Document:

Exhibit 4.2

	
 
    

 

EXECUTION VERSION

 

FIRST SUPPLEMENTAL INDENTURE

 

Dated as of May 29, 2014

 

Supplementing that Certain

 

INDENTURE

 

Dated as of May 29, 2014

 

 

Among

 

KKR GROUP FINANCE CO. III LLC,

 

THE GUARANTOR PARTIES HERETO

 

and

 

THE BANK OF NEW YORK MELLON TRUST COMPANY, N.A.,

 

as Trustee

 

 

5.125% Senior Notes due 2044

	
 
    

 

 

TABLE OF CONTENTS

 

 

	
 
    	
PAGE
    
	
 
    
	
ARTICLE I
    
	
ISSUANCE OF SECURITIES
    
	
 
    	
 
    
	
Section 1.1.   Issuance of Notes; Principal Amount; Maturity; Title
    	
2
    
	
Section 1.2.   Interest
    	
3
    
	
Section 1.3.   Relationship with Base Indenture
    	
4
    
	
 
    	
 
    
	
ARTICLE II
    
	
DEFINITIONS AND OTHER   PROVISIONS OF GENERAL APPLICATION
    
	
 
    	
 
    
	
Section 2.1.   Definitions
    	
4
    
	
 
    	
 
    
	
ARTICLE III
    
	
SECURITY FORMS
    
	
 
    	
 
    
	
Section 3.1.   Form Generally
    	
9
    
	
Section 3.2.   Form of Note
    	
10
    
	
Section 3.3.   Transfer and Exchange of Global Securities
    	
25
    
	
 
    	
 
    
	
ARTICLE IV
    
	
REMEDIES
    
	
 
    	
 
    
	
Section 4.1.   Events of Default
    	
26
    
	
Section 4.2.   Waiver of Past Defaults
    	
26
    
	
 
    	
 
    
	
ARTICLE V
    
	
REDEMPTION OF SECURITIES
    
	
 
    	
 
    
	
Section 5.1.   Optional Redemption
    	
27
    
	
 
    	
 
    
	
ARTICLE VI
    
	
PARTICULAR COVENANTS
    
	
 
    	
 
    
	
Section 6.1.   Liens
    	
28
    
	
Section 6.2.   Obligation to Offer to Repurchase Upon a Change of Control Repurchase Event
    	
28
    
	
Section 6.3.   Financial Reports
    	
30
    
	
 
    	
 
    
	
ARTICLE VII
    
	
SUPPLEMENTAL INDENTURES
    
	
 
    	
 
    
	
Section 7.1.   Supplemental Indentures without Consent of Holders of Notes
    	
31
    

 

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Section 7.2.   Supplemental Indentures with Consent of Holders of Notes
    	
31
    
	
 
    	
 
    
	
ARTICLE VIII
    
	
DEFEASANCE
    
	
 
    	
 
    
	
Section 8.1.   Covenant Defeasance
    	
33
    
	
 
    	
 
    
	
ARTICLE IX
    
	
MISCELLANEOUS
    
	
 
    	
 
    
	
Section 9.1.   Execution as Supplemental Indenture
    	
34
    
	
Section 9.2.   Not Responsible for Recitals or Issuance of Notes
    	
34
    
	
Section 9.3.   Separability Clause
    	
34
    
	
Section 9.4.   Successors and Assigns
    	
35
    
	
Section 9.5.   Execution and Counterparts
    	
35
    
	
Section 9.6.   Governing Law
    	
35
    

 

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This First Supplemental Indenture, dated as of May 29, 2014 (the “First Supplemental Indenture”), among KKR Group Finance Co. III LLC, a limited liability company duly organized and existing under the laws of the State of Delaware, having its principal office at 9 West 57th Street, Suite 4200, New York, New York 10019 (the “Company”), the Guarantors party hereto (the “Guarantors”) and The Bank of New York Mellon Trust Company, N.A., as Trustee under the Base Indenture (as hereinafter defined) and hereunder (the “Trustee”), supplements that certain Indenture, dated as of May 29, 2014, among the Company, the Guarantors named therein and the Trustee (the “Base Indenture” and subject to Section 1.3 hereof, together with this First Supplemental Indenture, the “Indenture”).

 

RECITALS OF THE COMPANY

 

The Company and the Guarantors have heretofore executed and delivered to the Trustee the Base Indenture providing for the issuance from time to time of one or more series of the Company’s senior unsecured debt securities (herein and in the Base Indenture called the “Securities”), the forms and terms of which are to be determined as set forth in Sections 201 and 301 of the Base Indenture, and the Guarantees thereof by the Guarantors; and

 

Section 901 of the Base Indenture provides, among other things, that the Company, the Guarantors and the Trustee may enter into indentures supplemental to the Base Indenture for, among other things, the purposes of (a) establishing the form or terms of Securities of any series as permitted by Sections 201 and 301 of the Base Indenture and (b) adding to or changing any of the provisions to the Base Indenture in certain circumstances;

 

The Company desires to create a series of Securities designated as its “5.125% Senior Notes due 2044” pursuant to the terms of this First Supplemental Indenture.

 

The Company has duly authorized the execution and delivery of this First Supplemental Indenture and the Notes to be issued from time to time, as provided for in the Indenture.

 

Each Guarantor has duly authorized its Guarantee of the Notes and to provide therefor each Guarantor has duly authorized the execution and delivery of this First Supplemental Indenture.

 

All things necessary have been done to make this First Supplemental Indenture a valid and legally binding agreement of the Company, in accordance with its terms and to make the Notes, when executed by the Company and authenticated and delivered by the Trustee under the Indenture and duly issued by the Company, the valid and legally binding obligations of the Company.

 

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All things necessary have been done to make the Guarantees, upon execution and delivery of this First Supplemental Indenture, the valid and legally binding obligations of each Guarantor and to make this First Supplemental Indenture a valid and legally binding agreement of each Guarantor, in accordance with its terms.

 

ARTICLE I
 ISSUANCE OF SECURITIES

 

Section 1.1.  Issuance of Notes; Principal Amount; Maturity; Title.

 

(1)        On May 29, 2014, the Company shall issue and deliver to the Trustee, and the Trustee shall authenticate, the Initial Notes substantially in the form set forth in Section 3.2 below, in each case with such appropriate insertions, omissions, substitutions and other variations as are required or permitted by the Base Indenture and this First Supplemental Indenture, and with such letters, numbers, or other marks of identification and such legends or endorsements placed thereon as may be required to comply with applicable tax laws or the rules of any securities exchange or Depositary therefor or as may, consistently herewith, be determined by the Officer executing such Notes, as evidenced by the execution of such Notes.

 

(2)        The Initial Notes to be issued pursuant to the Indenture shall be issued in the aggregate principal amount of $500,000,000 and shall mature on June 1, 2044, unless the Notes are redeemed prior to that date as described in Section 5.1.  The aggregate principal amount of Initial Notes Outstanding at any time may not exceed $500,000,000, except for Notes issued, authenticated and delivered upon registration of transfer of, or in exchange for, or in lieu of, other Notes of the series pursuant to Sections 304, 305, 306, 906 or 1107 of the Base Indenture and except for any Notes which, pursuant to Section 303 of the Base Indenture, are deemed never to have been authenticated and delivered.  The Company may without the consent of the Holders, issue additional Notes hereunder as part of the same series and on the same terms and conditions (and having the same Guarantors) and with the same CUSIP numbers as the Initial Notes, but may be offered at a different offering price or have a different issue date, initial interest accrual date or initial interest payment date (“Additional Notes”); provided that if any Additional Notes are issued at a price that causes such Additional Notes to have “original issue discount” within the meaning of Section 1273 of the United States Internal Revenue Code of 1986, as amended, and regulations of the United States Department of Treasury thereunder (the “Code”) or if any Additional Notes are not otherwise fungible with the Initial Notes for U.S. federal income tax purposes, such Additional Notes shall not have the same CUSIP number as the Initial Notes.

 

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(3)        The Notes shall be issued only in fully registered form without coupons in minimum denominations of $2,000 and any integral multiple of $1,000 in excess thereof.

 

(4)        Pursuant to the terms hereof and Sections 201 and 301 of the Base Indenture, the Company hereby creates a series of Securities designated as the “5.125% Senior Notes due 2044” of the Company (as amended or supplemented from time to time, that are issued under the Indenture, including both the Initial Notes and the Additional Notes, if any, the “Notes”), which Notes shall be deemed “Securities” for all purposes under the Base Indenture.

 

Section 1.2.  Interest.

 

(1)        Interest on a Note will accrue at the per annum rate of 5.125% (the “Note Interest Rate”), from and including the date specified on the face of such Note to, but excluding, the date on which the principal thereof is paid, deemed paid, or made available for payment and, in each case, will be paid on the basis of a 360-day year comprised of twelve 30-day months.

 

(2)        The Company shall pay interest on the Notes semi-annually in arrears on June 1 and December 1 of each year (each, an “Interest Payment Date”), commencing December 1, 2014.

 

(3)        Interest shall be paid on each Interest Payment Date to the registered Holders of the Notes as of the close of business on the Regular Record Date.

 

(4)        Amounts due on the Stated Maturity or earlier Redemption Date of the Notes will be payable at the Corporate Trust Office except as otherwise provided in the Notes.  The Company shall make payments of principal, premium, if any, and interest or the Repurchase Price in connection with a Change of Control Repurchase Event in respect of the Notes in book-entry form to DTC in immediately available funds, while disbursement of such payments to owners of beneficial interests in Notes in book-entry form will be made in accordance with the procedures of DTC and its participants in effect from time to time.  The Company may at any time designate additional Paying Agents or rescind the designation of any Paying Agent or approve a change in the office through which any Paying Agent acts, except that the Company shall be required to maintain a Paying Agent in each Place of Payment for the Notes.  Neither the Company nor the Trustee shall impose any service charge for any transfer or exchange of a Note.  However, the Company may require Holders of the Notes to pay any taxes or other governmental charges in connection with a transfer or exchange of Notes.

 

(5)        If any Interest Payment Date, Stated Maturity, or earlier Redemption Date or Repurchase Price Payment Date falls on a day that is not a Business Day in The City of New York, the Company shall make the required payment of principal, premium, if any, and/or interest or Repurchase Price in connection with

 

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a Change of Control Repurchase Event on the next succeeding Business Day as if it were made on the date payment was due, and no interest will accrue on the amount so payable for the period from and after that Interest Payment Date, Stated Maturity or earlier Redemption Date or Repurchase Price Payment Date, as the case may be, to such next succeeding Business Day.

 

Section 1.3.  Relationship with Base Indenture.

 

The terms and provisions contained in the Base Indenture will constitute, and are hereby expressly made, a part of this First Supplemental Indenture.  However, to the extent any provision of the Base Indenture conflicts with the express provisions of this First Supplemental Indenture, the provisions of this First Supplemental Indenture will govern and be controlling.

 

ARTICLE II
 DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION

 

Section 2.1.  Definitions.

 

For all purposes of this First Supplemental Indenture (except as herein otherwise expressly provided or unless the context of this First Supplemental Indenture otherwise requires):

 

(1)        any reference to an “Article” or a “Section” refers to an Article or a Section, as the case may be, of this First Supplemental Indenture;

 

(2)        the words “herein,” “hereof” and “hereunder” and other words of similar import refer to this First Supplemental Indenture as a whole and not to any particular Article, Section or other subdivision;

 

(3)        “including” means including without limitation;

 

(4)        unless otherwise provided, references to agreements and other instruments shall be deemed to include all amendments and other modifications to such agreements and instruments, but only to the extent such amendments and other modifications are not prohibited by the terms of this Indenture.

 

The terms defined in this Section 2.1 (except as herein otherwise expressly provided or unless the context of this First Supplemental Indenture otherwise requires) for all purposes of this First Supplemental Indenture and of any indenture supplemental hereto have the respective meanings specified in this Section 2.1.  All other terms used in this First Supplemental Indenture that are defined in the Base Indenture, either directly or by reference therein (except as herein otherwise expressly provided or unless the context of this First Supplemental Indenture otherwise requires), have the respective meanings

 

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assigned to such terms in the Base Indenture, as in force at the date of this First Supplemental Indenture as originally executed; provided that any term that is defined in both the Base Indenture and this First Supplemental Indenture shall have the meaning assigned to such term in this First Supplemental Indenture.

 

“Additional Notes” has the meaning specified in Section 1.1(2).

 

“Applicable Procedures” means, with respect to any transfer or transaction involving a Global Security or beneficial interest therein, the rules and procedures of DTC, Euroclear or Clearstream, in each case to the extent applicable to such transaction and as in effect from time to time.

 

“Below Investment Grade Rating Event” means the rating on the Notes is lowered in respect of a Change of Control and the Notes are rated below Investment Grade by both Rating Agencies on any date from the date of the public notice of an arrangement that could result in a Change of Control until the end of the 60-day period following public notice of the occurrence of a Change of Control (which period shall be extended until the ratings are announced if during such 60 day period the rating of the Notes is under publicly announced consideration for possible downgrade by either of the Rating Agencies); provided that a Below Investment Grade Rating Event otherwise arising by virtue of a particular reduction in rating shall not be deemed to have occurred in respect of a particular Change of Control (and thus shall not be deemed a Below Investment Grade Rating Event for purposes of the definition of Change of Control Repurchase Event hereunder) if the Rating Agencies making the reduction in rating to which this definition would otherwise apply do not announce or publicly confirm or inform the Company in writing at its request that the reduction was the result, in whole or in part, of any event or circumstance comprised of or arising as a result of, or in respect of, the applicable Change of Control (whether or not the applicable Change of Control shall have occurred at the time of the Below Investment Grade Rating Event).

 

“Change of Control” means the occurrence of the following:

 

(1)                                 the direct or indirect sale, transfer, conveyance or other disposition (other than by way of merger or consolidation), in one or a series of related transactions, of all or substantially all of the combined assets of the Credit Group taken as a whole to any “person” (as that term is used in Section 13(d)(3) of the Exchange Act or any successor provision), other than to a Continuing KKR Person; or

 

(2)                                 the consummation of any transaction (including, without limitation, any merger or consolidation) the result of which is that any “person” (as that term is used in Section 13(d)(3) of the Exchange Act or any successor provision), other than a Continuing KKR

 

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Person, becomes the beneficial owner (within the meaning of Rule 13d-3 under the Exchange Act or any successor provision) of a majority of the controlling interests in (i) the Partnership or (ii) one or more Guarantors that together hold all or substantially all of the assets of the Credit Group taken as a whole.

 

“Change of Control Offer” has the meaning specified in Section 6.2(1).

 

“Change of Control Repurchase Event” means the occurrence of a Change of Control and a Below Investment Grade Rating Event.

 

“Clearstream” means Clearstream Banking, S.A.

 

“Code” has the meaning specified in Section 1.1(2).

 

“Commission” means the Securities and Exchange Commission or any successor entity.

 

“Comparable Treasury Issue” means the United States Treasury security or securities selected by an Independent Investment Banker as having an actual or interpolated maturity comparable to the remaining term of the Notes to be redeemed that would be utilized, at the time of selection and in accordance with customary financial practice, in pricing new issues of corporate debt securities of a comparable maturity to the remaining term of such Notes.

 

“Comparable Treasury Price” means, with respect to any Redemption Date, the average of the Reference Treasury Dealer Quotations for such Redemption Date or, if the Independent Investment Banker obtains only one Reference Treasury Dealer Quotation, such Reference Treasury Dealer Quotation.

 

“Continuing KKR Person” means, immediately prior to and immediately following any relevant date of determination, (i) an individual who (a) is an executive of the KKR Group, (b) devotes substantially all of his or her business and professional time to the activities of the KKR Group and (c) did not become an executive of the KKR Group or begin devoting substantially all of his or her business and professional time to the activities of the KKR Group in contemplation of a Change of Control, or (ii) any Person in which any one or more of such individuals directly or indirectly, singly or as a group, holds a majority of the controlling interests.

 

“Covenant Defeasance” has the meaning specified in Section 8.1.

 

“DTC” means The Depository Trust Company, a New York corporation.

 

“Euroclear” means Euroclear Bank, S.A./N.V., as operator of the Euroclear system.

 

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“Event of Default” has the meaning specified in Section 4.1.

 

“Existing Indebtedness” means indebtedness incurred under (x) the Amended and Restated Credit Agreement dated as of February 22, 2011 among Kohlberg Kravis Roberts & Co. L.P., the other borrowers and lenders party thereto, and HSBC Bank PLC, as administrative agent, as amended by Amendment No. 1 to the Amended and Restated Credit Agreement dated as of June 3, 2011; and (y) the Amended and Restated Revolving Credit Agreement dated as of March 30, 2012 among KKR Capital Markets Holdings L.P., as Borrower, the lenders party thereto, and Mizuho Corporate Bank, Ltd., as administrative agent, and in the case of each of clauses (x) and (y) above, any amendments, supplements, modifications, extensions, renewals, restatements or refundings thereof and any indentures, notes, debentures or credit facilities or commercial paper facilities that replace, refund or refinance any part of the loans, notes, other credit facilities or commitments thereunder, including any such replacement, refunding or refinancing facility or indenture that alters the maturity or interest rate thereof, provided that the aggregate principal amount of Existing Indebtedness outstanding at any one time shall not exceed $2.425 billion.

 

“Fitch” means Fitch Ratings Inc. or any successor thereto.

 

“Independent Investment Banker” means one of the Reference Treasury Dealers appointed by the Company from time to time.

 

“Initial Notes” means Notes in an aggregate principal amount of up to $500,000,000 initially issued under this First Supplemental Indenture in accordance with Section 1.1(2).

 

“Interest Payment Date” has the meaning specified in Section 1.2(2).

 

“Investment Grade” means a rating of BBB- or better by Fitch (or its equivalent under any successor rating categories of Fitch) and BBB- or better by S&P (or its equivalent under any successor rating categories of S&P) (or, in each case, if such Rating Agency ceases to rate the Notes for reasons outside of the Company’s control, the equivalent investment grade credit rating from any Rating Agency selected by the Company as a replacement Rating Agency).

 

“KKR Group” means the KKR Group Partnerships, the direct and indirect parents (including, without limitation, general partners) of the KKR Group Partnerships (the “Parent Entities”), any direct or indirect subsidiaries of the Parent Entities or the KKR Group Partnerships, the general partner or similar controlling entities of any investment or vehicle that is managed, advised or sponsored by the KKR Group (“KKR Fund”) and any other entity through which any of the foregoing directly or indirectly conduct its business, but shall exclude any company in which a KKR Fund has an investment.

 

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“KKR Group Partnerships” means KKR Management Holdings L.P., a Delaware limited partnership, and KKR Fund Holdings L.P., a Cayman Islands limited partnership, together.

 

“Maturity Date” means June 1, 2044.

 

“Note Interest Rate” has the meaning specified in Section 1.2(1).

 

“Notes” has the meaning specified in Section 1.1(4).

 

“Permitted Liens” means (a) liens on voting stock or profit participating equity interests of any Subsidiary existing at the time such entity becomes a direct or indirect Subsidiary of the Partnership or is merged into a direct or indirect Subsidiary of the Partnership (provided such liens are not created or incurred in connection with such transaction and do not extend to any other Subsidiary), (b) statutory liens, liens for taxes or assessments or governmental liens not yet due or delinquent or which can be paid without penalty or are being contested in good faith, (c) other liens of a similar nature as those described in subclauses (a) and (b) above, and (d) liens granted under Existing Indebtedness.

 

“Rating Agency” means:

 

(1)                                 each of Fitch and S&P; and

 

(2)                                 if either of Fitch or S&P ceases to rate the Notes or fails to make a rating of the Notes publicly available for reasons outside of the Company’s control, a “nationally recognized statistical rating organization” within the meaning of Section 3(a)(62) of the Exchange Act selected by the Company as a replacement agency for Fitch or S&P, or both, as the case may be.

 

“Reference Treasury Dealer” means each of Citigroup Global Markets Inc. and Morgan Stanley & Co. LLC or their respective affiliates which are primary U.S. Government securities dealers, and their respective successors; provided that if Citigroup Global Markets Inc. or Morgan Stanley & Co. LLC or their respective affiliates shall cease to be a primary U.S. Government securities dealer in The City of New York (a “Primary Treasury Dealer”), the Company shall substitute therefor another Primary Treasury Dealer.

 

“Reference Treasury Dealer Quotations” means, with respect to each Reference Treasury Dealer and any Redemption Date, the average, as determined by the Independent Investment Banker, of the bid and asked prices for the Comparable Treasury Issue (expressed in each case as a percentage of its principal amount) quoted in writing to the Independent Investment Banker by such Reference Treasury Dealer at 3:30 p.m. New York time on the third business day preceding such Redemption Date.

 

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“Registrar” means the Security Registrar for the Notes, which shall initially be The Bank of New York Mellon Trust Company, N.A., or any successor entity thereof, subject to replacement as set forth in the Base Indenture.

 

“Regular Record Date” for interest payable in respect of any Note on any Interest Payment Date means the 15th calendar day of the month immediately preceding the relevant Interest Payment Date (whether or not a Business Day).

 

“Repurchase Price” has the meaning specified in Section 6.2(1).

 

“Repurchase Price Payment Date” has the meaning specified in Section 6.2(3)(iii).

 

“S&P” means Standard & Poor’s Ratings Services, a division of McGraw Hill Financial, Inc., or any successor thereto.

 

“Treasury Rate” means, with respect to any Redemption Date, the rate per annum equal to the semiannual equivalent yield to maturity or interpolated (on a day count basis) of the Comparable Treasury Issue, assuming a price for the Comparable Treasury Issue (expressed as a percentage of its principal amount) equal to the Comparable Treasury Price for such Redemption Date.

 

ARTICLE III
 SECURITY FORMS

 

Section 3.1.  Form Generally.

 

(1)        The Notes shall be in substantially the form set forth in Section 3.2 of this Article III, with such appropriate insertions, omissions, substitutions and other variations as are required or permitted by the Base Indenture and this First Supplemental Indenture, and may have such letters, numbers or other marks of identification and such legends or endorsements placed thereon as may be required to comply with applicable tax laws or the rules of any securities exchange or Depositary therefor or as may, consistent herewith, be determined by the Officer executing such Notes, as evidenced by the execution thereof.  All Notes shall be in fully registered form.

 

(2)        The Notes shall be printed, lithographed or engraved on steel engraved borders or may be produced in any other manner, all as determined by the Officer of the Company executing such Notes, as evidenced by the execution of such Notes.

 

(3)        Upon their original issuance, the Notes shall be issued in the form of one or more Global Securities in definitive, fully registered form without interest coupons.  Each such Global Security shall be duly executed by the Company,

 

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authenticated and delivered by the Trustee and shall be registered in the name of DTC, as Depositary, or its nominee, and deposited with the Trustee, as custodian for DTC.  Beneficial interests in the Global Securities will be shown on, and transfers will only be made through, the records maintained by DTC and its participants, including Clearstream and the Euroclear System.

 

Section 3.2.  Form of Note.

 

[FORM OF FACE OF NOTE]

 

[THE FOLLOWING LEGEND SHALL APPEAR ON THE FACE OF EACH GLOBAL SECURITY SOLD PURSUANT TO RULE 144A UNDER THE SECURITIES ACT:

 

THIS SECURITY (INCLUDING THE RELATED GUARANTEES) HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR THE SECURITIES LAWS OF ANY STATE OR OTHER JURISDICTION.  NEITHER THIS SECURITY NOR ANY INTEREST OR PARTICIPATION HEREIN MAY BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION OR UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO, SUCH REGISTRATION.  THE HOLDER OF THIS SECURITY, BY ITS ACCEPTANCE HEREOF, AGREES ON ITS OWN BEHALF AND ON BEHALF OF ANY INVESTOR ACCOUNT FOR WHICH IT HAS PURCHASED SECURITIES, TO OFFER, SELL OR OTHERWISE TRANSFER SUCH SECURITY, PRIOR TO THE DATE (THE “RESALE RESTRICTION TERMINATION DATE”) THAT IS ONE YEAR AFTER THE LATER OF THE ISSUE DATE HEREOF OR ANY OTHER ISSUE DATE IN RESPECT OF A FURTHER ISSUANCE OF SECURITIES OF THE SAME SERIES AND THE LAST DATE ON WHICH KKR GROUP FINANCE CO. III LLC OR ANY AFFILIATE OF KKR GROUP FINANCE CO. III LLC WAS THE OWNER OF THIS SECURITY (OR ANY PREDECESSOR OF SUCH SECURITY), ONLY (A) TO KKR GROUP FINANCE CO. III LLC, KKR & CO. L.P., KKR MANAGEMENT HOLDINGS L.P. OR KKR FUND HOLDINGS L.P. OR ANY SUBSIDIARY THEREOF, (B) PURSUANT TO A REGISTRATION STATEMENT THAT HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES ACT, (C) FOR SO LONG AS THE SECURITIES ARE ELIGIBLE FOR

 

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RESALE PURSUANT TO RULE 144A UNDER THE SECURITIES ACT (“RULE 144A”), TO A PERSON IT REASONABLY BELIEVES IS A “QUALIFIED INSTITUTIONAL BUYER” AS DEFINED IN RULE 144A THAT PURCHASES FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN THAT THE TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A, (D) PURSUANT TO OFFERS AND SALES TO NON-U.S. PERSONS THAT OCCUR OUTSIDE THE UNITED STATES WITHIN THE MEANING OF REGULATION S UNDER THE SECURITIES ACT, (E) TO AN INSTITUTIONAL “ACCREDITED INVESTOR” WITHIN THE MEANING OF RULE 501(a)(1), (2), (3) OR (7) UNDER THE SECURITIES ACT THAT IS NOT A QUALIFIED INSTITUTIONAL BUYER AND THAT IS PURCHASING FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF ANOTHER INSTITUTIONAL ACCREDITED INVESTOR, IN EACH CASE IN A MINIMUM PRINCIPAL AMOUNT OF THE SECURITIES OF $250,000, FOR INVESTMENT PURPOSES AND NOT WITH A VIEW TO OR FOR OFFER OR SALE IN CONNECTION WITH ANY DISTRIBUTION IN VIOLATION OF THE SECURITIES ACT OR (F) PURSUANT TO ANOTHER AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT, SUBJECT TO KKR GROUP FINANCE CO. III LLC’S AND THE TRUSTEE’S RIGHT PRIOR TO ANY SUCH OFFER, SALE OR TRANSFER PURSUANT TO CLAUSES (D), (E) OR (F) TO REQUIRE THE DELIVERY OF AN OPINION OF COUNSEL, CERTIFICATION AND/ OR OTHER INFORMATION SATISFACTORY TO EACH OF THEM.  THIS LEGEND WILL BE REMOVED UPON THE REQUEST OF THE HOLDER AFTER THE RESALE RESTRICTION TERMINATION DATE.]

 

[THE FOLLOWING LEGEND SHALL APPEAR ON THE FACE OF EACH GLOBAL SECURITY SOLD PURSUANT TO REGULATION S UNDER THE SECURITIES ACT:

 

THIS SECURITY (INCLUDING THE RELATED GUARANTEES) HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR THE SECURITIES LAWS OF ANY STATE OR OTHER JURISDICTION.  NEITHER THIS SECURITY NOR ANY INTEREST OR PARTICIPATION

 

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HEREIN MAY BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION OR UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO, SUCH REGISTRATION.  THE HOLDER OF THIS SECURITY, BY ITS ACCEPTANCE HEREOF, AGREES ON ITS OWN BEHALF AND ON BEHALF OF ANY INVESTOR ACCOUNT FOR WHICH IT HAS PURCHASED SECURITIES, TO OFFER, SELL OR OTHERWISE TRANSFER SUCH SECURITY, PRIOR TO THE DATE (THE “RESALE RESTRICTION TERMINATION DATE”) THAT IS 40 DAYS AFTER THE LATER OF THE ISSUE DATE HEREOF OR ANY OTHER ISSUE DATE IN RESPECT OF A FURTHER ISSUANCE OF SECURITIES OF THE SAME SERIES AND THE LAST DATE ON WHICH KKR GROUP FINANCE CO. III LLC OR ANY AFFILIATE OF KKR GROUP FINANCE CO. III LLC WAS THE OWNER OF THIS SECURITY (OR ANY PREDECESSOR OF SUCH SECURITY), ONLY (A) TO KKR GROUP FINANCE CO. III LLC, KKR & CO. L.P., KKR MANAGEMENT HOLDINGS L.P. OR KKR FUND HOLDINGS L.P. OR ANY SUBSIDIARY THEREOF, (B) PURSUANT TO A REGISTRATION STATEMENT THAT HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES ACT, (C) FOR SO LONG AS THE SECURITIES ARE ELIGIBLE FOR RESALE PURSUANT TO RULE 144A UNDER THE SECURITIES ACT (“RULE 144A”), TO A PERSON IT REASONABLY BELIEVES IS A “QUALIFIED INSTITUTIONAL BUYER” AS DEFINED IN RULE 144A THAT PURCHASES FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN THAT THE TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A, (D) PURSUANT TO OFFERS AND SALES TO NON-U.S. PERSONS THAT OCCUR OUTSIDE THE UNITED STATES WITHIN THE MEANING OF REGULATION S UNDER THE SECURITIES ACT, (E) TO AN INSTITUTIONAL “ACCREDITED INVESTOR” WITHIN THE MEANING OF RULE 501(a)(1), (2), (3) OR (7) UNDER THE SECURITIES ACT THAT IS NOT A QUALIFIED INSTITUTIONAL BUYER AND THAT IS PURCHASING FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF ANOTHER INSTITUTIONAL ACCREDITED INVESTOR, IN EACH CASE IN A MINIMUM PRINCIPAL AMOUNT OF THE SECURITIES OF $250,000, 

 

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FOR INVESTMENT PURPOSES AND NOT WITH A VIEW TO OR FOR OFFER OR SALE IN CONNECTION WITH ANY DISTRIBUTION IN VIOLATION OF THE SECURITIES ACT OR (F) PURSUANT TO ANOTHER AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT, SUBJECT TO KKR GROUP FINANCE CO. III LLC’S AND THE TRUSTEE’S RIGHT PRIOR TO ANY SUCH OFFER, SALE OR TRANSFER PURSUANT TO CLAUSES (D), (E) OR (F) TO REQUIRE THE DELIVERY OF AN OPINION OF COUNSEL, CERTIFICATION AND/OR OTHER INFORMATION SATISFACTORY TO EACH OF THEM.  THIS LEGEND WILL BE REMOVED UPON THE REQUEST OF THE HOLDER AFTER THE RESALE RESTRICTION TERMINATION DATE.  BY ITS ACQUISITION HEREOF, THE HOLDER HEREOF REPRESENTS THAT IT IS NOT A U.S. PERSON NOR IS IT PURCHASING FOR THE ACCOUNT OF A U.S. PERSON AND IS ACQUIRING THIS SECURITY IN AN OFFSHORE TRANSACTION IN ACCORDANCE WITH REGULATION S UNDER THE SECURITIES ACT.

 

[THE FOLLOWING LEGEND SHALL APPEAR ON THE FACE OF EACH GLOBAL SECURITY:

 

THIS SECURITY IS A GLOBAL SECURITY WITHIN THE MEANING OF THE INDENTURE REFERRED TO ON THE REVERSE HEREOF.  TRANSFERS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS IN WHOLE, BUT NOT IN PART, TO THE DEPOSITORY TRUST COMPANY (“DTC”) OR ITS NOMINEE OR TO A SUCCESSOR THEREOF OR SUCH SUCCESSOR’S NOMINEE AND TRANSFERS OF PORTIONS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE RESTRICTIONS SET FORTH IN THE INDENTURE REFERRED TO ON THE REVERSE HEREOF.].

 

[THE FOLLOWING LEGEND SHALL APPEAR ON THE FACE OF EACH GLOBAL SECURITY FOR WHICH DTC IS TO BE THE DEPOSITARY:

 

UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF DTC TO THE COMPANY OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY 

 

13

 

CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.]

 

KKR GROUP FINANCE CO. III LLC

 

5.125% SENIOR NOTE DUE 2044

 

	
No.
    	
Principal   Amount (US)$             
    
	
CUSIP NO.
    	
 
    

 

KKR Group Finance Co. III LLC, a limited liability company duly organized and existing under the laws of the State of Delaware (herein called the “Company”, which term includes any successor Person under the Indenture referred to on the reverse hereof), for value received, hereby promises to pay to Cede & Co., or registered assigns, the principal sum of                    United States Dollars (U.S.$                  ), or such other principal amount as shall be set forth in the Schedule of Increases and Decreases in Note attached hereto, on June 1, 2044 and to pay interest thereon, from May 29, 2014, or from the most recent Interest Payment Date to which interest has been paid or duly provided for to but excluding the next Interest Payment Date, which shall be June 1 and December 1 of each year, commencing December 1, 2014, at the per annum rate of 5.125% (the “Note Interest Rate”), until the principal hereof is paid or made available for payment.

 

The interest so payable, and punctually paid or duly provided for, on any Interest Payment Date will, as provided in the Indenture, be paid to the Person in whose name this Note is registered at the close of business on the Regular Record Date for such interest, which shall be the 15th calendar day of the month immediately preceding the relevant Interest Payment Date (whether or not a Business Day).  Except as otherwise provided in the Indenture, any such interest not so punctually paid or duly provided for will forthwith cease to be payable to the Holder on such Regular Record Date and may either be paid to the Person in whose name this Note is registered at the close of business on a Special Record Date for the payment of such Defaulted Interest to be fixed by the Trustee, notice of which shall be given to Holders of Notes not less than 10 days prior to the Special Record Date, or be paid at any time in any other lawful manner not inconsistent with the requirements of any securities exchange on which such

 

14

 

Notes may be listed, all as more fully provided in the Indenture.  Interest will be computed on the basis of a 360-day year comprised of twelve 30-day months.

 

Payment of principal of, and premium, if any, and interest on this Note and the Repurchase Price in connection with a Change of Control Repurchase Event will be made at the Corporate Trust Office, in such coin or currency of the United States of America as at the time of payment shall be legal tender for the payment of public and private debts.  With respect to Global Securities, the Company will make such payments by wire transfer of immediately available funds to DTC, or its nominee, as registered owner of the Global Securities.  With respect to certificated Notes, the Company will make such payments, subject to surrender of such Note at the Corporate Trust Office, except in the case of installments of interest, by wire transfer of immediately available funds to a United States Dollar account maintained in New York, New York to each Holder of an aggregate principal amount of Notes in excess of U.S. $5,000,000 that has furnished wire instructions in writing to the Trustee no later than 15 days prior to the relevant payment date.  If a Holder of a certificated Note (i) does not furnish such wire instructions as provided in the preceding sentence or (ii) holds U.S. $5,000,000 or less aggregate principal amount of Notes, the Company will make such payments by mailing or causing to be mailed a check to such Holder’s registered address.

 

Reference is hereby made to the further provisions of this Note set forth on the reverse hereof, which further provisions shall for all purposes have the same effect as if set forth at this place.

 

Unless the certificate of authentication hereon has been executed by the Trustee referred to on the reverse hereof by manual signature, this Note shall not be entitled to any benefit under the Indenture or be valid or obligatory for any purpose.

 

15

 

IN WITNESS WHEREOF, the Company has caused this instrument to be duly executed.

 

 

	
 
    	
KKR GROUP FINANCE   CO. III LLC
    
	
 
    	
 
    
	
 
    	
By:
    	
KKR Management   Holdings Corp., 
   its managing member
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
 
    	
Name:
    
	
 
    	
 
    	
Title:
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
Attest:
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
By:
    	
 
    	
 
    	
 
    
	
 
    	
Name:
    	
 
    	
 
    
	
 
    	
Title:
    	
 
    	
 
    

 

16

 

CERTIFICATE OF AUTHENTICATION

 

This is one of the Securities of the series designated therein referred to in the within-mentioned Indenture.

 

	
Dated:
    	
 
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
THE BANK OF NEW YORK MELLON 
   TRUST COMPANY, N.A., as Trustee
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
By:
    	
 
    	
 
    
	
 
    	
Authorized   Signatory
    	
 
    
				

 

17

 

[FORM OF REVERSE OF NOTE]

 

1.  Indenture.  This Note is one of a duly authorized issue of securities of the Company designated as its “5.125% Senior Notes due 2044” (herein called the “Notes”), issued under a First Supplemental Indenture, dated as of May 29, 2014 (the “First Supplemental Indenture”), to an indenture, dated as of May 29, 2014 (as it may be amended or supplemented from time to time in accordance with the terms thereof, the “Base Indenture” and herein with the First Supplemental Indenture, collectively, the “Indenture”), among the Company, the Guarantors named therein and The Bank of New York Mellon Trust Company, N.A., as Trustee (herein called the “Trustee,” which term includes any successor trustee under the Indenture), to which reference is hereby made for a statement of the respective rights, limitations of rights, duties and immunities thereunder of the Company, the Guarantors, the Trustee and the Holders of the Notes and of the terms upon which the Notes are, and are to be, authenticated and delivered.  The aggregate principal amount of Initial Notes Outstanding at any time may not exceed $500,000,000 in aggregate principal amount, except for, or in lieu of, other Notes of the series pursuant to Sections 304, 305, 306, 906 or 1107 of the Base Indenture and except for any Notes which, pursuant to Section 303 of the Base Indenture, are deemed never to have been authenticated and delivered.  The First Supplemental Indenture pursuant to which this Note is issued provides that Additional Notes may be issued thereunder.

 

All terms used in this Note which are defined in the Indenture shall have the meanings assigned to them in the Indenture.  In the event of a conflict or inconsistency between this Note and the Indenture, the provisions of the Indenture shall govern.

 

2.  Optional Redemption.  Prior to December 1, 2043, the Company may at its option redeem all or a part of the Notes upon not more than 60 nor less than 30 days prior notice, at a redemption price in cash equal to the greater of (i) 100% of the aggregate principal amount of any Notes being redeemed and (ii) the sum of the present values of the remaining scheduled payments of principal of and interest on the Notes to be redeemed (exclusive of interest accrued to the Redemption Date) discounted to the Redemption Date on a semiannual basis (assuming a 360-day year consisting of twelve 30-day months) at the Treasury Rate plus 30 basis points, plus in each case accrued and unpaid interest thereon to, but excluding, the Redemption Date.

 

On and after December 1, 2043, the Company may at its option redeem all or a part of the Notes upon not more than 60 nor less than 30 days prior notice, at a redemption price in cash equal to 100% of the aggregate principal amount of any Notes being redeemed, plus accrued and unpaid interest thereon to, but excluding, the Redemption Date.

 

18

 

3.  Change of Control Repurchase Event.  In the event of a Change of Control Repurchase Event, unless the Company has exercised its option to redeem the Notes, the Company will make an offer to each Holder of Notes to repurchase all or any part of that Holder’s Notes at a repurchase price in cash equal to 101% of the aggregate principal amount of the Notes, plus any accrued and unpaid interest, if any, pursuant to the provisions of Section 6.2 of the First Supplemental Indenture.

 

4.  Global Security.  If this Note is a Global Security, then, in the event of a deposit or withdrawal of an interest in this Note, including an exchange, transfer, redemption, repurchase or conversion of this Note in part only, the Trustee, as custodian of the Depositary, shall make an adjustment on its records to reflect such deposit or withdrawal in accordance with the Applicable Procedures.

 

5.  Defaults and Remedies.  If an Event of Default shall occur and be continuing, the principal of all the Notes may be declared due and payable in the manner and with the effect provided in the Indenture.  Upon payment of the amount of principal so declared due and payable, all obligations of the Company in respect of the payment of the principal of and interest on the Notes shall terminate.

 

No Holder of Notes shall have any right to institute any proceeding, judicial or otherwise, with respect to the Indenture, or for the appointment of a receiver, assignee, trustee, liquidator or sequestrator (or similar official) or for any other remedy hereunder (except actions for payment of overdue principal of, and premium, if any, or interest on such Notes in accordance with its terms), unless (i)  such Holder has previously given written notice to the Trustee of a continuing Event of Default, specifying an Event of Default, as required under the Indenture; (ii) the Holders of not less than 25% in aggregate principal amount of the Outstanding Notes shall have made written request to the Trustee to institute proceedings in respect of such Event of Default in its own name as Trustee under the Indenture; (iii) such Holder or Holders have offered to the Trustee indemnity reasonably satisfactory to it against the costs, expenses and liabilities to be incurred in compliance with such request; (iv) the Trustee has failed to institute any such proceeding for 60 days after its receipt of such notice, request and offer of indemnity; and (v) no direction inconsistent with such written request has been given to the Trustee during such 60-day period by the Holders of a majority in aggregate principal amount of the Outstanding Notes, it being understood and intended that no one or more of such Holders shall have any right in any manner whatever by virtue of, or by availing of, any provision of the Indenture to affect, disturb or prejudice the rights of any other of such Holders, or to obtain or to seek to obtain priority or preference over any other of such Holders or to enforce any right under the Indenture, except in the manner provided in the Indenture and for the equal and ratable benefit of all of such Holders.

 

19

 

The foregoing shall not apply to any suit instituted by the Holder of this Note for the enforcement of any payment of principal of, and premium, if any, or interest hereon, on or after the respective due dates expressed or provided for herein.

 

6.  Amendment, Supplement and Waiver.  The Indenture permits, with certain exceptions as therein provided, the amendment thereof and the modification of the rights and obligations of the Company and the rights of the Holders of the Notes under the Indenture at any time by the Company and the Trustee with the written consent of the Holders of at least a majority in aggregate principal amount of the Outstanding Notes.  The Indenture also contains provisions permitting the Holders of specified percentages in aggregate principal amount of the Outstanding Notes, on behalf of the Holders of all the Notes, to waive compliance by the Company with certain provisions of the Indenture and certain past defaults under the Indenture and their consequences.  Any such consent or waiver by the Holder of this Note shall be conclusive and binding upon such Holder and upon all future Holders of this Note and of any Note issued upon the registration of transfer hereof or in exchange herefor or in lieu hereof whether or not notation of such consent or waiver is made upon this Note or such other Note.  Certain modifications or amendments to the Indenture require the consent of the Holder of each Outstanding Note affected.

 

No reference herein to the Indenture and no provision of this Note or of the Indenture shall alter or impair (without the consent of the Holder hereof) the obligation of the Company, which is absolute and unconditional, to pay the principal of, premium, if any, and interest on this Note at the times, places and rate, and in the coin or currency, herein prescribed.

 

7.             Registration and Transfer.  As provided in the Indenture and subject to certain limitations therein set forth, the transfer of this Note is registerable on the Security Register.  Upon surrender for registration of transfer of this Note at the office or agency of the Company in a Place of Payment, the Company shall execute, and the Trustee shall authenticate and deliver, in the name of the designated transferee or transferees, one or more new Notes of any authorized denominations and of like tenor and principal amount.  As provided in the Indenture and subject to certain limitations therein set forth, at the option of the Holder, this Note may be exchanged for one or more new Notes of any authorized denominations and of like tenor and principal amount, upon surrender of this Note at such office or agency.  Upon such surrender by the Holder, the Company shall execute, and the Trustee shall authenticate and deliver, in the name of the designated transferee or transferees, one or more new Notes of any authorized denominations and of like tenor and principal amount.  Every Note presented or surrendered for registration of transfer or for exchange shall be duly endorsed (if so required by the Company or the Trustee), or be accompanied by a written instrument of transfer in form satisfactory to the Company and the 

 

20

 

Security Registrar duly executed, by the Holder thereof or such Holder’s attorney duly authorized in writing.  No service charge shall be made for any such registration of transfer or exchange, but the Company may require payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in connection therewith.

 

Prior to due presentment of this Note for registration of transfer, the Company, the Guarantors, the Trustee and any agent of the Company, a Guarantor or the Trustee may treat the Person in whose name such Note is registered as the owner thereof for all purposes (except as otherwise provided in the Indenture), whether or not such Note be overdue, and neither the Company, the Guarantors, the Trustee nor any agent of the Company, a Guarantor or the Trustee shall be affected by notice to the contrary.

 

8.             Guarantee.  As expressly set forth in the Base Indenture, payment of this Note is jointly and severally and fully and unconditionally guaranteed by the Guarantors that have become and continue to be Guarantors pursuant to the Indenture.  Guarantors may be released from their obligations under the Indenture and their Guarantees under the circumstances specified in the Base Indenture.

 

9.             Governing Law.  THE INDENTURE, THIS SECURITY AND THE GUARANTEES SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.

 

ABBREVIATIONS

 

The following abbreviations, when used in the inscription of the face of this Note, shall be construed as though they were written out in full according to applicable laws or regulations:

 

TEN COM (= tenant in common)

TEN ENT (= tenants by the entireties (Cust))

JT TEN (= joint tenants with right of survivorship and not as tenants in common)

UNIF GIFT MIN ACT (= under Uniform Gifts to Minors Act )

 

Additional abbreviations may also be used though not in the above list.

 

21

 

ASSIGNMENT FORM

 

To assign this Note, fill in the form below:

 

	
(I) or (we) assign and transfer this Note   to:
    	
 
    
	
 
    	
(Insert assignee’s legal name)
    
	
 
    
	
 
    
	
(Insert assignee’s soc. sec. or tax I.D.   no.)
    
	
 
    
	
 
    
	
 
    
	
 
    
	
 
    
	
 
    
	
 
    
	
 
    
	
(Print or type assignee’s name, address   and zip code)
    

 

and irrevocably appoint                                                                                                   , as agent, to transfer this Note on the books of the Company.  The agent may substitute another to act for him.

 

In connection with the assignment of the Notes evidenced by this certificate occurring prior to the date that is one year or six months, as the case may be (as specified in Rule 144(d) under the Securities Act), after the later of the date of original issuance of such Notes and the last date, if any, on which such Notes were owned by the Company or any affiliate of the Company, the undersigned confirms that such Notes are being:

 

CHECK ONE BOX BELOW:

 

	
1
    	
 ̈
    	
acquired for the undersigned’s own account,   without transfer; or
    
	
 
    	
 
    	
 
    
	
2
    	
 ̈
    	
transferred to the Company; or
    
	
 
    	
 
    	
 
    
	
3
    	
 ̈
    	
transferred pursuant to and in compliance with   Rule 144A promulgated under the Securities Act of 1933, as amended (the   “Securities Act”); or
    
	
 
    	
 
    	
 
    
	
4
    	
 ̈
    	
transferred pursuant to an effective registration   statement under the Securities Act; or
    
	
 
    	
 
    	
 
    
	
5
    	
 ̈
    	
transferred pursuance to and in compliance with   Regulation S promulgated under the Securities Act; or
    

 

22

 

	
6
    	
 ̈
    	
transferred to an institutional “accredited   investor” (as defined in Rule 501(a)(1), (2), (3), or (7) under the   Securities Act) that, prior to such transfer, furnished the Trustee with a   signed letter containing certain representations and agreements relating to   the transfer; or
    
	
 
    	
 
    	
 
    
	
7
    	
 ̈
    	
transferred pursuant to another available   exemption from the registration requirements of the Securities Act.
    

 

Unless one of the boxes is checked, the Trustee will refuse to register any of the Notes evidenced by this certificate in the name of any Person other than the registered holder thereof; provided, however, that if box (5), (6) or (7) is checked, the Company may require, prior to registering any such transfer of the Notes, in its sole discretion, such legal opinions, certifications and other information as the Company may reasonably request to confirm that such transfer is being made pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act, such as the exemption provided by Rule 144A promulgated under the Securities Act.

 

 

	
Dated:
    	
 
    	
 
    	
Signature:
    	
 
    
	
 
    	
 
    	
 
    
	
Signature Guarantee:
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
(Signature must be   guaranteed)
    	
 
    	
 
    	
Signature
    
						

 

The signature(s) should be guaranteed by an eligible guarantor institution (banks, stockbrokers, savings and loan associations and credit unions with membership in an approved signature guarantee medallion program), pursuant to Rule 17Ad-15 of the Securities Exchange Act.

 

TO BE COMPLETED BY PURCHASER IF (1) OR (3) ABOVE IS CHECKED.

 

The undersigned represents and warrants that it is purchasing this Note for its own account or an account with respect to which it exercises sole investment discretion and that it and any such account is a “qualified institutional buyer” within the meaning of Rule 144A under the Securities Act, and is aware that the sale to it is being made in reliance on Rule 144A promulgated under the Securities Act and acknowledges that it has received such information regarding the Company as the undersigned has requested pursuant to Rule 144A or has determined not to request such information 

 

23

 

and that it is aware that the transferor is relying upon the undersigned’s foregoing representations in order to claim the exemption from registration provided by Rule 144A.

 

 

	
Dated:
    	
 
    	
 
    	
Signature:
    	
 
    

 

24

 

[SCHEDULE OF INCREASES AND DECREASES IN NOTE

 

KKR Group Finance Co. III LLC

 

5.125% Senior Note due 2044

 

The initial principal amount of this Note is $                  . The following increases or decreases in this Note have been made:

 

	
Date 
    	
 
    	
Amount of
   decrease in
   Principal
   Amount of
   this Note
    	
 
    	
Amount of
   increase in
   Principal
   Amount of
   this Note
    	
 
    	
Principal
   Amount of
   this Note
   following
   such decrease
   or increase
    	
 
    	
Signature of
   authorized
   officer of
   Trustee] (1)
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    

 

(1)Insert for Global Securities only

 

Section 3.3.Transfer and Exchange of Global Securities.

 

(1)        The transfer and exchange of Global Securities or beneficial interests therein shall be effected through the Depositary, in accordance with the Indenture (including applicable restrictions on transfer set forth in the Indenture and in the Global Security) and the procedures of the Depositary therefor.  A transferor of a beneficial interest in a Global Security to another Global Security shall deliver to the Security Registrar a duly completed Assignment Form in the form attached to the Global Security, any applicable certifications or opinions required by the Assignment Form and a written order given in accordance with the Applicable Procedures containing information regarding the participant account of the Depositary to be credited with a beneficial interest in the Global Security.  The Security Registrar shall, in accordance with such instructions, instruct the Depositary to credit to the account of the Person specified in such instructions a beneficial interest in the Global Security and to debit the account of the Person making the transfer the beneficial interest in the Global Security being transferred.

 

(2)        If the proposed transfer is a transfer of a beneficial interest in one Global Security to a beneficial interest in another Global Security, the Security Registrar shall reflect on its books and records the date and an increase in the principal amount of the Global Security to which such interest is being transferred in an amount equal to the principal amount of the interest to be so transferred, and 

 

25

 

the Security Registrar shall reflect on its books and records the date and a corresponding decrease in the principal amount of the Global Security from which such interest is being transferred.

 

(3)        If the Company determines (upon the advice of counsel and such other certifications and evidence as the Company may reasonably require) that a Note is eligible for resale after the applicable Resale Restriction Termination Date (as defined in the applicable Note) pursuant to Rule 144 under the Securities Act (or a successor provision) without the need for current public information and that the applicable legend in either the first or second paragraph of Section 3.2 hereto (a “Restricted Legend”) is no longer necessary or appropriate in order to ensure that subsequent transfers of the Note (or a beneficial interest therein) are effected in compliance with the Securities Act, the Company may instruct the Trustee to cancel the Note and issue to the Holder thereof (or to its transferee) a new Note in any authorized denominations of like tenor and aggregate principal amount, registered in the name of the Holder thereof (or its transferee), that does not bear the Restricted Legend, and the Trustee will comply with such instruction.

 

ARTICLE IV
 REMEDIES

 

Section 4.1.  Events of Default.

 

“Event of Default” means, wherever used herein with respect to the Notes, any one of the following events (whatever the reason for such Event of Default and whether it shall be voluntary or involuntary or be effected by operation of law or pursuant to any judgment, decree or order of any court or any order, rule or regulation of any administrative or governmental body):

 

(1)        an Event of Default pursuant to Section 501 of the Base Indenture; or

 

(2)        the Company’s failure to pay the Repurchase Price when due in connection with a Change of Control Repurchase Event.

 

Section 4.2.  Waiver of Past Defaults.

 

Section 512 of the Base Indenture shall not apply to the Notes, and, with respect to the Notes, any reference to Section 512 in the Base Indenture shall instead be deemed to refer to this Section 4.2.

 

The Holders of not less than a majority in aggregate principal amount of the Outstanding Notes may on behalf of the Holders of all the Notes waive any past Default hereunder with respect to the Notes and its consequences, except a default

 

26

 

(1)        in the payment of the principal of or premium, if any, or interest on any Note or the Repurchase Price in connection with a Change of Control Repurchase Event; or

 

(2)        in respect of a covenant or provision hereof or of the Base Indenture which under Article VII hereof or under Article IX of the Base Indenture cannot be modified or amended without the consent of the Holder of each Outstanding Note affected,

 

provided that there had been paid or deposited with the Trustee a sum sufficient to pay all amounts due to the Trustee and to reimburse the Trustee for any and all fees, expenses and disbursements advanced by the Trustee, its agents and its counsel incurred in connection with such default or Event of Default.

 

Upon any such waiver, such Default shall cease to exist, and any Event of Default arising therefrom shall be deemed to have been cured, for every purpose of this First Supplemental Indenture, but no such waiver shall extend to any subsequent or other Default or impair any right consequent thereon.

 

ARTICLE V
 REDEMPTION OF SECURITIES

 

Section 5.1.  Optional Redemption.

 

Prior to December 1, 2043, the Notes will be redeemable in whole or in part, at the Company’s option at any time and from time to time, at a Redemption Price equal to the greater of (i) 100% of the aggregate principal amount of any Notes being redeemed and (ii) the sum of the present values of the remaining scheduled payments of principal and interest on any Notes being redeemed (exclusive of interest accrued to the Redemption Date) discounted to the Redemption Date on a semiannual basis (assuming a 360-day year consisting of twelve 30-day months) at the Treasury Rate plus 30 basis points, plus in each case accrued and unpaid interest thereon to, but excluding, the Redemption Date.

 

The Company shall give the Trustee notice of the Redemption Price with respect to any redemption pursuant to the preceding paragraph as soon as practicable after the calculation thereof and the Trustee shall have no responsibility for such calculation.

 

On and after December 1, 2043, the Notes will be redeemable in whole or in part, at the Company’s option at any time and from time to time, at a Redemption Price equal to 100% of the aggregate principal amount of any Notes being redeemed, plus accrued and unpaid interest thereon to, but excluding, the Redemption Date.

 

27

 

ARTICLE VI
 PARTICULAR COVENANTS

 

Section 6.1.  Liens.

 

The Credit Parties shall not create, assume, incur or guarantee any indebtedness for money borrowed that is secured by a pledge, mortgage, lien or other encumbrance (other than Permitted Liens) on any voting stock or profit participating equity interests of their respective Subsidiaries (to the extent of their ownership of such voting stock or profit participating equity interests) or any entity that succeeds (whether by merger, consolidation, sale of assets or otherwise) to all or any substantial part of the business of any of such Subsidiaries, without providing that the Notes (together with, if the Credit Parties shall so determine, any other indebtedness of, or guarantee by, the Credit Parties ranking equally with the Notes and existing as of the closing of the offering of the Notes or thereafter created) will be secured equally and ratably with or prior to all other indebtedness secured by such pledge, mortgage, lien or other encumbrance on the voting stock or profit participating equity interests of any such entities.  This Section 6.1 shall not limit the ability of the Credit Parties to incur indebtedness or other obligations secured by liens on assets other than the voting stock or profit participating equity interests of their respective Subsidiaries.

 

Section 6.2.  Obligation to Offer to Repurchase Upon a Change of Control Repurchase Event.

 

(1)        If a Change of Control Repurchase Event occurs, unless the Company has exercised its option to redeem the Notes pursuant to Article V by giving notice of such redemption to the Holders of the Notes pursuant to Section 1104 of the Base Indenture, the Company shall make an offer to each Holder of Notes to repurchase all or any part of that Holder’s Notes (the “Change of Control Offer”) at a repurchase price in cash equal to 101% of the aggregate principal amount of Notes repurchased plus any accrued and unpaid interest on the Notes repurchased to, but excluding, the date of purchase (the “Repurchase Price”). The portion of any Note purchased in part must be in a principal amount equal to $2,000 or an integral multiple of $1,000 in excess thereof.

 

(2)        In connection with any Change of Control related to a Change of Control Repurchase Event and any particular reduction in the rating on the Notes, the Company shall request from the Rating Agencies each such Rating Agency’s written confirmation that such reduction in the rating on the Notes was the result, in whole or in part, of any event or circumstance comprised of or arising as a result of, or in respect of, the applicable Change of Control (whether or not the applicable Change of Control shall have occurred at the time of any Below Investment Grade Rating Event).  The Company shall promptly certify to the Trustee as to whether or not such confirmation has been received or denied.

 

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(3)        Within 30 days following any Change of Control Repurchase Event or, at the Company’s option, prior to any Change of Control, but after the public announcement of the Change of Control, the Company shall give notice to each Holder of Notes, with a written copy to the Trustee.  Such notice shall state:

 

(i)         a description of the transaction or transactions that constitute or may constitute the Change of Control Repurchase Event;

 

(ii)        that the Change of Control Offer is being made pursuant to this Section 6.2;

 

(iii)       the Repurchase Price and the date on which the Repurchase Price will be paid, which date shall be a Business Day that is no earlier than 30 days and no later than 60 days from the date such notice is mailed, other than as may be required by law (the “Repurchase Price Payment Date”); and

 

(iv)       if the notice is given prior to the date of consummation of the Change of Control, a statement that the offer to purchase is conditioned on the Change of Control Repurchase Event occurring on or prior to the payment date specified in the notice.

 

(4)        The Company shall comply with the requirements of Rule 14e-1 under the Exchange Act and any other securities laws and regulations thereunder to the extent those laws and regulations are applicable in connection with the repurchase of the Notes as a result of a Change of Control Repurchase Event.  To the extent that the provisions of any securities laws or regulations conflict with the Change of Control Repurchase Event provisions of the Notes, the Company shall comply with the applicable securities laws and regulations and shall not be deemed to have breached its obligations under the Change of Control Repurchase Event provisions of the Notes by virtue of such conflict.

 

(5)        On the Repurchase Price Payment Date, the Company shall, to the extent lawful:

 

(i)         accept for payment all Notes or portions of Notes properly tendered pursuant to the Change of Control Offer;

 

(ii)        deposit with the Paying Agent an amount equal to the Repurchase Price in respect of all Notes or portions of Notes properly tendered; and

 

(iii)       deliver or cause to be delivered to the Trustee the Notes properly accepted together with an Officers’ Certificate stating the aggregate principal amount of Notes or portions of Notes being purchased.

 

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The Paying Agent shall promptly mail to each Holder of Notes properly tendered the Repurchase Price for such Notes, and the Trustee shall promptly authenticate and mail (or cause to be transferred by book-entry) to each Holder of Notes properly tendered a new Note equal in principal amount to any unpurchased portion of any Notes surrendered; provided that each new Note will be in a principal amount of $2,000 or any integral multiple of $1,000 in excess thereof.

 

(6)        Notwithstanding the foregoing, the Company shall not be required to make an offer to repurchase the Notes upon a Change of Control Repurchase Event if (i) a third party makes such an offer in respect of the Notes in the manner, at the times and otherwise in compliance with the requirements for an offer made by the Company and such third party purchases all the Notes properly tendered and not withdrawn under its offer or (ii) the Company has given written notice of a redemption as provided under Section 1104 of the Base Indenture; provided that the Company has not failed to pay the Redemption Price on the Redemption Date.

 

Section 6.3.  Financial Reports

 

Section 704 of the Base Indenture shall apply to the reports, information, and documents delivered under this Section 6.3.

 

(1)        For so long as the Partnership is subject to the reporting requirements of Section 13 or 15(d) of the Exchange Act, the Company shall provide (or cause its Affiliates to provide) to the Trustee, unless available on the Commission’s Electronic Data Gathering, Analysis and Retrieval System (or successor system), within 15 days after the Partnership files the same with the Commission, copies of the annual reports and of the information, documents and other reports (or copies of such portions of any of the foregoing as the Commission may from time to time by rules and regulations prescribe) which the Partnership may file with the Commission pursuant to Section 13 or Section 15(d) of the Exchange Act.  The Trustee may conclusively presume, and shall incur no liability in such presumption, that the Partnership has not filed any such reports, information, documents and other reports with the Commission that are not available on the Commission’s Electronic Data Gathering, Analysis and Retrieval System (or successor system) unless and until it shall have received written notice from the Company to the contrary.

 

(2)        For so long as any of the Notes remain Outstanding, the Company shall, or shall cause its Affiliates to, furnish to the Holders of the Notes and prospective investors, upon their request, the information required to be delivered pursuant to Rule 144A(d)(4) under the Securities Act for the Company and, unless available on the Commission’s Electronic Data Gathering, Analysis and Retrieval System (or successor system), for the Partnership (as if such rule applied to it); provided, however, that if any time the Partnership no longer directly or indirectly controls the Credit Parties or guarantees the Notes, such 

 

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information shall be provided for either (i) the Credit Parties on a combined and consolidated basis and taken as a whole or (ii) any Person that directly or indirectly controls the Credit Parties and guarantees the Notes (in each case, as if such rule applied to such Persons).  The Company shall, or shall cause its Affiliates to, make the above information and reports available to securities analysts and prospective investors upon request.

 

(3)        Delivery of such reports, information and documents to the Trustee shall be for informational purposes only and the Trustee’s receipt of such shall not constitute constructive notice of any information contained therein or determinable from information contained therein, including the Company’s compliance with any of the covenants contained in the Indenture (as to which the Trustee will be entitled to conclusively rely upon an Officer’s Certificate). The Trustee shall have no obligation to determine if and when the Company’s information is available on the Commission’s Electronic Data Gathering, Analysis and Retrieval System (or successor system) and the Trustee shall have no obligation to obtain any reports that are posted on the Commission’s Electronic Data Gathering, Analysis and Retrieval System (or successor system).

 

ARTICLE VII
 SUPPLEMENTAL INDENTURES

 

Section 7.1.  Supplemental Indentures without Consent of Holders of Notes.

 

For the purposes of the Base Indenture and this First Supplemental Indenture, no amendment to cure any ambiguity, defect or inconsistency in this First Supplemental Indenture, the Base Indenture or the Notes made solely to conform this First Supplemental Indenture, the Base Indenture or the Notes to the Description of the Notes contained in the Company’s offering memorandum dated May 21, 2014, to the extent that such provision in the Description of the Notes was intended to be a verbatim recitation of a provision of this First Supplemental Indenture, the Base Indenture or the Notes, shall be deemed to adversely affect the interests of the Holders of any Notes.

 

Section 7.2.  Supplemental Indentures with Consent of Holders of Notes.

 

Section 902 of the Base Indenture shall not apply to the Notes, and, with respect to the Notes, any reference to Section 902 in the Base Indenture shall instead be deemed to refer to this Section 7.2.

 

With the consent of the Holders of not less than a majority in aggregate principal amount of the Outstanding Notes affected by such supplemental indenture (including consents obtained in connection with a tender offer or exchange for the Notes), by Act of said Holders delivered to the Company, the

 

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Guarantors and the Trustee, the Company, the Guarantors and the Trustee may enter into an indenture or indentures supplemental hereto for the purpose of adding any provisions to or changing in any manner or eliminating any of the provisions of the Indenture or of modifying in any manner the rights of the Holders of such Notes under the Indenture; provided, however, no such supplemental indenture shall, without the consent of the Holder of each Outstanding Note affected thereby:

 

(1)        change the Stated Maturity of the principal of, or any installment of principal of or interest on, any Note;

 

(2)        reduce the principal amount of any Note which would be due and payable upon a declaration of acceleration of the Maturity thereof pursuant to Section 502 of the Base Indenture, or reduce the rate of or extend the time of payment of interest on any Note;

 

(3)        reduce the Repurchase Price in connection with a Change of Control Repurchase Event;

 

(4)        reduce any premium payable upon the redemption of or change the date on which any Note may or must be redeemed;

 

(5)        change the coin or currency in which the principal of or premium, if any, or interest on any Note is payable;

 

(6)        impair the right of any Holder to institute suit for the enforcement of any such payment on or after the Stated Maturity thereof (or, in the case of redemption or repayment, on or after the Redemption Date or a Repurchase Price Payment Date, as applicable);

 

(7)        reduce the percentage in principal amount of the Outstanding Notes the consent of whose Holders is required for modification or amendment of this First Supplemental Indenture or the Base Indenture or the consent of whose Holders is required for any waiver (of compliance with certain provisions of the Base Indenture or this First Supplemental Indenture or certain defaults thereunder and hereunder and their consequences) provided for in the Base Indenture and this First Supplemental Indenture;

 

(8)        modify any of the provisions of this Section 7.2 or Section 512 or Section 1005 of the Base Indenture, except to increase any such percentage or to provide that certain other provisions of the Indenture cannot be modified or waived without the consent of the Holder of each Outstanding Note affected thereby; provided, however, that this clause shall not be deemed to require the consent of any Holder with respect to changes in the references to “the Trustee” and concomitant changes in this Section 7.2 and Section 1005 of the Base 

 

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Indenture, or the deletion of this proviso, in accordance with the requirements of Sections 611 and 901(7) of the Base Indenture;

 

(9)        subordinate the Notes or any Guarantee of a Guarantor in respect thereof to any other obligation of the Company or such Guarantor;

 

(10)     modify the terms of any Guarantee in a manner adverse to the Holders of the Notes; or

 

(11)     modify clauses (1) through (10) above.

 

It shall not be necessary for any Act of Holders under this Section 7.2 to approve the particular form of any proposed supplemental indenture, but it shall be sufficient if such Act shall approve the substance thereof.

 

A supplemental indenture which changes or eliminates any covenant or other provision of the Indenture which has expressly been included solely for the benefit of one or more particular series of Securities other than the Notes, or which modifies the rights of the Holders of Securities of such series with respect to such covenant or other provision, shall be deemed not to affect the rights under this Indenture of the Holders of the Notes.

 

In addition, the Holders of at least a majority in aggregate principal amount of the Outstanding Notes may, on behalf of the Holders of all Notes, and subject to and in accordance with the provisions of Section 1005 of the Base Indenture, waive compliance with the Credit Parties’ covenants described under Sections 6.1, 6.2 and 6.3 of this First Supplemental Indenture and Article VIII and Section 1402 of the Base Indenture (other than any covenant, a modification to which under clause (3) of this Section 7.2 would require the consent of the Holder of each Outstanding Note affected thereby).

 

ARTICLE VIII
 DEFEASANCE

 

Section 8.1.  Covenant Defeasance.

 

Section 1303 of the Base Indenture shall not apply to the Notes, and, with respect to the Notes, any reference to Section 1303 in the Base Indenture shall instead be deemed to refer to this Section 8.1.

 

Upon the Company’s exercise of its option, if any, to have Section 1303 of the Base Indenture applied to the Notes, or if Section 1303 of the Base Indenture shall otherwise apply to the Notes, (1)the Company and the Guarantors shall be released from their respective obligations and any covenants provided pursuant to Article VI of this First Supplemental Indenture and Section 301(18), Section 801, 

 

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Section 901(1) or Section 901(12) and Article XIV of the Base Indenture for the benefit of the Holders of the Notes and (2) the occurrence of any event specified in Section 501(4) and Section 501(8) shall be deemed not to be or result in an Event of Default, in each case with respect to the Notes and the related Guarantees as provided in Section 1303 of the Base Indenture on and after the date the conditions set forth in Section 1304 of the Base Indenture are satisfied (hereinafter called “Covenant Defeasance”).  For this purpose, such Covenant Defeasance means that, with respect to the Notes and Guarantees thereof, each of the Company and the Guarantors may omit to comply with and shall have no liability in respect of any term, condition or limitation set forth in any such specified Section, whether directly or indirectly by reason of any reference elsewhere herein or in the Base Indenture to any such Section or by reason of any reference in any such Section to any other provision herein or in the Base Indenture or in any other document, but the remainder of the Base Indenture, this First Supplemental Indenture and such Notes and Guarantees thereof shall be unaffected thereby.

 

ARTICLE IX
 MISCELLANEOUS

 

Section 9.1.  Execution as Supplemental Indenture.

 

This First Supplemental Indenture is executed and shall be construed as an indenture supplemental to the Base Indenture and, as provided in the Base Indenture, this First Supplemental Indenture forms a part thereof.

 

Section 9.2.  Not Responsible for Recitals or Issuance of Notes.

 

The recitals contained herein and in the Notes, except the Trustee’s certificates of authentication, shall be taken as the statements of the Company and the Guarantors, as the case may be, and the Trustee assumes no responsibility for their correctness.  The Trustee makes no representations as to the validity or sufficiency of this First Supplemental Indenture or of the Securities or the Guarantees.  The Trustee shall not be accountable for the use or application by the Company of the Notes or the proceeds thereof.

 

Section 9.3.  Separability Clause.

 

In case any provision in this First Supplemental Indenture or in the Notes shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby.

 

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Section 9.4.  Successors and Assigns.

 

All covenants and agreements in this First Supplemental Indenture by the Company and the Guarantors shall bind their respective successors and assigns, whether so expressed or not.  All agreements of the Trustee in this First Supplemental Indenture shall bind its successors and assigns, whether so expressed or not.

 

Section 9.5.  Execution and Counterparts.

 

This First Supplemental Indenture may be executed in any number of counterparts, each of which so executed shall be deemed to be an original, and all such counterparts shall together constitute but one and the same instrument.

 

Section 9.6.  Governing Law.

 

This First Supplemental Indenture and the Notes shall be governed by, and construed in accordance with, the law of the State of New York.

 

[Signature page to follow.]

 

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IN WITNESS WHEREOF, the parties hereto have caused this First Supplemental Indenture to be duly executed all as of the day and year first above written.

 

	
 
    	
KKR Group Finance   Co. III LLC  
    
	
 
    	
 
    
	
 
    	
By:
    	
KKR Management   Holdings Corp., 
   its managing member
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/ David Sorkin
    
	
 
    	
 
    	
Name: David Sorkin
    
	
 
    	
 
    	
Title: Secretary
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
KKR & Co. L.P.  
    
	
 
    	
 
    
	
 
    	
By:
    	
KKR Management   LLC, 
   its general partner
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/ David Sorkin
    
	
 
    	
 
    	
Name: David Sorkin
    
	
 
    	
 
    	
Title: Secretary
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
KKR Management   Holdings L.P.  
    
	
 
    	
 
    
	
 
    	
By:
    	
KKR Management   Holdings Corp., 
   its general partner
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/ David Sorkin
    
	
 
    	
 
    	
Name: David Sorkin
    
	
 
    	
 
    	
Title: Secretary
    

 

[Signature Page to First Supplemental Indenture]

 

 

	
 
    	
KKR Fund Holdings   L.P.  
    
	
 
    	
 
    
	
 
    	
By:
    	
KKR Fund Holdings   GP Limited, 
   its general partner
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
KKR Group Holdings   L.P., its 
   general partner  
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
KKR Group Limited,   the general 
   partner of KKR Group Holdings 
   L.P.
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/ David Sorkin
    
	
 
    	
 
    	
Name: David Sorkin
    
	
 
    	
 
    	
Title: Director
    

 

[Signature Page to First Supplemental Indenture]

 

 

	
 
    	
The Bank of New York Mellon Trust 
   Company, N.A., as Trustee
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/ Melonee Young
    
	
 
    	
 
    	
Name: Melonee   Young
    
	
 
    	
 
    	
Title:Vice   President
    

 

[Signature Page to First Supplemental Indenture]Exhibit 10.1

 

UBS SECURITIES LLC

 

CUSTOMER AGREEMENT

FOR FUTURES AND OPTIONS ON FUTURES

CONTRACTS

 

 

	
 
    	
See   Exhibit A
    
	
 
    	
Customer Name
    

 

 

CUSTOMER AGREEMENT

 

It is understood and agreed that this document shall constitute a separate agreement with each party listed on Exhibit A attached hereto, as if each such party had executed a separate document naming only itself as Customer, and that no party listed on Exhibit A shall have any liability under this document for the obligations of any other party engaging in Transactions with UBS-S LLC, including any other party so listed.  With respect to any one such party, references in this Agreement to Customer shall be deemed to refer only to such party, and (iii) the term “this Agreement” shall be construed according to the foregoing provisions.

 

This Customer Agreement (“Agreement”) between UBS Securities LLC (“UBS-S LLC”) and each fund listed in Exhibit A (jointly not severally) (“Customer”) shall govern the purchase and sale by UBS-S LLC of certain futures contracts, options thereon and options contracts for the account and risk of Customer through one or more accounts carried by UBS-S LLC on behalf and in the name of Customer (collectively, the “Account”), as more fully described below.  “Business Day” as used in this Agreement means any day other than a Saturday, Sunday and/or other day on which the New York Stock Exchange is closed.

 

1.                                      UBS-S LLC’S AUTHORIZATION TO ACT AS BROKER

 

Customer authorizes UBS-S LLC, acting through employees and agents selected by it in its sole discretion, to purchase and sell for the Account contracts for certain futures contracts, options thereon and options contracts for which UBS-S LLC has notified Customer that UBS-S LLC is prepared to execute transactions (collectively, “Contracts”) within or outside the United States of America in accordance with Customer’s instructions.

 

2,                                      CUSTOMER’S REPRESENTATIONS AND WARRANTIES

 

(a)                                 Representations and Warranties.  Customer hereby represents and warrants (which representations and warranties are deemed to be continuing for the term of this Agreement) as follows:

 

(i)                                    Authority.  Customer has full right, power and authority to enter into this Agreement and the Contracts, and the person executing this Agreement on behalf of Customer is authorized to do so.  This Agreement is binding on Customer and enforceable against Customer in accordance with its terms;

 

(ii)                                Lawful Agreement.  Customer may lawfully establish and open the Account for the purpose of effecting purchases and sales of Contracts through UBS-S LLC.  Transactions entered into pursuant to this Agreement will not violate any “Applicable Law” (as defined below) to which Customer is subject or any agreement to which Customer is subject or a party and the execution, delivery and performance of this Agreement by Customer require no action by or in respect of or filing with any governmental body, agency or official;

 

(iii)                               Customers Information.  Any financial or other information provided to UBS-S LLC by Customer in connection with this Agreement will be accurate and complete in every material respect.

 

(iv)                              Interest or Control of Account.  If any person or entity has, or during the term of this Agreement will have, any interest in the Account other than Customer, Customer hereby agrees to so notify UBS-S LLC immediately (and no later than within one Business Day); and

 

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(v)                                 Designation.  If Customer is not a citizen or resident of the United States, Customer has been informed by UBS-S LLC of Commodity Futures Trading Commission (“CFTC”) Regulations concerning the designation of a futures commission merchant as the agent of foreign brokers, customers of a foreign broker and foreign traders for certain purposes as set forth in CFTC Regulation §15.05 and concerning special calls for information from futures commission merchants, foreign brokers and members of contract markets as set forth in CFTC Regulation §21.03.

 

(b)                                 Notice of Change.  Customer shall immediately (and no later than within one Business Day) notify UBS-S LLC in writing if any of the representations contained herein materially change or cease to be true and correct.

 

3.                                      APPLICABLE LAW

 

The Account and all transactions and agreements in respect of the Account shall be subject to the regulations of all applicable Federal, state and self-regulatory agencies or authorities, including but not limited to:  (a) the provisions of the Commodity Exchange Act, as amended, and any rules, regulations, orders and interpretations promulgated thereunder by the CFTC; (b) the constitution, by-laws, rules, regulations, orders and interpretations of the relevant board of trade, trading facility, market, or exchange and its clearing house, if any (each, an “exchange”) on or subject to the rules of which such transactions are executed and/or cleared, and any relevant registered futures association, including, without limitation, the National Futures Association (“NFA”); and (c) custom and usage of the trade.  All such provisions, rules, regulations, orders, interpretations, constitution, by-laws, custom and usage, as in effect from time to time, are hereinafter collectively referred to as “Applicable Law.”

 

4.                                      RELIANCE ON INSTRUCTIONS

 

UBS-S LLC shall be entitled to rely on any instructions, notices and communications, whether oral or in writing, that it believes to be that of an individual authorized to act on behalf of Customer, including, but not limited to, any individual identified in writing by Customer as authorized to act on its behalf, and Customer shall be bound thereby.  Customer hereby waives any defense that any such instruction was not in writing as may be required by the Statute of Frauds or any other similar law, rule or regulation.

 

5.                                      ACCEPTANCE OF ORDERS; POSITION LIMITS

 

(a)                                 Acceptance of Orders.  UBS-S LLC shall have the right to limit the size of open positions (net or gross) of Customer with respect to the Account at any time and to refuse acceptance of any orders (whether such refusal or limitation is required by, and whether such refusal is based on position limits imposed under, Applicable Law).  UBS-S LLC shall immediately notify Customer of its rejection of any order.  Unless specified by Customer, UBS-S LLC may designate the exchange or trading system on which it will attempt to execute orders.

 

(b)                                 Position Limits.  Customer shall not, either alone or in combination with others, violate any position or exercise limit established by or under Applicable Law.  If Customer intends at any time to exceed such position limits, Customer shall cause to be filed an application with the CFTC or the relevant exchange requesting authorization for Customer to exceed such position limits and shall provide UBS-S LLC with a copy of such application and such other information as UBS-S LLC may reasonably request with respect to such application.  Customer shall indemnify and hold UBS-S LLC harmless from and against all claims, damages, fines or assessments of any kind whatsoever, including

 

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reasonable attorneys’ fees in connection with the defense thereof, made and incurred in connection with any violation by Customer of its obligations under this Section 5(b).

 

6.                                      ORIGINAL AND VARIATION MARGIN; PREMIUMS; OTHER CONTRACT OBLIGATIONS

 

With respect to every Contract purchased, sold or cleared for the Account, Customer shall make, or cause to be made, all applicable original margin, variation margin, intra-day margin and premium payments, and perform all other obligations attendant to transactions or positions in such Contracts, as may be required by Applicable Law or by UBS-S LLC in its sole and absolute discretion.  Requests for margin deposits and/or premium payments may, at UBS-S LLC’s election, be communicated to Customer orally, telephonically or in writing.  Margin requirements established by UBS-S LLC may exceed the margin requirements set by any exchange on which transactions are executed or cleared or caused to be executed or cleared by UBS-S LLC or any agent thereof for Customer and may be changed by UBS-S LLC without prior notice to Customer.  Except as otherwise provided herein, all such margin and premium payments shall be in the form, as UBS-S LLC permits, of cash in U.S. dollars, securities of the U.S. Government, or a combination thereof.  If at any time Customer fails timely to deposit or maintain required margin, or Customer fails timely to make any premium payments, UBS-S LLC may at any time, without further notice to Customer, close out Customer’s open position in whole or in part and take any action it deems appropriate.

 

7.                                      SECURITY INTEREST AND RIGHTS RESPECTING COLLATERAL

 

All Contracts, cash, securities, and/or other property of Customer, including all proceeds of all such property such as profits from Account transactions (collectively, the “Collateral”) now or at any future time in the Account or otherwise held by UBS-S LLC or its affiliates, any exchange through which trades of the Account are executed and/or positions are held, or any other entity authorized to act as an agent of UBS-S LLC or Customer, hereby are pledged to UBS-S LLC and shall be subject to a general lien and continuing first priority security interest in UBS-S LLC’s favor to secure any indebtedness or other amounts at any time owing from Customer to UBS-S LLC, and to secure any and all other obligations and liabilities of Customer to UBS-S LLC (collectively, the “Customer’s Liabilities”). Customer will not cause or allow any of the Collateral held in Customer’s Accounts whether now owned or hereafter acquired, to be or become subject to any liens, security interests or encumbrances of any nature without the prior written consent of UBS-S LLC and in no event shall the Collateral held in Customer’s Account be subject to a lien or security interest superior to that of UBS-S LLC.  Customer hereby grants UBS-S LLC the right to borrow, pledge, repledge, hypothecate, rehypothecate, loan or invest any of the Collateral without notice to Customer, and without any obligation to pay or to account to Customer for any interest, income or benefit that may be derived therefrom.  UBS-S LLC shall be under no obligation to deliver to Customer the identical Collateral in the Account, but shall only be under an obligation to deliver to Customer Collateral of like or equivalent kind and amount.  The rights of UBS-S LLC set forth above shall be qualified by any applicable requirements for segregation of customer’s property under Applicable Law.

 

8.                                      PAYMENT OBLIGATIONS OF CUSTOMER

 

(a)                                 Charges to the Account.  With respect to every Contract purchased, sold or cleared for the Account, Customer shall pay UBS-S LLC upon demand and UBS-S LLC hereby is authorized to charge Customer’s Account for:  (i) all brokerage charges, give-up fees, commissions and service fees as UBS-S LLC may from time to time charge as agreed in writing between Customer and UBS-S LLC; (ii) all exchange, clearing member, NFA or CFTC fees or charges, fines or penalties; (iii) any tax imposed on such transactions by any competent taxing authority; (iv) the amount of any trading losses in the

 

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Account; (v) any debit balance or deficiency in the Account; (vi) interest and service charges on any debit balances or deficiencies in the Account, any advances or any loan (including interest on the amount of variation margin calls, until satisfaction of such calls, when the Customer posts U.S. Treasury Bills for original margin purposes), at the rate customarily charged by UBS-S LLC and agreed in writing between Customer and UBS-S LLC (which may be at the prevailing and/or allowable rates according to the laws of the State of Illinois) from the day any such deficit was incurred to (but not including) the day of payment (calculated on the basis of a 360 day year and for the actual number of days elapsed for all deficits, except for those denominated in foreign currencies for which generally accepted accounting principles require that the interest rate shall be calculated otherwise), together with costs and reasonable attorneys’ fees incurred in collecting any such deficit; (vii) all storage and delivery service fees; and (viii) any other amounts owed by Customer to UBS-S LLC with respect to the Account or any transactions therein.

 

(b)                                 Payment in U.S. Dollars.  Any and all payment obligations of Customer, if not deducted from Customer’s Account as permitted hereunder, shall be made upon demand in immediately available U.S. dollars to UBS-S LLC or at such other place and at such time and in such manner as UBS-S LLC notifies Customer.  The obligation of Customer to make all payments due hereunder shall not be discharged or satisfied by any tender, or any recovery pursuant to any judgment, which is expressed in or converted into any other currency other than U.S. dollars, except to the extent that such tender or recovery shall result in the actual receipt by UBS-S LLC of the full amount of such U.S. dollars expressed to be payable in respect of such amounts.  Customer agrees that its obligations to make payment in U.S. dollars as aforesaid shall be enforceable as an alternative or additional cause of action for the purpose of recovery of the amount (if any) by which such actual receipt shall fall short of the full amount of U.S. dollars expressed to be payable in respect of such amount due hereunder, and shall not be affected by judgment being obtained for other sums due hereunder.

 

(c)                                  Setoff.  Any Collateral may at any time or from time to time without notice or compliance with any condition precedent (which notice hereby is expressly waived) be setoff, appropriated and applied by UBS-S LLC against any and all payment obligations of Customer hereunder including, but not limited to, any deficit balance or margin deficiency in the Account (or any sub-account within the Account), in such manner as UBS-S LLC in its discretion may determine.

 

(d)                                 Netting.  UBS-S LLC may at any time or from time to time without notice or compliance with any condition precedent (which notice hereby is expressly waived) net (i) any Collateral held in or on behalf of the Account (or any sub-account within the Account) or liabilities or payment obligations of UBS-S LLC to Customer or the Account (or any sub-account within the Account) against (ii) any liabilities or payment obligations of Customer thereunder, including, but not limited to any deficit balance or margin deficiency in the Account (or any sub-account within the Account), paying to Customer only the amount by which the aggregate amount of (i) above exceeds the aggregate amount of (ii) above.

 

(e)                                  Gross-Up.  All payments made by Customer to UBS-S LLC hereunder will be made without setoff or counterclaim free and clear and without deduction or withholding for, any present or future taxes, levies, assessments or other charges of whatever nature, now or hereinafter imposed by any jurisdiction or by any agency, state or other political subdivision or taxing authority thereof or therein, and all interest, penalties, or similar liabilities with respect thereto (collectively, “Taxes”).  If any Taxes are so levied or imposed, Customer agrees to pay the full amount of such Taxes, and such additional amounts as may be necessary so that every net payment of all amounts due hereunder, after withholding

 

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or deduction for or on account of any Taxes, will not be less than the amount provided for herein.  Customer will furnish to UBS-S LLC, within thirty days after the date the payment of any Taxes is due pursuant to Applicable Law, certified copies of tax receipts evidencing such payment by Customer.

 

9.                                      DELIVERY PROCEDURES; OPTIONS ALLOCATION PROCEDURE

 

(a)                                 Instructions.  Customer will provide UBS-S LLC with instructions either to liquidate Contracts previously established by Customer, make or take delivery under any such Contracts, or exercise options entered into by Customer, within such time limits as may be specified by UBS-S LLC; provided that if no such time limit is specified, (i) if Customer maintains an Account for speculation, liquidating instructions on open futures positions maturing in a current delivery month must be given to UBS-S LLC at least five (5) Business Days prior to the first notice day or last trading day, whichever is earlier; and (ii) if Customer maintains an Account for hedging, Customer understands that liquidating instructions on open futures positions maturing in a current delivery month must be given to UBS-S LLC at least one (1) Business Day prior to the first notice day in the case of long positions, and in the case of short positions, at least one (1) Business Day prior to the last trading day.  UBS-S LLC shall have no responsibility to take any action on behalf of Customer, including, without limitation, exercising option Contracts, unless and until UBS-S LLC receives oral or written instructions reasonably acceptable to UBS-S LLC indicating the action UBS-S LLC is to take.  Any instructions, if given orally to UBS-S LLC, shall immediately be confirmed in writing by Customer.  Funds sufficient to take delivery pursuant to such Contract or deliverable grade commodities to make delivery pursuant to such Contract must be delivered to UBS-S LLC at such time and location as UBS-S LLC may require in connection with any delivery.

 

(b)                                 Allocation Procedures.  Short option Contracts may be subject to exercise at any time.  Exercise notices received by UBS-S LLC with respect to option Contracts sold by Customer may be allocated to Customer pursuant to a random allocation procedure, and Customer shall be bound by any such allocation of exercise notices.  Such notices may be allocated to Customer after the close of trading on the day on which such notices have been allocated to UBS-S LLC by the applicable exchange.  In the event of any allocation to Customer, unless UBS-S LLC has previously received instructions from Customer, UBS-S LLC’s sole responsibility shall be to use commercially reasonable efforts to notify Customer by telephone of such allocation at any time before trading commences on the first day on which such option Contracts are traded on the applicable exchange following the day on which the applicable contract market has allocated such notices to UBS-S LLC.

 

(c)                                  Failure to Provide Instructions.  If Customer fails to comply with any of the foregoing obligations, UBS-S LLC may, in its sole and absolute discretion, liquidate any open positions, make or receive delivery of any commodities or instruments, or exercise or allow the expiration of any options, in such manner and on such terms as UBS-S LLC, in its sole and absolute discretion, deems necessary or appropriate.  Any such action taken shall be in the sole and absolute discretion of UBS-S LLC and Customer shall remain fully liable for all costs, losses, expenses, liabilities and damages (including special, indirect and consequential damages, penalties and fines) which UBS-S LLC may be required to pay or which it has sustained in connection with such transactions and for any remaining debit balance in the Account.

 

10.                               EVENTS OF DEFAULT; UBS-S LLC’S REMEDIES

 

(a)                                 Events of Default.  As used herein, each of the following shall be deemed an “Event of Default”:  (i) the commencement of a case under any bankruptcy, insolvency or reorganization law or similar law effecting creditors’ rights of any jurisdiction, or the filing of a petition for the appointment of a receiver

 

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by or against Customer, for the benefit of its creditors, an admission in writing by Customer that it is insolvent or is unable to pay its debts when they mature, or the suspension by the Customer of its usual business or any material portion thereof; (ii) the issuance of any warrant or order of attachment against the Account or the levy of a judgment against the Account; (iii) if Customer is an employee benefit plan, the termination of Customer or the filing by Customer of a notice of intent to terminate with the Pension Benefit Guaranty Corporation (or other similar governmental agency or body of any jurisdiction), or the receipt of a notice of the Pension Benefit Guaranty Corporation’s (or other similar governmental agency’s or body’s) intent to terminate Customer, or the inability of Customer to pay benefits under the relevant employee benefit plan when due; (iv) the failure by Customer to deposit or maintain margins, to pay required premiums, or to make payments required by Section 8 hereof; (v) the Account shall incur a deficit balance; (vi) the failure by Customer to perform, in any material respect, its obligations respecting delivery, exercise or a notice of allocation of exercise, payment for delivery, or settlement under Contracts held in the Account (it being understood that any failure to comply with any Applicable Law shall be deemed material); (vii) the failure by Customer, in any material respect, to perform any of its other obligations hereunder (it being understood that any failure to comply with any Applicable Law shall be deemed material); (viii) if UBS-S LLC for any reason whatsoever deems it necessary or desirable for its protection; or (ix) there occurs or exists (1) an event as described in sub-paragraphs (i)-(viii) above under one or more agreements or instruments entered into by the Customer with UBS-S LLC or its affiliates (“Other Agreement”), or (2) there occurs or exists an event which constitutes an event of default (howsoever defined or described) under any Other Agreement.

 

(b)                                 Remedies.  Upon the occurrence of an Event of Default that is continuing UBS-S LLC shall have the right, in addition to any other remedy available to UBS-S LLC at law or in equity, and in addition to any other action UBS-S LLC may deem appropriate under the circumstances, to liquidate, spread or roll-forward any or all open Contracts held in or for the Account, sell any or all of the securities or other property of Customer held by UBS-S LLC and its affiliates and to apply the proceeds thereof to any amounts owed by Customer to UBS-S LLC, borrow or buy any options, securities, Contracts or other property for the Account and cancel any unfilled orders for the purchase or sale of Contracts for the Account, or take such other or further actions as UBS-S LLC, in its reasonable discretion, deems necessary or appropriate for its protection, all without demand for margin and without notice or advertisement.  In the event UBS-S LLC’s position would not be jeopardized thereby, UBS-S LLC will make reasonable efforts under the circumstances to notify Customer prior to taking any such action.  Any such liquidation, sale, purchase, borrowing or cancellation shall be made at the discretion of UBS-S LLC on, through or subject to the rules of an exchange, on other markets, at public auction or by private transaction, including, without limitation, by an exchange for physical transaction or similar transaction wherein UBS-S LLC may act as agent and/or as principal in such transaction.  Customer acknowledges and agrees that a prior demand or margin call of any kind from UBS-S LLC or prior notice from UBS-S LLC shall not be considered a waiver of UBS-S LLC’s right to take any action without notice or demand.  In any transaction described above, UBS-S LLC may sell any Collateral to itself or its affiliates or buy any Collateral from itself or its affiliates.  UBS-S LLC may, to the extent permitted by law, purchase the whole or any part thereof free from any right of redemption.  In all cases, Customer shall remain liable for and shall pay to UBS-S LLC on demand the amount of any deficiency in its Account resulting from any such transaction, and Customer shall reimburse, compensate and indemnify UBS-S LLC for any and all costs, losses, penalties, fines, taxes and damages which UBS-S LLC may incur, including reasonable attorneys’ fees incurred in connection with the exercise of its remedies and the recovery of any such costs, losses, penalties, fines, taxes and damages.

 

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11.                               EXCULPATION AND INDEMNIFICATION

 

(a)                                 Exculpation.  Neither UBS-S LLC nor any of its managing directors, officers, employees or affiliates shall be liable for any costs, losses, penalties, fines, Taxes and damages sustained or incurred by Customer other than as a result of UBS-S LLC’s gross negligence or willful misconduct.  In no event will UBS-S LLC be liable to Customer for consequential, incidental or special damages.  Without limiting the generality of the foregoing, neither UBS-S LLC nor any of its managing directors, officers, employees or affiliates shall have any responsibility or liability to Customer hereunder for any costs, losses, penalties, fines, Taxes and damages, including consequential, incidental or special damages, sustained or incurred by Customer, (i) in connection with the performance or non-performance by any exchange, clearing firm or other third party (including other exchange members, banks and floor brokers) to UBS-S LLC of its obligations in respect of any Contract or other property of Customer; (ii) as a result of any prediction, recommendation or advice made or given by a representative of UBS-S LLC whether or not made or given at the request of Customer; (iii) as a result of any delay in the performance or non-performance of any of UBS-S LLC’s obligations hereunder to the extent that losses arising therefrom are, directly or indirectly, caused by the occurrence of any contingency beyond the control of UBS-S LLC including, but not limited to, the unscheduled closure of an exchange or contract market or delays in the transmission of orders due to breakdowns or failures of transmission or communication facilities, execution, and/or trading facilities or other systems; (iv) as a result of any action taken by UBS-S LLC, its managing directors, officers, employees, agents (including other clearing firms through which transactions are effected on behalf of Customer) or floor brokers, to comply with Applicable Law; or (v) for any acts or omissions of those neither employed nor supervised by UBS-S LLC.  Moreover, UBS-S LLC shall have no responsibility for compliance by Customer with any law or regulation governing Customer’s conduct as a fiduciary, if applicable.

 

(b)                                 Force Majeure and Acts of State.  In the event that UBS-S LLC’s performance of any of its obligations and undertakings hereunder shall be interrupted or delayed by any occurrence not occasioned by the conduct of either party hereto, whether such occurrence shall be an act of God or the common enemy or the result of war, riot, fire, flood, civil commotion, acts of terrorism, sovereign conduct or other acts of State, or the act or conduct of any person or persons not party or privy hereto, then UBS-S LLC shall be excused from performance for such period of time as is reasonably necessary after such occurrence to remedy the effects thereof and neither UBS-S LLC nor any of its managing directors, officers, employees or affiliates shall be directly or indirectly responsible for losses occasioned thereby.

 

(c)                                  Electronic Trading Systems Waiver.  In consideration of UBS-S LLC making electronic trading systems or services available, in whole or in part, directly or indirectly, Customer agrees that neither UBS-S LLC, the electronic trading systems or services provided, exchanges whose products may be traded on or through such electronic trading systems or services, nor any other entities controlling, controlled by or under common control with such entities, nor their respective directors, officers, or employees, shall be liable for any losses, damages, costs or expenses (including, but not limited to, loss of profits, loss of use, incidental or consequential damages), regardless of the cause, arising from any fault, delay, omission, inaccuracy or termination of the electronic trading systems or services, or the inability to enter or cancel orders, or any other cause in connection with the furnishing, performance, maintenance, or use of or inability to use all or any part of the electronic trading systems or services.  The foregoing shall apply regardless of whether a claim arises in contract, tort, negligence, strict liability or otherwise.

 

(d)                                 Indemnification of UBS-S LLC.  Customer agrees to indemnify and hold UBS-S LLC and its managing directors, officers, employees and affiliates harmless from and against any and all costs

 

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(including reasonable attorneys’ fees), losses, penalties, fines, taxes and damages incurred by UBS-S LLC as a result of any action taken or not taken by UBS-S LLC in reliance upon any instructions, notices and communications which UBS-S LLC believes to be that of an individual authorized to act on behalf of Customer, or in connection with UBS-S LLC’s recovery of any such costs, losses, penalties, fines, taxes and damages.

 

12.                               TERMINATION

 

This Agreement may be terminated at any time by Customer or UBS-S LLC by written notice to the other; provided, however, that any such termination shall not relieve either party of any obligations in connection with any debit or credit balance in the Account or other liability or obligation arising or accruing prior to such termination.  In the event of such notice, Customer shall promptly either close out open positions in the Account or arrange for such open positions to be transferred to another futures commission merchant.  Upon satisfaction by Customer of all of Customer’s Liabilities, UBS-S LLC shall transfer to another futures commission merchant all Contracts, if any, then held for the Account, and shall transfer to Customer or to another futures commission merchant, as Customer may instruct, all cash, securities and other property held in the Account, whereupon this Agreement shall terminate.

 

13.                               CLOSE-OUT OF OFFSETTING POSITIONS

 

UBS-S LLC shall close-out any Contract for which an offsetting order is entered by Customer, unless Customer instructs UBS-S LLC not to close-out such Contract and to maintain the offsetting Contracts as open positions; provided, that UBS-S LLC shall not be obligated to comply with any such instructions given by Customer if Customer fails to provide UBS-S LLC with any representations, documentation or information reasonably requested by UBS-S LLC or if, in UBS-S LLC’s reasonable judgment, any failure to close-out such offsetting Contracts against each other would result in a violation of Applicable Law.  If offsetting Contracts are not closed out, Customer acknowledges that any such offsetting long and short positions may result in the charging of additional fees and commissions and the payment of additional margin, even though such offsetting Contracts may not result in any additional market gain or loss.

 

14.                               REPORTS AND OBJECTIONS

 

All confirmations, purchase and sale notices, correction notices and account statements (collectively, “Reports”) shall be submitted to Customer and shall be conclusive and binding on Customer unless Customer notifies UBS-S LLC of any objection thereto prior to the opening of trading on the contract market on which such transaction occurred on the Business Day following the day on which Customer receives such Report; provided, that with respect to monthly statements, Customer may notify UBS-S LLC of any objection thereto within five (5) Business Days after receipt of such monthly statement, provided the objection could not have been raised at the time any prior Report was received by Customer as provided for above.  Any such notice of objection, if given orally to UBS-S LLC, shall promptly (and in no event later than within one (1) Business Day) be confirmed in writing by Customer.

 

Customer consents to the electronic delivery of Reports via facsimile, electronic mail, computer networks (e.g., local area networks, commercial on-line services and SwisKey, Abacus or any similar online statement delivery system) or other electronic means agreed upon by Customer and UBS-S LLC.  Customer may revoke its consent at any time upon reasonable notice to UBS-S LLC.

 

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15.                               FOREIGN CURRENCY TRANSACTIONS

 

In the event that the Customer directs UBS-S LLC to enter into any Contract on an exchange on which such transactions are effected in a currency other than the U.S. dollar, any profit or loss arising as a result of a fluctuation in the exchange rate affecting such currency will be entirely for the account and risk of the Customer.  All initial and subsequent deposits for margin purposes, and the return to the Customer of any funds, are expected to be made in the currency of contract settlement.  Should the Customer elect to deposit funds other than the currency of settlement or instruct UBS-S LLC to convert funds which are already on deposit in another currency, UBS-S LLC shall debit or credit the Account of Customer at a rate of exchange determined by UBS-S LLC in its sole discretion on the basis of the then prevailing market rate of exchange for such foreign currency.  Customer authorizes UBS-S LLC to deposit Customer funds in depositories located outside of the United States consistent with the requirements of Applicable Law.

 

16.                               UBS-S LLC’S RESPONSIBILITY

 

UBS-S LLC is not acting as a fiduciary, foundation manager, commodity pool operator, commodity trading advisor or investment adviser in respect of any Account opened by Customer and UBS-S LLC shall have no responsibility hereunder for compliance with any law or regulation governing the conduct of fiduciaries, foundation managers, commodity pool operators, commodity trading advisors or investment advisers.

 

17.                               ADVICE

 

All advice communicated by UBS-S LLC with respect to any Account opened by Customer hereunder is incidental to the conduct of UBS-S LLC’s business as a futures commission merchant, does not constitute an offer to sell or the solicitation of an offer to buy any Contract, and such advice will not serve as the primary basis for any decision by or on behalf of Customer.  UBS-S LLC shall have no discretionary authority, power or control over any decisions made by or on behalf of Customer in respect of the Account, regardless of whether Customer relies on the advice of UBS-S LLC in making any such decision.  Any such advice, although based upon information from sources UBS-S LLC believes to be reliable, may be incomplete or inaccurate, may not be verified and may be changed without notice to Customer.  UBS-S LLC makes no representation as to the accuracy, completeness, reliability or prudence of any such advice or information or as to the tax consequences of Customer’s futures or options trading.  UBS-S LLC is a separate and independent corporate entity, distinct from its affiliates and it shall be free to purchase and sell Contracts for any affiliates without limitation or restriction.  The relationship between UBS-S LLC and Customer as described herein shall not affect any provisions of credit to Customer by UBS AG or any other subsidiary of UBS AG.  Moreover, Customer acknowledges that UBS-S LLC and its managing directors, officers, employees and affiliates may take or hold positions in, or advise other customers concerning, contracts which are the subject of advice from UBS-S LLC to Customer.  The positions and advice of UBS-S LLC and its managing directors, officers, employees and affiliates may be inconsistent with or contrary to positions of, and the advice given by, UBS-S LLC to Customer.

 

18.                               FINANCIAL AND OTHER INFORMATION

 

Customer agrees to furnish appropriate financial statements to UBS-S LLC and to inform UBS-S LLC of any material changes in the financial position of Customer and to furnish promptly such other information concerning Customer as UBS-S LLC reasonably requests.  UBS-S LLC is authorized from time to time to contact banks, financial institutions and credit agencies for verification of the financial

 

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condition of Customer. Customer agrees that UBS-S LLC may, from time to time, share with its branches, agencies and affiliates, certain non-public information concerning Customer as required to open and maintain Customer’s Account in accordance with this Agreement.

 

19.                               RECORDING

 

UBS-S LLC, in its sole and absolute discretion, may record, on tape or otherwise, any telephone conversation between UBS-S LLC and Customer involving their respective officers, agents and employees.  Customer hereby agrees and consents to such recording, with or without the use of an automatic tone warning device. Customer acknowledges that UBS-S LLC may erase such recordings after a reasonable period of time.

 

20.                               ACCOUNTS INTRODUCED BY OTHER BROKERS

 

If UBS-S LLC is carrying the Account of Customer as executing or clearing broker by arrangement with another broker through whose courtesy the Account has been introduced to UBS-S LLC, then, until receipt from Customer of written notice to the contrary, UBS-S LLC may accept from such other broker, without inquiry or investigation by UBS-S LLC, (i) orders for the purchase or sale in the Account of Contracts, and (ii) any other instructions concerning the Account.  UBS-S LLC shall not be responsible or liable for any acts or omissions of such other broker or its employees.

 

21.                               SEVERABILITY

 

If any provision of this Agreement is, or at any time becomes, inconsistent with any present or future Applicable Law, and if any of these authorities have jurisdiction over the subject matter of this Agreement, the inconsistent provision shall be deemed superseded or modified to conform with such law, rule or regulation but in all other respects, this Agreement shall continue and remain in full force and effect.

 

22.                               BINDING EFFECT

 

This Agreement shall be binding on and inure to the benefit of the parties and their successors.  In accordance with CFTC regulations, UBS-S LLC may assign Customer’s Account(s) and this Agreement to another registered Futures Commission Merchant (“FCM”) by notifying Customer of the date and name of the intended assignee FCM.  Unless Customer objects to the assignment prior to the scheduled date for the assignment, the assignment will be binding on Customer.  Customer may not assign this Agreement without UBS-S LLC’s prior consent.

 

23.                               ENTIRE AGREEMENT

 

This Agreement contains the entire agreement between the parties and supersedes any prior agreements between the parties as to the subject matter hereof.  No provision of this Agreement shall in any respect be waived, altered, modified, or amended unless such waiver, alteration, modification or amendment is signed by the party against whom such waiver, alteration, modification or amendment is to be enforced.

 

24.                               INSTRUCTIONS, NOTICES OR COMMUNICATIONS

 

(a)                                 Except as specifically otherwise provided in this Agreement, all instructions, notices or other communications may be oral or written.  All oral instructions, unless custom and usage of trade dictate otherwise, shall be promptly confirmed in writing.  All written instructions, notices or other communications shall be addressed as follows:

 

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(i)                                     if to UBS-S LLC:

 

UBS Securities LLC

One North Wacker Drive Chicago, IL 60606

Attn:  ETD Legal Department, 31st Floor

 

(ii)                                  if to Customer at the address as indicated on the New Account Information Form.

 

(b)                                 All instructions, notices or other communications sent, shall be deemed given to Customer and effective as follows:  if posted on the internet, on the date it is posted; if in writing and delivered in person or by courier, on the date it is delivered or delivery is attempted; if sent by facsimile transmission, on the date sent; if sent by certified or registered mail (airmail, if overseas) or the equivalent (return receipt requested), on the date that mail is delivered or its delivery attempted; or; if sent by electronic messaging system, on the date sent.  All instructions, notices or other communications to UBS-S LLC shall be directed to UBS-S LLC’s office at the address listed above or such other addresses as UBS-S LLC may hereafter direct to Customer in writing.

 

25.                               RIGHTS AND REMEDIES CUMULATIVE

 

All rights and remedies arising under this Agreement as amended and modified from time to time are cumulative and not exclusive of any rights or remedies which may be available at law or otherwise.

 

26.                               NO WAIVER

 

No failure on the part of UBS-S LLC to exercise, and no delay in exercising, any contractual right will operate as a waiver thereof, nor will any single or partial exercise by UBS-S LLC of any right preclude any other or future exercise thereof or the exercise of any other partial right.

 

27.                               GOVERNING LAW

 

THE INTERPRETATION AND ENFORCEMENT OF THIS AGREEMENT AND THE RIGHTS, OBLIGATIONS AND REMEDIES OF THE PARTIES SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF ILLINOIS, WITHOUT REGARD TO PRINCIPLES OF CHOICE OF LAW.

 

28.                               CONSENT TO JURISDICTION

 

Any litigation between UBS-S LLC and Customer relating to this Agreement or transactions hereunder shall take place in the Courts of the State of Illinois located in Cook County or in the United States District Court for the Northern District of Illinois, and the parties agree to submit to such exclusive jurisdiction.  Customer consents to the service of process by the mailing to Customer of copies of such court filing by certified mail to the address of Customer as it appears on the books and records of UBS-S LLC, such service to be effective ten days after mailing.  Customer hereby waives irrevocably any immunity to which it might otherwise be entitled in any arbitration, action at law, suit in equity or any other proceeding arising out of or based on this Agreement or any transaction in connection herewith.

 

29.                               WAIVER OF JURY TRIAL

 

Customer hereby waives trial by jury in any action or proceeding arising out of or relating to this Agreement or any transaction in connection herewith.

 

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30.                               ACCEPTANCE OF AGREEMENT

 

This Agreement shall not be deemed to be accepted by UBS-S LLC or become a binding contract between Customer and UBS-S LLC until approved by a duly authorized officer of UBS-S LLC in writing. This Agreement may be executed by the parties hereto in any number of counterparts, each of which when so executed and delivered will be an original, but all of which counterparts will together constitute one and the same instrument.

 

31.                               CUSTOMER ACKNOWLEDGEMENTS (please check box below with an “x”):

 

o                                    (a)                                 FUTURES AND OPTIONS DISCLOSURE DOCUMENTS

 

CUSTOMER HEREBY ACKNOWLEDGES THAT IT HAS RECEIVED, UNDERSTANDS AND CONSENTS TO THE FUTURES AND OPTIONS DISCLOSURE DOCUMENTS FURNISHED TO CUSTOMER INCLUDING DISCLOSURES REGARDING:

 

Risk Disclosure Statement for Futures and Options

 

Notice Regarding Average Pricing

 

Questions and Answers to Address Key Features of CME Rule 553 — Average Pricing System

 

Electronic Trading and Order Routing Systems Disclosure Statement

 

UBS-S LLC Special Disclosure Statement

 

Cross Trade Consent

 

Non-US Futures and Options Direct Order Transmittal Customer Disclosure Statement

 

LME Guidelines (applicable to customers trading LME contracts)

 

Hong Kong Position Limit Notice (applicable to customers trading on Hong Kong Exchanges)

 

Non US Trader Disclosure Statement

 

Uniform Notification regarding access to Market Data

 

CME Disclosure on Payment for Order Flow

 

Third Party Vendor Disclosure Statement

 

Disclosure Statement on Futures Exchange Ownership Interests and Incentive Programs

 

o                                    (b)                                 CONSENT TO TRANSFER FUNDS

 

The undersigned acknowledges that UBS-S LLC may, until it receives a written notice of revocation with respect thereto, in its sole and absolute discretion and without prior notice to the undersigned, transfer any funds, securities, commodities, Contracts or other property from any account (segregated, secured or non-regulated) maintained by the undersigned to any other account (segregated, secured or non-regulated) of the undersigned maintained by UBS-S LLC or any of its affiliates.  UBS-S LLC will promptly confirm in writing

 

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each transfer of funds, securities, commodities, Contracts or other property pursuant hereto.  UBS-S LLC shall not be liable for making or failing to make any transfer authorized hereby.

 

32.                           HEDGING REPRESENTATION (The following must be completed by Customers who will engage in all or a portion of their transactions for bona fide hedging purposes.)  Customer has indicated on the New Account Information Form that the Account is either solely or partially for hedging purposes and therefore at least a portion of the transactions effected for the Account will be bona fide hedging transactions as described in Section 4a of the Commodity Exchange Act, as amended, and Rule 1.3(z) promulgated thereunder (a copy of which is attached hereto as Annex A), unless Customer specifically notifies UBS-S LLC to the contrary in writing with respect to any transaction or group of transactions. Customer represents that it is familiar with CFTC and exchange rules, regulations, and advisories concerning hedging and agrees to provide UBS-S LLC with such notification should the Account no longer be solely or partially for hedging purposes.  .  As such, in accordance with CFTC Rule 190.06, Customer may specify whether, in the unlikely event of UBS-S LLC’s bankruptcy, Customer prefers that the trustee liquidate open commodity contracts in the Account without seeking Customer’s instructions.  Accordingly, in the event of UBS-S LLC’s bankruptcy, the trustee should (check one of the following):

 

o                                    Attempt to contact Customer for instructions regarding the disposition of open contracts in the Account.

 

o                                    Liquidate open commodity contracts without seeking Customer’s instructions.

 

This instruction may be changed at any time by written notice sent to UBS-S LLC.

 

If you indicated on the New Account Information Form that the Account is partially for hedging purposes

 

please specify the Commodities to be Hedged:

 

 

*  *  *  *  *

 

(signature page on next page)

 

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IN WITNESS WHEREOF, Customer has executed this Agreement on the date indicated below.

 

	
See   Exhibit A
    	
 
    
	
(“Customer”)
    

 

 

	
By:
    	
Jerry   Pascucci, President, Sydling Futures Management
    	
 
    	
/s/   Jerry Pascucci
    	
 
    	
12/17/2012
    
	
 
    	
 
    
	
 
    	
Print   Name and Title
    	
 
    	
Signature
    	
 
    	
Date
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
By:
    	
Jennifer   Magro, Chief Financial Officer, Sydling Futures Management
    	
 
    	
/s/   Jennifer Magro
    	
 
    	
12/17/2012
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
Print   Name and Title
    	
 
    	
Signature
    	
 
    	
Date
    

 

 

ACCEPTED BY UBS SECURITIES LLC

 

 

	
By:
    	
Joseph   P. Healy, Director 
    	
 
    	
/s/   Joseph P. Healy 
    	
 
    	
1/22/13   
    
	
 
    	
Print   Name and Title
    	
 
    	
Signature
    	
 
    	
Date
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
By:
    	
Tami   A. Jensen, Director 
    	
 
    	
/s/   Tami A. Jensen 
    	
 
    	
1/22/13   
    
	
 
    	
Print   Name and Title
    	
 
    	
Signature
    	
 
    	
Date
    

 

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ANNEX A

 

1.3(z) Bona fide hedging transactions and positions —

 

(1) General definition. Bona fide hedging transactions and positions shall mean transactions or positions in a contract for future delivery on any contract market, or in a commodity option, where such transactions or positions normally represent a substitute for transactions to be made or positions to be taken at a later time in a physical marketing channel, and where they are economically appropriate to the reduction of risks in the conduct and management of a commercial enterprise, and where they arise from:

 

(i) The potential change in the value of assets which a person owns, produces, manufactures, processes, or merchandises or anticipates owning, producing, manufacturing, processing, or merchandising,

 

(ii) The potential change in the value of liabilities which a person owns or anticipates incurring, or

 

(iii) The potential change in the value of services which a person provides, purchases, or anticipates providing or purchasing.

 

Notwithstanding the foregoing, no transactions or positions shall be classified as bona fide hedging unless their purpose is to offset price risks incidental to commercial cash or spot operations and such positions are established and liquidated in an orderly manner in accordance with sound commercial practices and, for transactions or positions on contract markets subject to trading and position limits in effect pursuant to section 4a of the Act, unless the provisions of paragraphs (z) (2) and (3) of this section and §§1.47 and 1.48 of the regulations have been satisfied.

 

(2) Enumerated hedging transactions. The definitions of bona fide hedging transactions and positions in paragraph (z)(1) of this section includes, but is not limited to, the following specific transactions and positions:

 

(i) Sales of any commodity for future delivery on a contract market which do not exceed in quantity:

 

(A) Ownership or fixed-price purchase of the same cash commodity by the same person; and

 

(B) Twelve months’ unsold anticipated production of the same commodity by the same person provided that no such position is maintained in any future during the five last trading days of that future.

 

(ii) Purchases of any commodity for future delivery on a contract market which do not exceed in quantity.

 

(A) The fixed-price sale of the same cash commodity by the same person.

 

(B) The quantity equivalent of fixed-price sales of the cash products and by-products of such commodity by the same person; and

 

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(C) Twelve months’ unfilled anticipated requirements of the same cash commodity for processing, manufacturing, or feeding by the same person, provided that such transactions and positions in the five last trading days of any one future do not exceed the person’s unfilled anticipated requirements of the same cash commodity for that month and for the next succeeding month.

 

(iii) Offsetting sales and purchases for future delivery on a contract market which do not exceed in quantity that amount of the same cash commodity which has been bought and sold by the same person at unfixed prices basis different delivery months of the contract market, provided that no such position is maintained in any future during the five last trading days of that future.

 

(iv) Sales and purchases for future delivery described in paragraphs (z)(2)(i), (ii), and (iii) of this section may also be offset other than by the same quantity of the same cash commodity, provided that the fluctuations in value of the position for future delivery are substantially related to the fluctuations in value of the actual or anticipated cash position, and provided that the positions in any one future shall not be maintained during the five last trading days of that future.

 

(3) Non-enumerated cases. Upon specific request made in accordance with §1.47 of the regulations, the Commission may recognize transactions and positions other than those enumerated in paragraph (z)(2) of this section as bona fide hedging in such amount and under such terms and conditions as it may specify in accordance with the provisions of §1.47. Such transactions and positions may include, but are not limited to, purchases or sales for future delivery on any contract market by an agent who does not own or who has not contracted to sell or purchase the offsetting cash commodity at a fixed price, provided That the person is responsible for the merchandising of the cash position which is being offset.

 

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EXHIBIT A

 

Customer

 

Sydling AAA Master Fund LLC

Sydling WNT Master Fund LLC

 

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