KKR Financial Holdings LLC
EXHIBIT 10.16
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<TYPE>EX-10.16
<SEQUENCE>5
<FILENAME>a2182829zex-10_16.htm
<DESCRIPTION>EXHIBIT 10.16
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<P ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2><A
NAME="kk49702_exhibit_10.16"> </A>
<A NAME="toc_kk49702_1"> </A>
<BR></FONT><FONT SIZE=2><B>Exhibit&nbsp;10.16    <BR>    </B></FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><A
NAME="kk49702_third_amendment_to_second_amen__thi02492"> </A>
<A NAME="toc_kk49702_2"> </A>
<BR></FONT><FONT SIZE=2><B>THIRD AMENDMENT TO<BR>  SECOND AMENDED AND RESTATED CREDIT AGREEMENT    <BR>    </B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;This THIRD AMENDMENT TO SECOND AMENDED AND RESTATED CREDIT AGREEMENT (this "</FONT><FONT SIZE=2><I>Agreement</I></FONT><FONT SIZE=2>") dated as of
December&nbsp;14, 2007, to the Second Amended and Restated Credit Agreement dated as of May&nbsp;4, 2007 (as amended, the "</FONT><FONT SIZE=2><I>Credit Agreement</I></FONT><FONT SIZE=2>;"
capitalized terms used herein and not otherwise defined herein shall have the meanings ascribed to such terms in the Credit Agreement) is entered into by and among (i)&nbsp;KKR FINANCIAL
HOLDINGS&nbsp;LLC, a Delaware limited liability company ("</FONT><FONT SIZE=2><I>KKR Financial</I></FONT><FONT SIZE=2>"), KKR FINANCIAL CORP., a Maryland corporation ("</FONT><FONT SIZE=2><I>KKR
Financial Corp</I></FONT><FONT SIZE=2>."), KKR TRS HOLDINGS,&nbsp;INC., a Delaware corporation ("</FONT><FONT SIZE=2><I>KKR TRS</I></FONT><FONT SIZE=2>"), KKR TRS HOLDINGS,&nbsp;LTD., a Cayman
Islands company ("</FONT><FONT SIZE=2><I>KKR TRS&nbsp;LTD</I></FONT><FONT SIZE=2>"), KKR FINANCIAL HOLDINGS II,&nbsp;LLC, a Delaware limited liability company ("</FONT><FONT SIZE=2><I>KKR
Holdings II</I></FONT><FONT SIZE=2>), KKR FINANCIAL HOLDINGS III,&nbsp;LLC, a Delaware limited liability company ("</FONT><FONT SIZE=2><I>KKR Holdings III</I></FONT><FONT SIZE=2>"), KKR FINANCIAL
HOLDINGS,&nbsp;INC., a Delaware corporation ("</FONT><FONT SIZE=2><I>KKR Holdings</I></FONT><FONT SIZE=2>"), AND KKR FINANCIAL HOLDINGS,&nbsp;LTD., a Cayman Islands company
("</FONT><FONT SIZE=2><I>KKR Holdings&nbsp;LTD</I></FONT><FONT SIZE=2>", and collectively with KKR Financial, KKR Financial Corp., KKR TRS, KKR TRS&nbsp;LTD, KKR Holdings II, KKR Holdings III and
KKR Holdings, the "</FONT><FONT SIZE=2><I>Borrowers</I></FONT><FONT SIZE=2>" and each, individually, a "</FONT><FONT SIZE=2><I>Borrower</I></FONT><FONT SIZE=2>"), (ii)&nbsp;each lender party
hereto (collectively, the "</FONT><FONT SIZE=2><I>Lenders</I></FONT><FONT SIZE=2>" and individually, a "</FONT><FONT SIZE=2><I>Lender</I></FONT><FONT SIZE=2>") and (iii)&nbsp;BANK OF AMERICA,
N.A., as Administrative Agent ("</FONT><FONT SIZE=2><I>Administrative Agent</I></FONT><FONT SIZE=2>") and Swingline Lender. </FONT></P>


<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;WHEREAS,
the Borrowers have requested that the Required Lenders agree to amend certain provisions of the Credit Agreement in the manner set forth herein; </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;WHEREAS,
the Lenders signatory to this Agreement are agreeable to such amendments on the terms and subject to the conditions set forth herein; and </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;WHEREAS,
pursuant to Section&nbsp;10.01 of the Credit Agreement, the consent of the Required Lenders is required to effect the amendments set forth herein. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;NOW,
THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged by the parties hereto, the parties hereto agree as follows: </FONT></P>


<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section&nbsp;1.</FONT><FONT
SIZE=2><I>&nbsp;&nbsp;&nbsp;&nbsp;Amendments to Credit Agreement.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;As of the Effective Date (as defined below), on the basis of
the representations and warranties contained in this Agreement, and subject to the terms and conditions of this Agreement (including satisfaction of the conditions set forth in </FONT> <FONT SIZE=2><I>Section&nbsp;2</I></FONT><FONT SIZE=2>) the
Required Lenders hereby amend the Credit Agreement as follows: </FONT></P>

<UL>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.1&nbsp;&nbsp;&nbsp;Section&nbsp;1.01
of the Credit Agreement shall be hereby amended such that the following definitions shall be added to such Section: </FONT></P>

<UL>
<UL>

<P style="font-family:times;"><FONT SIZE=2>"</FONT><FONT
SIZE=2><I>Adjusted Net Income from Continuing Operations</I></FONT><FONT SIZE=2>" means, as of any date of determination, Net Income from Continuing Operations plus any net income (or
loss) related to the Retained MBS Portfolio that is included in Net Income from Discontinued Operations. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>"</FONT><FONT
SIZE=2><I>Adjusted Consolidated Tangible Net Worth</I></FONT><FONT SIZE=2>" means, as of any date of determination, actual Consolidated Tangible Net Worth </FONT> <FONT SIZE=2><I>less</I></FONT><FONT SIZE=2> Net Worth of VIE Interest Adjustments,
</FONT><FONT SIZE=2><I>less</I></FONT><FONT SIZE=2> any net worth adjustments attributable to KKR Atlantic
and KKR Pacific after September&nbsp;30, 2007. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>"</FONT><FONT
SIZE=2><I>Adjusted Total Liabilities</I></FONT><FONT SIZE=2>" means, as of any date of determination, Consolidated Total Liabilities less: (i)&nbsp;Non-Company VIE
Liabilities, (ii)&nbsp;Atlantic and Pacific Adjustments and (iii)&nbsp;Trust Preferred Indebtedness (as of such date of determination, but in no event greater than $440,000,000). For the avoidance
of doubt, any Indebtedness secured by the Retained MBS Portfolio shall be included in the definition of Adjusted Total Liabilities. </FONT></P>

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<P style="font-family:times;"><FONT SIZE=2>"</FONT><FONT
SIZE=2><I>Atlantic and Pacific Adjustments</I></FONT><FONT SIZE=2>" means, as of any date of determination, the liabilities of KKR Financial Corp. and its subsidiaries attributable to
KKR Atlantic and KKR Pacific. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>"</FONT><FONT
SIZE=2><I>Eligible MBS Portfolio</I></FONT><FONT SIZE=2>" means, as of any date of determination, the securities within the Retained MBS Portfolio, that are also listed on
Schedule&nbsp;II hereto (as Schedule&nbsp;II may be modified or deemed modified as described in the rest of this definition). The Borrowers may from time to time request the Administrative Agent
to approve the addition to the Eligible MBS Portfolio of one or more securities then within the Retained MBS Portfolio. To the extent the Administrative Agent in its sole discretion approves such
request in writing, following such approval Schedule&nbsp;II shall be deemed modified to include such additional approved securities from the Retained MBS Portfolio as part of the Eligible MBS
Portfolio. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>"</FONT><FONT
SIZE=2><I>First Lien Bank Loan</I></FONT><FONT SIZE=2>" means Bank Loans secured by a first priority security interest in and lien on substantially all of the material obligors' assets. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>"</FONT><FONT
SIZE=2><I>KKR Atlantic</I></FONT><FONT SIZE=2>" means KKR Atlantic Funding Trust. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>"</FONT><FONT
SIZE=2><I>KKR Pacific</I></FONT><FONT SIZE=2>" means KKR Pacific Funding Trust. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>"</FONT><FONT
SIZE=2><I>Net Income from Continuing Operations</I></FONT><FONT SIZE=2>" means for any period, for KKR Financial and its Subsidiaries on a consolidated basis, the Consolidated Net
Income less Net Income from Discontinued Operations. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>"</FONT><FONT
SIZE=2><I>Net Income from Discontinued Operations</I></FONT><FONT SIZE=2>" means for any period, for KKR Financial and its Subsidiaries on a consolidated basis, the net income from
discontinued operations (classified as "Discontinued" in the report on Form&nbsp;10-Q filed with the Securities and Exchange Commission on November&nbsp;7, 2007 for the quarterly
period ending September&nbsp;30, 2007) of KKR Financial and its Subsidiaries for that period in accordance with GAAP. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>"</FONT><FONT
SIZE=2><I>Net Worth of VIE Interest Adjustments</I></FONT><FONT SIZE=2>" means, as of any date of determination from and after June&nbsp;30, 2007, the variable interest entity other
comprehensive income adjustments required by the application of FAS&nbsp;115 that are attributable to the other owners of a variable interest entity other than the Borrowers and their consolidated
Subsidiaries. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>"</FONT><FONT
SIZE=2><I>Non-Company VIE Liabilities</I></FONT><FONT SIZE=2>" means, as of any date of determination after September&nbsp;30, 2007, the sum of (i)&nbsp;the liabilities
arising out of the Disposition by KKR Financial Corp. of all of its residential real estate assets as contemplated by Section&nbsp;7.05(b) that are nonrecourse to the Borrowers and are recorded by
KKR Financial based on the required application of FAS&nbsp;140 and FIN-46(R), and (ii)&nbsp;the liabilities of the Borrowers to the other owners of a variable interest entity arising
out of the required application of FAS&nbsp;140 or FIN-46(R) and the percentage of the nonrecourse liabilities attributable to the other owners of such variable interest entity. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>"</FONT><FONT
SIZE=2><I>Retained MBS Portfolio</I></FONT><FONT SIZE=2>" means, as of any date of determination, the securities owned by the Borrowers and their Subsidiaries and listed on
Schedule&nbsp;I hereto (as Schedule&nbsp;I may be modified or deemed modified as described in the rest of this definition). If a security is acquired by a Borrower from KKR Atlantic or KKR Pacific
with the consent of the Administrative Agent in accordance with Section&nbsp;7.15 of this Agreement, upon such acquisition Schedule&nbsp;I shall be deemed modified to include such acquired
security as part of the Retained MBS Portfolio. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>"</FONT><FONT
SIZE=2><I>Second Lien Bank Loan</I></FONT><FONT SIZE=2>" means Bank Loans secured by a second priority security interest in and lien on substantially all of the material obligors'
assets. </FONT></P>

</UL>
</UL>
</UL>
<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>2</FONT></P>

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<UL>

<P style="font-family:times;"><FONT SIZE=2>"</FONT><FONT
SIZE=2><I>SLN Repurchase Agreements</I></FONT><FONT SIZE=2>" means each of (i)&nbsp;the Amended&nbsp;&amp; Restated Master Repurchase Agreement, including the Amended&nbsp;&amp; Restated
Annex&nbsp;I attached thereto, each dated as of October&nbsp;15, 2007, between KKR Atlantic, as buyer, and KKR Atlantic Funding Depositor Corporation, as seller, (ii)&nbsp;the Amended&nbsp;&amp;
Restated Master Repurchase Agreement, including the Amended&nbsp;&amp; Restated Annex&nbsp;I attached thereto, each dated as of October&nbsp;15, 2007, between KKR Atlantic, as buyer, and KKR
Financial Corp., as seller, (iii)&nbsp;the Amended&nbsp;&amp; Restated Master Repurchase Agreement, including the Amended&nbsp;&amp; Restated Annex&nbsp;I attached thereto, each dated as of
October&nbsp;15, 2007, between KKR Pacific, as buyer, and KKR Pacific Funding Depositor Corporation, as seller, and (iv)&nbsp;the Amended&nbsp;&amp; Restated Master Repurchase Agreement, including
the Amended&nbsp;&amp; Restated Annex&nbsp;I attached thereto, each dated as of October&nbsp;15, 2007, between KKR Pacific, as buyer, and KKR Financial Corp., as seller. </FONT></P>

</UL>
</UL>
</UL>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.2</FONT><FONT
SIZE=2><I>&nbsp;&nbsp;&nbsp;&nbsp;Facility Size.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;The definition of "Aggregate Commitment Amount" set forth in Section&nbsp;1.01 of the
Credit Agreement shall be hereby amended by deleting such definition in its entirety and replacing it with the following: </FONT></P>

<UL>
<UL>
<UL>

<P style="font-family:times;"><FONT SIZE=2>"</FONT><FONT
SIZE=2><I>Aggregate Commitment Amount</I></FONT><FONT SIZE=2>" means the aggregate principal amount of the Aggregate Commitments from time to time. On the date hereof, the Aggregate
Commitment Amount equals $500,000,000. </FONT></P>

</UL>
</UL>
</UL>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.3</FONT><FONT
SIZE=2><I>&nbsp;&nbsp;&nbsp;&nbsp;Applicable Rate.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;The definition of "Applicable Rate" set forth in Section&nbsp;1.01 of the Credit
Agreement shall be hereby amended by deleting such definition in its entirety and replacing it with the following: </FONT></P>

<UL>
<UL>
<UL>

<P style="font-family:times;"><FONT SIZE=2>"</FONT><FONT
SIZE=2><I>Applicable Rate</I></FONT><FONT SIZE=2>" means a per annum rate equal to: </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;&nbsp;&nbsp;with
respect to Tranche&nbsp;A Loans, 0.825% </FONT></P>


<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;&nbsp;&nbsp;with
respect to Tranche&nbsp;B Loans, 1.075%; and </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)&nbsp;&nbsp;&nbsp;with
respect to the Facility Fee, 0.175%. </FONT></P>

</UL>
</UL>
</UL>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.4</FONT><FONT
SIZE=2><I>&nbsp;&nbsp;&nbsp;&nbsp;Applicable Sublimit.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;The definition of "Applicable Sublimit" set forth in Section&nbsp;1.01 of the Credit
Agreement shall be hereby amended by deleting such definition in its entirety and replacing it with the following: </FONT></P>

<UL>
<UL>
<UL>

<P style="font-family:times;"><FONT SIZE=2>"</FONT><FONT
SIZE=2><I>Applicable Sublimit</I></FONT><FONT SIZE=2>" means the exclusion from the Tranche&nbsp;B Borrowing Base of any amount (without duplication) attributable to any Eligible
Specified Financial Asset to the extent that the Net Value Amount included in the Tranche&nbsp;B Borrowing Base would exceed the amount shown in the chart below for the applicable Eligible Specified
Financial Asset: </FONT></P>
</UL>
</UL>
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<TR VALIGN="BOTTOM">
<TH COLSPAN=3 ALIGN="LEFT" style="font-family:times;"><FONT SIZE=1><B>Eligible Specified Financial Asset<BR> </B></FONT><HR NOSHADE></TH>
<TH WIDTH="3%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH WIDTH="16%" ALIGN="CENTER" style="font-family:times;"><FONT SIZE=1><B>Sublimits</B></FONT><HR NOSHADE></TH>
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<TD COLSPAN=3 style="font-family:times;"><FONT SIZE=2>Rule&nbsp;144A private placed Debt Securities with registration rights only</FONT></TD>
<TD WIDTH="3%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="16%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>a.</FONT></TD>
<TD WIDTH="3%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="77%" style="font-family:times;"><FONT SIZE=2>NAIC 1 / AAA thru A-</FONT></TD>
<TD WIDTH="3%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="16%" ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>Unlimited(1)</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>b.</FONT></TD>
<TD WIDTH="3%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="77%" style="font-family:times;"><FONT SIZE=2>NAIC 2 / BBB+ thru BBB-</FONT></TD>
<TD WIDTH="3%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="16%" ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>Unlimited(1)</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>c.</FONT></TD>
<TD WIDTH="3%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="77%" style="font-family:times;"><FONT SIZE=2>NAIC 3 / BB+ thru BB and NAIC 4 / BB- thru B-</FONT></TD>
<TD WIDTH="3%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="16%" ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>$100&nbsp;million</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD COLSPAN=3 style="font-family:times;"><FONT SIZE=2><BR>
Second Lien Bank Loans, Bridge Loans and Mezzanine Loans</FONT></TD>
<TD WIDTH="3%" style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="16%" ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><BR>
$125&nbsp;million</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD COLSPAN=3 VALIGN="TOP" style="font-family:times;"><FONT SIZE=2><BR>
MBS in the Eligible MBS Portfolio (not constituting Mortgage-backed Debt Securities Interest Only Strips) with a weighted average life of less than five years rated A- through BB-</FONT></TD>
<TD WIDTH="3%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="16%" ALIGN="CENTER" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2><BR>
$75&nbsp;million</FONT></TD>
</TR>
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<TD COLSPAN=3 VALIGN="TOP" style="font-family:times;"><FONT SIZE=2><BR>
CLO Tranches rated BB+/Ba1 or lower (including non-rated) on transactions managed by KKR Financial&nbsp;LLC or an Affiliate thereof</FONT></TD>
<TD WIDTH="3%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="16%" ALIGN="CENTER" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2><BR>
$100&nbsp;million</FONT></TD>
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<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>3</FONT></P>

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<TD COLSPAN=3 VALIGN="TOP" style="font-family:times;"><FONT SIZE=2><BR>
144A Private Placed Debt Securities with registration rights only rated BB+ to B- </FONT><FONT SIZE=2><I>plus</I></FONT><FONT SIZE=2> MBS in the Eligible MBS Portfolio (not constituting Mortgage-backed Debt Securities Interest Only Strips) with a
weighted average life of less than five years rated A- to BB- </FONT><FONT SIZE=2><I>plus</I></FONT><FONT SIZE=2> CLO Tranches rated BB+ / Ba1 or lower (including non rated) on transactions managed by KKR Financial&nbsp;LLC or an Affiliate
thereof</FONT></TD>
<TD WIDTH="3%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="16%" ALIGN="CENTER" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2><BR>
$175&nbsp;million</FONT></TD>
</TR>
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<TD COLSPAN=3 VALIGN="TOP" style="font-family:times;"><FONT SIZE=2><BR>
Investments Denominated in Foreign Currency (Euros, Pounds, or Yen)</FONT></TD>
<TD WIDTH="3%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="16%" ALIGN="CENTER" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2><BR>
$60&nbsp;million</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD COLSPAN=3 style="font-family:times;"><FONT SIZE=2><BR>
CLO Tranches(2)</FONT></TD>
<TD WIDTH="3%" style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="16%" style="font-family:times;"><FONT SIZE=2><BR>
&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>a.</FONT></TD>
<TD WIDTH="3%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="77%" style="font-family:times;"><FONT SIZE=2>AAA thru AA-</FONT></TD>
<TD WIDTH="3%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="16%" ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>$125&nbsp;million</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>b.</FONT></TD>
<TD WIDTH="3%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="77%" style="font-family:times;"><FONT SIZE=2>A+ thru BBB</FONT></TD>
<TD WIDTH="3%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="16%" ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>$65&nbsp;million</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>c.</FONT></TD>
<TD WIDTH="3%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="77%" style="font-family:times;"><FONT SIZE=2>BBB-</FONT></TD>
<TD WIDTH="3%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="16%" ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>$15&nbsp;million</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD COLSPAN=3 VALIGN="TOP" style="font-family:times;"><FONT SIZE=2><BR>
Mortgage-backed Debt Securities Interest Only Strips in the Eligible MBS Portfolio</FONT></TD>
<TD WIDTH="3%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="16%" ALIGN="CENTER" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2><BR>
$30&nbsp;million</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>a.</FONT></TD>
<TD WIDTH="3%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="77%" style="font-family:times;"><FONT SIZE=2>Federal National Mortgage Association Fannie Mae ("</FONT><FONT SIZE=2><I>FNMA</I></FONT><FONT SIZE=2>") Interest Only Strips</FONT></TD>
<TD WIDTH="3%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="16%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>b.</FONT></TD>
<TD WIDTH="3%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="77%" style="font-family:times;"><FONT SIZE=2>Non Agency Interest Only Strips</FONT></TD>
<TD WIDTH="3%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="16%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD COLSPAN=3 style="font-family:times;"><FONT SIZE=2><BR>
CCC+ thru CCC- rated Eligible Specified Financial Assets</FONT></TD>
<TD WIDTH="3%" style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="16%" style="font-family:times;"><FONT SIZE=2><BR>
&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>a.</FONT></TD>
<TD WIDTH="3%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="77%" style="font-family:times;"><FONT SIZE=2>Rule&nbsp;144A private placed Debt Securities with registration rights only NAIC&nbsp;5 / CCC+ thru CCC-</FONT></TD>
<TD WIDTH="3%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="16%" ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>$60&nbsp;million; however when combined with other CCC-rated Eligible Specified Financial Assets not to exceed $100&nbsp;million in aggregate.</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>b.</FONT></TD>
<TD WIDTH="3%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="77%" style="font-family:times;"><FONT SIZE=2>Other Debt Securities, excl. MBS, rated CCC+/Caa1 thru CCC-/Caa3</FONT></TD>
<TD WIDTH="3%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="16%" ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>$60&nbsp;million; however when combined with other CCC-rated Eligible Specified Financial Assets not to exceed $100&nbsp;million in aggregate.</FONT></TD>
</TR>
</TABLE>
<!-- insert table folio -->
<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>4</FONT></P>

<HR NOSHADE>
<P style='font-family:times;page-break-before:always'></p>
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<TABLE WIDTH="100%" BORDER=0 CELLSPACING=0 CELLPADDING=0>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>c.</FONT></TD>
<TD WIDTH="3%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="77%" style="font-family:times;"><FONT SIZE=2>Senior Unsecured Bank Loans CCC+ thru CCC-</FONT></TD>
<TD WIDTH="3%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="16%" ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>$60&nbsp;million; however when combined with other CCC-rated Eligible Specified Financial Assets not to exceed $100&nbsp;million in aggregate.</FONT></TD>
</TR>
</TABLE>
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<HR NOSHADE ALIGN="LEFT" WIDTH="120">
<DL compact>
<DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>(*)</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>References
to credit ratings are to the Debt Rating.
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>(1)</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>Subject
to there not being any restrictions on Bank of America's ability as Administrative Agent to sell any securities financed in the Senior Credit Facility. A sublimit of 15% of
the Aggregate Commitment Amount will apply to 144A privately placed debt transactions that are less than $100&nbsp;million in size and in which the Borrowers, in the aggregate, own more than 33% of
the total issuance.
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>(2)</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>Amounts
attributable to CLO Tranches rated BBB or better shall be excluded from the Tranche&nbsp;B Borrowing Base to the extent that any such Eligible Specified Financial Assets
have been included in such Borrowing Base for more than 180 consecutive days, provided, that if the Borrowers remove such Eligible Specified Financial Assets as collateral prior to the elapsing of
such 180 consecutive days, such assets may not thereafter be included as part of such Borrowing Base. </FONT></DD></DL>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.5</FONT><FONT
SIZE=2><I>&nbsp;&nbsp;&nbsp;&nbsp;CLO/CBO/CDO Tranches.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;The definition of "CLO/CBO/CDO Tranches" set forth in Section&nbsp;1.01 of the
Credit Agreement shall be hereby amended by deleting such definition in its entirety and replacing it with the following: </FONT></P>

<UL>
<UL>
<UL>

<P style="font-family:times;"><FONT SIZE=2>"</FONT><FONT
SIZE=2><I>CLO Tranches</I></FONT><FONT SIZE=2>" means collateralized loan obligation tranches of collateralized loan obligation transactions managed by KKR Financial&nbsp;LLC or an
Affiliate thereof. </FONT></P>

</UL>
</UL>
</UL>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.6</FONT><FONT
SIZE=2><I>&nbsp;&nbsp;&nbsp;&nbsp;References to CLO/CBO/CDO Tranches.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;Each reference in the Credit Agreement to the term "CLO/CBO/CDO
Tranches" shall be deleted and replaced with the term "CLO Tranches." </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.7</FONT><FONT
SIZE=2><I>&nbsp;&nbsp;&nbsp;&nbsp;Concentration Limit.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;The definition of "Concentration Limit" set forth in Section&nbsp;1.01 of the Credit
Agreement shall be hereby amended by deleting such definition in its entirety and replacing it with the following: </FONT></P>

<UL>
<UL>
<UL>

<P style="font-family:times;"><FONT SIZE=2>"</FONT><FONT
SIZE=2><I>Concentration Limit</I></FONT><FONT SIZE=2>" means, (i)&nbsp;with respect to any single Eligible Specified Financial Asset (other than CLO Tranches rated BB+/Ba1 or lower
(including non-rated CLO Tranches)), the exclusion from the Tranche&nbsp;B Borrowing Base of an amount attributable to such Eligible Specified Financial Asset, to the extent that
(a)&nbsp;the amount included in such Borrowing Base would exceed the applicable maximum Net Value Amount for each category as specified in the chart below and (b)&nbsp;the number of investments in
any single Eligible Specified Financial Asset exceeds the maximum number of investments for each category as specified in the chart below, (ii)&nbsp;with respect to any Single Obligor of one or more
Eligible Specified Financial Assets (other than CLO Tranches rated BB+/Ba1 or lower (including non-rated CLO Tranches)), the exclusion from the Tranche&nbsp;B Borrowing Base of an amount
attributable to such Single Obligor, to the extent that (a)&nbsp;the amount included in the Borrowing Base would exceed the applicable maximum Net Value Amount for each category as specified in the
chart below and (b)&nbsp;the number of </FONT></P>

</UL>
</UL>
</UL>
<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>5</FONT></P>

<HR NOSHADE>
<P style='font-family:times;page-break-before:always'></p>
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<A NAME="page_kk49702_1_6"> </A>
<UL>
<UL>
<UL>

<P style="font-family:times;"><FONT SIZE=2>investments
attributable to any Single Obligor exceeds the maximum number of investments for each category as specified in the chart below, (iii)&nbsp;with respect to any First Lien Bank Loans,
Second Lien Bank Loans, Mezzanine Obligations, Bridge Loans and Mortgage-backed Debt Securities Interest Only Strips in the Eligible MBS Portfolio, to the extent there is no Debt Rating (each, an
"</FONT><FONT SIZE=2><I>Unrated Asset</I></FONT><FONT SIZE=2>"), considered individually, the exclusion from the Tranche&nbsp;B Borrowing Base of an amount attributable to such Eligible Specified
Financial Asset, to the extent that (a)&nbsp;the amount included in the Borrowing Base would exceed the applicable maximum Net Value Amount for each category as specified in the chart below and
(b)&nbsp;the number of investments attributable to any unrated Eligible Specified Financial Asset exceeds the maximum number of investments for each category as specified in the chart below. </FONT></P>
</UL>
</UL>
</UL>
<!-- User-specified TAGGED TABLE -->
<TABLE WIDTH="100%" BORDER=0 CELLSPACING=0 CELLPADDING=0>
<TR VALIGN="BOTTOM">
<TH COLSPAN=5 ALIGN="CENTER" style="font-family:times;"><FONT SIZE=1><B>Limits on Single Obligor/Single Asset/Unrated Asset Investments</B></FONT><HR NOSHADE></TH>
</TR>
<TR VALIGN="BOTTOM">
<TH WIDTH="22%" ALIGN="CENTER" style="font-family:times;"><FONT SIZE=1><B>Category of Investments<BR>
based on Net Value<BR>
Amount ($Millions)*<BR> </B></FONT><HR NOSHADE></TH>
<TH WIDTH="7%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH WIDTH="38%" ALIGN="CENTER" style="font-family:times;"><FONT SIZE=1><B>Maximum Number<BR>
of Investments<BR>
Allowed*</B></FONT><HR NOSHADE></TH>
<TH WIDTH="7%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH WIDTH="25%" ALIGN="CENTER" style="font-family:times;"><FONT SIZE=1><B>Maximum Net Value Amount per<BR>
Single Obligor/Asset ($Millions)</B></FONT><HR NOSHADE></TH>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD WIDTH="22%" ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>&gt; $50 but up to $75</FONT></TD>
<TD WIDTH="7%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="38%" ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>1</FONT></TD>
<TD WIDTH="7%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="25%" ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>75</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD WIDTH="22%" ALIGN="CENTER" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&gt; $25 but up to $50</FONT></TD>
<TD WIDTH="7%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="38%" ALIGN="CENTER" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>3</FONT></TD>
<TD WIDTH="7%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="25%" ALIGN="CENTER" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>50</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD WIDTH="22%" ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>&lt; or&nbsp;= $25</FONT></TD>
<TD WIDTH="7%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="38%" ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>Up to Aggregate Commitment Amount</FONT></TD>
<TD WIDTH="7%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="25%" ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>N/A</FONT></TD>
</TR>
</TABLE>
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<HR NOSHADE ALIGN="LEFT" WIDTH="120">
<DL compact>
<DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>*</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>If
there are no Single Obligor, single Eligible Specified Financial Asset or Unrated Asset investments in any particular category specified in the left hand column of the chart (the
"</FONT><FONT SIZE=2><I>Unutilized Category of Investments</I></FONT><FONT SIZE=2>"), then the Tranche&nbsp;B Borrowing Base may include an increased number of Single Obligor, single Eligible
Specified Financial Asset or Unrated Asset investments in a category specifying lower Net Value Amounts so long as the aggregate Net Value of such investments does not exceed the Maximum Net Value
Amount per Single Obligor, single Eligible Specified Financial Asset or Unrated Asset investment specified in the right hand column of the chart for such Unutilized Category of Investments; </FONT> <FONT SIZE=2><I>provided</I></FONT><FONT SIZE=2>,
</FONT><FONT SIZE=2><I>however</I></FONT><FONT SIZE=2>, that the Tranche&nbsp;B Borrowing Base shall not, at any time, include amounts
attributable to more than four (4)&nbsp;Single Obligor, single Eligible Specified Financial Asset or Unrated Asset investments the Net Value Amount of which, individually, exceeds
$25.0&nbsp;million. </FONT></DD></DL>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.8</FONT><FONT
SIZE=2><I>&nbsp;&nbsp;&nbsp;&nbsp;Participation Interest.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;The definition of "Participation Interest" set forth in Section&nbsp;1.01 of the
Credit Agreement shall be hereby amended by deleting such definition in its entirety and replacing it with the following: </FONT></P>

<UL>
<UL>
<UL>

<P style="font-family:times;"><FONT SIZE=2>"</FONT><FONT
SIZE=2><I>Participation Interest</I></FONT><FONT SIZE=2>" means any participating interest in any Specified Financial Asset which is a collateralized loan obligation, First Lien Bank
Loan, Second Lien Bank Loan, Mezzanine Obligation or Bridge Loan where the record holder of such interest is a Financing SPE or a financial institution which has a Debt Rating equal to A+ by S&amp;P, or
its equivalent from another rating agency, or higher. </FONT></P>

</UL>
</UL>
</UL>
<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>6</FONT></P>

<HR NOSHADE>
<P style='font-family:times;page-break-before:always'></p>
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<A NAME="page_kk49702_1_7"> </A>
<UL>
<UL>
</UL>
</UL>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.9</FONT><FONT
SIZE=2><I>&nbsp;&nbsp;&nbsp;&nbsp;Specified Percentage.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;The definition of "Specified Percentage" set forth in Section&nbsp;1.01 of the
Credit Agreement shall be hereby amended by deleting such definition in its entirety and replacing it with the following: </FONT></P>

<UL>
<UL>
<UL>

<P style="font-family:times;"><FONT SIZE=2>"</FONT><FONT
SIZE=2><I>Specified Percentage</I></FONT><FONT SIZE=2>" means, in relation to any Eligible Specified Financial Assets, the percentage set forth in the table below opposite such Eligible
Specified Financial Asset: </FONT></P>
</UL>
</UL>
</UL>
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<TABLE WIDTH="100%" BORDER=0 CELLSPACING=0 CELLPADDING=0>
<TR VALIGN="BOTTOM">
<TH COLSPAN=3 ALIGN="CENTER" style="font-family:times;"><FONT SIZE=1><B>TRANCHE A</B></FONT><HR NOSHADE></TH>
<TH WIDTH="2%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
</TR>
<TR VALIGN="BOTTOM">
<TH WIDTH="80%" ALIGN="LEFT" style="font-family:times;"><FONT SIZE=1><B>Eligible Specified Financial Asset(*)<BR> </B></FONT><HR NOSHADE></TH>
<TH WIDTH="3%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH WIDTH="15%" ALIGN="CENTER" style="font-family:times;"><FONT SIZE=1><B>Specified&nbsp;Percentage</B></FONT><HR NOSHADE></TH>
<TH WIDTH="2%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD WIDTH="80%" style="font-family:times;"><FONT SIZE=2>Cash</FONT></TD>
<TD WIDTH="3%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="15%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>100</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>%</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD WIDTH="80%" style="font-family:times;"><FONT SIZE=2>Certificates of deposit</FONT></TD>
<TD WIDTH="3%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="15%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>95</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>%</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD WIDTH="80%" style="font-family:times;"><FONT SIZE=2>Commercial paper (Limited to A1/P1 or higher)</FONT></TD>
<TD WIDTH="3%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="15%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>95</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>%</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD WIDTH="80%" style="font-family:times;"><FONT SIZE=2>United States obligations consisting of interest rate strips or zero coupon obligations</FONT></TD>
<TD WIDTH="3%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="15%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>90</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>%</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD WIDTH="80%" style="font-family:times;"><FONT SIZE=2>Other United States obligations maturing in 10 or more and up to 30&nbsp;years</FONT></TD>
<TD WIDTH="3%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="15%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>95</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>%</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD WIDTH="80%" style="font-family:times;"><FONT SIZE=2>Other United States obligations maturing in 2 or more but less than 10</FONT></TD>
<TD WIDTH="3%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="15%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>97</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>%</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD WIDTH="80%" style="font-family:times;"><FONT SIZE=2>Other United States obligations maturing in less than 2&nbsp;years</FONT></TD>
<TD WIDTH="3%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="15%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>98</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>%</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD WIDTH="80%" style="font-family:times;"><FONT SIZE=2>MBS in the Eligible MBS Portfolio rated AAA and with a weighted average life of less than five years</FONT></TD>
<TD WIDTH="3%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="15%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>85</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>%</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD WIDTH="80%" style="font-family:times;"><FONT SIZE=2>MBS in the Eligible MBS Portfolio rated AA+ to AA and with a weighted average life of less than five years</FONT></TD>
<TD WIDTH="3%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="15%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>80</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>%</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD WIDTH="80%" style="font-family:times;"><FONT SIZE=2>MBS in the Eligible MBS Portfolio rated AA- to A and with a weighted average life of less than five years</FONT></TD>
<TD WIDTH="3%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="15%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>75</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>%</FONT></TD>
</TR>
</TABLE>
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<!-- User-specified TAGGED TABLE -->
<TABLE WIDTH="76%" BORDER=0 CELLSPACING=0 CELLPADDING=0>
<TR VALIGN="TOP">
<TD WIDTH="100%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
</TABLE>
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<!-- User-specified TAGGED TABLE -->
<TABLE WIDTH="100%" BORDER=0 CELLSPACING=0 CELLPADDING=0>
<TR VALIGN="BOTTOM">
<TH COLSPAN=5 ALIGN="CENTER" style="font-family:times;"><FONT SIZE=1><B>TRANCHE B</B></FONT><HR NOSHADE></TH>
<TH WIDTH="2%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
</TR>
<TR VALIGN="BOTTOM">
<TH COLSPAN=3 ALIGN="LEFT" style="font-family:times;"><FONT SIZE=1><B>Eligible Specified Financial Asset(*)<BR> </B></FONT><HR NOSHADE></TH>
<TH WIDTH="3%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH WIDTH="15%" ALIGN="CENTER" style="font-family:times;"><FONT SIZE=1><B>Specified&nbsp;Percentage</B></FONT><HR NOSHADE></TH>
<TH WIDTH="2%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD COLSPAN=3 VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>Publicly traded investment grade Debt Securities</FONT></TD>
<TD WIDTH="3%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="15%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD WIDTH="2%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>a.</FONT></TD>
<TD WIDTH="3%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="75%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>BBB+ or higher</FONT></TD>
<TD WIDTH="3%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="15%" ALIGN="RIGHT" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>90</FONT></TD>
<TD WIDTH="2%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>%</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD WIDTH="2%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>b.</FONT></TD>
<TD WIDTH="3%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="75%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>BBB thru BBB-</FONT></TD>
<TD WIDTH="3%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="15%" ALIGN="RIGHT" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>80</FONT></TD>
<TD WIDTH="2%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>%</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD COLSPAN=3 VALIGN="TOP" style="font-family:times;"><FONT SIZE=2><BR>
Rule&nbsp;144A private placed Debt Securities with registration rights only</FONT></TD>
<TD WIDTH="3%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="15%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2><BR>
&nbsp;</FONT></TD>
<TD WIDTH="2%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD WIDTH="2%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>a.</FONT></TD>
<TD WIDTH="3%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="75%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>NAIC 1 / AAA thru A-</FONT></TD>
<TD WIDTH="3%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="15%" ALIGN="RIGHT" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>85</FONT></TD>
<TD WIDTH="2%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>%</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD WIDTH="2%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>b.</FONT></TD>
<TD WIDTH="3%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="75%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>NAIC 2 / BBB+ thru BBB-</FONT></TD>
<TD WIDTH="3%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="15%" ALIGN="RIGHT" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>80</FONT></TD>
<TD WIDTH="2%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>%</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD WIDTH="2%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>c.</FONT></TD>
<TD WIDTH="3%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="75%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>NAIC 3 / BB+ thru BB</FONT></TD>
<TD WIDTH="3%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="15%" ALIGN="RIGHT" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>70</FONT></TD>
<TD WIDTH="2%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>%</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD WIDTH="2%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>d.</FONT></TD>
<TD WIDTH="3%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="75%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>NAIC 4 / BB- thru B-</FONT></TD>
<TD WIDTH="3%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="15%" ALIGN="RIGHT" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>55</FONT></TD>
<TD WIDTH="2%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>%</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD WIDTH="2%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>e.</FONT></TD>
<TD WIDTH="3%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="75%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>NAIC 5 / CCC+ thru CCC-</FONT></TD>
<TD WIDTH="3%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="15%" ALIGN="RIGHT" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>40</FONT></TD>
<TD WIDTH="2%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>%</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD COLSPAN=3 VALIGN="TOP" style="font-family:times;"><FONT SIZE=2><BR>
Other Debt Securities, excluding MBS in the Eligible MBS Portfolio, rated BB+/Ba1 through BB-/Ba3</FONT></TD>
<TD WIDTH="3%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="15%" ALIGN="RIGHT" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2><BR>
70</FONT></TD>
<TD WIDTH="2%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2><BR>%</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD COLSPAN=3 VALIGN="TOP" style="font-family:times;"><FONT SIZE=2><BR>
Other Debt Securities, excluding MBS in the Eligible MBS Portfolio, rated B+/B1 through B-/B3</FONT></TD>
<TD WIDTH="3%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="15%" ALIGN="RIGHT" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2><BR>
60</FONT></TD>
<TD WIDTH="2%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2><BR>%</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD COLSPAN=3 VALIGN="TOP" style="font-family:times;"><FONT SIZE=2><BR>
Other Debt Securities, excluding MBS in the Eligible MBS Portfolio, rated CCC+/Caa1 through CCC-/Caa3</FONT></TD>
<TD WIDTH="3%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="15%" ALIGN="RIGHT" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2><BR>
40</FONT></TD>
<TD WIDTH="2%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2><BR>%</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD COLSPAN=3 VALIGN="TOP" style="font-family:times;"><FONT SIZE=2><BR>
First Lien Bank Loans</FONT></TD>
<TD WIDTH="3%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="15%" ALIGN="RIGHT" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2><BR>
75</FONT></TD>
<TD WIDTH="2%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2><BR>%</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD COLSPAN=3 VALIGN="TOP" style="font-family:times;"><FONT SIZE=2><BR>
Second Lien Bank Loans</FONT></TD>
<TD WIDTH="3%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="15%" ALIGN="RIGHT" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2><BR>
65</FONT></TD>
<TD WIDTH="2%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2><BR>%</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD COLSPAN=3 VALIGN="TOP" style="font-family:times;"><FONT SIZE=2><BR>
Real estate related Mezzanine Obligations</FONT></TD>
<TD WIDTH="3%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="15%" ALIGN="RIGHT" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2><BR>
60</FONT></TD>
<TD WIDTH="2%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2><BR>%</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD COLSPAN=3 VALIGN="TOP" style="font-family:times;"><FONT SIZE=2><BR>
Mezzanine Obligations (other than real estate related Mezzanine Obligations)</FONT></TD>
<TD WIDTH="3%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="15%" ALIGN="RIGHT" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2><BR>
50</FONT></TD>
<TD WIDTH="2%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2><BR>%</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD COLSPAN=3 VALIGN="TOP" style="font-family:times;"><FONT SIZE=2><BR>
Bridge Loans</FONT></TD>
<TD WIDTH="3%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="15%" ALIGN="RIGHT" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2><BR>
50</FONT></TD>
<TD WIDTH="2%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2><BR>%</FONT></TD>
</TR>
</TABLE>
<!-- insert table folio -->
<BR>
<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>7</FONT></P>

<HR NOSHADE>
<P style='font-family:times;page-break-before:always'></p>
<!-- ZEQ.=7,SEQ=7,EFW="2182829",CP="KKR FINANCIAL HOLDINGS LLC",DN="5",CHK=247511,FOLIO='7',FILE='DISK105:[08ZAE2.08ZAE49702]KK49702A.;9',USER='JKEENE',CD='26-FEB-2008;15:07' -->
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<TABLE WIDTH="100%" BORDER=0 CELLSPACING=0 CELLPADDING=0>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD COLSPAN=3 VALIGN="TOP" style="font-family:times;"><FONT SIZE=2><BR>
MBS in the Eligible MBS Portfolio (not constituting Mortgage-backed Debt Securities Interest Only Strips) rated A- to BBB&#151;and with a weighted average life of less than five years</FONT></TD>
<TD WIDTH="3%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="15%" ALIGN="RIGHT" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2><BR>
50</FONT></TD>
<TD WIDTH="2%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2><BR>%</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD COLSPAN=3 VALIGN="TOP" style="font-family:times;"><FONT SIZE=2><BR>
MBS in the Eligible MBS Portfolio (not constituting Mortgage-backed Debt Securities Interest Only Strips) rated BB+ to BB- and with a weighted average life of less than five years</FONT></TD>
<TD WIDTH="3%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="15%" ALIGN="RIGHT" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2><BR>
40</FONT></TD>
<TD WIDTH="2%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2><BR>%</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD COLSPAN=3 VALIGN="TOP" style="font-family:times;"><FONT SIZE=2><BR>
CLO Tranches rated BB+/Ba1 or lower (including non-rated)</FONT></TD>
<TD WIDTH="3%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="15%" ALIGN="RIGHT" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2><BR>
35</FONT></TD>
<TD WIDTH="2%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2><BR>%</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD COLSPAN=3 style="font-family:times;"><FONT SIZE=2><BR>
Investments Denominated in Foreign Currency (Euros, Pounds, or Yen)</FONT></TD>
<TD WIDTH="3%" style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="15%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2><BR>
Mimic rates on US currency denominated assets if micro hedged for FX risk and, if not, an additional decrease of 5%(1)</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD COLSPAN=3 VALIGN="TOP" style="font-family:times;"><FONT SIZE=2><BR>
CLO Tranches</FONT></TD>
<TD WIDTH="3%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="15%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2><BR>
&nbsp;</FONT></TD>
<TD WIDTH="2%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD WIDTH="2%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>a.</FONT></TD>
<TD WIDTH="3%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="75%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>AAA through AA-</FONT></TD>
<TD WIDTH="3%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="15%" ALIGN="RIGHT" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>75</FONT></TD>
<TD WIDTH="2%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>%</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD WIDTH="2%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>b.</FONT></TD>
<TD WIDTH="3%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="75%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>A+ through BBB</FONT></TD>
<TD WIDTH="3%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="15%" ALIGN="RIGHT" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>60</FONT></TD>
<TD WIDTH="2%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>%</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD WIDTH="2%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>c.</FONT></TD>
<TD WIDTH="3%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="75%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>BBB-</FONT></TD>
<TD WIDTH="3%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="15%" ALIGN="RIGHT" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>50</FONT></TD>
<TD WIDTH="2%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>%</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD COLSPAN=3 VALIGN="TOP" style="font-family:times;"><FONT SIZE=2><BR>
Mortgage-backed Debt Securities Interest Only Strips in the Eligible MBS Portfolio</FONT></TD>
<TD WIDTH="3%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="15%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2><BR>
&nbsp;</FONT></TD>
<TD WIDTH="2%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD WIDTH="2%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>a.</FONT></TD>
<TD WIDTH="3%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="75%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>FNMA Interest Only Strips</FONT></TD>
<TD WIDTH="3%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="15%" ALIGN="RIGHT" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>50</FONT></TD>
<TD WIDTH="2%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>%</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD WIDTH="2%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>b.</FONT></TD>
<TD WIDTH="3%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="75%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>Non-Agency Interest Only Strips</FONT></TD>
<TD WIDTH="3%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="15%" ALIGN="RIGHT" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>40</FONT></TD>
<TD WIDTH="2%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>%</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD COLSPAN=3 VALIGN="TOP" style="font-family:times;"><FONT SIZE=2><BR>
Senior Unsecured Bank Loans</FONT></TD>
<TD WIDTH="3%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="15%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2><BR>
&nbsp;</FONT></TD>
<TD WIDTH="2%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD WIDTH="2%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>a.</FONT></TD>
<TD WIDTH="3%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="75%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>BBB- or higher</FONT></TD>
<TD WIDTH="3%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="15%" ALIGN="RIGHT" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>70</FONT></TD>
<TD WIDTH="2%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>%</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD WIDTH="2%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>b.</FONT></TD>
<TD WIDTH="3%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="75%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>BB+ thru BB-</FONT></TD>
<TD WIDTH="3%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="15%" ALIGN="RIGHT" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>65</FONT></TD>
<TD WIDTH="2%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>%</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD WIDTH="2%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>c.</FONT></TD>
<TD WIDTH="3%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="75%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>B+ thru B-</FONT></TD>
<TD WIDTH="3%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="15%" ALIGN="RIGHT" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>60</FONT></TD>
<TD WIDTH="2%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>%</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD WIDTH="2%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>d.</FONT></TD>
<TD WIDTH="3%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="75%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>CCC+ thru CCC-</FONT></TD>
<TD WIDTH="3%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="15%" ALIGN="RIGHT" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>40</FONT></TD>
<TD WIDTH="2%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>%</FONT></TD>
</TR>
</TABLE>
<!-- end of user-specified TAGGED TABLE -->

<HR NOSHADE ALIGN="LEFT" WIDTH="120">
<DL compact>
<DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>*</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>References
to credit ratings are to the Debt Rating.
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>(1)</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>Subject
to confirmation of Administrative Agent's first lien on foreign exchange hedges. </FONT></DD></DL>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.10</FONT><FONT
SIZE=2><I>&nbsp;&nbsp;&nbsp;&nbsp;Swingline Sublimit.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;The definition of "Swingline Sublimit" set forth in Section&nbsp;1.01 of the Credit
Agreement shall be hereby amended by deleting such definition in its entirety and replacing it with the following: </FONT></P>

<UL>
<UL>
<UL>

<P style="font-family:times;"><FONT SIZE=2>"</FONT><FONT
SIZE=2><I>Swingline Sublimit</I></FONT><FONT SIZE=2>" means, at any time, an amount equal to the lesser of (a)&nbsp;$46,875,000 and (b)&nbsp;the Aggregate Commitment Amount. The
Swingline Sublimit is part of, and not in addition to, the Aggregate Commitment Amount. </FONT></P>

</UL>
</UL>
</UL>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.11</FONT><FONT
SIZE=2><I>&nbsp;&nbsp;&nbsp;&nbsp;Tranche&nbsp;A Specified Financial Asset.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;Subsection&nbsp;(b) of the definition of "Tranche&nbsp;A
Specified Financial Asset" set forth in Section&nbsp;1.01 of the Credit Agreement shall be hereby amended by deleting such subsection in its entirety and replacing it with the following: </FONT></P>

<UL>
<DL compact>
<DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>(b)</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>commercial
paper maturing in less than 90&nbsp;days from the date of acquisition and rated A1/P1 or higher. </FONT></DD></DL>
</UL>
<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>8</FONT></P>

<HR NOSHADE>
<P style='font-family:times;page-break-before:always'></p>
<!-- ZEQ.=8,SEQ=8,EFW="2182829",CP="KKR FINANCIAL HOLDINGS LLC",DN="5",CHK=510548,FOLIO='8',FILE='DISK105:[08ZAE2.08ZAE49702]KK49702A.;9',USER='JKEENE',CD='26-FEB-2008;15:07' -->
<UL>
<UL>
</UL>
</UL>
<!-- THIS IS THE END OF A COMPOSITION COMPONENT -->

<P style="font-family:times;"><FONT SIZE=2><A
NAME="page_km49702_1_9"> </A>

<!-- COMMAND=ADD_BASECOLOR,"Black" -->


<!-- COMMAND=ADD_DEFAULTFONT,"font-family:times;" -->

 </FONT> <FONT SIZE=2>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.12</FONT><FONT SIZE=2><I>&nbsp;&nbsp;&nbsp;&nbsp;Tranche&nbsp;B Specified Financial Asset.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;Subsections&nbsp;(c) through (e)&nbsp;of the definition of
"Tranche&nbsp;B Specified Financial Asset" set forth in Section&nbsp;1.01 of the Credit Agreement shall be hereby amended by deleting such subsections in their entirety and replacing them with the
following: </FONT></P>

<UL>
<DL compact>
<DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>(c)</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>other
Debt Securities (including, in the case of CLO Tranches, non-rated securities, whether or not related as debt for tax purposes), excluding mortgage-backed securities
having the Debt Ratings indicated in the table for Specified Percentages;
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>(d)</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>First
Lien Bank Loans;
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>(e)</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>Second
Lien Bank Loans; </FONT></DD></DL>
</UL>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.13</FONT><FONT
SIZE=2><I>&nbsp;&nbsp;&nbsp;&nbsp;Increase Effective Date.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;The definition of "Increase Effective Date" set forth in Section&nbsp;1.01 of
the Credit Agreement shall be hereby deleted in its entirety. </FONT></P>


<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.14</FONT><FONT
SIZE=2><I>&nbsp;&nbsp;&nbsp;&nbsp;Increase in Commitments.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;Section&nbsp;2.13 of the Credit Agreement shall be hereby amended by deleting
such Section in its entirety and replacing it with the following: </FONT></P>

<UL>
<UL>
<UL>

<P style="font-family:times;"><FONT SIZE=2>"2.13&nbsp;&nbsp;&nbsp;&nbsp;[RESERVED]"
</FONT></P>

</UL>
</UL>
</UL>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.15</FONT><FONT
SIZE=2><I>&nbsp;&nbsp;&nbsp;&nbsp;Financial Statements.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;Section&nbsp;6.01 of the Credit Agreement shall be hereby amended by
(i)&nbsp;deleting "and" at the end of Subsection&nbsp;(a); (ii)&nbsp;replacing "." with "; and" at the end of Subsection&nbsp;(b) and (iii)&nbsp;adding the following after
Subsection&nbsp;(b): </FONT></P>

<UL>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;"(c)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;as
soon as available, but in any event within 90&nbsp;days after the fiscal year of KKR Financial or within 45&nbsp;days after the end of each of the
first three fiscal quarters of each fiscal year of KKR Financial, an agreed upon procedures report completed by KKR Financial's auditor, in the form to be agreed upon by the Borrower and the
Administrative Agent, with respect to the calculation of certain terms and covenants of the Agreement initially defined in that certain Third Amendment to the Second Amended and Restated Credit
Agreement." </FONT></P>

</UL>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.16</FONT><FONT
SIZE=2><I>&nbsp;&nbsp;&nbsp;&nbsp;Consolidated Tangible Net Worth.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;Section&nbsp;7.09(a) of the Credit Agreement shall be hereby amended by
deleting such Section in its entirety and replacing it with the following: </FONT></P>

<UL>
<DL compact>
<DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>"(a)</FONT></DT><DD style="font-family:times;"><FONT SIZE=2><I>Consolidated Tangible Net Worth</I></FONT><FONT SIZE=2>.&nbsp;&nbsp;&nbsp;&nbsp;Permit Adjusted Consolidated Tangible Net Worth, at any time, to be less than the sum of
(i)&nbsp;the greater of (x)&nbsp;$1,437,000,000, or (y)&nbsp;an amount equal to 85% of the Adjusted Consolidated Tangible Net Worth as of September&nbsp;30, 2007, plus (ii)&nbsp;85% of the
net proceeds received from the issuance and sale, at any time after September&nbsp;30, 2007, of Equity Interests of KKR Financial or any Subsidiary (other than issuances to any Borrower or a
wholly-owned Subsidiary), including upon any conversion of Debt Securities of KKR Financial into such Equity Interests." </FONT></DD></DL>
</UL>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.17</FONT><FONT
SIZE=2><I>&nbsp;&nbsp;&nbsp;&nbsp;Leverage Ratio.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;Section&nbsp;7.09(b) of the Credit Agreement shall be hereby amended by deleting such
Section in its entirety and replacing it with the following: </FONT></P>

<UL>
<DL compact>
<DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>"(b)</FONT></DT><DD style="font-family:times;"><FONT SIZE=2><I>Leverage Ratio</I></FONT><FONT SIZE=2>.&nbsp;&nbsp;&nbsp;&nbsp;Permit the ratio of Adjusted Total Liabilities to the sum of: (i)&nbsp;Adjusted Consolidated Tangible
Net Worth and (ii)&nbsp;the Trust Preferred Indebtedness (as of the date of such calculation, but in no event greater than $440,000,000), to exceed 4.75 to 1.00." </FONT></DD></DL>
</UL>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.18</FONT><FONT
SIZE=2><I>&nbsp;&nbsp;&nbsp;&nbsp;Positive Net Income.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;Section&nbsp;7.09(c) of the Credit Agreement shall be hereby amended by deleting
such Section in its entirety and replacing it with the following: </FONT></P>

<UL>
<DL compact>
<DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>"(c)</FONT></DT><DD style="font-family:times;"><FONT SIZE=2><I>Positive Net Income</I></FONT><FONT SIZE=2>.&nbsp;&nbsp;&nbsp;&nbsp;Permit KKR Financial's Adjusted Net Income from Continuing Operations to be less than $1.00 for any
fiscal quarter." </FONT></DD></DL>
</UL>
<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>9</FONT></P>

<HR NOSHADE>
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<UL>
<UL>
</UL>
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<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.19</FONT><FONT
SIZE=2><I>&nbsp;&nbsp;&nbsp;&nbsp;Valuation Policies.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;Section&nbsp;7.14 shall be added to the Credit Agreement and shall state the
following: </FONT></P>

<UL>

<P style="font-family:times;"><FONT SIZE=2>"</FONT><FONT
SIZE=2><B>7.14&nbsp;&nbsp;&nbsp;&nbsp;Valuation Policies.</B></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;Materially alter the policies contained in the KKR Financial&nbsp;LLC and Subsidiaries Valuation
Policies and Procedures as in effect on the Effective Date, a copy of which were provided to the Administrative Agent on the Effective Date, without obtaining the prior written consent of the
Administrative Agent if such alterations affect any of the Collateral or Eligible Specified Financial Assets, which, shall not be unreasonably withheld or delayed; provided that if the Administrative
Agent has not responded within 10 Business Days after written request for a consent by the Borrowers, it shall be deemed to have consented." </FONT></P>

</UL>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.20</FONT><FONT
SIZE=2><I>&nbsp;&nbsp;&nbsp;&nbsp;KKR Atlantic and KKR Pacific.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;Section&nbsp;7.15 shall be added to the Credit Agreement and shall state
the following: </FONT></P>

<UL>

<P style="font-family:times;"><FONT SIZE=2>"</FONT><FONT
SIZE=2><B>7.15&nbsp;&nbsp;&nbsp;&nbsp;KKR Atlantic and KKR Pacific</B></FONT><FONT SIZE=2>.&nbsp;&nbsp;&nbsp;&nbsp;(i)&nbsp;Purchase an Equity Interest in, (ii)&nbsp;pay any Indebtedness of,
(iii)&nbsp;transfer any assets (including without limitation, in connection with the acquisition of a mortgage-backed security, unless such acquisition has been consented to in writing by the
Administrative Agent) to or (iv)&nbsp;provide any other financial support to, in each case, either KKR Atlantic or KKR Pacific, other than with respect to assets pledged to KKR Atlantic or KKR
Pacific as of September&nbsp;30, 2007 (it being understood, for the avoidance of doubt, that the repayment of Indebtedness of KKR Atlantic or KKR Pacific from the proceeds of their own assets is not
restricted by this provision). Upon any such acquisition of a mortgage-backed security with the consent of the Administrative Agent, in accordance with the foregoing, the acquired security shall
become a part of the Retained MBS Portfolio (as contemplated in the definition of that term)." </FONT></P>

</UL>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.21</FONT><FONT
SIZE=2><I>&nbsp;&nbsp;&nbsp;&nbsp;Cross-Default.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;Section&nbsp;8.01(e) of the Credit Agreement shall be hereby amended by deleting such
Section in its entirety and replacing it with the following: </FONT></P>

<UL>

<P style="font-family:times;"><FONT SIZE=2>"(e)&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT
SIZE=2><I>Cross-Default</I></FONT><FONT SIZE=2>.&nbsp;&nbsp;&nbsp;&nbsp;(i)&nbsp;Any Borrower fails to make any payment (whether of principal or interest and regardless of
amount) in respect of any Material Indebtedness (other than with respect to KKR Atlantic or KKR Pacific or with respect to any SLN Repurchase Agreement), when and as the same shall become due and
payable (with all applicable grace periods having expired), or (ii)&nbsp;any event or condition occurs that results in any Material Indebtedness (other than with respect to KKR Atlantic or KKR
Pacific or with respect to any SLN Repurchase Agreement) becoming due prior to its scheduled maturity or that enables or permits (with or without the giving of notice, the lapse of time or both, but
after all applicable grace periods have expired) the holder or holders of any Material Indebtedness (other than with respect to KKR Atlantic or KKR Pacific or with respect to any SLN Repurchase
Agreement) or any trustee or agent on its or their behalf to cause any Material Indebtedness to become due, or to require the prepayment, repurchase, redemption or defeasance thereof, prior to its
scheduled maturity; </FONT><FONT SIZE=2><I>provided</I></FONT><FONT SIZE=2> that this </FONT><FONT SIZE=2><I>Section&nbsp;8.01(e)(ii)</I></FONT><FONT SIZE=2> shall not apply to secured
Indebtedness that becomes due as a result of the voluntary sale or transfer of the property or assets securing such Indebtedness; or" </FONT></P>

</UL>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.22</FONT><FONT
SIZE=2><I>&nbsp;&nbsp;&nbsp;&nbsp;Commitments and Applicable Percentages.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;Schedule&nbsp;2.01 to the Credit Agreement shall be hereby
amended by deleting such Schedule in its entirety and replacing it with Schedule&nbsp;2.01 attached hereto. </FONT></P>


<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.23&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
Credit Agreement shall be hereby amended to add Schedules&nbsp;I and II attached hereto as Schedules&nbsp;I and II, respectively, to the Credit
Agreement. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.24&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Exhibit&nbsp;D
to the Credit Agreement (the form of Borrowing Base Report) shall be hereby amended by deleting such Exhibit in its entirety and
replacing it with Exhibit&nbsp;D attached hereto. </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>10</FONT></P>

<HR NOSHADE>
<P style='font-family:times;page-break-before:always'></p>
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<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.25&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Exhibit&nbsp;E
to the Credit Agreement (the form of Compliance Certificate) shall be hereby amended by deleting such Exhibit in its entirety and
replacing it with Exhibit&nbsp;E attached hereto. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section&nbsp;2.</FONT><FONT
SIZE=2><I>&nbsp;&nbsp;&nbsp;&nbsp;Conditions Precedent.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;This Agreement shall become effective on the date (the
"</FONT><FONT SIZE=2><I>Effective Date</I></FONT><FONT SIZE=2>") upon which the following conditions have been satisfied in full or waived by the Administrative Agent in writing: </FONT></P>


<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.1&nbsp;&nbsp;&nbsp;The
Administrative Agent shall have received counterparts of this Agreement duly executed by each Borrower, the Required Lenders and the Administrative Agent. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.2&nbsp;&nbsp;&nbsp;All
representations and warranties contained in this Agreement or otherwise made in writing to the Administrative Agent in connection herewith shall be true and correct. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.3&nbsp;&nbsp;&nbsp;Other
than the fees and other amounts due and owing in accordance with </FONT><FONT SIZE=2><I>Section&nbsp;4</I></FONT><FONT SIZE=2> hereof, the Borrowers shall have
paid all outstanding interest and fees due and payable under the Credit Agreement and the other Loan Documents. </FONT></P>


<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.4&nbsp;&nbsp;&nbsp;The
Borrowers shall have paid the amendment fee specified in Section&nbsp;4 hereof, and shall have paid the expenses described in Section&nbsp;4 hereof to the extent
invoiced or otherwise specified in writing to the Borrowers at or prior to the time of the fee payment referred to above (but with any failure to so invoice or specify in writing not having any effect
on the Borrowers' obligation to pay such expenses under Section&nbsp;4 or the Credit Agreement, as applicable). </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.5&nbsp;&nbsp;&nbsp;The
Administrative Agent shall have received from the Borrowers (i)&nbsp;a Borrowing Base Report, substantially in the form attached hereto as Exhibit&nbsp;D, dated
as of the Effective Date and (ii)&nbsp;a Compliance Certificate, substantially in the form attached hereto as Exhibit&nbsp;E, demonstrating compliance, dated as of September&nbsp;30, 2007. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section&nbsp;3.</FONT><FONT
SIZE=2><I>&nbsp;&nbsp;&nbsp;&nbsp;Effect of Amendment.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;</FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.1&nbsp;&nbsp;&nbsp;Each
Borrower agrees that after giving effect to this Agreement there is no Default nor Event of Default in existence, nor would a Default nor an Event of Default be
caused by this Agreement or the implementation of the matters reflected herein. </FONT></P>


<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.2&nbsp;&nbsp;&nbsp;Except
as specifically modified by this Agreement, the terms and provisions of the Credit Agreement are ratified and confirmed by the parties hereto and remain in full
force and effect. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.3&nbsp;&nbsp;&nbsp;The
parties hereto acknowledge that for the purposes of the Credit Agreement, this Agreement is a Loan Document and, upon effectiveness of this Agreement, each reference
in the Credit Agreement to "this Agreement", "hereunder", "hereof", "herein" or words of like import referring to the Credit Agreement, and each reference in the other Loan Documents to the "Credit
Agreement", "thereunder", "thereof", "therein" or words of like import referring to the Credit Agreement shall mean and be a reference to the Credit Agreement as amended by this Agreement. </FONT></P>


<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section&nbsp;4.</FONT><FONT
SIZE=2><I>&nbsp;&nbsp;&nbsp;&nbsp;Fees; Expenses.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;The Borrowers agree to pay to the Administrative Agent for the ratable benefit
of each of the Lenders executing and delivering this Agreement a non-refundable one time amendment fee of 0.235% of the Commitment of each such Lender and such other fees as may be
mutually agreed upon. The Borrowers shall reimburse the Administrative Agent upon demand for all reasonable out-of-pocket costs and expenses incurred by the Administrative
Agent and its Affiliates (including the reasonable fees, charges and disbursements of counsel for the Administrative Agent) in connection with the preparation, negotiation, execution, delivery and
administration of this Agreement and any other agreements and documents executed and delivered in connection herewith. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section&nbsp;5.</FONT><FONT
SIZE=2><I>&nbsp;&nbsp;&nbsp;&nbsp;Acknowledgments.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;</FONT></P>

<UL>
<DL compact>
<DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>5.1</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>(a)&nbsp;&nbsp;&nbsp;&nbsp;Each
Borrower agrees that the outstanding obligations of such Borrower to the Administrative Agent and each of the Lenders as evidenced by or otherwise arising under
the </FONT></DD></DL>
</UL>
<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>11</FONT></P>

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<UL>
<UL>

<P style="font-family:times;"><FONT SIZE=2>Credit
Agreement and the other Loan Documents, except as otherwise expressly modified in this Agreement, are, by such Borrower's execution of this Agreement, ratified and confirmed in all respects.
Each Security Document to which such Borrower is a party and all security interests and Liens granted thereunder shall continue in full force and effect and is and shall continue to be applicable to
all of the Obligations and to this Agreement. </FONT></P>

</UL>
<DL compact>
<DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>(b)</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>Each
Borrower acknowledges and agrees that, as of the date hereof: (i)&nbsp;the Borrower has no claim or cause of action against any of the Lenders or the Administrative Agent (or
any of their directors, officers, employees, attorneys or agents) arising out of or in connection with the Credit Agreement or any instrument, document or agreement entered into in connection
therewith; (ii)&nbsp;the Borrower has no offset rights, counterclaims or defenses of any kind against any of their obligations, indebtedness or liabilities to any of the Lenders or the Agent arising
out of or in connection with the Credit Agreement or any instrument, document or agreement entered into in connection therewith; and (iii)&nbsp;each Lender and the Administrative Agent have
heretofore properly performed and satisfied in a timely manner all of their obligations to the Borrowers arising out of or in connection with the Credit Agreement or any instrument, document or
agreement entered into in connection therewith. </FONT></DD></DL>
</UL>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.2&nbsp;&nbsp;&nbsp;Each
Borrower ratifies and confirms the grant of the security interest in and the Lien on the Collateral contained in the Loan Documents to which each is a party which
were executed in connection with the Credit Agreement. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.3&nbsp;&nbsp;&nbsp;For
the avoidance of doubt, each party hereto hereby confirms, as of the date hereof, that (i)&nbsp;the $20,000,000 obligation pledged in connection with the IPS
Corporation 11.25% Senior Subordinated Unsecured Notes program qualifies as a Specified Financial Asset that may be treated as a Rule&nbsp;144A private placed Debt Security (regardless of whether it
has registration rights), and (ii)&nbsp;any obligation within the Eligible MBS Portfolio may constitute a Specified Financial Asset (with the determination of whether it is a Tranche&nbsp;A
Specified Financial Asset or Tranche&nbsp;B Specified Financial Asset to be made in accordance with the definitions of those terms, as amended hereby). </FONT></P>


<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section&nbsp;6.</FONT><FONT
SIZE=2><I>&nbsp;&nbsp;&nbsp;&nbsp;Representations of the Borrower.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;</FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;After
giving effect to this Agreement, each Borrower reaffirms and restates the representations and warranties set forth in Article&nbsp;V of the Credit Agreement (except to the extent
such representations and warranties expressly relate to an earlier date, in which case such representations and warranties shall be true and correct in all material respects as of such earlier date)
and all such representations and warranties shall be true and correct on the date hereof with the same force and effect as if made on
such date. Each Borrower represents and warrants (which representations and warranties shall survive the execution and delivery hereof) to the Administrative Agent that: </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6.1&nbsp;&nbsp;&nbsp;It
has the corporate power and authority to execute, deliver and carry out the terms and provisions of this Agreement and the transactions contemplated hereby and has
taken or caused to be taken all necessary corporate action to authorize the execution, delivery and performance of this Agreement and the transactions contemplated hereby; </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6.2&nbsp;&nbsp;&nbsp;No
consent of any Person (including, without limitation, shareholders or creditors of the Borrowers), and no action of, or filing with any governmental or public body or
authority is required to authorize, or is otherwise required in connection with the execution, delivery and performance of this Agreement; </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6.3&nbsp;&nbsp;&nbsp;This
Agreement has been duly executed and delivered on behalf of each Borrower by a duly authorized officer, and constitutes a legal, valid and binding obligation of the
Borrowers enforceable in accordance with its terms, subject to bankruptcy, reorganization, insolvency, moratorium and other similar laws affecting the enforcement of creditors' rights generally and
the exercise of judicial discretion in accordance with general principles of equity; and </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>12</FONT></P>

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<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6.4&nbsp;&nbsp;&nbsp;The
execution, delivery and performance of this Agreement will not violate any law, statute or regulation, or any order or decree of any court or governmental
instrumentality, or conflict with, or result in the breach of, or constitute a default under any contractual obligation of the Borrowers. </FONT></P>


<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6.5&nbsp;&nbsp;&nbsp;Since
September&nbsp;30, 2007, there has been no event or circumstance, either individually or in the aggregate, that has had or could reasonably be expected to have a
Material Adverse Effect. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section&nbsp;7.</FONT><FONT
SIZE=2><I>&nbsp;&nbsp;&nbsp;&nbsp;Successors and Assigns.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;The provisions of this Agreement shall be binding upon and inure to
the benefit of the parties hereto and their respective successors and assigns. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section&nbsp;8.</FONT><FONT
SIZE=2><I>&nbsp;&nbsp;&nbsp;&nbsp;Governing Law.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW
OF THE STATE OF NEW YORK, WITHOUT REGARD TO THE CHOICE OF LAW PROVISIONS THEREOF OTHER THAN SECTION&nbsp;5-1401 OF THE NEW YORK GENERAL OBLIGATIONS LAW. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section&nbsp;9.</FONT><FONT
SIZE=2><I>&nbsp;&nbsp;&nbsp;&nbsp;Effect.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;Except as expressly stated herein, the terms and conditions of the Credit Agreement
and the other Loan Documents remain in full force and effect. The amendments contained herein shall be deemed to have prospective application only, unless otherwise specifically stated herein. </FONT></P>


<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section&nbsp;10.</FONT><FONT
SIZE=2><I>&nbsp;&nbsp;&nbsp;&nbsp;Counterparts; Integration.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;This Agreement may be executed in counterparts (and by different
parties hereto in different counterparts), each of which shall constitute an original, but all of which when taken together shall constitute a single contract. Delivery of an executed counterpart of a
signature page by telecopier shall be effective as delivery of a manually executed counterpart. </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>[The
remainder of this page left blank intentionally] </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>13</FONT></P>

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 </FONT> <FONT SIZE=2>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;IN WITNESS WHEREOF, the parties hereto have caused this Amendment to Second Amended and Restated Credit Agreement to be duly executed as of the date first above written. </FONT></P>

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<TD WIDTH="45%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=3 style="font-family:times;"><FONT SIZE=2><B>KKR FINANCIAL HOLDINGS&nbsp;LLC</B></FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="45%" style="font-family:times;"><FONT SIZE=2><BR>
&nbsp;</FONT></TD>
<TD WIDTH="3%" style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="5%" style="font-family:times;"><FONT SIZE=2><BR>
By:</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="45%" style="font-family:times;"><FONT SIZE=2><BR>
/s/ Jeffery L. Power</FONT><HR NOSHADE><FONT SIZE=2> Name: Jeffery L. Power<BR>
Title: Authorized Signatory</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="45%" style="font-family:times;"><FONT SIZE=2><BR>
&nbsp;</FONT></TD>
<TD WIDTH="3%" style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD COLSPAN=3 style="font-family:times;"><BR><FONT SIZE=2><B>KKR FINANCIAL HOLDINGS II,&nbsp;LLC</B></FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="45%" style="font-family:times;"><FONT SIZE=2><BR>
&nbsp;</FONT></TD>
<TD WIDTH="3%" style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="5%" style="font-family:times;"><FONT SIZE=2><BR>
By:</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="45%" style="font-family:times;"><FONT SIZE=2><BR>
/s/ Jeffery L. Power</FONT><HR NOSHADE><FONT SIZE=2> Name: Jeffery L. Power<BR>
Title: Authorized Signatory</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="45%" style="font-family:times;"><FONT SIZE=2><BR>
&nbsp;</FONT></TD>
<TD WIDTH="3%" style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD COLSPAN=3 style="font-family:times;"><BR><FONT SIZE=2><B>KKR FINANCIAL HOLDINGS III,&nbsp;LLC</B></FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="45%" style="font-family:times;"><FONT SIZE=2><BR>
&nbsp;</FONT></TD>
<TD WIDTH="3%" style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="5%" style="font-family:times;"><FONT SIZE=2><BR>
By:</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="45%" style="font-family:times;"><FONT SIZE=2><BR>
/s/ Jeffery L. Power</FONT><HR NOSHADE><FONT SIZE=2> Name: Jeffery L. Power<BR>
Title: Authorized Signatory</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="45%" style="font-family:times;"><FONT SIZE=2><BR>
&nbsp;</FONT></TD>
<TD WIDTH="3%" style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD COLSPAN=3 style="font-family:times;"><BR><FONT SIZE=2><B>KKR FINANCIAL HOLDINGS,&nbsp;INC.</B></FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="45%" style="font-family:times;"><FONT SIZE=2><BR>
&nbsp;</FONT></TD>
<TD WIDTH="3%" style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="5%" style="font-family:times;"><FONT SIZE=2><BR>
By:</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="45%" style="font-family:times;"><FONT SIZE=2><BR>
/s/ Jeffery L. Power</FONT><HR NOSHADE><FONT SIZE=2> Name: Jeffery L. Power<BR>
Title: Authorized Signatory</FONT></TD>
</TR>
</TABLE>
<!-- end of user-specified TAGGED TABLE -->

<HR NOSHADE>
<P style='font-family:times;page-break-before:always'></p>
<!-- ZEQ.=1,SEQ=14,EFW="2182829",CP="KKR FINANCIAL HOLDINGS LLC",DN="5",CHK=561032,FOLIO='blank',FILE='DISK105:[08ZAE2.08ZAE49702]KO49702A.;4',USER='JKEENE',CD='26-FEB-2008;14:53' -->

<!-- User-specified TAGGED TABLE -->
<TABLE WIDTH="100%" BORDER=0 CELLSPACING=0 CELLPADDING=0>
<TR VALIGN="TOP">
<TD WIDTH="45%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=3 style="font-family:times;"><FONT SIZE=2><B>KKR FINANCIAL HOLDINGS,&nbsp;LTD.</B></FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="45%" style="font-family:times;"><FONT SIZE=2><BR>
&nbsp;</FONT></TD>
<TD WIDTH="3%" style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="5%" style="font-family:times;"><FONT SIZE=2><BR>
By:</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="45%" style="font-family:times;"><FONT SIZE=2><BR>
/s/ Andrew J. Sossen</FONT><HR NOSHADE><FONT SIZE=2> Name: Andrew J. Sossen<BR>
Title: Authorized Signatory</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="45%" style="font-family:times;"><FONT SIZE=2><BR>
&nbsp;</FONT></TD>
<TD WIDTH="3%" style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD COLSPAN=3 style="font-family:times;"><BR><FONT SIZE=2><B>KKR FINANCIAL CORP.</B></FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="45%" style="font-family:times;"><FONT SIZE=2><BR>
&nbsp;</FONT></TD>
<TD WIDTH="3%" style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="5%" style="font-family:times;"><FONT SIZE=2><BR>
By:</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="45%" style="font-family:times;"><FONT SIZE=2><BR>
/s/ Andrew J. Sossen</FONT><HR NOSHADE><FONT SIZE=2> Name: Andrew J. Sossen<BR>
Title: Authorized Signatory</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="45%" style="font-family:times;"><FONT SIZE=2><BR>
&nbsp;</FONT></TD>
<TD WIDTH="3%" style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD COLSPAN=3 style="font-family:times;"><BR><FONT SIZE=2><B>KKR TRS HOLDINGS,&nbsp;INC.</B></FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="45%" style="font-family:times;"><FONT SIZE=2><BR>
&nbsp;</FONT></TD>
<TD WIDTH="3%" style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="5%" style="font-family:times;"><FONT SIZE=2><BR>
By:</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="45%" style="font-family:times;"><FONT SIZE=2><BR>
/s/ Andrew J. Sossen</FONT><HR NOSHADE><FONT SIZE=2> Name: Andrew J. Sossen<BR>
Title: Authorized Signatory</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="45%" style="font-family:times;"><FONT SIZE=2><BR>
&nbsp;</FONT></TD>
<TD WIDTH="3%" style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD COLSPAN=3 style="font-family:times;"><BR><FONT SIZE=2><B>KKR TRS HOLDINGS,&nbsp;LTD.</B></FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="45%" style="font-family:times;"><FONT SIZE=2><BR>
&nbsp;</FONT></TD>
<TD WIDTH="3%" style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="5%" style="font-family:times;"><FONT SIZE=2><BR>
By:</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="45%" style="font-family:times;"><FONT SIZE=2><BR>
/s/ Andrew J. Sossen</FONT><HR NOSHADE><FONT SIZE=2> Name: Andrew J. Sossen<BR>
Title: Authorized Signatory</FONT></TD>
</TR>
</TABLE>
<!-- end of user-specified TAGGED TABLE -->

<HR NOSHADE>
<P style='font-family:times;page-break-before:always'></p>
<!-- ZEQ.=2,SEQ=15,EFW="2182829",CP="KKR FINANCIAL HOLDINGS LLC",DN="5",CHK=830173,FOLIO='blank',FILE='DISK105:[08ZAE2.08ZAE49702]KO49702A.;4',USER='JKEENE',CD='26-FEB-2008;14:53' -->

<!-- User-specified TAGGED TABLE -->
<TABLE WIDTH="100%" BORDER=0 CELLSPACING=0 CELLPADDING=0>
<TR VALIGN="TOP">
<TD WIDTH="45%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=3 style="font-family:times;"><FONT SIZE=2><B>BANK OF AMERICA, N.A.</B></FONT><FONT SIZE=2>, as<BR>
Administrative Agent</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="45%" style="font-family:times;"><FONT SIZE=2><BR>
&nbsp;</FONT></TD>
<TD WIDTH="3%" style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="5%" style="font-family:times;"><FONT SIZE=2><BR>
By:</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="45%" style="font-family:times;"><FONT SIZE=2><BR>
/s/ Paula Laesch</FONT><HR NOSHADE><FONT SIZE=2> Name: Paula Laesch<BR>
Title: Vice President</FONT></TD>
</TR>
</TABLE>
<!-- end of user-specified TAGGED TABLE -->

<HR NOSHADE>
<P style='font-family:times;page-break-before:always'></p>
<!-- ZEQ.=3,SEQ=16,EFW="2182829",CP="KKR FINANCIAL HOLDINGS LLC",DN="5",CHK=381928,FOLIO='blank',FILE='DISK105:[08ZAE2.08ZAE49702]KO49702A.;4',USER='JKEENE',CD='26-FEB-2008;14:53' -->

<!-- User-specified TAGGED TABLE -->
<TABLE WIDTH="100%" BORDER=0 CELLSPACING=0 CELLPADDING=0>
<TR VALIGN="TOP">
<TD WIDTH="45%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=3 style="font-family:times;"><FONT SIZE=2><B>BANK OF AMERICA, N.A.</B></FONT><FONT SIZE=2>, as a Lender,<BR>
and Swingline Lender</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="45%" style="font-family:times;"><FONT SIZE=2><BR>
&nbsp;</FONT></TD>
<TD WIDTH="3%" style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="5%" style="font-family:times;"><FONT SIZE=2><BR>
By:</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="45%" style="font-family:times;"><FONT SIZE=2><BR>
/s/ Paula Laesch</FONT><HR NOSHADE><FONT SIZE=2> Name: Paula Laesch<BR>
Title: Vice President</FONT></TD>
</TR>
</TABLE>
<!-- end of user-specified TAGGED TABLE -->

<HR NOSHADE>
<P style='font-family:times;page-break-before:always'></p>
<!-- ZEQ.=4,SEQ=17,EFW="2182829",CP="KKR FINANCIAL HOLDINGS LLC",DN="5",CHK=489256,FOLIO='blank',FILE='DISK105:[08ZAE2.08ZAE49702]KO49702A.;4',USER='JKEENE',CD='26-FEB-2008;14:53' -->

<!-- User-specified TAGGED TABLE -->
<TABLE WIDTH="100%" BORDER=0 CELLSPACING=0 CELLPADDING=0>
<TR VALIGN="TOP">
<TD WIDTH="45%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=3 style="font-family:times;"><FONT SIZE=2><B>CITICORP NORTH AMERICA,&nbsp;INC.</B></FONT><FONT SIZE=2>, as<BR>
a Lender</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="45%" style="font-family:times;"><FONT SIZE=2><BR>
&nbsp;</FONT></TD>
<TD WIDTH="3%" style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="5%" style="font-family:times;"><FONT SIZE=2><BR>
By:</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="45%" style="font-family:times;"><FONT SIZE=2><BR>
/s/ Robert B. Goldstein</FONT><HR NOSHADE><FONT SIZE=2> Name: Robert B. Goldstein<BR>
Title: Managing Director/Senior Credit Officer</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="45%" style="font-family:times;"><FONT SIZE=2><BR>
&nbsp;</FONT></TD>
<TD WIDTH="3%" style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD COLSPAN=3 style="font-family:times;"><BR><FONT SIZE=2><B>CITICORP NORTH AMERICA,&nbsp;INC.</B></FONT><FONT SIZE=2>, as<BR>
Syndication Agent</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="45%" style="font-family:times;"><FONT SIZE=2><BR>
&nbsp;</FONT></TD>
<TD WIDTH="3%" style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="5%" style="font-family:times;"><FONT SIZE=2><BR>
By:</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="45%" style="font-family:times;"><FONT SIZE=2><BR>
/s/ Robert B. Goldstein</FONT><HR NOSHADE><FONT SIZE=2> Name: Robert B. Goldstein<BR>
Title: Managing Director/Senior Credit Officer</FONT></TD>
</TR>
</TABLE>
<!-- end of user-specified TAGGED TABLE -->

<HR NOSHADE>
<P style='font-family:times;page-break-before:always'></p>
<!-- ZEQ.=5,SEQ=18,EFW="2182829",CP="KKR FINANCIAL HOLDINGS LLC",DN="5",CHK=489620,FOLIO='blank',FILE='DISK105:[08ZAE2.08ZAE49702]KO49702A.;4',USER='JKEENE',CD='26-FEB-2008;14:53' -->

<!-- User-specified TAGGED TABLE -->
<TABLE WIDTH="100%" BORDER=0 CELLSPACING=0 CELLPADDING=0>
<TR VALIGN="TOP">
<TD WIDTH="45%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=3 style="font-family:times;"><FONT SIZE=2><B>JPMORGAN CHASE BANK, N.A.</B></FONT><FONT SIZE=2>, as a<BR>
Syndication Agent and a Lender</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="45%" style="font-family:times;"><FONT SIZE=2><BR>
&nbsp;</FONT></TD>
<TD WIDTH="3%" style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="5%" style="font-family:times;"><FONT SIZE=2><BR>
By:</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="45%" style="font-family:times;"><FONT SIZE=2><BR>
/s/ Richard J. Poworoznek</FONT><HR NOSHADE><FONT SIZE=2> Name: Richard J. Poworoznek<BR>
Title: Executive Direct</FONT></TD>
</TR>
</TABLE>
<!-- end of user-specified TAGGED TABLE -->

<HR NOSHADE>
<P style='font-family:times;page-break-before:always'></p>
<!-- ZEQ.=6,SEQ=19,EFW="2182829",CP="KKR FINANCIAL HOLDINGS LLC",DN="5",CHK=799627,FOLIO='blank',FILE='DISK105:[08ZAE2.08ZAE49702]KO49702A.;4',USER='JKEENE',CD='26-FEB-2008;14:53' -->

<!-- User-specified TAGGED TABLE -->
<TABLE WIDTH="100%" BORDER=0 CELLSPACING=0 CELLPADDING=0>
<TR VALIGN="TOP">
<TD WIDTH="45%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=3 style="font-family:times;"><FONT SIZE=2><B>THE BANK OF NOVA SCOTIA</B></FONT><FONT SIZE=2>, as a<BR>
Lender</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="45%" style="font-family:times;"><FONT SIZE=2><BR>
&nbsp;</FONT></TD>
<TD WIDTH="3%" style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="5%" style="font-family:times;"><FONT SIZE=2><BR>
By:</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="45%" style="font-family:times;"><FONT SIZE=2><BR>
/s/ David Mahmood</FONT><HR NOSHADE><FONT SIZE=2> Name: David Mahmood<BR>
Title: Director</FONT></TD>
</TR>
</TABLE>
<!-- end of user-specified TAGGED TABLE -->

<HR NOSHADE>
<P style='font-family:times;page-break-before:always'></p>
<!-- ZEQ.=7,SEQ=20,EFW="2182829",CP="KKR FINANCIAL HOLDINGS LLC",DN="5",CHK=778210,FOLIO='blank',FILE='DISK105:[08ZAE2.08ZAE49702]KO49702A.;4',USER='JKEENE',CD='26-FEB-2008;14:53' -->

<!-- User-specified TAGGED TABLE -->
<TABLE WIDTH="100%" BORDER=0 CELLSPACING=0 CELLPADDING=0>
<TR VALIGN="TOP">
<TD WIDTH="45%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=3 style="font-family:times;"><FONT SIZE=2><B>CREDIT SUISSE, CAYMAN ISLANDS<BR>
BRANCH</B></FONT><FONT SIZE=2>, as a Lender</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="45%" style="font-family:times;"><FONT SIZE=2><BR>
&nbsp;</FONT></TD>
<TD WIDTH="3%" style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="5%" style="font-family:times;"><FONT SIZE=2><BR>
By:</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="45%" style="font-family:times;"><FONT SIZE=2><BR>
/s/ Ian Nalitt</FONT><HR NOSHADE><FONT SIZE=2> Name: Ian Nalitt<BR>
Title: Vice President</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="45%" style="font-family:times;"><FONT SIZE=2><BR>
&nbsp;</FONT></TD>
<TD WIDTH="3%" style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="5%" style="font-family:times;"><FONT SIZE=2><BR>
By:</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="45%" style="font-family:times;"><FONT SIZE=2><BR>
/s/ James Neira</FONT><HR NOSHADE><FONT SIZE=2> Name: James Neira<BR>
Title: Associate</FONT></TD>
</TR>
</TABLE>
<!-- end of user-specified TAGGED TABLE -->

<HR NOSHADE>
<P style='font-family:times;page-break-before:always'></p>
<!-- ZEQ.=8,SEQ=21,EFW="2182829",CP="KKR FINANCIAL HOLDINGS LLC",DN="5",CHK=634267,FOLIO='blank',FILE='DISK105:[08ZAE2.08ZAE49702]KO49702A.;4',USER='JKEENE',CD='26-FEB-2008;14:53' -->

<!-- User-specified TAGGED TABLE -->
<TABLE WIDTH="100%" BORDER=0 CELLSPACING=0 CELLPADDING=0>
<TR VALIGN="TOP">
<TD WIDTH="45%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=3 style="font-family:times;"><FONT SIZE=2><B>GOLDMAN SACHS&nbsp;&amp;&nbsp;CO.,&nbsp;INC.</B></FONT><FONT SIZE=2>, as a<BR>
Lender</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="45%" style="font-family:times;"><FONT SIZE=2><BR>
&nbsp;</FONT></TD>
<TD WIDTH="3%" style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="5%" style="font-family:times;"><FONT SIZE=2><BR>
By:</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="45%" style="font-family:times;"><FONT SIZE=2><BR>
/s/ David J. Rosenblum</FONT><HR NOSHADE><FONT SIZE=2> Name: David J. Rosenblum<BR>
Title: Managing Director</FONT></TD>
</TR>
</TABLE>
<!-- end of user-specified TAGGED TABLE -->

<HR NOSHADE>
<P style='font-family:times;page-break-before:always'></p>
<!-- ZEQ.=9,SEQ=22,EFW="2182829",CP="KKR FINANCIAL HOLDINGS LLC",DN="5",CHK=630833,FOLIO='blank',FILE='DISK105:[08ZAE2.08ZAE49702]KO49702A.;4',USER='JKEENE',CD='26-FEB-2008;14:53' -->

<!-- User-specified TAGGED TABLE -->
<TABLE WIDTH="100%" BORDER=0 CELLSPACING=0 CELLPADDING=0>
<TR VALIGN="TOP">
<TD WIDTH="45%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=3 style="font-family:times;"><FONT SIZE=2><B>ROYAL BANK OF CANADA</B></FONT><FONT SIZE=2>, as a<BR>
Lender</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="45%" style="font-family:times;"><FONT SIZE=2><BR>
&nbsp;</FONT></TD>
<TD WIDTH="3%" style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="5%" style="font-family:times;"><FONT SIZE=2><BR>
By:</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="45%" style="font-family:times;"><FONT SIZE=2><BR>
/s/ Howard Lee</FONT><HR NOSHADE><FONT SIZE=2> Name: Howard Lee<BR>
Title: Authorized Signatory</FONT></TD>
</TR>
</TABLE>
<!-- end of user-specified TAGGED TABLE -->

<HR NOSHADE>
<P style='font-family:times;page-break-before:always'></p>
<!-- ZEQ.=10,SEQ=23,EFW="2182829",CP="KKR FINANCIAL HOLDINGS LLC",DN="5",CHK=1007177,FOLIO='blank',FILE='DISK105:[08ZAE2.08ZAE49702]KO49702A.;4',USER='JKEENE',CD='26-FEB-2008;14:53' -->

<!-- User-specified TAGGED TABLE -->
<TABLE WIDTH="100%" BORDER=0 CELLSPACING=0 CELLPADDING=0>
<TR VALIGN="TOP">
<TD WIDTH="45%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=3 style="font-family:times;"><FONT SIZE=2><B>FORTIS CAPITAL CORP.</B></FONT><FONT SIZE=2>, as a Lender</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="45%" style="font-family:times;"><FONT SIZE=2><BR>
&nbsp;</FONT></TD>
<TD WIDTH="3%" style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="5%" style="font-family:times;"><FONT SIZE=2><BR>
By:</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="45%" style="font-family:times;"><FONT SIZE=2><BR>
/s/ Shane Klein</FONT><HR NOSHADE><FONT SIZE=2> Name: Shane Klein<BR>
Title: Senior Vice President</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="45%" style="font-family:times;"><FONT SIZE=2><BR>
&nbsp;</FONT></TD>
<TD WIDTH="3%" style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="5%" style="font-family:times;"><FONT SIZE=2><BR>
By:</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="45%" style="font-family:times;"><FONT SIZE=2><BR>
/s/ Alan Krouk</FONT><HR NOSHADE><FONT SIZE=2> Name: Alan Krouk<BR>
Title: Managing Director</FONT></TD>
</TR>
</TABLE>
<!-- end of user-specified TAGGED TABLE -->

<HR NOSHADE>
<P style='font-family:times;page-break-before:always'></p>
<!-- ZEQ.=11,SEQ=24,EFW="2182829",CP="KKR FINANCIAL HOLDINGS LLC",DN="5",CHK=576657,FOLIO='blank',FILE='DISK105:[08ZAE2.08ZAE49702]KO49702A.;4',USER='JKEENE',CD='26-FEB-2008;14:53' -->

<!-- User-specified TAGGED TABLE -->
<TABLE WIDTH="100%" BORDER=0 CELLSPACING=0 CELLPADDING=0>
<TR VALIGN="TOP">
<TD WIDTH="45%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=3 style="font-family:times;"><FONT SIZE=2><B>MIZUHO CORPORATE BANK,&nbsp;LTD.</B></FONT><FONT SIZE=2>,<BR>
as a Lender</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="45%" style="font-family:times;"><FONT SIZE=2><BR>
&nbsp;</FONT></TD>
<TD WIDTH="3%" style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="5%" style="font-family:times;"><FONT SIZE=2><BR>
By:</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="45%" style="font-family:times;"><FONT SIZE=2><BR>
/s/ James R. Fayen</FONT><HR NOSHADE><FONT SIZE=2> Name: James R. Fayen<BR>
Title: Deputy General Manager</FONT></TD>
</TR>
</TABLE>
<!-- end of user-specified TAGGED TABLE -->

<HR NOSHADE>
<P style='font-family:times;page-break-before:always'></p>
<!-- ZEQ.=12,SEQ=25,EFW="2182829",CP="KKR FINANCIAL HOLDINGS LLC",DN="5",CHK=30312,FOLIO='blank',FILE='DISK105:[08ZAE2.08ZAE49702]KO49702A.;4',USER='JKEENE',CD='26-FEB-2008;14:53' -->

<!-- User-specified TAGGED TABLE -->
<TABLE WIDTH="100%" BORDER=0 CELLSPACING=0 CELLPADDING=0>
<TR VALIGN="TOP">
<TD WIDTH="45%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=3 style="font-family:times;"><FONT SIZE=2><B>MORGAN STANLEY BANK</B></FONT><FONT SIZE=2>, as a Lender</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="45%" style="font-family:times;"><FONT SIZE=2><BR>
&nbsp;</FONT></TD>
<TD WIDTH="3%" style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="5%" style="font-family:times;"><FONT SIZE=2><BR>
By:</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="45%" style="font-family:times;"><FONT SIZE=2><BR>
/s/ Daniel Twenge</FONT><HR NOSHADE><FONT SIZE=2> Name: Daniel Twenge<BR>
Title: Authorized Signatory</FONT></TD>
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<TD COLSPAN=3 style="font-family:times;"><FONT SIZE=2><B>SUMITOMO MITSUI BANKING</B></FONT><FONT SIZE=2>, as a<BR>
Lender</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="45%" style="font-family:times;"><FONT SIZE=2><BR>
&nbsp;</FONT></TD>
<TD WIDTH="3%" style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="5%" style="font-family:times;"><FONT SIZE=2><BR>
By:</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="45%" style="font-family:times;"><FONT SIZE=2><BR>
/s/ Leo E. Pagarigan</FONT><HR NOSHADE><FONT SIZE=2> Name: Leo E. Pagarigan<BR>
Title: General Manager</FONT></TD>
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<P style='font-family:times;page-break-before:always'></p>
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<TD WIDTH="3%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=3 style="font-family:times;"><FONT SIZE=2><B>CHANG HWA COMMERCIAL<BR>
BANK&nbsp;LTD.</B></FONT><FONT SIZE=2>, as a Lender</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="45%" style="font-family:times;"><FONT SIZE=2><BR>
&nbsp;</FONT></TD>
<TD WIDTH="3%" style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="5%" style="font-family:times;"><FONT SIZE=2><BR>
By:</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="45%" style="font-family:times;"><FONT SIZE=2><BR>
Jim C.Y. Chen</FONT><HR NOSHADE><FONT SIZE=2> Name: Jim C.Y. Chen<BR>
Title: VP&nbsp;&amp; General Manager</FONT></TD>
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<P style='font-family:times;page-break-before:always'></p>
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<BR>
<P><br><A NAME="08ZAE49701_5">QuickLinks</A><br></P><!-- TOC_BEGIN -->
<UL>
<FONT SIZE=2 style="font-family:times;"><A HREF="#toc_kk49702_1">Exhibit 10.16</A></FONT><BR>
</UL>
<FONT SIZE=2 style="font-family:times;"><A HREF="#toc_kk49702_2">THIRD AMENDMENT TO SECOND AMENDED AND RESTATED CREDIT AGREEMENT</A></FONT><BR>
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