NYSE: KFN

There shall be constituted a standing committee of the board of directors (the "Board") of KKR FINANCIAL HOLDINGS LLC (the "Company") to be known as the nominating and corporate governance committee (the "Nominating and Corporate Governance Committee").

The Nominating and Corporate Governance Committee shall be comprised of three or more directors, each of whom shall satisfy the independence requirements of the New York Stock Exchange for directors, as determined by the Board.

The members of the Nominating and Corporate Governance Committee shall be appointed by the Board at the Board's annual meeting and may be removed by the Board. The members of the Nominating and Corporate Governance Committee shall serve for one year or until their successors are duly elected and qualified. The full Board shall elect a Chairman, and if a Chairman is not elected by the full Board, the members of the Nominating and Corporate Governance Committee shall designate a Chairman by majority vote of the full Nominating and Corporate Governance Committee.

The Nominating and Corporate Governance Committee assists the Board by: (1) identifying individuals qualified to become Board members and recommending to the Board director nominees for election at the annual meeting of shareholders; (2) recommending to the Board the assignment of directors to committees; (3) playing a leadership role in shaping the governance of the Company and recommending to the Board corporate governance guidelines for the Company; and (4) overseeing the evaluation of the Board.

Among its specific duties and responsibilities, the Nominating and Corporate Governance Committee shall:

1. Review with the Board annually the composition of the Board as a whole and the requisite skills and characteristics of Board members, and develop criteria for identifying and evaluating candidates for the Board, which criteria shall include, among other things, an individual's business experience and skills, independence, judgment, integrity, and ability to commit sufficient time and attention to the activities of the Board, as well as the absence of any potential conflicts with the Company's interests;

2. Actively seek, identify and recommend to the Board individuals qualified to become Board members;

3. Assess the contributions and independence of incumbent directors in determining whether to recommend them for re-election to the Board;

4. Recommend to the Board nominees for election or re-election as directors at each annual shareholders' meeting and recommend candidates to be elected by the Board as necessary to fill vacancies and newly created directorships;

5. Make recommendations to the Board regarding tenure of directors;

6. Oversee the annual evaluation of the Board's performance and, based on the evaluation, recommend ways to improve the Board's effectiveness;

7. Recommend to the Board the assignment of directors to committees, including the designation of committee chairs, at each annual meeting of the Board, and to fill vacancies as needed. In making its recommendations, the Nominating and Corporate Governance Committee considers specific qualifications, if any, that are required for membership on each committee, such as the requirement of financial literacy and a financial expert for the Audit Committee;

8. Recommend corporate governance guidelines and annually review and reassess the adequacy of the corporate governance guidelines of the Company, and recommend any proposed changes to the Board for approval;

9. Review periodically the Company's conflict of interest policies as it concerns directors and review with management the Company's procedures for implementing and monitoring compliance with the conflict of interest policies; and

10. Review and reassess the adequacy of this Charter annually and recommend any proposed changes to the Board for approval, and annually review the Nominating and Corporate Governance Committee's performance based upon, among other things, an assessment of the Nominating and Corporate Governance Committee's fulfillment of its obligations pursuant to this Charter. The Nominating and Corporate Governance Committee's findings shall be reported to the Board, and such review shall seek to identify specific areas, if any, in need of improvement or strengthening.

The Nominating and Corporate Governance Committee shall meet at least twice a year and as often as may be deemed necessary or appropriate in its judgment. The Chairman or a majority of the members of the Nominating and Corporate Governance Committee may call meetings of the Nominating and Corporate Governance Committee upon reasonable notice to all members of the Nominating and Corporate Governance Committee. The Nominating and Corporate Governance Committee shall report to the Board at least twice a year with respect to its activities.

In the course of fulfilling its duties, the Nominating and Corporate Governance Committee shall, to the extent it deems necessary, have the authority to retain and terminate any search firm to be used to identify director candidates. The Nominating and Corporate Governance Committee shall also have, to the extent it deems necessary, the authority to obtain advice and assistance from other internal or external advisors. Such search firms and other internal or external advisors shall be appropriately compensated, as determined by the Nominating and Corporate Governance Committee, with funding provided by the Company.