Exhibit 10.4

 

STOCK PURCHASE AGREEMENT

 

STOCK PURCHASE AGREEMENT (this “Agreement”) made as of this 11th 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 all of Seller’s shares of the common stock of Buyer owned by Seller
as of the close of business on November 11, 2009, subject to a maximum of
650,000 shares (all such shares, the “Shares”) for the purchase price per share
set forth on the execution page of this Agreement (“Purchase Price Per Share”).

 

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 agrees to sell to
Buyer and Buyer hereby agrees to purchase from Seller at the Closing (as defined
in Section 3(c)) the Shares at the Purchase Price Per Share (the total purchase
price of the Shares, the “Aggregate Purchase Price”).

 

2.             Agreement not to Convert.  In further consideration of the
Aggregate Purchase Price, Seller hereby agrees it has not and will not exercise
its Conversion Rights with respect to the Shares or, if it has already exercised
its Conversion Rights, it hereby agrees to withdraw and revoke such exercise and
will execute all necessary documents and take all actions required in
furtherance of such revocation.

 

3.             Closing Matters.

 

(a)           Within one business day of the date of this Agreement, (i) Seller
shall send Buyer a notice of the number of Shares that Seller owns and that are
subject to this Agreement, together with a calculation of the Aggregate Purchase
Price, 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”).  The Company shall use commercially
reasonable efforts to cause the trust account to be liquidated on the Closing
Date but in no event shall such liquidation occur more than seven calendar days
after 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.

 

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. 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.

 

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(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.
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, or as of the Closing will be, the
legal and beneficial owner of the Shares and will transfer to Buyer on or prior
to 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.

 

(f)            Number of Shares. The Shares include all of the common stock
owned by Seller as of the date hereof and as of the close of business on
November 11.

 

(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.  Buyer has made no Purchase Price Per
Share offer to any other party in excess of such Purchase Price Per Share being
offered to Seller.  If Buyer offers a Purchase Price Per Share to any party in
excess of the Purchase Price Per Share offered to Seller (such offer, a “Greater
Offer”), Buyer shall (a) inform Seller in writing of the Greater Offer and
(b) pay to Seller the difference between (i) the Greater Offer and (ii) the
Purchase Price Per Share offered to Seller.  For purposes of this Section 4(h),
“Purchase Price Per Share” shall not include any fees paid to a third party
“aggregator” engaged by the Buyer to buy shares from Buyer stockholders who have
indicated an intention to convert their shares and/or vote against the Merger.

 

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.

 

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(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, except that Seller may purchase common stock of Buyer on or before the
close of business on November 11, 2009, as long as Seller does not own more than
650,000 shares of Buyer’s common stock as of the close of business on
November 11, 2009.

 

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 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

 

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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 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, 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

 

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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. 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 reason
whatsoever in respect thereof. In the event Seller commences any 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:

/s/ David A. Minella

 

Name:  David A. Minella

 

Title:  Chairman and Chief Executive Officer

 

 

 

 

 

NISSWA ACQUISITION MASTER FUND LTD.

 

 

 

 

 

By:

/s/ Jeff Stolt

 

Name:  Jeff Stolt

 

Title:    CTO-Pine River Capital Mgmt LP
             Its: Investment Manager

 

 

Purchase Price Per Share: $ 9.95

Number of Shares: 650,000

 

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PROSPECT ACQUISITION CORP.

9130 GALLERIA COURT, SUITE 318

NAPLES, FLORIDA 34109

 

Annex 1

 

November    , 2009

 

Continental Stock Transfer & Trust Company

17 Battery Place

New York, New York 10004

 

Attn:                                          

 

Re: Trust Account No. 530-151677

 

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 Nisswa Acquisition
Master Fund Ltd. in accordance with the bank wire instructions provided to you
below.

 

Bene Bank — JPMorgan Chase, New York

Bene SWIFT —                           

Bene ABA —                              

A/C — Goldman Sachs & Co New York

A/C #                                           

FFC — Nisswa Acquisition Master Fund Ltd

FFC A/C # –                                

 

In order to expedite payment, attached is Nisswa Acquisition Master Fund Ltd.’s
Form W-8IMY.

 

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The address for Nisswa Acquisition Master Fund Ltd. is 601 Carlson Parkway,
Suite 330, Minnetonka, MN 55305. The contact person for Nisswa Acquisition
Master Fund Ltd. is Jeff Stolt. He can be reached at 612 238 3350.

 

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:

 

 

 

 

 

NISSWA ACQUISITION MASTER FUND LTD.

 

 

 

 

By:

 

 

Name:

 

 

Title:

 

 

 

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