FORM OF SHARE SUBSCRIPTION AGREEMENT by and between KKR FINANCIAL HOLDINGS LLC and the Party Signatory Hereto Dated as of August , 2007

EXHIBIT 10.1

FORM OF SHARE SUBSCRIPTION AGREEMENT

by and between
KKR FINANCIAL HOLDINGS LLC

and

the Party Signatory Hereto



Dated as of August     , 2007

Table of Contents

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        SHARE SUBSCRIPTION AGREEMENT dated as of August     , 2007 (this “ Agreement ”) between KKR Financial Holdings LLC, a Delaware limited liability company (the “ Company ”) and the party signatory hereto (the “ Purchaser ”).

BACKGROUND

        The Company has proposed to offer and sell Common Shares pursuant to a rights offering (the “ Rights Offering ”) whereby each holder of Common Shares as of August 30, 2007 (the “ Record Date ”), shall be offered 0.19430 non-transferable rights (for each Common Share held by such holder) (each, a “ Right ”, and collectively, the “ Rights ”) to receive, upon payment of the $14.40 per share subscription price, one Common Share.

        The Purchaser wishes to subscribe for and purchase, and the Company, desires to issue and sell, a certain portion of the Unsubscribed Shares (as defined below) (the “ Shares ”), on the terms and subject to the conditions set forth herein.

        In consideration of the mutual covenants and agreements contained in this Agreement, the receipt and sufficiency of which are herby acknowledged, the parties herby agree as follows:

ARTICLE I

THE SHARES

        The Shares shall be issued to the Purchaser pursuant to Article II hereof and shall be subject to the terms and provisions of the Amended and Restated Operating Agreement of the Company, dated as of May 3, 2007.

ARTICLE II

PURCHASE AND SALE

        Section 2.1     Purchase and Sale.     Upon the terms and subject to the conditions of this Agreement the Company agrees to issue and sell to the Purchaser and the Purchaser agrees to purchase from the Company the aggregate number of Common Shares equal to the product of (x) a total number of Common Shares equal to 18,750,000 minus the number of Common Shares subscribed for and purchased pursuant to the Rights Offering and purchased on or before September 24, 2007 (the “ Unsubscribed Shares ”) ( provided , that in no event shall the total number of Unsubscribed Shares set forth in this clause (x) exceed 6,944,444 Common Shares), which number shall be set forth in a Section 6.1 Notice (as defined below) and (y) the pro rata percentage (the “ Pro Rata Percentage ”), which percentage is calculated by dividing the numeral one by the total number of purchasers agreeing to acquire a portion of the Unsubscribed Shares on the date hereof or such other percentage that may otherwise be agreed to by the Company and each of the purchasers agreeing to acquire a portion of the Unsubscribed Shares on the date hereof; provided , that in no event shall the Purchaser acquire more than 1% of the outstanding Common Shares of the Company. Each such Common Share shall be purchased by the Purchaser for a purchase price equal to $14.40 per share (the “ Purchase Price ”).

        Section 2.2     Payment of Purchase Price; Closing.     The Company will deliver the Shares to the Purchaser, against payment by or on behalf of the Purchaser of the purchase price therefor (as set forth above in Section 2.1 ) by wire transfer in immediately available funds to the account designated by the Company on Annex A . The time and date of such delivery and payment shall be 9:30 a.m., New York City time, on October 2, 2007, or, if the Section 6.1 Notice is not delivered to the Purchaser on or before September 25, 2007, date of such delivery and payment shall be on the fifth New York

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Business Day (as defined below) following receipt of the Section 6.1 Notice by the Purchaser (such time being referred to herein as the “ Closing ”).

        The documents to be delivered at the Closing by or on behalf of the parties hereto pursuant to this Article II and any additional documents requested by the Purchaser pursuant to this Article II , will be delivered at the Closing at the offices of Simpson Thacher & Bartlett LLP, 425 Lexington Avenue, New York, New York 10017 (the “ Closing Location ”). A meeting will be held at the Closing Location at 4:00 p.m., New York City time, on the New York Business Day next preceding the Closing, at which meeting the final drafts of the documents to be delivered pursuant to the preceding sentence will be available for review by the parties hereto. For the purposes of this Section 2.2 , “ New York Business Day ” shall mean each Monday, Tuesday, Wednesday, Thursday and Friday which is not a day on which banking institutions in The City of New York are generally authorized or obligated by law or executive order to close.

ARTICLE III

REPRESENTATIONS AND WARRANTIES OF THE COMPANY

        The Company represents and warrants to the Purchaser as of the date hereof and as of the Closing that:

        Section 3.1     Existence and Power.     Each of the Company and its subsidiaries is duly organized and validly existing under the laws of the state of its organization and has all power and authority to own its property and assets and to transact the business in which it is engaged and presently proposes to engage. The Company has all power and authority to enter into and perform its obligations under this Agreement.

        Section 3.2     Capitalization.     All of the issued shares of capital stock of the Company have been duly and validly authorized and issued and are fully paid and non-assessable and were not issued in violation of any preemptive rights.

        Section 3.3     Authorization.     This Agreement has been duly authorized, executed and delivered by the Company. When executed and delivered by the Company and countersigned by the Purchaser, this Agreement shall constitute the legal, valid and binding obligation of the Company, enforceable against the Company in accordance with its terms, except as such may be limited by bankruptcy, insolvency, reorganization or other laws affecting creditors' rights generally and by general equitable principles.

        Section 3.4     Valid Issuance of Shares.     The Shares have been duly authorized and issued by the Company and, when delivered against payment therefor as provided in this Agreement, (a) will be validly issued, fully paid and nonassessable, (b) will not be subject to any encumbrances, preemptive rights or any other similar contractual rights of the stockholders of the Company or any other person, and (c) the Purchaser will obtain sole record and beneficial ownership of such Shares and take good and marketable title thereto, free and clear of any liens.

        Section 3.5     Non-Contravention/No Consents.     The issue and sale of the Shares, the execution, delivery and performance by the Company of this Agreement, and the compliance by the Company with all of the provisions of this Agreement and the consummation of the transactions herein and therein contemplated will not conflict with or result in a breach or violation of any of the terms or provisions of, or constitute a default under, any indenture, mortgage, deed of trust, loan agreement or other agreement or instrument to which the Company is a party or by which the Company is bound or to which any of the property or assets of the Company is subject, nor will such action result in any violation of the provisions of any of the organizational or governing documents of the Company or any statute, order, rule or regulation of any court or governmental agency or body having jurisdiction over the Company or any of its properties; and no consent, approval, authorization, order, registration or

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qualification of or with any such court or governmental agency or body is required for the issue and sale the Shares or the consummation by the Company of the transactions contemplated by this Agreement.

        Section 3.6     Registered Shares.     The Company has filed a registration statement under the Securities Act of 1933, as amended (the “ Securities Act ”) relating to the Shares with th