Document:

Exhibit 10.93

 

KENNEDY—WILSON,
INC.

 

1992 NON-EMPLOYEE DIRECTOR STOCK OPTION PLAN

 

Section 1.  Purpose of
Plan.

 

The purpose of this 1992
Non-Employee Director Stock Option Plan (the “Plan”) of Kennedy-Wilson, Inc.,
a Delaware corporation (the “Company”), is to provide present and prospective
directors of the Company who are not employed by the Company with the
opportunity to obtain equity ownership interests in the Company through the
exercise of stock options.

 

Section 2.  Persons Eligible Under Plan.

 

Participation in this Plan
is limited to non— employee directors. A non—employee director (referred to
herein as a “Director”) is a director of the Company who, at the time stock
options are granted to him or her under the Plan, is not an employee of the Company
or of any subsidiary of the Company.

 

Section 3.  Administration.

 

This Plan shall be
administered by the Board of Directors (the “Board”) of the Company. The grant
of options (the “Options”) to purchase shares of Common Stock, par value $.01
per share, of the Company (the “Common Shares”) under this Plan and the amount,
price and nature of the awards shall be automatic as described in section 4.
However, subject to the provisions of this Plan, the Board, in its sole and
absolute discretion, is authorized to do all things necessary or desirable in
connection with the administration of this Plan, including, without limitation,
the following:

 

(i)           subject to section 8, adopt, amend and rescind rules and
regulations relating to this Plan;

 

(ii)          determine whether, and the extent to which, adjustments are
required pursuant to Section 7 hereof; and

 

(iii) I
interpret and construe this Plan and the terms and conditions of any Option
granted hereunder.

 

Section 4. Terms and
Conditions of Options.

 

(a)           Amount, Exercise Price and Exercisability of Initial
Grants. Each Director shall automatically be granted on the date of the
adoption of the Plan by the Company’s stockholders or on the date of such
Directors’ election to the Board of Directors, whichever occurs later (the “Date
of Initial Grant”) an Option to purchase 25,000 Common Shares (subject to
adjustment as provided in Section 7). The exercise price for each Option
granted pursuant to this Section 4(a) shall be (i) if the Option
is granted on the date of adoption of the Plan, the value of the Common Shares
calculated using the initial public offering price of the Common Shares, or (ii) if
granted upon such Director’s election to the Board of Directors, the Fair
Market Value

 

 

(as
defined in section 4(b) below) of the Common Shares at the close of
business on the date preceding the Date of Initial Grant (the “Exercise Price”).

 

(b)           Amount. Exercise Price and Exercisability of Automatic
Annual Grants. Each Director shall automatically be granted, on the date of
such Director’s re—election to the Board of Directors (the “Date of Grant”) at
the Company’s annual meeting of stockholders (the “Annual Meeting”) an Option
to purchase 1,000 Common shares (subject to adjustment as provided in Section 7).
The exercise price for each Option granted pursuant to this Section 4(b) shall be the Fair Market Value (as defined below) of the
Common Shares at the close of business on the date preceding the Date of Grant
(the “Exercise Price”). The “Fair Market Value” of a Common Share on any day
shall be equal to the last sale price per Common Share on such day or, in case
no such sale takes place on such day, the average of the closing bid and asked
prices in either case as reported in the principal consolidated transaction
reporting system with respect to securities listed or admitted to trading on
the NASDAQ National Market System (“NMS”), or, if the Common Shares are not
listed or admitted to trading on the NNS, as reported in
the principal consolidated transaction reporting system with respect to
securities listed on the principal national securities exchange on which the
Common Shares are listed or admitted to trading or, if the Common Shares are
not listed or admitted to trading on any national securities exchange or the
NMS, the last quoted price or, if not so quoted, the average of the high bid
and low asked prices in the over—the—counter market, as reported by the
National Association of Securities Dealers, Inc. Automated Quotations
System or such other system then in use or, if on any such date the Common
Shares are not quoted by any such organization, the average of the closing bid
and asked prices as furnished by a professional market maker making a market in
the Common Shares who is selected in good faith by the Board of Directors of
the Company.

 

(c)           Vesting. An Option granted under Section 4(a) of
this Plan shall vest and become exercisable on the first anniversary of the
Date of Initial Grant, but only if the recipient of such Option (the “Optionee”)
continues to serve as a Director for at least one year from the Date of Initial
Grant. An Option granted under section 4(b) of this Plan shall vest and
become exercisable on the date of the Annual Meeting following the Date of -Grant of such
Option, but only if the Optionee continues to serve as a Director until at
least the date of the Annual Meeting following the Date of Grant of such
Option.

 

(d)           Manner of Exercise. Any vested and exercisable
Option may be exercised by the holder thereof by giving written notice, signed
by such holder, to the Company stating the number of Common shares with respect
to which the Option is being exercised, accompanied by payment in full of the
aggregate Exercise Price in cash or by check payable to the Company. No Option
may be exercised with respect to any fractional share; cash shall be paid in
lieu of fractional shares. As promptly as practicable following the receipt of
a notice hereunder, the Company shall issue a stock certificate registered in
the name of the Director exercising such Option, representing the number of
Common Shares issued to such Director upon exercise of the Option.

 

(e)           Termination or Expiration. Each Option shall expire
on the earlier of the tenth anniversary of the Date of Grant or ninety (90)
days after the date the Optionee ceases to be a Director of the Company,
whichever comes first.

 

 

(f)            Transferability. Neither the Option nor any
interest therein may be sold, assigned, conveyed, gifted, pledged, hypothecated
or otherwise transferred in any manner other than by will or the laws of
descent and distribution. During the recipient’s lifetime, an Option may only
be exercised by the Optionee or the optionee’s guardian or legal
representative.

 

(g)           Payment of Withholding Taxes. If the Company is
obligated by law to withhold an amount on account of any Federal, state or
local tax imposed as a result of the exercise of the Option (such amount shall
be referred to herein as the “Withholding Liability”), the Optionee shall, on
the first date upon which the Company becomes obligated to pay the Withholding
Liability to the appropriate taxing authority pay the Withholding Liability to
the Company in full in cash or by check.

 

(h)          Stock Exchange Requirements;
Applicable Laws. Notwithstanding anything to the contrary in this Plan, no
Common Shares purchased upon exercise of the Option, and no certificate
representing all or any part of such shares, shall be issued or delivered if (a) such
shares have not been admitted to listing upon official notice of issuance on
the NMS or on each stock exchange upon which shares of that class are then
listed or (b) in the opinion of counsel to the Company, such issuance or
delivery would~ cause the Company to be in violation of or to incur liability
under any Federal, state or other securities law, or any requirement of any
listing agreement to which the Company is a party, or any other requirement of
law or of any administrative or regulatory body having jurisdiction over the
Company. It is the Company’s intent that this Plan comply in all respects with Rule 16b-3
of the Securities Exchange Act of 1934, as amended (the “Act”), and any
regulations promulgated thereunder. If any provision of this Plan is later
found not to be in compliance with Rule 16b—3, such provision shall be
deemed null and void. All grants and exercises of Options under this Plan shall
be executed in accordance with the requirements of section 16 of the Act and
any regulations promulgated thereunder.

 

(i)            Stock Option Agreement. Each grant of an option
under this Plan shall be evidenced by an agreement duly executed on behalf of
the Company and the Optionee, dated as of the applicable Date of Grant. Each
such agreement shall set forth the number of Common Shares subject to the
Option, the Exercise Price and the date upon which the Option becomes
exercisable and shall incorporate by reference the terms and conditions of this
Plan.

 

Section 5. Stock
Subject to Plan.

 

(a)           The maximum number of Common Shares that may be issued
pursuant to all Options granted under this Plan is 150,000, subject to
adjustment as provided in Section 7 hereof (such maximum number, as so
adjusted, shall be referred to herein as the “Share Limitation”).

 

(b)           Notwithstanding Section 4 of this Plan, no Option
shall be granted under this Plan unless, on the date of grant, the sum of (i) the
maximum number of Common Shares issuable at any time pursuant to such Option,
plus (ii) the number of Common Shares that have previously been issued· pursuant to the exercise of
Options granted under this Plan, plus (iii) the

 

 

maximum
number of Common Shares that may be issued at any time thereafter pursuant to
the exercise of Options granted under this Plan that are outstanding on such
date, does not exceed the Share Limitation.

 

Section 6.  Duration of Plan.

 

(a) No Options shall be
granted under this Plan after May 11, 2002. Although Common Shares may be
issued after May 11, 2002 pursuant to Options granted prior to such date,
no Common Shares shall be issued under this Plan after May 11, 2Q12.

 

Section 7.  Adjustments for Changes in Capitalization.

 

If the outstanding
securities of the class then subject to this Plan are increased, decreased,
changed into or exchanged for a different number or kind of shares of the
Company through reorganization, recapitalization, reclassification, stock
dividend, stock split or reverse stock split, upon proper authorization of the
Board of Directors, an appropriate and proportionate adjustment shall be made
in (a) the number and type of shares or other securities or cash or other
property that may be acquired pursuant to Options theretofore granted under
this Plan and (b) the maximum number and type of shares or other
securities that may be issued pursuant to Options thereafter granted under this
Plan.

 

Section 8. Amendment
and Termination of Plan.

 

The Board may amend or
terminate this Plan at any time and in any manner. However, (a) no such
amendment or termination shall deprive the recipient of any Option theretofore
granted under this Plan, without the consent of such recipient, of any of his
or her rights thereunder or with respect thereto, (b) no such amendment
shall be effective without the approval of the stockholders of the Company, if
stockholder approval of the amendment is then required pursuant to Rule 16b—3
under the Act, or the applicable rules of any securities exchange, and (c) to
the extent prohibited by Rule 16b-3(c) (2) (ii) (B) under
the Act, this Plan may not be amended more than once every six months.

 

Section 9. Effective
Date of Plan.

 

This Plan shall be effective
as of May 11, 1992, the date upon which it was approved by the Board;
provided, however, that no Common Shares may be issued under this Plan until it
has been approved, directly or indirectly, by the affirmative votes of the
holders of a majority of the securities of the Company present, or represented,
and entitled to vote at a meeting duly held in accordance with the laws of the
State of Delaware or by the unanimous written consent of such holders.

 

Section 10. No
Rights as Stockholder and Rights of Directors.

 

Neither an Optionee nor an
Optionee’s successor or successors in interest shall have rights as a
stockholder of the Company with respect to any Common Shares subject to an
Option granted to such person until the date of issuance of a stock certificate
for such Common

 

 

Shares.
Neither this Plan, nor the granting of an Option hereunder, nor any other
action taken pursuant to this Plan shall constitute or be evidence of any
agreement or understanding, express or implied, that a Director has a right to continue
as a Director for any period of time or at any particular rate ·of compensation.

 

Section 11. Governing
Law.

 

This Plan and all rights and
obligations under this Plan shall be construed in accordance with and governed
by the laws of the State of Delaware.

 

 

EXHIBIT
A

 

AMENDMENT NUMBER 1

TO THE KENNEDY-WILSON, INC. 1992 NON-EMPLOYEE DIRECTOR

STOCK OPTION PLAN

 

WHEREAS, Kennedy-Wilson, Inc.,
a Delaware corporation (the “Company”), has adopted the Kennedy-Wilson, Inc.
1992 Non-Employee Director Stock Option Plan (the “Plan”); and

 

WHEREAS, Sections 3 and 8 of
the Plan permit the Board of Directors of the Company to amend the Plan,
subject to certain limitations; and

 

WHEREAS, the Board of
Directors of the Company has passed a resolution to amend the Plan to permit
additional circumstances under which shares of the Company’s common stock, $.O
1 par value, may be awarded under the Plan (the “Amendment”).

 

NOW, THEREFORE, the Plan is
hereby amended as follows:

 

1. Section 3 of the
Plan is hereby amended by deleting the word “automatic” in the first paragraph
thereof.

 

2. Section 4 of the
Plan is hereby amended by deleting Section 4(c) through and including
Section 4(i) and inserting the following:

 

“(c) Amount,
Exercise Price and Exercisability of Discretionary Grants The
Chief Executive Officer of the Company shall have authority, subject to the
express provisions and restrictions in this Plan, to award Options to such
Directors as he or she shall determine and, shall have authority, subject to
the express provisions and restrictions in this Plan, to determine the time
when such Options will be granted, if any, the terms and conditions of each
such Option other than those terms and conditions fixed under this Plan and the
number of shares which may be issued upon exercise of each such Option. The
exercise price for each Option granted pursuant to this Section 4(c) shall be
the Fair Market Value of the Common Shares at the close of business on the date
preceding the Date of Grant (the “Exercise Price”).

 

(d)           Vesting. An Option granted under Section 4(a) of
this Plan shall vest and become exercisable on the first anniversary of the
Date of Initial Grant, but only if the recipient of such Option (the “Optionee”)
continues to serve as a Director for at least one year from the Date of Initial
Grant. An Option granted under Section 4(b) of this Plan shall vest
and become exercisable on the date of the Annual Meeting following the Date of
Grant of such option, but only if the Optionee continues to serve as a Director
until at least the date of the Annual Meeting following the Date of Grant of
such Option. An

 

 

Option
granted under Section 4(c) of this Plan shall vest and become
exercisable at such times and in such installments (which may be cumulative) as
the Chief Executive Officer shall provide in the terms of each individual
Option; provided, however, that no Common Shares acquired by an Optionee
pursuant to an exercise of an Option granted under Section 4(c) of
this Plan may be disposed of in whole or in part until one (1) year after
the date on which the Option is granted; provided, further, that an Option
granted under Section 4(c) of this Plan shall vest and become
exercisable only if the Optionee continues to serve as a Director from the date
of grant through the one year anniversary of the date of grant.

 

(e)           Manner of Exercise. Any
vested and exercisable Option may be exercised by the holder thereof by giving
written notice, signed by such holder, to the Company stating the number of
Common Shares with respect to which the Option is being exercised, accompanied
by payment in full of the aggregate Exercise Price in cash or by check payable
to the Company. No Option may be exercised with respect to any fractional
share; cash shall be paid in lieu of fractional shares. As promptly as
practicable following the receipt of a notice hereunder, the Company shall
issue a stock certificate registered in the name of the Director exercising
such Option, representing the number of Common Shares issued to such Director
upon exercise of the Option.

 

(I)            Termination or Expiration.
Each Option shall expire on the earlier of the tenth anniversary of the Date of
Grant or ninety (90) days after the date the Optionee ceases to be a Director
of the Company, whichever comes first.

 

(g)           Transferability. Neither the Option nor any
interest therein may be sold, assigned, conveyed, gifted, pledged, hypothecated
or otherwise transferred in any manner other than by will or the laws of
descent and distribution. During the recipient’s lifetime, an Option may only
be exercised by the Optionee or the Optionee’s guardian or legal
representative.

 

(h)           Payment of Withholding  Taxes.
If the Company is obligated by law to withhold an amount on account of any
Federal, state or local tax imposed as a result of the exercise of the option
(such amount shall be referred to herein as the “Withholding Liability”), the
Optionee shall, on the first date upon which the Company becomes obligated to
pay the Withholding Liability to the appropriate taxing authority pay the Withholding
Liability to the Company in full in cash or by check.

 

(i)            Stock Exchange Requirements;
Applicable Law. Notwithstanding anything to the contrary in
this Plan, Po Common Shares purchased upon exercise of the Option, and no
certificate representing all or any part of such shares, shall be issued or
delivered if(a) such shares have not been admitted to listing upon
official notice of issuance on the NMS or on each stock exchange upon which
shares of that class are then

 

2

 

listed
or (b) in the opinion of counsel to the Company, such issuance or delivery
would cause the Company to be in violation of or to incur liability under any
Federal, state or other securities law, or any requirement of any listing
agreement to which the Company is a party, or any other requirement of law or
of any administrative or regulatory body having jurisdiction over the Company.
It is the Company’s intent that this Plan comply in all respects with Rule 16b-3
of the Securities Exchange Act of 1934, as amended (the “Act”), and any
regulations promulgated thereunder. If any provision of this Plan is later
found not to be in compliance with Rule 16b-3, such provision shall be
deemed null and void. Ml grants and exercises of Options under this Plan shall
be executed in accordance with the requirements of Section 16 of the Act
and any regulations promulgated thereunder.

 

(j)            Stock Option Agreement. Each grant of
an Option under this Plan shall be evidenced by an agreement duly executed on
behalf of the Company and the Optionee, dated as of the applicable Date of
Grant. Each such agreement shall set forth the number of Common Shares subject
to the Option, the Exercise Price and the date upon which the Option becomes
exercisable and shall incorporate by reference the terms and conditions of this
Plan.”

 

3. The provisions of this
Amendment shall be effective as of the date the Amendment is approved by the
Board of Directors of the Company.

 

4. Except as expressly
amended herein, the Plan shall continue to be, and shall remain, in full force
and effect in accordance with its terms.

 

*                     *                     *

 

3Exhibit
10.94

 

SHAREHOLDERS AGREEMENT

 

This SHAREHOLDERS AGREEMENT (as the same
may hereafter be amended, supplemented, restated or otherwise modified, this “Shareholders Agreement”) is entered
into as of this 3rd day of November, 2008 by and among (a) “KENNEDY-WILSON, INC., a Delaware
corporation (together with any successors and assigns who become such in
accordance herewith, the “Company”), (b) THE GUARDIAN LIFE INSURANCE COMPANY OF
AMERICA (together with its successors and assigns, “Guardian”) and (c) each Person
holding Securities of the Company listed on Schedule 1 hereto and each
other Person who becomes a party hereto pursuant to Section 7.5 hereof
(together with Guardian, collectively, the “Shareholders”).

 

RECITALS

 

A.                                   The Company is a party to that certain
Securities Purchase Agreement, dated as of October 31, 2008 (the “Securities Purchase Agreement”), by
and among the Company and Guardian pursuant to which the Company has agreed to
issue and sell $30,000,000.00 aggregate principal amount of its 7% Convertible
Subordinated Notes due November 3, 2018 (the “Notes”).

 

B.                                     The Company has issued to the
Shareholders, either directly or indirectly, the number of shares of Preferred
Stock, Common Stock or other Securities set forth opposite their respective
names on Schedule 1 attached hereto.

 

C.                                     To induce Guardian to enter into the
Securities Purchase Agreement and consummate the transactions contemplated
therein, the Company and the Shareholders have agreed to enter into this
Shareholders Agreement with Guardian to create and define certain rights as
among and between themselves as further specified herein.

 

NOW
THEREFORE, in
consideration of the foregoing and the mutual promises herein contained, the
Company, Guardian and the Shareholders mutually agree as follows.

 

1.                                       DEFINITIONS

 

Capitalized terms used
herein and not otherwise defined shall have the respective meanings ascribed to
such terms in the Securities Purchase Agreement. As used in this Shareholders
Agreement, the following terms have the following meanings:

 

(a)                                  “Affiliate” means, at any time, and with respect to
any Person, any other Person that at such time directly or indirectly through
one or more intermediaries Controls, or is Controlled by, or is under common
Control with, such first Person, and, with respect to the Company, shall
include any Person beneficially owning or holding, directly or indirectly, 20%
or more of any class of voting or equity interests of the Company, or any
Subsidiary or any corporation of which the Company and its Subsidiaries
beneficially own or hold, in the aggregate, directly or indirectly, 20% or more
of any class of voting or equity interests. As used in this definition, “Control”
means the possession, directly or indirectly, of the power to direct or cause
the direction of the management and policies of a Person, whether
through the ownership 

 

 

of voting securities, by contract or
otherwise. Unless the context otherwise clearly requires, any reference to an “Affiliate” is a reference to an
Affiliate of the Company.

 

(b)                                 “Board of Directors” means the board of directors (or similar
governing body) of the Company.

 

(c)                                  “Business Day” means any day, other than a Saturday or
Sunday or a national or California state holiday or a day on which banking
institutions in the States of California and New York are authorized or
obligated by law, regulation or executive order to close.

 

(d)                                 “Common Stock” means the Common Stock of the Company,
$.01 par value.

 

(e)                                  “Convertible Securities”
means any
securities or other instruments that are convertible into or exercisable or
exchangeable for Common Stock, including the Notes.

 

(f)                                    “Family Group” means (a) the parents, spouse and
descendants (by birth or adoption) of a Shareholder, (b) any custodian of
a custodianship for and on behalf of a Stockholder or his or her parents,
spouse or descendants (by birth or adoption), (c) any trustee of a trust
solely for the benefit of a Shareholder or his or her parents, spouse or
descendants (by birth or adoption) or (d) any limited partnership solely
for the benefit of a Shareholder or his or her parents, spouse or descendants
(by birth or adoption).

 

(g)                                 “Fully-Diluted Basis” shall mean the number of shares of Common
Stock which would be outstanding, as of the date of computation, if all vested
and outstanding Purchase Rights and Convertible Securities had been converted,
exercised or exchanged; provided, however, that any Purchase Rights and Convertible.
Securities which are subject to vesting but have not vested as of the date of
computation will be disregarded for purposes of determining Fully-Diluted
Basis.

 

(h)                                 “McMorrow” means William J. McMorrow.

 

(i)                                     “Permitted Transfer” means a Transfer of Securities:

 

(i)                                     between any Shareholder who is a natural
person and such Shareholder’s Family Group (whether inter
vivos or upon
death); provided, however, that, prior to any such Transfer, the Shareholder must
demonstrate to the reasonable satisfaction of the Company and Guardian that the
Shareholder will retain, until his death, all rights to vote and Transfer the
Securities that are proposed to be Transferred to such Shareholder’s Family
Group;

 

(ii)                                  by a Shareholder who is a natural person
and who is deceased or adjudicated incompetent to the personal representative
of such Shareholder;

 

(iii)                               by the personal representative of a Shareholder who is
a natural person and who is deceased or adjudicated incompetent to such
Shareholder’s Family Group; and

 

(iv)                              by a Shareholder that is not a natural
person to Affiliates of such Shareholder; provided, however, that,
prior to any such Transfer, the Shareholder must demonstrate to the reasonable
satisfaction of the Company and Guardian that the Shareholder 

 

2

 

will retain all rights to vote and Transfer the Securities that are
proposed to be Transferred to such Shareholder’s Affiliates.

 

Notwithstanding
the foregoing, no Permitted Transfer shall be effective unless and until the
transferee of the Securities so Transferred, if such transferee is not a party
to this Shareholders Agreement, executes and delivers to the Company a Joinder
Agreement in substantially the form attached hereto as Exhibit A.

 

(j)                                     “Person” means an individual, partnership,
corporation, limited liability company, association, trust, unincorporated
organization, business entity or governmental authority.

 

(k)                                  “Preferred Stock” means shares of the Company which shall
be entitled to preference or priority over any other shares of the Company in
respect of either the payment of dividends or the distribution of assets upon
liquidation.

 

(l)                                     “Purchase Rights” means options, warrants or other rights
to purchase or subscribe for Common Stock or Convertible Securities.

 

(m)                               “Purchaser Securities” means the Notes and the shares of Common
Stock issuable upon the conversion of the Notes in accordance with the terms of
the Notes.

 

(n)                                 “Securities” or “Security”
means Common Stock, Preferred Stock, Convertible Securities,
Purchase Rights and any other shares of capital stock or equity interests of
the Company, whether or not issued or outstanding on the date of this
Shareholders Agreement.

 

(o)                                 “Securities Act” means the Securities Act of 1933, as
amended from time to time, and the rules and regulations promulgated
thereunder from time to time in effect.

 

(p)                                 “Spousal Consent” means a consent by a spouse of a
Shareholder or prospective holder of Securities in the form set forth in Exhibit B.

 

(q)                                 “Subsidiary” or “Subsidiaries”
means, as to any Person, any other Person in which such first Person
or one or more of its Subsidiaries or such first Person and one or more of its
Subsidiaries owns sufficient equity or voting interests to enable it or them
(as a group) ordinarily, in the absence of contingencies, to elect a majority
of the directors (or Persons performing similar functions) of such second
Person, and any partnership or joint venture if more than a 50% interest in the
profits or capital thereof is owned by such first Person or one or more of its
Subsidiaries or such first Person and one or more of its Subsidiaries (unless
such partnership or joint venture can and does ordinarily take major business
actions without the prior approval of such Person or one or more of its
Subsidiaries). Unless the context otherwise clearly requires, any reference to
a “Subsidiary” is a reference to a Subsidiary of the Company.

 

(r)                                    “Transfer” means any direct or indirect transfer,
donation, sale, assignment, pledge, encumbrance, hypothecation, gift, creation
of a security interest in or lien on, or other disposition, irrespective of
whether any of the foregoing are effected with or without consideration,
voluntarily or involuntarily, directly or indirectly, by operation of law or
otherwise, inter vivos or upon death.

 

3

 

(s)                                  “Voting Stock” means capital stock (or other equity
interests) of any class or classes of the Company, the holders of which are
ordinarily, in the absence of contingencies, entitled to vote in the election
of corporate directors (or individuals performing similar functions) of the
Company or which permit the holders thereof to control the management of the
Company.

 

2.                                       REPRESENTATIONS AND WARRANTIES OF THE
COMPANY

 

The Company represents
and warrants to each of the Shareholders and Guardian as
follows:

 

(a)                                  The Company is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware.

 

(b)                                 The Company has full corporate power and
corporate authority to make, execute, deliver and perform this Shareholders
Agreement and to carry out all of the transactions provided for herein without
the need for the consent of any other Person.

 

(c)                                  This Shareholders Agreement constitutes
the legal, valid and binding obligation of the Company, enforceable against the
Company in accordance with the terms hereof, except as such enforcement may be
limited by bankruptcy, insolvency and other similar laws affecting the
enforcement of creditors’ rights generally.

 

(d)                                 Schedule I  hereto sets forth a true, accurate and
complete list of the shares of capital stock (on a Fully-Diluted Basis) held by
each Shareholder as of the date hereof and the percentage of the total capital
stock of the Company held by such Shareholder (determined on a Fully-Diluted
Basis).

 

3.                                       REPRESENTATIONS, WARRANTIES AND COVENANTS
OF EACH SHAREHOLDER

 

Each of the Shareholders
severally (but not jointly) represents and warrants to, and covenants and
agrees with, the Company and Guardian that:

 

(a)                                  Such Shareholder has full legal right,
power and authority to enter into this Shareholders Agreement and to perform
such Shareholder’s obligations hereunder without the need for the consent of
any other Person.

 

(b)                                 This Shareholders Agreement has been duly
authorized, executed and delivered by, and constitutes the legal, valid and
binding obligation of, such Shareholder enforceable against such Shareholder in
accordance with the terms hereof, except as such enforcement may be limited by
bankruptcy, insolvency and other similar laws affecting the enforcement of
creditors’ rights generally.

 

(c)                                  Such Shareholder is the record and
beneficial owner of the Securities set forth opposite such Shareholder’s name
on Schedule 1, free and clear from any purchase, sale or other right or
restriction of any third party, other than as provided in this Shareholders
Agreement.

 

4

 

(d)                                 Except as set forth in this Shareholders
Agreement, such Shareholder (i) has not granted or entered into, and will
not grant or enter into, any proxy, and (ii) has not entered into or
agreed to be bound by, and will not enter into or agree to be bound by, (A) any
voting trust or other voting arrangement with respect to the Securities, or (B) any
stockholders agreements or arrangements of any kind with any Person with respect
to the Securities on terms which conflict with or violate any provision of this
Shareholders Agreement, including but not limited to, agreements or
arrangements with respect to the acquisition, disposition, Transfer or voting
of Securities inconsistent with this Shareholders Agreement.

 

(e)                                  The execution, delivery and performance
of this Shareholders Agreement by such Shareholder does not and will not
conflict with, violate or cause a breach of any document, agreement, contract
or instrument to which such Shareholder is a party or any judgment, order or
decree to which such Shareholder is subject.

 

(f)                                    If such Shareholder is at any time a
married individual, then the spouse of such Shareholder, acting with legal
capacity to do so, will execute and deliver to the Company a Spousal Consent.

 

4.                                       STOCK DIVIDENDS, SPLITS,
RECLASSIFICATIONS, MERGERS, ETC.

 

Each Shareholder
acknowledges and agrees that Securities issued by the Company pursuant to a
stock dividend, stock split, reclassification or like action, or pursuant to
the exercise of a right granted by the Company to all holders of Securities to
purchase Securities on a proportionate basis, will be treated for all purposes
in the same manner as, and be subject to the same options and have the same
rights and limitations on Transfer as, the Securities which were split or
reclassified or with respect to which a stock dividend was paid or rights to
purchase stock on a proportionate basis were granted. In the event of a merger
of or exchange involving the Company where this Shareholders Agreement does not
terminate, partnership units, membership units, shares of common stock or
similar equity interests (and/or securities convertible into such units, shares
or similar equity interests) which are issued in exchange for Securities will
thereafter be deemed to be Securities subject to the terms of this Shareholders
Agreement.

 

5.                                       BOARD REPRESENTATION

 

5.1.                              Boards of Directors.

 

(a)                                  Election of Director of
the Company. At
all times, and from time to time, from and after the date of this Shareholders
Agreement and during which Guardian (or any of its Affiliates) shall hold at
least 50% of the outstanding principal amount of the Notes (or following
conversion of all of the Notes, at least 50% of the total outstanding shares of
Common Stock issued upon conversion of the Notes), each of the Company and the
Shareholders hereby agrees to take all actions necessary to call, or cause the
Company, and the appropriate officers and directors of the Company to call, an
annual meeting (and, when circumstances so require, a special meeting) of
shareholders of the Company and to vote all shares of Voting Stock then owned
by them, directly or indirectly, at any such meeting and at any other annual or
special meeting of shareholders in favor of, or take by written consent in lieu
of any such meeting all actions as may be necessary to cause, the election as a
member of the Board of Directors of the 

 

5

 

Company of one individual designated by Guardian, which individual
shall be elected to such Board of Directors commencing on or before the date
fifteen (15) days after Guardian sends written notice to the Company of its
intent to designate an individual for election to such Board of Directors.

 

Guardian may rescind its
designation and redesignate another individual at any time by delivering a
written notice to the Company setting forth any such recission and identifying
the other individual chosen by Guardian to fill such position on such Board of
Directors (or its election to leave such position vacant); promptly upon
receipt of such notice, the Shareholders shall cause such prior designee to be
removed as a director and such subsequent designee to be elected as a director
of the Company.

 

If any director
designated by Guardian shall for whatever reason resign or be removed as a
director of the Company, Guardian may submit the name of a new individual to
hold such directorship and the Shareholders shall promptly vote for such
individual to fill such vacancy.

 

The rights conferred in
this Section 5.1(a) are personal to Guardian (and any of its
Affiliates) and shall not pass to any other holder of Purchaser Securities
including any transferees or assignees of Guardian (other than an Affiliate of
Guardian).

 

(b)                                 Size of Board of
Directors. Each
of the Company and the Shareholders agrees not to cause or permit the
certificate of incorporation or the by-laws of the Company to be amended, or to
authorize any resolution of the Company’s Board of Directors, so as to increase
the number of directors which make up such Board of Directors to a number
greater than 7 (seven). The Company, Guardian and the Shareholders agree to
cause at least one meeting of the Board of Directors of the Company to be held
during each fiscal quarter of the Company.

 

(c)                                  Power of Attorney. Each of the Company and the Shareholders
grants to Guardian its proxy, in respect of the election of the director of the
Company designated by Guardian, to vote all shares of Voting Stock held by the
Company and the Shareholders in favor of the nominee selected by Guardian, and
hereby names Guardian as its duly appointed agent and attorney in fact for
purposes of effectuating its agreements pursuant to this Section 5. +Each
of the Company and the Shareholders acknowledges that this proxy, agency and
attorney in fact are coupled with an interest and have been given in
consideration of the other agreements of Guardian. Each of the Company and the
Shareholders agrees that this proxy, agency and attorney in fact are
irrevocable.

 

(d)                                 Director &  Officer
Liability Insurance. At any time that a representative of Guardian
has been elected a member of the Board of Directors in accordance with Section 5.1(a),
the Company agrees to have in effect, at the expense of the Company, a director
and officer liability insurance policy for the benefit of the Company and such
representative with such deductibles and policy limits as shall be reasonably
acceptable to Guardian.

 

5.2.                              Remedies.

 

The Company and the
Shareholders agree that the remedies of Guardian at law in respect of any
breach by any of the Shareholders or the Company of their respective
obligations pursuant to this Section 5 would be inadequate and that, upon
any finding by any court of competent

 

6

 

jurisdiction
that any of the Shareholders or the Company has breached any such obligation,
Guardian shall be entitled to, and the Company and the Shareholders agree that
they will not contest, upon any such finding of any such breach, the award of
specific performance and injunctive relief in favor of Guardian and compelling
the Company and the Shareholders to comply with such obligations.

 

6.             TAG-ALONG RIGHTS IN RESPECT OF SALE OF STOCK

 

6.1.          Right
to Transfer Proportionate Number of Shares.

 

If McMorrow proposes, at
any time or from time to time, to Transfer any Securities to any Person
(including the Company) (the “Proposed Buyer”) in a transaction or
in a series of related transactions which would result in McMorrow owning less
than 40% of the Common Stock of the Company (determined on a Fully-Diluted
Basis) after giving effect to such Transfer (any such transaction or series of
transactions, a “Tag-Along Sale”), then, as part of
such transaction or series of transactions, Guardian shall have the right (but
not the obligation) to Transfer a Proportionate Amount of Common Stock then
held by Guardian (including any shares of Common Stock issuable upon conversion
of the Notes to the extent the Notes have not then been converted) at the same
price and on the same terms and conditions, and to the same purchaser or
purchasers (in the case of a private sale) or to the public (in the case of a
public sale), in accordance with this Section 6.

 

For purposes of this
Section. 6,
the “Proportionate
Amount” which Guardian shall be entitled to sell with respect
to any Tag-Along Sale shall be equal to the product (calculated as of the date
of such proposed Tag-Along Sale) of:

 

(a)           the total number of shares represented by
or underlying the Securities proposed to be sold in such Tag-Along Sale by
McMorrow, multiplied by

 

(b)           the quotient  of:

 

(i)            the aggregate number of shares of Common
Stock owned by Guardian immediately prior to such Tag-Along Sale, on a
Fully-Diluted Basis (including any shares of Common Stock issuable upon
conversion of the Notes), divided by

 

(ii)           the aggregate number of shares of Common
Stock owned by McMorrow and Guardian immediately prior to such Tag-Along Sale,
on a Fully- Diluted Basis (including any shares of Common Stock issuable upon
conversion of the Notes).

 

Notwithstanding anything
herein to the contrary, the number of shares of Common Stock permitted to be
sold by McMorrow hereunder is equal to (x) the number of shares of Common Stock
specified in clause (a) above minus (y) the aggregate number of shares of
Common Stock to be sold in such transaction by Guardian pursuant to this Section
6.

 

6.2.          Notice
of Proposed Tag-Along Sale.

 

If McMorrow intends to
Transfer any Securities in a Tag-Along Sale, then McMorrow shall provide
written notice to Guardian of such intention not less than thirty (30) days
prior to 

 

7

 

the
closing of such proposed Tag-Along Sale. Such written notice (the “Notice of Sale”) shall state (i) the date upon which such
proposed Tag-Along Sale is scheduled to close, ‘(ii) the name and address of
the Proposed Buyer, (iii) the proposed amount of consideration and the terms
and conditions offered by such Proposed Buyer (and, if the proposed
consideration is not all cash, the Tag-Along Notice shall describe the terms of
the proposed consideration), and (iv) that the Proposed Buyer has been informed
of the rights and obligations provided for in this Section 6 and has agreed to
purchase Securities in accordance with the terms of this Shareholders
Agreement. A complete and accurate copy of the Proposed Buyer’s offer to
purchase the Securities from McMorrow shall be attached to any such Notice of
Sale.

 

6.3.          Election
by Guardian.

 

Upon receipt of a Notice
of Sale, Guardian shall have twenty (20) days to deliver written notice of its
election to participate in such Tag-Along Sale and the number of shares of
Common Stock (including any shares of Common Stock issuable upon conversion of
the Notes) which Guardian is electing to Transfer, which number shall not
exceed Guardian’s Proportionate Amount. If Guardian delivers such notice within
said twenty (20) day period, then it shall sell the shares of Common Stock
specified therein upon the same terms and conditions as are applicable to the
sale by McMorrow and, to the extent necessary for such sale, shall convert the
Notes into Common Stock prior to the consummation thereof. If such notice is
not received from Guardian within the twenty (20) day period specified above,
McMorrow shall have the right to Transfer the Securities to the Proposed Buyer
without any participation by Guardian, but only (i) on the terms and conditions
stated in the Notice of Sale and (ii) if the sale of such Common Stock is
consummated not later than sixty (60) days after the end of such twenty (20)
day period.

 

6.4.          Expense
of Tag-Along Sale.

 

All expenses and costs
incurred by any Shareholder in connection with any Tag-Along Sale, including,
without limitation, the fees and expenses of any legal counsel retained by such
Shareholder in connection with such Tag-Along Sale, shall be borne by such
Shareholder individually.

 

6.5.          Transactions
Exempt from Tag-Along Rights.

 

Notwithstanding anything
to the contrary contained in this Section 6, neither (a) a Transfer which
constitutes a Permitted Transfer, nor (b) a sale pursuant to an effective
registration statement under the Securities Act, shall be deemed a sale subject
to the rights and restrictions contained in this Section 6.

 

7.             MISCELLANEOUS

 

7.1.          Notices.

 

All communications
hereunder shall be in writing, shall be delivered by nationwide ‘overnight
courier, or facsimile transmission (confirmed by delivery by nationwide
overnight courier sent on the day of the sending of such facsimile
transmission), and

 

(a)           if to the Company, at:

 

8

 

Kennedy-Wilson,
Inc.

9601
Wilshire Boulevard, Suite 220

Beverly
Hills, California 90210

Attention:
Chairman and Chief Executive Officer

 

with a
copy to:

 

Kent
Y. Mouton, Esq.

Kulik, Gottesman, Mouton & Siegel, LLP

15303 Ventura Boulevard, Suite 1400

Sherman
Oaks, California 91403

Facsimile:
(310) 557-0224

 

or
such other address as the Company shall designate to Guardian and the
Shareholders in writing; and

 

(b)           if to Guardian or to any other Shareholder,
at the address set forth opposite such Person’s name on Schedule 1  attached hereto or, if applicable, the
Joinder Agreement executed by such Person pursuant to Section 7,5 hereof, or
such other address as such Person shall designate to the Company and each other
party to this Shareholders Agreement in writing.

 

Any communication
addressed and delivered as herein provided shall be deemed to be received when
actually delivered to the address of the addressee (whether or not delivery is
accepted) or received by the facsimile machine of the recipient. Any
communication not so addressed and delivered shall be ineffective.

 

The Company, upon the
written request of any holder of Securities, will promptly supply such holder
with a list of the names and addresses of each party hereto at such time.

 

7.2.          Counterparts.

 

This Shareholders
Agreement may be executed in any number of counterparts and each of such
counterparts shall for all purposes be deemed to be an original, and all such
counterparts shall together constitute but one and the same instrument.

 

7.3.          Amendments.

 

Any amendment to this
Shareholders Agreement shall be in writing and shall require the written
consent of (i) the Company, (ii) Guardian and (iii) if materially adverse to
the interests of a particular Shareholder or group of Shareholders (other than
Guardian), of that Shareholder or the holders of a majority of the Common
Stock, on a Fully-Diluted Basis, at the time held by that group, as the case
may be.

 

7.4.          Termination.

 

From and after the date
that a Shareholder ceases to own any Securities (including any shares of Common
Stock issuable upon conversion of the Notes), such Shareholder will no 

 

9

 

longer
be deemed to be a Shareholder for purposes of this Shareholders Agreement and
all rights and obligations such Shareholder may have under this Shareholders
Agreement will terminate.

 

7.5.          Effectiveness
of Transfers; Additional Shareholders.

 

Any Person who is not a
party to this Shareholders Agreement and who acquires Securities from a
Shareholder shall, on or before the Transfer of such Securities, execute and
deliver to the Company a Joinder Agreement in substantially the form attached
hereto as Exhibit A (and, if the transferee is a married individual,
cause the transferee’s spouse to execute and deliver to the Company a Spousal
Consent). No Securities shall be Transferred on the Company’s books and
records, and no Transfer of Securities shall be otherwise effective, unless any
such Transfer is made in accordance with the terms and conditions of this
Shareholders Agreement, and the Company is hereby authorized by all of the
Shareholders to enter appropriate stop transfer notations on its transfer
records to give effect to this Shareholders Agreement. The Company shall not
issue Securities to any Person that has not executed such a Joinder Agreement
(and, if such Person is a married individual, has not caused such Person’s
spouse to execute and deliver a Spousal Consent).

 

7.6.          Descriptive
Headings.

 

Descriptive headings of
the several sections of this Shareholders Agreement are inserted for
convenience only and shall not control or affect the meaning or construction of
any of the provisions hereof.

 

7.7.          Severability.

 

The fact that any given
provision of this Shareholders Agreement is found to be unenforceable, void or
voidable under the laws of any jurisdiction shall not affect the validity of
the remaining provisions of this Shareholders Agreement in such jurisdiction,
and shall not affect the enforceability of the entire Shareholders Agreement
under the laws of any other jurisdiction.

 

7.8.          Governing
Law.

 

This Shareholders
Agreement shall be construed and enforced in accordance with, and the rights of
the parties shall be governed by, the law of the State of New York excluding
choice-of-law principles of the law of such State that would permit the
application of the laws of a jurisdiction other than such State.

 

7.9.          Successors
and Assigns.

 

Except as expressly set
forth in Section 5 hereof, all covenants and other agreements contained in this
Shareholders Agreement by or on behalf of any of the parties hereto bind and
inure to the benefit of their respective successors and assigns whether so
expressed or not.

 

10

 

7.10.        Waiver of Jury Trial.

 

The parties hereto hereby
waive trial by jury in any action brought on or with respect to this
Shareholders Agreement, the Notes or any other document executed in connection
herewith or therewith.

 

7.11.        Construction,
etc.

 

Each covenant contained
herein shall be construed (absent express provision to the contrary) as being
independent of each other covenant contained herein, so that compliance with
any one covenant shall not (absent such an express contrary provision) be
deemed to excuse compliance with any other covenant. Where any provision herein
refers to action to be taken by any Person, or which such Person is prohibited
from taking, such provision shall be applicable whether such action is taken
directly or indirectly by such Person. For the avoidance of doubt, all
Schedules and Exhibits attached to this Shareholders Agreement shall be deemed
to be a part hereof.

 

[Remainder of page intentionally
left blank.  Next page is signature
page.)

 

11

 

IN
WITNESS WHEREOF, the
parties hereto have caused this Shareholders Agreement to be duly executed and
delivered, all as of the date and year first above written.

 

	
   

  	
  KENNEDY-WILSON, INC.

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Freeman Lyle

  
	
   

  	
  Name:

  	
  FREEMAN LYLE

  
	
   

  	
  Title:

  	
  Executive Vice President, CFO

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  THE GUARDIAN LIFE INSURANCE COMPANY
  OF AMERICA

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Thomas G. Sorell

  
	
   

  	
  Name:

  	
  THOMAS G. SORRELL

  
	
   

  	
  Title:

  	
  Executive Vice President and Chief Investment Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  OTHER SHAREHOLDERS

  
	
   

  	
   

  
	
   

  	
  /s/ William J. McMorrow

  
	
   

  	
  WILLIAM J. MCMORROW

  
	
   

  	
   

  
	
   

  	
  /s/ Mary Ricks

  
	
   

  	
  MARY RICKS

  
	
   

  	
   

  
	
   

  	
  /s/ Lyle Freeman

  
	
   

  	
  LYLE FREEMAN

  

 

12

 

SCHEDULE 1

 

SCHEDULE OF HOLDERS

 

	
  Name and Address

  	
  Securities Held

  

 

William
J. McMorrow

c/o Kennedy-Wilson,
Inc.

9601 Wilshire
Boulevard

Suite 220

Beverly Hills,
California 90210

 

Mary
Ricks

c/o Kennedy-Wilson,
Inc.

9601 Wilshire
Boulevard

Suite 220

Beverly Hills,
California 90210

 

Freeman
Lyle

c/o Kennedy-Wilson,
Inc.

9601 Wilshire Boulevard

Suite 220

Beverly Hills,
California 90210

 

The
Guardian Life Insurance Company of America

7 Hanover Square

New York, New York
10004-2616

 

 

EXHIBIT A

 

[FORM OF JOINDER AGREEMENT]

 

[Letterhead of Transferee]

 

FORM OF JOINDER AGREEMENT

 

The
undersigned hereby agrees, effective as of the date hereof, to become a party
to that certain Shareholders Agreement (the “Shareholders Agreement”) dated
as of November 3, 2008 and as may be amended from time to time by and among
Kennedy-Wilson, Inc., a Delaware corporation (the “Company”), and the
other parties named therein. Capitalized terms used but not defined in this
Joinder Agreement shall have the meanings ascribed to such terms in the
Shareholders Agreement. The undersigned acknowledges and agrees that (a) the
Securities Transferred to the undersigned shall continue to be subject to the
Shareholders Agreement, (b) as to such Securities the undersigned shall be
bound by the restrictions of the Shareholders Agreement and shall take such
other actions and execute such other documents as the Company reasonably
requests, and (c) for all purposes of the Shareholders Agreement, the
undersigned shall be included within the term “Shareholders.” The address and
facsimile number to which notices may be sent to the undersigned are as
follows:

 

	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Address:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Facsimile No:

  	
   

  	
   

  
						

 

	
  Date:

  	
   

  	
  [Signature Block to be provided]

  

 

 

EXHIBIT B

 

FORM OF SPOUSAL CONSENT

 

I
acknowledge that I have read the foregoing Shareholders Agreement and that I
know its contents. I acknowledge and agree that capitalized terms used and not
defined in this spousal consent shall have the meanings ascribed to such terms
in the Shareholders Agreement. I am aware that by the provisions of the
Shareholders Agreement, my spouse agrees, among other things, to the imposition
of certain restrictions on the Transfer of Securities, including my community
interest therein (if any), which rights and restrictions may survive my spouse’s
death. I hereby consent to such rights and restrictions, approve of the
provisions of the Shareholders Agreement, and agree that I will bequeath any
interest which I may have in said Securities or any of them, including my
community interest, if any, or permit any such interest to be purchased, in a
manner consistent with the provisions of the Shareholders Agreement. I direct
that any residuary clause in my will not be deemed to apply to my community
interest (if any) in such Securities except to the extent consistent with the
provisions of the Shareholders Agreement.

 

I
further agree that in the event of a dissolution of the marriage between myself
and my spouse, in connection with which I secure or am awarded any Securities
or any interest therein through property settlement agreement or otherwise, (a)
I will receive and hold said Securities subject to all the provisions and
restrictions contained in the Shareholders Agreement, and (b) I hereby
irrevocably constitute and appoint my spouse, as true and lawful attorney and
proxy (the “Proxy”) of my Securities with full power of substitution, to
vote (at any annual or special meeting or by written consent) such Securities
which I would be entitled to vote as a Shareholder, together with any and all
Securities issued in replacement or in respect of such Securities by dividend,
distribution, stock split, reorganization, recapitalization or otherwise.

 

I also
acknowledge that I have been advised to obtain independent counsel to represent
my interests with respect to this spousal consent.

 

	
  Date:

  	
   

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Name of Spouse:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Name of Shareholder:

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