KFN Kkr Financial Holdings Llc

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the

Securities Exchange Act of 1934

Date of Report (Date of earliest event reported):

June 27, 2014

KKR FINANCIAL HOLDINGS LLC

(Exact name of registrant as specified in its charter)

Registrant’s telephone number, including area code: (415) 315-3620

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

o                           Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o                           Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o                           Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o                           Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 1.01                   Entry into a Material Definitive Agreement.

On June 27, 2014, KKR Financial Holdings LLC (the “Company”) and KKR Financial Advisors LLC (the “Manager”) entered into a Third Amendment Agreement (the “Third Amendment Agreement”) to the Amended and Restated Management Agreement, dated as of May 4, 2007, by and between the Company and the Manager (the “Management Agreement”). The Company and the Manager are indirect subsidiaries of KKR & Co. L.P. (together with its subsidiaries, “KKR”). The Third Amendment Agreement amends certain provisions of the Management Agreement principally to reflect the Company’s status as an indirect subsidiary of KKR & Co. L.P. as of April 30, 2014.

The Third Amendment Agreement is attached to this Current Report as Exhibit 10.1 and is incorporated herein by reference.

Item 5.02                   Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.

On June 27, 2014, Craig J. Farr resigned as President and Chief Executive Officer of the Company, and the Company’s board of directors elected William J. Janetschek, 51, to succeed Mr. Farr in these roles effective as of such date. Mr. Janetschek also serves as a director of the Company. Mr. Janetschek joined KKR in 1997 and is the Chief Financial Officer of the managing partner of KKR & Co. L.P., the Company’s ultimate parent. Certain members of Mr. Janetschek’s immediate family have an indirect interest in $100,000 principal amount of the Company’s 8.375% senior notes due 2041, $300,000 principal amount of the Company’s 7.500% senior notes due 2042 and in each case the related payments of periodic interest.

Item 5.03                   Amendments to Articles of Incorporation or Bylaws; Change in Fiscal Year.

On June 27, 2014, the Company’s board of directors adopted an amendment (“Amendment No. 3”) to the Company’s Amended and Restated Operating Agreement (the “Operating Agreement”), which amends certain provisions of the Operating Agreement principally to reflect the Company’s status as an indirect subsidiary of KKR & Co. L.P. as of April 30, 2014.

Amendment No. 3 is attached to this Current Report as Exhibit 3.1 and is incorporated herein by reference.

Item 8.01                   Other Events.

On June 27, 2014, the Company’s board of directors declared a cash distribution of $0.460938 per share on the Company’s outstanding 7.375% Series A LLC Preferred Shares (the “Preferred Shares”). The distribution is payable on July 15, 2014 to holders of record of Preferred Shares as of the close of business on July 8, 2014.

Item 9.01                   Financial Statements and Exhibits.

(d) Exhibits

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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 hereunto duly authorized.

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EXHIBIT INDEX

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Exhibit 3.1

AMENDMENT NO. 3
TO THE
AMENDED AND RESTATED
OPERATING AGREEMENT
OF
KKR FINANCIAL HOLDINGS LLC

This Amendment No. 3 (this “Amendment”) to the Amended and Restated Operating Agreement of KKR Financial Holdings LLC, a Delaware limited liability company (the “Company”), is made as of June 27, 2014. Capitalized terms used herein and not otherwise defined are used as defined in the Current Agreement (as defined below).

WHEREAS, the Company was formed pursuant to (i) the Certificate of Formation of the Company, dated January 17, 2007, as filed in the office of the Secretary of State of the State of Delaware on January 17, 2007, and (ii) the Operating Agreement of the Company, dated as of January 17, 2007 (the “Original Agreement”);

WHEREAS, the Original Agreement was amended and restated pursuant to the Amended and Restated Operating Agreement of the Company, dated as of May 3, 2007, as amended effective March 24, 2009, and was further amended by (i) Amendment No. 1 to the Amended and Restated Operating Agreement, dated as of February 28, 2010, (ii) Amendment No. 2 to the Amended and Restated Operating Agreement, dated as of January 10, 2013, and (iii) the Share Designation of the 7.375% Series A LLC Preferred Shares, dated as of January 17, 2013 (as so amended, the “Current Agreement”);

WHEREAS, the board of directors of the Company (the “Board”), pursuant to Article 18 of the Current Agreement, has the authority to amend the Current Agreement as specified in this Amendment upon affirmative vote of the majority of the Board; and

WHEREAS, a committee of Independent Directors (as defined in the Current Agreement), empowered to act on behalf of the Board, has approved this Amendment.

NOW, THEREFORE, in consideration of the premises set forth in this Amendment, the Current Agreement is hereby amended as follows:

I.             AMENDMENTS.

A.            Section 6.5 of the Current Agreement is hereby amended by deleting the first sentence thereof.

B.            Section 6.13 of the Current Agreement is hereby amended and restated in its entirety to read as follows:

“Section 6.13  Voting.  The action of the majority of the Directors (which majority must include at least one Director who was appointed as a Director pursuant to the terms of the Management Agreement, unless the Board of Directors delegates such matter to a committee composed entirely of Independent Directors) present at a meeting at which a quorum is present shall be the action of the Board of Directors, unless the concurrence of a greater proportion is required for such action by the Act or this Agreement. If enough Directors have withdrawn from a meeting to leave less than a quorum but the meeting is not adjourned, the action of the majority of that number of

Directors necessary to constitute a quorum at such meeting (which majority must include at least one Director who was appointed as a Director pursuant to the terms of the Management Agreement, unless the Board of Directors delegates such matter to a committee composed entirely of Independent Directors) shall be the action of the Board of Directors, unless the concurrence of a greater proportion is required for such action by the Act or this Agreement.”

C.            Section 7.1(a) of the Current Agreement is hereby amended by replacing “shall” in the fourth sentence thereof with “may”.

D.            Section 7.12 of the Current Agreement is hereby amended by replacing “shall render” in the second paragraph thereof with “shall, upon the request of the Board of Directors, render”.

E.            Section 9.2 of the Current Agreement is hereby amended by replacing “shall” with “may” and inserting the following words at the end thereof:

“and shall be held for the holders of Preferred Shares to the extent that the holders of such Preferred Shares have the right to elect one or more Directors to the Board of Directors.”

F.             Section 9.3 of the Current Agreement is hereby amended by deleting “, in each case pursuant to Regulation 14A (or any successor provision) under the Exchange Act” in the second sentence of clause (1) thereof.

G.            Section 9.5 of the Current Agreement is hereby amended by inserting “unless waived by each Member entitled to vote at such meeting,” immediately following “Not less than ten nor more than 90 days before each meeting of Members,”.

H.            Section 9.6 of the Current Agreement is hereby amended by inserting “unless waived by each Member entitled to vote at such meeting,” immediately following “in the case of a meeting of Members,” in the second sentence of the first paragraph thereof.

I.             Section 13.1(a) of the Current Agreement is hereby amended and restated in its entirety to read as follows:

“(a)         The Company (i) shall indemnify, to the fullest extent permitted by law, each Person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative (other than an action by or in the right of the Company), by reason of the fact that the Person is or was a Director, officer or Tax Matters Member of the Company, and (ii) may indemnify, to the fullest extent permitted by law, each Person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative (other than an action by or in the right of the Company), by reason of the fact that the Person is or was an employee or agent of the Company, or is or was serving at the request of the Company as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, in each case for clauses (i) and (ii) against expenses (including attorneys’ fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by the Person in connection with such action, suit or proceeding, if the Person acted in good faith and in a manner the Person reasonably

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believed to be in or not opposed to the best interests of the Company, and, with respect to any criminal action or proceeding, had no reasonable cause to believe the Person’s conduct was unlawful. The termination of any action, suit or proceeding by judgment, order, settlement, conviction, or upon a plea of nolo contendere or its equivalent, shall not, of itself, create a presumption that the Person did not act in good faith and in a manner which the Person reasonably believed to be in or not opposed to the best interests of the Company, and, with respect to any criminal action or proceeding, had reasonable cause to believe that the Person’s conduct was unlawful.

The Company (i) shall indemnify, to the fullest extent permitted by law, any Person who was or is a party or is threatened to be made a party to any threatened, pending or completed action or suit by or in the right of the Company to procure a judgment in its favor by reason of the fact that the Person is or was a Director, officer, or Tax Matters Member of the Company, and (ii) may indemnify, to the fullest extent permitted by law, any Person who was or is a party or is threatened to be made a party to any threatened, pending or completed action or suit by or in the right of the Company to procure a judgment in its favor by reason of the fact that the Person is or was an employee or agent of the Company, or is or was serving at the request of the Company as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, in each case for clauses (i) and (ii) against expenses (including attorneys’ fees) actually and reasonably incurred by the Person in connection with the defense or settlement of such action or suit if the Person acted in good faith and in a manner the Person reasonably believed to be in or not opposed to the best interests of the Company and except that no indemnification shall be made in respect of any claim, issue or matter as to which such Person shall have been adjudged to be liable to the Company unless and only to the extent that the Court of Chancery of the State of Delaware or the court in which such action or suit was brought shall determine upon application that, despite the adjudication of liability but in view of all the circumstances of the case, such Person is fairly and reasonably entitled to indemnity for such expenses which the Court of Chancery of the State of Delaware or such other court shall deem proper.

Each of the Persons entitled to be indemnified for expenses and liabilities as contemplated above may, in the performance of his, her or its duties, consult with legal counsel and accountants, and any act or omission by such Person on behalf of the Company in furtherance of the interests of the Company in good faith in reliance upon, and in accordance with, the advice of such legal counsel or accountants will be full justification for any such act or omission, and such Person will be fully protected for such acts and omissions; provided that such legal counsel or accountants were selected with reasonable care by or on behalf of the Company.”

II.            MISCELLANEOUS

A.            Full Force and Effect.  Except to the extent modified hereby, the Current Agreement shall remain in full force and effect.

B.            Governing Law.  This Amendment shall be interpreted in accordance with the laws of the State of Delaware (without regard to conflict of laws principles), all rights and remedies being governed by such laws.

[Signature Page Follows]

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IN WITNESS WHEREOF, the undersigned has caused this Amendment to be duly executed as of the day and year first above written.

[Signature Page to Amendment No. 3 to Operating Agreement]

Exhibit 10.1

THIRD AMENDMENT AGREEMENT

THIS THIRD AMENDMENT AGREEMENT (this “Third Amendment Agreement”) is entered into this 27th day of June, 2014 between KKR Financial Holdings LLC, a Delaware limited liability company (the “Company”), and KKR Financial Advisors LLC, a Delaware limited liability company (together with its permitted assignees, the “Manager”).

W I T N E S S E T H:

WHEREAS, the Company and the Manager are parties to an Amended and Restated Management Agreement, dated as of May 4, 2007, as amended pursuant to the First Amendment Agreement, dated as of June 15, 2007 and the Second Amendment Agreement, dated as of February 27, 2013 (as so amended, the “Management Agreement”); and

WHEREAS, this Third Amendment Agreement has been approved by a committee of the Company’s Independent Directors (as defined in the Operating Agreement of the Company).

NOW, THEREFORE, in consideration of the foregoing and the mutual covenants and agreements herein contained and other good and valuable consideration, the receipt, adequacy and sufficiency of which are hereby acknowledged, the parties hereto hereby agree as follows (all capitalized terms used but not defined herein shall have the meanings specified in the Management Agreement):

SECTION 1.         AMENDMENTS TO THE MANAGEMENT AGREEMENT.

(a)   Section 1(b) of the Management Agreement is hereby amended by (i) deleting the reference to “monthly” and replacing it with “quarterly” and deleting the reference to “1/12” and replacing it with “1/4”.

(b)   Section  1(f) of the Management Agreement is hereby amended by deleting each reference to “month” and replacing it with “quarter”.

(c)   Section 2(b) of the Management Agreement is hereby amended by deleting the reference to “a majority of the Independent Directors” in clause (i) thereof and replacing it with “the Board of Directors”.

(d)   Section 2(c) of the Management Agreement is hereby amended by deleting the entirety of the proviso thereof beginning with “; provided that (i) any such agreements entered into” through “subject to the Company’s prior written approval.” and replacing it with “; provided that any such agreements entered into with affiliates of the Manager shall be approved by a majority of the Independent Directors.”

(e)   Section 2(e) of the Management Agreement is hereby amended by deleting the second reference to “Company” and replacing it with “Board of Directors”.

(f)    Section 2(g) of the Management Agreement is hereby amended and restated in its entirety to read as follows:

“The Manager shall prepare reports, to the extent requested by the Board of Directors, to enable the Board of Directors to review the Company’s acquisitions, portfolio composition and characteristics, credit quality, performance and compliance with the Guidelines and policies approved by the Board of Directors.”

(g)   Section 3(a) of the Management Agreement is hereby amended by deleting the last sentence thereof.

(h)   Section 3(b) of the Management Agreement is hereby amended by deleting the first sentence thereof.

(i)    Section 3(c) of the Management Agreement is hereby amended by deleting the reference to “clauses (a) and (b)” and replacing it with “clause (a)”.

(j)    Section 7(c) of the Management Agreement is hereby amended and restated in its entirety to read as follows:

“The Manager shall not (i) consummate any transaction which would involve the acquisition by the Company of an asset in which the Manager or any affiliate thereof has an ownership interest or the sale by the Company of an asset to the Manager or any affiliate thereof, or (ii) under circumstances where the Manager is subject to an actual or potential conflict of interest, in the reasonable judgment of the Manager, because it manages both the Company and another Person (not an affiliate of the Company) with which the Company has a contractual relationship, take any action constituting the granting to such Person of a waiver, forbearance or other relief, or the enforcement against such Person of remedies, under or with respect to the applicable contract, unless the Independent Directors have been notified of such transaction or action, as the case may be and in each case, and such transaction or action is consummated or taken, as the case may be, within the parameters, if any, that have been approved by a majority of the Independent Directors.”

(k)   Section 7(d) of the Management Agreement is hereby amended and restated in its entirety to read as follows:

“The Board of Directors periodically reviews the Guidelines and the Company’s portfolio of Investments but will not review each proposed investment, except as otherwise provided herein. If the Board of Directors determines in its periodic review of transactions that a particular transaction does not comply with the Guidelines (including as a result of violation of the provisions of Section 7(c) above), then the Board of Directors will consider what corrective action, if any, can be taken. The Manager shall be permitted to rely upon the direction of the Secretary of the Company to evidence the approval of the Board of Directors with respect to a proposed investment.”

(l)    Section 8(a) of the Management Agreement is hereby amended by deleting the reference to “monthly” and replacing it with “quarterly”.

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(m)  Section 8(b) of the Management Agreement is hereby amended by (i) deleting each reference to “month” and replacing it with “quarter” and (ii) deleting each reference to “fifteen (15) business days” or “twenty (20) business days” and replacing it with “forty-five (45) calendar days”.

(n)   Section 8(e) of the Management Agreement is hereby amended by deleting the reference to “30” and replacing it with “45”.

(o)   Section 10 of the Management Agreement is hereby amended by (i) deleting each reference to “month” and replacing it with “quarter” and (ii) deleting the reference to “20” and replacing it with “45”.

(p)   Section 14(a) of the Agreement is hereby amended by deleting the phrase “an entity whose day-to-day business and operations are managed and supervised by Messrs. Fanlo and Netjes (collectively, the “Principals”)” and replacing it with “an affiliate of the Manager”.

SECTION 2.         MISCELLANEOUS.  This Third Amendment Agreement may be executed in one or more counterparts, all of which shall be considered one and the same agreement and shall become effective when one or more counterparts have been signed by each of the parties hereto and delivered to the other parties hereto.  This Third Amendment Agreement may be executed by facsimile signature.

SECTION 3.         GOVERNING LAW.  This Third Amendment Agreement and the rights and obligations of the parties hereunder shall be governed by, and construed and interpreted in accordance with, the law of the State of New York.

[Remainder of page intentionally left blank.]

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

[Signature Page to Third Amendment Agreement]