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Exhibit 10.8    
    

 
 

INVESTMENT MANAGEMENT TRUST AGREEMENT    
    

        This Agreement is made as of [    •    ], 2007 by and between Prospect Acquisition Corp., a Delaware
corporation (the "Company"), and Continental Stock Transfer & Trust Company (the "Trustee"). 

        WHEREAS, the Company's registration statement on Form S-1, No. 333-145110
("Registration Statement"), for its initial public offering of securities ("IPO") has been declared
effective as of the date hereof ("Effective Date") by the Securities and Exchange Commission (capitalized terms used herein and not otherwise defined
shall have the meanings set forth in the Registration Statement); and 

        WHEREAS, Citigroup Global Markets Inc. ("Citigroup") is acting as the
representative of the several underwriters in the IPO (the "Underwriters") pursuant to an underwriting agreement dated on or about the date hereof
between the Company and Citigroup (the "Underwriting Agreement"); and 

        WHEREAS, as described in the Registration Statement, and in accordance with the Company's Certificate of Incorporation, $146,750,000 of
the gross proceeds of the IPO, including certain deferred underwriting discounts and commissions and proceeds from the sale of the Sponsors' Warrants (or $168,350,000 if the underwriters'
over-allotment option is exercised in full or a pro rata portion thereof pursuant to the terms of the Underwriting Agreement if the underwriters' over-allotment option is
exercised in part, but not in full, prior to the time of its expiration), will be delivered to the Trustee to be deposited and held in a trust account for the benefit of the Company and the holders of
the Company's common stock, par value $.0001 per share, issued in the IPO as hereinafter provided (the amount to be delivered to the Trustee will be referred to herein as the
"Property", the stockholders for whose benefit the Trustee shall hold the Property will be referred to as the "Public
Stockholders," and the Public Stockholders and the Company will be referred to together as the "Beneficiaries"); 

        WHEREAS, pursuant to the Underwriting Agreement, a portion of the Property equal to $4,500,000 (or $5,175,000, if the underwriters'
over-allotment option is exercised in full or a pro rata portion thereof pursuant to the terms of the Underwriting Agreement if the underwriters'
over-allotment option is exercised in part, but not in full, prior to the time of its expiration as specified in a notice pursuant to Paragraph 3(e) hereof) is attributable to
deferred underwriting commissions that will become payable by the Company to Citigroup upon the consummation of an Initial Business Combination (as defined in the Registration Statement) (the
"Deferred Discount"); and 

        WHEREAS, the Company and the Trustee desire to enter into this Agreement to set forth the terms and conditions pursuant to which the
Trustee shall hold the Property; 

        IT IS AGREED:  

        1.    Agreements and Covenants of Trustee.    The Trustee hereby agrees and covenants to:

        (a)   Hold
the Property in trust for the Beneficiaries in accordance with the terms of this Agreement in a segregated trust account (the "Trust
Account") established by the Trustee at JPMorgan Chase, N.A.; 

        (b)   Manage,
supervise and administer the Trust Account subject to the terms and conditions set forth herein; 

        (c)   In
a timely manner, upon the instruction of the Company, to invest and reinvest the Property in United States "government securities" within the meaning of
Section 2(a)(16) of the Investment Company Act of 1940 having a maturity of 180 days or less, and/or in any open ended investment company registered under the Investment Company Act of
1940 that holds itself out as a money market fund selected by the Company meeting the conditions of paragraphs (c)(2), (c)(3) and (c) (4) of Rule 2a-7 promulgated under the
Investment Company Act of 1940, as determined by the Company; 

        (d)   Collect
and receive, when due, all principal and income arising from the Property, which shall become part of the "Property," as such term is used herein; 

        (e)   Notify
the Company and Citigroup of all communications received by it with respect to any Property requiring action by the Company; 

        (f)    Supply
any necessary information or documents as may be requested by the Company in connection with the Company's preparation of the tax returns for the Trust Account; 

        (g)   Participate
in any plan or proceeding for protecting or enforcing any right or interest arising from the Property if, as and when instructed by the Company to do so; 

        (h)   Render
to the Company, and to such other person as the Company may instruct, monthly written statements of the activities of and amounts in the Trust Account reflecting
all receipts and disbursements of the Trust Account; and 

        (i)    Commence
liquidation of the Trust Account only after and promptly after receipt of, and only in accordance with, the terms of a letter (each, a
"Termination Letter"), in a form substantially similar to that attached hereto as either  Exhibit A or Exhibit B hereto, signed on behalf of the Company by its Chief Executive
Officer, Chief Financial Officer, Secretary or Assistant Secretary or other authorized officer of the Company, and complete the liquidation of the Trust Account and distribute the Property in the
Trust Account only as directed in the Termination Letter and the other documents referred to therein; provided,  however, that in the event that a
Termination Letter has not been received by the Trustee by the date which is 24-months after the date of
the final prospectus for the IPO (the "Last Date"), the Trust Account shall be liquidated in accordance with the procedures set forth in the Termination
Letter attached as Exhibit B hereto and distributed to the stockholders of record on the Last Date. In all cases, the Trustee shall provide Citigroup with a copy of any Termination Letters
and/or any other correspondence that it receives with respect to any proposed withdrawal from the Trust Account promptly after it receives same. The provisions of this Section 1(i) may
not be modified, amended or deleted under any circumstances. 

        2.    Limited Distributions of Income from Trust Account.    

        (a)   Upon
written request from the Company, which may be given from time to time in a form substantially similar to that attached hereto as  Exhibit C, the Trustee shall distribute to the Company the amount
requested by the Company to cover any income, franchise or other tax obligation
owed by the Company as a result of interest or other income earned on the funds held in the Trust Account; 

        (b)   Upon
written request from the Company, which may be given from time to time in a form substantially similar to that attached hereto as  Exhibit D, the Trustee shall distribute to the Company the amount
requested by the Company to cover expenses related to investigating and
selecting a target business and other working capital requirements; provided, however, that the
aggregate amount of all such distributions shall not exceed the lesser of (y) the aggregate amount of income actually received on amounts in the Trust Account less an amount equal to estimated
taxes that are or will be due on such income at an assumed rate of 40% and (z) $2,000,000; 

        (c)   Distribute,
upon notice by the Company, the Deferred Discount, as defined in Section 3(e) to Citibank; and 

        (d)   The
limited distributions referred to in Sections 2(a) and 2(b) above shall be made only from income collected on the Property. Except as provided in
Section 2(a), 2(b) and 2(c) above, no other distributions from the Trust Account shall be permitted except in accordance with Section 1(i) hereof. 

        (e)   It
is understood and agreed between the parties hereto that the Trustee's only responsibility under this Section 2 is to follow the instructions of the Company. 

        3.    Agreements and Covenants of the Company.    The Company hereby agrees and covenants to: 

        (a)   Give
all instructions to the Trustee hereunder in writing, signed by the Company's Chief Executive Officer, Chief Financial Officer or other authorized officer. In
addition, except with 

respect
to its duties under paragraphs 1(i), 2(a) and 2(b) above, the Trustee shall be entitled to rely on, and shall be protected in relying on, any verbal or telephonic advice or instruction which
it in good faith believes to be given by any one of the persons authorized above to give written instructions, provided that the Company shall promptly confirm such instructions in writing; 

        (b)   Hold
the Trustee harmless and indemnify the Trustee from and against, any and all expenses, including reasonable counsel fees and disbursements, or loss suffered by the
Trustee in connection with any action, suit or other proceeding brought against the Trustee involving any claim, or in connection with any claim or demand which in any way arises out of or relates to
this Agreement, the services of the Trustee hereunder, or the Property or any income earned from investment of the Property, except for expenses and losses resulting from the Trustee's gross
negligence or willful misconduct. Promptly after the receipt by the Trustee of notice of demand or claim or the commencement of any action, suit or proceeding, pursuant to which the Trustee intends to
seek indemnification under this paragraph, it shall notify the Company in writing of such claim (hereinafter referred to as the "Indemnified Claim").
The Trustee shall have the right to conduct and manage the defense against such Indemnified Claim, provided, that the Trustee shall obtain the consent of the Company with respect to the selection of
counsel, which consent shall not be unreasonably withheld. The Trustee may not agree to settle any Indemnified Claim without the prior written consent of the Company, which consent shall not be
unreasonably withheld, unless such settlement includes a full release of the Company with respect to such Indemnified Claim. The Company may participate in such action with its own counsel; 

        (c)   Pay
the Trustee an initial acceptance fee, an annual fee and a transaction processing fee for each disbursement made pursuant to Section 2 as set forth on
Schedule A hereto, which fees shall be subject to modification by the parties from time to time. It is expressly understood that the Property shall not be used to pay such fees unless and until
it is distributed to the Company pursuant to Section 2. The Company shall pay the Trustee the initial acceptance fee and first year's fee at the consummation of the IPO and thereafter on the
anniversary of the Effective Date. The Trustee shall refund to the Company the annual fee (on a pro rata basis) with respect to any period after the liquidation of the Trust Account. The Company shall
not be responsible for any other fees or charges of the Trustee except as set forth in this Section 3(c) and as may be provided in Section 3(b) hereof (it being expressly understood that
the Property shall not be used to make any payments to the Trustee under such Sections); 

        (d)   In
connection with any vote of the Company's stockholders regarding a Business Combination, provide to the Trustee an affidavit or certificate of a firm regularly
engaged in the business of soliciting proxies and/or tabulating stockholder votes (which firm may be the Trustee) verifying the vote of the Company's stockholders regarding such Business Combination;
and 

        (e)   Within
five business days after Citigroup's over-allotment option (or any unexercised portion thereof) expires or is exercised in full, provide the Trustee
with a notice in writing (with a copy to Citigroup) of the total amount of the Deferred Discount to be released to Citigroup upon consummation of an Initial Business Combination, which shall in no
event be less than $4,500,000. 

        4.    Limitations of Liability.    The Trustee shall have no responsibility or liability to: 

        (a)   Take
any action with respect to the Property, other than as directed in paragraphs 1 and 2 hereof and the Trustee shall have no liability to any party except for
liability arising out of its own gross negligence or willful misconduct; 

        (b)   Institute
any proceeding for the collection of any principal and income arising from, or institute, appear in or defend any proceeding of any kind with respect to, any
of the Property unless and until it shall have received instructions from the Company given as provided herein to do so and the Company shall have advanced or guaranteed to it funds sufficient to pay
any expenses incident thereto; 

        (c)   Change
the investment of any Property, other than in compliance with paragraph 1(c); 

        (d)   Refund
any depreciation in principal of any Property; 

        (e)   Assume
that the authority of any person designated by the Company to give instructions hereunder shall not be continuing unless provided otherwise in such designation,
or unless the Company shall have delivered a written revocation of such authority to the Trustee; 

        (f)    The
other parties hereto or to anyone else for any action taken or omitted by it, or any action suffered by it to be taken or omitted, in good faith and in the exercise
of its own best judgment, except for its gross negligence or willful misconduct. The Trustee may rely conclusively and shall be protected in acting upon any order, notice, demand, certificate, opinion
or advice of counsel (including counsel chosen by the Trustee), statement, instrument, report or other paper or document (not only as to its due execution and the validity and effectiveness of its
provisions, but also as to the truth and acceptability of any information therein contained) which is believed by the Trustee, in good faith, to be genuine and to be signed or presented by the proper
person or persons. The Trustee shall not be bound by any notice or demand, or any waiver, modification, termination or rescission of this Agreement or any of the terms hereof, unless evidenced by a
written instrument delivered to the Trustee signed by the proper party or parties and, if the duties or rights of the Trustee are affected, unless it shall give its prior written consent thereto; 

        (g)   Verify
the correctness of the information set forth in the Registration Statement or to confirm or assure that any acquisition made by the Company or any other action
taken by it is as contemplated by the Registration Statement it being understood that the foregoing shall not limit the Trustee's obligation to act upon such requests for distribution; and 

        (h)   File
information returns with the United States Internal Revenue Service and payee statements with the Company, documenting the taxes payable by the Company, if any,
relating to interest earned on the Property. 

        (i)    Prepare,
execute and file tax reports, income or other tax returns and pay any taxes with respect to income and activities relating to the Trust Account, regardless of
whether such tax is payable by the Trust Account or the Company (including, but not limited to, income tax obligations), it being expressly understood that as set forth in Section 1(i), if
there is any income or other tax obligation relating to the Trust Account or the Property in the Trust Account, as determined from time to time by the Company and regardless of whether such tax is
payable by the Company or the Trust, at the written instruction of the Company, the Trustee shall make funds available in cash from the Property in the Trust Account an amount specified by the Company
as owing to the applicable taxing authority, which amount shall be paid directly to the company by electronic funds transfer, account debit or other method of payment, and the Company shall forward
such payment to the applicable taxing authority. 

        (j)    Verify
calculations, qualify or otherwise approve Company requests for distributions pursuant to Section 2(a), 2(b) or 2(c) above. 

        5.    Termination.    This Agreement shall terminate as follows: 

        (a)   If
the Trustee gives written notice to the Company that it desires to resign under this Agreement, the Company shall use its reasonable efforts to locate a successor
trustee. At such time that the Company notifies the Trustee that a successor trustee has been appointed by the Company and has agreed to become subject to the terms of this Agreement, the Trustee
shall transfer the management of the Trust Account to the successor trustee, including but not limited to the transfer of copies of the reports and statements relating to the Trust Account, whereupon
this Agreement shall terminate; provided, however, that, in the event that the Company does not locate a successor trustee within ninety days of receipt of the resignation notice from the Trustee, the
Trustee may submit an application to have the Property deposited with any court in the State of New York or with the United States District Court for the Southern District of New York and upon such
deposit, the Trustee shall be immune from any liability whatsoever; or 

        (b)   At
such time that the Trustee has completed the liquidation of the Trust Account in accordance with the provisions of paragraph 1(i) hereof, and
distributed the Property in accordance with the provisions of the Termination Letter, this Agreement shall terminate except with respect to Paragraph 3(b). 

        6.    Trust Account Waiver.    The Trustee has no right, title, interest, or claim of any kind
("Claim") in or to any monies or Property in the Trust Account, and hereby waives any Claim in or to any monies or Property in the Trust Account it may
have in the future, and hereby agrees not to seek recourse, reimbursement, payment or satisfaction for any Claim against the Trust Account for any reason whatsoever. 

        7.    Miscellaneous.    

        (a)   The
Company and the Trustee each acknowledge that the Trustee will follow the security procedures set forth below with respect to funds transferred from the Trust
Account. Upon receipt of written instructions, the Trustee will confirm such instructions with an Authorized Individual at an Authorized Telephone Number listed on the attached Exhibit E. The
Company and the Trustee will each restrict access to confidential information relating to such security procedures to authorized persons. Each party must notify the other party immediately if it has
reason to believe unauthorized persons may have obtained access to such information, or of any change in its authorized personnel. In executing funds transfers, the Trustee will rely upon account
numbers or other identifying numbers of a beneficiary, beneficiary's bank or intermediary bank, rather than names. The Trustee shall not be liable for any loss, liability or expense resulting from any
error in an account number or other identifying number, provided it has accurately transmitted the numbers provided. 

        (b)   This
Agreement shall be governed by and construed and enforced in accordance with the laws of the State of New York, without giving effect to conflicts of law principles
that would result in the application of the substantive laws of another jurisdiction. It may be executed in several original or facsimile counterparts, each one of which shall constitute an original,
and together shall constitute but one instrument. 

        (c)   This
Agreement contains the entire agreement and understanding of the parties hereto with respect to the subject matter hereof. Except for
Section 1(i) (which may not be amended under any circumstances), this Agreement or any provision hereof may only be changed, amended or modified by a writing signed by each of the
parties hereto; provided, however, that no such change, amendment or modification may be made without
the prior written consent of the Public Stockholders, it being the specific intention of the parties hereto that each Public Stockholder is and shall be a third-party beneficiary of this
paragraph 7(c) with the same right and power to enforce this paragraph 7(c) as either of the parties hereto, and provided, further, that this Agreement may not be changed, waived,
amended or modified in such a manner as to adversely affect the right of the Underwriters to receive the Deferred Discount as contemplated herein without the written consent of Citigroup. For purposes
of this paragraph 6(c), the "consent of the Public Stockholders" shall mean receipt by the Trustee of a certificate from an entity certifying that (i) such entity regularly engages in
the business of serving as inspector of elections for companies whose securities are publicly traded, and (ii) either (a) 70% of the Public Stockholders of record as of a record date
established in accordance with Section 213(a) of the Delaware General Corporation Law, as amended (the "DGCL"), have voted in favor of such
amendment or modification or (b) 70% of the Public Stockholders of record as of a record date established in accordance with Section 213(b) of the DGCL have delivered to such entity a
signed writing approving such amendment or modification. As to any claim, cross-claim or counterclaim in any way relating to this Agreement, each party waives the right to trial by jury. 

        (d)   The
parties hereto consent to the jurisdiction and venue of any state or federal court located in the City of New York, Borough of Manhattan, for purposes of resolving
any disputes hereunder. 

        (e)   Any
notice, consent or request to be given in connection with any of the terms or provisions of this Agreement shall be in writing and shall be sent by express mail or
similar private courier service, by certified mail (return receipt requested), by hand delivery or by facsimile transmission: 

	if to the Trustee, to:	 	Continental Stock Transfer & Trust Company

17 Battery Place

New York, New York 10004

Attn: Steven G. Nelson and Frank DiPaolo

Fax No.: (212) 509-5150
	

if to the Company, to:	
 	

Prospect Acquisition Corp.

695 East Main Street

Stamford, Connecticut 06901

Attn: Chief Executive Officer

Fax No.: (203) 656-0051
	

in either case,

with a copy to:	
 	

Citigroup Global Markets Inc.

388 Greenwich Street

New York, New York 10013

Attn: General Counsel

Fax No.: (212) 816-7912
	

and	
 	

Bingham McCutchen LLP

399 Park Avenue

New York, New York 10022

Attn: Floyd I. Wittlin, Esq.

Fax No.: (212) 752-5378

        (f)    This
Agreement may not be assigned by the Trustee without the prior consent of the Company and Citigroup. 

        (g)   Each
of the Trustee and the Company hereby represents that it has the full right and power and has been duly authorized to enter into this Agreement and to perform its
respective obligations as contemplated hereunder. The Trustee acknowledges and agrees that it shall not make any claims or proceed against the Trust Account, including by way of set-off,
and shall not be entitled to any funds in the Trust Account under any circumstance. 

        (h)   Each
of the Company and the Trustee hereby acknowledge that Citigroup is a third party beneficiary of this Agreement. 

[SIGNATURE PAGE FOLLOWS]

        IN WITNESS WHEREOF, the parties have duly executed this Investment Management Trust Agreement as of the date first written above. 

	 	 	CONTINENTAL STOCK TRANSFER & TRUST COMPANY, as Trustee
	

 	
 	

By:	
 	

          

	 	 	Name:	 	          

	 	 	Title:	 	          

	

 	
 	
PROSPECT ACQUISITION CORP.
	

 	
 	

By:	
 	

          

	 	 	Name:	 	          

	 	 	Title:	 	          

 
 

SCHEDULE A    
    

	Fee Item
 
	 	Time and method of payment
	 	Amount

	Initial acceptance fee	 	Initial closing of IPO by wire transfer	 	$	1,000
	

Annual fee	
 	

First year, initial closing of IPO by wire transfer; thereafter on the anniversary of the effective date of the IPO by wire transfer or check	
 	
$	

3,000
	

Transaction processing fee for disbursements to Company under Section 2	
 	

Deduction by Trustee from accumulated income following disbursement made to Company under Section 2	
 	
$	

250

 
 

EXHIBIT A    
    

[Letterhead
of Company] 

[Insert
date] 

Continental
Stock Transfer & Trust Company

17 Battery Place

New York, New York 10004

Attn: Steven Nelson and Frank DiPaolo 

        Re:    Trust
Account No.                        Termination Letter 

Gentlemen: 

        Pursuant
to paragraph 1(i) of the Investment Management Trust Agreement between Prospect Acquisition Corp. ("Company") and
Continental Stock Transfer & Trust Company ("Trustee"), dated as
of                        , 2007 ("Trust
Agreement"), this is to advise you that the Company has entered into an agreement ("Business Agreement")
with                        
("Target Business") to consummate a business combination with Target Business ("Business Combination")
on or about [insert date]. The Company shall notify you at least 48 hours in advance of the actual date of the
consummation of the Business Combination ("Consummation Date"). 

        In
accordance with the terms of the Trust Agreement, we hereby authorize you to commence liquidation of the Trust Account to the effect that, on the Consummation Date, all of funds held
in the Trust Account will be immediately available for transfer to the account or accounts that the Company shall direct on the Consummation Date. 

        On
the Consummation Date (i) counsel for the Company shall deliver to you written notification that the Business Combination has been consummated
("Counsel's Letter"), (ii) the Company shall deliver to you (a) [an affidavit]
[a certificate] of                        , which verifies the vote of the Company's stockholders in
connection with the Business Combination and
(b) written instructions with respect to the transfer of the funds held in the Trust Account other than the Deferred Discount ("Instruction
Letter") and (iii) Citigroup shall deliver to you written instructions for delivery of the Deferred Discount. You are hereby directed and authorized to transfer the
funds held in the Trust Account immediately upon your receipt of the Counsel's Letter and the Instruction Letter. In the event that certain deposits held in the Trust Account may not be liquidated by
the Consummation Date without penalty, you will notify the Company of the same and the Company shall direct you as to whether such funds should remain in the Trust Account and distributed after the
Consummation Date to the Company. Upon the distribution of all the funds in the Trust Account pursuant to the terms hereof, the Trust Agreement shall be terminated and the Trust Account closed. 

        In
the event that the Business Combination is not consummated on the Consummation Date described in the notice thereof and we have not notified you on or before the original Consummation
Date of a new Consummation Date, then, upon receipt of written instruction from the Company, the funds held in the Trust Account shall be reinvested as provided in the Trust Agreement on the business
day immediately following the Consummation Date as set forth in the notice. 

	 	 	Very truly yours,
	

 	
 	
PROSPECT ACQUISITION CORP.
	

 	
 	

By:	
 	

          

	 	 	Name:	 	          

	 	 	Title:	 	          

	

cc:    Citigroup Global Markets Inc.	
 	

 	
 	

 

 
 

EXHIBIT B    
    

[Letterhead
of Company] 

[Insert
date] 

Continental
Stock Transfer & Trust Company

17 Battery Place

New York, New York 10004

Attn: Steven Nelson and Frank DiPaolo

        Re:    Trust
Account No.                        Termination Letter 

Gentlemen:

        Pursuant
to paragraph 1(i) of the Investment Management Trust Agreement between Prospect Acquisition Corp. ("Company") and
Continental Stock Transfer & Trust Company ("Trustee"), dated as
of                        , 2007 ("Trust
Agreement"), this is to advise you that the Company has been unable to effect a Business Combination with a Target Company within the time frame specified in the Company's
Certificate of Incorporation, as described in the Company's prospectus relating to its IPO. 

        In
accordance with the terms of the Trust Agreement, we hereby authorize you, to commence liquidation of the Trust Account. The Company has
appointed                        to serve as its
paying agent (the "Designated Paying Agent"); accordingly, you will notify the Company and the Designated Paying Agent in writing as to when all of the
funds in the Trust Account will be available for immediate transfer (the "Transfer Date"). The Designated Paying Agent shall thereafter notify you as to
the account or accounts of the Designated Paying Agent that the funds in the Trust Account should be transferred to on the Transfer Date so that the Designated Paying Agent may commence distribution
of such funds in accordance with the Company's instructions. You shall have no obligation to oversee the Designated Paying Agent's distribution of the funds. Upon the distribution of all the funds in
the Trust Account, your obligations under the Trust Agreement shall be terminated. 

	 	 	Very truly yours,
	

 	
 	
PROSPECT ACQUISITION CORP.
	

 	
 	

By:	
 	

          

	 	 	Name:	 	          

	 	 	Title:	 	          

	cc:    Citigroup Global Markets Inc.	 	 	 	 

 
 

EXHIBIT C    
    

[Letterhead
of Company] 

[Insert
date] 

Continental
Stock Transfer & Trust Company

17 Battery Place

New York, New York 10004

Attn: Frank DiPaolo and Cynthia Jordan

        Re:    Trust
Account No.            

Gentlemen:

        Pursuant
to paragraph 2(a) of the Investment Management Trust Agreement between Prospect Acquisition Corp. ("Company") and
Continental Stock Transfer & Trust Company ("Trustee"), dated as
of                        , 2007 ("Trust
Agreement"), this is to advise you that the Company hereby requests that you deliver to the Company
$                        of the income earned and collected on the Property as of the
date hereof. The Company needs such funds to pay for the tax obligations as set forth on the attached tax return or tax statement. In accordance with the terms of the Trust Agreement, you are hereby
directed and authorized to transfer (via wire transfer) such funds promptly upon your receipt of this letter to the Company's operating account at: 

[WIRE INSTRUCTION INFORMATION]

	 	 	Very truly yours,
	

 	
 	
PROSPECT ACQUISITION CORP.
	

 	
 	

By:	
 	

          

	 	 	Name:	 	          

	 	 	Title:	 	          

 
 

EXHIBIT D    
    

[Letterhead
of Company] 

[Insert
date] 

Continental
Stock Transfer & Trust Company

17 Battery Place

New York, New York 10004

Attn: Frank DiPaolo and Cynthia Jordan 

        Re:    Trust
Account No. 

Gentlemen:

        Pursuant
to paragraph 2(b) of the Investment Management Trust Agreement between Prospect Acquisition Corp. ("Company") and
Continental Stock Transfer & Trust Company ("Trustee"), dated as
of                        , 2007 ("Trust
Agreement"), this is to advise you that the Company hereby requests that you deliver to the Company
$                        of the income earned and collected on the Property as of the
date hereof, which does not exceed, in the aggregate with all such prior disbursements pursuant to paragraph 2(b), if any, the maximum amount set forth in paragraph 2(b). The Company
needs such funds to cover its expenses relating to investigating and selecting a target business and other working capital requirements. In accordance with the terms of the Trust Agreement, you are
hereby directed and authorized to transfer (via wire transfer) such funds promptly upon your receipt of this letter to the Company's operating account at: 

[WIRE INSTRUCTION INFORMATION]

	 	 	Very truly yours,
	

 	
 	
PROSPECT ACQUISITION CORP.
	

 	
 	

By:	
 	

          

	 	 	Name:	 	          

	 	 	Title:	 	          

	cc:    Citigroup Global Markets Inc.	 	 	 	 

 
 

EXHIBIT E    
    

	AUTHORIZED INDIVIDUAL(S) FOR TELEPHONE CALL BACK

	 	AUTHORIZED TELEPHONE NUMBER(S)

	Company:	 	(203) 363-0885
	

Prospect Acquisition Corp.

695 East Main Street

Stamford, Connecticut 06901

Attn: Chief Financial Officer	
 	

 
	
Trustee:	
 	

(212) 845-3200
	

Continental Stock Transfer & Trust Company

17 Battery Place

New York, New York 10004

Attn: Frank DiPaolo, CFO	
 	

 

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Exhibit 10.8

INVESTMENT MANAGEMENT TRUST AGREEMENT

SCHEDULE A

EXHIBIT A

EXHIBIT B

EXHIBIT C

EXHIBIT D

EXHIBIT EQuickLinks
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Exhibit 10.9    
    

        ESCROW AGREEMENT, dated as
of                        , 2007 ("Agreement"),
by and among PROSPECT ACQUISITION CORP., a Delaware corporation ("Company"), FLAT RIDGE INVESTMENTS LLC, LLM STRUCTURED EQUITY FUND L.P., LLM INVESTORS
L.P., CAPITAL MANAGEMENT SYSTEMS, INC., MICHAEL P. CASTINE, SJC CAPITAL, LLC, MICHAEL DOWNEY, JAMES CAHILL AND DANIEL GRESSEL (collectively "Initial
Stockholders") and CONTINENTAL STOCK TRANSFER & TRUST COMPANY, a New York corporation ("Escrow Agent"). 

        WHEREAS, the Company has entered into an Underwriting Agreement, dated                        ,
2007 ("Underwriting
Agreement"), with Citigroup Global Markets Inc. ("Citigroup") acting as representative of the several underwriters
(collectively, the "Underwriters"), pursuant to which, the Underwriters have agreed to purchase 15,000,000 units
("Units") of the Company. Each Unit consists of one share of the Company's common stock, par value $0.0001 per share ("Common
Stock"), and one warrant to purchase one share of Common Stock, all as more fully described in the Company's final Prospectus,
dated                        , 2007
("Prospectus") comprising part of the Company's Registration Statement on Form S-1 (File No. 333-145110) under the
Securities Act of 1933, as amended ("Registration Statement"), declared effective
on                        , 2007 ("Effective
Date"). 

        WHEREAS, the Underwriters have required as a condition to purchase of the Units that the Initial Stockholders deposit the number of shares
of Common Stock of the Company (the "Escrow Shares") and the number of Sponsors' Warrants (as defined in the Warrant Agreement
dated                        ,
2007 between the Company and Continental Stock Transfer & Trust Company, as Warrant Agent (the "Warrant Agreement"), in each case, as set forth
opposite their respective names in Exhibit A attached hereto (the Escrow Shares and Sponsors' Warrants are collectively referred to herein as the "Escrow
Securities") in escrow as hereinafter provided. 

        WHEREAS, the Company and the Initial Stockholders desire that the Escrow Agent accept the Escrow Securities, in escrow, to be held and
disbursed as hereinafter provided. 

        IT
IS AGREED: 

        1.    Appointment of Escrow Agent.    The Company and the Initial Stockholders hereby appoint the Escrow Agent to act
in accordance with and subject to the terms of this Agreement and the Escrow Agent hereby accepts such appointment and agrees to act in accordance with and subject to such terms. 

        2.    Deposit of Escrow Shares.    On or before the Effective Date, each of the Initial Stockholders shall have
delivered or caused to be delivered to the Escrow Agent certificates representing his, her or its respective Escrow Securities, to be held and disbursed subject to the terms and conditions of this
Agreement. Each Initial Stockholder acknowledges that the certificates representing his, her or its Escrow Securities is legended to reflect the deposit of such Escrow Securities under this Agreement. 

        3.    Disbursement of the Escrow Securities.    The Escrow Agent shall hold the Escrow Shares until the date that is
one year after the date of completion of an Initial Business Combination (as defined in the Warrant Agreement) and the Sponsors' Warrants until the date that is 30 days after the date of
completion of an Initial Business Combination (in each case, the "Escrow Period"), on which respective dates it shall, upon written instructions from
the Company's General Counsel or Chief Executive Officer, disburse the Escrow Shares (and any applicable stock power) or Sponsors' Warrants, as the case may be, to the Initial Stockholders;  provided,
however, that at the end of the 30-day period in which the Underwriters may
exercise their over-allotment to purchase an additional 2,250,000 Units of the Company (as described in the Registration Statement), the Company shall give the Escrow Agent notice with
respect to the amount, if any, of the over-allotment that was exercised by the Underwriters and, upon such notice, the Initial Stockholders agree that the Escrow Agent shall return to the
Company for cancellation, at no cost, the number of Escrow Shares held by each Initial Stockholder determined by multiplying (a) the product of (i) 562,500, multiplied by (ii) a
fraction, (x) the numerator of which is the number Escrow Shares held by each Initial Stockholder, and (y) the denominator of which is the total number of Escrow Shares, by (b) a
fraction, (i) the numerator of which is 2,250,000 

 

minus
the number of shares of Common Stock purchased by the Underwriters upon the exercise of their over-allotment option, and (ii) the denominator of which is 2,250,000;  provided further, however, that if the Escrow Agent is notified by the Company pursuant to
Section 6.7 hereof that the Company is being liquidated then the Escrow Agent shall promptly destroy the certificates representing the Escrow Securities held pursuant to this Agreement;  provided further, however, that if, after the Company consummates an Initial Business Combination,
(i) it (or the surviving entity) subsequently consummates a liquidation, merger, stock exchange or other similar transaction which results in all of the stockholders of such entity having the
right to exchange their shares of Common Stock for cash, securities or other property or (ii) the Closing Price of the Common Stock (as defined in the Warrant Agreement) equals or exceeds
$14.50 per share for any 20 trading days within any 30-trading day period, then the Escrow Agent will, upon receipt of a certificate, executed by the Chairman of the Board, Chief Executive
Officer, President or other authorized officer of the Company, in form reasonably acceptable to the Escrow Agent, that such transaction is then being consummated or such conditions have been achieved,
as applicable, release the Escrow Shares to the Initial Stockholders. The Escrow Agent shall have no further duties hereunder after the disbursement or destruction of the Escrow Securities in
accordance with this Section 3. 

        4.    Rights of Initial Stockholders in Escrow Securities.    

        4.1.    Voting Rights as a Stockholder.    Subject to the terms of the Insider Letter described in Section 4.3
hereof and except as herein provided, the Initial Stockholders shall retain all of their rights as stockholders of the Company during the Escrow Period, including, without limitation, the right to
vote the Escrow Shares. 

        4.2.    Dividends and Other Distributions in Respect of the Escrow Shares.    During the Escrow Period, all dividends
payable in cash with respect to the Escrow Shares shall be paid to the Initial Stockholders, but all dividends payable in stock or other non-cash property
("Non-Cash Dividends") shall be delivered to the Escrow Agent to hold in accordance with the terms hereof. As used herein, the term
"Escrow Shares" shall be deemed to include the Non-Cash Dividends distributed thereon, if any. 

        4.3.    Restrictions on Transfer.    During the Escrow Period, no sale, transfer or other disposition may be made of
any or all of the Escrow Securities except to Permitted Transferees (as defined in the Warrant Agreement); provided,  however, that such permitted transfers
may be implemented only upon the respective Permitted Transferee's written agreement to be bound by the terms and
conditions of this Agreement and, as applicable, the Insider Letter signed by the Initial Stockholders transferring the Escrow Shares and/or Warrant Agreement. Even if transferred in accordance with
this Section 4.3, the Escrow Securities will remain subject to this Agreement and may only be released from escrow in accordance with Section 3 hereof. As used herein, the term
"Insider Letter" refers to that letter entered into by each of the Initial Stockholders, with Citigroup and the Company, dated as indicated on
Exhibit A hereto, and which is filed as an exhibit to the Registration Statement, respecting the rights and obligations of such Initial Stockholder in certain events, including but not limited
to the liquidation of the Company and certain voting and transfer restrictions which will apply during the Escrow Period. 

        4.4.    Sponsors' Warrants.    The Initial Stockholders who hold Sponsors' Warrants acknowledge that the Sponsors'
Warrants are subject to restrictions on exercise and transfer during the Escrow Period as specified in the Warrant Agreement. 

        5.    Concerning the Escrow Agent.    

        5.1.    Good Faith Reliance.    The Escrow Agent shall not be liable for any action taken or omitted by it in good
faith and in the exercise of its own best judgment, and may rely conclusively and shall be protected in acting upon any order, notice, demand, certificate, opinion or advice of counsel (including
counsel chosen by the Escrow Agent), statement, instrument, report or other paper or document (not only as to its due execution and the validity and effectiveness of its provisions, but also as to the
truth 

2

 

and
acceptability of any information therein contained) which is believed by the Escrow Agent to be genuine and to be signed or presented by the proper person or persons. The Escrow Agent shall not be
bound by any notice or demand, or any waiver, modification, termination or rescission of this Agreement unless evidenced by a writing delivered to the Escrow Agent signed by the proper party or
parties and, if the duties or rights of the Escrow Agent are affected, unless it shall have given its prior written consent thereto. 

        5.2.    Indemnification.    The Escrow Agent shall be indemnified and held harmless by the Company from and against
any expenses, including counsel fees and disbursements, or loss suffered by the Escrow Agent in connection with any action, suit or other proceeding involving any claim which in any way, directly or
indirectly, arises out of or relates to this Agreement, the services of the Escrow Agent hereunder, or the Escrow Securities held by it hereunder, other than expenses or losses arising from the gross
negligence or willful misconduct of the Escrow Agent. Promptly after the receipt by the Escrow Agent of notice of any demand or claim or the commencement of any action, suit or proceeding, the Escrow
Agent shall notify the other parties hereto in writing. In the event of the receipt of such notice, the Escrow Agent, in its sole discretion, may commence an action in the nature of interpleader in an
appropriate court to determine ownership or disposition of the Escrow Securities or it may deposit the Escrow Securities with the clerk of any appropriate court or it may retain the Escrow Securities
pending receipt of a final, non appealable order of a court having jurisdiction over all of the parties hereto directing to whom and under what circumstances the Escrow Securities are to be disbursed
and delivered. The provisions of this Section 5.2 shall survive in the event the Escrow Agent resigns or is discharged pursuant to Sections 5.5 or 5.6 below. 

        5.3.    Compensation.    The Escrow Agent shall be entitled to reasonable compensation from the Company for all
services rendered by it hereunder. The Escrow Agent shall also be entitled to reimbursement from the Company for all expenses paid or incurred by it in the administration of its duties hereunder
including, but not limited to, all counsel, advisors' and agents' fees and disbursements and all taxes or other governmental charges. 

        5.4.    Further Assurances.    From time to time on and after the date hereof, the Company and the Initial
Stockholders shall deliver or cause to be delivered to the Escrow Agent such further documents and instruments and shall do or cause to be done such further acts as the Escrow Agent shall reasonably
request to carry out more effectively the provisions and purposes of this Agreement, to evidence compliance herewith or to assure itself that it is protected in acting hereunder. 

        5.5.    Resignation.    The Escrow Agent may resign at any time and be discharged from its duties as escrow agent
hereunder by its giving the other parties hereto written notice and such resignation shall become effective as hereinafter provided. Such resignation shall become effective at such time that the
Escrow Agent shall turn over to a successor escrow agent appointed by the Company, the Escrow Securities held hereunder. If no new escrow agent is so appointed within the 60 day period
following the giving of such notice of resignation, the Escrow Agent may deposit the Escrow Securities with any court it reasonably deems appropriate. 

        5.6.    Discharge of Escrow Agent.    The Escrow Agent shall resign and be discharged from its duties as escrow agent
hereunder if so requested in writing at any time by the other parties hereto, jointly, provided, however, that such resignation shall become effective only upon acceptance of appointment by a
successor escrow agent as provided in Section 5.5. 

        5.7.    Liability.    Notwithstanding anything herein to the contrary, the Escrow Agent shall not be relieved from
liability hereunder for its own gross negligence or its own willful misconduct. 

        5.8.    Trust Account Waiver.    The Escrow Agent hereby waives all right, title, interest, or claim of any kind
("Claim") in or to any monies in the trust account of the Company (the "Trust Account") created pursuant
to the Investment Management Trust Agreement, dated as of [    •    ], 2007, by and 

3

 

between
the Company and Continental Stock Transfer & Trust Company, as Trustee, that it may have now or in the future, and hereby agrees not to seek recourse, reimbursement, payment or
satisfaction for any Claim against the Trust Account for any reason whatsoever. 

        6.    Miscellaneous.    

        6.1.    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, without giving effect to conflicts of law principles that would result in the application of the substantive laws of another jurisdiction (whether of
the State of New York or any other jurisdiction that would cause the application of the laws of any jurisdiction other than the State of New York). The Company 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. The Company hereby waives any objection to such exclusive jurisdiction or that such
courts represent an inconvenience forum. Any such process or summons to be served upon the Company may be served by transmitting a copy thereof by registered or certified mail, return receipt
requested, postage prepaid, addressed to it at the address set forth in Section 6.6 hereof. Such mailing
shall be deemed personal service and shall be legal and binding upon the Company in any action, proceeding or claim. 

        6.2.    Third Party Beneficiaries.    Each of the Initial Stockholders hereby acknowledges that the Underwriters are
third party beneficiaries of this Agreement and this Agreement may not be modified or changed without the prior written consent of Citigroup. 

        6.3.    Entire Agreement.    This Agreement contains the entire agreement of the parties hereto with respect to the
subject matter hereof and, except as expressly provided herein, may not be changed or modified except by an instrument in writing signed by each party hereto. It may be executed in several original or
facsimile counterparts, each one of which shall constitute an original, and together shall constitute but one instrument. 

        6.4.    Headings.    The headings contained in this Agreement are for reference purposes only and shall not affect in
any way the meaning or interpretation thereof. 

        6.5.    Binding Effect.    This Agreement shall be binding upon and inure to the benefit of the respective parties
hereto and their legal representatives, successors and assigns. 

        6.6.    Notices.    Any notice or other communication required or which may be given hereunder shall be in writing and
either be delivered personally or be mailed, certified or registered mail, or by private national courier service, return receipt requested, postage prepaid, and shall be deemed given when so
delivered personally or, if mailed, two days after the date of mailing, as follows: 

If
to the Company, to: 

Prospect
Acquisition Corp.

695 East Main Street

Stamford, Connecticut 06901

Attn: David A. Minella

Fax No.: (203) 656-0051 

If
to an Initial Stockholder, to his, her or its address set forth in Exhibit A. 

4

 

and
if to the Escrow Agent, to: 

Continental
Stock Transfer & Trust Company

17 Battery Place

New York, New York 10004

Attn: Chairman

Fax No.: (212) 509-5150 

A
copy of any notice sent hereunder shall be sent to: 

Bingham
McCutchen LLP

399 Park Avenue

New York, New York 10022

Attn: Floyd I. Wittlin, Esq.

Fax No.: (212) 752-5378 

and: 

Citigroup
Global Markets Inc.

388 Greenwich Street

New York, New York 10013

Attn: General Counsel

Fax No.: (212) 816-7912 

and:

Akin
Gump Strauss Hauer & Feld LLP

590 Madison Avenue

New York, New York 10022

Attn: Bruce Mendelsohn, Esq.

Fax No.: (212) 872-1002 

        The
parties may change the persons and addresses to which the notices or other communications are to be sent by giving written notice to any such change in the manner provided herein for
giving notice. 

        6.7.    Liquidation of the Company.    The Company shall give the Escrow Agent written notification of the liquidation
and dissolution of the Company in the event that the Company fails to consummate an Initial Business Combination within the time period(s) specified in the Prospectus. 

[SIGNATURE PAGES FOLLOW]

5

 

        WITNESS the execution of this Agreement as of the date first above written. 

	 	 	COMPANY:
	 	 	PROSPECT ACQUISITION CORP.
	

 	
 	

By:	
 	

          

	 	 	Name:	 	David A. Minella
	 	 	Title:	 	Chief Executive Officer
	

 	
 	
INITIAL STOCKHOLDERS:
	

 	
 	

FLAT RIDGE INVESTMENTS LLC
	

 	
 	

By:	
 	

          

	 	 	Name:	 	David A. Minella
	 	 	Title:	 	Managing Member
	

 	
 	

LLM STRUCTURED EQUITY FUND L.P.
	

 	
 	

By:	
 	

          

	 	 	Name:	 	 
	 	 	Title:	 	 
	

 	
 	

LLM INVESTORS L.P.
	

 	
 	

By:	
 	

 
	 	 	Name:	 	 
	 	 	Title:	 	 
	

 	
 	

CAPITAL MANAGEMENT SYSTEMS, INC.
	

 	
 	

By:	
 	

          

	 	 	Name:	 	 
	 	 	Title:	 	 
	

 	
 	

 Michael P. Castine
	

 	
 	

SJC CAPITAL, LLC
	

 	
 	

By:	
 	

          

	 	 	Name:	 	William Crengros
	 	 	Title:	 	 
	

 	
 	

 Michael Downey
	

 	
 	

 James Cahill
	

 	
 	

 Daniel Gressel
	 	 	 	 	 

6

 

	

 	
 	
ESCROW AGENT:
	

 	
 	

CONTINENTAL STOCK TRANSFER & TRUST COMPANY
	

 	
 	

By:	
 	

          

	 	 	Name:	 	          

	 	 	Title:	 	          

7

 

	Name and Address

of Initial Stockholder
 
	 	Number of

Escrow

Shares
	 	Stock

Certificate

Number
	 	Date of

Insider

Letter
	 	Number of

Sponsors'

Warrants
	 	Warrant

Certificate

Number

	Flat Ridge Investments LLC

814 Hollow Tree Ridge Road

Darien, CT 06820

Attn: David A. Minella	 	2,156,248	 	11	 	 	 	2,100,000	 	 
	

LLM Structured Equity Fund L.P.

265 Franklin Street, 20th Floor

Boston, Massachusetts 02110

Attn:	
 	

1,183,350	
 	

13	
 	

 	
 	

1,097,600	
 	

 
	

LLM Investors L.P.

265 Franklin Street, 20th Floor

Boston, Massachusetts 02110

Attn:	
 	

24,150	
 	

14	
 	

 	
 	

22,400	
 	

 
	

Capital Management Systems, Inc.

308 E. Lancaster Avenue

Suite 300

Wynnewood, PA 19096	
 	

301,875	
 	

15	
 	

 	
 	

280,000	
 	

 
	

Michael Castine

14 Larkspur Lane

Greenwich, CT 06831	
 	

107,813	
 	

5	
 	

 	
 	

0	
 	

 
	

SJC Capital, LLC

31975 Peppertree Bend

San Juan Capistrano, CA 92675	
 	

107,813	
 	

6	
 	

 	
 	

0	
 	

 
	

Michael Downey

2 Parsons Lane

Rochester, NY 14610	
 	

107,813	
 	

12	
 	

 	
 	

0	
 	

 
	

James Cahill

3 Kimberly Drive

Redding, CT 06896	
 	

215,625	
 	

16	
 	

 	
 	

0	
 	

 
	

Daniel Gressel

55 Cedar Cliff Road

Greenwich, CT 06878	
 	

107,813	
 	

7	
 	

 	
 	

0	
 	

 

8

QuickLinks

Exhibit 10.9

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