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:


 

















 


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.


 

















 


(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.


 

















 


(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 


 

















 


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 


 

















 


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]


 

















 


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


 

















 


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.


 

















 


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: