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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
☒QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2022
☐TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ________________ to ________________
Commission File Number: 001-38082
kref-20220331_g1.jpg
KKR Real Estate Finance Trust Inc.
(Exact name of registrant as specified in its charter)
Maryland47-2009094
(State or other jurisdiction of incorporation or organization)(I.R.S. Employer Identification No.)
30 Hudson Yards,Suite 7500New York,NY10001
(Address of principal executive offices)(Zip Code)
(212) 750-8300
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common stock, par value $0.01 per shareKREFNew York Stock Exchange
6.50% Series A Cumulative Redeemable Preferred Stock, par value $0.01 per shareKREF PRANew York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    ☒ Yes    ☐ No
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    ☒ Yes    ☐ No
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company" and "emerging growth company" in Rule 12b-2 of the Exchange Act.
    Large accelerated filer    ☒    Accelerated filer    ☐
    Non-accelerated filer     ☐    Smaller reporting company    ☐
            Emerging growth company    ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.     ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    ☐ Yes    ☒ No

The number of shares of the registrant's common stock, par value $0.01 per share, outstanding as of April 20, 2022 was 67,933,704.





KKR REAL ESTATE FINANCE TRUST INC.
FORM 10-Q
FOR THE QUARTER ENDED MARCH 31, 2022
INDEX

PAGE

Table of Contents
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the "Securities Act"), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), which reflect our current views with respect to, among other things, our operations and financial performance. You can identify these forward-looking statements by the use of words such as "outlook," "believe," "expect," "potential," "continue," "may," "should," "seek," "approximately," "predict," "intend," "will," "plan," "estimate," "anticipate," the negative version of these words, other comparable words or other statements that do not relate strictly to historical or factual matters. By their nature, forward-looking statements speak only as of the date they are made, are not statements of historical fact or guarantees of future performance and are subject to risks, uncertainties, assumptions or changes in circumstances that are difficult to predict or quantify. Our expectations, beliefs and projections are expressed in good faith and we believe there is a reasonable basis for them. However, there can be no assurance that management's expectations, beliefs and projections will result or be achieved and actual results may vary materially from what is expressed in or indicated by the forward-looking statements.

There are a number of risks, uncertainties and other important factors that could cause our actual results to differ materially from the forward-looking statements contained in this Quarterly Report on Form 10-Q. Such risks, uncertainties and other important factors include, among others, the risks, uncertainties and factors set forth under Part I, Item 1A. "Risk Factors" in our Annual Report on Form 10-K for the fiscal year ended December 31, 2021 (the "Form 10-K"). Such risks and uncertainties include, but are not limited to, the following:

•the potential negative impacts of COVID-19 on the global economy and on our loan portfolio, financial condition and business operations;

•how widely utilized COVID-19 vaccines will be, whether they will be effective in preventing the spread of COVID-19 (including its variant strains), and their impact on the ultimate severity and duration of the COVID-19 pandemic;

•actions that may be taken by governmental authorities to contain the COVID-19 outbreak or to treat its impact;

•adverse developments in the availability of desirable investment opportunities whether they are due to competition, regulation or otherwise;

•the general political, economic and competitive conditions in the United States and in any foreign jurisdictions in which we invest;

•the level and volatility of prevailing interest rates and credit spreads, including as a result of the planned
    discontinuance of LIBOR and the transition to alternative reference rates;

•adverse changes in the real estate and real estate capital markets;

•difficulty or delays in redeploying the proceeds from repayments of our existing investments;

•general volatility of the securities markets in which we participate;

•changes in our business, investment strategies or target assets;

•deterioration in the performance of the properties securing our investments that may cause deterioration in the performance of our investments and, potentially, principal losses to us;

•acts of God such as hurricanes, earthquakes and other natural disasters, pandemics such as COVID-19, acts of war and/or terrorism and other events that may cause unanticipated and uninsured performance declines and/or losses to us or the owners and operators of the real estate securing our investments;

•the economic impact of escalating global trade tensions, and the conflict between Russia and Ukraine, and the adoption
or expansion of economic sanctions or trade restrictions;

•the adequacy of collateral securing our investments and declines in the fair value of our investments;

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•difficulty in obtaining financing or raising capital;

•difficulty in successfully managing our growth, including integrating new assets into our existing systems;

•reductions in the yield on our investments and increases in the cost of our financing;

•defaults by borrowers in paying debt service on outstanding indebtedness;

•the availability of qualified personnel and our relationship with our Manager;

•subsidiaries of KKR & Co. Inc. have significant influence over us and KKR's interests may conflict with those of our stockholders in the future;

•the cost of operating our platform, including, but not limited to, the cost of operating a real estate investment platform;

•adverse legislative or regulatory developments;

•our qualification as a real estate investment trust ("REIT") for U.S. federal income tax purposes and our exclusion from registration under the Investment Company Act of 1940, as amended (the "Investment Company Act"); and

•authoritative accounting principles generally accepted in the United States of America ("GAAP") or policy changes from such standard-setting bodies such as the Financial Accounting Standards Board (the "FASB"), the Securities and Exchange Commission (the "SEC"), the Internal Revenue Service, the New York Stock Exchange and other authorities that we are subject to, as well as their counterparts in any foreign jurisdictions where we might do business.

There may be other factors that may cause our actual results to differ materially from the forward-looking statements, including factors set forth under Part I, Item 1A. "Risk Factors" in the Form 10-K and Part I, Item 2. "Management's Discussion and Analysis of Financial Condition and Results of Operations" in this Form 10-Q, as such factors may be updated from time to time in our other periodic filings with the SEC, which are accessible on the SEC's website at www.sec.gov and on the investor relations section of our website at www.kkrreit.com. You should evaluate all forward-looking statements made in this Form 10-Q in the context of these risks and uncertainties.

We caution you that the risks, uncertainties and other factors referenced above may not contain all of the risks, uncertainties and other factors that are important to you. In addition, we cannot assure you that we will realize the results, benefits or developments that we expect or anticipate or, even if substantially realized, that they will result in the consequences or affect us or our business in the way expected. All forward-looking statements in this Form 10-Q apply only as of the date made and are expressly qualified in their entirety by the cautionary statements included in this Form 10-Q and in other filings we make with the SEC. We undertake no obligation to publicly update or revise any forward-looking statements to reflect subsequent events or circumstances, except as required by law.

Except where the context requires otherwise, the terms "Company," "we," "us," "our" and "KREF" refer to KKR Real Estate Finance Trust Inc., a Maryland corporation, and its subsidiaries; "Manager" refers to KKR Real Estate Finance Manager LLC, a Delaware limited liability company, our external manager; and "KKR" refers to KKR & Co. Inc., a Delaware corporation, and its subsidiaries.

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PART I — FINANCIAL INFORMATION

ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

KKR Real Estate Finance Trust Inc. and Subsidiaries

Condensed Consolidated Balance Sheets (Unaudited)
(Amounts in thousands, except share and per share data)
March 31, 2022December 31, 2021
Assets
Cash and cash equivalents(A)
$173,178 $271,487 
Commercial real estate loans, held-for-investment6,772,884 6,316,733 
Less: Allowance for credit losses(20,676)(22,244)
Commercial real estate loans, held-for-investment, net6,752,208 6,294,489 
Real estate owned, net78,569 78,569 
Equity method investments36,595 35,537 
Accrued interest receivable19,091 15,241 
Other assets(B)(C)
90,122 7,916 
Total Assets$7,149,763 $6,703,239 
Liabilities and Equity
Liabilities
Secured financing agreements, net$3,035,230 $3,726,593 
Collateralized loan obligations, net1,929,616 1,087,976 
Secured term loan, net337,971 338,549 
Convertible notes, net142,193 141,851 
Dividends payable29,411 26,589 
Accrued interest payable9,528 6,627 
Accounts payable, accrued expenses and other liabilities(D)
7,426 7,521 
Due to affiliates8,668 5,952 
Total Liabilities5,500,043 5,341,658 
Commitments and Contingencies (Note 14)— — 
Permanent Equity
Preferred Stock, 50,000,000 shares authorized
Series A cumulative redeemable preferred stock, $0.01 par value (13,110,000 and 6,900,000 shares issued and outstanding as of March 31, 2022 and December 31, 2021, respectively; liquidation preference of $25.00 per share)
131 69 
Common stock, $0.01 par value, 300,000,000 authorized (71,834,030 and 65,271,058 shares issued; 67,933,704 and 61,370,732 shares outstanding as of March 31, 2022 and December 31, 2021, respectively)
679 613 
Additional paid-in capital1,747,340 1,459,959 
Accumulated deficit(37,616)(38,208)
Repurchased stock (3,900,326 shares repurchased as of March 31, 2022 and December 31, 2021)
(60,999)(60,999)
Total KKR Real Estate Finance Trust Inc. Stockholders’ Equity1,649,535 1,361,434 
Noncontrolling interests in equity of consolidated joint venture
185 147 
Total Permanent Equity1,649,720 1,361,581 
Total Liabilities and Equity$7,149,763 $6,703,239 
    

(A)    Includes $54.0 million held in collateralized loan obligation as of December 31, 2021.
(B)    Includes $1.7 million and $2.3 million of restricted cash as of March 31, 2022 and December 31, 2021, respectively.
(C)    Includes $80.9 million of pre-close loan fundings into escrow as of March 31, 2022.
(D)    Includes $1.8 million and $1.5 million of expected loss reserve for unfunded loan commitments as of March 31, 2022 and December 31, 2021, respectively.
See Notes to Condensed Consolidated Financial Statements.
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KKR Real Estate Finance Trust Inc. and Subsidiaries

Condensed Consolidated Statements of Income (Unaudited)
(Amounts in thousands, except share and per share data)
Three Months Ended March 31,
20222021
Net Interest Income
Interest income$73,230 $64,766 
Interest expense32,459 27,383 
Total net interest income40,771 37,383 
Other Income
Revenue from real estate owned operations2,629 — 
Income (loss) from equity method investments1,886 1,090 
Other income1,915 66 
Total other income (loss)6,430 1,156 
Operating Expenses
General and administrative4,446 3,505 
Provision for (reversal of) credit losses, net(1,218)(1,588)
Management fee to affiliate6,007 4,290 
Incentive compensation to affiliate— 2,192 
Expenses from real estate owned operations2,554 — 
Total operating expenses11,789 8,399 
Income (Loss) Before Income Taxes, Noncontrolling Interests, Preferred Dividends, Redemption Value Adjustment and Participating Securities' Share in Earnings35,412 30,140 
Income tax expense— 48 
Net Income (Loss)35,412 30,092 
Noncontrolling interests in (income) loss of consolidated joint venture
56 — 
Net Income (Loss) Attributable to KKR Real Estate Finance Trust Inc. and Subsidiaries
35,468 30,092 
Preferred stock dividends and redemption value adjustment5,326 908 
Participating securities' share in earnings346 — 
Net Income (Loss) Attributable to Common Stockholders$29,796 $29,184 
Net Income (Loss) Per Share of Common Stock
Basic$0.47 $0.52 
Diluted$0.46 $0.52 
Weighted Average Number of Shares of Common Stock Outstanding
Basic63,086,452 55,619,428 
Diluted69,402,626 55,731,061 
Dividends Declared per Share of Common Stock$0.43 $0.43 

See Notes to Condensed Consolidated Financial Statements.
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KKR Real Estate Finance Trust Inc. and Subsidiaries

Condensed Consolidated Statements of Changes in Equity (Unaudited)
(Amounts in thousands, except share data)
Permanent EquityTemporary Equity
KKR Real Estate Finance Trust Inc.
Preferred StockSeries A Preferred StockCommon Stock
SharesStated ValueSharesPar ValueSharesPar ValueAdditional Paid-In CapitalAccumulated DeficitRepurchased StockTotal KKR Real Estate Finance Trust Inc. Stockholders' EquityNoncontrolling Interests in Equity of Consolidated Joint VentureTotal Permanent EquityRedeemable Preferred Stock
Balance at December 31, 2021— $— 6,900,000 $69 61,370,732 $613 $1,459,959 $(38,208)$(60,999)$1,361,434 $147 $1,361,581 $— 
Issuance of common stock— — — — 6,562.972 66 135,205 — — 135,271 — 135,271 — 
Issuance of preferred stock— — 6,210,000 62 — — 151,105 — — 151,167 — 151,167 — 
Offering costs— — — — — — (1,055)— — (1,055)— (1,055)— 
Contribution by noncontrolling interest— — — — — — — — — — 94 94 — 
Series A preferred dividends declared, $0.41 per share
— — — — — — — (5,326)— (5,326)— (5,326)— 
Common dividends declared, $0.43 per share
— — — — — — — (29,211)— (29,211)— (29,211)— 
Participating security dividends declared, $0.43 per share
— — — — — — — (339)— (339)— (339)— 
Stock-based compensation, net— — — — — — 2,126 — — 2,126 — 2,126 — 
Net income (loss)— — — — — — — 35,468 — 35,468 (56)35,412 — 
Balance at March 31, 2022— $— 13,110,000 $131 67,933,704 $679 $1,747,340 $(37,616)$(60,999)$1,649,535 $185 $1,649,720 $— 
Permanent EquityTemporary Equity
KKR Real Estate Finance Trust Inc.
Preferred StockSeries A Preferred StockCommon Stock
SharesStated ValueSharesPar ValueSharesPar ValueAdditional Paid-In CapitalAccumulated DeficitRepurchased StockTotal KKR Real Estate Finance Trust Inc. Stockholders' EquityNoncontrolling Interests in Equity of Consolidated Joint VentureTotal Permanent EquityRedeemable Preferred Stock
Balance at December 31, 20201 $— — $— 55,619,428 $556 $1,169,695 $(65,698)$(60,999)$1,043,554 $— $1,043,554 $1,852 
Special non-voting preferred dividends declared— — — — — — — — — — — — (198)
Common dividends declared, $0.43 per share
— — — — — — — (23,916)— (23,916)— (23,916)— 
Stock-based compensation— — — — — — 1,994 — — 1,994 — 1,994 — 
Adjustment of redeemable preferred stock to redemption value— — — — — — — (710)— (710)— (710)710 
Net income (loss)— — — — — — — 29,894 — 29,894 — 29,894 198 
Balance at March 31, 20211 $— — $— 55,619,428 $556 $1,171,689 $(60,430)$(60,999)$1,050,816 $— $1,050,816 $2,562 

See Notes to Condensed Consolidated Financial Statements.
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KKR Real Estate Finance Trust Inc. and Subsidiaries

Condensed Consolidated Statements of Cash Flows (Unaudited)
(Amounts in thousands)
Three Months Ended March 31,
20222021
Cash Flows From Operating Activities
Net income (loss)$35,412 $30,092 
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Amortization of deferred debt issuance costs and discounts4,844 3,660 
Accretion of deferred loan fees and discounts(6,083)(4,460)
Payment-in-kind interest(464)(845)
(Income) Loss from equity method investments(1,058)(288)
Provision for (reversal of) credit losses, net(1,218)(1,588)
Stock-based compensation expense2,126 1,994 
Changes in operating assets and liabilities:
Accrued interest receivable, net(3,850)(1,101)
Other assets985 82 
Accrued interest payable2,901 2,487 
Accounts payable, accrued expenses and other liabilities(532)246 
Due to affiliates67 (11)
Net cash provided by (used in) operating activities33,130 30,268 
Cash Flows From Investing Activities
Proceeds from principal repayments and sale/syndication of commercial real estate loans, held-for-investment282,282 370,566 
Origination of commercial real estate loans, held-for-investment(812,756)(571,796)
Net cash provided by (used in) investing activities(530,474)(201,230)
Cash Flows From Financing Activities
Proceeds from borrowings under secured financing agreements479,329 718,112 
Proceeds from issuance of collateralized loan obligations847,500 — 
Net proceeds from issuance of common stock135,271 — 
Net proceeds from issuance of preferred stock151,167 — 
Payments of common stock dividends(26,389)(23,916)
Payments of preferred stock dividends(5,326)(366)
Principal repayments on borrowings under secured financing agreements(1,172,268)(422,096)
Payments of debt and collateralized debt obligation issuance costs(9,787)(433)
Payments of stock issuance costs(1,036)(104)
Tax withholding on stock-based compensation— (1,720)
Net cash provided by (used in) financing activities398,461 269,477 
Net Increase (Decrease) in Cash, Cash Equivalents and Restricted Cash(98,883)98,515 
Cash, Cash Equivalents and Restricted Cash at Beginning of Period273,770 110,832 
Cash, Cash Equivalents and Restricted Cash at End of Period$174,887 $209,347 
Reconciliation of cash, cash equivalents and restricted cash
Cash and cash equivalents$173,178 $209,347 
Restricted cash1,709 — 
Total cash, cash equivalents and restricted cash shown in the Condensed Consolidated Statements of Cash Flows$174,887 $209,347 
Supplemental Disclosure of Cash Flow Information
Cash paid during the period for interest$24,715 $20,561 
Pre-close loan fundings into escrow80,870 — 
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Cash paid during the period for income taxes— — 
Supplemental Schedule of Non-Cash Investing and Financing Activities
Loan principal payments held by servicer— 40,000 
Dividend declared, not yet paid29,211 24,119 
Deferred financing costs, not yet paid3,314 — 

See Notes to Condensed Consolidated Financial Statements.
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KKR Real Estate Finance Trust Inc.
Notes to Condensed Consolidated Financial Statements
(dollars in tables in thousands, except per share amounts)
Note 1. Business and Organization

KKR Real Estate Finance Trust Inc. (together with its consolidated subsidiaries, referred to throughout this report as the "Company" or "KREF") is a Maryland corporation that was formed and commenced operations on October 2, 2014 as a mortgage real estate investment trust ("REIT") that focuses primarily on originating and acquiring transitional senior loans secured by commercial real estate ("CRE") assets.

KREF has elected and intends to maintain its qualification to be taxed as a REIT under the requirements of the Internal Revenue Code of 1986, as amended (the "Internal Revenue Code"), for U.S. federal income tax purposes. As such, KREF will generally not be subject to U.S. federal income tax on that portion of its income that it distributes to stockholders if it distributes at least 90% of its REIT taxable income, determined without regard to the deduction for dividends paid and excluding any net capital gains. See Note 17 regarding taxes applicable to KREF.
KREF is externally managed by KKR Real Estate Finance Manager LLC ("Manager"), an indirect subsidiary of KKR & Co. Inc. (together with its subsidiaries, "KKR"), through a management agreement ("Management Agreement") pursuant to which the Manager provides a management team and other professionals who are responsible for implementing KREF’s business strategy, subject to the supervision of KREF’s board of directors. For its services, the Manager is entitled to management fees and incentive compensation, both defined in, and in accordance with the terms of, the Management Agreement (Note 15).

As of March 31, 2022, KKR beneficially owned 14,250,001 shares, or 21.0% of KREF's outstanding common stock.

KREF's principal business activities are related to the origination and purchase of credit investments related to CRE. Management assesses the performance of KREF's current portfolio of leveraged and unleveraged commercial real estate loans and commercial mortgage-backed securities ("CMBS") as a whole and makes operating decisions accordingly. As a result, management presents KREF's operations within a single reporting segment.

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KKR Real Estate Finance Trust Inc.
Notes to Condensed Consolidated Financial Statements
(dollars in tables in thousands, except per share amounts)
Note 2. Summary of Significant Accounting Policies

Basis of Presentation — The accompanying unaudited condensed consolidated financial statements and related notes of KREF are prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP") for interim financial information and instructions to Form 10-Q. The condensed consolidated financial statements, including the accompanying notes, are unaudited and exclude some of the disclosures required in annual financial statements. Accordingly, certain information and footnote disclosures normally included in the consolidated financial statements have been condensed or omitted. The condensed consolidated financial statements include the accounts of KREF and its consolidated subsidiaries, and all intercompany transactions and balances have been eliminated. In the opinion of management, all adjustments considered necessary for a fair presentation of KREF’s financial position, results of operations and cash flows have been included and are of a normal and recurring nature. The operating results presented for interim periods are not necessarily indicative of the results that may be expected for any other interim period or for the entire year. These condensed consolidated financial statements should be read in conjunction with KREF's Annual Report on Form 10-K.

Risks and Uncertainties — The coronavirus pandemic ("COVID-19") has adversely impacted global commercial activity and has contributed to significant volatility in financial markets. During 2020, the COVID-19 pandemic created disruption in global supply chains, increased rates of unemployment and adversely impacted many industries, including industries related to the collateral underlying certain of our loans. The impact of the outbreak has been rapidly evolving around the globe, with several countries taking drastic measures to limit the spread of the virus by instituting quarantines or lockdowns, imposing travel restrictions and limiting operations of non-essential offices and retail centers.

Since 2020, the global economy has, with certain setbacks, begun reopening, and wider distribution of vaccines will likely encourage greater economic activity. However, wide disparities in vaccination rates and continued vaccine hesitancy, combined with the emergence of COVID-19 variants and surges in COVID-19 cases, could trigger the reinstatement of restrictions, including mandatory business shut-downs, travel restrictions, reduced business operations and social distancing requirements, which could dampen or delay any economic recovery and could materially and adversely affect KREF’s results and financial condition. In addition, the COVID-19 pandemic continues to disrupt global supply chains, has caused labor shortages and has added broad inflationary pressures, which has a potential negative impact on KREF's borrowers’ ability to execute on their business plans and potentially their ability to perform under the terms of their loan obligations. Although KREF has observed signs of economic recovery and is generally encouraged by the response of its borrowers, KREF cannot predict the time required for a widespread sustainable economic recovery to take hold.

Use of Estimates — The preparation of condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements and the reported amounts of revenue and expenses during the reporting period. Management makes subjective estimates to project cash flows KREF expects to receive on its investments in loans and securities as well as the related market discount rates, which significantly impacts the interest income, impairments, allowance for loan loss and fair values recorded or disclosed. The effects of COVID-19 may negatively and materially impact significant estimates and assumptions used by the Company including, but not limited to estimates of expected credit losses, valuation of our equity method investments and the fair value estimates of the Company’s assets and liabilities. Actual results could materially differ from those estimates.

Consolidation — KREF consolidates those entities for which (i) it controls through either majority ownership or voting rights or (ii) management determines that KREF is the primary beneficiary of entities deemed to be variable interest entities ("VIEs").

Variable Interest Entities — VIEs are entities (i) in which equity investors do not have an interest with the characteristics of a controlling financial interest, (ii) do not have sufficient equity at risk for the entity to finance its activities without additional subordinated financial support from other parties or (iii) established with non-substantive voting rights. A VIE is required to be consolidated only by its primary beneficiary, which is defined as the party that has the power to direct the activities of the VIE that most significantly impact the VIE’s economic performance and that has the obligation to absorb losses of, or the right to receive benefits from, the VIE that could be potentially significant to the VIE (Note 10).

To assess whether KREF has the power to direct the activities of a VIE that most significantly impact the VIE’s economic performance, KREF considers all the facts and circumstances, including its role in establishing the VIE and its ongoing rights and responsibilities. This assessment includes, first, identifying the activities that most significantly impact the VIE’s economic performance; and second, identifying which party, if any, has power to direct those activities. To assess whether KREF has the
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KKR Real Estate Finance Trust Inc.
Notes to Condensed Consolidated Financial Statements
(dollars in tables in thousands, except per share amounts)
obligation to absorb losses of, or the right to receive benefits from, the VIE that could potentially be significant to the VIE, KREF considers all of its economic interests and applies judgment in determining whether these interests, in the aggregate, are considered potentially significant to the VIE.

Collateralized Loan Obligations — KREF consolidates collateralized loan obligations (“CLOs”) when it determines that the CLO issuers, wholly-owned subsidiaries of KREF, are VIEs and that KREF is the primary beneficiary of such VIEs.

The collateral assets of KREF's CLOs, comprised of a pool of loan participations, are included in “Commercial real estate loans, held-for-investment, net” on the Condensed Consolidated Balance Sheets. The liabilities of KREF's consolidated CLOs consist solely of obligations to the senior CLO noteholders, excluding subordinated CLO tranches held by KREF as such interests are eliminated in consolidation, are presented in “Collateralized loan obligations, net” on the Condensed Consolidated Balance Sheets. The collateral assets of the CLOs can only be used to settle the obligations of the consolidated CLOs. The interest income from the CLOs’ collateral assets and the interest expense on the CLOs’ liabilities are presented on a gross basis in “Interest income” and “Interest expense”, respectively, in KREF's Condensed Consolidated Statements of Income.

Real Estate Owned Joint Venture — KREF consolidated a joint venture that held the majority of KREF’s sole investment in real estate owned (“REO”) property that was acquired in the fourth quarter of 2021, in which a third party owned a 10% noncontrolling interest (Note 10). Management determined the joint venture to be a VIE as the joint venture had insufficient equity-at-risk. KREF owns 90% of the equity interest in the joint venture and participates in the profits and losses. Management concluded KREF to be the primary beneficiary of the joint venture as KREF held decision-making power over the activities that most significantly impact the economic performance and has the obligation to absorb losses of, or the right to receive benefits from, the joint venture that could be potentially significant to the joint venture.

Noncontrolling Interests — Noncontrolling interests represent the ownership interests in certain consolidated subsidiaries held by entities or persons other than KREF. These noncontrolling interests do not include redemption features and are presented as "Noncontrolling interests in equity of consolidated joint venture" on the Condensed Consolidated Balance Sheet.

Temporary Equity — KREF's Special Non-Voting Preferred Stock (“SNVPS”) became redeemable by the SNVPS holder in the second quarter of 2018. As a result, starting with the second quarter of 2018, KREF adjusted the carrying value of the SNVPS to its redemption value quarterly. The SNVPS Redemption Value Adjustment was treated similar to a dividend on preferred stock for GAAP purposes and therefore was deducted from (or added back to) “Net Income (Loss)” to arrive at “Net Income (Loss) Attributable to Common Stockholders” on KREF's Condensed Consolidated Statements of Income.

KREF recorded a $3.3 million non-cash redemption value adjustment to the SNVPS (“SNVPS Redemption Value Adjustment”) during the year ended December 31, 2021, which increased the carrying value of the SNVPS to its redemption value of $5.1 million prior to redemption of the SNVPS by KREF on October 1, 2021 for a cash redemption value of $5.1 million (Note 10).

Equity Method Investments — Investments are accounted for under the equity method when KREF has significant influence over the operations of an investee but does not consolidate that investment. Equity method investments, for which management has not elected a fair value option, are initially recorded at cost and subsequently adjusted for KREF's share of net income or loss and cash contributions and distributions each period.

Management determined that KREF's investment in the Manager is an interest in a VIE, however KREF is not the primary beneficiary. KREF does not have substantive participating or kick-out rights nor the power to direct activities and the obligation to absorb losses of the Manager that could be significant to the Manager. KREF accounts for its investment in the Manager using the equity method. On October 1, 2021, KREF TRS redeemed its interest in the Manager for a cash call amount of $5.1 million when the KKR Member exercised its Call Option to redeem the Non-Voting Manager Units, including the Non-Voting Manager Units held by KREF TRS (Note 10).

Management determined that KREF's investment in an aggregator vehicle alongside KKR Real Estate Credit Opportunity Partners L.P. ("RECOP I ") is an interest in a VIE, however KREF is not the primary beneficiary and does not have substantive participating or kick-out rights. KREF records its share of net asset value in RECOP I in “Equity method investments” on its Condensed Consolidated Balance Sheets and its share of unrealized gains or losses in “Income from equity method investments” in its Condensed Consolidated Statements of Income. Management elected the fair value option for KREF's investment in RECOP I.

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KKR Real Estate Finance Trust Inc.
Notes to Condensed Consolidated Financial Statements
(dollars in tables in thousands, except per share amounts)
KREF classifies distributions received from equity method investees using the cumulative earnings approach. Distributions received up to the cumulative earnings from each equity method investee are considered returns on investment and presented within “Cash Flows from Operating Activities” in the Condensed Consolidated Statements of Cash Flows; excess distributions received are considered returns of investment and presented within “Cash Flows from Investing Activities” in the Condensed Consolidated Statements of Cash Flows.

Fair Value — GAAP requires the categorization of the fair value of financial instruments into three broad levels that form a hierarchy based on the transparency of inputs to the valuation.

Level 1    -    Inputs are unadjusted, quoted prices in active markets for identical assets or liabilities at the measurement date.

Level 2    -    Inputs are other than quoted prices that are observable for the asset or liability, either directly or indirectly. Level 2 inputs include quoted prices for similar instruments in active markets, and inputs other than quoted prices that are observable for the asset or liability.

Level 3    -    Inputs are unobservable for the asset or liability, and include situations where there is little, if any, market activity for the asset or liability.

KREF follows this hierarchy for its financial instruments. The classifications are based on the lowest level of input that is significant to the fair value measurement.

Valuation Process — The Manager reviews the valuation of Level 3 financial instruments as part of KKR's quarterly process. As of March 31, 2022, KKR’s valuation process for Level 3 measurements, as described below, subjected valuations to the review and oversight of various committees. KKR has a global valuation committee assisted by the asset class-specific valuation committees, including a real estate valuation committee that reviews and approves all preliminary Level 3 valuations for real estate assets, including the financial instruments held by KREF. The global valuation committee is responsible for coordinating and implementing KKR’s valuation process to ensure consistency in the application of valuation principles across portfolio investments and between periods. All Level 3 valuations are also subject to approval by the global valuation committee.

Valuation of Commercial Real Estate Loans and Participation Sold — Management generally considers KREF's commercial real estate loans Level 3 assets in the fair value hierarchy as such assets are illiquid, structured investments that are specific to the sponsor, underlying property and its operating performance (Note 16). On a quarterly basis, management engages an independent valuation firm to estimate the fair value of each loan categorized as a Level 3 asset. Management reviews the quarterly loan valuation estimates provided by the independent valuation firm. These loans are generally valued using a discounted cash flow model using discount rates derived from observable market data applied to the capital structure of the respective sponsor and/or estimated property value. In the event that management's estimate of fair value differs from the fair value estimate provided by the independent valuation firm, KREF ultimately relies solely upon the valuation prepared by the investment personnel of the Manager.

Valuation of CLO Consolidated VIEs — Management estimates the fair value of the CLO liabilities using prices obtained from an independent valuation firm. If prices received from the independent valuation firm are inconsistent with values determined in connection with management’s independent review, management makes inquiries to the independent valuation firm about the prices received and related methods. In the event management determines the price obtained from an independent valuation firm to be unreliable or an inaccurate representation of the fair value of the CLO liabilities (based on considerations given to observable market data), management then compiles evidence independently and presents the independent valuation firm with such evidence supporting a different value. As a result, the independent valuation firm may revise their price after evaluating any additional evidence.

However, if management continues to disagree with the price from the independent valuation firm, in light of evidence that management compiled independently and believes to be compelling, valuations are then prepared using inputs based on non-binding broker quotes obtained from independent, well-known, major financial brokers that are CLO market makers. In validating any non-binding broker quote used in this circumstance, management compares the non-binding quote to the observable market data points in addition to understanding the valuation methodologies used by the market makers. These market participants may utilize a similar methodology as the independent valuation firm to value the CLO liabilities, with the
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KKR Real Estate Finance Trust Inc.
Notes to Condensed Consolidated Financial Statements
(dollars in tables in thousands, except per share amounts)
key input of expected yield determined independently based on both observable and unobservable factors. To avoid reliance on any single broker-dealer, management receives a minimum of two non-binding quotes, of which the average is used.

Other Valuation Matters — For Level 3 financial assets originated, or otherwise acquired, and financial liabilities assumed during the current calendar quarter that were conducted in an orderly transaction with an unrelated party, management generally believes that the transaction price provides the most observable indication of fair value given the illiquid nature of these financial instruments, unless management is aware of any circumstances that may cause a material change in the fair value through the remainder of the quarterly reporting period. For instance, significant changes to the underlying property or its planned operations may cause material changes in the fair value of commercial real estate loans acquired, or originated, by KREF.

KREF’s determination of fair value is based upon the best information available for a given circumstance and may incorporate assumptions that are management’s best estimates after consideration of a variety of internal and external factors. When an independent valuation firm expresses an opinion on the fair value of a financial instrument in the form of a range, management selects a value within the range provided by the independent valuation firm, generally the midpoint, to assess the reasonableness of management’s estimated fair value for that financial instrument.

See Note 16 for additional information regarding the valuation of KREF's financial assets and liabilities.

Sales of Financial Assets and Financing Agreements — KREF will, from time to time, transfer loans, securities and other assets as well as finance assets in the form of secured borrowings. In each case, management evaluates whether the transaction constitutes a sale through legal isolation of the transferred financial asset from KREF, the ability of the transferee to pledge or exchange the transferred asset without constraint and the transfer of control of the transferred asset. For transfers that constitute sales, KREF (i) recognizes the financial assets it retains and liabilities it has incurred, if any, (ii) derecognizes the financial assets it has sold, and derecognizes liabilities when extinguished and (iii) recognizes a realized gain, or loss, based upon the excess, or deficient, proceeds received over the carrying value of the transferred asset. KREF does not recognize a gain, or loss, on interests retained, if any, where management elected the fair value option prior to sale.

Balance Sheet Measurement

Cash and Cash Equivalents and Restricted Cash — KREF considers cash equivalents as highly liquid short-term investments with maturities of 90 days or less when purchased. Substantially all amounts on deposit with major financial institutions exceed insured limits.

KREF must maintain sufficient cash and cash equivalents to satisfy liquidity covenants related to its secured financing agreements. However, such amounts are not restricted from use in KREF's current operations, and KREF does not present these cash and cash equivalents as restricted. As of March 31, 2022 and December 31, 2021, KREF was required to maintain unrestricted cash and cash equivalents of at least $44.3 million and $65.6 million, respectively, to satisfy its liquidity covenants (Note 5).

As of March 31, 2022 and December 31, 2021, KREF had $1.7 million and $2.3 million of restricted cash held in lender-controlled bank accounts, respectively. Such amount is presented within "Other Assets" in the Condensed Consolidated Balance Sheet.

Commercial Real Estate Loans Held-For-Investment and Allowance for Credit Losses — KREF recognizes its investments in commercial real estate loans based on management's intent, and KREF's ability, to hold those investments through their contractual maturity. Management classifies those loans that management does not intend to sell in the foreseeable future, and KREF is able to hold until maturity, as held-for-investment. Loans that are held-for-investment are carried at their aggregate outstanding principal, net of applicable (i) unamortized origination or acquisition premiums and discounts, (ii) unamortized deferred nonrefundable fees and other direct loan origination costs, and (iii) allowance for credit losses, net of write-offs of impaired loans. If a loan is determined to be impaired, management writes off the loan through a charge to the "Allowance for credit losses" and respective loan balance. KREF applies the interest method to amortize origination or acquisition premiums and discounts and deferred nonrefundable fees or other direct loan origination costs, or on a straight-line basis when it approximates the interest method. Loans for which management elects the fair value option at the time of origination, or acquisition, are carried at fair value on a recurring basis (Note 3).

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KKR Real Estate Finance Trust Inc.
Notes to Condensed Consolidated Financial Statements
(dollars in tables in thousands, except per share amounts)
On January 1, 2020, KREF adopted ASU No. 2016-13, Financial Instruments-Credit Losses, and subsequent amendments (“ASU 2016-13”), which replaced the incurred loss methodology with an expected loss model known as the Current Expected Credit Loss ("CECL") model. CECL amended the previous credit loss model to reflect a reporting entity's current estimate of all expected credit losses, not only based on historical experience and current conditions, but also by including reasonable and supportable forecasts incorporating forward-looking information. The measurement of expected credit losses under CECL is applicable to financial assets measured at amortized cost, and off-balance sheet credit exposures such as unfunded loan commitments. The allowance for credit losses required under ASU 2016-13 is deducted from the respective loans’ amortized cost basis on KREF's Condensed Consolidated Balance Sheets. The allowance for credit losses attributed to unfunded loan commitments is included in “Accounts payable, accrued expenses and other liabilities” on the Condensed Consolidated Balance Sheets. The guidance also required a cumulative-effect adjustment to retained earnings as of the beginning of the reporting period of adoption.

In connection with KREF’s adoption of ASU 2016-13, KREF implemented new processes including the utilization of loan loss forecasting models, updates to KREF's reserve policy documentation, changes to internal reporting processes and related internal controls. KREF has implemented loan loss forecasting models for estimating expected life-time credit losses, at the individual loan level, for its commercial real estate loan portfolio. The CECL forecasting methods used by KREF include (i) a probability of default and loss given default method using an underlying third-party CMBS/CRE loan database with historical loan losses from 1998 through 2021 and (ii) a probability weighted expected cash flow method, depending on the type of loan and the availability of relevant historical market loan loss data. KREF might use other acceptable alternative approaches in the future depending on, among other factors, the type of loan, underlying collateral and availability of relevant historical market loan loss data.

KREF estimates the CECL allowance for its loan portfolio, including unfunded loan commitments, at the individual loan level. Significant inputs to KREF’s forecasting methods include (i) key loan-specific inputs such as loan-to-value ("LTV"), vintage year, loan-term, underlying property type, geographic location, and expected timing and amount of future loan fundings, (ii) performance against the underwritten business plan and KREF's internal loan risk rating and (iii) a macro-economic forecast. These estimates may change in future periods based on available future macro-economic data and might result in a material change in KREF’s future estimates of expected credit losses for its loan portfolio. KREF considers the individual loan internal risk rating as the primary credit quality indicator underlying the CECL assessment. In certain instances, KREF considers relevant loan-specific qualitative factors to certain loans to estimate its CECL allowance.

KREF considers loan investments that are both (i) expected to be substantially repaid through the operation or sale of the underlying collateral, and (ii) for which the borrower is experiencing financial difficulty, to be “collateral-dependent” loans. For such loans that KREF determines that foreclosure of the collateral is probable, KREF measures the expected losses based on the difference between the fair value of the collateral and the amortized cost basis of the loan as of the measurement date. For collateral-dependent loans that KREF determines foreclosure is not probable, KREF applies a practical expedient to estimate expected losses using the difference between the collateral’s fair value (less costs to sell the asset if repayment is expected through the sale of the collateral) and the amortized cost basis of the loan.

See "Expense Recognition — Commercial Real Estate Loans, Held-For-Investment" for additional discussion regarding management’s determination for loan losses.

Commercial Real Estate Loans Held-For-Sale — Loans that KREF originates or acquires, which KREF is unable to hold, or management intends to sell or otherwise dispose of, in the foreseeable future are classified as held-for-sale and are carried at the lower of amortized cost or fair value.

Real Estate Owned — To maximize recovery from a defaulted loan, KREF may assume legal title or physical possession of the underlying collateral through foreclosure or the execution of a deed in lieu of foreclosure. Foreclosed properties are generally recognized at fair value in accordance with ASC 805 on KREF's consolidated balance sheets as Real Estate Owned (“REO”) when KREF assumes either legal title or physical possession. KREF’s cost basis in REO equals the estimated fair value on the acquisition date plus related acquisition costs. Any difference between the estimated fair value of the REO from the net carrying value of the related loan is recorded in “Provision for credit losses, net” in the Consolidated Statements of Income.

REO assets, except for land, are depreciated using the straight-line method over estimated useful lives. Renovations and/or replacements that improve or extend the life of the REO asset are capitalized and depreciated over their estimated useful lives. The cost of ordinary repairs and maintenance are expensed as incurred.
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KKR Real Estate Finance Trust Inc.
Notes to Condensed Consolidated Financial Statements
(dollars in tables in thousands, except per share amounts)

REO assets are evaluated for impairment on a quarterly basis. KREF considers the following factors when performing the impairment analysis: (1) significant underperformance relative to anticipated operating results; (2) significant negative industry and economic outlook or trends; (3) expected material costs necessary to extend the life or operate the REO asset; and (4) KREF’s ability to hold and dispose of the REO asset in the ordinary course of business. A REO asset is considered for impairment when the sum of estimated future undiscounted cash flows to be generated by the REO asset over the estimated remaining holding period is less than the carrying value of such REO asset. An impairment charge is recorded when the carrying value of the REO exceeds the fair value. When determining the fair value of a REO asset, KREF makes certain assumptions including, but not limited to, projected operating cash flows, comparable selling prices and projected cash flows from the eventual disposition of the REO asset.

Secured Financing Agreements — KREF's secured financing agreements, including uncommitted repurchase facilities, term lending agreements, warehouse facility, asset specific financings and term loan financings, are treated as floating-rate collateralized financing arrangements carried at their contractual amounts, net of unamortized debt issuance costs (Note 5). Included within KREF's secured financing agreements is KREF's corporate revolving credit facility ("Revolver"), which is full recourse to certain guarantor wholly-owned subsidiaries of KREF.

Secured Term Loan, Net — KREF records its secured term loan at its contractual amount, net of unamortized original issuance discount and deferred financing costs (Note 7) on its Condensed Consolidated Balance Sheets. Any original issuance discount or deferred financing costs are amortized through the maturity date of the secured term loan as additional non-cash interest expense.

Convertible Notes, Net — KREF accounts for its convertible debt with a cash conversion feature in accordance with ASC 470-20, Debt with Conversion and Other Options, which requires the liability and equity components of convertible debt instruments that may be settled in cash upon conversion, including partial cash settlement, to be separately accounted for in a manner that reflects the issuer’s nonconvertible debt borrowing rate. The initial proceeds from the sale of convertible notes are allocated between a liability component and an equity component in a manner that reflects interest expense at the rate of similar nonconvertible debt that could have been issued at such time. The equity component represents the excess initial proceeds received over the fair value of the liability component of the notes as of the date of issuance. KREF measured the estimated fair value of the debt component of the 6.125% convertible senior notes due May 15, 2023 (“Convertible Notes”) as of the issuance date based on KREF’s nonconvertible debt borrowing rate. The equity component of the Convertible Notes is reflected within "Additional paid-in capital" on the Condensed Consolidated Balance Sheets, and the resulting debt discount is amortized over the period during which such Convertible Notes are expected to be outstanding (through the maturity date) as additional non-cash interest expense using the interest method, or on a straight line basis when it approximates the interest method. The additional non-cash interest expense attributable to such convertible notes will increase in subsequent periods through the maturity date as the notes accrete to their par value over the same period (Note 8).

Loan Participations Sold, Net — In connection with its investments in CRE loans, KREF finances certain investments through the syndication of non-recourse, or limited-recourse, loan participation to unaffiliated third parties. KREF’s presentation of the senior loan and related financing involved in the syndication depends upon whether the transaction is recognized as a sale under GAAP, though such differences in presentation do not generally impact KREF’s net stockholders’ equity or net income aside from timing differences in the recognition of certain transaction costs.

To the extent that a sale is recognized under GAAP from the syndication, KREF derecognizes the participation in the senior/whole loan that KREF sold and continues to carry the retained portion of the loan as an investment. While KREF does not generally expect to recognize a material gain or loss on these sales, KREF would realize a gain or loss in an amount equal to the difference between the net proceeds received from the third party purchaser and its carrying value of the loan participation that KREF sold at time of sale. Furthermore, KREF recognizes interest income only on the portion of the loan that it retains as a result of the sale.

To the extent that a sale is not recognized under GAAP from the syndication, KREF does not derecognize the participation in the senior/whole loan that it sold. Instead, KREF recognizes a loan participation sold liability in an amount equal to the principal of the loan participation syndicated less any unamortized discounts or financing costs resulting from the syndication. KREF continues to recognize interest income on the entire senior loan, including the interest attributable to the loan participation sold, as well as interest expense on the loan participation sold liability (Note 9).

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KKR Real Estate Finance Trust Inc.
Notes to Condensed Consolidated Financial Statements
(dollars in tables in thousands, except per share amounts)
Other Assets and Accounts Payable, Accrued Expenses and Other Liabilities — As of March 31, 2022, other assets included $80.9 million of pre-close loan fundings into escrow for loans closed immediately after quarter-end, $4.6 million of deferred financing costs related to KREF's Revolver (Note 5), $1.7 million of restricted cash, $1.4 million of REO accounts receivable and $0.7 million of prepaid expenses. As of December 31, 2021, other assets included $2.3 million of restricted cash, $1.7 million of deferred financing costs related to KREF's Revolver, $1.4 million of interest collections held by the servicer and $1.4 million of prepaid expenses.

As of March 31, 2022, accounts payable, accrued expenses and other liabilities included $2.9 million of REO liabilities, $2.5 million of accrued expenses and $1.8 million of allowance for credit losses related to KREF's unfunded loan commitments. As of December 31, 2021, accounts payable, accrued expenses and other liabilities included $3.9 million of accrued expenses, $3.3 million of assumed REO liabilities, $1.5 million of allowance for credit losses related to KREF's unfunded loan commitments and $0.6 million of prepaid stub interests.

Dividends Payable — KREF records dividends payable on its common stock and preferred stock upon declaration of such dividends. In March 2022, KREF's board of directors declared a dividend of $0.43 per share of common stock to stockholders of record as of March 31, 2022, which was accrued in “Dividends payable” on KREF’s Condensed Consolidated Balance Sheet as of March 31, 2022 and was subsequently paid on April 15, 2022. In February 2022, KREF's board of directors declared a dividend of $0.41 per each issued and outstanding share of the Company’s 6.50% Series A Cumulative Redeemable Preferred Stock, which represents an annual dividend of $1.625 per share. The dividend was paid on March 15, 2022 to KREF’s preferred stockholders of record as of February 28, 2022.

Special Non-Voting Preferred Stock — Equity instruments that are redeemable for cash or other assets are classified as temporary equity if the instrument is redeemable, at the option of the holder, at a fixed or determinable price on a fixed or determinable date or upon the occurrence of an event that is not solely within the control of the issuer. Redeemable equity instruments are initially carried at the fair value of the equity instrument at the issuance date, which is subsequently adjusted at each balance sheet date if the instrument is currently redeemable or probable of becoming redeemable. KREF accounted for the SNVPS as redeemable preferred stock since a third party holds a redemption option, exercisable after May 5, 2018, and such redemption was not solely within KREF's control. As a result, starting with the second quarter of 2018, KREF adjusted the carrying value of the SNVPS to its redemption value quarterly.

KREF recorded a $3.3 million SNVPS Redemption Value Adjustment during the year ended December 31, 2021, which increased the carrying value of the SNVPS to its redemption value of $5.1 million prior to SNVPS redemption by KREF on October 1, 2021 for a cash redemption value of $5.1 million (Note 11).

Repurchased Stock — KREF accounts for repurchases of its common stock based on the settlement date and presents repurchased stock in “Repurchased stock” on its Condensed Consolidated Balance Sheets (Note 11). Payments for stock repurchases that are not yet settled as of the reporting date are presented within “Other assets” on the Condensed Consolidated Balance Sheets. As of March 31, 2022, KREF did not retire any repurchased stock.

Income Recognition

Interest Income — Loans where management expects to collect all contractually required principal and interest payments are considered performing loans. KREF accrues interest income on performing loans based on the outstanding principal amount and contractual terms of the loan. Interest income also includes origination fees, direct loan origination costs and related exit fees for loans that KREF originates, but where management did not elect the fair value option, as a yield adjustment using the interest method over the loan term, or on a straight line basis when it approximates the interest method. KREF expenses origination fees and direct loan origination costs for loans acquired, but not originated, by KREF as well as loans for which management elected the fair value option, as incurred.

Revenue from Real Estate Owned Operations — Revenue from REO operations is primarily comprised of rental income, including base rent and reimbursements of property operating expenses. For leases that have fixed and measurable base rent escalations, KREF recognizes base rent on a straight-line basis over the non-cancelable lease terms. The difference between such rental income earned and the cash rent amount is recorded as straight-line rent receivable and presented within "Other assets" on the Condensed Consolidated Balance Sheets. Reimbursement of property operating expenses arises from tenant leases which provide for the recovery of certain operating expenses and real estate taxes of the respective property. This revenue is accrued in the same periods as the expenses are incurred. Rental income is presented within “Revenue from real estate owned operations” in the Condensed Consolidated Statements of Income.
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KKR Real Estate Finance Trust Inc.
Notes to Condensed Consolidated Financial Statements
(dollars in tables in thousands, except per share amounts)

Other Income — KREF recognizes interest income earned on its cash balances and miscellaneous fee income in “Other income” on its Condensed Consolidated Statements of Income.

Realized Gain (Loss) on Sale of Investments — KREF recognizes the excess, or deficiency, of net proceeds received, less the net carrying value of such investments, as realized gains or losses, respectively. KREF reverses cumulative, unrealized gains or losses previously reported in its Condensed Consolidated Statements of Income with respect to the investment sold at the time of sale.

Expense Recognition

Commercial Real Estate Loans, Held-For-Investment — For each loan in KREF's portfolio, management performs a quarterly evaluation of credit quality indicators of loans classified as held-for-investment using applicable loan, property, market and sponsor information obtained from borrowers, loan servicers and local market participants. Such indicators may include the net present value of the underlying collateral, property operating cash flows, the sponsor’s financial wherewithal and competency in managing the property, macroeconomic trends, and property submarket—specific economic factors. The evaluation of these credit quality indicators requires significant judgment by management to determine whether failure to collect contractual amounts is probable.

If management deems that it is probable that KREF will be unable to collect all amounts owed according to the contractual terms of a loan, deterioration in credit quality of that loan is indicated. Management evaluates all available facts and circumstances that might impact KREF’s ability to collect outstanding loan balances when determining loan write-offs. These facts and circumstances may vary and may include, but are not limited to, (i) significant deterioration in the underlying collateral performance and/or value, if repayment is solely based on the collateral, (ii) correspondence from the borrower indicating that it does not intend to pay the contractual principal and interest, (iii) violation of multiple debt covenants without indication the borrower has the ability to remediate such violations, (iv) occurrence of one or more events of default by the borrower, or (v) KREF has sufficient information to determine that the borrower is insolvent, or the borrower has filed for bankruptcy, and the value of the underlying collateral is below the loan basis.

If management considers a loan to be impaired, management writes-off the loan through a charge to "Allowance for credit losses" based on the present value of expected future cash flows discounted at the loan’s contractual effective rate or the fair value of the collateral, if repayment is expected solely from the collateral. Significant judgment is required in determining impairment and in estimating the resulting credit loss allowance, and actual losses, if any, could materially differ from those estimates.

Management considers loans to be past due when a monthly payment is due and unpaid for 60 days or more. Loans are placed on nonaccrual status and considered non-performing when full repayment of principal and interest is in doubt, which generally occurs when principal or interest is 120 days or more past due unless the loan is both well secured and in the process of collection. Interest received on loans placed on nonaccrual status are accounted for under the cost-recovery method, until qualifying for return to accrual. Management may return a loan to accrual status when repayment of principal and interest is reasonably assured under the terms of the restructured loan. As of March 31, 2022, one mezzanine loan with an outstanding principal balance of $5.5 million was on nonaccrual status and was fully written-off (Note 3).

In certain circumstances, KREF may also modify the original terms of a loan agreement by granting a concession to a borrower experiencing financial difficulty. Such modifications are considered troubled debt restructurings (“TDR”) under GAAP and typically include interest rate reductions, payment extension and modification of loan covenants. None of KREF’s loan modifications in 2022 to-date is considered a TDR.

In conjunction with reviewing commercial real estate loans held-for-investment for impairment, the Manager evaluates KREF's commercial real estate loans on a quarterly basis, assesses the risk factors of each loan, and assigns a risk rating based on a variety of factors, including, without limitation, underlying real estate performance and asset value, values of comparable properties, durability and quality of property cash flows, sponsor experience and financial wherewithal, and the existence of a risk-mitigating loan structure. Additional key considerations include loan-to-value ratios, debt service coverage ratios, loan structure, real estate and credit market dynamics, and risk of default or principal loss. Based on a five-point scale, KREF's loans are rated "1" through "5," from less risk to greater risk, which ratings are defined as follows:

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Notes to Condensed Consolidated Financial Statements
(dollars in tables in thousands, except per share amounts)
1—Very Low Risk—The underlying property performance has surpassed underwritten expectations, and the sponsor’s business plan is generally complete. The property demonstrates stabilized occupancy and/or rental rates resulting in strong current cash flow and/or a very low loan-to-value ratio (<65%). At the level of performance, it is very likely that the underlying loan can be refinanced easily in the period’s prevailing capital market conditions.

2—Low Risk—The underlying property performance has matched or exceeded underwritten expectations, and the sponsor’s business plan may be ahead of schedule or has achieved some or many of the major milestones from a risk mitigation perspective. The property has achieved improving occupancy at market rents, resulting in sufficient current cash flow and/or a low loan-to-value ratio (65%-70%). Operating trends are favorable, and the underlying loan can be refinanced in today’s prevailing capital market conditions. The sponsor/manager is well capitalized or has demonstrated a history of success in owning or operating similar real estate.

3—Average Risk—The underlying property performance is in-line with underwritten expectations, or the sponsor may be in the early stages of executing its business plan. Current cash flow supports debt service payments, or there is an ample interest reserve or loan structure in place to provide the sponsor time to execute the value-improvement plan. The property exhibits a moderate loan-to-value ratio (<75%). Loan structure appropriately mitigates additional risks. The sponsor/manager has a stable credit history and experience owning or operating similar real estate.

4—High Risk/Potential for Loss—A loan that has a risk of realizing a principal loss. The underlying property performance is behind underwritten expectations, or the sponsor is behind schedule in executing its business plan. The underlying market fundamentals may have deteriorated, comparable property valuations may be declining or property occupancy has been volatile, resulting in current cash flow that may not support debt service payments. The loan exhibits a high loan-to-value ratio (>80%), and the loan covenants are unlikely to fully mitigate some risks. Interest payments may come from an interest reserve or sponsor equity.

5—Impaired/Loss Likely—A loan that has a very high risk of realizing a principal loss or has otherwise incurred a principal loss. The underlying property performance is significantly behind underwritten expectations, the sponsor has failed to execute its business plan and/or the sponsor has missed interest payments. The market fundamentals have deteriorated, or property performance has unexpectedly declined or valuations for comparable properties have declined meaningfully since loan origination. Current cash flow does not support debt service payments. With the current capital structure, the sponsor might not be incentivized to protect its equity without a restructuring of the loan. The loan exhibits a very high loan-to-value ratio (>90%), and default may be imminent.

Commercial Real Estate Loans, Held-For-Sale — For commercial real estate loans held-for-sale, KREF applies the lower of cost or fair value accounting and may be required, from time to time, to record a nonrecurring fair value adjustment.

Accrued Interest Receivables — KREF elected not to measure an allowance for credit losses for accrued interest receivables. KREF generally writes off an accrued interest receivable balance when interest is 120 days or more past due unless the loan is both well secured and in the process of collection. Write-offs of accrued interest receivable are recognized as “Provision for (reversal of) credit losses, net” in the Condensed Consolidated Statements of Income.

Tenant Receivables — KREF periodically reviews its tenant receivables for collectability, taking into consideration changes in factors such as the tenant’s payment history, the financial condition of the tenant, business conditions in the industry in which the tenant operates and economic conditions in the area where the property is located. Tenant receivables, including receivables arising from the straight-lining of rents, are written-off directly when management deems that the collectability of substantially all future lease payments from a specified lease is not probable of collection, at which point, KREF will begin recognizing revenue on a cash basis, based on actual amounts received. Any receivables that are deemed to be uncollectable are recognized as a reduction to “Revenue from real estate owned operations” in the Condensed Consolidated Statements of Income.

Interest Expense — KREF expenses contractual interest due in accordance with KREF's financing agreements as incurred.

Deferred Debt Issuance Costs — KREF capitalizes and amortizes deferred financing costs incurred in connection with financing arrangements over their respective expected term using the interest method, or on a straight line basis when it approximates the interest method. KREF presents such expensed amounts, as well as deferred amounts written off, as additional interest expense in its Condensed Consolidated Statements of Income.

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KKR Real Estate Finance Trust Inc.
Notes to Condensed Consolidated Financial Statements
(dollars in tables in thousands, except per share amounts)
General and Administrative Expenses — KREF expenses general and administrative costs, including legal, diligence and audit fees; information technology costs; insurance premiums; and other costs as incurred.

Management and Incentive Compensation to Affiliate — KREF expenses management fees and incentive compensation earned by the Manager on a quarterly basis in accordance with the Management Agreement (Note 15).

Income Taxes — Certain activities of KREF are conducted through joint ventures that are formed as limited liability companies, taxed as partnerships, and consolidated by KREF. Some of these joint ventures are subject to state and local income taxes, based on the tax jurisdictions in which they operate. In addition, certain activities of KREF are conducted through taxable REIT subsidiaries consolidated by KREF. Taxable REIT subsidiaries are subject to federal, state and local income taxes (Note 17).

As of March 31, 2022 and December 31, 2021, KREF did not have any material deferred tax assets or liabilities arising from future tax consequences attributable to differences between the carrying amounts of existing assets and liabilities in accordance with GAAP and their respective tax bases.

KREF recognizes tax benefits for uncertain tax positions only if it is more likely than not that the position is sustainable based on its technical merits. Interest and penalties on uncertain tax positions are included as a component of the provision for income taxes in KREF's Condensed Consolidated Statements of Income. As of March 31, 2022, KREF did not have any material uncertain tax positions.

Stock-Based Compensation

KREF's stock-based compensation consists of awards issued to employees of the Manager or its affiliates that vest over the life of the awards, as well as restricted stock units issued to certain members of KREF's board of directors. KREF recognizes the compensation cost of stock-based awards to its directors and employees of the Manager or its affiliates on a straight-line basis over the awards’ term at their grant date fair value. Certain stock-based awards are entitled to nonforfeitable dividends, at the same rate as those declared on the common stock, during the vesting period. Such nonforteitable dividends are deducted from "Retained earnings (Accumulated deficit)" in the condensed consolidated financial statements. KREF accounts for forfeitures as they occur. Refer to Note 12 for additional information.

Earnings per Share

KREF calculates basic earnings per share ("EPS") using the two-class method, which defines unvested share-based payment awards that contain nonforfeitable rights to dividends as participating securities. The two-class method is an allocation formula that determines earnings per share for each share of common stock and participating securities according to dividends declared and participation rights in undistributed earnings. Under this method, all earnings (distributed and undistributed) are allocated to common shares and participating securities based on their respective rights. Basic EPS, is calculated by dividing net income (loss) attributable to common stockholders by the weighted average number of common stock outstanding for the period.

On January 1, 2022, KREF adopted ASU No. 2020-06, Debt — Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging — Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity, which requires KREF to include convertible instruments in the diluted EPS calculation, regardless of a company's intent and ability to settle such debt in cash. KREF included 6,316,174 potentially issuable shares related to its Convertible Notes in the dilutive EPS calculations starting with the first quarter of 2022.

KREF presents diluted EPS under the more dilutive of the treasury stock and if-converted methods or the two-class method. Under the treasury stock and if-converted methods, the denominator includes weighted average common stock outstanding plus the incremental dilutive shares issuable from restricted stock units and an assumed conversion of the Convertible Notes. The numerator includes any changes in income (loss) attributable to common stockholders that would result from the assumed conversion of these potential shares of common stock. Refer to Note 11 for additional discussion of earnings per share.

Recent Accounting Pronouncements

In March 2020, the FASB issued ASU No. 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting, which provides temporary optional expedients and exceptions to the US GAAP guidance on contract modifications and hedge accounting to ease the financial reporting burdens of the expected market
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KKR Real Estate Finance Trust Inc.
Notes to Condensed Consolidated Financial Statements
(dollars in tables in thousands, except per share amounts)
transition from LIBOR and other interbank offered rates to alternative reference rates. The guidance is effective upon issuance and generally may be elected over time through December 31, 2022. KREF has not adopted any of the optional expedients or exceptions through March 31, 2022, but will continue to evaluate the possible adoption of any such expedients or exceptions during the effective period as circumstances evolve.

In March 2022, the FASB issued ASU No. 2022-02, Financial Instruments — Credit Losses (Topic 326): Troubled Debt Restructurings and Vintage Disclosures, which eliminates the recognition and measurement guidance for a troubled debt restructuring (TDR) for creditors that have adopted CECL and requires public business entities to present gross write-offs by year of origination in their vintage disclosures. The guidance is effective for KREF in the first quarter of 2023. The guidance allows the use of a prospective or modified retrospective transition method. KREF is evaluating the impact of ASU 2022-02.
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KKR Real Estate Finance Trust Inc.
Notes to Condensed Consolidated Financial Statements
(dollars in tables in thousands, except per share amounts)
Note 3. Commercial Real Estate Loans

The following table summarizes KREF's investments in commercial real estate loans as of March 31, 2022 and December 31, 2021:

Weighted Average(C)
Loan TypeOutstanding Principal
Amortized Cost(A)
Carrying Value(B)
Loan CountFloating Rate Loan %
Coupon(D)
Life (Years)(E)
March 31, 2022
Loans held-for-investment
Senior loans(F)
$6,719,467 $6,676,761 $6,656,365 64 100.0 %4.0 %3.5
Mezzanine and other loans(G)
102,109 96,123 95,843 4 94.6 11.3 3.7
$6,821,576 $6,772,884 $6,752,208 68 99.9 %4.1 %3.5
December 31, 2021
Loans held-for-investment
Senior loans(F)
$6,263,370 $6,222,058 $6,200,078 59 100.0 %3.9 %3.6
Mezzanine and other loans(G)
100,735 94,675 94,411 4 94.5 11.2 4.0
$6,364,105 $6,316,733 $6,294,489 63 99.9 %4.1 %3.6

(A)    Amortized cost represents the outstanding principal of loan, net of applicable unamortized discounts, loan origination fees and write-off on uncollectable loan balances.
(B)    Carrying value represents the amortized cost of loan, net of applicable allowance for credit losses.
(C)    Average weighted by outstanding loan principal.
(D)     Weighted average coupon assumes the greater of applicable index rate, including one-month LIBOR and Term SOFR, or the applicable contractual rate floor.
(E)    The weighted average life assumes all extension options are exercised by the borrowers.
(F)    Senior loans may include accommodation mezzanine loans in connection with the senior mortgage financing. Also, includes CLO loan participations of $2,300.0 million and $1,246.0 million as of March 31, 2022 and December 31, 2021, respectively.
(G)    Includes one real estate corporate loan to a multifamily operator with a principal and a carrying value of $41.5 million and $41.0 million, respectively, as of March 31, 2022, and $41.1 million and $40.3 million, respectively, as of December 31, 2021.

Activity — For the three months ended March 31, 2022, the loan portfolio activity was as follows:

Amortized CostAllowance for
Credit Losses		Carrying Value
Balance at December 31, 2021
$6,316,733 $(22,244)$6,294,489 
Originations and future fundings, net(A)
731,886 — 731,886 
Proceeds from sales and loan repayments(282,282)— (282,282)
Accretion of loan discount and other amortization, net(B)
6,083 — 6,083 
Payment-in-kind interest464 — 464 
(Provision for) Reversal of credit losses— 1,568 1,568 
Balance at March 31, 2022
$6,772,884 $(20,676)$6,752,208 

(A)    Net of applicable premiums, discounts and deferred loan origination costs. Includes fundings on previously originated loans.
(B)    Includes accretion of applicable discounts, certain fees and deferred loan origination costs.

As of March 31, 2022 and December 31, 2021, there was $43.2 million and $41.9 million, respectively, of unamortized origination discounts and deferred fees included in "Commercial real estate loans, held-for-investment, net" on the Condensed Consolidated Balance Sheets. KREF recognized net accelerated fee income of $0.8 million and $1.0 million, respectively, during the three months ended March 31, 2022 and 2021.

KREF may enter into loan modifications that include, among other changes, incremental capital contributions or partial repayments from certain borrowers, repurposing of reserves, and a temporary partial deferral for a portion of the coupon as payment-in-kind interest (“PIK Interest”) due, which is capitalized, compounded, and added to the outstanding principal balance of the respective loans. In January 2022, KREF received full repayment of $76.2 million on one 4-rated senior hospitality loan, including $0.2 million of deferred PIK interest.

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Notes to Condensed Consolidated Financial Statements
(dollars in tables in thousands, except per share amounts)
Loan Risk Ratings — As further described in Note 2, our Manager evaluates KREF's commercial real estate loan portfolio on a quarterly basis. In conjunction with the quarterly commercial real estate loan portfolio review, KREF's Manager assesses the risk factors of each loan and assigns a risk rating based on a variety of factors. Loans are rated “1” (very low risk) through “5” Impaired/Loss Likely), which ratings are defined in Note 2.

The following tables summarize the carrying value of the loan portfolio based on KREF's internal risk ratings:

March 31, 2022December 31, 2021
Risk Rating
Number of Loans(B)
Carrying Value
Total Loan Exposure(A)
Total Loan Exposure %
Number of Loans(B)
Carrying Value
Total Loan Exposure(A)
Total Loan Exposure %
11 $248,860 $249,010 3.5 %1 $243,549 $243,552 3.6 %
23 415,329 416,147 5.8 3 410,293 411,424 6.2 
360 5,753,587 6,119,804 85.7 54 5,268,590 5,627,927 84.3 
43 355,108 354,652 5.0 4 394,301 394,336 5.9 
51 — — — 1 — — — 
Total loan receivable68 $6,772,884 $7,139,613 100.0 %63 $6,316,733 $6,677,239 100.0 %
Allowance for credit losses(20,676)(22,244)
Loan receivable, net$6,752,208 $6,294,489 

(A)    In certain instances, KREF finances its loans through the non-recourse sale of a senior interest that is not included in the consolidated financial statements. Total loan exposure includes the entire loan KREF originated and financed, including $323.5 million and $318.6 million of such non-consolidated interests as of March 31, 2022 and December 31, 2021, respectively.
(B)    Includes one impaired 5-rated mezzanine retail loan that was fully written off.

As of March 31, 2022, the average risk rating of KREF's portfolio was 2.9 (Average Risk), weighted by total loan exposure, consistent with that as of December 31, 2021.

Loan Vintage — The following tables present the amortized cost of the loan portfolio by KREF's internal risk rating and year of origination. The risk ratings are updated as of March 31, 2022 and December 31, 2021 in the corresponding table.

March 31, 2022
Amortized Cost by Year of Origination
Risk RatingNumber of LoansOutstanding Principal20222021202020192018PriorTotal
Commercial Real Estate Loans
11 $249,010 $— $— $— $— $248,860 $— $248,860 
23 416,147 — — 135,263 — 85,996 194,070 415,329 
360 5,796,267 616,803 3,550,090 208,491 805,754 572,449 — 5,753,587 
43 354,652 — — — 156,674 165,825 32,609 355,108 
51 5,500 — — — — — — — 
68 $6,821,576 $616,803 $3,550,090 $343,754 $962,428 $1,073,130 $226,679 $6,772,884 

December 31, 2021
Amortized Cost by Year of Origination
Risk RatingNumber of LoansOutstanding Principal20212020201920182017PriorTotal
Commercial Real Estate Loans
11 $243,552 $— $— $— $243,549 $— $— $243,549 
23 411,424 — 130,400 — 85,943 193,950 — 410,293 
354 5,309,293 3,523,611 203,961 1,017,080 523,938 — — 5,268,590 
44 394,336 — — 76,221 210,701 107,379 — 394,301 
51 5,500 — — — — — — — 
63 $6,364,105 $3,523,611 $334,361 $1,093,301 $1,064,131 $301,329 $— $6,316,733 

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KKR Real Estate Finance Trust Inc.
Notes to Condensed Consolidated Financial Statements
(dollars in tables in thousands, except per share amounts)
Allowance for Credit Losses — The following tables present the changes to the allowance for credit losses for the three months ended March 31, 2022 and 2021, respectively:

Commercial
Real Estate Loans		Unfunded Loan CommitmentsTotal
Balance at December 31, 2021$22,244 $1,495 $23,739 
Provision for (reversal of) credit losses, net(1,568)350 (1,218)
Write-off charged— — — 
Recoveries— — — 
Balance as March 31, 2022
$20,676 $1,845 $22,521 

Commercial
Real Estate Loans		Unfunded Loan CommitmentsTotal
Balance at December 31, 2020$59,801 $902 $60,703 
Provision for (reversal of) credit losses, net(1,328)(260)(1,588)
Write-off charged— — — 
Recoveries— — — 
Balance as March 31, 2021
$58,473 $642 $59,115 

The $1.2 million net benefit during the three months ended March 31, 2022 was primarily due to the reversal in allowance for credit losses in connection with the full repayments of one 4-rated senior hospitality loan and one 4-rated senior industrial loan, partially offset by an increase to the allowance related to newly originated loans and 4-risk rated loans. The $1.6 million benefit from the reversal of credit losses during the three months ended March 31, 2021 was primarily attributable to a slightly more stable macro-economic outlook based on improved observed economic data.

Concentration of Credit Risk — The following tables present the geographies and property types of collateral underlying KREF's commercial real estate loans as a percentage of the loans' principal amounts:

March 31, 2022December 31, 2021March 31, 2022December 31, 2021
Geography(A)
Collateral Property Type
Texas14.0 %15.0 %Multifamily48.8 %46.7 %
California12.9 10.8 Office25.1 25.4 
Florida10.7 10.5 Life Science10.0 9.3 
Massachusetts9.7 10.3 Hospitality5.3 6.9 
New York9.5 11.5 Industrial3.8 4.4 
Virginia9.2 6.7 Condo (Residential)3.6 3.9 
Pennsylvania7.7 8.2 Student Housing3.0 3.1 
Washington D.C.5.6 4.7 Single Family Rental0.3 0.2 
Washington3.5 3.6 Retail0.1 0.1 
Illinois3.5 3.8 Total100.0 %100.0 %
Minnesota3.0 3.1 
Colorado2.5 2.7 
Georgia2.1 2.2 
North Carolina1.9 2.0 
Nevada1.5 1.6 
Alabama1.0 1.1 
Arizona— 1.2 
Other U.S.1.7 1.0 
Total100.0 %100.0 %

(A)    Excludes one real estate corporate loan to a multifamily operator with an outstanding principal amount of $41.5 million and $41.1 million, representing 0.6% of KREF’s commercial real estate loans, as of March 31, 2022 and December 31, 2021, respectively.

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KKR Real Estate Finance Trust Inc.
Notes to Condensed Consolidated Financial Statements
(dollars in tables in thousands, except per share amounts)
Note 4. Real Estate Owned

In 2015, KREF originated a $177.0 million senior loan secured by a retail property in Portland, Oregon. The loan had a risk rating of 5 and placed on non-accrual status in October 2020, with an amortized cost and carrying value of $109.6 million and $69.3 million, respectively, as of September 30, 2021. On December 17, 2021, KREF took title to the retail property. Such acquisition was accounted for as an asset acquisition under ASC 805. Accordingly, KREF recognized the property on the Condensed Consolidated Balance Sheets as REO with a carrying value of $78.6 million, which included the estimated fair value of the property and capitalized transaction costs. In addition, KREF assumed $2.0 million in other net assets of the REO. As a result KREF recognized an $8.2 million benefit from the reversal of credit losses, representing the difference between the carrying value of the foreclosed loan and the fair value of the REO’s net assets.

The following table presents the REO assets and liabilities included on KREF's Condensed Consolidated Balance Sheets:

March 31, 2022
December 17, 2021(C)
Assets
Cash$2,051 $3,377 
Real estate owned, net78,569 78,569 
In-place lease intangibles(A)
318335
Tenant receivables(A)
1,010 — 
Other assets(A)
823 1,119 
Total$82,771 $83,400 
Liability
Below-market lease intangibles(B)
$1,734 $1,825 
Accounts payable, accrued expenses and other liabilities(B)
1,187 1,742 
Total$2,921 $3,567 

(A)    Included in “Other assets” on the Condensed Consolidated Balance Sheets.
(B)    Included in “Accounts payable, accrued expenses and other liabilities” on the Condensed Consolidated Balance Sheets.
(C)    The REO operations and related income (loss) were immaterial between the acquisition date and December 31, 2021.

KREF assumed certain legacy lease arrangements upon the acquisition of the REO and entered into short-term lease arrangements during the course of the REO operations. These arrangements entitle KREF to receive contractual rent payments during the lease periods and tenant reimbursements for certain property operating expenses, including common area costs, insurance, utilities and real estate taxes. KREF elects the practical expedient to not separate the lease and non-lease components of the rent payments and accounts for these lease arrangements as operating leases.

The following table presents the REO operations and related income (loss) included in KREF’s Condensed Consolidated Statements of Income:

Three Months Ended
March 31, 2022
Rental income(A)
$2,287 
Other operating income(A)
342 
Expenses from real estate owned operations(2,554)
Other income(B)
403 
Total$478 

(A)    Included in “Revenue from real estate owned operations” on the Condensed Consolidated Statements of Income.
(B)    Represents one-time local tax refunds received during the three months ended March 31, 2022.

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Notes to Condensed Consolidated Financial Statements
(dollars in tables in thousands, except per share amounts)
The following table presents the amortization of lease intangibles included in KREF’s Condensed Consolidated Statements of Income:

Three Months Ended
Income Statement LocationMarch 31, 2022
Asset
In-place lease intangiblesExpenses from real estate owned operations$17 
Liability
Below-market lease intangibles
Revenue from real estate owned operations91 

The following table presents the amortization of lease intangibles for each of the five succeeding fiscal years:

YearIn-place Lease Intangible AssetsBelow-market Lease Intangible Liabilities
2022$50 $274 
202367 365 
202467 365 
202567 365 
202667 365 

Future Minimum Lease Payments — The following table presents the future minimum lease payments to be collected under non-cancelable operating leases, excluding tenant reimbursements of expenses:

YearContractual
Lease Payments
2022$3,897 
20234,390 
20243,579 
20252,839 
20262,042 
Thereafter
45 
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KKR Real Estate Finance Trust Inc.
Notes to Condensed Consolidated Financial Statements
(dollars in tables in thousands, except per share amounts)
Note 5. Debt Obligations

The following table summarizes KREF's secured master repurchase agreements and other financing arrangements in place as of March 31, 2022 and December 31, 2021:

March 31, 2022December 31, 2021
FacilityCollateralFacility
Month IssuedMaximum Facility SizeOutstanding Principal
Carrying Value(A)
Final Stated Maturity
Weighted Average Funding Cost(B)
Weighted Average Life (Years)(B)
Outstanding PrincipalAmortized Cost BasisCarrying Value
Weighted Average Life (Years)(C)
Carrying Value(A)
Master Repurchase Agreements(D)
Wells Fargo(E)
Oct 2015$1,000,000 $665,620 $664,047 Sep 20262.0 %3.1$894,440 $881,518 $879,997 4.4$978,615 
Morgan Stanley(F)
Dec 2016600,000 433,368 432,248 Dec 20232.9 1.7612,504 606,072 604,695 4.2382,081 
Goldman Sachs(G)
Sep 2016240,000 105,301 104,458 Oct 20233.2 1.6189,087 184,087 183,720 4.5189,456 
Term Lending Agreements
KREF Lending V(H)
Jun 2019633,388 602,113 601,897 Jun 20262.4 0.9761,770 760,500 758,897 1.7617,185 
KREF Lending IX(I)
Jul 2021750,000 340,467 333,620 n.a2.5 3.0422,826 418,040 417,091 4.6493,853 
Warehouse Facility
HSBC Facility(J)
Mar 2020500,000 — — Mar 2023— 0.9— — — n.a(55)
Asset Specific Financing
BMO Facility(K)
Aug 2018300,000 — — n.a— 0.0— — — n.a60,000 
Revolving Credit Agreement
Revolver(L)
Dec 2018520,000 — — Mar 2027— 5.0 n.a  n.a n.an.a135,000 
Total / Weighted Average$4,543,388 $2,146,869 $2,136,270 2.4 %2.1$2,856,135 

(A)    Net of $10.6 million and $11.3 million unamortized deferred financing costs as of March 31, 2022 and December 31, 2021, respectively.
(B)    Average weighted by the outstanding principal of borrowings. Funding cost includes deferred financing costs.
(C)    Average based on the fully extended loan maturity, weighted by the outstanding principal of the collateral.
(D)    Borrowings under these repurchase agreements are collateralized by senior loans, held-for-investment, and bear interest equal to the sum of (i) a floating rate index, including one-month LIBOR and Term SOFR, and (ii) a margin, based on the collateral. As of March 31, 2022 and December 31, 2021, the percentage of the outstanding principal of the collateral sold and not borrowed under these repurchase agreements, or average "haircut" weighted by outstanding principal of collateral, was 29.0% and 30.3%, respectively (or 25.4% and 25.9%, respectively, if KREF had borrowed the maximum amount approved by its repurchase agreement counterparties as of such dates).
(E)    In September 2021, the current stated maturity date was amended to September 2024, which does not reflect two twelve-month facility term extension options available to KREF, which are subject to certain covenants and thresholds. As of March 31, 2022, the collateral-based margin was between 1.25% and 1.55%.
(F)    In December 2021, the current stated maturity was extended to December 2022, with a one-year extension option upon KREF giving written notice and another two one-year extension periods subject to approval by the lender. In addition, KREF has the option to increase the facility amount to $750.0 million. As of March 31, 2022, the collateral-based margin was between 1.70% and 2.20%.
(G)    In October 2021, the current stated maturity date was amended to October 2022. In addition, KREF has the option to extend the maturity date to October 31, 2023, subject to the satisfaction of certain conditions. As of March 31, 2022, the collateral-base margin was between 1.75% and 3.20%.
(H)    In June 2019, KREF, through its wholly–owned subsidiary KREF Lending V LLC, entered into a Master Repurchase and Securities Contract Agreement ("KREF Lending V Facility") with Morgan Stanley Mortgage Capital Holdings LLC ("Administrative Agent"), as administrative agent on behalf of Morgan Stanley Bank, N.A. ("Initial Buyer"), which provides non-mark-to-market financing. The Initial Buyer subsequently syndicated a portion of the facility to multiple financial institutions. As of March 31, 2022, the Initial Buyer held 24.2% of the total commitment under the facility. Borrowings under the facility are collateralized by certain loans, held for investment, and bear interest equal to one-month LIBOR, plus a 1.90% margin. In March 2021, the current stated maturity was extended to June 2022, subject to four additional one-year extension options, which may be exercised by KREF upon the satisfaction of certain customary conditions and thresholds.
(I)    In July 2021, KREF, through its wholly–owned subsidiary KREF Lending IX LLC, entered into a $500.0 million Master Repurchase and Securities Contract Agreement with a financial institution ("KREF Lending IX Facility"). In March 2022, KREF increased the borrowing capacity to $750.0 million. The facility, which provides financing on a non-mark-to-market basis with partial recourse to KREF, has a three-year draw period and matched term to the underlying loans. As of March 31, 2022, the collateral-based margin was between 1.65% and 1.75%.
(J)    In March 2020, KREF entered into a $500.0 million Loan and Security Agreement with HSBC Bank USA, National Association (“HSBC Facility”). The facility, which matures in March 2023, provides warehouse financing on a non-mark-to-market basis with partial recourse to KREF.
(K)    In August 2018, KREF entered into a $200.0 million loan financing facility with BMO Harris Bank ("BMO Facility"). The facility provides asset-based financing on a non-mark to market basis with matched-term up to five years with partial recourse to KREF. During May 2019, KREF increased the borrowing capacity to $300.0 million.
(L)    In December 2018, KREF entered into a $100.0 million corporate revolving credit facility (“Revolver”) administered by Morgan Stanley Senior Funding, Inc. Additional lenders were added subsequently, further increasing the Revolver borrowing capacity to $520.0 million as of March 31, 2022. The current stated maturity of the facility is March 2027. Borrowings under the facility bear interest at a per annum rate equal to the sum of (i) a floating rate index and (ii) a fixed margin. Borrowings under this facility are full recourse to certain guarantor wholly-owned subsidiaries of KREF. As of March 31, 2022, the carrying value excluded $4.6 million unamortized debt issuance costs presented within "Other assets" on KREF's Condensed Consolidated Balance Sheets.

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KKR Real Estate Finance Trust Inc.
Notes to Condensed Consolidated Financial Statements
(dollars in tables in thousands, except per share amounts)
As of March 31, 2022 and December 31, 2021, KREF had outstanding repurchase agreements and term lending agreements where the amount at risk with any individual counterparty, or group of related counterparties, exceeded 10.0% of KREF’s stockholders' equity. The amount at risk under these agreements is the net counterparty exposure, defined as the excess of the carrying amount (or market value, if higher than the carrying amount, for repurchase agreements) of the assets sold under agreement to repurchase, including accrued interest plus any cash or other assets on deposit to secure the repurchase obligation, over the amount of the repurchase liability, adjusted for accrued interest. The following table summarizes certain characteristics of KREF's repurchase agreements where the amount at risk with any individual counterparty, or group of related counterparties, exceeded 10.0% of KREF’s stockholders' equity as of March 31, 2022 and December 31, 2021:

Outstanding PrincipalNet Counterparty ExposurePercent of Stockholders' Equity
Weighted Average Life (Years)(A)
March 31, 2022
Wells Fargo$665,620 $228,153 13.8 %3.1
Morgan Stanley433,368 176,301 10.7 1.7
Total / Weighted Average$1,098,988 $404,454 24.5 %2.5
December 31, 2021
Wells Fargo$980,593 $409,489 30.1 %3.4
Morgan Stanley383,592 166,426 12.2 0.8
KREF Lending V(B)
617,627 139,149 10.2 0.5
Total / Weighted Average$1,981,812 $715,064 52.5 %2.0

(A)    Average weighted by the outstanding principal of borrowings under the secured financing agreement.
(B)    There were multiple counterparties to the KREF Lending V Facility. Morgan Stanley Bank, N.A. represented 2.5% of the net counterparty exposure as a percent of stockholders' equity as of December 31, 2021.

Debt obligations included in the tables above are obligations of KREF’s consolidated subsidiaries, which own the related collateral, and such collateral is generally not available to other creditors of KREF.

While KREF is generally not required to post margin under certain repurchase agreement terms for changes in general capital market conditions such as changes in credit spreads or interest rates, KREF may be required to post margin for changes in conditions to specific loans that serve as collateral for those repurchase agreements. Such changes may include declines in the appraised value of property that secures a loan or a negative change in the borrower's ability or willingness to repay a loan. To the extent that KREF is required to post margin, KREF's liquidity could be significantly impacted. Both KREF and its lenders work cooperatively to monitor the performance of the properties and operations related to KREF's loan investments to mitigate investment-specific credit risks. Additionally, KREF incorporates terms in the loans it originates to further mitigate risks related to loan nonperformance.

Term Loan Financing

In April 2018, KREF, through its consolidated subsidiaries, entered into a term loan financing agreement (“Term Loan Facility”) with third party lenders for an initial borrowing capacity of $200.0 million that was subsequently increased to $1.0 billion in October 2018. The facility provides asset-based financing on a non-mark-to-market basis with matched term up to five years and is non-recourse to KREF. Borrowings under the facility are collateralized by senior loans, held-for-investment, and bear interest equal to one-month LIBOR plus a margin. The weighted average margin on the facility was 1.6% as of March 31, 2022 and December 31, 2021.

The following tables summarize our borrowings under the Term Loan Facility:

March 31, 2022
Term Loan FacilityCountOutstanding PrincipalAmortized CostCarrying Value
Wtd. Avg. Yield/Cost(A)
Guarantee(B)
Wtd. Avg. Term(C)
Collateral assets13$1,141,803 $1,139,773 $1,132,639 
+ 3.3%
n.a.October 2024
Financing providedn.a.898,959 898,959 898,959 
L + 1.6%
n.a.October 2024
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Notes to Condensed Consolidated Financial Statements
(dollars in tables in thousands, except per share amounts)
December 31, 2021
Term Loan FacilityCountOutstanding PrincipalAmortized CostCarrying Value
Wtd. Avg. Yield/Cost(A)
Guarantee(B)
Wtd. Avg. Term(C)
Collateral assets12$1,078,795 $1,076,241 $1,074,116 
L + 3.4%
n.a.August 2024
Financing providedn.a.870,458 870,458 870,458 
L + 1.6%
n.a.August 2024

(A)     Floating rate loans and related liabilities are indexed to one-month LIBOR and/or Term SOFR. KREF's net interest rate exposure is in direct proportion to its interest in the net assets indexed to that rate. In addition to cash coupon, yield/cost includes the amortization of deferred origination/financing costs.
(B)    Financing under the Term Loan Facility is non-recourse to KREF.
(C)    The weighted-average term is weighted by outstanding principal, using the maximum maturity date of the underlying loans assuming all extension options are exercised by the borrower.

Activity — For the three months ended March 31, 2022, the activity related to the carrying value of KREF’s secured financing agreements were as follows:

Secured Financing Agreements, Net
Balance as of December 31, 2021$3,726,593 
Principal borrowings479,329 
Principal repayments/sales(1,171,393)
Deferred debt issuance costs(1,479)
Amortization of deferred debt issuance costs2,180 
Balance as of March 31, 2022$3,035,230 

Maturities — KREF’s secured financing agreements, term loan financing and other consolidated debt obligations in place as of March 31, 2022 had contractual maturities as follows:

YearNonrecourse
Recourse(A)
Total
2022$531,704 $59,015 $590,719 
2023924,332 207,970 1,132,302 
2024433,405 91,270 524,675 
2025331,923 110,641 442,564 
Thereafter287,748 67,821 355,569 
$2,509,112 $536,717 $3,045,829 

(A)    Except for the Revolver, which is full recourse, amounts borrowed subject to a maximum 25.0% recourse limit. The Revolver expires in March 2027.

Covenants — KREF is required to comply with customary loan covenants and event of default provisions related to its secured financing agreements and Revolver, including, but not limited to, negative covenants relating to restrictions on operations with respect to KREF’s status as a REIT, and financial covenants. Such financial covenants include an interest income to interest expense ratio covenant (1.5 to 1.0); a minimum consolidated tangible net worth covenant (75.0% of the aggregate cash proceeds of any equity issuances made and any capital contributions received by KREF and certain subsidiaries or up to approximately $1,309.4 million depending upon the facility); a cash liquidity covenant (the greater of $10.0 million or 5.0% of KREF's recourse indebtedness); and a total indebtedness covenant (83.3% of KREF's Total Assets, as defined in the applicable financing agreements). As of March 31, 2022 and December 31, 2021, KREF was in compliance with its financial debt covenants.


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KKR Real Estate Finance Trust Inc.
Notes to Condensed Consolidated Financial Statements
(dollars in tables in thousands, except per share amounts)
Note 6. Collateralized Loan Obligations

In August 2021, KREF financed a pool of loan participations from its existing loan portfolio through a managed CLO ("KREF 2021-FL2"). KREF 2021-FL2 provides KREF with match-term financing on a non-mark-to-market and non-recourse basis. KREF 2021-FL2 has a two-year reinvestment feature that allows principal proceeds of the collateral assets to be reinvested in qualifying replacement assets, subject to the satisfaction of certain conditions set forth in the indenture. Upon the execution of the KREF 2021-FL2, KREF recorded $8.9 million in issuance costs, inclusive of $0.9 million in structuring and placement agent fees paid to KKR Capital Markets ("KCM"), an affiliate of KREF.

In February 2022, KREF financed a pool of loan participations from its existing multifamily loan portfolio through a managed CLO ("KREF 2022-FL3"). KREF 2022-FL3 provides KREF with match-term financing on a non-mark-to-market and non-recourse basis and has a two-year reinvestment feature. Upon the execution of the KREF 2022-FL3, KREF recorded $7.4 million in issuance costs, inclusive of $0.5 million in structuring and placement agent fees paid to KCM.

The CLO issuance costs are netted against the outstanding principal balance of the CLO notes in "Collateralized loan obligations, net" in the Condensed Consolidated Balance Sheets.

The following tables outline CLO collateral assets and respective borrowing as of March 31, 2022 and December 31, 2021:

March 31, 2022
 Count Outstanding Principal Amortized Cost Carrying Value
Wtd. Avg. Yield/Cost(A)
Wtd. Avg. Term(B)
KREF 2021-FL2
Collateral assets(C)
21$1,300,000 $1,300,000 $1,295,901 
+ 3.4%
August 2025
Financing provided11,095,250 1,089,080 1,089,080 
L + 1.7%
February 2039
KREF 2022-FL3
Collateral assets(C)
16$1,000,000 $1,000,000 $997,782 
+ 3.0%
September 2026
Financing provided1847,500 840,537 840,537 
S + 2.1%
February 2039

December 31, 2021
KREF 2021-FL2
 Count Outstanding Principal Amortized Cost Carrying ValueWtd. Avg. Yield/Cost
Wtd. Avg. Term(B)
Collateral assets(C)(D)
20$1,300,000 $1,300,000 $1,296,745 
L + 3.4%
June 2025
Financing provided11,095,250 1,087,976 1,087,976 
L + 1.7%
February 2039

(A)    Expressed as a spread over the relevant benchmark rates, which include one-month LIBOR and Term SOFR, as applicable to each loan. As of March 31, 2022, 96.4% and 3.6% of the CLO collateral loan assets by principal balance earned a floating rate of interest indexed to one-month LIBOR and Term SOFR, respectively. In addition to cash coupon, yield/cost includes the amortization of deferred origination/financing costs.
(B)    Loan term represents weighted-average final maturity, assuming all extension options are exercised by the borrowers, weighted by outstanding principal. Repayments of CLO notes are dependent on timing of underlying collateral loan asset repayments post reinvestment period. The term of the CLO notes represents the rated final distribution date.
(C)    Collateral loan assets represent 33.7% and 19.6% of the principal of KREF's commercial real estate loans as of March 31, 2022 and December 31, 2021, respectively. As of March 31, 2022 and December 31, 2021, 100% of KREF loans financed through the CLOs are floating rate loans.
(D)    Including $54.0 million cash held in CLO as of December 31, 2021.

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KKR Real Estate Finance Trust Inc.
Notes to Condensed Consolidated Financial Statements
(dollars in tables in thousands, except per share amounts)
The following table presents the CLO assets and liabilities included in KREF’s Condensed Consolidated Balance Sheets:

AssetsMarch 31, 2022December 31, 2021
Cash$— $54,000 
Commercial real estate loans, held-for-investment2,300,000 1,246,000 
Less: Allowance for credit losses(6,317)(3,255)
Commercial real estate loans, held-for-investment, net2,293,683 1,242,745 
Accrued interest receivable5,941 3,091 
Other assets155 766 
Total$2,299,779 $1,300,602 
Liabilities
Collateralized loan obligations, net(A)
$1,929,617 $1,087,976 
Accrued interest payable1,305 852 
Total$1,930,922 $1,088,828 

(A)     Net of $13.1 million and $7.3 million of unamortized deferred financing costs as of March 31, 2022 and December 31, 2021, respectively.

The following table presents the components of net interest income of CLOs included in KREF’s Condensed Consolidated Statements of Income:

Three Months Ended March 31,
20222021
Net Interest Income
  Interest income$17,111 $11,121 
  Interest expense(A)
7,768 3,025 
    Net interest income$9,343 $8,096 

(A)     Net of interest expense on internally held CLO notes. Includes $1.6 million and $0.0 million of deferred financing costs amortization for the three months ended March 31, 2022 and 2021, respectively.
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KKR Real Estate Finance Trust Inc.
Notes to Condensed Consolidated Financial Statements
(dollars in tables in thousands, except per share amounts)
Note 7. Secured Term Loan, Net

In September 2020, KREF entered into a $300.0 million secured term loan at a price of 97.5%, which bears interest at a per annum rate equal to LIBOR plus a 4.75% margin, subject to a 1.0% LIBOR floor, payable quarterly beginning in December 2020. The secured term loan is partially amortizing, with an amount equal to 1.0% per annum of the principal balance due in quarterly installments starting March 31, 2021. The secured term loan matures on September 1, 2027 and contains restrictions relating to liens, asset sales, indebtedness, investments and transactions with affiliates. The secured term loan is secured by KREF level guarantees and does not include asset-based collateral. Upon the execution of the secured term loan, KREF recorded a $7.5 million issuance discount and $5.1 million in issuance costs, inclusive of $1.1 million in arrangement and structuring fees paid to KCM.

In November 2021, KREF completed the repricing of $297.8 million then existing secured term loan and a $52.2 million add-on, for an aggregate principal amount of $350.0 million due September 2027, which was issued at par. The upsize of the secured term loan was accounted for as partial debt extinguishment under GAAP, accordingly, KREF recognized an accelerated deferred loan financing cost of $0.7 million during the fourth quarter of 2021. The new secured term loan bears interest at LIBOR plus 3.5% and is subject to a LIBOR floor of 0.5%. KREF recorded $2.0 million in issuance costs, inclusive of $0.8 million in arrangement and structuring fees paid to KCM.

Inclusive of the amortization of the discount and issuance costs, KREF’s total cost of the secured term loan is LIBOR plus 4.1% per annum, subject to the applicable LIBOR floor, as of March 31, 2022. The following table summarizes KREF’s secured term loan at March 31, 2022 and December 31, 2021, respectively :

March 31, 2022December 31, 2021
Principal amount$349,125 $350,000 
Unamortized discount(5,407)(5,652)
Deferred financing costs(5,747)(5,799)
Carrying amount$337,971 $338,549 

Covenants — KREF is required to comply with customary loan covenants and event of default provisions related to its secured term loan that include, but are not limited to, negative covenants relating to restrictions on operations with respect to KREF’s status as a REIT, and financial covenants. Such financial covenants include a minimum consolidated tangible net worth of $650.0 million and a maximum Total Debt to Total Assets ratio, as defined in the secured term loan agreements, of 83.3% (the “Leverage Covenant”). KREF was in compliance with such covenants as of March 31, 2022 and December 31, 2021.
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KKR Real Estate Finance Trust Inc.
Notes to Condensed Consolidated Financial Statements
(dollars in tables in thousands, except per share amounts)
Note 8. Convertible Notes, Net
In May 2018, KREF issued $143.75 million of Convertible Notes, which bear interest at a rate of 6.125% per year, payable semi-annually in arrears on May 15 and November 15 of each year, beginning on November 15, 2018. The Convertible Notes mature on May 15, 2023, unless earlier repurchased or converted. The Convertible Notes’ issuance costs of $5.1 million are amortized through interest expense over the life of the Convertible Notes.

The initial conversion rate for the Convertible Notes is 43.9386 shares of KREF’s common stock per $1,000 principal amount of Notes, which is equivalent to an initial conversion price of approximately $22.76 per share of KREF’s common stock, which represents a 10% conversion premium over the last reported sale price of $20.69 per share of KREF’s common stock on the New York Stock Exchange on May 15, 2018. The conversion rate is subject to adjustment under certain circumstances. In addition, upon a make-whole fundamental change as defined within the indenture governing the Convertible Notes, KREF will, under certain circumstances, increase the applicable conversion rate for a holder that elects to convert its Notes in connection with such make-whole fundamental change. Prior to February 15, 2023, the Convertible Notes will be convertible only upon satisfaction of certain conditions and during certain periods, and thereafter, at any time until the close of business on the second scheduled trading day immediately preceding the maturity date. KREF will satisfy any conversion elections by paying or delivering, as the case may be, cash, shares of KREF’s common stock or a combination of cash and shares of KREF’s common stock, at its election.

Upon the issuance of the Convertible Notes, KREF recorded a $1.8 million discount based on the implied value of the conversion option and an assumed effective interest rate of 6.50%, as well as $5.1 million of initial issuance costs, inclusive of $0.8 million paid to KCM. Inclusive of the amortization of this discount and the issuance costs, KREF’s total cost of the May 2018 Convertible Notes issuance is 6.92% per annum.

The following table details the carrying value of the Convertible Notes on KREF's Condensed Consolidated Balance Sheets:

March 31, 2022December 31, 2021
Principal$143,750 $143,750 
Deferred financing costs(1,152)(1,405)
Unamortized discount(405)(494)
Carrying value$142,193 $141,851 

The following table details the interest expense related to the Convertible Notes:

Three Months Ended March 31,
20222021
Cash coupon$2,201 $2,201 
Discount and issuance cost amortization342 342 
Total interest expense$2,543 $2,543 

Accrued interest payable for the Convertible Notes was $3.3 million and $1.1 million as of March 31, 2022 and December 31, 2021, respectively. Refer to Note 2 for additional discussion of accounting policies for the Convertible Notes.
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KKR Real Estate Finance Trust Inc.
Notes to Condensed Consolidated Financial Statements
(dollars in tables in thousands, except per share amounts)
Note 9. Loan Participations Sold

KREF finances certain loan investments through the syndication of a non-recourse, or limited-recourse, loan participations to unaffiliated third parties. In October 2019, KREF syndicated a $65.0 million vertical participation in one of its loan investments with a principal balance of $328.5 million to an unaffiliated third party, at par value. In June 2020, KREF increased the maximum loan amount by $6.5 million and syndicated an additional $1.2 million vertical participation to the same third party. Such syndications did not qualify for "sale" accounting under GAAP and therefore were consolidated in KREF's condensed consolidated financial statements. In September 2021, KREF fully repaid the $66.2 million vertical loan participation in connection with the payoff of the underlying loan.

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KKR Real Estate Finance Trust Inc.
Notes to Condensed Consolidated Financial Statements
(dollars in tables in thousands, except per share amounts)
Note 10. Variable Interest Entities

Collateralized Loan Obligations — KREF is the primary beneficiary of its consolidated CLOs (Note 6). Management considers the CLO Issuers, wholly-owned subsidiaries of KREF, to be the primary beneficiary as the CLO Issuers have the ability to control the most significant activities of the CLO, the obligation to absorb losses, and the right to receive benefits of the CLO through the subordinate interests the CLO Issuers own.

Real Estate Owned Joint Venture — Concurrently with taking title of KREF’s sole REO asset, KREF contributed the REO to a joint venture with a third party local developer operator (“JV Partner”), whereby KREF has a 90% interest in the joint venture and the JV Partner has a 10% interest. Management determined the joint venture to be a VIE as the joint venture has insufficient equity-at-risk and concluded that KREF is the primary beneficiary of the joint venture as KREF holds decision-making power over the activities that most significantly impact the economic performance of the joint venture and has the obligation to absorb losses of, or the right to receive benefits from, the joint venture that could be potentially significant to the joint venture.

As of March 31, 2022, the joint venture held REO assets with a net carrying value of $68.9 million. KREF had priority of distributions up to $68.8 million before the JV Partner can participate in the economics of the joint venture.

Equity Method Investments

As of March 31, 2022, KREF held a 3.5% interest in RECOP I, an unconsolidated VIE of which KREF is not the primary beneficiary, at its fair value of $36.6 million. The aggregator vehicle in which KREF invests is controlled and advised by affiliates of the Manager. RECOP I primarily acquired junior tranches of CMBS newly issued by third parties. KREF will not pay any fees to RECOP I, but KREF bears its pro rata share of RECOP I's expenses. KREF reported its share of the net asset value of RECOP I in its Condensed Consolidated Balance Sheets, presented as “Equity method investments” and its share of net income, presented as “Income from equity method investments” in the Condensed Consolidated Statements of Income.

KREF, through a Taxable REIT Subsidiary ("TRS"), held non-voting limited liability company interests issued by the Manager ("Non-Voting Manager Units"), a VIE, for the benefit of the holder of the SNVPS (Note 11). KREF reported its share of net income, presented as “Income from equity method investments” in the Condensed Consolidated Statements of Income. On October 1, 2021, KREF TRS redeemed its interest in the Manager for a cash call amount of $5.1 million when the KKR Member exercised its Call Option to redeem the Non-Voting Manager Units, including the Non-Voting Manager Units held by KREF TRS.
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KKR Real Estate Finance Trust Inc.
Notes to Condensed Consolidated Financial Statements
(dollars in tables in thousands, except per share amounts)
Note 11. Equity

Authorized Capital — On October 2, 2014, KREF's board of directors authorized KREF to issue up to 350,000,000 shares of stock, at $0.01 par value per share, consisting of 300,000,000 shares of common stock and 50,000,000 shares of preferred stock, subject to certain restrictions on transfer and ownership of shares. Restrictions placed on the transfer and ownership of shares relate to KREF's REIT qualification requirements.

Common Stock — As further described below, since December 2015, KREF issued the following shares of common stock:

Pricing Date
Shares Issued(A)
Net Proceeds
As of December 31, 201513,636,416 $272,728 
February 20162,000,000 40,000 
May 20163,000,138 57,130 
June 2016(B)
21,838 — 
August 20165,500,000 109,875 
As of December 31, 201624,158,392 $479,733 
February 20177,386,208 147,662 
April 201710,379,738 207,595 
May 2017 - Initial Public Offering11,787,500 219,356 
As of December 31, 201753,711,838 $1,054,346 
August 20185,000,000 98,326 
November 2018500,000 9,351 
As of December 31, 201859,211,838 $1,162,023 
November 20215,000,000 108,800 
November 2021(C)
1 — 
November 2021547,361 11,911 
As of December 31, 202164,759,200 $1,282,734 
February 202268,817 1,426 
March 20226,494,155 133,845 
As of March 31, 202271,322,172 $1,418,005 

(A)    Excludes 511,858 net shares of common stock issued in connection with vested restricted stock units.
(B)    KREF did not receive any proceeds with respect to 21,838 shares of common stock issued to certain current and former employees of, and non-employee consultants to, KKR and third-party investors in the private placement completed in March 2016, in accordance with KREF's Stockholders Agreement dated as of March 29, 2016.
(C)    KREF did not receive any proceeds with respect to 1 share of common stock issued to KKR in connection with the conversion of the special voting preferred stock, in accordance with KREF’s Articles of Restatement dated as of May 10, 2017.

In May 2021, KKR sold 5,750,000 shares of KREF common stock through a secondary offering, including the exercise of the underwriters' option to purchase additional common shares, and received all of the $100.4 million net proceeds from the offering. On November 1, 2021, KKR converted its special voting preferred stock into one share of KREF common stock when KREF issued 5,000,000 shares of common stock, resulting in KKR’s ownership to decrease below 25.0% of KREF’s outstanding common stock.

KKR and affiliates beneficially owned 14,250,001 and 14,250,001 shares, or 21.0% and 23.2% of KREF's outstanding common stock as of March 31, 2022 and December 31, 2021, respectively.

In March 2022, KREF issued 6,494,155 shares of Common Stock in an underwritten offering, which included the partial exercise of the underwriters’ option to purchase additional shares of Common Stock, and received net proceeds after underwriting discounts and commissions of $133.8 million.

During the three months ended March 31, 2022 and 2021, no common stock was issued related to the vesting of restricted stock units. Upon any payment of shares as a result of restricted stock unit vesting, the related tax withholding obligation will generally be satisfied by KREF, reducing the number of shares to be delivered by a number of shares necessary to satisfy the related applicable tax withholding obligation. Refer to Note 12 for further detail.

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KKR Real Estate Finance Trust Inc.
Notes to Condensed Consolidated Financial Statements
(dollars in tables in thousands, except per share amounts)
Of the 71,834,030 common shares KREF issued, there were 67,933,704 common shares outstanding as of March 31, 2022, which includes 511,858 net shares of common stock issued in connection with vested restricted stock units and is net of 3,900,326 common shares repurchased.

Share Repurchase Program — Under the Company’s current share repurchase program, which has no expiration date, the Company may repurchase up to $100.0 million of its common stock beginning July 1, 2020, of which up to $50.0 million may be repurchased under a pre-set trading plan meeting the requirements of Rule 10b5-1 under the Exchange Act, and provide for repurchases of common stock when the market price per share is below book value per share (calculated in accordance with GAAP as of the end of the most recent quarterly period for which financial statements are available), and the remaining $50.0 million may be used for repurchases in the open market, pursuant to pre-set trading plans meeting the requirements of Rule 10b5-1 under the Exchange Act, in privately negotiated transactions or otherwise. The timing, manner, price and amount of any common stock repurchases will be determined by the Company in its discretion and will depend on a variety of factors, including legal requirements, price and economic and market conditions. The program does not require the Company to repurchase any specific number of shares of common stock, and the program may be suspended, extended, modified or discontinued at any time.

KREF did not repurchase any of its common stock during the three months ended March 31, 2022 and 2021. As of March 31, 2022, KREF had $100.0 million of remaining capacity to repurchase shares under the program.

At the Market Stock Offering Program — On February 22, 2019, KREF entered into an equity distribution agreement with certain sales agents, pursuant to which KREF may sell, from time to time, up to an aggregate sales price of $100.0 million of its common stock pursuant to a continuous offering program (the “ATM”). Sales of KREF’s common stock made pursuant to the ATM may be made in negotiated transactions or transactions that are deemed to be “at the market” offerings as defined in Rule 415 under the Securities Act of 1933, as amended. The timing and amount of actual sales will depend on a variety of factors including market conditions, the trading price of KREF’s common stock, KREF’s capital needs, and KREF’s determination of the appropriate sources of funding to meet such needs.

During the three months ended March 31, 2022, KREF issued and sold 68,817 shares of common stock under the ATM, generating net proceeds totaling $1.4 million. As of March 31, 2022, $98.6 million remained available for issuance under the ATM.

Special Voting Preferred Stock — In March 2016, KREF issued one share of special voting preferred stock to KKR Fund Holdings L.P. ("KKR Fund Holdings") for $20.00 per share, which KKR Fund Holdings transferred to its subsidiary, KKR REFT Asset Holdings LLC. The holder of the special voting preferred stock had special voting rights related to the election of members to KREF's board of directors until KKR and its affiliates ceased to own at least 25.0% of KREF's issued and outstanding common stock.

On November 1, 2021, KREF issued 5,000,000 shares of common stock, which resulted in KKR’s ownership decreasing below 25.0% of KREF’s outstanding common stock. Accordingly, KKR converted its special voting preferred share into one share of KREF common stock and ceased to possess its special voting rights related to the election of members to KREF's board of directors.

Special Non-Voting Preferred Stock — In connection with KREF's initial investors’ subscription for shares of KREF's common stock in the private placements prior to the initial public offering of KREF's equity on May 5, 2017, those investors were also allocated a class of non-voting limited liability company interest in the Manager ("Non-Voting Manager Units"). In February 2017, KREF issued an investor one share of SNVPS, at $0.01 per share, in lieu of that investor receiving Non-Voting Manager Units to facilitate compliance by the investor with regulatory requirements applicable to it. The corresponding Non-Voting Manager Units were held by a wholly-owned TRS of KREF ("KREF TRS"). All distributions received by KREF TRS from these Non-Voting Manager Units were passed through to the investor as preferred distributions on its SNVPS, less applicable taxes and withholdings. Except for the Non-Voting Manager Units, an indirect subsidiary of KKR ("KKR Member"), owned and controlled the limited liability company interests of the Manager.

Dividends on the SNVPS were payable quarterly, and accrued whether or not KREF had earnings, there were assets legally available for the payment of those dividends or those dividends had been declared. Any dividend payment made on the SNVPS would first be credited against the earliest accumulated but unpaid dividend due with respect to the SNVPS. Upon redemption of the SNVPS or liquidation of KREF, the holder of the SNVPS was entitled to payment of $0.01 per share,
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KKR Real Estate Finance Trust Inc.
Notes to Condensed Consolidated Financial Statements
(dollars in tables in thousands, except per share amounts)
together with any accumulated but unpaid preferred distributions, including respective call or put amounts, before any holder of junior security interests, which included KREF's common stock. As KREF did not control the circumstances under which the holder of the SNVPS could redeem its interests, management considered the SNVPS as temporary equity (Note 2).

KREF was required to redeem the SNVPS at the option of the holder at any time or upon the redemption by the KKR Member of the Non-Voting Manager Units (the "Call Option"). Upon redemption, KREF paid a price in cash equal to $0.01 per share of the SNVPS, together with any accumulated but unpaid preferred distributions, including respective call or put amounts, and the SNVPS was canceled automatically and ceased to be outstanding. Concurrently, upon redemption of the SNVPS, the KKR Member acquired from KREF TRS its respective Non-Voting Manager Units, resulting in a one-time gain, thus substantially eliminating the historical cumulative impact of the SNVPS redemption value adjustments recorded in KREF's permanent equity.

On October 1, 2021, the KKR Member exercised its Call Option to redeem the Non-Voting Manager Units, including the Non-Voting Manager Units held by KREF TRS. Accordingly, KREF TRS received a cash call amount of $5.1 million and KREF concurrently redeemed the SNVPS, which resulted in book value accretion in the fourth quarter of $2.6 million, or $0.05 per common share, thus eliminating the cumulative negative impact of the SNPVS on book value.

6.50% Series A Cumulative Redeemable Preferred Stock — In April 2021 and January 2022, KREF issued 6,900,000 and 6,210,000 shares of 6.50% Series A Cumulative Redeemable Preferred Stock (the “Series A Preferred Stock”), which included the exercise of the underwriters' option to purchase additional shares of Series A Preferred Stock, and received net proceeds after underwriting discount and commission of $167.1 million and $151.2 million, respectively.

The perpetual Series A Preferred Stock is redeemable, at KREF's option, at a liquidation price of $25.00 per share plus accrued and unpaid dividends commencing in April 2026. Dividends on the Series A Preferred Stock are payable quarterly at a rate of 6.50% per annum of the $25.00 liquidation preference, which is equivalent to $1.625 per annum per share. With respect to dividend rights and liquidation, the Series A Preferred Stock ranks senior to KREF's common stock.

Noncontrolling Interests — Noncontrolling interests represent a third party’s 10.0% interest in a joint venture, a consolidated VIE, that holds portion of KREF’s sole REO investment. KREF and the noncontrolling interest holder contribute to the joint venture’s ongoing operating shortfalls and capital expenditures on a pari passu basis. Distributions from the joint venture are allocated between KREF and the noncontrolling interest holder based on contractual terms and waterfalls as outlined in the joint venture agreement.

Dividends — During the three months ended March 31, 2022 and 2021, KREF's board of directors declared the following dividends on shares of its common stock and special voting preferred stock:

Amount
Declaration DateRecord DatePayment DatePer ShareTotal
2022
March 15, 2022March 31, 2022April 15, 2022$0.43 $29,211 
$29,211 
2021
March 15, 2021March 31, 2021April 15, 2021$0.43 $23,916 
$23,916 

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KKR Real Estate Finance Trust Inc.
Notes to Condensed Consolidated Financial Statements
(dollars in tables in thousands, except per share amounts)
During the three months ended March 31, 2022, KREF's board of directors declared the following dividends on shares of its Series A Preferred Stock:

Amount
Declaration DateRecord DatePayment DatePer ShareTotal
2022
February 1, 2022February 28, 2022March 15, 2022$0.41 $5,326 
$5,326 


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KKR Real Estate Finance Trust Inc.
Notes to Condensed Consolidated Financial Statements
(dollars in tables in thousands, except per share amounts)
Note 12. Stock-based Compensation

KREF is externally managed by the Manager and does not currently have any employees. However, as of March 31, 2022, certain individuals employed by the Manager and affiliates of the Manager and certain members of KREF's board of directors were compensated, in part, through the issuance of stock-based awards.

As of March 31, 2022, KREF had restricted stock unit (“RSU”) awards outstanding under the KKR Real Estate Finance Trust Inc. 2016 Omnibus Incentive Plan that was adopted on February 12, 2016 and amended and restated on November 17, 2016 (the "Incentive Plan") to certain members of KREF’s board of directors and employees of the Manager or its affiliates, none of whom are KREF employees. RSUs awarded to employees of the Manager or its affiliates, generally vest over three consecutive one-year periods and awards to certain members of KREF's board of directors generally vest over a one-year period, pursuant to the terms of the respective award agreements and the terms of the Incentive Plan.

In December 2021, KREF's board of directors granted 400,000 shares of RSU awards that are entitled to nonforfeitable dividends during the vesting periods, at the same rate as those declared on the common stock. In February 2022, KREF's board of directors approved a modification that entitled the unvested RSU awards granted prior to December 2021 to dividends during the vesting periods, at the same rate as those declared on the common stock, starting with the first quarter of 2022.

The following table summarizes the activity in KREF’s outstanding RSUs and the weighted-average grant date fair value per RSU:

Restricted Stock Units
Weighted Average Grant Date Fair Value Per RSU(A)
Unvested as of December 31, 2021808,330 $19.50 
Granted— — 
Vested— — 
Forfeited / cancelled— — 
Unvested as of March 31, 2022808,330 $19.50 

(A)    The grant-date fair value is based upon the closing price of KREF’s common stock at the date of grant.

KREF expects the unvested RSUs outstanding to vest during the following years:

YearRestricted Stock Units
2022402,494 
2023272,489 
2024133,347 
Total808,330 

KREF recognizes the compensation cost of RSUs awarded to employees of the Manager, or one or more of its affiliates, on a straight-line basis over the awards’ term at their grant date fair value, consistent with the RSUs awarded to certain members of KREF's board of directors.

During the three months ended March 31, 2022 and 2021, KREF recognized $2.1 million and $2.0 million, respectively, of stock-based compensation expense included in “General and administrative” expense in the Condensed Consolidated Statements of Income. As of March 31, 2022, there was $12.1 million of total unrecognized stock-based compensation expense related to unvested share-based compensation arrangements. This cost is expected to be recognized over a weighted average period of 1.1 years.

During the three months ended March 31, 2022 and 2021, KREF declared $0.3 million and $0.0 million, respectively, of nonforfeitable dividends on employee RSUs during the vesting period. Such nonforfeitable dividends were deducted from “Retained earnings (Accumulated deficit)” in the Condensed Consolidated Statement of Changes in Stockholders' Equity.

Upon any payment of shares as a result of restricted stock unit vesting, the related tax withholding obligation will generally be satisfied by KREF, reducing the number of shares to be delivered by a number of shares necessary to satisfy the related
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KKR Real Estate Finance Trust Inc.
Notes to Condensed Consolidated Financial Statements
(dollars in tables in thousands, except per share amounts)
applicable tax withholding obligation. The amount results in a cash payment related to this tax liability and a corresponding reduction to additional paid-in capital in the Condensed Consolidated Statement of Changes in Stockholders' Equity. No
shares were delivered for vested RSUs during the three months ended March 31, 2022.

Refer to Note 15 for additional information regarding the Incentive Plan.

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KKR Real Estate Finance Trust Inc.
Notes to Condensed Consolidated Financial Statements
(dollars in tables in thousands, except per share amounts)
Note 13. Earnings (Loss) per Share

Earnings (Loss) per Share — KREF calculates its basic EPS using the two-class method, which defines unvested share-based payment awards that contain nonforfeitable rights to dividends as participating securities. Under the two-class method earnings (distributed and undistributed) are allocated to common shares and participating securities based on their respective rights. Basic EPS, is calculated by dividing net income (loss) attributable to common stockholders by the weighted average common stock outstanding for the period.

KREF presents diluted EPS under the more dilutive of the treasury stock and if-converted methods or the two-class method. Under the treasury stock and if-converted methods, the denominator includes weighted average common stock outstanding plus the incremental dilutive shares issuable from restricted stock units and an assumed conversion of the Convertible Notes. The numerator includes any changes in income (loss) that would result from the assumed conversion of these potential shares of common stock.

For the three months ended March 31, 2022, 6,316,174 potentially issuable shares related to the Convertible Notes were included in the dilutive EPS denominator after the adoption of ASU 2020-06. For the three months ended March 31, 2021, all potentially issuable shares related to the Convertible Notes were excluded from the calculation of diluted EPS because KREF had the intent and ability to settle the Convertible Notes in cash.

The following table illustrates the computation of basic and diluted EPS for the three months ended March 31, 2022 and 2021:

Three Months Ended March 31,
20222021
Basic Earnings
Net Income (Loss) $35,468 $30,092 
Less: Preferred stock dividends and redemption value adjustment
5,326 908 
Less: Participating securities' share in earnings
346 — 
Net income (loss) attributable to common stockholders$29,796 $29,184 
Diluted Earnings
Net income (loss) attributable to common stockholders$29,796 $29,184 
Add: Interest expense attributable to the Convertible Notes2,201 — 
Less: Reallocation of undistributed earnings to participating securities
(25)— 
Net income (loss) attributable to common stockholders, diluted
$31,972 $29,184 
Denominator
Basic weighted average common shares outstanding63,086,452 55,619,428 
Dilutive shares under assumed conversion of the Convertible Notes6,316,174 — 
Dilutive restricted stock units— 111,633 
Diluted weighted average common shares outstanding69,402,626 55,731,061 
Net income (loss) attributable to common stockholders, per:
Basic common share$0.47 $0.52 
Diluted common share$0.46 $0.52 

For the three months ended March 31, 2022 and 2021, 181,560 and zero weighted average unvested RSUs, respectively, were excluded from the calculation of diluted EPS because the effect was anti-dilutive.
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KKR Real Estate Finance Trust Inc.
Notes to Condensed Consolidated Financial Statements
(dollars in tables in thousands, except per share amounts)
Note 14. Commitments and Contingencies

As of March 31, 2022, KREF was subject to the following commitments and contingencies:

Litigation — From time to time, KREF may be involved in various claims and legal actions arising in the ordinary course of business. KREF establishes an accrued liability for legal proceedings only when those matters present loss contingencies that are both probable and reasonably estimable.

As of March 31, 2022, KREF was not involved in any material legal proceedings regarding claims or legal actions against KREF.

Indemnifications — In the normal course of business, KREF enters into contracts that contain a variety of representations and warranties that provide general indemnifications and other indemnities relating to contractual performance. In addition, certain of KREF’s subsidiaries have provided certain indemnities relating to environmental and other matters and has provided nonrecourse carve-out guarantees for fraud, willful misconduct and other customary wrongful acts, each in connection with the financing of certain real estate investments that KREF has made. KREF’s maximum exposure under these arrangements is unknown as this would involve future claims that may be made against KREF that have not yet occurred. However, KREF expects the risk of material loss to be low.

Capital Commitments — As of March 31, 2022, KREF had future funding commitments of $1,449.1 million related to its investments in commercial real estate loans. These future funding commitments primarily relate to construction projects, capital improvements, tenant improvements and leasing commissions. Generally, funding commitments are subject to certain conditions that must be met, such as customary construction draw certifications, minimum credit metrics or executions of new leases before advances are made to the borrower.

In January 2017, KREF committed $40.0 million to invest in an aggregator vehicle alongside RECOP I. The two-year investment period for RECOP I ended in April 2019. As of March 31, 2022, KREF had a remaining commitment of $4.3 million to RECOP I.

Impact of the COVID-19 Pandemic — Although the global economy has, with certain setbacks, begun reopening and wider distribution of vaccines will likely encourage greater economic activity, KREF is unable to predict how widely utilized the vaccines will be, whether they will be effective in preventing the spread of COVID-19 (including its variant strains), and the time required for a widespread sustainable economic recovery to take hold. Accordingly, the full extent of the impact of COVID-19 on the global economy generally, and on KREF’s business and on the businesses of KREF’s borrowers, in particular, is uncertain. However, to the extent COVID-19 continues to cause dislocations in the global economy, our financial condition, results of operations and cash flows may be adversely impacted. Refer to “Note 2 — Summary of Significant Accounting Policies” for further discussion regarding COVID-19.

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KKR Real Estate Finance Trust Inc.
Notes to Condensed Consolidated Financial Statements
(dollars in tables in thousands, except per share amounts)
Note 15. Related Party Transactions

Management Agreement — The Management Agreement between KREF and the Manager is a three-year agreement that provides for automatic one-year renewal periods starting October 8, 2017, subject to certain termination and nonrenewal rights, which in the case of KREF are exercisable by a two-thirds vote by the independent directors of KREF's board of directors. If the independent directors of KREF's board of directors decline to renew the Management Agreement other than for cause, KREF is required to pay the Manager a termination fee equal to three times the total 24-month trailing average annual management fee and incentive compensation earned by the Manager through the most recently completed calendar quarter. For administrative efficiency purposes, the Management Agreement was amended in August 2019 to change the expiration date of each automatic renewal period from October 7th to December 31st.

Pursuant to the Management Agreement, the Manager, as agent to KREF and under the supervision of KREF's board of directors, manages the investments, subject to investment guidelines approved by KREF's board of directors; financing activities; and day-to-day business and affairs of KREF and its subsidiaries.

For its services to KREF, the Manager is entitled to a quarterly management fee equal to the greater of $62,500 or 0.375% of weighted average adjusted equity and quarterly incentive compensation equal to 20.0% of the excess of (a) the trailing 12-month distributable earnings (before incentive compensation payable to the Manager) over (b) 7.0% of the trailing 12-month weighted average adjusted equity (“Hurdle Rate”), less incentive compensation KREF already paid to the Manager with respect to the first three calendar quarters of such trailing 12-month period. The quarterly incentive compensation is calculated and paid in arrears with a one-quarter lag.

Adjusted equity generally represents the proceeds received by KREF and its subsidiaries from equity issuances, without duplication and net of offering costs, and distributable earnings, reduced by distributions, equity repurchases, and incentive compensation paid. Distributable earnings generally represent the net income, or loss, attributable to equity interests in KREF and its subsidiaries, without duplication, as well as realized losses not otherwise included in such net income, or loss, excluding non-cash equity compensation expense, incentive compensation, depreciation and amortization and unrealized gains or losses, from and after the effective date to the end of the most recently completed calendar quarter. KREF's board of directors, after majority approval by independent directors, may also exclude one-time events pursuant to changes in GAAP and certain material non-cash income or expense items from distributable earnings. For purposes of calculating incentive compensation, adjusted equity excludes: (i) the effects of equity issued by KREF and its subsidiaries that provides for fixed distributions or other debt characteristics and (ii) unrealized provision for (reversal of) credit losses.

KREF is also required to reimburse the Manager or its affiliates for documented costs and expenses incurred by it and its affiliates on behalf of KREF, except those specifically required to be borne by the Manager under the Management Agreement. The Manager is responsible for, and KREF does not reimburse the Manager or its affiliates for, the expenses related to investment personnel of the Manager and its affiliates who provide services to KREF. However, KREF does reimburse the Manager for KREF's allocable share of compensation paid to certain of the Manager’s non-investment personnel, based on the percentage of time devoted by such personnel to KREF's affairs.

Incentive Plan — KREF's compensation committee or board of directors may administer the Incentive Plan, which provides for awards of stock options; stock appreciation rights; restricted stock; RSUs; limited partnership interests of KKR Real Estate Finance Holdings L.P. (the "Operating Partnership"), a wholly owned subsidiary of KREF, that are directly or indirectly convertible into or exchangeable or redeemable for shares of KREF's common stock pursuant to the limited partnership agreement of the Operating Partnership (“OP Interests”); awards payable by (i) delivery of KREF's common stock or other equity interests, or (ii) reference to the value of KREF's common stock or other equity interests, including OP Interests; cash-based awards; or performance compensation awards.

No more than 7.5% of the issued and outstanding shares of common stock on a fully diluted basis, assuming the exercise of all outstanding stock options granted under the Incentive Plan and the conversion of all warrants and convertible securities into shares of common stock, or a total of 4,028,387 shares of common stock, will be available for awards under the Incentive Plan. In addition, (i) the maximum number of shares of common stock subject to awards granted during a single fiscal year to any non-employee director (as defined in the Incentive Plan), taken together with any cash fees paid to such non-employee director during the fiscal year, may not exceed $1.0 million and (ii) the maximum amount that can be paid to any participant for a single fiscal year during a performance period (or with respect to each single fiscal year if a performance period extends beyond a single fiscal year) pursuant to a performance compensation award denominated in cash may not exceed $10.0 million.
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KKR Real Estate Finance Trust Inc.
Notes to Condensed Consolidated Financial Statements
(dollars in tables in thousands, except per share amounts)

No awards may be granted under the Incentive Plan on and after February 12, 2026. The Incentive Plan will continue to apply to awards granted prior to such date. During the three months ended March 31, 2022 and 2021, no awards were granted to KREF's directors and employees of the Manager. As of March 31, 2022, 2,708,199 shares of common stock remained available for awards under the Incentive Plan.

Due to Affiliates — The following table contains the amounts presented in KREF's Condensed Consolidated Balance Sheets that it owes to affiliates:

March 31, 2022December 31, 2021
Management fees$6,007 $5,289 
Expense reimbursements and other(A)
2,661 663 
$8,668 $5,952 

(A)    Includes $2.6 million and $0.6 million of accrued KCM fees as of March 31, 2022 and December 31, 2021, respectively.

Affiliates Expenses — The following table contains the amounts included in KREF's Condensed Consolidated Statements of Income that arose from transactions with the Manager:

Three Months Ended March 31,
20222021
Management fees$6,007 $4,290 
Incentive compensation— 2,192 
Expense reimbursements and other(A)
726 352 
$6,733 $6,834 

(A)    KREF presents these amounts in "General and administrative" in its Condensed Consolidated Statements of Income. Affiliate expense reimbursements presented in the table above exclude the out-of-pocket amounts paid by the Manager to parties unaffiliated with the Manager on behalf of KREF, and for which KREF reimburses the Manager in cash. For the three months ended March 31, 2022 and 2021, these cash reimbursements totaled $0.8 million and $2.1 million, respectively.

In connection with the ATM, KCM, in its capacity as one of the sales agents, will receive commissions for the shares of KREF’s common stock it sells. This amount is not to exceed, but may be less than, 2.0% of the gross sales price per share. KREF sold 68,817 shares under the ATM through a third-party broker and did not incur or pay any commissions to KCM during the three months ended March 31, 2022.

In connection with the HSBC Facility entered into in March 2020, and in consideration for structuring and sourcing this arrangement, KREF is obligated to pay KCM a structuring fee equal to 0.25% of the respective committed loan advances under the agreement. Such fees are capitalized as deferred financing cost and amortized to interest expense over the lesser of the initial term of the loan or the facility. During the three months ended March 31, 2022 and 2021, KREF did not incur or pay any KCM structuring fees in connection with the facility.

In connection with the secured term loan, and in consideration for structuring and arranging the loan, KREF paid KCM a $1.1 million arrangement and structuring fee equal to 0.37% of the principal amount of the secured term loan in the third quarter of 2020. In addition, KREF paid KCM a $0.8 million arrangement and structuring fee in connection with the secured term loan repricing and upsize in the fourth quarter of 2021. Such fees were capitalized as deferred financing cost and amortized to interest expense over the life of the secured term loan.

In connection with the syndication of a senior mortgage loan in February 2021, and in consideration for its services as the placement agent, KREF paid KCM a $0.4 million placement agent fee equal to 0.25% of KREF’s proportionate share of the senior loan commitment. Such fee was capitalized as a direct loan origination cost and amortized to interest income over the life of the loan.

In connection with the Series A Preferred Stock issuance in April 2021 and January 2022, and in consideration for its services as joint bookrunner, KREF incurred and paid KCM a $1.6 million and $1.3 million in underwriting discount and commission,
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Notes to Condensed Consolidated Financial Statements
(dollars in tables in thousands, except per share amounts)
respectively. The underwriting discount and commission was settled net of the preferred stock issuance proceeds and recorded as a reduction to additional paid-in-capital in KREF's condensed consolidated financial statements.

In connection with the KREF Lending IX Facility entered into in July 2021, and in consideration for structuring and sourcing this arrangement, KREF is obligated to pay KCM a structuring fee equal to 0.75% of the respective committed loan advances under the agreement. Such fees are capitalized as deferred financing cost and amortized to interest expense over the draw period of the facility. During the three months ended March 31, 2022, KREF paid KCM $0.6 million in structuring fees, accrued as of December 31, 2021, in connection with the facility.

In connection with the KREF 2021-FL2 and KREF 2022-FL3 CLO issuances in August 2021 and February 2022, and in consideration for its services as the co-lead manager and joint bookrunner, KREF paid KCM $0.9 million and $0.5 million, respectively, in structuring and placement agent fees in the third quarter of 2021 and first quarter of 2022. These fees were capitalized as deferred financing cost and amortized to interest expense over the estimated life of the CLOs.

In connection with the extension and upsize of the Revolver in March 2022, and in consideration for its services as the arranger, KREF is obligated to pay KCM an arrangement fee equal to 0.375% of the aggregate amount of existing commitments plus 0.75% of the aggregate amount of new commitments. Such fees were capitalized as deferred financing cost included within "Other assets" on the Condensed Consolidated Balance Sheet and amortized to interest expense over the life of the Revolver. During the three months ended March 31, 2022, KREF accrued for $2.6 million of arrangement fees in connection with the Revolver.


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KKR Real Estate Finance Trust Inc.
Notes to Condensed Consolidated Financial Statements
(dollars in tables in thousands, except per share amounts)
Note 16. Fair Value of Financial Instruments

The carrying values and fair values of KREF’s financial assets and liabilities recorded at fair value on a recurring basis, as well as other financial instruments not carried at fair value, as of March 31, 2022 were as follows:

Fair Value
Principal Balance
Amortized Cost(A)
Carrying Value(B)
Level 1Level 2Level 3Total
Assets
Cash and cash equivalents$173,178 $173,178 $173,178 $173,178 $— $— $173,178 
Commercial real estate loans, held-for-investment, net(C)
6,821,577 6,772,884 6,752,208 — — 6,784,505 6,784,505 
Equity method investments36,595 36,595 36,595 — — 36,595 36,595 
$7,031,350 $6,982,657 $6,961,981 $173,178 $— $6,821,100 $6,994,278 
Liabilities
Secured financing agreements, net$3,045,829 $3,035,230 $3,035,230 $— $— $3,035,230 $3,035,230 
Collateralized loan obligations, net1,942,750 1,929,616 1,929,616 — — 1,926,717 1,926,717 
Secured term loan, net349,125 337,971 337,971 — 353,053 — 353,053 
Convertible notes, net143,750 142,193 142,193 — 147,115 — 147,115 
$5,481,454 $5,445,010 $5,445,010 $— $500,168 $4,961,947 $5,462,115 

(A)    The amortized cost of commercial real estate loans is net of $5.5 million write-off on a mezzanine loan and $43.2 million unamortized origination discounts and deferred fees. The amortized cost of secured financing agreements is net of $10.6 million unamortized debt issuance costs. The amortized cost of collateralized loan obligations is net of $13.1 million unamortized debt issuance costs.
(B)    The carrying value of commercial mortgage loans is net of $20.7 million allowance for credit losses.
(C)    Includes $2,300.0 million of CLO loan participations as of March 31, 2022.

The carrying values and fair values of KREF’s financial assets recorded at fair value on a recurring basis, as well as other financial instruments for which fair value is disclosed, as of December 31, 2021 were as follows:

Fair Value
Principal Balance
Amortized Cost(A)
Carrying Value(B)
Level 1Level 2Level 3Total
Assets
Cash and cash equivalents$271,487 $271,487 $271,487 $271,487 $— $— $271,487 
Commercial real estate loans, held-for-investment, net(C)
6,364,105 6,316,733 6,294,489 — — 6,340,837 6,340,837 
Equity method investments35,537 35,537 35,537 — — 35,537 35,537 
$6,671,129 $6,623,757 $6,601,513 $271,487 $— $6,376,374 $6,647,861 
Liabilities
Secured financing agreements, net$3,737,893 $3,726,593 $3,726,593 $— $— $3,726,593 $3,726,593 
Collateralized loan obligations, net1,095,250 1,087,976 1,087,976 — — 1,094,834 1,094,834 
Secured term loan, net350,000 338,549 338,549 — 352,625 — 352,625 
Convertible notes, net143,750 141,851 141,851 — 152,203 — 152,203 
$5,326,893 $5,294,969 $5,294,969 $— $504,828 $4,821,427 $5,326,255 

(A)    The amortized cost of commercial real estate loans is net of $5.5 million write-off on a mezzanine loan and $41.9 million unamortized origination discounts and deferred fees. The amortized cost of secured financing agreements is net of $11.3 million unamortized debt issuance costs. The amortized cost of collateralized loan obligations is net of $7.3 million unamortized debt issuance costs.
(B)    The carrying value of commercial mortgage loans is net of $22.2 million allowance for credit losses.
(C)    Includes $1,246.0 million of CLO loan participations as of December 31, 2021.
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KKR Real Estate Finance Trust Inc.
Notes to Condensed Consolidated Financial Statements
(dollars in tables in thousands, except per share amounts)
The following table contains the Level 3 inputs used to value assets and liabilities on a recurring and nonrecurring basis or where KREF discloses fair value as of March 31, 2022:

Fair ValueValuation Methodologies
Unobservable Inputs(A)
Weighted Average(B)
Range
Assets and Liabilities(C)
Commercial real estate loans, held-for-investment(D)
$6,784,505 Discounted cash flowDiscount rate4.2%
2.9% - 14.6%
$6,784,505 

(A)    An increase (decrease) in the valuation input results in a decrease (increase) in value.
(B)    Represents the average of the input value, weighted by the unpaid principal balance of the financial instrument.
(C)    KREF carries a $36.6 million investment in an aggregator vehicle alongside RECOP I (Note 10) at its pro rata share of the aggregator's net asset value, which management believes approximates fair value.
(D)    Commercial real estate loans are generally valued using a discounted cash flow model using a discount rate derived from relevant market indices and/or estimates of the underlying property's value.

Assets and Liabilities Measured at Fair Value on a Nonrecurring Basis

Certain assets not measured at fair value on an ongoing basis but subject to fair value adjustments only in certain circumstances, such as when there is evidence of impairment, are measured at fair value on a nonrecurring basis. KREF measures commercial real estate loans held-for-sale at the lower of cost or fair value and may be required, from time to time, to record a nonrecurring fair value adjustment. KREF measures commercial real estate loans held-for-investment at amortized cost, but may be required, from time to time, to record a nonrecurring fair value adjustment in the form of a valuation provision or impairment.

KREF did not report any significant financial assets or liabilities at fair value on a nonrecurring basis as of March 31, 2022 and December 31, 2021.

Assets and Liabilities for Which Fair Value is Only Disclosed

KREF does not carry its secured financing agreements at fair value as management did not elect the fair value option for these liabilities. As of March 31, 2022, the fair value of KREF's financing facilities approximated their respective carrying value.

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KKR Real Estate Finance Trust Inc.
Notes to Condensed Consolidated Financial Statements
(dollars in tables in thousands, except per share amounts)
Note 17. Income Taxes

KREF has elected to be taxed as a REIT under Sections 856 through 860 of the Internal Revenue Code commencing with its taxable year ended December 31, 2014. A REIT is generally not subject to U.S. federal and state income tax on that portion of its income that is distributed to stockholders if it distributes at least 90% of its REIT taxable income, determined without regard to the deduction for dividends paid and excluding any net capital gains. A REIT will also be subject to a nondeductible excise tax to the extent certain percentages of its taxable income are not distributed within specified dates. While KREF expects to distribute at least 90% of its net taxable income for the foreseeable future, KREF will continue to evaluate its capital and liquidity needs in light of the significant uncertainties created by the COVID-19 pandemic, including the potential for a continued and prolonged adverse impact on economic and market conditions.

KREF consolidates subsidiaries that incur U.S. federal, state and local income taxes, based on the tax jurisdiction in which each subsidiary operates. During the three months ended March 31, 2022 and 2021, KREF recorded no current income tax provision, related to the operations of its taxable REIT subsidiaries and various other state and local taxes. There were no deferred tax assets or liabilities as of March 31, 2022 and December 31, 2021.

As of March 31, 2022, tax years 2017 through 2021 remain subject to examination by taxing authorities.

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KKR Real Estate Finance Trust Inc.
Notes to Condensed Consolidated Financial Statements
(dollars in tables in thousands, except per share amounts)
Note 18. Subsequent Events

The following events occurred subsequent to March 31, 2022:

Investing Activities

KREF originated the following loans:
Description/ LocationProperty TypeMonth OriginatedCommitted Principal AmountInitial Principal Funded
Interest Rate (A)
Maturity Date(B)
LTV
Senior Loan, Carrollton, TXMultifamilyApril 2022$48,477 $43,449 
 + 2.9%
April 202774%
Senior Loan, Dallas, TXMultifamilyApril 202243,890 38,308 
 + 2.9%
April 202773
Senior Loan, San Antonio, TXMultifamilyApril 202257,600 55,200 
 + 2.7%
May 202779
Total/ Weighted Average$149,967 $136,957 
 + 2.8%
76%

(A)    Floating rate based on Term SOFR.
(B)    Maturity date assumes all extension options are exercised, if applicable.


Financing Activities

In April 2022, KREF increased the borrowing capacity under its Revolver from $520.0 million to $610.0 million.

Corporate Activities

Dividends

In April 2022, KREF paid $29.2 million in dividends on its common stock, or $0.43 per share, with respect to the first quarter of 2022, to stockholders of record on March 31, 2022.

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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion should be read in conjunction with the unaudited condensed consolidated financial statements and notes thereto appearing elsewhere in this Form 10-Q. The historical consolidated financial data below reflects the historical results and financial position of KREF. In addition, this discussion and analysis contains forward-looking statements and involves numerous risks and uncertainties, including those described under Part I, Item 1A. "Risk Factors" in the Form 10-K and under "Cautionary Note Regarding Forward-Looking Statements." Actual results may differ materially from those contained in any forward-looking statements.

Overview

Our Company and Our Investment Strategy

We are a real estate finance company that focuses primarily on originating and acquiring transitional senior loans secured by commercial real estate ("CRE") assets. We are a Maryland corporation that was formed and commenced operations on October 2, 2014, and we have elected to qualify as a REIT for U.S. federal income tax purposes. Our investment strategy is to originate or acquire transitional senior loans collateralized by institutional-quality CRE assets that are owned and operated by experienced and well-capitalized sponsors and located in liquid markets with strong underlying fundamentals. The assets in which we invest include senior loans, mezzanine loans, preferred equity and commercial mortgage-backed securities ("CMBS") and other real estate-related securities. Our investment allocation strategy is influenced by prevailing market conditions at the time we invest, including interest rate, economic and credit market conditions. In addition, we may invest in assets other than our target assets in the future, in each case subject to maintaining our qualification as a REIT for U.S. federal income tax purposes and our exclusion from registration under the Investment Company Act. Our investment objective is capital preservation and generating attractive risk-adjusted returns for our stockholders over the long term, primarily through dividends.

Our Manager
       
We are externally managed by our Manager, KKR Real Estate Finance Manager LLC, an indirect subsidiary of KKR & Co. Inc. KKR is a leading global investment firm with an over 45-year history of leadership, innovation, and investment excellence. KKR manages multiple alternative asset classes, including private equity, real estate, energy, infrastructure and credit, with strategic manager partnerships that manage hedge funds. Our Manager manages our investments and our day-to-day business and affairs in conformity with our investment guidelines and other policies that are approved and monitored by our board of directors. Our Manager is responsible for, among other matters, (i) the selection, origination or purchase and sale of our portfolio investments, (ii) our financing activities and (iii) providing us with investment advisory services. Our Manager is also responsible for our day-to-day operations and performs (or causes to be performed) such services and activities relating to our investments and business and affairs as may be appropriate. Our investment decisions are approved by an investment committee of our Manager that is comprised of senior investment professionals of KKR, including senior investment professionals of KKR's global real estate group. For a summary of certain terms of the management agreement, see Note 15 to our condensed consolidated financial statements included in this Form 10-Q.
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Key Financial Measures and Indicators

As a real estate finance company, we believe the key financial measures and indicators for our business are earnings per share, dividends declared, Distributable Earnings and book value per share.

Earnings (Loss) Per Share and Dividends Declared

The following table sets forth the calculation of basic and diluted net income (loss) per share and dividends declared per share (amounts in thousands, except share and per share data):
Three Months Ended,
March 31, 2022December 31, 2021
Net income attributable to common stockholders$29,796 $35,198 
Weighted-average number of shares of common stock outstanding
Basic63,086,45259,364,672
Diluted69,402,62659,453,264
Net income per share, basic$0.47 $0.59 
Net income per share, diluted$0.46 $0.59 
Dividends declared per share$0.43 $0.43 

Distributable Earnings

Distributable Earnings, a measure that is not prepared in accordance with GAAP, is a key indicator of our ability to generate sufficient income to pay our quarterly dividends and in determining the amount of such dividends, which is the primary focus of yield/income investors who comprise a significant portion of our investor base. Accordingly, we believe providing Distributable Earnings on a supplemental basis to our net income as determined in accordance with GAAP is helpful to our stockholders in assessing the overall performance of our business.

We define Distributable Earnings as net income (loss) attributable to our stockholders or, without duplication, owners of our subsidiaries, computed in accordance with GAAP, including realized losses not otherwise included in GAAP net income (loss) and excluding (i) non-cash equity compensation expense, (ii) depreciation and amortization, (iii) any unrealized gains or losses or other similar non-cash items that are included in net income for the applicable reporting period, regardless of whether such items are included in other comprehensive income or loss, or in net income, and (iv) one-time events pursuant to changes in GAAP and certain material non-cash income or expense items agreed upon after discussions between our Manager and our board of directors and after approval by a majority of our independent directors. The exclusion of depreciation and amortization from the calculation of Distributable Earnings only applies to debt investments related to real estate to the extent we foreclose upon the property or properties underlying such debt investments.

While Distributable Earnings excludes the impact of our unrealized current provision for (reversal of) credit losses, any loan losses are charged off and realized through Distributable Earnings when deemed non-recoverable. Non-recoverability is determined (i) upon the resolution of a loan (i.e. when the loan is repaid, fully or partially, or in the case of foreclosure, when the underlying asset is sold), or (ii) with respect to any amount due under any loan, when such amount is determined to be non-collectible.

Distributable Earnings should not be considered as a substitute for GAAP net income. We caution readers that our methodology for calculating Distributable Earnings may differ from the methodologies employed by other REITs to calculate the same or similar supplemental performance measures, and as a result, our reported Distributable Earnings may not be comparable to similar measures presented by other REITs.

Historically, when calculating our share count for purposes of GAAP earnings per diluted share and Distributable Earnings per diluted share, we have excluded the number of shares that may be issued upon the conversion of the Convertible Notes. As a result of updated accounting guidance, beginning with the first quarter of 2022, we are now required to include such shares in our diluted shares outstanding under GAAP notwithstanding that we currently have the intent and ability to settle the Convertible Notes in cash. Accordingly, beginning with the first quarter of 2022, for purposes of calculating Distributable Earnings per diluted weighted average share, the weighted average diluted shares outstanding has been adjusted from the weighted average diluted shares outstanding under GAAP to exclude potential shares that may be issued upon the conversion of the Convertible Notes. Consistent with the treatment of other unrealized adjustments to Distributable Earnings, these potentially
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issuable shares are excluded until a conversion occurs, which we believe is a useful presentation for investors. We believe that excluding shares issued in connection with a potential conversion of the Convertible Notes from our computation of Distributable Earnings per diluted weighted average share is useful to investors for various reasons, including: (i) conversion of Convertible Notes to shares would require the holder of a note to elect to convert the Convertible Note and for us to elect to settle the conversion in the form of shares, and we currently intend to settle the Convertible Notes in cash; (ii) future conversion decisions by note holders will be based on our stock price in the future, which is presently not determinable; and (iii) we believe that when evaluating our operating performance, investors and potential investors consider our Distributable Earnings relative to our actual distributions, which are based on shares outstanding and not shares that might be issued in the future.

The table below reconciles the weighted average diluted shares under GAAP to the weighted average diluted shares used for Distributable Earnings:
Three Months Ended,
March 31, 2022December 31, 2021
Diluted weighted average common shares outstanding, GAAP69,402,626 59,453,264 
Less: Dilutive shares under assumed conversion of the Convertible Notes (ASU 2020-06)(6,316,174)— 
Less: Anti-dilutive restricted stock units— (88,592)
Diluted weighted average common shares outstanding, Distributable Earnings63,086,452 59,364,672 

We also use Distributable Earnings (before incentive compensation payable to our Manager) to determine the management and incentive compensation we pay our Manager. For its services to KREF, our Manager is entitled to a quarterly management fee equal to the greater of $62,500 or 0.375% of a weighted average adjusted equity and quarterly incentive compensation equal to 20.0% of the excess of (a) the trailing 12-month Distributable Earnings (before incentive compensation payable to our Manager) over (b) 7.0% of the trailing 12-month weighted average adjusted equity(1) (“Hurdle Rate”), less incentive compensation KREF already paid to the Manager with respect to the first three calendar quarters of such trailing 12-month period. The quarterly incentive compensation is calculated and paid in arrears with a three-month lag.

(1)    For purposes of calculating incentive compensation under our Management Agreement, adjusted equity excludes: (i) the effects of equity issued that provides for fixed distributions or other debt characteristics and (ii) unrealized provision for (reversal of) credit losses.

The following table provides a reconciliation of GAAP net income attributable to common stockholders to Distributable Earnings (amounts in thousands, except share and per share data):
Three Months Ended,
March 31, 2022December 31, 2021
Net Income (Loss) Attributable to Common Stockholders$29,796 $35,198 
Adjustments
Non-cash equity compensation expense2,126 1,413 
Unrealized (gains) or losses(A)
(1,032)1,463 
Provision for (reversal of) credit losses, net(1,218)(3,077)
Non-cash convertible notes discount amortization89 91 
Loan write-offs(B)
— (32,905)
Gain on redemption of non-voting manager units— (5,126)
Distributable Earnings
$29,761 $(2,943)
Weighted average number of shares of common stock outstanding
  Basic63,086,45259,364,672
  Adjusted Diluted Shares Outstanding(C)
63,086,45259,364,672
Distributable Earnings per Diluted Weighted Average Share(C)
$0.47 $(0.05)

(A)    Includes ($1.0) million and ($1.1) million of unrealized mark-to-market adjustment to our RECOP I's underlying CMBS investments for the three months ended March 31, 2022 and December 31, 2021, respectively. Includes $2.5 million non-cash redemption value adjustment of our Special Non-Voting Preferred Stock for the three months ended December 31, 2021.
(B)    Includes $32.1 million write-off on a defaulted senior retail loan which we took title of the underlying property and $0.9 million write-off of the remaining balance on an impaired mezzanine retail loan during the three months ended December 31, 2021.
(C)    See the reconciliation from weighted average diluted shares under GAAP to the adjusted weighted average diluted shares used for Distributable
Earnings above.

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Book Value per Share

We believe that book value per share is helpful to stockholders in evaluating the growth of our company as we have scaled our equity capital base and continue to invest in our target assets. The following table calculates our book value per share of common stock (amounts in thousands, except share and per share data):
March 31, 2022December 31, 2021
KKR Real Estate Finance Trust Inc. stockholders' equity$1,649,535 $1,361,434 
Series A preferred stock (liquidation preference of $25.00 per share)
(327,750)(172,500)
Common stockholders' equity$1,321,785 $1,188,934 
Shares of common stock issued and outstanding at period end67,933,704 61,370,732 
Book value per share of common stock$19.46 $19.37 

Book value as of March 31, 2022 included the impact of an estimated CECL credit loss allowance of $22.5 million, or ($0.33) per common share. See Note 2 — Summary of Significant Accounting Policies, to our condensed consolidated financial statements included in this Form 10-Q for detailed discussion of allowance for credit losses.
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Our Portfolio

We have established a $7,253.9 million portfolio of diversified investments, consisting primarily of performing senior and mezzanine commercial real estate loans as of March 31, 2022.

Our loan portfolio is 100.0% performing as of March 31, 2022. During the three months ended March 31, 2022, we collected 100.0% of interest payments due on our loan portfolio. As of March 31, 2022, the average risk rating of our loan portfolio was 2.9 (Average Risk), weighted by total loan exposure. As of March 31, 2022, 95.0% of our loans, based on total loan exposure, was risk-rated 3 or better. As of March 31, 2022, the average loan commitment in our portfolio was $128.8 million and multifamily and office loans comprised 75% of our loan portfolio, while hospitality loans comprised 5% of the portfolio.

In addition to our loan portfolio, as of March 31, 2022, as a result of taking title to the collateral of one defaulted senior retail loan, we owned one REO asset with a net carrying value of $78.6 million, comprised of the fair value of the acquired retail property and the capitalized transaction costs, as of March 31, 2022. This property is held for investment and reflected on our consolidated balance sheets at its estimated fair value at the time of acquisition plus related acquisition costs.

Since our IPO, we have continued to execute on our primary investment strategy of originating floating-rate transitional senior loans and, as we continue to scale our loan portfolio, we expect that our originations will continue to be heavily weighted toward floating-rate loans. As of March 31, 2022, 100.0% of our loans by total loan exposure earned a floating rate of interest. We expect the majority of our future investment activity to focus on originating floating-rate senior loans that we finance with our repurchase and other financing facilities, with a secondary focus on originating floating-rate loans for which we syndicate a senior position and retain a subordinated interest for our portfolio. As of March 31, 2022, all of our investments were located in the United States.

The following charts illustrate the diversification and composition of our loan portfolio(A), based on type of investment, interest rate, underlying property type, geographic location, vintage and LTV as of March 31, 2022:
kref-20220331_g2.jpg

The charts above are based on total outstanding principal amount of our commercial real estate loans.

(A)    Excludes: (i) one REO retail asset on a defaulted loan with net carrying value of $78.6 million as of March 31, 2022, (ii) CMBS B-Piece investments held through RECOP I, an equity method investment and (iii) one impaired mezzanine loan with an outstanding principal of $5.5 million that was fully written off.
(B)    Senior loans include senior mortgages and similar credit quality loans, including related contiguous junior participations in senior loans where we have financed a loan with structural leverage through the non-recourse sale of a corresponding first mortgage.
(C)    We classify a loan as life science if more than 50% of the gross leasable area is leased to, or will be converted to, life science-related space.
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(D)    Excludes one real estate corporate loan to a multifamily operator with an outstanding principal amount of $41.5 million, representing 0.6% of our commercial real estate loans as of March 31, 2022.
(E)    LTV is generally based on the initial loan amount divided by the as-is appraised value as of the date the loan was originated or by the current principal amount as of the date of the most recent as-is appraised value.

The following table details our quarterly loan activity (dollars in thousands):
Three Months Ended
March 31, 2022December 31, 2021September 30, 2021June 30, 2021
Loan originations$843,624 $1,804,897 $1,536,993 $967,108 
Loan fundings(A)
$744,192 $1,680,890 $1,142,969 $558,387 
Loan repayments/syndications(282,282)(679,749)(934,899)(270,980)
Net fundings461,910 1,001,141 208,070 287,407 
PIK interest464 418 373 458 
Write-off— (32,905)— — 
Transfer to REO— (77,516)— — 
Total activity$462,374 $891,138 $208,443 $287,865 
(A)    Includes initial funding of new loans and additional fundings made under existing loans.

The following table details overall statistics for our loan portfolio as of March 31, 2022 (dollars in thousands):
Total Loan Exposure(A)
Balance Sheet PortfolioTotal Loan PortfolioFloating Rate LoansFixed Rate Loans
Number of loans686767—
Principal balance$6,821,576$7,139,613$7,139,613$—
Amortized cost$6,772,884$7,096,421$7,096,421$—
Unfunded loan commitments(B)
$1,449,105$1,449,105$1,449,105$—
Weighted-average cash coupon(C)
4.1 %+ 3.30 %+ 3.30 %n.a.
Weighted-average all-in yield(C)
4.4 %+ 3.60 %+ 3.60 %n.a.
Weighted-average maximum maturity (years)(D)
3.53.53.5n.a.
LTV(E)
67 %67 %67 %n.a.

(A)     In certain instances, we finance our loans through the non-recourse sale of a senior interest that is not included in our condensed consolidated financial statements. Total loan exposure includes the entire loan we originated and financed and excludes one impaired mezzanine loan with an outstanding principal of $5.5 million that was fully written off.
(B)     Unfunded commitments will primarily be funded to finance property improvements and renovations or lease-related expenditures by the borrowers. These future commitments will be funded over the term of each loan, subject in certain cases to an expiration date.
(C)     As of March 31, 2022, 87.1% and 12.9% of floating rate loans by loan exposure were indexed to one-month USD LIBOR and Term SOFR, respectively. In addition to cash coupon, all-in yield includes the amortization of deferred origination fees, loan origination costs and purchase discounts.
(D)     Maximum maturity assumes all extension options are exercised by the borrower; however, our loans may be repaid prior to such date. As of March 31, 2022, based on total loan exposure, 66.8% of our loans were subject to yield maintenance or other prepayment restrictions and 33.2% were open to repayment by the borrower without penalty.
(E)     LTV is generally based on the initial loan amount divided by the as-is appraised value as of the date the loan was originated or by the current principal amount as of the date of the most recent as-is appraised value. Weighted average LTV excludes one real estate corporate loan to a multifamily operator with an outstanding principal of $41.5 million as of March 31, 2022.



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The table below sets forth additional information relating to our portfolio as of March 31, 2022 (dollars in millions):
Investment(A)
LocationProperty TypeInvestment Date
Total Whole Loan(B)
Committed Principal Amount(B)
Current Principal Amount
Net Equity(C)
Coupon(D)(E)
Max Remaining Term (Years)(D)(F)
Loan Per SF / Unit / Key(G)
LTV(D)(H)
Risk Rating
Senior Loans(J)
1Senior LoanArlington, VAMultifamily9/30/2021$381.0 $381.0 $352.9 $70.2 +3.2%4.5 $ 317,965 / unit69 %3
2Senior LoanBellevue, WAOffice9/13/2021520.8 260.4 68.2 16.3 +3.65.0 $ 855 / SF63 3
3Senior LoanLos Angeles, CAMultifamily2/19/2021260.0 260.0 250.0 38.0 +3.63.9 $ 466,400 / unit68 3
4Senior LoanBoston, MALife Science5/24/2018250.5 250.5 249.0 60.7 +3.21.8 $ 533 / SF53 1
5Senior LoanMountain View, CAOffice7/14/2021362.8 250.0 186.7 44.8 +3.34.4 $ 607 / SF73 3
6Senior LoanNew York, NYCondo (Residential)12/20/2018234.5 234.5 214.8 59.2 +3.61.8 $ 1,341 / SF71 3
7Senior LoanBronx, NYIndustrial8/27/2021381.2 228.7 111.3 109.8 +4.14.4 $ 277 / SF52 3
8Senior LoanVariousMultifamily5/31/2019216.5 216.5 216.3 38.9 +4.02.2 $ 202,104 / unit74 3
9
Senior Loan(K)
VariousIndustrial6/30/2021425.0 212.5 26.5 24.0 +5.44.3 $ 210 / SF68 3
10Senior LoanMinneapolis, MNOffice11/13/2017194.4 194.4 194.4 33.0 +3.80.7 $ 179 / SF65 2
11Senior LoanWashington, D.C.Office11/9/2021187.7 187.7 125.9 31.6 +3.34.7 $ 362 / SF55 3
12Senior LoanBoston, MAOffice2/4/2021375.0 187.5 187.5 37.4 +3.33.9 $ 506 / SF71 3
13Senior LoanChicago, ILMultifamily6/6/2019186.0 186.0 179.5 32.4 +3.62.2 $ 364,837 / unit72 3
14Senior LoanThe Woodlands, TXHospitality9/15/2021183.3 183.3 168.9 30.5 +4.24.5 $ 185,810 / key64 3
15Senior LoanPhiladelphia, PAOffice4/11/2019182.6 182.6 157.0 24.9 +2.62.1 $ 220 / SF68 4
16Senior LoanWashington, D.C.Office12/20/2019175.5 175.5 127.1 43.9 +3.42.8 $ 622 / SF58 3
17Senior LoanWest Palm Beach, FLMultifamily12/29/2021171.5 171.5 169.6 25.2 +2.74.8 $ 208,857 / unit73 3
18Senior LoanChicago, ILOffice7/15/2019170.0 170.0 137.6 27.1 +3.32.4 $ 132 / SF59 3
19Senior LoanBoston, MALife Science4/27/2021332.3 166.2 124.3 20.8 +3.64.1 $ 516 / SF66 3
20Senior LoanPhiladelphia, PAOffice6/19/2018165.0 165.0 165.0 92.2 +2.51.3 $ 169 / SF71 4
21Senior LoanNew York, NYMultifamily12/5/2018163.0 163.0 148.0 22.3 +4.01.7 $ 556,391 / unit77 3
22Senior LoanOakland, CAOffice10/23/2020509.9 159.7 112.3 17.7 +4.33.6 $ 306 / SF65 3
23Senior LoanPlano, TXOffice2/6/2020153.7 153.7 135.7 21.2 +2.72.9 $ 188 / SF63 2
24Senior LoanSeattle, WALife Science10/1/2021188.0 140.3 90.0 23.9 +3.14.5 $ 575 / SF69 3
25Senior LoanBoston, MAMultifamily3/29/2019138.0 138.0 137.0 21.3 +2.72.0 $ 351,282 / unit59 3
26Senior LoanDallas, TXOffice12/10/2021138.0 138.0 135.8 25.0 +3.64.7 $ 432 / SF68 3
27Senior LoanArlington, VAMultifamily1/20/2022135.3 135.3 130.9 31.5 +2.94.9 $ 436,300 / unit65 3
28Senior LoanFort Lauderdale, FLHospitality11/9/2018130.0 130.0 130.0 24.2 +3.41.7 $ 375,723 / key66 3
29Senior LoanSan Carlos, CALife Science2/1/2022195.9 125.0 80.8 19.7 +3.64.9 $ 551 / SF68 3
30Senior LoanFontana, CAIndustrial5/11/2021119.9 119.9 48.7 19.5 +4.64.2 $ 102 / SF64 3
31Senior LoanIrving, TXMultifamily4/22/2021117.6 117.6 110.5 17.6 +3.34.1 $ 121,745 / unit70 3
32Senior LoanCambridge, MALife Science12/22/2021401.3 115.7 53.4 14.3 +3.94.8 $ 1072 / SF51 3
33Senior LoanPittsburgh, PAStudent Housing6/8/2021112.5 112.5 112.5 16.9 +2.94.2 $ 155,602 / bed74 3
34Senior LoanLas Vegas, NVMultifamily12/28/2021106.3 106.3 102.0 19.7 +2.74.8 $ 193,182 / unit61 3
35Senior LoanDoral, FLMultifamily12/10/2021212.0 106.0 106.0 20.8 +2.84.7 $ 335,975 / unit77 3
36Senior LoanSan Diego, CAMultifamily10/20/2021103.5 103.5 103.5 18.3 +2.84.6 $ 448,052 / unit71 3
37Senior LoanOrlando, FLMultifamily12/14/2021102.4 102.4 88.9 21.3 +3.04.8 $ 234,565 / unit74 3
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Investment(A)
LocationProperty TypeInvestment Date
Total Whole Loan(B)
Committed Principal Amount(B)
Current Principal Amount
Net Equity(C)
Coupon(D)(E)
Max Remaining Term (Years)(D)(F)
Loan Per SF / Unit / Key(G)
LTV(D)(H)
Risk Rating
38Senior LoanWest Hollywood, CAMultifamily1/26/2022102.0 102.0 102.0 15.1 +3.04.9 $ 2,756,757 / unit65 3
39Senior LoanWashington, D.C.Office1/13/2022228.5 100.0 57.4 8.9 +3.25.9 $ 210 / SF55 3
40Senior LoanPhoenix, AZIndustrial1/13/2022195.3 100.0 5.6 3.2 +4.04.9 $ 57 / SF57 3
41Senior LoanBrisbane, CALife Science7/22/202195.0 95.0 85.6 17.0 +3.04.4 $ 739 / SF71 3
42Senior LoanState College, PAStudent Housing10/15/201993.4 93.4 87.8 21.7 +2.72.6 $ 73,507 / bed64 3
43Senior LoanBrandon, FLMultifamily1/13/202290.3 90.3 61.9 8.4 +3.14.9 $ 189,939 / unit75 3
44Senior LoanDallas, TXMultifamily12/23/202190.0 90.0 77.5 14.9 +2.84.8 $ 238,488 / unit67 3
45Senior LoanMiami, FLMultifamily10/14/202189.5 89.5 89.5 17.0 +2.84.6 $ 304,422 / unit76 3
46Senior LoanDenver, COMultifamily6/24/202188.5 88.5 88.5 15.4 +3.04.3 $ 295,000 / unit77 3
47Senior LoanDallas, TXOffice1/22/202187.0 87.0 87.0 21.1 +3.33.9 $ 288 / SF65 3
48Senior LoanCharlotte, NCMultifamily12/14/202186.8 86.8 76.0 10.8 +3.04.8 $ 206,522 / unit74 3
49Senior LoanNew York, NYMultifamily3/29/201886.0 86.0 86.0 13.2 +4.01.0 $ 462,366 / unit63 2
50Senior LoanHollywood, FLMultifamily12/20/202181.0 81.0 81.0 14.6 +3.04.8 $ 327,935 / unit74 3
51Senior LoanSeattle, WAOffice3/20/201880.7 80.7 80.7 13.2 +4.11.0 $ 468 / SF56 3
52Senior LoanPhoenix, AZSingle Family Rental4/22/202172.1 72.1 18.8 11.2 +4.84.1 $ 157,092 / unit50 3
53Senior LoanArlington, VAMultifamily10/23/2020141.8 70.9 70.9 11.5 +3.83.5 $ 393,858 / unit73 3
54Senior LoanDenver, COMultifamily9/14/202170.3 70.3 69.3 11.0 +2.74.5 $ 286,157 / unit78 3
55Senior LoanWashington, D.C.Multifamily12/4/202069.0 69.0 66.3 10.3 +3.53.7 $ 265,132 / unit63 3
56Senior LoanDallas, TXMultifamily8/18/202168.2 68.2 68.2 9.8 +3.84.4 $ 189,444 / unit70 3
57Senior LoanManassas Park, VAMultifamily2/25/202268.0 68.0 68.0 67.5 +2.74.9 $ 223,684 / unit73 3
58Senior LoanPlano, TXMultifamily3/31/202267.8 67.8 64.2 63.5 +2.85.0 $ 241,165 / unit75 3
59Senior LoanNashville, TNHospitality12/9/202166.0 66.0 64.3 9.8 +3.64.8 $ 279,498 / key68 3
60Senior LoanAtlanta, GAMultifamily12/10/202161.5 61.5 55.8 13.7 +2.94.8 $ 184,763 / unit67 3
61Senior LoanDurham, NCMultifamily12/15/202160.0 60.0 50.3 8.4 +2.94.8 $ 145,740 / unit67 3
62Senior LoanSharon, MAMultifamily12/1/202156.9 56.9 56.9 8.3 +2.84.7 $ 296,484 / unit70 3
63Senior LoanQueens, NYIndustrial2/22/202255.3 55.3 52.0 51.7 +4.01.9 $ 84 / SF68 3
64Senior LoanGeorgetown, TXMultifamily12/16/202141.8 41.8 41.8 10.1 +3.34.8 $ 199,048 / unit68 3
65
Senior Loan(L)
New York, NYCondo (Residential)8/4/201732.6 32.6 32.6 32.6 +4.2— $ 1,244 / SF73 4
66Senior LoanDenver, COIndustrial12/11/202028.8 28.8 13.7 13.3 +3.83.8 $ 58 / SF61 3
Total/Weighted Average
Senior Loans Unlevered		$10,837.1 $8,590.0 $7,098.1 $1,743.3 +3.3%3.5 67 %2.9
Non-Senior Loans
1Corporaten.a.Multifamily12/11/2020103.8 41.5 41.5 41.0 +12.03.7 n.a.n.a.3
Total/Weighted Average
Non-Senior Loans Unlevered		$103.8 $41.5 $41.5 $41.0 +12.0%3.7 n.a.3.0
CMBS B-Pieces
1
RECOP I(I)
VariousVarious2/13/2017n.a.40.0 35.7 35.7 4.67.2 n.a.58 n.a.
Total/Weighted Average
CMBS B-Pieces Unlevered		$40.0 $35.7 $35.7 4.6%7.2 58 %
Real Estate Owned
1Real Estate AssetPortland, ORRetail12/16/2021n.a.n.a.78.6 78.4 n.a.n.a.n.a.n.a.n.a.
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Investment(A)
LocationProperty TypeInvestment Date
Total Whole Loan(B)
Committed Principal Amount(B)
Current Principal Amount
Net Equity(C)
Coupon(D)(E)
Max Remaining Term (Years)(D)(F)
Loan Per SF / Unit / Key(G)
LTV(D)(H)
Risk Rating
Total/Weighted Average
Real Estate Owned		$78.6 $78.4 
Grand Total / Weighted Average$8,671.5 $7,253.9 $1,898.4 4.1%3.6 67 %2.9
n

*    Numbers presented may not foot due to rounding.
(A)    Our total portfolio represents the current principal amount on senior, mezzanine and corporate loans, net equity in RECOP I, which holds CMBS B-Piece investments, and net carrying value of our sole REO investment. Excludes one impaired mezzanine loan with an outstanding principal of $5.5 million that was fully written off.
For Senior Loan 12, the total whole loan is $375.0 million, co-originated and co-funded by us and a KKR affiliate. Our interest was 50% of the loan or $187.5 million, of which $150.0 million in senior notes were syndicated to a third party. Post syndication, we retained a mezzanine loan with a commitment of $37.5 million, fully funded as of March 31, 2022, at an interest rate of L+7.9%.
For Senior Loan 13, the total whole loan is $186.0 million, of which an $81.6 million senior note was syndicated to a third party lender. Post syndication, we retained the mezzanine loan and a 45% interest in the senior loan with a total commitment of $104.4 million, of which $100.7 million was funded as of March 31, 2022, at a blended interest rate of L+4.7%.
For Senior Loan 22, the total whole loan is $509.9 million, co-originated and co-funded by us and a KKR affiliate. Our interest was 31% of the loan or $159.7 million, of which $134.7 million in senior notes were syndicated to third party lenders. Post syndication, we retained a mezzanine loan with a commitment of $25.0 million, of which $17.6 million was funded as of March 31, 2022, at an interest rate of L+12.9%.
(B)    Total Whole Loan represents total commitment of the entire whole loan originated. Committed Principal Amount includes participations by KKR affiliated entities and third parties that are syndicated/sold.
(C)    Net equity reflects (i) the amortized cost basis of our loans, net of borrowings; and (ii) the cost basis of our investments in RECOP I and REO.
(D)    Weighted average is weighted by the current principal amount for our senior, mezzanine and corporate loans and by net equity for our RECOP I CMBS B-Pieces.
(E)    Coupon expressed as spread over the relevant floating benchmark rates, which include one-month LIBOR and Term SOFR, as applicable to each loan. As of March 31, 2022, 87.1% and 12.9% of floating rate loans by principal amount were indexed to one-month LIBOR and Term SOFR, respectively.
(F)    Max remaining term (years) assumes all extension options are exercised, if applicable.
(G)    Loan Per SF / Unit / Key is based on the current principal amount divided by the current SF / Unit / Key. For Senior Loans 2, 7, 9, 30, 32, 40, 52, and 66, Loan Per SF / Unit / Key is calculated as the total commitment amount of the loan divided by the proposed SF / Unit / Key.
(H)    For senior loans, LTV is generally based on the initial loan amount divided by the as-is appraised value as of the date the loan was originated or by the current principal amount as of the date of the most recent as-is appraised value; for mezzanine loans, LTV is based on the current balance of the whole loan divided by the as-is appraised value as of the date the loan was originated; for RECOP I CMBS B-Pieces, LTV is based on the weighted average LTV of the underlying loan pool at issuance. Weighted Average LTV excludes one fully funded corporate loan to a multifamily operator with an outstanding principal amount of $41.5 million.
For Senior Loan 6, LTV is based on the initial loan amount divided by the appraised bulk sale value assuming a condo-conversion and no renovation.
For Senior Loan 65, LTV is based on the current principal amount divided by the adjusted appraised gross sellout value net of sales cost.
For Senior Loans 2, 7, 9, 30, 32, 40, 52 and 66, LTV is calculated as the total commitment amount of the loan divided by the as-stabilized value as of the date the loan was originated.
(I)    Represents our investment in an aggregator vehicle alongside RECOP I that invests in CMBS B-Pieces. Committed principal represents our total commitment to the aggregator vehicle whereas current principal represents the current funded amount.
(J)    Senior loans include senior mortgages and similar credit quality investments, including junior participations in our originated senior loans for which we have syndicated the senior participations and retained the junior participations for our portfolio and excludes vertical loan participations.
(K)    For Senior Loan 9, the total whole loan facility is $425.0 million, co-originated and co-funded by us and a KKR affiliate. Our interest was 50% of the facility or $212.5 million. The facility is comprised of individual cross-collateralized whole loans. As of March 31, 2022, there were six underlying senior loans in the facility with a commitment of $65.9 million and outstanding principal of $26.5 million.
(L)    For Senior Loan 65, Loan per SF of $1,244 is based on the allocated loan amount of the residential units. Excluding the value of the retail and parking components of the collateral, the Loan per SF is $1,928 based on allocating the full amount of the loan to only the residential units.
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Portfolio Surveillance and Credit Quality

Our Manager actively manages our portfolio and assesses the risk of any deterioration in credit quality by quarterly evaluating the performance of the underlying property, the valuation of comparable assets as well as the financial wherewithal of the associated borrower. Our loan documents generally give us the right to receive regular property, borrower and guarantor financial statements; approve annual budgets and tenant leases; and enforce loan covenants and remedies. In addition, our Manager evaluates the macroeconomic environment, prevailing real estate fundamentals and micro-market dynamics where the underlying property is located. Through site inspections, local market experts and various data sources, as part of its risk assessment, our Manager monitors criteria such as new supply and tenant demand, market occupancy and rental rate trends, and capitalization rates and valuation trends.

We maintain a robust asset management relationship with our borrowers and have utilized these relationships to proactively address the potential impacts of the COVID-19 pandemic on our loans secured by properties experiencing cash flow pressure, most significantly hospitality and retail assets. Some of our borrowers have indicated that due to the impact of the COVID-19 pandemic, they will be unable to timely execute their business plans, have had to temporarily close their businesses, or have experienced other negative business consequences and have requested temporary interest deferral or forbearance, or other modifications of their loans. Accordingly, discussions we have had with our borrowers have addressed potential near-term defensive loan modifications, which could include repurposing of reserves, temporary deferrals of interest, or performance test or covenant waivers on loans collateralized by assets directly impacted by the COVID-19 pandemic, and which would generally be coupled with an additional equity commitment and/or guaranty from sponsors.

We believe our loan sponsors are generally committed to supporting assets collateralizing our loans through additional equity investments, and that we will benefit from our long-standing core business model of originating senior loans collateralized by large assets in major markets with experienced, well-capitalized institutional sponsors. While we believe the principal amounts of our loans are generally adequately protected by underlying collateral value, there is a risk that we will not realize the entire principal value of certain investments.

In addition to ongoing asset management, our Manager performs a quarterly review of our portfolio whereby each loan is assigned a risk rating of 1 through 5, from lowest risk to highest risk. Our Manager is responsible for reviewing, assigning and updating the risk ratings for each loan on a quarterly basis. The risk ratings are based on many factors, including, but not limited to, underlying real estate performance and asset value, values of comparable properties, durability and quality of property cash flows, sponsor experience and financial wherewithal, and the existence of a risk-mitigating loan structure. Additional key considerations include LTVs, debt service coverage ratios, real estate and credit market dynamics, and risk of default or principal loss. Based on a five-point scale, our loans are rated "1" through "5," from less risk to greater risk, which ratings are defined as follows:

1—Very Low Risk—The underlying property performance has surpassed underwritten expectations, and the sponsor’s business plan is generally complete. The property demonstrates stabilized occupancy and/or rental rates resulting in strong current cash flow and/or a very low LTV (<65%). At the level of performance, it is very likely that the underlying loan can be refinanced easily in the period’s prevailing capital market conditions.

2—Low Risk—The underlying property performance has matched or exceeded underwritten expectations, and the sponsor’s business plan may be ahead of schedule or has achieved some or many of the major milestones from a risk mitigation perspective. The property has achieved improving occupancy at market rents, resulting in sufficient current cash flow and/or a low LTV (65%-70%). Operating trends are favorable, and the underlying loan can be refinanced in today’s prevailing capital market conditions. The sponsor/manager is well capitalized or has demonstrated a history of success in owning or operating similar real estate.

3—Average Risk—The underlying property performance is in-line with underwritten expectations, or the sponsor may be in the early stages of executing its business plan. Current cash flow supports debt service payments, or there is an ample interest reserve or loan structure in place to provide the sponsor time to execute the value-improvement plan. The property exhibits a moderate LTV (<75%). Loan structure appropriately mitigates additional risks. The sponsor/manager has a stable credit history and experience owning or operating similar real estate.


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4—High Risk/Potential for Loss—A loan that has a risk of realizing a principal loss. The underlying property performance is behind underwritten expectations, or the sponsor is behind schedule in executing its business plan. The underlying market fundamentals may have deteriorated, comparable property valuations may be declining or property occupancy has been volatile, resulting in current cash flow that may not support debt service payments. The loan exhibits a high LTV (>80%), and the loan covenants are unlikely to fully mitigate some risks. Interest payments may come from an interest reserve or sponsor equity.

5—Impaired/Loss Likely—A loan that has a very high risk of realizing a principal loss or has otherwise incurred a principal loss. The underlying property performance is significantly behind underwritten expectations, the sponsor has failed to execute its business plan and/or the sponsor has missed interest payments. The market fundamentals have deteriorated, or property performance has unexpectedly declined or valuations for comparable properties have declined meaningfully since loan origination. Current cash flow does not support debt service payments. With the current capital structure, the sponsor might not be incentivized to protect its equity without a restructuring of the loan. The loan exhibits a very high LTV (>90%), and default may be imminent.

As of March 31, 2022, the average risk rating of our loan portfolio was 2.9 (Average Risk), weighted by total loan exposure, consistent with that as of December 31, 2021.

March 31, 2022December 31, 2021
Risk RatingNumber of LoansCarrying Value
Total Loan Exposure(A)
Total Loan Exposure %Number of LoansCarrying Value
Total Loan Exposure(A)
Total Loan Exposure %
11 $248,860 $249,010 3.5 %1 $243,549 $243,552 3.6 %
23 415,329 416,147 5.8 3 410,293 411,424 6.2 
360 5,753,587 6,119,804 85.7 54 5,268,590 5,627,927 84.3 
43 355,108 354,652 5.0 4 394,301 394,336 5.9 
51 — — — 1 — — — 
Total loan receivable68 $6,772,884 $7,139,613 100.0 %63 $6,316,733 $6,677,239 100.0 %
Allowance for credit losses(20,676)(22,244)
Loan receivable, net$6,752,208 $6,294,489 

(A)    In certain instances, we finance our loans through the non-recourse sale of a senior interest that is not included in our condensed consolidated financial statements under GAAP. Total loan exposure includes the entire loan we originated and financed, including $323.5 million and $318.6 million of such non-consolidated senior interests as of March 31, 2022 and December 31, 2021, respectively.

CMBS B-Piece Investments

Our current CMBS exposure is through RECOP I, an equity method investment. Our Manager has processes and procedures in place to monitor and assess the credit quality of our CMBS B-Piece investments and promote the regular and active management of these investments. This includes reviewing the performance of the real estate assets underlying the loans that collateralize the investments and determining the impact of such performance on the credit and return profile of the investments. Our Manager holds monthly surveillance calls with the special servicer of our CMBS B-Piece investments to monitor the performance of our portfolio and discuss issues associated with the loans underlying our CMBS B-Piece investments. At each meeting, our Manager is provided with a due diligence submission for each loan underlying our CMBS B-Piece investments, which includes both property- and loan-level information. These meetings assist our Manager in monitoring our portfolio, identifying any potential loan issues, determining if a re-underwriting of any loan is warranted and examining the timing and severity of any potential losses or impairments.

Valuations for our CMBS B-Piece investments are prepared using inputs from an independent valuation firm and confirmed by our Manager via quotes from two or more broker-dealers that actively make markets in CMBS. As part of the quarterly valuation process, our Manager also reviews pricing indications for comparable CMBS and monitors the credit metrics of the loans that collateralize our CMBS B-Piece investments.

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Portfolio Financing

Our portfolio financing arrangements include term loan financing, term lending agreements, collateralized loan obligations, secured term loan, warehouse facility, asset specific financing, non-consolidated senior interest (collectively “Non-Mark-to-Market Financing Sources”) and master repurchase agreements.

Our Non-Mark-to-Market Financing Sources, which accounted for 79% of our total secured financing (excluding our corporate revolver) as of March 31, 2022, are not subject to credit or capital markets mark-to-market provisions. The remaining 21% of our secured borrowings, which is primarily comprised of three master repurchase agreements, are only subject to credit marks.

We continue to expand and diversify our financing sources, especially those sources that provide non-mark-to-market financing, reducing our exposure to market volatility.

The following table summarizes our portfolio financing (dollars in thousands):
Portfolio Financing Outstanding Principal Balance
Non-/Mark-to-MarketMarch 31, 2022December 31, 2021
Master repurchase agreementsMark-to-Credit$1,204,289 $1,554,808 
Collateralized loan obligationsNon-Mark-to-Market1,942,750 1,095,250 
Term lending agreementsNon-Mark-to-Market942,580 1,117,627 
Term loan financingNon-Mark-to-Market898,959 870,458 
Secured term loanNon-Mark-to-Market349,125 350,000 
Asset specific financingNon-Mark-to-Market— 60,000 
Warehouse facilityNon-Mark-to-Market— — 
Non-consolidated senior interestsNon-Mark-to-Market323,537 318,634 
Total portfolio financing$5,661,240 $5,366,777 

Financing Agreements

The following table details our financing agreements (dollars in thousands):
March 31, 2022
MaximumCollateralBorrowings
Facility Size(A)
Assets(B)
Potential(C)
OutstandingAvailable
Master Repurchase Agreements
Wells Fargo$1,000,000 $894,440 $670,830 $665,620 $5,210 
Morgan Stanley600,000 612,504 458,695 433,368 25,327 
Goldman Sachs240,000 189,087 135,899 105,301 30,598 
Term Loan Facility1,000,000 1,141,803 898,959 898,959 — 
Term Lending Agreements
KREF Lending V633,388 761,770 606,474 602,113 4,361 
KREF Lending IX750,000 422,826 341,057 340,467 590 
Warehouse Facility
HSBC500,000 — — — — 
Asset Specific Financing
BMO Facility300,000 — — — — 
Revolver520,000 — 520,000 — 520,000 
$5,543,388 $4,022,430 $3,631,914 $3,045,828 $586,086 

(A)     Maximum facility size represents the largest amount of borrowings available under a given facility once sufficient collateral assets have been approved by the lender and pledged by us.
(B)     Represents the principal balance of the collateral assets.
(C)     Potential borrowings represents the total amount we could draw under each facility based on collateral already approved and pledged. When undrawn, these amounts are available to us under the terms of each credit facility.

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Master Repurchase Agreements

We utilize master repurchase facilities to finance the origination of senior loans. After a mortgage asset is identified by us, the lender agrees to advance a certain percentage of the principal of the mortgage to us in exchange for a secured interest in the mortgage. We have not received any margin calls on any of our master repurchase facilities to date.

Repurchase agreements effectively allow us to borrow against loans and participations that we own in an amount generally equal to (i) the market value of such loans and/or participations multiplied by (ii) the applicable advance rate. Under these agreements, we sell our loans and participations to a counterparty and agree to repurchase the same loans and participations from the counterparty at a price equal to the original sales price plus an interest factor. The transaction is treated as a secured loan from the financial institution for GAAP purposes. During the term of a repurchase agreement, we receive the principal and interest on the related loans and participations and pay interest to the lender under the master repurchase agreement. At any point in time, the amounts and the cost of our repurchase borrowings will be based upon the assets being financed—higher risk assets will result in lower advance rates (i.e., levels of leverage) at higher borrowing costs and vice versa. In addition, these facilities include various financial covenants and limited recourse guarantees, including those described below.

Each of our existing master repurchase facilities includes "credit mark-to-market" features. "Credit mark-to-market" provisions in repurchase facilities are designed to keep the lenders' credit exposure generally constant as a percentage of the underlying collateral value of the assets pledged as security to them. If the credit underlying collateral value decreases, the gross amount of leverage available to us will be reduced as our assets are marked-to-market, which would reduce our liquidity. The lender under the applicable repurchase facility sets the valuation and any revaluation of the collateral assets in its sole, good faith discretion. As a contractual matter, the lender has the right to reset the value of the assets at any time based on then-current market conditions, but the market convention is to reassess valuations on a monthly, quarterly and annual basis using the financial information delivered pursuant to the facility documentation regarding the real property, borrower and guarantor under such underlying loans. Generally, if the lender determines (subject to certain conditions) that the market value of the collateral in a repurchase transaction has decreased by more than a defined minimum amount, the lender may require us to provide additional collateral or lead to margin calls that may require us to repay all or a portion of the funds advanced. We closely monitor our liquidity and intend to maintain sufficient liquidity on our balance sheet in order to meet any margin calls in the event of any significant decreases in asset values. As of March 31, 2022 and December 31, 2021, the weighted average haircut under our repurchase agreements was 29.0% and 30.3%, respectively (or 25.4% and 25.9%, respectively, if we had borrowed the maximum amount approved by its repurchase agreement counterparties as of such dates). In addition, our existing master repurchase facilities are not entirely term-matched financings and may mature before our CRE debt investments that represent underlying collateral to those financings. As we negotiate renewals and extensions of these liabilities, we may experience lower advance rates and higher pricing under the renewed or extended agreements.

Term Loan Financing

In connection with our efforts to diversify our financing sources, further expand our non-mark-to-market borrowing base and reduce our exposure to market volatility, we entered into a term loan financing agreement in April 2018 with third party lenders for an initial borrowing capacity of $200.0 million that was increased to $1.0 billion in October 2018 (“Term Loan Facility”). The facility provides us with asset-based financing on a non-mark-to-market basis with matched term up to five years and is non-recourse to us. Borrowings under the facility are collateralized by senior loans, held-for-investment, and bear interest equal to one-month LIBOR plus a margin.

The following table summarizes our borrowings under the Term Loan Facility (dollars in thousands):
March 31, 2022
Term Loan FacilityCountOutstanding PrincipalAmortized CostCarrying Value
Wtd. Avg. Yield/Cost(A)
Guarantee(B)
Wtd. Avg. Term(C)
Collateral assets13$1,141,803 $1,139,773 $1,132,639 
+ 3.3%
n.a.October 2024
Financing providedn.a.898,959 898,959 898,959 
L + 1.6%
n.a.October 2024
(A)     Collateral loan assets are indexed to one-month LIBOR and/or Term SOFR. In addition to cash coupon, yield/cost includes the amortization of deferred origination/financing costs.
(B)    Financing under the Term Loan Facility is non-recourse to us.
(C)    The weighted-average term is weighted by outstanding principal, using the maximum maturity date of the underlying loans assuming all extension options are exercised by the borrower.

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Term Lending Agreements

In June 2019, we entered into a Master Repurchase and Securities Contract Agreement ("KREF Lending V Facility") with Morgan Stanley Mortgage Capital Holdings LLC ("Administrative Agent"), as administrative agent on behalf of Morgan Stanley Bank, N.A. ("Initial Buyer"), which provides non-mark-to-market financing. In March 2021, the current stated maturity was extended to June 2022, subject to four additional one-year extension options, which may be exercised by us upon the satisfaction of certain customary conditions and thresholds. The Initial Buyer subsequently syndicated a portion of the facility to multiple financial institutions. As of March 31, 2022, the Initial Buyer held 24.2% of the total commitment under the facility. Borrowings under the facility are collateralized by certain loans, held for investment, and bear interest equal to one-month LIBOR, plus a 1.9% margin.

In July 2021, we entered into a $500.0 million Master Repurchase and Securities Contract Agreement with a financial institution (“KREF Lending IX Facility”). In March 2022, we increased the borrowing capacity to $750.0 million. The facility, which provides financing on a non-mark-to-market basis with partial recourse to us, has a three-year draw period and matched term to the underlying loans.

Warehouse Facility

In March 2020, we entered into a $500.0 million Loan and Security Agreement with HSBC Bank USA, National Association (“HSBC Facility”). The facility, which matures in March 2023, provides warehouse financing on a non-mark-to-market basis with partial recourse to us. Borrowings under the facility are collateralized by certain loans, held for investment, and bear interest equal to one-month LIBOR, plus a margin.

Asset Specific Financing

In August 2018, we entered into a $200.0 million loan financing facility with BMO Harris Bank (the "BMO Facility”). In May 2019, we increased the borrowing capacity to $300.0 million. The facility provides asset-based financing on a non-mark-to-market basis with matched-term up to five years with partial recourse to us.

Revolving Credit Agreement

In March 2022, we upsized our corporate revolving credit facility (“Revolver”), administered by Morgan Stanley Senior Funding, Inc., to $520.0 million and extended the maturity date to March 2027. We may use our Revolver as a source of financing, which is designed to provide short-term liquidity to originate or de-lever loans, pay operating expenses and borrow amounts for general corporate purposes. Borrowings under the Revolver bear interest at a per annum rate equal to the sum of (i) Term SOFR and (ii) a fixed margin. Our Revolver is secured by corporate level guarantees and does not include asset-based collateral.

Collateralized Loan Obligations

In August 2021, we financed a pool of loan participations from our existing loan portfolio through a managed collateralized loan obligation ("CLO" or "KREF 2021-FL2") and, in February 2022, we financed a pool of loan participations from our existing multifamily loan portfolio through a managed CLO ("KREF 2022-FL3"). The CLOs provide us with match-term financing on a non-mark-to-market and non-recourse basis. The CLOs have a two-year reinvestment feature that allows principal proceeds of the collateral assets to be reinvested in qualifying replacement assets, subject to the satisfaction of certain conditions set forth in the indentures.

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The following table outlines the CLO collateral assets and respective borrowing (dollars in thousands):

March 31, 2022
 Count Outstanding Principal Amortized Cost Carrying Value
Wtd. Avg. Yield/Cost(A)
 
Wtd. Avg. Term(B)
KREF 2021-FL2
Collateral assets(C)
21$1,300,000 $1,300,000 $1,295,901 + 3.4%August 2025
Financing provided11,095,250 1,089,080 1,089,080 L + 1.7%February 2039
KREF 2022-FL3
Collateral assets(C)
161,000,000 1,000,000 997,782 + 3.0%September 2026
Financing provided1847,500 840,537 840,537 S + 2.1%February 2039

(A)Expressed as a spread over the relevant benchmark rates, which include one-month LIBOR and Term SOFR, as applicable to each loan. As of March 31, 2022, 96.4% and 3.6% of the CLO collateral loan assets by principal balance earned a floating rate of interest indexed to one-month LIBOR and Term SOFR, respectively. In addition to cash coupon, yield/cost includes the amortization of deferred origination/financing costs.
(B)Loan term represents weighted-average final maturity, assuming all extension options are exercised by the borrower, weighted by outstanding principal. Repayments of CLO notes are dependent on timing of underlying collateral loan asset repayments post reinvestment period. The term of the CLO notes represents the rated final distribution date.
(C)Collateral loan assets represent 33.7% of the principal of our commercial real estate loans as of March 31, 2022. As of March 31, 2022, 100% of our loans financed through the CLOs are floating rate loans.

Loan Participations Sold

In connection with our investments in CRE loans, we finance certain investments through the syndication of a non-recourse, or limited-recourse, loan participation to unaffiliated third parties. Our presentation of the senior loan and related financing involved in the syndication depends upon whether GAAP recognized the transaction as a sale, though such differences in presentation do not generally impact our net stockholders’ equity or net income aside from timing differences in the recognition of certain transaction costs.

To the extent that GAAP recognizes a sale resulting from the syndication, we derecognize the participation in the senior/whole loan that we sold and continue to carry the retained portion of the loan as an investment. While we do not generally expect to recognize a material gain or loss on these sales, we would realize a gain or loss in an amount equal to the difference between the net proceeds received from the third party purchaser and our carrying value of the loan participation we sold at time of sale. Furthermore, we recognize interest income only on the portion of the senior loan that we retain as a result of the sale.

To the extent that GAAP does not recognize a sale resulting from the syndication, we do not derecognize the participation in the senior/whole loan that we sold. Instead, we recognize a loan participation sold liability in an amount equal to the principal of the loan participation syndicated less any unamortized discounts or financing costs resulting from the syndication. We continue to recognize interest income on the entire senior loan, including the interest attributable to the loan participation sold, as well as interest expense on the loan participation sold liability.

Non-Consolidated Senior Interests

In certain instances, we finance our loans through the non-recourse sale of a senior loan interest that is not included in our condensed consolidated financial statements. These non-consolidated senior interests provide structural leverage on a non-mark-to-market, matched-term basis for our net investments, which are typically reflected in the form of mezzanine loans or other subordinate interests on our balance sheets and in our statements of income.

The following table details the subordinate interests retained on our balance sheet and the related non-consolidated senior interests (dollars in thousands):
March 31, 2022
Non-Consolidated Senior InterestsCountPrincipal BalanceCarrying ValueWtd. Avg. Yield/CostGuarantee
Wtd. Avg.
Term
Total loan3$479,344 n.a.L + 3.6%n.a.June 2025
Senior participation3323,537 n.a.L + 2.3%n.a.August 2025
Interests retained155,807 L + 6.4%December 2024

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Secured Term Loan

In September 2020, we entered into a $300.0 million secured term loan at a price of 97.5%, which bears interest at a per annum rate equal to LIBOR plus a 4.75% margin, subject to a 1.0% LIBOR floor, payable quarterly beginning in December 2020. The secured term loan is partially amortizing, with an amount equal to 1.0% per annum of the principal balance due in quarterly installments starting March 31, 2021.

In November 2021, we completed a repricing of a $297.8 million existing secured term loan and a $52.2 million add-on, for an aggregate principal amount of $350.0 million, which was issued at par. The new secured term loan bears interest at LIBOR plus a 3.50% margin, and is subject to a 0.50% LIBOR floor, which is an aggregate improvement of 1.75% over the 2020 secured term loan.

The secured term loan matures on September 1, 2027 and contains restrictions relating to liens, asset sales, indebtedness, investments and transactions with affiliates. Our secured term loan is secured by corporate level guarantees and does not include asset-based collateral. Refer to Notes 2 and 7 to our condensed consolidated financial statements for additional discussion of our secured term loan.

Convertible Notes

We may issue convertible debt to take advantage of favorable market conditions. In May 2018, we issued $143.75 million of 6.125% Convertible Notes due on May 15, 2023. The Convertible Notes bear interest at a rate of 6.125% per year, payable semi-annually in arrears on May 15 and November 15 of each year, beginning on November 15, 2018. The Convertible Notes mature on May 15, 2023, unless earlier repurchased or converted. Refer to Notes 2 and 8 to our condensed consolidated financial statements for additional discussion of our Convertible Notes.

Borrowing Activities

The following tables provide additional information regarding our borrowings (dollars in thousands):
Three Months Ended March 31, 2022
Outstanding Principal as of March 31, 2022
Average Daily Amount Outstanding(A)
Maximum Amount OutstandingWeighted Average Daily Interest Rate
Wells Fargo$665,620 $775,874 $980,593 1.6 %
Morgan Stanley433,368 471,188 564,665 2.0 
Goldman Sachs105,301 153,422 192,313 2.3 
Term Loan Facility898,959 902,148 918,959 1.8 
KREF Lending V602,113 609,870 617,627 2.1 
KREF Lending IX340,467 394,996 500,000 1.9 
BMO Facility— 8,000 60,000 1.8 
Revolver— 19,333 140,000 2.1 
Total/Weighted Average$3,045,828 1.9 %

(A)     Represents the average for the period the facility was outstanding.

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Average Daily Amount Outstanding(A)
Three Months Ended
March 31, 2022December 31, 2021
Wells Fargo$775,874 $566,984 
Morgan Stanley471,188 326,625 
Goldman Sachs153,422 99,140 
Term Loan Facility902,148 933,928 
KREF Lending V609,870 638,958 
KREF Lending IX394,996 422,974 
BMO Facility8,000 60,000 
Revolver19,333 119,837 

(A)     Represents the average for the period the debt was outstanding.

Covenants—Each of our repurchase facilities, term lending agreements, warehouse facility and our Revolver contain customary terms and conditions, including, but not limited to, negative covenants relating to restrictions on our operations with respect to our status as a REIT, and financial covenants, such as:

•an interest income to interest expense ratio covenant (1.5 to 1.0); 
•a minimum consolidated tangible net worth covenant (75.0% of the aggregate net cash proceeds of any equity issuances made and any capital contributions received by us and KKR Real Estate Finance Holdings L.P. (our "Operating Partnership") or up to approximately $1,309.4 million, depending on the agreement; 
•a cash liquidity covenant (the greater of $10.0 million or 5.0% of our recourse indebtedness);
•a total indebtedness covenant (83.3% of our Total Assets, as defined in the applicable financing agreements);

With respect to our secured term loan, we are required to comply with customary loan covenants and event of default provisions that include, but not limited to, negative covenants relating to restrictions on operations with respect to our status as a REIT, and financial covenants. Such financial covenants include a minimum consolidated tangible net worth of $650.0 million and a maximum total debt to total assets ratio of 83.3% (the “Leverage Covenant”).

As of March 31, 2022, we were in compliance with the covenants of our financing facilities.

Guarantees—In connection with our financing arrangements including; master repurchase agreements, our term lending agreements, and our asset specific financing, our Operating Partnership has entered into a limited guarantee in favor of each lender, under which our Operating Partnership guarantees the obligations of the borrower under the respective financing agreement (i) in the case of certain defaults, up to a maximum liability of 25.0% of the then-outstanding repurchase price of the eligible loans, participations or securities, as applicable, or (ii) up to a maximum liability of 100.0% in the case of certain "bad boy" defaults. The borrower in each case is a special purpose subsidiary of us. In addition, some guarantees include certain full recourse insolvency-related trigger events.

With respect to our Revolver, amounts borrowed are full recourse to certain guarantor wholly-owned subsidiaries of us.

Real Estate Owned and Joint Venture

In 2015, we originated a $177.0 million senior loan secured by a retail property in Portland, Oregon. The loan had a risk rating of 5 and was placed on a non-accrual status in October 2020, with an amortized cost and carrying value of $109.6 million and $69.3 million, respectively, as of September 30, 2021. In December 2021, we took title to the retail property; such acquisition was accounted for as an asset acquisition under ASC 805. Accordingly, we recognized the property on our balance sheet as REO with a carrying value of $78.6 million, which included the estimated fair value of the property and capitalized transaction costs. In addition, we assumed $2.0 million in other net assets of the REO. As a result, we recognized an $8.2 million benefit from the reversal of the allowance for credit losses for GAAP, and a $32.1 million realized loss on loan write-off through distributable earnings (representing the difference between the carrying value of the foreclosed loan and the fair value of the REO’s net assets).

Concurrently with taking the title of our sole REO asset, we contributed the majority of the REO's net assets to a joint venture with a third party local development operator (“JV Partner”), whereby we have a 90% interest in the joint venture and the JV
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Partner has a 10% interest. As of March 31, 2022, the joint venture held REO assets with a net carrying value of $68.9 million. We have priority of distributions up to $68.8 million before the JV Partner can participate in the economics of the joint venture.
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Results of Operations

Three Months Ended March 31, 2022 Compared to Three Months Ended December 31, 2021

The following table summarizes the changes in our results of operations for the three months ended March 31, 2022 and
December 31, 2021 (dollars in thousands, except per share data):

Three Months Ended,Increase (Decrease)
March 31, 2022December 31, 2021DollarsPercentage
Net Interest Income
Interest income$73,230 $72,715 $515 0.7 %
Interest expense32,459 30,266 2,193 7.2 
Total net interest income40,771 42,449 (1,678)(4.0)
Other Income
Revenue from real estate owned operations2,629 — 2,629 100.0 
Income (loss) from equity method investments1,886 1,863 23 1.2 
Gain (loss) on sale of investments— 5,126 (5,126)(100.0)
Other income1,915 390 1,525 391.0 
Total other income (loss)6,430 7,379 (949)(12.9)
Operating Expenses
General and administrative4,446 3,383 1,063 31.4 
Provision for (reversal of ) credit losses, net(1,218)(3,077)1,859 60.4 
Management fee to affiliate6,007 5,289 718 13.6 
Incentive compensation to affiliate— 3,463 (3,463)(100.0)
Expenses from real estate owned operations
2,554 — 2,554 100.0 
Total operating expenses11,789 9,058 2,731 30.2 
Income (Loss) Before Income Taxes, Noncontrolling Interests, Preferred Dividends, Redemption Value Adjustment and Participating Securities' Share in Earnings35,412 40,770 (5,358)(13.1)
Income tax expense— 427 (427)(100.0)
Net Income (Loss)35,412 40,343 (4,931)(12.2)
Noncontrolling interests in (income) loss of consolidated joint venture56 — 56 100.0 
Net Income (Loss) Attributable to KKR Real Estate Finance Trust Inc. and Subsidiaries35,468 40,343 (4,875)(12.1)
Preferred stock dividends and redemption value adjustment5,326 4,966 360 7.2 
Participating securities' share in earnings346 179 167 93.3 
Net Income (Loss) Attributable to Common Stockholders$29,796 $35,198 $(5,402)(15.3)%
Net Income (Loss) Per Share of Common Stock
Basic$0.47 $0.59 $(0.12)(19.9)%
Diluted$0.46 $0.59 $(0.13)(21.9)%
Weighted Average Number of Shares of Common Stock Outstanding
Basic63,086,452 59,364,672 3,721,780 6.3 %
Diluted69,402,626 59,453,264 9,949,362 16.7 %
Dividends Declared per Share of Common Stock$0.43 $0.43 $— — %


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Net Interest Income

Net interest income decreased by $1.7 million during the three months ended March 31, 2022, compared to the three months ended December 31, 2021. This decrease was primarily due to an increase in the weighted-average index rates, including LIBOR and Term SOFR, which increased our interest expense compared to the prior quarter. Interest income increased slightly due to an increase in the weighted average principal of our loan portfolio of $824.0 million, partially offset by a decrease in the weighted average coupon.

In addition, we recognized $6.1 million of deferred loan fees and origination discounts accreted into interest income during the three months ended March 31, 2022, as compared to $7.1 million during the three months ended December 31, 2021. We recorded $4.8 million of deferred financing costs amortization into interest expense during the three months ended March 31, 2022, as compared to $5.2 million during the three months ended December 31, 2021.

Other Income

Total other income decreased by $0.9 million during the three months ended March 31, 2022, as compared to the three months ended December 31, 2021. This decrease was primarily due to a non-recurring $5.1 million gain from the redemption of our equity method investment in the Manager during the three months ended December 31, 2021, which was partially offset by a $2.6 million increase in REO operating revenue and $1.3 million of profit sharing income in connection with the repayment of an industrial senior loan during the three months ended March 31, 2022.

Operating Expenses

Total operating expenses increased by $2.7 million during the three months ended March 31, 2022, as compared to the three months ended December 31, 2021. This increase was primarily due to (i) a net increase of $1.9 million in provision for credit losses, (ii) a $2.6 million increase in REO operating expenses and (iii) a $0.7 million increase in noncash stock-based compensation expense. This increase was partially offset by a $3.5 million decrease in Manager incentive compensation for the three months ended March 31, 2022.

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Three Months Ended March 31, 2022 Compared to Three Months Ended March 31, 2021

The following table summarizes the changes in our results of operations for the three months ended March 31, 2022 and 2021 (dollars in thousands, except per share data):

Three Months Ended March 31,Increase (Decrease)
20222021DollarsPercentage
Net Interest Income
Interest income$73,230 $64,766 $8,464 13.1 %
Interest expense32,459 27,383 5,076 18.5 
Total net interest income40,771 37,383 3,388 9.1 
Other Income
Revenue from real estate owned operations2,629 — 2,629 100.0 
Income (loss) from equity method investments1,886 1,090 796 73.0 
Other income1,915 66 1,849 2,801.5 
Total other income (loss)6,430 1,156 5,274 456.2 
Operating Expenses
General and administrative4,446 3,505 941 26.8 
Provision for (reversal of ) credit losses, net(1,218)(1,588)370 23.3 
Management fee to affiliate6,007 4,290 1,717 40.0 
Incentive compensation to affiliate— 2,192 (2,192)(100.0)
Expenses from real estate owned operations
2,554 — 2,554 100.0 
Total operating expenses11,789 8,399 3,390 40.4 
Income (Loss) Before Income Taxes, Noncontrolling Interests, Preferred Dividends, Redemption Value Adjustment and Participating Securities' Share in Earnings35,412 30,140 5,272 17.5 
Income tax expense— 48 (48)(100.0)
Net Income (Loss)35,412 30,092 5,320 17.7 
Noncontrolling interests in (income) loss of consolidated joint venture56 — 56 100.0 
Net Income (Loss) Attributable to KKR Real Estate Finance Trust Inc. and Subsidiaries35,468 30,092 5,376 17.9 
Preferred stock dividends and redemption value adjustment5,326 908 4,418 486.6 
Participating securities' share in earnings346 — 346 100.0 
Net Income (Loss) Attributable to Common Stockholders$29,796 $29,184 $612 2.1 %
Net Income (Loss) Per Share of Common Stock
Basic$0.47 $0.52 $(0.05)(9.2)%
Diluted$0.46 $0.52 $(0.06)(11.4)%
Weighted Average Number of Shares of Common Stock Outstanding
Basic63,086,452 55,619,428 7,467,024 13.4 %
Diluted69,402,626 55,731,061 13,671,565 24.5 %
Dividends Declared per Share of Common Stock$0.43 $0.43 $— — %


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Net Interest Income

Net interest income increased by $3.4 million, during the three months ended March 31, 2022, as compared to the three months ended March 31, 2021. This increase was primarily due to an increase in the weighted average principal of our loan portfolio of $1,565.5 million for the three months ended March 31, 2022, as compared to the three months ended March 31, 2021, as a result of continuing capital deployment from loan repayments and deployment of the proceeds from the preferred and common stock issuances.

The increase in interest expense was primarily due to an increase in market rates and an increase in the weighted average principal balance of our financing facilities of $1,299.6 million for the three months ended March 31, 2022, as compared to the three months ended March 31, 2021. The proceeds from our financing facilities were used to fund our loan originations and funding on previously closed loans.

In addition, we recognized $6.1 million of deferred loan fees and origination discounts accreted into interest income during the three months ended March 31, 2022, as compared to $4.8 million during the three months ended March 31, 2021. We recorded $4.8 million of deferred financing costs amortization into interest expense during the three months ended March 31, 2022, as compared to $3.7 million during the three months ended March 31, 2021.

Other Income

Total other income increased by $5.3 million during the three months ended March 31, 2022, as compared to the three months ended March 31, 2021. This increase was primarily due to a $2.6 million increase in REO operating revenue and $1.3 million of profit sharing income in connection with the repayment of an industrial senior loan during the three months ended March 31, 2022. In addition, we recognized a $1.0 million unrealized mark-to-market gain on our RECOP I's underlying CMBS investments during the three months ended March 31, 2022, as compared to a de minimis unrealized mark-to-market gain during the three months ended March 31, 2021.

Operating Expenses

Total operating expenses increased by $3.4 million during the three months ended March 31, 2022, as compared to the three months ended March 31, 2021. This increase was primarily due to a (i) net increase of $0.4 million in the provision for credit losses, (ii) $1.7 million increase in management fees resulting from our preferred and common stock issuances and (iii) $2.6 million increase in REO operating expenses. This increase was partially offset by a $2.2 million decrease in incentive fee during the three months ended March 31, 2022.

The following table provides additional information regarding total operating expenses (dollars in thousands):
Three Months Ended
March 31, 2022December 31, 2021September 30, 2021June 30, 2021March 31, 2021
Operating expenses$2,320 $1,970 $1,632 $1,694 $1,513 
Stock-based compensation2,126 1,413 2,027 1,994 1,992 
Total general and administrative expenses4,446 3,383 3,659 3,688 3,505 
Provision for (reversal of) credit losses, net (1,218)(3,077)1,165 (559)(1,588)
Management fee to affiliate6,007 5,289 4,964 4,835 4,290 
Incentive compensation to affiliate— 3,463 2,215 2,403 2,192 
Expenses from real estate owned operations
2,554 — — — — 
Total operating expenses$11,789 $9,058 $12,003 $10,367 $8,399 

COVID-19 Impact

Since its onset in 2020, the COVID-19 pandemic has created significant disruption in global supply chains, increased rates of unemployment and adversely impacted many industries, including industries related to the collateral underlying certain of our loans.

In 2021 and 2022, the global economy has, with certain setbacks, begun reopening and wider distribution of vaccines will likely encourage greater economic activity. Although we have observed signs of economic recovery and are generally encouraged by
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the response of our borrowers, the pandemic has resulted in, and may continue to result in, declines in rental rates and increases in rental concessions, including free rent to renew tenants early, to retain tenants who are up for renewal or to attract new tenants, or rent abatements for tenants severely impacted by the COVID-19 pandemic. In addition, the COVID-19 pandemic continues to disrupt global supply chains, has caused labor shortages and has added broad inflationary pressures, which has a potential negative impact on our borrowers’ ability to execute on their business plans and potentially their ability to perform under the terms of their loan obligations. Further, declines in economic conditions caused by the COVID-19 pandemic could negatively impact real estate and real estate capital markets and result in lower occupancy, lower rental rates and declining values in our portfolio, which could adversely impact the value of our investments, making it more difficult for us to make distributions or meet our financing obligations.

We believe any future impact of COVID-19 on our business, financial performance and operating results will in part be significantly driven by a number of factors that we are unable to predict or control, including, for example: the severity and duration of the pandemic; the distribution and acceptance of vaccines and their impact on the timing and speed of economic recovery; the spread of new variants of the virus; the pandemic’s impact on the U.S. and global economies, including concerns regarding additional surges of the pandemic or the expansion of the economic impact thereof as a result of certain jurisdictions “re-opening” or otherwise lifting certain restrictions prematurely; the availability of U.S. federal, state, local or non-U.S. funding programs aimed at supporting the economy during the COVID-19 pandemic, including uncertainties regarding the potential implementation of new or extended programs; the timing, scope and effectiveness of additional governmental responses to the pandemic; and the negative impact on our financing sources, vendors and other business partners that may indirectly adversely affect us.
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Liquidity and Capital Resources

Overview

We have capitalized our business to date primarily through the issuance and sale of our common stock and preferred stock, borrowings from Non-Mark-to-Market Financing Sources(1), borrowings from three master repurchase agreements, the issuance and sale of convertible notes and our secured term loan. Our Non-Mark-to-Market Financing Sources, which accounted for 79% of our total secured financing (excluding our corporate Revolver) as of March 31, 2022, are not subject to credit or capital markets mark-to-market provisions. The remaining 21% of our secured borrowings, which are comprised of three master repurchase agreements, are only subject to credit marks. We have not received any margin calls on our master repurchase agreements to date, nor do we expect any at this time.

Our primary sources of liquidity include $173.2 million of cash on our consolidated balance sheet, $520.0 million of available capacity on our corporate revolver, $61.1 million of available borrowings under our financing arrangements based on existing collateral and cash flows from operations. In addition, we had $377.3 million of unencumbered senior loans that can be financed, as of March 31, 2022. Our corporate revolver and secured term loan are secured by corporate level guarantees and do not include asset-based collateral. We may seek additional sources of liquidity from syndicated financing, other borrowings (including borrowings not related to a specific investment) and future offerings of equity and debt securities.

Our primary liquidity needs include our ongoing commitments to repay the principal and interest on our borrowings and pay other financing costs, financing our assets, meeting future funding obligations, making distributions to our stockholders, funding our operations that includes making payments to our Manager in accordance with the management agreement, and other general business needs. We believe that our cash position and sources of liquidity will be sufficient to meet anticipated requirements for financing, operating and other expenditures in both the short- and long-term, based on current conditions.

As described in Note 10 to our condensed consolidated financial statements, we have off-balance sheet arrangements related to VIEs that we account for using the equity method of accounting and in which we hold an economic interest or have a capital commitment. Our maximum risk of loss associated with our interests in these VIEs is limited to the carrying value of our investment in the entity and any unfunded capital commitments. As of March 31, 2022, we held $36.6 million of interests in such entities, which does not include a remaining commitment of $4.3 million to RECOP I that we are required to fund if called.

We are continuing to monitor the COVID-19 pandemic and its impact on our operating partners, financing sources, borrowers and their tenants, and the economy as a whole. While the availability of approved COVID-19 vaccines and their impact on the economy is encouraging, the distribution and acceptance of such vaccines and their effectiveness with respect to new variants of the virus remain unknown. Accordingly, the ultimate magnitude and duration of the COVID-19 pandemic, as well as its impact on our borrowers, lenders and the economy as a whole, remains uncertain and continues to evolve. To the extent that our operating partners, financing sources, borrower’s and their tenants continue to be impacted by the COVID-19 pandemic, or by the other risks disclosed in this Quarterly Report on Form 10-Q and our Annual Report on Form 10-K, it would have a material adverse effect on our liquidity and capital resources.

To facilitate future offerings of equity, debt and other securities, we have in place an effective shelf registration statement (the “Shelf”) with the SEC. The amount of securities to be issued pursuant to this Shelf was not specified when it was filed and there is no specific dollar limit on the amount of securities we may issue. The securities covered by this Shelf include: (i) common stock, (ii) preferred stock, (iii) depository shares, (iv) debt securities, (v) warrants, (vi) subscription rights, (vii) and purchase contracts, and (viii) units. The specifics of any future offerings, along with the use of proceeds of any securities offered, will be described in detail in a prospectus supplement, or other offering material, at the time of any offering. In January 2022, we issued 6,210,000 shares of 6.50% Series A Preferred Stock under the Shelf, which included the exercise of the underwriters option to purchase additional shares of Series A Preferred Stock, and received net proceeds after underwriting discounts and commissions of $151.2 million. In March 2022, we issued 6,494,155 shares of Common Stock under the Shelf, which included the partial exercise of the underwriters’ option to purchase additional shares of Common Stock, and received net proceeds after underwriting discounts and commissions of $133.8 million.


(1)    Comprised of term loan financing, term lending agreements, collateralized loan obligations, secured term loan, warehouse facility, asset specific financing, and non-consolidated senior interests.
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We have also entered into an equity distribution agreement with certain sales agents, pursuant to which we may sell, from time to time, up to an aggregate sales price of $100.0 million of our common stock, pursuant to a continuous offering program (the “ATM”), under the Shelf. Sales of our common stock made pursuant to the ATM may be made in negotiated transactions or transactions that are deemed to be “at the market” offerings as defined in Rule 415 under the Securities Act. During the three months ended March 31, 2022, we issued and sold 68,817 shares of common stock under the ATM, generating net proceeds totaling $1.4 million. As of March 31, 2022, $98.6 million remained available for issuance under the ATM.

See Notes 5, 6, 7, 8 and 11 to our condensed consolidated financial statements for additional details regarding our secured financing agreements, collateralized loan obligations, secured term loan, convertible notes and stock activity.

Debt-to-Equity Ratio and Total Leverage Ratio

The following table presents our debt-to-equity ratio and total leverage ratio:
March 31, 2022December 31, 2021
Debt-to-equity ratio(A)
1.5x2.3x
Total leverage ratio(B)
3.2x3.7x

(A)     Represents (i) total outstanding debt agreements (excluding non-recourse term loan facility), secured term loan and convertible notes, less cash to (ii) total permanent equity, in each case, at period end.
(B)    Represents (i) total outstanding debt agreements, secured term loan, convertible notes, and collateralized loan obligations, less cash to (ii) total permanent equity, in each case, at period end.

Sources of Liquidity

Our primary sources of liquidity include cash and cash equivalents and available borrowings under our secured financing agreements, inclusive of our Revolver. Amounts available under these sources as of the date presented are summarized in the following table (dollars in thousands):
March 31, 2022December 31, 2021
Cash and cash equivalents$173,178 $271,487 
Available borrowings under revolving credit agreements520,000 200,000 
Available borrowings under master repurchase agreements61,135 51,601 
Available borrowings under term lending agreements4,951 5,826 
Available borrowings under warehouse facility— — 
$759,264 $528,914 

We also had $377.3 million and $235.3 million of unencumbered senior loans that can be pledged to financing facilities subject to lender approval, as of March 31, 2022 and December 31, 2021. In addition to our primary sources of liquidity, we have the ability to access further liquidity through our ATM program and public offerings of debt and equity securities. Our existing loan portfolio also provides us with liquidity as loans are repaid or sold, in whole or in part, and the proceeds from repayment become available for us to invest.

Cash Flows

The following table sets forth changes in cash and cash equivalents for the three months ended March 31, 2022 and 2021 (dollars in thousands):
Three Months Ended March 31,
20222021
Cash Flows From Operating Activities$33,130 $30,268 
Cash Flows From Investing Activities(530,474)(201,230)
Cash Flows From Financing Activities398,461 269,477 
Net Increase (Decrease) in Cash, Cash Equivalents, and Restricted Cash$(98,883)$98,515 
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Cash Flows from Operating Activities

Our cash flows from operating activities were primarily driven by our net interest income, which is driven by the income generated by our investments less financing costs. The following table sets forth interest received by, and paid for, our investments for the three months ended March 31, 2022 and 2021 (dollars in thousands):
Three Months Ended March 31,
20222021
Interest Received:
Commercial real estate loans$63,072 $57,071 
63,072 57,071 
Interest Paid:
Interest expense24,715 20,561 
Net interest collections$38,357 $36,510 

Our net interest collections were partially offset by cash used to pay management and incentive fees, as follows (dollars in thousands):
Three Months Ended March 31,
20222021
Management Fees to affiliate$5,289 $4,252 
Incentive Fees to affiliate— 2,192 
Net decrease in cash and cash equivalents$5,289 $6,444 

Cash Flows from Investing Activities

Our cash flows from investing activities consisted of cash outflows to fund new loan originations and our commitments under existing loan investments, partially offset by cash inflows from the sale/syndication and principal repayments on our loan investments. During the three months ended March 31, 2022, we funded $812.8 million of CRE loans and received $282.3 million from repayments of CRE loans.

During the three months ended March 31, 2021, we funded $571.8 million of CRE loans and received $370.6 million from the sale/syndication and repayments of CRE loans.

Cash Flows from Financing Activities

Our cash flows from financing activities were primarily driven by proceeds from borrowings under our financing agreements of $479.3 million, proceeds from CLO KREF 2022-FL3 issuance of $847.5 million, net proceeds from Series A Preferred Stock issuance of $151.2 million, and net proceeds from common stock issuance of $135.3 million during the three months ended March 31, 2022, partially offset by (i) repayments of $1,172.3 million on borrowings under our financing agreements and (ii) payment of $31.7 million in dividends.

During the three months ended March 31, 2021, our cash flows from financing activities were primarily driven by proceeds from borrowings under our financing agreements of $718.1 million, which were offset by (i) repayments of $422.1 million on borrowings under our financing agreements and (ii) payment of $24.3 million in dividends.

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Contractual Obligations and Commitments

The following table presents our contractual obligations and commitments (including interest payments) as of March 31, 2022 (dollars in thousands):
TotalLess than 1 year1 to 3 years3 to 5 yearsThereafter
Recourse Obligations:
Master Repurchase Facilities(A)
Wells Fargo(B)
$695,886 $12,180 $683,706 $— $— 
Morgan Stanley(C)
440,085 440,085 — — — 
Goldman Sachs(D)
106,916 106,916 — — — 
Term Lending Agreements(A)
KREF Lending V(E)
605,417 605,417 — — — 
KREF Lending IX364,228 7,462 223,631 133,135 — 
Warehouse Facility
HSBC— — — — — 
Asset Specific Financing
BMO Facility(A)
— — — — — 
Total secured financing agreements2,212,532 1,172,060 907,337 133,135 — 
Convertible Notes153,778 8,927 144,851 — — 
Secured Term Loan423,941 17,606 34,824 34,218 337,293 
Future funding obligations(F)
1,449,105 593,643 763,867 91,595 — 
RECOP I commitment(G)
4,324 4,324 — — — 
Revolver(H)
— — — — — 
Total recourse obligations4,243,680 1,796,560 1,850,879 258,948 337,293 
Non-Recourse Obligations:
Collateralized Loan Obligations2,123,319 36,094 72,188 72,287 1,942,750 
Term Loan Financing924,743 571,911 265,519 87,313 — 
Total$7,291,742 $2,404,565 $2,188,586 $418,548 $2,280,043 

(A)    The allocation of repurchase facilities and term lending agreements is based on the current maturity date of each individual borrowing under these facilities. The amounts include the related future interest payment obligations, which are estimated by assuming the amounts outstanding under these facilities and the interest rates in effect as of March 31, 2022 will remain constant into the future. This is only an estimate, as actual amounts borrowed and rates may vary over time. Amounts borrowed are subject to a maximum 25.0% recourse limit.
(B)    In September 2021, the current stated maturity was amended to September 2024, subject to two, twelve-month facility term extensions available to us, which is contingent upon certain covenants and thresholds.
(C)    In December 2021, the current stated maturity was extended to December 2022, with one-year extension option upon KREF giving written notice and another two one-year extension periods subject to approval by Morgan Stanley.
(D)    In October 2021, the current stated maturity was amended to October 2022, subject to a twelve-month extension option available to us, subject to the satisfaction of certain conditions.
(E)    In March 2021, the current stated maturity was extended to June 2022, subject to four additional one-year extension options, which may be exercised by us upon the satisfaction of certain customary conditions and thresholds.
(F)    We have future funding obligations related to our investments in senior loans. These future funding obligations primarily relate to construction projects, capital improvements, tenant improvements and leasing commissions. Generally, funding obligations are subject to certain conditions that must be met, such as customary construction draw certifications, minimum debt service coverage ratios, minimal debt yield tests, or executions of new leases before advances are made to the borrower. As such, the allocation of our future funding obligations is based on the earlier of the expected funding or commitment expiration date.
(G)    Amounts committed to invest in an aggregator vehicle alongside RECOP I, which had a two-year investment period which ended in April 2019.
(H)    Any amounts borrowed are full recourse to certain subsidiaries of KREF. Includes principal and assumes interest outstanding over a one-year period. Amounts are estimated based on the amount outstanding under the Revolver and the interest rate in effect as of March 31, 2022. This is only an estimate as actual amounts borrowed, the timing of repayments and interest rates may vary over time. The Revolver matures in March 2027.

We are required to pay our Manager a base management fee, an incentive fee and reimbursements for certain expenses pursuant to our management agreement. The table above does not include the amounts payable to our Manager under our management agreement as they are not fixed and determinable. See Note 15 to our condensed consolidated financial statements included in this Form 10-Q for additional terms and details of the fees payable under our management agreement.

As a REIT, we generally must distribute at least 90% of our REIT taxable income, determined without regard to the deduction for dividends paid and excluding net capital gains, to stockholders in the form of dividends to comply with the REIT provisions
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Table of Contents
of the Code. Our taxable income does not necessarily equal our net income as calculated in accordance with GAAP, or our Distributable Earnings as described above under "Key Financial Measures and Indicators — Distributable Earnings."

Subsequent Events

Our subsequent events are detailed in Note 18 to our condensed consolidated financial statements.

Critical Accounting Policies and Use of Estimates

Our discussion and analysis of our financial condition and results of operations is based upon our condensed consolidated financial statements, which have been prepared in accordance with GAAP. The preparation of these condensed consolidated financial statements requires our Manager to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue and expenses, and related disclosure of contingent assets and liabilities. Actual results could differ from these estimates. There have been no material changes to our Critical Accounting Policies and Use of Estimates described in our Annual Report on Form 10-K.

Allowance for Credit Losses

We originate and purchase CRE debt and related instruments generally to be held as long-term investments at amortized cost. We adopted ASU No. 2016-13, Financial Instruments—Credit Losses, and subsequent amendments (“ASU 2016-13”), which replaced the incurred loss methodology with an expected loss model known as the Current Expected Credit Loss or CECL model. CECL amends the previous credit loss model to reflect our current estimate of all expected credit losses, not only based on historical experience and current conditions, but also by including reasonable and supportable forecasts incorporating forward-looking information.

In connection with our adoption of ASU No. 2016-13 on January 1, 2020, we implemented new processes including the utilization of loan loss forecasting models, updates to our reserve policy documentation, changes to our internal reporting processes and related internal controls. We have implemented loan loss forecasting models for estimating expected life-time credit losses, at the individual loan level, for our commercial mortgage loan portfolio. The CECL forecasting methods used by us include (i) a probability of default and loss given default method using underlying third-party CMBS/CRE loan database with historical loan losses from 1998 to 2020, and (ii) probability weighted expected cash flow method, depending on the type of loan and the availability of relevant historical market loan loss data. We might use other acceptable alternative approaches in the future depending on, among other factors, the type of loan, underlying collateral, and availability of relevant historical market loan loss data.

We estimate our CECL allowance for our loan portfolio, including unfunded loan commitments, at the individual loan level. Significant inputs to our forecasting methods include (i) key loan-specific inputs such as loan-to-value ("LTV"), vintage year, loan-term, underlying property type, geographic location, and expected timing and amount of future loan fundings, (ii) performance against the underwritten business plan and our internal loan risk rating and (iii) a macro-economic forecast. In certain instances, we consider relevant loan-specific qualitative factors to certain loans to estimate its CECL allowance.

We consider loan investments that are both (i) expected to be substantially repaid through the operation or sale of the underlying collateral, and (ii) for which the borrower is experiencing financial difficulty, to be “collateral-dependent” loans. For such loans that we determine that foreclosure of the collateral is probable, we measure the expected losses based on the difference between the fair value of the collateral and the amortized cost basis of the loan as of the measurement date. For collateral-dependent loans that we determine foreclosure is not probable, we apply a practical expedient to estimate expected losses using the difference between the collateral’s fair value (less costs to sell the asset if repayment is expected through the sale of the collateral) and the amortized cost basis of the loan.

We consider the individual loan internal risk rating as the primary credit quality indicator underlying the CECL assessment. We perform a quarterly review of our loan portfolio at the individual loan level to determine the internal risk rating for each of our loans by assessing the risk factors of each loan, including, without limitation, LTV, debt yield, property type, geographic and local market dynamics, physical condition, cash flow volatility, leasing and tenant profile, loan structure and exit plan, and project sponsorship. Considering these factors, we rate our loans based on a five-point scale, "1" though "5", from less risk to greater risk, which ratings are defined as follows:

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Table of Contents
1—Very Low Risk—The underlying property performance has surpassed underwritten expectations, and the sponsor’s business plan is generally complete. The property demonstrates stabilized occupancy and/or rental rates resulting in strong current cash flow and/or a very low loan-to-value ratio (<65%). At the level of performance, it is very likely that the underlying loan can be refinanced easily in the period’s prevailing capital market conditions.

2—Low Risk—The underlying property performance has matched or exceeded underwritten expectations, and the sponsor’s business plan may be ahead of schedule or has achieved some or many of the major milestones from a risk mitigation perspective. The property has achieved improving occupancy at market rents, resulting in sufficient current cash flow and/or a low loan-to-value ratio (65%-70%). Operating trends are favorable, and the underlying loan can be refinanced in today’s prevailing capital market conditions. The sponsor/manager is well capitalized or has demonstrated a history of success in owning or operating similar real estate.

3—Average Risk—The underlying property performance is in-line with underwritten expectations, or the sponsor may be in the early stages of executing its business plan. Current cash flow supports debt service payments, or there is an ample interest reserve or loan structure in place to provide the sponsor time to execute the value-improvement plan. The property exhibits a moderate loan-to-value ratio (<75%). Loan structure appropriately mitigates additional risks. The sponsor/manager has a stable credit history and experience owning or operating similar real estate.

4—High Risk/Potential for Loss—A loan that has a risk of realizing a principal loss. The underlying property performance is behind underwritten expectations, or the sponsor is behind schedule in executing its business plan. The underlying market fundamentals may have deteriorated, comparable property valuations may be declining or property occupancy has been volatile, resulting in current cash flow that may not support debt service payments. The loan exhibits a high loan-to-value ratio (>80%), and the loan covenants are unlikely to fully mitigate some risks. Interest payments may come from an interest reserve or sponsor equity.

5—Impaired/Loss Likely—A loan that has a very high risk of realizing a principal loss or has otherwise incurred a principal loss. The underlying property performance is significantly behind underwritten expectations, the sponsor has failed to execute its business plan and/or the sponsor has missed interest payments. The market fundamentals have deteriorated, or property performance has unexpectedly declined or valuations for comparable properties have declined meaningfully since loan origination. Current cash flow does not support debt service payments. With the current capital structure, the sponsor might not be incentivized to protect its equity without a restructuring of the loan. The loan exhibits a very high loan-to-value ratio (>90%), and default may be imminent.

Refer to Note 2 to our condensed consolidated financial statements for the description of our significant accounting policies.

Recently Adopted Accounting Standard

Earnings per Share

On January 1, 2022, we adopted ASU No. 2020-06, Debt — Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging — Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity, which requires to include convertible instruments in the diluted EPS calculation, regardless of a company’s intent and ability to settle such debt in cash.

We included the potentially issuable shares related to our Convertible Notes in the diluted EPS calculations starting with the first quarter of 2022. Prior to December 31, 2021, all potentially issuable shares related to the Convertible Notes were excluded from the calculation of diluted EPS because we had the intent and ability to settle the Convertible Notes in cash.
79

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We seek to manage our risks related to the credit quality of our assets, interest rates, liquidity, prepayment rates and market value, while at the same time seeking to provide an opportunity to stockholders to realize attractive risk-adjusted returns. While risks are inherent in any business enterprise, we seek to quantify and justify risks in light of available returns and to maintain capital levels consistent with the risks we undertake.

Credit Risk

Our investments are subject to credit risk, including the risk of default. The performance and value of our investments depend upon the sponsors' ability to operate the properties that serve as our collateral so that they produce cash flows adequate to pay interest and principal due to us. To monitor this risk, our Manager reviews our investment portfolio and is in regular contact with the sponsors, monitoring performance of the collateral and enforcing our rights as necessary.

The COVID-19 pandemic continues to disrupt global supply chains, has caused labor shortages and has added broad inflationary pressures, which has a potential negative impact on our borrowers’ ability to execute on their business plans and potentially their ability to perform under the terms of their loan obligations. The COVID-19 pandemic has adversely impacted the commercial real estate markets, causing reduced occupancy, requests from tenants for rent deferral or abatement, and delays in property renovations currently planned or underway. While the economy has improved significantly from the initial outbreak of the COVID-19 pandemic, these negative conditions may persist into the future and impair our borrowers’ ability to pay principal and interest due under our loan agreements. We maintain robust asset management relationships with our borrowers and have leveraged these relationships to address the potential impact of the COVID-19 pandemic on our loans secured by properties experiencing cash flow pressure, most significantly hospitality and retail assets, to which we have limited exposure.

Based on the limited loan modifications completed to date, and the relative performance of most modified loans, we are encouraged by our borrowers’ response to the COVID-19 pandemic’s impact on their properties and current trends. We believe our loan sponsors are generally committed to supporting assets collateralizing our loans through additional equity investments. While we believe the principal amounts of our loans are generally adequately protected by underlying collateral value and have adequate CECL reserves, there is a risk that we will not realize the entire principal value of certain investments.

Credit Yield Risk

Credit yields measure the return demanded on financial instruments by the lending market based on their risk of default. Increasing supply of credit-sensitive financial instruments and reduced demand will generally cause the market to require a higher yield on such financial instruments, resulting in a lower price for the financial instruments we hold.

Interest Rate Risk

Generally, the composition of our investments is such that rising interest rates will increase our net income, while declining interest rates will decrease our net income. Our net interest income currently benefits from in-the-money rate floors in our loan portfolio, which benefit is expected to decrease as the index rates increase. There can be no assurance that we will continue to utilize rate floors. There can be no assurance of how our net income may be affected in future quarters, which will depend on, among other things, the interest rate environment and our then-current portfolio.

Recently, interest rates have remained at relatively low levels on a historical basis and the Federal Reserve maintained the
federal funds target range at 0.0% to 0.25% for much of 2021. However, in March 2022, the Federal Reserve approved a 0.25%
rate increase and has indicated that, in light of increasing signs of inflation, it foresees further increases in interest rates
throughout the year and into 2023 and 2024.

As of March 31, 2022, 100.0% of our loan portfolio and related portfolio financing by principal amount earned or paid a floating rate of interest indexed to one-month USD LIBOR and/or Term SOFR. Accordingly, our interest income and expense will generally change directionally with index rates; however, in certain circumstances, rate floors relating to our loan portfolio may partially offset the impact from changing rates. As of March 31, 2022, a 25 basis point decrease in the index rates would increase our expected cash flows by approximately $1.0 million, or $0.01 per common share, for the following twelve-month period. Conversely, a 50 basis point increase in the index rates would decrease our expected cash flows by approximately $1.4 million, or $0.02 per common share; while a 200 basis point increase in the index rates would increase our expected cash flows by approximately $7.8 million, or $0.12 per common share, for the same period.
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LIBOR Transition

On March 5, 2021, the Financial Conduct Authority of the U.K. (the “FCA”), which regulates LIBOR, announced (the “FCA Announcement”) that all LIBOR tenors relevant to us will cease to be published or will no longer be representative after June 30, 2023. The FCA Announcement coincides with the March 5, 2021 announcement of LIBOR’s administrator, the ICE Benchmark Administration Limited (the “IBA”), indicating that, as a result of not having access to input data necessary to calculate LIBOR tenors relevant to us on a representative basis after June 30, 2023, the IBA would have to cease publication of such LIBOR tenors immediately after the last publication on June 30, 2023. The United States Federal Reserve has also advised banks to cease entering into new contracts that use USD LIBOR as a reference rate. The Federal Reserve, in conjunction with the Alternative Reference Rate Committee, a committee convened by the Federal Reserve that includes major market participants, has identified the Secured Overnight Financing Rate, or SOFR, a new index calculated by short-term repurchase agreements, backed by Treasury securities, as its preferred alternative rate for LIBOR. There are significant differences between LIBOR and SOFR, such as LIBOR being an unsecured lending rate while SOFR is a secured lending rate, and SOFR is an overnight rate while LIBOR reflects term rates at different maturities. If our LIBOR-based borrowings are converted to SOFR, the differences between LIBOR and SOFR, could result in higher interest costs for us, which could have a material adverse effect on our operating results. Although SOFR is the ARRC’s recommended replacement rate, it is also possible that lenders may instead choose alternative replacement rates that may differ from LIBOR in ways similar to SOFR or in other ways that would result in higher interest costs for us. We cannot predict the effect of the decision not to sustain LIBOR, or the potential transition to SOFR or another alternative reference rate as LIBOR’s replacement.

As of March 31, 2022, 87.1% and 12.9% of our loans by principal amount earned a floating rate of interest indexed to LIBOR and Term SOFR, respectively; and 75.0% and 25.0% of our outstanding floating rate financing arrangements bear interest indexed to LIBOR and Term SOFR, respectively. All of our LIBOR-based arrangements provide procedures for determining an alternative base rate in the event that LIBOR is discontinued. Regardless, there can be no assurances as to what additional alternative base rates may be and whether such base rate will be more or less favorable than LIBOR and any other unforeseen impacts of the discontinuation of LIBOR. We are monitoring the developments with respect to the phasing out of LIBOR and are working with our lenders and borrowers to minimize the impact of any LIBOR transition on our financial condition and results of operations, but can provide no assurances regarding the impact of the discontinuation of LIBOR.

Prepayment Risk

Prepayment risk is the risk that principal will be repaid at an earlier date than anticipated, potentially causing the return on certain investments to be less than expected. As we receive prepayments of principal on our assets, any premiums paid on such assets are amortized against interest income. In general, an increase in prepayment rates accelerates the amortization of purchase premiums, thereby reducing the interest income earned on the assets. Conversely, discounts on such assets are accreted into interest income. In general, an increase in prepayment rates accelerates the accretion of purchase discounts, thereby increasing the interest income earned on the assets. Additionally, we may not be able to reinvest the principal repaid at the same or higher yield of the original investment.

Financing Risk

We finance our target assets using our repurchase facilities, our term lending agreements, our Term Loan Financing, Warehouse Facility, Asset Based Financing, secured term loan, collateralized loan obligations and through syndicating senior participations in our originated senior loans. Over time, as market conditions change, we may use other forms of leverage in addition to these methods of financing. Weakness or volatility in the financial markets, the CRE and mortgage markets or the economy generally could adversely affect one or more of our lenders or potential lenders and could cause one or more of our lenders or potential lenders to be unwilling or unable to provide us with financing, or to decrease the amount of our available financing through a market to market, or to increase the costs of that financing.

Real Estate Risk

The market values of commercial real estate assets are subject to volatility and may be adversely affected by a number of factors, including, but not limited to, national, regional and local economic conditions (which may be adversely affected by industry slowdowns and other factors); local real estate conditions; changes or continued weakness in specific industry segments; construction quality, age and design; demographic factors; and retroactive changes to building or similar codes. In
81

addition, decreases in property values reduce the value of the collateral and the potential proceeds available to a borrower to repay the underlying loans, which could also cause us to suffer losses.

ITEM 4. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

We maintain disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) that are designed to ensure that the information required to be disclosed by us in the reports filed or submitted by us under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and such information is accumulated and communicated to management, including the Chief Executive Officer and the Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. Any controls and procedures, no matter how well designed and operated, can provide only reasonable assurances of achieving the desired controls.

As of March 31, 2022, we carried out an evaluation, under the supervision and with the participation of our management, including the Chief Executive Officer and the Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures. Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that, as of March 31, 2022, our disclosure controls and procedures were effective to accomplish their objectives at the reasonable assurance level.

Changes in Internal Control over Financial Reporting

No change in our internal control over financial reporting (as such term is defined in Rule 13a-15(f) of the Exchange Act) occurred during the quarter ended March 31, 2022 that materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
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PART II — OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

The section entitled “Litigation” appearing in Note 14 of our condensed consolidated financial statements included in this Form 10-Q is incorporated herein by reference.

ITEM 1A. RISK FACTORS

For information regarding the risk factors that could affect the Company’s business, results of operations, financial condition and liquidity, see the information under Part I, Item 1A. “Risk Factors” in the Form 10-K, which is accessible on the SEC’s website at www.sec.gov. There have been no material changes to the risk factors previously disclosed in the Form 10-K.
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ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

Issuer Purchases of Equity Securities
In May 2018, our board of directors approved a $100.0 million share repurchase program, effective June 12, 2018, which was originally scheduled to expire on June 30, 2019. On June 17, 2019, we announced that our board of directors approved an extension of the program through June 30, 2020, and on June 15, 2020, our board of directors authorized a further extension of the program. Under the extended program, which no longer has an expiration date, we may repurchase up to $100.0 million of our common stock beginning July 1, 2020, of which up to $50.0 million may be repurchased under a pre-set trading plan meeting the requirements of Rule 10b5-1 under the Exchange Act that provides for repurchases of common stock when the market price per share is below book value per share (calculated in accordance with GAAP as of the end of the most recent quarterly period for which financial statements are available), and the remaining $50.0 million may be used for repurchases in the open market, pursuant to pre-set trading plans meeting the requirements of Rule 10b5-1 under the Exchange Act, in privately negotiated transactions or otherwise. The timing, manner, price and amount of any common stock repurchases will be determined by us in our discretion and will depend on a variety of factors, including legal requirements, price and economic and market conditions. The program does not require us to repurchase any specific number of shares of common stock, and the program may be suspended, extended, modified or discontinued at any time.

We did not repurchase any shares of our common stock during the three months ended March 31, 2022. As of March 31, 2022, we had $100.0 million of availability to repurchase shares under the program.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

ITEM 5. OTHER INFORMATION

None.


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ITEM 6. EXHIBITS
Exhibit
Number		 Exhibit Description
3.1
4.1
10.1
10.2
10.3
10.4*
10.5*
10.6*
10.7*
10.8
10.9†
31.1
31.2
32.1
32.2
101.INSInline XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
101.SCHInline XBRL Taxonomy Extension Schema Document.
101.CALInline XBRL Taxonomy Extension Calculation Linkbase Document.
85

101.DEFInline XBRL Taxonomy Extension Definition Linkbase Document.
101.LABInline XBRL Taxonomy Extension Label Linkbase Document.
101.PREInline XBRL Taxonomy Extension Presentation Linkbase Document.
104Cover Page Interactive Data File, formatted in Inline XBRL and contained in Exhibit 101.
_______________________
* Certain information contained in this agreement has been omitted because it is not material and is the type that the registrant treats as private or confidential.
† Management contract or compensatory plan in which directors and/or executive officers are eligible to participate.

Certain agreements and other documents filed as exhibits to this Form 10-Q contain representations and warranties that the parties thereto made to each other. These representations and warranties have been made solely for the benefit of the other parties to such agreements and may have been qualified by certain information that has been disclosed to the other parties to such agreements and other documents and that may not be reflected in such agreements and other documents. In addition, these representations and warranties may be intended as a way of allocating risks among parties if the statements contained therein prove to be incorrect, rather than as actual statements of fact. Accordingly, there can be no reliance on any such representations and warranties as characterizations of the actual state of facts. Moreover, information concerning the subject matter of any such representations and warranties may have changed since the date of such agreements and other documents.
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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

KKR REAL ESTATE FINANCE TRUST INC.
Date:April 25, 2022By:
/s/ Matthew A. Salem
Name:    Matthew A. Salem
Title:    Chief Executive Officer
(Principal Executive Officer)
Date:April 25, 2022By:/s/ Kendra L. Decious
Name:    Kendra L. Decious
Title:    Chief Financial Officer and Treasurer
(Principal Financial and Accounting Officer)
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Exhibit 10.1

EXECUTION VERSION

MASTER REPURCHASE AGREEMENT AND SECURITIES CONTRACT

Dated as of July 27, 2021

by and between

KREF LENDING IX LLC,
 
as Seller,
 
and
 
MUFG UNION BANK, N.A.,
 
as Buyer
 
TABLE OF CONTENTS

   
Page
     
1.
APPLICABILITY
1
     
2.
DEFINITIONS
1
     
3.
INITIATION; CONFIRMATION; TERMINATION; FEES; EXTENSIONS
29
     
4.
CASH SWEEP PERIOD
39
     
5.
INCOME PAYMENTS AND PRINCIPAL PAYMENTS
40
     
6.
SECURITY INTEREST
43
     
7.
PAYMENT, TRANSFER AND CUSTODY
45
     
8.
SALE, TRANSFER, HYPOTHECATION OR PLEDGE OF PURCHASED ASSETS
51
     
9.
RECOURSE
52
     
10.
REPRESENTATIONS AND WARRANTIES OF SELLER
52
     
11.
NEGATIVE COVENANTS OF SELLER
57
     
12.
AFFIRMATIVE COVENANTS OF SELLER
60
     
13.
SPECIAL PURPOSE ENTITY
65
     
14.
EVENTS OF DEFAULT; REMEDIES
67
     
15.
SINGLE AGREEMENT
73
     
16.
CONFIDENTIALITY
74
     
17.
NOTICES AND OTHER COMMUNICATIONS
75
     
18.
ENTIRE AGREEMENT; SEVERABILITY
75
     
19.
SUCCESSORS AND ASSIGNS
75
     
20.
GOVERNING LAW
79
     
21.
NO WAIVERS, ETC
79
     
22.
RESERVED
79
     
23.
INTENT
79
     
24.
DISCLOSURE RELATING TO CERTAIN FEDERAL PROTECTIONS
81
     
25.
CONSENT TO JURISDICTION; WAIVER OF JURY TRIAL
81
     
26.
NO RELIANCE
82
     
27.
INDEMNITY
83
     
28.
DUE DILIGENCE
84
     
29.
SERVICING
84

i
30.
TAXES
86
     
31.
U.S. TAX TREATMENT
89
     
32.
USA PATRIOT ACT
90
     
33.
SET OFF
90
     
34.
MISCELLANEOUS
90
     
35.
RECOGNITION OF THE U.S. SPECIAL RESOLUTION REGIMES
92
     
36.
ADMINISTRATIVE AGENT
92

ii
ANNEXES and EXHIBITS
 
ANNEX I
Names and Addresses for Communications between Parties
   
ANNEX II
Approved Bailees
   
EXHIBIT A Form of Transaction Request
   
EXHIBIT B
Form of Confirmation
   
EXHIBIT C
Authorized Representatives of Seller
   
EXHIBIT D
Due Diligence Checklist
   
EXHIBIT E
Form of Compliance Certificate
   
EXHIBIT F
Form of Power of Attorney
   
EXHIBIT G-1
Representations and Warranties Regarding Individual Purchased Assets Consisting of Whole Loans
   
EXHIBIT G-2 Representations and Warranties Regarding Individual Purchased Assets Consisting of Participation Interests
   
EXHIBIT H
Intentionally Omitted
   
EXHIBIT I
Form of Redirection Letter
   
EXHIBIT J
Form of Bailee Letter
   
EXHIBIT K
Intentionally Omitted
   
EXHIBIT L
Form of Amended and Restated Confirmation
   
EXHIBIT M Intentionally Omitted
   
EXHIBIT N-1 Form of Lost Note Affidavit (Non-Florida)
   
EXHIBIT N-2 Form of Lost Note Affidavit (Florida)
   
EXHIBIT O
Form of Tier 2 Assignment Document

iii
MASTER REPURCHASE AGREEMENT AND SECURITIES CONTRACT, dated as of July 27, 2021, is made by and between KREF LENDING IX LLC, a Delaware limited liability company, as Seller, and MUFG UNION BANK, N.A., as Buyer.  Seller and Buyer (each a “Party”) hereby agree as follows.
 
1.
APPLICABILITY
 
Subject to the terms and conditions of the Program Documents, from time to time during the Availability Period and at the request of Seller, the Parties may enter into transactions (each a “Transaction”) in which Seller agrees to sell, transfer and assign to Buyer certain Eligible Assets and all related rights in and interests related to such Eligible Assets on a servicing released basis, against the transfer of funds by Buyer representing the Purchase Price for such Eligible Assets, with a simultaneous agreement by Buyer to sell, transfer and assign to Seller and Seller to repurchase such Eligible Assets and all related rights in and interests related to such Eligible Assets on a servicing released basis, in a repurchase transaction at a date not later than the Facility Termination Date, against the transfer of funds by Seller representing the Repurchase Price for such Eligible Assets.
 
2.
DEFINITIONS
 
“1934 Act” shall have the meaning specified in Section 24(a) of this Agreement.
 
“Accelerated Repurchase Date” shall have the meaning specified in Section 14(b)(i) of this Agreement.
 
“Accepted Servicing Practices” shall have the meaning given to such term (or any similar or substitute term) in the related Servicing Agreement.
 
“Account Bank” shall mean Wells Fargo Bank, National Association, or any successor Account Bank appointed by Buyer with the prior written consent of Seller (which consent shall not be unreasonably withheld or delayed).
 
“Account Control Agreement” shall mean the deposit account control agreement entered into pursuant to Section 5(a), among Account Bank, Seller and Buyer relating to the Repo Collection Account and the Reserve Account, as the same may be amended, restated, supplemented or otherwise modified from time to time.
 
“Administrative Agent” shall have the meaning set forth in Section 36(b).
 
“Affiliate” shall mean, (a) when used with respect to the Seller, Pledgor, Guarantor, REIT or Manager, (i) REIT and any Subsidiary of REIT that is also a direct or indirect parent of the Seller, and (ii) Manager and (b) when used with respect to any other specified Person, any other Person directly or indirectly Controlling, Controlled by, or under common Control with, such Person.
 
“Agreement” shall mean this Master Repurchase Agreement and Securities Contract, dated as of July 27, 2021, by and between Seller and Buyer, including any applicable annexes,
 
exhibits and schedules hereto, as such agreement may be amended, restated, supplemented or otherwise modified from time to time.
 
“Alternative Rate Transaction” shall mean, with respect to any Pricing Rate Period, any Transaction with respect to which the Pricing Rate for such Pricing Rate Period is determined with reference to the Benchmark Replacement.
 
“Amended and Restated Confirmation” shall have the meaning specified in Section 3(c)(iii) of this Agreement.
 
“Anti-Corruption Laws” shall have the meaning specified in Section 11(n) of this Agreement.
 
“Anti-Money Laundering Laws” shall mean any laws or regulations relating to money laundering or terrorist financing, including the Bank Secrecy Act, 31 U.S.C. sections 5301 et seq.; the PATRIOT Act; Laundering of Monetary Instruments, 18 U.S.C. section 1956; Engaging in Monetary Transactions in Property Derived from Specified Unlawful Activity, 18 U.S.C. section 1957; the Financial Recordkeeping and Reporting of Currency and Foreign Transaction Regulations, 31 C.F.R. Part 103; and any similar laws or regulations currently in force or hereafter enacted.
 
“Applicable Spread” shall have the meaning assigned to such term in the Fee Letter.
 
“Appraisal” shall mean a FIRREA-compliant appraisal of the related Mortgaged Property from an Independent Appraiser addressed to the applicable Originator, Seller or Buyer, as the case may be (and if not addressed to Buyer, either containing reliance language for the benefit of Buyer or the addressee’s successors and/or assigns, or Seller shall have obtained a reliance letter for the benefit of Buyer) and in conformance with the Uniform Standards of Professional Appraisal Practice as adopted and published by the Appraisal Standards Board of the Appraisal  Foundation and the Interagency Appraisal and Evaluation Guidelines, as revised 12/10/10.
 
“Appraised Value” shall mean the as-is value (or, as-stabilized value with respect to Eligible Industrial Construction Loans) of the underlying Mortgaged Property relating to a Purchased Asset specified (x) in the Appraisal delivered by Seller to Buyer in connection with the Purchase Date for such Purchased Asset or (y) when calculating the Facility Leverage Ratio Test, in the most recent Appraisal delivered by Seller to Buyer (and reasonably acceptable to Buyer) or procured by Buyer in accordance with the terms of this Agreement.
 
“Approved Co-Buyer Agreement” has the meaning assigned to such term in the Fee Letter.
 
“Approved Exceptions” has the meaning assigned to such term in the Fee Letter.
 
“Asset-Level Test Date” shall mean, with respect to any Purchased Asset, each of (i) the related Purchase Date and the date of each Future Funding Advance with respect to such Purchased Asset, (ii) as of the Purchase Date and the date of each Future Funding Advance with respect to any other Purchased Asset and (iii) as of the date of each quarterly compliance certificate delivered to Buyer in accordance with Section 12(h)(i) or 12(h)(ii) if no Purchase Date
 
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or Future Funding Advance date occurred with respect to any Purchased Asset in the related calendar quarter.
 
“Assignee” shall have the meaning specified in Section 19(c) of this Agreement.
 
“Assignment of Leases” shall mean, with respect to any Mortgaged Property, an assignment of leases under the related Mortgage, or a separate assignment of leases, notice of transfer or equivalent instrument in recordable form, sufficient under the laws of the jurisdiction wherein such Mortgaged Property is located to reflect the assignment of leases.
 
“Assignment of Mortgage” shall mean, with respect to any Mortgage, an assignment of the mortgage, notice of transfer or equivalent instrument in recordable form, sufficient under the laws of the jurisdiction wherein the related Mortgaged Property is located to reflect the assignment and pledge of the Mortgage, subject to the terms, covenants and provisions of this Agreement.
 
“Authorized Representative of Seller” shall mean each of the natural persons listed on Exhibit C, as such Exhibit C may be updated by Seller by written notice to Buyer.
 
“Availability Period” shall mean the period from the date hereof to and including the earlier of (i) the Funding Expiration Date and (ii) the Facility Termination Date; provided however that the Availability Period shall be suspended during the continuance of any Event of Default.
 
“Available Purchase Price” shall have the meaning specified in Section 3(l) of this Agreement.
 
“Available Purchase Price Advance” shall have the meaning specified in Section 3(l) of this Agreement.
 
“Available Tenor” shall mean, as of any date of determination and with respect to the then-current Benchmark, as applicable, (x) if the then-current Benchmark is a term rate, any tenor or period for such Benchmark that is used for determining the Pricing Rate or (y) otherwise, any payment period for interest calculated with reference to such Benchmark, as applicable, that is or may be used for determining the length of a Pricing Rate Period pursuant to this Agreement as of such date and not including, for the avoidance of doubt, any tenor for such Benchmark that is then-removed from the definition of “Pricing Rate Period” pursuant to clause (v) of Section 3(f). Any reference to “Benchmark” shall include, as applicable, the published component used in the calculation thereof.
 
“Bailee” shall mean (i) any of the law firms identified on Annex II hereto or (ii) any other law firm or other third party not identified on Annex II that is reasonably acceptable to Buyer, in each case, that has delivered at Seller’s request a Bailee Letter with respect to any Purchased Asset.
 
“Bailee Letter” shall mean a letter from Seller and acknowledged by Bailee and Buyer substantially in the form attached hereto as Exhibit J, as amended, restated, supplemented or otherwise modified from time to time.
 
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“Bailee Trust Receipt” shall mean a trust receipt issued by Bailee to Buyer in accordance with and substantially in the form of Attachment 2 to the form of Bailee Letter attached as Exhibit J hereto, confirming the Bailee’s possession of the Purchased Asset Documents listed thereon.
 
“Bankruptcy Code” shall mean Title 11 of the United States Code, entitled “Bankruptcy”, as amended from time to time, and any successor statute or statutes.
 
“Benchmark” shall mean, initially, LIBOR; provided that if a Benchmark Transition Event, a Term SOFR Transition Event or an Early Opt-in Election, as applicable, and its related Benchmark Replacement Date have occurred with respect to LIBOR or the then-current Benchmark, then “Benchmark” means the applicable Benchmark Replacement to the extent that such Benchmark Replacement has replaced such prior benchmark rate pursuant to clause (i) or (ii) of Section 3(f).
 
“Benchmark Replacement” shall mean, for any Available Tenor,
 
(a) with respect to any Benchmark Transition Event or Early Opt-in Election, the first alternative set forth in the order below that can be determined by Buyer for the applicable Benchmark Replacement Date:
 
(1)          the sum of: (A) Term SOFR and (B) the related Benchmark Replacement Adjustment;
 
(2)          the sum of: (A) Daily Simple SOFR and (B) the related Benchmark Replacement Adjustment for a one-month period;
 
(3)          the sum of: (A) the alternate benchmark rate for the applicable Corresponding Tenor that has been selected by Buyer (in consultation with Seller) as the replacement for the then-current Benchmark for the applicable Corresponding Tenor giving due consideration to (i) any selection or recommendation of a replacement benchmark rate or the mechanism for determining such a rate by the Relevant Governmental Body or (ii) any evolving or then-prevailing market convention for determining a benchmark rate as a replacement for the then-current Benchmark for repurchase facilities at such time and (B) the related Benchmark Replacement Adjustment; or
 
(b) with respect to any Term SOFR Transition Event, the sum of (i) Term SOFR and (ii) the related Benchmark Replacement Adjustment.
 
provided that, in the case of clause (a)(1) or clause (b), such Unadjusted Benchmark Replacement is displayed on a screen or other information service that publishes such rate from time to time as selected by Buyer in its reasonable discretion. If the Benchmark Replacement as determined pursuant to clause (a)(1), (a)(2) or (a)(3) or clause (b) above would be less than the Floor, the Benchmark Replacement will be deemed to be the Floor for the purposes of this Agreement and the other Program Documents.
 
“Benchmark Replacement Adjustment” shall mean, with respect to any replacement of the then-current Benchmark with an Unadjusted Benchmark Replacement for any applicable
 
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Pricing Rate Period and Available Tenor for any setting of such Unadjusted Benchmark Replacement:
 
(1)          for purposes of clauses (a)(1) and (a)(2) of the definition of “Benchmark Replacement,” the first alternative set forth in the order below that can be determined by Buyer:
 
(a)          the spread adjustment, or method for calculating or determining such spread adjustment (which may be a positive or negative value or zero) as of the Reference Time such Benchmark Replacement is first set for such Pricing Rate Period that has been selected or recommended by the Relevant Governmental Body for the replacement of such Available Tenor of such Benchmark with the applicable Unadjusted Benchmark Replacement;
 
(b)          the spread adjustment (which may be a positive or negative value or zero) as of the Reference Time such Benchmark Replacement is first set for such Pricing Rate Period that would apply to the fallback rate for a derivative transaction referencing the ISDA Definitions to be effective upon an index cessation event with respect to such Available Tenor of such Benchmark; and
 
(2)         for purposes of clause (a)(3) or clause (b) of the definition of “Benchmark Replacement,” the spread adjustment, or method for calculating or determining such spread adjustment, (which may be a positive or negative value or zero) that has been selected by Buyer (in consultation with Seller) for the applicable Corresponding Tenor giving due consideration to (i) any selection or recommendation of a spread adjustment, or method for calculating or determining such spread adjustment, for the replacement of such Benchmark with the applicable Unadjusted Benchmark Replacement by the Relevant Governmental Body on the applicable  Benchmark Replacement Date or (ii) any evolving or then-prevailing market convention for determining a spread adjustment, or method for calculating or determining such spread adjustment, for the replacement of such Benchmark with the applicable Unadjusted Benchmark Replacement for U.S. repurchase facilities denominated in Dollars that are substantially similar to the facilities under this Agreement.
 
provided that, (x) in the case of clause (1) above, such adjustment is displayed on a screen or other information service that publishes such Benchmark Replacement Adjustment from time to time as selected by Buyer in its reasonable discretion and (y) if the then-current Benchmark is a term rate, more than one tenor of such Benchmark is available as of the applicable Benchmark Replacement Date and the applicable Unadjusted Benchmark Replacement that will replace such Benchmark in accordance with Section 3(f) will not be a term rate, the Available Tenor of such Benchmark for purposes of this definition of “Benchmark Replacement Adjustment” shall be deemed to be, with respect to each Unadjusted Benchmark Replacement having a payment period for interest calculated with reference thereto, the Available Tenor that has approximately the same length (disregarding business day adjustments) as such payment period.
 
“Benchmark Replacement Conforming Changes” shall mean, with respect to any Benchmark Replacement, any technical, administrative or operational changes (including changes to the definition of “Business Day,” the definition of “Pricing Rate Period,” timing and frequency of determining rates and making payments of interest, timing of borrowing requests or
 
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prepayment, conversion or continuation notices, length of lookback periods, the applicability of breakage provisions and other technical, administrative or operational matters) that Buyer decides (in consultation with Seller) may be appropriate to reflect the adoption and implementation of such Benchmark Replacement and to permit the administration thereof by Buyer in a manner substantially consistent with market practice (or, if Buyer decides that adoption of any portion of such market practice is not administratively feasible or if Buyer determines that no market practice for the administration of such Benchmark Replacement exists, in such other manner of administration as Buyer (in consultation with Seller) decides is reasonably necessary in connection with the administration of this Agreement and the other Program Documents).
 
“Benchmark Replacement Date” shall mean the earliest to occur of the following events with respect to the then-current Benchmark:
 
(1)          in the case of clause (1) or (2) of the definition of “Benchmark Transition Event,” the later of (a) the date of the public statement or publication of information referenced therein and (b) the date on which the administrator of such Benchmark (or the published component used in the calculation thereof) permanently or indefinitely ceases to provide all Available Tenors of such Benchmark (or such component thereof);
 
(2)        in the case of clause (3) of the definition of “Benchmark Transition Event,” the date of the public statement or publication of information referenced therein;
 
(3)          in the case of a Term SOFR Transition Event, the date that is thirty (30) days after Buyer has provided a Term SOFR Notice to Seller pursuant to clause (ii) of Section 3(f); or
 
(4)          in the case of an Early Opt-in Election, the sixth (6th) Business Day after the date notice of such Early Opt-in Election is provided to Seller.
 
For the avoidance of doubt, (i) if the event giving rise to the Benchmark Replacement Date occurs on the same day as, but earlier than, the Reference Time in respect of any determination, the Benchmark Replacement Date will be deemed to have occurred prior to the Reference Time for such determination and (ii) the “Benchmark Replacement Date” will be deemed to have occurred in the case of clause (1) or (2) with respect to any Benchmark upon the occurrence of the applicable event or events set forth therein with respect to all then-current Available Tenors of such Benchmark (or the published component used in the calculation thereof).
 
“Benchmark Transition Event” shall mean the occurrence of one or more of the following events with respect to the then-current Benchmark:
 
(1)        a public statement or publication of information by or on behalf of the administrator of such Benchmark (or the published component used in the calculation thereof) announcing that such administrator has ceased or will cease to provide all Available Tenors of such Benchmark (or such component thereof), permanently or indefinitely, provided that, at the time of such statement or publication, there is no successor administrator that will continue to provide any Available Tenor of such Benchmark (or such component thereof);
 
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(2)         a public statement or publication of information by the regulatory supervisor for the administrator of such Benchmark (or the published component used in the calculation thereof), the Board of Governors of the Federal Reserve System, the Federal Reserve Bank of New York, an insolvency official with jurisdiction over the administrator for such Benchmark (or such component), a resolution authority with jurisdiction over the administrator for such Benchmark (or such component) or a court or an entity with similar insolvency or resolution authority over the administrator for such Benchmark (or such component), which states that the administrator of such Benchmark (or such component) has ceased or will cease to provide all Available Tenors of such Benchmark (or such component thereof) permanently or indefinitely, provided that, at the time of such statement or publication, there is no successor administrator that will continue to provide any Available Tenor of such Benchmark (or such component thereof); or
 
(3)          a public statement or publication of information by the regulatory supervisor for the administrator of such Benchmark (or the published component used in the calculation thereof) announcing that all Available Tenors of such Benchmark (or such component thereof) are no longer representative.
 
For the avoidance of doubt, a “Benchmark Transition Event” will be deemed to have occurred with respect to any Benchmark if a public statement or publication of information set forth above has occurred with respect to each then-current Available Tenor of such Benchmark (or the published component used in the calculation thereof).
 
“Beneficial Ownership Rule” shall mean 31 C.F.R. § 1010.230.
 
“BHC Act Affiliate” has the meaning assigned to the term “affiliate” in, and shall be interpreted in accordance with, 12 U.S.C. § 1841(k).
 
“Business Day” shall mean a day other than (i) a Saturday or Sunday, or (ii) a day on which the New York Stock Exchange, the Federal Reserve Bank of New York or banks, depository institutions or trust companies in the States of Kansas, New York or Minnesota are authorized or obligated by law, regulation or executive order to be closed.
 
“Buyer” shall mean (i) MUFG and (ii) each New Buyer.
 
“Capital Stock” shall mean any and all shares, interests, participations or other equivalents (however designated) of capital stock of a corporation, any and all equivalent equity ownership interests in a Person that is not a corporation, including, without limitation, any and all member or other equivalent interests in any limited liability company, and any and all warrants or options to purchase any of the foregoing.
 
“Cash Sweep Period” shall have the meaning set forth in Section 4(b).
 
“Cash Sweep Period Trigger Event” shall have the meaning set forth in Section 4(a).
 
“Cash Sweep Period Trigger Event Notice” shall have the meaning set forth in Section 4(a).
 
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“Change of Control” shall mean, (i) Guarantor, without the prior written approval of Buyer, ceases to own and control, of record and beneficially, directly or indirectly, 100% of the outstanding Capital Stock of Seller or Pledgor, (ii) Pledgor, without the prior written approval of Buyer, ceases to own and control, of record and beneficially, directly or indirectly, 100% of the outstanding Capital Stock of Seller, (iii) with respect to Guarantor, a transfer of all or substantially all of Guarantor’s assets, (iv) the consummation of a merger or consolidation of the REIT or Guarantor with or into another entity or any other reorganization if more than fifty percent (50%) of the combined voting power of the continuing or surviving entity’s Capital Stock (or the Capital Stock of the parent entity thereof) outstanding immediately after such merger, consolidation or such other reorganization is not owned directly or indirectly by Persons who were holders of such Capital Stock in the REIT or Guarantor immediately prior to such merger, consolidation or other reorganization; (v) any “person” or “group” (within the meaning of Section 13(d) or 14(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) shall become, or obtain rights (whether by means of warrants, options or otherwise) to become, the “beneficial owner” (as defined in Rules 13d-3 and 13d-5 under the Exchange Act), directly or indirectly, of a percentage of the total voting power of all classes of Capital Stock of Guarantor or the REIT entitled to vote generally in the election of directors of more than fifty percent (50%), other than Controlled Affiliates or to the extent such interests are obtained through a public market offering or secondary market trading or (vi) with respect to Manager, (a) Manager ceases to be a Controlled Affiliate, (b) the sale, merger, consolidation or reorganization of Manager with or into any entity that is not a Controlled Affiliate or (c) the related management agreement is terminated or Manager otherwise ceases to be the manager of the REIT; provided that, for the avoidance of doubt, the transfer of Manager’s rights and obligations under the then existing management agreement to a replacement manager that is another Controlled Affiliate shall not be considered a Change of Control.
 
“Closing Date” shall mean the date first written above.
 
“Co-Buyer Agreement” shall mean (i) any co-buyer agreement entered into among MUFG, as administrative agent, and one or more Assignees in connection with the Transactions and the Program Documents and (ii) any participation agreement entered into among MUFG, as administrative agent, and any Participants in connection with the Transactions and the Program Documents, as each may be amended, modified and/or restated from time to time.
 
“Code” shall mean the Internal Revenue Code of 1986, as amended.
 
“Collateral” shall mean all of the property pledged pursuant to Sections 6(a), 6(d) and 6(e) of this Agreement.
 
“Collection Period” shall mean with respect to the Remittance Date in any month, the period beginning from but excluding the Determination Date in the month preceding the month in which such Remittance Date occurs and continuing and including the Determination Date immediately preceding such Remittance Date.
 
“Concentration Limit Test” shall have the meaning assigned to such term in the Fee Letter.
 
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“Concentration Limit Breach Period” shall mean any period during which a breach of any Concentration Limit has occurred and is continuing beyond any applicable cure period.
 
“Confirmation” shall mean a purchase confirmation in the form of Exhibit B, or an Amended and Restated Confirmation in the form of Exhibit L, as applicable and in each case duly completed, executed and delivered by Seller and Buyer in accordance with the applicable provisions of this Agreement.
 
“Connection Income Taxes” shall mean Other Connection Taxes that are imposed on or measured by net income (however denominated) or that are franchise or branch profits Taxes.
 
“Control” shall mean, with respect to any Person, the direct or indirect power to direct or cause the direction of the management or policies of such Person, including investment decisions, whether through the ability to exercise voting power, by contract or otherwise.  “Controlling,” “Controlled” and “under common Control” have correlative meanings.
 
“Controlled Affiliate” means any entity that is majority owned and Controlled by KKR & Co., Inc.
 
“Corresponding Tenor” with respect to any Available Tenor shall mean, as applicable, either a tenor (including overnight) or an interest payment period having approximately the same length (disregarding business day adjustment) as such Available Tenor.
 
“Credit Event” shall have the meaning assigned to such term in the Fee Letter.
 
“Custodial Agreement” shall mean the Custodial Agreement, dated as of July 27, 2021, by and among Custodian, Seller and Buyer, as the same may be amended, restated, supplemented or otherwise modified from time to time.
 
“Custodian” shall mean Wells Fargo Bank, National Association, or any successor Custodian appointed by Buyer with the prior written consent of Seller (which consent shall not be unreasonably withheld or delayed).
 
“Daily Simple SOFR” shall mean, for any day, SOFR, with the conventions for this rate (which will include a lookback) being established by Buyer in accordance with the conventions for this rate selected or recommended by the Relevant Governmental Body for determining “Daily Simple SOFR” for bilateral business loans; provided, that if Buyer decides that any such convention is not administratively feasible for Buyer, then Buyer may establish another convention in its reasonable discretion which shall be consistent with the then-prevailing market conventions.
 
“Debt Yield” shall have the meaning assigned to such term in the Fee Letter.
 
“Debt Yield Test” shall have the meaning assigned to such term in the Fee Letter.
 
“Default” shall mean any event which, with the giving of notice, the passage of time, or both, would constitute an Event of Default.
 
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“Default Right” has the meaning assigned to that term in, and shall be interpreted in accordance with, 12 C.F.R. § 252.81.
 
“Determination Date”:  shall have the meaning assigned to such term in the Servicer Notice and Acknowledgement.
 
“Diligence Cap” shall have the meaning assigned to such term in the Fee Letter.
 
“Diligence Materials” shall mean, collectively, (i) the Due Diligence Package furnished by or on behalf of Seller to Buyer and (ii) any other diligence materials delivered by or on behalf of Seller to Buyer in connection with Buyer’s review of any New Asset, whether pursuant to a Supplemental Due Diligence List or otherwise.
 
“Discretionary New Asset” shall have the meaning assigned to such term in the Fee Letter.
 
“Division” shall mean, with respect to any limited liability company or limited partnership organized under the laws of the State of Delaware, any (a) division of such Person into two or more Persons (whether or not the original Person survives such division) or (b) creation, or reorganization into, one or more series, in each case, as contemplated under the laws of the State of Delaware, including, without limitation, Section 18-217 of the Delaware LLC Act or Section 17-220 of the Delaware Limited Partnership Act.
 
“Dollars” and “$” shall mean lawful money of the United States of America.
 
“DSCR” shall mean, with respect to any Purchased Asset that is an Eligible Transitional Loan, the ratio calculated as (i) as-stabilized NOI (or in the case of a Participation Interest, the allocated portion of NOI with respect to such Participation Interest based on such Participation Interest’s proportionate share of the outstanding principal balance of the underlying Whole Loan) divided by (ii) (a) the related Purchase Price Percentage multiplied by (b) the maximum principal balance of such Purchased Asset multiplied by (c) the interest rate of the underlying Whole Loan or Participation Interest; provided that, the Purchased Asset and the related Mezzanine Loan, if applicable, shall be considered a single Purchased Asset for purposes of calculating the DSCR as of the related Purchase Date.
 
“DSCR Test” shall have the meaning assigned to such term in the Fee Letter.
 
“Due Diligence Package” shall mean, with respect to any New Asset, all of the information necessary for Buyer to perform its diligence to confirm that such New Asset is an Eligible Asset and, with respect to Discretionary New Assets only, to perform its underwriting of such New Asset.  Such information shall include the materials listed on Exhibit D to the extent such materials are applicable to such New Asset and are in Seller’s possession.
 
“Early Facility Termination Date” shall have the meaning specified in Section 3(e) of this Agreement.
 
“Early Opt-in Election” shall mean, if the then-current Benchmark is LIBOR, the occurrence of:
 
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  (1)
a determination by Buyer that at least five (5) currently outstanding syndicated or bi-lateral credit facilities substantially similar to the facility under this Agreement at such time contain (as a result of amendment or as originally executed) a SOFR-based rate (including SOFR, a term SOFR or any other rate based upon SOFR) as the then-current benchmark rate, and
 

 (2)
the election by Buyer to trigger a fallback from LIBOR and the provision by Buyer of written notice of such election to Seller.
 
“Early Repurchase Date” shall have the meaning specified in Section 3(c)(ii) of this Agreement.
 
“Eligible Asset” shall have the meaning assigned to such term in the Fee Letter.
 
“Eligible Industrial Construction Loan” shall have the meaning assigned to such term in the Fee Letter.
 
“Eligible Transitional Loan” shall have the meaning assigned to such term in the Fee Letter.
 
“Environmental Law” shall mean, any federal, state, foreign or local statute, law, rule, regulation, ordinance, code, guideline, written policy and rule of common law now or hereafter in effect and in each case as amended, and any judicial or administrative interpretation thereof, including any judicial or administrative order, consent decree or judgment, relating to the environment, employee health and safety or Hazardous Materials, including, without limitation, CERCLA; RCRA; the Federal Water Pollution Control Act, 33 U.S.C. § 1251 et seq.; the Toxic Substances Control Act, 15 U.S.C. § 2601 et seq.; the Clean Air Act, 42 U.S.C. § 7401 et seq.; the Safe Drinking Water Act, 42 U.S.C. § 3803 et seq.; the Oil Pollution Act of 1990, 33 U.S.C. § 2701 et seq.; the Emergency Planning and Community Right-to-Know Act of 1986, 42 U.S.C. § 11001 et seq.; the Hazardous Material Transportation Act, 49 U.S.C. § 1801 et seq.; and the Occupational Safety and Health Act, 29 U.S.C. § 651 et seq.; and any state and local or foreign counterparts or equivalents, in each case as amended from time to time.
 
“ERISA” shall mean the Employee Retirement Income Security Act of 1974, as amended from time to time, and the regulations promulgated thereunder.  Section references to ERISA are to ERISA, as in effect at the date of this Agreement and, as of the relevant date, any subsequent provisions of ERISA, amendatory thereof, supplemental thereto or substituted therefor.
 
“ERISA Affiliate” shall mean any corporation or trade or business that is a member of any group of organizations (i) described in Section 414(b) or (c) of the Code of which Seller is a member and (ii) solely for purposes of potential liability under Section 302(c)(11) of ERISA and Section 412(c)(11) of the Code and the lien created under Section 302(f) of ERISA and Section 412(n) of the Code, described in Section 414(m) or (o) of the Code of which Seller is a member.
 
“ESA” shall have the meaning specified in Exhibit G-1.
 
“Event of Default” shall have the meaning specified in Section 14(a) of this Agreement.
 
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“Excluded Taxes” shall mean any of the following Taxes imposed on or with respect to a Buyer or required to be withheld or deducted from any payment to a Buyer:  (a) Taxes imposed on or measured by net income (however denominated), franchise Taxes, and branch profits Taxes, in each case, (i) imposed as a result of such Buyer being organized under the laws of, or having its principal office or, in the case of a Buyer, its office from which it books the Transactions located in, the jurisdiction imposing such Taxes (or any political subdivision thereof) or, (ii) that are Other Connection Taxes, (b) in the case of a Buyer, U.S. federal withholding Taxes imposed on amounts payable to or for the account of such Buyer pursuant to a law in effect on the date on which Buyer (i) acquires an interest in a Transaction or (ii) changes the office from which it books Transactions, except in each case to the extent that, pursuant to Section 30 of this Agreement, amounts with respect to such Taxes were payable either to Buyer’s assignor immediately before Buyer became a party hereto or to Buyer immediately before it changed its lending office, (c) Taxes attributable to Buyer’s failure to comply with Section 30(e) of this Agreement, and (d) any U.S. federal withholding Taxes imposed under FATCA.
 
“Extension Maximum LTV Test(s)” shall mean any Purchased Asset-specific extension maximum loan-to-value ratio limitations set forth in the related Purchased Asset Documents to be tested at the time of the applicable extension(s) of a Purchased Asset, which shall be set forth in the related Confirmation.
 
“Extension Minimum Debt Yield Test(s)” shall mean any Purchased Asset-specific extension minimum debt yield requirements set forth in the related Purchased Asset Documents to be tested at the time of the applicable extension(s) of a Purchased Asset, which shall be set forth in the related Confirmation.
 
“Facility” shall have the meaning assigned to such term in Section 19(c).
 
“Facility Leverage Ratio Test” shall have the meaning assigned to such term in the Fee Letter.
 
“Facility Termination Date” shall mean the earliest of (a) any Accelerated Repurchase Date, (b) the latest date specified in any Confirmation as the “Repurchase Date” for any Purchased Asset, as any such date may be extended in accordance with Section 3(c)(iii), and (c) the date specified by Seller in a written notice to Buyer pursuant to Section 3(e).
 
“FATCA” shall mean Sections 1471 through 1474 of the Code, as of the date of this Agreement (or any amended or successor version that is substantively comparable and not materially more onerous to comply with), any current or future regulations or official interpretations thereof and any agreements entered into pursuant to Section 1471(b)(1) of the Code and any applicable intergovernmental agreements with respect to such Sections 1471 through 1474 of the Code entered into with the United States and any legislation, rules or guidance implementing such intergovernmental agreements.
 
“FCPA” shall have the meaning assigned to such term in Section 10(w) of this Agreement.
 
“FDIA” shall have the meaning specified in Section 23(c) of this Agreement.
 
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“FDICIA” shall have the meaning specified in Section 23(d) of this Agreement.
 
“Fee Letter” shall mean the Fee Letter, dated as of the date hereof, between Buyer and Seller, as the same may be amended, restated, supplemented or otherwise modified from time to time.
 
“FIRREA” shall mean the Financial Institutions Reform, Recovery and Enforcement Act of 1989, as amended.
 
“Fitch” shall mean Fitch Ratings, Inc. or its successor in interest.
 
“Floor” shall have the meaning assigned to such term in the Fee Letter.
 
“Foreign Buyer” shall mean any Buyer, which term includes, for the avoidance of doubt, any New Buyer, if such Buyer is not a U.S. Buyer.
 
“Funding Expiration Date” shall mean July 27, 2024.
 
“Future Funding” shall mean any additional advance under a Future Funding Eligible Asset that is required to be funded by Seller.
 
“Future Funding Advance” shall have the meaning specified in Section 3(k) of this Agreement.
 
“Future Funding Eligible Asset” shall mean any Purchased Asset with respect to which less than the full principal amount is funded at origination and Seller is obligated, subject to the satisfaction of certain conditions precedent under the related Purchased Asset Documents, to make additional advances to the Mortgagor and which is identified as a “Future Funding Eligible Asset” in the related Confirmation.  For the avoidance of doubt, Seller shall at all times remain solely liable for any additional advances required to be made to any Mortgagor in connection with any Future Funding Eligible Asset and Buyer shall be under no obligation to make any additional advances under a Future Funding Eligible Asset.
 
“GAAP” shall mean United States generally accepted accounting principles consistently applied as in effect from time to time.
 
“Governmental Authority” shall mean the government of the United States or any other nation, or of any political subdivision thereof, whether state or local, and any agency, board, bureau, commission, authority, instrumentality, regulatory body, court, central bank or other entity exercising executive, legislative, judicial, taxing, regulatory or administrative powers or functions of or pertaining to government (including any supra-national bodies such as the European Union or the European Central Bank).
 
“Government Lists” shall mean (a) the list of “Specially Designated Nationals and Blocked Persons” maintained by OFAC, (b) any other list of terrorists, terrorist organizations or narcotics traffickers maintained pursuant to any of the rules and regulations of OFAC that Buyer notifies Seller in writing is now included in “Government Lists,” (c) any similar lists maintained by (i) the United States Department of State, (ii) the United States Department of Commerce,
 
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(iii) any other Governmental Authority, or (iv) the European Parliament or the Council of the European Union (to the extent publicly available) or (d) any similar lists maintained pursuant to any Executive Order of the President of the United States of America that Buyer notifies Seller in writing is now included in “Government Lists.”
 
“Ground Lease” shall mean a ground lease pursuant to which any Mortgagor holds a leasehold interest in the related Mortgaged Property, together with any estoppels, waivers or other agreements executed and delivered by the ground lessor in favor of the lender under the related Purchased Asset.
 
“Guarantor” shall mean KKR Real Estate Finance Holdings L.P., a Delaware limited partnership.
 
“Guaranty” shall mean the Limited Guaranty, dated as of the date hereof, made by Guarantor in favor of Buyer, as the same may be amended, restated, supplemented or otherwise modified from time to time.
 
“Hazardous Material” shall mean any substance defined, listed, or regulated as a “hazardous substance,” “toxic substance,” “hazardous waste,” “dangerous preparation” or “dangerous substance” or any other term of similar import under any Environmental Law.
 
“Income” shall mean with respect to any Purchased Asset, all of the following (in each case with respect to the entire par amount of the related Whole Loan (or in the case of a Participation Interest subject to any Transaction, the entire par amount of such Participation Interest) represented by such Purchased Asset and not just with respect to the portion of the par amount represented by the Purchase Price advanced against such Purchased Asset):  (i) all Principal Payments, interest payments and all other income, distributions, receipts, payments, collections, prepayments, recoveries, proceeds (including insurance and condemnation proceeds) and other payments or amounts of any kind paid, received, collected, recovered or distributed on, in connection with or on account of such Purchased Asset, including interest payments, principal and interest payments, prepayment fees, extension fees, exit fees, defeasance fees, transfer fees, make whole fees, late charges, late fees and all other fees or charges of any kind or nature, premiums, yield maintenance charges, penalties, default interest, dividends, gains, receipts, allocations, rents, interests, profits, payments in kind, returns or repayment of contributions, net sale, foreclosure, liquidation, insurance payments, settlements and proceeds and (ii) any amounts representing net sales proceeds received by Seller or any Affiliate of Seller in connection with a sale or other transfer of such Purchased Asset; provided, that “Income” shall exclude Underlying Purchased Asset Reserves.
 
“Indemnified Amounts” shall have the meaning specified in Section 27 of this Agreement.
 
“Indemnified Parties” shall have the meaning specified in Section 27 of this Agreement.
 
“Indemnified Taxes” shall mean (a) Taxes, other than Excluded Taxes, imposed on or with respect to any payment made by or on account of any obligation of Seller, Pledgor or Guarantor under any Program Document and (b) to the extent not otherwise described in clause (a) above, Other Taxes.
 
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“Independent Appraiser” shall mean an independent professional real estate appraiser reasonably acceptable to Buyer who is in good standing of the American Appraisal Institute, and, if the state in which the related Mortgaged Property is located certifies or licenses appraisers, is certified or licensed in such state, and in each such case, who has a minimum of five years’ experience in the subject property type.
 
“Independent Manager” shall mean an individual who has prior experience as an independent director, independent manager or independent member with at least three (3) years of employment experience and who is provided by Maples Fiduciary Services (Delaware) Inc., Corporation Service Company, CT Corporation, Lord Securities Corporation, National Registered Agents, Inc., Global Securitization Services LLC, Stewart Management Company, Wilmington Trust Company, or, if none of those companies is then providing professional independent managers, another nationally-recognized company that provides professional independent managers and other corporate services in the ordinary course of its business and which is reasonably approved by Buyer, is not an Affiliate of Seller, and has never been, and will not while serving as Independent Manager be, any of the following:
 
(i)        a member (other than an independent, non-economic “springing” member), partner, equityholder, manager, director, officer or employee of Seller or any of Seller’s equityholders or Affiliates (other than as an independent manager, director or non-economic “springing” member of an Affiliate of Seller that is not in the direct chain of ownership of Seller and that is required by a creditor to be a special purpose bankruptcy remote entity);
 
(ii)        a creditor, supplier or service provider (including provider of professional services) to Seller or any of Seller’s equityholders or Affiliates (other than a nationally-recognized company that routinely provides professional independent managers or independent directors and other corporate services and that also provides lien search and other similar services to Seller or any of its equityholders or Affiliates in the ordinary course of business);
 
(iii)        a family member of any such member, partner, equityholder, manager, director, officer, employee, creditor, supplier or service provider; or
 
(iv)          a Person that Controls (whether directly, indirectly or otherwise) any of (i) or (ii) above.
 
A natural person who otherwise satisfies the foregoing definition and satisfies subparagraph (i) by reason of being the independent manager or independent director of a “special purpose entity” affiliated with Seller shall not be disqualified from serving as the Independent Manager of Seller; provided that the fees that such natural person earns from serving as an independent manager or independent director of such Affiliates of Seller in any given year constitute, in the aggregate, less than five percent (5%) of such individual’s annual income for that year. The same natural persons may not serve as the Independent Manager of Seller and, at the same time, serve as an independent director or independent manager of an equityholder or member of Seller.
 
“Insolvency Event” shall mean, with respect to any Person, (i) the filing of a decree or order for relief by a court having jurisdiction in the premises with respect to such Person or any
 
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substantial part of its assets or property in an involuntary case under any applicable Insolvency Law now or hereafter in effect, or appointing a receiver, liquidator, assignee, custodian, trustee, sequestrator or similar official for such Person or for any substantial part of its assets or property, or ordering the winding-up or liquidation of such Person’s affairs, and such decree or order shall remain undismissed, unstayed and in effect for a period of sixty (60) days, (ii) the commencement by such Person of a voluntary case under any applicable Insolvency Law now or hereafter in effect, (iii) the consent by such Person to the entry of an order for relief in an involuntary case under any Insolvency Law, (iv) the consent by such Person to the appointment of or taking possession by a receiver, liquidator, assignee, custodian, trustee, sequestrator or similar official for such Person or for any substantial part of its assets or property, (v) the making by such Person of any general assignment for the benefit of creditors, (vi) the admission in a legal proceeding of the inability of such Person to pay its debts generally as they become due, (vii) the failure by such Person generally to pay its debts as they become due, or (viii) the taking of action by such Person in furtherance of any of the foregoing.
 
“Insolvency Laws” shall mean, the Bankruptcy Code and all other applicable liquidation, conservatorship, bankruptcy, moratorium, rearrangement, receivership, insolvency, reorganization, suspension of payments and similar debtor relief laws from time to time in effect affecting the rights of creditors generally.
 
“Insolvency Proceeding” shall mean any case, action or proceeding before any court or other Governmental Authority relating to any Insolvency Event.
 
“ISDA Definitions” shall mean the 2006 ISDA Definitions published by the International Swaps and Derivatives Association, Inc. or any successor thereto, as amended or supplemented from time to time, or any successor definitional booklet for interest rate derivatives published from time to time by the International Swaps and Derivatives Association, Inc. or such successor thereto.
 
“LIBOR” shall mean, with respect to any Pricing Rate Period (a) the average rate of interest per annum equal to the London Interbank Offered Rate or LIBOR promulgated by the Intercontinental Exchange Benchmark Administration Ltd. (“ICE”, or the successor thereto if ICE is no longer making a London Interbank Offered Rate available) for one-month LIBOR as published by Bloomberg (or, if not available, such other commercially available source providing quotations of ICE LIBOR as designated by Buyer from time to time) at approximately 11:00 a.m. (London time) on the related Pricing Rate Determination Date, (b) if the foregoing method is not available and no such rate is ascertainable as of 11:00 a.m., London time, on such Pricing Rate Determination Date, Buyer (in consultation with Seller) will request the principal London office of any four major reference banks in the London interbank market selected by Buyer (in consultation with Seller) to provide such bank's offered quotation (expressed as a percentage per annum) to prime banks in the London interbank market for deposits in U.S. dollars for an equivalent one-month LIBOR term as of 11:00 a.m., London time, on such Pricing Rate Determination Date for the amounts of not less than $1,000,000 and if at least two such offered quotations are so provided, LIBOR will be the arithmetic mean of such quotations; and if fewer than two such quotations are so provided, Buyer will request any three major banks in New York City selected by Buyer (in consultation with Seller) to provide such bank's rate (expressed as a percentage per annum) for loans in U.S. dollars to leading European banks for an
 
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equivalent one-month LIBOR term as of approximately 11:00 a.m., New York City time, on the applicable Pricing Rate Determination Date for amounts of not less than $1,000,000 and if at least two such rates are so provided, LIBOR will be the arithmetic mean of such rates or (c) if notwithstanding the availability of the foregoing methods the London Interbank Offered Rate or LIBOR is not available and no such rate is ascertainable, then (subject to Section 3(f) hereof) a comparable or successor rate selected by Buyer (in consultation with Seller) in its reasonable judgment that most closely approximates the unavailable London Interbank Offered Rate or LIBOR, with due regard to other substitute rates published and employed by lenders similar to Buyer for repurchase facilities comparable to the repurchase facility established hereby.  Notwithstanding anything contained in this definition, if and for so long as LIBOR would ever be less than zero percent (0%), LIBOR will be deemed to be equal to zero percent (0%).  For the avoidance of ambiguity, (i) clause (b) of this definition shall apply if the London Interbank Offered Rate or LIBOR is available but not promulgated by ICE or its successor or not published by Bloomberg or other commercially available source as described in clause (a) of this definition, and (ii) clause (c) of this definition shall apply if the London Interbank Offered Rate or LIBOR does not exist or is otherwise not ascertainable.
 
“LIBOR Business Day” shall mean any day except a Saturday, a Sunday or a day on which commercial banks in London are authorized or required by law to close.
 
“LIBOR Transaction” shall mean, with respect to any Pricing Rate Period, any Transaction with respect to which the Pricing Rate for such Pricing Rate Period is determined with reference to LIBOR.
 
“Lien” shall mean any mortgage, deed of trust, lien, pledge, hypothecation, assignment, security interest, or any other easement, restriction, covenant, encumbrance, charge or transfer of, on or affecting Seller, any Purchased Asset or any Mortgaged Property or any portion thereof or any interest therein, including, without limitation, any conditional sale or other title retention agreement, any financing lease having substantially the same economic effect as any of the foregoing, the filing of any financing statement, and mechanic’s, materialman’s and other similar liens and encumbrances.
 
“LTV” shall have the meaning specified in the Fee Letter.
 
“LTV Test” shall have the meaning specified in the Fee Letter.
 
“Manager” shall mean KKR Real Estate Finance Manager LLC, a Delaware limited liability company.
 
“Mandatory Repurchase Asset” shall mean any Purchased Asset (i) for which Seller has knowledge of a monetary event of default or a material, non-monetary event of default under the related Purchased Asset Documents beyond any applicable notice or cure period or (ii) that no longer qualifies as an Eligible Asset, as determined in Buyer’s sole discretion.
 
“Mandatory Repurchase Date” shall mean, with respect to any Purchased Asset, the date that is ten (10) Business Days following any date such Purchased Asset becomes a Mandatory Repurchase Asset (which, for the purposes of clause (ii) of the definition of Mandatory Repurchase Asset, shall be the date on which Seller receives written notice from Buyer that
 
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Buyer has determined that such Purchased Asset no longer qualifies as an Eligible Asset); provided, that Seller shall, no later than the fifth (5th) Business Day after such Purchased Asset becomes a Mandatory Repurchase Asset, deliver to Buyer a certification that Seller has requested from one or more of its Affiliates the necessary capital in order to satisfy the repurchase price for such Purchased Asset.
 
“Material Adverse Change” shall mean a material adverse change in or to (i) the property, business, operations or financial condition of Seller, Pledgor or Guarantor, taken as a whole, (ii) the ability of Seller, Pledgor or Guarantor to perform its material obligations under any of the Program Documents to which it is a party, (iii) the validity or enforceability of any Program Document or (iv) the material rights and remedies of Buyer under any Program Document.  For the avoidance of doubt, no Material Adverse Change shall be determined to exist solely as a result of (x) any disruption in the commercial mortgage backed securities market, debt or equity capital markets, general credit or bank funding markets, or any other event that results in the increase or decrease of credit spreads or financial indices such as U.S. Treasuries, interest rate swaps, SOFR, LIBOR, any Benchmark Replacement or the Prime Rate or (y) COVID-19 and any government mandated shutdown or restrictions related thereto.
 
“Material Modification” shall have the meaning assigned to such term in the Fee Letter.
 
“Maximum Facility Amount” shall have the meaning assigned to such term in the Fee Letter.
 
“Maximum Pass-Through Leverage Ratio Test” shall have the meaning assigned to such term in the Fee Letter.
 
“Maximum Purchase Price” shall have the meaning assigned to such term in the Fee Letter.
 
“Maximum Purchase Price Percentage” shall have the meaning assigned to such term in the Fee Letter.
 
“Mezzanine Loan” shall mean a mezzanine loan secured by pledges of 100% of the Capital Stock of the Mortgagor under a related Whole Loan which is a Purchased Asset.
 
“Mezzanine Note” shall mean the original executed promissory note or other tangible evidence of the Mezzanine Loan indebtedness.
 
“Minimum Balance Amount” shall mean an amount equal to the aggregate amount obtained by daily application of the Pricing Rate to the Outstanding Facility Amount on a 360-day-per-year basis for a period of ninety (90) days, as determined by Buyer in its sole and absolute discretion.
 
“Moody’s” shall mean Moody’s Investors Service, Inc., or its successor in interest.
 
“Mortgage” shall mean the mortgage, deed of trust, deed to secure debt or other similar instrument, creating a valid and enforceable first lien on or a first priority ownership interest in the Mortgaged Property.
 
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“Mortgage Note” shall mean a note or other evidence of indebtedness of a Mortgagor secured by a Mortgage.
 
“Mortgaged Property” shall mean, in the case of a Whole Loan, the real property securing repayment of the debt evidenced by a Mortgage Note.
 
“Mortgagee” shall mean the record holder of a Mortgage Note secured by a Mortgage.
 
“Mortgagor” shall mean the obligor on a Mortgage Note and/or the grantor of the related Mortgage.
 
“Mortgagor Change” shall mean, with respect to any Mortgagor related to any Purchased Asset, (i) the occurrence of a change in Control of such Mortgagor resulting from direct or indirect transfers of Capital Stock of such Mortgagor, by contract or otherwise, (ii) the acquisition by any Person, together with its Affiliates, directly or indirectly, of more than fifty (50%) of the outstanding Capital Stock of such Mortgagor, in each case whether in a single transaction or a series of transactions or (iii) the transfer of the related Mortgaged Property by the related Mortgagor, unless, in each case, such change, acquisition or transfer is expressly permitted pursuant to the related Purchased Asset Documents and all conditions precedent thereto in such Purchased Asset Documents have been satisfied in all material respects, or in the case of clause (iii), is required by eminent domain or any threat of eminent domain.
 
“MUFG” shall mean MUFG Union Bank, N.A. or any successor thereto.
 
“Multiemployer Plan” shall mean a multiemployer plan defined as such in Section 3(37) of ERISA to which contributions have been, or were required to have been, in the five (5) year period ended prior to the date of this Agreement, made by Seller or any ERISA Affiliate and which is covered by Title IV of ERISA.
 
“New Asset” shall mean an Eligible Asset that Seller proposes to sell to Buyer pursuant to a Transaction.
 
“New Buyer” shall mean each Participant or Assignee who executes a Co-Buyer Agreement in accordance with the terms of Section 19(b) or Section 19(c).
 
“NOI” or “Net Operating Income” has the meaning assigned to such term in the Fee Letter.
 
“OFAC” shall have the meaning assigned to such term in Section 10(w) of this Agreement.
 
“OFAC Laws” shall mean any laws, regulations, and Executive Orders relating to the economic sanctions programs administered by OFAC, the International Emergency Economic Powers Act, 50 U.S.C. sections 1701 et seq.; the Trading with the Enemy Act, 50 App. U.S.C. sections 1 et seq.; and the Office of Foreign Assets Control, Department of the Treasury Regulations, 31 C.F.R. Parts 500 et seq. (implementing the economic sanctions programs administered by OFAC) and any similar laws, regulations or orders of the European Union, Her Majesty’s Treasury or the Federal Republic of Germany.
 
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“OFAC Violation” shall have the meaning assigned to such term in Section 12(p) of this Agreement.
 
“Originator” shall mean, with respect to each Purchased Asset, Seller, KREF Capital LLC, a Delaware limited liability company, or any other Affiliate of Seller approved by Buyer in its reasonable discretion.
 
“Originator Pledge Agreement” shall mean, with respect to each Purchased Asset originated by an Originator other than Seller, the Originator Pledge and Security Agreement by such Originator for the benefit of Buyer, as the same may be amended, restated, supplemented or otherwise modified from time to time.
 
“Other Connection Taxes” shall mean with respect to any Buyer, Taxes imposed as a result of a present or former connection between such Buyer and the jurisdiction imposing such Taxes (other than a connection arising from such Buyer having executed, delivered, become a party to, performed its obligations under, received payments under, received or perfected a security interest under, engaged in any other transaction pursuant to or enforced any Program Document, or sold or assigned an interest in any Transaction or Program Document).
 
“Other Taxes” shall mean any and all present or future stamp, court or documentary, intangible, recording, filing or similar Taxes that arise from any payment made under any Program Document or Purchased Asset Document or from the execution, delivery or enforcement of, or otherwise with respect to, any Program Document or Purchased Asset Document, except any such Taxes that are Other Connection Taxes imposed with respect to an assignment.
 
“Outstanding Facility Amount” shall mean, as of any date of determination, the aggregate Purchase Price of all the Purchased Assets subject to Transactions then-outstanding.
 
“Pari Passu Participation Interest” shall mean any controlling or non-controlling pari passu participation interest in a Whole Loan evidenced by a Participation Certificate.
 
“Participant” shall have the meaning specified in Section 19(b)(i) of this Agreement.
 
“Participant Register” shall have the meaning specified in Section 19(b)(ii) of this Agreement.
 
“Participation Certificate” means a certificate evidencing a 100% interest in the related Participation Interest.
 
“Participation Interest” shall mean any Pari Passu Participation Interest or Senior Participation Interest.
 
“Party” shall have the meaning assigned to it in the opening paragraph of this Agreement.
 
“PATRIOT Act” shall mean the USA PATRIOT Act (Title III of Pub. L. 107-56 (signed into law October 26, 2001)).
 
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“Patriot Act Offense” shall mean any violation of the criminal laws of the United States of America or of any of the several states, or that would be a criminal violation if committed within the jurisdiction of the United States of America or any of the several states, relating to terrorism or the laundering of monetary instruments, including any offense under (i) the criminal laws against terrorism or (ii) the Anti-Money Laundering Laws.  “Patriot Act Offense” also includes the crimes of conspiracy to commit, or aiding and abetting another to commit, a Patriot Act Offense.
 
“Permitted Liens” shall mean any of the following as to which no enforcement, collection, execution, levy or foreclosure proceeding has been commenced: (i) Liens for state, municipal, local or other local taxes not yet due and payable, not overdue for more than thirty (30) days or being contested in good faith by appropriate proceedings, (ii) Liens imposed by any Requirement of Law, such as materialman’s, mechanics’, carriers’, workman’s, repairman’s and similar Liens, arising in the ordinary course of business securing obligations that are not overdue for more than thirty (30) days or are being contested in good faith by appropriate proceedings, and (iii) Liens granted pursuant to or by the Program Documents.
 
“Person” shall mean an individual, corporation, limited liability company, business trust, partnership, joint tenant or tenant-in-common, trust, unincorporated organization, or other entity, or a federal, state or local government or any agency or political subdivision thereof.
 
“Plan” shall mean an employee benefit or other plan established or maintained by Seller or any ERISA Affiliate during the five (5) year period ended prior to the date of this Agreement or to which Seller or any ERISA Affiliate makes, is obligated to make or has, within the five (5) year period ended prior to the date of this Agreement, been required to make contributions and that is covered by Title IV of ERISA or Section 302 of ERISA or Section 412 of the Code, other than a Multiemployer Plan.
 
“Plan Assets” shall mean “plan assets” within the meaning of 29 C.F.R. § 2510.3-101, as modified in by Section 3(42) of ERISA.
 
“Pledge Agreement” shall mean the Pledge and Security Agreement, dated as of the date hereof, by Pledgor for the benefit of Buyer, as the same may be amended, restated, supplemented or otherwise modified from time to time.
 
“Pledged Collateral”  shall have the meaning assigned to the term
 
“Pledged Collateral” under the Pledge Agreement.
 
“Pledgor” shall mean KREF Holdings IX LLC, a Delaware limited liability company.
 
“PML” shall have the meaning specified in Exhibit G-1.
 
“Price Differential” shall mean, with respect to any Transaction as of any date of determination, the aggregate amount obtained by daily application of the Pricing Rate to the outstanding Purchase Price for such Transaction on a 360-day-per-year basis for the actual number of days during the period commencing on (and including) the Purchase Date for such Transaction and ending on (but excluding) such date of determination (reduced by any amount of such Price Differential previously paid by Seller to Buyer with respect to such Transaction).
 
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“Pricing Rate” shall mean for each Pricing Rate Period with respect to any Transaction, an annual rate stated in the related Confirmation and equal to the LIBOR plus the Applicable Spread, or with respect to any Alternative Rate Transaction, the Benchmark Replacement plus the Applicable Spread, in each case, for such Pricing Rate Period for such Transaction and shall be subject to adjustment and/or conversion as provided in Sections 3(f) and 3(g) of this Agreement.
 
“Pricing Rate Determination Date” shall mean with respect to any Pricing Rate Period and subject to Sections 3(f) and 3(g), with respect to any Transaction, the second (2nd) LIBOR Business Day preceding the first day of such Pricing Rate Period.
 
“Pricing Rate Period” shall mean, (a) in the case of the first Pricing Rate Period with respect to any Transaction, the period commencing on and including the Purchase Date for such Transaction and ending on and excluding the following Remittance Date and, (b) in the case of any subsequent Pricing Rate Period, the period commencing on and including such Remittance Date and ending on and excluding the following Remittance Date; provided, however, that in no event shall any Pricing Rate Period end subsequent to the Repurchase Date for the related Purchased Asset.
 
“Prime Rate” shall mean the “Prime Rate” (as published from time to time in the “Money Rates” section of The Wall Street Journal).
 
“Principal Payment” shall mean, with respect to any Purchased Asset, any payment or prepayment of principal received by Account Bank or Buyer in respect thereof and applied as principal toward the Purchase Price of such Purchased Asset pursuant to Section 5.
 
“Program Documents” shall mean, collectively, this Agreement, the Guaranty, the Fee Letter, the Pledge Agreement, each Originator Pledge Agreement, the Account Control Agreement, the Custodial Agreement, the Servicing Agreement and all Confirmations executed pursuant to this Agreement in connection with specific Transactions.
 
“Prohibited Transferee” shall have the meaning assigned to such term in the Fee Letter.
 
“Purchase Agreement” shall mean each sale and/or contribution agreement pursuant to which the related Originator transfers Eligible Assets to Seller.
 
“Purchase Date” shall mean, with respect to any Purchased Asset, the date on which such Purchased Asset is to be transferred by Seller to Buyer.
 
“Purchase Price” shall have the meaning assigned to such term in the Fee Letter.
 
“Purchase Price Percentage” shall have the meaning assigned to such term in the Fee Letter.
 
“Purchased Asset Documents” shall mean, with respect to a Purchased Asset, the documents comprising the Purchased Asset File for such Purchased Asset.
 
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“Purchased Asset File” shall mean, with respect to any Purchased Asset, the documents specified as the “Purchased Asset File” in Section 7(b).
 
“Purchased Asset Schedule” shall have the meaning assigned to such term in the Custodial Agreement.
 
“Purchased Asset(s)” shall mean (i) with respect to any Transaction, the Eligible Asset or Eligible Assets sold by Seller to Buyer in such Transaction and not repurchased by Seller and (ii) with respect to the Transactions in general, all Eligible Assets sold by Seller to Buyer and not repurchased by Seller and any additional collateral delivered by Seller to Buyer pursuant to this Agreement, in each case together with all Purchased Asset Documents, Servicing Agreements, Servicing Records, Servicing Rights, insurance relating to any such Eligible Asset, and collection and escrow accounts relating to any such Eligible Asset.
 
“Qualified Assignee”  have the meaning assigned to such term in the Fee Letter.
 
“Qualified Servicing Expenses” shall mean, with respect to any Servicer that is not an Affiliate of Seller, (i) the Servicing Fee and (ii) any expenses payable to such Servicer that are expressly provided for in the related Servicing Agreement, including any such amounts constituting Servicer Income and that are netted by such Servicer out of collections pursuant to such Servicing Agreement.
 
“Redirection Letter” shall mean an irrevocable redirection letter in the form attached as Exhibit I to this Agreement, undated and executed in blank by the related Mortgagee (or an agent on its behalf) instructing Mortgagor, Servicer or any other Person to pay all amounts payable under the related Purchased Asset to the Repo Collection Account, which Buyer may send to each Mortgagor with respect to each Purchased Asset subject to a Transaction after the occurrence and continuance of an Event of Default.
 
“Reference Time” with respect to any setting of the then-current Benchmark shall mean (1) if such Benchmark is LIBOR, 11:00 a.m. (London time) on the day that is two London banking days preceding the date of such setting, and (2) if such Benchmark is not LIBOR, the time determined by Buyer in its reasonable discretion.
 
“Register” shall have the meaning specified in Section 19(f) of this Agreement.
 
“REIT” means KKR Real Estate Finance Trust Inc., a Maryland corporation.
 
“Relevant Governmental Body” shall mean the Board of Governors of the Federal Reserve System or the Federal Reserve Bank of New York, or a committee officially endorsed or convened by the Board of Governors of the Federal Reserve System or the Federal Reserve Bank of New York, or any successor thereto.
 
“REMIC” shall mean a real estate mortgage investment conduit, within the meaning of Section 860D(a) of the Code.
 
“REMIC Provisions” shall mean the provisions of United States federal income tax law relating to real estate mortgage investment conduits, which appear at Section 860A through
 
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Section 860G of subchapter M of Chapter 1 of the Code, and related provisions and regulations promulgated thereunder, as the foregoing may be in effect from time to time.
 
“Remittance Date” shall mean the fifteenth (15th) calendar day of each month, or the next succeeding Business Day, if such calendar day shall not be a Business Day.
 
“Replenishment Amount” shall have the meaning specified in Section 5(f) of this Agreement.
 
“Replenishment Amount Notice” shall have the meaning specified in Section 5(f) of this Agreement.
 
“Repo Collection Account” shall mean a segregated non-interest bearing account, in the name of Seller, for the benefit of Buyer, established at Account Bank, bearing the account number specified in the Account Control Agreement.
 
“Repurchase Date” shall mean, with respect to each Purchased Asset, the earliest to occur of (i) the Facility Termination Date, (ii) any Early Repurchase Date, Mandatory Repurchase Date or Accelerated Repurchase Date therefor and (iii) the date on which Seller is to repurchase such Purchased Asset as specified in the related Confirmation (after giving effect to all extensions thereto granted pursuant to Section 3(c)(iii)).
 
“Repurchase Date Extension Conditions” shall have the meaning specified in Section 3(c)(iii) of this Agreement
 
“Repurchase Obligations” shall mean all obligations of Seller to pay the Repurchase Price of each Purchased Asset on the Repurchase Date with respect to such Purchased Asset and all other obligations and liabilities of Seller to Buyer arising under or in connection with the Program Documents, whether now existing or hereafter arising, and all interest and fees that accrue after the commencement by or against Seller, Guarantor or Pledgor or any Affiliate of Seller, Guarantor or Pledgor of any Insolvency Proceeding naming such Person as the debtor in such proceeding, regardless of whether such interest and fees are allowed claims in such proceeding (in each case, whether due or accrued).
 
“Repurchase Price” shall mean, with respect to any Purchased Asset, as of any date, an amount equal to the sum of (i) the outstanding Purchase Price as of such date, (ii) the accrued and unpaid Price Differential for such Purchased Asset as of such date, and (iii) any accrued and unpaid fees and expenses and indemnity amounts and any other amounts owed by Seller, Guarantor or Pledgor to Buyer under this Agreement or any other Program Document.  For the avoidance of doubt, in the event that the Repurchase Price is deposited into the Repo Collection Account, Price Differential shall continue to accrue for purposes of calculating the Repurchase Price up to the date Buyer receives payment of the Repurchase Price in Buyer’s account.
 
“Required Equity Amount” shall have the meaning assigned to such term in the Fee Letter.
 
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“Requirement of Law” shall mean any law, treaty, ordinance, rule, regulation, code, directive, policy, order or requirement or determination of an arbitrator or a court or other Governmental Authority whether now or hereafter enacted or in effect.
 
“Reserve Account” shall mean the interest reserve account established at the Reserve Account Bank pursuant to the Account Control Agreement in accordance with Section 5(a), which may be a sub-account of the Repo Collection Account.
 
“Reserve Account Bank” shall mean, with respect to the Reserve Account, the depository at which the Repo Collection Account is established, as approved by Buyer.
 
“Review Standard” shall have the meaning assigned to such term in the Fee Letter.
 
“S&P” means Standard & Poor’s Financial Services LLC, a division of The McGraw Hill Companies, Inc., a New York corporation, or any successor thereto.
 
“Sanctioned Country” means, at any time, a country or territory which is the subject or target of any Sanctions.
 
“Sanctioned Person” means, at any time, (i) any Person currently the subject or the target of any Sanctions, including any Person listed in any Sanctions-related list of designated Persons maintained by OFAC (or any successor thereto) or the U.S. Department of State, or as otherwise published from time to time; (ii) that is fifty-percent or more owned, directly or indirectly, in the aggregate by one or more Persons described in clause (i) above; (iii) that is operating, organized or resident in a Sanctioned Country; (iv) with whom engaging in trade, business or other activities is otherwise prohibited or restricted by Sanctions; or (v) (a) an agency of the government of a Sanctioned Country, (b) an organization directly or indirectly controlled by a Sanctioned Country, or (c) a Person resident in a Sanctioned Country, to the extent subject to a sanctions program administered by OFAC.
 
“Sanctions” shall have the meaning specified in Section 10(w) of this Agreement.
 
“SEC” shall have the meaning specified in Section 24(a) of this Agreement.
 
“Seller” shall mean KREF Lending IX LLC, a Delaware limited liability company.
 
“Senior Participation Interest” shall mean a senior, controlling or non-controlling, participation interest in a Whole Loan evidenced by a Participation Certificate.
 
“Servicer” shall mean Midland Loan Services, a Division of PNC Bank, National Association or any other Servicer mutually agreed upon by Buyer and Seller.
 
“Servicer Account” shall mean the “Collection Account” maintained by Servicer on behalf of Seller in accordance with the terms of the Servicing Agreement.
 
“Servicer Income” shall mean any Income that a Servicer, under the express terms of the Servicing Agreement to which it is a party, is entitled to receive and retain for its own account
 
25
and is not required to pay over to Seller or Buyer, including, without limitation, any accrued fees due and payable to a Servicer.
 
“Servicer Notice and Acknowledgement” shall mean that certain Servicer Notice and Acknowledgment, by and among Buyer, REIT, Seller and Servicer in form and substance mutually agreeable to the parties thereto, as the same may be amended, restated, supplemented, replaced or otherwise modified from time to time.
 
“Servicer Remittance Date” shall mean for each calendar month during the term of this Agreement, third (3rd) Business Day prior to the related Remittance Date or such other date set forth in the Servicer Notice and Acknowledgement.
 
“Servicing Agreement” shall mean, with respect to the Servicer, the Servicing Agreement dated as of December 15, 2017 by and between REIT and Servicer, as supplemented by the Servicer Notice and Acknowledgment, as the same may be further amended, restated, supplemented, replaced or otherwise modified from time to time.
 
“Servicing Fee” shall have the meaning assigned to such term (or any similar or substitute term) in the applicable Servicing Agreement.
 
“Servicing Records” shall have the meaning specified in Section 29(b) of this Agreement.
 
“Servicing Rights” shall mean all of Seller’s right, title and interest in and to any and all of the following:  (a) any and all rights of Seller to service, collect and or direct Servicer’s actions and decisions with respect to, the Purchased Assets or to appoint (or terminate the appointment of) any third party as servicer of the Purchased Assets; (b) any payments to or monies received by or payable to Seller or any other Person as compensation for servicing the Purchased Assets; (c) any late fees, penalties or similar payments with respect to the Purchased Assets; (d) all agreements or documents creating, defining or evidencing any such servicing rights to the extent they relate to such servicing rights and all rights of Seller (individually or as servicer) thereunder (including all rights to set the compensation of any third-party servicer); (e) the rights to collect and maintain escrow payments or other similar payments with respect to the Purchased Assets and any amounts actually collected by Seller or any third-party servicer with respect thereto; (f) the rights, if any, to appoint, designate and retain any other servicers, sub-servicers, special servicers, agents, custodians, trustees and liquidators with respect to the Purchased Assets; and (g) all rights of Seller to give directions with respect to the management and distribution of any collections, escrow accounts, reserve accounts or other similar payments or accounts in connection with the Purchased Assets, and, in each case, all obligations related or incidental thereto, in each case, subject to the requirements and limitations set forth in the related Servicing Agreement.
 
“SIPA” shall have the meaning specified in Section 24(a) of this Agreement.
 
“SOFR” shall mean, with respect to any Business Day, a rate per annum equal to the secured overnight financing rate for such Business Day published by the SOFR Administrator on the SOFR Administrator’s Website on the immediately succeeding Business Day.
 
26
“SOFR Administrator” shall mean the Federal Reserve Bank of New York (or a successor administrator of the secured overnight financing rate).
 
“SOFR Administrator’s Website” shall mean the website of the Federal Reserve Bank of New York, currently at http://www.newyorkfed.org, or any successor source for the secured overnight financing rate identified as such by the SOFR Administrator from time to time.
 
“Stabilization” shall mean year 5 of Seller’s underwriting unless Seller’s underwriting utilizes a shorter stabilization period in which case it shall be the furthest outside date.
 
“Standard of Care” means that standard of care that Administrative Agent would use in dealing with a master repurchase facility of the same type and size as the master repurchase facility made pursuant to this Agreement and the other Program Documents held for its own account in its performance of its duties under this Agreement and the other Program Documents and in accordance with all applicable Requirements of Law.
 
“Supplemental Due Diligence List” shall mean, with respect to any New Asset, information or deliveries concerning the New Asset that Buyer may reasonably request in addition to the Due Diligence Package.
 
“Survey” shall mean a certified ALTA/ACSM (or applicable state standards for the state in which the Mortgaged Property is located) survey of a Mortgaged Property prepared by a registered independent surveyor or engineer and in form and content satisfactory to Buyer as of the Purchase Date and the company issuing the Title Policy for such Mortgaged Property.
 
“Syndication Date” shall have the meaning set forth in Section 36(b) of this Agreement.
 
“Taxes” shall mean all present or future taxes, levies, imposts, duties, deductions, withholdings (including backup withholding), assessments, fees or other charges imposed by any Governmental Authority, including any interest, additions to tax or penalties applicable thereto.
 
“Term SOFR” shall mean, for the applicable Corresponding Tenor as of the applicable Reference Time, the forward-looking term rate based on SOFR that has been selected or recommended by the Relevant Governmental Body; provided that such rate is displayed on a screen or other information service that publishes such rate from time to time as selected by Buyer in its reasonable discretion.
 
“Term SOFR Notice” shall mean a notification by Buyer to Seller of the occurrence of a Term SOFR Transition Event.
 
“Term SOFR Transition Event” shall mean the determination by Buyer (in consultation with Seller) that (a) Term SOFR has been recommended for use by the Relevant Governmental Body, (b) the administration of Term SOFR is administratively feasible for Buyer  and (c) a Benchmark Transition Event or an Early Opt-In Election, as applicable, has previously occurred resulting in the replacement of the then current Benchmark for all purposes hereunder and under any Program Document in accordance with Section 3(f) with a Benchmark Replacement the Unadjusted Benchmark Replacement component of which is not Term SOFR.
 
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“Testing Date” shall have the meaning specified in Exhibit G-1.
 
“Title Exceptions” shall have the meaning specified in Exhibit G-1.
 
“Title Policy” shall have the meaning specified in Exhibit G-1.
 
“Transaction” shall have the meaning specified in Section 1 of this Agreement.
 
“Transaction Conditions Precedent” shall have the meaning assigned to such term in the Fee Letter.
 
“Transaction Request” shall have the meaning specified in Section 3(a) of this Agreement.
 
“Trust Receipt” shall have the meaning specified in the Custodial Agreement.
 
“UCC” shall have the meaning specified in Section 6(b) of this Agreement.
 
“Unadjusted Benchmark Replacement” shall mean the applicable Benchmark Replacement excluding the related Benchmark Replacement Adjustment.
 
“Underlying Whole Loan” shall have the meaning specified in Exhibit G-2.
 
“Underlying Purchased Asset Reserves” shall mean, with respect to any Purchased Asset, the escrows, reserve funds or other similar amounts properly retained in accounts maintained by Servicer of such Purchased Asset unless and until such funds are, pursuant to the terms of the related Purchased Asset Documents, released or otherwise available to Seller (but not if such funds are used for the purpose for which they were maintained, or if such funds are released to the related Mortgagor in accordance with the relevant Purchased Asset Documents).
 
“U.S. Buyer” shall mean any Buyer, which term includes, for the avoidance of doubt, any New Buyer, if  such Buyer is a “United States person” as defined in Section 7701(a)(30) of the Code.
 
“U.S. Special Resolution Regime” means each of (i) the Federal Deposit Insurance Act and the regulations promulgated thereunder and (ii) Title II of the Dodd-Frank Wall Street Reform and Consumer Protection Act and the regulations promulgated thereunder.
 
“U.S. Tax Compliance Certificate” shall have the meaning specified in Section 30(e)(ii)(B)(III) of this Agreement.
 
“Wet Purchased Asset” shall have the meaning set forth in the Custodial Agreement.
 
“Whole Loan” shall mean a whole mortgage loan secured by a first lien on Mortgaged Property.
 
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3.
INITIATION; CONFIRMATION; TERMINATION; FEES; EXTENSIONS
 
(a)          On any day during the Availability Period, subject to the terms and conditions set forth in this Section 3(a) and Section 3(b) (including, without limitation, the Transaction Conditions Precedent (including paragraph (N) of the definition thereof with respect to Discretionary New Assets)), pursuant to a written request in the form of Exhibit A at the initiation of Seller (each, a “Transaction Request”), Buyer shall enter into Transactions with Seller.  Buyer (as well as its counsel and any third-party due diligence provider) shall have the right to review all New Assets proposed to be sold to Buyer in any Transaction and to conduct its own due diligence investigation of such New Assets (including the related Mortgaged Properties) as determined by Buyer in accordance with the Review Standard to confirm that such New Assets satisfy the applicable requirements of Eligible Assets set forth in the definition thereto (and, with respect to any Discretionary New Asset, such additional diligence that it determines in accordance with the Review Standard as is necessary in connection with its underwriting of such Discretionary New Asset), which due diligence investigation Buyer shall be completed within ten (10) Business Days of Buyer’s receipt from Seller of each of the following: a Transaction Request, the information listed on Exhibit D and all principal third-party reports (i.e., Appraisal, title commitment, environmental report, engineering report and survey); provided that, with respect to a Wet Purchased Asset, Buyer’s due diligence investigation shall be completed within ten (10) Business Days of Buyer’s receipt of (i) a Transaction Request, (ii) the information listed on Exhibit D (except that such information can be in the form of drafts to the extent that any such information is not finalized at the time the Transaction Request is delivered), (iii) the Appraisal and (iv) ESA (as defined in Exhibit G-1), engineering report and title commitment for prospective Mortgaged Property, which may, in each case for this items listed in this clause (iv), be in final draft form. In addition Buyer shall have the right to request that Seller deliver to Buyer Supplemental Due Diligence with respect to such Transaction.  It is expressly agreed and acknowledged that, subject to any Approved Exceptions, Buyer is entering into the Transactions on the basis of representations and warranties made by Seller in this Agreement and the other Program Documents, and on the completeness and accuracy in all material respects of the information furnished by Seller to Buyer pursuant to this Section 3(a) and, subject to the Approved Exceptions, any material incompleteness or inaccuracies in such information, taken as a whole, furnished by Seller to Buyer and not corrected by the Purchase Date will only be acceptable to Buyer if disclosed in writing to Buyer by Seller in advance of the related Purchase Date, and then only if Buyer, in its sole but reasonable discretion, opts to purchase the related Purchased Asset(s) from Seller notwithstanding such material incompleteness and inaccuracies.  Seller shall inform Buyer as soon as commercially practicable of its request for any proposed Transaction to be entered into based on a Bailee Trust Receipt.
 
(b)         Upon Buyer’s satisfactory completion of its due diligence pursuant to Section 3(a), and subject to the terms of this Section 3(b), Buyer shall promptly deliver to Seller a written Confirmation (in electronic form) in the form of Exhibit B of each Transaction, and provided each of the Transaction Conditions Precedent shall have been satisfied at or prior to the closing of the Transaction as determined by Buyer in accordance with the Review Standard (or affirmatively waived in writing by Buyer, including as set forth in the Confirmation), Buyer shall execute the Confirmation and pay the Purchase Price for such Transaction to Seller by wire transfer of immediately available funds in Dollars on the related Purchase Date.
 
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Buyer’s approval of the purchase of a New Asset shall be evidenced only by its execution and delivery of the related Confirmation pursuant to Section 3(b).  Each Confirmation, together with this Agreement, shall be conclusive evidence of the terms of the Transaction covered thereby, and shall be construed to be cumulative to the extent possible.  If terms in a Confirmation are inconsistent with terms in this Agreement with respect to a particular Transaction, the Confirmation shall prevail.  The fact that Buyer has conducted or has failed to conduct any partial or complete examination or any other due diligence review of any Purchased Asset shall in no way affect any rights Buyer may have under the Program Documents or otherwise with respect to any representations or warranties or other rights or remedies thereunder or otherwise, including the right to determine at any time in accordance with the terms hereof that such Purchased Asset is not an Eligible Asset.
 
No Transaction shall be entered into if (i) any Default or Event of Default exists or would exist as a result of such Transaction, (ii) the Repurchase Date for the Purchased Assets subject to such Transaction would be later than the Facility Termination Date, (iii) after giving effect to such Transaction, the Outstanding Facility Amount would exceed the Maximum Facility Amount or (iv) any Transaction Conditions Precedent have not been satisfied or waived by Buyer.  If at any time the Outstanding Facility Amount exceeds the Maximum Facility Amount, Seller shall immediately pay to Buyer, without premium or penalty, an amount necessary to reduce such aggregate outstanding Purchase Price to an amount equal to or less than the Maximum Facility Amount.
 
With respect to any Transaction, the Pricing Rate shall be determined initially on the Pricing Rate Determination Date applicable to the first Pricing Rate Period for such Transaction, and shall be reset on each Pricing Rate Determination Date for the succeeding Pricing Rate Period for such Transaction.  Buyer or its agent shall determine the Pricing Rate in accordance with the terms of this Agreement on each Pricing Rate Determination Date for the related Pricing Rate Period and notify Seller of such rate for such period on such Pricing Rate Determination Date.
 
(c)          (i)          On the Repurchase Date with respect to a Transaction, termination of such Transaction will be effected by transfer to Seller or its agent of the Purchased Assets relating to such Transaction and any Income in respect thereof received by Buyer (and not previously credited or transferred to, or applied to the obligations of, Seller pursuant to Section 5 of this Agreement) against the simultaneous transfer of the Repurchase Price with respect to such Transaction to an account of Buyer.  In connection with any such termination of a Transaction pursuant to the preceding sentence, upon its receipt of the Repurchase Price as confirmed by Buyer, Buyer shall (i) be deemed to have simultaneously released its security interest in such Purchased Asset and the related Collateral, (ii) authorize Custodian to release to Seller the Purchased Asset Documents for such Purchased Asset and (iii) permit, to the extent any UCC financing statement filed against Seller specifically identifies such Purchased Asset by name, Seller to file an amendment thereto or termination thereof evidencing the release of such Purchased Asset from Buyer’s security interest therein.  Any such transfer or release shall be without recourse to Buyer and without representation or warranty by Buyer other than a representation that the Purchased Asset is free and clear of any Lien placed on such Purchased Asset (other than any UCC financing statement referred to in clause (iii) immediately above that remains of record as of the termination date) by or with the consent or authorization of Buyer.  Any Income with respect to such Purchased Asset received by Buyer after payment in full of the
 
30
Repurchase Price therefor and any other amounts due hereunder with respect to such Purchased Asset, and the release of such Purchased Asset in accordance with the terms of this Agreement, shall be promptly transferred to Seller.  Notwithstanding the foregoing, on or before the Facility Termination Date, Seller shall repurchase all Purchased Assets by paying to Buyer the outstanding Repurchase Price therefor and all other outstanding Repurchase Obligations.  At any time during the existence of an uncured monetary or material non-monetary Default or Event of Default, it shall be a condition to Seller’s repurchase of a Purchased Asset in connection with a full payoff of the underlying Whole Loan by the related Mortgagor that one-hundred percent (100%) of the net proceeds due in connection with the relevant payoff shall be paid directly to the Repo Collection Account. Subject to the proviso in this sentence, such net proceeds shall be applied by Buyer to reduce the Repurchase Price of the related Purchased Asset and then to reduce any other amounts then due and payable to Buyer under this Agreement; provided, that so long as any monetary or material non-monetary Default is continuing, the portion of such net proceeds in excess of the then-current Repurchase Price of the related Purchased Asset shall remain in the Repo Collection Account until the earlier of (x) such Default being cured, in which case such portion of net proceeds in excess of the then current Repurchase Price of the related Purchased Asset shall be returned to Seller and (y) the occurrence of an Event of Default in which case such portion of net proceeds in excess of the then current Repurchase Price of the related Purchased Asset shall be applied by Buyer to reduce any other amounts due and payable to Buyer under this Agreement.  In addition to the other rights and remedies of Buyer under this Agreement and the other Program Documents, Seller shall repurchase any Mandatory Repurchase Asset on or before the related Mandatory Repurchase Date.
 

 (ii)
Except as expressly provided herein, no Transaction shall be terminable on demand by Buyer.  Seller shall be entitled to terminate a Transaction on demand, in whole or in part, and repurchase any or all Purchased Assets subject to such Transaction on any Business Day prior to the Repurchase Date (each, an “Early Repurchase Date”); provided, however, that:
 

 (A)
Seller notifies Buyer in writing of its intent to terminate such Transaction and repurchase such Purchased Assets no later than five (5) Business Days prior to such Early Repurchase Date; provided that, if requested by Seller, Buyer will use best efforts to complete such repurchase within three (3) Business Days’ after its receipt of such notice);
 

 (B)
on such Early Repurchase Date Seller pays to Buyer an amount equal to the sum of the Repurchase Price for such Transaction(s), the Exit Fee (if applicable), and any other amounts payable under the Program Documents (including, without limitation, Section 3(h) of this Agreement) with respect to such Transaction(s) against transfer to Seller or its agent of such Purchased Assets, all in accordance with Section 3(c)(i); and
 

 (C)
other than in the case of (i) a payoff of such Purchased Asset by the underlying Mortgagor or other obligor thereunder and (ii) an Early Facility Termination Date, no Event of Default shall have
 
31
occurred and be continuing and no Event of Default or Cash Sweep Period Trigger Event would occur as a result of such repurchase.
 

 (iii)
The Repurchase Date with respect to each Transaction may be extended one or more times in accordance with terms of the related Confirmation; provided, that all of the Repurchase Date Extension Conditions shall have been satisfied.  For purposes of the preceding sentence, the “Repurchase Date Extension Conditions” shall be deemed to have been satisfied if:
 

 (A)
Seller shall have given Buyer written notice, not less than thirty (30) days and no more than ninety (90) days, prior to the then scheduled Repurchase Date, of Seller’s desire to extend the Repurchase Date;
 

 (B)
no monetary or material non-monetary Default or Event of Default under this Agreement shall have occurred and be continuing as of the scheduled Repurchase Date;
 

 (C)
Seller, Pledgor and Guarantor are in compliance in all material respects with all covenants and conditions in the Program Documents as of the scheduled Repurchase Date;
 

 (D)
the representations and warranties made by Seller, Guarantor and Pledgor in the Program Documents shall be true and correct in all material respects as of the scheduled Repurchase Date (except for any Approved Exceptions), unless such representations and warranties were made as of a specified date in which case such representations and warranties shall have been true and correct in all material respects as of such date (except for any Approved Exceptions);
 

 (E)
Seller has paid to Buyer the Extension Fee due and payable on such date and any breakage costs pursuant to Section 3(h) on or before the scheduled Repurchase Date;
 

 (F)
Seller shall certify to Buyer that all conditions to the extension of the maturity date under the relevant Purchased Asset Documents, including any Extension Minimum Debt Yield Test(s) or Extension Maximum LTV Test(s) set forth under the relevant Purchased Asset documents, have been satisfied in all material respects;
 

 (G)
an amended and restated Confirmation in the form of Exhibit L (an “Amended and Restated Confirmation”) reflecting such extension and that is otherwise acceptable to Buyer and Seller has been delivered by Seller and executed by Seller and Buyer; and
 
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 (H)
solely with respect to any such extension of the Repurchase Date to any date occurring on or after July 27, 2025, Seller executes and delivers any supplements, modifications, addendums, opinions or other documents as may be necessary in Buyer’s sole and absolute discretion, in order to cause this Agreement and the Transactions contemplated hereby to qualify for, comply with the provisions of, or otherwise satisfy, maintain or preserve the criteria for safe harbor treatment under the Bankruptcy Code, including, without limitation, such opinions from counsel to Seller as Buyer may require with respect to the applicability of safe harbor treatment under the Bankruptcy Code (which opinions may be from the same counsel and, subject to any updates in applicable law, may be in the same form and substance as the opinion(s) regarding safe harbor treatment delivered to Buyer in connection with the closing of the facility).
 
(d)          This Agreement shall terminate on the Facility Termination Date.
 
(e)          In addition, Seller may terminate this Agreement and the other Program Documents on any date prior to the then scheduled Facility Termination Date (the “Early Facility Termination Date”), provided that:
 

 (i)
Seller notifies Buyer in writing at least thirty (30) days before the Early Facility Termination Date of its intent to terminate this Agreement and the other Program Documents;
 

 (ii)
subject to the provisions set forth in Section 3(c)(i), Seller repurchases all of the Purchased Assets then held by Buyer on the Early Facility Termination Date; and
 

 (iii)
Seller pays the Repurchase Price for each Purchased Asset and all other Repurchase Obligations then due and payable pursuant to the Program Documents on the Early Facility Termination Date.
 
(f)          Benchmark Replacement.
 

 (i)
Notwithstanding anything to the contrary herein or in any other Program Document, if a Benchmark Transition Event or an Early Opt-in Election, as applicable, and its related Benchmark Replacement Date have occurred prior to the Reference Time in respect of any setting of the then-current Benchmark, then (x) if a Benchmark Replacement is determined in accordance with clause (1) or (2) of the definition of “Benchmark Replacement” for such Benchmark Replacement Date, such Benchmark Replacement will replace such Benchmark for all purposes hereunder and under any Program Document in respect of such Benchmark setting and subsequent Benchmark settings without any amendment to, or further action or consent of any other party to, this Agreement or any other
 
33
Program Document and (y) if a Benchmark Replacement is determined in accordance with clause (3) of the definition of “Benchmark Replacement” for such Benchmark Replacement Date, such Benchmark Replacement will replace such Benchmark for all purposes hereunder and under any Program Document in respect of any Benchmark setting at 5:00 p.m. (New York City time) on the fifth (5th) Business Day after the date notice of such Benchmark Replacement is provided by Buyer to Seller without any amendment to, or further action or consent of any other party to, this Agreement or any other Program Document.
 

 (ii)
Notwithstanding anything to the contrary herein or in any other Program Document, if a Term SOFR Transition Event and its related Benchmark Replacement Date have occurred prior to the Reference Time in respect of any setting of the then-current Benchmark, then the applicable Benchmark Replacement will replace the then-current Benchmark for all purposes hereunder or under any Program Document in respect of such Benchmark setting and subsequent Benchmark settings, without any amendment to, or further action or consent of any other party to, this Agreement or any other Program Document; provided that this clause (ii) shall not be effective unless Buyer has delivered to Seller a Term SOFR Notice.  For the avoidance of doubt, Buyer shall not be required to deliver a Term SOFR Notice after a Term SOFR Transition Event.
 

 (iii)
In connection with the implementation of a Benchmark Replacement, Buyer will have the right to make Benchmark Replacement Conforming Changes from time to time and, notwithstanding anything to the contrary herein or in any other Program Document, any amendments implementing such Benchmark Replacement Conforming Changes will become effective without any further action or consent of Seller.
 

 (iv)
Buyer will promptly notify Seller of (a) any occurrence of a Benchmark Transition Event, a Term SOFR Transition Event or an Early Opt-in Election, as applicable, and its related Benchmark Replacement Date, (b) the implementation of any Benchmark Replacement, (c) the effectiveness of any Benchmark Replacement Conforming Changes and (d) the removal or reinstatement of any tenor of a Benchmark pursuant to Section 3(f)(v) below. Any determination, decision or election that may be made by Buyer, pursuant to this Section 3(f)(iv), including any determination with respect to a tenor, rate or adjustment or of the occurrence or non-occurrence of an event, circumstance or date and any decision to take or refrain from taking any action or any selection, will be conclusive and binding absent manifest error and may be made in its sole discretion and without consent from Seller; provided that Seller shall consult with Buyer to the extent set forth in the definition of “Benchmark Replacement Conforming Changes”.
 
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 (v)
Notwithstanding anything to the contrary herein or in any other Program Document, at any time (including in connection with the implementation of a Benchmark Replacement), (i) if  the then-current Benchmark is a term rate (including Term SOFR or LIBOR) and either (A) any tenor for such Benchmark is not displayed on a screen or other information service that publishes such rate from time to time as selected by Buyer in its reasonable discretion or (B) the regulatory supervisor for the administrator of such Benchmark has provided a public statement or publication of information announcing that any tenor for such Benchmark (1) is no longer representative or will no longer be representative as of a specified date or (2) will cease to be provided by the administrator permanently or indefinitely as of specified date, then Buyer may modify the definition of “Pricing Rate Period” for any Benchmark settings at or after such time to remove such affected tenor and (ii) if a tenor that was removed pursuant to clause (i) above either (A) is subsequently displayed on a screen or information service for such Benchmark (including a Benchmark Replacement) or (B) is not, or is no longer, subject to an announcement that it is no longer or will no longer be representative for such Benchmark (including a Benchmark Replacement) or will no longer cease to be provided by the administrator, then Buyer may modify the definition of “Pricing Rate Period” for all settings of such Benchmark at or after such time to reinstate such previously removed tenor.
 

 (vi)
Buyer does not warrant or accept responsibility for, and shall not have any liability to Seller hereunder or otherwise for, any loss, damage or claim arising from or relating to (i) the administration of, submission of, calculation of or any other matter related to the Benchmark, any component definition thereof or rates referred to in the definition thereof or any alternative, comparable or successor rate thereto (including any then-current Benchmark or any Benchmark Replacement), including whether the composition or characteristics of any such alternative, comparable or successor rate (including any Benchmark Replacement) will be similar to, or produce the same value or economic equivalence of, or have the same volume or liquidity as, the then-current Benchmark until such time as a new Benchmark has been determined pursuant to the terms hereunder, (ii) the effect, implementation or composition of any Benchmark Replacement Conforming Changes or (iii) any mismatch between the Benchmark or the Benchmark Replacement and any of Seller’s other financing instruments (including those that are intended as hedges).
 

 (vii)
On March 5, 2021, the ICE Benchmark Administration (the “IBA”), the administrator of the London interbank offered rate, and the Financial Conduct Authority (the “FCA”), the regulatory supervisor of the IBA, announced in public statements (the “Announcements”) that the final publication or representativeness date for (i) 1-week and 2-month London interbank offered rate tenor settings will be December 31, 2021 and (ii)
 
35
overnight, 1-month, 3-month, 6-month and 12-month London interbank offered rate tenor settings will be June 30, 2023.  No successor administrator for the IBA was identified in such Announcements.  The parties hereto agree and acknowledge that the Announcements resulted in the occurrence of a Benchmark Transition Event with respect to the London interbank offered rate pursuant to the terms of this Agreement and that any obligation of Buyer to notify any parties of such Benchmark Transition Event pursuant to Section 3(f)(iv) shall be deemed satisfied.
 
(g)         Notwithstanding any other provision herein, if after the date of this Agreement the adoption of or any change in any Requirement of Law or in the interpretation or application thereof shall make it unlawful for Buyer to effect or continue Transactions as contemplated by the Program Documents, (i) the ability of Buyer to enter into new Transactions hereunder and the commitment of Buyer hereunder to continue Transactions shall be canceled, and (ii) if the Pricing Rate is then determined by reference to LIBOR, the Transactions then outstanding shall be converted automatically to Alternative Rate Transactions on the last day of the then current Pricing Rate Period or within such earlier period as may be required by law. If any such conversion of a Transaction occurs on a day which is not the last day of the then current Pricing Rate Period with respect to such Transaction, Seller shall pay to Buyer such amounts, if any, as may be required pursuant to Section 3(h) of this Agreement.  Buyer’s exercise of its rights under this Section 3(g) shall be applied in the same manner Buyer is treating its similarly situated repurchase facility customers where Buyer has a comparable contractual right.
 
(h)        Upon demand by Buyer, Seller shall indemnify Buyer and hold Buyer harmless from any net actual, out of pocket loss or expense (not to include any lost profit or opportunity) (including, without limitation, reasonable actual attorneys’ fees and disbursements) which Buyer sustains or incurs as a consequence of (i) default by Seller in terminating any Transaction after Seller has given a notice in accordance with Section 3(c)(ii) of a termination of a Transaction, (ii) any payment of the Repurchase Price with respect to a Purchased Asset on any day other than a Remittance Date or the Repurchase Date (or the Early Repurchase Date or the Early Facility Termination Date, as applicable) with respect to such Purchased Asset (including, without limitation, any such actual, out of pocket loss or expense arising from the reemployment of funds obtained by Buyer to maintain Transactions hereunder or from customary and reasonable fees payable to terminate the deposits from which such funds were obtained), (iii) conversion of any Transaction to an Alternative Rate Transaction pursuant to Section 3(g) of this Agreement on a day which is not the last day of the then current Pricing Rate Period or (iv) any conversion of the Pricing Rate to the Benchmark Replacement because LIBOR is not available for any reason on a day that is not the last day of the then current Pricing Rate Period.  A certificate as to such actual costs, losses, damages and expenses, setting forth in reasonable detail the calculations therefor shall be prima facie evidence of the information set forth therein in the absence of manifest error.  This Section 3(h) shall not apply with respect to Taxes other than any Taxes that represent losses, claims, damages, etc. arising from any non-Tax claim.
 
(i)           If after the date of this Agreement the adoption of or any change in any Requirement of Law or in the interpretation or application thereof by any Governmental Authority or compliance by Buyer with any request or directive (whether or not having the force
 
36
of law) from any central bank or other Governmental Authority having jurisdiction over Buyer made subsequent to the date hereof:
 

 (i)
shall subject Buyer to any Taxes (other than (A) Indemnified Taxes, (B) Taxes described in clauses (b) through (d) of the definition of Excluded Taxes and (C) Connection Income Taxes) with respect to the Program Documents, any Purchased Asset or any Transaction;
 

 (ii)
shall impose, modify or hold applicable any reserve, special deposit, compulsory loan or similar requirement against assets held by, deposits or other liabilities in or for the account of, advances, loans or other extensions of credit by, or any other acquisition of funds by, any office of Buyer which is not otherwise included in the determination of the Benchmark hereunder; or
 

 (iii)
shall impose on Buyer any other condition;
 
and the result of any of the foregoing is to increase the cost to Buyer, by an amount which Buyer deems, in its sole and absolute discretion, to be material, of entering into, continuing or maintaining Transactions or to reduce any amount receivable under the Program Documents in respect thereof; then, in any such case, Seller shall, within ten (10) Business Days after written notice from Buyer setting forth in reasonable detail the calculation thereof, pay Buyer any additional amounts necessary to compensate Buyer for such increased cost or reduced amount receivable (in the case of Taxes, in an amount such that, after deduction of the applicable Tax, Buyer receives the amount to which it would have been entitled if no Tax were deductible).  If Buyer becomes entitled to claim any additional amounts pursuant to this Section 3(i), it shall notify Seller in writing of the event by reason of which it has become so entitled.  A certificate as to the calculation of any additional amounts payable pursuant to this subsection shall be prima facie evidence of such additional amounts in the absence of manifest error.  Failure or delay on the part of Buyer to demand compensation under this Section 3(i) shall not constitute a waiver of Buyer’s right to demand such compensation.  This covenant shall survive the termination of this Agreement and the repurchase by Seller of any or all Purchased Assets.  Buyer’s exercise of its rights under this Section 3(i) shall be applied in the same manner Buyer is treating its similarly situated repurchase facility customers where Buyer has a comparable contractual right.
 
(j)        If Buyer shall have determined that the adoption of or any change after the date of this Agreement in any Requirement of Law regarding capital adequacy or in the interpretation or application thereof or compliance by Buyer or any entity controlling Buyer with any request or directive regarding capital adequacy (whether or not having the force of law) from any Governmental Authority made subsequent to the date hereof does or shall have the effect of increasing the amount of capital to be held by Buyer in respect of any Transaction hereunder or reducing the rate of return on Buyer’s or such entity’s capital as a consequence of its obligations hereunder to a level below that which Buyer or such entity could have achieved but for such adoption, change or compliance (taking into consideration Buyer’s or such entity’s policies with respect to capital adequacy) by an amount deemed by Buyer to be material, then from time to time, Seller shall, within ten (10) Business Days after written notice from Buyer setting forth in reasonable detail the calculation thereof, pay to Buyer such additional amount or amounts as will
 
37
compensate Buyer for such reduction.  In determining any additional amounts due under this Section 3(j), Buyer shall treat Seller in the same manner it treats other similarly situated repurchase facility customers where Buyer has a comparable contractual right.  A certificate as to the calculation of any additional amounts payable pursuant to this subsection shall be prima facie evidence of such additional amounts in the absence of manifest error.  Failure or delay on the part of Buyer to demand compensation under this Section 3(j) shall not constitute a waiver of Buyer’s right to demand such compensation.  This covenant shall survive the termination of this Agreement and the repurchase by Seller of any or all of the Purchased Asset.
 
(k)         At any time prior to the applicable Repurchase Date, in the event a Future Funding is made or is to be made by Seller pursuant to the Purchased Asset Documents for a Purchased Asset, Seller may submit to Buyer a request that Buyer transfer cash to Seller in an amount not to exceed an amount equal to the product of the related Purchase Price Percentage and the amount of such Future Funding (a “Future Funding Advance”), which Future Funding Advance once made shall increase the Purchase Price for such Purchased Asset.  It shall be a condition to Buyer’s obligation to make any Future Funding Advance that (i) as of the funding of such Future Funding Advance, no Default or Event of Default has occurred and is continuing, and no Default, Event of Default or Cash Sweep Period Trigger Event would result from the funding of such Future Funding Advance, (ii) the funding of the Future Funding Advance would not cause the Outstanding Facility Amount to exceed the Maximum Facility Amount, (iii) Seller deposit the Replenishment Amount (if any) into the Reserve Account so that the balance of the Reserve Account is no less than the Minimum Balance Amount as of the funding date in accordance with Section 5(f), (iv) Seller shall certify to Buyer that all conditions to the Future Funding under the relevant Purchased Asset Documents have been satisfied in all material respects (which can be made via a representation in the Amended and Restated Confirmation) and (v) Buyer shall be satisfied in its commercially reasonable discretion that all conditions to the Future Funding under the relevant Purchased Asset Documents have been satisfied. Buyer shall transfer cash to Seller as provided in this Section 3(k) (and in accordance with the wire instructions provided by Seller and subject to the provisions of Section 7(a)) on the date requested by Seller, which date shall be no earlier than five (5) Business Days following Seller’s written request. In connection with any funding of a Future Funding Advance pursuant to this Section 3(k), Buyer and Seller shall enter into an Amended and Restated Confirmation for the applicable Transaction to set forth the new Purchase Price for such Purchased Asset and any other necessary modifications to the terms set forth on the existing Confirmation. Notwithstanding anything to the contrary herein, Buyer shall not be obligated to make any Future Funding Advance unless Seller has previously or simultaneously with Buyer’s funding of a Future Funding Advance funded or caused to be funded the Future Funding (including with the proceeds of Buyer’s Future Funding Advance) to the Mortgagor (or to an escrow agent or as otherwise directed by the underlying Mortgagor) in respect of such Purchased Asset.
 
(l)          If, on any Business Day during the Availability Period, the Maximum Purchase Price of any Purchased Asset is greater than the outstanding Purchase Price for such Purchased Asset (an “Available Purchase Price”), then Seller may submit to Buyer a request that Buyer transfer cash to Seller in an amount not to exceed such Available Purchase Price (an “Available Purchase Price Advance”); provided that in no event shall (x) Seller submit more than two (2) requests for an Available Purchase Price Advance in any one (1) month period or (y) any Available Purchase Price Advance be in an amount less than $1,000,000.  It shall be a condition
 
38
to Buyer’s obligation to make any Available Purchase Price Advance that (i) as of the funding of such Available Purchase Price Advance, no Cash Sweep Period Trigger Event, Default or Event of Default has occurred and is continuing or would result from the funding of such Available Purchase Price Advance, (ii) the funding of the Available Purchase Price Advance would not cause the Outstanding Facility Amount to exceed the Maximum Facility Amount and (iii) Seller deposit the Replenishment Amount (if any) into the Reserve Account so that the balance of the Reserve Account is no less than the Minimum Balance Amount as of the funding date in accordance with Section 5(f). Buyer shall transfer cash to Seller as provided in this Section 3(l) (and in accordance with the wire instructions provided by Seller and subject to the provisions of Section 7(a)) on the date requested by Seller, which date shall be no earlier than five (5) Business Days following Seller’s written request. In connection with any funding of an Available Purchase Price Advance pursuant to this Section 3(l), Buyer and Seller shall enter into an Amended and Restated Confirmation for the applicable Transaction to set forth the new Purchase Price for such Purchased Asset.
 
(m)        Seller may, from time to time, upon written notice to Buyer at least thirty (30) days prior to the effective date thereof, permanently reduce in part the Maximum Facility Amount; provided that in no event shall the Outstanding Facility Amount exceed the Maximum Facility Amount after giving effect to such reduction.
 
4.
CASH SWEEP PERIOD
 
(a)         If, on any Business Day, (x) the Facility Leverage Ratio Test is not satisfied or (y) any Extension Minimum Debt Yield Test or any Extension Maximum LTV Test with respect to any Purchased Asset is not satisfied (each, a “Cash Sweep Period Trigger Event”), Buyer shall notify Seller of such Cash Sweep Period Trigger Event (such notice, a “Cash Sweep Period Trigger Event Notice”). Seller may cure such Cash Sweep Period Trigger Event by exercise of one or more of the following options: (i) repurchasing one or more Purchased Assets, (ii) making a payment to Buyer in reduction of the outstanding Purchase Price of any Purchased Asset in an amount sufficient to cure such Cash Sweep Period Trigger Event (including, without limitation, pursuant to Section 5(c)), (iii) delivering to Buyer (or Buyer ordering) an updated Appraisal of one or more Purchased Assets, at Seller’s expense, showing that such Cash Sweep Period Trigger Event is cured, (iv) during the Availability Period, substituting any affected Purchased Asset with one or more other Eligible Asset(s) and paying any related breakage costs pursuant to Section 3(h) to Buyer or (v) during the Availability Period, selling additional Purchased Asset(s) to Buyer in accordance with Section 3(b).  In connection with any substitution of an Eligible Asset pursuant to Section 4(a)(iv), Buyer and Seller shall enter into a new Confirmation for the applicable Transaction to set forth any information for the new Eligible Asset(s) and any other necessary modifications to the terms set forth in the existing Confirmation.
 
(b)         If, within ten (10) Business Days of Seller’s receipt of notice of a Cash Sweep Period Trigger Event, Seller has not cured such Cash Sweep Period Trigger Event, a cash sweep period shall commence on such tenth (10th) Business Day following notice of a Cash Sweep Period Trigger Event and end upon (i) Seller’s cure of the related Cash Sweep Period Trigger Event(s), and (ii) Buyer’s receipt of confirmation from the Reserve Account Bank that the balance of the Reserve Account is no less than the Minimum Balance Amount (such period, a “Cash Sweep Period”).  During a Cash Sweep Period, Income shall be applied to cure any related
 
39
Cash Sweep Period Trigger Event in accordance with Section 5(c) and Buyer shall be permitted to withdraw from the Reserve Account an amount necessary to cure any Cash Sweep Period Trigger Event.
 
(c)          The failure of Buyer, on any one or more occasions, to exercise its rights under this Section 4, shall not change or alter the terms and conditions to which this Agreement is subject or limit the right of Buyer to do so at a later date. Seller and Buyer each agree that a failure or delay by Buyer to exercise its rights under this Section 4 shall not limit or waive Buyer’s rights under this Agreement or otherwise existing by law or in any way create additional rights for Seller.  Notwithstanding the foregoing, Buyer retains the right, in its sole discretion, to notify Seller of a Cash Sweep Period Trigger Event in accordance with the provisions of this Section 4.
 
5.
INCOME PAYMENTS AND PRINCIPAL PAYMENTS
 
(a)          Seller, Account Bank and Buyer shall enter into the Account Control Agreement and the Repo Collection Account shall be established by Seller at Account Bank on or prior to the initial Purchase Date hereunder.  The Reserve Account shall be established at the Reserve Account Bank.  Buyer shall have sole dominion and control over the Reserve Account and the Repo Collection Account.  All Income (other than Servicer Income) in respect of the Purchased Assets shall be deposited directly into the Servicer Account and transferred into the Repo Collection Account in accordance with the terms of the related Servicing Agreement. All such amounts transferred into the Repo Collection Account shall be remitted by Account Bank in accordance with the applicable provisions of Sections 5(c) and 5(d) of this Agreement.  So long as no Event of Default shall have occurred and be continuing, prior to Buyer’s delivery of any distribution instructions to Account Bank, Buyer shall provide such distribution instructions to Seller for its review and confirmation.
 
(b)          If a Mortgagor, servicer, borrower or other obligor forwards any Income (other than Servicer Income) with respect to a Purchased Asset to Seller or any of its Affiliates rather than directly to the Servicer or the Repo Collection Account, Seller shall (i) make commercially reasonable efforts to cause such Mortgagor, servicer, borrower or other obligor to forward such amounts directly to Servicer or the Repo Collection Account, (ii) hold such amounts in trust for the benefit of Buyer and (iii) within two (2) Business Days of Seller’s receipt, deposit in the Repo Collection Account any portion of such amounts constituting Income (other than Servicer Income).
 
(c)          From the Closing Date, so long as no Event of Default shall have occurred and be continuing, all Income in respect of the Purchased Assets received by Servicer during each Collection Period and on deposit in the Repo Collection Account on the Remittance Date shall be applied by Account Bank on the related Remittance Date in the following order of priority:
 

 (i)
first, to remit to (a) Custodian an amount equal to any accrued and unpaid custodial fees and expenses and (b) Account Bank and Servicer an amount equal to the depository fee and any unpaid Qualified Servicing Expenses (to the extent not retained by Servicer), if any, respectively, due and payable on such Remittance Date;
 
40

 (ii)
second, to remit to Buyer an amount equal to the Price Differential which has accrued and is outstanding in respect of all Purchased Assets as of such Remittance Date;
 

 (iii)
third, to remit to Buyer an amount equal to any unpaid fees, expenses and indemnity amounts due from and payable by Seller under the Program Documents;
 

 (iv)
fourth, to remit to Buyer, with respect to any Purchased Asset for which a Principal Payment was received, subject to clause eighth below, an amount equal to the amount of such Principal Payment multiplied by the related Purchase Price Percentage, to be applied to reduce the outstanding Purchase Price of such Purchased Asset (it being understood and agreed that such amount may only be a portion of the outstanding Purchase Price with respect to such Purchased Asset);
 

 (v)
fifth, to Buyer, the Replenishment Amount (after giving effect to any reductions of the Purchase Price and the Purchased Assets pursuant to clause eighth below, as applicable, on such date); provided, that Buyer shall cause the Replenishment Amount to be deposited into the Reserve Account;
 

 (vi)
sixth, during any Cash Sweep Period, to Buyer, any remaining amounts to cure any Cash Sweep Period Trigger Event, such amounts to be applied to reduce the outstanding Purchase Price of all Purchased Assets on a pro rata basis unless otherwise mutually agreed upon by Buyer and Seller;
 

 (vii)
seventh, during any Concentration Limit Breach Period, to Buyer, any remaining amounts to be applied to reduce the Purchase Price of one or more Purchased Assets as determined by Seller toward the remediation of the breach of any Concentration Limit Test;
 

 (viii)
eighth, so long as no Cash Sweep Period or Concentration Limit Breach Period is then in effect, at Seller’s election, the amount of any Principal Payment required to be applied to reduce the Purchase Price with respect to the related Purchased Asset pursuant to clause fourth may be reduced by an amount determined by Seller as long as, after giving effect to the application of such reduced amount of Principal Payment, the Purchase Price with respect to such Purchased Asset does not exceed the Maximum Purchase Price with respect thereto (after giving effect to the reduction of the Purchase Price resulting from the Principal Payment for such Purchased Asset) (the amount of such reduction to the Principal Payment, the “Excess Prepayment Amount”), which Excess Prepayment Amount may be retained by Seller (to the extent that any portion of such Excess Prepayment Amount is not required to satisfy the Replenishment Amount under clause fifth above) or used by Seller to prepay the Purchase Price of
 
41
one or more Purchased Assets in such amounts as determined by Seller in its sole discretion; and
 

 (ix)
ninth, to remit to Seller the remainder, if any.
 
(d)          At any time that an Event of Default shall have occurred and be continuing, all Income in respect of the Purchased Assets received by Servicer during each Collection Period and on deposit in the Repo Collection Account on the Remittance Date shall be applied by Account Bank on the related Remittance Date in the following order of priority:
 

 (i)
first, to remit to (a) Custodian an amount equal to any accrued and unpaid custodial fees and expenses and (b) Account Bank and Servicer an amount equal to the depository fee and any unpaid Qualified Servicing Expenses (to the extent not retained by such Servicer), if any, respectively, due and payable as of such Remittance Date;
 

 (ii)
second, to remit to Buyer an amount equal to the Price Differential which has accrued and is outstanding in respect of all Purchased Assets as of such Remittance Date;
 

 (iii)
third, to remit to Buyer an amount equal to any unpaid fees, expenses and indemnity amounts due from and payable by Seller under the Program Documents;
 

 (iv)
fourth, to make a payment to Buyer on account of the Repurchase Price of the Purchased Assets until the Repurchase Price for all Purchased Assets has been reduced to zero; and
 

 (v)
fifth, to remit to Seller the remainder, if any.
 
(e)          All Underlying Purchased Asset Reserves must be held and applied by Servicer in accordance with Section 29 hereof, the Servicing Agreement and the applicable Purchased Asset Documents.
 
(f)          Seller shall establish the Reserve Account on or before the initial Purchase Date hereunder, which account shall at all times, subject to this Section 5(f), have a balance at least equal to the Minimum Balance Amount.  Seller shall deposit or cause to be deposited in the Reserve Account the amount necessary to cause the Reserve Account balance to equal the Minimum Balance Amount (the “Replenishment Amount”) (i) in connection with each new Purchased Asset, on or before the Purchase Date of such new Purchased Asset and (ii) in connection with any Future Funding Advance or Available Purchase Price Advance, on or before the date of such Future Funding Advance or Available Purchase Price Advance. In connection with any withdrawal from the Reserve Account to cure any Cash Sweep Period Trigger Event in accordance with Section 4(b), the Replenishment Amount shall be deposited into the Reserve Account pursuant to Section 5(c)(v).  If, at any time, amounts on deposit in the Repo Collection Account are insufficient to pay the amounts described in Section 5(c)(ii) or Section 5(c)(vi), Buyer shall (x) direct Reserve Account Bank to remit funds from the Reserve Account to the Repo Collection Account in an amount necessary to pay any such amounts to Buyer on such date
 
42
and (y) notify Seller of the Replenishment Amount (the “Replenishment Amount Notice”). Seller shall deposit or cause to be deposited in the Reserve Account the Replenishment Amount on or before the date that is two (2) Business Days following its receipt of the Replenishment Amount Notice (or such greater number of Business Days, in any event not to exceed ten (10) Business Days, as Seller requires to request from one or more of its Affiliates the necessary capital in order to make such deposit or cause such deposit to made in the Reserve Account, so long as by the fifth (5th) Business Day after its receipt of the Replenishment Amount Notice, Seller delivers to Buyer a certification from Seller that Seller has requested from one or more of its Affiliates such necessary capital).  During the continuance of an Event of Default, Buyer may apply any amounts on deposit in the Reserve Account in its sole and absolute discretion).  If, at any time, amounts on deposit in the Reserve Account exceed the amount required to be on deposit therein pursuant to this Section 5(f), then, so long as no Event of Default is then continuing, upon written request from Seller to Buyer, Buyer shall direct Reserve Account Bank to remit funds from the Reserve Account to Seller in the amount of such excess.
 
6.
SECURITY INTEREST
 
(a)          Other than for U.S. federal, state and local income and franchise tax purposes, Buyer and Seller intend that all Transactions hereunder be sales to Buyer of the Purchased Assets and not loans from Buyer to Seller secured by the Purchased Assets.  However, in the event any such Transaction is deemed to be a loan, Seller hereby pledges all of its right, title, and interest in, to and under, and grants a first priority lien on, and security interest in, all of its right, title, and interest in the following property, whether now owned or hereafter acquired, now existing or hereafter created and wherever located to Buyer to secure the payment and performance of all amounts or obligations owing to Buyer pursuant to this Agreement and the other Program Documents:
 

 (i)
the Purchased Assets, Servicing Agreements, Servicing Records, Servicing Rights, all insurance relating to the Purchased Assets, Underlying Purchased Asset Reserves, any interest rate protection agreements entered into by a Mortgagor in connection with any Purchased Asset, and collection and escrow accounts relating to the Purchased Assets;
 

 (ii)
all “general intangibles”, “accounts”, “instruments” and “chattel paper” as defined in the UCC relating to or constituting any and all of the foregoing; and
 

 (iii)
all replacements, substitutions or distributions on or proceeds, payments, Income (other than Servicer Income) and profits of, and records (but excluding any financial models or other proprietary information) and files relating to any and all of any of the foregoing.
 
(b)          For purposes of the grant of the security interest pursuant to Section 6 of this Agreement, this Agreement shall be deemed to constitute a security agreement under the New York Uniform Commercial Code (the “UCC”).  Buyer shall have all of the rights and may exercise all of the remedies of a secured creditor under the UCC and the other laws of the State
 
43
of New York.  In furtherance of the foregoing, (a) Buyer, at Seller’s sole cost and expense, shall cause to be filed in such locations as may be necessary to perfect and maintain perfection and priority of the security interest granted hereby, UCC financing statements and continuation statements, and (b) Seller shall from time to time take such further actions as may be requested by Buyer to maintain and continue the perfection and priority of the security interest granted hereby.  Seller hereby irrevocably authorizes Buyer at any time and from time to time to file in any filing office in any jurisdiction any initial financing statements and amendments and continuations thereto that (1) indicate the Collateral (i) as all assets of Seller whether now owned or hereafter acquired, now existing or hereafter created and wherever located, including all accessions thereto and products and proceeds thereof or words of similar effect, regardless of whether any particular asset comprised in the Collateral falls within the scope of Article 9 of the UCC in such jurisdiction, or (ii) as being of an equal or lesser scope or with greater detail, and (2) contain any other information required by part 5 of Article 9 of the UCC for the sufficiency or filing office acceptance of any financing statement or amendment, including whether Seller is an organization, the type of organization and any organization identification number issued to Seller.
 
(c)          Buyer’s security interest in a Purchased Asset, the Collateral as a whole and the Pledged Collateral, shall terminate only upon (i) in the case of an individual Purchased Asset and the Collateral related thereto, the repurchase thereof in accordance with the terms of this Agreement and (ii) in the case of the Collateral as a whole and Pledged Collateral, the repayment in full of all Repurchase Obligations (other than any obligations that expressly survive termination of this Agreement and that are not then due and payable) and the termination of this Agreement and the other Program Documents.  Upon any such termination, the security interest in the Collateral and the Pledged Collateral, as applicable, shall automatically be released and Buyer shall deliver to Seller such UCC termination statements and other release documents as may be commercially reasonable and return the Purchased Assets and all Purchased Asset Documents and the Pledged Collateral (or approve the return by the Custodian, as applicable) to Seller or Seller’s designee.
 
(d)          Seller hereby pledges to Buyer as security for the performance by Seller of its obligations under the Transactions and the Program Documents and hereby grants to Buyer a first priority security interest in all of Seller’s right, title and interest in and to the Repo Collection Account and the Reserve Account and all amounts and property from time to time on deposit therein and all replacements, substitutions or distributions on or proceeds, payments and profits of, and records and files relating to the Repo Collection Account and the Reserve Account, as applicable.
 
(e)          In order to further secure the Repurchase Obligations hereunder, Seller hereby grants, assigns and pledges to Buyer a fully perfected first priority security interest in all of Seller’s right, title and interest in the Mezzanine Loans, all replacements, substitutions or distributions on, or proceeds, payments and profits of, and records and files relating thereto, and all related Servicing Rights, all documentation governing the Mezzanine Loans, any right or interest in or to property of any kind whatsoever, whether real, personal, or mixed and whether tangible or intangible, securing the Mezzanine Loans, all insurance policies and insurance proceeds relating to any Mezzanine Loans or the related Mortgaged Property, including, but not limited to, any payments or proceeds under any related primary insurance, hazard insurance,
 
44
Income, interest rate protection agreements, accounts (including any interest of Seller in escrow accounts) and any other contract rights, instruments, accounts, payments, rights to payment (including payments of interest or finance charges), general intangibles and other assets relating to the Mezzanine Loans (including, without limitation, any other accounts) or any interest in Mezzanine Loans, and any proceeds (including the related securitization proceeds) and distributions with respect to any of the foregoing and any other property, rights, title or interests as are specified on a Confirmation and/or Trust Receipt with respect to the Mezzanine Loans, in all instances, whether now owned or hereafter acquired, now existing or hereafter created.
 
7.
PAYMENT, TRANSFER AND CUSTODY
 
(a)        On the Purchase Date for each Transaction, ownership of the related Purchased Assets shall be transferred to Buyer or its designee (including Custodian) against the simultaneous transfer of the Purchase Price to an account of Seller specified in the Confirmation relating to such Transaction.
 
(b)          On or before such Purchase Date, Seller shall deliver or cause to be delivered to Buyer or its designee the Purchased Asset Schedule.  In connection with each sale, transfer, conveyance and assignment of a Purchased Asset, on or prior to each Purchase Date with respect to such Purchased Asset, Seller shall deliver or cause to be delivered and released to Custodian the documents (collectively, the “Purchased Asset File”) set forth below in this Section 7(b) and pertaining to each of the Purchased Assets identified in the Purchased Asset Schedule delivered therewith (provided that, in connection with the delivery of recordable documents prior to such documents having been recorded, Seller shall deliver a certificate of an Authorized Representative of Seller certifying that the originals of such documents have been submitted for recordation in the appropriate governmental recording office of the jurisdiction where the Mortgaged Property is located); provided, however, that, and notwithstanding anything to the contrary set forth in this Section 7(b),  with respect to any New Asset proposed to be purchased as a Wet Purchased Asset, (i) Buyer agrees to use its best efforts to purchase such New Asset as a Wet Purchased Asset, so long as (A) Buyer has previously purchased two Purchased Assets that were not Wet Purchased Assets and (B) Seller has or has caused a Bailee to execute and deliver to Buyer (via electronic mail) a Bailee Letter and Bailee Trust Receipt in connection with such Wet Purchased Asset on or before the proposed Purchase Date for such Wet Purchased Asset and (ii) Seller shall deliver (or cause to be delivered) the Purchased Asset File in respect of such Wet Purchased Asset to Custodian by 5:00 p.m. (New York time) on the third (3rd) Business Day after the related Purchase Date:
 

 (i)
Other than in connection with a Participation Interest, the original executed Mortgage Note (and, if applicable, one or more allonges) bearing all intervening endorsements (including those reflecting a complete, unbroken chain from the applicable Originator to Seller), endorsed “Pay to the order of [_____________________] without recourse” and signed in the name of Seller by an authorized Person (in the event that the Purchased Asset was acquired by Seller in a merger, the signature must be in the following form:  “KREF Lending IX LLC, successor by merger to [name of predecessor]”; or in the event that the Purchased Asset was acquired or originated by Seller while doing business under another name,
 
45
the signature must be in the following form:  “KREF Lending IX LLC, formerly known as [previous name]”) or a lost note affidavit in substantially the form set forth on Exhibit N-1 or N-2, as applicable.
 

 (ii)
The original or a copy of each and every executed predecessor note to the Mortgage Note and the original of any and all historic amendments, modifications, spreaders, splitters, restatements and/or consolidations of such note(s), reflecting a complete, unbroken chain from the original lender to the applicable Originator (if any).
 

 (iii)
An original or copy of any guarantee executed in connection with the Mortgage Note (if any).
 

 (iv)
The original or certified (as set forth in the proviso to Section 7(b) and the last paragraph of this Section 7) copy of the Mortgage with evidence of recording thereon.
 

 (v)
The original or certified (either by the county recorder or as set forth in the proviso to Section 7(b) and the last paragraph of this Section 7) copy of each and every executed predecessor mortgage to the Mortgage, including, without limitation, the original or certified copy of any and all historic amendments, modifications, spreaders, splitters, restatements and/or consolidations of such mortgage(s), reflecting a complete, unbroken chain from the original lender to the applicable Originator (if any).
 

 (vi)
The originals or certified (as set forth in the proviso to Section 7(b) and the last paragraph of this Section 7) copies of all assumption, modification, consolidation or extension agreements with evidence of recording thereon (if related to a recorded document).
 

 (vii)
The original Assignment of Mortgage in blank for each Purchased Asset, (other than a Participation Interest) in form and substance acceptable for recording in the relevant jurisdiction, and in substantially the form set forth on Exhibit O and signed in the name of Seller (in the event that the Purchased Asset was acquired by Seller in a merger, the signature must be in the following form:  “KREF Lending IX LLC, successor by merger to [name of predecessor]”; or in the event that the Purchased Asset was acquired or originated by Seller while doing business under another name, the signature must be in the following form: “KREF Lending IX LLC, formerly known as [previous name]”).
 

 (viii)
The originals or copies of all intervening assignments of mortgage, if any, (and other than with respect to a Participation Interest) evidencing a complete chain of title from the applicable Originator with evidence of recording thereon.
 

 (ix)
An original or copy of the attorney’s opinion of title and abstract of title or the original or copy of the mortgagee title insurance policy, or if the
 
46
mortgagee title insurance policy (including any applicable endorsements) has not been issued, a copy of the irrevocable marked commitment to issue the same (including any applicable endorsements).
 

 (x)
An original or copy of any security agreement, chattel mortgage or equivalent document executed in connection with the Purchased Asset (if any).
 

 (xi)
An original or copy of any assignment of leases and rents, if any, (and other than with respect to a Participation Interest), together with all intervening assignments of assignment of leases and rents evidencing a complete chain of title from the applicable Originator, with evidence of recording thereon (or certified by Seller as set forth in the proviso to Section 7(b) and the last paragraph of this Section 7).
 

 (xii)
The original assignment of assignment of leases and rents in blank for each Purchased Asset (other than a Participation Interest), if applicable, in form and substance acceptable for recording in the relevant jurisdiction, and in substantially the form set forth on Exhibit O and signed in the name of Seller (in the event that the Purchased Asset was acquired by Seller in a merger, the signature must be in the following form:  “KREF Lending IX LLC, successor by merger to [name of predecessor]”; or in the event that the Purchased Asset was acquired or originated by Seller while doing business under another name, the signature must be in the following form: “KREF Lending IX LLC, formerly known as [previous name]”).
 

 (xiii)
Other than with respect to a Participation Interest, a copy of the UCC financing statements and all necessary UCC continuation statements, in each case, with evidence of filing thereon or copies thereof certified by Seller (certified by Seller as set forth in the proviso to Section 7(b) and the last paragraph of this Section 7) that such financing statements have been sent for filing, and UCC assignments prepared by Seller in blank, which UCC assignments shall be in form and substance acceptable for filing in the applicable jurisdictions.
 

 (xiv)
An original or copy of the environmental indemnity agreement or similar guaranty or indemnity (if any).
 

 (xv)
An original or copy of the loan agreement, intercreditor agreement, lockbox agreement, cash management agreement, deposit account agreement, deposit account control agreement, and construction contract (in each case, if any).
 

 (xvi)
Other than in connection with a Participation Interest, an original omnibus assignment in blank of all other agreements and instruments relating to the Purchased Asset (if any).
 

 (xvii)
[Intentionally omitted].
 
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 (xviii)
A copy of a Survey (if any).
 

 (xix)
[Intentionally omitted].
 

 (xx)
A copy of any Mortgagor’s, and, if applicable, any guarantor’s opinion of counsel (if any).
 

 (xxi)
A copy of any assignment of permits, contracts and other material agreements (if any).
 

 (xxii)
A copy of the collateral assignment of interest rate cap agreement or an interest rate swap or similar arrangement (if any).
 

 (xxiii)
The original of all letters of credit issued and outstanding as security for such Purchased Asset (if any) (except that copies may be delivered in connection with a Participation Interest), with any modifications, amendments or endorsements necessary to permit Buyer to draw upon them when and if it is contractually permitted to do so pursuant to this Agreement (if any).
 

 (xxiv)
Copies or originals of any power of attorney related to the Purchased Asset.
 

 (xxv)
Copies or originals (including recorded copies or originals, as applicable) of any subordination, non-disturbance and attornment agreements or similar instruments related to the Mortgaged Property.
 

 (xxvi)
Copies or originals of any ground lease and/or ground lease estoppels received by Seller or the applicable Originator and related to the Mortgaged Property.
 

 (xxvii)
Copies or originals of all other material letters, agreements, instruments, certificates or other documents evidencing, guaranteeing, insuring, securing or modifying the Purchased Asset.
 

 (xxviii)
The original Redirection Letter.
 

 (xxix)
With respect to any Participation Interest, the original Participation Certificate and a copy of the related participation agreement.
 

 (xxx)
With respect to any Participation Interest, any related intercreditor agreement or similar agreement.
 

 (xxxi)
Any additional documents and information required to be delivered to Buyer or its designee (including Custodian) pursuant to this Agreement.
 

 (xxxii)
With respect to any Mezzanine Loan related to a Purchased Asset:
 
48

 (A)
the original executed Mezzanine Note bearing all intervening endorsements into Seller, and further endorsed by Seller “Pay to the order of __________ without recourse” and signed in the name of Seller, or a lost note affidavit attached thereto;
 

 (B)
the original or a copy of any loan agreement, guarantee or indemnity executed in connection with the Mezzanine Loan;
 

 (C)
the original or a copy of any intercreditor agreement executed in connection with the Mezzanine Loan;
 

 (D)
the original or a copy of any security agreement executed in connection with the Mezzanine Loan;
 

 (E)
copies of any assignment, assumption, modification, consolidation or extension made in respect of such Mezzanine Loan, or any document or agreement referred to in clause (C) above, with evidence of recording thereon (as appropriate), and evidencing a complete chain of assignment and transfer from the related Originator to Seller, as applicable;
 

 (F)
a copy of any UCC-1 financing statements filed in connection with such Mezzanine Loan and all necessary UCC-3 continuation statements, in either case with evidence of filing thereon and UCC-3 assignments prepared by Seller in blank;
 

 (G)
the original certificate(s) representing the pledged equity interests (if any);
 

 (H)
original stock powers relating to each pledged equity interest, executed in blank, if an original stock certificate is provided;
 

 (I)
any original letters of credit and originals or copies of interest rate cap or swap agreements relating to such Mezzanine Loan;
 

 (J)
the original omnibus assignment in blank, if any, signed in the name of Seller;
 

 (K)
the original or copy of the Eagle 9 insurance policy, if any;
 

 (L)
a copy of the power of attorney relating to such Mezzanine Loan, if any;
 

 (M)
a copy of the release letter relating to such Mezzanine Loan, if any.
 
Notwithstanding the foregoing, if the Mortgagor under each Purchased Asset or Servicer with respect to each Purchased Asset, as applicable, remits any sums required to be remitted to the holder of each Purchased Asset under the loan documents to Seller or any of its Affiliates,
 
49
Seller or its Affiliate shall hold such sums in trust for the benefit of Buyer and remit such sums, within two (2) Business Days of receipt, to Servicer for transfer to the Account Bank for deposit in the Repo Collection Account as set forth in Section 5 or as otherwise directed in the written notice signed by Seller and Buyer.
 
From time to time, Seller shall forward or cause Servicer to forward to Custodian additional original documents or additional documents evidencing any assumption, modification, consolidation or extension of a Purchased Asset approved in accordance with the terms of this Agreement, and upon receipt of any such other documents, Custodian shall hold such other documents as Custodian shall request pursuant to the Custodial Agreement.  For the avoidance of doubt, with respect to any documents which have been delivered or are being delivered to recording offices for recording and have not been returned to Seller in time to permit their delivery hereunder at the time required, in lieu of delivering unrecorded originals or copies of  documents, Seller shall deliver to Custodian a true copy thereof with an officer’s certificate certifying that such copy is a true, correct and complete copy of the original, which has been transmitted for recordation.  Seller shall deliver such recorded original documents (or copies thereof by electronic mail, if applicable) to Custodian promptly when they are received.  With respect to all Purchased Assets delivered by Seller to Custodian on behalf of Buyer, Seller shall execute an omnibus power of attorney substantially in the form of Exhibit F attached hereto irrevocably appointing Buyer its attorney-in-fact with full power following the occurrence and during the continuation of an Event of Default to (i) record the Assignment of Mortgage and assignment of assignment of leases and rents and (ii) take such other steps as may be reasonably necessary or desirable to enforce Buyer’s rights against such Purchased Assets and the related Purchased Asset Files and the Servicing Records.  Buyer shall deposit the Purchased Asset Files representing the Purchased Assets, or direct that the Purchased Asset Files be deposited directly, with Custodian.  The Purchased Asset Files shall be maintained in accordance with the Custodial Agreement.  Any Purchased Asset Files not delivered to Buyer or its designee (including Custodian) are and shall be held in trust by Seller or its designee for the benefit of Buyer as the owner thereof.  Seller or its designee shall maintain a copy of the Purchased Asset File.  The possession of the Purchased Asset File by Seller or its designee is at the will of Buyer for the sole purpose of servicing the related Purchased Asset, and such retention and possession by Seller or its designee is in a custodial capacity only.  The books and records (including, without limitation, any computer records or tapes) of Seller or its designee shall be marked appropriately to reflect clearly the sale of the related Purchased Asset to Buyer.  Seller or its designee (including Custodian) shall release its custody of the Purchased Asset Files only in accordance with written instructions from Buyer, unless such release is required as incidental to the servicing of the Purchased Assets, is in connection with a repurchase of any Purchased Asset by Seller or as otherwise required by law or in accordance with the Custodial Agreement.
 
(c)          Subject to automatic revocation upon the occurrence and during the continuance of an Event of Default as set forth below, and subject in all respects to Section 11(g) and the terms of the Servicing Agreement, Buyer hereby authorizes Seller to act as the “Lender” or, in the case of any Participation Interest, “Participant”, under the Purchased Asset Documents and to take (and to direct the Servicer to take, as applicable) such actions under the Purchased Asset Documents and to exercise such powers and perform such duties as are necessary under the Purchased Asset Documents to administer the Purchased Assets (including, without limitation, (i) entering into amendments, modifications and waivers to, under or in connection with the
 
50
Purchased Asset Documents, (ii) releasing and otherwise dealing with any collateral for such Purchased Asset, (iii) receiving all notices and deliveries delivered by the obligor(s) under the Purchased Asset Documents, (iv) consenting to or approving any matter which requires “Lender’s”  or, in the case of any Participation Interests, “Participant’s”, consent or approval under the Purchased Asset Documents, (v) administering all matters related to additional advances to be provided under any Purchased Asset Document, including, if applicable, making out of its own funds, any additional advances pursuant to the terms of the related Purchased Asset Documents, (vi) enforcement and related remedies under the Purchased Asset Documents and (vii) exercising all voting, consent and corporate rights with respect to the Purchased Assets), together with such powers as are reasonably incidental thereto).  Upon the occurrence of and during the continuance of an Event of Default, Seller’s authority to act as the “Lender” or, in the case of any Participation Interest, “Participant”, under the Purchased Asset Documents and to direct the Servicer to take actions with respect to the Purchased Assets pursuant to this Section 7(c) shall automatically terminate and be revoked.  So long as no Event of Default is then continuing, Buyer may not take any action in respect of the Purchased Assets and may not deal with the obligors under the Purchased Asset Documents in any way without the express consent of Seller.
 
8.
SALE, TRANSFER, HYPOTHECATION OR PLEDGE OF PURCHASED ASSETS
 
Other than for U.S. federal, state and local income and franchise tax purposes, title to all Purchased Assets shall pass to and vest in Buyer on the applicable Purchase Dates and, subject to the terms of the Program Documents and the Purchased Asset Documents, Buyer or its designee shall have free and unrestricted use of all Purchased Assets and be entitled to exercise all rights, privileges and options relating to the Purchased Assets as the owner thereof, including rights of subscription, conversion, exchange, substitution, voting, consent and approval, and to direct any servicer or trustee.  Subject to Section 19, Buyer or its designee may engage (at their own expense) in repurchase transactions with the Purchased Assets or otherwise sell, pledge, repledge, transfer, hypothecate, or rehypothecate (at their own expense) the Purchased Assets, all on terms that Buyer may determine but at all times in conformity with the terms and conditions of the Purchased Asset Documents and the Program Documents; provided, that (i) any such transaction, sale, pledge, repledge, transfer, hypothecation or rehypothecation shall be to a Qualified Assignee and not a Prohibited Transferee or an Affiliate of a Prohibited Transferee, (ii) no such transaction, sale, pledge, repledge, transfer, hypothecation or rehypothecation shall affect or relieve the obligations of Buyer to transfer the Purchased Assets to Seller on each applicable Repurchase Date free and clear of any pledge, Lien, security interest, encumbrance, charge or other adverse claim, or to transfer to credit or pay Income to, or apply Income to the obligations of Seller pursuant to Section 5 of this Agreement, (iii) Seller shall not be liable for any costs incurred by Buyer in connection with any transaction, sale, pledge, repledge, transfer, hypothecation or rehypothecation described in this Section 8, and (iv) no transaction, sale, pledge, repledge, transfer, hypothecation or rehypothecation described in this Section 8 shall otherwise affect  the rights, obligations and remedies of any party to this Agreement.
 
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9.
RECOURSE
 
The obligations of Seller from time to time to pay the Repurchase Price, the Price Differential, and all other amounts due and obligations owing under this Agreement are full recourse obligations of Seller.
 
10.
REPRESENTATIONS AND WARRANTIES OF SELLER
 
Seller represents and warrants to Buyer that as of the Closing Date, as of each Purchase Date for the purchase of any Purchased Assets by Buyer from Seller and, other than as expressly set forth in Section 10(h),  as of each date any Transaction is outstanding hereunder:
 
(a)          Organization.  Seller is duly formed, validly existing and in good standing under the laws and regulations of the state of Seller’s formation and is duly licensed, qualified, and in good standing in every state where such licensing or qualification is necessary for the transaction of Seller’s business, except where the failure to be so licensed and in good standing would not reasonably be expected to result in a Material Adverse Change.  Seller has the power to own and hold the assets it purports to own and hold, and to carry on its business as now being conducted and proposed to be conducted.  Seller is duly authorized and has the power to execute and deliver this Agreement, to enter into the Transactions contemplated hereunder and to perform its obligations under this Agreement and the other Program Documents, and it has taken all necessary action to authorize such execution, delivery and performance.
 
(b)          Due Execution; Enforceability; Transactions.
 

 (i)
The Program Documents have been duly executed and delivered by Seller for good and valuable consideration.  The Program Documents constitute the legal, valid and binding obligations of Seller, enforceable against Seller in accordance with their respective terms subject to bankruptcy, insolvency, and other limitations on creditors’ rights generally and to equitable principles.
 

 (ii)
Seller will engage in the Transactions contemplated hereunder as principal (or, if agreed in writing, in the form of an annex, exhibit or schedule hereto or otherwise, in advance of any Transactions by the other party hereto, as agent for a disclosed principal), and, as of the Closing Date, the person signing this Agreement on its behalf is duly authorized to do so on its behalf (or on behalf of any such disclosed principal).
 
(c)          Non-Contravention; Consents.  None of the execution, delivery and performance of the Program Documents, the consummation by Seller of the transactions contemplated by the Program Documents, including the Transactions contemplated hereunder (or any of them), nor compliance by Seller with the terms, conditions and provisions of the Program Documents (or any of them) will conflict with or result in a breach of any of the terms, conditions or provisions of (i) the organizational documents of Seller, (ii) any material contractual obligation by which Seller is bound or the rights related to which have been assigned to Seller or the obligations under which have been assumed by Seller or to which the assets of Seller are subject or constitute a default thereunder, or result thereunder in the creation or imposition of any lien upon
 
52
any of the assets of Seller, other than pursuant to the Program Documents, (iii) any judgment or order, writ, injunction, decree or demand of any court applicable to Seller, or (iv) any applicable Requirement of Law applicable to Seller.  Seller has obtained all necessary authorizations, licenses, permits and other consents from Governmental Authorities required in connection with this Agreement and the Transactions contemplated hereunder, to acquire, own and sell the Purchased Assets and for the performance of its obligations under the Program Documents, and such authorizations, licenses, permits and other consents are in full force and effect.
 
(d)        Litigation; Requirements of Law.  Except as otherwise disclosed by Seller to Buyer in writing from time to time, there is no action, suit, proceeding, investigation, or arbitration pending or, to the knowledge of Seller, threatened against Seller or Pledgor or any of their respective assets which if adversely determined, would reasonably be expected to result in any Material Adverse Change or would have a material adverse effect on the validity of the Purchased Assets.  Seller is in compliance in all material respects with all Requirements of Law.  Neither Seller nor Pledgor is in default in any material respect with respect to any judgment, order, writ, injunction, decree, rule or regulation of any arbitrator or Governmental Authority.
 
(e)         No Broker.  Seller has not dealt with any broker, investment banker, agent, or other Person (other than Buyer or an Affiliate of Buyer) who may be entitled to any commission or compensation in connection with the sale of Purchased Assets pursuant to any of the Program Documents.
 
(f)          Good Title to Purchased Assets.  Immediately prior to the purchase of any Purchased Asset by Buyer from Seller, Seller owned such Purchased Asset free and clear of any lien, encumbrance or impediment to transfer (including any “adverse claim” as defined in Section 8-102(a)(1) of the UCC), and Seller is the record and beneficial owner of and has good and marketable title to and the right to sell and transfer such Purchased Asset to Buyer and, upon transfer of such Purchased Asset to Buyer, Buyer shall be the owner of such Purchased Asset (other than for U.S. federal, state and local income and franchise tax purposes) free of any adverse claim, subject to the rights of Seller pursuant to the terms of this Agreement.  If contrary to the intention of the parties hereto, any Transaction is characterized as a secured financing of the related Purchased Assets, the provisions of this Agreement and the other Program Documents are effective to create in favor of Buyer a valid security interest in all rights, title and interest of Seller in, to and under the Collateral related to such Purchased Assets, and to the extent such security interest can be perfected by filing or by delivery to and possession by Custodian, Buyer shall have a valid, perfected first priority security interest in such Purchased Assets upon proper filing, or upon delivery to and possession by the Custodian in accordance with the Custodial Agreement, as the case may be.
 
(g)          No Default.  Except as otherwise disclosed by Seller to Buyer in writing, to Seller’s knowledge, (i) no Default or Event of Default has occurred and is continuing under or with respect to the Program Documents, and (ii) no event or circumstance is outstanding which would reasonably be expected to result in any Material Adverse Change.
 
(h)          Representations and Warranties Regarding the Purchased Assets; Delivery of Purchased Asset File.  Seller represents and warrants to Buyer that, as of each Asset-Level Test Date, each Purchased Asset sold in a Transaction hereunder, conforms to the applicable
 
53
representations and warranties set forth in Exhibit G-1 or Exhibit G-2, as applicable, in all material respects as applicable, except for Approved Exceptions.  It is understood and agreed that the representations and warranties set forth in Exhibit G-1 and Exhibit G-2 as modified by any Approved Exceptions shall survive delivery of the respective Purchased Asset File to Buyer or its designee (including Custodian) to the extent permitted by applicable law.  With respect to each Purchased Asset, the Mortgage Note, the Mortgage, the Assignment of Mortgage and any other documents required to be delivered under this Agreement and the Custodial Agreement for such Purchased Asset have been delivered to Buyer or Custodian or Bailee on its behalf except to the extent disclosed to and approved by Buyer.  Seller or its designee is in possession of a complete, true and accurate Purchased Asset File with respect to each Purchased Asset, except for such documents the originals of which have been delivered to Custodian or held by Bailee and except as disclosed to and approved by Buyer in writing.
 
(i)          Adequate Capitalization; No Fraudulent Transfer.  Seller has, as of the Purchase Date after giving effect to the Transactions, adequate capital for the normal obligations reasonably foreseeable in a business of its size and character and in light of its contemplated business operations.  After giving effect to each Transaction, Seller is generally able to pay, and as of the date hereof is paying, its debts as they come due.  After giving effect to each Transaction, Seller will not be insolvent within the meaning of 11 U.S.C. Section 101(32) or any successor provision thereto or, to its knowledge, any other insolvency laws of any jurisdiction relevant to any such determination in respect of Seller nor will Seller be made insolvent by virtue of Seller’s execution of or performance under any of the Program Documents within the meaning of the bankruptcy laws or the insolvency laws of any jurisdiction relevant to any such determination in respect of Seller.  Seller has not entered into any Program Document or any Transaction pursuant thereto in contemplation of insolvency or with intent to hinder, delay or defraud any creditor.
 
(j)           [intentionally omitted]
 
(k)          Ownership.  As of the date hereof, the direct, and to the extent depicted, the indirect, ownership interests in Seller, Guarantor, Pledgor and Originator are as set forth on the organizational chart attached as Exhibit A to the Fee Letter.
 
(l)           Organizational Documents.  Seller has delivered to Buyer certified copies of its organizational documents, together with all amendments thereto, if any.
 
(m)         No Encumbrances.  Subject to the terms of the Program Documents and except for Permitted Liens and Title Exceptions, there are (i) no outstanding rights, options, warrants or agreements on the part of Seller for a purchase, sale or issuance, in connection with the Purchased Assets, and (ii) no agreements on the part of Seller to issue, sell or distribute the Purchased Assets.
 
(n)          Investment Company.  None of Seller, Guarantor or Pledgor is an “investment company” or a company controlled by an “investment company” within the meaning of the Investment Company Act of 1940, as amended.  Seller is relying on the exclusion contained in Section 3(c)(5)(C) thereof although there may be additional exclusions or exemptions available
 
54
to Seller.  Seller is not a “covered fund” for purposes of the Volcker Rule under the Dodd-Frank Wall Street Reform and Consumer Protection Act.
 
(o)          Taxes.  Seller has filed or caused to be filed all U.S. federal, state and other Tax returns and reports that would be delinquent if  not filed on or before the date hereof and has paid all Taxes, assessments, fees and other charges levied or imposed upon it or its properties, income or assets by any Governmental Authority that are otherwise due and payable except (i) any Taxes, assessments, fees or other governmental charges that are being contested in good faith by appropriate proceedings diligently conducted and with respect to which adequate reserves are maintained  in accordance with GAAP or (ii) to the extent that the failure to do so could not reasonably be expected to have a material adverse effect on (a) the property, business, operations or financial condition of Seller, (b) the ability of Seller to perform its material obligations under any of the Program Documents to which it is a party, (c) the validity or enforceability of any Program Document or (d) the material rights and remedies of Buyer under any Program Document; no Tax liens have been filed against any of Seller’s assets other than Permitted Liens, if any, and  no claims are being asserted with respect to any such Taxes, fees or other charges that are not being contested in good faith in the manner described in the immediately preceding clause (i) of this Section 10(o) or that could reasonably be expected to result in a Material Adverse Change  with respect to Seller.  For U.S. federal and applicable state and local income and franchise tax purposes, Seller has been and is classified and reported as a “qualified REIT subsidiary” (as defined in Section 856(i) of the Code) or other “disregarded entity” whose existence is not separate from that of REIT, its sole beneficial owner.
 
(p)         ERISA.  Except as would not reasonably be expected to result in a Material Adverse Change, Seller does not sponsor, maintain, contribute to, or have any liability with respect to any Plans and does not make any contributions to or have any liability with respect to any Multiemployer Plans.  Seller does not have any ERISA Affiliates.
 
(q)          Judgments/Bankruptcy.  Except as disclosed in writing to Buyer, there are no judgments against Seller or, to Seller’s knowledge, Pledgor or Guarantor unsatisfied of record or docketed in any court located in the United States of America that would constitute a Default or Event of Default hereunder and no Insolvency Event has ever occurred with respect to Seller, Guarantor or Pledgor.
 
(r)         Full and Accurate Disclosure.  No information contained in the Program Documents executed and delivered by Seller, Guarantor or Pledgor, or any written statement furnished by or on behalf of Seller pursuant to the terms of the Program Documents (in each case, as modified or supplemented by other information so furnished), contains any untrue statement of a material fact or, to Seller’s knowledge, omits to state a material fact necessary to make the statements contained herein or therein not misleading in light of the circumstances under which they were made; provided that, with respect to projected financial information, Seller represents only that such information was prepared in good faith based upon assumptions believed to be reasonable at the time.
 
(s)          Financial Information.  All financial data concerning Seller and Guarantor that has been delivered by or on behalf of Seller and Guarantor to Buyer is true, complete and correct
 
55
in all material respects and has been prepared in accordance with GAAP to the extent applicable.  Since the delivery of such data.
 
(t)          Payment Instructions.  On or before the Purchase Date for each Purchased Asset, Seller has instructed the related Mortgagor, borrower or other obligor, as applicable, in writing to pay all amounts due under such Purchased Asset to Servicer.
 
(u)          Notice Address; Jurisdiction of Organization.  On the date of this Agreement, Seller’s address for notices is specified in Annex I hereto.  Seller’s jurisdiction of formation is Delaware.  The location where Seller keeps its books and records, including all computer tapes and records relating to the Collateral, is Seller’s address for notices specified in Annex I hereto or such other address as Seller may notify Buyer in writing from time to time pursuant to Section 17.
 
(v)          Material Adverse Change.          Since March 31, 2021, there has been no development or event which has resulted in a Material Adverse Change.
 
(w)          Sanctions; Anti-Corruption; Anti-Money Laundering Laws.
 

 (i)
None of Seller, any director, manager (including any managing member), officer, agent, of Seller, nor, to the knowledge of Seller, any employee of Seller or any person acting on behalf  of Seller that will act in any capacity in connection with or benefit from this Agreement, is an individual or entity that is, or is Owned or Controlled by, or is acting for or on behalf of, providing assistance, support, sponsorship or services of any kind for, Persons that are: (i) the subject/target of any financial, economic, or trade sanctions laws, regulations, rules, decisions, embargoes and/or restrictive measures imposed, administered or enforced by the Government of the United States, the United Nations Security Council, the European Union, Her Majesty’s Treasury of the United Kingdom, the Government of Japan, or other relevant sanctions authority (collectively, “Sanctions”), (ii) located, organized or resident in a Sanctioned Country or (iii) Sanctioned Persons.
 

 (ii)
Seller and its directors, managers (including any managing member), officers and employees and, to the knowledge of Seller, the agents of Seller are in compliance with all applicable Sanctions and with the Foreign Corrupt Practices Act of 1977, as amended, and the rules and regulations thereunder (the “FCPA”) and any other applicable anti-corruption law, in all material respects.  Seller is subject to policies and procedures designed to ensure continued compliance with applicable Sanctions, the FCPA and any other applicable anti-corruption laws.
 

 (iii)
Neither Seller nor any Person who (together with, in the case of a natural person, such person’s family members or trusts) holds any legal or beneficial interest in Seller, whether directly or indirectly:
 

 (A)
appears on any Government List;
 
56

 (B)
to Seller’s knowledge, has conducted business with or engaged in any transaction with any Person named on any Government List or any Person included in, owned by, Controlled by, acting for or on behalf of, providing assistance, support, sponsorship, or services of any kind to any of the Persons referred to or described in any Government List in contravention of applicable Requirements of Law;
 

 (C)
is a Person who has been determined by competent authority to be subject to the prohibitions contained in Presidential Executive Order No. 13224 (Sept. 23, 2001) or any other similar prohibitions contained in the rules and regulations of OFAC or in any enabling legislation or other Presidential Executive Orders in respect thereof;
 

 (D)
has been previously indicted for or convicted of any felony involving a crime or crimes of moral turpitude or a Patriot Act Offense; or
 

 (E)
is currently under investigation by any Governmental Authority for alleged criminal activity.
 
(x)         Proceeds.  No proceeds received by Seller in connection with any Program Document will be used in any manner that will violate Anti-Money Laundering Laws, OFAC Laws or Sanctions.
 
(y)         Beneficial Ownership Rule.  Seller is an entity that is organized under the laws of the United States or of any State and at least 51 percent of whose common stock or analogous equity interest is owned, directly or indirectly, by a Person whose common stock or analogous equity interests are listed on the New York Stock Exchange or the American Stock Exchange or have been designated as a NASDAQ National Market Security listed on the NASDAQ stock exchange and is excluded on that basis from the definition of Legal Entity Customer as defined in the Beneficial Ownership Rule.
 
(z)          Plan Assets. The assets of Seller do not constitute Plan Assets and transactions contemplated by this Agreement or any Program Document do not violate any law applicable to Seller that regulates investments of, or fiduciary obligations with respect to, governmental plans and that is similar to the provisions of Section 406 of ERISA or Section 4975 of the Code.
 
11.
NEGATIVE COVENANTS OF SELLER
 
On and as of the date hereof and each Purchase Date and until this Agreement is no longer in effect with respect to any Transaction, Seller shall not, without the prior written consent of Buyer:
 
(a)          Subject to Seller’s right to repurchase the Purchased Assets, engage in any action which would directly or indirectly materially impair or adversely affect Buyer’s title to the Purchased Assets;
 
57
(b)          transfer, assign, convey, grant, bargain, sell, set over, deliver or otherwise dispose of, or pledge or hypothecate, directly or indirectly, any interest in any Purchased Asset to any Person other than Buyer, or engage in repurchase transactions or similar transactions with respect to any Purchased Asset with any Person other than Buyer;
 
(c)          change its name or its jurisdiction of organization from the jurisdiction referred to in Section 10(u) unless it shall have provided Buyer fifteen (15) days’ prior written notice of such change;
 
(d)        create, incur or permit to exist any lien, encumbrance or security interest in or on any Purchased Asset, except for any (i) Liens created in favor of Buyer under this Agreement, (ii) Permitted Liens and (iii) Title Exceptions;
 
(e)         create, incur or permit to exist any lien, encumbrance or security interest in or on any of the other Collateral subject to the security interest granted by Seller pursuant to Section 6 of this Agreement, except for any (i) Liens created in favor of Buyer under this Agreement, (ii) Permitted Liens and (iii) Title Exceptions;
 
(f)           modify in any material respect (with the parties hereto agreeing that changing officers is not material) or terminate any of the organizational documents of Seller;
 
(g)         consent or assent to any Material Modification to any Purchased Asset without the prior written consent of Buyer in its sole and absolute discretion (unless the applicable Purchased Asset Documents impose a different standard of discretion on the lender or with respect to such Material Modification (including, without limitation, that such lender must act reasonably in its decision with respect to such Material Modification), in which case such different standard shall govern); provided that (i) Buyer agrees to respond to any request by Seller for approval of a Material Modification no later than five (5) Business Days after the submission by Seller of such request along with all information and documentation reasonably determined by Seller as being necessary for Buyer to evaluate such request (the “Request Date”), (ii) if Buyer fails to respond to such request within ten (10) Business Days of such Request Date, then Buyer shall be deemed to have consented to such Material Modification and (iii) if Seller enters into a Material Modification before obtaining the prior written consent of Buyer to enter into such Material Modification, then such action shall not, in and of itself, constitute a Default or Event of Default if (A) Seller determines, in its commercially reasonable discretion, that the failure to enter into such Material Modification would be materially adverse to Seller, Buyer or the Purchased Asset and (B) Seller repurchases the related Purchased Asset from Buyer pursuant to Section 3(c) within ten (10) Business Days from Seller’s receipt from Buyer of written notice denying Seller’s request for Buyer’s consent to such Material Modification within the period described in clause (ii) of the proviso to this Section 11(g).
 
(h)          admit any additional members in Seller, or permit the sole member of Seller to assign or transfer all or any portion of its membership interests in Seller other than pursuant to the terms of the Program Documents;
 
(i)           take any action, file any Tax return, or make any election inconsistent with the classification, treatment and reporting of Seller, for U.S. federal and applicable state and local
 
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income and franchise tax purposes, as a “qualified REIT subsidiary” (as defined in Section 856(i) of the Code) or other “disregarded entity” whose existence is not separate from that of REIT, its sole beneficial owner, including making an election under Section 301.7701-3(a) of the United States Treasury Regulations to be classified as an association taxable as a corporation for U.S. federal income tax purposes;
 
(j)          after the occurrence and during the continuation of any Default or any Event of Default, make any distribution, payment on account of, or set apart assets for, a sinking or other analogous fund for the purchase, redemption, defeasance, retirement or other acquisition of any Capital Stock of Seller, whether now or hereafter outstanding, or make any other distribution in respect thereof, either directly or indirectly, whether in cash or property or in obligations of Seller; provided, however, that nothing in this Section or Agreement shall restrict a distribution by Seller to REIT that is necessary for the REIT to comply with Section 857(a)(1) of the Code for a taxable year or to avoid the imposition of tax on REIT under Sections 857(b)(1), (b)(5) or 4981(a) of the Code.
 
(k)         except as would not reasonably be expected to result in a Material Adverse Change, establish, maintain, contribute to or have any liability (contingent or otherwise) with respect to any Plans or Multiemployer Plans;
 
(l)          send a Redirection Letter or otherwise instruct any Mortgagor or servicer, as applicable, to make any payment due on such Purchased Asset to any account other than the Repo Collection Account;
 
(m)         use, or permit its respective directors, officers, employees or agents to use, any Purchase Price paid by Buyer directly or indirectly (A) in furtherance of an offer, payment, promise to pay, or authorization of the payment or giving of money, or anything else of value, to any Person in violation of any Anti-Money Laundering Laws or OFAC Laws, (B) for the purpose of funding or financing any activities, business or transaction of or with any Sanctioned Person, or in any Sanctioned Country, in each case to the extent doing so would violate any Sanctions, or (C) in any other manner that would result in liability to any Person under any applicable Sanctions or result in the violation of any Anti-Money Laundering Laws, OFAC Laws or Sanctions; or
 
(n)         engage in, or permit any director, officer, employee, agent or other Person acting on behalf of Seller in any capacity in connection with or directly benefitting from this Agreement to engage in, or to conspire to engage in, any transaction that evades or avoids, or has the purpose of evading or avoiding, or attempts to violate, any of the prohibitions set forth in any Anti-Money Laundering Laws, OFAC Laws, Sanctions or that would breach any applicable laws, rules, or regulations pertaining to bribery or corruption (“Anti-Corruption Laws”), including the FCPA, the U.K. Bribery Act 2010, and any applicable law or regulation implementing the OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions.
 
(o)         become an entity deemed to hold Plan Assets or cause transactions contemplated by this Agreement or any Program Document to violate any law applicable to Seller that
 
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regulates investments of, or fiduciary obligations with respect to, governmental plans and that is similar to the provisions of Section 406 of ERISA or Section 4975 of the Code.
 
12.
AFFIRMATIVE COVENANTS OF SELLER
 
(a)         Seller shall promptly (and in any event within two (2) Business Days of obtaining knowledge thereof) notify Buyer of any Material Adverse Change; provided, however, that such notice shall not relieve Seller of its other  obligations under this Agreement.
 
(b)       Seller shall provide Buyer with copies of such documents as Buyer may reasonably request evidencing the truthfulness of the representations set forth in Section 10; provided that, Seller shall not be required to disclose (x) information regarding any direct or indirect shareholders of public shareholders of REIT or any holders of Capital Stock of less than twenty percent (20%) of the Capital Stock of Seller, Pledgor or Guarantor, or (y) to the extent disclosing the same would violate any confidentiality obligations of Seller, Pledgor, Guarantor or REIT.  Nothing contained in this Agreement or any Program Document (including this Section 12(b)) shall require Seller, Guarantor or any Affiliate of Seller or Guarantor to provide Buyer with copies of its tax returns.
 
(c)          Seller (i) shall defend the right, title and interest of Buyer in and to the Collateral against, and take such other action as is necessary to remove, all Liens, security interests, claims and demands of all Persons (other than security interests by or through Buyer, Permitted Liens and Title Exceptions) against the Purchased Assets or Collateral and (ii) shall, at Buyer’s request, take all action necessary to ensure that Buyer will have a first priority security interest in the Purchased Assets in the event such Transactions are recharacterized as secured financings.
 
(d)          Seller shall notify Buyer of the occurrence of any Default or Event of Default in each case of which Seller has actual knowledge (and the steps, if any, being taken to remedy it) as soon as possible but in no event later than two (2) Business Days after obtaining actual knowledge of such event.
 
(e)          Seller shall promptly (and in any event not later than two (2) Business Days following receipt or knowledge) deliver or cause Servicer to deliver to Buyer (i) any notice of the occurrence of an event of default (beyond all applicable notice and cure periods) under any Purchased Asset Document (it being understood that Seller shall consult with Buyer with respect to any remedies Seller intends to pursue in connection with any such event of default prior to or concurrently with pursuing such remedies, except to the extent that any such remedy needs, in the reasonable commercial judgement of Seller, to be exercised immediately or in an emergency situation), in which case Seller shall give Buyer notice thereof promptly thereafter and in no event later than two (2) Business Days thereafter, (ii) notice of the occurrence of any event that results in a Purchased Asset becoming a Mandatory Repurchase Asset, (iii) notice of the occurrence of any event that results in a Purchased Asset no longer being an Eligible Asset, (iv) notice of the occurrence of any Credit Event and (v) any other information with respect to any Purchased Asset as may be reasonably requested by Buyer from time to time and within Seller’s possession.
 
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(f)          Seller will permit Buyer or its designated representative (accompanied by Seller or a representative of Seller) to inspect Seller’s records with respect to the Collateral and the conduct and operation of its business related thereto upon reasonable prior written notice from Buyer (but no less than fifteen (15) Business Days prior notice) or its designated representative, at such reasonable times and with reasonable frequency (not to exceed once per calendar year absent the continuance of an Event of Default), and to make copies of extracts of any and all thereof, subject to the terms of any confidentiality agreement between Buyer and Seller and Requirements of Law, and if no such confidentiality agreement then exists between Buyer and Seller, Buyer and Seller shall act in accordance with customary market standards regarding confidentiality and Requirements of Law.  Buyer shall act in a commercially reasonable manner in requesting and conducting any inspection relating to the conduct and operation of Seller’s business.
 
(g)         At any time upon the reasonable request of Buyer, at the sole expense of Seller, Seller will promptly and duly execute and deliver to Buyer such further instruments and documents and take such further actions as Buyer may reasonably request for the purposes of obtaining or preserving the full benefits of this Agreement including the first priority security interest granted hereunder and of the rights and powers herein granted (including, among other things, filing such UCC financing statements as Buyer may request).  If any amount payable under or in connection with any of the Collateral shall be or become evidenced by any promissory note, other instrument or chattel paper, such note, instrument or chattel paper shall be promptly, and in any event within two (2) Business Days, delivered to Buyer, duly endorsed in a manner satisfactory to Buyer, to be held as Collateral pursuant to this Agreement, and the documents delivered in connection herewith.
 
(h)          Seller (or Servicer on its behalf) shall provide Buyer with the following financial and reporting information:
 

 (i)
Within sixty (60) days after the last day of each of the first three (3) calendar quarters in any fiscal year of Guarantor, Guarantor’s consolidated and unaudited balance sheet and income statement as of the end of such calendar quarter, in each case presented fairly in accordance with GAAP (subject to normal year-end audit adjustments) and accompanied by a compliance certificate in the form of Exhibit E hereto; provided that Seller shall not be required to separately deliver the foregoing if such financial reporting has been posted to the REIT’s publicly available website at www.KKRReit.com/investor-relations/sec-filings;
 

 (ii)
Within ninety (90) days after the last day of its fiscal year:
 

 (A)
the consolidated balance sheet and statement of equity of the REIT combined, which shall incorporate its consolidated Subsidiaries (including Seller and Guarantor) as at the end of such fiscal year, and the related combined consolidated statements of operations and cash flows for REIT which shall incorporate such consolidated Subsidiaries, in each case, audited by an independent certified public accountant of recognized national standing, which opinion
 
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shall not be qualified as to scope of audit or “going concern”, presented fairly in accordance with GAAP and accompanied by a compliance certificate in the form of Exhibit E hereto; provided that Seller shall not be required to separately deliver the foregoing if such financial reporting has been posted to the REIT’s publicly available website at www.KKRReit.com/investor-relations/sec-filings; and
 

 (B)
an unaudited consolidated balance sheet and income statement of the Guarantor as at the end of such fiscal year, certified by the chief executive officer, chief financial officer, treasurer or controller of Guarantor as fairly presenting the financial condition, results of operations, of the Guarantor in accordance with GAAP as at the end of, and for, such period.
 

 (iii)
Within sixty (60) days after the last day of each calendar quarter in any fiscal year, any and all (a) written information or reports with respect to the Purchased Assets and (b) operating statements, financial statements and occupancy status reports with respect to the Purchased Assets, in each case with respect to clause (a) and clause (b), delivered to and received by Seller from Mortgagor or any underling guarantor pursuant to the terms of the Purchased Asset Documents (including without limitation quarterly reports, sponsor’s business plan and any capex plan); provided that Seller’s obligation to deliver the foregoing information shall be deemed satisfied so long as Buyer has access to Seller’s “box site” or other electronic dataroom where such information is posted by Seller and Servicer;
 

 (iv)
Within thirty (30) calendar days of Buyer’s request (or forty-five (45) calendar days in the case that the related Mortgaged Property is a portfolio of properties), (A) not more frequently than once per year in the normal course, (B) upon the occurrence of a Credit Event and (C) in connection with the cure of a Cash Sweep Period Trigger Event, a new Appraisal with respect to the Mortgaged Property relating to the Purchased Asset subject to the event, in each case, at Seller’s expense; provided, that if Seller shall fail to deliver any new Appraisal pursuant to this Section 12(h)(iv), following Buyer’s request, Buyer shall have the right to obtain such Appraisal at Seller’s expense; provided further that Seller shall only be responsible for the cost and expense of any Appraisal ordered or requested by Buyer pursuant to and in accordance with this clause (iv) and, for the avoidance of doubt, any Appraisal provided to Buyer in connection with Buyer’s diligence prior to the related Purchase Date.
 

 (v)
On the Servicer Remittance Date, the Remittance Report (in the form attached as Exhibit D to the Servicer Notice and Acknowledgment);
 

 (vi)
[reserved]; and
 
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 (vii)
Any other report with respect to the Purchased Assets reasonably requested by Buyer to the extent such report is reasonably available to Seller.
 
(i)          Seller shall at all times comply in all material respects with all laws (including, without limitation, ERISA and any applicable environmental laws), ordinances, rules and regulations of any federal, state, municipal or other public authority having jurisdiction over Seller or any of its assets, and Seller shall do or cause to be done all things reasonably necessary to preserve and maintain in full force and effect its legal existence, and all licenses material to its business.
 
(j)          Seller shall at all times keep proper books of records and accounts in which full, true and correct entries shall be made of its transactions in accordance with GAAP and set aside on its books from its earnings for each fiscal year all such proper reserves in accordance with GAAP.
 
(k)          Seller shall observe, perform and satisfy all the terms, provisions, covenants and conditions required to be observed, performed or satisfied by it, and shall pay when due all out-of-pocket costs, fees and expenses required to be paid by it, under the Program Documents.  Seller shall pay and discharge all Taxes, levies, liens and other charges, if any, on its assets and on the Collateral that, in each case, in any manner would create any lien or charge upon the Collateral, except for any such Taxes as are being appropriately contested in good faith by appropriate proceedings diligently conducted and with respect to which adequate reserves have been provided in accordance with GAAP and excluding other Permitted Liens and Title Exceptions.
 
(l)          Seller shall advise Buyer in writing of any change in Seller’s name or organizational structure or the places where the books and records pertaining to the Purchased Assets are held not less than fifteen (15) Business Days prior to taking any such action.
 
(m)         Seller will maintain records with respect to the Collateral and the conduct and operation of its business with no less a degree of prudence than if the Collateral were held by Seller for its own account.
 
(n)          [intentionally omitted].
 
(o)          Seller is subject to policies and procedures designed to ensure compliance by Seller and its directors, officers, employees, and agents with applicable Sanctions and with the FCPA and any other applicable Anti-Corruption Laws.
 
(p)          Compliance with Anti-Money Laundering and OFAC Laws.
 

 (i)
Seller shall comply at all times with the requirements of all Anti-Money Laundering Laws.
 

 (ii)
Seller shall provide Buyer with any information regarding Seller, reasonably necessary for Buyer to comply with all Anti-Money Laundering Laws.
 
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 (iii)
Seller shall comply at all times with the requirements of all OFAC Laws in all material respects.
 

 (iv)
Seller shall not, nor shall Persons holding any legal or beneficial interest in Seller (whether directly or indirectly), conduct business with or engage in any transaction with any Person named in any Government List or any Person included in, owned by, Controlled by, acting for or on behalf of, providing assistance, support, sponsorship, or services of any kind to any of the Persons referred to or described in any Government List in violation of applicable Requirements of Law.
 

 (v)
If Seller obtains actual knowledge or receives any written notice that Seller or any Person holding any legal or beneficial interest whatsoever therein (whether directly or indirectly) is named on any Government List (such occurrence, an “OFAC Violation”), Seller shall promptly (i) give written notice to Buyer of such OFAC Violation and (ii) comply with all applicable Requirements of Law with respect to such OFAC Violation (regardless of whether the party included on the list of “Specially Designated Nationals and Blocked Persons” maintained by OFAC is located within the jurisdiction of the United States of America), including the OFAC Laws, and Seller hereby authorizes and consents to Buyer taking any and all steps Buyer deems necessary, in its sole but good faith discretion, to comply with all applicable Requirements of Law with respect to any such OFAC Violation, including the requirements of the OFAC Laws that are legally binding on Buyer (including the “freezing” and/or “blocking” of assets and reporting such action to OFAC as may be legally required on account of any actual or potential OFAC Violation).
 

 (vi)
The representations and warranties of Seller set forth in Section 10(w) hereof shall continue to be true and correct in all material respects.
 

 (vii)
Upon Buyer’s request from time to time (to be made not more frequently than once in any twelve (12) calendar month period), Seller shall deliver a certification confirming its compliance with the covenants set forth in this Section 12(p).
 
(q)          Seller shall promptly notify Buyer of any action, suit, proceeding, investigation, or arbitration pending or, to the best knowledge of Seller, threatened in writing against Seller, Guarantor, Pledgor or any of their respective assets in any federal or state court or before any Governmental Authority, which, if not cured or if adversely determined, would reasonably be expected to have a Material Adverse Change or would have a material adverse effect on the validity of the Purchased Assets.
 
(r)          Promptly following any change that would result in a change to the status of Seller as an excluded “Legal Entity Customer” under the Beneficial Ownership Rule, Seller shall execute and deliver to Buyer a Certification of Beneficial Owner(s) complying with the Beneficial Ownership Rule, in form and substance reasonably acceptable to Buyer.
 
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13.
SPECIAL PURPOSE ENTITY
 
Seller hereby represents and warrants to Buyer, and covenants with Buyer, that as of the date hereof and so long as any of the Program Documents shall remain in effect:
 
(a)          It was formed solely for the purpose of (i) originating, acquiring, holding, administering, financing, servicing, managing, enforcing, selling and disposing, directly and subject to this Agreement, the Purchased Assets and the other Collateral, assets being offered as Eligible Assets pursuant to this Agreement and any incidental property relating to any of the foregoing, (ii) engaging in the Transactions and (iii) performing its obligations under the Program Documents.
 
(b)          It is and intends to remain solvent and it has paid and will pay its debts and liabilities (including employment and overhead expenses) from its own assets as the same shall become due.
 
(c)           It has complied and will comply with the provisions of its certificate of formation and its limited liability company agreement.
 
(d)         It has done or caused to be done and will, to the extent under its control, do all things necessary to observe all limited liability company formalities and to preserve its existence.
 
(e)         It has maintained and will maintain all of its books, records, financial statements and bank accounts separate from those of its Affiliates, its members and any other Person, and it will file its own tax returns, if any, which are required by law (except to the extent consolidation is required under GAAP (in the case of financial statements) or has been elected or is mandatory under the Code or the tax law of any State (in the case of tax returns) or is required as a matter of law), provided, however, that Seller’s assets may be included in a consolidated financial statements and tax returns of Guarantor; provided, further, that, (i) an appropriate notation shall be made on such consolidated financial statement to indicate the separateness of Seller from Guarantor and to indicate that Seller’s assets and liabilities are not available to satisfy the debts and other obligations of Guarantor or any other Person and (ii) such assets shall also be listed on Seller’s own separate balance sheet.
 
(f)           (i) It has been, is and will be and at all times will hold itself out to the public as a legal entity separate and distinct from any other Person (including any Affiliate), (ii) shall correct any known misunderstanding regarding its status as a separate entity, (iii) shall conduct business in its own name, (iv) shall not identify itself as a division or part of any of its Affiliates, (v) shall maintain and utilize separate stationery, invoices and checks, and (vi) shall pay to any Affiliate that incurs costs for office space and administrative services that it uses, the amount of such costs allocable to its use of such office space and administrative services.
 
(g)           It has not owned and will not own any property or any other assets other than the Purchased Assets and the other Collateral, cash and interests in hedges, Eligible Assets that are to be offered as Purchased Assets or which have been repurchased, and incidental property and assets relating to any of the foregoing.
 
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(h)        It has not engaged and will not engage in any business other than the origination, acquisition, ownership, hedging, administering, financing, servicing, management, enforcement, sale and disposition of the Purchased Assets and other Collateral and any asset being offered as an Eligible Asset and incidental property and assets related to the foregoing, all in accordance with the applicable provisions of the Program Documents and Seller’s organizational documents.
 
(i)           It has not entered into, and will not enter into, any contract or agreement with any of its Affiliates, except upon terms and conditions that are substantially similar to those that would be available on an arm’s-length basis with Persons other than an Affiliate.
 
(j)          It has not incurred and will not incur any indebtedness or obligation, secured or unsecured, direct or indirect, absolute or contingent (including guaranteeing any obligation), other than (i) obligations under the Program Documents; (ii) obligations under the Purchased Asset Documents; and (iii) unsecured trade payables and other liabilities, contingent or otherwise, which are normal and incidental to the origination, acquisition, ownership, hedging, administering, financing, servicing, management, enforcement, sale and disposition of the Purchased Assets and other Collateral and any asset being offered as an Eligible Asset and incidental property and assets related to the foregoing (including, without limitation, unsecured trade payables in the ordinary course of its business which are either (x) no more than ninety (90) days past due or (y) to the extent that any trade payables are more than ninety (90) days past due, such trade payables do not exceed $250,000 and are being contested in good faith and for which adequate reserves are maintained).
 
(k)          It has not made and will not make any loans or advances (other than Eligible Assets) to any other Person, and shall not acquire obligations or securities of any member or any Affiliate of any member (other than in connection with the acquisition of the Eligible Assets) or any other Person.
 
(l)           It will maintain adequate capital for the normal obligations reasonably foreseeable in a business of its size and character and in light of its contemplated business operations; provided that the foregoing shall in no way be construed as requiring the contribution of capital to Seller by any direct or indirect holders of interests in Seller.
 
(m)          It shall not seek a Division with respect to itself.
 
(n)          It will not commingle its funds and other assets with those of any of its Affiliates or any other Person.
 
(o)          It has maintained and will maintain its assets in such a manner that it will not be costly or difficult to segregate, ascertain or identify its individual assets from those of any of its Affiliates or any other Person.
 
(p)          It has not held and will not hold itself out to be responsible for the debts or obligations of any other Person.
 
(q)          It shall not take any of the following actions without the affirmative vote of the Independent Manager: (i) permit its members to dissolve or liquidate Seller, in whole or in part; (ii) consolidate or merge with or into any other entity or convey or transfer all or substantially all
 
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of its properties and assets to any entity; or (iii) institute any proceeding to be adjudicated as bankrupt or insolvent, or consent to the institution of bankruptcy or insolvency proceedings against it, or file a petition or answer or consent seeking reorganization or relief under the Bankruptcy Code, or effect any similar procedure under any similar law, or consent to the filing of any such petition or to the appointment of a receiver, rehabilitator, conservator, liquidator, assignee, trustee or sequestrator (or other similar official) of Seller or of any substantial part of its property, or order the winding up or liquidation of its affairs, or make an assignment for the benefit of creditors, or admit in writing its inability to pay its debts generally as they become due, or take any action in furtherance of any of the foregoing.
 
(r)          It has no liabilities, contingent or otherwise, other than those normal and incidental to the origination, acquisition, ownership, hedging, financing, sale and disposition of the Purchased Assets and other Collateral and any asset being offered as an Eligible Asset and incidental property and assets related to the foregoing, except as contemplated by the Program Documents.
 
(s)           It has not maintained and shall not maintain any employees but shall be permitted to utilize employees of its Affiliates pursuant to arm’s length terms.
 
(t)           It shall at all times maintain at least one Independent Manager whose identity has been made known to Buyer and shall give prior written notice to Buyer of any resignation, withdrawal, discharge or replacement of such Independent Manager. Seller shall not terminate, replace or otherwise remove any Independent Manager without giving prior written notice to Buyer.
 
(u)           It shall at all times discharge all obligations and liabilities due and owing by it from its own funds.
 
14.
EVENTS OF DEFAULT; REMEDIES
 
(a)          The occurrence of any of the following events shall be an Event of Default hereunder (each, an “Event of Default”):
 

 (i)
failure of Buyer to receive on any Remittance Date the accrued and unpaid Price Differential (including, without limitation, in the event the Income paid or distributed on or in respect of the Purchased Assets is insufficient to make such payment and Seller does not make such payment or cause such payment to be made); provided, however, to the extent that any such failure occurs despite sufficient funds being on deposit in the Repo Collection Account, Seller shall have one (1) Business Day to cure such failure, except that such failure shall not be an Event of Default if sufficient Income, which would otherwise be remitted to Buyer pursuant to Section 5 hereof, is on deposit in the Repo Collection Account but the Account Bank fails to remit such funds to Buyer, so long as Seller causes such funds to be remitted to Buyer within one (1) Business Day of such failure;
 
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 (ii)
Seller fails to repurchase any Purchased Asset upon the related Repurchase Date;
 

 (iii)
[intentionally omitted];
 

 (iv)
an Insolvency Event occurs with respect to Seller, Guarantor or Pledgor;
 

 (v)
[intentionally omitted];
 

 (vi)
either (A) the Program Documents shall for any reason not cause, or shall cease to cause, Buyer to be the owner free of any adverse claim (other than the rights of Seller pursuant to this Agreement, Permitted Liens and Title Exceptions) of any of the Purchased Assets, or (B) if a Transaction is recharacterized as a secured financing, the Program Documents with respect to any Transaction shall for any reason cease to create a valid first priority security interest in favor of Buyer in any of the Purchased Assets, and in any such case, such condition is not cured within three (3) Business Days following notice thereof to Seller;
 

 (vii)
failure of Seller to make any other payment owing to Buyer which has become due, whether by acceleration or otherwise under the terms of this Agreement, which failure is not remedied within five (5) Business Days;
 

 (viii)
any governmental, regulatory, or self-regulatory authority shall have taken any action to remove, limit, restrict, suspend or terminate the rights, privileges, or operations of Seller, which removal, limitation, restriction, suspension or termination results in a Material Adverse Change;
 

 (ix)
a Change of Control shall have occurred without the prior written consent of Buyer;
 

 (x)
any representation made by Seller, Guarantor, Pledgor or Originator (other than a representation or warranty set forth in Exhibit G-1 or Exhibit G-2) in any Program Document or any document or certificate delivered pursuant thereto shall have been incorrect or untrue in any material respect when made or repeated or deemed to have been made or repeated which incorrect or untrue representation is not cured within ten (10) Business Days of the earlier of (i) the receipt of notice by Seller and (ii) knowledge of Seller; provided, however, in the case of any breach of a representation or warranty which is susceptible to cure but cannot be cured within such initial ten (10) Business Day period through the exercise of reasonable diligence, (A) if Seller, Guarantor, Pledgor or Originator is working diligently to cure such breach within such initial ten (10) Business Day period, such period shall be extended for such additional ten (10) Business Days, and (B) if Seller, Guarantor, Pledgor or Originator is working diligently to cure such breach within such additional ten (10) Business Day period, such period shall be extended for such additional ten (10)
 
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Business Days, such total cure period not to exceed thirty (30) Business Days in the aggregate;
 

 (xi)
Guarantor shall (i) fail to comply with any of the financial covenants set forth in the Guaranty or (ii) have defaulted or failed to perform any other obligation under the Guaranty and, in each such case, such breach remains uncured for five (5) Business Days;
 

 (xii)
a final non-appealable judgment (other than a judgment to the extent covered by insurance) by any competent court in the United States of America for the payment of money in an amount greater than  $1,000,000 (in the case of Seller or Pledgor) or $50,000,000 (in the case of Guarantor) shall have been rendered against Seller, Guarantor or Pledgor and remained undischarged or unpaid for a period of thirty (30) days, during which period execution of such judgment is not effectively stayed by bonding over or other means acceptable to Buyer;
 

 (xiii)
Guarantor, or Pledgor shall have failed to make any payment (after the expiration of any applicable grace period) under any note, indenture, loan agreement, guaranty, repurchase agreement, swap agreement or any other contract, agreement or transaction to which it is a party, which payment is in excess of $1,000,000 (in the case of Pledgor) or $50,000,000 (in the case of Guarantor);
 

 (xiv)
if Seller, Pledgor or Originator shall breach or fail to perform any of the terms, covenants, obligations or conditions of this Agreement or any other Program Document that such party is required to perform, other than as specifically otherwise referred to in this definition of “Event of Default”, and such breach or failure to perform is not remedied within ten (10) Business Days after notice thereof to Seller by Buyer; provided, however, in the case of any such breach or failure that cannot be cured within such initial ten (10) Business Day period through the exercise of reasonable diligence, (A) if Seller, Pledgor or Originator is working diligently to cure such breach or failure within such initial ten (10) Business Day period such period shall be extended for such additional ten (10) Business Days, and (B) if Seller, Pledgor or Originator is working diligently to cure such breach or failure within such additional ten (10) Business Day period such period shall be extended for such additional ten (10) Business Days, such total cure period not to exceed thirty (30) Business Days in the aggregate;
 

 (xv)
a Material Adverse Change shall have occurred, as determined by Buyer in its reasonable discretion, and such default is not remedied within ten (10) Business Days after notice thereof to Seller by Buyer; provided, however, in the case of any default under this clause (xv) which is susceptible to cure but cannot be cured within such initial ten (10) Business Day period through the exercise of reasonable diligence, (A) if Seller, Guarantor or Pledgor is working diligently to cure such default
 
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within such initial ten (10) Business Day period such period shall be extended for such additional ten (10) Business Days, and (B) if Seller, Guarantor or Pledgor is working diligently to cure such default within such additional ten (10) Business Day period, such period shall be extended for such additional ten (10) Business Days, such total cure period not to exceed thirty (30) Business Days in the aggregate;
 

 (xvi)
a Division shall have occurred with respect to Seller or Pledgor without the prior written consent of Buyer;
 

 (xvii)
Seller consents or assents to or otherwise allows any Material Modification without the prior written consent of Buyer and Seller has not repurchased the related Purchased Asset within the time period permitted pursuant to Section 11(g); or
 

 (xviii)
The assets of Seller are deemed to constitute Plan Assets or the transactions contemplated by this Agreement or any Program Document violate any law applicable to Seller that regulates investments of, or fiduciary obligations with respect to, governmental plans and that is similar to the provisions of Section 406 of ERISA or Section 4975 of the Code.
 
(b)          If an Event of Default shall occur and be continuing, the following rights and remedies shall be available to Buyer:
 

 (i)
At the option of Buyer, exercised by written notice to Seller (which option shall be deemed to have been exercised, even if no notice is given, immediately upon the occurrence of an Insolvency Event with respect to Seller, Guarantor or Pledgor), the Repurchase Date for each Transaction hereunder shall, if it has not already occurred, be deemed immediately to occur (the date on which such option is exercised or deemed to have been exercised being referred to hereinafter as the “Accelerated Repurchase Date”).
 

 (ii)
If Buyer exercises or is deemed to have exercised the option referred to in Section 14(b)(i) of this Agreement:
 

 (A)
Seller’s obligations hereunder to repurchase all Purchased Assets shall become immediately due and payable on and as of the Accelerated Repurchase Date;
 

 (B)
to the extent permitted by applicable law, the Repurchase Price with respect to each Transaction (determined as of the Accelerated Repurchase Date) shall be increased by the aggregate amount obtained by daily application of, on a 360 day per year basis for the actual number of days during the period from and including the Accelerated Repurchase Date to but excluding the date of payment of the Repurchase Price (as so increased), (x) the Pricing Rate for
 
70
such Transaction times (y) the Purchase Price for such Transaction; and
 

 (C)
Custodian shall, upon the request of Buyer, deliver to Buyer all instruments, certificates and other documents then held by Custodian relating to the Purchased Assets.
 

 (iii)
Buyer may in accordance with Requirements of Law (A) immediately sell, at a public or private sale in a commercially reasonable manner and at such price or prices as Buyer may reasonably deem satisfactory any or all Purchased Assets or (B) in its sole discretion elect, in lieu of selling all or a portion of such Purchased Assets, to give Seller credit for such Purchased Assets in an amount equal to the market value of such Purchased Assets as determined by Buyer consistent with its and its Affiliates’ methods for determining the market value for similar commercial real estate portfolios against the aggregate unpaid Repurchase Price for such Purchased Assets and any other amounts owing by Seller under the Program Documents.  The proceeds of any disposition of Purchased Assets effected pursuant to this Section 14(b)(iii) shall be applied in accordance with Section 5(d), with any amounts remaining after the payment of all Repurchase Obligations in full and the termination of this Agreement to be paid to Seller.
 

 (iv)
The parties acknowledge and agree that (A) the Purchased Assets subject to the Transactions hereunder are not instruments traded in a recognized market, and, in the absence of a generally recognized source for prices or bid or offer quotations for any Purchased Assets, Buyer may establish the source therefor in its sole discretion and (B) all prices, bids and offers shall be determined together with accrued Income (except to the extent contrary to market practice with respect to the relevant Purchased Assets). The parties recognize that it may not be possible to purchase or sell all Purchased Assets on a particular Business Day, or in a transaction with the same purchaser, or in the same manner because the market for such Purchased Assets may not be liquid at such time.  In view of the nature of the Purchased Assets, the parties agree that liquidation of a Transaction or the Purchased Assets does not require a public purchase or sale and that a good faith private purchase or sale shall be deemed to have been made in a commercially reasonable manner.  Accordingly, Buyer may elect, in its sole discretion, the time and manner of liquidating any Purchased Assets, and nothing contained herein shall (1) obligate Buyer to liquidate any Purchased Assets on the occurrence and during the continuance of an Event of Default or to liquidate all Purchased Assets in the same manner or on the same Business Day or (2) constitute a waiver of any right or remedy of Buyer under the Program Documents.
 

 (v)
Seller shall be liable to Buyer for (A) the amount of all reasonable out-of-pocket expenses, including reasonable legal fees and expenses, actually
 
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incurred by Buyer in connection with or as a consequence of an Event of Default, (B) all out-of-pocket costs actually incurred in connection with covering transactions of the type described in Section 3(i), and (C) any other actual out-of-pocket loss, damage, cost or expense directly arising or resulting from the occurrence of an Event of Default.
 

 (vi)
Buyer shall have, in addition to its rights and remedies under the Program Documents, all of the rights and remedies provided by applicable federal, state, foreign, and local laws (including, without limitation, if the Transactions are characterized as secured financings, the rights and remedies of a secured party under the UCC of the State of New York, to the extent that the UCC is applicable, and the right to offset any mutual debt and claim), in equity, and under any of the Program Documents.  Without limiting the generality of the foregoing, Buyer shall be entitled to set-off the proceeds of the liquidation of the Purchased Assets against all of Seller’s obligations to Buyer under this Agreement, whether or not such obligations are then due, without prejudice to Buyer’s right to recover any deficiency.
 

 (vii)
Subject to the notice and grace periods set forth herein, Buyer may exercise any or all of the remedies available to Buyer immediately upon the occurrence of an Event of Default and at any time during the continuance thereof.  All rights and remedies arising under the Program Documents, as amended from time to time, are cumulative and not exclusive of any other rights or remedies which Buyer may have.
 

 (viii)
Buyer may enforce its rights and remedies hereunder without prior judicial process or hearing, and Seller hereby expressly waives any defenses Seller might otherwise have to require Buyer to enforce its rights by judicial process.  Seller also waives any defense Seller might otherwise have arising from the use of nonjudicial process, disposition of any or all Purchased Assets, or from any other election of remedies.  Seller recognizes that nonjudicial remedies are consistent with the usages of the trade, are responsive to commercial necessity and are the result of a bargain at arm’s length.
 

 (ix)
Buyer may, without prior notice to Seller, set off any sum or obligation (whether or not arising under this Agreement, whether matured or unmatured, whether or not contingent and irrespective of the currency, place of payment or booking office of the sum or obligation) owed by Seller to Buyer or any Affiliate of Buyer against any sum or obligation (whether or not arising under this Agreement, whether matured or unmatured, whether or not contingent and irrespective of the currency, place of payment or booking office of the sum or obligation) owed by Buyer or any Affiliate of Buyer to Seller.  Buyer will give notice to the other party of any set-off effected under this Section 14(b)(ix).  If a sum or obligation is unascertained, Buyer may in good faith estimate that
 
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obligation and set-off in respect of the estimate, subject to the relevant party accounting to the other when the obligation is ascertained.  Nothing in this Section 14(b)(ix) shall be effective to create a charge or other security interest.  This Section 14(b)(ix) shall be without prejudice and in addition to any right of set-off, combination of accounts, lien or other rights to which any party is at any time otherwise entitled (whether by operation of law, contract or otherwise).
 

 (x)
Seller shall, within two (2) Business Days following Buyer’s written request, execute and deliver to Buyer such documents, instruments, certificates, assignments and other writings, and do such other acts as Buyer may reasonably request for the purposes of assuring, perfecting and evidencing Buyer’s ownership of the Purchased Assets, including, without limitation: (A) forwarding to buyer or Buyer’s designee (including, if applicable, Custodian), any payments Seller or any of its Affiliates receives on account of the Purchased Assets, in each case promptly upon receipt thereof; (B) to the extent not already contained in the Purchased Asset File, delivering to Buyer or such designee any certificates, instruments, documents, notices or files evidencing or relating to the Purchased Assets which are in Seller’s possession or under its control; (C) to the extent not already contained in the Purchased Asset File, delivering to Buyer underwriting summaries, credit memos, asset summaries, status reports or similar documents relating to the Purchased Assets and in Seller’s possession or under its control.
 

 (xi)
Seller hereby appoints Buyer as attorney-in-fact of Seller for the purpose of carrying out the provisions of this Section 14(b) and taking any action and executing or endorsing any instruments that Buyer may deem necessary or advisable to accomplish the purposes of this Section 14(b), which appointment as attorney-in-fact is irrevocable and coupled with an interest until all of the Repurchased Obligations have been paid in full (other than inchoate indemnification obligations).
 
15.
SINGLE AGREEMENT
 
Buyer and Seller acknowledge that, and have entered hereinto and will enter into each Transaction hereunder in consideration of and in reliance upon the fact that, all Transactions hereunder constitute a single business and contractual relationship and have been made in consideration of each other.  Accordingly, each of Buyer and Seller agrees (a) to perform all of its obligations in respect of each Transaction hereunder, and that a default in the performance of any such obligations shall constitute a default by it in respect of all Transactions hereunder, (b) that each of them shall be entitled to set-off claims and apply property held by them in respect of any Transaction against obligations owing to them in respect of any other Transactions hereunder and (c) that payments, deliveries and other transfers made by either of them in respect of any Transaction shall be deemed to have been made in consideration of payments, deliveries and other transfers in respect of any other Transactions hereunder, and the obligations to make any such payments, deliveries and other transfers may be applied against each other and netted.
 
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16.
CONFIDENTIALITY
 
All of the terms and provisions set forth in any of the Program Documents and any information concerning or provided in respect of the Program Documents, Eligible Assets, Purchased Assets, Purchased Asset Documents or the Transactions, provided pursuant to any Due Diligence Package and/or Supplemental Due Diligence List or otherwise provided in connection with, or related to, any proposed Eligible Asset, Purchased Asset and/or Transaction or proposed Transaction, or Program Documents shall be used by Buyer solely for purposes of evaluating Transactions hereunder, shall be kept confidential and shall not be disclosed by either party to any Person without the prior written consent of the each other party hereto, except (a) to the Affiliates of such Party or its or their respective directors, officers, employees, agents, advisors, attorneys, accountants, insurance providers and other representatives who are informed of the confidential nature of such information and instructed to keep it confidential, (b) to the extent ordinarily disclosed by Seller and/or Guarantor by virtue of Guarantor being a publicly traded company, or to the extent requested by any regulatory authority (including the SEC) having jurisdiction over such party or required by Requirements of Law or by any subpoena or similar legal process, (c) to the extent required to be included in the financial statements or reporting of either party or an Affiliate thereof, (d) to the extent required to exercise any rights or remedies under the Program Documents, Purchased Assets, the Purchased Asset Documents or Mortgaged Properties, (e) to the extent required to consummate and administer a Transaction, (f) to any actual or prospective participant or assignee which agrees to keep any such information confidential pursuant to terms substantially similar to this Section 16, (g) to the extent required in connection with any litigation between the parties in connection with any Program Document, (h) on a confidential basis to  (i) any ratings agency in connection with rating Seller or any of its Subsidiaries or this Agreement, or (ii) the CUSIP Service Bureau or any similar agency in connection with the issuance and monitoring of CUSIP numbers or other market identifiers with respect to repurchase agreements, (i) to the extent any such information becomes publicly available other than as a result of a breach of this Section  or (j) by Seller or Guarantor to potential or existing investors in or financing parties to Guarantor or its Affiliates and subsidiaries who are informed of the confidential nature of such information and instructed to keep it confidential; provided, that no such disclosure made with respect to any Program Documents shall include a copy of such Program Document to the extent that a summary would suffice, but if it is necessary for a copy of any Program Document to be disclosed, all pricing and other economic terms set forth therein shall be redacted before disclosure to the extent such disclosure can be satisfied by a redacted copy of such Program Document. Notwithstanding anything contained herein to the contrary, any press communication or other media announcement relating to the Program Documents and/or the Transactions must be mutually consented to in advance by Buyer and Seller in writing.
 
Notwithstanding the foregoing or anything to the contrary contained herein or in any other Program Document, the parties hereto may disclose to any and all Persons, without limitation of any kind, the federal, state and local tax treatment or tax structure of the Transactions, any fact relevant to understanding the federal, state and local tax treatment or tax structure of the Transactions, and all materials of any kind (including opinions or other tax analyses) relating to such federal, state and local tax treatment and that may be relevant to understanding such tax treatment or tax structure; provided that the “tax treatment or “tax structure” shall be limited to any facts relevant to the U.S. federal, state or local tax treatment or
 
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tax structure of any Transaction contemplated hereunder and specifically does not include any information relating to the identity of Buyer or any pricing terms hereunder.
 
17.
NOTICES AND OTHER COMMUNICATIONS
 
Unless otherwise expressly provided in this Agreement, all notices, consents, approvals and requests required or permitted hereunder shall be given in writing and shall be effective for all purposes if hand delivered or sent by (a) hand delivery, with proof of attempted delivery, (b) certified or registered United States mail, postage prepaid, (c) expedited prepaid delivery service, either commercial or United States Postal Service, with proof of attempted delivery, or (d) by telecopier (with answerback acknowledged) provided that such telecopied notice must also be delivered by one of the means set forth in (a), (b) or (c) above, or (e) by email with confirmation of delivery, in each case,  to the address specified in Annex I hereto or at such other address and person as shall be designated from time to time by any party hereto, as the case may be, in a written notice to the other parties hereto in the manner provided for in this Section 17.  A notice shall be deemed to have been given: (v) in the case of hand delivery, at the time of delivery, (w) in the case of registered or certified mail, when delivered or the first attempted delivery on a Business Day, (x) in the case of expedited prepaid delivery upon the first attempted delivery on a Business Day, (y) in the case of telecopier, upon receipt of answerback confirmation, provided that such telecopied notice was also delivered as required in this Section 17 or (z) in the case of email, upon transmission properly evidenced and with confirmation of receipt by the receiving party.  A party receiving a notice which does not comply with the technical requirements for notice under this Section 17 may elect to waive any deficiencies and treat the notice as having been properly given.
 
18.
ENTIRE AGREEMENT; SEVERABILITY
 
This Agreement shall supersede any existing agreements between the parties containing general terms and conditions for repurchase transactions.  Each provision and agreement herein shall be treated as separate and independent from any other provision or agreement herein and shall be enforceable notwithstanding the unenforceability of any such other provision or agreement.
 
19.
SUCCESSORS AND ASSIGNS
 
(a)          Subject to the terms of this Section 19, the provisions of this Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective permitted successors and assigns, except that none of Seller, Pledgor, Guarantor or Originator may assign or otherwise transfer any of its respective rights or obligations under this Agreement or the other Program Documents and under any Transaction without the prior written consent of Buyer.
 
(b)          (i)          Buyer may at any time at no cost or expense to Seller grant to one or more Persons (each, a “Participant”) participating interests in a portion of Buyer’s rights under the Program Documents and Transactions; provided that, (A) so long as no Event of Default is continuing, Buyer shall have first obtained Seller’s prior written consent to any participation of its rights and obligations under the Program Documents and Transactions (which such consent shall not be unreasonably withheld, delayed or conditioned so long as such participant is a
 
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Qualified Assignee and not a Prohibited Transferee or an Affiliate of a Prohibited Transferee), (B) (i) no such participation shall be for less than $50,000,000 and Buyer agrees (without limiting clause (b)(iii) immediately below) to use its best efforts to limit the aggregate number of participants and Buyers at any one time under this Agreement to a maximum of three (including MUFG), (ii) such participant shall be to a Qualified Assignee, (iii) MUFG thereof shall at all times retain at least sixty percent (60%) of its interests in the Program Documents and Transactions (for the avoidance of doubt such interest shall not be subject to a participation interest), and (iv) notwithstanding anything to the contrary in this Agreement (including without limitation Section 36), any other Program Document, co-buyer agreement, co-lending agreement or other similar agreement among Buyers, no waiver, amendment, modification, consent or other action requiring the vote of some or all Buyers (or, for the avoidance of doubt, Administrative Agent) shall require the consent of any Buyer or participant (or, for the avoidance of doubt, Administrative Agent), other than MUFG or an Affiliate of MUFG, that is a Qualified Assignee and not a Prohibited Transferee unless otherwise permitted pursuant to the terms of an Approved Co-Buyer Agreement; provided that Seller shall consider any request to grant any such rights to a participant (other than MUFG) in good faith, (C) Buyer shall notify Seller in writing of such participation at least ten (10) days prior to the effective date thereof, (D) Buyer’s obligations and Seller’s rights and obligations under the Program Documents and Transactions shall remain unchanged, (E) Seller shall be entitled to deal with MUFG as the exclusive representative of all Buyers on all matters relating to the Program  Documents and the Transactions, (F) MUFG as Administrative Agent shall have consented to such participation and (G) Seller shall not be charged for, incur or be required to reimburse Buyer or any other Person for any costs or expense relating to any such participation interest or to pay or reimburse Buyer or any other Person for any costs that would not have been incurred by Buyer had no participation interests in such Program Documents and Transactions been issued or sold.  Until MUFG shall have assigned or participated forty percent (40%) of its interests in the Program Documents and Transactions pursuant to the terms hereof, Seller shall, and shall cause its Affiliate with primary responsibility for managing the Purchased Assets, to use commercially reasonable efforts to assist Buyer in connection with any such participation and, at Buyer’s sole cost and expense, Seller shall enter into such restatements of, and amendments, supplements and other modifications to, this Agreement or the other Program Documents in order to give effect to such participation; provided that neither Seller, Pledgor, Originator nor Guarantor shall have any obligation to enter into any such restatements, amendments, supplements or modifications if such restatements, amendments, supplements or modifications would have the effect of (i) modifying any of the commercial terms under the Program Documents, (ii) reducing any of Seller’s, Pledgor’s, Originator’s or Guarantor’s rights under the Program Documents or (iii) increasing any of Seller’s, Pledgor’s, Originator’s or Guarantor’s obligations under the Program Documents.
 

 (ii)
In the event that Buyer grants participations in the Program Documents or any or all of the Transactions hereunder, Buyer shall, acting solely for this purpose as a non-fiduciary agent of Seller, maintain a register on which it enters the names and addresses of all Participants in the Program Documents and/or Transactions held by it and the principal amount or Purchase Price (and stated interest or Price Differential thereon) of the portion thereof which is the subject of the participation (the “Participant Register”). Any Program Document or any Transaction may be participated in whole or in part only by registration of such participation
 
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on the Participant Register. Any participation of the Program Documents or Transactions may be effected only by the registration of such participation on the Participant Register. Buyer shall have no obligation to disclose all or any portion of the Participant Register (including the identity of any Participant or any information relating to a Participant’s interest in the Program Documents or the Transactions) to any Person except to the extent that such disclosure is necessary to establish that the Program Documents or the Transactions are in registered form under Section 5f.103-1(c) of the United States Treasury Regulations; provided that the Participant Register shall be available for inspection by Seller at any reasonable time and from time to time upon reasonable prior notice.  The entries in the Participant Register shall be conclusive absent manifest error, and Buyer and Seller shall treat each Person whose name is recorded in the Participant Register as the owner of such participation for all purposes of the Program Documents notwithstanding any notice to the contrary. . Seller agrees that each Participant shall be entitled to the benefits of Section 30 (subject to the requirements and limitations therein, including the requirements under Section 30(e) (it being understood that the documentation required under Section 30(e) shall be delivered to the participating Buyer)) to the same extent as if it were a Buyer Assignee and had acquired its interest by assignment pursuant to paragraph (c) of this Section 19.
 
(c)          Buyer may at any time at no cost or expense to Seller assign to one or more Persons (each, an “Assignee”) a portion of its rights and obligations under this Agreement, the Transactions and the other Program Documents (collectively, the “Facility”), and such Assignee shall assume such rights and obligations, pursuant to an assignment and assumption agreement in form and substance reasonably satisfactory to Buyer and Seller (an “Assignment and Assumption Agreement”), executed by such Assignee, Seller (if applicable) and Buyer; provided that, (A) so long as no Event of Default is continuing, Buyer shall have first obtained Seller’s prior written consent to any assignment of its rights and obligations under the Program Documents and Transactions (which such consent shall not be unreasonably withheld, delayed or conditioned so long as such assignee is a Qualified Assignee and not a Prohibited Transferee or an Affiliate of a Prohibited Transferee), (B) (i) no such assignment shall be for less than $50,000,000, and Buyer agrees (without limiting clause (c)(iii) immediately below) to use its best efforts to limit the aggregate number of participants and Buyers at any one time under this Agreement to a maximum of three (including MUFG), (ii) such assignment shall be to a Qualified Assignee, (iii) MUFG thereof shall at all times retain at least sixty percent (60%) of its interests in the Program Documents and Transactions, and (iii) notwithstanding anything to the contrary in this Agreement (including without limitation Section 36), any other Program Document, co-buyer agreement, co-lending agreement or other similar agreement among Buyers, no waiver, amendment, modification, consent or other action requiring the vote of one or more Buyers shall require the consent of any Buyer or participant, other than MUFG or an Affiliate of MUFG, that is a Qualified Assignee and not a Prohibited Transferee (and each Buyer shall acknowledge and consent to such voting arrangement in the Assignment and Assumption Agreement) unless otherwise permitted pursuant to the terms of an Approved Co-Buyer Agreement; provided that Seller shall consider any request to grant any such rights to a Buyer (other than MUFG) in good
 
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faith, (C) Buyer shall notify Seller in writing of such assignment at least ten (10) days prior to the effective date thereof, (D) Seller shall be entitled to deal with MUFG as the exclusive representative of all Buyers on all matters relating to the Program  Documents and the Transactions, (E) such assignee shall execute an Approved Co-Buyer Agreement with respect to this Agreement and Program Documents, (F) MUFG as Administrative Agent shall have consented to such assignment and (G) Seller shall not be charged for, incur or be required to reimburse Buyer or any other Person for any costs or expense relating to any such assignment or to pay or reimburse Buyer or any other Person for any costs that would not have been incurred by Buyer had no assignment in such Program Documents and Transactions been issued or sold.  Without limiting the foregoing, until MUFG shall have assigned or participated forty percent (40%) of its interests in the Program Documents and Transactions pursuant to the terms hereof, Seller shall, and shall cause its Affiliate with primary responsibility for managing the Purchased Assets, to use commercially reasonable efforts to assist Buyer in connection with any such assignment and, at Buyer’s sole cost and expense, Seller shall enter into such restatements of, and amendments, supplements and other modifications to this Agreement or the other Program Documents in order to give effect to such assignment; provided that neither Seller, Pledgor, Originator nor Guarantor shall have any obligation to enter into any such restatements, amendments, supplements or modifications if such restatements, amendments, supplements or modifications would have the effect of (i) modifying any of the commercial terms under the Program Documents, (ii) reducing any of Seller’s, Pledgor’s, Originator’s or Guarantor’s rights under the Program Documents or (iii) increasing any of Seller’s, Pledgor’s, Originator’s or Guarantor’s obligations under the Program Documents.
 
Subject to the terms and conditions set forth in this Section 19, upon execution and delivery of an Assignment and Assumption Agreement and payment by such Assignee to such Buyer of an amount equal to the purchase price agreed between such Buyer and such Assignee, such Assignee shall be a party to this Agreement and the applicable Program Documents and shall have all the rights, protections and obligations of Buyer, and Buyer shall be released from its obligations hereunder and the applicable Program Documents to a corresponding extent, and no further consent or action by any party shall be required.
 
(d)          Buyer may at any time pledge its rights under this Agreement to a Federal Reserve Bank. No such pledge shall release Buyer from its obligations hereunder or substitute any such pledgee for Buyer as a party hereto.
 
(e)          No Assignee, Participant or other transferee of Buyer’s rights shall be entitled to receive any greater payment under any provision hereof than Buyer would have been entitled to receive with respect to the rights transferred, except, in the case Section 30 hereof, to the extent such entitlement to receive a greater payment results from a change in a Requirement of Law that occurs after the Assignee, Participant or other transferee acquired its applicable rights or participation hereunder.
 
(f)          Nothing in the Program Documents, express or implied, shall give any Person, other than the parties to the Program Documents and their respective successors and assigns, any benefit or any legal or equitable power, right, remedy or claim under the Program Documents.
 
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(g)          Buyer, on Seller’s behalf, shall maintain a copy of each assignment and a register for the recordation of the names and addresses of the Assignees and the amount of each Assignee’s interest in the Program Documents and/or Transactions held by it and the principal amount or Purchase Price (and stated interest or Price Differential thereon) of the portion thereof which is the subject of the assignment (the “Register”).  Any assignment of the Program Documents or Transactions may be effected only by the registration of such assignment on the Register.  The entries in the Register shall be conclusive absent manifest error, and Buyer and Seller shall treat each Person whose name is recorded in the Register as the owner of such assignment for all purposes of the Program Documents notwithstanding any notice to the contrary.  If Buyer transfers or sells its entire interest in the Program Documents and does not hold legal title, the transferee shall be responsible for the continued maintenance of the Register and all further reporting under this Section 19(f).
 
20.
GOVERNING LAW
 
This Agreement shall be construed in accordance with, and governed by, the internal laws of the State of New York, without giving effect to any laws, rules or provisions of the State of New York that would cause the application of the laws, rules or provisions of any jurisdiction other than the State of New York.
 
21.
NO WAIVERS, ETC.
 
No express or implied waiver of any Event of Default by Buyer shall constitute a waiver of any other Event of Default and no exercise of any remedy hereunder by Buyer shall constitute a waiver of its right to exercise any other remedy hereunder.  Except as may be set forth in a Confirmation duly executed and delivered by the parties thereto in accordance with this Agreement, no modification or waiver of any provision of this Agreement and no consent by any party to a departure herefrom shall be effective unless and until such modification, waiver or consent shall be in writing and duly executed by the parties hereto and accompanied by (i) a duly executed and delivered reaffirmation by Guarantor of the Guaranty and (ii) a duly executed and delivered reaffirmation by Pledgor of the Pledge Agreement.
 
22.
RESERVED
 
23.
INTENT
 
(a)         The parties intend (i) for this Agreement and each Transaction hereunder to qualify for the safe harbor treatment provided by the Bankruptcy Code and for Buyer to be entitled to all of the rights, benefits and protections afforded to Persons under the Bankruptcy Code with respect to a “securities contract” as defined in Section 741(7) of the Bankruptcy Code and a “master netting agreement” as defined in Section 101(38A) of the Bankruptcy Code, (ii) that payments made under this Agreement are deemed “margin payments” or “settlement payments,” as defined in Sections 101, 741(5) and 741(8) of the Bankruptcy Code, (iii) for the grant of each security interest set forth in Section 6 to also be a “securities contract” as defined in Section 741(7)(A)(xi) of the Bankruptcy Code and a “master netting agreement” as defined in Section 101(38A) of the Bankruptcy Code, (iv) for the grant of each security interest/pledge of collateral in both the Pledge Agreement and each Originator Pledge Agreement to also be a
 
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“securities contract” as defined in Section 741(7)(A)(xi) of the Bankruptcy Code and a “master netting agreement” as defined in Section 101(38A) of the Bankruptcy Code; (v) for the Guaranty to constitute “a security agreement or other arrangement or other credit enhancement” that is “related to” the Agreement and Transactions hereunder within the meaning of Sections 101(38A)(A) and 741(7)(A)(xi) of the Bankruptcy Code; and (vi) that Buyer (as a “financial institution,” “financial participant” or other entity listed in Sections 555, 561, 362(b)(6) or 362(b)(27) of the Bankruptcy Code) shall be entitled to the “safe harbor” benefits and protections afforded under the Bankruptcy Code with respect to a “securities contract” and a “master netting agreement” including (x) the rights, set forth in Section 14 and in Sections 555 and 561 of the Bankruptcy Code, to liquidate the Purchased Assets and terminate this Agreement, (y) the right to offset or net out as set forth in Section 33 and in Sections 362(b)(6) or 362(b)(27) of the Bankruptcy Code and (z) the non-avoidability of transfers made in connection with this Agreement as set forth in Sections 546(e) and 546(j) of the Bankruptcy Code.  Each Party further agrees that it shall not challenge, and hereby waives to the fullest extent available under applicable law its right to challenge, the characterization of any Transaction under this Agreement or this Agreement as a “securities contract” and/or “master netting agreement” within the meaning of the Bankruptcy Code.
 
(b)          It is understood that (i) Buyer’s right to liquidate the Purchased Assets and other Collateral delivered to it in connection with the Transactions hereunder or to accelerate or terminate this Agreement or otherwise exercise any other remedies pursuant to Section 14 hereof is a contractual right to liquidate, accelerate or terminate such Transaction as described in Bankruptcy Code Sections 555 and 561; and (ii) Buyer’s right to set-off claims and appropriate and apply any and all deposits of money or property or any other indebtedness at any time held or owing by Buyer to or for the credit of the account of any Affiliate against and on account of the obligations and liabilities of Seller pursuant to Section 33 hereof is a contractual right as described in Bankruptcy Code Sections 553, 555 and 561.
 
(c)          The parties agree and acknowledge that if a party hereto is an “insured depository institution,” as such term is defined in the Federal Deposit Insurance Act, as amended (“FDIA”), then each Transaction hereunder is a “qualified financial contract,” as that term is defined in FDIA and any rules, orders or policy statements thereunder (except insofar as the type of assets subject to such Transaction would render such definition inapplicable).
 
(d)          It is understood that this Agreement constitutes a “netting contract” as defined in and subject to Title IV of the Federal Deposit Insurance Corporation Improvement Act of 1991 (“FDICIA”) and each payment entitlement and payment obligation under any Transaction hereunder shall constitute a “covered contractual payment entitlement” or “covered contractual payment obligation”, respectively, as defined in and subject to FDICIA (except insofar as one or both of the parties is not a “financial institution” as that term is defined in FDICIA).
 
(e)          In light of the intent set forth above in this Section 23, Seller agrees that, from time to time upon the written request of Buyer, Seller will execute and deliver any supplements, modifications, addendums or other documents as may be necessary or desirable, in Buyer’s reasonable discretion, in order to cause this Agreement and the Transactions contemplated hereby to qualify for, comply with the provisions of, or otherwise satisfy, maintain or preserve the criteria for safe harbor treatment under the Bankruptcy Code for “securities contracts” and
 
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“master netting agreements”; provided, however, that Buyer’s failure to request, or Buyer’s or Seller’s failure to execute, such supplements, modifications, addendums or other documents does not in any way alter or otherwise change the intention of the parties hereto that this Agreement and the Transactions hereunder constitute “securities contracts” and/or a “master netting agreement” as such terms are defined in the Bankruptcy Code.
 
(f)          The parties agree and acknowledge that (i) the security interests granted to Buyer in this Agreement, the Pledge Agreement and each Originator Pledge Agreement are each granted to Buyer to induce Buyer to enter into this Agreement and (ii) such security interests and the Guaranty relate to the Transactions as part of an integrated, simultaneously-closing suite of secured financial contracts.
 
(g)          Each party agrees that this Agreement and each Transaction hereunder is intended to create a mutuality of obligations among the parties, and as such, the Agreement and each Transaction constitutes a contract that (i) is between all of the parties and (ii) places each party in the same right and capacity.
 
24.
DISCLOSURE RELATING TO CERTAIN FEDERAL PROTECTIONS
 
The parties acknowledge that they have been advised that:
 
(a)         in the case of Transactions in which one of the parties is a broker or dealer registered with the Securities and Exchange Commission (“SEC”) under Section 15 of the Securities Exchange Act of 1934 (“1934 Act”), the Securities Investor Protection Corporation has taken the position that the provisions of the Securities Investor Protection Act of 1970 (“SIPA”) do not protect the other party with respect to any Transaction hereunder;
 
(b)          in the case of Transactions in which one of the parties is a government securities broker or a government securities dealer registered with the SEC under Section 15C of the 1934 Act, SIPA will not provide protection to the other party with respect to any Transaction hereunder; and
 
(c)          in the case of Transactions in which one of the parties is a financial institution, funds held by the financial institution pursuant to a Transaction hereunder are not a deposit and therefore are not insured by the Federal Deposit Insurance Corporation or the National Credit Union Share Insurance Fund, as applicable.
 
25.
CONSENT TO JURISDICTION; WAIVER OF JURY TRIAL
 
(a)         Each party irrevocably and unconditionally (i) submits to the exclusive jurisdiction of any United States Federal or New York State court sitting in Manhattan, and any appellate court from any such court, solely for the purpose of any suit, action or proceeding brought to enforce its obligations under this Agreement or relating in any way to this Agreement or any Transaction under this Agreement and (ii) waives, to the fullest extent it may effectively do so, any defense of an inconvenient forum to the maintenance of such action or proceeding in any such court and any right of jurisdiction on account of its place of residence or domicile.
 
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(b)          To the extent that either party has or hereafter may acquire any immunity (sovereign or otherwise) from any legal action, suit or proceeding, from jurisdiction of any court or from set-off or any legal process (whether service or notice, attachment prior to judgment, attachment in aid of execution of judgment, execution of judgment or otherwise) with respect to itself or any of its property, such party hereby irrevocably waives and agrees not to plead or claim such immunity in respect of any action brought to enforce its obligations under this Agreement or relating in any way to this Agreement or any Transaction under this Agreement.
 
(c)         The parties hereby irrevocably consent to the service of any summons and complaint and any other process by the mailing of copies of such process to them at their respective address specified herein.  The parties hereby agree that a final judgment in any such action or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by law.  Nothing in this Section 25 shall affect the right of Buyer to serve legal process in any other manner permitted by law or affect the right of Buyer to bring any action or proceeding against Seller or its property in the courts of other jurisdictions.
 
(d)        EACH OF THE PARTIES HEREBY IRREVOCABLY WAIVES ALL RIGHT TO A TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR RELATING TO THIS AGREEMENT, ANY OTHER PROGRAM DOCUMENT OR ANY INSTRUMENT OR DOCUMENT DELIVERED HEREUNDER OR THEREUNDER.
 
26.
NO RELIANCE
 
Each of Buyer and Seller hereby acknowledges, represents and warrants to the other that, in connection with the negotiation of, the entering into and the performance under the Program Documents and each Transaction thereunder:
 
(a)          It is not relying (for purposes of making any investment decision or otherwise) upon any advice, counsel or representations (whether written or oral) of the other party to the Program Documents, other than the representations expressly set forth in the Program Documents;
 
(b)          It has consulted with its own legal, regulatory, tax, business, investment, financial and accounting advisors to the extent that it has deemed necessary, and it has made its own investment, hedging and trading decisions (including decisions regarding the suitability of any Transaction) based upon its own judgment and upon any advice from such advisors as it has deemed necessary and not upon any view expressed by the other party;
 
(c)          It is a sophisticated and informed Person that has a full understanding of all the terms, conditions and risks (economic and otherwise) of the Program Documents and each Transaction thereunder and is capable of assuming and willing to assume (financially and otherwise) those risks;
 
(d)          It is entering into the Program Documents and each Transaction thereunder for the purposes of managing its borrowings or investments or hedging its underlying assets or liabilities and not for purposes of speculation; and
 
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(e)          It is not acting as a fiduciary or financial, investment or commodity trading advisor for the other party and has not given the other party (directly or indirectly through any other Person) any assurance, guaranty or representation whatsoever as to the merits (either legal, regulatory, tax, business, investment, financial accounting or otherwise) of the Program Documents or any Transaction thereunder.
 
27.
INDEMNITY
 
(a)          Seller hereby agrees to indemnify Buyer and its officers, directors, employees and agents (“Indemnified Parties”) from and against any and all actual out-of-pocket liabilities, obligations, actual out-of-pocket losses, actual out-of-pocket damages, actual out-of-pocket penalties, actions, judgments, suits, actual out-of-pocket fees, actual out-of-pocket costs, actual out-of-pocket expenses (including, without limitation, reasonable attorneys’ fees and disbursements of outside counsel) or disbursements (all of the foregoing, collectively “Indemnified Amounts”) which may at any time (including, without limitation, such time as this Agreement shall no longer be in effect and the Transactions shall have been repaid in full) be imposed on or asserted against any Indemnified Party in any way whatsoever arising out of or in connection with, or relating to, this Agreement or any Transactions hereunder (including, for the avoidance of doubt, arising out of or in connection with (i) any breach by Seller of its obligations under the Custodial Agreement or (ii) any breach by any Bailee of its obligations under the related Bailee Letter or any Bailee’s negligence, lack of good faith or willful misconduct) or any action taken or omitted to be taken by any Indemnified Party under or in connection with any of the foregoing; provided, that Seller shall not be liable for Indemnified Amounts resulting from the gross negligence, willful misconduct, bad faith or fraud of any Indemnified Party.  Without limiting the generality of the foregoing, Seller agrees to hold Buyer harmless from and indemnify Buyer against all Indemnified Amounts with respect to all Purchased Assets relating to or arising out of any violation or alleged violation of any Environmental Law unless resulting from any Indemnified Party’s gross negligence, willful misconduct, bad faith or fraud.  In any suit, proceeding or action brought by Buyer in connection with any Purchased Asset for any sum owing thereunder, or to enforce any provisions of any Purchased Asset, Seller will save, indemnify and hold Buyer harmless from and against all actual out-of-pocket expenses (including, without limitation, reasonable attorneys’ fees of outside counsel), damage suffered by any Indemnified Party by reason of any defense, set-off, counterclaim, recoupment or reduction or liability whatsoever of the account debtor or obligor thereunder, arising out of a breach by Seller of any obligation thereunder or arising out of any other agreement, indebtedness or liability at any time owing to or in favor of such account debtor or obligor or its successors from Seller.  Seller agrees to reimburse Buyer as and when billed by Buyer for all of Buyer’s reasonable out-of-pocket costs and expenses incurred during the continuance of a Default or Event of Default in connection with the enforcement or the preservation of Buyer’s rights under this Agreement or any Transaction contemplated hereby, including, without limitation, the reasonable out-of-pocket fees and disbursements of its outside counsel.  This Section 27 shall not apply with respect to Taxes other than any Taxes that represent losses, claims or damages arising from any non-Tax claim.
 
(b)          Seller hereby agrees to save, indemnify and hold each Indemnified Party harmless from and against any civil penalty or fine assessed by OFAC or any other Governmental Authority administering any Anti-Money Laundering Law, OFAC Law or Sanctions, and all
 
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reasonable costs and expenses (including reasonable documented legal fees and disbursements) incurred in connection with defense thereof, by any Indemnified Party in connection with the Program Documents as a result of any action of Seller.
 
28.
DUE DILIGENCE
 
Seller acknowledges that, at reasonable times and upon reasonable notice (but not less than fifteen (15) Business Days’ prior notice), Buyer has the right to perform continuing due diligence reviews with respect to the Purchased Assets, for purposes of verifying compliance with the representations, warranties and specifications made hereunder, or otherwise, and Seller agrees that upon reasonable prior notice (but not less than fifteen (15) Business Days’ prior notice) to Seller, Buyer or its authorized representatives (accompanied by a representative of Seller or one of its affiliates) will be permitted during normal business hours to examine, inspect and make copies and extracts of the Purchased Asset Files, Servicing Records and any and all documents, records, agreements, instruments or information relating to such Purchased Assets in the possession or under the control of Seller, Servicer or subservicer and/or Custodian subject to the terms of any confidentiality agreement between Buyer and Seller and Requirements of Law, and if no such confidentiality agreement then exists between Buyer and Seller, Buyer and Seller shall act in accordance with customary market standards regarding confidentiality and Requirements of Law.  Buyer shall act in a commercially reasonable manner in requesting and conducting any inspection relating to the conduct and operation of Seller’s business.  Buyer shall be permitted, no more than once a calendar year, to visit Guarantor and/or Seller’s offices at a mutually agreeable time to meet with the investment and management teams including, if requested, a knowledgeable financial or accounting officer, regarding their investment and management strategies with respect to the Purchased Assets.  Without limiting the generality of the foregoing, Seller acknowledges that Buyer shall enter into Transactions with Seller based solely upon the information provided by Seller to Buyer and the representations, warranties and covenants contained herein, and that Buyer, at its option and, subject to this Section 28, at its cost, has the right at any time to conduct a partial or complete due diligence review on some or all Purchased Assets.  With respect to Discretionary New Assets, Buyer may underwrite such Discretionary New Assets itself or engage, subject to this Section 28, at its cost, a third-party underwriter to perform such underwriting. Seller agrees to reasonably cooperate with Buyer and any third-party underwriter in connection with such underwriting, including, but not limited to, providing Buyer and any third-party underwriter with access to any and all documents, records, agreements, instruments or information relating to such Discretionary New Assets in the possession, or under the control, of Seller.  Seller shall reimburse Buyer for all actual out-of-pocket legal costs incurred by Buyer relating to Buyer’s review of any New Asset in an amount not to exceed the related Diligence Cap; provided that Seller shall not be responsible for any other  costs and expenses of Buyer incurred in connection with its diligence or underwriting. Seller agrees to reasonably cooperate with Buyer and any Independent Appraiser in connection with obtaining Appraisals required pursuant to Section 12(h)(iv).
 
29.
SERVICING
 
(a)          Seller and Buyer agree that all Servicing Rights with respect to the Purchased Assets are being transferred hereunder to Buyer on the applicable Purchase Date and such Servicing Rights shall be transferred by Buyer to Seller upon Seller’s payment of the Repurchase
 
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Price for the Purchased Assets, and any servicing provisions of this Agreement or any other Program Document constitute (i) “related terms” under this Agreement within the meaning of Section 101(47)(A)(i) of the Bankruptcy Code and/or (ii) a security agreement or other arrangement or other credit enhancement related to the Program Documents.  Notwithstanding the transfer of Servicing Rights to Buyer, Buyer hereby agrees that Servicer may, subject to the terms of the Servicing Agreement, continue to service the Purchased Assets (excluding the Servicing Rights) for the benefit of Buyer and Buyer’s successors or permitted assigns; provided, however, that Servicer shall have entered into the Servicer Notice and Acknowledgement and, if the Servicer is not Midland Loan Services, a Division of PNC Bank, National Association, such other Servicer shall have entered into documentation satisfactory to Buyer acknowledging Buyer’s interest in the related Purchased Assets and its rights to sell such Purchased Assets on a servicing-released basis and to terminate the term of such Servicer with respect to any Purchased Assets sold by Buyer upon the occurrence and during the continuance of an Event of Default.  Seller shall cause the Purchased Assets to be serviced in accordance with Accepted Servicing Practices as provided in the Servicing Agreement.
 
(b)          Seller agrees that Buyer is the owner of all servicing records, including but not limited to the Servicing Agreement any and all other servicing agreements, files, documents, records, data bases, computer tapes, copies of computer tapes, proof of insurance coverage, insurance policies, appraisals, other closing documentation, payment history records, and any other records relating to or evidencing the servicing of Purchased Assets (collectively, the “Servicing Records”) so long as the Purchased Assets are subject to this Agreement.  Seller covenants to safeguard such Servicing Records (if any are in Seller’s possession) and to deliver them promptly to Buyer or its designee (including Custodian) at Buyer’s request.
 
(c)          Upon the occurrence and during the continuance of an Event of Default, Buyer may, in its sole discretion, (i) sell its rights to the Purchased Assets on a servicing-released basis and/or (ii) terminate any Servicer or any sub-servicer of the Purchased Assets with or without cause, in each case without payment of any penalty or termination fee.  Seller shall use commercially reasonable efforts to cause Servicer to cooperate with Buyer in effecting such termination and transferring all authority to service such Purchased Asset to the successor servicer, including requiring Servicer to (i) promptly transfer all data in its possession relating to the Purchased Assets to the successor servicer in such electronic format as the successor servicer may reasonably request, (ii) promptly transfer to the successor servicer, Buyer or Buyer’s designee, the Purchased Asset File and all other files, records, correspondence and documents in its possession relating to the Purchased Assets and (iii) use commercially reasonable efforts to cooperate and coordinate with the successor servicer and/or Buyer to comply with any applicable legal or regulatory requirement associated with the transfer of the servicing of the applicable Purchased Assets.  Seller agrees that if Seller or any Servicer fails to cooperate with Buyer or any successor servicer in effecting the termination of such Servicer as servicer of any Purchased Asset or the transfer of all authority to service such Purchased Asset to such successor servicer in accordance with the terms hereof and the Servicing Agreement, Buyer will be irreparably harmed and entitled to injunctive relief.
 
(d)          Seller shall not employ any Servicer rated below “above average” by S&P, unless such Servicer is otherwise approved by Buyer, in its sole and absolute discretion, to service the Purchased Assets (excluding the Servicing Rights).
 
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(e)          If Servicer is an Affiliate of Seller, Pledgor, Guarantor or Originator, the payment of servicing fees shall be subordinate to payment of amounts outstanding under any Transaction and this Agreement.
 
30.
TAXES
 
(a)          Any and all payments by or on account of any obligation of Seller under this Agreement or any other Program Document shall be made without deduction or withholding for any Taxes, except as required by applicable law.  If any applicable law requires the deduction or withholding of any Tax from any such payment, then Seller shall make (or cause to be made) such deduction or withholding and shall timely pay (or cause to be timely paid) the full amount deducted or withheld to the relevant Governmental Authority in accordance with applicable law and, if such Tax is an Indemnified Tax, then the sum payable shall be increased by Seller as necessary so that after such deduction or withholding has been made (including such deductions and withholdings applicable to additional sums payable under this Section 30) the applicable Buyer receives an amount equal to the sum it would have received had no such deduction or withholding been made.
 
(b)          Without duplication of other amounts payable by Seller under this Section 30, Seller shall timely pay any Other Taxes to the relevant Governmental Authority in accordance with applicable law.
 
(c)        Seller shall indemnify Buyer, within ten (10) Business Days after written demand therefor, for the full amount of any Indemnified Taxes (including Indemnified Taxes imposed or asserted on or attributable to amounts payable under this Section 30) payable or paid by Buyer or required to be withheld or deducted from a payment to Buyer, and any reasonable expenses arising therefrom or with respect thereto, whether or not such Indemnified Taxes were correctly or legally imposed or asserted by the relevant Governmental Authority.  A certificate as to the amount of such payment or liability delivered to Seller by Buyer shall be conclusive absent manifest error.
 
(d)          As soon as practicable after any payment of Taxes by Seller to a Governmental Authority pursuant to this Section 30, Seller shall deliver to the applicable Buyer the original or a certified copy of a receipt issued by such Governmental Authority evidencing such payment, a copy of the return reporting such payment or other evidence of such payment reasonably satisfactory to Buyer.
 
(e)          (i)          Any Buyer that is entitled to an exemption from or reduction of withholding Tax with respect to payments made under any Program Document shall deliver to Seller, at the time or times reasonably requested by Seller, such properly completed and executed documentation reasonably requested by Seller as will permit such payments to be made without withholding or at a reduced rate of withholding.  In addition, Buyer shall deliver such other documentation prescribed by applicable law or reasonably requested by Seller as will enable Seller to determine whether or not Buyer is subject to backup withholding or information reporting requirements.  Notwithstanding anything to the contrary in the preceding two sentences, the completion, execution and submission of such documentation (other than such documentation set forth in Section 30(e)(ii)(A), Section 30(e)(ii)(B) and Section 30(e)(ii)(D)
 
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below) shall not be required if in Buyer’s reasonable judgment such completion, execution or submission would subject Buyer to any material unreimbursed cost or expense or would materially prejudice the legal or commercial position of Buyer.
 

 (ii)
Without limiting the generality of the foregoing, in the event that Seller is a “United States person” within the meaning of Section 7701(a)(30) of the Code, or is classified as a “qualified REIT subsidiary” (as defined in Section 856(i) of the Code) or other “disregarded entity” of REIT,
 

 (A)
any Buyer that is a U.S. Buyer shall deliver to Seller on or prior to the date on which such Buyer becomes a Party under this Agreement (and from time to time thereafter upon the reasonable request of Seller), executed copies of IRS Form W-9 certifying that such Buyer is exempt from U.S. federal backup withholding tax;
 

 (B)
any Buyer that is a Foreign Buyer shall, to the extent it is legally entitled to do so, deliver to Seller (in such number of copies as shall be reasonably requested by Seller) on or prior to the date on which such Buyer becomes a Party under this Agreement (and from time to time thereafter upon the reasonable request of Seller), whichever of the following is applicable:
 

 (I)
in the case of a Foreign Buyer claiming the benefits of an income tax treaty to which the United States is a party, (x) with respect to payments of interest under any Program Document, executed copies of IRS Form W-8BEN or IRS Form W-8BEN-E establishing an exemption from, or reduction of, U.S. federal withholding Tax pursuant to the “interest” article of such tax treaty and (y) with respect to any other applicable payments under any Program Document, IRS Form W-8BEN or IRS Form W-8BEN-E establishing an exemption from, or reduction of, U.S. federal withholding Tax pursuant to the “business profits” or “other income” article of such tax treaty;
 

 (II)
executed copies of IRS Form W-8ECI;
 

 (III)
in the case of a Foreign Buyer claiming the benefits of the exemption for portfolio interest under Sections 871(h) or 881(c) of the Code, (x) a certificate to the effect that such Foreign Buyer is not a “bank” within the meaning of Section 881(c)(3)(A) of the Code, a “10 percent shareholder” of Seller within the meaning of Sections 871(h)(3) or 881(c)(3)(B) of the Code, or a “controlled foreign corporation” described in Section 881(c)(3)(C) of the Code (a “U.S. Tax Compliance Certificate”) and (y)
 
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executed copies of IRS Form W-8BEN or IRS Form W-8BEN-E; or
 

 (IV)
to the extent a Foreign Buyer is not the beneficial owner, executed copies of IRS Form W-8IMY, accompanied by IRS Form W-8ECI, IRS Form W-8BEN, IRS Form W-8BEN-E,  a U.S. Tax Compliance Certificate, IRS Form W-9, and/or other certification documents from each beneficial owner, as applicable; provided that if the Foreign Buyer is a partnership and one or more direct or indirect partners of such Foreign Buyer are claiming the portfolio interest exemption, such Foreign Buyer may provide a U.S. Tax Compliance Certificate on behalf of each such direct and indirect partner;
 

 (C)
any Buyer that is a Foreign Buyer shall, to the extent it is legally entitled to do so, deliver to Seller (in such number of copies as shall be requested reasonably by Seller) on or prior to the date on which such Buyer becomes a Party under this Agreement (and from time to time thereafter upon the reasonable request of Seller), executed copies of any other form prescribed by Requirements of Law as a basis for claiming exemption from or a reduction in U.S. federal withholding Tax, duly completed, together with such supplementary documentation as may be prescribed by Requirements of Law to permit Seller to determine the withholding or deduction required to be made; and
 

 (D)
if a payment made to a Buyer under any Program Document would be subject to U.S. federal withholding Tax imposed by FATCA if such Buyer were to fail to comply with the applicable reporting requirements of FATCA (including those contained in Section 1471(b) or 1472(b) of the Code, as applicable), such Buyer shall deliver to Seller at the time or times prescribed by law and at such time or times reasonably requested by Seller such documentation prescribed by Requirements of Law (including as prescribed by Section 1471(b)(3)(C)(i) of the Code) and such additional documentation reasonably requested by Seller as may be necessary for Seller to comply with its obligations under FATCA and to determine that such Buyer has complied with such Buyer’s obligations under FATCA or to determine the amount to deduct and withhold from such payment.  Solely for purposes of this clause (D), “FATCA” shall include any amendments made to FATCA after the date of this Agreement.
 

 (iii)
Buyer agrees that if any form or certification it previously delivered expires or becomes obsolete or inaccurate in any respect, it shall update
 
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such form or certification or promptly notify Seller in writing of its legal inability to do so.
 
(f)           If any Party determines, in its sole discretion exercised in good faith, that it has received a refund of any Taxes as to which it has been indemnified pursuant to this Section 30 (including by the payment of additional amounts pursuant to this Section 30), it shall pay to the indemnifying party an amount equal to such refund (but only to the extent of indemnity payments made under this Section 30 with respect to the Taxes giving rise to such refund), net of all out-of-pocket expenses (including Taxes) of such indemnified party and without interest (other than any interest paid by the relevant Governmental Authority with respect to such refund).  Such indemnifying party, upon the request of such indemnified party, shall repay to such indemnified party the amount paid over pursuant to this Section 30(f) (plus any penalties, interest or other charges imposed by the relevant Governmental Authority) in the event that such indemnified party is required to repay such refund to such Governmental Authority.  Notwithstanding anything to the contrary in this Section 30(f), in no event will the indemnified party be required to pay any amount to an indemnifying party pursuant to this Section 30(f) the payment of which would place the indemnified party in a less favorable net after-Tax position than the indemnified party would have been in if the indemnification payments or additional amounts giving rise to such refund had never been paid.  This Section 30(f) shall not be construed to require any indemnified party to make available its Tax returns (or any other information relating to its Taxes that it deems confidential) to the indemnifying party or any other Person.
 
(g)          Each party’s obligations under this Section 30 shall survive any assignment of rights by, or the replacement of, a Buyer or a Buyer assignee or participant, and the repayment, satisfaction or discharge of all obligations under any Program Document.
 
31.
U.S. TAX TREATMENT
 
Notwithstanding anything to the contrary in the Program Documents, each party to this Agreement acknowledges that it is its intent, for purposes of U.S. federal, state and local income and franchise taxes, to treat the Transactions as (i) indebtedness of Seller that is secured by the Purchased Assets, and the Purchased Assets as owned by Seller in the absence of an Event of Default by Seller that has occurred and is continuing and (ii) not giving rise to or resulting in treatment of all or part of Seller or any Transaction as a taxable mortgage pool (as defined in Section 7701(i) of the Code). All parties to this Agreement agree to the foregoing tax treatment and agree to take no action inconsistent with such treatment, unless required by law.
 
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32.       USA PATRIOT ACT Buyer hereby notifies Seller that pursuant to the requirements of the PATRIOT Act, Buyer may be required to obtain, verify and record information that identifies Seller, Pledgor, Guarantor and Originator, which information includes the name, address, tax identification number and other information regarding Seller, Pledgor, Guarantor and Originator that will allow Buyer to identify Seller, Pledgor, Guarantor and Originator in accordance with the PATRIOT Act. This notice is given in accordance with the requirements of the PATRIOT Act.  Seller agrees to provide Buyer, from time to time, all documentation and other information required by bank regulatory authorities under “know your customer” and anti-money laundering and counter-terrorist financing laws, rules and regulations, including the PATRIOT Act.
 
33.
SET OFF
 
In addition to any rights and remedies of Buyer hereunder and by law, during the continuance of an Event of Default, Buyer shall have the right, without prior notice to Seller, any such notice being expressly waived by Seller to the extent permitted by applicable law to set-off and appropriate and apply against any obligation from Seller to Buyer or any of its Affiliates any and all deposits (general or special, time or demand, provisional or final), in any currency, and any other obligation (including to return excess margin), credits, indebtedness or claims, in any currency, in each case whether direct or indirect, absolute or contingent, matured or unmatured, at any time held or owing by or due from Buyer or any Affiliate thereof to or for the credit or the account of Seller to any obligations of Seller owing to Buyer under the Program Documents.  All such set-offs shall be subject to the priorities set forth in Section 5.  Buyer agrees promptly to notify Seller after any such set off and application made; provided, that neither the inability (upon Seller’s intervening bankruptcy or insolvency) nor failure Buyer to give such notice shall not affect the validity of such set off and application.
 
34.
MISCELLANEOUS
 
(a)          All rights, remedies and powers of Buyer hereunder and in connection herewith are irrevocable and cumulative, and not alternative or exclusive, and shall be in addition to all other rights, remedies and powers of Buyer whether under law, equity or agreement.  In addition to the rights and remedies granted to it in this Agreement, to the extent applicable, Buyer shall have all rights and remedies of a secured party under the UCC.
 
(b)          The Program Documents may be executed in counterparts, each of which so executed shall be deemed to be an original, but all of such counterparts shall together constitute but one and the same instrument. Any signed signature page to any Program Document delivered by electronic transmission in the portable document format (.pdf) or similar format shall treated in all respects as an original signed signature page.  To the extent applicable, the foregoing constitutes the election of the parties to invoke any law authorizing electronic signatures.
 
(c)          The headings in the Program Documents are for convenience of reference only and shall not affect the interpretation or construction of the Program Documents.
 
(d)         Without limiting the rights and remedies of Buyer under the Program Documents, Seller shall pay Buyer’s reasonable actual out-of-pocket costs and expenses, including reasonable out-of-pocket fees and expenses of accountants, attorneys and advisors, incurred in
 
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connection with the preparation, negotiation, execution and consummation of and any amendment, supplement or modification to, the Program Documents and the Transactions thereunder.  Seller agrees to pay Buyer all reasonable out-of-pocket costs and expenses (including reasonable out-of-pocket attorney’s fees of outside counsel) of any subsequent enforcement of any of the provisions hereof, or of the performance by Buyer of any obligations of Seller in respect of the Purchased Assets, or any actual or attempted sale, or any exchange, enforcement, collection, compromise or settlement in respect of the Collateral and for the custody, care or preservation of the Collateral (including insurance costs) and defending or asserting rights and claims of Buyer in respect thereof, by litigation or otherwise.  In addition, Seller agrees to pay Buyer on demand all reasonable costs and expenses (including reasonable expenses of outside counsel) incurred in connection with the maintenance of the Repo Collection Account or the Reserve Account and, subject to the other terms and conditions of this Agreement, registering the Collateral in the name of Buyer or its nominee.  All such expenses shall be recourse obligations of Seller to Buyer under this Agreement.
 
(e)         Each provision of this Agreement shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Agreement shall be prohibited by or be invalid under such law, such provision shall be ineffective to the extent of such prohibition or invalidity, without invalidating the remainder of such provision or the remaining provisions of this Agreement.
 
(f)          Seller hereby covenants to file all UCC financing statements required by Buyer in order to perfect its security interest created hereby in such rights and obligations granted above, it being agreed that Seller shall pay any and all fees required to file such financing statements.
 
(g)          This Agreement, the Fee Letter and each Confirmation contains a final and complete integration of all prior expressions by the parties with respect to the subject matter hereof and thereof and shall constitute the entire agreement among the parties with respect to such subject matter, superseding all prior oral or written understandings.
 
(h)         The parties understand that this Agreement is a legally binding agreement that may affect such party’s rights.  Each party represents to the other that it has received legal advice from counsel of its choice regarding the meaning and legal significance of this Agreement and that it is satisfied with its legal counsel and the advice received from it.
 
(i)           Should any provision of this Agreement require judicial interpretation, it is agreed that a court interpreting or construing the same shall not apply a presumption that the terms hereof shall be more strictly construed against any Person by reason of the rule of construction that a document is to be construed more strictly against the Person who itself or through its agent prepared the same, it being agreed that all parties have participated in the preparation of this Agreement.
 
(j)          Buyer and Seller agree that neither party shall assert any claims against the other or against any of their respective Affiliates for special, indirect, consequential or punitive damages under this Agreement, any Program Document or any Transaction, all such damages and claims being hereby irrevocably waived.
 
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(k)          Unless the context otherwise requires, whenever the words “including”, “include”, or “includes” are used herein, they shall be deemed to be followed by the phrase “without limitation”.
 
35.
RECOGNITION OF THE U.S. SPECIAL RESOLUTION REGIMES
 
(a)          In the event that MUFG Union Bank, N.A. becomes subject to a proceeding under a U.S. Special Resolution Regime, the transfer of this Agreement and any other Program Document (and any interest and obligation in or under, and any property securing, this Agreement or any other Program Document) from MUFG Union Bank, N.A will be effective to the same extent as the transfer would be effective under the U.S. Special Resolution Regime (and such provisions shall be applicable notwithstanding that this Agreement and each other Program Document is in fact governed by the laws of the United States or a state of the United States).
 
(b)          In the event that MUFG Union Bank, N.A or a BHC Act Affiliate of MUFG Union Bank, N.A becomes subject to a proceeding under a U.S. Special Resolution Regime, Default Rights under this Agreement or any other Program Document that may be exercised against MUFG Union Bank, N.A are permitted to be exercised to no greater extent than such Default Rights could be exercised under the U.S. Special Resolution Regime (and such provisions shall be applicable notwithstanding that this Agreement and each other Program Document is in fact governed by the laws of the United States or a state of the United States).
 
36.
ADMINISTRATIVE AGENT
 
Subject in all cases to the terms and conditions set forth in Section 19:
 
(a)        By execution of the related Approved Co-Buyer Agreement, each New Buyer that is an Assignee shall join this Agreement as party hereto and each Buyer hereby acknowledges and agrees that, upon the Syndication Date, MUFG shall be appointed as Administrative Agent, and each Buyer hereby irrevocably authorizes and directs Administrative Agent to act as agent for and in the best interest of Buyers and, subject to Section 36(b) and the related Approved Co-Buyer Agreement, but in all cases subject to Sections 19(b) and (c) of this Agreement, to (i) accept any grant of a security interest or pledge of Collateral or Pledged Collateral to “Buyer” as Administrative Agent for the ratable benefit of Buyers, and hold as the owner thereof for the ratable benefit of Buyers pursuant to the term and conditions of the Program Documents, any Purchased Assets or other Collateral transferred to “Buyer” by Seller pursuant to this Agreement and the other Program Documents, and (ii)  take such actions as Buyers are obligated or entitled to take under the provisions of this Agreement and the other Program Documents and to exercise such powers as are set forth herein or therein, together with such other powers as are reasonably incidental thereto. This Agreement is not intended to be, and shall not be construed to be, the formation of a partnership or joint venture between Administrative Agent and any Buyer. In performing its functions and duties under the Program Documents, Administrative Agent shall act solely as agent of Buyers and does not assume, and shall not be deemed to have assumed, any obligations toward or relationship of agency or trust with or for Seller.
 
(b)          Upon MUFG’s execution of an Approved Co-Buyer Agreement pursuant to the terms of Section 19(c) (the “Syndication Date”), MUFG shall accept the authorization and
 
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direction of Buyers set forth in Section 36(a) and act as administrative agent (the “Administrative Agent”) on behalf of each Buyer and, subject to the terms of the Program Documents and any Approved Co-Buyer Agreement, but in all cases subject to Sections 19(b) and (c), shall (i) perform each obligation of “Buyer” under the Program Documents on behalf of Buyers, except for any obligation of “Buyer” to fund any amounts hereunder; provided, that, each Buyer shall fund its portion of the Purchase Price hereunder in accordance with the terms hereof and of the related Approved Co-Buyer Agreement, (ii) accept any grant of a security interest or pledge of Collateral or Pledged Collateral to “Buyer” as Administrative Agent for the ratable benefit of Buyers, and hold as the owner thereof for the ratable benefit of Buyers pursuant to the term and conditions of the Program Documents, any Purchased Assets or other Collateral transferred to “Buyer” by Seller pursuant to this Agreement and the other Program Documents, (iii) exercise each right and remedy of “Buyer” under the Program Documents for the ratable benefit of Buyers and (iv) receive any notice directed to “Buyer” and communicate with Seller as required under the Program Documents on behalf of Buyers.
 
(c)          Except as expressly modified by the terms of the Approved Co-Buyer Agreement (which modifications may not reduce Seller’s rights or increase Seller’s obligations), this Agreement and each of the other Program Documents shall remain, in full force and effect in accordance with their respective terms; provided, however, that, subject in all cases to Sections 19(b) and (c), from and after the Syndication Date, (i) each reference in the Program Documents to the parties to this Agreement shall be deemed to include MUFG, as Administrative Agent on behalf of Buyers, and the Buyers from time to time party hereto and (ii) each reference in the Program Documents to “Buyer” shall be a reference to (x) Administrative Agent, for ratable benefit of Buyer, (y) Administrative Agent, on behalf of Buyer or (z) each Buyer in its individual capacity (including, without limitation, with respect to any reference to (1) Buyer’s obligation to fund Purchase Price and (2) Buyer’s right to receive any payment of Price Differential, Repurchase Price or any other amounts in reduction of the Purchase Price with respect to any Purchased Asset), in each case, as the context may require.
 
(d)         The agency created hereby shall in no way impair or affect any of the rights and powers of, or impose any additional duties or obligations upon, any Buyer that becomes Administrative Agent in accordance with the provisions of this Agreement in its individual capacity as a Buyer. With respect to its interest in the Transactions, except as specifically provided in this Agreement, Administrative Agent shall have the same rights and powers hereunder as a Buyer and may exercise the same as though it were not performing the duties and functions delegated to it, as Administrative Agent, hereunder. The term “Buyers” or “Buyer” or any similar term shall, unless the context clearly otherwise indicates, include any Buyer that becomes Administrative Agent in accordance with the provisions of this Agreement in its individual capacity as a Buyer and not as Administrative Agent. Administrative Agent, Buyers and each of their respective Affiliates may accept deposits from, lend money to and generally engage in any kind of banking, trust, financial advisory or other business with Seller or any of its Affiliates (in each case not related to the Transactions) as if it were not performing its duties as Administrative Agent or Buyer (as applicable) specified herein, and may accept fees and other consideration from Seller or its Affiliates for services in connection therewith and otherwise without having to account for the same to Administrative Agent or the other Buyers, as applicable. Notwithstanding anything to the contrary set forth herein, MUFG shall not transfer or
 
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assign any of its rights or interest as Administrative Agent without the prior written consent of Seller in its sole and absolute discretion.
 
(e)         In furtherance of the authorizations set forth in this Section 36, each Buyer hereby irrevocably appoints Administrative Agent as its attorney-in-fact, with full power of substitution, for and on behalf of and in the name of each such Buyer (i) to enter into Program Documents and any amendments or modifications thereof in accordance with Section 19, (ii) to take action with respect to the Transactions and Program Documents to create, perfect, maintain, and preserve Buyers’ Liens therein, and (iii) to execute instruments of release and terminations or to take other action necessary to release Liens upon any Purchased Asset. This power of attorney shall be liberally, not restrictively, construed so as to give the greatest latitude to Administrative Agent’s power, as attorney, under this Agreement and the Program Documents. The powers and authorities herein conferred on Administrative Agent may be exercised by Administrative Agent through any Person who, at the time of the execution of a particular instrument, is an officer of Administrative Agent (or any Person acting on behalf of Administrative Agent pursuant to a valid power of attorney). The power of attorney conferred by this Section 36 to Administrative Agent is granted for valuable consideration and is coupled with an interest and is irrevocable so long as the Program Documents remain in effect.
 
(f)          Each Buyer acknowledges and agrees that so long as no Event of Default has occurred and is continuing, notwithstanding anything to the contrary contained in any Approved Co-Buyer Agreement or any similar document entered into between one or more Buyers on the one hand and the Administrative Agent and/or other Buyers on the other hand, Seller shall be entitled to deal with Administrative Agent as the exclusive representative of Buyers on all matters relating to the Transactions, this Agreement and each of the other Program Documents, and, subject to the terms hereof and the terms of the Approved Co-Buyer Agreement (in all cases, subject to the terms of Section 19(b) and (c) of this Agreement), each Buyer shall be bound by the acts of Administrative Agent with respect to the Transactions.
 
(g)         Administrative Agent shall administer and service its obligations under this Agreement and the other Program Documents, and shall make such decisions and take such actions as it shall in its reasonable judgment deem necessary, desirable or appropriate in connection therewith, in each case consistent with the Standard of Care.
 
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 IN WITNESS WHEREOF, the parties have executed this Agreement as of the day first written above.
 
 
SELLER:
   
 
KREF LENDING IX LLC
    
 
By:
/s/ Patrick Mattson
 
Name: Patrick Mattson
 
Title: President and Chief Operating Officer

 
BUYER:
   
 
MUFG UNION BANK, N.A.
    
 
By:
/s/ Bernard A. Fernandez
 
Name: Bernard A. Fernandez
 
Title: Director


Exhibit 10.2

EXECUTION COPY

LIMITED GUARANTY

LIMITED GUARANTY, dated as of July 27, 2021 (as amended, restated, supplemented, or otherwise modified from time to time, this “Guaranty”), made by KKR REAL ESTATE FINANCE HOLDINGS L.P., a Delaware limited partnership, having its principal place of business at c/o KKR Real Estate Finance Trust Inc., 30  Hudson Yards, Suite 7500, New York, New York 10001 (“Guarantor”), in favor of MUFG UNION BANK, N.A. (“Buyer”).
 
RECITALS
 
Pursuant to that certain Master Repurchase Agreement and Securities Contract, dated as of the date hereof (as amended, restated, supplemented or otherwise modified from time to time, the “Repurchase Agreement”), by and between KREF LENDING IX LLC, a Delaware limited liability company (“Seller”), and Buyer, Buyer has agreed, from time to time, to enter into Transactions with Seller, upon the terms and subject to the conditions set forth therein.
 
It is a condition precedent to Buyer entering into Transactions with Seller that Guarantor shall have executed and delivered this Guaranty with respect to the due and punctual payment and performance when due, whether at stated maturity, by acceleration or otherwise, of all of the following: (a) all payment obligations owing by Seller to Buyer under or in connection with the Repurchase Agreement and any other Program Documents; (b) all reasonable out-of-pocket expenses, including, without limitation, reasonable attorneys’ fees and disbursements, that are actually incurred by Buyer in the enforcement of any of the foregoing or any obligation of Guarantor under this Guaranty; and (c) any other payment obligations of Seller owing to Buyer under each of the Program Documents (collectively, the “Guaranteed Obligations”).
 
NOW, THEREFORE, in consideration of the foregoing premises, to induce Buyer to enter into the Repurchase Agreement and the other Program Documents and to enter into the transactions contemplated thereunder, Guarantor hereby agrees with Buyer, as follows:
 
1.          Defined Terms.  Capitalized terms used but not defined herein shall have the meanings given to such terms in the Repurchase Agreement.
 
“Capitalized Lease Obligations” shall mean, for any Person, all obligations of such Person to pay rent or other amounts under a lease of (or other agreement conveying the right to use) property to the extent such obligations are required to be classified and accounted for as a capital lease on a balance sheet of such Person under GAAP, and, for purposes of this Guaranty, the amount of such obligations shall be the capitalized amount thereof, determined in accordance with GAAP.

“Cash” shall mean coin or currency of the United States or immediately available federal funds, including such funds delivered by wire transfer.
 
“Cash Equivalents” shall mean any of the following, to the extent owned by Guarantor or any of its subsidiaries free and clear of all Liens and having a maturity of not greater than ninety (90) days from the date of issuance thereof: (a) readily marketable direct obligations of the government of the United States or any agency or instrumentality thereof or

obligations unconditionally guaranteed by the full faith and credit of the government of the United States or (b) certificates of deposit of or time deposits with Buyer or a member of the Federal Reserve System that issues (or the parent of which issues) commercial paper rated as described in clause (c) below, is organized under the laws of the United States or any state thereof and has combined capital and surplus of at least $1,000,000,000 or (c) commercial paper in an aggregate amount of not more than $50,000,000 per issuer outstanding at any time, issued by any corporation organized under the laws of any state of the United States and rated at least “Prime-1” (or the then equivalent grade) by Moody’s or “A-1” (or the then equivalent grade) by S&P.
 
“Cash Liquidity” shall mean, at any date of determination, the sum of unrestricted Cash plus Cash Equivalents.
 
“Consolidated Subsidiaries” shall mean, as of any date and with respect to any Person, any and all Subsidiaries or other entities that are consolidated with such Person in accordance with GAAP.
 
“Covenant Period” shall mean, with respect to any date of determination, the period of four (4) consecutive fiscal quarters ended on or most recently prior to such date of determination.
 
“Guaranteed Obligations” shall have the meaning assigned to such term in the Recitals.
 
“Indebtedness” shall mean, for any Person,  (a) obligations created, issued or incurred by such Person for borrowed money (whether by loan, the issuance and sale of debt securities or the sale of property to another Person subject to an understanding or agreement, contingent or otherwise, to repurchase such property from such Person); (b) obligations of such Person to pay the deferred purchase or acquisition price of property or services, other than trade accounts payable (other than for borrowed money) arising, and accrued expenses incurred, in the ordinary course of business so long as such trade accounts payable are payable within sixty (60) days of the date the respective goods are delivered or the respective services are rendered; (c) Indebtedness of others secured by a lien on the property of such Person, whether or not the respective Indebtedness so secured has been assumed by such Person; (d) obligations (contingent or otherwise) of such Person in respect of letters of credit or similar instruments issued or accepted by banks and other financial institutions for account of such Person; (e) obligations of such Person under repurchase agreements, sale/buy-back agreements or like arrangements; (f) Indebtedness of others guaranteed by such Person; (g) all obligations of such Person incurred in connection with the acquisition or carrying of fixed assets by such Person; (h) Indebtedness of general partnerships of which such Person is secondarily or contingently liable (other than by endorsement of instruments in the course of collection), whether by reason of any agreement to acquire such indebtedness to supply or advance sums or otherwise; (i) Capitalized Lease Obligations of such Person; and (j) all net liabilities or obligations under any interest rate swap, interest rate cap, interest rate floor, interest rate collar, or other interest rate hedging instrument or agreement.
 
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“Interest Expense” shall mean, with respect to any Person and its Consolidated Subsidiaries, if any, for any period, the amount of interest paid in cash with respect to indebtedness as shown on such Person’s consolidated statement of cash flow in accordance with GAAP, as offset by the amount of receipts pursuant to net received interest rate swap agreements of such Person and its consolidated Subsidiaries during the applicable period, plus the amount of any interest expense allocated to any non-consolidated Subsidiary of such Person.
 
“Interest Income” shall mean, with respect to any Person and its Consolidated Subsidiaries, all amounts set forth on an income statement of such Person and its Consolidated Subsidiaries prepared in accordance with GAAP for interest income.
 
“Manager” shall mean KKR Real Estate Finance Manager LLC, a Delaware limited liability company.
 
“Moody’s” shall mean Moody’s Investors Service, Inc. and any successor thereto.
 
“S&P” shall mean Standard & Poor’s Ratings Services, a division of The McGraw-Hill Companies, Inc. and any successor thereto.
 
“Subsidiary” shall mean, as to any Person, a corporation, partnership or other entity, directly or indirectly, majority owned or Controlled by such Person.
 
“Tangible Net Worth” shall mean, with respect to any Person and its Consolidated Subsidiaries on a consolidated basis, as of any date of determination, the sum of (a) all amounts that would be included under capital or shareholders’ equity (or like caption) on the balance sheet of such Person on such date, determined in accordance with GAAP as of such date, plus (b) the aggregate amount of all qualified capital commitments of such Person, less (c) (i) amounts owing to such Person or Consolidated Subsidiary from Affiliates or from officers, employees, partners, members, director, shareholders or other Persons similarly affiliated with such Person or any Affiliate thereof, (ii) intangible assets of such Person (other than hedging transactions specifically related to the Purchased Assets) and (iii) prepaid taxes and/or expenses, all on or as of such date, plus (d)(i) the aggregate amount of accumulated depreciation and amortization related to properties, and (ii) the aggregate credit loss allowance related to “current expected credit loss” model prescribed by AC 326, all on as of such date and determined in accordance with GAAP.
 
“Total Assets” means, with respect to any Person, on any date of determination, an amount equal to the aggregate book value of all assets owned by such Person and its Consolidated Subsidiaries and the proportionate share of such Person of all assets owned by Affiliates of such Person as consolidated in accordance with GAAP, less (a) amounts owing to such Person and its Consolidated Subsidiaries from any Affiliate thereof, or from officers, employees, partners, members, directors, shareholders or other Persons similarly affiliated with such Person or any Affiliate thereof, (b) Intangible Assets, and (c) prepaid taxes and expenses, all on or as of such date, and (d) the amount of non-recourse indebtedness, including but not limited to, those owing pursuant to securitization transactions that are not issued or sponsored by Guarantor, Affiliates of Guarantor and/or Affiliates of Manager (e.g. commercial real estate CLOs (including, without limitation, any CMBS investments)) that result from the consolidation

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of “variable interest entities” under the requirements of the Accounting Standards Codification Section 810, as amended, modified or supplemented from time to time, or other similar financing transactions, plus (i) the aggregate amount of accumulated depreciation and amortization related to properties, and (ii) the aggregate credit loss allowance related to the “current expected credit loss” model prescribed by ASC 326, all on as of such date and determined in accordance with GAAP.

“Total Indebtedness” means, with respect to any Person, as of any date of determination, the aggregate indebtedness (other than contingent liabilities not reflected on such Person’s consolidated balance sheet) of such Person and its Consolidated Subsidiaries plus the proportionate share of all indebtedness (other than contingent liabilities not reflected on such Person’s consolidated balance sheet) of all non-Consolidated Subsidiaries of such Person as of such date, all on or as of such date and determined in accordance with GAAP, less (a) the amount of non-recourse indebtedness, including but not limited to, those owing pursuant to securitization transactions that are not issued or sponsored by Guarantor, Affiliates of Guarantor and/or Affiliates of Manager (e.g. commercial real estate CLOs (including, without limitation, any CMBS investments)) that result from the consolidation of “variable interest entities” under the requirements of the Accounting Standards Codification Section 810, as amended, modified or supplemented from time to time, or other similar financing transactions, and (b) any funding obligations or commitments, under any commercial real estate loan investments, and/or any aggregate credit loss allowance related to “current expected credit loss” model prescribed by ASC 326, all on as of such date and determined in accordance with GAAP, related to such funding obligations or commitments.
 
2.          Guaranty.  (a) Subject to Sections 2(b), 2(c) and 2(d) below, Guarantor hereby unconditionally and irrevocably, guarantees to Buyer the prompt and complete payment and performance by Seller of the Guaranteed Obligations as and when the same shall become due and payable (whether at the stated maturity, by acceleration or otherwise).
 
(b)       Notwithstanding anything herein or in any other Program Document express or implied to the contrary, but subject to Sections 2(c) and 2(d) below, the maximum liability of Guarantor under this Guaranty shall in no event exceed twenty-five percent (25%) of the Outstanding Facility Amount.
 
(c)        Notwithstanding the foregoing, the limitation on recourse liability as set forth in Section 2(b) above SHALL BECOME NULL AND VOID and shall be of no further force and effect and the Guaranteed Obligations immediately shall become full recourse to Guarantor in the event of any of the following:
 
(i)          a voluntary bankruptcy or insolvency proceeding is commenced by Guarantor, Pledgor or Seller under the Bankruptcy Code or any similar federal or state law; or
 
(ii)        an involuntary bankruptcy or insolvency proceeding is commenced against Guarantor, Seller or Pledgor under the Bankruptcy Code or any similar federal or state law in connection with which Guarantor,

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Seller, Pledgor or any Affiliate of any of the foregoing has or have colluded in any way with the creditors in connection with such proceeding.
 
(d)          In addition to the foregoing, Guarantor shall be liable for any and all actual out-of-pocket losses, costs, claims, expenses or other liabilities incurred by Buyer arising out of or attributable to the following items (collectively, “Losses”):
 
(i)        any material breach by Seller of the separateness covenants set forth in Section 13 of the Repurchase Agreement (other than those separateness covenants that relate to solvency or adequacy of capital and excluding any breach to the extent arising out of insufficient cash flow from the Purchased Assets);
 
(ii)         fraud or intentional misrepresentation by Guarantor, Seller, Pledgor or Originator in connection with the execution, delivery and performance of this Guaranty, the Repurchase Agreement, or any of the other Program Documents, or any certificate, report, financial statement or other instrument or document furnished by Guarantor, Seller, Pledgor or Originator to Buyer at the time of the closing of the Repurchase Agreement or during the term of the Repurchase Agreement;
 
(iii)        [Reserved];
 
(iv)        the misappropriation of any funds related to any of the Program Documents by Guarantor, Pledgor, Seller or Originator;
 
(v)         any voluntary transfer by Seller of the Purchased Assets or any Collateral related thereto in violation of any of the Program Documents;
 
(vi)        any Change of Control which Buyer does not consent to in writing;
 
(vii)      any breach of any representations and warranties made by Guarantor, Seller, Pledgor or Originator contained in any Program Document relating to Environmental Laws, or any breach of any indemnity for costs incurred in connection with the violation of any Environmental Law, the correction of any environmental condition, or the removal of any substances, materials, wastes, pollutants or contaminants defined as hazardous or toxic or regulated under any applicable Environmental Law, in each case in any way affecting any Mortgaged Property or any of the Purchased Assets;
 
(viii)      [Reserved]; or
 
(ix)        Seller’s failure to obtain Buyer’s prior written consent to any voluntary liens that encumber any or all of the Purchased Assets that are not permitted under the Program Documents.
 
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(e)       Nothing herein shall be deemed to be a waiver of any right which Buyer may have under Section 506(a), 506(b), 1111(b) or any other provision of the Bankruptcy Code to file a claim for the full amount of the indebtedness secured by the Repurchase Agreement or to require that all collateral shall continue to secure all of the indebtedness owing to Buyer in accordance with the Repurchase Agreement or any other Program Documents.
 
(f)        Notwithstanding the limitation on recourse liability set forth in Section 2(b), in the event that Guarantor shall breach or fail to timely perform any provisions of this Guaranty, Guarantor agrees to pay any and all reasonable and documented out-of-pocket expenses (including, without limitation, all reasonable out-of-pocket fees and disbursements of outside counsel) which are actually paid or incurred by Buyer in enforcing, or obtaining advice of counsel in respect of, any rights with respect to, or collecting, any or all of the Guaranteed Obligations from Guarantor and/or enforcing any rights with respect to, or collecting against, Guarantor under this Guaranty.
 
(g)        No payment or payments made by Seller or any other Person or received or collected by Buyer from Seller or any other Person by virtue of any action or proceeding or any set-off or appropriation or application, at any time or from time to time, in reduction of or in payment of the Guaranteed Obligations shall be deemed to modify, reduce, release or otherwise affect the liability of Guarantor hereunder (other than with respect to such Guaranteed Obligations so paid or reduced) which shall, notwithstanding any such payment or payments, remain liable for the amount of the Guaranteed Obligations (taking into account the Guaranteed Obligations so paid or reduced) (subject Sections 2(b), (c) and (d) above) until the Guaranteed Obligations are paid in full; provided, that this provision is not intended to allow Buyer to recover an amount greater than the amount of the Guaranteed Obligations (subject to Sections 2(b), (c) and (d) above).
 
(h)        [Reserved].
 
(i)       Notwithstanding anything in this Guaranty to the contrary, neither Buyer nor Guarantor shall assert any claims against the other or against any of their respective Affiliates for special, indirect, consequential or punitive damages under this Guaranty, all such damages and claims being hereby irrevocably waived. Notwithstanding anything to the contrary set forth in this Guaranty, in no event shall Guarantor be responsible for or be required to pay any Losses resulting from (i) the acts or omissions of Seller, Pledgor or any servicer, agents, nominee or representatives taken (or omitted to be taken) at the written direction of Buyer or its Affiliates or designees or nominees, (ii) the acts of Buyer, on behalf of Seller or Pledgor pursuant to a power of attorney, proxy or similar instrument, or (iii) the willful misconduct, bad faith, illegal acts or fraud of Buyer or any of its respective Affiliates.
 
(j)         Notwithstanding anything to the contrary contained in this Guaranty, in no event shall Guarantor have any liability under this Guaranty for matters that relate to facts or circumstances that arise from and after the earlier of the date on which Buyer exercises its remedies pursuant to Section 14(b)(iii) or completes a UCC foreclosure pursuant to Section 14(b)(vi) of the Repurchase Agreement with respect to all Purchased Assets then subject to a Transaction under the Repurchase Agreement, or the date on which Buyer or its nominee or any third party takes title to, or ownership of, the Pledged Collateral (the “Cut-off Date”); provided,

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however, that the same shall not have resulted from (i) an action by or at the direction of Guarantor, Pledgor, Seller, Originator or any Affiliate of any of the foregoing after the Cut-off Date or (ii) any activity consented to or permitted by Guarantor, Pledgor, Seller, Originator or any Affiliate of any of the foregoing prior to the Cut-off Date; provided, further that, (1) if any exercise of Buyer’s remedies pursuant to Section 14(b)(iii) of the Repurchase Agreement or any applicable foreclosure event under Section 14(b)(vi) of the Repurchase Agreement giving rise to the Cut-off Date is rescinded or declared void in a non-appealable judgment by a court of competent jurisdiction (the “Rescission Date”), then all of Guarantor’s obligations hereunder shall be automatically reinstated in their entirety as if the Cut-off Date had not occurred without further action by any Guarantor or Buyer; provided that Guarantor shall not be liable for any action by or at the direction of Buyer during the period from the Cut-off Date through such Rescission Date and (2) Guarantor shall bear the burden of proving that any facts or circumstances first arose after the Cut-off Date.
 
3.       Subrogation.  Upon making any payment hereunder, Guarantor shall be subrogated to the rights of Buyer against Seller and any collateral for any Guaranteed Obligations with respect to such payment; provided that Guarantor shall not seek to enforce any right or receive any payment by way of subrogation until all amounts due and payable by Seller to Buyer under the Program Documents or any related documents have been paid in full; provided, further, that such subrogation rights shall be subordinate in all respects to all amounts owing to Buyer under the Program Documents.
 
4.        Amendments, etc. with Respect to the Guaranteed Obligations.  Guarantor shall remain obligated hereunder notwithstanding that, without any reservation of rights against Guarantor, and without notice to or further assent by Guarantor, any demand for payment of any of the Guaranteed Obligations made by Buyer may be rescinded by Buyer and any of the Guaranteed Obligations continued, and the Guaranteed Obligations, or the liability of any other party upon or for any part thereof, or any collateral security or guarantee therefor or right of offset with respect thereto, may, from time to time, in whole or in part, be renewed, extended, amended, modified, accelerated, compromised, waived, surrendered or released by Buyer in accordance with the Program Documents, and any Program Document and any other document in connection therewith may be amended, modified, supplemented or terminated, in whole or in part, as Buyer may deem advisable from time to time but in accordance with the Program Documents, and any collateral security, guarantee or right of offset at any time held by Buyer for the payment of the Guaranteed Obligations may be sold, exchanged, waived, surrendered or released, in all such cases, in accordance with the Program Documents.  Buyer shall have no obligation to protect, secure, perfect or insure any lien at any time held by it as security for the Guaranteed Obligations or for this Guaranty or any property subject thereto.  When making any demand hereunder against Guarantor, Buyer may, but shall be under no obligation to, make a similar demand on Seller or any other guarantor, and any failure by Buyer to make any such demand or to collect any payments from Seller or any such other guarantor or any release of Seller or such other guarantor shall not relieve Guarantor of the Guaranteed Obligations or liabilities hereunder, and shall not impair or affect the rights and remedies, express or implied, or as a matter of law, of Buyer against Guarantor.  For the purposes hereof “demand” shall include the commencement and continuance of any legal proceedings.
 
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5.        Guaranty Absolute and Unconditional.  (a) Guarantor hereby agrees that its obligations under this Guaranty constitute a guarantee of payment when due and not of collection.  Guarantor waives any and all notice of the creation, renewal, extension or accrual of any of the Guaranteed Obligations and notice of or proof of reliance by Buyer upon this Guaranty or acceptance of this Guaranty; the Guaranteed Obligations, and any of them, shall conclusively be deemed to have been created, contracted or incurred in reliance upon this Guaranty; and all dealings between Seller or Guarantor, on the one hand, and Buyer, on the other hand, shall likewise be conclusively presumed to have been had or consummated in reliance upon this Guaranty.  Guarantor waives promptness, diligence, presentment, protest, demand for payment and notice of default or nonpayment to or upon Seller or Guarantor with respect to the Guaranteed Obligations. This Guaranty shall be construed as a continuing, absolute and unconditional guarantee of payment without regard to (i) the validity, regularity or enforceability of any Program Document, any of the Guaranteed Obligations or any collateral security therefor or guarantee or right of offset with respect thereto at any time or from time to time held by Buyer, (ii) any defense, set-off or counterclaim (other than a defense of payment or performance) which may at any time be available to or be asserted by Seller against Buyer, (iii) any requirement that Buyer exhaust any right to take any action against Seller or any other Person prior to or contemporaneously with proceeding to exercise any right against Guarantor under this Guaranty or (iv) any other circumstance whatsoever (with or without notice to or knowledge of Seller or Guarantor) which constitutes, or might be construed to constitute, an equitable or legal discharge of Seller for the Guaranteed Obligations or of Guarantor under this Guaranty, in bankruptcy or in any other instance.  When pursuing its rights and remedies hereunder against Guarantor, Buyer may, but shall be under no obligation, to pursue such rights and remedies that Buyer may have against Seller or any other Person or against any collateral security or guarantee for the Guaranteed Obligations or any right of offset with respect thereto, and any failure by Buyer to pursue such other rights or remedies or to collect any payments from Seller or any such other Person or to realize upon any such collateral security or guarantee or to exercise any such right of offset, or any release of Seller or any such other Person or any such collateral security, guarantee or right of offset, shall not relieve Guarantor of any liability hereunder, and shall not impair or affect the rights and remedies, whether express, implied or available as a matter of law, of Buyer against Guarantor, except to the extent set forth in Section 7 below.  This Guaranty shall remain in full force and effect and be binding in accordance with and to the extent of its terms upon Guarantor and its successors and assigns, and shall inure to the benefit of Buyer, and its permitted successors, endorsees, transferees and assigns, until all the Guaranteed Obligations and the obligations of Guarantor under this Guaranty shall have been terminated, discharged or satisfied by payment in full, notwithstanding that from time to time during the term of the Program Documents Seller may be free from any obligations under the Repurchase Agreement.
 
(b)        Without limiting the generality of the foregoing, Guarantor hereby agrees, acknowledges, and represents and warrants to Buyer as follows:
 
(i)          Guarantor hereby waives any defense arising by reason of, and any and all right to assert against Buyer any claim or defense based upon, an election of remedies by Buyer which in any manner impairs, affects, reduces, releases, destroys and/or extinguishes Guarantor’s subrogation rights, rights to proceed against Seller, or any other guarantor for reimbursement or contribution, and/or any other rights of Guarantor to

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proceed against Seller or against any other guarantor, or against any other Person or security.
 
(ii)          Guarantor is presently informed of the financial condition of Seller and of all other circumstances which diligent inquiry would reveal and which bear upon the risk of nonpayment of the Guaranteed Obligations.  Guarantor hereby covenants that it will make its own investigation and will continue to keep itself informed about Seller’s financial condition, the status of other guarantors, if any, of circumstances which bear upon the risk of nonpayment and that it will continue to rely upon sources other than Buyer for such information and will not rely upon Buyer for any such information.  Absent a written request for such information by Guarantor to Buyer, Guarantor hereby waives the right, if any, to require Buyer to disclose to Guarantor any information which Buyer may now or hereafter acquire concerning such condition or circumstances including, but not limited to, the release of or revocation by any other guarantor.
 
(iii)        Guarantor has independently reviewed the Program Documents and related agreements and has made an independent determination as to the validity and enforceability thereof, and in executing and delivering this Guaranty to Buyer, Guarantor is not in any manner relying upon any other Person’s determination of the validity, and/or enforceability, and/or attachment, and/or perfection of any liens or security interests of any kind or nature granted by Seller or any other guarantor to Buyer, now or at any time and from time to time in the future.
 
6.         Reinstatement.  This Guaranty shall continue to be effective, or be reinstated, as the case may be, if at any time payment, or any part thereof, of any of the Guaranteed Obligations is rescinded or must otherwise be restored or returned by Buyer upon the insolvency, bankruptcy, dissolution, liquidation or reorganization of Seller or upon or as a result of the appointment of a receiver, intervenor or conservator of, or trustee or similar officer for, any of Seller or any substantial part of Seller’s property, or otherwise, all as though such payments had not been made.
 
7.         Payments.  Guarantor hereby agrees that the Guaranteed Obligations will be paid to Buyer without set-off or counterclaim in Dollars at the address specified in writing by Buyer within ten (10) Business Days of Guarantor’s receipt of written demand therefor from Buyer.
 
8.          Representations and Warranties.  Guarantor represents and warrants that:
 
(a)        Guarantor has the legal capacity and the legal right to execute and deliver this Guaranty and to perform Guarantor’s obligations hereunder;
 
(b)       no consent or authorization of, filing with, or other act by or in respect of, any arbitrator or Governmental Authority and no consent of any other Person (including, without limitation, any creditor of Guarantor) is required in connection with the execution, delivery,

9
performance, validity or enforceability of this Guaranty other than consents, authorizations, acts or filings which have been obtained or made and which are, if applicable, in full force and effect;
 
(c)      this Guaranty has been duly authorized, executed and delivered by Guarantor and constitutes a legal, valid and binding obligation of Guarantor enforceable in accordance with its terms, except as enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting the enforcement of creditors’ rights generally and by general principles of equity (whether enforcement is sought in proceedings in equity or at law);
 
(d)        the execution, delivery and performance of this Guaranty will not violate (i) any Requirement of Law to which the Guarantor is subject except to the extent that such violation could not reasonably be expected to result in a Material Adverse Change, or (ii) any provision of any security issued by Guarantor or of any material agreement, instrument or other undertaking to which Guarantor is a party or by which Guarantor or any of its property is bound (“Contractual Obligation”), except to the extent that such violation could not reasonably be expected to result in a Material Adverse Change;
 
(e)        except as disclosed in writing to Buyer from time to time, no litigation, investigation or proceeding of or before any arbitrator or Governmental Authority is pending or, to the knowledge of Guarantor, threatened in writing by or against Guarantor or against any of Guarantor’s properties or revenues with respect to this Guaranty or any of the transactions contemplated hereby, which litigation, investigation or proceeding could be reasonably likely to result in a Material Adverse Change with respect to Guarantor;
 
(f)        Guarantor has filed or caused to be filed all U.S. federal and state income and other material Tax returns and reports that would be delinquent if they had not been filed on or before the date hereof and has paid all Taxes, assessments, fees and other charges levied or imposed upon it or its properties, income or assets by any Governmental Authority that are otherwise due and payable, except (i) any Taxes, assessments, fees or other governmental charges that are being contested in good faith by appropriate proceedings diligently conducted and with respect to which adequate reserves are maintained in accordance with GAAP or (ii) to the extent that the failure to do so could not reasonably be expected to result in a Material Adverse Change with respect to Guarantor; no tax liens have been filed against any of Guarantor’s assets other than Permitted Liens, if any, or to the extent such liens could not reasonably be expected to result in a Material Adverse Change with respect to Guarantor, and, no claims are being asserted with respect to any such Taxes, fees or other charges that are either not being contested in good faith by appropriate proceedings diligently conducted and with respect to which adequate reserves are maintained in accordance with GAAP or could reasonably be expected to result in a Material Adverse Change with respect to Guarantor;
 
(g)        [intentionally omitted];
 
(h)       none of Guarantor or, to the knowledge of Guarantor, any director, manager (including any managing member), officer, employee, agent of Guarantor or any of its Subsidiaries, is an individual or entity that is, or is owned or Controlled by, or acting for or on behalf of, providing assistance, support, sponsorship or services of any kind for Persons that are:

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(i) the subject/target of any Sanctions, or (ii) located, organized or resident in a Sanctioned Country; and
 
(i)        Guarantor, its Subsidiaries and its directors, managers (including any managing member), officers and employees and, to the knowledge of Guarantor, the agents of Guarantor and its Subsidiaries, are in compliance with all applicable Sanctions and the FCPA and any other applicable anti-corruption law, in all material respects.  Guarantor and its respective Subsidiaries are subject to policies and procedures designed to ensure continued compliance with applicable Sanctions and the FCPA and any other applicable anti-corruption laws.
 
(j)        The assets of  Guarantor do not constitute Plan Assets and transactions contemplated by this Agreement do not violate any law applicable to Guarantor that regulates investments of, or fiduciary obligations with respect to, governmental plans and that is similar to the provisions of Section 406 of ERISA or Section 4975 of the Code.
 
Guarantor agrees that the foregoing representations and warranties shall be deemed to have been made by Guarantor on the date hereof, on the date of each Transaction under the Repurchase Agreement and on each date a Transaction is outstanding under the Repurchase Agreement as though made hereunder on and as of such date.
 
9.          Covenants.
 
(a)        Guarantor hereby agrees that, until the Repurchase Obligations have been paid in full (other than contingent indemnity obligations) and the Program Documents are terminated, Guarantor shall not:
 
(i)          permit at any time the ratio of (i) Interest Income (excluding deferred interest and the amortized portion of any upfront fees) for the Covenant Period to (ii) the Interest Expense of Guarantor to be less than 1.50 to 1.00, as determined as soon as practicable after the Covenant Period, but in no event later than forty-five (45) days after the last day of the Covenant Period;
 
(ii)         permit at any time the ratio of Total Indebtedness of Guarantor to Total Assets of Guarantor to be greater than 83.33%;
 
(iii)       permit at any time the Cash Liquidity of Guarantor to be less than the greater of (i) ten million dollars ($10,000,000) and (ii) 5.0% of the recourse Indebtedness of Guarantor;
 
(iv)        permit at any time the Tangible Net Worth of Guarantor to be less than the sum of (A) one hundred and seventy-five million dollars ($175,000,000) plus (B) 75% of the aggregate net cash proceeds of any equity issuances made and any capital contributions received by Guarantor at any time after the date hereof; or
 
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(v)         become an entity deemed to hold Plan Assets or cause transactions contemplated by this Agreement to violate any law applicable to Guarantor that regulates investments of, or fiduciary obligations with respect to, governmental plans and that is similar to the provisions of Section 406 of ERISA or Section 4975 of the Code.
 
(b)        [Reserved].
 
(c)       Guarantor shall remain subject to policies and procedures designed to promote compliance by Guarantor, its Subsidiaries, and its directors, officers, employees and agents with applicable Sanctions and with the FCPA and any other applicable anti-corruption laws.
 
10.       Severability.  Any provision of this Guaranty which is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction.
 
11.      Section Headings.  The section headings used in this Guaranty are for convenience of reference only and are not to affect the construction hereof or be taken into consideration in the interpretation hereof.
 
12.       No Waiver; Cumulative Remedies.  Buyer shall not by any act (except by a written instrument pursuant to Section 13 hereof), delay, indulgence, omission or otherwise be deemed to have waived any right or remedy hereunder or to have acquiesced in any default or event of default or in any breach of any of the terms and conditions hereof.  No failure to exercise, nor any delay in exercising, on the part of Buyer, any right, power or privilege hereunder shall operate as a waiver thereof.  No single or partial exercise of any right, power or privilege hereunder shall preclude any other or further exercise thereof or the exercise of any other right, power or privilege.  A waiver by Buyer of any right or remedy hereunder on any one occasion shall not be construed as a bar to any right or remedy which Buyer would otherwise have on any future occasion.  The rights and remedies herein provided are cumulative, may be exercised singly or concurrently and are not exclusive of any rights or remedies provided by law.
 
13.       Waivers and Amendments; Successors and Assigns; Governing Law.  None of the terms or provisions of this Guaranty may be waived, amended, supplemented or otherwise modified except by a written instrument executed by Guarantor and Buyer; provided that, subject to any limitations set forth in the Repurchase Agreement, any provision of this Guaranty may be waived by Buyer in a letter or agreement executed by Buyer or by email or facsimile transmission from Buyer.  This Guaranty shall be binding upon the successors and assigns of the Guarantor and shall inure to the benefit of Buyer and its permitted successors and assigns.  THIS GUARANTY SHALL BE CONSTRUED IN ACCORDANCE WITH, AND GOVERNED BY, THE INTERNAL LAWS OF THE STATE OF NEW YORK WITHOUT GIVING EFFECT TO ANY LAWS, RULES OR PROVISIONS OF THE STATE OF NEW YORK THAT WOULD CAUSE THE APPLICATION OF THE LAWS,

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RULES OR PROVISIONS OF ANY JURISDICTION OTHER THAN THE STATE OF NEW YORK.
 
14.        Notices.  Unless otherwise provided in this Guaranty, all notices, consents, approvals and requests required or permitted to be given to Guarantor or Buyer hereunder shall be given in writing and shall be effective for all purposes if hand delivered or sent by (a) hand delivery, with proof of attempted delivery, (b) certified or registered United States mail, postage prepaid, (c) expedited prepaid delivery service, either commercial or United States Postal Service, with proof of attempted delivery, or (d) by telecopier (with answerback acknowledged); provided that such telecopied notice must also be delivered by one of the means set forth in (a), (b) or (c) above, or (e) by email with confirmation of delivery, in each case, (i) with respect to Guarantor, to the address specified under its signature below or at such other address and Person as shall be designated from time to time by Guarantor, in a written notice to Buyer in the manner provided for in Section 17 of the Repurchase Agreement and (ii) with respect to Buyer, in accordance with Section 17 of the Repurchase Agreement.  A notice shall be deemed to have been given: (v) in the case of hand delivery, at the time of delivery, (w) in the case of registered or certified mail, when delivered or first attempted delivery on a Business Day, (x) in the case of expedited prepaid delivery upon the first attempted delivery on a Business Day, (y) in the case of telecopier, upon receipt of answerback confirmation; provided that such telecopied notice was also delivered as required in this Section 14, or (z) in the case of email, upon confirmation of delivery.  A party receiving a notice which does not comply with the technical requirements for notice under this Section 14 may elect to waive any deficiencies and treat the notice as having been properly given.
 
15.    SUBMISSION TO JURISDICTION; WAIVERS.  EACH OF GUARANTOR AND, BY ITS ACCEPTANCE OF THIS GUARANTY, BUYER HEREBY IRREVOCABLY AND UNCONDITIONALLY:
 
(a)     SUBMITS FOR ITSELF AND ITS PROPERTY IN ANY LEGAL ACTION OR PROCEEDING RELATING TO THIS GUARANTY AND THE OTHER PROGRAM DOCUMENTS TO WHICH IT IS A PARTY, OR FOR RECOGNITION AND ENFORCEMENT OF ANY JUDGMENT IN RESPECT THEREOF, TO THE EXCLUSIVE GENERAL JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK, THE COURTS OF THE UNITED STATES OF AMERICA FOR THE SOUTHERN DISTRICT OF NEW YORK, AND APPELLATE COURTS WITHIN THE STATE OF NEW YORK;
 
(b)       CONSENTS THAT ANY SUCH ACTION OR PROCEEDING MAY BE BROUGHT IN SUCH COURTS AND WAIVES ANY OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO THE VENUE OF ANY SUCH ACTION OR PROCEEDING IN ANY SUCH COURT OR THAT SUCH ACTION OR PROCEEDING WAS BROUGHT IN AN INCONVENIENT COURT AND AGREES NOT TO PLEAD OR CLAIM THE SAME;
 
(c)     AGREES THAT SERVICE OF PROCESS IN ANY SUCH ACTION OR PROCEEDING MAY BE EFFECTED BY MAILING A COPY THEREOF BY REGISTERED OR CERTIFIED MAIL (OR ANY SUBSTANTIALLY SIMILAR FORM OF MAIL), POSTAGE PREPAID, TO SUCH PARTY AT ITS ADDRESS SET FORTH UNDER ITS
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SIGNATURE BELOW OR AT SUCH OTHER ADDRESS OF WHICH A PARTY SHALL HAVE BEEN NOTIFIED; AND
 
(d)        AGREES THAT NOTHING HEREIN SHALL AFFECT THE RIGHT TO EFFECT SERVICE OF PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR SHALL LIMIT THE RIGHT TO SUE IN ANY OTHER JURISDICTION.
 
16.      Integration.  This Guaranty represents the entire agreement of Guarantor with respect to the subject matter hereof and there are no promises or representations by Buyer relative to the subject matter hereof not reflected herein.
 
17.        Acknowledgments.  Guarantor hereby acknowledges that:
 
(a)        Guarantor has been advised by counsel in the negotiation, execution and delivery of this Guaranty and the related documents;
 
(b)        Buyer has no fiduciary relationship to Guarantor, and the relationship between Buyer and Guarantor is solely that of surety and creditor; and
 
(c)        no joint venture exists between or among any of Buyer, Guarantor and Seller.
 
18.       WAIVERS OF JURY TRIAL.  EACH OF GUARANTOR AND, BY ITS ACCEPTANCE OF THIS GUARANTY, BUYER HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING RELATING TO THIS GUARANTY OR ANY RELATED DOCUMENT AND FOR ANY COUNTERCLAIM HEREIN OR THEREIN.
 
19.       Intent.
 
(a)       Guarantor intends that (i) the guaranty provided to Buyer in this Guaranty has been provided to induce the Buyer to enter into the Repurchase Agreement, (ii) the security interest granted to Buyer in the Pledge and Security Agreement is granted to Buyer to induce Buyer to enter into the Repurchase Agreement and (iii) this Guaranty and such security interest relate to the Transactions as part of an integrated, simultaneously-closing suite of secured financial contracts.
 
(b)       Guarantor further intends and agrees that (i) this Guaranty is “a security agreement or arrangement or other credit enhancement” that is “related to” and provided “in connection with” the Repurchase Agreement and each Transaction is within the meaning of Section 741(7)(A)(xi) of Title 11 of the United States Code (the “Bankruptcy Code”) and is, therefore, (A) a “securities contract” as that term is defined in Section 741 (7)(A)(xi) of the Bankruptcy Code and (B) a “master netting agreement” as that term is defined in Section 101 of the Bankruptcy Code, (ii) any party’s right to cause the termination, liquidation or acceleration of, or to offset net termination values, payment amounts or other transfer obligations arising under or in connection with the Repurchase Agreement and this Guaranty is in each case a contractual right to cause the termination, liquidation or acceleration of, or to offset net termination values, payment amounts or other transfer obligations arising under or in connection

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with this Guaranty as described in Sections 555 and 561 of the Bankruptcy Code and (iii) any payments or transfers of property made with respect to this Guaranty shall be considered a “settlement payment” as such term is defined in Bankruptcy Code Sections 101(51A) and 741(8).  Guarantor agrees that it shall not challenge, and hereby waives to the fullest extent available under applicable law its right to challenge, the characterization of this Guaranty, the Repurchase Agreement or any Transaction thereunder as either a “securities contract” or a “master netting agreement” within the meaning of the Bankruptcy Code.
 
20.       Termination. This Guaranty and the obligations of Guarantor hereunder shall automatically terminate upon the final payment in full of all Repurchase Obligations (other than contingent indemnity obligations).
 
[SIGNATURES COMMENCE ON THE FOLLOWING PAGE]
 
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IN WITNESS WHEREOF, the undersigned has caused this Guaranty to be duly executed and delivered as of the date first above written.

 
KKR REAL ESTATE FINANCE HOLDINGS L.P., a Delaware limited partnership
   
 
By: KKR Real Estate Finance Trust Inc.
 
a Maryland corporation, its general partner
     
 
By:
/s/ Patrick Mattson
  
   
Name: Patrick Mattson
  
   
Title: President and Chief Operating Officer
  

Address for Notices:
  
   
KKR Real Estate Finance Holdings, L.P.
  
30 Hudson Yards, Suite 7500
  
New York, New York 10001
  
Attention:  Patrick Mattson
  
Tel:  [**]
  
Email: [**]
  
   
With a copy to:
  
   
Hunton Andrews Kurth LLP
  
200 Park Avenue
  
New York, New York 10166
  
Attention:  Nadia Burgard, Esq.
  
Tel:  [**]
  
Email: [**]
  


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Exhibit 10.3

EXECUTION VERSION

OMNIBUS AMENDMENT AND REAFFIRMATION AGREEMENT

OMNIBUS AMENDMENT AND REAFFIRMATION AGREEMENT, dated as of March 31, 2022 (this “Amendment and Reaffirmation”), by KREF LENDING IX LLC, a Delaware limited liability company (“Seller”), KKR REAL ESTATE FINANCE HOLDINGS L.P., a Delaware limited partnership (“Guarantor”), KREF HOLDINGS IX LLC, a Delaware limited liability company (“Pledgor”), KREF CAPITAL LLC, a Delaware limited liability company (“Originator”), and MUFG BANK, LTD. (“Buyer”), as the assignee of all of the rights and obligations of MUFG UNION BANK, N.A. (“Original Buyer”) under the Program Documents pursuant to the Assignment and Assumption Agreement (as defined below).
 
RECITALS
 
WHEREAS, (i) Seller and Buyer (after giving effect to the Assignment and Assumption Agreement) are parties to that certain Master Repurchase Agreement and Securities Contract, dated as of July 27, 2021 (as amended, restated, supplemented or otherwise modified and in effect prior to the date hereof, the “Existing Repurchase Agreement”, and as amended pursuant to this Amendment and Reaffirmation and as further amended, restated, supplemented or otherwise modified and in effect from time to time, the “Repurchase Agreement”), (ii) Seller and Buyer (after giving effect to the Assignment and Assumption Agreement) are parties to that certain Fee Letter, dated as of July 27, 2021 (as amended, restated, supplemented or otherwise modified and in effect prior to the date hereof, the “Existing Fee Letter”, and as amended pursuant to this Amendment and Reaffirmation and as further amended, restated, supplemented or otherwise modified and in effect from time to time, the “Fee Letter”), (iii) Guarantor is party to that certain Limited Guaranty in favor of Buyer (after giving effect to the Assignment and Assumption Agreement), dated as of July 27, 2021 (as amended, restated, supplemented or otherwise modified and in effect from time to time, the “Guaranty”), (iv) Pledgor and Buyer (after giving effect to the Assignment and Assumption Agreement) are parties to that certain Pledge and Security Agreement, dated as of July 27, 2021 (as amended, restated, supplemented or otherwise modified and in effect from time to time, the “Pledge Agreement”), and (v) Originator and Buyer (after giving effect to the Assignment and Assumption Agreement) are parties to that certain Originator Pledge and Security Agreement, dated as of July 27, 2021 (as amended, restated, supplemented or otherwise modified and in effect from time to time, the “Originator Pledge Agreement”);
 
WHEREAS, simultaneously with the execution and delivery of this Amendment and Reaffirmation, Original Buyer assigned all of its rights and obligations in the Program Documents to Buyer, and Buyer assumed all of Original Buyer’s rights and obligations thereunder pursuant to the terms of the Assignment and Assumption Agreement;
 
WHEREAS, in connection with such assignment and assumption, Seller and Buyer wish to modify certain terms of the Existing Repurchase Agreement;
 
WHEREAS, Seller and Buyer wish to modify the definition of “Maximum Facility Amount” in the Existing Fee Letter; and
 
WHEREAS, in connection with the modifications contemplated by this Amendment and Reaffirmation and the assignment and assumption contemplated by the Assignment and
 
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Assumption Agreement, Buyer has requested that each of Guarantor, Pledgor and Originator reaffirm its respective obligations for the benefit of Buyer under the Guaranty, Pledge Agreement or Originator Pledge Agreement, as applicable, and reaffirm that the provisions of the Guaranty, Pledge Agreement or Originator Pledge Agreement, as applicable, shall remain in full force and effect for the benefit of Buyer upon the effectiveness of this Amendment and Reaffirmation and the Assignment and Assumption Agreement.
 
NOW, THEREFORE, in consideration of the premises and the agreements hereinafter set forth, the parties hereto hereby agree as follows:
 
1.  Definitions. Unless otherwise defined herein, terms defined in the Repurchase Agreement and used herein shall have the meanings given to them in the Repurchase Agreement.
 
2.  Amendment to Fee Letter. Buyer and Seller hereby agree that, as of the date hereof, the Existing Fee Letter is hereby amended by replacing the existing definition of “Maximum Facility Amount” in clause (d) with the following:
 
“Maximum Facility Amount” shall mean $750,000,000, as such amount may be reduced from time to time by Seller pursuant to Section 3(m) of the Repurchase Agreement.

3.  Amendments to the Existing Repurchase Agreement. Buyer and Seller hereby agree that, as of the date hereof, the Existing Repurchase Agreement is hereby amended as follows:

(a)       The definition of “MUFG” in Section 2 of the Existing Repurchase Agreement is hereby deleted in its entirety and replaced with the following:““MUFG” shall mean MUFG Bank, Ltd. or any successor thereto.”;

(b)       Section 35 of the Existing Repurchase Agreement is hereby amended by replacing each reference to “MUFG Union Bank, N.A.” therein with “MUFG Bank, Ltd.”; and
 
(c)       Exhibit A, Exhibit B, Exhibit E, Exhibit F, Exhibit I, Exhibit J and Exhibit L are hereby amended and restated as set forth in Annex 1 hereto.

4.  Reaffirmations.
 
(a)      Guarantor hereby reaffirms its obligations under the Guaranty and acknowledges that its obligations under the Guaranty, after giving effect to this Amendment and Reaffirmation and the Assignment and Assumption Agreement, are continuing and in full force and effect in favor of Buyer.
 
(b)      Pledgor hereby (i) reaffirms its obligations under the Pledge Agreement and acknowledges that its obligations under the Pledge Agreement, after giving effect to this Amendment and Reaffirmation and the Assignment and Assumption Agreement, are continuing and in full force and effect in favor of Buyer and (ii) consents to the filing of the UCC-3 financing statement attached hereto as Exhibit A.
 
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(c)      Originator hereby reaffirms (i) its obligations under the Originator Pledge Agreement and acknowledges that its obligations under the Originator Pledge Agreement, after giving effect to this Amendment and Reaffirmation and the Assignment and Assumption Agreement, are continuing and in full force and effect in favor of Buyer and (ii) consents to the filing of the UCC-3 financing statement attached hereto as Exhibit B.
 
(d)       Seller hereby consents to the filing of the UCC-3 financing statement attached hereto as Exhibit C.
 
5.            Conditions Precedent.  This Amendment and Reaffirmation shall become effective as of the date hereof, subject to the satisfaction of the following conditions precedent:
 
(a)        Delivered Documents.  On the date hereof, Buyer shall have received the following documents, each of which shall be in form and substance reasonably satisfactory to Buyer:
 
 
(i)
this Amendment and Reaffirmation, executed and delivered by the duly authorized officers of each party hereto;

 
(ii)
an Assignment and Assumption Agreement (the “Assignment and Assumption Agreement”), executed and delivered by the duly authorized officers of Original Buyer and Buyer and consented to by Seller;

 
(iii)
the UCC-3 financing statements set forth on Exhibits A, B and C hereto;

 
(iv)
an omnibus power of attorney substantially in the form of Exhibit F set forth in Annex 1 hereto;

 
(v)
an Amended and Restated Custodial Agreement, executed and delivered by the duly authorized officers of Buyer, Custodian and Seller;

 
(vi)
a notice to Account Bank and Reserve Account Bank pursuant to the terms of the Account Control Agreement of the assignment of Original Buyer’s rights thereunder to Buyer;

 
(vii)
a Upsize Structuring Fee Side Letter (the “Upsize Fee Letter”), executed and delivered by the duly authorized officers of Buyer and Seller; and

 
(viii)
an opinion of counsel to Seller, Guarantor, Pledgor and Originator, in form and substance reasonably acceptable to Buyer, including, without limitation, with respect to corporate matters, due authorization, non-contravention and enforceability of this Amendment and Reaffirmation.

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(b)       Fees and Expenses. Seller has paid all fees and expenses to the extent due and payable by Seller to Buyer as of the date hereof pursuant to the terms of the Program Documents, including the Upsize Fee Letter.
 
6.            Representations and Warranties. Seller, Guarantor, Pledgor and Originator each hereby represents and warrants to Buyer that as of the date hereof:
 
(a)       Such party has the requisite power and authority to execute, deliver and perform this Amendment and Reaffirmation.
 
(a)       Such party has taken all necessary corporate (or analogous) action to authorize the execution, delivery and performance of this Amendment and Reaffirmation. This Amendment and Reaffirmation constitutes a legal, valid and binding obligation of such party, enforceable against such party in accordance with its terms, except as enforceability may be limited by applicable bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium or other similar laws relating to or affecting creditors’ rights generally, and subject to general equitable principles (whether considered in a proceeding in equity or at law) and an implied covenant of good faith and fair dealing.
 
(b)       Each of the representations and warranties made by such party herein or in or pursuant to the Program Documents is true and correct in all material respects on and as of the date hereof as if made on and as of such date; provided that any representation or warranty made solely with respect to a specified prior date shall be true and correct in all material respects as of such specified date.
 
7.          Governing Law. THIS AMENDMENT AND REAFFIRMATION SHALL BE CONSTRUED IN ACCORDANCE WITH, AND GOVERNED BY, THE INTERNAL LAWS OF THE STATE OF NEW YORK, WITHOUT GIVING EFFECT TO ANY LAWS, RULES OR PROVISIONS OF THE STATE OF NEW YORK THAT WOULD CAUSE THE APPLICATION OF THE LAWS, RULES OR PROVISIONS OF ANY JURISDICTION OTHER THAN THE STATE OF NEW YORK.
 
8.            Continuing Effect.  As amended by this Amendment and Reaffirmation, all terms, covenants and provisions of the Fee Letter and the Repurchase Agreement, are ratified and confirmed and shall remain in full force and effect. This Amendment and Reaffirmation shall not constitute a novation of the Fee Letter, the Repurchase Agreement or any Program Document but shall constitute modifications thereof.  In addition, any and all guaranties and indemnities for the benefit of Buyer and agreements subordinating rights and liens to the rights and liens of Buyer, are hereby ratified and confirmed and shall not be released, diminished, impaired, reduced or adversely affected by this Amendment and Reaffirmation, and each party indemnifying Buyer, and each party subordinating any right or lien to the rights and liens of Buyer, hereby consents, acknowledges and agrees to the modifications set forth in this Amendment and Reaffirmation and waives any common law, equitable, statutory or other rights which such party might otherwise have as a result of or in connection with this Amendment and Reaffirmation.
 
9.            Binding Effect; No Partnership; Counterparts. The provisions of the Fee Letter and the Repurchase Agreement, as amended hereby, shall be binding upon and inure to the
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benefit of the parties thereto and their respective successors and permitted assigns.  Nothing herein contained shall be deemed or construed to create a partnership or joint venture between any of the parties hereto. This Amendment and Reaffirmation may be executed in counterparts, each of which so executed shall be deemed to be an original, but all of such counterparts shall together constitute but one and the same instrument. Any signed signature page to this Amendment and Reaffirmation delivered by electronic transmission in the portable document format (.pdf) or similar format shall treated in all respects as an original signed signature page.  To the extent applicable, the foregoing constitutes the election of the parties to invoke any law authorizing electronic signatures.

10.        Further Agreements. At Buyer’s sole cost and expense, (i) Seller agrees to execute and deliver such additional documents, instruments or agreements as may be reasonably requested by Buyer from time to time to the extent necessary to effectuate the purposes of this Amendment and Reaffirmation and (ii) Guarantor agrees to execute and deliver an amendment and restatement of the Guaranty on the same terms and conditions as the Guaranty existing on the date hereof (changing only the name of Original Buyer to Buyer) if Buyer reasonably determines that such a restatement is necessary in order to give further effect to its reaffirmation in Section 4(a) hereof.

11.          Headings, etc. Section or other headings contained in this Amendment and Reaffirmation are for reference purposes only and shall not in any way affect the meaning or interpretation of this Amendment and Reaffirmation.
 
12.          Program Document. Each of Seller, Guarantor, Pledgor and Originator hereby acknowledges and agrees that, notwithstanding anything to the contrary contained herein, in the Repurchase Agreement or in any other Program Document, this Amendment and Reaffirmation and the Assignment and Assumption Agreement shall each constitute a Program Document under the Repurchase Agreement.  All references to the Repurchase Agreement and the Fee Letter in any Program Document, or in any other document executed or delivered in connection therewith shall, from and after the execution and delivery of this Amendment and Reaffirmation, be deemed a reference to the Repurchase Agreement or the Fee Letter, as applicable, as amended hereby, unless the context expressly requires otherwise.
 
13.          No Waiver.  The execution, delivery and effectiveness of this Amendment and Reaffirmation shall not operate as a waiver of any right, power or remedy of Buyer under any Program Document, nor constitute a waiver of any provision of any Program Document by any of the parties hereto.
 
14.          Post-Close Covenants.
 
 
(a)
Within thirty (30) Business Days of the date hereof, the Original Buyer shall have returned to Seller the omnibus power of attorney executed by Seller for the benefit of Original Buyer on July 27, 2021.

 
(b)
Within three (3) Business Days of the date hereof, Buyer shall have received a Servicer Acknowledgment Letter, executed and delivered by the duly authorized officers of Original Buyer, Buyer, Servicer, KKR Real Estate

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Finance Trust Inc. and Seller in form and substance reasonably satisfactory to Buyer.
 
[SIGNATURE PAGES FOLLOW]
 
-6-
IN WITNESS WHEREOF, the parties hereto have caused this Amendment and Reaffirmation to be duly executed and delivered by their proper and duly authorized officers as of the day and year first above written.
 
 
KREF LENDING IX LLC, as Seller
 
 
 
By:
/s/ Patrick Mattson
 
 
Name:  Patrick Mattson
 
 
Title:  Chief Operating Officer and President
 
 
 
 
KKR REAL ESTATE FINANCE HOLDINGS L.P., as Guarantor
   
 
By: KKR Real Estate Finance Trust Inc., a Maryland corporation, its general partner
 
 
 
By:
/s/ Patrick Mattson
 
 
Name:  Patrick Mattson
 
 
Title:  Chief Operating Officer and President
 
 
 
 
KREF HOLDINGS IX LLC, as Pledgor
 
 
 
By:
/s/ Patrick Mattson
 
 
Name:  Patrick Mattson
 
 
Title:  Chief Operating Officer and President
     
 
KREF CAPITAL LLC, as Originator
 
 
 
By:
/s/ Patrick Mattson
 
 
Name:  Patrick Mattson
 
 
Title:  Chief Operating Officer and President

 [SIGNATURES CONTINUE ON THE NEXT PAGE]
 
 
MUFG BANK, LTD., as Buyer
 
 
 
By:
/s/ Bernard A. Fernandez
 
 
Name:  Bernard A. Fernandez
 
 
Title:  Director
 

Exhibit 10.4

Execution Version
CERTAIN INFORMATION, IDENTIFIED BY, AND REPLACED WITH, A MARK OF “[**]” HAS BEEN EXCLUDED FROM THIS DOCUMENT BECAUSE IT IS BOTH (I) NOT MATERIAL AND (II) IS THE TYPE THAT THE REGISTRANT TREATS AS PRIVATE OR CONFIDENTIAL.
 

SEVENTH AMENDMENT, dated as of March 16, 2022 (this “Amendment”), to the Credit Agreement (as defined below) among KREF Holdings X LLC, as the Borrower (the “Borrower”), KKR Real Estate Financing Holdings L.P., as Opco (“Opco”), the Lenders party hereto and Morgan Stanley Senior Funding, Inc., as Administrative Agent (the “Administrative Agent”).
 
RECITALS
 
A.          The Borrower, Opco, the other Guarantors and the Lenders party thereto from time to time and the Administrative Agent are party to that certain Credit Agreement dated as of December 20, 2018 (as amended, supplemented or otherwise modified from time to time prior to the date hereof, the “Credit Agreement” and the Credit Agreement as amended by this Amendment, the “Amended Credit Agreement”).
 
B.          Pursuant to Section 2.21 of the Credit Agreement, the Borrower has requested that the Persons set forth on Schedule I hereto (each, a “Seventh Amendment Incremental Lender”) provide an Incremental Commitment in an aggregate principal amount for all such Lenders equal to $85,000,000 (the “Seventh Amendment Incremental Commitments”, and the loans thereunder, the “Seventh Amendment Incremental Loans”) such that the aggregate amount of the Commitments after giving effect to the Incremental Commitments provided for under this Amendment is $420,000,000.
 
C.          Pursuant to Section 2.22 of the Credit Agreement, the Borrower has requested that the Commitments of the Lenders party hereto (each, a “Consenting Lender”) be converted to extend the termination date thereof, and the scheduled maturity date with respect thereto, as set forth herein.
 
D.          Subject to the terms and conditions set forth herein, Opco, the Borrower, the Administrative Agent and Lenders constituting the Required Lenders have agreed to make certain other amendments to the Credit Agreement as set forth herein in accordance with Section 10.02(b) of the Credit Agreement.
 
AGREEMENTS
 
In consideration of the foregoing and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, each of the parties hereto hereby agree as follows:
 
ARTICLE I.
 
SECTION 1.01.          Defined Terms.  Capitalized terms used herein (including in the recitals hereto) and not otherwise defined herein shall have the meanings assigned to such terms in the Amended Credit Agreement.  The rules of construction specified in Section 1.03 of the Credit Agreement also apply to this Amendment.
 
SECTION 1.02.         Seventh Amendment Incremental Commitments.
 
(a)          Pursuant to Section 2.21 of the Credit Agreement and on the terms and subject to the conditions set forth herein, each Seventh Amendment Incremental Lender hereby agrees to make Seventh Amendment Incremental Commitments available to the Borrower on the Seventh Amendment
 
1
Effective Date in an aggregate principal amount set forth opposite its name under the heading “Seventh Amendment Incremental Commitment” on Schedule I hereto.
 
(b)          The Borrower agrees to pay to the Administrative Agent, for the account of each Lender as of the Seventh Amendment Effective Date, all unpaid commitment fees that have accrued to, but excluding, the Seventh Amendment Effective Date under Section 2.11(a) of the Credit Agreement (the “Seventh Amendment Effective Date Fees”). The Seventh Amendment Effective Date Fees shall be due and payable on the Seventh Amendment Effective Date.
 
(c)          The Seventh Amendment Incremental Commitments shall be an “Incremental Commitment” for all purposes of the Amended Credit Agreement and the other Loan Documents and shall have the same terms applicable to, and shall constitute, “Commitments” under the Amended Credit Agreement.  The Seventh Amendment Incremental Loans shall have the same terms applicable to, and shall constitute, “Loans” under the Amended Credit Agreement.  From and after the Seventh Amendment Effective Date, each Seventh Amendment Incremental Lender shall constitute a “Lender” for all purposes of the Amended Credit Agreement and the other Loan Documents.
 
(d)          After giving effect to this Amendment, Schedule 2.01 to the Credit Agreement will be amended and replaced with Schedule II hereto, which shall be Schedule 2.01 to the Amended Credit Agreement for all purposes therein.
 
SECTION 1.03.          Credit Agreement Amendments.  With effect from and after the Seventh Amendment Effective Date and immediately after the establishment of the Seventh Amendment Incremental Commitments, the Credit Agreement is hereby amended in accordance with Annex A hereto by deleting the stricken text (indicated textually in the same manner as the following example: stricken text) and inserting the double-underlined text (indicated textually in the same manner as the following example: double-underlined text), in each case in the place where such text appears therein.
 
SECTION 1.04.          Amendment Effectiveness.  This Amendment shall become effective as of the date (the “Seventh Amendment Effective Date”) on which the following conditions are satisfied (or waived):
 
(a)          the Administrative Agent (or its counsel) shall have received from (i) the Borrower, (ii) Opco, (iii) the Administrative Agent, (iv) each Seventh Amendment Incremental Lender and (v) Lenders constituting the Required Lenders as of the Seventh Amendment Effective Date after giving effect to the establishment of the Seventh Amendment Incremental Commitments either (x) counterparts of this Amendment signed on behalf of such parties or (y) written evidence satisfactory to the Administrative Agent (which may include facsimile or other electronic transmissions of signed signature pages) that such parties have signed counterparts of this Amendment;
 
(b)          the Administrative Agent shall have received, on behalf of the Lenders, an executed legal opinion of Simpson Thacher & Bartlett LLP, counsel to the Loan Parties, and the Loan Parties hereby instruct such counsel to deliver such legal opinion;
 
(c)          the Borrower shall have paid to the Administrative Agent (i) for the account of each Seventh Amendment Incremental Lender as of the Seventh Amendment Effective Date, a fee equal to 0.25% of the aggregate amount of Seventh Amendment Incremental Commitments provided to the Borrower on the Seventh Amendment Effective Date and (ii) all reasonable costs and expenses (including, without limitation the reasonable fees, charges and disbursements of Milbank LLP) of the Administrative Agent for which invoices have been presented at least two Business Days prior to the Seventh Amendment Effective Date;
 
2
(d)          the representations and warranties of each Loan Party set forth in the Loan Documents shall be, after giving effect to this Amendment, true and correct in all material respects on and as of the date of this Amendment with the same effect as though made on and as of such date (except where such representations and warranties expressly relate to an earlier date, in which case such representations and warranties shall have been true and correct in all material respects as of such earlier date); provided that any representation and warranty that is qualified as to “materiality,” “Material Adverse Effect” or similar language shall be true and correct (after giving effect to any qualification therein) in all respects on such respective dates;
 
(e)          as of the date of this Amendment and immediately after giving effect hereto, no Default shall have occurred and be continuing; and
 
(f)          the Administrative Agent shall have received a certificate of the Borrower signed by an Authorized Officer thereof (i) certifying and attaching a copy of the resolutions adopted by the governing body of the Borrower authorizing the establishment of the Seventh Amendment Incremental Commitments and the other amendments contained herein and (ii) certifying that the conditions set forth in the immediately preceding subclauses (d) and (e) have been satisfied.
 
The Administrative Agent shall notify the Borrower and the Lenders of the Seventh Amendment Effective Date, and such notice shall be conclusive and binding.
 
ARTICLE II.
Miscellaneous
 
SECTION 2.01.          Representations and Warranties.  To induce the other parties hereto to enter into this Amendment, the Borrower represents and warrants to each of the Lenders and the Administrative Agent that, as of the Seventh Amendment Effective Date and after giving effect to the amendments to occur on the Seventh Amendment Effective Date, this Amendment has been duly authorized, executed and delivered by each of Opco and the Borrower and constitutes, and the Amended Credit Agreement will constitute, its legal, valid and binding obligation, enforceable against each of the Loan Parties in accordance with its terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium or other laws affecting creditors’ rights generally and subject to general principles of equity, regardless of whether considered in a proceeding in equity or at law.
 
SECTION 2.02.          Effect of Amendment.  (a)  Except as expressly set forth herein, this Amendment shall not by implication or otherwise limit, impair, constitute a waiver of, or otherwise affect the rights and remedies of, the Lenders or the Administrative Agent under the Credit Agreement or any other Loan Document, and shall not alter, modify, amend or in any way affect any of the terms, conditions, obligations, covenants or agreements contained in the Credit Agreement or any other Loan Document, all of which are ratified and affirmed in all respects and shall continue in full force and effect.  The parties hereto acknowledge and agree that the amendment of the Credit Agreement pursuant to this Amendment and all other Loan Documents amended and/or executed and delivered in connection herewith shall not constitute a novation of the Credit Agreement and the other Loan Documents as in effect prior to the Seventh Amendment Effective Date.  Nothing herein shall be deemed to establish a precedent for purposes of interpreting the provisions of the Credit Agreement or entitle any Loan Party to a consent to, or a waiver, amendment, modification or other change of, any of the terms, conditions, obligations, covenants or agreements contained in the Credit Agreement or any other Loan Document in similar or different circumstances.  This Amendment shall apply to and be effective only with respect to the provisions of the Credit Agreement and the other Loan Documents specifically referred to herein.
 
3
(a)          On and after the Seventh Amendment Effective Date, each reference in the Amended Credit Agreement to “this Agreement”, “hereunder”, “hereof”, “herein” or words of like import, and each reference to the Credit Agreement, “thereunder”, “thereof”, “therein” or words of like import in any other Loan Document, shall be deemed a reference to the Amended Credit Agreement.  This Amendment shall constitute a “Lender Joinder Agreement”, an “Extension Amendment” (entered into in accordance with, and subject to the terms of, Section 2.22(a) of the Credit Agreement) and a “Loan Document” for all purposes of the Amended Credit Agreement and the other Loan Documents.
 
SECTION 2.03.          Reaffirmation.  Each of the Loan Parties (a) affirms and confirms, after giving effect to this Amendment, its guarantees, pledges, grants and other undertakings under the Credit Agreement and the other Loan Documents to which it is a party and (b) agrees that, after giving effect to this Amendment (i) each Loan Document to which it is a party shall continue to be in full force and effect and (ii) all guarantees, pledges, grants and other undertakings thereunder with respect to the Obligations shall continue to be in full force and effect and shall accrue to the benefit of the Secured Parties.
 
SECTION 2.04.          Direction to Administrative Agent.  The undersigned Lenders (representing collectively the Required Lenders) hereby authorize and direct the Administrative Agent to enter into this Amendment.
 
SECTION 2.05.          Assignments. Concurrently with the execution of this Amendment, (a) [**] shall assign all of its rights and obligations in its capacity as a Lender under the Credit Agreement to [**] and (b) [**] shall assign all of its rights and obligations in its capacity as a Lender under the Credit Agreement to [**], in each case, pursuant to and in accordance with Section 10.04 of the Credit Agreement, and each of the Borrower, the Swingline Lender and the Administrative Agent hereby consent to such assignments (which shall be recorded by the Administrative Agent in the Register).
 
SECTION 2.06.          Governing Law.  This Amendment shall be governed by and construed in accordance with the laws of the State of New York.  The provisions of Sections 10.09 and 10.10 of the Amended Credit Agreement shall apply to this Amendment to the same extent as if fully set forth herein.
 
SECTION 2.07.          Costs and Expenses.  The Borrower agrees to reimburse the Administrative Agent for its reasonable out of pocket expenses in connection with this Amendment, including the reasonable fees, charges and disbursements of Milbank LLP, counsel for the Administrative Agent.
 
SECTION 2.08.          Counterparts.  This Amendment may be executed in any number of counterparts and by different parties hereto in separate counterparts, each of which when so executed and delivered shall be deemed an original, but all such counterparts together shall constitute but one and the same instrument.  Delivery of any executed counterpart of a signature page of this Amendment by facsimile transmission or other electronic imaging means shall be effective as delivery of a manually executed counterpart hereof. The words “execution,” “signed,” “signature” and words of like import in this Amendment shall be deemed to include electronic signatures or the keeping of records in electronic form, each of which shall be of the same legal effect, validity or enforceability as a manually executed signature or the use of a paper-based recordkeeping system, as the case may be, to the extent and as provided for in any applicable law, including the Federal Electronic Signatures in Global and National Commerce Act, the New York State Electronic Signatures and Records Act or any other similar state laws based on the Uniform Electronic Transactions Act.
 
[**] = Certain information contained in this document, marked by “[**]” has been excluded because it is both (i) not material and (ii) is the type that the registrant treats as private or confidential.
 
4
SECTION 2.09.          Headings.  The headings of this Amendment are for purposes of reference only and shall not limit or otherwise affect the meaning hereof.
 
[Signature Pages Follow]
 
5
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly executed and delivered by their officers as of the date first above written.
 
 
KREF HOLDINGS X LLC
   
 
BY
/s/ Patrick Mattson
   
NAME: Patrick Mattson
   
TITLE: Authorized Signatory
     
 
KKR REAL ESTATE FINANCE HOLDINGS L.P.
   
 
BY
/s/ Patrick Mattson
   
NAME: Patrick Mattson
   
TITLE: Authorized Signatory
     
 
KREF CAPITAL LLC
   
 
BY
/s/ Patrick Mattson
   
NAME: Patrick Mattson
   
TITLE: Authorized Signatory
     
 
KREF CAPITAL TRS LLC
   
 
BY
/s/ Patrick Mattson
   
NAME: Patrick Mattson
   
TITLE: Authorized Signatory
     
 
KREF MEZZ HOLDINGS LLC
   
 
BY
/s/ Patrick Mattson
   
NAME: Patrick Mattson
   
TITLE: Authorized Signatory
     
 
KREF SECURITIES HOLDINGS, LLC
   
 
BY
/s/ Patrick Mattson
   
NAME: Patrick Mattson
   
TITLE: Authorized Signatory

[Signature Page to Seventh Amendment]

 
KREF SECURITIES HOLDINGS II, LLC
   
 
BY
/s/ Patrick Mattson
   
NAME: Patrick Mattson
   
TITLE: Authorized Signatory
     
 
REFH SR MEZZ LLC
   
 
BY
/s/ Patrick Mattson
   
NAME: Patrick Mattson
   
TITLE: Authorized Signatory

[Signature Page to Seventh Amendment]

 
MORGAN STANLEY SENIOR FUNDING, INC.,
 
as Administrative Agent
   
 
BY
/s/ Lisa Hanson
   
Name: Lisa Hanson
   
Title: Authorized Signatory

[Signature Page to Seventh Amendment]

[Lenders signatures are on file with the Administrative Agent]

[Signature Page to Seventh Amendment]

Schedule I

Seventh Amendment Incremental Commitments

  Seventh Amendment Incremental Lender  
Seventh Amendment
Incremental
Commitment 
 
[**]
  
$[**]
 
[**]
  
$[**]
 
[**]
  
$[**]
 
[**]
  
$[**]
 
Total
  
$85,000,000

[**] = Certain information contained in this document, marked by “[**]” has been excluded because it is both (i) not material and (ii) is the type that the registrant treats as private or confidential.
 
Schedule II

Commitments

 
Lender
  
Commitment
 
[**]
  
$[**]
 
[**]
  
$[**]
 
[**]
  
$[**]
 
[**]
  
$[**]
 
[**]
  
$[**]
 
[**]
  
$[**]
 
[**]
  
$[**]
 
[**]
  
$[**]
 
[**]
  
$[**]
 
[**]
  
$[**]
 
Total
  
$420,000,000

[**] = Certain information contained in this document, marked by “[**]” has been excluded because it is both (i) not material and (ii) is the type that the registrant treats as private or confidential.
 
Annex A

[See Attached]

Annex A to Seventh Amendment
CREDIT AGREEMENT
 
dated as of
 
December 20, 2018
 
among
 
KREF Holdings X LLC,
as Borrower,
 
KKR REAL ESTATE FINANCE HOLDINGS L.P.,
 
as Opco
 
The Guarantors from time to time party hereto,
 
The Lenders from time to time party hereto,
 
and
 
Morgan Stanley Senior Funding, Inc.,
as Administrative Agent
 

KKR Capital Markets LLC,
as Lead Arranger and Bookrunner
 
TABLE OF CONTENTS

   
Page
 
ARTICLE 1
  
 
DEFINITIONS
  
     
Section 1.01.
Defined Terms
1
Section 1.02.
Classification of Loans and Borrowings
2629
Section 1.03.
Terms Generally
2629
Section 1.04.
Accounting Terms; GAAP
2630
Section 1.05.
Exchange Rates; Currency Equivalents
2730
Section 1.06.
Alternative Currencies
2730
     
 
ARTICLE 2
  
 
THE CREDITS
  
     
Section 2.01.
Commitments
2731
Section 2.02.
Loans and Borrowings
2831
Section 2.03.
Requests for Borrowings
2832
Section 2.04.
Swingline Loans
2933
Section 2.05.
[Reserved]
3034
Section 2.06.
Funding of Borrowings
3034
Section 2.07.
Interest Elections
3134
Section 2.08.
Termination and Reduction of Commitments
3236
Section 2.09.
Repayment of Loans; Evidence of Debt
3336
Section 2.10.
Prepayment of Loans
3437
Section 2.11.
Fees
3438
Section 2.12.
Interest
3538
Section 2.13.
Alternate Rate of Interest
3639
Section 2.14.
Increased Costs
3641
Section 2.15.
Break Funding Payments
3843
Section 2.16.
Taxes
3844
Section 2.17.
Payments Generally; Pro Rata Treatment; Sharing of Set‑offs
4247
Section 2.18.
Mitigation Obligations; Replacement of Lenders
4449
Section 2.19.
[Reserved]
4450
Section 2.20.
Defaulting Lenders
4550
Section 2.21.
Incremental Facilities
4651
Section 2.22.
Extended Commitments and Extended Loans
4752
     
ARTICLE 3  
REPRESENTATIONS AND WARRANTIES
  
     
Section 3.01.
Organization; Powers
4954
Section 3.02.
Authorization; Enforceability
4954
Section 3.03.
Governmental Approvals; No Conflicts
4955
Section 3.04.
Financial Condition; No Material Adverse Change
4955
Section 3.05.
Litigation and Environmental Matters
5055

i
Section 3.06.
Compliance with Laws
5055
Section 3.07.
Investment Company Status; Regulatory Restrictions on Borrowing
5056
Section 3.08.
Taxes
5056
Section 3.09.
ERISA
5056
Section 3.10.
Disclosure
5156
Section 3.11.
Compliance with Sanctions, Anti-Corruption Laws and Anti-Money Laundering Laws
5157
Section 3.12.
Beneficial Ownership Certification
5257
Section 3.13.
Solvency
5257
     
 
ARTICLE 4
  
 
CONDITIONS
  
     
Section 4.01.
Effectiveness
5257
Section 4.02.
Each Credit Event
5359
     
 
ARTICLE 5
  
 
AFFIRMATIVE COVENANTS
  
     
Section 5.01.
Financial Statements; Other Information
5459
Section 5.02.
Notices of Material Events
5661
Section 5.03.
Existence; Conduct of Business
5662
Section 5.04.
Payment of Taxes
5662
Section 5.05.
Maintenance of Properties; Insurance
5662
Section 5.06.
Books and Records; Inspection Rights
5762
Section 5.07.
Compliance with Laws
5763
Section 5.08.
Use of Proceeds
5863
Section 5.09.
Further Assurances
5863
Section 5.10.
Pledge of Additional Equity Interests
5964
     
 
ARTICLE 6
  
 
NEGATIVE COVENANTS
  
     
Section 6.01.
Liens
5964
Section 6.02.
Fundamental Changes
6065
Section 6.03.
Sanctions and Anti-Corruption Use of Proceeds
6066
Section 6.04.
Fiscal Year
6066
Section 6.05.
Financial Covenants
6166
     
 
ARTICLE 7
  
 
EVENTS OF DEFAULT
  
     
Section 7.01.
Events of Default
66
Section 7.02.
Application of Payments
69

ii
 
ARTICLE 8
  
 
THE ADMINISTRATIVE AGENT
  
     
Section 8.01.
Appointment and Authorization
6470
Section 8.02.
Rights and Powers as a Lender
6570
Section 8.03.
Limited Parties and Responsibilities
6570
Section 8.04.
Authority to Rely on Certain Writings, Statements and Advice
6671
Section 8.05.
Sub-Agents and Related Parties
6671
Section 8.06.
Resignation; Successor Administrative Agent
6672
Section 8.07.
Credit Decisions by Lenders
6772
Section 8.08.
Arranger
6773
Section 8.09.
Withholding Taxes
6773
Section 8.10.
Agent Under Security Documents and Guarantee
6773
Section 8.11.
Right to Realize on Collateral and Enforce Guarantee
6873
Section 8.12.
Erroneous Payments.
74
     
 
ARTICLE 9
  
 
[RESERVED]
  
     
 
ARTICLE 10
  
 
MISCELLANEOUS
  
     
Section 10.01.
Notices
6878
Section 10.02.
Waivers; Amendments
7079
Section 10.03.
Expenses; Indemnity; Damage Waiver
7282
Section 10.04.
Successors and Assigns
7484
Section 10.05.
Survival
7888
Section 10.06.
Counterparts; Integration; Effectiveness
7988
Section 10.07.
Severability
7988
Section 10.08.
Right of Setoff
7989
Section 10.09.
Governing Law; Jurisdiction; Consent to Service of Process
8089
Section 10.10.
Waiver of Jury Trial
8090
Section 10.11.
Headings
8190
Section 10.12.
Confidentiality
8190
Section 10.13.
Interest Rate Limitation
8292
Section 10.14.
USA PATRIOT Act
8392
Section 10.15.
Judgment Currency
8392
Section 10.16.
No Fiduciary Duty
8393
Section 10.17.
Acknowledgement Regarding Any Supported QFCs
8493
Section 10.18.
Acknowledgement and Consent to Bail-In of Affected Financial Institutions
8594
     
 
ARTICLE 11
  
 
LOAN PARTY GUARANTY
  
     
Section 11.01.
Guaranty
8695
Section 11.02.
Right of Contribution
8696

iii
Section 11.03.
No Subrogation
8796
Section 11.04.
Guaranty Absolute and Unconditional
8796
Section 11.05.
Reinstatement
8897
Section 11.06.
Payments
8898
Section 11.07.
Additional Guarantors
8898

iv
SCHEDULES:
 
Schedule 1.01
–
Closing Date Liens
Schedule 2.01
–
Commitments
Schedule 3.05
–
Disclosed Matters
Schedule 5.09
–
Post-Closing Actions
     
EXHIBITS:
    
     
Exhibit A
–
Form of Assignment
Exhibit B
–
Form of Compliance Certificate
Exhibit C
–
Form of Loan Party Joinder Agreement
Exhibit D
–
Form of Lender Joinder Agreement
Exhibit E
–
Form of Borrowing Request
Exhibit F
–
Form of Interest Election Request
Exhibit G-1-4
–
Form of U.S. Tax Compliance Certificate
Exhibit H
–
Form of Note
Exhibit I
–
Form of Pledge Agreement
Exhibit J
 –
Form of Security Agreement
 
v
CREDIT AGREEMENT (this “Agreement”) dated as of December 20, 2018 among KREF HOLDINGS X LLC, as Borrower (the “Borrower”), KKR REAL ESTATE FINANCE HOLDINGS L.P.  (“Opco”), the GUARANTORS party hereto from time to time, the LENDERS party hereto from time to time and MORGAN STANLEY SENIOR FUNDING, INC., as Administrative Agent.
 
In consideration of the mutual covenants and agreements herein contained, the parties hereto covenant and agree as follows:
 
ARTICLE 1
Definitions
 
Section 1.01.          Defined Terms.  As used in this Agreement, the following terms have the meanings specified below:
 
“ABR”, when used in reference to any Loan or Borrowing, refers to whether such Loan, or the Loans comprising such Borrowing, are bearing interest at a rate determined by reference to the Alternate Base Rate.
 
“Administrative Agent” means Morgan Stanley Senior Funding, Inc., in its capacity as administrative agent under the Loan Documents and collateral agent under the Security Documents.
 
“Administrative Questionnaire” means an Administrative Questionnaire in a form supplied by the Administrative Agent.
 
“Affected Financial Institution” means (a) any EEA Financial Institution or (b) any UK Financial Institution.
 
“Affiliate” means, with respect to a specified Person, another Person that directly, or indirectly through one or more intermediaries, Controls or is Controlled by or is under common Control with such specified Person.
 
“Agreement” has the meaning assigned to such term in the introductory paragraph to this Agreement.
 
“Alternative Asset Investment Firm” means any alternative asset investment firm and any fund managed by a firm whose primary purpose is generally understood to be alternative asset investing.
 
“Alternate Base Rate” means, for any day, a rate per annum equal to the greatesthighest of (a) the Prime Rate in effect on such day, (b) the Federal Funds Effective Rate in effect on such day plus ½ of 1% and (c) the sum of 1% plus the Eurocurrency Rate for Dollars for an Interest Period of one month appearing on the Screen at approximately 11:00 a.m., London time, on such day (or if such day is not a Business Day, on the immediately preceding Business Day); provided that if such Eurocurrency Rate shall be less than zero, such rate shall be deemed to be zero for purposes of this clause (c)Term SOFR for a one-month Interest Period in effect on such day plus 1.00%; provided
 
that, for the avoidance of doubt, Term SOFR for any day shall be Term SOFR for a one-month Interest Period on the day that is two (2) Business Days prior to such day, as such rate is published by the Term SOFR Administrator.  Any change in the Alternate Base Rate due to a change in the Prime Rate or, the Federal Funds Effective Rate or Term SOFR shall be effective from and including the effective date of such change in the Prime Rate or, the Federal Funds Effective Rate or Term SOFR, respectively.
 
“Alternative Currency” means any currency (other than U.S. Dollars) that is approved in accordance with Section 1.06.
 
“Anti-Corruption Laws” means any laws, rules or regulations relating to corruption or bribery, including the U.S. Foreign Corrupt Practices Act of 1977.
 
“Anti-Money Laundering Laws” means any laws, rules or regulations relating to money laundering or terrorism financing, including the Bank Secrecy Act, as amended by the USA PATRIOT Act.
 
“Applicable Percentage” means, with respect to any Lender, the percentage of the total Commitments represented by such Lender’s Commitment; provided that in the case of Section 2.20 when a Defaulting Lender shall exist, “Applicable Percentage” shall mean the percentage of the total Commitments (disregarding any Defaulting Lender’s Commitment) represented by such Lender’s Commitment.  If the Commitments have terminated or expired, the Applicable Percentages shall be determined based upon the Commitments most recently in effect, giving effect to any assignments.
 
“Applicable Rate” means, for any day, a rate per annum equal to (a) with respect to any EurocurrencySOFR Borrowing, 2.00% and (b) with respect to any ABR Borrowing, 1.00%.
 
“Approved Fund” has the meaning assigned to such term in Section 10.04.
 
“Arranger” means KKR Capital Markets LLC, in its capacity as lead arranger and bookrunner for the credit facility established under this Agreement.
 
“Assignment” means an assignment and assumption entered into by a Lender and an assignee (with the consent of any party whose consent is required by Section 10.04), and accepted by the Administrative Agent, in the form of Exhibit A or any other form approved by the Administrative Agent.
 
“Authorized Officer” means, with respect to any Person, any individual holding the position of the Chief Executive Officer, the Chief Operating Officer, President, the Chief Financial Officer, the Treasurer, the Controller, the General Counsel, Secretary, the Vice President, or any other senior officer with express authority to act on behalf of such Person designated as such by the board of directors, general partner or other managing authority of such Person.
 
“Availability Period” means the period from and including the Closing Date to but excluding the earlier of the Maturity Date and date of the Termination of the Commitments.
 
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“Available Tenor” means, as of any date of determination and with respect to the then-current Benchmark, as applicable, (a) if such Benchmark is a term rate, any tenor for such Benchmark (or component thereof) that is or may be used for determining the length of an interest period pursuant to this Agreement or (b) otherwise, any payment period for interest calculated with reference to such Benchmark (or component thereof) that is or may be used for determining any frequency of making payments of interest calculated with reference to such Benchmark, in each case, as of such date and not including, for the avoidance of doubt, any tenor for such Benchmark that is then-removed from the definition of “Interest Period” pursuant to Section 2.13.
 
“Bail-In Action” means the exercise of any Write-Down and Conversion Powers by the applicable Resolution Authority in respect of any liability of an Affected Financial Institution.
 
“Bail-In Legislation” means (a) with respect to any EEA Member Country implementing Article 55 of Directive 2014/59/EU of the European Parliament and of the Council of the European Union, the implementing law, regulation rule or requirement for such EEA Member Country from time to time which is described in the EU Bail-In Legislation Schedule and (b) with respect to the United Kingdom, Part I of the United Kingdom Banking Act 2009 (as amended from time to time) and any other law, regulation or rule applicable in the United Kingdom relating to the resolution of unsound or failing banks, investment firms or other financial institutions or their affiliates (other than through liquidation, administration or other insolvency proceedings).
 
“Bankruptcy Event” means, with respect to any Person, such Person becomes the subject of a bankruptcy or insolvency proceeding, or has had a receiver, conservator, trustee, administrator, custodian, assignee for the benefit of creditors or similar Person charged with the reorganization or liquidation of its business appointed for it, or, in the good faith determination of the Administrative Agent, has taken any action in furtherance of, or indicating its consent to, approval of, or acquiescence in, any such proceeding or appointment, provided that a Bankruptcy Event shall not result solely by virtue of any ownership interest, or the acquisition of any ownership interest, in such Person by a governmental authority or instrumentality thereof, provided, further, that such ownership interest does not result in or provide such Person with immunity from the jurisdiction of courts within the United States or from the enforcement of judgments or writs of attachment on its assets or permit such Person (or such governmental authority or instrumentality) to reject, repudiate, disavow or disaffirm any contracts or agreements made by such Person.
 
“Benchmark” means, initially, Term SOFR; provided that, if a Benchmark Transition Event has occurred with respect to Term SOFR or the then-current Benchmark, then “Benchmark” means the applicable Benchmark Replacement to the extent that such Benchmark Replacement has replaced such prior benchmark rate pursuant to Section 2.13.
 
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“Benchmark Replacement” means, with respect to any Benchmark Transition Event, the first alternative set forth in the order below that can be determined by the Administrative Agent for the applicable Benchmark Replacement Date:
 
(a) Daily Simple SOFR; or
 
(b) the sum of: (i) the alternate benchmark rate that has been selected by the Administrative Agent and the Borrower giving due consideration to (A) any selection or recommendation of a replacement benchmark rate or the mechanism for determining such a rate by the Relevant Governmental Body or (B) any evolving or then-prevailing market convention for determining a benchmark rate as a replacement to the then-current Benchmark for U.S. Dollar-denominated syndicated credit facilities and (ii) the related Benchmark Replacement Adjustment.
 
If the Benchmark Replacement as determined pursuant to clause (a) or (b) above would be less than the Floor, the Benchmark Replacement will be deemed to be the Floor for the purposes of this Agreement and the other Loan Documents.
 
“Benchmark Replacement Adjustment” means, with respect to any replacement of the then-current Benchmark with an Unadjusted Benchmark Replacement, the spread adjustment, or method for calculating or determining such spread adjustment, (which may be a positive or negative value or zero) that has been selected by the Administrative Agent and the Borrower giving due consideration to (a) any selection or recommendation of a spread adjustment, or method for calculating or determining such spread adjustment, for the replacement of such Benchmark with the applicable Unadjusted Benchmark Replacement by the Relevant Governmental Body or (b) any evolving or then-prevailing market convention for determining a spread adjustment, or method for calculating or determining such spread adjustment, for the replacement of such Benchmark with the applicable Unadjusted Benchmark Replacement for U.S. Dollar denominated syndicated credit facilities at such time.
 
 “Benchmark Replacement Date” means the earliest to occur of the following events with respect to the then-current Benchmark:
 
(a)          in the case of clause (a) or (b) of the definition of “Benchmark Transition Event”, the later of (i) the date of the public statement or publication of information referenced therein and (ii) the date on which the administrator of such Benchmark (or the published component used in the calculation thereof) permanently or indefinitely ceases to provide all Available Tenors of such Benchmark (or such component thereof); or
 
(b)          in the case of clause (c) of the definition of “Benchmark Transition Event”, the first date on which such Benchmark (or the published component used in the calculation thereof) has been determined and announced by or on behalf of the administrator of such Benchmark (or such component thereof) or the regulatory supervisor for the administrator of such Benchmark (or such component thereof) to
 
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be non-representative; provided that such non-representativeness will be determined by reference to the most recent statement or publication referenced in such clause (c) and even if any Available Tenor of such Benchmark (or such component thereof) continues to be provided on such date.
 
For the avoidance of doubt, the “Benchmark Replacement Date” will be deemed to have occurred in the case of clause (a) or (b) with respect to any Benchmark upon the occurrence of the applicable event or events set forth therein solely to the extent such event applies to all then-current Available Tenors of such Benchmark (or the published component used in the calculation thereof).
 
“Benchmark Transition Event” means the occurrence of one or more of the following events with respect to the then-current Benchmark:
 
(a)          a public statement or publication of information by or on behalf of the administrator of such Benchmark (or the published component used in the calculation thereof) announcing that such administrator has ceased or will cease to provide all Available Tenors of such Benchmark (or such component thereof), permanently or indefinitely; provided that, at the time of such statement or publication, there is no successor administrator that will continue to provide any Available Tenor of such Benchmark (or such component thereof);
 
(b)          a public statement or publication of information by the regulatory supervisor for the administrator of such Benchmark (or the published component used in the calculation thereof), the Federal Reserve Board, the Federal Reserve Bank of New York, an insolvency official with jurisdiction over the administrator for such Benchmark (or such component), a resolution authority with jurisdiction over the administrator for such Benchmark (or such component) or a court or an entity with similar insolvency or resolution authority over the administrator for such Benchmark (or such component), which states that the administrator of such Benchmark (or such component) has ceased or will cease to provide all Available Tenors of such Benchmark (or such component thereof) permanently or indefinitely; provided that, at the time of such statement or publication, there is no successor administrator that will continue to provide any Available Tenor of such Benchmark (or such component thereof); or
 
(c)          a public statement or publication of information by or on behalf of the administrator of such Benchmark (or the published component used in the calculation thereof) or the regulatory supervisor for the administrator of such Benchmark (or such component thereof) announcing that all Available Tenors of such Benchmark (or such component thereof) are not, or as of a specified future date will not be, representative.
 
For the avoidance of doubt, a “Benchmark Transition Event” will be deemed to have occurred with respect to any Benchmark solely to the extent that a public statement or publication of information set forth above has occurred with respect to
 
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all then-current Available Tenors of such Benchmark (or the published component used in the calculation thereof).
 
“Benchmark Unavailability Period” means, the period (if any) (a) beginning at the time that a Benchmark Replacement Date has occurred if, at such time, no Benchmark Replacement has replaced the then-current Benchmark for all purposes hereunder and under any Loan Document in accordance with Section 2.13 and (b) ending at the time that a Benchmark Replacement has replaced the then-current Benchmark for all purposes hereunder and under any Loan Document in accordance with Section 2.13.
 
“Beneficial Ownership Certification” means a certification regarding beneficial ownership required by the Beneficial Ownership Regulation.
 
“Beneficial Ownership Regulation” means 31 C.F.R. § 1010.230.
 
 “Board” means the Board of Governors of the Federal Reserve System of the United States of America.
 
“Borrower” has the meaning assigned to such term in the introductory paragraph to this Agreement.
 
“Borrower Group Companies” means the Loan Parties and their Subsidiaries.
 
“Borrowing” means (a) Global Loans of the same Type and in the same currency, made, converted or continued on the same date and, in the case of EurocurrencySOFR Loans, as to which a single Interest Period is in effect, or (b) a Swingline Loan.
 
“Borrowing Request” means a request for a Borrowing in accordance with Section 2.03 or Section 2.04 and in the form of Exhibit E or any other form reasonably acceptable to the Administrative Agent.
 
“Business Day” means any day that is not a Saturday, Sunday or other day on which commercial banks in New York City are authorized or required by law to remain closed.; provided that, in relation to Loans denominated in U.S. Dollars and in relation to the calculation of Term SOFR, the term “Business Day” shall also exclude any day on which the Securities Industry and Financial Markets Association recommends that the fixed income departments of its members be closed for the entire day for purposes of trading in United States government securities.
 
“Capital Lease” means, as applied to any Person, any lease of any property (whether real, personal, or mixed) by that Person as lessee that, in conformity with GAAP, is, or is required to be, accounted for as a capital lease on the balance sheet of that Person, subject to Section 1.04.
 
“Capital Lease Obligations” means, at the time any determination thereof is to be made, the amount of the liability in respect of a Capital Lease that would at such time be required to be capitalized and reflected as a liability on a balance sheet (excluding the
 
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footnotes thereto) prepared in accordance with GAAP (other than capital leases that are characterized as such (i) because they relate to entire buildings or (ii) based on subjective acceleration clauses or cross default clauses, without giving effect to any change in GAAP subsequent to December 31, 2017), subject to Section 1.04.
 
“Cash” means coin or currency of the United States of America or immediately available federal funds, including such funds delivered by wire transfer.
 
“Cash Equivalents” means any of the following, to the extent owned by Opco or any of its Subsidiaries free and clear of all Liens (other than Liens permitted hereunder): (a) readily marketable direct obligations of the government of the United States or any agency or instrumentality thereof or obligations unconditionally guaranteed by the full faith and credit of the government of the United States, (b) certificates of deposit of or time deposits with the Administrative Agent or a member of the Federal Reserve System that issues (or the parent of which issues) commercial paper rated as described in clause (c) below, is organized under the laws of the United States or any state thereof and has combined capital and surplus of at least $1,000,000,000 or (c) commercial paper in an aggregate amount of not more than $50,000,000 per issuer outstanding at any time, issued by any corporation organized under the laws of any state of the United States and rated at least “Prime-1” (or the then equivalent grade) by Moody’s or “A-1” (or the then equivalent grade) by S&P.
 
“CFC” means a direct or indirect Subsidiary of Opco that is a “controlled foreign corporation” within the meaning of Section 957 of the Code.
 
“CFC Holding Company” means a direct or indirect Domestic Subsidiary of Opco substantially all of the assets of which consist (directly or indirectly) of capital stock, stock equivalents and/or Indebtedness of one or more Foreign Subsidiaries that are CFCs.
 
“Change of Control” means the occurrence of the following:
 
(a)          the direct or indirect sale, transfer, conveyance or other disposition (other than by way of merger or consolidation), in one or a series of related transactions, of all or substantially all of the combined assets of the Credit Group taken as a whole to any “person” (as that term is used in Section 13(d)(3) of the Exchange Act or any successor provision); or
 
(b)          the consummation of any transaction (including, without limitation, any merger or consolidation) the result of which is that any “person” (as that term is used in Section 13(d)(3) of the Exchange Act or any successor provision) becomes the beneficial owner (within the meaning of Rule 13d-3 under the Exchange Act or any successor provision) of a majority of the controlling interests in Parent;
 
provided, in the case of clauses (a) and (b) above, that no transaction shall constitute a Change of Control if a member of the KKR Group continues, after giving effect to such transaction, to exercise investment control over such Person.
 
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“Change in Law” means (a) the adoption of any law, rule or regulation after the Closing Date, (b) any change in any law, rule or regulation or in the interpretation or application thereof by any Governmental Authority after the Closing Date or (c) compliance by any Lender (or, for purposes of Section 2.14(b), by any lending office of such Lender or by such Lender’s holding company, if any) with any request, guideline or directive (whether or not having the force of law) of any Governmental Authority made or issued after the Closing Date. For purposes of this definition, (i) the Dodd-Frank Wall Street Reform and Consumer Protection Act and all requests, rules, regulations, guidelines, or directives thereunder or issued in connection therewith and (ii) all requests, rules, guidelines, requirements, or directives promulgated by the Bank for International Settlements, the Basel Committee on Banking Supervision (or any successor or similar authority), or the United States or foreign regulatory authorities pursuant to Basel III, shall in each case described in clauses (i) and (ii) above be deemed to be a Change in Law and have gone into effect after the date hereof, regardless of the date enacted, adopted, issued or implemented.
 
“Class”, when used in reference to any Loan or Borrowing, refers to whether such Loan, or the Loans comprising such Borrowing, are Global Loans or Swingline Loans.
 
“CLO” means a collateralized loan obligation vehicle.
 
“Closing Date” means the date on which the conditions specified in Section 4.01 are satisfied (or waived in accordance with Section 10.02).
 
“Code” means the Internal Revenue Code of 1986, as amended from time to time.
 
“Collateral” means all property pledged or purported to be pledged pursuant to the Security Documents, excluding in all events Excluded Property.
 
“Commitment” means, with respect to each Lender, the commitment of such Lender to make Global Loans and to acquire participations in Swingline Loans hereunder, expressed as an amount representing the maximum aggregate amount of such Lender’s Credit Exposure hereunder, as such commitment may be (a) reduced from time to time pursuant to Section 2.08 and (b) reduced or increased from time to time pursuant to assignments by or to such Lender pursuant to Section 10.04.  The amount of each Lender’s Commitment is set forth on Schedule 2.01, or in the Assignment pursuant to which such Lender shall have assumed its Commitment, as applicable.  As of the ClosingSeventh Amendment Effective Date, the aggregate amount of the Lenders’ Commitments is $100,000,000420,000,000.
 
“Compliance Certificate” means a certificate substantially in the form of Exhibit B, properly completed and signed by an Authorized Officer of the Borrower.
 
“Conforming Changes” means, with respect to the use, administration, adoption or implementation of any Benchmark Replacement, any technical, administrative or operational changes (including changes to the definition of “Alternate Base Rate”, the definition of “Business Day,” the definition of “Interest Period” or any similar or analogous definition (or the addition of a concept of
 
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“interest period”), timing and frequency of determining rates and making payments of interest, timing of borrowing requests or prepayment, conversion or continuation notices, the applicability and length of lookback periods, the applicability of Section 2.15 and other technical, administrative or operational matters) that the Administrative Agent decides (in consultation with the Borrower) may be appropriate to reflect the adoption and implementation of any such rate or to permit the use and administration thereof by the Administrative Agent in a manner substantially consistent with market practice (or, if the Administrative Agent decides (in consultation with the Borrower) that adoption of any portion of such market practice is not administratively feasible or if the Administrative Agent determines that no market practice for the administration of any such rate exists, in such other manner of administration as the Administrative Agent decides (in consultation with the Borrower) is reasonably necessary in connection with the administration of this Agreement and the other Loan Documents.
 
“Connection Income Taxes” means Other Connection Taxes that are imposed on or measured by net income (however denominated) or that are franchise Taxes or branch profits Taxes.
 
“Consenting Commitments” means the Commitments of the Consenting Lenders.
 
“Consenting Lender” has the meaning specified in the Seventh Amendment.
 
“Consolidated Depreciation and Amortization Expense” means, with respect to any Person for any period, the total amount of depreciation and amortization expense, including the amortization of deferred financing fees or costs, debt issuance costs, commissions, fees, and expenses, capitalized expenditures (including capitalized software expenditures), customer acquisition costs, the amortization of original issue discount resulting from the issuance of Indebtedness at less than par and incentive payments, conversion costs, and contract acquisition costs of such Person and its Subsidiaries for such period on a consolidated basis and otherwise determined in accordance with GAAP.
 
“Consolidated Interest Income” means all amounts set forth on an income statement of Parent and its Subsidiaries prepared in accordance with GAAP for interest income (excluding deferred interest and the amortized portion of any upfront fees) for the Test Period ended on or most recently prior to such date of determination.
 
“Consolidated Interest Expense” means, with respect to any Person and its Subsidiaries, if any, for any period, the amount of interest paid in cash with respect to Indebtedness as shown on such Person’s consolidated statement of cash flow in accordance with GAAP, as offset by the amount of receipts pursuant to net received interest rate swap agreements of such Person and its Subsidiaries during the applicable period. For purposes of this definition, interest on a Capital Lease Obligation shall be deemed to accrue at an interest rate reasonably determined by such Person to be the rate of interest implicit in such Capital Lease Obligation in accordance with GAAP.
 
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“Constituent Documents” means, with respect to any Person, (a) the articles of incorporation, certificate of incorporation, certificate of limited partnership, constitution or certificate of formation (or the equivalent organizational documents) of such Person and (b) the by-laws, operating agreement or limited partnership agreement (or the equivalent governing documents) of such Person.
 
“Contingent Obligations” means contingent indemnification and expense reimbursement obligations as to which no claim has been asserted.
 
“Control” means possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of a Person, whether through the ability to exercise voting power, by contract or otherwise.  “Controlling” and “Controlled” have meanings correlative thereto.
 
“Credit Exposure” means, with respect to any Lender at any time, the sum of the outstanding principal amount of such Lender’s Global Loans and its Swingline Exposure at such time.
 
“Credit Group” means the Loan Parties and the Loan Parties’ direct and indirect Subsidiaries (to the extent of their economic ownership interest in such Subsidiaries) taken as a whole.
 
“Daily Simple SOFR” means, for any day, SOFR, with the conventions for this rate (which will include a lookback) being established by the Administrative Agent in accordance with the conventions for this rate selected or recommended by the Relevant Governmental Body for determining “Daily Simple SOFR” for syndicated business loans; provided that, if the Administrative Agent decides that any such convention is not administratively feasible for the Administrative Agent, then the Administrative  Agent may establish another convention in consultation with the Borrower.
 
“Debt to Asset Ratio” means the ratio of (a) the Recourse Indebtedness for borrowed money of Parent and its consolidated Subsidiaries to (b) the aggregate book value of all assets of Parent and its consolidated Subsidiaries and the proportionate share of such assets owned by Affiliates of such Person, in each case, determined in accordance with GAAP.
 
“Default” means any event or condition which constitutes an Event of Default or which upon notice, lapse of time or both would, unless cured or waived, become an Event of Default.
 
“Defaulting Lender” means any Lender that (a) has failed, within two Business Days of the date required to be funded or paid, to (i) fund all or any portion of its Loans, (ii) fund all or any portion of its participations in Swingline Loans or (iii) pay over to the Administrative Agent or any Lender any other amount required to be paid by it hereunder, unless, in the case of clause (i) above, such Lender notifies the Administrative Agent and the Borrower in writing that such failure is the result of such Lender’s reasonable determination that a condition precedent to funding (specifically identified and including
 
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the particular default, if any) has not been satisfied, (b) has notified the Borrower or the Administrative Agent in writing, or has made a public statement to the effect, that it does not intend or expect to comply with all or any portion of its funding obligations under this Agreement (unless such writing or public statement indicates that such position is based on such Lender’s reasonable determination that a condition precedent (specifically identified and including the particular default, if any) to funding under this Agreement cannot be satisfied) or generally under other agreements in which it commits to extend credit, (c) has failed, within three Business Days after written request by the Administrative Agent, acting in good faith, to provide a certification in writing from an authorized officer of such Lender that it will comply with its obligations to fund Loans and participations in then outstanding Swingline Loans under this Agreement, provided that such Lender shall cease to be a Defaulting Lender pursuant to this clause (c) upon the Administrative Agent’s receipt of such certification in form and substance reasonably satisfactory to it, or (d) has become the subject of a Bankruptcy Event or has a Controlling Person that has become the subject of a Bankruptcy Event.
 
“Delaware Divided LLC” means any Delaware LLC which has been formed upon the consummation of a Delaware LLC Division.
 
“Delaware LLC” means any limited liability company organized or formed under the laws of the State of Delaware.
 
“Delaware LLC Division” means the statutory division of any Delaware LLC into two or more Delaware LLCs pursuant to Section 18-217 of the Delaware Limited Liability Company Act.
 
“Determination Day” has the meaning specified in the definition of “Term SOFR”.
 
“Disclosed Matters” means the actions, suits and proceedings and the environmental matters disclosed in Schedule 3.05.
 
“Domestic Subsidiary” means each Subsidiary of Opco organized under the laws of the United States or any state or territory thereof or the District of Columbia.
 
“EEA Financial Institution” means (a) any credit institution or investment firm established in any EEA Member Country which is subject to the supervision of an EEA Resolution Authority, (b) any entity established in an EEA Member Country which is a parent of an institution described in clause (a) of this definition, or (c) any financial institution established in an EEA Member Country which is a subsidiary of an institution described in clauses (a) or (b) of this definition and is subject to consolidated supervision with its parent.
 
“EEA Member Country” means any of the member states of the European Union, Iceland, Liechtenstein, and Norway.
 
“EEA Resolution Authority” means any public administrative authority or any person entrusted with public administrative authority of any EEA Member Country
 
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(including any delegee) having responsibility for the resolution of any EEA Financial Institution.
 
“Environmental Laws” means all laws, rules, regulations, codes, ordinances, orders, decrees, judgments, injunctions, notices or binding agreements issued, promulgated or entered into by any Governmental Authority, relating in any way to the environment, the preservation or reclamation of natural resources, the management, release or threatened release of any Hazardous Material or to health and safety matters.
 
“Environmental Liability” means any liability, contingent or otherwise (including any liability for damages, costs of remediation, fines, penalties or indemnities), of any Loan Party directly or indirectly resulting from or based upon (a) violation of any Environmental Law, (b) the generation, use, handling, transportation, storage, treatment or disposal of any Hazardous Materials, (c) exposure to any Hazardous Materials, (d) the release or threatened release of any Hazardous Materials into the environment or (e) any contract, agreement or other consensual arrangement pursuant to which liability is assumed or imposed with respect to any of the foregoing.
 
“Equal Priority Intercreditor Agreement” means an intercreditor agreement substantially in the form of Exhibit K.
 
“ERISA” means the Employee Retirement Income Security Act of 1974, as amended from time to time.
 
“ERISA Affiliate” means each Loan Party as well as any trade or business (whether or not incorporated) that, together with any Loan Party, is treated as a single employer under Section 414(b) or (c) of the Code or, solely for purposes of Section 302 of ERISA and Section 412 of the Code, is treated as a single employer under Section 414 of the Code.
 
“ERISA Event” means (a) any “reportable event”, as defined in Section 4043 of ERISA or the regulations issued thereunder with respect to a Plan (other than an event for which the 30 day notice period is waived); (b) the failure by any Plan to satisfy the minimum funding standards (within the meaning of Section 412 of the Code or Section 302 of ERISA), whether or not waived; (c) the filing pursuant to Section 412(c) of the Code or Section 302(c) of ERISA of an application for a waiver of the minimum funding standard with respect to any Plan; (d) the incurrence by any ERISA Affiliate of any liability under Title IV of ERISA with respect to the termination of any Plan; (e) the receipt by any ERISA Affiliate from the PBGC or a plan administrator of any notice relating to an intention to terminate any Plan or Plans or to appoint a trustee to administer any Plan; (f) the incurrence by any ERISA Affiliate of any liability with respect to the withdrawal or partial withdrawal from any Plan or Multiemployer Plan; or (g) the receipt by any ERISA Affiliate of any notice, or the receipt by any Multiemployer Plan from any ERISA Affiliate of any notice, concerning the imposition of Withdrawal Liability or a determination that a Multiemployer Plan is, or is expected to be, insolvent or in reorganization, within the meaning of Title IV of ERISA.
 
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“Erroneous Payment” has the meaning assigned to such term in Section 8.12(a).
 
“Erroneous Payment Deficiency Assignment” has the meaning assigned to such term in Section 8.12(d)(i).
 
“Erroneous Payment Impacted Class” has the meaning assigned to such term in Section 8.12(d)(i).
 
“Erroneous Payment Return Deficiency” has the meaning assigned to such term in Section 8.12(d)(i).
 
“Erroneous Payment Subrogation Rights” has the meaning assigned to such term in Section 8.12(e).
 
“EU Bail-In Legislation Schedule” means the EU Bail-In Legislation Schedule published by the Loan Market Association (or any successor person), as in effect from time to time.
 
“Eurocurrency”, when used with respect to any Loan or Borrowing, refers to whether such Loan, or the Loans comprising such Borrowing, are bearing interest at a rate determined by reference to the Eurocurrency Rate.
 
“Eurocurrency Rate” means, with respect to any Eurocurrency Borrowing for any Interest Period, the rate per annum equal to the ICE Benchmark Administration LIBOR Rate from the relevant page of the Reuters screen (or any successor to or substitute for such screen, providing rate quotations comparable to those currently provided on such page of such screen, as determined by the Administrative Agent from time to time) (the “Screen”) at approximately 11:00 a.m., London time, two Business Days prior to the commencement of such Interest Period, as the rate for deposits in the currency of such Eurocurrency Borrowing with a maturity comparable to such Interest Period; provided that if the Screen shall not be available at such time for such Interest Period (an “Impacted Interest Period”) then the “Eurocurrency Rate” with respect to such Eurocurrency Borrowing for such Interest Period shall be the Interpolated Rate; provided that if the Interpolated Rate shall not be available at such time for any reason, to the extent a comparable or successor rate is approved by the Administrative Agent in connection herewith, the approved rate shall be applied in a manner consistent with market practice; provided, further, that to the extent such market practice is not administratively feasible for the Administrative Agent, such approved rate shall be applied in a manner as otherwise reasonably determined by the Administrative Agent in consultation with the Borrower. Notwithstanding the foregoing, if the applicable rate described above is less than zero, such rate shall be deemed to be zero for purposes of this Agreement.
Further, notwithstanding anything contained herein to the contrary, in the event that the Administrative Agent shall have determined, in consultation with the Borrower, (which determination shall be final and conclusive and binding upon all parties hereto) that there exists, at such time, a broadly accepted market convention for determining a rate of interest for loans in the United States in lieu of the Screen, and the Administrative Agent shall have given notice of such determination to the Borrower and each Lender (it being understood that the Administrative Agent shall have no obligation to
 
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make such determination and/or to give such notice), then the Administrative Agent and the Borrower shall enter into an amendment to this Agreement to reflect such alternate rate of interest and such other related changes to this Agreement as may be applicable.  Notwithstanding anything to the contrary in Section 10.02 (Waivers; Amendments), such amendment shall become effective without any further action or consent of any other party to this Agreement so long as the Lenders shall have received at least five Business Days’ prior written notice thereof and the Administrative Agent shall not have received, within five Business Days of the date of such notice to the Lenders, a written notice from the Required Lenders stating that the Required Lenders object to such amendment.  Until an alternate rate of interest shall be determined in accordance with this paragraph (but only to the extent the Screen for the applicable Interest Period is not available or published at such time on a current basis), (x) no Loans may be made as, or converted to, Eurocurrency Rate Loans, and (y) any notice of conversion or continuation given by the Borrower with respect to Eurocurrency Rate Loans shall be deemed to be rescinded by the Borrower.
 
“Event of Default” has the meaning assigned to such term in Article 7.
 
“Exchange Act” means the U.S. Securities Exchange Act of 1934 and any statute successor thereto, in each case as amended from time to time.
 
“Excluded Equity Interests” means (i) any equity interests with respect to which, in the reasonable judgment of the Administrative Agent and Opco, the cost or other consequences of pledging such equity interests in favor of the Secured Parties under the Security Documents shall be excessive in view of the benefits to be obtained by the Lenders therefrom, (ii) solely in the case of any pledge of equity interests of any (a) Foreign Subsidiary or (b) CFC Holding Company, any voting equity interests of any class of such Foreign Subsidiary or such CFC Holding Company in excess of 66% of the total combined voting power of all classes of such voting equity interests in such Foreign Subsidiary or such CFC Holding Company, (iii) any equity interests of any direct or indirect Subsidiary of a Foreign Subsidiary or a CFC Holding Company, (iv) any equity interests to the extent the pledge thereof would violate any applicable Requirements of Law (including any legally effective requirement to obtain the consent of any Governmental Authority unless such consent has been obtained), (v) in the case of (A) any equity interests of any Subsidiary to the extent such equity interests are subject to a Lien of a third party or (B) any equity interests of any Subsidiary that is not a wholly owned Subsidiary of Opco and its Subsidiaries at the time such Subsidiary becomes a Subsidiary, any equity interests of each such Subsidiary described in clause (A) or (B) to the extent (I) that a pledge thereof to secure the Obligations is prohibited by any applicable contractual requirement, (II) any contractual requirement prohibits such a pledge without the consent of any other party or (III) a pledge thereof to secure the Obligations would give any other party (other than a Loan Party or wholly owned Subsidiary) to any contract, agreement, instrument, or indenture governing such equity interests the right to terminate its obligations thereunder, (vi) any equity interests of any Subsidiary to the extent that the pledge of such equity interests would result in materially adverse tax consequences to Opco, the Borrower or any Subsidiary as reasonably determined by Opco in consultation with the Administrative Agent, (vii) any equity interests that are margin stock, and (viii) any equity interests of any
 
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Subsidiary that is not a Material Subsidiary, a captive insurance Subsidiary or any special purpose entity.
 
“Excluded Property” has the meaning assigned to such term in the Security Agreement.
 
“Excluded Subsidiary” means (i) each Subsidiary, in each case, for so long as any such Subsidiary does not, on a consolidated basis with its Subsidiaries, determined by reference to the financial statements delivered (x) on the Closing Date pursuant to Section 3.04(a) and (y) after the Closing Date pursuant to Sections 5.01(a) and 5.01(b), constitute a Material Subsidiary, (ii) each Subsidiary that is not a wholly owned Subsidiary on any date such Subsidiary would otherwise be required to become a Guarantor pursuant to the requirements of Section 11.07 (for so long as such Subsidiary remains a non-wholly owned Subsidiary), (iii) any CFC Holding Company, (iv) any direct or indirect Subsidiary of a Foreign Subsidiary or a CFC Holding Company, (v) any Foreign Subsidiary, (vi) each Subsidiary that is prohibited by any contract or Requirements of Law from guaranteeing or granting Liens to secure the Obligations and for so long as such restriction or any replacement or renewal thereof is in effect or would require third-party or governmental (including regulatory) consent, approval, license or authorization to guarantee or grant such Liens to secure the Obligations, (vii) each Subsidiary with respect to which, as reasonably determined by Opco, the consequence of providing a Guarantee of the Obligations would adversely affect the ability of Opco and its Subsidiaries to satisfy applicable Requirements of Law, (viii) each Subsidiary with respect to which, as reasonably determined by Opco in consultation with the Administrative Agent, providing such a Guarantee would result in material adverse tax consequences to Opco, any direct or indirect owner of Opco, the Borrower or any Subsidiary, (ix) any other Subsidiary with respect to which, in the reasonable judgment of the Administrative Agent and Opco, the cost or other consequences of providing a Guarantee of the Obligations shall be excessive in view of the benefits to be obtained by the Lenders therefrom, (x) each other Subsidiary acquired pursuant to an acquisition or other investment and financed with assumed secured Indebtedness permitted hereunder, and each Subsidiary acquired in such acquisition or other investment that guarantees such Indebtedness, in each case to the extent that, and for so long as, the documentation relating to such Indebtedness to which such Subsidiary is a party prohibits such Subsidiary from guaranteeing the Obligations and such prohibition was not created in contemplation of such acquisition or other investment, (xi) each Subsidiary that is a registered broker dealer and (xii) each not for profit Subsidiary, captive insurance company or any special purpose entity.
 
“Excluded Taxes” means, with respect to any Lender Party or any other recipient of any payment to be made by or on account of any obligation of any Loan Party hereunder, (a) Taxes imposed on (or measured by) its net income (however denominated) or franchise Taxes, in each case (i) imposed as a result of such recipient being organized under the law of, or having its principal office located in or, in the case of any Lender, having its applicable lending office in, the jurisdiction imposing such Tax (or any political subdivision thereof) or (ii) that are Other Connection Taxes, (b) any branch profits Taxes imposed by the United States of America, or any similar Tax described in clauses (a)(i) or (ii) above, (c) in the case of a Lender, any withholding Tax imposed by the United States
 
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of America at the time such Lender first becomes a party to this Agreement (other than by an assignment made pursuant to Section 2.18(b)) with respect to amounts payable by any Person that is then the Borrower under this Agreement, except to the extent that such Lender’s assignor (if any) was entitled at the time of assignment to receive additional amounts with respect to withholding Taxes pursuant to Section 2.16(a), (d) any Taxes to the extent attributable to such Lender’s failure to comply with Section 2.16 and (e) any withholding Taxes imposed under FATCA.
 
“Existing Commitment” has the meaning assigned to such term in Section 2.22(a)(i).
 
“Existing Loans” has the meaning assigned to such term in Section 2.22(a)(i).
 
“Extended Commitments” has the meaning assigned to such term in Section 2.22(a)(i).
 
“Extended Loans” has the meaning assigned to such term in Section 2.22(a)(i).
 
“Extending Lender” has the meaning assigned to such term in Section 2.22(a)(ii).
 
“Extension Amendment” has the meaning assigned to such term in Section 2.22(a)(iii).
 
“Extension Date” has the meaning assigned to such term in Section 2.22(a)(iv).
 
“Extension Election” has the meaning assigned to such term in Section 2.22(a)(ii).
 
“Extension Request” has the meaning assigned to such term in Section 2.22(a)(i).
 
“Extension Series” means all Extended Loans and Extended Commitments that are established pursuant to the same Extension Amendment (or any subsequent Extension Amendment to the extent such Extension Amendment expressly provides that the Extended Loans or Extended Commitments, as applicable, provided for therein are intended to be a part of any previously established Extension Series) and that provide for the same interest margins, commitment fees, extension fees, maturity, and amortization schedule.
 
“FATCA” means Sections 1471 through 1474 of the Code, as of the date of this Agreement (or any amended or successor version that is substantively comparable and not materially more onerous to comply with), and any current or future regulations or official interpretations thereof, any agreements entered into pursuant to Section 1471(b)(1) of the Code, and any law, regulation, rule, promulgation, guidance notes, practices or official agreement implementing an official government agreement with respect to the foregoing.
 
“Federal Funds Effective Rate” means, for any day, the weighted average (rounded upwards, if necessary, to the next 1/100 of 1%) of the rates on overnight Federal funds transactions with members of the Federal Reserve System arranged by Federal funds brokers, as published on the next succeeding Business Day by the Federal Reserve Bank of New York, or, if such rate is not so published for any day that is a Business Day, the
 
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average (rounded upwards, if necessary, to the next 1/100 of 1%) of the quotations for such day for such transactions received by the Administrative Agent from three Federal funds brokers of recognized standing selected by it; provided that if the applicable rate described above shall be less than zero, it shall be deemed to be zero for purposes of this Agreement.
 
“Fee Letter” means the letter agreement among the Lenders and the Borrower dated as of the date hereof.
 
“Floor” means a rate of interest equal to 0.00%.
 
“Foreign Lender” means, with respect to any Loan, any Lender making such Loan that is organized under the laws of a jurisdiction other than the Relevant Jurisdiction.
 
“Foreign Subsidiary” means each Subsidiary of Opco that is not a Domestic Subsidiary.
 
“GAAP” means generally accepted accounting principles in the United States of America.
 
“Global Loan” means a Loan made in U.S. Dollars or in one or more Alternative Currencies pursuant to Section 2.01.
 
“Governmental Authority” means the government of the United States of America, any other nation or any political subdivision thereof, whether state or local, and any agency, authority, instrumentality, regulatory body, court, central bank or other entity exercising executive, legislative, judicial, taxing, regulatory or administrative powers or functions of or pertaining to government (including any supra‑national bodies such as the European Union or the European Central Bank).
 
“Guarantor” means (i) each Subsidiary of Opco that is party to this Agreement on the Closing Date, (ii) each Subsidiary of Opco that becomes a party to this Agreement after the Closing Date pursuant to Section 11.07 or otherwise, and (iii) Opco; provided that in no event shall any Excluded Subsidiary be required to be a Guarantor (unless such Subsidiary is no longer an Excluded Subsidiary).
 
“Guaranty” of or by any Person (the “guarantor”) means any obligation, contingent or otherwise, of the guarantor guaranteeing or having the economic effect of guaranteeing any Indebtedness of any other Person (the “primary obligor”) in any manner, whether directly or indirectly, and including any obligation of the guarantor, direct or indirect, (a) to purchase or pay (or advance or supply funds for the purchase or payment of) such Indebtedness or to purchase (or to advance or supply funds for the purchase of) any security for the payment thereof, (b) to purchase or lease property, securities or services for the purpose of assuring the owner of such Indebtedness of the payment thereof, (c) to maintain working capital, equity capital or any other financial statement condition or liquidity of the primary obligor so as to enable the primary obligor to pay such Indebtedness or (d) as an account party in respect of any letter of credit or letter of guaranty issued to support such Indebtedness; provided that the term “Guaranty” shall not include
 
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endorsements for collection or deposit in the ordinary course of business.  The term “Guarantee” used as a verb has a corresponding meaning.
 
“Hazardous Materials”  means all explosive or radioactive substances or wastes and all hazardous or toxic substances, wastes or other pollutants, including petroleum or petroleum distillates, asbestos or asbestos containing materials, polychlorinated biphenyls, radon gas, infectious or medical wastes and all other substances or wastes of any nature regulated pursuant to any Environmental Law.
 
“Immaterial Subsidiary” means any Subsidiary other than (x) a Material Subsidiary or (y) a Subsidiary that the Borrower has deemed to be a Material Subsidiary.
 
“Impacted Interest Period” has the meaning assigned to such term in the definition of “Eurocurrency Rate.”
 
“Incremental Commitments” has the meaning assigned to such term in Section 2.21(a).
 
“Incremental Effective Date” has the meaning assigned to such term in Section 2.21(a).
 
“Indebtedness” of any Person means, without duplication, (a) all obligations of such Person for borrowed money or with respect to deposits or advances of any kind, (b) all obligations of such Person evidenced by bonds, debentures, notes or similar instruments, (c) all obligations of such Person under conditional sale or other title retention agreements relating to property acquired by such Person, (d) all obligations of such Person in respect of the deferred purchase price of property or services (excluding accounts payable incurred in the ordinary course of business), (e) all Indebtedness of others secured by (or for which the holder of such Indebtedness has an existing right, contingent or otherwise, to be secured by) any Lien on property owned or acquired by such Person, whether or not the Indebtedness secured thereby has been assumed, (f) all Guaranties by such Person of Indebtedness of others, (g) all Capital Lease Obligations of such Person, (h) all obligations, contingent or otherwise, of such Person as an account party in respect of letters of credit and letters of guaranty, (i) all obligations, contingent or otherwise, of such Person in respect of bankers’ acceptances, and (j) all net obligations of such Person under Swap Contracts; provided that Indebtedness shall not include (i) deferred or prepaid revenue, (ii) purchase price holdbacks in respect of a portion of the purchase price of an asset to satisfy warranty or other unperformed obligations of the respective seller, or (iii) any obligations from investment financing arrangements of investment funds, investment vehicles or managed accounts or any of their respective special purpose vehicles that are not obligations of the Loan Parties or their Subsidiaries.  The amount of Indebtedness of any person for purposes of clause (e) above shall be deemed to be equal to the lesser of (i) the aggregate unpaid amount of such Indebtedness and (ii) the fair market value of the property encumbered thereby as determined by such person in good faith.  The amount of any net obligation under any Swap Contract on any date shall be deemed to be the Swap Termination Value thereof as of such date.
 
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“Indemnified Taxes” means (a) all Taxes, other than Excluded Taxes, imposed on or with respect to any payment by or on account of any obligation of any Loan Party hereunder or under any other Loan Document, and (b) to the extent not otherwise described in (a), Other Taxes.
 
“Interest Coverage Ratio” means, as of any date of determination, the ratio of (i) Consolidated Interest Income for the Test Period most recently ended on or prior to such date of determination to (ii) the Consolidated Interest Expense of Parent and its Subsidiaries for such Test Period.
 
“Interest Election Request” means a request by the Borrower to change or continue the Type of a Borrowing in accordance with Section 2.07 and in the form of Exhibit F or any other form reasonably acceptable to the Administrative Agent.
 
“Interest Payment Date” means (a) with respect to any ABR Loan (other than a Swingline Loan), the last day of each March, June, September and December, (b) with respect to any EurocurrencySOFR Loan, the last day of the Interest Period applicable to the Borrowing of which such Loan is a part and, in the case of a EurocurrencySOFR Borrowing with an Interest Period of more than three months’ duration, each day prior to the last day of such Interest Period that occurs at intervals of three months’ duration after the first day of such Interest Period, and (c) with respect to any Swingline Loan, the day that such Loan is required to be repaid.
 
“Interest Period” means, with respect to any EurocurrencySOFR Borrowing, the period beginning on the date of such Borrowing specified in the applicable Borrowing Request or on the date specified in the applicable Interest Election and ending on the numerically corresponding day in the calendar month that is one, two, three or six months thereafter (or such other period as all of the Lenders may agree), as the Borrower may elect; provided that (i) if any Interest Period would end on a day other than a Business Day, such Interest Period shall be extended to the next succeeding Business Day unless such next succeeding Business Day would fall in the next calendar month, in which case such Interest Period shall end on the next preceding Business Day, and (ii) any Interest Period that commences on the last Business Day of a calendar month (or on a day for which there is no numerically corresponding day in the last calendar month of such Interest Period) shall end on the last Business Day of the last calendar month of such Interest Period.
 
“International Plan” means any “defined benefit plan” as such term is defined in Section 3(35) of ERISA, that is not subject to US Law and which is sponsored, maintained, administered, contributed to, extended or arranged by Opco or any of its Subsidiaries under which Opco or any of its Subsidiaries has any liability (contingent or otherwise) and covers any current or former employee, officer, director or independent contractor of Opco or any of its Subsidiaries who is located exclusively outside of the United States.
 
“Interpolated Rate” means, at any time, for any Interest Period, the rate per annum (rounded to the same number of decimal places as the Screen) determined by the Administrative Agent (which determination shall be conclusive and binding absent manifest error) to be equal to the rate that results from interpolating on a linear basis
 
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between: (a) the Screen (for the longest period for which the Screen is available) that is shorter than the Impacted Interest Period; and (b) the Screen for the shortest period (for which that Screen is available) that exceeds the Impacted Interest Period, in each case, at such time.
 
“Investment Company Act” has the meaning assigned to such term in Section 3.07.
 
“Junior Priority Intercreditor Agreement” means an intercreditor agreement substantially in the form of Exhibit J.
 
“KKR Group” means the KKR Group Partnerships, the direct and indirect parents (including, without limitation, general partners) of the KKR Group Partnerships (the “Parent Entities”), any direct or indirect Subsidiaries of the Parent Entities or the KKR Group Partnerships, the general partner or similar controlling entities of any investment or vehicle that is managed, advised or sponsored by the KKR Group (“KKR Fund”) and any other entity through which any of the foregoing directly or indirectly conduct its business, but shall exclude any company in which a KKR Fund has an investment.
 
“KKR Group Partnerships” means Opco, KKR Management Holdings L.P., a Delaware limited partnership, KKR Fund Holdings L.P., a Cayman Islands exempted limited partnership, and KKR International Holdings L.P., a Cayman Islands exempted limited partnership.
 
“Lender Joinder Agreement” means a joinder agreement in the form of Exhibit D to this Agreement or any other form reasonably acceptable to the Administrative Agent.
 
“Lender Parties” means the Lenders (including the Swingline Lender) and the Administrative Agent.
 
“Lenders” means the Persons listed on Schedule 2.01 and any other Person that shall have become a party hereto pursuant to an Assignment or pursuant to a Lender Joinder Agreement, other than any such Person that ceases to be a party hereto pursuant to an Assignment.  Unless the context otherwise requires, the term “Lenders” includes the Swingline Lender.
 
“Lien” means, with respect to any asset, (a) any mortgage, deed of trust, lien, pledge, hypothecation, encumbrance, charge or security interest in, on or of such asset and (b) the interest of a vendor or a lessor under any conditional sale agreement, capital lease or title retention agreement (or any financing lease having substantially the same economic effect as any of the foregoing) relating to such asset.
 
“Loan Documents” means this (i) Agreement, (ii) the Security Documents, (iii) the Lender Joinder Agreements (including, for the avoidance of doubt, the Seventh Amendment), (iv) the Extension Amendments, (v) the Loan Party Joinder Agreements and (vi) the Fee Letter.
 
“Loan Parties” means the Borrower and the Guarantors.
 
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“Loan Party Guaranty” means the Guaranty set forth in Article 11.
 
“Loan Party Joinder Agreement” means a joinder agreement in the form of Exhibit C to this Agreement or any other form reasonably acceptable to the Administrative Agent.
 
“Loans” means the loans made by the Lenders to the Borrower pursuant to this Agreement.
 
“Material Adverse Effect” means a material adverse effect on (a) the business, results of operations, or financial condition of the Loan Parties taken as a whole, (b) the ability of any Loan Party to perform its obligations under the Loan Documents or (c) the validity or enforceability of the Loan Documents or the rights or remedies of any Lender Party thereunder.
 
“Material Indebtedness” means any Recourse Indebtedness (other than the Loans) of any one or more of the Borrower Group Companies in an aggregate principal amount exceeding $75,000,000; provided that Material Indebtedness shall consist solely of Indebtedness of the types described in subclauses (a) and (b) of the definition thereof.
 
“Material Subsidiary” means any Subsidiary which, together with its own Subsidiaries, (i) accounts for more than 10% of the consolidated assets of Parent as of the last day of the most recently ended fiscal quarter of Parent or (ii) accounts for more than 10% of the consolidated revenues of Parent for the most recently ended period of four consecutive fiscal quarters of Parent; provided that in the event that the Immaterial Subsidiaries, taken together, (i) account for more than 20% of the consolidated assets of Parent as of the last day of the most recently ended fiscal quarter of Parent or (ii) account for more than 20% of the consolidated revenues of Parent for the most recently ended period of four consecutive fiscal quarters of Parent, the Borrower shall designate one or more Immaterial Subsidiaries to be a Material Subsidiary as may be necessary such that the foregoing 20.0% limit shall not be exceeded, and any such Subsidiary shall thereafter be deemed to be a Material Subsidiary hereunder; provided, further, that the Borrower may re-designate Material Subsidiaries as Immaterial Subsidiaries so long as the Borrower is in compliance with the foregoing.
 
“Maturity Date” means, with respect to (a) the Non-Consenting Commitments that have not been extended pursuant to Section 2.22 on the Seventh Amendment Effective Date, the fifth anniversary of the Closing Date, as itand (b) the Consenting Commitments that have been extended pursuant to Section 2.22 on the Seventh Amendment Effective Date, March 16, 2027, in each case as such date may be extended from time to time pursuant to Section 2.22.
 
“Maximum Corporate Secured Debt Amount” has the meaning assigned to such term in Section 2.21(a).
 
“Moody’s” means Moody’s Investors Service, Inc., and any successor to its rating agency business.
 
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“Multiemployer Plan” means a multiemployer plan as defined in Section 4001(a)(3) of ERISA.
 
“New Lender” has the meaning assigned to such term in Section 2.21(b).
 
“New Loan” has the meaning assigned to such term in Section 2.21(b).
 
“Non-U.S. Lender” means a Lender, with respect to the Borrower, that is not a U.S. Person.
 
“Non-Consenting Commitments” means the Commitments of the Lenders that are not Consenting Lenders.
 
“Non-Recourse Indebtedness” means any Indebtedness other than Recourse Indebtedness.
 
“Non-U.S. Lender” means a Lender, with respect to the Borrower, that is not a U.S. Person.
 
“Obligations” means all advances to, and debts, liabilities, obligations, covenants and duties of, any Loan Party arising under any Loan Document or otherwise with respect to any Loan, whether direct or indirect (including those acquired by assumption), absolute or contingent, due or to become due, now existing or hereafter arising, and including interest and fees that accrue after (or would accrue but for) the commencement by or against any Loan Party or any Affiliate thereof of any proceeding under any Federal, state or foreign bankruptcy, insolvency, receivership or similar law naming such Person as the debtor in such proceeding, regardless of whether such interest and fees are allowed claims in such proceeding.
 
“OFAC” means the Office of Foreign Assets Control of the U.S. Department of the Treasury.
 
“Opco” means KKR Real Estate Finance Holdings L.P., a Delaware limited partnership.
 
“Other Currency Equivalent” means, at any time, with respect to any amount denominated in U.S. Dollars, the equivalent amount thereof in the applicable Alternative Currency, as determined by the Administrative Agent at such time on the basis of the Spot Rate (determined in respect of the most recent Revaluation Date) for the purchase of such Alternative Currency with U.S. Dollars.
 
“Other Connection Taxes” means with respect to any Lender Party, Taxes imposed as a result of a present or former connection between such Lender Party and the jurisdiction imposing such Tax (other than connections arising from such Lender Party having executed, delivered, become a party to, performed its obligations under, received payments under, received or perfected a security interest under, engaged in any other transaction pursuant to, or enforced, any Loan Document, or sold or assigned an interest in any Loan or Loan Document).
 
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“Other Taxes” means any and all present or future stamp, court or documentary, intangible, recording, filing or similar Taxes or any other excise or property Taxes, charges or similar levies arising from any payment made under any Loan Document or from the execution, performance, delivery or enforcement of, or otherwise with respect to, any Loan Document, except any such Taxes that are Other Connection Taxes imposed with respect to an assignment (other than an assignment made pursuant to Section 2.18(b)).
 
“Outstanding Amount” means, with respect to any Class of Loans on any date, the U.S. Dollar Equivalent of the aggregate outstanding principal amount thereof after giving effect to any borrowings and prepayments or repayments of such Class of Loans occurring on such date.
 
“Parent” means KKR Real Estate Finance Trust Inc., a Delaware corporation.
 
“Parent Entity” has the meaning assigned to such term in the definition of “KKR Group”.
 
“Participant” has the meaning assigned to such term in Section 10.04.
 
“Participant Register” has the meaning assigned to such term in Section 10.04.
 
“Participating Member State” means each state so described in any EMU Legislation.
 
“Payment Recipient” has the meaning assigned to such term in Section 8.12(a).
 
“PBGC” means the Pension Benefit Guaranty Corporation referred to and defined in ERISA and any successor entity performing similar functions.
 
“Permitted Liens” means:
 
(a)          Liens on voting stock or profit participating equity interests of any Subsidiary existing at the time such entity becomes a direct or indirect Subsidiary of Opco or is merged into a direct or indirect Subsidiary of Opco (provided such Liens are not created or incurred in connection with such transaction and do not extend to any other Subsidiary),
 
(b)          statutory Liens, Liens for taxes or assessments or governmental liens not yet due or delinquent or which can be paid without penalty or are being contested in good faith,
 
(c)          other Liens of a similar nature as those described in subclauses (a) and (b) above, and
 
(d)        Liens existing on the Closing Date; provided that any Lien securing Indebtedness or other obligations in excess of (a) $1,000,000 individually or (b) $5,000,000 in the aggregate (when taken together with all other Liens securing obligations outstanding in reliance on this clause (d) that are not listed on Schedule 1.01) shall only be permitted if
 
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set forth on Schedule 1.01, and, in each case, any modifications, replacements, renewals, refinancings or extensions thereof.
 
“Person” means any natural person, corporation, limited liability company, trust, joint venture, association, company, partnership, Governmental Authority or other entity.
 
“Plan” means any employee pension benefit plan (other than a Multiemployer Plan) subject to the provisions of Title IV of ERISA or Section 412 of the Code or Section 302 of ERISA, and in respect of which any ERISA Affiliate is (or, if such plan were terminated, would under Section 4069 of ERISA be deemed to be) an “employer” as defined in Section 3(5) of ERISA.
 
“Pledge Agreement” means the Pledge Agreement, entered into by the Loan Parties party thereto and the Administrative Agent for the benefit of the Secured Parties, substantially in the form of Exhibit I.
 
“Prime Rate” means the rate of interest last quoted by The Wall Street Journal as the “Prime Rate” in the U.S. or, if The Wall Street Journal ceases to quote such rate, the highest per annum interest rate published by the Board in Federal Reserve Statistical Release H.15 (519) (Selected Interest Rates) as the “bank prime loan” rate or, if such rate is no longer quoted therein, any similar rate quoted therein (as determined by the Administrative Agent) or any similar release by the Board (as determined by the Administrative Agent).  The Prime Rate is a reference rate and does not necessarily represent the lowest or best rate actually charged to any customer.  The Administrative Agent or any Lender may make commercial loans or other loans at rates of interest at, above or below the Prime Rate.  Any change in the Prime Rate shall take effect at the opening of business on the day specified in the public announcement of such change.
 
“Recourse Indebtedness” means, with respect to any Person, for any period, without duplication, the aggregate Indebtedness of such Person during such period for which such Person is directly responsible or liable as obligor or guarantor; provided, for the avoidance of doubt, that in the case of any Indebtedness that is only partially recourse in nature, Recourse Indebtedness shall include only the portion of such Indebtedness for which such Person is directly responsible or liable as obligor or guarantor.
 
“Reference Period” means any period of four consecutive fiscal quarters.
 
“Register” has the meaning assigned to such term in Section 10.04.
 
“Related Parties” means, with respect to any specified Person, such Person’s Affiliates and the respective directors, officers, employees, agents and advisors of such Person and such Person’s Affiliates.
 
“Relevant Governmental Body” means (a) with respect to a Benchmark Replacement in respect of Obligations, interest, fees, commissions or other amounts denominated in, or calculated with respect to, U.S. Dollars, the Federal Reserve Board or the Federal Reserve Bank of New York, or a committee officially endorsed or convened by the Federal Reserve Board or the Federal Reserve Bank of New York,
 
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or any successor thereto and (b) with respect to a Benchmark Replacement in respect of Obligations, interest, fees, commissions or other amounts denominated in, or calculated with respect to, any Alternative Currency, (1) the central bank for the currency in which such Obligations, interest, fees, commissions or other amounts are denominated, or calculated with respect to, or any central bank or other supervisor which is responsible for supervising either (A) such Benchmark Replacement or (B) the administrator of such Benchmark Replacement or (2) any working group or committee officially endorsed or convened by (A) the central bank for the currency in which such Obligations, interest, fees, commissions or other amounts are denominated, or calculated with respect to, (B) any central bank or other supervisor that is responsible for supervising either (i) such Benchmark Replacement or (ii) the administrator of such Benchmark Replacement, (C) a group of those central banks or other supervisors or (D) the Financial Stability Board or any part thereof.
 
“Relevant Jurisdiction” means (i) in the case of any Loan to any Domestic Borrower, the United States of America, and (ii) in the case of any Loan to any other Borrower, the jurisdiction imposing (or having the power to impose) withholding tax on payments by the Borrower under this Agreement.
 
“Required Lenders” means, at any time, Lenders (or, if there are two or more Lenders, at least two Lenders) having Credit Exposures and unused Commitments representing more than 50% of the sum of the total Credit Exposures and unused Commitments at such time, exclusive in each case of the Credit Exposure and unused Commitment of any Defaulting Lender.
 
“Requirements of Law” means, as to any Person, the certificate of incorporation and by-laws or other organizational or governing documents of such Person, and any law, treaty, rule, or regulation or determination of an arbitrator or a court or other Governmental Authority, in each case applicable to or binding upon such Person or any of its property or assets or to which such Person or any of its property or assets is subject.
 
“Resolution Authority” means an EEA Resolution Authority or, with respect to any UK Financial Institution, a UK Resolution Authority.
 
“Revaluation Date” means with respect to any Loan, each of the following:  (i) each date of receipt by the Administrative Agent of a Borrowing Request denominated in an Alternative Currency, (ii) each date of receipt by the Administrative Agent of an Interest Election Request (or, if a Borrowing is continued pursuant to Section 2.07(e), each date by which an Interest Election Request would have been due) denominated in an Alternative Currency and (iii) such additional dates as the Administrative Agent shall determine or the Required Lenders shall require.
 
“S&P” means S&P Global Ratings and any successor to its rating agency business.
 
“Sanctioned Country” means any country or territory that is the subject or target of a comprehensive countrywide trade or investment embargo under any Sanctions.  As of the Seventh Amendment Effective dDate of this Agreement, the following are the only
 
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“Sanctioned Countries”: the so-called Donetsk People’s Republic, the so-called Luhansk People’s Republic, Russia, the Crimea Region of Ukraine, Cuba, Iran, North Korea, and Syria, and the Crimea region (formerly of Ukraine).
 
“Sanctioned Person” means any Person that is: (i) identified on a Sanctions List; (ii) domiciled or resident in any Sanctioned Country; (iii) 50% or more owned by, or controlled by, directly or indirectly, one or more Persons described in clause (i) or (ii); and (iv) otherwise the subject or target of any Sanctions.
 
“Sanctions” means any law, rules, regulation or executive order relating to economic or financial sanctions or trade embargoes imposed, administered or enforced by the U.S. government (including OFAC and U.S. Department of State), the European Union, the United Kingdom (including the Office of Financial Sanctions Implementation of Her Majesty’s Treasury) and any other relevant national or supra-national sanctions authority that has jurisdiction over the Borrower.
 
“Sanctions List” means any Sanctions-related list of designated Persons maintained by OFAC at its official website.
 
“Screen” has the meaning assigned to such term in the definition of Eurocurrency Rate.
 
“SEC” means the Securities and Exchange Commission, any successor thereto and any analogous Governmental Authority.
 
“Secured Parties” means the Administrative Agent and each Lender.
 
“Security Agreement” means the Security Agreement entered into by the Borrower and the Guarantors party thereto, and the Administrative Agent for the benefit of the Secured Parties, substantially in the form of Exhibit J.
 
“Security Documents” means, collectively, the Pledge Agreement, the Security Agreement and each other security agreement or other instrument or document executed and delivered pursuant to Sections 5.09, 5.10 or 11.07 or pursuant to any other such Security Documents to secure the Obligations or to govern the lien priorities of the holders of Liens on the Collateral.
 
“Senior Debt Incurrence Ratio” means the ratio of (a) the Senior Recourse Indebtedness for borrowed money of Parent and its consolidated Subsidiaries to (b) (i) the aggregate book value of all assets of Parent and its consolidated Subsidiaries and the proportionate share of such assets owned by Affiliates of such Person, in each case, determined in accordance with GAAP, minus (ii) the amount of Non-Recourse Indebtedness for borrowed money of Parent and its consolidated Subsidiaries.
 
“Senior Recourse Indebtedness” means Recourse Indebtedness that is secured by a Lien on the Collateral ranking equal in priority (but without regard to the control of remedies) with the Lien on the Collateral securing the Obligations.
 
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“Seventh Amendment” means the Seventh Amendment, dated as of March 16, 2022, among the Borrower, Opco, the other Guarantors party thereto, the Administrative Agent and the Lenders party thereto.
 
“Seventh Amendment Effective Date” means March 16, 2022.
 
“SOFR” means a rate equal to the secured overnight financing rate as administered by the SOFR Administrator.
 
“SOFR Administrator” means the Federal Reserve Bank of New York (or a successor administrator of the secured overnight financing rate).
 
“SOFR Borrowing” means, as to any Borrowing, the SOFR Loans comprising such Borrowing.
 
“SOFR Loan” means a Loan that bears interest at a rate based on Term SOFR, other than pursuant to clause (c) of the definition of “Alternate Base Rate”.
 
“Solvent” means, with respect to the Borrower and the Credit Group on a consolidated basis on any date of determination, that on such date (a) the fair value of the assets of the Borrower and the Credit Group on a consolidated basis, exceeds the debts and liabilities, direct, subordinated, contingent or otherwise, of the Borrower and the Credit Group on a consolidated basis; (b) the present fair saleable value of the property of the Borrower and the Credit Group on a consolidated basis will be greater than the amount that will be required to pay the probable liability of the Borrower and the Credit Group on a consolidated basis on their debts and other liabilities, direct, subordinated, contingent or otherwise, as such debts and other liabilities become absolute and matured; (c) the Borrower and the Credit Group on a consolidated basis do not intend to incur, or believe that they will incur, debts (including current obligations and contingent liabilities) beyond their ability to pay such debts as they mature in the ordinary course of business; and (d) the Borrower and the Credit Group on a consolidated basis will not have unreasonably small capital with which to conduct the businesses in which they are engaged as such businesses are conducted on the Closing Date.
 
“Specified Existing Commitment” has the meaning assigned to such term in Section 2.22(a)(i).
 
“Spot Rate” means, on any day, for any currency, the spot rate quoted by the Administrative Agent, in New York at approximately 11:00 a.m. for the purchase of such currency with another currency for delivery two Business Days later.
 
“subsidiary” means, with respect to any Person at any date, (a) any corporation more than 50% of whose equity interests of any class or classes having by the terms thereof ordinary voting power to elect a majority of the directors of such corporation (irrespective of whether or not at the time equity interests of any class or classes of such corporation shall have or might have voting power by reason of the happening of any contingency) is at the time owned by such Person directly or indirectly through subsidiaries, or (b) any limited liability company, partnership, association, joint venture or other entity of which
 
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such Person directly or indirectly through subsidiaries has more than a 50% equity interest (of either economic interests or ordinary voting power, as applicable) at the time.
 
“Subsidiary” means any subsidiary of Opco; provided that Subsidiaries shall not include (a) any investment funds, investment vehicles or separately managed accounts, (b) any portfolio company or portfolio investment of any such fund, investment vehicle or separately managed account (or any entity Controlled by a portfolio company or portfolio investment) and (c) CLOs or principal other investments managed, Controlled or held as investments by Ultimate Parent or its Subsidiaries.
 
“Substantially All Merger” means a merger or consolidation of one or more Loan Parties with or into another Person that would, in one or a series of related transactions, result in the transfer or other disposition, directly or indirectly, of all or substantially all of the combined assets of the Loan Parties taken as a whole to a Person that is not within the Loan Parties immediately prior to such transaction, including pursuant to a Delaware LLC Division; provided that in no event shall a merger or consolidation to effect the winding up, dissolution, liquidation or other disposition of a Subsidiary that is not a Material Subsidiary be a Substantially All Merger.
 
“Substantially All Sale” means a sale, assignment, transfer, lease or conveyance to any other Person, in one or a series of related transactions, directly or indirectly, including any disposition of property pursuant to a Delaware Divided LLC pursuant to a Delaware LLC Division, of all or substantially all of the combined assets of the Loan Parties taken as a whole to a Person that is not within the Loan Parties immediately prior to such transaction; provided that in no event shall the winding up, dissolution, liquidation or other disposition of a Subsidiary that is not a Material Subsidiary be a Substantially All Sale.
 
“Swap Contract” means (a) any and all rate swap transactions, basis swaps, credit derivative transactions, forward rate transactions, commodity swaps, commodity options, forward commodity contracts, equity or equity index swaps or options, bond or bond price or bond index swaps or options or forward bond or forward bond price or forward bond index transactions, interest rate options, forward foreign exchange transactions, cap transactions, floor transactions, collar transactions, currency swap transactions, cross-currency rate swap transactions, currency options, spot contracts, or any other similar transactions or any combination of any of the foregoing (including any options to enter into any of the foregoing), whether or not any such transaction is governed by or subject to any master agreement, and (b) any and all transactions of any kind, and the related confirmations, which are subject to the terms and conditions of, or governed by, any form of master agreement published by the International Swaps and Derivatives Association, Inc., any International Foreign Exchange Master Agreement, or any other master agreement (any such master agreement, together with any related schedules, a “Master Agreement”), including any such obligations or liabilities under any Master Agreement.
 
“Swap Termination Value” means, in respect of any one or more Swap Contracts, after taking into account the effect of any legally enforceable netting agreement relating to such Swap Contracts, (a) for any date on or after the date such Swap Contracts have been
 
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closed out and termination value(s) determined in accordance therewith, such termination value(s), and (b) for any date prior to the date referenced in clause (a), the amount(s) determined as the mark-to-market value(s) for such Swap Contracts, as determined based upon one or more mid-market or other readily available quotations provided by any recognized dealer in such Swap Contracts (which may include a Lender or any Affiliate of a Lender).
 
“Swingline Exposure” means, at any time, the aggregate principal amount of all Swingline Loans outstanding at such time.  The Swingline Exposure of any Lender at any time shall be its Applicable Percentage of the total Swingline Exposure at such time.
 
“Swingline Lender” means Morgan Stanley Senior Funding, Inc., in its capacity as lender of Swingline Loans hereunder.
 
“Swingline Loan” means a Loan made pursuant to Section 2.04.
 
“Taxes” means any and all present or future taxes, levies, imposts, duties, deductions, withholdings, assessments, fees or other charges imposed by any Governmental Authority, including any interest, additions to tax or penalties applicable thereto.
 
“Term SOFR” means, with respect to any Interest Period, the forward-looking term rate based on SOFR for a tenor comparable to the applicable Interest Period on the day (such day, the “Determination Day”) that is two (2) Business Days prior to the first day of such Interest Period, as such rate is published by the Term SOFR Administrator; provided, however, that if as of 5:00 p.m. (New York City time) on any Determination Day the Term SOFR Rate for the applicable tenor has not been published by the Term SOFR Administrator and a Benchmark Replacement Date with respect to the Term SOFR Rate has not occurred, then Term SOFR will be the Term SOFR Rate for such tenor published by the Term SOFR Administrator on the Business Day first preceding such Determination Day so long as such Business Day is not more than three (3) Business Days prior to such Determination Day; provided, further, that if Term SOFR determined as provided above  shall ever be less than the Floor, then Term SOFR shall be deemed to be the Floor.
 
“Term SOFR Administrator” means CME Group Benchmark Administration Limited (CBA) (or a successor administrator of the Term SOFR Reference Rate selected by the Administrative Agent in its reasonable discretion).
 
“Termination Date” means the date on which the Commitments have expired or terminated in accordance with the terms of this Agreement and the Loans, together with interest, fees and all other Obligations incurred hereunder (other than Contingent Obligations) are paid in full.
 
“Test Period” means, for any determination under this Agreement, the four consecutive fiscal quarters of Opco most recently ended on or prior to such date of
 
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determination and for which financial statements shall have been delivered (or were required to be delivered) to the Administrative Agent pursuant to Section 5.01(a) or (b) (or, before the first delivery of such financial statements, the most recent period of four fiscal quarters as at the end of which financial statements are available).
 
“Total Debt Incurrence Ratio” means the ratio of (a) the Recourse Indebtedness for borrowed money of Parent and its consolidated Subsidiaries to (b) (i) the aggregate book value of all assets of Parent and its consolidated Subsidiaries and the proportionate share of such assets owned by Affiliates of such Person, in each case, determined in accordance with GAAP, minus (ii) the amount of Non-Recourse Indebtedness for borrowed money of Parent and its consolidated Subsidiaries.
 
“Transaction Expenses” means any fees, costs, or expenses incurred or paid by Opco, the Borrower, or any of their respective Affiliates in connection with the Transactions, this Agreement and the other Loan Documents, and the transactions contemplated hereby and thereby.
 
“Transactions” means the execution, delivery and performance by the Loan Parties of this Agreement and the Loan Documents, the borrowing of Loans and the use of the proceeds thereof.
 
“Type”, when used in reference to any Loan or Borrowing, refers to whether the rate of interest on such Loan, or on the Loans comprising such Borrowing, is determined by reference to the Eurocurrency RateTerm SOFR or the Alternate Base Rate.
 
“UK Financial Institution” means any BRRD Undertaking (as such term is defined under the PRA Rulebook (as amended form time to time) promulgated by the United Kingdom Prudential Regulation Authority) or any person falling within IFPRU 11.6 of the FCA Handbook (as amended from time to time) promulgated by the United Kingdom Financial Conduct Authority, which includes certain credit institutions and investment firms, and certain affiliates of such credit institutions or investment firms.
 
“UK Resolution Authority” means the Bank of England or any other public administrative authority having responsibility for the resolution of any UK Financial Institution.
 
“Ultimate Parent” means KKR & Co. Inc., a Delaware corporation (or its successor).
 
“Unadjusted Benchmark Replacement” means the applicable Benchmark Replacement excluding the related Benchmark Replacement Adjustment.
 
“U.S. Dollar Equivalent” means, at any time, (a) with respect to any amount denominated in U.S. Dollars, such amount, and (b) with respect to any amount denominated in any Alternative Currency, the equivalent amount thereof in U.S. Dollars as determined by the Administrative Agent at such time on the basis of the Spot Rate (determined in respect of the most recent Revaluation Date) for the purchase of U.S. Dollars with such Alternative Currency.
 
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“U.S. Dollars” and “$” mean the lawful currency of the United States of America.
 
“U.S. Person” means a “United States person” within the meaning of Section 7701(a)(30) of the Code.
 
“USA PATRIOT Act” means the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001, Title III of Pub.L.107-56, signed into law October 26, 2001, as amended.
 
“Withdrawal Liability” means liability to a Multiemployer Plan as a result of a complete or partial withdrawal from such Multiemployer Plan, as such terms are defined in Part I of Subtitle E of Title IV of ERISA.
 
“Write-Down and Conversion Powers” means, (a) with respect to any EEA Resolution Authority, the write-down and conversion powers of such EEA Resolution Authority from time to time under the Bail-In Legislation for the applicable EEA Member Country, which write-down and conversion powers are described in the EU Bail-In Legislation Schedule, and (b) with respect to the United Kingdom,  any powers of the applicable Resolution Authority under the Bail-In Legislation to cancel, reduce, modify or change the form of a liability of any UK Financial Institution or any contract or instrument under which that liability arises, to convert all or part of that liability into shares, securities or obligations of that person or any other person, to provide that any such contract or instrument is to have effect as if a right had been exercised under it or to suspend any obligation in respect of that liability or any of the powers under that Bail-In Legislation that are related to or ancillary to any of those powers.
 
Section 1.02.          Classification of Loans and Borrowings.  For purposes of this Agreement, Loans may be classified and referred to by Class (e.g., a “Global Loan”) or by Type (e.g., a “EurocurrencySOFR Loan”) or by Class and Type (e.g., a “EurocurrencySOFR Global Loan”).  Borrowings also may be classified and referred to by Class (e.g., a “Global Borrowing”) or by Type (e.g., a “EurocurrencySOFR Borrowing”) or by Class and Type (e.g., a “EurocurrencySOFR Global Borrowing”).
 
Section 1.03.          Terms Generally.  The definitions of terms herein shall apply equally to the singular and plural forms of the terms defined.  Whenever the context may require, any pronoun shall include the corresponding masculine, feminine and neuter forms.  The words “include”, “includes” and “including” shall be deemed to be followed by the phrase “without limitation”.  The word “will” shall be construed to have the same meaning and effect as the word “shall”.  Unless the context requires otherwise (a) any definition of or reference to any agreement, instrument or other document herein shall be construed as referring to such agreement, instrument or other document as from time to time amended, supplemented or otherwise modified (subject to any restrictions on such amendments, supplements or modifications set forth herein), (b) any reference herein to any Person shall be construed to include such Person’s successors and assigns, (c) the words “herein”, “hereof” and “hereunder”, and words of similar import, shall be construed to refer to this Agreement in its entirety and not to any particular provision hereof, (d) all references herein to Articles, Sections, Exhibits and Schedules shall be construed to refer
 
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to Articles and Sections of, and Exhibits and Schedules to, this Agreement, (e) any reference to any law or regulation herein shall, unless otherwise specified, refer to such law or regulation as amended, modified or supplemented from time to time and (f) the words “asset” and “property” shall be construed to have the same meaning and effect and to refer to any and all tangible and intangible assets and properties, including cash, securities, accounts and contract rights.
 
Section 1.04.          Accounting Terms; GAAP.  Except as otherwise expressly provided herein, all terms of an accounting or financial nature shall be construed in accordance with GAAP, as in effect from time to time, with such adjustments thereto as are reflected in and consistent with the financial statements referred to in Section 3.04(a), but in any event without giving effect to principles of consolidation; provided that, if the Borrower notifies the Administrative Agent that the Borrower requests an amendment to any provision hereof to eliminate the effect of any change occurring after the date hereof in GAAP or in the application thereof on the operation of such provision (or if the Administrative Agent notifies the Borrower that the Required Lenders request an amendment to any provision hereof for such purpose), regardless of whether any such notice is given before or after such change in GAAP or in the application thereof, then such provision shall be interpreted on the basis of GAAP as in effect and applied immediately before such change shall have become effective until such notice shall have been withdrawn or such provision amended in accordance herewith.
 
Section 1.05.          Exchange Rates; Currency Equivalents.  (a) The Administrative Agent shall determine the Spot Rates as of each Revaluation Date to be used for calculating U.S. Dollar Equivalent amounts of Borrowings and Outstanding Amounts denominated in Alternative Currencies.  Such Spot Rates shall become effective as of such Revaluation Date and shall be the Spot Rates employed in converting any amounts between the applicable currencies until the next Revaluation Date to occur.
 
(b)          Wherever in this Agreement in connection with a Borrowing, conversion, continuation or prepayment of a Eurocurrency Loan an amount, such as a required minimum or multiple amount, is expressed in U.S. Dollars, but such Borrowing or Loan is denominated in an Alternative Currency, such amount shall be the relevant Other Currency Equivalent of such U.S. Dollar amount (rounded to the nearest unit of such Alternative Currency, with 0.5 of a unit being rounded upward), as determined by the Administrative Agent.
 
Section 1.06.          Alternative Currencies. (a) The Borrower may from time to time request that Eurocurrency Loans be made in a currency other than U.S. Dollars; provided that such requested currency is a lawful currency (other than U.S. Dollars) that is readily available and freely transferable and convertible into U.S. Dollars.  Any such request shall be subject to the approval of the Administrative Agent and the Lenders.
 
(b)          Any such request shall be made to the Administrative Agent not later than 11:00 a.m., ten Business Days prior to the date of the desired Borrowing (or such other time or date as may be agreed by the Administrative Agent, in its sole discretion).  In the case of any such request, the Administrative Agent shall promptly notify each Lender
 
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thereof.  Each Lender shall notify the Administrative Agent, not later than 11:00 a.m., five Business Days after receipt of such request, whether it consents, in its sole discretion, to the making of Eurocurrency Loans in such requested currency.
 
(c)          Any failure by a Lender to respond to such request within the time period specified in the preceding sentence shall be deemed to be a refusal by such Lender to permit Eurocurrency Loans to be made in such requested currency.  If the Administrative Agent and the Lenders consent to making Eurocurrency Loans in such requested currency, the Administrative Agent shall so notify the Borrower and such currency shall thereupon be deemed for all purposes to be an Alternative Currency hereunder. If the Administrative Agent shall fail to obtain consent to any request for an additional currency under this Section, the Administrative Agent shall promptly so notify the Borrower.
 
ARTICLE 2
The Credits
 
Section 2.01.          Commitments.  Subject to the terms and conditions set forth herein, each Lender, severally and not jointly, agrees to make Global Loans to the Borrower in U.S. Dollars or in one or more Alternative Currencies from time to time during the Availability Period in an aggregate principal amount that will not result in (i) such Lender’s Credit Exposure exceeding such Lender’s Commitment, or (ii) the sum of the total Credit Exposures exceeding the total Commitments.  Within the foregoing limits and subject to the terms and conditions set forth herein, the Borrower may borrow, prepay and reborrow Global Loans.
 
Section 2.02.          Loans and Borrowings.  (a) Each Global Loan shall be made as part of a Borrowing consisting of Global Loans made by the Lenders ratably in accordance with their respective Commitments.  The failure of any Lender to make any Loan required to be made by it shall not relieve any other Lender of its obligations hereunder; provided that the Commitments of the Lenders are several and no Lender shall be responsible for any other Lender’s failure to make Loans as required.
 
(b)          Subject to Section 2.13, each Global Borrowing shall be comprised entirely of ABR Loans or EurocurrencySOFR Loans, as the Borrower may request in accordance herewith.  All ABR Loans and SOFR Loans shall be denominated in U.S. Dollars.  Eurocurrency Loans may be denominated in U.S. Dollars or an Alternative Currency. Each Swingline Loan shall be an ABR Loan.  Each Lender at its option may make any Loan by causing any domestic or foreign branch or Affiliate of such Lender to make such Loan; provided that any exercise of such option shall not affect the obligation of the Borrower to repay such Loan in accordance with the terms of this Agreement.
 
(c)          At the commencement of each Interest Period for any EurocurrencySOFR Borrowing, such Borrowing shall be in an aggregate amount that is an integral multiple of $1,000,000 and not less than $5,000,000.  At the time that each ABR Borrowing is made, such Borrowing shall be in an aggregate amount that is an integral multiple of $1,000,000 and not less than $5,000,000; provided that an ABR Borrowing may be in an aggregate amount that is equal to the entire unused balance of the total Commitments.  Each
 
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Swingline Loan shall be in an amount that is an integral multiple of $100,000 and not less than $1,000,000.  Borrowings of more than one Type and Class may be outstanding at the same time; provided that there shall not at any time be more than a total of ten EurocurrencySOFR Borrowings outstanding.
 
(d)          Notwithstanding any other provision of this Agreement, the Borrower shall not be entitled to request, or to elect to convert or continue, any Borrowing if the Interest Period requested with respect thereto would end after the Maturity Date.
 
Section 2.03.          Requests for Borrowings.  To request a Borrowing, the Borrower shall notify the Administrative Agent of such request in the form of a Borrowing Request signed by the Borrower not later than 11:00 a.m., New York City time, (a) in the case of a EurocurrencySOFR Borrowing denominated in U.S. Dollars, two Business Days before the date of the proposed Borrowing, (b) in the case of a Eurocurrency Borrowing denominated in an Alternative Currency, four Business Days before the date of the proposed Borrowing (provided that this Agreement shall have been amended by the Administrative Agent and the Borrower on or prior to such date to reflect the addition of appropriate benchmark rate mechanics for such Alternative Currency), or (c) in the case of an ABR Borrowing, on the date of the proposed Borrowing.  Each such Borrowing Request shall be irrevocable.  Each such Borrowing Request shall specify the following information in compliance with Section 2.02:
 
(i)          the aggregate amount of the requested Borrowing;
 
(ii)         the date of such Borrowing, which shall be a Business Day;
 
(iii)        whether such Borrowing is to be an ABR Borrowing or a EurocurrencySOFR Borrowing;
 
(iv)       in the case of a EurocurrencySOFR Borrowing, the initial Interest Period to be applicable thereto, which shall be a period contemplated by the definition of “Interest Period”;
 
(v)         the location and number of the Borrower’s account to which funds are to be disbursed, which shall comply with the requirements of Section 2.06; and
 
(vi)        in the case of a EurocurrencySOFR Borrowing denominated in an Alternative Currency, the currency of such Borrowing.
 
Promptly following receipt of a Borrowing Request in accordance with this Section, the Administrative Agent shall advise each Lender of the details thereof and of the amount of such Lender’s Loan to be made as part of the requested Borrowing.
 
Section 2.04.          Swingline Loans. (a) Subject to the terms and conditions set forth herein, the Swingline Lender agrees to make Swingline Loans to the Borrower from time to time during the Availability Period, in an aggregate principal amount at any time outstanding that will not result in (i) the aggregate principal amount of outstanding Swingline Loans exceeding 25% of the total Commitments at such time or (ii) the sum of
 
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the total Credit Exposures exceeding the total Commitments; provided that the Swingline Lender shall not be required to make a Swingline Loan to refinance an outstanding Swingline Loan.  Within the foregoing limits and subject to the terms and conditions set forth herein, the Borrower may borrow, prepay and reborrow Swingline Loans.
 
(b)          To request a Swingline Loan, the Borrower shall notify the Administrative Agent of such request in the form of a Borrowing Request signed by the Borrower, not later than 11:00 a.m., New York City time, on the day of a proposed Swingline Loan.  Each such notice shall be irrevocable and shall specify the requested date (which shall be a Business Day) and amount of the requested Swingline Loan.  The Administrative Agent will promptly advise the Swingline Lender of any such notice received by it.  The Swingline Lender shall make each Swingline Loan available by means of a credit to the general deposit account of the Borrower with the Swingline Lender or disbursement to such other account of the Borrower as the Borrower may specify in its Borrowing Request on the requested date of such Swingline Loan.
 
(c)          The Swingline Lender may by written notice given to the Administrative Agent not later than 10:00 a.m., New York City time, on any Business Day require the Lenders to acquire participations on such Business Day in all or a portion of the Swingline Loans outstanding.  Such notice shall specify the aggregate amount of Swingline Loans in which Lenders will participate.  Promptly upon receipt of such notice, the Administrative Agent will give notice thereof to each Lender, specifying in such notice such Lender’s Applicable Percentage of such Swingline Loan or Loans.  Each Lender hereby absolutely and unconditionally agrees, upon receipt of notice as provided above, to pay to the Administrative Agent, for the account of the Swingline Lender, such Lender’s Applicable Percentage of such Swingline Loan or Loans.  Each Lender acknowledges and agrees that its obligation to acquire participations in Swingline Loans pursuant to this paragraph is absolute and unconditional and shall not be affected by any circumstance whatsoever, including the occurrence and continuance of a Default or reduction or termination of the Commitments, and that each such payment shall be made without any offset, abatement, withholding or reduction whatsoever.  Each Lender shall comply with its obligation under this paragraph by wire transfer of immediately available funds, in the same manner as provided in Section 2.06 with respect to Loans made by such Lender (and Section 2.06 shall apply, mutatis mutandis, to the payment obligations of the Lenders), and the Administrative Agent shall promptly pay to the Swingline Lender the amounts so received by it from the Lenders.  The Administrative Agent shall promptly notify the Borrower of any participations in any Swingline Loan acquired pursuant to this paragraph, and thereafter payments in respect of such Swingline Loan shall be made to the Administrative Agent and not to the Swingline Lender.  Any amounts received by the Swingline Lender from the Borrower in respect of a Swingline Loan after receipt by the Swingline Lender of the proceeds of a sale of participations therein shall be promptly remitted to the Administrative Agent; any such amounts received by the Administrative Agent shall be promptly remitted by the Administrative Agent to the Lenders that shall have made their payments pursuant to this paragraph and to the Swingline Lender, as their interests may appear; provided that any such payment so remitted shall be repaid to the Swingline Lender or to the Administrative Agent, as applicable, if and to the extent such payment is required to be refunded to the Borrower for any reason.  The purchase of participations in a
 
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Swingline Loan pursuant to this paragraph shall not relieve the Borrower of any default in the payment thereof.
 
Section 2.05.          [Reserved]
 
Section 2.06.          Funding of Borrowings.  (a) Each Lender shall make each Loan to be made by it hereunder on the proposed date thereof by wire transfer of immediately available funds by 12:00 noon, New York City time (in the case of fundings to an account in New York City), or 12:00 noon, local time (in the case of fundings to an account in another jurisdiction), in each case to the account of the Administrative Agent most recently designated by it for such purpose by notice to the Lenders; provided that (x) ABR Loans shall be made available by 2:00 p.m. New York City or local time, as the case may be, and (y) Swingline Loans shall be made as provided in Section 2.04.  The Administrative Agent will make such funds available to the Borrower by promptly crediting the amounts so received, in like funds, to an account of the Borrower maintained in New York City or London or in the financial center of the country of the currency of such Loans and designated by the Borrower in the applicable Borrowing Request.
 
(b)          Unless the Administrative Agent receives notice from a Lender before the proposed date of any Borrowing that such Lender will not make its share of such Borrowing available to the Administrative Agent, the Administrative Agent may assume that such Lender has made such share available on such date in accordance with Section 2.06(a) and may, in reliance on such assumption, make available to the Borrower a corresponding amount in the required currency.  In such event, if a Lender has not in fact made its share of the applicable Borrowing available to the Administrative Agent, then the applicable Lender and the Borrower severally agree to pay to the Administrative Agent forthwith on demand such corresponding amount with interest thereon, for each day from and including the date such amount is made available to the Borrower to but excluding the date of payment to the Administrative Agent, at (i) in the case of such Lender, if such Borrowing is denominated in U.S. Dollars, the greater of the Federal Funds Effective Rate and a rate determined by the Administrative Agent in accordance with banking industry rules on interbank compensation, and if such Borrowing is denominated in an Alternative Currency, a rate determined by the Administrative Agent to represent its cost of overnight or short-term funds in the relevant currency (which determination shall be conclusive absent manifest error), or (ii) in the case of the Borrower, the interest rate applicable to such Borrowing (provided that in the case of a Borrowing denominated in U.S. Dollars, the interest rate applicable to ABR Loans).  If such Lender pays such amount to the Administrative Agent, then such amount shall constitute such Lender’s Loan included in such Borrowing.
 
Section 2.07.          Interest Elections.  (a) Each Borrowing initially shall be of the Type specified in the applicable Borrowing Request and, in the case of a EurocurrencySOFR Borrowing, shall have an initial Interest Period as specified in such Borrowing Request.  Thereafter, the Borrower may elect to convert such Borrowing to a different Type or to continue such Borrowing and, in the case of a EurocurrencySOFR Borrowing, may elect Interest Periods therefor, all as provided in this Section.  The Borrower may elect different options with respect to different portions of the affected
 
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Borrowing, in which case each such portion shall be allocated ratably among the Lenders holding the Loans comprising such Borrowing, and the Loans comprising each such portion shall be considered a separate Borrowing.  Notwithstanding the foregoing, the Borrower may not (i) elect to convert the currency in which any Loans are denominated, (ii) elect an Interest Period for EurocurrencySOFR Loans that does not comply with Section 2.02(d), (iii) elect to convert any ABR Loans to EurocurrencySOFR Loans that would result in the number of EurocurrencySOFR Borrowings exceeding the maximum number of EurocurrencySOFR Borrowings permitted under Section 2.02(c), or (iv) elect an Interest Period for EurocurrencySOFR Loans unless the aggregate outstanding principal amount of EurocurrencySOFR Loans (including any EurocurrencySOFR Loans in the same currency made on the date that such Interest Period is to begin) to which such Interest Period will apply complies with the requirements as to minimum principal amount set forth in Section 2.02(c).  This Section shall not apply to Swingline Borrowings, which may not be converted or continued.
 
(b)          To make an election pursuant to this Section, the Borrower shall notify the Administrative Agent of such election in the form of an Interest Election Request signed by the Borrower by the time that a Borrowing Request would be required under Section 2.03 if the Borrower were requesting a Borrowing of the Type resulting from such election to be made on the effective date of such election; provided that in the case of a conversion of EurocurrencySOFR Loans to ABR Loans, notice of such election must be delivered not later than 11:00 a.m., New York City time, three Business Days before the end of the current Interest Period for such EurocurrencySOFR Loans.  Each such Interest Election Request shall be irrevocable.
 
(c)          Each Interest Election Request shall specify the following information in compliance with Section 2.02 and Section 2.07(e):
 
(i)          the Borrowing to which such Interest Election Request applies and, if different options are being elected with respect to different portions thereof, the portions thereof to be allocated to each resulting Borrowing (in which case the information to be specified pursuant to clauses (iii) and (iv) below shall be specified for each resulting Borrowing);
 
(ii)          the effective date of the election made pursuant to such Interest Election Request, which shall be a Business Day;
 
(iii)          whether the resulting Borrowing is to be an ABR Borrowing or a EurocurrencySOFR Borrowing; and
 
(iv)          if the resulting Borrowing is to be a EurocurrencySOFR Borrowing, the Interest Period to be applicable thereto after giving effect to such election, which shall be a period contemplated by the definition of “Interest Period”.
 
If an Interest Election Request requests a EurocurrencySOFR Borrowing but does not specify an Interest Period, then the Borrower shall be deemed to have selected an Interest Period of one month’s duration.
 
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(d)          Promptly following receipt of an Interest Election Request, the Administrative Agent shall advise each Lender of the details thereof and of such Lender’s portion of each resulting Borrowing.
 
(e)          If the Borrower fails to deliver a timely Interest Election Request with respect to a EurocurrencySOFR Borrowing before the end of the Interest Period applicable thereto, then, unless such Borrowing is repaid as provided herein, at the end of such Interest Period such Borrowing shall be continued as a EurocurrencySOFR Loan having an Interest Period of one month.  Notwithstanding any contrary provision hereof, if an Event of Default has occurred and is continuing and the Administrative Agent, at the request of the Required Lenders, so notifies the Borrower, then, so long as an Event of Default is continuing, no outstanding ABR Borrowing may be converted to a EurocurrencySOFR Borrowing.
 
Section 2.08.          Termination and Reduction of Commitments(a).  (a) Unless previously terminated, the Commitments shall terminate on the Maturity Date.
 
(b)          The Borrower may at any time terminate, or from time to time reduce, the Commitments; provided that (i) each reduction of the Commitments shall be in an amount that is an integral multiple of $1,000,000 and not less than $5,000,000 and (ii) the Borrower shall not terminate or reduce the Commitments if, after giving effect to any concurrent prepayment of the Loans in accordance with Section 2.10, the sum of the Credit Exposures would exceed the total Commitments.
 
(c)          The Borrower shall notify the Administrative Agent of any election to terminate or reduce the Commitments under paragraph (b) of this Section at least three Business Days before the effective date of such termination or reduction, specifying such election and the effective date thereof.  Promptly following receipt of any notice, the Administrative Agent shall advise the Lenders of the contents thereof.  Each notice delivered by the Borrower pursuant to this Section shall be irrevocable; provided that a notice of termination or reduction of the Commitments may state that such termination or reduction is conditioned upon the effectiveness of a refinancing or other events, in which case such notice may be revoked (by notice to the Administrative Agent on or prior to the specified effective date) if such condition is not satisfied.  Any termination or reduction of the Commitments shall be permanent and will be made ratably among the Lenders in accordance with their respective Commitments.
 
Section 2.09.          Repayment of Loans; Evidence of Debt.  (a) The Borrower hereby unconditionally promises to pay (i) to the Administrative Agent for the account of each Lender the then unpaid principal amount of each Global Loan on the Maturity Date and (ii) to the Swingline Lender the then unpaid principal amount of each Swingline Loan on the earlier of the Maturity Date and the first date after such Swingline Loan is made that is the 15th or last day of a calendar month and is at least two Business Days after such Swingline Loan is made; provided that on each date that a Global Borrowing is made, the Borrower shall repay all Swingline Loans then outstanding.
 
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(b)          Each Lender shall maintain in accordance with its usual practice an account or accounts evidencing the indebtedness of the Borrower to such Lender resulting from each Loan made by such Lender, including the amounts of principal and interest payable and paid to such Lender from time to time hereunder.
 
(c)          The Administrative Agent shall maintain accounts in which it shall record (i) the amount of each Loan made hereunder, the currency, Class and Type thereof and the Interest Period (if any) applicable thereto, (ii) the amount of any principal or interest due and payable or to become due and payable from the Borrower to each Lender hereunder and (iii) the amount of any sum received by the Administrative Agent hereunder for the account of the Lenders and each Lender’s share thereof.
 
(d)          The entries made in the accounts maintained pursuant to Section 2.09(b) or 2.09(c) shall be prima facie evidence of the existence and amounts of the obligations recorded therein; provided that any failure by any Lender or the Administrative Agent to maintain such accounts or any error therein shall not affect the obligation of the Borrower to repay the Loans in accordance with the terms of this Agreement. In the event of any conflict between the records maintained pursuant to Section 2.09(b) and Section 2.09(c) and the Register, the Register shall control in the absence of manifest error.
 
(e)          Any Lender may request that Loans of any Class made by it be evidenced by a promissory note.  In such event, the Borrower shall prepare, execute and deliver promptly to such Lender a promissory note payable to the order of such Lender (or, if requested by such Lender, to such Lender and its registered assigns) substantially in the form of Exhibit H.  Thereafter, the Loans evidenced by such promissory note and interest thereon shall at all times (including after assignment pursuant to Section 10.04) be represented by one or more promissory notes in such form payable to the order of the payee named therein (or, if such promissory note is a registered note, to such payee and its registered assigns).
 
Section 2.10.          Prepayment of Loans.  (a) The Borrower shall have the right at any time to prepay any Borrowing in whole or in part, subject to the provisions of this Section.
 
(b)          If the Administrative Agent notifies the Borrower at any time that the aggregate Outstanding Amount of all Credit Exposure at such time exceeds an amount equal to 105% of the Commitments then in effect, then, within seven Business Days after receipt of such notice, the Borrower shall prepay Loans in an aggregate amount sufficient to reduce such Outstanding Amount as of such date of payment to an amount not to exceed 100% of the Commitments then in effect.  The Administrative Agent may, at any time and from time to time after the initial deposit of such cash collateral, request that additional cash collateral be provided in order to protect against the results of further exchange rate fluctuations.
 
(c)          The Borrower shall notify the Administrative Agent (and, in the case of prepayment of a Swingline Loan, the Swingline Lender) by telephone (confirmed by telecopy) of any prepayment hereunder (i) in the case of prepayment of a EurocurrencySOFR Borrowing denominated in U.S. Dollars, not later than 11:00 a.m.,
 
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New York City time, three Business Days before the date of prepayment, (ii) in the case of a Eurocurrency Borrowing denominated in an Alternative Currency, not later than 11:00 a.m., New York City time, three Business Days before the date of payment, (iii) in the case of prepayment of an ABR Borrowing, not later than 11:00 a.m., New York City time, on the date of prepayment, or (iv) in the case of prepayment of a Swingline Loan, not later than 11:00 a.m., New York City time, on the date of prepayment.  Each such notice shall be irrevocable and shall specify the prepayment date and the principal amount of each Borrowing or portion thereof to be prepaid; provided that such notice may state that the prepayment is conditioned upon the effectiveness of a refinancing or other events, in which case such notice may be revoked (by notice to the Administrative Agent on or prior to the specified effective date) if such condition is not satisfied.  Promptly following receipt of any such notice, the Administrative Agent shall advise the Lenders of the contents thereof.  Each partial prepayment of any Borrowing shall be in an amount that would be permitted in the case of an advance of a Borrowing of the same Type as provided in Section 2.02.  Each prepayment of a Borrowing shall be applied ratably to the Loans included in the prepaid Borrowing.  Prepayments shall be accompanied by accrued interest to the extent required by Section 2.12.
 
Section 2.11.          Fees.  (a) The Borrower agrees to pay to the Administrative Agent for the account of each Lender a facility fee, which shall accrue at a rate per annum equal to 0.15% on the daily amount of the Commitment of such Lender (whether used or unused) during the period from and including the Closing Date to but excluding the date on which such Commitment terminates; provided that, if such Lender continues to have any Credit Exposure after its Commitment terminates, then such facility fee shall continue to accrue on the daily amount of such Lender’s Credit Exposure from and including the date on which its Commitment terminates to but excluding the date on which such Lender ceases to have any Credit Exposure.  Accrued facility fees shall be payable in arrears on the last day of March, June, September and December of each year and on the date on which the Commitments terminate, commencing on the first such date to occur after the date hereof; provided that any facility fees accruing after the date on which the Commitments terminate shall be payable on demand.  All facility fees shall be computed on the basis of a year of 360 days and shall be payable for the actual number of days elapsed (including the first day but excluding the last day).
 
(b)          The Borrower agrees to pay to the Administrative Agent, for its own account, fees payable in the amounts and at the times separately agreed upon in writing by the Borrower and the Administrative Agent.
 
(c)          All fees payable hereunder shall be paid on the dates due, in immediately available funds in U.S. Dollars, to the Administrative Agent for distribution, in the case of facility fees and participation fees, to the Lenders.  Fees paid shall not be refundable under any circumstances.
 
Section 2.12.          Interest.  (a) The Loans comprising each ABR Borrowing (including each Swingline Loan) shall bear interest at the Alternate Base Rate plus the Applicable Rate.
 
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(b)          The Loans comprising each EurocurrencySOFR Borrowing shall bear interest at the Eurocurrency RateTerm SOFR for the Interest Period in effect for such Borrowing plus the Applicable Rate.
 
(c)          Notwithstanding the foregoing, if any principal of or interest on any Loan or any fee or other amount payable by the Borrower hereunder is not paid when due, whether at stated maturity, upon acceleration or otherwise, such overdue amount shall bear interest, after as well as before judgment, at a rate per annum equal to (i) in the case of overdue principal of any Loan, 2% plus the rate otherwise applicable to such Loan as provided in the preceding subsections of this Section or (ii) in the case of any other amount, 2% plus the rate applicable to ABR Loans.
 
(d)          Accrued interest on each Loan shall be payable in arrears on each Interest Payment Date for such Loan and upon termination of the Commitments; provided that (i) interest accrued pursuant to Section 2.12(c) shall be payable on demand, (ii) upon any repayment or prepayment of any Loan (other than a prepayment of an ABR Loan prior to the end of the Availability Period), accrued interest on the principal amount repaid or prepaid shall be payable on the date of such repayment or prepayment and (iii) upon any conversion of any EurocurrencySOFR Loan prior to the end of the current Interest Period therefor, accrued interest on such Loan shall be payable on the effective date of such conversion.
 
(e)          All interest hereunder shall be computed on the basis of a year of 360 days, except that interest computed by reference to the Alternate Base Rate at times when the Alternate Base Rate is based on the Prime Rate shall be computed on the basis of a year of 365 days (or 366 days in a leap year) and interest in respect of Loans denominated in Alternative Currencies as to which market practice differs from the foregoing shall be computed in accordance with such market practice, and in each case shall be payable for the actual number of days elapsed (including the first day but excluding the last day).  The applicable Alternate Base Rate or Eurocurrency RateTerm SOFR, as applicable, shall be determined by the Administrative Agent, and such determination shall be conclusive absent manifest error.
 
Section 2.13.          Alternate Rate of Interest. .  (a) If before the commencement of any Interest Period for a EurocurrencySOFR Borrowing:
 
(ai)          the Administrative Agent determines (which determination shall be conclusive absent manifest error) that adequate and reasonable means do not exist for ascertaining the Eurocurrency RateTerm SOFR for such Interest Period;
 
(bii)          the Administrative Agent is advised by the Required Lenders that the Eurocurrency RateTerm SOFR for such Interest Period will not adequately and fairly reflect the cost to such Lenders of making or maintaining such Loans for such Interest Period; or
 
(ciii)          the Administrative Agent determines (which determination shall be conclusive absent manifest error) that deposits in the principal amounts of
 
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the Loans comprising such Borrowing and in the currency in which such Loans are to be denominated are not generally available in the relevant market;
 
then the Administrative Agent shall give notice thereof to the Borrower and the Lenders by telephone or telecopy as promptly as practicable thereafter and, until the Administrative Agent notifies the Borrower and the Lenders that the circumstances giving rise to such notice no longer exist, (i) any request by the Borrower for a Eurocurrency Borrowing of the affected currency or(i) a conversion to or continuation of a EurocurrencySOFR Borrowing in the affected currency, pursuant to Section 2.03 or 2.07, shall be deemed rescinded, and (ii) if any Borrowing Request requests a Eurocurrency Borrowing denominated in U.S. Dollars, such Borrowing shall be made as an ABR a Borrowing of SOFR Loans pursuant to Section 2.03 shall be deemed to be a request for a Borrowing of ABR Loans.
 
(b)          Benchmark Replacement.
 
(i)          Notwithstanding anything to the contrary herein or in any other Loan Document, if a Benchmark Transition Event and its related Benchmark Replacement Date have occurred prior to any setting of the then-current Benchmark, then (x) if a Benchmark Replacement is determined in accordance with clause (a) of the definition of “Benchmark Replacement” for such Benchmark Replacement Date, such Benchmark Replacement will replace such Benchmark for all purposes hereunder and under any Loan Document in respect of such Benchmark setting and subsequent Benchmark settings without any amendment to, or further action or consent of any other party to, this Agreement or any other Loan Document and (y) if a Benchmark Replacement is determined in accordance with clause (b) of the definition of “Benchmark Replacement” for such Benchmark Replacement Date, such Benchmark Replacement will replace such Benchmark for all purposes hereunder and under any Loan Document in respect of any Benchmark setting at or after 5:00 p.m. (New York City time) on the fifth (5th) Business Day after the date notice of such Benchmark Replacement is provided to the Lenders and the Borrower without any amendment to, or further action or consent of any other party to, this Agreement or any other Loan Document so long as the Administrative Agent has not received, by such time, written notice of objection to such Benchmark Replacement from Lenders comprising the Required Lenders.
 
(ii)          No Swap Contract shall be deemed to be a “Loan Document” for purposes of this Section 2.13.
 
(c)          Benchmark Replacement Conforming Changes. In connection with the implementation and administration of a Benchmark Replacement, the Administrative Agent will have the right to make Benchmark Replacement Conforming Changes from time to time and, notwithstanding anything to the contrary herein or in any other Loan Document, any amendments implementing such Benchmark Replacement Conforming Changes will become effective without any further action or
 
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consent of any other party to this Agreement or any other Loan Document (other than as provided in the definition of Benchmark Replacement Conforming Changes).
 
(d)          Notices; Standards for Decisions and Determinations. The Administrative Agent will promptly (and in any event within five (5) Business Days) notify the Borrower and the Lenders of (i) any occurrence of a Benchmark Transition Event, (ii) the implementation of any Benchmark Replacement, and (iii)  the effectiveness of any Conforming Changes.  The Administrative Agent will promptly notify the Borrower of the removal or reinstatement of any tenor of a Benchmark pursuant to Section 2.13(e). Any determination,  decision or election that may be made by the Administrative  Agent or, if  applicable, or any Lender (or group of Lenders) pursuant to this Section 2.13, including any determination with respect to a tenor, rate or adjustment or of the occurrence or non-occurrence of an event, circumstance or date and any decision to take or refrain from taking any action or any selection, will be conclusive and binding absent manifest error and may be made in its or their sole discretion and without consent from any other party to this Agreement or any other Loan Document, except, in each case, as expressly required pursuant to this Section 2.13.
 
(e)          Unavailability of Tenor of Benchmark. Notwithstanding anything to the contrary herein or in any other Loan Document, at any time (including in connection with the implementation of a Benchmark Replacement), (i) if the then-current Benchmark is a term rate (including Term SOFR) and either (A) any tenor for such Benchmark is not displayed on a screen or other information service that publishes such rate from time to time as selected by the Administrative Agent in its reasonable discretion or (B) the administrator of such Benchmark or the regulatory supervisor for the administrator of such Benchmark has provided a public statement or publication of information announcing that any tenor for such Benchmark is not or will not be representative, then the Administrative Agent may modify the definition of “Interest Period” (or any similar or analogous definition) for any Benchmark settings at or after such time to remove such unavailable or non-representative tenor and (ii) if a tenor that was removed pursuant to clause (i) above either (A) is subsequently displayed on a screen or information service for a Benchmark (including a Benchmark Replacement) or (B) is not, or is no longer, subject to an announcement that it is not or will not be representative, then the Administrative Agent may modify the definition of “Interest Period” (or any similar or analogous definition) for all Benchmark settings at or after such time to reinstate such previously removed tenor.
 
(f)          Benchmark Unavailability Period.  Upon the Borrower’s receipt of notice of the commencement of a Benchmark Unavailability Period, the Borrower may revoke any pending request for a Borrowing of, conversion to or continuation of SOFR Loans to be made, converted or continued during any Benchmark Unavailability Period and, failing that, (i) the Borrower will be deemed to have converted any such request into a request for a Borrowing of or conversion to Alternate Base Rate Loans and (ii) any outstanding affected SOFR Loans will be deemed to have been converted into Alternate Base Rate Loans at the end of the
 
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applicable Interest Period.  During a Benchmark Unavailability Period or at any time that a tenor for the then-current Benchmark is not an Available Tenor, the component of Alternate Base Rate based upon the then-current Benchmark or such tenor for such Benchmark, as applicable, will not be used in any determination of Alternate Base Rate.
 
Section 2.14.          Increased Costs.  (a) If any Change in Law after the Closing Date shall:
 
(i)          impose, modify or deem applicable any reserve, special deposit or similar requirement against assets of, deposits with or for the account of, or credit extended by, any Lender (except any reserve requirement contemplated by Section 2.14(e));
 
(ii)          subject any Lender Party to any Taxes (other than (A) Indemnified Taxes, (B) Taxes described in clauses (b) through (e) of the definition of Excluded Taxes and (C) Connection Income Taxes) with respect to EurocurrencySOFR Loans made by such Lender (including on its deposits, reserves, other liabilities or capital attributable thereto); or
 
(iii)         impose on any Lender or the London interbank market any other condition, cost or expense (other than Taxes) affecting this Agreement or EurocurrencySOFR Loans made by such Lender;
 
and the result of any of the foregoing shall be to increase the cost to such Lender of making, continuing, converting to or maintaining any EurocurrencySOFR Loan (or of maintaining its obligation to make any such Loan) or to reduce the amount of any sum received or receivable by such Lender hereunder (whether of principal, interest or otherwise), then the Borrower shall, after receipt of a written request by such Lender (which request shall set forth in reasonable detail the basis for requesting such amount), promptly pay to the Administrative Agent for the account of such Lender any amounts required to compensate such Lender for such additional costs actually incurred or reduction actually suffered by such Lender, but only to the extent such Lender is generally imposing such charges on borrowers (similarly situated to the Borrower hereunder) under comparable credit facilities.
 
(b)          If any Lender determines that any Change in Law after the Closing Date regarding capital or liquidity requirements has or would have the effect of reducing the rate of return on such Lender’s capital or on the capital of such Lender’s holding company, if any, as a consequence of this Agreement or the Loans made by such Lender to a level below that which such Lender or such Lender’s holding company could have achieved but for such Change in Law (taking into consideration such Lender’s policies and the policies of such Lender’s holding company with respect to capital adequacy), then from time to time, promptly after written demand by such Lender (with a copy to the Administrative Agent), the Borrower shall pay to such Lender such actual additional amount or amounts as will compensate such Lender or its holding company for such actual reduction, it being understood and agreed, however, that a Lender shall not be entitled to such compensation as a result of such Lender’s compliance with, or pursuant to any request or directive to
 
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comply with, any law, rule or regulation as in effect on the Closing Date or to the extent such Lender is generally not imposing such charges on, or requesting such compensation from, borrowers (similarly situated to the Borrower hereunder) under comparable credit facilities. Each Lender, upon determining in good faith that any additional amounts will be payable pursuant to this Section 2.14(b), will give prompt written notice thereof to the Borrower, which notice shall set forth in reasonable detail the basis of the calculation of such additional amounts, although the failure to give any such notice shall not, subject to Section 2.14(d), release or diminish the Borrower’s obligations to pay additional amounts pursuant to this Section 2.14(b) promptly following receipt of such notice.
 
(c)          A certificate of a Lender setting forth the amount or amounts necessary to compensate such Lender or its holding company as specified in Section 2.14(a) or 2.14(b) and setting forth in reasonable detail the manner in which such amount or amounts were determined shall be delivered to the Borrower and shall be conclusive, absent manifest error.
 
(d)          Failure or delay by any Lender to demand compensation pursuant to this Section shall not constitute a waiver of such Lender’s right to demand such compensation; provided that the Borrower shall not be required to compensate a Lender pursuant to this Section for any increased costs or reductions incurred more than 180 days before the date that such Lender notifies the Borrower of the Change in Law giving rise to such increased cost or reduction and of such Lender’s intention to claim compensation therefor; provided further that, if the Change in Law giving rise to such increased cost or reduction is retroactive, then the 180-day period referred to above shall be extended to include the period of retroactive effect thereof.
 
(e)          The Borrower shall pay to each Lender, (i) as long as such Lender shall be required to maintain reserves with respect to liabilities or assets consisting of or including EurocurrencySOFR funds or deposits (currently known as “Eurocurrency liabilities”), additional interest on the unpaid principal amount of each EurocurrencySOFR Loan equal to the actual costs of such reserves allocated to such Loan by such Lender (as determined by such Lender in good faith, which determination shall be conclusive), and (ii) as long as such Lender shall be required to comply with any reserve ratio requirement or analogous requirement of any other central banking or financial regulatory authority imposed in respect of the maintenance of the Commitments or the funding of the EurocurrencySOFR Loans, such additional costs (expressed as a percentage per annum and rounded upwards, if necessary, to the nearest five decimal places) equal to the actual costs allocated to such Commitment or Loan by such Lender (as determined by such Lender in good faith, which determination shall be conclusive), which in each case shall be due and payable on each date on which interest is payable on such Loan, provided the Borrower shall have received at least 10 days’ prior notice (with a copy to the Administrative Agent) of such additional interest or costs from such Lender.  If a Lender fails to give notice 10 days prior to the relevant Interest Payment Date, such additional interest or costs shall be due and payable 30 days from receipt of such notice.
 
(f)          Except in the case of Section 2.14(a)(ii), this Section 2.14 shall not apply to matters covered by Section 2.16 relating to Taxes, including any Excluded Taxes.
 
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Section 2.15.          Break Funding Payments.  In the event of (a) a prepayment of any principal of any EurocurrencySOFR Loan by the Borrower to or for the account of a Lender other than on the last day of the Interest Period applicable thereto, (b) the conversion of any EurocurrencySOFR Loan other than on the last day of the Interest Period applicable thereto or (c) the failure to borrow, convert, continue or prepay any EurocurrencySOFR Loan on the date specified in any notice delivered pursuant hereto (regardless of whether such notice may be revoked under Section 2.10(c) and is revoked in accordance therewith), then the Borrower shall, after receipt of a written request by such Lender (which request shall set forth in reasonable detail the basis for requesting such amount), promptly pay to the Administrative Agent for the account of such Lender any amounts required to compensate such Lender for any additional losses, costs or expenses actually incurred by such Lender as a result of such prepayment, including any loss, cost or expense (excluding loss of anticipated profits) actually incurred by reason of the liquidation or reemployment of deposits or other funds acquired by such Lender to fund or maintain such EurocurrencySOFR Loan.  A certificate of a Lender setting forth the amount or amounts necessary to compensate such Lender as specified in this Section 2.15 and setting forth in reasonable detail the manner in which such amount or amounts were determined shall be delivered to the Borrower and shall be conclusive, absent manifest error.
 
Section 2.16.          Taxes.  (a) Any and all payments by or on account of any obligation of any Loan Party under the Loan Documents shall be made free and clear of and without deduction or withholding for any Indemnified Taxes or Other Taxes; provided that if a Loan Party shall be required to deduct or withhold any Indemnified Taxes or Other Taxes from such payments, then (i) the sum payable by such Loan Party shall be increased as necessary so that after making all required deductions and withholdings (including, for the avoidance of doubt, deductions and withholdings applicable to additional sums payable under this Section) each Lender Party receives an amount equal to the sum it would have received had no such deductions or withholdings been made, (ii) such Loan Party shall make such deductions and withholdings and (iii) such Loan Party shall pay the full amount deducted or withheld to the relevant Governmental Authority in accordance with applicable law.
 
(b)          Without limiting the provisions of subsection (a) above, the Loan Parties shall pay any Other Taxes to the relevant Governmental Authority in accordance with applicable law, or at the option of the Administrative Agent timely reimburse it for the payment of, any Other Taxes.
 
(c)          Without limiting the provisions of subsection (a) above, each Loan Party shall, jointly and severally, indemnify each Lender Party, within 30 days after written demand therefor, for the full amount of any Indemnified Taxes imposed on or with respect to any payment made by or on account of any obligation of any Loan Party under the Loan Documents or Other Taxes (together with any penalties, interest and reasonable expenses) payable or paid by such Lender Party or required to be withheld or deducted from a payment to such Lender Party, whether or not such Indemnified Taxes or Other Taxes were correctly or legally imposed or asserted by the relevant Governmental Authority.  A certificate as to the amount of such payment or liability delivered to such Loan Party by a
 
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Lender Party on its own behalf, or by the Administrative Agent on behalf of a Lender Party, shall be conclusive absent manifest error.
 
(d)         As soon as practicable after any payment of Indemnified Taxes or Other Taxes by any Loan Party to a Governmental Authority, such Loan Party shall deliver to the Administrative Agent the original or a certified copy of a receipt issued by such Governmental Authority evidencing such payment, a copy of the return reporting such payment or other evidence of such payment reasonably satisfactory to the Administrative Agent.
 
(e)          (i) Any Lender that is entitled to an exemption from or reduction of withholding tax (including FATCA) under the law of a Relevant Jurisdiction, or any treaty to which such jurisdiction is a party, or under any law or treaty of any other jurisdiction in which payments may be made by the Borrower pursuant to this Agreement, with respect to payments under this Agreement, shall deliver to the Borrower (with a copy to the Administrative Agent), at the time or times reasonably requested by the Borrower or the Administrative Agent, such properly completed and executed documentation prescribed by applicable law or reasonably requested by the Borrower as will permit such payments to be made without withholding or at a reduced rate.  Each Lender shall promptly notify the Administrative Agent of any change in facts which would modify or render invalid any such claimed exemption or reduction.  Notwithstanding anything to the contrary herein, the completion, execution and submission of such documentation (other than such documentation set forth in clauses (ii) and (iii) of this Section 2.16(e)) shall not be required if in the Lender’s reasonable judgment such completion, execution or submission would subject such Lender to any material unreimbursed cost or expense or would materially prejudice the legal or commercial position of such Lender.
 
(ii)          If a payment made to a Lender under any Loan Document would be subject to U.S. federal withholding Tax imposed by FATCA if such Lender were to fail to comply with the applicable reporting requirements of FATCA (including those contained in Section 1471(b) or 1472(b) of the Code, as applicable), such Lender shall deliver to the Borrower and the Administrative Agent at the time or times prescribed by law and at such time or times reasonably requested by the Borrower or the Administrative Agent such documentation prescribed by applicable law (including as prescribed by Section 1471(b)(3)(C)(i) of the Code) and such additional documentation reasonably requested by the Borrower or the Administrative Agent as may be necessary for the Borrower or the Administrative Agent to comply with its obligations under FATCA, to determine that such Lender has or has not complied with such Lender’s obligations under FATCA or to determine the amount to deduct and withhold from such payment.  Solely for the purposes of this Section 2.16(e), “FATCA” shall include any amendments made to FATCA after the date of this Agreement.
 
(iii)          Without limiting the generality of the foregoing, in the event that the Borrower is a U.S. Person,
 
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(A)          any Lender that is a U.S. Person shall deliver to the Borrower and the Administrative Agent on or prior to the date on which such Lender becomes a Lender under this Agreement (and from time to time thereafter upon the reasonable request of the Borrower or the Administrative Agent), executed copies of IRS Form W-9 certifying that such Lender is exempt from U.S. Federal backup withholding tax;
 
(B)          any Non-U.S. Lender shall, to the extent it is legally entitled to do so, deliver to the Borrower and the Administrative Agent (in such number of copies as shall be requested by the recipient) on or prior to the date on which such Non-U.S. Lender becomes a Lender under this Agreement (and from time to time thereafter upon the reasonable request of the Borrower or the Administrative Agent), whichever of the following is applicable:
 
(1)          in the case of a Non-U.S. Lender claiming the benefits of an income tax treaty to which the United States is a party (x) with respect to payments of interest under any Loan Document, executed copies of IRS Form W-8BEN or W-8BEN-E establishing an exemption from, or reduction of, U.S. Federal withholding Tax pursuant to the “interest” article of such tax treaty and (y) with respect to any other applicable payments under any Loan Document, IRS Form W-8BEN or W-8BEN-E establishing an exemption from, or reduction of, U.S. Federal withholding Tax pursuant to the “business profits” or “other income” article of such tax treaty;
 
(2)           executed copies of IRS Form W-8ECI;
 
(3)          in the case of a Non-U.S. Lender claiming the benefits of the exemption for portfolio interest under Section 881(c) of the Code, (x) a certificate substantially in the form of Exhibit G-1 to the effect that such Non-U.S. Lender is not a “bank” within the meaning of Section 881(c)(3)(A) of the Code, a “10 percent shareholder” of the Borrower within the meaning of Section 881(c)(3)(B) of the Code, or a “controlled foreign corporation” described in Section 881(c)(3)(C) of the Code (a “U.S. Tax Compliance Certificate”) and (y) executed copies of IRS Form W-8BEN or W-8BEN-E; or
 
(4)          to the extent a Non-U.S. Lender is not the beneficial owner, executed copies of IRS Form W-8IMY, accompanied by IRS Form W-8ECI, IRS Form W-8BEN or W-8BEN-E, a U.S. Tax Compliance Certificate substantially in the form of Exhibit G-2 or Exhibit G-3, IRS Form W-9, and/or other certification documents from each beneficial owner, as applicable; provided that if the Non-U.S. Lender is a partnership and one or
 
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more direct or indirect partners of such Non-U.S. Lender are claiming the portfolio interest exemption, such Non-U.S. Lender may provide a U.S. Tax Compliance Certificate substantially in the form of Exhibit G-4 on behalf of each such direct and indirect partner.
 
(f)          If a Lender Party determines, in its sole discretion, that it has received a refund of any Taxes or Other Taxes as to which it has been indemnified by a Loan Party or with respect to which a Loan Party has paid additional amounts pursuant to this Section that in the good faith judgment of such Lender Party is allocable to such indemnity or additional amounts and is not subject to return, reassessment or other repayment, it shall pay to such Loan Party an amount equal to such refund (but only to the extent of indemnity payments made, or additional amounts paid, by such Loan Party under this Section with respect to the Taxes or Other Taxes giving rise to such refund), net of such Lender Party’s out-of-pocket expenses and without interest (other than any interest paid by the relevant Governmental Authority with respect to such refund); provided that such Loan Party, upon the request of such Lender Party, agrees to repay the amount paid over to such Loan Party (plus any penalties, interest or other charges imposed by the relevant Governmental Authority) to such Lender Party in the event such Lender Party is required to repay such refund to such Governmental Authority. Notwithstanding anything to the contrary in this paragraph (f), in no event will a Lender Party be required to pay any amount to a Loan Party pursuant to this paragraph (f) the payment of which would place the Lender Party in a less favorable net after-tax position than the Lender Party would have been in if the Tax giving rise to such refund had not been deducted, withheld or otherwise imposed and the indemnification payments or additional amounts with respect to such Tax had never been paid.  This Section shall not be construed to require any Lender Party to make available its tax returns (or any other information relating to its taxes which it deems confidential) to any Loan Party or any other Person.
 
(g)          Each Lender shall severally indemnify the Administrative Agent for any Taxes, including Indemnified or Other Taxes imposed or asserted on or attributable to amounts payable under this Section (but only to the extent that the Loan Parties have not already indemnified the Administrative Agent for such Taxes and without limiting the obligation, if any, of the Loan Parties to do so), in each case attributable to such Lender that are paid or payable by the Administrative Agent in connection with any Loan Document, whether or not such Taxes were correctly or legally imposed or asserted, and any reasonable expenses arising therefrom or with respect thereto.  This indemnification shall be made within 15 days from the date the Administrative Agent makes demand therefor.
 
(h)          For purposes of this Section 2.16, the term “applicable law” includes FATCA.
 
Section 2.17.          Payments Generally; Pro Rata Treatment; Sharing of Set‑offs.  (a) The Borrower shall make each payment required to be made by it under the Loan Documents (whether of principal, interest or fees, or of amounts payable under Section 2.14, 2.15 or 2.16, or otherwise) before the time expressly required under the relevant Loan
 
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Document for such payment (or, if no such time is expressly required, before 12:00 noon, local time at the place of payment), on the date when due, in immediately available funds, without set off or counterclaim.  Any amount received after such time on any day may, in the discretion of the Administrative Agent, be deemed to have been received on the next succeeding Business Day for purposes of calculating interest thereon.  All such payments shall be made to such account of the Administrative Agent as the Administrative Agent shall specify by notice to the Borrower, except payments to be made directly to the Swingline Lender as expressly provided herein and except that payments pursuant to Sections 2.14, 2.15, 2.16 and 10.03 shall be made directly to the Persons entitled thereto and payments pursuant to other Loan Documents shall be made to the Persons specified therein.  The Administrative Agent shall distribute any such payment received by it for the account of any other Person to the appropriate recipient promptly following receipt thereof.  If any payment under any Loan Document shall be due on a day that is not a Business Day, the date for payment shall be extended to the next succeeding Business Day, and, if such payment accrues interest, interest thereon shall be payable for the period of such extension.  All payments hereunder of principal and interest in respect of any Loan (or of any breakage indemnity or payment under Section 2.15 in respect of any Loan) shall be made in the currency of such Loan; all other payments under each Loan Document shall be made in U.S. Dollars.
 
(b)          If at any time insufficient funds are received by and available to the Administrative Agent to pay fully all amounts of principal, interest and fees then due hereunder, such funds shall be applied (i) first, to pay ratably any unpaid fees, costs and expenses of the Administrative Agent, (ii) second, to pay interest and fees then due hereunder, ratably among the other Lender Parties entitled thereto in accordance with the amounts of interest and fees then due to such parties, and (iii) third, to pay principal then due hereunder, ratably among the parties entitled thereto in accordance with the amounts of principal then due to such parties.
 
(c)          If any Lender shall, by exercising any right of set off or counterclaim or otherwise, obtain payment in respect of any principal of or interest on any of its Global Loans or participations in Swingline Loans resulting in such Lender receiving payment of a greater proportion of the aggregate amount of its Global Loans or participations in Swingline Loans and accrued interest thereon than the proportion received by any other applicable Lender, then the Lender receiving such greater proportion shall purchase (for cash at face value) participations in the Global Loans or Swingline Loans of other Lenders to the extent necessary so that the benefit of all such payments shall be shared by the Lenders ratably in accordance with the aggregate amount of principal of and accrued interest on their respective Global Loans and participations in Swingline Loans; provided that (x) if any such participations are purchased and all or any portion of the payment giving rise thereto is recovered, such participations shall be rescinded and the purchase price restored to the extent of such recovery, without interest, and (y) the provisions of this subsection shall not be construed to apply to any payment made by the Borrower pursuant to and in accordance with the express terms of this Agreement or any payment obtained by a Lender as consideration for the assignment of or sale of a participation in any of its Loans to any assignee or participant, other than to the Borrower or any Subsidiary or Affiliate thereof (as to which the provisions of this subsection shall apply).  The Borrower consents
 
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to the foregoing and agrees, to the extent it may effectively do so under applicable law, that any Lender acquiring a participation pursuant to the foregoing arrangements may exercise against the Borrower rights of set-off and counterclaim with respect to such participation as fully as if such Lender were a direct creditor of the Borrower in the amount of such participation.
 
(d)          Unless the Administrative Agent shall have received notice from the Borrower prior to the date on which any payment is due to the Administrative Agent for the account of one or more Lender Parties hereunder that such payment will not be made, the Administrative Agent may assume that such payment has been made on such date in accordance herewith and may, in reliance upon such assumption, distribute to each relevant Lender Party the amount due.  In such event, if such payment has not in fact been made, then each Lender Party severally agrees to repay to the Administrative Agent forthwith on demand the amount so distributed to such Lender Party with interest thereon, for each day from and including the date such amount is distributed to it to but excluding the date of payment to the Administrative Agent, at, if such payment is denominated in U.S. Dollars, the greater of the Federal Funds Effective Rate and a rate determined by the Administrative Agent in accordance with banking industry rules on interbank compensation, and, if such payment is denominated in an Alternative Currency, a rate determined by the Administrative Agent to represent its cost of overnight or short-term funds in the relevant currency (which determination shall be conclusive absent manifest error).
 
(e)          If any Lender shall fail to make any payment required to be made by it pursuant to Section 2.04(c), 2.06(b), 2.17(d) or 10.03(b), then the Administrative Agent may, in its discretion (notwithstanding any contrary provision hereof), apply any amounts thereafter received by the Administrative Agent for the account of such Lender to satisfy such Lender’s obligations under such Sections until all such unsatisfied obligations are fully paid.
 
Section 2.18.          Mitigation Obligations; Replacement of Lenders.  (a) If any Lender requests compensation under Section 2.14, or if the Borrower is required to pay any additional amount to any Lender or any Governmental Authority for the account of any Lender pursuant to Section 2.16, then such Lender shall use reasonable efforts to designate a different lending office for funding or booking its Loans hereunder or to assign its rights and obligations hereunder to another of its offices, branches or affiliates, if, in the judgment of such Lender, such designation or assignment (i) would eliminate or reduce amounts payable pursuant to Section 2.14 or 2.16, as the case may be, in the future and (ii) would not subject such Lender to any unreimbursed cost or expense and would not otherwise be disadvantageous to such Lender.  The Borrower agrees to pay all reasonable costs and expenses incurred by any Lender in connection with any such designation or assignment.
 
(b)          If any Lender requests compensation under Section 2.14, or if the Borrower is required to pay any additional amount to any Lender or any Governmental Authority for the account of any Lender pursuant to Section 2.16 and, in each case, such Lender has declined or is unable to designate a different lending office in accordance with paragraph (a) of this Section, or if any Lender becomes a Defaulting Lender, or if a Lender does not
 
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consent to a proposed amendment, waiver, consent or release with respect to any Loan Document that requires the consent of each Lender and has been approved by the Required Lenders, then the Borrower may, at its sole expense and effort, upon notice to such Lender and the Administrative Agent, require such Lender to assign, without recourse (in accordance with and subject to the restrictions contained in Section 10.04), all its interests, rights  (other than its existing rights to compensation and additional amounts pursuant to Section 2.14 and Section 2.16) and obligations under this Agreement to an assignee that shall assume such obligations (which assignee may be another Lender, if a Lender accepts such assignment); provided that (i) to the extent required under Section 10.04, the Borrower shall have received the prior written consent of the Administrative Agent, which consent shall not unreasonably be withheld, (ii) such Lender shall have received payment of an amount equal to the outstanding principal of its Loans and participations in Swingline Loans, accrued interest thereon, accrued fees and all other amounts payable to it hereunder, from the assignee (to the extent of such outstanding principal and accrued interest and fees) or the Borrower (in the case of all other amounts) and (iii) in the case of any such assignment resulting from a claim for compensation under Section 2.14 or payments required to be made pursuant to Section 2.16, such assignment will result in a material reduction in such compensation or payments.  A Lender shall not be required to make any such assignment if, prior thereto, as a result of a waiver by such Lender or otherwise, the circumstances entitling the Borrower to require such assignment cease to apply.  At any time prior to the effectiveness of such assignment, the Borrower, in its sole discretion, may revoke the notice requiring such assignment.
 
Section 2.19.          [Reserved].
 
Section 2.20.          Defaulting Lenders.  If any Lender becomes a Defaulting Lender, then the following provisions shall apply for so long as such Lender is a Defaulting Lender:
 
(a)          fees shall cease to accrue on the unused portion of the Commitment of such Defaulting Lender pursuant to Section 2.11(a);
 
(b)          the Commitment and Credit Exposure of such Defaulting Lender shall not be included in determining whether the Required Lenders have taken or may take any action hereunder (including any consent to any amendment, waiver or other modification permitted to be effected by the Required Lenders pursuant to Section 10.02);
 
(c)          if any Swingline Exposure exists at the time such Lender becomes a Defaulting Lender then:
 
(i)          so long as no Event of Default has occurred and is continuing, the Swingline Exposure of such Defaulting Lender shall be automatically reallocated among the non-Defaulting Lenders in accordance with their respective Applicable Percentages but only to the extent the sum of all non-Defaulting Lenders’ Credit Exposures plus such Defaulting Lender’s Swingline Exposure does not exceed the total of all non-Defaulting Lenders’ Commitments; and
 
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(ii)          if the reallocation described in clause (i) above cannot, or can only partially, be effected, the Borrower shall within three Business Days following notice by the Administrative Agent prepay such Swingline Exposure; and
 
(d)          so long as such Lender is a Defaulting Lender, the Swingline Lender shall not be required to fund any Swingline Loan unless it is satisfied that the related exposure will be 100% covered by the Commitments of the non-Defaulting Lenders, and participating interests in any newly made Swingline Loan shall be allocated among non-Defaulting Lenders in a manner consistent with Section 2.20(c)(i) (and such Defaulting Lender shall not participate therein).
 
If the Swingline Lender has a good faith belief that any Lender has defaulted in fulfilling its funding obligations under one or more other agreements in which such Lender commits to extend credit, the Swingline Lender shall not be required to fund any Swingline Loan unless the Swingline Lender shall have entered into arrangements with the Borrower or such Lender reasonably satisfactory to the Swingline Lender to defease any risk to it in respect of such Lender hereunder.
 
In the event that the Administrative Agent, the Borrower and the Swingline Lender agree that a Defaulting Lender has adequately remedied all matters that caused such Lender to be a Defaulting Lender, then the Swingline Exposure of the Lenders shall be readjusted to reflect the inclusion of such Lender’s Commitment and on such date such Lender shall purchase at par such of the Loans of the other Lenders other than the Swingline Loans as the Administrative Agent shall determine is necessary in order for such Lender to hold such Loans in accordance with its Applicable Percentage; provided that there shall be no retroactive effect on fees adjusted or reallocated pursuant to Section 2.20(a).
 
Section 2.21.          Incremental Facilities.
 
(a)          The Borrower may by written notice to the Administrative Agent elect to request the establishment of one or more increases in Commitments (the “Incremental Commitments”), by an aggregate amount that is an integral multiple of $5,000,000 and not less than $10,000,000 individually (or such lesser amount as may be approved by the Administrative Agent); provided that at no time shall the aggregate amount of Commitments, after giving effect to the relevant Incremental Commitments (assuming for purposes of this Section 2.21(a) that such Incremental Commitments effected pursuant to this Section, exceed $500,000,000 (the “Maximum Corporate Secured Debt Amount”)are fully drawn), the Senior Debt Incurrence Ratio shall not exceed the greater of (i) 0.80:1.00 or (ii) if such Incremental Commitments are incurred in connection with any acquisition or other investment not prohibited by the Loan Documents, the Senior Debt Incurrence Ratio immediately prior to the incurrence of such Incremental Commitments, in each case, calculated on a pro forma basis, including the application of the proceeds thereof.  Each such notice shall specify the date (each, an “Incremental Effective Date”) on which the Borrower proposes that the Incremental Commitments shall be effective.  The Borrower may approach any Lender or any other Person (other than a natural person) to provide all or a portion of the Incremental Commitments; provided that any Lender may elect or decline, in its sole discretion, to
 
53
provide such Incremental Commitment.  Each Incremental Commitment shall become effective as of the applicable Incremental Effective Date; provided that (i) (x) the conditions set forth in Section 4.02 shall be satisfied (with all references in such Section to a Borrowing being deemed to be references to such Incremental Commitment), and (y) no Event of Default shall have occurred and be continuing, and the Administrative Agent shall have received a certificate to that effect dated such date and executed by an Authorized Officer, (ii) the Incremental Commitments shall be effected pursuant to one or more Lender Joinder Agreements executed and delivered by the Borrower and the Administrative Agent, (iii) the Administrative Agent and the Swingline Lender shall have consented (not to be unreasonably withheld or delayed) to any New Lender (as defined below) to the extent such consent, if any, would be required under Section 10.04 for an assignment of Loans or Commitments to such Person and (iv) the Borrower shall make any payments required pursuant to Section 2.15 in connection with the Incremental Commitments, as applicable.
 
(b)          On any Incremental Effective Date, subject to the satisfaction of the foregoing terms and conditions, (i) each of the Lenders with existing Commitments shall assign to each Lender with an Incremental Commitment (each, a “New Lender”) and each of the New Lenders shall purchase from each of the Lenders with existing Commitments, at the principal amount thereof, such interests in the Loans outstanding on such Incremental Effective Date as shall be necessary in order that, after giving effect to all such assignments and purchases, the Loans will be held by existing Lenders and New Lenders ratably in accordance with their Commitments after giving effect to the addition of such Incremental Commitments to the Commitments, (ii) each Incremental Commitment shall be deemed for all purposes a Commitment and, each Loan made under an Incremental Commitment (a “New Loan”) shall be deemed, for all purposes, Loans and (iii) each New Lender shall become a Lender with respect to the Incremental Commitment and all matters relating thereto.
 
(c)          Incremental Commitments and New Loans shall be identical to the Commitments and the Loans.
 
(d)          Each Lender Joinder Agreement may, without the consent of any other Lenders, effect technical and corresponding amendments to this Agreement and the other Loan Documents as may be necessary or appropriate, in the opinion of the Administrative Agent, to effect the provision of this Section 2.21.
 
Section 2.22.          Extended Commitments and Extended Loans.
 
(a)          (i)          The Borrower may at any time and from time to time request that all or a portion of the Commitments, and/or any Extended Commitments, each existing at the time of such request (each, an “Existing Commitment” and any related revolving credit loans thereunder, “Existing Loans”) be converted to extend the termination date thereof and the scheduled maturity date(s) of any payment of principal with respect to all or a portion of any principal amount of Loans related to such Existing Commitments (any such Existing Commitments which have been so extended, “Extended Commitments” and any related Loans, “Extended Loans”) and to provide for other terms consistent with this Section 2.22(a).  In order to establish any Extended Commitments, the Borrower shall
 
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provide a notice (an “Extension Request”) to the Administrative Agent (who shall provide a copy of such notice to the Lenders) setting forth the proposed terms of the Extended Commitments to be established, which shall not be materially more restrictive to the Loan Parties (as determined in good faith by the Borrower), when taken as a whole, than the terms of the applicable Existing Commitments (the “Specified Existing Commitment”) unless (x) the Lenders providing Existing Loans receive the benefit of such more restrictive terms or (y) any such provisions apply after the Maturity Date, in each case, to the extent provided in the applicable Extension Amendment; provided, however, that (x) (A) the interest margins with respect to the Extended Commitments may be higher or lower than the interest margins for the Specified Existing Commitments and/or (B) additional fees and premiums may be payable to the Lenders providing such Extended Commitments in addition to or in lieu of any increased margins contemplated by the preceding clause (A) and (y) the facility fee with respect to the Extended Commitments may be higher or lower than the facility fee for the Specified Existing Commitment; provided that, notwithstanding anything to the contrary in this Section 2.22(a) or otherwise, (1) the borrowing and repayment of Extended Loans shall be made on a pro rata basis with all other Existing Loans so long as the Existing Commitments are outstanding and (2) assignments and participations of Extended Commitments and Extended Loans shall be governed by the same assignment and participation provisions applicable to Existing Commitments and Existing Loans as set forth in Section 10.04.  Any extension request by the Borrower shall be made to all Lenders holding the applicable Existing Commitments and Existing Loans but no Lender shall have any obligation to agree to have any of its Loans or Commitments converted into Extended Loans or Extended Commitments pursuant to an Extension Request.  Any Extended Commitments of any Extension Series shall constitute a separate series of revolving credit commitments from the Specified Existing Commitments and from any other Existing Commitments (together with any other Extended Commitments so established on such date).
 
(ii)          Any Lender (an “Extending Lender”) wishing to have all or a portion of its Existing Commitments subject to such Extension Request converted into Extended Commitments shall notify the Administrative Agent (an “Extension Election”) on or prior to the date specified in such Extension Request of the amount of its Existing Commitments that it has elected to convert into Extended Commitments.  Such Extended Commitment shall be treated identically to all other Commitments for purposes of the obligations of a Lender in respect of Swingline Loans under Section 2.04, except that the applicable Extension Amendment may provide that the maturity dates for Swingline Loans may be extended and the related obligations to make Swingline Loans may be continued so long as the Swingline Lender has consented to such extension in its sole discretion (it being understood that no consent of any other Lender shall be required in connection with any such extension).
 
(iii)          Extended Commitments, as applicable, shall be established pursuant to an amendment (an “Extension Amendment”) to this Agreement executed by the Borrower, the Administrative Agent and the Extending Lenders (and not any other Lenders).  No Extension Amendment shall provide for any tranche of
 
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Extended Commitments in an aggregate principal amount that is less than $10,000,000.
 
(iv)          Notwithstanding anything to the contrary contained in this Agreement, (A) on any date on which any Existing Commitment or Existing Loan is converted to extend the related scheduled maturity date(s) in accordance with clause (i) above (an “Extension Date”), in the case of the Specified Existing Commitments of each Extending Lender, the aggregate principal amount of such Specified Existing Commitments shall be deemed reduced by an amount equal to the aggregate principal amount of Extended Commitments so converted by such Lender on such date, and such Extended Commitments shall be established as a separate series of revolving credit commitments from any Existing Commitments and (B) if, on any Extension Date, any Loans of any Extending Lender are outstanding under the applicable Specified Existing Commitments, such Loans (and any related participations) shall be deemed to be allocated as Extended Loans (and related participations) and Existing Loans (and related participations) in the same proportion as such Extending Lender’s Specified Existing Commitments to Extended Commitments.  Each Extended Commitment shall become effective as of the applicable Extension Date; provided that the conditions set forth in Section 4.02 shall be satisfied (with all references in such Section to a Borrowing being deemed to be references to such Extension Request) and the Administrative Agent shall have received a certificate to that effect dated such date and executed by an Authorized Officer,
 
(b)          The Administrative Agent and the Lenders (other than the Swingline Lender to the extent such consent is expressly required by this Section 2.22) hereby consent to the consummation of the transactions contemplated by this Section 2.22 (including, for the avoidance of doubt, payment of any interest, fees, or premium in respect of any Extended Commitments set forth in the relevant Extension Amendment) and hereby waive the requirements of any provision of this Agreement (including, without limitation, any pro rata payment or amendment section) or any other Loan Document that may otherwise prohibit or restrict any such extension or any other transaction contemplated by this Section 2.22.
 
ARTICLE 3
Representations and Warranties
 
In order to induce the Lenders to enter into this Agreement and to make the Loans as provided for herein, each Loan Party makes the following representations and warranties to the Lenders, all of which shall survive the execution and delivery of this Agreement and the making of the Loans:
 
Section 3.01.          Organization; Powers.  Each Loan Party (a) is duly organized, validly existing and in good standing (if applicable) under the laws of the jurisdiction of its organization, has all requisite power and authority to carry on its business as now conducted and (b), except where the failure to do so, individually or in the aggregate, would not reasonably be expected to result in a Material Adverse Effect, is qualified to do business
 
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in, and is in good standing (if applicable) in, every jurisdiction where such qualification is required.
 
Section 3.02.          Authorization; Enforceability.  The Transactions to be entered into by each Loan Party are within its organizational powers and have been duly authorized by all necessary organizational action.  This Agreement has been duly executed and delivered by each Loan Party and constitutes, and each other Loan Document to which any Loan Party is to be a party, when executed and delivered by such Loan Party, will constitute, a legal, valid and binding obligation of such Loan Party, as the case may be, in each case enforceable in accordance with its terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium or other laws affecting creditors’ rights generally and subject to general principles of equity, regardless of whether considered in a proceeding in equity or at law.
 
Section 3.03.          Governmental Approvals; No Conflicts.  The Transactions (a) do not require any consent or approval of, registration or filing with, or any other action by, any Governmental Authority, except (i) such as have been obtained or made and are in full force and effect or (ii) where the failure to obtain or make them would not reasonably be expected to have a Material Adverse Effect, (b) will not violate (i) the Constituent Documents of any Borrower Group Company or (ii) except where such violation would not reasonably be expected to have a Material Adverse Effect, any law or regulation applicable to any Borrower Group Company or any order of any Governmental Authority, (c) will not violate or result in a default under any indenture, agreement or other instrument binding upon any Borrower Group Company or its assets, or give rise to a right thereunder to require any Borrower Group Company to make any payment except where the failure to do so, in the aggregate, would not reasonably be expected to result in a Material Adverse Effect, and (d) will not result in the creation or imposition of any Lien on any asset of any Borrower Group Company, except where the failure to do so, in the aggregate, would not reasonably be expected to result in a Material Adverse Effect.
 
Section 3.04.          Financial Condition; No Material Adverse Change.  (a) The Borrower has heretofore furnished to the Administrative Agent statements of financial condition, results of operations, changes in equity and cash flows of Parent as of and for the (i) fiscal years ended December 31, 2015, December 31, 2016 and December 31, 2017 and (ii) fiscal quarter ended September 30, 2018.  Such financial statements present fairly, in all material respects, the financial position and results of operations and cash flows of Parent, as of such dates and for such periods on a consolidated basis and in accordance with GAAP, except to the extent provided in the notes to said financial statements and in the case of the statements referred to in clause (ii) above, subject to year-end adjustments and the absence of footnotes.
 
(b)          As of the Closing Date, there has been no Material Adverse Effect since December 31, 2017.
 
Section 3.05.          Litigation and Environmental Matters.  (a) As of the Closing Date, there are no actions, suits or proceedings by or before any arbitrator or Governmental Authority pending against or, to the knowledge of any Loan Party, threatened in writing
 
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against or affecting any Borrower Group Company (i) as to which there is a reasonable possibility of adverse determinations that, in the aggregate, would reasonably be expected to result in a Material Adverse Effect (other than the Disclosed Matters) or (ii) that involve any of the Loan Documents or the Transactions.
 
(b)          Except for any matters that, in the aggregate, would not reasonably be expected to result in a Material Adverse Effect, no Borrower Group Company (i) has failed to comply with any Environmental Law or to obtain, maintain or comply with any permit, license or other approval required under any Environmental Law, (ii) is subject to any Environmental Liability, (iii) has received written notice of any claim with respect to any Environmental Liability or (iv) knows of any basis for any Environmental Liability.
 
Section 3.06.          Compliance with Laws.  Each Borrower Group Company is in compliance with all laws, regulations and orders of any Governmental Authority applicable to it or its property, except where the failure to do so, in the aggregate, would not reasonably be expected to result in a Material Adverse Effect.
 
Section 3.07.          Investment Company Status; Regulatory Restrictions on Borrowing.  No Loan Party is required to be registered as an “investment company” under the Investment Company Act of 1940, as amended (the “Investment Company Act”).
 
Section 3.08.          Taxes.  Each Borrower Group Company has timely filed or caused to be filed all Tax returns required to have been filed by it and has paid or caused to be paid all Taxes required to have been paid by it, except (a) Taxes that are being contested in good faith by appropriate proceedings and for which the relevant Borrower Group Company has set aside on its books adequate reserves in accordance with GAAP or (b) to the extent that failures to do so, in the aggregate, could not reasonably be expected to result in a Material Adverse Effect.
 
Section 3.09.          ERISA.  (a) No ERISA Event has occurred or is reasonably expected to occur that, when taken together with all other ERISA Events for which liability is reasonably expected to occur, could reasonably be expected to result in a Material Adverse Effect.  Each Borrower Group Company and its ERISA Affiliates are in compliance with those provisions of ERISA and the regulations and published interpretations thereunder which are applicable to it, except where noncompliance could not reasonably be expected to result in a Material Adverse Effect.
 
(b)          Each International Plan has been maintained in compliance with its terms and with the requirements prescribed by applicable law (including any special provisions relating to qualified plans where such International Plan was intended to so qualify) and has been maintained in good standing with the applicable regulatory authorities, except where noncompliance would not result in a Material Adverse Effect.  No unfunded liabilities, determined on the basis of actuarial assumptions which are reasonable in the aggregate, exist under all of the International Plans in the aggregate that could reasonably be expected to result in a Material Adverse Effect.
 
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(c)          Except as would not reasonably be expected to result in a Material Adverse Effect, no Plan or International Plan is a Multiemployer Plan and no Plan or International Plan is a multiple employer welfare arrangement as defined in Section 3(40) of ERISA which is subject to ERISA.
 
Section 3.10.          Disclosure.  None of the written information and written data furnished by or on behalf of any Loan Party to the Administrative Agent or any Lender in connection with the negotiation of this Agreement or any other Loan Document or delivered hereunder or thereunder (as modified or supplemented by other information so furnished), when taken as a whole, contains any material misstatement of fact or omits to state any material fact necessary to make the statements therein (taken as a whole), in the light of the circumstances under which they were made, not materially misleading at such time, it being understood and agreed that for purposes of this Section 3.10, such factual information and data shall not include pro forma information, projections, estimates (including financial estimates, forecasts, and other forward-looking information) or other forward-looking information and information of a general economic or general industry nature; provided that, with respect to any pro forma information or any projected financial information (including financial estimates, forecasts and other forward-looking information), each Loan Party represents only that such information was prepared in good faith based upon assumptions believed to be reasonable at the time made, it being recognized by the Lenders that such projections as to future events are not to be viewed as facts and that actual results during the period or periods covered by any such projections may differ from the projected results and such differences may be material.
 
Section 3.11.          Compliance with Sanctions, Anti-Corruption Laws and Anti-Money Laundering Laws.
 
(a)        None of the Borrower Group Companies or any of their respective directors or officers or, to the knowledge of any Loan Party, employees or agents: (i) is a Sanctioned Person; or (ii) has, in the past five years, engaged in any dealings with, involving or for the benefit of any Sanctioned Person in violation of applicable Sanctions.
 
(b)         None of the Borrower Group Companies or any of their respective directors or officers or, to the knowledge of any Loan Party, employees or agents has, in the past five years, violated any applicable Anti-Corruption Law in any material respect.
 
(c)          The Borrower Group Companies have not, in the last five years, violated Anti-Money Laundering Laws in any material respect.
 
Section 3.12.          Beneficial Ownership Certification. As of the Closing Date, to the knowledge of the Borrower the information included in the Beneficial Ownership Certification, if applicable, is true and correct in all material respects.
 
Section 3.13.          Solvency. As of the Closing Date, after the making of the Loans under this Agreement, and after giving effect to the application of the proceeds of such Loans, the Borrower and the Credit Group, on a consolidated basis, are Solvent.
 
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ARTICLE 4
Conditions
 
Section 4.01.          Effectiveness.  This Agreement shall become effective on the date that each of the following conditions shall have been satisfied (or waived in accordance with Section 10.02):
 
(a)          The Administrative Agent (or its counsel) shall have received a counterpart of this Agreement, the Pledge Agreement and the Security Agreement signed on behalf of each Loan Party party hereto or thereto, as applicable, or, in each case, written evidence reasonably satisfactory to the Administrative Agent (which may include telecopy transmission of a signed signature page of this Agreement) that such party has signed a counterpart of such Loan Document.
 
(b)          Except for any items referred to on Schedule 5.09:
 
(i)          all outstanding equity interests in whatever form of the Borrower and each Subsidiary that is directly owned by or on behalf of any Loan Party and required to be pledged pursuant to the Security Documents shall have been pledged pursuant thereto;
 
(ii)          the Administrative Agent shall have received the certificates representing the equity interests in the Borrower and each Loan Party’s wholly owned Subsidiaries that are Domestic Subsidiaries to the extent required to be delivered under the Security Documents and pledged under the Security Documents to the extent certificated, accompanied by instruments of transfer and undated stock powers or allonges endorsed in blank; and
 
(iii)         all Uniform Commercial Code financing statements required to be filed, registered or recorded to create the Liens intended to be created by any Security Document and perfect such Liens to the extent required by such Security Document shall have been delivered to the Administrative Agent, and shall be in proper form, for filing, registration or recording.
 
(c)         The Administrative Agent shall have received customary written opinions (addressed to the Administrative Agent and the Lenders party to this Agreement as of the Closing Date and dated the Closing Date) of Simpson Thacher & Bartlett LLP, counsel to the Loan Parties, covering such matters relating to the Loan Parties, the Loan Documents and the Transactions as is customary and appropriate for financings of this type.  The Borrower hereby requests such counsel to deliver such opinions.
 
(d)       The Administrative Agent shall have received customary documents and certificates relating to the organization, existence and good standing of each Loan Party, the authorization of the Transactions and any other legal matters relating to such Loan Party, the Loan Documents or the Transactions.
 
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(e)        The Administrative Agent shall have received a certificate, dated the Closing Date and signed by an Authorized Officer of the Borrower, confirming compliance with the conditions set forth in clauses (a) and (b) of Section 4.02.
 
(f)          The Administrative Agent shall have received payment in full of (i) fees due on the Closing Date pursuant to the Fee Letter, and (ii) to the extent invoiced in reasonable detail at least three Business Days prior to the Closing Date, reimbursement or payment of all reasonable out-of-pocket expenses required to be reimbursed or paid by any Loan Party hereunder.
 
(g)         The Lenders shall have received, to the extent requested by the Lenders at least two (2) days prior to the Closing Date, on or before the date which is one (1) Business Days prior to the Closing Date, all documentation and other information with respect to the Loan Parties required by bank regulatory authorities under applicable “know your customer” and Anti-Money Laundering Laws (including, for the avoidance of doubt, a Beneficial Ownership Certification).
 
(h)          All indebtedness for borrowed money of KREF Holdings X LLC as initial borrower and borrower representative pursuant to the revolving credit agreement dated as of May 4, 2017 between, among others, KREF Holdings X LLC, KKR Real Estate Finance Holdings L.P. as parent guarantor and Barclays Bank as sole lead arranger, bookrunner and administrative agent thereunder, shall have been repaid, redeemed, defeased, discharged, refinanced, replaced or terminated.
 
The Administrative Agent shall notify the Borrower and the Lenders of the Closing Date, and such notice shall be conclusive and binding.
 
Section 4.02.          Each Credit Event.  Other than with respect to Section 2.21 and 2.22, the obligation of each Lender to make any Loan is subject to the satisfaction of the following conditions:
 
(a)        The representations and warranties of each Loan Party set forth in the Loan Documents shall be true and correct in all material respects on and as of the date of such Borrowing (except where such representations and warranties expressly relate to an earlier date, in which case such representations and warranties shall have been true and correct in all material respects as of such earlier date); provided that any representation and warranty that is qualified as to “materiality,” “Material Adverse Effect” or similar language shall be true and correct (after giving effect to any qualification therein) in all respects on such respective dates.
 
(b)          At the time of and immediately after giving effect to such Borrowing, no Default shall have occurred and be continuing.
 
Each Borrowing shall be deemed to constitute a representation and warranty by the Borrower, on the date thereof, as to the matters specified in clauses (a) and (b) of this Section.
 
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ARTICLE 5
Affirmative Covenants
 
Each of the Loan Parties covenants and agrees with the Lenders that on the Closing Date and thereafter, until the Termination Date:
 
Section 5.01.          Financial Statements; Other Information.  The Borrower will furnish to the Administrative Agent:
 
(a)          as soon as available and in any event on or before the date that is five (5) days after the date on which consolidated financial statements of Parent are required to be filed with the SEC (after giving effect to any permitted extensions; and if such consolidated financial statements are not required to be filed with the SEC, on or before the date that is 120 days after the end of each fiscal year of Parent), the consolidated statements of financial condition, operations, changes in equity and cash flows as of the end of and for such year, in each case for Parent, setting forth in each case in comparative form the figures for the previous fiscal year, all in reasonable detail and prepared in accordance with GAAP, and, in each case, certified by independent certified public accountants of recognized national standing whose opinion shall not be qualified as to the scope of audit or as to the status of Parent or any of the Material Subsidiaries (or group of Subsidiaries that together would constitute a Material Subsidiary) as a going concern (other than any exception, explanatory paragraph or qualification, that is expressly solely with respect to, or expressly resulting solely from, (i) an upcoming maturity date under any Indebtedness occurring within one year from the time such opinion is delivered or (ii) any potential inability to satisfy a financial maintenance covenant on a future date or in a future period);
 
(b)          as soon as available and in any event on or before the date that is five (5) days after the date on which consolidated financial statements of Parent are required to be filed with the SEC with respect to each of the first three fiscal quarters (commencing with the fiscal quarter ending March 31, 2019) of each fiscal year of Parent (after giving effect to any permitted extensions; and if such consolidated financial statements are not required to be filed with the SEC, on or before the date that is 60 days after the end of each of the first three fiscal quarters of each fiscal year of Parent), the consolidated statements of financial condition, operations, changes in equity and cash flows as of the end of and for such fiscal quarter and the then elapsed portion of the fiscal year, in each case for Parent, setting forth in each case in comparative form the figures for the corresponding period or periods of the previous fiscal year;
 
(c)          no later than the date that the financial statements or other information is required to be delivered under clause (a) or (b) above, a duly completed Compliance Certificate of an Authorized Officer of the Borrower (i) certifying as to whether a Default has occurred and, if a Default has occurred, specifying the details thereof and any action taken or proposed to be taken with respect thereto and (ii) setting forth reasonably detailed calculations demonstrating compliance with Section 6.05; and
 
(d)          promptly following any request therefor, such other information regarding the operations, business affairs and financial condition of any Borrower Group Company,
 
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or compliance with the terms of any Loan Document, as the Administrative Agent (or the Administrative Agent on behalf of the Required Lenders) may reasonably request.
 
Documents required to be delivered pursuant to Section 5.01 (other than Section 5.01(c)) may be delivered electronically and, if so delivered, shall be deemed to have been delivered on the earliest date on which (i) such documents are posted on the Borrower’s behalf on an Internet or intranet website, if any, to which each Lender and the Administrative Agent have access (whether a commercial, third-party website or whether sponsored by the Administrative Agent) or (ii) such financial statements and/or other documents are posted on the SEC’s EDGAR website on the Internet; provided that the Borrower shall notify the Administrative Agent (by telecopier or electronic mail) of the posting of any such documents on any website described in this paragraph and upon request by the Administrative Agent, provide to the Administrative Agent by electronic mail electronic versions (i.e., soft copies) of such documents. The Administrative Agent shall have no obligation to request the delivery or to maintain copies of the documents referred to above, and in any event shall have no responsibility to monitor compliance by the Borrower with any such request for delivery, and each Lender shall be solely responsible for requesting delivery to it or maintaining its copies of such documents.
 
The Borrower hereby acknowledges that (a) the Administrative Agent may make available to the Lenders materials and/or information provided by or on behalf of the Borrower hereunder (collectively, “Borrower Materials”) by posting the Borrower Materials on IntraLinks or another similar electronic system (the “Platform”), so long as the access to such Platform (i) is limited to the Administrative Agent, the Lenders and assignees or prospective assignees and their respective advisors and (ii) remains subject to the confidentiality requirements set forth in Section 10.12, and (b) certain of the Lenders may be “public-side” Lenders (i.e., Lenders that do not wish to receive material non-public information with respect to the Loan Parties or their securities) (each, a “Public Lender”).  The Borrower hereby agrees that (w) all Borrower Materials that are to be made available to Public Lenders shall be clearly and conspicuously marked “PUBLIC” which, at a minimum, shall mean that the word “PUBLIC” shall appear prominently on the first page thereof; (x) by marking Borrower Materials “PUBLIC,” the Borrower shall be deemed to have authorized the Administrative Agent and the Lenders to treat such Borrower Materials as not containing any material non-public information with respect to the Borrower or its securities for purposes of United States federal and state securities laws (provided, however, that to the extent such Borrower Materials constitute Information, they shall be treated as set forth in Section 10.12); (y) all Borrower Materials marked “PUBLIC” are permitted to be made available through a portion of the Platform designated “Public Investor;” and (z) the Administrative Agent shall be entitled to treat any Borrower Materials that are not marked “PUBLIC” as being suitable only for posting on a portion of the Platform not designated “Public Investor.”  Notwithstanding the foregoing, the Borrower shall be under no obligation to mark any Borrower Materials “PUBLIC.”
 
Section 5.02.          Notices of Material Events.  The Borrower will furnish to the Administrative Agent (which will promptly thereafter furnish to the Lenders) prompt written notice of the following:
 
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(a)          the occurrence of any Default or Event of Default;
 
(b)         the filing or commencement of any action, suit or proceeding by or before any arbitrator or Governmental Authority against or affecting any Borrower Group Company or any Affiliate thereof that could reasonably be expected to be adversely determined and, if so determined, would reasonably be expected to result in a Material Adverse Effect; and
 
(c)          any other development that results in, or would reasonably be expected to result in, a Material Adverse Effect.
 
Each notice delivered under this Section shall be accompanied by a statement of the Authorized Officer of the Borrower setting forth the details of the event or development requiring such notice and any action taken or proposed to be taken with respect thereto.
 
Section 5.03.          Existence; Conduct of Business.  Each Loan Party will, and will cause each of its Material Subsidiaries to, take all actions necessary to preserve, renew and keep in full force and effect its legal existence and the rights, licenses, permits, privileges and franchises material to the conduct of its business except to the extent that the failure to do so would not reasonably be expected to have a Material Adverse Effect; provided that the foregoing shall not prohibit any merger, consolidation, liquidation or dissolution permitted under Section 6.02.
 
Section 5.04.          Payment of Taxes.  Each Loan Party will pay and discharge, and will cause each of its Subsidiaries to pay and discharge, all tax obligations before the same shall become delinquent or in default and before penalties accrue thereon, except where (a) (i) the validity or amount thereof is being contested in good faith by appropriate proceedings, (ii) such Loan Party has set aside on its books adequate reserves with respect thereto (in the good faith judgment of the management of such Loan Party) in accordance with GAAP, and (iii) such contest effectively suspends collection of the contested obligation and the enforcement of any Lien securing such obligation or (b) the failure to make payment pending such contest would not reasonably be expected to result in a Material Adverse Effect.
 
Section 5.05.          Maintenance of Properties; Insurance.  Each Loan Party will, and will cause each of its Subsidiaries to, (a) keep and maintain all property material to the conduct of its business in good working order and condition, ordinary wear and tear excepted, except to the extent that the failure to do so would not reasonably be expected to have a Material Adverse Effect and (b) maintain insurance in such amounts and against such risks as, in the good faith judgment of the management of such Loan Party, is reasonable and prudent to be maintained by companies of the same size and nature of business operating in the same or similar locations and in light of the availability of insurance on a cost-effective basis. Within 90 days following the date hereof, each policy of insurance shall (i) name the Administrative Agent, on behalf of the Secured Parties, as an additional insured thereunder as its interests may appear and (ii) in the case of each casualty and property insurance policy, contain a loss payable clause or lender’s loss
 
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payee/mortgagee endorsement that names the Administrative Agent, on behalf of the Secured Parties as the lender’s loss payee or mortgagee thereunder.
 
Section 5.06.          Books and Records; Inspection Rights.  Each Loan Party will, and will cause each of its Subsidiaries to, keep books of record and account with respect to its assets and business and will permit any representatives designated by the Administrative Agent or the Required Lenders, upon reasonable prior notice, to visit and inspect its properties, to examine its books and records, and to discuss its affairs, finances and condition with its officers, all at such reasonable times and as often as reasonably requested; provided that (x) excluding any such visits and inspections during the continuation of an Event of Default, (i) only the Administrative Agent on behalf of the Required Lenders may exercise the rights of the Administrative Agent and the Lenders under this Section and (ii) the Administrative Agent may not exercise such rights more than once in any calendar year, and (y) when an Event of Default exists, the Administrative Agent or any representative of the Required Lenders (or any of its respective representatives or independent contractors) may do any of the foregoing at the expense of the applicable Borrower Group Company at any time during normal business hours and upon reasonable advance notice.  Notwithstanding anything to the contrary in this Section 5.06, none of the Loan Parties will be required to disclose, permit the inspection, examination or making copies or abstracts of, or discuss, any document, information or other matter that (a) constitutes non-financial trade secrets or non-financial proprietary information, (b) in respect of which disclosure to the Administrative Agent or any Lender (or their respective representatives or agents) is prohibited by law or any agreement binding on a third party (not created in contemplation thereof) or (c) in any Loan Party’s reasonable judgment, would compromise any attorney-client privilege, privilege afforded to attorney work product or similar privilege, provided that such Borrower Group Company shall make available redacted versions of requested documents or, if unable to do so consistent with the preservation of such privilege, shall make commercially reasonable efforts to disclose information responsive to the requests of the Administrative Agent, any Lender or any of their respective representatives and agents, in a manner that will protect such privilege.
 
Section 5.07.         Compliance with Laws.  Each Loan Party will, and will cause each Subsidiary to, comply with all laws, rules, regulations and orders of any Governmental Authority (including, without limitation, Environmental Laws ) applicable to it or its property, except where failures to do so, in the aggregate, could not reasonably be expected to result in a Material Adverse Effect; provided that with respect to: (i) Anti-Money Laundering Laws, each Loan Party will, and will cause each Subsidiary to, comply in all material respects; and (ii) Anti-Corruption Laws and Sanctions, each Loan Party will, and will cause each Restricted Subsidiary to, comply in all material respects.
 
Section 5.08.         Use of Proceeds.  The proceeds of the Loans will be used for general corporate purposes (including any transaction not prohibited by the Loan Documents); provided that no part of the proceeds of any Loan will be used, whether directly or indirectly, for any purpose that entails a violation of Regulation U or X of the Board.
 
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Section 5.09.           Further Assurances.
 
(a)          If any Person is required to be a Guarantor after the Closing Date pursuant to clause (ii) of the definition thereof, Opco and the Borrower will cause such Person to become a Guarantor pursuant to the terms of Section 11.07.
 
(b)        Subject to the terms of this Section 5.09, Section 5.10, Section 11.07 and the Security Documents, Opco and the Borrower will, and will cause each other Loan Party to, execute any and all further documents, financing statements, agreements, and instruments, and take all such further actions (including the filing and recording of financing statements, fixture filings, deeds of trust, and other documents) that may be required under any applicable law, or that the Administrative Agent or the Required Lenders may reasonably request, in order to grant, preserve, protect, and perfect the validity and priority of the security interests created or intended to be created by the Security Documents, all at the expense of Opco, the Borrower and the Subsidiaries.
 
(c)          Subject to any applicable limitations set forth in the Security Documents and other than (x) when in the reasonable determination of the Administrative Agent and Opco, the cost or other consequences of doing so would be excessive in view of the benefits to be obtained by the Secured Parties therefrom or (y) to the extent doing so would result in material adverse tax consequences as reasonably determined by Opco in consultation with the Administrative Agent, if any assets (other than Excluded Property and equity interests of any Subsidiary, which are provided for in Section 5.10) with a fair market value in excess of the greater of (a) $5,000,000 and (b) 5.0% of the consolidated revenue of Opco and its Subsidiaries for the most recently ended Test Period (calculated on a pro forma basis) (at the time of acquisition) are acquired by Opco, the Borrower or any other Loan Party after the Closing Date (other than assets constituting Collateral under a Security Document that become subject to the Lien of the applicable Security Document upon acquisition thereof) that are of a nature secured by a Security Document, the Borrower will notify the Administrative Agent, and, if requested by the Administrative Agent, Opco and the Borrower will cause such assets to be subjected to a Lien securing the Obligations and will take, and cause the other applicable Loan Parties to take, such actions as shall be necessary or reasonably requested by the Administrative Agent, as soon as commercially reasonable but in no event later than 90 days after acquisition, unless waived or extended by the Administrative Agent in its sole discretion, to grant and perfect such Liens consistent with the applicable requirements of the Security Documents, including actions described in clause (a) of this Section 5.09.
 
(d)          Each of Opco and the Borrower agrees that it will, or will cause its relevant Subsidiaries to, complete each of the actions described on Schedule 5.09 as soon as commercially reasonable and by no later than the date set forth on Schedule 5.09 with respect to such action or such later date as the Administrative Agent may reasonably agree.
 
Section 5.10.        Pledge of Additional Equity Interests. Subject to any applicable limitations set forth in the Security Documents and other than (x) when in the reasonable determination of the Administrative Agent and Opco, the cost or other consequences of doing so would be excessive in view of the benefits to be obtained by the Secured Parties
 
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therefrom or (y) to the extent doing so would result in material adverse tax consequences as reasonably determined by Opco in consultation with the Administrative Agent, Opco and the Borrower will cause all certificates representing equity interests of the Borrower or any Subsidiary (other than any Excluded Equity Interests) held directly by Opco, the Borrower or any other Loan Party to be delivered to the Administrative Agent as security for the Obligations accompanied by undated instruments of transfer executed in blank pursuant to the terms of the Security Documents.
 
ARTICLE 6
Negative Covenants
 
Each of the Loan Parties covenants and agrees with the Lenders that on the Closing Date and thereafter, until the Termination Date:
 
Section 6.01.           Liens.  The Loan Parties shall not create, assume, incur or guarantee any Indebtedness for borrowed money that is secured by a Lien (other than Permitted Liens) on any voting stock or profit participating equity interests of their respective Subsidiaries (to the extent of their ownership of such voting stock or profit participating equity interests) or any entity that succeeds (whether by merger, consolidation, sale of assets or otherwise) to all or any substantial part of the business of any of such Subsidiaries (including, without limitation, any entities structurally senior to Opco and the Borrower), without providing that the Obligations hereunder (together with, if the Loan Parties shall so determine, any other Indebtedness of (including any Guarantee of Indebtedness by) the Loan Parties ranking equally with the Obligations and existing as of the Closing Date or thereafter incurred) will be secured equally and ratably with or prior to all other Indebtedness secured by such Lien on the voting stock or profit participating equity interests of any such entities; provided that the Loan Parties may create, assume, incur or guarantee any Indebtedness for borrowed money that is secured by a Lien if after giving effect to any incurrence of such Indebtedness on a pro forma basis either (a) in the case of any Indebtedness that is secured by Liens on the Collateral ranking equal in priority (but without regard to the control of remedies) with the Liens on the Collateral securing the Obligations, the Senior Debt Incurrence Ratio shall not exceed either (i) 0.80:1.00 or (ii) if such Indebtedness is incurred in connection with any acquisition or other investment not prohibited by the Loan Documents, the Senior Debt Incurrence Ratio immediately prior to the incurrence of such Indebtedness or (b) in the case of any Indebtedness that is secured by Liens on the Collateral ranking junior in priority to the Liens on the Collateral securing the Obligations, the Total Debt Incurrence Ratio shall not exceed either (i) 0.82:1.00 or (ii) if such Indebtedness is incurred in connection with any acquisition or other investment not prohibited by the Loan Documents, the Total Debt Incurrence Ratio immediately prior to the incurrence of such Indebtedness (provided that, in the case of each of clause (a) and (b) (A) such Indebtedness shall not have a final maturity date prior to the Maturity Date, (B) such Indebtedness shall be secured solely by the Collateral, (C) no such Indebtedness shall be guaranteed by entities other than the Guarantors and (D) the Administrative Agent and the Borrower shall have entered into an Equal Priority Intercreditor Agreement, in the case of clause (a), or a Junior Priority Intercreditor Agreement, in the case of clause (b), with the holders of any such Indebtedness or a designated representative thereof). Subject to the immediately preceding sentence, this Section 6.01 shall not limit the ability of the Loan
 
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Parties to incur Indebtedness or other obligations secured by Liens on assets other than the voting stock or profit participating equity interests of their respective Subsidiaries.
 
Section 6.02.           Fundamental Changes.  No Loan Party shall be a party to a Substantially All Merger or participate in a Substantially All Sale, unless:
 
(i)          such Loan Party is the surviving Person, or the Person formed by or surviving such Substantially All Merger or to which such Substantially All Sale has been made (the “Successor Person”) is organized under the laws of the United States, and has expressly assumed, by a Loan Party Joinder Agreement, all of the obligations of such Loan Party under the Loan Documents;
 
(ii)          immediately after giving effect to such transaction, no Default or Event of Default has occurred and is continuing;
 
(iii)        the Lenders shall have received all documentation and other information with respect to the Successor Person required by bank regulatory authorities under applicable “know your customer” requirements and Anti-Money Laundering Laws; and
 
(iv)       such Loan Party shall have delivered to the Administrative Agent a customary opinion of counsel with respect to the Successor Person and the Loan Party Joinder Agreement and a certificate on behalf of such Loan Party signed by one of its Responsible Officers stating that all conditions provided in this Section 6.02 relating to such transaction have been satisfied.
 
Section 6.03.          Sanctions and Anti-Corruption Use of Proceeds.  The Borrower will not, directly or indirectly, use the proceeds of the Loans, or lend, contribute or otherwise make available such proceeds to any Subsidiary, joint venture partner or other Person for the purpose of funding activities or business; (i) of, with or for the benefit of any Sanctioned Person in violation of applicable Sanctions; (ii) in or involving any Sanctioned Country in violation of applicable Sanctions; or (iii) in any other manner that would constitute or give rise to violation of Sanctions by any party hereto, including any Lender Person.  The Borrower will not, directly or indirectly, use the proceeds of the Loans in furtherance of an offer, payment, promise to pay, or authorization of the payment or giving of money, or anything else of value, to any Person in violation of applicable Anti-Corruption Laws..
 
Section 6.04.          Fiscal Year.  Parent shall not change its fiscal year-end from December 31 without the consent of the Administrative Agent.
 
Section 6.05.          Financial Covenants.
 
(a)          The Interest Coverage Ratio, calculated on the last day of any fiscal quarter, commencing March 31, 2019, shall not be less than 1.50:1.00; and
 
(b)          The Debt to Asset Ratio, calculated on the last day of any fiscal quarter, commencing March 31, 2019, shall not be greater than 0.75:1.00.
 
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(c)          The sum of the unrestricted Cash and Cash Equivalents of ParentOpco and its consolidated Subsidiaries shall not at any time be less than the greater of (i) $10,000,000 and (ii) 5% of the Recourse Indebtedness for borrowed money of ParentOpco and its consolidated Subsidiaries.
 
ARTICLE 7
Events of Default
 
Section 7.01.          Events of Default.
 
If any of the following events (“Events of Default”) shall occur:
 
Section 7.01.          (a)    the Borrower shall fail to pay any principal of any Loan when the same shall become due and payable;
 
(b)        the Borrower shall fail to pay any interest on any Loan or any fee or any other amount (other than an amount referred to in (a) of this Article) payable under any Loan Document, when and as the same shall become due and payable, and such failure shall continue unremedied for a period of five Business Days;
 
(c)         any representation, warranty, or certification made or deemed made by or on behalf of any Loan Party in any Loan Document or any certificate furnished pursuant to any Loan Document, shall prove to have been incorrect in any material respect when made or deemed made;
 
(d)          the Borrower shall fail to observe or perform any covenant, condition or agreement contained in Section 5.02(a), 5.03 (with respect to the existence of the Borrower), 5.08 or in Article 6;
 
(e)          any Loan Party shall fail to observe or perform any covenant, condition or agreement contained in any Loan Document (other than those specified in clause (a), (b) or (d) of this Article), and such failure shall continue unremedied for a period of 30 days after written notice thereof from the Administrative Agent or the Required Lenders to the Borrower;
 
(f)         any Borrower Group Company shall fail to make any payment in respect of any Material Indebtedness (whether of principal or interest or, in the case of Swap Contracts, payment required as a result of termination events of such Swap Contracts and that is not otherwise being contested in good faith), when the same shall become due and payable (after giving effect to all applicable grace period and delivery of all required notices, if any, provided in the instrument or agreement under which such Material Indebtedness was created), whether at the due date thereof or at a date fixed for prepayment thereof or otherwise;
 
(g)         any event or condition occurs (other than, with respect to Indebtedness in respect of Swap Contracts, termination events (such as illegality, force majeure or tax events) or equivalent events that are not events of default pursuant to the terms of such
 
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Swap Contracts) (after giving effect to all applicable grace period and delivery of all required notices) that results in any Material Indebtedness becoming due before its scheduled maturity or that enables or permits the holder or holders of such Material Indebtedness or any trustee or agent on its or their behalf to cause Material Indebtedness to become due, or to require the prepayment, repurchase, redemption or defeasance thereof, before its scheduled maturity; provided that this clause (g) shall not apply to secured Indebtedness that becomes due as a result of the sale, transfer or other disposition (including as a result of the casualty or condemnation event) of the property securing such Indebtedness;
 
(h)          an involuntary proceeding shall be commenced or an involuntary petition shall be filed seeking (i) liquidation, reorganization or other relief in respect of any Loan Party or Material Subsidiary or its debts, or of a substantial part of its assets, under any federal, state or foreign bankruptcy, insolvency, receivership or similar law now or hereafter in effect or (ii) the appointment of a receiver, trustee, custodian, sequestrator, conservator or similar official for any Loan Party or Material Subsidiary or for a substantial part of its assets, and, in any such case, such proceeding or petition shall continue undismissed for 60 days or an order or decree approving or ordering any of the foregoing shall be entered;
 
(i)          any Loan Party or Material Subsidiary shall (i) voluntarily commence any proceeding or file any petition seeking liquidation, reorganization or other relief under any federal, state or foreign bankruptcy, insolvency, receivership or similar law now or hereafter in effect, (ii) consent to the institution of, or fail to contest in a timely and appropriate manner, any proceeding or petition described in clause (h) of this Article, (iii) apply for or consent to the appointment of a receiver, trustee, custodian, sequestrator, conservator or similar official for any Loan Party or Material Subsidiary or for a substantial part of its assets, (iv) file an answer admitting the material allegations of a petition filed against it in any such proceeding, (v) make a general assignment for the benefit of creditors or (vi) take any action for the purpose of effecting any of the foregoing;
 
(j)          any Loan Party shall admit in writing its inability or fail generally to pay its debts as they become due;
 
(k)          one or more judgments for the payment of money in an aggregate amount in excess of $75,000,000 (after giving effect to amounts payable by insurance) shall be rendered against any Loan Party or Material Subsidiary and shall remain undischarged for a period of 60 consecutive days during which execution shall not be effectively stayed, or any action shall be legally taken by a judgment creditor to attach or levy upon any asset of any Loan Party or Material Subsidiary to enforce any such judgment;
 
(l)          an ERISA Event shall have occurred that, in the opinion of the Required Lenders, when taken together with all other ERISA Events that have occurred, would reasonably be expected to result in a Material Adverse Effect;
 
(m)         an International Plan shall fail to comply with applicable local law, which, in the aggregate, would reasonably be expected to result in a Material Adverse Effect;
 
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(n)          a Change of Control shall occur;
 
(o)         the Loan Party Guaranty shall at any time fail to constitute a valid and binding agreement of (i) Opco or (ii) any other Guarantor party thereto (in the case of clause (ii), in any material respects) or any party shall so assert in writing;
 
(p)          other than as expressly permitted hereunder, the Pledge Agreement or any other Security Document pursuant to which the equity interests of the Borrower or any Subsidiary is pledged or any material provision thereof shall cease to be in full force or effect (other than pursuant to the terms hereof or thereof or solely as a result of acts or omissions of the Administrative Agent or any Lender or solely as a result of the Administrative Agent’s failure to maintain possession of any equity interests that have been previously delivered to it) or any pledgor thereunder or any Loan Party shall deny or disaffirm in writing any pledgor’s obligations under any Security Document; or
 
(q)          other than as expressly permitted hereunder, the Security Agreement or any other Security Document pursuant to which the assets of Opco, the Borrower or any Material Subsidiary are pledged as Collateral or any material provision thereof shall cease to be in full force or effect (other than pursuant to the terms hereof or thereof or solely as a result of acts or omissions of the Administrative Agent in respect of certificates, promissory notes or instruments actually delivered to it (including as a result of the Administrative Agent’s failure to file a Uniform Commercial Code continuation statement)) or any grantor thereunder or any Loan Party shall deny or disaffirm in writing any grantor’s obligations under any Security Document;
 
then, and in every such event (other than an event with respect to the Borrower described in clause (h) or (i) of this Article), and at any time thereafter during the continuance of such event, the Administrative Agent shall, at the request of the Required Lenders, by notice to the Borrower, take either or both of the following actions, at the same or different times:  (i) terminate the Commitments, and thereupon the Commitments shall terminate immediately, and (ii) declare the Loans then outstanding to be due and payable in whole (or in part, in which case any principal not so declared to be due and payable may thereafter be declared to be due and payable), and thereupon the principal of the Loans so declared to be due and payable, together with accrued interest thereon and all fees and other obligations of the Borrower accrued hereunder, shall become due and payable immediately, without presentment, demand, protest or other notice of any kind, all of which are waived by the Borrower to the extent permitted by applicable law; and in case of any event with respect to the Borrower described in clause (h) or (i) of this Article, the Commitments shall automatically terminate and the principal of the Loans then outstanding, together with accrued interest thereon and all fees and other obligations of the Borrower accrued hereunder, shall automatically become due and payable, without presentment, demand, protest or other notice of any kind, all of which are waived by the Borrower to the extent permitted by applicable law.
 
Section 7.02.          Application of Payments.  Any amount received by the Administrative Agent from any Loan Party (or from proceeds of any Collateral) following any acceleration of the Obligations under this Agreement or any Event of Default with
 
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respect to the Borrower under Section 7.01, that is continuing, shall be applied by the Administrative Agent in the following order:
 
(a)      first, to payment of that portion of the Obligations constituting fees, indemnities, expenses and other amounts (including fees, disbursements and other charges of counsel payable under Section 10.03 and amounts payable under Article 4) payable to the Administrative Agent in its capacity as such;
 
(b)      second, to payment of that portion of the Obligations constituting fees, indemnities, expenses and other amounts (other than principal and interest) payable to the Lenders (including fees, disbursements and other charges of counsel payable under Section 10.03) arising under the Loan Documents and amounts payable under Article 4, ratably among them in proportion to the respective amounts described in this clause (c) held by them;
 
(d)       third, to payment of that portion of the Obligations constituting accrued and unpaid interest on the Loans, ratably among the Lenders in proportion to the respective amounts described in this clause (d) held by them;
 
(e)      fourth, to payment of that portion of the Obligations constituting unpaid principal of and premiums, if any, payable on the Loans ratably among the Lenders in proportion to the respective amounts described in this clause (e) held by them;
 
(f)        fifth, to the payment of all other Obligations of the Loan Parties owing under or in respect of the Loan Documents that are then due and payable to the Administrative Agent and the other Secured Parties, ratably based upon the respective aggregate amounts of all such Obligations then owing to the Administrative Agent and the other Secured Parties; and
 
(g)       last, after all of the Obligations have been indefeasibly paid in full, to the Borrower or as otherwise required by Law.
 
ARTICLE 8
The Administrative Agent
 
Section 8.01.          Appointment and Authorization.  Each Lender Party hereby irrevocably appoints the Administrative Agent as its agent and authorizes the Administrative Agent to take such actions on its behalf and to exercise such powers as are delegated to the Administrative Agent by the terms of the Loan Documents, together with such actions and powers as are reasonably incidental thereto.
 
Section 8.02.          Rights and Powers as a Lender.  The bank serving as the Administrative Agent hereunder shall have the same rights and powers in its capacity as a Lender as any other Lender and may exercise the same as though it were not the Administrative Agent, and the term “Lender” or “Lenders” shall, unless otherwise expressly indicated or unless the context otherwise requires, include the person serving as the Administrative Agent hereunder in its individual capacity.  Such bank and its Affiliates
 
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may accept deposits from, lend money to, act as financial advisor or in any other advisory capacity for, and generally engage in any kind of business with, any Loan Party or Affiliate thereof as if it were not the Administrative Agent hereunder and without duty to account therefor to the Lenders.
 
Section 8.03.          Limited Parties and Responsibilities.  The Administrative Agent shall not have any duties or obligations except those expressly set forth in the Loan Documents.  Without limiting the generality of the foregoing, (a) the Administrative Agent shall not be subject to any fiduciary or other implied duties, regardless of whether a Default has occurred and is continuing, (b) the Administrative Agent shall not have any duty to take any discretionary action or exercise any discretionary powers, except discretionary rights and powers expressly contemplated by the Loan Documents that the Administrative Agent is required in writing to exercise as directed by the Required Lenders (or such other number or percentage of the Lenders as shall be necessary under the circumstances as provided in Section 10.02); provided that the Administrative Agent shall not be required to take any action that, in its opinion or the opinion of its counsel, may expose such Administrative Agent to liability, if the Administrative Agent is not indemnified to its satisfaction, or that is contrary to any Loan Document or applicable law, and (c) except as expressly set forth in the Loan Documents, the Administrative Agent shall not have any duty to disclose, and shall not be liable for any failure to disclose, any information relating to any Loan Party that is communicated to or obtained by the bank serving as Administrative Agent or any of its Affiliates in any capacity.  The Administrative Agent shall not be liable for any action taken or not taken by it (x) with the consent or at the request of the Required Lenders (or such other number or percentage of the Lenders as shall be necessary under the circumstances as provided in Section 10.02), (y) in the absence of its own gross negligence or willful misconduct (as finally determined by a court of competent jurisdiction) or (z) by reason of any occurrence beyond the control of the Administrative Agent (including but not limited to any act or provision of any present or future law or regulation of any Governmental Authority, any act of God or war, civil unrest, local or national disturbance or disaster, any act of terrorism, or the unavailability of the Federal Reserve Bank wire or facsimile or other wire or communication facility).  The Administrative Agent shall be deemed not to have knowledge of any Default unless and until written notice thereof is given to the Administrative Agent by the Borrower or a Lender, and the Administrative Agent shall not be responsible for or have any duty to ascertain or inquire into (i) any statement, warranty or representation made in or in connection with any Loan Document, (ii) the contents of any certificate, report or other document delivered thereunder or in connection therewith, (iii) the performance or observance of any of the covenants, agreements or other terms or conditions set forth in any Loan Document, (iv) the validity, enforceability, effectiveness or genuineness of any Loan Document or any other agreement, instrument or document, or (v) the satisfaction of any condition set forth in Article 4 or elsewhere in any Loan Document, other than to confirm receipt of items expressly required to be delivered to the Administrative Agent.  Nothing in this Agreement shall oblige the Administrative Agent to carry out any “know your customer” or other checks in relation to any person on behalf of any Lender and each Lender confirms to the Administrative Agent that it is solely responsible for any such checks it is required to carry out and that it may not rely on any statement in relation to such checks made by the Administrative Agent.
 
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Section 8.04.          Authority to Rely on Certain Writings, Statements and Advice.  The Administrative Agent shall be entitled to rely on, and shall not incur any liability for relying on, any notice, request, certificate, consent, statement, instrument, document or other writing believed by it to be genuine and to have been signed or sent by the proper Person.  The Administrative Agent also may rely on any statement made to it orally or by telephone and believed by it to be made by the proper Person, and shall not incur any liability for relying thereon.  The Administrative Agent may consult with legal counsel (who may be counsel for a Loan Party), independent accountants and other experts selected by it, and shall not be liable for any action taken or not taken by it in accordance with the advice of any such counsel, accountants or experts.
 
Section 8.05.          Sub-Agents and Related Parties.  The Administrative Agent may perform any and all its duties and exercise its rights and powers by or through any one or more sub-agents appointed by it.  The Administrative Agent and any such sub-agent may perform any and all its duties and exercise its rights and powers through their respective Related Parties.  The exculpatory provisions of the preceding Sections of this Article shall apply to any such sub-agent and to the Related Parties of the Administrative Agent and any such sub-agent, and shall apply to their respective activities in connection with the syndication of the credit facilities provided for herein as well as activities as Administrative Agent.
 
Section 8.06.          Resignation; Successor Administrative Agent.  (a) Subject to the appointment and acceptance of a successor Administrative Agent as provided in this Section, the Administrative Agent may resign at any time by notifying the Lenders and the Borrower.  Upon any such resignation, the Required Lenders shall have the right, in consultation with the Borrower, to appoint a successor.  If no successor shall have been so appointed by the Required Lenders and shall have accepted such appointment within 30 days after the retiring Administrative Agent gives notice of its resignation, then the retiring Administrative Agent may, on behalf of the Lenders, appoint a successor Administrative Agent which shall be a bank with an office in New York, New York, or an Affiliate of any such bank.  Upon acceptance of its appointment as Administrative Agent hereunder by a successor, such successor shall succeed to and become vested with all the rights, powers, privileges and duties of the retiring Administrative Agent, and the retiring Administrative Agent shall be discharged from its duties and obligations hereunder.  The fees payable by the Borrower to a successor Administrative Agent shall be the same as those payable to its predecessor unless otherwise agreed by the Borrower and such successor.  After the Administrative Agent’s resignation hereunder, the provisions of this Article and Section 10.03 shall continue in effect for the benefit of such retiring Administrative Agent, its sub-agents and their respective Related Parties in respect of any actions taken or omitted to be taken by any of them while the retiring Administrative Agent was acting as Administrative Agent.
 
(b)          Notwithstanding clause (a) above, any entity into which the Administrative Agent in its individual capacity may be merged or converted or with which it may be consolidated, or any corporation resulting from any merger, conversion or consolidation to which the Administrative Agent in its individual capacity shall be a party, or any corporation to which substantially all of the corporate trust business of the Administrative
 
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Agent in its individual capacity may be transferred, shall succeed the Administrative Agent and assume the obligations of the Administrative Agent, without any further action; provided that the Administrative Agent shall notify the Borrower and the Lenders of such merger, conversion, consolidation or transfer.
 
Section 8.07.          Credit Decisions by Lenders.  Each Lender acknowledges that it has, independently and without reliance on the Administrative Agent, the Arranger or any other Lender and based on such documents and information as it has deemed appropriate, made its own credit analysis and decision to enter into this Agreement.  Each Lender also acknowledges that it will, independently and without reliance on the Administrative Agent, the Arranger or any other Lender and based on such documents and information as it shall from time to time deem appropriate, continue to make its own decisions in taking or not taking action under or based on this Agreement, any other Loan Document or related agreement or any document furnished hereunder or thereunder.
 
Section 8.08.          Arranger.  The Arranger shall have no duty or obligation whatsoever under this Agreement.
 
Section 8.09.          Withholding Taxes.  To the extent required by any applicable law, the Administrative Agent shall be entitled to deduct withholding from any payment to any Lender as required under FATCA and shall have no obligation to gross-up any payment hereunder or to pay any additional amount as a result of such FATCA withholding.  If the Internal Revenue Service or any other Governmental Authority asserts a claim that the Administrative Agent did not properly withhold Tax from amounts paid to or for the account of any Lender because the appropriate form was not delivered or was not properly executed or because such Lender failed to notify the Administrative Agent of a change in circumstance which rendered the exemption from, or reduction of, withholding Tax ineffective or for any other reason, or if Administrative Agent reasonably determines that a payment was made to a Lender pursuant to this Agreement without deduction of applicable withholding Tax from such payment, such Lender shall indemnify the Administrative Agent fully for all amounts paid, directly or indirectly, by the Administrative Agent as Tax or otherwise, including any penalties or interest and together with all expenses (including legal expenses, allocated internal costs and out-of-pocket expenses) incurred.
 
Section 8.10.          Agent Under Security Documents and Guarantee. Each Secured Party hereby further authorizes the Administrative Agent, on behalf of and for the benefit of the Secured Parties, to be the agent for and representative of the Secured Parties with respect to the Collateral and the Security Documents, whether described as “Administrative Agent”, “Collateral Agent” or otherwise. Subject to Section 10.02, without further written consent or authorization from any Secured Party, the Administrative Agent may execute any documents or instruments necessary to (a) release any Lien on any property granted to or held by the Administrative Agent (or any sub-agent thereof) under any Loan Document (i) upon the earlier of the Maturity Date and the Termination Date, (ii) that is sold or to be sold or transferred to a Person that is not a Loan Party, (iii) if the property subject to such Lien is owned by a Guarantor, upon the release of such Guarantor from its Guarantee otherwise in accordance with the Loan Documents, (iv) as provided in the Security
 
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Documents, (v) that constitutes Excluded Property or Excluded Equity Interests or (vi) if approved, authorized or ratified in writing in accordance with Section 10.02; (b) release any Guarantor (other than Opco (except as otherwise permitted by Section 6.02) from its obligations under the Guarantee if such Person ceases to be a Subsidiary (or becomes an Excluded Subsidiary); (c) subordinate any Lien on any property granted to or held by the Administrative Agent under any Loan Document to the holder of any Lien permitted hereunder; and (d) enter into subordination agreements or any Equal Priority Intercreditor Agreement, any Junior Priority Intercreditor Agreement or any other intercreditor agreement with respect to Indebtedness.
 
Section 8.11.          Right to Realize on Collateral and Enforce Guarantee. Anything contained in any of the Loan Documents to the contrary notwithstanding, Opco, the Borrower, the Administrative Agent and each Secured Party hereby agree that (i) no Secured Party shall have any right individually to realize upon any of the Collateral or to enforce the Guarantee, it being understood and agreed that all powers, rights, and remedies hereunder may be exercised solely by the Administrative Agent, on behalf of the Secured Parties, in accordance with the terms hereof and all powers, rights, and remedies under the Security Documents may be exercised solely by the Administrative Agent, and (ii) in the event of a foreclosure by the Administrative Agent on any of the Collateral pursuant to a public or private sale or other disposition, the Administrative Agent or any Lender may be the purchaser or licensor of any or all of such Collateral at any such sale or other disposition and the Administrative Agent, as agent for and representative of the Secured Parties (but not any Lender or Lenders in its or their respective individual capacities unless the Required Lenders shall otherwise agree in writing) shall be entitled, for the purpose of bidding and making settlement or payment of the purchase price for all or any portion of the Collateral sold at any such public sale, to use and apply any of the Obligations as a credit on account of the purchase price for any collateral payable by the Administrative Agent at such sale or other disposition.
 
Section 8.12.          Erroneous Payments.
 
(a)          If the Administrative Agent (x) notifies a Lender or Secured Party, or any Person who has received funds on behalf of a Lender or Secured Party (any such Lender, Secured Party or other recipient (and each of their respective successors and assigns), a “Payment Recipient”) that the Administrative Agent has determined in its reasonable discretion (whether or not after receipt of any notice under immediately succeeding clause (b)) that any funds (as set forth in such notice from the Administrative Agent) received by such Payment Recipient from the Administrative Agent or any of its Affiliates were erroneously or mistakenly transmitted to, or otherwise erroneously or mistakenly received by, such Payment Recipient (whether or not known to such Lender, Secured Party or other Payment Recipient on its behalf)  (any such funds, whether  transmitted or received as a payment, prepayment or repayment of principal, interest, fees, distribution or otherwise, individually and collectively, an “Erroneous Payment”) and (y) demands in writing the return of such Erroneous Payment (or a portion thereof), such Erroneous Payment shall at all times remain the property of the Administrative Agent pending its return or repayment as
 
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contemplated below in this Section 8.12 and held in trust for the benefit of the Administrative Agent, and such Lender or Secured Party shall (or, with respect to any Payment Recipient who received such funds on its behalf, shall cause such Payment Recipient to) promptly, but in no event later than two Business Days thereafter (or such later date as the Administrative Agent may, in its sole discretion, specify in writing), return to the Administrative Agent the amount of any such Erroneous Payment (or portion thereof) as to which such a demand was made, in same day funds (in the currency so received), together with interest thereon (except to the extent waived in writing by the Administrative Agent) in respect of each day from and including the date such Erroneous Payment (or portion thereof) was received by such Payment Recipient to the date such amount is repaid to the Administrative Agent in same day funds at the greater of the Federal Funds Effective Rate and a rate determined by the Administrative Agent in accordance with banking industry rules on interbank compensation from time to time in effect. A notice of the Administrative Agent to any Payment Recipient under this clause (a) shall be conclusive, absent manifest error.
 
(b)          Without limiting immediately preceding clause (a), each Lender, Secured Party or any Person who has received funds on behalf of a Lender or Secured Party (and each of their respective successors and assigns), agrees that if it receives a payment, prepayment or repayment (whether received as a payment, prepayment or repayment of principal, interest, fees, distribution or otherwise) from the Administrative Agent (or any of its Affiliates) (x) that is in a different amount than, or on a different date from, that specified in this Agreement or in a notice of payment, prepayment or repayment sent by the Administrative Agent (or any of its Affiliates) with respect to such payment, prepayment or repayment, (y) that was not preceded or accompanied by a notice of payment, prepayment or repayment sent by the Administrative Agent (or any of its Affiliates), or (z) that such Lender or Secured Party, or other such recipient, otherwise becomes aware was transmitted, or received, in error or by mistake (in whole or in part), then in each such case:
 
(i)
it acknowledges and agrees that (A) in the case of immediately preceding clauses (x) or (y), an error and mistake shall be presumed to have been made (absent written confirmation from the Administrative Agent to the contrary) or (B) an error and mistake has been made (in the case of immediately preceding clause (z)), in each case, with respect to such payment, prepayment or repayment; and
 
(ii)
such Lender or Secured Party shall use commercially reasonable efforts to (and shall use commercially reasonable efforts to cause any other recipient that receives funds on its respective behalf to) promptly (and, in all events, within one
 
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Business Day of its knowledge of the occurrence of any of the circumstances described in immediately preceding clauses (x), (y) and (z)) notify the Administrative Agent of its receipt of such payment, prepayment or repayment, the details thereof (in reasonable detail) and that it is so notifying the Administrative Agent pursuant to this Section 8.12(b).
 
For the avoidance of doubt, the failure to deliver a notice to the Administrative Agent pursuant to this Section 8.12(b) shall not have any effect on a Payment Recipient’s obligations pursuant to Section 8.12(a) or on whether or not an Erroneous Payment has been made.

(c)          Each Lender or Secured Party hereby authorizes the Administrative Agent to set off, net and apply any and all amounts at any time owing to such Lender or Secured Party under any Loan Document, or otherwise payable or distributable by the Administrative Agent to such Lender or Secured Party under any Loan Document with respect to any payment of principal, interest, fees or other amounts, against any amount that the Administrative Agent has demanded to be returned under immediately preceding clause (a).
 
(d)          (i) In the event that an Erroneous Payment (or portion thereof) is not recovered by the Administrative Agent for any reason, after demand therefor in accordance with immediately preceding clause (a), from any Lender that has received such Erroneous Payment (or portion thereof) (and/or from any Payment Recipient who received such Erroneous Payment (or portion thereof) on its respective behalf)  (such unrecovered amount, an “Erroneous Payment Return Deficiency”), upon the Administrative Agent’s notice to such Lender at any time, then effective immediately (with the consideration therefor being acknowledged by the parties hereto), (A) such Lender shall be deemed to have assigned its Loans (but not its Commitments) with respect to which such Erroneous Payment was made (the “Erroneous Payment Impacted Class”) in an amount equal to the Erroneous Payment Return Deficiency (or such lesser amount as the Administrative Agent may specify) (such assignment of the Loans (but not Commitments) of the Erroneous Payment Impacted Class, the “Erroneous Payment Deficiency Assignment”) (on a cashless basis and such amount calculated at par plus any accrued and unpaid interest (with the assignment fee to be waived by the Administrative Agent in such instance)), and is hereby (together with the Borrower) deemed to execute and deliver an Assignment and Assumption (or, to the extent applicable, an agreement incorporating an Assignment and Assumption by reference pursuant to the Platform as to which the Administrative Agent and such parties are participants) with respect to such Erroneous Payment Deficiency Assignment, and such Lender  shall deliver any Notes evidencing such Loans to the Borrower or the Administrative Agent (but the failure of such Person to deliver any such Notes shall not affect the effectiveness of the foregoing assignment), (B) the Administrative Agent as the assignee Lender
 
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shall be deemed to have acquired the Erroneous Payment Deficiency Assignment, (C) upon such deemed acquisition, the Administrative Agent as the assignee Lender shall become a Lender, as applicable, hereunder with respect to such Erroneous Payment Deficiency Assignment and the assigning Lender shall cease to be a Lender, as applicable, hereunder with respect to such Erroneous Payment Deficiency Assignment, excluding, for the avoidance of doubt, its obligations under the indemnification provisions of this Agreement and its applicable Commitments which shall survive as to such assigning Lender, (D) the Administrative Agent and the Borrower shall each be deemed to have waived any consents required under this Agreement to any such Erroneous Payment Deficiency Assignment, and (E) the Administrative Agent will reflect in the Register its ownership interest in the Loans subject to the Erroneous Payment Deficiency Assignment. For the avoidance of doubt, no Erroneous Payment Deficiency Assignment will reduce the Commitments of any Lender and such Commitments shall remain available in accordance with the terms of this Agreement.
 
(ii)  Subject to Section 10.04 (but excluding, in all events, any assignment consent or approval requirements (whether from the Borrower or otherwise)), the Administrative Agent may, in its discretion, sell any Loans acquired pursuant to an Erroneous Payment Deficiency Assignment and upon receipt of the proceeds of such sale, the Erroneous Payment Return Deficiency owing by the applicable Lender shall be reduced by the net proceeds of the sale of such Loan (or portion thereof), and the Administrative Agent shall retain all other rights, remedies and claims against such Lender (and/or against any recipient that receives funds on its respective behalf). In addition, an Erroneous Payment Return Deficiency owing by the applicable Lender (x) shall be reduced by the proceeds of prepayments or repayments of principal and interest, or other distribution in respect of principal and interest, received by the Administrative Agent on or with respect to any such Loans acquired from such Lender pursuant to an Erroneous Payment Deficiency Assignment (to the extent that any such Loans are then owned by the Administrative Agent) and (y) may, in the sole discretion of the Administrative Agent, be reduced by any amount specified by the Administrative Agent in writing to the applicable Lender from time to time.

(e)          The parties hereto agree that (x) irrespective of whether the Administrative Agent may be equitably subrogated, in the event that an Erroneous Payment (or portion thereof) is not recovered from any Payment Recipient that has received such Erroneous Payment (or portion thereof) for any reason, the Administrative Agent shall be subrogated to all the rights and interests of such Payment Recipient (and, in the case of any Payment Recipient who has received funds on behalf of a Lender or Secured Party, to the rights and interests of such Lender or Secured Party, as the case may be) under the Loan Documents with respect to such amount (the “Erroneous Payment Subrogation Rights”) (provided that the Loan Parties’ Obligations under the Loan Documents in respect of the Erroneous Payment Subrogation Rights shall not be duplicative of such Obligations in respect of Loans that have been assigned to the Administrative Agent under an Erroneous Payment
 
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Deficiency Assignment) and (y) an Erroneous Payment shall not pay, prepay, repay, discharge or otherwise satisfy any Obligations owed by the Borrower or any other Loan Party; provided that this Section 8.12 shall not be interpreted to increase (or accelerate the due date for), or have the effect of increasing (or accelerating the due date for), the Obligations of the Borrower relative to the amount (and/or timing for payment) of the Obligations that would have been payable had such Erroneous Payment not been made by the Administrative Agent; provided, further, that, for the avoidance of doubt, the immediately preceding clauses (x) and (y) shall not apply to the extent any such Erroneous Payment is, and solely with respect to the amount of such Erroneous Payment that is, comprised of funds received by the Administrative Agent from the Borrower or any other Loan Party for the purpose of making a payment to satisfy certain Obligations and is not otherwise repaid or returned to a Loan Party by the Administrative Agent, any Lender or any of their respective Affiliates, whether pursuant to a legal proceeding or otherwise.
 
(f)          To the extent permitted by applicable law, no Payment Recipient shall assert any right or claim to  an Erroneous Payment, and hereby waives, and is deemed to waive, any claim, counterclaim, defense or right of set-off or recoupment with respect to any demand, claim or counterclaim by the Administrative Agent for the return of any Erroneous Payment received, including, without limitation, any defense based on “discharge for value” or any similar doctrine.

(g)          Each party’s obligations, agreements and waivers under this Section 8.12 shall survive the resignation or replacement of the Administrative Agent, any transfer of rights or obligations by, or the replacement of, a Lender the termination of the Commitments and/or the repayment, satisfaction or discharge of all Obligations (or any portion thereof) under any Loan Document.

ARTICLE 9
[Reserved]
 
ARTICLE 10
Miscellaneous
 
Section 10.01.          Notices.  (a) Unless otherwise expressly provided herein, all notices and other communications provided for herein or under any other Loan Document shall be in writing (including by facsimile transmission) and shall be delivered by hand or overnight courier service, mailed by certified or registered mail, sent by telecopy or sent by electronic mail, as follows:
 
(i)   If to any Loan Party, to it in care of the Borrower at 9 West 57th Street30 Hudson Yards, Suite 42007500, New York, New York 1001910001; Attention: Chief Financial Officer; provided that a copy of all such notices and other communications shall be delivered to (x) Borrower at 9 West 57th Street30
 
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Hudson Yards, Suite 42007500, New York, New York 1001910001, Attention: Chief Operating Officer and (y) Simpson Thacher & Bartlett LLP, 425 Lexington Avenue, New York, New York 10017 (Telecopy No. (212) 455-7678), Attention: Adam Shapiro.
 
(ii)   If to the Administrative Agent and Swingline Lender, to:
 
MORGAN STANLEY SENIOR FUNDING, INC.
 
Address:
1300 THAMES STREET, 4TH FLOOR
THAMES STREET WHARF
BALTIMORE, MD, 21231
Group Hotline: (917) 260-0588
Email for Borrowers: [**]
 
Email for Lenders: [**]
 
(iii) If to any other Lender, to it at its address (or telecopy number or electronic mail address) set forth in its Administrative Questionnaire.
 
(b)          Notices and other communications to the Lenders hereunder may be delivered or furnished by electronic communications pursuant to procedures approved by the Administrative Agent; provided that the foregoing shall not apply to notices pursuant to Article 2 unless otherwise agreed by the Administrative Agent and the applicable Lender.  The Administrative Agent or the Borrower may, in its discretion, agree to accept notices and other communications to it or in its care hereunder by electronic communications pursuant to procedures approved by it; provided that approval of such procedures may be limited to particular notices or communications.
 
(c)          Any party hereto may change its address, telecopy number or electronic mail address for notices and other communications hereunder by notice to the other parties hereto.  All notices and other communications given to any party hereto in accordance with the provisions of this Agreement shall be deemed to have been given on the date of receipt, which shall be deemed to occur in the case of courier service, mail, telecopy or electronic mail as follows:
 
(i)          if by way of courier service or mail, when it has been received at the relevant address in an envelope addressed to such party at that address; or
 
(ii)          if by way of telecopy, when received in legible form;
 
(iii)          if by way of electronic mail, when received;
 
and, if a particular department or officer is specified as part of its address details provided pursuant to this Section, if addressed to that department or officer; provided that (x) any communication to be made or delivered to the Administrative Agent will be effective only when actually received by the Administrative Agent
 
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and then only if it is expressly marked for the attention of the department or officer specified by the Administrative Agent for this purpose, and (y) it is understood that any communication made or delivered to the Borrower in accordance with this Section will be deemed to have been made or delivered to each of the Loan Parties.
 
Section 10.02.          Waivers; Amendments.  (a) No failure or delay by any Lender Party in exercising any right or power hereunder or under any other Loan Document shall operate as a waiver thereof, nor shall any single or partial exercise of any such right or power, or any abandonment or discontinuance of steps to enforce such a right or power, preclude any other or further exercise thereof or the exercise of any other right or power.  The rights and remedies of the Lender Parties under the Loan Documents are cumulative and are not exclusive of any rights or remedies that they would otherwise have.  No waiver of any provision of any Loan Document or consent to any departure by any Loan Party therefrom shall in any event be effective unless the same shall be permitted by Section 10.02(b), and then such waiver or consent shall be effective only in the specific instance and for the purpose for which given.
 
(b)          No Loan Document or provision thereof may be waived, amended or modified except pursuant to an agreement or agreements in writing entered into by the Borrower and the Required Lenders or by the Borrower and the Administrative Agent with the consent of the Required Lenders; provided that no such agreement shall
 
(i)          increase the Commitment without the written consent of each Lender directly and adversely affected thereby,
 
(ii)          reduce the rate of interest on any Loan, or reduce any fee payable hereunder, without the written consent of each Lender Party directly and adversely affected thereby,
 
(iii)          postpone the scheduled date of payment of the principal amount of any Loan, or any date for the payment of any interest or any fee payable hereunder, or reduce the amount of, waive or excuse any such payment, or postpone the scheduled date of expiration of any Commitment, without the written consent of each Lender Party directly and adversely affected thereby,
 
(iv)          change Section 2.17(b) or (c) in a manner that would alter the pro rata sharing or payments required thereby, without the written consent of each Lender directly and adversely affected thereby,
 
(v)          change any provision of this Section or decrease the percentage set forth in the definition of “Required Lenders” or any other provision of any Loan Document specifying the number or percentage of Lenders required to take any action thereunder, without the written consent of each Lender,
 
(vi)          change the currency of any Loan, without the written consent of each Lender,
 
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(vii)          release all or substantially all of the Guarantors from the Loan Party Guaranty (except as expressly provided hereunder or under such Loan Document), or limit the liability of all or substantially all of the Guarantors in respect thereof, without the written consent of each Lender, or
 
(viii)          release all or substantially all of the Collateral under the Security Documents (except as expressly provided hereunder or under the Security Documents), without the written consent of each Lender;
 
provided further that no such agreement shall amend, modify or otherwise affect the rights or duties of the Administrative Agent or the Swingline Lender hereunder without the prior written consent of the Administrative Agent or the Swingline Lender, as the case may be.
 
Notwithstanding the foregoing, in addition to any credit extensions and related Lender Joinder Agreement(s) effectuated without the consent of Lenders in accordance with Section 2.21 or Section 2.22, this Agreement may be amended (or amended and restated) with the written consent of the Required Lenders, the Administrative Agent and the Borrower (a) to add one or more additional credit facilities to this Agreement and to permit the extensions of credit from time to time outstanding thereunder and the accrued interest and fees in respect thereof to share ratably in the benefits of this Agreement and the other Loan Documents with the Loans and the accrued interest and fees in respect thereof and (b) to include appropriately the Lenders holding such credit facilities in any determination of the Required Lenders and other definitions related to such new Loans.
 
The Lenders hereby irrevocably agree that the Liens granted to the Administrative Agent by the Loan Parties on any Collateral shall be automatically released (i) in full, upon the earlier of the Maturity Date and the Termination Date, (ii) upon the sale or other disposition of such Collateral to any Person other than another Loan Party, (iii) to the extent such Collateral is comprised of property leased to a Loan Party, upon termination or expiration of such lease, (iv) if the release of such Lien is approved, authorized or ratified in writing by the Required Lenders (or such other percentage of the Lenders whose consent may be required in accordance with this Section 10.02), (v) to the extent the property constituting such Collateral is owned by any Guarantor, upon the release of such Guarantor from its obligations under the Guarantee, (vi) as required to effect any sale or other disposition of Collateral in connection with any exercise of remedies of the Administrative Agent pursuant to the Security Documents, and (vii) if such assets constitute Excluded Property or Excluded Equity Interests.  Any such release shall not in any manner discharge, affect, or impair the Obligations or any Liens (other than those being released) upon (or obligations (other than those being released) of the Loan Parties in respect of) all interests retained by the Loan Parties, including the proceeds of any sale, all of which shall continue to constitute part of the Collateral except to the extent otherwise released in accordance with the provisions of the Loan Documents.  Additionally, the Lenders hereby irrevocably agree that any Subsidiary that is a Guarantor shall be released from the Guarantees upon consummation of any transaction resulting in such Subsidiary ceasing to constitute a Subsidiary or otherwise no longer being required to be a Guarantor hereunder.  The Lenders hereby authorize the Administrative Agent to execute and deliver any instruments, documents, and agreements necessary or desirable to evidence and confirm the release of
 
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any Guarantor or Collateral pursuant to the foregoing provisions of this paragraph, all without the further consent or joinder of any Lender.
 
Notwithstanding anything in this Agreement (including, without limitation, this Section 10.02) or any other Loan Document to the contrary, (i) this Agreement and the other Loan Documents may be amended to effect an incremental facility pursuant to Section 2.21 or extension facility pursuant to Section 2.22 (and the Administrative Agent and the Borrower may effect such amendments to this Agreement and the other Loan Documents without the consent of any other party as may be necessary or appropriate, in the reasonable opinion of the Administrative Agent and the Borrower, to effect the terms of any such incremental facility or extension facility) and (ii) any provision of this Agreement or any other Loan Document may be amended by an agreement in writing entered into by the Borrower and the Administrative Agent, in accordance with the procedures described below in this clause to (x) cure any ambiguity, omission, mistake, defect or inconsistency (as reasonably determined by the Administrative Agent and Opco) and (y) effect administrative changes of a technical or immaterial nature and such amendment shall be deemed approved by the Lenders if the Lenders shall have received at least five Business Days’ prior written notice of such change and the Administrative Agent shall not have received, within five Business Days of the date of such notice to the Lenders, a written notice from the Required Lenders stating that the Required Lenders object to such amendment.
 
Section 10.03.          Expenses; Indemnity; Damage Waiver.  (a) The Borrower shall pay (i) all reasonable and documented out-of-pocket 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 syndication of the credit facilities provided for herein, the preparation and administration of the Loan Documents and any amendments, supplements, modifications or waivers of the provisions thereof (whether or not the transactions contemplated hereby or thereby shall be consummated) and (ii) all reasonable and documented out-of-pocket expenses incurred by any Lender Party, including the fees, charges and disbursements of any counsel for any Lender Party (which shall be limited to one counsel for all Lender Parties, except (x) solely in the case of an actual or perceived conflict of interest where the Indemnitee affected by such conflict notifies the Borrower of any existence of such conflict, one additional counsel in each relevant jurisdiction (which may include a single special counsel acting in multiple jurisdictions) and (y) to the extent that the Administrative Agent notifies the Borrower of the need for specialized legal skills and thereafter, after receipt of the consent of the Borrower (which consent shall not be unreasonably withheld or delayed) has retained its own counsel), in connection with the enforcement or protection of its rights in connection with the Loan Documents, including its rights under this Section, or in connection with the Loans made hereunder, including all such out-of-pocket expenses incurred during any workout, restructuring or negotiations in respect of such Loans.
 
(b)          The Borrower shall indemnify each of the Lender Parties and their respective Related Parties (without duplication) (each such Person being called an “Indemnitee”) against, and hold each Indemnitee harmless from, any and all losses, claims, damages, liabilities and related expenses, including the reasonable and documented
 
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fees, charges and disbursements of any counsel for any Indemnitee (which shall be limited to one counsel for all Indemnitees, except (x) solely in the case of an actual or perceived conflict of interest where the Indemnitee affected by such conflict notifies the Borrower of any existence of such conflict, one additional counsel in each relevant jurisdiction (which may include a single special counsel acting in multiple jurisdictions and (y) to the extent that the Indemnitee notifies the Borrower of the need for specialized legal skills and thereafter, after receipt of the consent of the Borrower (which consent shall not be unreasonably withheld or delayed) has retained its own counsel), incurred by or asserted against any Indemnitee arising out of, in connection with, or as a result of (i) the execution or delivery of any Loan Document or any other agreement or instrument contemplated hereby, the performance by the parties to the Loan Documents of their respective obligations thereunder or the consummation of the Transactions or any other transactions contemplated hereby, (ii) any Loan or the use of the proceeds therefrom, (iii) any actual or prospective claim, litigation, investigation or proceeding relating to any of the foregoing, whether based on contract, tort or any other theory and regardless of whether any Indemnitee or any Loan Party is a party thereto or whether or not such claim, litigation, investigation or proceeding is brought by any Loan Party or any other Person; provided that such indemnity shall not be available to any Indemnitee to the extent that such losses, claims, damages, liabilities or related expenses (x) are determined by a court of competent jurisdiction by final and nonappealable judgment to have resulted from such Indemnitee’s or any of its Related Parties’ bad faith, gross negligence or willful misconduct or from a material breach of the obligations of such Indemnitee or any of its Related Parties under the Credit Agreement or (y) arise out of, or in connection with, any actual or threatened litigation, investigation or proceeding that does not involve an act or omission by any Loan Party or any of its Affiliates and that is brought by one Indemnitee against another Indemnitee.
 
(c)          To the extent that the Borrower fails to pay any amount required to be paid by it to the Administrative Agent or the Swingline Lender under Section 10.03(a) or (b), each Lender severally agrees to pay to the Administrative Agent or the Swingline Lender, as the case may be, such Lender’s Applicable Percentage (determined as of the time that the applicable unreimbursed expense or indemnity payment is sought) of such unpaid amount; provided that the unreimbursed expense or indemnified loss, claim, damage, liability or related expense, as the case may be, was incurred by or asserted against the Administrative Agent or the Swingline Lender in its capacity as such.  For purposes hereof, a Lender’s “pro rata share” shall be determined based on its share of the sum of the total Credit Exposures and unused Commitments at the time.
 
(d)          To the extent permitted by applicable law, no Loan Party nor any Indemnitee shall have any liability, for special, indirect, consequential or punitive damages (as opposed to direct or actual damages) arising out of, in connection with, or as a result of, this Agreement, any other Loan Document or any agreement or instrument contemplated hereby or thereby, the Transactions, any Loan or the use of the proceeds thereof; provided that nothing contained in this Section 10.03(d) shall limit the Borrower’s indemnity obligations with respect to third party claims.  No Indemnitee referred to in paragraph (b) above shall be liable for any damages arising from the use by unintended recipients of any information or other materials distributed by it through
 
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telecommunications, electronic or other information transmission systems in connection with this Agreement or the other Loan Documents or the transactions contemplated hereby or thereby, except to the extent that such damages are determined by a court of competent jurisdiction by final and nonappealable judgment to have resulted from such Indemnitee’s or any of its Related Parties’ willful misconduct or gross negligence.
 
(e)          Each Indemnitee shall provide prompt notice of any claim; provided that the failure to give such notice shall not affect any Indemnitee’s rights to indemnity under this Section 10.03.  All amounts due under this Section shall be payable within thirty (30) days after written demand therefor; provided, however, that any Indemnitee shall promptly refund an indemnification payment received hereunder to the extent that there is a final judicial determination that such Indemnitee was not entitled to indemnification with respect to such payment pursuant to this Section 10.03.
 
(f)          The Borrower is entitled to assume and control the defense and settlement of any claim so long as the Borrower confirms its obligation to indemnify such Indemnitee in accordance with this Section 10.03.  No such Indemnitee may settle a claim without the prior written consent of the Borrower, which may not be unreasonably withheld or delayed; provided that without the prior written consent of an Indemnitee (which consent shall not be unreasonably withheld or delayed), the Borrower shall not effect any settlement of any pending or threatened proceeding against an Indemnitee in respect of which indemnity could have been sought hereunder by such Indemnitee unless (i) such settlement includes an unconditional release of such Indemnitee from all liability or claims that are the subject matter of such proceeding and (ii) such settlement does not include any statement as to any admission of fault, culpability, wrongdoing or failure to act by such Indemnitee.
 
(g)          This Section 10.03 shall not apply with respect to Taxes, other than any Taxes that represent losses, claims, damages, liabilities, obligations, penalties, actions, judgments, suits, costs, expenses or disbursements arising from any non-Tax claim.
 
Section 10.04.          Successors and Assigns.  (a) The provisions of this Agreement shall be binding on and inure to the benefit of the parties hereto and their respective successors and assigns permitted hereby, except that (i) except as permitted under Section 6.02, neither the Borrower nor any Guarantor may assign or otherwise transfer any of its rights or obligations hereunder without the prior written consent of each Lender (and any attempted assignment or transfer by the Borrower or any Guarantor without such consent shall be null and void), and (ii) no Lender may assign or otherwise transfer its rights or obligations hereunder except in accordance with this Section.  Nothing in this Agreement, expressed or implied, shall be construed to confer upon any Person (other than the parties hereto, their respective successors and assigns permitted hereby, Participants (to the extent provided in paragraph (c) of this Section) and, to the extent expressly contemplated hereby, the Related Parties of the Lender Parties) any legal or equitable right, remedy or claim under or by reason of this Agreement.
 
(b)          (i) Subject to the conditions set forth in paragraph (b)(ii) below, any Lender may assign to one or more assignees all or a portion of its rights and obligations under this
 
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Agreement (including all or a portion of its Commitment and the Loans at the time owing to it) with the prior written consent of:
 
(A)          the Borrower, (such consent not to be unreasonably withheld or delayed), provided that no consent of the Borrower shall be required for an assignment to a Lender or an Affiliate of a Lender that is a nationally recognized commercial bank an Approved Fund or, if an Event of Default under Section 7(a), (b), (h) or (i) has occurred and is continuing, any other assignee, unless, in each case, such assignment is to an Alternative Asset Investment Firm, in which case such assignment shall require the consent of the Borrower in its sole discretion; provided further, that, notwithstanding anything else herein to the contrary, no such consent shall be required for assignment or transfer of any rights or obligations hereunder by (i) [**] to [**], or (ii) Morgan Stanley Senior Funding, Inc. to Morgan Stanley Bank, N.A.;
 
(B)          the Administrative Agent (such consent not to be unreasonably withheld or delayed), provided that no consent of the Administrative Agent shall be required for an assignment of any Commitment to an assignee that is a Lender with a Commitment immediately prior to giving effect to such assignment; and
 
(C)          the Swingline Lender (such consent not to be unreasonably withheld or delayed).
 
Notwithstanding the foregoing, no such assignment shall be made to a natural Person, to the Borrower or any Affiliate of the Borrower or Defaulting Lender.
 
(ii)          Assignments shall be subject to the following additional conditions:
 
(A)          except in the case of an assignment to a Lender or an Affiliate of a Lender or an assignment of the entire remaining amount of the assigning Lender’s Commitment or Loans, the amount of the Commitment or Loans of the assigning Lender subject to each such assignment (determined as of the date the Assignment with respect to such assignment is delivered to the Administrative Agent) shall not be less than $10,000,000 unless each of the Borrower and the Administrative Agent otherwise consent, provided that no such consent of the Borrower shall be required if an Event of Default under Section 7(a), (b), (h) or (i) has occurred and is continuing;
 
[**] = Certain information contained in this document, marked by “[**]” has been excluded because it is both (i) not material and (ii) is the type that the registrant treats as private or confidential.
 
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(B)          each partial assignment shall be made as an assignment of a proportionate part of all the assigning Lender’s rights and obligations under this Agreement;
 
(C)          the parties to each assignment shall execute and deliver to the Administrative Agent an Assignment, together with a processing and recordation fee of $3,500;
 
(D)          the assignee, if it shall not be a Lender, shall deliver to the Administrative Agent tax forms required pursuant to Section 2.16(e) and a completed Administrative Questionnaire in which the assignee designates one or more credit contacts to whom all syndicate-level information (which may contain material non-public information about the Loan Parties and their related parties or their respective securities) will be made available and who may receive such information in accordance with the assignee’s compliance procedures and applicable laws, including federal and state securities laws; and
 
(E)          the Administrative Agent shall not be obligated to consent to an assignment hereunder until it is satisfied it has complied with all necessary “know your customer” or other similar checks under all applicable laws and regulations in relation to the assignment to the assignee, and an assignment will only be effective after performance by the Administrative Agent of all “know your customer” or other checks relating to any Person that it is required to carry out in relation to such assignment, the completion of which the Administrative Agent shall promptly notify to the assigning Lender and the assignee.
 
For the purposes of this Section 10.04(b), the term “Approved Fund” has the following meaning:
 
“Approved Fund” means any Person (other than a natural person) that is engaged in making, purchasing, holding or investing in bank loans and similar extensions of credit in the ordinary course of its business and that is administered or managed by (a) a Lender, (b) an Affiliate of a Lender or (c) an entity or an Affiliate of an entity that administers or manages a Lender.
 
(iii)          Subject to acceptance and recording thereof pursuant to subsection (b)(iv) of this Section, from and after the effective date specified in each Assignment the assignee thereunder shall be a party hereto and, to the extent of the interest assigned by such Assignment, have the rights and obligations of a Lender under this Agreement, and the assigning Lender thereunder shall, to the extent of the interest assigned by such Assignment, be released from its obligations under this Agreement (and, in the case of an Assignment covering all of the assigning Lender’s rights and obligations under this Agreement, such Lender shall cease to be a party hereto but shall continue to be entitled to the benefits of Sections 2.14, 2.15, 2.16 and 10.03).  Any assignment or transfer by a Lender of rights or
 
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obligations under this Agreement that does not comply with this Section shall be null and void.
 
(iv)          The Administrative Agent, acting solely for purposes of Treasury Regulations Section 5f.103-1(c) and Section 1.163-5(b)(1) of the proposed United State Treasury Regulations, as a non-fiduciary agent of the Borrower, shall maintain at one of its offices a copy of each Assignment delivered to it and a register for the recordation of the names and addresses of the Lenders, and the Commitment of, and principal amounts of (and stated interest on) the Loans owing to, each Lender pursuant to the terms hereof from time to time (the “Register”).  The entries in the Register shall be conclusive, absent manifest error, and the parties hereto may treat each Person whose name is recorded in the Register pursuant to the terms hereof as a Lender for all purposes of this Agreement, notwithstanding notice to the contrary.  The Register shall be available for inspection by any party hereto, at any reasonable time and from time to time upon reasonable prior notice.
 
(v)          Upon its receipt of a duly completed Assignment executed by an assigning Lender and an assignee, the assignee’s completed Administrative Questionnaire and applicable tax forms (unless the assignee shall already be a Lender hereunder), the processing and recordation fee referred to in subsection (b)(ii)(C) of this Section and any written consent to such assignment required by subsection (b) of this Section, the Administrative Agent shall accept such Assignment and record the information contained therein in the Register; provided that if either the assigning Lender or the assignee shall have failed to make any payment required to be made by it pursuant to Section 2.04(c), 2.06(b), 2.17(d) or 10.03(b), the Administrative Agent shall have no obligation to accept such Assignment and record the information therein in the Register unless and until such payment shall have been made in full, together with all accrued interest thereon.  No assignment, whether or not evidenced by a promissory note, shall be effective for purposes of this Agreement unless it has been recorded in the Register as provided in this subsection.
 
(c)          (i) Any Lender may, without the consent of any Loan Party or other Lender Party, sell participations to one or more banks or other entities (other than a natural Person, the Borrower or any Affiliate or Subsidiary of the Borrower) (a “Participant”) in all or a portion of such Lender’s rights and obligations under this Agreement (including all or a portion of its Commitment and the Loans owing to it); provided that (A) such Lender’s obligations under this Agreement shall remain unchanged, (B) such Lender shall remain solely responsible to the other parties hereto for the performance of such obligations and (C) the Borrowers and the other Lender Parties shall continue to deal solely and directly with such Lender in connection with such Lender’s rights and obligations under this Agreement. Any agreement or instrument pursuant to which a Lender sells such a participation shall provide that such Lender shall retain the sole right to enforce the Loan Documents and to approve any amendment, modification or waiver of any provision of the Loan Documents; provided that such agreement or instrument may provide that such Lender will not, without the consent of the Participant, agree to any amendment, modification or waiver described in the first proviso to Section 10.02(b) that affects such
 
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Participant. Subject to subsection (c)(ii) of this Section, the Borrower agrees that each Participant shall be entitled to the benefits of Sections 2.14, 2.15 and 2.16 to the same extent as if it were a Lender and had acquired its interest by assignment pursuant to subsection (b) of this Section. Each Lender that sells a participation, acting solely for this purpose as a non-fiduciary agent of the Borrower, shall maintain a register on which it enters the name and address of each Participant and the principal amounts (and stated interest) of each Participant’s interest in the Loans or other obligations under this Agreement (the “Participant Register”); provided that, no Lender shall have any obligation to disclose all or any portion of the Participant Register to any Person (including the identity of any Participant or any information relating to a Participant’s interest in any Commitments, Loans or its other obligations under any Loan Document) except to the extent that such disclosure is necessary to establish that such Commitment, Loan or other obligation is in registered form under Section 5f.103-1(c) of the United States Treasury Regulations. The entries in the Participant Register shall be conclusive, absent manifest error, and such Lender, each Loan Party and the Administrative Agent shall treat each person whose name is recorded in the Participant Register pursuant to the terms hereof as the owner of such participation for all purposes of this Agreement, notwithstanding notice to the contrary.
 
(ii) A Participant shall not be entitled to receive any greater payment under Section 2.14 or Section 2.16 than the applicable Lender would have been entitled to receive with respect to the participation sold to such Participant (except to the extent that such entitlement to receive greater payments results from a Change in Law that occurs after the Participant acquired the applicable participation), unless the sale of the participation to such Participant is made with the Borrower Representative’s prior written consent. A Participant that would be a Foreign Lender if it were a Lender shall not be entitled to the benefits of Section 2.16 unless the Borrower Representative is notified of the participation sold to such Participant and such Participant agrees, for the benefit of the Borrowers, to comply with Section 2.16(e) as though it were a Lender.
 
(d)          Any Lender may at any time pledge or assign a security interest in all or any portion of its rights under this Agreement to secure obligations of such Lender, including without limitation any pledge or assignment to secure obligations to a Federal Reserve Bank or other central bank having jurisdiction over such Lender, and this Section shall not apply to any such pledge or assignment of a security interest; provided that no such pledge or assignment of a security interest shall release a Lender from any of its obligations hereunder or substitute any such pledgee or assignee for such Lender as a party hereto.
 
Section 10.05.          Survival.  All covenants, agreements, representations and warranties made by the Loan Parties in the Loan Documents and in the certificates or other instruments delivered in connection with or pursuant to the Loan Documents shall be considered to have been relied upon by the other parties hereto and shall survive the execution and delivery of the Loan Documents and the making of any Loans, regardless of any investigation made by any such other party or on its behalf and notwithstanding that any Lender Party may have had notice or knowledge of any Default or incorrect representation or warranty at the time any credit is extended hereunder, and shall continue
 
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in full force and effect as long as any principal of or accrued interest on any Loan or any fee or any other amount payable under the Loan Documents (other than Contingent Obligations) is outstanding and unpaid or any Commitment has not expired or terminated.  The provisions of Sections 2.14, 2.15, 2.16 and 10.03 and Article 8 shall survive and remain in full force and effect regardless of the consummation of the transactions contemplated hereby, the repayment of the Loans, the expiration or termination of the Commitments or the termination of this Agreement or any provision hereof.
 
Section 10.06.          Counterparts; Integration; Effectiveness.  This Agreement may be executed in counterparts (and by different parties hereto on different counterparts), each of which shall constitute an original, but all of which when taken together shall constitute a single contract.  The Loan Documents and any separate letter agreements with respect to fees payable to the Administrative Agent constitute the entire contract among the parties relating to the subject matter hereof and supersede any and all previous agreements and understandings, oral or written, relating to the subject matter hereof.  Except as provided in Section 4.01, this Agreement shall become effective when it shall have been executed by the Administrative Agent and when the Administrative Agent shall have received counterparts hereof which, when taken together, bear the signatures of each of the other parties hereto, and thereafter shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns.  Delivery of an executed counterpart of a signature page of this Agreement by telecopy or electronic transmission shall be effective as delivery of a manually executed counterpart of this Agreement.
 
Section 10.07.          Severability.  If any provision of any Loan Document is invalid, illegal or unenforceable in any jurisdiction then, to the fullest extent permitted by law, (i) such provision shall, as to such jurisdiction, be ineffective to the extent (but only to the extent) of such invalidity, illegality or unenforceability, (ii) the other provisions of the Loan Documents shall remain in full force and effect in such jurisdiction and (iii) the invalidity, illegality or unenforceability of any such provision in any jurisdiction shall not affect the validity, legality or enforceability of such provision in any other jurisdiction.
 
Section 10.08.          Right of Setoff.  If an Event of Default shall have occurred and be continuing, each Lender Party and each Affiliate of the Administrative Agent is authorized at any time and from time to time, to the fullest extent permitted by law, to set off and apply any and all deposits (general or special, time or demand, provisional or final) at any time held and other obligations at any time owing by such Lender Party or Affiliate of the Administrative Agent to or for the credit or the account of a Loan Party against any of and all the obligations of a Loan Party now or hereafter existing under this Agreement held by such Lender Party, irrespective of whether or not such Lender Party shall have made any demand under this Agreement and although such obligations may be unmatured.  The rights of each Lender Party under this Section are in addition to other rights and remedies (including other rights of setoff) which such Lender Party may have. Each Lender Party agrees promptly to notify the Loan Parties and the Administrative Agent after any such set-off and application made by such Lender Party or Affiliate of the Administrative Agent; provided that the failure to give such notice shall not affect the validity of such set-off and application.
 
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Section 10.09.          Governing Law; Jurisdiction; Consent to Service of Process.  (a) This Agreement and the rights and obligations of the parties hereunder shall be construed in accordance with and governed by the laws of the State of New York.
 
(b)          Each party hereto irrevocably and unconditionally submits, for itself and its property, to the exclusive jurisdiction of any court of the State of New York and of any Federal court, in each case located in the Borough of Manhattan in connection with any action or proceeding arising out of or relating to any Loan Document, and each party hereto irrevocably and unconditionally agrees that all claims in respect of any such action or proceeding shall be heard and determined in such New York State or, to the extent permitted by law, in such Federal court.
 
(c)          Each party hereto irrevocably and unconditionally waives, to the fullest extent it may legally and effectively do so, any objection which it may now or hereafter have to the laying of venue of any suit, action or proceeding arising out of or relating to any Loan Document in any court referred to Section 10.09(b).  Each party hereto irrevocably waives, to the fullest extent permitted by law, the defense of an inconvenient forum to the maintenance of any such suit, action or proceeding in any such court.
 
(d)          Each party hereto irrevocably consents to service of process in the manner provided for notices in Section 10.01.  Nothing in any Loan Document will affect the right of any party to this Agreement to serve process in any other manner permitted by law.
 
Each Loan Party irrevocably appoints the Borrower (the “Process Agent”) as its agent to receive on behalf of such Loan Party and its properties service of copies of the summon and complaint and any other process which may be served in any such action or proceeding. Such service may be made by mailing or delivering a copy of such process to such Loan Party in care of the Process Agent at the Process Agent’s above address, and each such Loan Party hereby irrevocably authorizes and directs the Process Agent to accept such service on its behalf.
 
Section 10.10.          Waiver of Jury Trial.  EACH PARTY HERETO IRREVOCABLY AND UNCONDITIONALLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO ANY LOAN DOCUMENT OR ANY TRANSACTION CONTEMPLATED THEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY) AND FOR ANY COUNTERCLAIM THEREIN.  EACH PARTY HERETO (a) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (b) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.
 
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Section 10.11.          Headings.  Article and Section headings and the Table of Contents herein are for convenience of reference only, are not part of this Agreement and shall not affect the construction of, or be taken into consideration in interpreting, this Agreement.
 
Section 10.12.          Confidentiality.  (a) Each Lender Party agrees to maintain the confidentiality of the Information (as defined below), except that Information may be disclosed (i) to its and its Affiliates’ directors, officers, employees and agents, including accountants, legal counsel, other advisors and any sub-agent appointed pursuant to Section 8.05 (it being understood that the Persons to whom such disclosure is made will be informed of the confidential nature of such Information and instructed to keep such Information confidential), (ii) to the extent requested by any regulatory authority (in which case such Lender Party agrees (except with respect to any routine or ordinary course audit or examination conducted by bank accountants or any governmental or bank regulatory authority exercising examination or regulatory authority), to the extent practicable and not prohibited by applicable law, rule or regulation, to inform the Borrower promptly thereof prior to disclosure), (iii) to the extent required by applicable laws or regulations or by any subpoena or similar legal process (in which case such Lender Party agrees (except with respect to any routine or ordinary course audit or examination conducted by bank accountants or any governmental or bank regulatory authority exercising examination or regulatory authority), to the extent practicable and not prohibited by applicable law, rule or regulation, to inform the Borrower promptly thereof prior to disclosure), (iv) to any other party to this Agreement, (v) in connection with the exercise of any remedies hereunder or any suit, action or proceeding relating to any Loan Document or the enforcement of any right thereunder, (vi) subject to an agreement containing provisions substantially the same as those of this Section, to (x) any assignee of or Participant in, or any prospective assignee of or Participant in, any of its rights or obligations under this Agreement or (y) any actual or prospective counterparty (or its advisors) to any swap or derivative transaction relating to any Loan Party and its obligations, provided that (i) the disclosure of any such Information to any assignee or Participant, or any prospective assignee or Participant, or any actual or prospective counterparty (or its advisors) referred to above shall only be made after the acknowledgment and acceptance by such assignee, Participant, prospective assignee or Participant or any actual or prospective counterparty (or its advisors) that such Information is being disseminated on a confidential basis (on substantially the terms set forth in this Section 10.12 or confidentiality provisions at least as restrictive as those set forth in this Section 10.12), in each case for the benefit of the Loan Parties, in accordance with the standard syndication processes of such Lender Party or customary market standards for dissemination of such type of information, which shall in any event require “click through” or other affirmative actions on the part of recipient to access such Information, (vii) with the consent of the Borrower, (viii) to the extent such Information (x) becomes publicly available other than as a result of a breach of this Section or (y) becomes available to any Lender Party on a nonconfidential basis from a third party that is not, to such Lender Party’s knowledge, subject to confidentiality obligations owing to the Borrower.  For the purposes of this Section, “Information” means all information received from the Loan Parties relating to the Loan Parties or their business, other than any such information that is available to any Lender Party on a nonconfidential basis prior to disclosure by the Loan Parties.  Any Person required to maintain the confidentiality of Information as provided in this Section shall be considered to have complied with its
 
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obligation to do so if such Person has exercised the same degree of care to maintain the confidentiality of such Information as such Person would accord to its own confidential information.
 
(b)          EACH LENDER ACKNOWLEDGES THAT INFORMATION AS DEFINED IN SECTION 10.12(a) FURNISHED TO IT PURSUANT TO THIS AGREEMENT MAY INCLUDE MATERIAL NON-PUBLIC INFORMATION CONCERNING THE BORROWER AND ITS RELATED PARTIES OR THEIR RESPECTIVE SECURITIES, AND CONFIRMS THAT IT HAS DEVELOPED COMPLIANCE PROCEDURES REGARDING THE USE OF MATERIAL NON-PUBLIC INFORMATION AND THAT IT WILL HANDLE SUCH MATERIAL NON-PUBLIC INFORMATION IN ACCORDANCE WITH THOSE PROCEDURES AND APPLICABLE LAW, INCLUDING FEDERAL AND STATE SECURITIES LAWS.
 
(c)          ALL INFORMATION, INCLUDING REQUESTS FOR WAIVERS AND AMENDMENTS, FURNISHED BY THE LOAN PARTIES OR THE ADMINISTRATIVE AGENT PURSUANT TO, OR IN THE COURSE OF ADMINISTERING, THIS AGREEMENT WILL BE SYNDICATE-LEVEL INFORMATION, WHICH MAY CONTAIN MATERIAL NON-PUBLIC INFORMATION ABOUT THE BORROWER AND ITS RELATED PARTIES OR THEIR RESPECTIVE SECURITIES.  ACCORDINGLY, EACH LENDER REPRESENTS TO THE BORROWER AND THE ADMINISTRATIVE AGENT THAT IT HAS IDENTIFIED IN ITS ADMINISTRATIVE QUESTIONNAIRE A CREDIT CONTACT WHO MAY RECEIVE INFORMATION THAT MAY CONTAIN MATERIAL NON-PUBLIC INFORMATION IN ACCORDANCE WITH ITS COMPLIANCE PROCEDURES AND APPLICABLE LAW.
 
Section 10.13.          Interest Rate Limitation.  Notwithstanding anything herein to the contrary, if at any time the interest rate applicable to any Loan, together with all fees, charges and other amounts which are treated as interest on such Loan under applicable law (collectively the “Charges”), shall exceed the maximum lawful rate (the “Maximum Rate”) that may be contracted for, charged, taken, received or reserved by the Lender holding such Loan in accordance with applicable law, the rate of interest payable in respect of such Loan hereunder, together with all Charges payable in respect thereof, shall be limited to the Maximum Rate and, to the extent lawful, the interest and Charges that would have been payable in respect of such Loan but were not payable as a result of the operation of this Section shall be cumulated and the interest and Charges payable to such Lender in respect of other Loans or periods shall be increased (but not above the Maximum Rate therefor) until such cumulated amount, together with interest thereon at the Federal Funds Effective Rate to the date of payment, shall have been received by such Lender.
 
Notwithstanding the foregoing, and after giving effect to all adjustments contemplated thereby, if any Lender shall have received from the Borrower an amount in excess of the maximum permitted by any applicable law, rule or regulation, then the Borrower shall be entitled, by notice in writing to the Administrative Agent to obtain reimbursement from that Lender in an amount equal to such excess, and pending such
 
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reimbursement, such amount shall be deemed to be an amount payable by that Lender to the Borrower.
 
Section 10.14.          USA PATRIOT Act.  Each Lender that is subject to the USA PATRIOT Act and the Administrative Agent (for itself and not on behalf of any Lender) hereby notifies the Loan Parties that pursuant to the requirements of the USA PATRIOT Act, it is required to obtain, verify and record information that identifies the Loan Parties, which information includes the name and address of the Loan Parties and other information that will allow such Lender or the Administrative Agent, as applicable, to identify the Loan Parties in accordance with the USA PATRIOT Act.
 
Section 10.15.          Judgment Currency.  (a) The Borrower’s obligations hereunder and under the other Loan Documents to make payments in a specified currency (the “Obligation Currency”) shall not be discharged or satisfied by any tender or recovery pursuant to any judgment expressed in or converted into any currency other than the Obligation Currency, except to the extent that such tender or recovery results in the effective receipt by the Administrative Agent or a Lender of the full amount of the Obligation Currency expressed to be payable to the Administrative Agent or such Lender under this Agreement or the other Loan Documents.  If, for the purpose of obtaining or enforcing judgment against any Loan Party in any court or in any jurisdiction, it becomes necessary to convert into or from any currency other than the Obligation Currency (such other currency being hereinafter referred to as the “Judgment Currency”) an amount due in the Obligation Currency, the conversion shall be made, at the rate of exchange at which in accordance with normal banking procedures the Administrative Agent could purchase the first currency with such other currency on the Business Day preceding that on which final judgment is given (such Business Day being hereinafter referred to as the “Judgment Currency Conversion Date”).
 
(b)          If there is a change in the rate of exchange prevailing between the Judgment Currency Conversion Date and the date of actual payment of the amount due, the Borrower covenants and agrees to pay, or cause to be paid, such additional amounts, if any (but in any event not a lesser amount), as may be necessary to ensure that the amount paid in the Judgment Currency, when converted at the rate of exchange prevailing on the date of payment, will produce the amount of the Obligation Currency which could have been purchased with the amount of Judgment Currency stipulated in the judgment or judicial award at the rate of exchange prevailing on the Judgment Currency Conversion Date.
 
(c)          For purposes of determining any rate of exchange or currency equivalent for this Section, such amounts shall include any premium and costs payable in connection with the purchase of the Obligation Currency.
 
Section 10.16.          No Fiduciary Duty.  The Administrative Agent, each Lender and their Affiliates (collectively, solely for purposes of this paragraph, the “Lenders”), may have economic interests that conflict with those of the Loan Parties, their stockholders and/or their affiliates.  Each Loan Party agrees that nothing in the Loan Documents or otherwise will be deemed to create an advisory, fiduciary or agency relationship or fiduciary or other implied duty between any Lender, on the one hand, and such Loan Party,
 
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its stockholders or its affiliates, on the other.  The Loan Parties acknowledge and agree that (i) the transactions contemplated by the Loan Documents (including the exercise of rights and remedies hereunder and thereunder) are arm’s-length commercial transactions between the Lenders, on the one hand, and the Loan Parties, on the other, and (ii) in connection therewith and with the process leading thereto, (x) no Lender has assumed an advisory or fiduciary responsibility in favor of any Loan Party, its stockholders or its affiliates with respect to the transactions contemplated hereby (or the exercise of rights or remedies with respect thereto) or the process leading thereto (irrespective of whether any Lender has advised, is currently advising or will advise any Loan Party, its stockholders or its Affiliates on other matters) or any other obligation to any Loan Party except the obligations expressly set forth in the Loan Documents and (y) each Lender is acting solely as principal and not as the agent or fiduciary of any Loan Party, its management, stockholders, creditors or any other Person.  Each Loan Party acknowledges and agrees that it has consulted its own legal and financial advisors to the extent it deemed appropriate and that it is responsible for making its own independent judgment with respect to such transactions and the process leading thereto.  Each Loan Party agrees that it will not claim that any Lender has rendered advisory services of any nature or respect, or owes a fiduciary or similar duty to such Loan Party, in connection with such transaction or the process leading thereto.
 
Section 10.17.          Acknowledgement Regarding Any Supported QFCs(a). To the extent that the Loan Documents provide support, through a guarantee or otherwise, for any agreement or instrument that is a QFC (such support, “QFC Credit Support” and each such QFC a “Supported QFC”), the parties acknowledge and agree as follows with respect to the resolution power of the Federal Deposit Insurance Corporation under the Federal Deposit Insurance Act and Title II of the Dodd-Frank Wall Street Reform and Consumer Protection Act (together with the regulations promulgated thereunder, the “U.S. Special Resolution Regimes”) in respect of such Supported QFC and QFC Credit Support (with the provisions below applicable notwithstanding that the Loan Documents and any Supported QFC may in fact be stated to be governed by the laws of the State of New York and/or of the United States or any other state of the United States):
 
(a)           In the event a Covered Entity that is party to a Supported QFC (each, a “Covered Party”) becomes subject to a proceeding under a U.S. Special Resolution Regime, the transfer of such Supported QFC and the benefit of such QFC Credit Support (and any interest and obligation in or under such Supported QFC and such QFC Credit Support, and any rights in property securing such Supported QFC or such QFC Credit Support) from such Covered Party will be effective to the same extent as the transfer would be effective under the U.S. Special Resolution Regime if the Supported QFC and such QFC Credit Support (and any such interest, obligation and rights in property) were governed by the laws of the United States or a state of the United States. In the event a Covered Party or a BHC Act Affiliate of a Covered Party becomes subject to a proceeding under a U.S. Special Resolution Regime, Default Rights under the Loan Documents that might otherwise apply to such Supported QFC or any QFC Credit Support that may be exercised against such Covered Party are permitted to be exercised to no greater extent than such Default Rights could be exercised under the U.S. Special Resolution Regime if the Supported QFC and the Loan Documents were governed by the laws of the United States or a state of the United States. Without limitation of the foregoing, it is understood and
 
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agreed that rights and remedies of the parties with respect to a Defaulting Lender shall in no event affect the rights of any Covered Party with respect to a Supported QFC or any QFC Credit Support.
 
As used in this Section 10.17, the following terms have the following meanings:
 
“BHC Act Affiliate” of a party means an “affiliate” (as such term is defined under, and interpreted in accordance with, 12 U.S.C. 1841(k)) of such party.
 
“Covered Entity” means any of the following:  (i) a “covered entity” as that term is defined in, and interpreted in accordance with, 12 C.F.R. § 252.82(b); (ii) a “covered bank” as that term is defined in, and interpreted in accordance with, 12 C.F.R. § 47.3(b); or (iii) a “covered FSI” as that term is defined in, and interpreted in accordance with, 12 C.F.R. § 382.2(b).
 
“Default Right” has the meaning assigned to that term in, and shall be interpreted in accordance with, 12 C.F.R. §§ 252.81, 47.2 or 382.1, as applicable.
 
“QFC” has the meaning assigned to the term “qualified financial contract” in, and shall be interpreted in accordance with, 12 U.S.C. 5390(c)(8)(D).
 
Section 10.18.          Acknowledgement and Consent to Bail-In of Affected Financial Institutions.  Notwithstanding anything to the contrary in any Loan Document or in any other agreement, arrangement or understanding among any such parties, each party hereto acknowledges that any liability of any Affected Financial Institution arising under any Loan Document, to the extent such liability is unsecured, may be subject to the write-down and conversion powers of the applicable Resolution Authority and agrees and consents to, and acknowledges and agrees to be bound by:
 
(a)          the application of any Write-Down and Conversion Powers by the applicable Resolution Authority to any such liabilities arising hereunder which may be payable to it by any party hereto that is an Affected Financial Institution; and
 
(b)          the effects of any Bail-in Action on any such liability, including, if applicable;
 
(i)          a reduction in full or in part or cancellation of any such liability;
 
(ii)          a conversion of all, or a portion of, such liability into shares or other instruments of ownership in such Affected Financial Institution, its parent undertaking, or a bridge institution that may be issued to it or otherwise conferred on it, and that such shares or other instruments of ownership will be accepted by it in lieu of any rights with respect to any such liability under this Agreement or any other Loan Document; or
 
(iii)          the variation of the terms of such liability in connection with the exercise of the write-down and conversion powers of the applicable Resolution Authority.
 
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ARTICLE 11
Loan Party Guaranty
 
Section 11.01.          Guaranty.  (a) Subject to the provisions of paragraph (b), each Guarantor hereby unconditionally and irrevocably guarantees to the Administrative Agent, for the benefit of the Lender Parties and their respective successors, indorsees, transferees and assigns, the prompt and complete payment and performance by the Borrower when due (whether at the stated maturity, by acceleration or otherwise) of the Obligations.
 
(b)          This Loan Party Guaranty is a guaranty of payment when due and not of collectability and this Loan Party Guaranty is a primary obligation of each Guarantor and not merely a contract of surety.
 
(c)          Anything herein or in any other Loan Document to the contrary notwithstanding, the maximum liability of each Guarantor hereunder and under the other Loan Documents shall in no event exceed the amount which can be guaranteed by such Guarantor under applicable laws relating to the insolvency of debtors.
 
(d)          Each Guarantor agrees that the Obligations may at any time and from time to time exceed the amount of the liability of such Guarantor hereunder without impairing this Loan Party Guaranty or affecting the rights and remedies of the Administrative Agent or any other Lender Party hereunder.
 
(e)          No payment or payments made by the Borrower, any Guarantor, any other guarantor or any other Person or received or collected by the Administrative Agent or any other Lender Party from the Borrower, any Guarantor, any other guarantor or any other Person by virtue of any action or proceeding or any set-off or appropriation or application at any time or from time to time in reduction of or in payment of the Obligations shall be deemed to modify, reduce, release or otherwise affect the liability of any Guarantor hereunder, which shall, notwithstanding any such payment or payments other than payments made by such Guarantor in respect of the Obligations or payments received or collected from such Guarantor in respect of the Obligations, remain liable for the Obligations up to the maximum liability of such Guarantor hereunder until the Obligations are paid in full (other than Contingent Obligations) and the Commitments are terminated.
 
(f)          Any and all payments by or on account of any obligation of any Guarantor under this Article 11 shall be governed by the terms set forth in Section 2.16 of this Agreement.
 
Section 11.02.          Right of Contribution.  Each Guarantor hereby agrees that, to the extent that any Guarantor shall have paid more than its proportionate share of any payments made in respect of the Loan Party Guaranty, such Person shall be entitled to seek and receive contribution from and against the Guarantors hereunder.  Each Guarantor’s right of contribution shall be subject to the terms and conditions of Section 11.03 hereof. The provisions of this Section 11.02 shall in no respect limit the obligations and liabilities of any Guarantor to the Administrative Agent and the Lenders, and each Guarantor shall
 
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remain liable to the Administrative Agent and the Lenders for the full amount guaranteed by such Person under the Loan Party Guaranty.
 
Section 11.03.          No Subrogation.  Notwithstanding any payment or payments made by any Guarantor hereunder or any set-off or application of funds of any Guarantor by any Lender, the Guarantors shall not be entitled to be subrogated to any of the rights of the Administrative Agent or any Lender against the Borrower or any other guarantor or any collateral security or guarantee or right of offset held by the Administrative Agent or any Lender for the payment of the Obligations, nor shall the Guarantors seek or be entitled to seek any contribution or reimbursement from the Borrower or any other guarantor in respect of payments made by any Guarantor hereunder, until all amounts owing to the Administrative Agent and the Lenders by the Borrower on account of the Obligations are paid in full (other than Contingent Obligations) and the Commitments are terminated.  If any amount shall be paid to any Guarantor on account of such subrogation rights at any time when all of the Obligations shall not have been paid in full or the Commitments shall not have been terminated, such amount shall be held by such Guarantor in trust for the Administrative Agent and the Lenders, segregated from other funds of such Guarantor, and shall, promptly upon receipt by such Guarantor, be turned over to the Administrative Agent in the exact form received by such Guarantor (duly indorsed by such Guarantor to the Administrative Agent, if required), to be applied against the Obligations, whether matured or unmatured, in such order as the Administrative Agent may determine.
 
Section 11.04.          Guaranty Absolute and Unconditional.  Each Guarantor waives any and all notice of the creation, renewal, extension or accrual of any of the Obligations and notice of or proof of reliance by the Administrative Agent or any Lender upon this Loan Party Guaranty or acceptance of this Loan Party Guaranty, the Obligations, and any of them, shall conclusively be deemed to have been created, contracted or incurred, or renewed, extended, amended or waived, in reliance upon this Loan Party Guaranty; and all dealings between the Borrower (or any of them) and the Guarantors (or any of them), on the one hand, and the Administrative Agent and the Lenders, on the other hand, likewise shall be conclusively presumed to have been had or consummated in reliance upon this Loan Party Guaranty.  Each Guarantor waives diligence, presentment, protest, demand for payment and notice of default or nonpayment to or upon the Borrower or any other Guarantor or other guarantors with respect to the Obligations.  Each Guarantor understands and agrees that this Loan Party Guaranty shall be construed as a continuing, absolute and unconditional guaranty of payment without regard to (a) the validity, regularity or enforceability of this Agreement, any other Loan Document, any of the Obligations or any collateral security therefor or guarantee or right of offset with respect thereto at any time or from time to time held by the Administrative Agent or any Lender, (b) any defense, set-off or counterclaim (other than a defense of payment or performance) which may at any time be available to or be asserted by any Guarantor against the Borrower, the Administrative Agent or any Lender, or (c) any other circumstance whatsoever (with or without notice to or knowledge of the Borrower, any Guarantor or other guarantor) which constitutes, or might be construed to constitute, an equitable or legal discharge of the Borrower for the Obligations, of any Guarantor under this Loan Party Guaranty or of any other guarantor, in bankruptcy or in any other instance.  When pursuing its rights and remedies hereunder against the Guarantor, the Administrative Agent and any Lender may,
 
99
but shall be under no obligation to, pursue such rights and remedies as it may have against the Borrower, any Guarantor any other guarantor or any other Person or against any collateral security or guarantee for the Obligations or any right of offset with respect thereto, and any failure by the Administrative Agent or any Lender to pursue such other rights or remedies or to collect any payments from any the Borrower, Guarantor or other guarantor or other Person or to realize upon any such collateral security or guarantee or to exercise any such right of offset, or any release of any the Borrower, Guarantor or other guarantor or other Person or any such collateral security, guarantee or right of offset, shall not relieve the Guarantors of any liability hereunder, and shall not impair or affect the rights and remedies, whether express, implied or available as a matter of law, of the Administrative Agent and the Lenders against the Guarantors.  This Loan Party Guaranty shall remain in full force and effect and be binding in accordance with and to the extent of its terms upon the Guarantors and the respective successors and assigns thereof, and shall inure to the benefit of the Administrative Agent and the Lenders, and their respective successors, indorsees, transferees and assigns, until all the Obligations and the obligations of the Guarantors under this Loan Party Guaranty (other than Contingent Obligations) shall have been satisfied by payment in full and the Commitments shall be terminated, notwithstanding that from time to time during the term of the Credit Agreement the Borrower may be free from any Obligations.
 
Section 11.05.          Reinstatement.  This Loan Party Guaranty shall continue to be effective, or be reinstated, as the case may be, if at any time payment, or any part thereof, of any of the Obligations is rescinded or must otherwise be restored or returned by the Administrative Agent or any Lender upon the insolvency, bankruptcy, administration, dissolution, liquidation or reorganization of the Borrower or any Guarantor or other guarantor, or upon or as a result of the appointment of a receiver, administrative receiver, administrator, intervenor or conservator of, or trustee or similar officer for, the Borrower or any Guarantor or other guarantor or any substantial part of the property of the Borrower, Guarantor or such other guarantor, or otherwise, all as though such payments had not been made.
 
Section 11.06.          Payments.  Each Guarantor hereby guarantees that payments hereunder will be paid to the Administrative Agent without set-off or counterclaim in the relevant currency at the administrative office specified by the Administrative Agent.
 
Section 11.07.          Additional Guarantors.  From time to time subsequent to the Closing Date, subject to any applicable limitations set forth in the Security Documents, Opco and the Borrower will cause each direct or indirect Subsidiary (other than any Excluded Subsidiary) formed or otherwise purchased or acquired after the Closing Date, and each other Subsidiary that ceases to constitute an Excluded Subsidiary, within 60 days from the date of such formation, acquisition or cessation, as applicable (or such longer period as the Administrative Agent may agree in its reasonable discretion), and either Opco or the Borrower, may at its option, cause any other Subsidiary, to execute a Loan Party Joinder Agreement and a supplement to each of the Pledge Agreement and the Security Agreement in order to become a Guarantor hereunder and a grantor under such Security Documents or, to the extent reasonably requested by the Administrative Agent, enter into a new Security Document substantially consistent with the analogous existing Security
 
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Documents and otherwise in form and substance reasonably satisfactory to the Administrative Agent and take all other action reasonably requested by the Administrative Agent to grant a perfected security interest in its assets to substantially the same extent as created and perfected by the Loan Parties on the Closing Date.  The execution and delivery of any instrument adding an additional Guarantor as a party to this Agreement shall not require the consent of any other party hereunder. The rights and obligations of each Guarantor hereunder shall remain in full force and effect notwithstanding the addition of any new Guarantor as a party to this Agreement. For the avoidance of doubt, none of Opco, the Borrower or any Subsidiary shall be required to take any action outside the United States to perfect any security interest in the Collateral (including the execution of any agreement, document or other instrument governed by the law of any jurisdiction other than the United States, any State thereof or the District of Columbia).
 
 
[Remainder of page intentionally left blank.]

 
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Exhibit 10.5

Execution Version

CERTAIN INFORMATION, IDENTIFIED BY, AND REPLACED WITH, A MARK OF “[**]” HAS BEEN EXCLUDED FROM THIS DOCUMENT BECAUSE IT IS BOTH (I) NOT MATERIAL AND (II) IS THE TYPE THAT THE REGISTRANT TREATS AS PRIVATE OR CONFIDENTIAL.
 
LENDER JOINDER AGREEMENT NO. 6
 
March 28, 2022
 
Reference is made to the Credit Agreement, dated as of December 20, 2018 (as amended by that certain Sixth Amendment, date as of July 26, 2020 and that certain Seventh Amendment dated as of March 16, 2022 and as further amended, restated, amended and restated, supplemented or otherwise modified, refinanced or replaced from time to time, the “Credit Agreement”; the terms defined therein being used herein as therein defined), among KKR Real Estate Finance Holdings L.P., a Delaware limited partnership (“Opco”), KREF Holdings X LLC, a Delaware limited liability company (the “Borrower”), the Guarantors from time to time party thereto, the lending institutions from time to time party thereto and Morgan Stanley Senior Funding, Inc. (“MSSF”), as Administrative Agent and Swingline Lender.
 
Upon execution and delivery of this Lender Joinder Agreement No. 6 (this “Lender Joinder Agreement”) by the parties hereto, [**] (the “New Lender”) hereby becomes a Lender under the Credit Agreement having the Commitment set forth in Schedule 1 hereto, effective as of the date hereof and agrees to be bound by the provisions of the Credit Agreement, and the New Lender’s Commitments shall be part of the same series of revolving commitments as the Consenting Commitments.  This Lender Joinder Agreement shall constitute the notice required to be delivered by the Borrower to the Administrative Agent pursuant to Section 2.21 of the Credit Agreement.
 
It is understood and agreed that, after giving effect to this Lender Joinder Agreement, Schedule 2.01 to the Credit Agreement will be amended and replaced with Schedule 2 hereto, which shall be Schedule 2.01 to the Credit Agreement for all purposes therein.
 
The New Lender (a) represents and warrants that (i) it has full power and authority, and has taken all action necessary, to execute and deliver this Lender Joinder Agreement and to consummate the transactions contemplated hereby and to become a Lender under the Credit Agreement, (ii) it satisfies the requirements, if any, specified in the Credit Agreement that are required to be satisfied by it in order to become a Lender, (iii) it has received a copy of the Credit Agreement, together with copies of the most recent financial statements delivered pursuant to Section 5.01 thereof, and such other documents and information as it has deemed appropriate to make its own credit analysis and decision to enter into this Lender Joinder Agreement on the basis of which it has made such analysis and decision independently and without reliance on the Administrative Agent or any other Lender and (iv) if it is a Non-U.S. Lender, attached to this Lender Joinder Agreement is any documentation required to be delivered by it pursuant to the terms of the Credit Agreement, duly completed and executed by the undersigned, and (b) agrees that (i) it will, independently and without reliance on the Administrative Agent or any other Lender, and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking action under the Loan Documents

and (ii) it will perform in accordance with their terms all of the obligations which by the terms of the Loan Documents are required to be performed by it as a Lender.
 
THIS LENDER JOINDER AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK.
 
This Lender Joinder Agreement may be executed by one or more of the parties hereto on any number of separate counterparts, and all of said counterparts taken together shall be deemed to constitute one and the same instrument.  Delivery of an executed signature page hereof by facsimile transmission shall be effective as delivery of a manually executed counterpart hereof.
 
2
IN WITNESS WHEREOF, the parties hereto have caused this Lender Joinder Agreement to be duly executed and delivered by their proper and duly authorized officers as of the date first written above.
 
[Lender signatures are on file with the Administrative Agent]

[Signature Page to Lender Joinder Agreement]

3
Accepted and agreed:
 
KREF HOLDINGS X LLC,
  
as Borrower
  
   
By:
/s/ Patrick Mattson
  
 
Name: Patrick Mattson
  
 
Title:   Authorized Signatory
  

[Signature Page to Lender Joinder Agreement]

4
Accepted and agreed:
 
MORGAN STANLEY SENIOR FUNDING, INC.,
  
as Administrative Agent and Swingline Lender
  
   
By:
/s/ Lisa Hanson
  
 
Name: Lisa Hanson
  
 
Title:  VP
  

[Signature Page to Lender Joinder Agreement]

5
SCHEDULE 2
 
Revolving Credit Commitments

 
Name of Lender
  
Revolving Credit Commitment
 
[**]
  
$[**]
 
[**]
  
$[**]
 
[**]
  
$[**]
 
[**]
  
$[**]
 
[**]
  
$[**]
 
[**]
  
$[**]
 
[**]
  
$[**]
 
[**]
  
$[**]
 
[**]
  
$[**]
 
[**]
  
$[**]
 
[**]
  
$[**]
 
Total:
  
$445,000,000

[**] = Certain information contained in this document, marked by “[**]” has been excluded because it is both (i) not material and (ii) is the type that the registrant treats as private or confidential.

6
Exhibit 10.6

Execution Version

CERTAIN INFORMATION, IDENTIFIED BY, AND REPLACED WITH, A MARK OF “[**]” HAS BEEN EXCLUDED FROM THIS DOCUMENT BECAUSE IT IS BOTH (I) NOT MATERIAL AND (II) IS THE TYPE THAT THE REGISTRANT TREATS AS PRIVATE OR CONFIDENTIAL.
 
LENDER JOINDER AGREEMENT NO. 7
 
March 31, 2022
 
Reference is made to the Credit Agreement, dated as of December 20, 2018 (as amended by that certain Sixth Amendment, date as of July 26, 2020 and that certain Seventh Amendment dated as of March 16, 2022 and as further amended, restated, amended and restated, supplemented or otherwise modified, refinanced or replaced from time to time, the “Credit Agreement”; the terms defined therein being used herein as therein defined), among KKR Real Estate Finance Holdings L.P., a Delaware limited partnership (“Opco”), KREF Holdings X LLC, a Delaware limited liability company (the “Borrower”), the Guarantors from time to time party thereto, the lending institutions from time to time party thereto and Morgan Stanley Senior Funding, Inc. (“MSSF”), as Administrative Agent and Swingline Lender.
 
Upon execution and delivery of this Lender Joinder Agreement No. 7 (this “Lender Joinder Agreement”) by the parties hereto, [**] (the “New Lender”) hereby becomes a Lender under the Credit Agreement having the Commitment set forth in Schedule 1 hereto, effective as of the date hereof and agrees to be bound by the provisions of the Credit Agreement, and the New Lender’s Commitments shall be part of the same series of revolving commitments as the Consenting Commitments.  This Lender Joinder Agreement shall constitute the notice required to be delivered by the Borrower to the Administrative Agent pursuant to Section 2.21 of the Credit Agreement.
 
It is understood and agreed that, after giving effect to this Lender Joinder Agreement, Schedule 2.01 to the Credit Agreement will be amended and replaced with Schedule 2 hereto, which shall be Schedule 2.01 to the Credit Agreement for all purposes therein.
 
The New Lender (a) represents and warrants that (i) it has full power and authority, and has taken all action necessary, to execute and deliver this Lender Joinder Agreement and to consummate the transactions contemplated hereby and to become a Lender under the Credit Agreement, (ii) it satisfies the requirements, if any, specified in the Credit Agreement that are required to be satisfied by it in order to become a Lender, (iii) it has received a copy of the Credit Agreement, together with copies of the most recent financial statements delivered pursuant to Section 5.01 thereof, and such other documents and information as it has deemed appropriate to make its own credit analysis and decision to enter into this Lender Joinder Agreement on the basis of which it has made such analysis and decision independently and without reliance on the Administrative Agent or any other Lender and (iv) if it is a Non-U.S. Lender, attached to this Lender Joinder Agreement is any documentation required to be delivered by it pursuant to the terms of the Credit Agreement, duly completed and executed by the undersigned, and (b) agrees that (i) it will, independently and without reliance on the Administrative Agent or any other Lender, and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking action under the Loan Documents and (ii) it will perform in accordance with their terms all of the obligations which by the terms of the Loan Documents are required to be performed by it as a Lender.

THIS LENDER JOINDER AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK.
 
This Lender Joinder Agreement may be executed by one or more of the parties hereto on any number of separate counterparts, and all of said counterparts taken together shall be deemed to constitute one and the same instrument.  Delivery of an executed signature page hereof by facsimile transmission shall be effective as delivery of a manually executed counterpart hereof.
 
2
IN WITNESS WHEREOF, the parties hereto have caused this Lender Joinder Agreement to be duly executed and delivered by their proper and duly authorized officers as of the date first written above.
 
[Lender signatures are on file with the Administrative Agent]

3
Accepted and agreed:
 
KREF HOLDINGS X LLC,
  
as Borrower
  
   
By:
/s/ Patrick Mattson
  
 
Name: Patrick Mattson
  
 
Title:   Authorized Signatory
  

4
Accepted and agreed:
 
MORGAN STANLEY SENIOR FUNDING, INC.,
  
as Administrative Agent and Swingline Lender
  
   
By:
/s/ Lisa Hanson
  
 
Name:  Lisa Hanson
  
 
Title:    VP
  

5
SCHEDULE 2
 
Revolving Credit Commitments
 
 
Name of Lender
  
Revolving Credit Commitment
 
[**]
  
$[**]
 
[**]
  
$[**]
 
[**]
  
$[**]
 
[**]
  
$[**]
 
[**]
  
$[**]
 
[**]
  
$[**]
 
[**]
  
$[**]
 
[**]
  
$[**]
 
[**]
  
$[**]
 
[**]
  
$[**]
 
[**]
  
$[**]
 
[**]
  
$[**]
 
Total:
  
$520,000,000

[**] = Certain information contained in this document, marked by “[**]” has been excluded because it is both (i) not material and (ii) is the type that the registrant treats as private or confidential.
 
6
Exhibit 10.7

Execution Version

CERTAIN INFORMATION, IDENTIFIED BY, AND REPLACED WITH, A MARK OF “[**]” HAS BEEN EXCLUDED FROM THIS DOCUMENT BECAUSE IT IS BOTH (I) NOT MATERIAL AND (II) IS THE TYPE THAT THE REGISTRANT TREATS AS PRIVATE OR CONFIDENTIAL.
 
LENDER JOINDER AGREEMENT NO. 8
 
April 4, 2022
 
Reference is made to the Credit Agreement, dated as of December 20, 2018 (as amended by that certain Sixth Amendment, date as of July 26, 2020 and that certain Seventh Amendment dated as of March 16, 2022 and as further amended, restated, amended and restated, supplemented or otherwise modified, refinanced or replaced from time to time, the “Credit Agreement”; the terms defined therein being used herein as therein defined), among KKR Real Estate Finance Holdings L.P., a Delaware limited partnership (“Opco”), KREF Holdings X LLC, a Delaware limited liability company (the “Borrower”), the Guarantors from time to time party thereto, the lending institutions from time to time party thereto and Morgan Stanley Senior Funding, Inc. (“MSSF”), as Administrative Agent and Swingline Lender.
 
Upon execution and delivery of this Lender Joinder Agreement No. 8 (this “Lender Joinder Agreement”) by the parties hereto, [**] (the “New Lender”) hereby becomes a Lender under the Credit Agreement having the Commitment set forth in Schedule 1 hereto, effective as of the date hereof and agrees to be bound by the provisions of the Credit Agreement, and the New Lender’s Commitments shall be part of the same series of revolving commitments as the Consenting Commitments.  This Lender Joinder Agreement shall constitute the notice required to be delivered by the Borrower to the Administrative Agent pursuant to Section 2.21 of the Credit Agreement.
 
It is understood and agreed that, after giving effect to this Lender Joinder Agreement, Schedule 2.01 to the Credit Agreement will be amended and replaced with Schedule 2 hereto, which shall be Schedule 2.01 to the Credit Agreement for all purposes therein.
 
The New Lender (a) represents and warrants that (i) it has full power and authority, and has taken all action necessary, to execute and deliver this Lender Joinder Agreement and to consummate the transactions contemplated hereby and to become a Lender under the Credit Agreement, (ii) it satisfies the requirements, if any, specified in the Credit Agreement that are required to be satisfied by it in order to become a Lender, (iii) it has received a copy of the Credit Agreement, together with copies of the most recent financial statements delivered pursuant to Section 5.01 thereof, and such other documents and information as it has deemed appropriate to make its own credit analysis and decision to enter into this Lender Joinder Agreement on the basis of which it has made such analysis and decision independently and without reliance on the Administrative Agent or any other Lender and (iv) if it is a Non-U.S. Lender, attached to this Lender Joinder Agreement is any documentation required to be delivered by it pursuant to the terms of the Credit Agreement, duly completed and executed by the undersigned, and (b) agrees that (i) it will, independently and without reliance on the Administrative Agent or any other Lender, and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking action under the Loan Documents and (ii) it will perform in accordance with their terms all of the obligations which by the terms of the Loan Documents are required to be performed by it as a Lender.

THIS LENDER JOINDER AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK.
 
This Lender Joinder Agreement may be executed by one or more of the parties hereto on any number of separate counterparts, and all of said counterparts taken together shall be deemed to constitute one and the same instrument.  Delivery of an executed signature page hereof by facsimile transmission shall be effective as delivery of a manually executed counterpart hereof.
 
2
IN WITNESS WHEREOF, the parties hereto have caused this Lender Joinder Agreement to be duly executed and delivered by their proper and duly authorized officers as of the date first written above.
 
[Lender signatures are on file with the Administrative Agent]

[Signature Page to Lender Joinder Agreement]

Accepted and agreed:
 
KREF HOLDINGS X LLC,
  
as Borrower
  
   
By:
/s/ Patrick Mattson
  
 
Name: Patrick Mattson
  
 
Title:   Authorized Signatory
  

[Signature Page to Lender Joinder Agreement]

Accepted and agreed:
 
MORGAN STANLEY SENIOR FUNDING, INC.,
  
as Administrative Agent and Swingline Lender
  
   
By:
/s/ Lisa Hanson
  
 
Name: Lisa Hanson
  
 
Title:   VP
  

[Signature Page to Lender Joinder Agreement]

SCHEDULE 2
 
Revolving Credit Commitments
 
 
Name of Lender
  
Revolving Credit Commitment
 
[**]
  
$[**]
 
[**]
  
$[**]
 
[**]
  
$[**]
 
[**]
  
$[**]
 
[**]
  
$[**]
 
[**]
  
$[**]
 
[**]
  
$[**]
 
[**]
  
$[**]
 
[**]
  
$[**]
 
[**]
  
$[**]
 
[**]
  
$[**]
 
[**]
  
$[**]
 
[**]
  
$[**]
 
Total:
  
$535,000,000

[**] = Certain information contained in this document, marked by “[**]” has been excluded because it is both (i) not material and (ii) is the type that the registrant treats as private or confidential.
 

Exhibit 10.8

Execution Version

EIGHTH AMENDMENT TO MASTER REPURCHASE AGREEEMNT
 
THIS EIGHTH AMENDMENT TO MASTER REPURCHASE AGREEMENT (this “Amendment”), dated as of February 15, 2022, by and among MORGAN STANLEY BANK, N.A. (“Buyer”), KREF LENDING IV LLC (“Seller”) and KKR REAL ESTATE FINANCE HOLDINGS L.P. (“Guarantor”) amends that certain Master Repurchase and Securities Contract Agreement, dated December 6, 2016, by and between Buyer and Seller, as modified by that certain Omnibus Amendment, dated as of November 10, 2017 by and among Guarantor, Seller and Buyer, as further modified by that certain First Amendment to Repurchase Agreement, dated as of December 31, 2018 by and between Buyer and Seller, as further modified by that certain Second Amendment to Repurchase Agreement, dated March 14, 2019 by and between Buyer and Seller, as further modified by that certain Third Amendment to Master Repurchase Agreement dated June 7, 2019 by and among Guarantor, Seller and Buyer, as further modified by that certain Fourth Amendment to Master Repurchase Agreement, dated December 4, 2019 by and among Guarantor, Seller and Buyer, as further modified by that certain Fifth Amendment to Master Repurchase Agreement, dated February 21, 2020 by and among Guarantor, Seller and Buyer, as further modified by that certain Sixth Omnibus Amendment, dated June 29, 2021 by and among Guarantor, Seller and Buyer, and as further modified by that certain Seventh Omnibus Amendment, dated December 29, 2021 by and among Guarantor, Seller and Buyer (as the same has been or may be further amended, modified and/or restated from time to time, the “Repurchase Agreement”) and the other Transaction Documents as provided herein.
 
RECITALS
 
WHEREAS, the parties hereto desire to make certain amendments to the Repurchase Agreement and the other Transaction Documents as provided herein.
 
NOW, THEREFORE, for good and valuable consideration, the parties hereto agree as follows:
 
1.          Amendment to the Repurchase Agreement. Notwithstanding any contrary provisions in the Repurchase Agreement, Seller and Buyer hereby agree that:
 
(a)       With respect to any new Transactions entered into by Buyer and Seller from and after January 1, 2022, the applicable provisions of the Repurchase Agreement are hereby amended with respect to such Transactions as set forth in Exhibit A attached hereto.
 
(b)        With respect to any Transactions entered into by Buyer and Seller prior to January 1, 2022 (“Existing Transactions”), effective February 15, 2022, the provisions of the Repurchase Agreement are hereby amended with respect to such Existing Transactions as set forth in Exhibit A attached hereto and Buyer and Seller shall execute and deliver replacement Confirmations reflecting such terms.  Buyer and Seller hereby agree that the “Benchmark Replacement Adjustment” shall be as set forth in clause (1) of the definition thereof appearing in Exhibit A to the Sixth Omnibus Amendment dated as

of June 29, 2021 by and between Buyer and Seller or as otherwise agreed between Buyer and Seller and reflected in the replacement Confirmations referenced above.
 
(c)          The definition of “Significant Modification” shall be amended by adding the following language immediately following clause (xi):
 
“provided that any waivers, consents, amendments or modifications to any Purchased Asset Document, to the extent providing for the conversion of the interest rate thereunder to a benchmark rate based on SOFR (or another benchmark rate to the extent that such other benchmark rate is being implemented in order to match the benchmark interest rate hereunder) and any benchmark conforming changes made in connection therewith (including waivers, consents, modifications or amendments to or replacements of any related interest rate protection agreements and/or caps relating to the applicable Purchased Asset that are necessary to effect such conversion to SOFR or such other benchmark rate) shall not be considered a Significant Modification.”

2.           Defined Terms. Capitalized terms used but not defined herein shall have the meanings set forth in the Repurchase Agreement.
 
3.           Ratification and Authority.
 
(a)         Seller hereby represents and warrants that (i) Seller has the power and authority to enter into this Amendment and to perform its obligations under the Repurchase Agreement as amended hereby and the other Transaction Documents, (ii) Seller has by proper action duly authorized the execution and delivery of this Amendment and (iii) this Amendment has been duly executed and delivered by Seller and constitutes Seller’s legal, valid and binding obligations, enforceable in accordance with its terms, subject to bankruptcy, insolvency and similar laws of general applicability relating to or affecting creditors’ rights and to general equity principles.
 
(b)         Seller hereby (i) unconditionally ratifies and confirms, renews and reaffirms all of its obligations under the Repurchase Agreement and each of the other Transaction Documents, (ii) acknowledges and agrees that such obligations remain in full force and effect, binding on and enforceable against it in accordance with the terms of the Repurchase Agreement as amended hereby and the other Transaction Documents, in each case, subject to bankruptcy, insolvency and similar laws of general applicability relating to or affecting creditors’ rights and to general equity principles and (iii) represents, warrants and covenants that it is not in default under the Repurchase Agreement or any of the other Transaction Documents beyond any applicable notice and cure periods, and there are no defenses, offsets or counterclaims against Seller’s obligations under the Repurchase Agreement or the other Transaction Documents.
 
(c)        Guarantor, by its signature below, hereby (i) unconditionally approves and consents to the execution by Seller of this Amendment and the modifications to the Transaction Documents effected thereby, (ii) unconditionally ratifies, confirms, renews, and reaffirms all of its obligations under the Guaranty, (iii) acknowledges and agrees that its obligations under the Guaranty remain in full force and effect, binding on and enforceable against it in accordance with its terms subject to bankruptcy, insolvency and similar laws of general applicability relating to or affecting creditors’ rights and to general equity principles and (iv) represents, warrants and covenants that it is not in default under the Guaranty beyond any applicable notice and cure periods, and there are no defenses, offsets or counterclaims against its obligations under the Guaranty. Guarantor hereby represents and warrants that it has the power and authority to enter into this Amendment and has by proper action duly authorized the execution and delivery of this Amendment by Guarantor.
 
4.           Continuing Effect. Except as expressly amended by this Amendment, the Repurchase Agreement, the Guaranty and the other Transaction Documents remain in full force and effect in accordance with their respective terms.  This Amendment shall not constitute a novation of any Transaction Document but shall constitute modifications thereof.
 
5.          References in Transaction Documents. All references to the Repurchase Agreement and the Guaranty in any Transaction Document, or in any other document executed or delivered in connection therewith shall, from and after the execution and delivery of this Amendment, be deemed a reference to the Repurchase Agreement as amended hereby, unless the context expressly requires otherwise.
 
6.          Governing Law. This Amendment shall be governed by and construed and interpreted in accordance with the laws of the State of New York without giving effect to the conflict of law principles thereof, except for Sections 5-1401 of the General Obligations Law of the State of New York.
 
7.          Counterparts. This Amendment may be executed in any number of counterparts, each of which when so executed and delivered shall be an original, but all of which shall constitute one and the same instrument. Delivery of an executed counterpart of a signature page to this Amendment in Portable Document Format (PDF) or by facsimile transmission shall be effective as delivery of a manually executed original counterpart thereof.
 
[Signatures appear on the next page.]
 
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly executed and delivered in their names as of the date first above written.
 
 
BUYER:
   
 
MORGAN STANLEY BANK, N.A.,
a national banking association
   
 
By:
/s/ Bill Bowman
  
 
Name: Bill Bowman
 
Title: Authorized Signatory

[Signatures continue on the next page.]
 
 
SELLER:
   
 
KREF LENDING IV LLC,
a Delaware limited liability company
   
 
By:
/s/ Patrick Mattson
  
 
Name: Patrick Mattson
 
Title: Authorized Signatory
   
 
GUARANTOR:
   
 
KKR REAL ESTATE FINANCE HOLDINGS L.P.,
a Delaware limited partnership
   
 
By:
  KKR REAL ESTATE FINANCE TRUST INC., its general partner
   
 
By:
/s/ Patrick Mattson
  
 
Name: Patrick Mattson
 
 Title: Authorized Signatory

EXHIBIT A

TERM SOFR REPLACEMENT PROVISIONS

1.           The following definitions in Section 2 of the Repurchase Agreement are hereby deleted in their entirety:

“LIBOR”; “Early Opt-In Election”

2.           The following definitions in Section 2 of the Repurchase Agreement are hereby amended and restated in their entirety as follows:

“Available Tenor” means, as of any date of determination and with respect to the then-current Benchmark, any tenor for such Benchmark or payment period for price differential calculated with reference to such Benchmark, as applicable, that is or may be used for determining the length of a Pricing Period pursuant to this Agreement as of such date.

“Benchmark” means, initially, Term SOFR; provided that, if a Benchmark Transition Event and the Benchmark Replacement Date with respect thereto have occurred with respect to the Term SOFR Reference Rate or the then-current Benchmark, then “Benchmark” means the applicable Benchmark Replacement to the extent such Benchmark Replacement has replaced such Benchmark pursuant to Section 3(l).

“Benchmark Replacement” means, for any Available Tenor, the first alternative set forth in the order below that can be determined by the Buyer on the applicable Benchmark Replacement Date:


 (1)
the sum of: (a) either of (i) Compounded SOFR or (ii) Daily Simple SOFR, as selected by the Buyer to be the then-prevailing market convention for determining a benchmark rate as a replacement for the then-current Benchmark for the applicable loan market and (b) the applicable Benchmark Replacement Adjustment;


(2)
the sum of: (a) the alternate rate of interest that has been selected or recommended by the Relevant Governmental Body as the replacement for the then-current Benchmark for the applicable Corresponding Tenor and (b) the Benchmark Replacement Adjustment; or


(3)
the sum of: (a) the alternate rate of interest that has been selected by the Buyer as the replacement for the then-current Benchmark for the applicable Corresponding Tenor in accordance with any industry-accepted rate of interest as a replacement for the then-current Benchmark for U.S . dollar denominated secured financings or securitizations relating to the relevant asset class, as applicable at such time and (b) the Benchmark Replacement Adjustment;

provided that, in each case, the alternative selected shall be consistent with the alternative selected by the Buyer in its commercial real estate mortgage loan repurchase facilities with similarly situated counterparties.  If at any time the Benchmark Replacement as determined pursuant to this definition would be less than the Floor, the Benchmark Replacement will be deemed to be the Floor for the purposes of this Agreement.

“Benchmark Replacement Adjustment” means the first alternative set forth in the order below that can be determined by Buyer as of the Benchmark Replacement Date:


 (1)
the spread adjustment, or method for calculating or determining such spread adjustment, (which may be a positive or negative value or zero) that has been selected, endorsed or recommended by the Relevant Governmental Body for the applicable Unadjusted Benchmark Replacement; or


(2)
the spread adjustment (which may be a positive or negative value or zero) that has been selected by the Buyer giving due consideration to any industry-accepted spread adjustment, or method for calculating or determining such spread adjustment, for the replacement of the then-current Benchmark with the applicable Unadjusted Benchmark Replacement for U.S. dollar denominated secured financing or securitization transactions relating to the relevant asset class, as applicable at such time;

provided that, in each case, the alternative selected shall be consistent with the alternative selected by the Buyer in its commercial real estate mortgage loan repurchase facilities with similarly situated counterparties.

“Benchmark Replacement Conforming Changes” means, with respect to the use or administration of Term SOFR or any Benchmark Replacement, any technical, administrative or operational changes (including but not limited to changes to the definition of “Business Day”, the definition of “Pricing Period,” timing and frequency of determining rates and making payments of price differential, timing of Transaction requests or prepayment, conversion or continuation notices, length of lookback periods, the applicability of breakage provisions, and other technical, administrative or operational matters) that the Buyer decides may be appropriate to reflect the adoption and implementation of such Benchmark Replacement and to permit the administration thereof by the Buyer in a manner substantially consistent with market practice for repurchase facilities or similar structured finance arrangements involving counterparties of similar size, credit quality and market reputation as the Seller (or, if the Buyer decides that adoption of any portion of such market practice is not administratively feasible or if the Buyer determines that no market practice for the administration of such Benchmark Replacement exists, in such other manner of administration as the Buyer determines is reasonably necessary in connection with the administration of this Agreement); provided that the technical, administrative or operational changes shall be consistent with the technical, administrative or operational changes selected by the Buyer in its commercial real estate mortgage loan repurchase facilities with similarly situated counterparties.

“Benchmark Replacement Date” means the earliest to occur of the following events with respect to the then-current Benchmark or if the then current Benchmark is Term SOFR, with respect to the Term SOFR Reference Rate:


 (1)
in the case of clause (1) or (2) of the definition of “Benchmark Transition Event,” the later of (a) the date of the public statement or publication of information referenced therein and (b) the date on which the administrator of such Benchmark (or the published component used in the calculation thereof) permanently or indefinitely ceases to provide all Available Tenors of such Benchmark (or such component thereof); or


(2)
in the case of clause (3) of the definition of “Benchmark Transition Event,” the date of the public statement or publication of information referenced therein.

For the avoidance of doubt, (i) if the event giving rise to the Benchmark Replacement Date occurs on the same day as, but earlier than, the Reference Time in respect of any determination, the Benchmark Replacement Date will be deemed to have occurred prior to the Reference Time for such determination and (ii) the “Benchmark Replacement Date” will be deemed to have occurred in the case of clause (1) or (2) with respect to any Benchmark upon the occurrence of the applicable event or events set forth therein with respect to all then-current Available Tenors of such Benchmark (or the published component used in the calculation thereof).

“Benchmark Transition Event” means the occurrence of one or more of the following events with respect to the then-current Benchmark:


 (1)
a public statement or publication of information by or on behalf of the administrator of such Benchmark (or the published component used in the calculation thereof) announcing that such administrator has ceased or will cease to provide all Available Tenors of such Benchmark (or such component thereof), permanently or indefinitely, provided that, at the time of such statement or publication, there is no successor administrator that will continue to provide any Available Tenor of such Benchmark (or such component thereof);


(2)
a public statement or publication of information by the regulatory supervisor for the administrator of such Benchmark (or the published component used in the calculation thereof), the Board of Governors of the Federal Reserve System, the Federal Reserve Bank of New York, an insolvency official with jurisdiction over the administrator for such Benchmark (or such component), a resolution authority with jurisdiction over the administrator for such Benchmark (or such component) or a court or an entity with similar insolvency or resolution authority over the administrator for such Benchmark (or such component), which states that the administrator of such Benchmark (or such component) has ceased or will cease to provide all Available Tenors of such Benchmark (or such component thereof) permanently or indefinitely, provided that, at the time of such statement or



publication, there is no successor administrator that will continue to provide any Available Tenor of such Benchmark (or such component thereof); or


(3)
a public statement or publication of information by the regulatory supervisor for the administrator of such Benchmark (or the published component used in the calculation thereof) announcing that all Available Tenors of such Benchmark (or such component thereof) are no longer representative.

For the avoidance of doubt, a “Benchmark Transition Event” will be deemed to have occurred with respect to any Benchmark if a public statement or publication of information set forth above has occurred with respect to each then-current Available Tenor of such Benchmark (or the published component used in the calculation thereof).

“Compounded SOFR” means the compounded average of SOFRs for the applicable Corresponding Tenor, with the rate, or methodology for this rate, and conventions for this rate (which, for example, may be compounded in arrears with a lookback and/or suspension period as a mechanism to determine the interest amount payable prior to the end of each Pricing Period or compounded in advance) being established by the Buyer in accordance with:


 (1)
the rate or methodology for this rate, and conventions for this rate selected or recommended by the Relevant Governmental Body for determining compounded SOFR; provided that:


(2)
if, and to the extent that, the Buyer determines that Compounded SOFR cannot be determined in accordance with clause (1) above, then the rate, or methodology for this rate, and conventions for this rate that have been selected by the Buyer giving due consideration to any industry-accepted market practice for similar U.S. dollar denominated secured financing or securitization transactions relating to the relevant asset class, as applicable at such time.

“Corresponding Tenor” with respect to any Available Tenor means, as applicable, either a tenor (including overnight) or a price differential payment period having approximately the same length (disregarding business day adjustment) as such Available Tenor.

“Daily Simple SOFR” means, for any day, SOFR, with the conventions for this rate (which may include a lookback) being established by the Buyer in accordance with the conventions for this rate selected or recommended by the Relevant Governmental Body for determining “Daily Simple SOFR” for business loans at such times; provided that, if the Buyer decides that any such convention is not administratively feasible, then the Buyer may establish another convention in its reasonable discretion.

“Floor” means zero basis points (0.0%).

“Reference Time” with respect to any setting of the then-current Benchmark means (1) if such Benchmark is Term SOFR, the time set forth in the definition of Term SOFR, and (2) if

such Benchmark not Term SOFR, the time determined by Buyer in accordance with the Benchmark Replacement Conforming Changes.

“Relevant Governmental Body” means the Board of Governors of the Federal Reserve System or the Federal Reserve Bank of New York, or a committee officially endorsed or convened by the Board of Governors of the Federal Reserve System or the Federal Reserve Bank of New York, or any successor thereto.

“Term SOFR” means, with respect to any advance of a Purchase Price or Future Advance Purchase for any day, the Term SOFR Reference Rate for a tenor comparable to the applicable Pricing Period on the day (such day, the “Term SOFR Determination Day”) that is two (2) U.S. Government Securities Business Days prior to the first day of such Pricing Period, as such rate is published by the Term SOFR Administrator for such day at 6:00 a.m. (New York City time); provided, however, that if as of 5:00 p.m. (New York City time) on any Term SOFR Determination Day the Term SOFR Reference Rate for the foregoing tenor has not been published by the Term SOFR Administrator and a Benchmark Replacement Date with respect to the Term SOFR Reference Rate has not occurred, then Term SOFR will be the Term SOFR Reference Rate for such tenor as published by the Term SOFR Administrator on the first preceding U.S. Government Securities Business Day for which such Term SOFR Reference Rate for such tenor was published by the Term SOFR Administrator so long as such first preceding U.S. Government Securities Business Day is not more than three (3) U.S. Government Securities Business Days prior to such Term SOFR Determination Day; provided, further, that if Term SOFR determined as provided above shall be less than the Floor, then Term SOFR shall be deemed to be the Floor.

“Unadjusted Benchmark Replacement” means the applicable Benchmark Replacement excluding the Benchmark Replacement Adjustment with respect thereto.

3.           The following definitions are hereby added to Section 2 of the Repurchase Agreement.

“Federal Funds Rate” means, for any day, an interest rate per annum equal to the weighted average of the rates on overnight federal funds transactions with members of the Federal Reserve Bank of New York arranged by federal funds brokers on such day, as published on the next succeeding Business Day by the Federal Reserve Bank of New York, or, if such rate is not so published for any day that is a Business Day, the average of the quotations at approximately 10:00 a.m. (New York time) on such day on such transactions received by Buyer from three federal funds brokers of recognized standing selected by Buyer in its sole discretion.

“Term SOFR Administrator” means CME Group Benchmark Administration Limited (CBA) (or a successor administrator of the Term SOFR Reference Rate selected by the Buyer in its reasonable discretion).
 
“Term SOFR Reference Rate” means the forward-looking term rate based on SOFR.
 
“Term SOFR Determination Day” shall have the meaning set forth in the definition of Term SOFR in this Agreement.
 
“U.S. Government Securities Business Day” means any day except for (a) a Saturday, (b) a Sunday or (c) a day on which the Securities Industry and Financial Markets Association recommends that the fixed income departments of its members be closed for the entire day for purposes of trading in United States government securities.

4.           Section 3(l) of the Repurchase Agreement is hereby deleted and the following is inserted in lieu thereof:

“(l)       Notwithstanding anything to the contrary herein or in any other Transaction Document, if a Benchmark Transition Event and a Benchmark Replacement Date with respect thereto have occurred prior to the Reference Time in connection with any setting of the then-current Benchmark, then such Benchmark Replacement will replace the then-current Benchmark for all purposes under this Agreement and under any other Transaction Document in respect of such Benchmark setting and subsequent Benchmark settings without requiring any amendment to, or requiring any further action by or consent of any other party to, this Agreement or any other Transaction Document.  Notwithstanding the foregoing, in the event that Buyer shall have determined (which determination shall be conclusive and binding upon Seller absent manifest error) that by reason of circumstances affecting the relevant market or otherwise, (i) adequate and reasonable means do not exist for ascertaining the applicable Benchmark, but a Benchmark Transition Event (as provided in the definition of Benchmark Transition Event as set forth herein) has not yet occurred or (ii) the Benchmark does not fairly and accurately reflect the costs to Buyer of effecting or maintaining the Transactions, then Buyer shall give written notice to Seller as soon as practicable thereafter.    If such notice is given, the Pricing Rate with respect to all outstanding Transactions, until such notice has been withdrawn by Buyer, shall be a per annum rate equal to the sum of i. the Federal Funds Rate, plus ii. 0.25%, plus iii. the Applicable Spread.”
 
5.           Section 3(m) of the Repurchase Agreement is hereby deleted and the following is inserted in lieu thereof:

“(m)      In connection with the implementation and administration of a Benchmark Replacement, Buyer will have the right to make Benchmark Replacement Conforming Changes from time to time and, notwithstanding anything to the contrary herein or in any other Transaction Document, any amendments implementing such Benchmark Replacement Conforming Changes will become effective without requiring any further action by or consent of any other party to this Agreement or any other Transaction Document.  Buyer will promptly notify Seller of (A) any occurrence of (i) a Benchmark Transition Event and (ii) the Benchmark Replacement Date with respect thereto, (B) the implementation of any Benchmark Replacement, and (C) the effectiveness of any Benchmark Replacement Conforming Changes.  Any determination, decision or election that may be made by Buyer pursuant to Section 3(k) or this Section 3(l), including any determination with respect to a tenor, rate or adjustment or of the occurrence or non-occurrence of an event, circumstance or date and any decision to take or refrain from taking any action or any selection, will be conclusive and binding absent manifest error and may be made in the sole discretion of Buyer and without consent from Seller or any other party to any other Transaction Document.”

6.           Section 3(t) of the Repurchase Agreement is hereby deleted and the following is inserted in lieu thereof:

“(t)   If (1) any of the events described in Section 3(l), Section 3(o), Section 3(p) or Section 3(q) result in Buyer’s request for additional amounts, or (2) the conversion to a Benchmark Replacement pursuant to Exhibit A of that certain Eighth Omnibus Amendment dated as of February 15, 2022 by and between Seller and Buyer occurs (unless Seller has consented to such Benchmark Replacement and related Benchmark Replacement Adjustment, if any, at the time of such conversion), then, in each such case, Seller shall have the option to notify Buyer in writing of its intent to terminate all of the Transactions and this Agreement and repurchase all of the Purchased Assets no later than five (5) Business Days after such notice is given to Buyer, and such repurchase by Seller shall be conducted pursuant to and in accordance with Section 3(i). The election by Seller to terminate the Transactions in accordance with this Section 3(t) shall not, with respect to Section 3(t)(1), relieve Seller for liability with respect to any additional amounts or increased costs actually incurred by Buyer prior to the actual repurchase of the Purchased Assets. Notwithstanding anything to the contrary herein, no Exit Fee shall be payable in connection with any such repurchase.”



Exhibit 31.1
CERTIFICATION OF CHIEF EXECUTIVE OFFICER

I, Matthew A. Salem, certify that:
    
1.I have reviewed this Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2022 of KKR Real Estate Finance Trust Inc.;

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a.Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b.Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c.Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d.Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
    
5.The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a.All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b.Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

By:
/s/ Matthew A. Salem
 Matthew A. Salem
 Chief Executive Officer and Director
(Principal Executive Officer)
 April 25, 2022


Exhibit 31.2
CERTIFICATION OF CHIEF FINANCIAL OFFICER

I, Kendra L. Decious, certify that:
    
1.I have reviewed this Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2022 of KKR Real Estate Finance Trust Inc.;

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a.Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b.Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c.Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d.Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
    
5.The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a.All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b.Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

By:
/s/ Kendra L. Decious
 Kendra L. Decious
 Chief Financial Officer
 (Principal Financial Officer)
 April 25, 2022


Exhibit 32.1
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY
ACT OF 2002

In connection with the Quarterly Report on Form 10-Q of KKR Real Estate Finance Trust Inc. (the “Company”) for the quarterly period ended March 31, 2022 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Matthew A. Salem, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:
    
1.The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2.The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
 
By:
/s/ Matthew A. Salem
 Matthew A. Salem
 Chief Executive Officer and Director
 (Principal Executive Officer)

April 25, 2022

*    The foregoing certification is being furnished solely pursuant to 18 U.S.C. Section 1350 and is not being filed as part of the Report or as a separate disclosure document.





Exhibit 32.2
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY
ACT OF 2002

In connection with the Quarterly Report on Form 10-Q of KKR Real Estate Finance Trust Inc. (the “Company”) for the quarterly period ended March 31, 2022 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Kendra L. Decious, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:
    
1.The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2.The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
 
By:/s/ Kendra L. Decious
 Kendra L. Decious
 Chief Financial Officer
 (Principal Financial Officer)

April 25, 2022

*    The foregoing certification is being furnished solely pursuant to 18 U.S.C. Section 1350 and is not being filed as part of the Report or as a separate disclosure document.