Exhibit 10.1

 

STOCK PURCHASE AGREEMENT

 

STOCK PURCHASE AGREEMENT (this “Agreement”) made as of this       day of
November, 2009 between Prospect Acquisition Corp., a Delaware corporation
(“Buyer” or “Prospect”), and the signatory on the execution page hereof
(“Seller”).

 

WHEREAS, Buyer was organized for the purpose of acquiring, through a merger,
capital stock exchange, asset acquisition or other similar business combination,
an operating business (“Business Combination”); and

 

WHEREAS, Buyer consummated an initial public offering in November, 2007 (“IPO”)
in connection with which it raised gross proceeds of approximately $250 million,
a significant portion of which was placed in a trust account pending the
consummation of a Business Combination, or the dissolution and liquidation of
Buyer in the event it is unable to consummate a Business Combination on or prior
to November 14, 2009; and

 

WHEREAS, Buyer has entered into that certain Agreement and Plan of Merger dated
September 8, 2009, as amended by Amendment No. 1 and Amendment No. 2 to the
Agreement and Plan of Merger dated October 22, 2009 and October 26, 2009,
respectively (the “Merger Agreement”), by and among Prospect, KW Merger Sub
Corp., a newly-formed Delaware corporation and wholly-owned subsidiary of
Prospect (“Merger Sub”) and Kennedy-Wilson, Inc. (“Kennedy-Wilson”), which
provides for the merger (the “Merger”) of Merger Sub with and into
Kennedy-Wilson as a result of which Kennedy-Wilson will become a wholly-owned
subsidiary of Prospect and outstanding shares of Kennedy-Wilson’s capital stock
will be exchanged for common stock of Prospect; and

 

WHEREAS, the approval of the Merger is contingent upon, among other things, the
affirmative vote of holders of a majority of the outstanding common shares of
Prospect issued in Prospect’s IPO and present and eligible to vote at the
special meeting called to approve the Merger; and

 

WHEREAS, pursuant to certain provisions in Buyer’s certificate of incorporation,
a holder of shares of Buyer’s common stock issued in the IPO may, if it votes
against the Merger, demand that Buyer convert such common shares into cash
(“Conversion Rights”); and

 

WHEREAS the Merger cannot be consummated if holders of 30% or more of Prospect
common stock issued in the IPO exercise their Conversion Rights; and

 

WHEREAS, Seller has agreed to sell to Buyer and Buyer has agreed to purchase
from Seller the common shares set forth on the execution page of this Agreement
(“Shares”) for the purchase price per share set forth therein (“Purchase Price
Per Share”) and for the aggregate purchase price set forth therein (“Aggregate
Purchase Price”).

 

NOW, THEREFORE, in consideration of the mutual covenants hereinafter set forth
and other good and valuable consideration, the sufficiency of which is hereby
acknowledged, the parties hereby agree as follows:

 

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1.                                       Purchase. Subject to Section 6, Seller
hereby sells to Buyer and Buyer hereby purchases from Seller at the Closing (as
defined in Section 3(c)) the Shares at the Purchase Price Per Share, for the
Aggregate Purchase Price.

 

2.                                       Agreement not to Convert; Appointment
of Proxy and Attorney-in-Fact.  In further consideration of the Aggregate
Purchase Price, Seller hereby agrees it has not and will not exercise its
Conversion Rights or, if it has already exercised its Conversion Rights, it
hereby withdraws and revokes such exercise and will execute all necessary
documents and take all actions required in furtherance of such revocation.
Seller acknowledges that the record date to vote on the proposals set forth in
the proxy statement/prospectus (the “Proxy Statement”) filed by Buyer with the
U.S. Securities Exchange Commission (the “SEC”) has passed. Accordingly, solely
with respect to the vote for the Merger and the other proposals set forth in the
Proxy Statement, Seller hereby irrevocably appoints David A. Minella and James
J. Cahill and each of them each with full power of substitution, as Seller’s
proxy and attorney-in-fact, to the full extent of Seller’s rights with respect
to the Shares (and any and all other shares or securities or rights issued or
issuable in respect thereof) to vote in such manner as each such person or his
substitute shall in his sole discretion deem proper, and to otherwise act
(including without limitation acting by written consent) with respect to all the
Shares at any meeting of stockholders (whether annual or special and whether or
not an adjourned meeting) of Buyer held on or prior to November 14, 2009. This
proxy is coupled with an interest and is irrevocable. Execution by Seller of
this Agreement shall revoke, without further action, all prior proxies granted
by Seller at any time with respect to the Shares (and such other shares or other
securities) and no subsequent proxies will be given by Seller (and if given will
be deemed not to be effective).

 

3.                                       Closing Matters.

 

(a)                                  Within one business day of the date of this
Agreement, (i) Seller shall provide Buyer with a true and correct copy of the
voting instruction form with respect to the Shares held by Seller indicating the
financial institution through which such shares are held and the control number
provided by Broadridge Financial Solutions (or other similar service provider)
regarding the voting of the Shares or written confirmation of such information
as would appear on the voting instruction form; and (ii) Buyer shall send the
notice attached as Annex 1 hereto to Prospect’s transfer agent.

 

(b)                                 Prior to the Closing, Seller shall deliver
or cause to be delivered to Buyer appropriate instructions for book entry
transfers of ownership of the Shares from Seller to Buyer.

 

(c)                                  The closing of the purchase and sale of the
Shares (“Closing”) will occur on the date on which Buyer’s trust account is
liquidated after the Merger is consummated (the “Closing Date”). At the Closing,
Buyer shall pay Seller the Aggregate Purchase Price by wire transfer from
Prospect’s trust account of immediately available funds to an account specified
by Seller and Seller shall deliver the Shares to Buyer electronically using the
Depository Trust Company’s DWAC (Deposit/Withdrawal at Custodian) System to an
account specified by Buyer. It shall be a condition to the obligation of Buyer
on the one hand and Seller on the other hand, to consummate the transfer of the
Shares contemplated hereunder that the other party’s representations and
warranties are true and correct on the Closing Date with the same effect as
though made on such date, unless waived in writing by the party to whom such
representations and warranties are made.

 

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4.                                       Representations and Warranties of the
Seller. Seller hereby represents and warrants to Buyer on the date hereof and on
the Closing that:

 

(a)                                  Sophisticated Seller. Seller is
sophisticated in financial matters and is able to evaluate the risks and
benefits attendant to the sale of Shares to Buyer.

 

(b)                                 Independent Investigation. Seller, in making
the decision to sell the Shares to Buyer, has not relied upon any oral or
written representations or assurances from Buyer or any of its officers,
directors or employees or any other representatives or agents of Buyer except
for the representations of the Buyer contained in this Agreement. Seller has had
access to all of the filings made by Prospect with the SEC, pursuant to the
Securities Exchange Act of 1934, as amended (the “Exchange Act”), and the
Securities Act of 1933, as amended, in each case to the extent available
publicly via the SEC’s Electronic Data Gathering, Analysis and Retrieval system.

 

(c)                                  Authority. This Agreement has been validly
authorized, executed and delivered by Seller and, assuming the due
authorization, execution and delivery thereof by Buyer, is a valid and binding
agreement enforceable in accordance with its terms, subject to the general
principles of equity and to bankruptcy or other laws affecting the enforcement
of creditors’ rights generally. The execution, delivery and performance of this
Agreement by Seller does not and will not conflict with, violate or cause a
breach of, constitute a default under, or result in a violation of (i) any
agreement, contract or instrument to which Seller is a party which would prevent
Seller from performing its obligations hereunder or (ii) any law, statute,
rule or regulation to which Seller is subject.

 

(d)                                 No Legal Advice from Buyer. Seller
acknowledges that it has had the opportunity to review this Agreement and the
transactions contemplated by this Agreement with Seller’s own legal counsel and
investment and tax advisors.  Except for the representations of the Buyer
contained in this Agreement, Seller is not relying on any statements or
representations of Buyer or any of its representatives or agents for legal, tax
or investment advice with respect to this Agreement or the transactions
contemplated by the Agreement.

 

(e)                                  Ownership of Shares. Seller is the legal
and beneficial owner of the Shares and will transfer to Buyer on the Closing
Date good and marketable title to the Shares free and clear of any liens,
claims, security interests, options, charges or any other encumbrance
whatsoever. The Seller beneficially owned all of the Shares as of the close of
the trading day on October 26, 2009 and has the sole right to exercise
conversion rights with respect to all of the Shares.

 

(f)                                    Number of Shares. The Shares being
transferred pursuant to this Agreement represent all the common stock owned by
Seller as of the date hereof.

 

(g)                                 Seller Taxes . Seller understands that
Seller (and not the Buyer) shall be responsible for any and all tax liabilities
of Seller that may arise as a result of the transactions contemplated by this
Agreement.

 

(h)                                 Aggregate Purchase Price Negotiated. Seller
represents that both the amount of Shares and the Aggregate Purchase Price were
negotiated figures by the parties and

 

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that the terms and conditions by the parties of this Agreement may differ from
arrangements entered into with other holders of Buyer’s common stock.

 

5.                                       Representations and Warranties of Buyer
. Buyer hereby represents to the Seller that:

 

(a)                                  Sophisticated Buyer. Buyer is sophisticated
in financial matters and is able to evaluate the risks and benefits attendant to
the purchase of Shares from Seller.

 

(b)                                 Independent Investigation. Except for the
representations of Seller contained in this Agreement, Buyer, in making the
decision to purchase the Shares from Seller, has not relied upon any oral or
written representations or assurances from Seller or any of its officers,
directors, partners or employees or any other representatives or agents of
Seller.

 

(c)                                  Authority. This Agreement has been validly
authorized, executed and delivered by Buyer and assuming the due authorization,
execution and delivery thereof by Seller, is a valid and binding agreement
enforceable in accordance with its terms, subject to the general principles of
equity and to bankruptcy or other laws affecting the enforcement of creditors’
rights generally. The execution, delivery and performance of this Agreement by
Buyer does not and will not conflict with, violate or cause a breach of,
constitute a default under, or result in a violation of (i) any agreement,
contract or instrument to which Buyer is a party which would prevent Buyer from
performing its obligations hereunder or (ii) any law, statute, rule or
regulation to which Buyer is subject.

 

(d)                                 No Legal Advice from Seller. Buyer
acknowledges that it has had the opportunity to review this Agreement and the
transactions contemplated by this Agreement with Buyer’s own legal counsel and
investment and tax advisors.  Except for the representations of Seller contained
in this Agreement, Buyer is relying solely on such counsel and advisors and not
on any statements or representations of Seller or any of its representatives or
agents for legal, tax or investment advice with respect to this Agreement or the
transactions contemplated by this Agreement.

 

6.                                       Termination. Notwithstanding any
provision in this Agreement to the contrary, this Agreement shall become null
and void and of no force and effect upon the earlier to occur of (a) the
termination of the Merger Agreement or (b) 11:59 Eastern Time on November 14,
2009 if the Merger has not been consummated by such time. Notwithstanding any
provision in this Agreement to the contrary, Buyer’s obligation to purchase the
Shares from Seller shall be conditioned on the consummation of the Merger.

 

7.                                       Covenant of Seller. After the execution
of this Agreement and prior to Closing, Seller shall not acquire any common
stock, warrants or other securities of Prospect or effect any derivative
transactions with respect thereto.

 

8.                                       Acknowledgement; Waiver. Seller
(i) acknowledges that Buyer may possess or have access to material non-public
information which has not been communicated to Seller; (ii) hereby waives any
and all claims, whether at law, in equity or otherwise, that he, she, or it may
now have or may hereafter acquire, whether presently known or unknown, against
Buyer or any of its officers, directors, employees, agents, affiliates,
subsidiaries, successors or assigns relating to any failure to disclose any
non-public information in connection with the transaction

 

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contemplated by this Agreement, including without limitation, any claims arising
under Rule 10-b(5) of the Exchange Act; and (iii) is aware that Buyer is relying
on the truth of the representations set forth in Section 4 of this Agreement and
the foregoing acknowledgement and waiver in clauses (i) and (ii) above,
respectively, in connection with the transactions contemplated by this
Agreement.

 

9.                                       Counterparts; Facsimile. This Agreement
may be executed in any number of counterparts, each of which when so executed
shall be deemed to be an original and all of which taken together shall
constitute one and the same instrument. This Agreement or any counterpart may be
executed via facsimile transmission, and any such executed facsimile copy shall
be treated as an original.

 

10.                                 Governing Law. This Agreement shall for all
purposes be deemed to be made under and shall be construed in accordance with
the laws of the State of New York. Each of the parties hereby agrees that any
action, proceeding or claim against it arising out of or relating in any way to
this Agreement shall be brought and enforced in the courts of the State of New
York or the United States District Court for the Southern District of New York,
and irrevocably submits to such jurisdiction, which jurisdiction shall be
exclusive. Each of the parties hereby waives any objection to such exclusive
jurisdiction and that such courts represent an inconvenient forum.

 

11.                                 Remedies. Each of the parties hereto
acknowledges and agrees that, in the event of any breach of any covenant or
agreement contained in this Agreement by the other party, money damages may be
inadequate with respect to any such breach and the non-breaching party may have
no adequate remedy at law. It is accordingly agreed that each of the parties
hereto shall be entitled, in addition to any other remedy to which they may be
entitled at law or in equity, to seek injunctive relief and/or to compel
specific performance to prevent breaches by the other party hereto of any
covenant or agreement of such other party contained in this Agreement.

 

12.                                 Binding Effect; Assignment. This Agreement
shall be binding upon and inure to the benefit of the parties hereto and their
respective legal representatives, successors and permitted assigns. This
Agreement shall not be assigned by either party without the prior written
consent of the other party hereto.

 

13.                                 Headings. The descriptive headings of the
Sections hereof are inserted for convenience only and do not constitute a part
of this Agreement.

 

14.                                 Entire Agreement; Changes in Writing. This
Agreement constitutes the entire agreement among the parties hereto and
supersedes and cancels any prior agreements, representations and warranties,
whether oral or written, among the parties hereto relating to the transaction
contemplated hereby. Neither this Agreement not any provision hereof may be
changed or amended orally, but only by an agreement in writing signed by the
other party hereto.

 

15.                                 Trust Waiver. Prospect’s initial public
offering was consummated on November 14, 2007 as a result of which it received
net proceeds of $247 million which are held in a trust fund established by
Prospect for the benefit of its public stockholders (the “Trust Fund”). The
Trust Fund is invested in U.S. government securities in a trust account at
JPMorgan Chase Bank, NA and held in trust by Continental Stock Transfer & Trust
Company (the “Trustee”) pursuant

 

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to the Investment Management Trust Account Agreement, dated as of November 14,
2007 (the “Trust Agreement”), between Prospect and Trustee. Seller understands
that, except for a portion of the interest earned on the amounts held in the
Trust Fund, Prospect may disburse monies from the Trust Fund only: (a) to
Prospect in limited amounts from time to time (and in no event more than
$2,750,000 in total) in order to permit Prospect to pay its operating expenses;
(b) if Prospect completes a Business Combination, to certain dissenting public
stockholders or stockholders who have entered into agreements similar to this
Agreement, to the underwriters in the amount of underwriting discounts and
commissions they earned in the IPO but whose payment they have deferred, and
then to Prospect; and (c) if Prospect fails to complete a Business Combination
within the allotted time period and liquidates, subject to the terms of the
Trust Agreement, to Prospect in limited amounts to permit Prospect to pay the
costs and expenses of its liquidation and dissolution, and then to Prospect’s
public stockholders (as such term is defined in the Trust Agreement). Seller
agrees that it does not now have, and shall not at any time have, other than
with respect to the Aggregate Purchase Price to be paid to Seller in connection
with this Agreement, any claim to, or make any claim against, the Trust Fund or
any asset contained therein, regardless of whether such claim arises as a result
of, in connection with or relating in any way to, the business relationship
between Seller, on the one hand, and Prospect, on the other hand, this
Agreement, or any other agreement or any other matter, and regardless of whether
such claim arises based on contract, tort, equity or any other theory of legal
liability.  Other than with respect to the Aggregate Purchase Price to be paid
to Seller in connection with this Agreement, Seller hereby irrevocably waives
any and all claims it may have, now or in the future (in each case, however,
prior to the consummation of a Business Combination), and will not seek recourse
against, the Trust Fund for any other reason whatsoever in respect thereof.
Other than with respect to an action for recovery of the Aggregate Purchase
Price to be paid to Seller in connection with this Agreement, in the event
Seller commences any other action or proceeding based upon, in connection with,
relating to or arising out of any matter relating to Prospect, which proceeding
seeks, in whole or in part, relief against the Trust Fund or the public
stockholders of Prospect, whether in the form of money damages or injunctive
relief, Prospect shall be entitled to recover from Seller the associated legal
fees and costs in connection with any such action.

 

[Signature Page Follows]

 

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IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the date
set forth on the first page of this Agreement.

 

 

 

PROSPECT ACQUISITION CORP.

 

 

 

 

 

 

 

 

By:

 

 

 

Name: David A. Minella

 

 

Title: Chairman and Chief Executive Officer

 

 

 

 

 

 

 

 

[SELLER]

 

 

 

 

 

 

 

 

By:

 

 

 

Name:

 

 

Title:

 

 

 

 

 

 

Purchase Price Per Share: $ 9.95

 

 

Number of Shares:   

 

 

Aggregate Purchase Price: $  

 

 

 

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PROSPECT ACQUISITION CORP.

9130 GALLERIA COURT, SUITE 318

NAPLES, FLORIDA 34109

 

November    , 2009

 

Continental Stock Transfer & Trust Company

17 Battery Place

New York, New York 10004

 

Attn:

 

Re: Trust Account No. [NUMBER]

 

Gentlemen:

 

Prospect Acquisition Corp. (the “Company”) is providing these irrevocable
instructions to you in connection with the above described Trust Account
established in connection with and pursuant to an Investment Management Trust
Agreement dated as of November 14, 2007 between the Company and Continental
Stock Transfer & Trust Company as Trustee (the “Trust Agreement”). Upper case
terms used herein shall have the meanings ascribed to such terms in the Trust
Agreement.

 

In the event the Company delivers to you a Termination Letter substantially in
the form of Exhibit A to the Trust Agreement, in addition to the other documents
required to be delivered pursuant to Exhibit A of the Trust Agreement, assuming
you are the Trustee on such date, then, in consideration for the electronic
transfer of [NUMBER] shares of the Company’s common stock, using the Depository
Trust Company’s DWAC (Deposit/Withdrawal at Custodian) System, to an account
specified by the Company, on the Consummation Date you are irrevocably
instructed to deliver as the initial distribution of funds from the Trust
Account the sum of [AMOUNT], which must be delivered to [FIRM] in accordance
with the bank wire instructions provided to you below.

 

[INSERT INSTRUCTIONS]

 

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The address for [FIRM] is [ADDRESS]. The contact person for [FIRM] is [PERSON].
He/she can be reached at [PHONE].

 

In order to expedite payment, attached is a Form W-9 for [FIRM].

 

Kindly acknowledge where indicated below, your receipt and understanding of
these instructions and return a copy to Bingham McCutchen LLP, attn: Kate Ness,
facsimile number (617)-951-8736.

 

A facsimile signed and electronically delivered copy of this letter shall be
deemed an original.

 

 

 

Very truly yours,

 

 

 

PROSPECT ACQUISITION CORP.

 

 

 

By:

 

 

Name:

David A. Minella

 

Title:

Chief Executive Officer

 

 

 

Acknowledged and Agreed:

 

 

 

CONTINENTAL STOCK TRANSFER &

 

TRUST COMPANY

 

 

 

By:

 

 

 

Name:

 

 

 

Title:

 

 

 

 

 

[FIRM]

 

 

 

By:

 

 

 

Name:

 

 

 

Title:

 

 

 

 

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