SUBSCRIPTION AGREEMENT

Exhibit 10.1

SUBSCRIPTION AGREEMENT

FOR INDIVIDUALS

KH FUNDING COMPANY COMMON STOCK

This Subscription Agreement is being furnished to KH Funding Company, a Maryland corporation (the “Corporation”), by the undersigned subscriber (the “Purchaser”) in connection with the proposed purchase by the Purchaser from the Corporation of ___________ shares (the “Shares”) of its common stock, par value $.01 per share (the “Common Stock”), at a price of $1.00 per share, or an aggregate purchase price of $_________ (the “Subscription Price”) in a private transaction, as described herein.

1.            Purchase .  The Purchaser hereby subscribes to purchase the Shares at the Subscription Price.  A check in the amount of the Subscription Price payable to the Corporation accompanies this Subscription Agreement.  Please deduct purchase price from my KH account # ___________.

2.            Acceptance or Rejection of Subscription .  The Corporation has the right to reject this subscription for the Shares for any reason.  In the event of the rejection of this subscription, this Subscription Agreement shall have no force or effect and the Corporation shall continue to be indebted to the Investor as described above.

(iii)                      The Investor represents and acknowledges that the Investor has had a reasonable opportunity, at a reasonable time prior to the Investor's investment in the Corporation, to ask questions of and receive answers from the Corporation or other representative of the Corporation concerning the terms and conditions of the offering of the Shares, and the Corporation and its operations, and all such questions have been answered to the Investor's full satisfaction.  The Investor further acknowledges that the Investor has had a reasonable opportunity to obtain any relevant information which the Corporation possesses or can acquire without unreasonable effort or expense.

(iv)                      The Investor represents and acknowledges that no oral representations have been made in connection with the offering of the Shares which are in any manner inconsistent with the materials that have been disclosed to the Investor.

(v)                 The Investor has neither relied upon nor seen any form of advertising or general or public solicitation, including communications published in or broadcasted by any print or electronic medium and mass mailings, in connection with the offering of the Shares, and are aware of no such solicitation or advertisement received by others.

(vi)                      The Investor is an “accredited investor” within the meaning of Rule 501 of Regulation D under the Securities Act of 1933, as amended (the “Securities Act”), and has checked the box(es) below which are next to the category or categories under which the Investor qualifies as an accredited investor:

A. ___ I certify that I am an accredited investor, as that term is defined in Rule 501(a) under the Securities Act (an “Accredited Investor”) because I have an individual net worth, or my spouse and I have a combined net worth, in excess of $1,000,000.  For purposes of this Subscription Agreement, “net worth” means the excess of total assets at fair market value, including home ¹ , home furnishings, and automobiles, over total liabilities.

B. ___  I certify that I am an Accredited Investor because I had individual income (exclusive of any income attributable to my spouse) of more than $200,000 in each of the last two years or joint income with my spouse in excess of $300,000 for each of those years, and I reasonably expect to reach the same income level in the current year.  For purposes of this Subscription Agreement, individual income means adjusted gross income, as reported for U.S. federal income tax purposes, less any income attributable to a spouse or to property owned by a spouse, increased by the following amounts (but not including any amounts attributable to a spouse or to property owned by a spouse):  (1) the amount of any tax-exempt interest income under Section 103 of the U.S. Internal Revenue Code of 1986 (the “Code”) received, (2) the amount of losses claimed as a limited partner in a limited partnership as reported on Schedule E of Form 1040, and (3) any deduction claimed for depletion under Section 611 et seq. of the Code.

(vii)                     The Investor, if a natural person, has his or her principal residence in the state listed on the signature page hereof, and has no present intention of changing such residence; and, if an entity, has its principal office in the state listed on the signature page hereof, and has no present intention of changing such principal office.

(viii)                    The Investor acknowledges that an investment in the Corporation involves a high degree of risk, and, having made Investor’s own evaluation of the risks associated with this investmen