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.


 

















 


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.


 

















 


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