Exhibit
10.2


 


STOCK
PURCHASE AGREEMENT


 


STOCK PURCHASE AGREEMENT
(this “Agreement”) made as of this     th day of
November, 2009 among Prospect Acquisition Corp., a Delaware corporation
(“Buyer” or “Prospect”), the signatory on the execution page hereof (“Seller”)
and solely for the purposes of Sections 3(d), 6 and 7(a) hereof, David A.
Minella (“Minella”), LLM Structured Equity Fund L.P. (“LLM Structured Equity”)
and LLM Investors L.P. (“LLM Investors” and together with Minella and LLM
Structured Equity, the “Insiders”).


 


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 in the
financial services industry (“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 (the “Trust Account”) maintained
by Continental Stock Transfer and Trust Company (“Continental”) 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, Prospect has
entered into that certain Agreement and Plan of Merger, dated September 8,
2009, among Prospect, KW Merger Sub Corp., Prospect’s wholly-owned subsidiary
formed for the purpose of consummating the merger (“Merger Sub”), and Kennedy-Wilson, Inc.
(“Kennedy-Wilson”), as amended, which, among other things, provides for the
merger of Merger Sub with and into Kennedy-Wilson, with Kennedy-Wilson
continuing as the surviving corporation and becoming a direct wholly-owned
subsidiary of Prospect (the “Merger”); 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 which are present
and entitled 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”)
plus the fees set forth therein (the “Fees”).


 


NOW, THEREFORE, for and 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:


 


1.             Purchase.  Seller hereby agrees to sell to Buyer and
Buyer hereby agrees to (i) purchase from Seller at the Closing (as defined
in Section 3(c)) the Shares at the Purchase Price Per Share, for the
Aggregate Purchase Price and (ii) pay the Fees to Seller at the Closing.


 

















 


2.             Agreement
not to Convert.  In further
consideration of the Aggregate Purchase Price and the Fees, provided that the
representations and warranties made by Buyer in Section 5 hereof are true
and correct on the date of the stockholder meeting in connection with the
approval of the Merger with the same effect as though made on such date and
Buyer has complied in all material respects with its obligations set forth in
this Agreement through such date, 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.


 


3.             Closing
Matters.


 


(a)           Within one
business day of the date of this Agreement, Buyer shall send the notice
attached as Annex 1 hereto to Continental.


 


(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 in connection with the consummation
of the Merger, which consummation shall occur no later than 11:59 p.m.
eastern standard time on the seventh day following the consummation of the
Merger (the “Closing Date”).  At the
Closing, Buyer shall pay Seller the Aggregate Purchase Price and the Fees by
wire transfer from Prospect’s Trust Account of immediately available funds in
accordance with the Irrevocable Instructions attached as Annex I hereto 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.


 


(d)           In the
event that the Merger is not consummated by 11:59 p.m. eastern standard on
November 14, 2009 and Buyer has not dissolved and liquidated its assets
and paid Seller the liquidation value of its Shares by November 20, 2009,
then Buyer shall pay to Seller in immediately available funds, until Buyer
liquidates and distributes its assets to its stockholders, an amount equal to
the lesser of (i) 4.0% of the Purchase Price Per Share per month
(pro-rated on a daily basis based on the date when payment is required and the
date such payment is made) or (ii) the highest lawful rate, for each Share
held by Seller from the date such payment was required to be made through the
date such payment is actually made. 
Buyer agrees to promptly dissolve and liquidate and distribute its
assets in accordance with Delaware law if the Merger is not consummated by
11:59 p.m. eastern standard time on November 14, 2009.


 


(e)           In the
event that the Merger is consummated and Seller has not received the Aggregate
Purchase Price and the Fees by November 20, 2009, then Buyer shall pay to
Seller in immediately available funds an amount equal to the lesser of (i) 4.0%
of the Purchase Price Per Share per month (pro-rated on a daily basis based on
the date when payment is required and the date such payment is made) or (ii) the
highest lawful rate, for each Share held by Seller from the date such payment
was required to be made through the date such payment is actually made.


 


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4.             Representations
and Warranties of the Seller.  Seller
makes the following representations and warranties to and for the benefit of
Buyer on the date hereof and on the Closing.


 


(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 as are
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 (the “Exchange Act”) and the Securities Act of
1933, as amended (the “Securities Act”) 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.  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, to its knowledge, will transfer to Buyer on
the Closing Date good title to the Shares free and clear of any liens, claims,
security interests, options, charges or any other encumbrance whatsoever,
except as otherwise agreed to in writing to Buyer.  Buyer acknowledges that the Shares may be
transferred without the right to vote them at the meeting of stockholders to
approve the Acquisition.


 


(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)           Aggregate
Purchase Price Negotiated.  Seller
represents that both the amount of Securities and the Aggregate Purchase Price
were negotiated figures by the parties and 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,
Warranties and Covenants of Buyer. 
Buyer makes the following representations, warranties and covenants to
and for the benefit of Seller on the date hereof and on the Closing.


 


(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.


 


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(b)           Independent
Investigation.  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, except as are contained in this Agreement.


 


(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 of Buyer
enforceable against Buyer 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.  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.


 


(e)           Organization.  Buyer has been duly organized and is validly
existing under the laws of its jurisdiction of organization, with all requisite
power and authority to enter into this Agreement, to carry out the provisions
and conditions hereof, and to consummate the transactions contemplated hereby.


 


(f)            Liabilities.  Buyer (i) has no liabilities,
obligations, guarantees or commitments of any nature whatsoever, asserted or
unasserted, known or unknown, absolute or contingent, accrued or unaccrued,
matured or unmatured or otherwise (“Liabilities”) other than those reflected on
the Schedule of Liabilities attached hereto, and (ii) has no outstanding
Liabilities that are not subject to an effective waiver of claims against the
Trust Account, except those Liabilities set forth on such Schedule of
Liabilities and indicated as “unwaived,” which Schedule of Liabilities
includes, but is not limited to, all Liabilities that resulted from, and
potential Liabilities that could result from, target businesses, vendors and
service providers that have not waived any claims against the Trust Account.


 


(g)           Title
and Liens.     (i) Buyer has good
title to the Trust Account and all assets in,
or credited to, in the Trust Account, and (ii) the Trust Account,
together with all assets in, or credited
to, the Trust Account, are free and clear of any security interest, mortgage, pledge, lien, charge, encumbrance, title
retention agreement or analogous instrument or device (a “Lien”) other
than the Liens in favor of Continental for the customary fees and expenses of
Continental incurred in connection with the administration of the Trust Account
and those creditors set forth on the Schedule of Liabilities attached hereto
and indicated as “unwaived”, and (iii) Buyer
has not and will not create, incur, or suffer to exist any Lien on the Trust
Account or any asset in or credited to the Trust Account, whether arising by
contract or agreement or under law.


 


(h)           Waivers
of Claims Against Trust Account. 
Except as otherwise disclosed on the Schedule of Liabilities described
in Section 5(f) above, Buyer has not obtained and agrees that it will
not obtain, the services of any vendor or service provider unless and until
such vendor or service provider acknowledges in writing that it does not have
any right, title, interest or claim of any kind in or to any monies,
securities, or other assets of the Trust Account and waives any claim it may
have in the future as a result of, or arising out of, any negotiations,
contracts or agreements with Buyer and will not seek recourse against the Trust
Account for any reason whatsoever; provided that the 


 


4

















 


foregoing shall not apply to Buyer’s independent
accountants.  In addition, the waiver of
claims against the Trust Account agreed to by Buyer and Kennedy-Wilson in the
Merger Agreement shall remain in full force and effect.


 


(i)            Future
Indebtedness.          Buyer agrees
that it shall not incur any Indebtedness (as defined below) in excess of
$10,000 in the aggregate, other than Indebtedness listed on Schedule I attached
hereto, without the prior written consent of Seller prior to the Closing.
“Indebtedness” means (i) indebtedness for borrowed money or the deferred
price of property, goods or services (other than trade and other payables
incurred in the ordinary course of business), such as reimbursement and other
obligations for surety bonds and letters of credit, (ii) obligations
evidenced by notes, bonds, debentures or similar instruments, (iii) capital
lease obligations, (iv) the net obligations of Buyer under derivative
transactions (including, but not limited to, under swap agreements) or
commodity transactions, and (v) any other operating expenses or other
obligations incurred by Buyer; and (vi) obligations of Buyer under a
guarantee of debt of others of the kinds referred to in clauses (i) through
(v) above. Notwithstanding anything
to the contrary in this Agreement, “Indebtedness” shall not mean or include (i) any
contracts or arrangements of Buyer to purchase additional shares of its common
stock using proceeds held in the Trust Account, (ii) any taxes owed to any
federal, state or local taxing authority and (iii) the payment of any
Conversion Rights.   The Indebtedness set
forth on Schedule I shall be subordinated in payment and performance to the
obligation to pay Seller pursuant to this Agreement in a manner reasonably
acceptable to Seller.


 


(j)            Trust
Account.  Buyer confirms that at
least $247,708,000 is held in the Trust Account.  Buyer covenants that the value of the Trust
Account, as of any date of determination, shall not be less than $[9.91] per
share of Buyer common stock issued in the IPO subject to conversion and shall
grant Seller view-only Internet access to the Trust Account to confirm such
value.


 


(k)           Irrevocable
Instructions to Continental.  Upon
execution of this Agreement, Buyer is delivering the Irrevocable Instructions
attached as Annex I to Continental requiring that no funds be released from the
Trust Account unless the amounts released from the Trust Account are used to
pay in full the amount due to the Seller under this Agreement prior to release
of any funds from the Trust Account to Buyer or any other party and Continental
has acknowledged and agreed to such Irrevocable Instructions. Seller hereby
agrees and consents to the terms of such irrevocable instruction letter. Buyer
shall deliver a copy of such Irrevocable Instructions to Seller upon execution
of this Agreement.  Buyer agrees that it
will not enter into an agreement for a replacement of Continental as trustee in
connection with the Trust Account unless and until Buyer, such substitute
trustee, and any other required signatory shall first deliver to the Seller
fully executed Irrevocable Instructions substantially in the form attached as
Annex 1 hereto together with all others instructions executed by Continental
and Buyer in connection with transfer of any funds in the Trust Account.  Upon the replacement of Continental, all
references herein to Continental will be to the substitute trustee.  Neither the Company shall provide, nor the
Insiders shall cause the Company to provide, any instructions with respect to
the distribution of the Trust Account that are different from the Irrevocable
Instructions without the consent of Seller and all signatories to the
Irrevocable Instructions; provided, however, upon written
confirmation of Trustee’s compliance with the irrevocable instruction letter
and payment of the Aggregate Purchase Price and the Fees to Seller, Buyer may
liquidate the Trust Account without further regard to this letter or such
irrevocable instructions.


 


(l)            Investments.
From the date of this Agreement until all amounts due to the Seller are paid,
Buyer agrees to invest the monies in the Trust Account in a money market fund
invested in United States “government securities” within the meaning of Section 2(a)(16)
of the Investment Company Act of 1940.


 


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(m)          Filings.
None of the filings and reports made by Buyer with SEC and available on the
SEC’s EDGAR system, as of their respective filing dates, will contain any
untrue statement of a material fact or omitted to state a material fact
required to be stated therein or necessary to make the statements therein, in
the light of the circumstances under which they were made, not misleading.  Prior to Closing, Buyer agrees to make all
required filings with the SEC under the federal securities laws.


 


6.             Representations,
Warranties and Covenants of Insiders. 
Each Insider makes the following representations, warranties and
covenants to and for the benefit of Seller on the date hereof and on the
Closing.


 


(a)           The
execution, delivery and performance of this Agreement by such Insider is a
legal, valid and binding agreement of such Insider, enforceable against such
Insider in accordance with its terms, subject to applicable bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium and similar laws
affecting creditors’ rights and remedies generally and subject, as to
enforceability, to general principles of equity, including principles of
commercial reasonableness, good faith and fair dealing (regardless of whether
enforcement is sought in a proceeding at law or in equity).


 


(b)           Such
Insider will not take any action or give any instructions that would result in
Buyer breaching this Agreement.


 


7.             Indemnification.


 


(a)           In the
event that the Aggregate Purchase Price and the Fees are not fully paid to
Seller at (a) the Closing or (b) if the Merger is not consummated,
upon the liquidation of Buyer while Seller owns any Shares, Buyer and each of
the Insiders hereby agree, jointly and severally, to indemnify and hold
harmless Seller against any loss incurred in an amount equal to the difference
between (i) the sum of the Aggregate Purchase Price, the Fees and the
Reimbursable Expenses (as defined in Section 11 hereof), minus (ii) the
amount received by Seller from Buyer, plus any default payments incurred
pursuant to Section 3(d) and 3(e) hereof. Buyer and the Insiders
agree, jointly and severally, to pay any and all costs, fees and expenses
(including counsel fees and expenses) incurred by Seller in enforcing its
rights under this Section 7(a).


 


(b)           Buyer and
each of the Insiders hereby agree, jointly and severally, to indemnify and hold
harmless Seller and each of its partners, principals, members, officers,
directors, employees, agents, representatives and affiliated or managed funds
from and against any and all losses, claims, damages, liabilities and expenses,
joint or several, of any kind or nature whatsoever, and any and all actions,
inquiries, proceedings and investigations in respect thereof (including any
proceeding by any government subdivision and any claim by any former or current
securityholder of Buyer), whether pending or threatened, to which any such
party may become subject, arising in any manner out of or in connection with
this Agreement or the transactions contemplated herein to the fullest extent
permitted under applicable law, regardless of whether any of such parties is a
party hereto, and immediately upon request reimburse such party for such
party’s legal and other expenses as they are incurred in connection with
investigating, preparing, defending, paying, settling or compromising any such
action, inquiry, proceeding or investigation (including, without limitation,
usual and customary per diem compensation for any such party’s involvement in
discovery proceedings or testimony); provided that Buyer and the Insiders shall
not be liable for any such loss, liability, claim, damage or expense resulting
from actions taken by Seller in bad faith or as a result of its gross
negligence or willful misconduct.


 


6

















 


8.             Termination
of Purchase Obligation.  The
obligation of Seller and Buyer to sell and purchase, respectively, the Shares
under this Agreement shall become null and void and of no force and effect upon
the earlier of (i) the termination of the Merger Agreement or abandonment
of the Merger or (ii) 11:59 p.m. eastern standard time on November 14,
2009 if the Merger has not been consummated by such date.  Notwithstanding any provision in this
Agreement to the contrary, Buyer’s obligation to purchase the Shares from
Seller and Seller’s obligation to sell the Shares to Buyer shall be conditioned
on the consummation of the Merger.


 


9.             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.


 


10.           Expenses.  All costs and expenses incurred in connection
with the transactions contemplated by this Agreement, including, without
limitation, legal fees and expenses and all other out-of-pocket costs and
expenses of third parties incurred by a party in connection with the
negotiation and effectuation of the terms and conditions of this Agreement and
the transactions contemplated thereby, shall be the obligation of the
respective party incurring such fees and expenses; provided that Buyer shall
pay up to $25,000 of the reasonable costs and expenses incurred by Seller in
connection with the transactions contemplated by this Agreement (the
“Reimbursable Expenses”).


 


11.           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 or electronic transmission,
and any such executed facsimile or electronic copy shall be treated as an
original.


 


12.           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 and irrevocably waives trial by jury.


 


13.           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.


 


14.           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,
except that Seller may assign any of its rights and interests to any person or
entity, with Buyer’s prior written consent (which consent will not be
unreasonably withheld) provided that the performance required of Seller
hereunder will not be impaired.


 


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


 


16.           Entire
Agreement; Changes in Writing.  This
Agreement constitutes the entire agreement among the parties hereto and
supersedes and cancels any prior agreements, representations, 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.


 


17.           Maximum
Payments.  Nothing contained herein
shall be deemed to establish or require the payment of a rate of interest or
other charges in excess of the maximum rate permitted by applicable law.  In the event that the rate of interest
required to be paid or other charges hereunder exceed the maximum rate
permitted by applicable law, any payments in excess of such maximum rate shall
be credited against amounts owed by Buyer or the Insiders to the Seller and
thus refunded to Buyer or the Insiders, as applicable.


 


[signatures on following page]


 


8
















 


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:

  
	
   

  	
  Title:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  VICTORY
  PARK SPECIAL SITUATIONS MASTER FUND, LTD.

  
	
   

  	
  By:
  Victory Park Capital Advisors, LLC, its investment manager

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:
  Scott R. Zemnick

  
	
   

  	
  Title:   General Counsel

  
	
   

  	
   

  
	
   

  	
  Address:

  
	
   

  	
  227 West Monroe
  Street, Suite 3900

  
	
   

  	
  Chicago,
  Illinois 60606

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  The
  undersigned joins as parties to the foregoing Agreement for the limited
  purposes provided in Sections 3(d), 6 and 7(a) of the Agreement:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  David
  A. Minella

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Patrick J. Landers

  



 


Purchase Price Per Share: $               


Number of Shares:                


Aggregate Purchase Price:  $               


Fees: $               


 


9

















 


Annex I


 


PROSPECT ACQUISITION CORP.


9130 Galleria Court, Suite 318


Naples, FL 34109


 


November     ,
2009


 


Continental
Stock Transfer & Trust Company


17
Battery Place


New
York, New York 10004


 


Attn:


 


Re:          Trust Account No.                        
(the “Trust Account”)


 


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”).  Capitalized 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, then on the date the Trust Account is liquidated, you are hereby
irrevocably instructed by the Company to immediately deliver from the Trust
Account an aggregate amount equal to USD $                  
(the “Aggregate Amount”) in consideration for the delivery (through the DWAC
System to the Company’s account) of an aggregate of                 
shares of the Company’s common stock (the “Shares”) beneficially owned by
Victory Park Credit Opportunities Master Fund, Ltd., Victory Park Special
Situations Master Fund, Ltd., Platinum Partners Liquid Opportunity Fund, LP and
Platinum Partners Value Arbitrage Fund, LP (each an “Investor” and,
collectively, the “Investors”) which shall be distributed to such Investors contemporaneously
in the amounts indicated on Schedule A hereto prior to the release of any funds
from the Trust Account to the Company or any other third party. Such amounts
shall be delivered to the Investors in accordance with the bank wire
instructions delivered to you by each of the Investors.  To the extent there is less than the
Aggregate Amount remaining in the Trust Account upon distribution to the
Investors, then such lesser amount shall be allocated to the Investors pari
passu.


 


The
funds distribution described above is for the benefit of the Investors, each of
whom is hereby made a third party beneficiary of these irrevocable instructions
with rights of enforcement.


 


Each
of the Company and Trustee acknowledges that the instructions contained herein may
not be amended, modified, waived or otherwise changed by the Company, Trustee
or any other person without the prior written consent of all the Investors.


 


In
order to expedite payment, attached is Victory Park’s Form W-8.


 


10

















 


Kindly
acknowledge where indicated below, your receipt and understanding of these
instructions and return a copy to Mintz Levin Cohn Ferris Glovsky and Popeo,
PC, 666 Third Avenue, New York, New York 10017, attention: Jeffrey P. Schultz, Esq.,
Fax Number: (212) 983-3115; Phone Number: (212) 692-6732 and to Grushko &
Mittman, P.C., 551 Fifth Avenue, Suite 1601, New York, NY 10176,
attention: Edward M. Grushko, Esq., Fax Number:  (212) 697-3575; Phone Number: (212) 697-9500.


 


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


 


	
   

  	
  Very truly yours,

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  PROSPECT ACQUISITION CORP.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  



 


Acknowledged
and Agreed:


 


CONTINENTAL
STOCK TRANSFER & TRUST COMPANY


 


	
  By:

  	
   

  	
   

  
	
  Name:

  
	
  Title:

  



 


11

















 


Schedule of Liabilities


 


Unwaived


 


 


Waived


 


12

















 


SCHEDULE I


 


13