Exhibit 10.1
AMENDMENT NO. 1
dated as of August 5, 2009
to
CREDIT AGREEMENT
and
SECURITY AGREEMENT
dated as of November 10, 2008
TABLE OF CONTENTS
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Page
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Section 1
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Defined Terms
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2
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Section 2
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Effectiveness of this Amendment
No. 1
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2
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Section 3
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Amendments
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2
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Section 4
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Addition of KKR CLO 2009-1 as
Borrower
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15
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Section 5
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Conditions to Amendment No. 1
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16
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Section 6
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Representations and Warranties
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17
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Section 7
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Counterparts.
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19
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Section 8
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Relation to the Credit Agreement
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Section 9
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Continued Effectiveness
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Section 10
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Waivers
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Section 11
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Survival of Representations and
Warranties
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Section 12
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Further Miscellaneous Provisions
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AMENDMENT NO. 1 TO CREDIT
AGREEMENT
This AMENDMENT NO. 1 (this “
Amendment No. 1 ”), dated as of August 5,
2009, to the Original Credit Agreement referenced below and the
Original Security Agreement referenced below, is entered into by
and among (i) KKR FINANCIAL HOLDINGS LLC, a Delaware limited
liability company (“ KKR Financial ”), KKR TRS
HOLDINGS, LTD., a Cayman Islands company (“ KKR TRS
LTD ”), KKR FINANCIAL HOLDINGS II, LLC, a Delaware
limited liability company (“ KKR Holdings II ”),
KKR FINANCIAL HOLDINGS III, LLC, a Delaware limited liability
company (“ KKR Holdings III ”), KKR FINANCIAL
HOLDINGS, INC., a Delaware corporation (“ KKR Holdings
”), KKR FINANCIAL HOLDINGS, LTD., a Cayman Islands company
(“ KKR Holdings LTD ”), and KKR FINANCIAL CLO
2009-1, LTD., a Cayman Islands company (“ KKR CLO
2009-1 ”, and collectively with KKR Financial, KKR TRS
LTD, KKR Holdings II, KKR Holdings III, KKR Holdings and KKR
Holdings LTD, the “ KKR Entities ” and each,
individually, a “ KKR Entity ”), as Borrowers,
(ii) BANK OF AMERICA, N.A., a national banking association
(together with its successors in interest, “ BofA
”), as Administrative Agent and a Lender, and
(iii) CITICORP NORTH AMERICA INC., a Delaware corporation
(together with its successors in interest, “ Citicorp
”), as a Lender.
RECITALS
WHEREAS, the KKR Entities (other
than KKR CLO 2009-1), BofA, Citicorp, Banc of America Securities
LLC and Citigroup Global Markets Inc. entered into that certain
Credit Agreement dated as of November 10, 2008 (the “
Original Credit Agreement ”, and as amended by this
Amendment No. 1 and as the same may be further amended,
supplemented or otherwise modified from time to time in accordance
with its terms, the “ Credit Agreement
”);
WHEREAS, the KKR Entities (other
than KKR CLO 2009-1) and BofA, as Administrative Agent on behalf of
itself and the other Lenders, entered into that certain Security
Agreement dated as of November 17, 2008 (the “
Original Security Agreement ”, and as amended by this
Amendment No. 1 and as the same may be further amended,
supplemented or otherwise modified from time to time in accordance
with its terms, the “Security Agreement”);
WHEREAS, the parties hereto wish to
amend the Original Credit Agreement and the Original Security
Agreement with respect to certain matters set forth
herein;
WHEREAS, pursuant to
Section 10.01 thereof, no amendment or waiver of any provision
of the Original Credit Agreement or any other Loan Document, and no
consent to any departure by any Borrower therefrom, shall be
effective unless in writing signed by the Required Lenders and the
applicable Borrower, as the case may be, and acknowledged by the
Administrative Agent, and each such waiver or consent shall be
effective only in the specific instance and for the specific
purpose for which given; provided that no such amendment,
waiver or consent may have the effects set forth in the first
proviso to Section 10.01 of the Original Credit Agreement
without the written consent of each Lender or each affected Lender,
as applicable; and provided , further , that no such
amendment, waiver or consent shall, unless in writing and signed by
the Administrative Agent in addition to the Lenders required above,
affect the rights or duties of the Administrative Agent under the
Original Credit Agreement or any other Loan Document;
WHEREAS, BofA is, as of the date
hereof, the Administrative Agent under the Original Credit
Agreement;
WHEREAS, BofA and Citicorp
constitute, as of the date hereof, all of the Lenders under the
Original Credit Agreement; and
WHEREAS, the KKR Entities (excluding
KKR CLO 2009-1) constitute, as of the date hereof, all of the
Borrowers under the Original Credit Agreement, and KKR CLO 2009-1
shall become a Borrower under the Credit Agreement upon the
effectiveness of this Amendment No. 1;
NOW THEREFORE, in consideration of
the premises and for other good and valuable consideration, the
parties agree as follows:
Section 1
Defined Terms
. Except as otherwise
specified herein or as the context may otherwise require,
capitalized terms used but not otherwise defined in this Amendment
No. 1 (including in the recitals hereto) have the respective
meanings set forth in the Original Credit Agreement.
Section 2
Effectiveness of this
Amendment No. 1 . This Amendment No. 1 will be
effective as of the date hereof (the “ Effective Date
”).
Section 3
Amendments
. From and after the Effective
Date, the Original Credit Agreement and the Security Agreement
shall be amended as follows:
(a)
The words “KKR Financial CLO 2009-1, Ltd.,” are added
to the introductory paragraph of the Original Credit Agreement
after the words “and collectively with” and before the
words “KKR Financial, KKR TRS LTD.”
(b)
The following definitions shall be added to Section 1.01 of
the Original Credit Agreement in alphabetical order relative to the
other words, terms and phrases defined therein:
(i)
“ Additional Financial
Assets ” has the meaning specified in
Section 6.13 .
(ii)
“ Amendment Effective
Date ” means the “Effective Date” under (and
as defined in) Amendment No. 1.
(iii)
“ Amendment Effective Date
Collateral ” means all assets described on Schedule I to
Amendment No. 1.
(iv)
“ Amendment No. 1
” means Amendment No. 1 dated as of August 5, 2009
to this Agreement
(v)
“ Cash Equivalents
” means Investments that, as of any date of determination,
are short-term highly liquid investments that (i) are (or,
without regard to any applicable rating requirements, are in the
nature of) Permitted Investments, (ii) are readily convertible
into cash, and (iii) have an original maturity of three months
or less.
(vi)
“ CLO Entity ”
means any of the following: (a) KKR Financial CLO
2005-1, Ltd., a Cayman Islands company, (b) KKR Financial CLO
2005-2, Ltd., a Cayman Islands company, (c) KKR Financial CLO
2006-1, Ltd., a Cayman Islands company, (d) KKR Financial CLO
2007-1, Ltd., a Cayman Islands company, (e) KKR Financial CLO
2007-A, Ltd., a Cayman Islands company and (f) KKR CLO
2009-1.
(vii)
“ KKR CLO 2009-1
” means KKR Financial CLO 2009-1, Ltd., a Cayman Islands
company.
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(viii)
“ KKR Revolving Credit
Agreement ” means that certain Revolving Credit Agreement
dated November 10, 2008, by and between the lenders identified
therein, including KKR Financial Advisors LLC and Kohlberg Kravis
Roberts & Co. (Fixed Income) LLC, and the borrowers
identified therein, including the Borrowers (other than KKR CLO
2009-1).
(ix)
“ Qualified Institutional
Buyer ” means a “qualified institutional
buyer” as defined in Rule 144A under the Securities Act
of 1933, as amended.
(x)
“ Reporting Date
” means the third Business Day of each calendar
week.
(xi)
“ Commitment Step-Down
Date ” means each of the Initial Commitment Step-Down
Date, the Second Commitment Step-Down Date, the Third Commitment
Step-Down Date, the Fourth Commitment Step-Down Date and the
Commitment Adjustment Date.
(xii)
“ Initial Commitment
Step-Down Date ” means the date of Amendment
No. 1.
(xiii)
“ Second Commitment
Step-Down Date ” means September 30, 2009 or, if
such day is not a Business Day, the next succeeding Business
Day.
(xiv)
“ Third Commitment Step-Down Date ” means
December 31, 2009 or, if such day is not a Business Day, the
next succeeding Business Day.
(xv)
“ Fourth Commitment Step-Down Date ” means
March 31, 2010 or, if such day is not a Business Day, the next
succeeding Business Day.
(xvi)
“ Securities Account ” has the meaning specified
in the Uniform Commercial Code of the relevant
jurisdiction.
(xvii)
“ Subordination and Standstill Agreement ” means
an intercreditor, subordination, subordination and standstill or
similar agreement executed by and between the Lenders (or the
Administrative Agent on their behalf) and the other
holder(s) of Liens on the Collateral, providing, at a minimum,
that all such Liens on the Collateral are subordinate in their
entirety to the Lien of the Security Agreement, that such other
holder(s) will not exercise any rights against the Collateral
or the obligors thereunder for a period reasonably acceptable to
the Lenders following payment in full of the Obligations, that such
other holder(s) waive all rights in a bankruptcy or insolvency
of any related party, together with other customary provisions
reasonably requested by the Lenders.
(c)
The definitions of “Adjusted Commitment”, “KKR
Structured Finance Transaction” and “KKR Structured
Finance Vehicle” in Section 1.01 of the Original Credit
Agreement shall be deleted in their entirety without
replacement.
(d)
The definition of “Audited Financial Statements” shall
be amended by deleting “2007” and replacing it with
“2008.”
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(e)
The definition of “Commitment” in Section 1.01 of
the Original Credit Agreement shall be deleted in its entirety and
replaced with the following:
““ Commitment
” means, as to each Lender, its obligation to make Loans to
the Borrowers pursuant to Section 2.01 , in an
aggregate principal amount at any one time outstanding (expressed
in Dollars) not to exceed: (1) with respect to each
Initial Lender, (a) prior to the Initial Commitment Step-Down
Date, an amount equal to $150,000,000, (b) on and after the
Initial Commitment Step-Down Date and prior to the Second
Commitment Step-Down Date, an amount equal to $100,000,000,
(c) on and after the Second Commitment Step-Down Date and
prior to the Third Commitment Step-Down Date, an amount equal to
the lesser of (i) the product of (A) such Lender’s
Applicable Percentage immediately prior to the Second Commitment
Step-Down Date, multiplied by (B) $187,500,000, and
(ii) such Lender’s Commitment immediately prior to the
Second Commitment Step-Down Date, (d) on and after the Third
Commitment Step-Down Date and prior to the Fourth Commitment
Step-Down Date, an amount equal to the lesser of (i) the
product of (A) such Lender’s Applicable Percentage
immediately prior to the Third Commitment Step-Down Date,
multiplied by (B) $175,000,000, and (ii) such
Lender’s Commitment immediately prior to the Third Commitment
Step-Down Date, (e) on and after the Fourth Commitment
Step-Down Date and prior to the Commitment Adjustment Date, the
lesser of (i) the product of (A) such Lender’s
Applicable Percentage immediately prior to the Fourth Commitment
Step-Down Date, multiplied by (B) $162,500,000, and
(ii) such Lender’s Commitment immediately prior to the
Fourth Commitment Step-Down Date, and (f) on and after the
Commitment Adjustment Date, an amount equal to the lesser of
(i) the product of (A) such Lender’s Applicable
Percentage immediately prior to the Commitment Adjustment Date,
multiplied by (B) $150,000,000 and (ii) such
Lender’s Commitment immediately prior to the Commitment
Adjustment Date; and (2) with respect to each other Lender, an
amount set forth in the Assignment and Assumption pursuant to which
such Lender becomes a party hereto; provided that each such
amount set forth in clauses (1) and (2) ,
respectively, of this definition shall be adjusted from time to
time in accordance with this Agreement including in connection with
a termination or reduction contemplated by Section 2.05
or a transfer or assignment contemplated by
Section 10.06 .”
(f)
The definition of “Commitment Adjustment Date” in
Section 1.01 of the Original Credit Agreement shall be deleted
in its entirety and replaced with the following:
““ Commitment
Adjustment Date ” means June 30, 2010 or, if such
date is not a Business Day, the next succeeding Business
Day.”
(g)
The definition of “Commitment Excess” in
Section 1.01 of the Original Credit Agreement shall be deleted
in its entirety and replaced with the following:
““ Commitment
Excess ” means, with respect to each Initial Lender, as
of any date of determination, an amount equal to the excess (if
any) of (a) the Outstanding Amount of such Initial
Lender’s Loans as of such date of determination, over
(b) such Initial Lender’s Commitment as of such date of
determination after giving effect to any reduction therein pursuant
to the definition of “Commitment.”
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(h)
The definition of “Control Agreement” in
Section 1.01 of the Original Credit Agreement shall be deleted
in its entirety and replaced with the following:
““ Control
Agreement ” means, with respect to (i) each Pledged
Account that constitutes a Deposit Account, a deposit account
control agreement which complies with Article IX of the
Uniform Commercial Code as in effect in the relevant jurisdiction,
and (ii) each Pledged Account that constitutes a Securities
Account, a securities account control agreement which complies with
Article VIII of the Uniform Commercial Code as in effect in
the relevant jurisdiction, in each case entered into by the bank at
which such Pledged Account is located, each Borrower with respect
to such Pledged Account and the Administrative Agent on behalf of
itself and the Lenders, in form and substance reasonably acceptable
to the Administrative Agent.”
(i)
The definition of “Fee Letter” in Section 1.01 of
the Original Credit Agreement shall be deleted in its entirety and
replaced with the following:
““ Fee Letter
” means, together, (i) the letter agreement, dated
November 10, 2008, between KKR Financial, the Administrative
Agent and the Arrangers, and (ii) the letter agreement, dated
August 5, 2009, between KKR Financial, the Administrative
Agent and the Arrangers.”
(j)
The definition of “Financing SPE” in Section 1.01
of the Original Credit Agreement shall be amended to add the
following at the end of such definition:
“It is understood and agreed
that KKR CLO 2009-1 is a Financing SPE for purposes of this
Agreement.”
(k)
The definition of “KKR Financial Form 10-K” in
Section 1.01 of the Original Credit Agreement shall be deleted
in its entirety and replaced with the following:
““ KKR Financial
Form 10-K ” means KKR Financial’s Annual
Report on Form 10-K filed with the SEC on March 2, 2009,
as amended prior to the date of Amendment No.1.”
(l)
The definition of “Maturity Date” in Section 1.01
of the Original Credit Agreement shall be deleted in its entirety
and replaced with the following:
““ Maturity Date
” means November 10, 2011, and, if such date is not a
Business Day, the Maturity Date shall be the next preceding
Business Day.”
(m)
The definition of “Non-U.S. Borrower” in
Section 1.01 of the Original Credit Agreement shall be deleted
in its entirety and replaced with the following:
““ Non-U.S.
Borrower ” means any of KKR TRS LTD, KKR Holdings LTD or
KKR CLO 2009-1.”
(n)
The definition of “Pledged Accounts” shall be deleted
in its entirety and replaced with the following:
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““ Pledged
Accounts ” means all operating Deposit Accounts and
Securities Accounts owned by or on behalf of any Borrower or any
Subsidiary (excluding any such Securities Account that will be
closed within 30 days of the Amendment Effective Date, provided
that all funds deposited therein are transferred to a Pledged
Account within one Business Day of such deposit), which accounts in
existence as of the Closing Date and as of the Amendment Effective
Date are identified on Schedule II hereto.”
(o)
The definition of “Specified Financial Assets” in
Section 1.01 of the Original Credit Agreement shall be amended
by (i) deleting “or” at the end of clause (j);
(ii) replacing “.” with “; or” at the
end of clause (k), and (iii) adding the following after clause
(k):
“(l)
the Amendment Effective Date Collateral and the Additional
Financial Assets.”
(p)
The definition of “Subsidiary” in Section 1.01 of
the Original Credit Agreement shall be deleted in its entirety and
replaced with the following:
““ Subsidiary
” of a Person means a corporation, partnership, joint
venture, limited liability company or other business entity of
which a majority of the shares of securities or other interests
having ordinary voting power for the election of directors or other
governing body (other than securities or interests having such
power only by reason of the happening of a contingency) are at the
time beneficially owned, or the management of which is otherwise
controlled, directly, or indirectly through one or more
intermediaries, or both, by such Person; provided that each
Non-U.S. Borrower shall be considered a Subsidiary of KKR Financial
so long as KKR Financial owns (directly or indirectly through other
Subsidiaries) a majority of the preferred shares of such Non-U.S.
Borrower; and provided further that none of the CLO
Entities (other than KKR CLO 2009-1) shall be considered a
Subsidiary of any Borrower for so long as any Person other than KKR
Financial or a Subsidiary or any affiliate thereof holds any
Indebtedness of such CLO Entity. Unless otherwise specified,
all references herein to a “Subsidiary” or to
“Subsidiaries” shall refer to a Subsidiary or
Subsidiaries of KKR Financial.”
(q)
The first sentence of Section 2.01 is deleted in its entirety
and replaced with the following:
“Subject to the terms and
conditions set forth herein, each Lender severally agrees to make
Loans in any Approved Currency to the Borrowers from time to time,
on any Business Day during the Availability Period, in an aggregate
amount not to exceed at any time outstanding the amount of such
Lender’s Commitment; provided that only Fixed Period
Eurodollar Loans may be denominated in an Alternate Currency; and
provided , further , that immediately after giving
effect to any Loan, (i) there does not exist a Borrowing Base
Deficiency greater than zero, and (ii) the aggregate
Outstanding Amount of the Loans of any Lender does not exceed such
Lender’s Commitment.”
(r)
Section 2.04(b) of the Original Credit Agreement is
deleted in its entirety and replaced with the
following:
“(b)
[Reserved]”
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(s)
Section 2.04(c) of the Original Credit Agreement is
deleted in its entirety and replaced with the
following:
“(c)
If for any reason, at any time, there exists a Borrowing Base
Deficiency greater than zero, then the Borrowers shall immediately
prepay the applicable Loans in an aggregate amount equal to such
Borrowing Base Deficiency.”
(t)
Section 2.06(b) of the Original Credit Agreement is
deleted in its entirety and replaced with the
following:
“(b)
On each Commitment Step-Down Date, the Borrowers shall repay to
each Initial Lender the principal amount of the Commitment Excess
then in effect for such Initial Lender on such
date.”
(u)
Section 5.23 of the Original Credit Agreement is deleted in
its entirety and replaced with the following:
“5.23
Pledged Accounts. The accounts identified on Schedule II
hereto constitute all of the Pledged Accounts in existence on the
Closing Date and on the Amendment Effective Date, and such Pledged
Accounts constitute Collateral and are subject to the Lien of the
Security Agreement.”
(v)
The following Sections 5.24 and 5.25, respectively, shall be added
at the end of Article V of the Original Credit
Agreement:
“5.24. Amendment
Effective Date Collateral. The Amendment Effective Date Collateral
constitutes any and all loans, bonds, instruments, securities, and
financial assets (excluding cash and Cash Equivalents that have
been deposited into a Pledged Account) directly or indirectly,
legally or beneficially owned by or held for the benefit of one or
more Borrowers or their respective Subsidiaries as of the Amendment
Effective Date, and such Amendment Effective Date Collateral is
subject to the Lien of the Security Agreement . For
purposes of the foregoing, the assets described on Schedule
5.24 (collectively, the “ SCF Assets ”) are
not legally or beneficially owned by or held for the benefit of any
Borrower or Subsidiary and therefore are not part of the Amendment
Effective Date Collateral (notwithstanding the fact that the
transfer of such assets has not yet been settled unless the
physical transfer of such assets has not occurred within 60 days of
the date of Amendment No. 1).
5.25. KKR CLO
2009-1 . All
Indebtedness of and Equity Interests in KKR CLO 2009-1 are
beneficially owned and, except to the extent they constitute
Collateral, legally owned and controlled by one or more Borrowers
and/or consolidated Subsidiaries thereof. Any and all Liens
on and Indebtedness secured by any Collateral owned, held or
controlled by, or constituting collateral pledged by, KKR CLO
2009-1 are and shall remain subject and subordinate to the Lien of
the Security Agreement with respect to such Collateral, and the
holder(s) of any such liens or indebtedness have agreed,
pursuant to a market subordination and standstill or similar
agreement, to subordination and standstill provisions reasonably
acceptable to the Lenders including, at a minimum, that such
holder(s) shall not exercise any rights with respect to such
Collateral or otherwise until 90 days after payment in full of the
Obligations and that such liens would not adversely affect the
security interest and Lien of the Lenders in such Collateral or
interfere with any
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claim of the Lenders with respect to
such Collateral, including in the event of the bankruptcy or
insolvency of any party.”
(w)
Sections 6.02(d) and (e) of the Original Credit Agreement
shall be amended to delete the words “on a weekly
basis” in each place where such words appear and to
substitute therefor the words “on each Reporting Date”
in each such place.
(x)
Section 6.02(f) of the Original Credit Agreement shall be
deleted in its entirety and replaced with the
following:
“(f)
[Reserved]”
(y)
Section 6.12(a) of the Original Credit Agreement is
deleted in its entirety and replaced with the
following:
“
(a) Prior to the Commitment Adjustment Date, deposit or cause
to be deposited into a Pledged Account that constitutes Collateral
and is subject to the Lien of the Security Agreement, all of the
following: (i) all funds received with respect to the
ownership and operation of the business of any Borrower and/or any
Subsidiary or any other operating cash flow, and all payments on
and proceeds of the Collateral, in each case in the possession of,
held on behalf of or under the control of, any Borrower and/or any
Subsidiary; and (ii) all Sales Proceeds.”
(z)
Section 6.12(c) of the Original Credit Agreement shall be
amended (i) to delete the words “Within 45 days of the
date of this Agreement” and to substitute therefor the words
“Within 30 days of the Amendment Effective Date “ and
(ii) to delete the words “on such date and on the
Closing Date” and to substitute therefor the words “on
such date, on the Closing Date and on the Amendment Effective
Date”.
(aa)
Section 6.13 of the Original Credit Agreement is deleted in
its entirety and replaced with the following:
“
6.13 Additional
Collateral.
(a)
Promptly following (or, in the case of Amendment Effective Date
Collateral, by) the later of (i) the Amendment Effective Date
and (ii) the date of the acquisition or transfer thereof,
grant a first priority perfected security interest to the
Administrative Agent in the following, as additional Collateral
subject to the Lien created by the Security Documents, and execute
and deliver any documents reasonably requested by the
Administrative Agent and the Collateral Agent in connection
therewith: (y) any and all loans, bonds, instruments,
securities, and financial assets (excluding cash and Cash
Equivalents that have been deposited into a Pledged Account)
directly or indirectly acquired by or otherwise transferred to or
for the benefit of one or more Borrowers or their respective
Subsidiaries following the Amendment Effective Date (any such
loans, bonds, instruments or securities, other than the foregoing
cash and Cash Equivalents, being “ Additional Financial
Assets ”); and (z) the Amendment Effective Date
Collateral. Promptly following (and in any event within 30
days of) such grant, take all actions necessary on its part to
otherwise deliver possession, record ownership and control of such
Collateral to the Administrative Agent (or the Collateral Agent on
its behalf) to the extent required by, and in accordance with the
provisions of, the Security Documents and the Collateral Agreement,
provided , that, for the avoidance of doubt, the Liens on
such
8
Collateral are required to
constitute fully p
