Exhibit 10.1

 

FORM OF

SHARE SUBSCRIPTION AGREEMENT

by and between

KKR FINANCIAL HOLDINGS LLC

and

the Party Signatory Hereto

Dated as of August 20, 2007

 

 

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Table of Contents

 

 

 

 

Page

 

 

 

ARTICLE I THE SHARES

 

1

 

 

 

ARTICLE II PURCHASE AND SALE

 

1

 

 

 

Section 2.1

 

Purchase and Sale

 

1

 

 

 

 

 

Section 2.2

 

Payment of Purchase Price; Closing

 

1

 

 

 

 

 

ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE COMPANY

 

2

 

 

 

Section 3.1

 

Existence and Power

 

2

 

 

 

 

 

Section 3.2

 

Capitalization

 

2

 

 

 

 

 

Section 3.3

 

Authorization

 

2

 

 

 

 

 

Section 3.4

 

Valid Issuance of Shares

 

2

 

 

 

 

 

Section 3.5

 

Non-Contravention/No Consents

 

2

 

 

 

 

 

Section 3.6

 

Registered Shares

 

3

 

 

 

 

 

Section 3.7

 

Periodic Filings; Financial Statements

 

3

 

 

 

 

 

ARTICLE IV REPRESENTATIONS AND WARRANTIES OF PURCHASER

 

3

 

 

 

Section 4.1

 

Existence and Power

 

3

 

 

 

 

 

Section 4.2

 

Authorization

 

4

 

 

 

 

 

Section 4.3

 

Governmental Authorization

 

4

 

 

 

 

 

Section 4.4

 

Non-Contravention

 

4

 

 

 

 

 

Section 4.5

 

No Brokers

 

4

 

 

 

 

 

Section 4.6

 

Reliance

 

4

 

 

 

 

 

ARTICLE V CONDITIONS TO CLOSING

 

4

 

 

 

Section 5.1

 

Conditions to the Obligations of the Company

 

4

 

 

 

 

 

Section 5.2

 

Conditions to the Obligations of the Purchaser

 

4

 

 

 

 

 

ARTICLE VI MISCELLANEOUS

 

5

 

 

 

Section 6.1

 

Transfers

 

5

 

 

 

 

 

Section 6.2

 

Notices

 

5

 

 

 

 

 

Section 6.3

 

Further Assurance

 

6

 

 

 

 

 

Section 6.4

 

Amendments and Waivers

 

6

 

 

 

 

 

Section 6.5

 

Fees and Expenses

 

6

 

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Section 6.6

 

Successors and Assigns

 

6

 

 

 

 

 

Section 6.7

 

Governing Law

 

7

 

 

 

 

 

Section 6.8

 

Jurisdiction

 

7

 

 

 

 

 

Section 6.9

 

Waiver Of Jury Trial

 

7

 

 

 

 

 

Section 6.10

 

Entire Agreement

 

7

 

 

 

 

 

Section 6.11

 

Effect of Headings and Table of Contents

 

7

 

 

 

 

 

Section 6.12

 

Severability

 

7

 

 

 

 

 

Section 6.13

 

Counterparts; Third Party Beneficiaries

 

7

 

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SHARE SUBSCRIPTION AGREEMENT dated as of August 20, 2007 (this “Agreement”)
between KKR Financial Holdings LLC, a Delaware limited liability company (the
“Company”) and the party signatory hereto (the “Purchaser”).

BACKGROUND

The Purchaser wishes to subscribe for and purchase, and the Company, desires to
issue and sell, certain Common Shares of the Company (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
                      Shares at 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 the later of August 20, 2007 and the New York
Business Day (as defined below) following the date on which the listing of the
Shares is approved by the New York Stock Exchange, or such other time and place
as mutually agreed by the parties hereto (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”).  Final drafts of the documents to be
delivered pursuant to the preceding sentence will be provided to the parties
hereto no later than 10:00 p.m., New York City time, on the New York Business
Day next preceding the Closing.  For the purposes of this Section 2.2, “New York
Business Day” shall

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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
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.

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Section 3.6             Registered Shares.  The Company has filed an “automatic
shelf registration statement” as defined in Rule 405 under the Securities Act of
1933, as amended (the “Securities Act”) relating to the Shares, including a form
of prospectus, with the U.S. Securities and Exchange Commission (the “SEC”) on
Form S-3 (No. 333-143451) (the “Registration Statement”); the Registration
Statement has been filed with the Commission not earlier than three years prior
to the date hereof.  The Company shall file the final prospectus (the
“Prospectus”) relating to the Shares, which has previously been provided to you,
pursuant to, and within the time period specified in, Rule 424(b) under the
Securities Act. The Shares will be listed on the New York Stock Exchange prior
to issuance.

Section 3.7             Periodic Filings; Financial Statements.  (a)     The
Company has furnished or made available to the Purchaser true and complete
copies of all reports or registration statements it has filed with the SEC under
the Securities Act and the Securities Exchange Act of 1934, as amended, and the
rules and regulations of the SEC promulgated thereunder (the “Exchange Act”),
for all periods subsequent to December 31, 2006, all in the form so filed
(collectively the “Company SEC Documents”).  As of their respective filing
dates, the Company SEC Documents complied as to form in all material respects
with the requirements of the Securities Act or the Exchange Act, as applicable,
and none of the Company SEC Documents contained, when filed with the SEC, and if
amended, as of the date of such amendment, any untrue statement of a material
fact or omitted to state a material fact required to be stated therein or
necessary in order to make the statements made therein, in light of the
circumstances in which they were made, not misleading, except to the extent
corrected by a subsequently filed document with the SEC.

(B)   THE COMPANY’S FINANCIAL STATEMENTS, INCLUDING THE NOTES THERETO, INCLUDED
IN THE COMPANY SEC DOCUMENTS (THE “COMPANY FINANCIAL STATEMENTS”) COMPLY AS TO
FORM IN ALL MATERIAL RESPECTS WITH APPLICABLE ACCOUNTING REQUIREMENTS AND WITH
THE PUBLISHED RULES AND REGULATIONS OF THE SEC WITH RESPECT THERETO, HAVE BEEN
PREPARED IN ACCORDANCE WITH GAAP CONSISTENTLY APPLIED (EXCEPT AS MAY BE
INDICATED IN THE NOTES AND SCHEDULES THERETO) DURING THE PERIODS INVOLVED AND
PRESENT FAIRLY THE COMPANY’S CONSOLIDATED FINANCIAL POSITION AT THE DATES
THEREOF AND OF ITS OPERATIONS AND CASH FLOWS FOR THE PERIODS THEN ENDED
(SUBJECT, IN THE CASE OF UNAUDITED STATEMENTS, TO NORMAL AUDIT ADJUSTMENTS). 
SINCE THE DATE OF THE MOST RECENT BALANCE SHEET INCLUDED IN THE COMPANY
FINANCIAL STATEMENTS, THE COMPANY HAS NOT EFFECTED ANY CHANGE IN ANY METHOD OF
ACCOUNTING OR ACCOUNTING PRACTICE, EXCEPT FOR ANY SUCH CHANGE REQUIRED BECAUSE
OF A CONCURRENT CHANGE IN GAAP.

ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PURCHASER

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

Section 4.1             Existence and Power.   The Purchaser is either (a) a
natural person or (b) duly organized and validly existing under the laws of the
state of its organization and has all power and authority to enter into and
perform its obligations under this Agreement, acting on behalf of the investment
management client accounts it represents, if applicable.

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Section 4.2             Authorization.   This Agreement has been duly authorized
by all necessary action on the part of the Purchaser.  When executed and
delivered by the Purchaser and countersigned by the Company, this Agreement
shall constitute the legal, valid and binding obligation of the Purchaser
(acting on behalf of the investment management client accounts it represents, if
applicable) enforceable against the Purchaser 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 4.3             Governmental Authorization.  As of the date hereof, no
permit, authorization, consent or approval of or by, or any notification of or
filing (including any filing under the United States Hart-Scott-Rodino Antitrust
Improvements act of 1976, as amended, and the rules and regulations promulgated
thereunder) with, any person (governmental or private) is required to be
obtained or made by it in connection with the execution, delivery and
performance by it of this Agreement, the consummation by it of the transactions
contemplated hereby or thereby, or the issuance, sale or delivery to it by the
Company of the Shares, other than a filing on a Form Schedule 13G (or 13G-A), if
applicable.

Section 4.4             Non-Contravention.  The execution, delivery and
performance by the Purchaser of this Agreement and the consummation by it of the
transactions contemplated hereby and thereby will not violate any statute,
order, rule or regulation of any court or governmental agency or body having
jurisdiction over the Purchaser or any of its properties.

Section 4.5             No Brokers.  The Purchaser has not employed any broker
or finder in connection with the transactions contemplated by this Agreement.

Section 4.6             Reliance.  The Purchaser acknowledges that the Company
and others will rely upon the truth and accuracy of the foregoing
acknowledgements, representations and agreements.

ARTICLE V
CONDITIONS TO CLOSING

Section 5.1             Conditions to the Obligations of the Company.  The
obligations of the Company hereunder shall be subject to the following
conditions:

(A)   ALL REPRESENTATIONS AND WARRANTIES AND OTHER STATEMENTS OF THE PURCHASER
HEREIN ARE, AT AND AS OF THE CLOSING, TRUE AND CORRECT; AND

(B)   THE PURCHASER SHALL HAVE PERFORMED ALL OF ITS OBLIGATIONS HEREUNDER
THERETOFORE TO BE PERFORMED.

Section 5.2             Conditions to the Obligations of the Purchaser.  The
obligations of the Purchaser hereunder shall be subject to the following
conditions:

(A)   ALL REPRESENTATIONS AND WARRANTIES AND OTHER STATEMENTS OF THE COMPANY
HEREIN ARE, AT AND AS OF THE CLOSING, TRUE AND CORRECT; AND

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(B)   THE COMPANY SHALL HAVE PERFORMED ALL OF ITS OBLIGATIONS HEREUNDER
THERETOFORE TO BE PERFORMED.

ARTICLE VI
MISCELLANEOUS

Section 6.1             Transfers.  (a)     If the Shares to be issued are not
freely transferable under the Securities Act by the Purchaser following the
Closing, the Company shall use its commercially reasonable efforts to cause to
be declared effective under the Securities Act by the Securities and Exchange
Commission, prior to the date which is one hundred eighty (180) days following
the Closing, one or more registration statements (the “Shelf Registration
Statement”) covering the registration of resale of such Shares by the Purchaser.

(B)   EXCEPT FOR CUSTOMARY BLACKOUT PERIODS OF NO MORE THAN 120 DAYS IN ANY
360-DAY PERIOD, THE COMPANY AGREES TO USE ITS COMMERCIALLY REASONABLE EFFORTS TO
KEEP THE SHELF REGISTRATION STATEMENT CONTINUOUSLY EFFECTIVE UNTIL THE
EXPIRATION OF THE PERIOD THAT WILL TERMINATE WHEN ALL THE SHARES COVERED BY THE
SHELF REGISTRATION STATEMENT HAVE BEEN SOLD (THE “SHELF EFFECTIVENESS PERIOD”). 
THE COMPANY FURTHER AGREES TO SUPPLEMENT OR AMEND THE SHELF REGISTRATION
STATEMENT AND THE RELATED PROSPECTUS IF REQUIRED BY THE RULES, REGULATIONS OR
INSTRUCTIONS APPLICABLE TO THE REGISTRATION FORM USED BY THE COMPANY FOR SUCH
SHELF REGISTRATION STATEMENT OR BY THE SECURITIES ACT OR BY ANY OTHER RULES AND
REGULATIONS THEREUNDER OR IF REASONABLY REQUESTED BY THE PURCHASER OF SHARES
WITH RESPECT TO INFORMATION RELATING TO SUCH PURCHASER, AND TO USE THEIR
REASONABLE BEST EFFORTS TO CAUSE ANY SUCH AMENDMENT TO BECOME EFFECTIVE, IF
REQUIRED, AND SUCH SHELF REGISTRATION STATEMENT AND PROSPECTUS TO BECOME USABLE
AS SOON AS THEREAFTER PRACTICABLE.

(C)   THE COMPANY SHALL PAY ALL CUSTOMARY REGISTRATION EXPENSES IN CONNECTION
WITH ANY REGISTRATION PURSUANT TO SECTION 6.1(A) HEREOF.  EACH PURCHASER SHALL
PAY ALL UNDERWRITING DISCOUNTS AND COMMISSIONS, BROKERAGE COMMISSIONS AND
TRANSFER TAXES, IF ANY, RELATING TO THE SALE OR DISPOSITION OF SUCH PURCHASER’S
SHARES PURSUANT TO THE SHELF REGISTRATION STATEMENT.

Section 6.2             Notices.  All notices and other communications required
or permitted to be given under this Agreement shall be in writing and shall be
deemed to have been given if delivered personally or by facsimile or seven days
after having been sent by certified mail, return receipt requested, postage
prepaid, to the parties to this Agreement at the following address or to such
other address either party to this Agreement shall specify by notice to the
other party:

(i)                                     If to the Company:

KKR Financial Holdings LLC
555 California Street, 50th Floor
San Francisco, CA 94104
Attention:  General Counsel
Facsimile:  (415) 391-3330

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with a copy to (which shall not constitute notice):

Simpson Thacher & Bartlett LLP
425 Lexington Avenue
New York, NY 10017
Attention:  David Sorkin

   Sean Rodgers

Facsimile:  (212) 455-2502

(ii)                                  If to the Purchaser:

                                                                    

Facsimile:                                                    

with a copy to (which shall not constitute notice):

                                                                    

Facsimile:                                                    

Section 6.3             Further Assurances.  Each party hereto shall do and
perform or cause to be done and performed all further acts and shall execute and
deliver all other agreements, certificates, instruments and documents as any
other party hereto reasonably may request in order to carry out the intent and
accomplish the purposes of this Agreement and the consummation of the
transactions contemplated hereby.

Section 6.4             Amendments and Waivers.  (a)  Any provision of this
Agreement may be amended or waived if, but only if, such amendment or waiver is
in writing and is duly executed and delivered by the Company and the Purchaser;
and

(B)   NO FAILURE OR DELAY BY ANY PARTY IN EXERCISING ANY RIGHT, POWER OR
PRIVILEGE HEREUNDER SHALL OPERATE AS A WAIVER THEREOF NOR SHALL ANY SINGLE OR
PARTIAL EXERCISE THEREOF PRECLUDE ANY OTHER OR FURTHER EXERCISE THEREOF OR THE
EXERCISE OF ANY OTHER RIGHT, POWER OR PRIVILEGE.  THE RIGHTS AND REMEDIES HEREIN
PROVIDED SHALL BE CUMULATIVE AND NOT EXCLUSIVE OF ANY RIGHTS OR REMEDIES
PROVIDED BY LAW.

Section 6.5             Fees and Expenses.  Each party hereto shall pay all of
its own fees and expenses (including attorneys’ fees) incurred in connection
with this Agreement and the transactions contemplated hereby.

Section 6.6             Successors and Assigns.  The provisions of this
Agreement shall be binding upon and inure to the benefit of the parties hereto
and their respective successors and assigns.

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Section 6.7             Governing Law.  THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.

Section 6.8             Jurisdiction.  The parties hereto agree that any suit,
action or proceeding seeking to enforce any provision of, or based on any matter
arising out of or in connection with, this Agreement or the transactions
contemplated hereby may only be brought in the United States District Court for
the Southern District of New York or any New York State court sitting in the
Borough of Manhattan in New York City, and each of the parties hereby consents
to the jurisdiction of such courts (and of the appropriate appellate courts
therefrom) in any such suit, action or proceeding and irrevocably waives, to the
fullest extent permitted by law, any objection which it may now or hereafter
have to the laying of the venue of any such suit, action or proceeding in any
such court or that any such suit, action or proceeding which is brought in any
such court has been brought in an inconvenient forum.  Process in any such suit,
action or proceeding may be served on any party anywhere in the world, whether
within or without the jurisdiction of any such court.

Section 6.9             Waiver Of Jury Trial.  EACH OF THE PARTIES HERETO HEREBY
IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING
ARISING OUT OF OR RELATED TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED
HEREBY.

Section 6.10           Entire Agreement.  This Agreement constitutes the entire
agreement between the parties with respect to the subject matter of this
Agreement and supersedes all prior agreements and understandings, both oral and
written, between the parties and/or their affiliates with respect to the subject
matter of this Agreement.

Section 6.11           Effect of Headings and Table of Contents.  The Article
and Section headings herein and the Table of Contents are for convenience only
and shall not affect the construction hereof.

Section 6.12           Severability.  If one or more provisions of this
Agreement are held to be unenforceable under applicable law, such provision
shall be deemed to be excluded from this Agreement and the balance of this
Agreement shall be interpreted as if such provision were so excluded and shall
be enforced in accordance with its terms to the maximum extent permitted by law.

Section 6.13           Counterparts; Third Party Beneficiaries.  This Agreement
may be signed in any number of counterparts, each of which shall be an original,
with the same effect as if the signatures were upon the same instrument.  No
provision of this Agreement shall confer upon any person other than the parties
hereto any rights or remedies hereunder.

[Remainder of page intentionally left blank]

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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed by their respective authorized officers as of the day and year first
above written.

 

 

 

KKR FINANCIAL HOLDINGS LLC

 

 

 

 

 

 

 

 

By:

 

 

 

 

Name:

 

 

Title:

 

 

 

 

 

 

 

 

PURCHASER

 

 

 

 

 

 

 

 

 

(please print legibly)

 

 

 

 

TIN Number

 

 

 

 

By:

 

 

 

 

Name:

 

 

 

 

 

Title:

 

 

 

[Share Subscription Agreement Signature Page]

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