Exhibit 10.1

 

AMENDMENT NO. 1 TO

AGREEMENT AND PLAN OF MERGER

 

THIS AMENDMENT NO. 1 (this “Amendment”) dated as of October 22, 2009, to that
certain AGREEMENT AND PLAN OF MERGER dated as of September 8, 2009 (the
“Original Agreement”), by and among PROSPECT ACQUISTION CORP., a company
incorporated under the laws of Delaware (“Prospect”), KW MERGER SUB CORP., a
company incorporated under the laws of Delaware and a wholly owned subsidiary of
Prospect (“Merger Sub”) and KENNEDY-WILSON, INC., a company incorporated under
the laws of Delaware (“KW”).

 

RECITALS

 

WHEREAS, the Parties are parties to the Original Agreement; and

 

WHEREAS, the Parties wish to amend the Original Agreement pursuant to and in
accordance with Section 11.2 thereof as further set forth herein.

 

NOW, THEREFORE, in consideration of the mutual promises contained herein and in
the Original Agreement, pursuant to and in accordance with Section 11.2 of the
Original Agreement, the Parties agree to amend the Original Agreement as
follows:

 

1.  Definitions.  All capitalized terms used herein without definition shall
have the meanings assigned to such terms in the Original Agreement.

 

2.  Amendment to Background Section.  The fourth full paragraph of the
Background section of the Original Agreement shall be deleted in its entirety
and replaced with the following:

 

“Concurrently with the execution of this Agreement, Prospect, the Prospect
Founders, De Guardiola Advisors, Inc. (“DGA”), De Guardiola Holdings, Inc.
(“DGH”) and KW are entering into a letter agreement, of even date herewith, as
may be amended and/or restated from time to time hereafter (as so amended and/or
restated, the “Forfeiture Agreement”), in the form attached hereto as Exhibit A,
pursuant to which, subject to the terms and conditions set forth therein (i) the
Prospect Founders have agreed to the forfeiture and cancellation of 4,750,000
shares of Prospect Common Stock and (ii) Prospect has agreed to issue to DGH an
aggregate of 250,000 shares of Prospect Common Stock upon the closing of the
transaction contemplated by this Agreement in satisfaction of an obligation of
Prospect under its engagement letter with DGA.”

 

3.  Replacement of Section 6.8.  Section 6.8 of the Original Agreement shall be
deleted in its entirety and replaced with the following:

 

“Section 6.8 Management Incentive Plan.  Prior to Closing, Prospect shall adopt
an equity incentive plan (the “Management Incentive Plan”), for the issuance of
up to 2,475,000 shares of Prospect Common Stock (the “Management Incentive
Shares”) and, effective at the Closing, Prospect shall grant awards under the
Management Incentive Plan for the aggregate number of Management Incentive
Shares to key employees of the Surviving Corporation in the amounts and upon
terms and conditions to be mutually agreed upon between Prospect and KW.

 

4.  Replacement of Section 8.2(w).  Section 8.2(w) of the Original Agreement
shall be deleted in its entirety and replaced with the following:

 

“(w)  Prospect Founder Forfeited Shares.  The Prospect Founders will have
delivered certificates representing 4,750,000 shares of Prospect Common Stock
duly endorsed in blank with executed blank stock powers pursuant to the terms of
the Forfeiture Agreement.”

 

5.  Full Force and Effect.  Except as expressly amended hereby, the Original
Agreement shall continue in full force and effect in accordance with the
provisions thereof.

 

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6.  Governing Law.  This Amendment shall be governed by and construed in
accordance with the laws of the State of New York regardless of the laws that
might otherwise govern under applicable principles of conflicts of laws thereof.

 

7.  Counterparts; Facsimile Execution.  This Amendment may be executed in one or
more counterparts, all of which shall be considered one and the same agreement
and shall become effective when one or more counterparts have been signed by
each of the Parties and delivered to the other Parties. Facsimile or electronic
execution and delivery of this Amendment is legal, valid and binding for all
purposes.

 

8.  Headings.  All section titles and captions contained in this Amendment are
for convenience only and shall not be deemed a part of this Amendment.

 

9.  Severability.  If any term or other provision of this Amendment is invalid,
illegal or incapable of being enforced by any rule or Law, or public policy, all
other conditions and provisions of this Amendment shall nevertheless remain in
full force and effect so long as the economic or legal substance of the
transactions contemplated hereby are not affected in any manner materially
adverse to any Party. Upon such determination that any term or other provision
is invalid, illegal or incapable of being enforced, the Parties shall negotiate
in good faith to modify this Amendment so as to effect the original intent of
the Parties as closely as possible in an acceptable manner to the end that
transactions contemplated by this Amendment are fulfilled to the extent
possible.

 

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IN WITNESS WHEREOF, the Parties hereto have caused this Amendment to be duly
executed by their respective authorized signatories as of the date first
indicated above.

 

 

PROSPECT ACQUISITION CORP.

 

 

 

 

 

By:

/s/ DAVID A. MINELLA

 

Name: David A. Minella

 

Title: Chairman & CEO

 

Address: 9130 Galleria Court, Suite 318

 

Naples, FL 34109

 

 

 

 

 

With a copy to:

 

 

 

 

 

Bingham McCutchen LLP

 

399 Park Avenue

 

New York, NY 10022

 

Attention: Floyd I. Wittlin, Esq.

 

 

 

 

 

KW MERGER SUB CORP.

 

 

 

 

 

By:

/s/ DAVID A. MINELLA

 

Name: David A. Minella

 

Title: President & Secretary

 

Address: c/o Prospect Acquisition Corp.

 

9130 Galleria Court, Suite 318

 

Naples, FL 34104

 

 

 

 

 

KENNEDY-WILSON, INC.

 

 

 

 

 

By:

/s/ WILLIAM J. MCMORROW

 

Name: William J. McMorrow

 

Title: Chief Executive Officer

 

Address: 9601 Wilshire Blvd.

 

Beverly Hills, CA 90210

 

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