Exhibit 10.5

RESTRICTED SHARE AWARD AGREEMENT

THIS AGREEMENT (the “Agreement”) is made, effective as of the <<DATE>>  (the
“Date of Grant”), between KKR Financial Holdings LLC, a Delaware limited
liability company (hereinafter called the “Company”), <<NAME>> (hereinafter
called the “Participant”).

R E C I T A L S:

WHEREAS, the Company has adopted the 2007 Share Incentive Plan for KKR Financial
Holdings LLC (the “Plan”), which Plan is incorporated herein by reference and
made a part of this Agreement; capitalized terms not otherwise defined herein
shall have the same meanings as in the Plan; and

WHEREAS, the Committee has determined that it would be in the best interests of
the Company and its Members to grant the restricted share award provided for
herein to the Participant pursuant to the Plan and the terms set forth herein.

NOW THEREFORE, in consideration of the mutual covenants hereinafter set forth,
the parties hereto agree as follows:

1.             Grant of the Restricted Shares.  Subject to the terms and
conditions of the Plan and the additional terms and conditions set forth in this
Agreement, the Company hereby grants to the Participant a restricted share award
(the “Restricted Share Award”) consisting of <<NUMBER>> Shares (hereinafter
called the “Restricted Shares”).  The Restricted Shares shall vest and become
nonforfeitable in accordance with Section 2 hereof.

2.             Vesting.

(a)           Subject to the Participant’s continued service with the Company
and its Affiliates, the Restricted Shares shall vest and become nonforfeitable
with respect to one-third of the Shares initially granted hereunder on each of
the first, second and third anniversaries of the Date of Grant.  Notwithstanding
the foregoing, in the event the above vesting schedule results in the vesting of
any fractional Shares, such fractional Shares shall not be deemed vested
hereunder but shall vest and become nonforfeitable when such fractional Shares
aggregate whole Shares.

(b)           If the Participant’s service with the Company and its Affiliates
terminates or is terminated for any reason, the Restricted Shares shall, to the
extent not then vested, be forfeited by the Participant without consideration;
provided that in the event the Participant’s service with the Company and its
Affiliates is terminated by the Company other than for Cause (as defined in the
Management Agreement), including non-renewal of the Management Agreement by the
Company, or by the Manager pursuant to Section 15 of the Management Agreement,
the Restricted Shares shall, to the extent not then vested and not previously
forfeited, immediately become fully vested.

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(c)           Notwithstanding any other provision of this Agreement to the
contrary, in the event a Change in Control occurs during the period the
Participant is providing services to the Company and its Affiliates, the
Restricted Shares shall, to the extent not then vested and not previously
forfeited, immediately become fully vested, subject to Section 9(b) of the Plan.

(d)           For purposes of this Agreement, “service” means service provided
by the Participant to the Company and its Affiliates pursuant to the terms of
the Management Agreement.

3.             Certificates.  Certificates evidencing the Restricted Shares
shall be issued by the Company and shall be registered in the Participant’s name
on the share transfer books of the Company promptly after the date hereof, but
shall remain in the physical custody of the Company or its designee at all times
prior to the vesting of such Restricted Shares pursuant to Section 2.  As a
condition to the receipt of this Restricted Share Award, the Participant shall
deliver to the Company a share power, duly endorsed in blank, relating to the
Restricted Shares. No certificates shall be issued for fractional Shares.

4.             Rights as a Member.  The Participant shall be the record owner of
the Restricted Shares until or unless such Restricted Shares are forfeited
pursuant to Section 2 hereof, and as record owner shall be entitled to all
rights of a member of the Company, including, without limitation, voting rights
with respect to the Restricted Shares and the Participant shall receive, when
paid, any dividends or distributions on all of the Restricted Shares granted
hereunder as to which the Participant is the record holder on the applicable
record date; provided that the Restricted Shares shall be subject to the
limitations on transfer and encumbrance set forth in Section 7. As soon as
practicable following the vesting of any Restricted Shares pursuant to
Section 2, certificates for the Restricted Shares which shall have vested shall
be delivered to the Participant along with the share powers relating thereto.

5.             Legend on Certificates.  The certificates representing the vested
Restricted Shares delivered to the Participant shall be subject to such stop
transfer orders and other restrictions as the Committee may deem advisable under
the Plan or the rules, regulations, and other requirements of the Securities and
Exchange Commission, any stock exchange upon which such Shares are listed, and
any applicable Federal or state laws, and the Committee may cause a legend or
legends to be put on any such certificates to make appropriate reference to such
restrictions.

6.             No Right to Continued Service.  The granting of the Restricted
Shares evidenced by this Agreement shall impose no obligation on the Company or
any Affiliate to continue the service of the Participant and shall not lessen or
affect the Company’s or any Affiliate’s right to terminate the service of such
Participant.

7.             Transferability.  The Restricted Shares may not, at any time
prior to becoming vested pursuant to Section 2, be assigned, alienated, pledged,
attached, sold or otherwise transferred or encumbered by the Participant and any
such purported assignment, alienation, pledge, attachment, sale, transfer or
encumbrance shall be void and unenforceable against the Company or any
Affiliate.  Notwithstanding the foregoing, subject to such terms and

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conditions as the Committee shall require in connection therewith, the
Participant may transfer all or part of the Restricted Share Award to an
employee of the Participant and other Persons who perform services for the
Company or its Affiliates (each, a “Permitted Transferee”); provided that the
Participant gives the Committee advance written notice describing the terms and
conditions of the proposed transfer and the Committee notifies the Participant
in writing that such transfer would comply with the requirements of the Plan,
this Agreement, and any other terms and conditions as the Committee shall
require in connection with such transfer.  The Company may issue replacement
Restricted Share Award agreements that reflect such transfer, and may require
the applicable Permitted Transferee to sign such agreement.  Unless otherwise
provided pursuant to a replacement Restricted Share Award agreement which
reflects such transfer, the terms of any Restricted Share Award so transferred
in accordance with the immediately preceding sentence shall apply to the
Permitted Transferee and any reference in the Plan or in this Agreement to the
Participant shall be deemed to refer to the Permitted Transferee, except that
(a) Permitted Transferees shall not be entitled to transfer any Restricted
Shares, other than by will or the laws of descent and distribution,
(b) Permitted Transferees shall not be entitled to receive any transferred
Restricted Shares unless there shall be in effect a registration statement on an
appropriate form covering the Shares if the Committee determines that such a
registration statement is necessary or appropriate, (c) the Committee or the
Company shall not be required to provide any notice to Permitted Transferees,
whether or not such notice is or would otherwise have been required to be given
to the Participant under the Plan or otherwise, and (d) the consequences of
termination of the Participant’s service with the Company and its Affiliates
under the terms of the Plan and this Agreement shall continue to be applied with
respect to the Participant and the Permitted Transferees.

8.             Withholding.  The Participant may be required to pay to the
Company or any Affiliate and the Company or any Affiliate shall have the right
and is hereby authorized to withhold, any applicable withholding taxes in
respect of the Restricted Shares, their grant or vesting or any payment or
transfer with respect to the Restricted Shares and to take such action as may be
necessary in the opinion of the Committee to satisfy all obligations for the
payment of such withholding taxes.  Without limiting the generality of the
foregoing, to the extent permitted by the Committee, the Participant may
satisfy, in whole or in part, the foregoing withholding liability by delivery of
Shares held by the Participant (which are fully vested and not subject to any
pledge or other security interest) or by having the Company withhold from the
number of Restricted Shares otherwise deliverable to the Participant hereunder
Restricted Shares with a Fair Market Value not in excess of the statutory
minimum withholding liability.

9.             Securities Laws.  Upon the vesting of any Restricted Shares, the
Participant will make or enter into such written representations, warranties and
agreements as the Committee may reasonably request in order to comply with
applicable securities laws or with this Agreement.

10.           Notices.  Any notice necessary under this Agreement shall be
addressed to the Company in care of its Secretary at the principal executive
office of the Company and to the Participant at the address appearing in the
corporate records of the Company for such Participant or to either party at such
other address as either party hereto may hereafter designate in writing to the
other.  Any such notice shall be deemed effective upon receipt thereof by the
addressee.

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11.           Choice of Law.  THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO CONFLICTS
OF LAWS.

12.           Restricted Share Award Subject to Plan.  By entering into this
Agreement the Participant agrees and acknowledges that the Participant has
received and read a copy of the Plan.  The Restricted Share Award and the
Restricted Shares granted hereunder are subject to the Plan.  The terms and
provisions of the Plan as it may be amended from time to time are hereby
incorporated herein by reference.  In the event of a conflict between any term
or provision contained herein and a term or provision of the Plan, the
applicable terms and provisions of the Plan will govern and prevail.

13.           Signature in Counterparts.  This Agreement may be signed in
counterparts, each of which shall be an original, with the same effect as if the
signatures thereto and hereto were upon the same instrument.

IN WITNESS WHEREOF, the parties hereto have executed this Agreement.

KKR FINANCIAL HOLDINGS LLC

 

 

 

By:

 

 

 

Name:

 

Title:

 

 

Agreed and acknowledged as of the date first

above written:

____________________

Name:

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