchange or The NASDAQ Stock
Market, as applicable, (ii) the filing with the United States Securities
and Exchange Commission (the “SEC”) and the declaration of effectiveness
thereby of the Registration Statement and (iii) filings necessary to
comply with foreign or state securities or blue sky laws.

 

3.5                                 Due Authorization and Validity. 
The Controlling Partnership Units and the limited partnership interests
evidenced thereby to be issued pursuant to Section 4.1 will be duly
authorized prior to issuance and, when issued pursuant to the terms and
conditions of this Agreement, will be validly issued and fully paid and
non-assessable (except as such non-assessability may be affected by Section 17-303,
Section 17-607 or Section 17-804 of the Delaware Revised Uniform
Limited Partnership Act or the Controlling Partnership LPA) and free and clear
of any Liens.  Except for (i) Controlling
Partnership Units issuable to KPE pursuant to Section 4.1, (ii) Controlling
Partnership Units issuable upon exchange by Holdings

 

4

 

or its designees or other
holders of Class A Units to the Controlling Partnership of partner
interests in the Group Partnerships in accordance with the Exchange Agreement
or a similar agreement providing for similar exchange rights, (iii) Controlling
Partnership Units that may be issued at or following the Closing upon exchange
of Group Partnership Units issued pursuant to awards
(including actual Group Partnership Units or phantom, option or
other derivative securities) granted under the Pre-Listing Incentive Plan
following the Effective Time (as defined in the Purchase Agreement), in
accordance with Section 4.12 of this Agreement; provided, that for
the avoidance of doubt, awards of Controlling Partnership Common
Units (including grants of phantom, option or other derivative
securities) may also be issued upon the completion of the Closing under
the Post-Listing Incentive Plan in accordance with its terms, (iv) non-economic general partner
interests in the Controlling Partnership, (v) Controlling Partnership
Units that may be issued in a separate primary offering by the Controlling
Partnership simultaneously with the US Listing and (vi) the assumption by
the Controlling Partnership of the Adjusted UARs in accordance with Section 4.13,
there are (A) no outstanding equity interests in the Controlling
Partnership, (B) outstanding securities or other instruments or rights of
any person convertible or exchangeable for equity interests in the Controlling
Partnership or (C) options or other rights to acquire from the Controlling
Partnership any equity interests in the Controlling Partnership or obligations
of the Controlling Partnership to issue any equity securities in the
Controlling Partnership.

 

3.6                                 Activities. Except as set forth in Section 3.6 of the
Confidential Controlling Partnership Disclosure Schedules delivered to the
Seller by the Controlling Partnership concurrently with the execution of this
Agreement (the “Confidential Controlling Partnership Disclosure Schedules”),
each of the Controlling Partnership, the
Purchaser, KKR Group Limited (the “Purchaser GP”) and KKR Management
Holdings Corp. has been formed solely for the purpose of engaging in the
transactions contemplated hereby (including the Contribution Transactions) and
in the Purchase Agreement and serving as the direct or indirect general partner
of the Purchaser and the Group Partnerships, as applicable, and has engaged
and, at the Closing, will have engaged in no other business activities, and has
incurred and, at the Closing, will have incurred no liabilities or obligations
other than in furtherance of the transactions contemplated hereby (including
the Contribution Transactions) or as a result of serving as the direct or
indirect general partner of the Purchaser or the Group Partnerships, as
applicable.

 

3.7                                 Other Agreements. 
Each of the agreements referred to in Section 4.7 will be duly
authorized, executed and delivered by the Controlling Partnership or the
parties thereto that are affiliated with the Controlling Partnership, as
applicable, and, assuming due authorization, execution and delivery by the
other parties thereto, will be a valid and binding obligation of the
Controlling Partnership or the parties thereto that are affiliated with the
Controlling Partnership, as applicable, enforceable against them in accordance
with its terms, except to the extent that enforceability may be limited by
bankruptcy, insolvency, reorganization, moratorium or other laws relating to or
affecting creditors’ rights generally and by general equity principles.

 

5

 

4.                                       ADDITIONAL AGREEMENTS

 

4.1                                 Contribution of Purchaser Common Units;
Restrictions; Affirmation of Assumption of Liabilities.

 

(a)                                  In the event that an Election Notice is delivered in
accordance with Section 1.1, at the time of the Closing, KPE shall
contribute all of its Purchaser Common Units to the Controlling Partnership in
exchange for a number of units representing limited partner interests in the
Controlling Partnership (the “Controlling Partnership Units”) equal to
the number of common units of KPE (the “KPE Common Units”) then
outstanding.  The transactions
contemplated by this Section 4.1(a), together with the execution of the
agreements required to be executed pursuant to Section 4.7 prior to the
Closing, are referred to as the “Contribution Transactions”.

 

(b)                                 Except as contemplated by this Section 4.1, KPE shall
not, and shall not permit any of its affiliates to, directly or indirectly
transfer, sell, assign, pledge, gift, donate or otherwise dispose of (“Transfer”)
its Purchaser Common Units without the prior written consent of the Controlling
Partnership.  Other than in furtherance
of the transactions contemplated by this Agreement, neither KPE nor the KPE GP
shall engage in any other business activities, including making, or agreeing to
make, any investments in any person and incurring any liabilities or
obligations.  Other than in furtherance
of the transactions contemplated hereby (including the Contribution
Transactions) or serving as the direct or indirect general partner of the Purchaser
or the Group Partnerships, as applicable, each of the Controlling Partnership,
the Purchaser, the Purchaser GP and KKR Management Holdings Corp. shall engage
in no other business activities, including making, or agreeing to make, any
investments in any person and incurring any liabilities or obligations.

 

(c)                                  Notwithstanding any provision herein to the contrary, it is
the intention of the parties hereto that, with respect to any benefits of the
combined business of the Consolidated Persons to which the holders of the Class A
units in the Group Partnerships (the “Class A Units”) are entitled,
the ultimate beneficial owners of the Class A Units (in their capacity as
such, the “Ultimate Owners”) are intended to be entitled to such
benefits in proportion to their relative ultimate beneficial ownership of the Class A
Units and, accordingly, from the Effective Time until the Closing, issuances of
equity or other economic interests, dividends and other distributions by any
Consolidated Person shall be structured to ensure that no Ultimate Owner shall
be disproportionately adversely affected relative to any other Ultimate Owner
without the consent of any such Ultimate Owner (or the Seller, in the case of
an Ultimate Owner whose beneficial interest is through the ownership of KPE
Common Units) that would be so disproportionately adversely affected.

 

(d)                                 In the event that an Election Notice is delivered in
accordance with Section 1.1, at the time of the completion of the
Dissolution Transactions, the Controlling Partnership shall cause the Purchaser
to reaffirm the assumption of the liabilities assumed by the Purchaser pursuant
to Section 1.2 of the Purchase Agreement.

 

6

 

4.2                               Registration
Statement.

 

(a)                                 The Controlling Partnership shall as promptly as practicable
following the delivery of an Election Notice in accordance with Section 1.1
prepare a registration statement on such form as the Controlling Partnership in
consultation with its legal counsel shall determine to be appropriate under the
United States Securities Exchange Act of 1934, as amended (the “Exchange Act”)
and, if applicable, the United States Securities Act of 1933, as amended (the “Securities
Act”) for the Controlling Partnership Units to be issued to, and
distributed by, KPE pursuant to this Agreement (such registration statement(s),
as amended or supplemented from time to time and together with any prospectus
included therein, the “Registration Statement”) and shall as promptly as
practicable thereafter file the Registration Statement with the SEC.  Each of the Controlling Partnership and KPE
shall use its reasonable best efforts to have the Registration Statement declared
effective by the SEC as promptly as practicable and to keep the Registration
Statement effective as long as is necessary to consummate the transactions
contemplated by this Agreement.  As
promptly as practicable following the date on which the Registration Statement
is declared effective by the SEC, KPE shall mail, or otherwise disseminate in a
manner that complies with any applicable law, rule, regulation and the KPE
Limited Partnership Agreement, the Registration Statement (or prospectus
contained therein) to the holders of the KPE Common Units.  Notwithstanding the foregoing, nothing
contained in this Agreement, including Section 4.3 and Section 4.5,
shall be deemed to require the Controlling Partnership or any of its affiliates
to take any action that would require the Controlling Partnership or any of its
affiliates to become subject to regulation under the Investment Company Act.

 

(b)                                 The directors of the KPE GP who are not affiliated with the
Controlling Partnership (the “Independent Directors”) shall furnish, or
cause to be furnished, to the Controlling Partnership all information
concerning the Independent Directors, if any, required to be included in the
Registration Statement.  The Controlling
Partnership shall provide KPE and its legal counsel with a reasonable
opportunity to review and comment on the Registration Statement and any
amendments or supplements thereto prior to the filing thereof with the
SEC.  The Controlling Partnership shall,
as promptly as practicable after receipt thereof, (i) provide KPE and its
legal counsel with copies of any written comments and advise KPE and its legal
counsel of any oral comments with respect to the Registration Statement
received from the SEC and (ii) notify KPE and its legal counsel of any
requests by the SEC for any supplement thereto or for additional
information.  As promptly as practicable
after receipt of any written correspondence from the SEC and reasonably in
advance of transmitting any written correspondence to the SEC, in each case
relating to the Registration Statement, the Controlling Partnership shall
provide KPE and its legal counsel with (i) copies of any such
correspondence and (ii) a reasonable opportunity to review and comment on
any such correspondence.

 

(c)                                  The Controlling Partnership and KPE shall cooperate and
consult with each other in connection with the filing with, and the review by,
the SEC of the Registration Statement. 
The Controlling Partnership shall (i) consider in good faith any
comments and suggestions on the disclosure to be included in the Registration
Statement made by KPE and/or its legal counsel and (ii) incorporate such
comments into the Registration Statement if failure to do so would reasonably
be expected, in the good faith judgment of the Controlling Partnership after
taking into account the advice of its outside legal counsel, to result in a
violation of, or give

 

7

 

rise to liability under any
applicable securities laws.  For purposes
of clauses (i) and (ii) above, where the Controlling Partnership
would otherwise elect not to incorporate any comment or suggestion made by KPE
or its legal counsel, KPE and its legal counsel shall be provided with the
reasonable opportunity to discuss any such comments directly with the
Controlling Partnership, the Controlling Partnership’s auditors and outside
legal counsel for the Controlling Partnership.

 

(d)                                 Notwithstanding the provisions of Section 4.2(c),
neither the Registration Statement (or any amendment or supplement thereto) nor
any written correspondence relating to the Registration Statement (including
any responses to any comments from the SEC) shall include any statements
regarding the Independent Directors without KPE’s prior written consent to
include such statements, which consent shall not be unreasonably withheld or
delayed.

 

(e)                                  The Controlling Partnership covenants and agrees that (i) as
of each of the date on which the Registration Statement becomes effective and
as of the Closing Date, the Registration Statement will not contain any untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein not misleading; provided
that the foregoing covenant shall not apply to any information concerning the
Independent Directors furnished in writing by or on behalf of the Independent
Directors specifically for use in the Registration Statement, it being
understood that such information shall be identified as such by KPE prior to
the effectiveness of the Registration Statement (the “Specified Information”)
and (ii) as of the date on which the Registration Statement becomes
effective, the Registration Statement will comply as to form in all material
respects with the applicable provisions of the Securities Act, Exchange Act and
the applicable rules and regulations of the SEC thereunder.

 

(f)                                   If at any time prior to the Closing any information should
be discovered by either the Controlling Partnership or KPE that should be set
forth in an amendment or supplement to the Registration Statement so that the
Registration Statement would not include any misstatement of a material fact or
omit to state any material fact necessary to make the statement therein, in the
light of the circumstances under which they were made, not misleading, the party
that discovers such information shall promptly notify the other party, and to
the extent required by law, rules or regulations, an appropriate amendment
or supplement describing such information shall be promptly filed with the SEC.

 

4.3                               Reasonable Best Efforts.

 

(a)                                 Subject to the terms and conditions of this Agreement,
following the delivery of an Election Notice in accordance with Section 1.1,
each of the Controlling Partnership and KPE shall use its reasonable best
efforts to take, or cause to be taken, all actions and to do, or cause to be
done, all things necessary, proper or advisable to ensure that the conditions
set forth in Section 6 of this Agreement are satisfied and to consummate
the transactions contemplated by this Agreement as promptly as practicable,
including using its reasonable best efforts to (i) obtain (and to
cooperate with the other party to obtain) any consent, authorization, order or
approval of, or any exemption by, any Governmental Entity or any third party
which is required to be obtained in connection with the transactions
contemplated by this Agreement from Governmental Entities or third parties, (ii) making
all registrations, notifications

 

8

 

and filings with any
Governmental Entity or any third party that are required to be made in
connection with the transactions contemplated by this Agreement and (iii) resolve
any objections asserted or suits instituted with respect to any of the
transactions contemplated hereby, by any Governmental Entity, which, if not
resolved, would reasonably be expected to prevent or materially impede or delay
the consummation of the transactions contemplated hereby.  Notwithstanding the foregoing, nothing in
this Agreement shall be deemed to require the Controlling Partnership or KPE to
take, or agree to take, any action if the taking of such action would
reasonably be expected to have, individually or in the aggregate, a material
adverse effect on the Controlling Partnership (after giving effect to the Contribution
Transactions).

 

(b)                                 Each of the Controlling Partnership and KPE shall in
connection with the efforts referenced in Section 4.3(a) (i) promptly
cooperate with and furnish information to the other in connection with any
action required to be taken pursuant to Section 4.3(a), and (ii) permit
the other to review any communication given by it to, and consult with each
other in advance of any meeting or conference with, any Governmental Entity in
connection with the foregoing, and to the extent permitted by law, give the
other the opportunity to attend and participate in such meetings and
conferences.

 

4.4                               Dissolution Transactions. 
Following the delivery of an Election Notice in accordance with Section 1.1,
KPE shall take, and the Controlling Partnership shall cause the non-Independent
Directors of the KPE GP to authorize, all actions necessary or advisable to (i) cause
the amendment to the KPE Limited Partnership Agreement in substantially the
form attached hereto as Exhibit E to be executed prior to the
Closing, (ii) deliver the Controlling Partnership Units to a bank or trust
company designated by KPE and reasonably acceptable to the Controlling
Partnership (the “Exchange Agent”) immediately upon the Closing, (iii) cause
the Exchange Agent to distribute the Controlling Partnership Units to the
holders of KPE Common Units in accordance with the KPE Limited Partnership
Agreement as of, or as promptly as practicable after, the Closing (the “Distribution”),
(iv) cause the KPE Common Units to be delisted from, and to cease to be
traded on, Euronext Amsterdam by NYSE Euronext, the regulated market of
Euronext Amsterdam N.V. as of, or as promptly as practicable after, the
Closing, and (v) cause KPE to be dissolved and liquidated by the KPE GP
acting as liquidator, in accordance with the KPE Limited Partnership Agreement
and the Limited Partnerships (Guernsey) Law, 1995, as amended, as promptly as
practicable after the Closing. The transactions contemplated by this Section 4.4
are sometimes referred to herein as the “Dissolution Transactions”.

 

4.5                               Stock Exchange
Listing.  In the event an Election
Notice is delivered in accordance with Section 1.1, the Controlling
Partnership shall use its reasonable best efforts to cause the Controlling
Partnership Units that are to be registered in the Registration Statement to be
approved for listing on the relevant United States stock exchange, subject to
official notice of issuance, prior to the Closing.

 

4.6                               Insurance.  In the event
an Election Notice is delivered in accordance with Section 1.1, prior to
the Closing, the Controlling Partnership shall obtain and fully pay the premium
for, or shall cause to be obtained and to be fully paid the premium for,
directors’ and officers’ liability insurance for the benefit of the directors
and officers (and former directors and officers) of the KPE GP, which shall (i) be
effective for a period from the date of the dissolution

 

9

 

of KPE (the “Dissolution
Date”) through and including the date that is six years after the
Dissolution Date, (ii) cover claims arising out of or relating to any
action, statement or omission (including a failure to act) of such directors
and officers of the KPE GP, whether on or before the Dissolution Date (including
the transactions contemplated by this Agreement and the decision making process
by the directors of the KPE GP in connection therewith) to the same extent as
the directors and officers of the Controlling Partnership GP acting in their
capacities as the directors and officers of the KPE GP are insured with respect
thereto, and (iii) shall contain a coverage limit of $100 million, and
shall contain coverage terms and conditions, including exclusions,
substantially comparable to the directors’ and officers’ liability insurance in
effect on the date of the Purchase Agreement; provided, however,
that in no event shall the Controlling Partnership be required to, or be
required to cause any other person to, expend for such insurance an amount in
excess of the amount set forth in Section 4.6 of the Confidential
Controlling Partnership Disclosure Schedules.

 

4.7                               Execution of Additional Agreements. 
In the event an Election Notice is delivered in accordance with Section 1.1,
the Controlling Partnership and Holdings shall use its reasonable best efforts
to execute, or to cause the other parties thereto to execute, prior to the
Closing, the Exchange Agreement between the Controlling Partnership, the Group
Partnerships and Holdings (the “Exchange Agreement”), the Tax Receivables
Agreement between the Controlling Partnership, Holdings, KKR Management
Holdings Corp. and Management Holdings (the “Tax Receivables Agreement”),
the Amended and Restated Limited Partnership Agreement of the Controlling
Partnership (the “Controlling Partnership LPA”) and the Amended and
Restated Limited Liability Company Agreement of the Controlling Partnership GP
(the “Controlling Partnership GP Agreement”), in each case substantially
in the form attached as exhibits to this Agreement (together with any changes
thereto as may be necessary to comply with requirements of the jurisdiction of
organization of the Controlling Partnership in the event that the Controlling
Partnership’s rights and obligations under this Agreement are assigned pursuant
to Section 8.10).

 

4.8                               Delivery of Letters.

 

(a)                                 In the event an Election Notice is delivered in accordance
with Section 1.1, the Controlling Partnership shall use its reasonable
best efforts to cause to be delivered to KPE a “comfort” letter from Deloitte &
Touche LLP with respect to financial information contained in the Registration
Statement, dated the effective date of the Registration Statement, in a form
customary in scope and substance for “comfort” letters delivered by independent
public accountants in connection with registration statements similar to the
Registration Statement (it being understood that such “comfort” letters shall
also provide comfort on the interim financial statements included in the
Registration Statement in accordance with applicable Statement on Auditing
Standards, customary comfort on the pro forma financial statements and other
data and customary negative assurance comfort).

 

(b)                                 In the event an Election Notice is delivered in accordance
with Section 1.1, the Controlling Partnership shall use its reasonable
best efforts to cause to be delivered to KPE a “negative assurance” letter from
Simpson Thacher & Bartlett LLP with respect to the absence of material
misstatements or omissions in the Registration Statement, dated the effective
date of the Registration Statement, in a form customary in scope and substance
for “negative

 

10

 

assurance” letters delivered by
issuer’s counsel in connection with registration statements similar to the
Registration Statement.

 

4.9                               Resignation of Independent Directors. 
Unless the Independent Directors agree otherwise in writing with the KPE
GP and the Controlling Partnership, the Independent Directors shall not be
required to resign until the completion of the Dissolution Transactions at
which point the Independent Directors shall be required to resign.

 

4.10                        Consent Rights.  From the Effective Time (as such term is
defined in the Purchase Agreement) until the Closing (the “Consent Period”),
without the prior consent of a majority of the Independent Directors, the
Controlling Partnership shall not, and shall not permit the Purchaser GP or any
Consolidated Person (as defined in the Purchase Agreement) to: (i) enter
into any amendment to the Exchange Agreement, the Tax Receivables Agreement, a
Lock-Up Agreement, the Controlling Partnership LPA, the Management Holdings
LPA, the Fund Holdings LPA, the Purchaser LPA or the Controlling Partnership GP
Agreement (each as defined in the Purchase Agreement), or any Contribution and
Indemnification Agreement (each of the foregoing, a “Covered Agreement”)
that, in the reasonable judgment of the Controlling Partnership, is or will
result in a conflict of interest or would have a materially disproportional
impact on KPE, (ii) enter into any transaction or series of related
transactions involving an aggregate amount in excess of $20 million with any
related person (as such term is defined in Item 404 of Regulation S-K under the
Securities Act) of the Controlling Partnership, the Purchaser GP or
Consolidated Person (other than any related person that is another Consolidated
Person or an investment fund or investment vehicle that is managed, sponsored,
or otherwise advised by the Controlling Partnership, the Purchaser GP or any
Consolidated Person) (a “Related Person”) that is the type of
transaction that would be required to be disclosed under the Securities Act by
the Controlling Partnership, the Purchaser GP or such Consolidated Person
pursuant to Item 404 of Regulation S-K under the Securities Act if the
Controlling Partnership, the Purchaser, the Purchaser GP or such Consolidated
Person were subject to the disclosure requirements of such Item (provided,
however, that, except with respect to any transaction for which the restrictions
of clause (ii) do not apply by virtue of the proviso below, the
Controlling Partnership shall on at least a quarterly basis provide a report in
reasonable detail of transactions which would be covered by this clause (ii) but
for the requirement set forth in this clause (ii) as to a minimum
aggregate amount), (iii) except in accordance with the Exchange Agreement,
enter into any transaction with any Related Person if such transaction would
reduce the percentage of KPE’s direct or indirect equity interest in any
Consolidated Person or the percentage of the equity interest in the Controlling
Partnership that the holders of KPE Common Units will receive upon the
Distribution; provided, however the foregoing clauses (ii) and
(iii) shall not restrict, and the approval of a majority of the
Independent Directors shall not be required with respect to, (A) the
payment, issuance, grant or delivery of compensation, including, subject to Section 4.12,
equity-based compensation, to any Related Person in respect of such Related
Person’s provision of services to the Controlling Partnership or a Consolidated
Person provided that in performing such
services, the Related Person is acting as a partner, member, director, officer
or employee of the Controlling Partnership or a Consolidated Person and not as
a third-party service provider, (B) any transaction or series of
related transactions with a Related Person made on substantially similar terms
as have been agreed to with unaffiliated third parties in connection with the
same transaction or series of related transactions, (C) any investment by
a Related Person in any investment fund or investment vehicle that is managed,
sponsored or otherwise advised by the

 

11

 

Controlling
Partnership or any Consolidated Person, or (D) the matters set forth in Section 4.10
of the Confidential Controlling Partnership Disclosure Schedules.  A “Contribution and Indemnification
Agreement” means any contribution and indemnification agreement among each
of the Group Partnerships and the other parties thereto providing for the
transfer by such other parties to the Group Partnerships of all or part of the
amounts borne by the Group Partnerships, directly or indirectly, with respect
to any “carried interest” or similar profit interest distributed by a fund,
investment vehicle or account whose investments are managed or advised by the
Controlling Partnership (if any) or an affiliate thereof (a “Fund”)
pursuant to the obligation of the general partner of a Fund to return such
amounts to the Fund. In addition, upon the request of the Controlling
Partnership, the Independent Directors shall review any other transaction among
the Controlling Partnership, the Purchaser GP and any of the Consolidated Persons
submitted to the Independent Directors by the Controlling Partnership for the
purposes of determining whether a conflict of interest exists with respect to
such transaction and that such transaction is in compliance with the respective
organizational documents of the Controlling Partnership, the Controlling
Partnership GP, the Purchaser GP and each of the Consolidated Persons.  Upon a determination by a majority of the
Independent Directors that any such transaction is in compliance with the
respective organizational documents of the Controlling Partnership, the
Controlling Partnership GP, the Purchaser GP and the Consolidated Persons, such
transaction shall not be void or voidable as a result of any conflict of
interest existing between the parties to such transaction and, except as set
forth in Section 5, neither the Controlling Partnership nor any of its
affiliates shall have any liability to KPE, any affiliate thereof, or any
person that has an equity interest in KPE, any Consolidated Person or any affiliate
thereof as a result of, or arising from, any such transaction.  At the request of the Controlling
Partnership, the organizational documents of any Consolidated Person may be
amended to include provisions to limit the liability of the Controlling Partnership
and its affiliates in the manner described in the immediately preceding
sentence.  During the Consent Period, (v) upon
the request of KPE, the Controlling Partnership agrees to take, or cause to be
taken, any action to enforce the rights of the Controlling Partnership or any
Consolidated Person directly or through one or more entities controlled by the
Controlling Partnership, under any Covered Agreement against (A) Holdings
(and any subsidiary or other designee of Holdings through which Holdings holds
any units representing limited partner interests in the Group Partnership) or
KKR Associates Holdings L.P. (“Associates Holdings”) (and any subsidiary
or other designee of Associates Holdings through which Associates Holdings
holds any units representing limited partner interests in the Group
Partnerships), (B) each person that is or becomes from time to time a
general partner or limited partner of Holdings or Associates Holdings or a
general partner, limited partner or holder of any other type of equity interest
of any such person and (C) each other party to the Contribution and
Indemnification Agreements, (w) the Controlling Partnership shall not
incur or assume any indebtedness for borrowed money or guarantee any such
indebtedness, (x) the Controlling Partnership shall not permit the
Designated Percentage with respect to Future Carried Interests (as such terms
are defined in the limited partnership agreements of the Group Partnerships) to
exceed 40%, (y) the Controlling Partnership shall not, and shall not
permit any Consolidated Person to, consent to any Transfer (as defined in the
limited partnership agreements of the Group Partnerships) of Class B Units
(as defined in the limited partnership agreements of the Group Partnerships)
without the Transferee (as defined in the limited partnership agreements of the
Group Partnerships) having entered into a contribution and indemnification
agreement that is substantially consistent with the Contribution Agreement
among each of the Group Partnerships,

 

12

 

Associates
Holdings and KKR Intermediate Partnership L.P. and that is reasonably
satisfactory to a majority of the Independent Directors, and (z) upon
reasonable notice and subject to the terms of the Confidentiality Agreement,
dated June 20, 2008, between KPE and Kohlberg Kravis Roberts &
Co. L.P., the Controlling Partnership agrees to take, or cause to be taken, all
actions necessary to provide the audit committee of the KPE GP board of
directors or the Independent Directors with access during normal business hours
to the personnel, books and records of the Consolidated Persons, and any
financial statements generated therefrom, relating to the activities of the
Controlling Partnership, the Purchaser GP and the Consolidated Persons, and
shall furnish to the audit committee of the KPE GP or the Independent Directors
as promptly as practicable after receiving a request therefor such other
information concerning the business of the Controlling Partnership, the Purchaser
GP and the Consolidated Persons as the audit committee or the Independent
Directors may reasonably request; provided that the foregoing shall not
obligate the Controlling Partnership to disclose any information to such audit
committee or the Independent Directors that the Controlling Partnership, the
Purchaser GP or the Consolidated Person reasonably determines, based on the
advice of counsel, to be privileged; provided further that
Controlling Partnership, the Purchaser GP or the Consolidated Person shall use
its reasonable best efforts to make appropriate substitute disclosure
arrangements under circumstances in which the immediately preceding proviso
applies.

 

4.11                        Ongoing Reporting Obligations. 
From the Effective Time (as such term is defined in the Purchase
Agreement) to the Closing Date, the Controlling Partnership shall, and shall
cause the Consolidated Persons (as such term is defined in the Purchase
Agreement) to, cooperate in good faith with KPE to take such actions as may be
reasonably necessary or advisable to comply with the financial reporting
obligations of KPE under applicable law, including the preparation of the
financial statements and other financial information of the KKR Group (as
defined in the Purchase Agreement) required to be included in the reports to be
submitted to holders of KPE Common Units.

 

4.12                        Equity Incentive Plans. 
At any time prior to the Closing, the Controlling Partnership may cause
the KKR Management Holdings L.P. Equity Incentive Plan, substantially in the
form attached hereto as Exhibit F (the “Pre-Listing Incentive
Plan”) to be adopted.  Upon the
Closing, the Controlling Partnership shall adopt the KKR & Co. L.P.
Equity Incentive Plan, substantially in the form attached hereto as Exhibit G
(the “Post-Listing Incentive Plan”). 
Without the prior written consent of a majority of the Independent
Directors, from and after the date of this Agreement until the completion of
the Closing, the Controlling Partnership shall not, and shall not permit any
Consolidated Person to, (i) pay to, grant, issue or otherwise deliver, or (ii) enter
into or adopt any plan, program, policy, agreement or arrangement that provides
for the payment, grant, issuance or delivery of, in the case of both clauses (i) and
(ii), to any current, former or future Participant (as defined in the Purchase
Agreement) to the Controlling Partnership or any Consolidated Person, any cash
or equity-based compensation that (A) is for such Participant’s services
to the Controlling Partnership, the Purchaser GP or any Consolidated Person, (B) the
amount of which is determined primarily based on the value of the interests in
the Controlling Partnership, the Purchaser GP or of any Consolidated Person and
(C) reduces (or upon exercise, payment or settlement, would reduce) the
Seller’s direct or indirect equity interest in any Consolidated Person or the
percentage of the equity interest in the Controlling Partnership that the
holders of KPE Common Units will receive upon the Distribution or the amount of
cash distributable to the Seller as a result of its direct or indirect equity
interest in the Controlling

 

13

 

Partnership or any
Consolidated Person; provided, however, that the foregoing
restrictions shall not prohibit grants of awards pursuant to the Pre-Listing
Incentive Plan during the period beginning at the Effective Time (as defined in
the Purchase Agreement) and ending immediately prior to the Closing, subject to
the aggregate limitation set forth therein (as such limitation is specified in Exhibit F),
except that until the earlier of (x) immediately following the Closing and
(y) the first anniversary of the Effective Time (or, in the case of this
clause (y), in the event that an Election Notice has been delivered prior to
such first anniversary but if the Closing has not occurred, the fifteen month
anniversary of the Effective Time), without the prior written consent of a
majority of the Independent Directors, no grants of awards shall be made under
the Pre-Listing Incentive Plan to any person who was a member of KKR &
Co. LLC as of the date of execution of the Purchase Agreement.

 

4.13                        Treatment of Seller Unit Appreciation
Rights.   Upon the closing of the transactions
contemplated by the Purchase Agreement, each outstanding unit appreciation
right with respect to KPE Common Units issued under KPE’s 2007 Equity Incentive
Plan (each, a “KPE UAR”) became fully vested and immediately
exercisable.  Upon the Closing, except as
may otherwise be agreed in writing between the Controlling Partnership and a
holder of a KPE UAR at any time prior to the Closing, (i) each outstanding
KPE UAR for which the exercise price per KPE Common Unit of such KPE UAR equals
or exceeds the closing price per KPE Common Unit on Euronext Amsterdam on the
final trading day of KPE Common Units shall be cancelled without the payment of
any consideration in respect thereof and (ii) each other KPE UAR (other
than those referred to in clause (i)) shall be converted into a fully vested
unit appreciation right, on the same terms and conditions as were applicable
under such KPE UAR, with respect to a number of Controlling Partnership Units
equal to the number of KPE Common Units subject to such KPE UAR immediately
prior to the Closing with an exercise price per Controlling Partnership Unit
equal to the per unit exercise price for such KPE UAR (the KPE UARs referred to
in this clause (ii), the “Adjusted UARs”). Upon the Closing, the
Controlling Partnership shall assume the Adjusted UARs and all obligations with
respect thereto.  As soon as practicable
following the Closing, the Controlling Partnership shall deliver to the holders
of Adjusted UARs appropriate notices setting forth such holders’ rights
pursuant to the Adjusted UARs (including the number of Controlling Partnership
Units subject to each such Adjusted UAR and the per unit exercise price with
respect thereto) and specifying that such Adjusted UARs have been assumed by
the Controlling Partnership and shall continue in effect on the same terms and
conditions as were applicable to the KPE UARs immediately prior to the
Closing.  Prior to the Closing, KPE and
the Controlling Partnership shall take all actions necessary or appropriate to
effectuate the provisions of this Section 4.13.

 

5.                                      INDEMNIFICATION

 

(a)                                 To the fullest extent permitted by applicable law, from the
Closing Date through the sixth anniversary thereof, the Group Partnerships
shall indemnify, defend and hold harmless, and provide advancement of expenses
to, each present and former director and officer of the KPE GP and the persons
identified in Section 5.1 of the Confidential Controlling Partnership
Disclosure Schedules against all losses, liabilities, damages, judgments and
fines (“Losses”) incurred in connection with any suit, claim, action,
proceeding, arbitration or investigation (“Proceedings”) arising out of
or related to actions taken by them in their capacity as directors or officers
of the KPE GP (including, this Agreement and the transactions

 

14

 

contemplated hereby) or taken by
them at the request of KPE or the KPE GP, whether asserted or claimed prior to,
at or after the Closing Date.

 

(b)                                 The Group Partnerships shall indemnify and hold harmless to
the fullest extent permitted by applicable law the Controlling Partnership, KPE
and each present and former director and officer of the KPE GP and the persons
identified in Section 5.1 of the Confidential Controlling Partnership
Disclosure Schedules against any and all Losses to which they or any of them
may become subject under the Securities Act, the Exchange Act or other
applicable law, statute, rule or regulation insofar as such Losses arise
out of or are based upon any untrue statement or alleged untrue statement of a
material fact contained in the Registration Statement and any other document
issued by the Controlling Partnership, KPE or any of their respective
affiliates in connection with or otherwise relating to the US Listing, or in
any amendment or supplement thereto, or arise out of or are based upon the
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading, and the Group Partnerships
agree to reimburse each such person, as incurred, for any legal or other
expenses reasonably incurred by such person in connection with investigating or
defending against any such Losses to the fullest extent permitted by applicable
law; provided, however that the Group Partnerships shall not be
liable in any such case to the extent that any such Losses arise out of or are
based upon any such untrue statement or alleged untrue statement or omission or
alleged omission made in the Registration Statement or in any amendment thereof
or supplement thereto, or in any such other document in reliance upon and in
conformity with the Specified Information.

 

(c)                                  The Group Partnerships shall, in respect of any indemnified
person that was a director of the KPE GP as of the date of the Original
Investment Agreement who may be called upon, subsequent to the date of his
resignation or expiration of his term, to testify in any Proceeding in
connection with this Agreement or the transactions contemplated hereby, provide
such person with reasonable compensation for his time spent testifying in such
Proceeding and preparing for such testimony.

 

(d)                                 If the indemnification provided for in this Section 5.1
is unavailable (other than as a result of application of the proviso to Section 5.1(b))
to or insufficient to hold harmless the indemnified person in respect of any
Losses, then the Group Partnerships shall contribute to the amount paid or
payable by the indemnified person as a result of such Losses (A) in such
proportion as is appropriate to reflect the relative fault of the Group
Partnerships, on the one hand, and the indemnified person, on the other or (B) if
the allocation provided by clause (A) is not permitted by applicable law,
or provides a lesser sum to the indemnified person than the amount hereinafter
calculated, in such proportion as is appropriate to reflect not only the
relative fault of the Group Partnerships, on the one hand, and the indemnified
person, on the other, in respect of such Losses but also the relative benefits
received by the Group Partnerships, on the one hand, and the indemnified
person, on the other, from the transactions contemplated by this Agreement as
well as any other relevant equitable considerations.  The amount paid or payable by the indemnified
person as a result of the Losses referred to above in this Section 5.1
shall be deemed to include any legal or other expenses reasonably incurred by
such indemnified person in connection with investigating or defending any such
action or claim.

 

15

 

(e)                                  In case any Proceeding shall be commenced or instituted
involving any person in respect of which indemnity or contribution may be
sought pursuant to this Section 5.1, such person shall promptly notify the
Group Partnerships thereof in writing; provided that the failure to so
notify the Group Partnerships will not affect the rights of such person under
this Section 5.1 except to the extent that the Group Partnerships are
actually prejudiced by such failure.  The
Group Partnerships shall be entitled to take control of and conduct such
Proceeding and to appoint counsel (including local counsel) of the Group
Partnerships’ choosing to represent the indemnified party in connection with
such Proceeding (in which case the Group Partnerships shall not thereafter be
responsible for the fees and expenses of any separate counsel retained by the
indemnified party).  Notwithstanding the
Group Partnerships’ election to appoint counsel (including local counsel) to
represent the indemnified party in connection with a Proceeding, the
indemnified party shall have the right to employ separate counsel (including
local counsel), and the Group Partnerships shall bear the reasonable fees,
costs and expenses of such separate counsel if (i) the use of counsel
chosen by the Group Partnerships to represent the indemnified party would
present such counsel with a conflict of interest (based on the advice of
counsel to the indemnified person), (ii) such Proceeding includes both the
indemnified party and the Group Partnerships, and the indemnified party shall
have reasonably concluded (based on the advice of counsel to the indemnified
person) that there may be legal defenses available to it and/or other
indemnified parties that are different from or additional to those available to
the Group Partnerships or (iii) the Group Partnerships shall authorize the
indemnified party to employ separate counsel at the expense of the Group
Partnerships.  It is understood that the
Group Partnerships shall not, in respect of the legal expenses of any
indemnified party in connection with any Proceeding or related Proceedings in
the same jurisdiction, be liable for the fees and expenses of more than one
separate firm (in addition to any local counsel) for all such indemnified
parties.  The Group Partnerships shall
not be liable under this Section 5.1 for any settlement or compromise or
consent to the entry of any judgment with respect to any pending or threatened
Proceeding in respect of which indemnification or contribution may be sought
under this Section 5.1 (whether or not the indemnified parties are actual
or potential parties to such claim or action), unless such settlement,
compromise or consent is consented to by the Group Partnerships, such consent
not to be unreasonably withheld or delayed.

 

(f)                                   Notwithstanding any other provision of this Agreement to the
contrary, the indemnified parties specified in this Section 5.1 shall be
third party beneficiaries of this Section 5.1.  The provisions of this Section 5.1 are
intended to be for the benefit of each such person to whom this Section 5.1
applies (and, in the case of each director of the KPE GP, for the benefit of
such director in his individual capacity) and his or her heirs.  The obligations of the Group Partnerships
under this Section 5.1 shall not be terminated or modified in such a
manner as to adversely affect any such person to whom this Section 5.1
applies without the express written consent of such affected person.

 

(g)                                  If any of the Group Partnerships or their successors or
assigns shall (i) consolidate with or merge into any person and shall not
be the continuing or surviving person in such consolidation or merger or (ii) transfer
all or substantially all of its assets to any other persons, then, and in each
such case, proper provisions shall be made so that the successors and assigns
of the Group Partnerships shall assume the obligations of the Group
Partnerships set forth in this Section 5.1.

 

16

 

(h)                                 The Group Partnerships or their successors or assigns shall
be entitled to repayment of all applicable expenses advanced to any person
pursuant to this Section 5 if it is ultimately determined by a
non-appealable judgment that such person is not entitled to indemnification
hereunder with respect to the matter for which any such expenses were advanced.

 

(i)                                     The obligations of the Group Partnerships set forth in this Section 5
shall be joint and several.

 

6.                                       CONDITIONS PRECEDENT

 

6.1                                 Conditions.  The respective
obligations of each party to consummate the US Listing shall be subject to the
satisfaction at or prior to the Closing Date of each of the following
conditions:

 

(a)                                  US Listing.  The Controlling Partnership Units to be
issued to KPE pursuant to Section 4.1 of this Agreement shall have been
authorized for listing on the relevant United States stock exchange, subject to
official notice of issuance.

 

(b)                                 Registration Statement Effectiveness.  The Registration
Statement shall have become effective under the Securities Act and/or Exchange
Act, as applicable, without any requirement that the Controlling Partnership or
any of its affiliates become subject to regulation under the Investment Company
Act, no stop order suspending the effectiveness of the Registration Statement
shall have been issued and no proceedings for that purpose shall have been
initiated or threatened by the SEC.

 

(c)                                  No Injunctions or Restraints; Illegality.  No order,
injunction, judgment, award or decree issued by any Governmental Entity of
competent jurisdiction or other legal restraint or prohibition preventing the
consummation of the US Listing and/or the Distribution shall be in effect.  No law, statute, rule, ordinance or
regulation shall have been enacted, entered, promulgated or enforced by any
Governmental Entity which prohibits or makes illegal the consummation of the US
Listing and/or the Distribution.

 

(d)                                 Contribution Transactions.  The Contribution Transactions shall have been
consummated in accordance with Section 4.1, except for any deviations
thereto permitted under Section 8.3 and any other deviations thereto which
would not reasonably be expected to have an adverse impact in more than an
insignificant respect on KPE, the Controlling Partnership or the holders of the
KPE Common Units.

 

(e)                                  Delivery of Letters. 
KPE shall have received the “comfort” letter and the “negative assurance”
letter contemplated by Section 4.8 of this Agreement, each in form and
substance reasonably satisfactory to KPE.

 

17

 

7.                                       TERMINATION

 

7.1                                 Termination. 
This Agreement may be terminated and the transactions contemplated
hereby may be abandoned at any time prior to the Closing by mutual written
consent of the Controlling Partnership and KPE.

 

7.2                                 Effect of Termination. 
In the event of termination of this Agreement and the abandonment of the
transactions contemplated hereby pursuant to Section 7.1, this Agreement
shall forthwith become void and have no effect, and no party or any of their
respective affiliates, employees or representatives shall have any liability of
any nature whatsoever under this Agreement, or in connection with the
transactions contemplated by this Agreement, except that (i) this Section 7.2
(Effect of Termination) and Section 8 (General Provisions) shall survive
any termination of this Agreement and (ii) neither KPE, the Controlling
Partnership nor the Group Partnerships shall be relieved or released from any
liabilities or damages arising out of its willful or intentional breach of any
provision of this Agreement.

 

8.                                       GENERAL PROVISIONS

 

8.1                                 Nonsurvival of Representations,
Warranties and Agreements.  None of the representations,
warranties, covenants and agreements in this Agreement or in any officer’s
certificate delivered pursuant to this Agreement, including any rights arising
out of any breach of such representations, warranties, covenants, and
agreements, shall survive the Closing, except for those covenants and
agreements contained in Section 4.1(d), Section 4.4, Section 4.6,
Section 4.9, Section 4.13, Section 5 and Section 8.

 

8.2                                 Expenses.  All costs and
expenses incurred by the Controlling Partnership, the Controlling Partnership
GP, KPE or the KPE GP in connection with this Agreement and the transactions
contemplated hereby shall be paid by the Group Partnerships.

 

8.3                                 Change in Law.

 

(a)                                  To the extent there is a change in law relating to the
taxation of (i) the income of KKR Fund Holdings L.P., or (ii) an
entity that is a “publicly traded partnership” pursuant to Section 7704 of
the Internal Revenue Code of 1986, as amended, the Controlling Partnership
shall have the right to elect to effect the transactions described herein in
such manner as the Controlling Partnership in its reasonable discretion, after
consultation with KPE, deems to be the most beneficial taking into
consideration such changes in law; provided that no alteration shall be
made to the manner in which the transactions described herein will be effected
in response to such a change in law to the extent such alteration would
reasonably be expected to have an adverse impact in more than an insignificant
respect on KPE, the Controlling Partnership or the holders of the KPE Common
Units (other than any adverse impact resulting from any change in law), without
the consent by KPE, which consent shall not be unreasonably withheld or
delayed.  Furthermore, the Controlling
Partnership shall have the right to elect to effect the transactions described
herein in such manner as the Controlling Partnership in its reasonable
discretion, after consultation with KPE, deems to be necessary in order to
permit the Controlling Partnership following the Contribution Transactions to
be treated as a continuation of KPE for U.S. Federal income tax purposes; provided
that no alteration shall be made to the manner in

 

18

 

which the transactions described
herein will be effected in order to permit such treatment to the extent such
alteration would reasonably be expected to have an adverse impact in more than
an insignificant respect on KPE, the Controlling Partnership or the holders of
the KPE Common Units, without the consent by KPE, which consent shall not be
unreasonably withheld or delayed.

 

(b)                                 Each of the Controlling Partnership and KPE shall use its
reasonable best efforts to effect the US Listing, the Contribution Transactions
and the Dissolution Transactions in a manner such that holders of KPE Common
Units will recognize no income, gain or loss for United States federal income tax
purposes; provided that to the extent there is a change in law so that
the US Listing, the Contribution Transactions or the Dissolution Transactions
may not be effected as currently contemplated without recognition by holders of
KPE Common Units of income, gain or loss for United States federal income tax
purposes, then each of the Controlling Partnership and KPE shall use reasonable
best efforts to effect the transactions in a manner that attempts to minimize
the recognition of income or gain for United States federal income tax purposes
by the holders of KPE Common Units except to the extent that (i) the
transactions and resulting structure results in an adverse impact in more than
an insignificant respect to the Controlling Partnership, its subsidiaries or
Holdings, or (ii) the Controlling Partnership and KPE agree there are
other considerations that outweigh the recognition of income or gain for United
States federal income tax purposes by the holders of KPE Common Units.

 

8.4                                 Notices.  All notices
and other communications hereunder shall be in writing and shall be deemed duly
given (a) on the date of delivery if delivered personally, or by
facsimile, upon confirmation of receipt, (b) on the first business day
following the date of dispatch if delivered by a recognized next-day courier
service, or (c) on the fifth business day following the date of mailing if
delivered by registered or certified mail, return receipt requested, postage
prepaid.  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 Controlling
Partnership or the Group Partnerships, to:

 

KKR &
Co. L.P.

9
W. 57th Street, Suite 4200

New
York, NY 10019

Attention:  David J. Sorkin

Facsimile:  (212) 750-0003

 

with a
copy to (which shall not constitute notice):

 

Simpson Thacher &
Bartlett LLP

425 Lexington Avenue

New York, NY  10017

Attention:  Alan M. Klein

Joseph H. Kaufman

Facsimile:  (212)
455-2502

 

if to KPE, to:

 

KKR Private Equity Investors, L.P.

 

19

 

P.O. Box 255

Trafalgar Court, Les Banques

St. Peter Port, Guernsey GY1 3QL

Channel Islands

Attention: Christopher Lee

Facsimile:  +44.1481.745.074

 

with a
copy to (which shall not constitute notice):

 

Bredin Prat

130
rue du Faubourg Saint Honoré

75008
Paris

France

Attention:  Patrick
Dziewolski

Benjamin Kanovitch

Facsimile:  +33 (0)1.42.89.10.73

 

and

 

Cravath, Swaine & Moore LLP

CityPoint | One Ropemaker Street

London EC2Y 9HR

UK

Attention :  George
Stephanakis

Facsimile:  +44
(0)207 860 1150

 

and

 

Cravath, Swaine & Moore LLP

825 Eighth Avenue

New York, NY 10019

Attention:  Sarkis
Jebejian

Facsimile:  (212)
474-3700

 

8.5                                 Interpretation. 
The words “hereof,” “herein” and “hereunder” and words of similar import
when used in this Agreement shall refer to this Agreement as a whole and the
schedules hereto and not to any particular provision of this Agreement, and Section references
are to this Agreement unless otherwise specified.  Whenever the words “include,” “includes” or “including”
are used in this Agreement, they shall be deemed to be followed by the words “without
limitation.”  The word “or” shall be
inclusive and not exclusive.  The table
of contents and headings contained in this Agreement are for reference purposes
only and shall not affect in any way the meaning or interpretation of this
Agreement.  This Agreement shall be
construed without regard to any presumption or interpretation against the party
drafting or causing any instrument to be drafted.  All schedules accompanying this Agreement and
all information specifically referenced in any such schedule form an integral
part of this Agreement, and references to this Agreement include references to
them.  The term “affiliate” has the
meaning given to it in Rule 12b-2 of the Exchange, and the term “person”
has the meaning given to it in Sections 3(a)(9) and 13(d)(3) of the
Exchange Act.  Whenever this Agreement
requires KPE or the Controlling Partnership to take, or not take, any action,
such requirement shall be deemed to

 

20

 

include an undertaking on the part of the KPE GP or
the Controlling Partnership GP, as the case may be, to cause KPE or the
Controlling Partnership to take, or not take, such action.

 

8.6                                 Amendment; Waiver. 
Subject to compliance with applicable law, this Agreement may be amended
by the parties hereto, by a written instrument authorized and executed on
behalf of the parties hereto (provided that in the case of KPE in addition to
any other requirement under applicable law, any such amendment shall be valid
only if approved by all of the Independent Directors).  At any time prior to the Closing, each party
hereto may, to the extent legally allowed, (a) extend the time for the
performance of any of the obligations or other acts by the other parties
hereto, (b) waive any inaccuracies in the representations and warranties
by the other parties hereto contained herein or in any document delivered
pursuant hereto and (c) waive compliance by the other parties hereto with
any of the agreements or conditions contained herein.  Any agreement on the part of a party hereto
to any such extension or waiver shall be valid only if set forth in a written
instrument signed on behalf of such party (provided that in the case of KPE in
addition to any other requirement under applicable law, any such extension or
waiver shall be valid only if approved by all of the Independent Directors),
but such extension or waiver or failure to insist on strict compliance with an
obligation, covenant, agreement or condition shall not operate as a waiver of,
or estoppel with respect to, any subsequent or other failure.  Notwithstanding any other provision of this
Agreement or the Purchase Agreement to the contrary, any amendment or waiver
hereto or thereto following the Closing with respect to the Controlling
Partnership’s rights or obligations that survive the Closing hereunder or
thereunder shall require the approval of a majority of the independent
directors of the Controlling Partnership GP.

 

8.7                                 Counterparts. 
This Agreement may be executed in counterparts, all of which shall be
considered one and the same agreement and shall become effective when
counterparts have been signed by each party and delivered to the other party,
it being understood that all parties need not sign the same counterpart.

 

8.8                                 Entire Agreement. 
This Agreement (together with the documents, schedules and the
instruments referred to herein) 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.

 

8.9                                 Severability. 
Any term or provision of this Agreement which is determined by a court
of competent jurisdiction to be invalid or unenforceable in any jurisdiction
shall, as to that jurisdiction, be ineffective to the extent of such invalidity
or unenforceability without rendering invalid or unenforceable the remaining
terms and provisions of this Agreement or affecting the validity or
enforceability of any of the terms or provisions of this Agreement in any other
jurisdiction, and if any provision of this Agreement is determined to be so
broad as to be unenforceable, the provision shall be interpreted to be only so broad
as is enforceable, in all cases so long as neither the economic nor legal
substance of the transactions contemplated hereby is affected in any manner
materially adverse to any party.

 

8.10                           Assignment. Neither this Agreement nor any of the rights, interests
or obligations of any party hereunder shall be assigned by any of the parties
hereto (whether by operation of law or otherwise) without the prior written
consent of the other party; provided,

 

21

 

however that with the prior written consent of KPE,
which consent shall not be unreasonably withheld or delayed, the Controlling
Partnership may assign all of its rights and obligations to an affiliate of the
Controlling Partnership and upon such assignment the assignee will be deemed to
be the Controlling Partnership and the common units or equivalent securities of
such assignee shall be deemed to be the Controlling Partnership Units for all
purposes under this Agreement.  Subject
to the preceding sentence, this Agreement will be binding upon, inure to the
benefit of and be enforceable by the parties and their respective successors
and permitted assigns.

 

8.11                           Third Party Beneficiaries. 
This Agreement (including the documents and instruments referred to
herein), except for the provisions of Section 4.6, Section 4.9 and Section 5,
is not intended to, and does not, confer upon any person other than the parties
hereto any rights or remedies hereunder.

 

8.12                           Further Assurances. 
The Controlling Partnership, Holdings and KPE each agrees to execute and
deliver such other documents or agreements and to use their respective
reasonable best efforts to take such other actions as may be reasonably
necessary or desirable for the implementation of this Agreement and the consummation
of the transactions contemplated hereby.

 

8.13                           Actions of KPE. 
The parties agree that, in accordance with Article 22(3) of
the articles of incorporation of the KPE GP, during the period from the date of
the Original Investment Agreement until the earlier of the Closing and the
termination of this Agreement in accordance with the terms hereof, the
Independent Directors, acting based on the affirmative vote of a majority of
the Independent Directors, shall be entitled to implement on behalf of KPE the
transactions contemplated by this Agreement, to exercise the rights of KPE
under this Agreement and to enforce this Agreement against the Controlling
Partnership and/or Holdings.  The parties
hereto further agree that (i) KPE shall not be deemed to have breached
this Agreement unless such breach was due to the taking of any action, or
failure to take any action, by the Independent Directors and (ii) the
Controlling Partnership shall be deemed to have breached this Agreement if the
Controlling Partnership or any of its affiliates (other than KPE or the KPE GP)
takes any action, or fails to take any action, that causes KPE to breach this
Agreement; provided that if the taking of such action, or failure to
take such action, would not reasonably have been expected to cause KPE to
breach this Agreement, the Controlling Partnership shall not be deemed to have
breached this Agreement as a result of the taking of, or failure to take, such
action and the Controlling Partnership shall have no liability to KPE as a result
of the taking of, or failure to take, such action.

 

8.14                           Actions of the Controlling Partnership. 
The parties hereto agree that, following the Closing Date, the
independent directors of the Controlling Partnership GP shall have the right to
enforce the Controlling Partnership’s rights under Section 5(b) against
the Group Partnerships and the organizational documents of the Controlling
Partnership and the Controlling Partnership GP shall provide for such right.

 

8.15                           Governing Law. 
This Agreement shall be governed and construed in accordance with the
laws of the State of New York.

 

22

 

8.16                           Submission to Jurisdiction. 
Each party irrevocably submits to the jurisdiction of (a) the
Supreme Court of the State of New York, New York County, and (b) the
United States District Court for the Southern District of New York, for the
purposes of any suit, action or other proceeding arising out of this Agreement
or any transaction contemplated hereby. 
Each party agrees to commence any action, suit or proceeding relating
hereto either in the United States District Court for the Southern District of
New York or, if such suit, action or other proceeding may not be brought in
such court for reasons of subject matter jurisdiction, in the Supreme Court of
the State of New York, New York County. 
Each party irrevocably and unconditionally waives any objection to the
laying of venue of any action, suit or proceeding arising out of this Agreement
or any transaction contemplated hereby in (i) the Supreme Court of the
State of New York, New York County, or (ii) the United States District
Court for the Southern District of New York, and hereby further irrevocably and
unconditionally waives and agrees not to plead or claim in any such court that
any such action, suit or proceeding brought in any such court has been brought
in an inconvenient forum.  Each party
further irrevocably consents to the service of process out of any of the
aforementioned courts in any such suit, action or other proceeding by the
mailing of copies thereof by mail to such party at its address set forth in
this Agreement, such service of process to be effective upon acknowledgment of
receipt of such registered mail; provided that nothing in this Section 8.16
shall affect the right of any party to serve legal process in any other manner
permitted by law.  The consent to
jurisdiction set forth in this Section 8.16 shall not constitute a general
consent to service of process in the State of New York and shall have no effect
for any purpose except as provided in this Section 8.16.  The parties agree that a final judgment in
any such suit, action or proceeding shall be conclusive and may be enforced in
other jurisdictions by suit on the judgment or in any other manner provided by
law.

 

8.17                           Enforcement. 
The parties agree that irreparable damage would occur in the event that
any of the provisions of this Agreement were not performed in accordance with
their specific terms on a timely basis or were otherwise breached.  It is accordingly agreed that the parties
shall be entitled to an injunction or other equitable relief to prevent
breaches of this Agreement and to enforce specifically the terms and provisions
of this Agreement in any court identified in Section 8.16, this being in
addition to any other remedy to which they are entitled at law or in equity.

 

8.18                           WAIVER OF JURY TRIAL. 
EACH OF THE PARTIES HEREBY WAIVES TRIAL BY JURY IN ANY JUDICIAL
PROCEEDING DIRECTLY INVOLVING ANY MATTERS (WHETHER SOUNDING IN TORT, CONTRACT OR
OTHERWISE) IN ANY WAY ARISING OUT OF, RELATED TO, OR CONNECTED WITH THIS
AGREEMENT OR ANY TRANSACTION CONTEMPLATED HEREBY.

 

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

 

[Remainder of
Page Intentionally Left Blank]

 

23

 

IN WITNESS WHEREOF, the parties hereto have executed
and delivered this Agreement as of the date first above written.

 

 

	
   

  	
  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
  PRIVATE EQUITY INVESTORS, L.P.

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  KKR GUERNSEY GP LIMITED, its general partner (Registration
  No. 44666)

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:
  

  	
  /s/
  KENDRA DECIOUS

  
	
   

  	
   

  	
  Name:
  Kendra Decious

  
	
   

  	
   

  	
  Title:
  Chief Financial Officer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  KKR
  FUND HOLDINGS L.P. (solely for purposes of Section 5 and
  Section 8.2)

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

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

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  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. (solely for purposes of Section 5 and
  Section 8.2)

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  KKR MANAGEMENT HOLDINGS CORP., its general partner

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:
  

  	
  /s/
  WILLIAM J. JANETSCHEK

  
	
   

  	
   

  	
  Name:
  William J. Janetschek

  
	
   

  	
   

  	
  Title:
  Chief Financial Officer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  KKR
  HOLDINGS L.P. (solely for purposes of Section 4.7 and Section 8.12)

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  KKR HOLDINGS GP LIMITED, its general partner

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:
  

  	
  /s/
  WILLIAM J. JANETSCHEK

  
	
   

  	
   

  	
  Name: William J. Janetschek

  
	
   

  	
   

  	
  Title: DirectorExhibit 10.5

 

 

 

FORM OF

 

TAX RECEIVABLE AGREEMENT

 

dated as of

 

, 20    

 

 

 

 

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

  	
  11

  
	
   

  	
   

  
	
  Section 4.01   Early Termination
  and Breach of Agreement

  	
  11

  
	
  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

  	
  13

  
	
   

  	
   

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

  	
  13

  
	
  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

  	
  16

  
	
  Section 7.06   Successors;
  Assignment; Amendments; Waivers

  	
  16

  
	
  Section 7.07   Titles and Subtitles

  	
  17

  
	
  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

  	
  19

  
	
  Section 7.12   Confidentiality

  	
  19

  
	
  Section 7.13   Group Partnership
  Agreement

  	
  20

  
	
  Section 7.14   Group Partnerships

  	
  20

  
	
  Section 7.15   Change in Law

  	
  20

  
	
  Section 7.16   Effective Date

  	
  21

  
	
  Section 7.18   Headings

  	
  21

  
	
   

  	
   

  
	
  Exhibit A —
  Form of Joinder Agreement

  	
   

  

 

ii

 

This TAX RECEIVABLE AGREEMENT (as amended from time
to time, this “Agreement”), dated as of                     ,     , is hereby entered into by and among KKR
Holdings L.P., a Cayman limited partnership (“KKR Holdings”), Management
Holdings Corp., a Delaware corporation (“Management Holdings”), KKR &
Co. L.P., a Delaware limited partnership (“Parent”)(1), 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);

 

(1) To
the extent it is ultimately determined that KKR & Co. L.P. will not be
the publicly traded entity following a US Listing (as such term is defined in
the Investment Agreement, dated as of [       ],
by and among KKR & Co. L.P., KKR Private Equity Investors, L.P., KKR
Guernsey GP Limited, KKR Management Holdings L.P., KKR Fund Holdings L.P., and
KKR Holdings L.P.) such other entity will be a party to this Agreement and
appropriate conforming changes will be made.

 

 

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.

 

2

 

“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.

 

“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).

 

3

 

“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.

 

“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.

 

4

 

“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 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.

 

5

 

“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 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.

 

6

 

“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.

 

“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 

 

7

 

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 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 

 

8

 

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 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 

 

9

 

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 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.

 

10

 

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 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 

 

11

 

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 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.

 

12

 

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 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 

 

13

 

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

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:

 

14

 

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:

 

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.

 

15

 

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 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 

 

16

 

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.

 

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.

 

17

 

(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.

 

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.

 

18

 

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 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 

 

19

 

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 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 

 

20

 

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 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:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  KKR
  MANAGEMENT HOLDINGS CORP.

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  
	
   

  	
  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:

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