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INDEX TO FINANCIAL STATEMENTS

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As filed with the Securities and Exchange Commission on September 24, 2009.

Registration No. 333-            

UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549



FORM S-4
REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933



PROSPECT ACQUISITION CORP.
(Exact Name of Each Registrant as Specified in Its Charter)

Delaware   6770   26-0508760
(State or Other Jurisdiction
of Incorporation or Organization)
  (Primary Standard Industrial
Classification Code Number)
  (I.R.S. Employer
Identification Number)

9130 Galleria Court, Suite 318
Naples, Florida 34109
(239) 254-4481
(Address, Including Zip Code, and Telephone Number, Including Area Code, of Registrant's Principal Executive Offices)

David A. Minella
Chairman and Chief Executive Officer
9130 Galleria Court, Suite 318
Naples, Florida 34109
(239) 254-4481

(Name, Address, Including Zip Code, and Telephone Number, Including Area Code, of Agent for Service)



Copies to:
Mitchell S. Nussbaum, Esq.
Loeb & Loeb LLP
345 Park Avenue
New York, New York 10154
(212) 407-4159
Facsimile: (212) 504-3013
  Floyd I. Wittlin
Laurie A. Cerveny
Bingham McCutchen LLP
399 Park Avenue
New York, NY
(212) 705-7000
Facsimile: (212) 752-5378



          Approximate date of commencement of proposed sale of the securities to the public: As soon as practicable after this Registration Statement becomes effective and all other conditions to the merger contemplated by the agreement and plan of merger included as Annex A to the proxy statement/prospectus forming part of this registration statement have been satisfied or waived.

          If the securities being registered on this form are being offered in connection with the formation of a holding company and there is compliance with General Instruction G, check the following box: o

          If this form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. o

          If this form is a post effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. o

          Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of "large accelerated filer," "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer o   Accelerated Filer ý   Non-accelerated filer o
(Do not check if a
smaller reporting company)
  Smaller reporting company o



CALCULATION OF REGISTRATION FEE

               
 
Title of Each Class of Security
Being Registered

  Amount Being
Registered

  Proposed Maximum
Offering Price
Per Share

  Proposed Maximum
Aggregate Offering
Price

  Amount of
Registration Fee

 

Shares of Common Stock par value $0.0001 per share

  26,000,000(1)   $9.87(2)   $256,620,000.00   $14,319.40(3)
 

Total Fee Due

              $14,319.40     

 

(1)
Represents shares of common stock to be issued to the Kennedy-Wilson, Inc. stockholders upon consummation of the transaction with Prospect Acquisition Corp.

(2)
Based on the average high and low prices of common stock, par value $0.0001 per share, of Prospect Acquisition Corp. on September 17, 2009 pursuant to Rule 457(f)(1).

(3)
Determined in accordance with Section 6(b) of the Securities Act at a rate equal to $55.80 per $1,000,000 of the proposed maximum aggregate offering price.



          The registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933, as amended, or until the registration statement shall become effective on such date as the SEC, acting pursuant to said Section 8(a), may determine.


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The information in this proxy statement/prospectus is not complete and may be changed. Prospect Acquisition Corp. may not issue these securities until the registration statement filed with the Securities and Exchange Commission is effective. This proxy statement/prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted.


SUBJECT TO AMENDMENT AND COMPLETION,
DATED                         , 2009

PROXY STATEMENT FOR SPECIAL MEETING OF
STOCKHOLDERS AND WARRANTHOLDERS OF
PROSPECT ACQUISITION CORP. AND
PROSPECTUS FOR UP TO 26,000,000 SHARES
OF COMMON STOCK

Dear Stockholders and Warrantholders of Prospect Acquisition Corp.:

        You are cordially invited to attend the special meeting of stockholders of Prospect Acquisition Corp. ("Prospect") and the special meeting of Prospect warrantholders scheduled to be held on                         , 2009 at 8:30 a.m., Eastern Standard time, at 9130 Galleria Court, Suite 318, Naples, FL 34109.

        Prospect is pleased to report that its board of directors and the board of directors and stockholders of Kennedy-Wilson, Inc. ("Kennedy-Wilson") have approved an Agreement and Plan of Merger (the "Merger Agreement"). The Merger Agreement provides for a merger of KW Merger Sub Corp., Prospect's wholly-owned subsidiary formed for the purpose of consummating the merger ("Merger Sub"), with and into Kennedy-Wilson, with Kennedy-Wilson continuing as the surviving corporation and becoming a direct wholly-owned subsidiary of Prospect (the "Merger"). The proposal to approve the Merger Agreement and certain other proposals discussed in this proxy statement/prospectus will be presented at the special meeting of Prospect stockholders.

        If the Merger is completed, Kennedy-Wilson's stockholders of record (the "Kennedy-Wilson Holders"), will receive an aggregate of 26 million shares of Prospect common stock (each share of Kennedy-Wilson common stock shall automatically convert into the right to receive 3.8031 shares of Prospect common stock and each share of Kennedy-Wilson preferred stock shall automatically convert into the right to receive 105.6412 shares of Prospect common stock) (the "Initial Shares"), minus any shares of Prospect common stock that would otherwise have been issuable to the Kennedy-Wilson Holders of dissenting shares (the "Dissenting Shares"), plus shares issued in lieu of fractional shares. Based on the closing market price of $9.79 per share on September 8, 2009, the last trading day of Prospect common stock prior to the announcement of the Merger Agreement, the Initial Shares had an aggregate value of $254.5 million. Based on the closing market price of Prospect common stock of $                         per share on                         , 2009 (the record date), the Initial Shares had an aggregate value of $                        .

        Prospect stockholders will be asked to (i) approve the Merger and the Merger Agreement, dated as of September 8, 2009, by and among Prospect, Merger Sub and Kennedy-Wilson, which, among other things, provides for the merger of Merger Sub with and into Kennedy-Wilson, with Kennedy-Wilson continuing as the surviving corporation and becoming a direct wholly-owned subsidiary of Prospect (the "Merger Proposal"); (ii) approve an amendment and restatement of Prospect's amended and restated certificate of incorporation to change Prospect's corporate name to "Kennedy-Wilson Holdings, Inc.," increase the number of authorized shares of Prospect capital stock from 73,000,000 to 81,000,000, provide for Prospect's perpetual existence, delete and replace Article Sixth and make certain other changes in tense and numbers that Prospect's board of directors believes are immaterial (the "Charter Amendment Proposal"); (iii) approve the Kennedy-Wilson Holdings, Inc. 2009 Equity Participation Plan (the "2009 Plan"), which is an equity-based incentive plan for directors, officers, employees and certain consultants, pursuant to which Prospect will reserve up to 4,000,000 shares of Prospect common stock for issuance under the 2009 Plan (the "Equity Participation Plan Proposal");


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(iv) elect seven directors to serve on Prospect's board of directors (the "Director Election Proposal"); and (v) approve the adjournment of the special meeting of Prospect stockholders to a later date or dates if necessary to permit further solicitation and vote of proxies if, based upon the tabulated vote at the time of the special meeting of Prospect stockholders, Prospect is not authorized to consummate the merger (the "Stockholder Adjournment Proposal").

        Prospect warrantholders will be asked to approve an amendment (the "Warrant Amendment") to the warrant agreement that governs all of the warrants of Prospect, each of which is exercisable for one share of common stock of Prospect in order to (1) allow each Prospect warrantholder to elect to receive upon the closing of the Merger, for each outstanding Prospect warrant that was issued in Prospect's initial public offering (the "Public Warrants"), either (i) $0.55 in cash (the "Cash Amount") or (ii) an amended and restated Public Warrant with a new exercise price of $12.50, a redemption trigger price of $19.50 and an expiration date of November 14, 2013, subject to adjustment and proration as described in this proxy statement/prospectus and (2) amend and restate the terms of the warrants purchased by each of Flat Ridge Investments LLC, an entity affiliated with David A. Minella, Prospect's Chairman and Chief Executive Officer, LLM Structured Equity Fund L.P. and LLM Investors L.P., entities associated with Patrick J. Landers, a director and President of Prospect, and CMS Platinum Fund, L.P. (formerly Capital Management Systems Inc.), an entity affiliated with William Landman, one of Prospect's directors, in connection with Prospect's initial public offering (the "Sponsors Warrants"), to provide for an exercise price of $12.50, a redemption trigger price of $19.50 and an expiration date of November 14, 2013 (items (1) and (2), collectively, the "Warrant Amendment Proposal"). If the Merger is consummated, any warrantholder who votes against the approval of the Warrant Amendment Proposal or who makes no election will receive the Cash Amount in exchange for each of its Public Warrants. Warrantholders will also be asked to approve an adjournment of the special meeting of Prospect warrantholders to a later date or dates, if necessary, to permit further solicitation and vote of proxies in favor of the Warrant Amendment Proposal (the "Warrantholder Adjournment Proposal"). See the sections entitled "The Warrant Amendment Proposal" and "The Warrantholder Adjournment Proposal" for additional information.

        Each of these proposals is more fully described in the accompanying proxy statement/prospectus.

        Prospect's board of directors recommends (i) that Prospect stockholders vote "FOR" approval of the Merger Proposal, "FOR" approval of the Charter Amendment Proposal, "FOR" approval of the Equity Participation Plan Proposal, "FOR" approval of the Director Election Proposal, and "FOR" approval of the Stockholder Adjournment Proposal and (ii) that Prospect warrantholders vote "FOR" approval of the Warrant Amendment Proposal and "FOR" approval of the Warrantholder Adjournment Proposal.

        Prospect's units, common stock and Public Warrants are currently quoted on NYSE AMEX LLC (formerly known as the American Stock Exchange) under the symbols "PAX.U", "PAX", and PAX.WS", respectively. Prospect intends to apply for re-listing on NYSE AMEX LLC upon the consummation of the Merger. If Prospect's securities are re-listed on NYSE AMEX LLC, the symbols may change to symbols that are reasonably representative of the post-Merger company's corporate name.

        Prospect is providing this proxy statement/prospectus and accompanying proxy card to its stockholders and warrantholders in connection with the solicitation of proxies to be voted at the special meeting of Prospect stockholders and the special meeting of Prospect warrantholders and at any adjournments or postponements of the meetings. This proxy statement/prospectus also constitutes a prospectus of Prospect for the securities of Prospect to be issued to stockholders of Kennedy-Wilson pursuant to the Merger Agreement.

        This proxy statement/prospectus provides you with detailed information about the Merger and other matters to be considered by the Prospect stockholders and warrantholders. Prospect encourages you to carefully read the entire document and the documents incorporated by reference. IN PARTICULAR, YOU SHOULD CAREFULLY CONSIDER THE MATTERS DISCUSSED UNDER "RISK FACTORS" BEGINNING ON PAGE 45.


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        Prospect Stockholders and Warrantholders—Your vote is very important.    Whether or not you expect to attend the special meeting of Prospect stockholders and/or the special meeting of Prospect warrantholders, the details of which are described on the following pages, please complete, date, sign and promptly return the accompanying proxy in the enclosed envelope.

        Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or passed upon the adequacy or accuracy of this proxy statement/prospectus. Any representation to the contrary is a criminal offense.

        This proxy statement/prospectus is dated                         , 2009, and is first being mailed to Prospect stockholders and Prospect warrantholders on or about                         , 2009.

        This proxy statement/prospectus incorporates important business and financial information about Prospect and Kennedy-Wilson that is not included in or delivered with this document. This information is available without charge to security holders upon written or oral request. To make this request, or if you would like additional copies of this proxy statement/prospectus or have questions about the Merger, you should contact James J. Cahill, Secretary, Prospect Acquisition Corp., 9130 Galleria Court, Suite 318, Naples, FL 34109, Telephone (239) 254-4481.

        TO OBTAIN TIMELY DELIVERY OF REQUESTED MATERIALS, STOCKHOLDERS AND WARRANTHOLDERS MUST REQUEST THE INFORMATION NO LATER THAN FIVE BUSINESS DAYS BEFORE THE DATE THEY SUBMIT THEIR PROXIES OR ATTEND THE SPECIAL MEETING OF PROSPECT STOCKHOLDERS OR THE SPECIAL MEETING OF PROSPECT WARRANTHOLDERS. THE LATEST DATE TO REQUEST THE INFORMATION TO BE RECEIVED TIMELY IS                         , 2009.

        All references in this proxy statement to "dollars" or "$" are to U.S. dollars, unless otherwise noted. Except as otherwise indicated, all financial statements and financial data contained in this proxy statement have been prepared in accordance with generally accepted accounting principles in the United States of America. Unless the context requires otherwise, references to "you" are references to Prospect stockholders and Prospect warrantholders, as applicable, and references to "we", "us" and "our" are to Prospect.


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PROSPECT ACQUISITION CORP.
9130 GALLERIA COURT, SUITE 318
NAPLES, FLORIDA 34109

NOTICE OF SPECIAL MEETING OF WARRANTHOLDERS
OF PROSPECT ACQUISITION CORP.
TO BE HELD ON                         , 2009.

To the Warrantholders of Prospect Acquisition Corp.:

        NOTICE IS HEREBY GIVEN that the special meeting of warrantholders of Prospect Acquisition Corp., a Delaware corporation ("Prospect"), will be held at 8:30 a.m., Eastern Standard time, on                         , 2009, at 9130 Galleria Court, Suite 318, Naples, FL 34109. You are cordially invited to attend the meeting, which will be held for the following purposes:

        These items of business are described in the enclosed proxy statement/prospectus, which you are encouraged to read in its entirety before voting. Only holders of record of Prospect warrants at the close of business on                         , 2009 are entitled to notice of the special meeting of Prospect warrantholders and to vote and have their votes counted at the special meeting of Prospect warrantholders and any adjournments or postponements thereof.

        Prospect's board of directors has determined that the Warrant Amendment Proposal and the Warrantholder Adjournment Proposal are fair to and in the best interests of Prospect and its warrantholders and unanimously recommends that you vote or give instruction to vote "FOR" the Warrant Amendment Proposal and "FOR" the Warrantholder Adjournment Proposal.


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        All Prospect warrantholders are cordially invited to attend the special meeting of Prospect warrantholders in person. Your vote is very important. To ensure your representation at the special meeting of Prospect warrantholders, however, you are urged to complete, sign, date and return the enclosed proxy card as soon as possible. If you are a warrantholder of record of Prospect warrants, you may also cast your vote in person at the special meeting of Prospect warrantholders. If your warrants are held in an account at a brokerage firm or bank, you must instruct your broker, bank or nominee on how to vote your warrants or, if you wish to attend the special meeting of Prospect warrantholders and vote in person, obtain a proxy from your broker, bank or nominee. If you do not vote or do not instruct your broker, bank or nominee how to vote, it will have the same effect as voting "AGAINST" the Warrant Amendment Proposal, but will have no effect on the Warrantholder Adjournment Proposal.

        A complete list of Prospect warrantholders of record entitled to vote at the special meeting of Prospect warrantholders will be available for ten days before the special meeting of Prospect warrantholders at 9130 Galleria Court, Suite 300, Naples, Florida 34109 for inspection by warrantholders during ordinary business hours for any purpose germane to the special meeting of Prospect warrantholders.

        Your vote is important to us regardless of the number of warrants you own. Whether or not you plan to attend the special meeting of Prospect warrantholders, please read the enclosed proxy statement/prospectus carefully, and sign, date and return the enclosed proxy card as soon as possible in the envelope provided. If your warrants are held in "street name" or are in a margin or similar account, you should contact your broker, bank or nominee to ensure that votes related to the warrants you beneficially own are properly counted.

        Thank you for your participation. We look forward to your continued support.

    By Order of the Board of Directors

 

 

David A. Minella
Chairman and Chief Executive Officer

                        

IF YOU RETURN YOUR PROXY CARD WITHOUT AN INDICATION OF HOW YOU WISH TO VOTE, YOUR WARRANTS WILL BE VOTED IN FAVOR OF EACH OF THE PROPOSALS.


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PROSPECT ACQUISITION CORP.
9130 GALLERIA COURT, SUITE 318
NAPLES, FLORIDA 34109

NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
OF PROSPECT ACQUISITION CORP.
TO BE HELD ON                         , 2009.

To the Stockholders of Prospect Acquisition Corp.:

        NOTICE IS HEREBY GIVEN that the special meeting of stockholders of Prospect Acquisition Corp., a Delaware corporation ("Prospect"), will be held immediately following the special meeting of Prospect warrantholders scheduled for 8:30 a.m. Eastern time, on                         , 2009 at 9130 Galleria Court, Suite 318, Naples, FL 34109. You are cordially invited to attend the meeting, which will be held for the following purposes:


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        These items of business are described in the enclosed proxy statement/prospectus, which we encourage you to read in its entirety before voting. Only holders of record of Prospect common stock at the close of business on                         , 2009 are entitled to notice of the special meeting of Prospect stockholders and to vote and have their votes counted at the special meeting of Prospect stockholders and any adjournments or postponements of the special meeting of Prospect stockholders.

        Prospect's board of directors has determined that the Merger Proposal and the other proposals are fair to and in the best interests of Prospect and its stockholders and unanimously recommends that you vote or give instruction to vote "FOR" the approval of all of the proposals and all of the persons nominated by Prospect's management for election as directors.

        All Prospect stockholders are cordially invited to attend the special meeting of Prospect stockholders in person. To ensure your representation at the special meeting of Prospect stockholders, however, you are urged to complete, sign, date and return the enclosed proxy card as soon as possible. If you are a holder of record of Prospect common stock, you may also cast your vote in person at the special meeting of Prospect stockholders. If your shares are held in an account at a brokerage firm or bank, you must instruct your broker, bank or nominee on how to vote your shares or, if you wish to attend the special meeting of Prospect stockholders and vote in person, obtain a proxy from your broker or bank. If you do not vote or do not instruct your broker, bank or nominee how to vote, it will have the same effect as voting "AGAINST" the Charter Amendment Proposal, but will have no effect on the Merger Proposal, the Equity Participation Plan Proposal, the Director Election Proposal, and the Stockholder Adjournment Proposal.

        A complete list of Prospect stockholders of record entitled to vote at the special meeting of Prospect stockholders will be available for ten days before the special meeting of Prospect stockholders at 9130 Galleria Court, Suite 300, Naples, Florida 34109 for inspection by stockholders during ordinary business hours for any purpose germane to the special meeting of Prospect stockholders.

        Your vote is important regardless of the number of shares you own. Whether you plan to attend the special meeting of Prospect stockholders or not, please sign, date and return the enclosed proxy card as soon as possible in the envelope provided. If your shares are held in "street name" or are in a margin or similar account, you should contact your broker to ensure that votes related to the shares you beneficially own are properly counted.

        Thank you for your participation. We look forward to your continued support.

  By Order of the Board of Directors

 

David A. Minella
Chairman and Chief Executive Officer

                        

IF YOU RETURN YOUR PROXY CARD WITHOUT AN INDICATION OF HOW YOU WISH TO VOTE, YOUR SHARES WILL BE VOTED IN FAVOR OF EACH OF THE PROPOSALS AND YOU WILL NOT BE ELIGIBLE TO HAVE YOUR SHARES CONVERTED INTO A PRO RATA PORTION OF THE TRUST ACCOUNT IN WHICH A SUBSTANTIAL PORTION OF THE NET PROCEEDS OF PROSPECT'S INITIAL PUBLIC OFFERING ARE HELD. IN ORDER TO PROPERLY EXERCISE YOUR CONVERSION RIGHTS, YOU MUST (I) AFFIRMATIVELY VOTE AGAINST THE MERGER PROPOSAL BY PROXY OR IN PERSON AT THE SPECIAL MEETING OF PROSPECT'S STOCKHOLDERS, (II) PRESENT WRITTEN INSTRUCTIONS TO PROSPECT'S TRANSFER AGENT NO LATER THAN ONE BUSINESS DAY PRIOR TO THE VOTE ON THE MERGER PROPOSAL STATING THAT YOU WISH TO CONVERT YOUR SHARES INTO CASH AND THAT YOU WILL CONTINUE TO HOLD YOUR SHARES THROUGH THE CLOSING DATE OF THE MERGER, (III) CONTINUE TO HOLD YOUR SHARES THROUGH THE CLOSING DATE OF THE MERGER AND (IV) TENDER YOUR SHARES TO PROSPECT'S TRANSFER AGENT WITHIN THE


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PERIOD SPECIFIED IN A NOTICE YOU WILL RECEIVE FROM OR ON BEHALF OF PROSPECT, WHICH PERIOD WILL NOT BE LESS THAN 20 DAYS. YOU MAY TENDER YOUR SHARES BY EITHER DELIVERING YOUR STOCK CERTIFICATE TO THE TRANSFER AGENT OR BY DELIVERING YOUR SHARES ELECTRONICALLY USING THE DEPOSITORY TRUST COMPANY'S DWAC (DEPOSIT/WITHDRAWAL AT CUSTODIAN) SYSTEM. IF THE MERGER IS NOT COMPLETED, THEN THESE SHARES WILL NOT BE CONVERTED INTO CASH. IF YOU HOLD THE SHARES IN STREET NAME, YOU WILL NEED TO INSTRUCT THE ACCOUNT EXECUTIVE AT YOUR BANK, BROKER OR NOMINEE TO WITHDRAW THE SHARES FROM YOUR ACCOUNT IN ORDER TO EXERCISE YOUR CONVERSION RIGHTS. SEE "SPECIAL MEETING OF PROSPECT WARRANTHOLDERS AND SPECIAL MEETING OF PROSPECT STOCKHOLDERS—CONVERSION RIGHTS" FOR MORE SPECIFIC INSTRUCTIONS.


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TABLE OF CONTENTS

 
  Page  

SUMMARY OF THE MATERIAL TERMS OF THE MERGER

    1  

QUESTIONS AND ANSWERS FOR PROSPECT STOCKHOLDERS AND WARRANTHOLDERS ABOUT THE PROPOSALS

    5  

FORWARD-LOOKING STATEMENTS

    16  

SUMMARY OF THE PROXY STATEMENT/PROSPECTUS

    18  

SELECTED UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

    40  

HISTORICAL AND UNAUDITED COMPARATIVE PRO FORMA PER SHARE DATA

    43  

RISK FACTORS

    45  

SPECIAL MEETING OF PROSPECT WARRANTHOLDERS AND SPECIAL MEETING OF PROSPECT STOCKHOLDERS

    69  

THE WARRANT AMENDMENT PROPOSAL

    79  

THE WARRANTHOLDER ADJOURNMENT PROPOSAL

    82  

THE MERGER PROPOSAL

    83  

THE MERGER AGREEMENT

    115  

SELECTED HISTORICAL FINANCIAL INFORMATION

    129  

UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL INFORMATION

    131  

PRO FORMA SENSITIVITY ANALYSIS

    142  

CAPITALIZATION

    143  

THE CHARTER AMENDMENT PROPOSAL

    144  

THE EQUITY PARTICIPATION PLAN PROPOSAL

    146  

THE DIRECTOR ELECTION PROPOSAL

    156  

THE STOCKHOLDER ADJOURNMENT PROPOSAL

    165  

INFORMATION RELATED TO PROSPECT

    166  

PROSPECT'S MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

    176  

BUSINESS OF KENNEDY-WILSON

    182  

KENNEDY-WILSON'S MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

    191  

EXECUTIVE COMPENSATION

    207  

COMPARISON OF RIGHTS OF PROSPECT AND KENNEDY-WILSON HOLDERS

    216  

BENEFICIAL OWNERSHIP OF SECURITIES

    226  

CERTAIN RELATIONSHIPS AND TRANSACTIONS WITH RELATED PERSONS

    231  

DESCRIPTION OF PROSPECT SECURITIES

    239  

PRICE RANGE OF SECURITIES AND DIVIDENDS

    246  

APPRAISAL RIGHTS

    249  

STOCKHOLDER PROPOSALS

    255  

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  Page  

LEGAL MATTERS

    255  

EXPERTS

    255  

DELIVERY OF DOCUMENTS TO STOCKHOLDERS

    255  

WHERE YOU CAN FIND MORE INFORMATION

    256  

DIRECTIONS TO PROSPECT'S SPECIAL MEETING OF STOCKHOLDERS AND THE SPECIAL MEETING OF WARRANTHOLDERS

    256  

INDEX TO FINANCIAL STATEMENTS

    F-1  

INFORMATION NOT REQUIRED IN PROSPECTUS

    II-1  

EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

    II-5  

SIGNATURES

    II-17  

ANNEXES

       

A—AGREEMENT AND PLAN OF MERGER

    A-1  

B—FORM OF AMENDMENT NO. 1 TO THE WARRANT AGREEMENT

    B-1  

C—FORM OF AMENDED AND RESTATED WARRANT AGREEMENT

    C-1  

D—FORM OF SECOND AMENDED AND RESTATED CERTIFICATE OF INCORPORATION

    D-1  

E—2009 EQUITY PARTICIPATION PLAN

    E-1  

F—HOULIHAN SMITH AND COMPANY, INC. FAIRNESS OPINION

    F-1  

G—SECTION 262 OF THE DELAWARE GENERAL CORPORATION LAW

    G-1  

H—CHAPTER 13 OF THE CALIFORNIA GENERAL CORPORATION LAW

    H-1  

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SUMMARY OF THE MATERIAL TERMS OF THE MERGER

        This summary highlights selected information from this proxy statement/prospectus and does not contain all of the information that is important to you. To better understand the Merger, you should read this entire document carefully, including "Risk Factors," the Merger Agreement attached as Annex A, and all annexes and exhibits attached to this proxy statement/prospectus. The Merger Agreement is the legal document that governs the Merger and the other transactions that will be undertaken in connection with the Merger. It is also described in detail elsewhere in this proxy statement/prospectus.


(1)
"Aggregate Value" is defined as the aggregate value of a transaction, which includes all debt and equity for each investment at cost at the time of initial investment or follow-on investment, including amounts representing investments by third parties unaffiliated with Kennedy-Wilson and closing costs.

Prospect believes that Kennedy-Wilson's management has the experience to successfully lead Kennedy-Wilson's business and that Kennedy-Wilson has in place the infrastructure for strong business operations and to achieve growth both organically and through strategic acquisitions. As a result, Prospect also believes that a business combination with Kennedy-Wilson will provide Prospect stockholders with an opportunity to participate in a company with significant growth potential.

If the Merger is consummated, Kennedy-Wilson's stockholders (the "Kennedy-Wilson Holders"), will receive an aggregate of 26 million shares of Prospect common stock (each share of Kennedy-Wilson common stock shall automatically convert into the right to receive 3.8031 shares of Prospect common stock and each share of Kennedy-Wilson preferred stock shall automatically convert into the right to receive 105.6412 shares of Prospect common stock) (the "Initial Shares"), minus any shares of Prospect common stock that would otherwise have been issuable to the Kennedy-Wilson Holders of dissenting shares (the "Dissenting Shares"). Based on the

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QUESTIONS AND ANSWERS
FOR PROSPECT STOCKHOLDERS AND WARRANTHOLDERS ABOUT THE PROPOSALS

Why am I receiving this proxy statement/prospectus?

        Prospect and Kennedy-Wilson have agreed to a business combination under the terms of the Merger Agreement that are described in this proxy statement/prospectus in the sections entitled "The Merger Proposal" and "The Merger Agreement." This agreement is referred to as the Merger Agreement. A copy of the Merger Agreement which is incorporated by reference is attached to this proxy statement/prospectus as Annex A, which Prospect encourages you to read.

        Prospect warrantholders are being asked to consider and vote upon a proposal, which we refer to as the Warrant Amendment Proposal, to approve the Warrant Amendment to the Warrant Agreement that governs all Prospect warrants, each of which is exercisable for one share of Prospect common stock, to (1) allow each Prospect warrantholder to elect to receive upon the closing of the Merger, for each outstanding Public Warrant, either (i) the Cash Amount of $0.55, or (ii) an amended and restated Public Warrant with an exercise price of $12.50, a redemption trigger price of $19.50 and an expiration date of November 14, 2013, subject to adjustment and proration as described in this proxy statement/prospectus and (2) amend and restate the terms of the Sponsors Warrants to provide for an exercise price of $12.50, a redemption trigger price of $19.50 and an expiration date of November 14, 2013. If the Merger is consummated, any warrantholder who votes against the approval of the Warrant Amendment Proposal or who makes no election will receive the Cash Amount in exchange for each of its Public Warrants. The exchange of the Public Warrants for cash is referred to herein as the "Cash Exchange" and the exchange of the Public Warrants for the amended and restated Public Warrants and the amendment of the Sponsors Warrants, is referred to herein as the "Warrant Exchange." The form of Warrant Amendment is attached to this proxy statement/prospectus as Annex B and the form of Amended and Restated Warrant Agreement, which will be in effect upon consummation of the Merger, is attached to this proxy statement/prospectus as Annex C and both are incorporated into this proxy statement/prospectus by reference. Prospect warrantholders are also being asked to consider and vote on the Warrantholder Adjournment Proposal to adjourn the special meeting of Prospect warrantholders to a later date or dates to permit further solicitation and vote of proxies if, based upon the tabulated vote at the time of the special meeting of Prospect warrantholders, Prospect is not authorized to amend the Warrant Agreement.

        Prospect stockholders are being asked to consider and vote upon a proposal to approve the Merger and the Merger Agreement, which, among other things, provides for the merger of Merger Sub with and into Kennedy-Wilson, with Kennedy-Wilson continuing as the surviving corporation and becoming a direct wholly-owned subsidiary of Prospect. You are also being requested to vote to approve: (i) the amendment and restatement of Prospect's amended and restated certificate of incorporation to (a) change Prospect's corporate name to "Kennedy-Wilson Holdings, Inc.," (b) increase the number of authorized shares of Prospect capital stock from 73,000,000 to 81,000,000, (c) provide for Prospect's perpetual existence, (d) delete and replace Article Sixth of Prospect's current amended and restated certificate of incorporation and (e) make certain other changes in tense and numbers that Prospect's board of directors believes are immaterial; (ii) the 2009 Plan; (iii) the election of seven directors; and (iv) the Stockholder Adjournment Proposal. With respect to the Charter Amendment Proposal, Article Sixth and its preamble relate to the operation of Prospect as a blank check company prior to the consummation of a business combination and will not be applicable after consummation of the Merger. Clause A of Article Sixth requires that the business combination be submitted to Prospect's stockholders for approval under the Delaware General Corporation Law ("DGCL") and be approved by the vote of a majority of the Public Shares present at the special meeting of Prospect stockholders in person or by proxy and eligible to vote thereon, provided that the business combination shall not be consummated if the holders of 30% or more of the Public Shares exercise their conversion rights. Clause B of Article Sixth provides that the proceeds of Prospect's IPO

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and the sale of the Sponsors Warrants are to be deposited in the Trust Account. Clause C of Article Sixth specifies the procedures for exercising conversion rights. Clause D of Article Sixth provides that Prospect shall take action to liquidate if it does not consummate an initial business combination prior to the "Termination Date" (November 14, 2009). Clause E of Article Sixth provides that holders of Public Shares are entitled to receive distributions from Prospect's Trust Account only if a business combination is not consummated by the "Termination Date" or by demanding conversion in accordance with Clause C. Clause F of Article Sixth provides that Prospect must consummate the "Business Combination," as defined in the preamble of Article Sixth, before Prospect can consummate any other type of business combination. Clause G of Article Sixth provides that Prospect shall not, and no employee of Prospect shall, disburse any funds from the Trust Account other than set forth in such clause. Clause H of Article Sixth provides the procedure by which Prospect's Audit Committee must approve all payments to Prospect's initial stockholders, sponsors, officers, directors and their or Prospect's affiliates. Clause I of Article Sixth provides the procedure by which the Audit Committee is required to review and monitor compliance with the requirements of the agreements entered into by Prospect in connection with its IPO. Clause J of Article Sixth prohibits Prospect's board of directors from issuing any securities (other than those issued in the IPO) that would participate in the proceeds of the Trust Account or vote as a class with the common stock on a business combination prior to the consummation of the initial business combination. Clause K of Article Sixth permits Prospect to have a classified board of directors prior to the business combination. See the section entitled "The Charter Amendment Proposal" for additional information.

        The approval of the Warrant Amendment Proposal by Prospect warrantholders and the approval of the Merger Proposal and the Charter Amendment Proposal by Prospect stockholders are conditions to the consummation of the Merger. If the Warrant Amendment Proposal is not approved, the stockholder proposals, other than the Stockholder Adjournment Proposal, will not be presented to the Prospect stockholders. If the Merger Proposal is not approved, the other proposals will not be presented to the stockholders for a vote. If the Charter Amendment Proposal is not approved, the other proposals will not be presented to the stockholders for a vote and the Merger will not be consummated. Prospect's second amended and restated certificate of incorporation, as it will appear if the Charter Amendment Proposal is approved, is attached to this proxy statement/prospectus as Annex D and you are encouraged to read it in its entirety. The 2009 Plan is attached to this proxy statement/prospectus as Annex E and you are encouraged to read it in its entirety. In addition to the foregoing proposals, the stockholders will also be asked to consider and vote upon the election of seven directors of Prospect, which proposal, along with the Equity Participation Plan Proposal, will not be presented for a vote if either the Merger Proposal or the Charter Amendment Proposal is not approved. The stockholders will also be asked to consider and vote upon a proposal to adjourn the special meeting of Prospect stockholders to a later date or dates to permit further solicitation and vote of proxies if, based upon the tabulated vote at the time of the special meeting of Prospect stockholders, Prospect would not have been authorized to consummate the Merger. The warrantholders will also be asked to consider and vote upon a proposal to adjourn the special meeting of Prospect warrantholders to a later date or dates to permit further solicitation and vote of proxies if, based upon the tabulated vote at the time of the special meeting of Prospect warrantholders, Prospect would not have been authorized to amend the Warrant Agreement. This proxy statement/prospectus contains important information about the proposed Merger and the other matters to be acted upon at the special meetings of Prospect stockholders and Prospect warrantholders. You should read it carefully.

        Your vote is important. Prospect encourages you to vote as soon as possible after carefully reviewing this proxy statement/prospectus.

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Why is Prospect proposing the Merger?

        Prospect was organized to effect an acquisition, capital stock exchange, asset acquisition or other similar business combination with an operating business.

        On November 20, 2007, Prospect issued and sold 25,000,000 units in its IPO. Each of Prospect's units consists of one share of Prospect's common stock and one warrant. Each warrant sold in the IPO entitles the holder to purchase one share of common stock at an exercise price of $7.50. Prospect's units began publicly trading on November 15, 2007. Prospect's Public Warrants and common stock have traded separately since December 3, 2007. The public offering price of each unit was $10.00, and the IPO raised gross proceeds of $250,000,000. Of the gross proceeds: (i) Prospect deposited $241,750,000 into a Trust Account at JP Morgan Chase Bank, NA, maintained by Continental Stock Transfer & Trust Company, as trustee, which included $10,000,000 of contingent underwriting discount (the underwriters have agreed to forgo $4,000,000 of deferred underwriting compensation otherwise payable to them in connection with, and in accordance with the terms of, the underwriting agreement for the IPO); (ii) the underwriters received $7,500,000 as underwriting discount (excluding the contingent underwriting discount); and (iii) Prospect retained $700,000 for offering expenses, plus $50,000 for working capital. In addition, Prospect deposited into the Trust Account $5,250,000 that it received from the private placement of 5,250,000 Sponsors Warrants to Flat Ridge Investments LLC, an entity affiliated with David A. Minella, Prospect's Chairman and Chief Executive Officer, LLM Structured Equity Fund L.P. and LLM Investors L.P., entities affiliated with Patrick J. Landers, Prospect's President and a director, and CMS Platinum Fund, L.P. (formerly Capital Management Systems, Inc.), a corporation affiliated with William Landman, one of Prospect's directors. The $247,000,000 held in the Trust Account will not be released until the earlier of (i) the completion of the initial business combination or (ii) Prospect's liquidation. Therefore, unless and until the initial business combination is consummated, the proceeds held in the Trust Account will not be available to Prospect, other than amounts required to pay taxes on any interest income earned on the Trust Account balance and up to $2,750,000 of interest income earned on the Trust Account balance, net of income taxes payable on such amount, which can be released to fund working capital requirements. As of                         , 2009 (the record date), approximately $                         was held in deposit in the Trust Account, including $10,000,000 of deferred underwriting compensation (the underwriters have agreed to forgo $4,000,000 of deferred underwriting compensation otherwise payable to them in connection with, and in accordance with, the terms of the underwriting agreement for the IPO). Prospect intends to use the funds released from the Trust Account (i) to pay Prospect stockholders who exercise conversion rights, (ii) to pay Prospect warrantholders in connection with the Cash Exchange, (iii) to pay expenses related to the business combination, (iv) to pay the deferred underwriting compensation, and (v) to pay investment banker's fees and to use the remaining funds released from the Trust Account for working capital and general corporate purposes.

        Founded in 1977, Kennedy-Wilson is a diversified, international real estate company that provides investment and real estate services. Kennedy-Wilson has grown from an auction business in one office into a vertically-integrated operating company with over 300 professionals in 21 offices throughout the U.S. and Japan. Kennedy-Wilson is an industry leader, currently owning real estate (through its closed-end funds and joint ventures) representing $2.9 billion in aggregate value and managing over 40 million square feet of residential, multifamily and commercial real estate, including 10,000 apartment units, throughout the U.S. and Japan.

        Based on its due diligence investigations of Kennedy-Wilson and the industry in which it operates, including the financial and other information provided by Kennedy-Wilson, Prospect believes that Kennedy-Wilson's management has the experience to successfully lead Kennedy-Wilson's business and that Kennedy-Wilson has in place the infrastructure for strong business operations and to achieve strong organic growth. As a result, Prospect also believes that a business combination with Kennedy-Wilson will provide Prospect stockholders with an opportunity to participate in a company with

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significant growth potential. See the section entitled "The Merger Proposal—Prospect's Board of Directors' Reasons for the Approval of the Merger" for additional information. In accordance with Prospect's amended and restated certificate of incorporation, if Prospect is unable to complete the business combination with Kennedy-Wilson by November 14, 2009, its corporate existence will terminate and it will be required to liquidate.

Are the proposals conditioned on one another?

        Yes. If the Warrant Amendment Proposal is not approved at the special meeting of Prospect warrantholders, none of the other warrantholder proposal or the stockholder proposals will be presented for a vote and if the Merger Proposal is not approved at the special meeting of Prospect stockholders, the other stockholder proposals will not be presented for a vote.

What vote is required to approve the proposals presented at the special meeting of Prospect warrantholders?

        Approval of the Warrant Amendment Proposal requires the affirmative vote of a majority in interest of the shares of Prospect common stock issuable upon exercise of the Prospect warrants affected by the Warrant Amendment and entitled to vote thereon as of the record date.

        Approval of the Warrantholder Adjournment Proposal requires the affirmative vote of a majority in interest of the shares of Prospect common stock issuable upon exercise of the outstanding Prospect warrants represented in person or by proxy and entitled to vote thereon as of the record date.

        Abstentions will have the same effect as a vote "AGAINST" the Warrant Amendment Proposal and the Warrantholder Adjournment Proposal. A broker non-vote will have the same effect as a vote "AGAINST" the Warrant Amendment Proposal. Broker non-votes will have no effect on the Warrantholder Adjournment Proposal.

What vote is required to approve the proposals presented at the special meeting of Prospect stockholders?

        Directors are elected by a plurality of all of the votes cast in person or by proxy and entitled to vote thereon as of the record date.

        Approval of the Charter Amendment Proposal requires the affirmative vote of a majority of the issued and outstanding shares of Prospect common stock entitled to vote thereon as of the record date.

        Approval of the Merger Proposal requires the affirmative vote of a majority of the issued and outstanding Public Shares represented in person or by proxy and entitled to vote thereon as of the record date. In addition, if holders of 30% or more of the Public Shares vote against the Merger Proposal and properly exercise their conversion rights, Prospect will not be permitted to consummate the Merger. See the section entitled "Special Meeting of Prospect Warrantholders and Special Meeting of Prospect Stockholders—Conversion Rights" for additional information.

        Approval of the Equity Participation Plan Proposal requires the affirmative vote of a majority of the issued and outstanding shares of Prospect common stock represented in person or by proxy and entitled to vote thereon as of the record date.

        Approval of the Stockholder Adjournment Proposal requires the affirmative vote of a majority of the shares of Prospect common stock represented in person or by proxy and entitled to vote thereon.

        Abstentions will have the same effect as a vote "AGAINST" the Charter Amendment Proposal, the Merger Proposal, the Equity Participation Plan Proposal and the Stockholder Adjournment Proposal, but will have no effect on the Director Election Proposal. A broker non-vote will have the same effect as a vote "AGAINST" the Charter Amendment Proposal. Broker non-votes, while considered present for the purposes of establishing a quorum, will have no effect on the Merger

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Proposal, the Equity Participation Plan Proposal, the Director Election Proposal, and the Stockholder Adjournment Proposal.

How will Prospect's directors and officers vote?

        In connection with the IPO, Prospect and the underwriters in the IPO entered into agreements with each of the Prospect founders (including its officers and directors) pursuant to which each Prospect founder agreed to (i) vote his or its founders shares on the Merger Proposal in accordance with the majority of the votes cast by the holders of Public Shares and (ii) waive any right to receive a liquidation distribution with respect to the founders shares in the event Prospect fails to consummate the initial business combination.

        This voting arrangement does not apply to any proposal other than the Merger Proposal, although the Prospect founders (including its officers and directors) have also indicated that they intend to vote their shares and warrants in favor of all other proposals. Approval of the Merger Proposal requires the affirmative vote of a majority of the issued and outstanding Public Shares represented in person or by proxy and entitled to vote thereon, and approval of the Charter Amendment Proposal requires the affirmative vote of a majority of the outstanding shares of Prospect common stock entitled to vote thereon as of the record date. As of the record date of the special meeting of Prospect stockholders, 6,250,000 founder shares, or 20% of the issued and outstanding shares of Prospect common stock, would be voted in accordance with the majority of the votes cast by Prospect stockholders with respect to the Merger Proposal. If the founders or Prospect's officers and directors purchase Public Shares from existing Prospect public stockholders that are likely to vote against the Merger Proposal or that are likely to elect to exercise their conversion rights, the probability that the vote to approve the Merger Proposal will succeed would increase.

What will happen in the Merger?

        At the closing of the Merger, Kennedy-Wilson Holders, will receive an aggregate of 26 million shares of Prospect common stock (each share of Kennedy-Wilson common stock shall automatically convert into the right to receive 3.8031 shares of Prospect common stock and each share of Kennedy-Wilson preferred stock shall automatically convert into the right to receive 105.6412 shares of Prospect common stock), minus any Dissenting Shares. Upon completion of the Merger, assuming that none of the Public Shares are converted into cash, the Kennedy-Wilson Holders will own approximately 44.2% of the shares of Prospect common stock outstanding immediately after the closing of the Merger, the current Prospect stockholders will own approximately 48.8% and the other new Prospect stockholders (including recipients of awards under the 2009 Plan) will own approximately 7.0% of Prospect's outstanding common stock. If 29.99% of the holders of Public Shares elect to convert their shares into cash, such percentages would be 50.7%, 41.3% and 8.0%, respectively. The holders of Prospect Public Warrants will receive either (i) $0.55 in cash or (ii) an amended and restated warrant (the "Amended and Restated Public Warrants"), for each Public Warrant they own immediately prior to the Merger. Each of the Amended and Restated Public Warrants and will have an exercise price of $12.50 per share, will be redeemable by the Company at $0.01 subject to a $19.50 redemption trigger price per share and will expire on November 14, 2013. The holders of Sponsors Warrants will have their terms amended and restated to provide for an exercise price of $12.50, a redemption trigger price of $19.50 and an expiration date of November 14, 2013. However, the Sponsor Warrants will not be redeemable so long as they are held by the founders or their permitted transferees. See the sections entitled "The Merger Proposal," "The Merger Agreement," "The Warrant Amendment Proposal" and "Description of Prospect Securities" for additional information.

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Do I have conversion rights?

        If you are a holder of Public Shares, you have the right to vote against the Merger Proposal and request that Prospect convert your shares into a pro rata portion of the Trust Account in which a substantial portion of the net proceeds of the IPO are held.

How do I exercise my conversion rights?

        If you are a holder of Public Shares and wish to exercise your conversion rights, you must (i) affirmatively vote against the Merger Proposal by proxy or in person at the special meeting of Prospect stockholders, (ii) present written instructions to Prospect's transfer agent no later than one business day prior to the vote on the Merger Proposal stating that you wish to convert your shares into cash and that you will continue to hold your shares through the closing date of the Merger, (iii) continue to hold your shares through the closing date of the Merger, and (iv) tender your shares to Prospect's transfer agent within the period specified in a notice you will receive from or on behalf of Prospect, which period will be not be less than 20 days. You may tender your shares by either delivering your stock certificate to the transfer agent or by delivering your shares electronically using the Depository Trust Company's DWAC (Deposit/Withdrawal At Custodian) System. If the Merger is not completed, then these shares will not be converted into cash.

        Any action that does not include an affirmative vote against the Merger will prevent you from exercising your conversion rights. Your vote on any proposal other than the Merger Proposal will have no impact on your right to seek conversion.

        You may exercise your conversion rights either by checking the box on the proxy card or by submitting your request in writing to Prospect's secretary at the address listed at the end of this section. If you (i) initially vote for the Merger Proposal but then wish to vote against it and exercise your conversion rights or (ii) initially vote against the Merger Proposal and wish to exercise your conversion rights but do not check the box on the proxy card providing for the exercise of your conversion rights or do not send a written request to Prospect to exercise your conversion rights or (iii) initially vote against the Merger, but later wish to vote for it, you may request that Prospect send you another proxy card on which you may indicate your intended vote. You may make such request by contacting Prospect at the phone number or address listed at the end of this section.

        Any corrected or changed proxy card or written demand of conversion rights must be received by Prospect's secretary no later than one business day prior to the special meeting of Prospect stockholders.

        If, notwithstanding your negative vote, the Merger is completed, then, if you have also properly exercised your conversion rights, you will be entitled to receive a pro rata portion of the Trust Account, including any interest earned thereon, calculated as of two business days prior to the date of the consummation of the Merger. As of                         , 2009 (the record date), there was approximately $                         in the Trust Account, or approximately $                         per Public Share. If you exercise your conversion rights, then you will be exchanging your shares of Prospect common stock for cash and will no longer own these shares.

        Exercise of your conversion rights does not result in either the exercise or loss of any Prospect warrants that you may hold. Your warrants will continue to be outstanding following a conversion of your common stock and will become exercisable upon consummation of the Merger. A registration statement must be in effect to allow you to exercise any warrants you may hold or to allow Prospect to call the warrants for redemption if the redemption conditions are satisfied. If the Merger is not consummated and Prospect does not consummate an acquisition by November 14, 2009, the warrants will not become exercisable and will be worthless.

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Do I have appraisal rights if I object to the proposed acquisition?

        No. Prospect stockholders do not have appraisal rights in connection with the Merger under the DGCL.

Do Kennedy-Wilson Holders have appraisal rights if they object to the proposed acquisition?

        Yes. Kennedy-Wilson Holders have appraisal rights under the DGCL. Any shares held by a Kennedy-Wilson stockholder who has not voted in favor of the Merger and who has demanded appraisal for such shares in accordance with the DGCL will not be converted into a right to receive the Merger consideration, unless such Kennedy-Wilson Holder fails to perfect, withdraws or otherwise loses such Kennedy-Wilson Holder's right to appraisal under the DGCL. If, after the consummation of the Merger, such Kennedy-Wilson Holder fails to perfect, withdraws or otherwise loses such Kennedy-Wilson Holder's right to appraisal, each such share will be treated as if it had been converted as of the consummation of the Merger into a right to receive the Merger consideration.

        Kennedy-Wilson's holders of common stock may also have appraisal rights under Chapter 13 of the California General Corporation Law (the "CGCL"). Any stockholder who does not vote in favor of the Merger and remains a holder of Kennedy-Wilson common stock at the effective time of the Merger may, by complying with the procedures set forth in Chapter 13 of the CGCL and sending Kennedy-Wilson a written demand for appraisal, be entitled to seek appraisal of the fair value of their shares as determined by the proper California superior court. These dissenters' rights are contingent upon consummation of the Merger.

        Prospect is not required to effect the Merger in the event that either (i) holders of more than 10% of the outstanding shares of Kennedy-Wilson common stock or (ii) holders of more than 10% of the outstanding shares of Kennedy-Wilson preferred stock exercise their appraisal rights. Prospect shall not waive this condition if the number of outstanding shares of Kennedy-Wilson common stock or preferred stock for which holders exercise appraisal rights is such that, pursuant to the transactions contemplated by the Merger Agreement, Prospect will not be acquiring "control" of Kennedy-Wilson as defined in Section 368(c) of the Internal Revenue Code of 1986, as amended (the "Code"), solely in exchange for Prospect common stock. See the section entitled "Appraisal Rights" for additional information.

What happens to the funds deposited in the Trust Account after consummation of the Merger?

        Upon consummation of the Merger, the funds in the Trust Account will be released to Prospect and used by Prospect to pay stockholders who properly exercise their conversion rights, to pay warrantholders in connection with the Cash Exchange, for expenses it incurred in pursuing its business combination, and for working capital and general corporate purposes. Such expenses include $6,000,000 that will be paid to the underwriters of Prospect's IPO for deferred underwriting compensation (the underwriters have agreed to forgo $4,000,000 of deferred underwriting compensation otherwise payable to them in connection with, and in accordance with the terms of, the underwriting agreement for the IPO), plus $3,000,000 in cash to Citigroup Global Markets Inc. ("Citigroup") for acting as Prospect's financial advisor in connection with the Merger, plus the reimbursement of reasonable out-of-pocket expenses not to exceed $30,000, and $85,000, plus the reimbursement of reasonable out-of-pocket expenses not to exceed $5,000, that will be paid to Houlihan Smith & Company, Inc. ("Houlihan Smith") for the fairness opinion it issued in connection with the Merger. De Guardiola Advisors, Inc. ("De Guardiola") also will receive a fee of $1,500,000, plus the reimbursement of reasonable out-of-pocket expenses, as well as 375,000 shares of Prospect common stock (to be held by its parent company, De Guardiola Holdings, Inc.) for acting as Prospect's financial advisor in connection with the Merger.

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What happens to Prospect units, common stock and Public Warrants after consummation of the Merger?

        Prospect's units, common stock and Public Warrants will continue to trade on the NYSE AMEX LLC (formerly known as the American Stock Exchange) ("AMEX"), upon consummation of the Merger. In addition, the Public Warrants will become exercisable upon consummation of the Merger in accordance with their terms as amended by the Warrant Amendment.

What happens if the Merger is not consummated?

        Prospect must liquidate if it does not consummate the Merger by November 14, 2009. In any liquidation of Prospect, the funds deposited in the Trust Account, plus any interest earned thereon, less claims requiring payment from the Trust Account by creditors who have not waived their rights against the Trust Account, if any, will be distributed pro rata to the holders of Public Shares. Holders of Prospect common stock issued prior to the IPO, including all of Prospect's officers and directors, have waived any right to any liquidation distribution with respect to these shares. David A. Minella, Prospect's Chairman and Chief Executive Officer and each of LLM Structured Equity Fund L.P. and LLM Investors L.P., entities affiliated with Patrick J. Landers, a director and President of Prospect, have agreed, pursuant to an agreement with Prospect and Citigroup, the representative of the underwriters of the IPO, that if Prospect liquidates prior to the consummation of a business combination, they will be jointly liable to ensure that the proceeds in the Trust Account are not reduced by the claims of target businesses or vendors or other entities that are owed money by Prospect for services rendered or contracted for or products sold to Prospect, other than with respect to amounts claimed by any third-party who executed a waiver (even if such waiver is subsequently found to be invalid and unenforceable). Prospect cannot assure you that Mr. Minella, LLM Structured Equity Fund L.P. and LLM Investors L.P. would be able to satisfy those obligations. Pursuant to the underwriting agreement between Prospect and Citigroup, Prospect agreed not to commence its due diligence investigation of any operating business which it sought to acquire or obtain the services of any vendor without using its best efforts to obtain an agreement pursuant to which such party would waive any claims against the Trust Account. As of the date of this proxy statement/prospectus, Prospect has received waiver agreements from each of its vendors other than its independent registered accounting firm and Kennedy-Wilson with respect to certain provisions in the Merger Agreement. There is currently an outstanding balance to Prospect's independent registered accounting firm of approximately $112,000 and Prospect intends to pay such fees in full in accordance with its past practices. Further, under the Merger Agreement, Kennedy-Wilson agreed to waive all rights, title and claims to the Trust Account, except for $10,000,000, in case of breach by Prospect of its no-shop/non-solicit provision. See the section entitled "Information Related to Prospect—Liquidation If No Business Combination" for additional information.

When do you expect the Merger to be completed?

        Assuming that all regulatory approvals have been obtained, it is currently anticipated that the Merger will be completed on                         , one day after the special meeting of Prospect stockholders and the special meeting of warrantholders both to be held on                         , 2009. For a description of the conditions to the completion of the Merger, see the section entitled "The Merger Agreement—Conditions to Closing of the Merger" for additional information.

Because the prospectus for the IPO did not disclose that Prospect may seek to amend the Warrant Agreement and exchange a portion of the Prospect Public Warrants for cash, what are my legal rights?

        You should be aware that because the registration statement for the IPO (the "IPO Prospectus"), did not disclose that Prospect may seek to amend the terms of the Warrant Agreement and exchange a portion of outstanding Public Warrants for cash proceeds released from the Trust Account, each holder of Public Shares at the time of the Merger who purchased such shares in the IPO may have securities law claims against Prospect for rescission (under which a successful claimant has the right to receive

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the total amount paid for his or her securities pursuant to an allegedly deficient prospectus, plus interest and less any income earned on the securities, in exchange for surrender of the securities) or damages (compensation for loss on an investment caused by alleged material misrepresentations or omissions in the sale of a security). Such claims may entitle such stockholders asserting them to up to $10.00 per share, based on the initial offering price of the Prospect units issued in the IPO, each comprised of one share of Prospect common stock and a Prospect warrant exercisable for an additional share of Prospect common stock, less any amount received from the sale of the original Public Warrants purchased with such Prospect units, plus interest from the date of the IPO (which, in the case of holders of Public Shares, may be more than the pro rata share of the Trust Account to which they are entitled if they exercise their conversion rights or if Prospect liquidates). See the sections entitled "The Merger Proposal—Rescission Rights" for more information.

What do I need to do now?

        Prospect urges you to read carefully and consider the information contained in this proxy statement/prospectus, including the "Risk Factors" and annexes, and to consider how the Merger will affect you as a stockholder of Prospect or how the Warrant Amendment will affect you as a warrantholder of Prospect, as the case may be. You should then vote as soon as possible in accordance with the instructions provided in this proxy statement/prospectus and on the enclosed proxy card, or if you hold your shares or warrants through a brokerage firm, bank or other nominee, on the voting instruction form provided by the broker, bank or nominee.

What is a "proxy?"

        A proxy is your legal designation giving another person permission to vote the shares or warrants you own. The person you designate is called your "proxy," and the document that designates someone as your proxy is called a "proxy" or "proxy card." A proxy card is included with this proxy statement/prospectus. When you sign the proxy card, you designate James J. Cahill and David A. Minella as your proxies at the special meeting of Prospect stockholders and special meeting of Prospect warrantholders.

Who is paying for this proxy statement/prospectus and the solicitation of my proxy, and how are proxies solicited?

        Prospect will pay the cost of soliciting proxies for both the special meeting of Prospect stockholders and special meeting of Prospect warrantholders. Proxies may be solicited on behalf of Prospect by directors, officers or employees of Prospect in person or by mail, telephone, or facsimile or other means of communication. In addition, brokerage firms, banks and other custodians, nominees and fiduciaries will send copies of these proxy materials to the beneficial owners of the stock held by them. Prospect will reimburse these institutions for the reasonable costs they incur to do so. Though Prospect does not plan to do so now, it may later decide to retain a professional proxy solicitation service. The cost of that service would be paid by Prospect.

How do I vote?

        If you are a holder of record of Prospect common stock or Prospect warrants on                         , 2009 (the record date for the special meeting of stockholders and the special meeting of Prospect warrantholders), you may vote in person at the special meeting of Prospect stockholders or at the special meeting of Prospect warrantholders, as the case may be, or by submitting a proxy. You may submit your proxy by completing, signing, dating and returning the enclosed proxy card in the accompanying pre-addressed postage paid envelope. If you hold your shares or warrants in "street name," which means your shares or warrants are held of record by a broker, bank or nominee, you should contact your broker, bank or nominee to ensure that votes related to the shares or warrants you beneficially own are properly counted. In this regard, you must provide the record holder of your shares or warrants with instructions on how to vote your shares or, if you wish to attend the special

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meeting of Prospect stockholders or the special meeting of Prospect warrantholders and vote in person, obtain a proxy from your broker, bank or nominee. You may also be represented by another person at these meetings by executing a proper proxy designating that person. If you hold your shares or warrants through a bank, broker or nominee, you must obtain a legal proxy from your broker, bank or nominee and present it to the inspector of elections with your ballot to be able to vote in person at the special meeting of Prospect stockholders or special meeting of Prospect warrantholders.

What is a "holder of record?"

        If your shares are registered in your name with Prospect's transfer agent, Continental Stock Transfer & Trust Company, then you are considered the holder of record for those shares. If your warrants are registered in your name with Prospect's warrant agent, Continental Stock Transfer & Trust Company, then you are considered the holder of record for those warrants. Prospect sends proxy materials directly to all holders of record.

If my shares or warrants are held in "street name," will my broker, bank or nominee automatically vote my shares or warrants for me?

        No. Except with respect to the election of directors, your broker, bank or nominee cannot vote your shares or warrants unless you provide instructions on how to vote in accordance with the information and procedures provided to you by your broker, bank or nominee.

What will happen if I abstain from voting or fail to vote at the special meeting of Prospect warrantholders or special meeting of prospect stockholders?

        Prospect will count a properly executed proxy marked "ABSTAIN" with respect to a particular proposal as present for purposes of determining whether a quorum is present at the special meeting of Prospect stockholders. For purposes of approval, an abstention or failure to vote on the Merger Proposal will have the same effect as a vote "AGAINST" the proposal, but will preclude you from having your shares converted into cash. In order to exercise your conversion rights, you must cast a vote against the Merger, make an election on the proxy card to convert such shares of common stock and follow the instructions under "Special Meeting of Prospect Warrantholders and Special Meeting of Prospect Stockholders—Conversion Rights" on page 74.

        An abstention from the Warrant Amendment Proposal, the Warrantholder Adjournment Proposal, the Charter Amendment Proposal, the Merger Proposal, the Equity Participation Plan Proposal and the Stockholder Adjournment Proposal will have the same effect as a vote "AGAINST" these proposals, but will have no effect on the Director Election Proposal.

If I am not going to attend the special meeting of Prospect warrantholders or the special meeting of Prospect stockholders in person, should I return my proxy card instead?

        Yes. Whether or not you plan to attend the special meeting of Prospect warrantholders or the special meeting of Prospect stockholders, after carefully reading and considering the information contained in this proxy statement/prospectus, please complete and sign your proxy card. Then return the proxy card in the pre-addressed postage-paid envelope provided herewith as soon as possible, so your shares or warrants, as the case may be, may be represented at the special meeting of Prospect warrantholders or the special meeting of Prospect stockholders.

May I change my vote after I have mailed my signed proxy card?

        Yes. Send a later-dated, signed proxy card to Prospect's secretary at the address set forth below so that it is received by Prospect's secretary prior to the special meeting of Prospect stockholders or the special meeting of Prospect warrantholders or attend the special meetings in person and vote. You also may revoke your proxy by sending a notice of revocation to Prospect's secretary, which must be

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received by Prospect's secretary at least one day prior to the special meeting of Prospect stockholders and the special meeting of Prospect warrantholders.

Who will count the votes?

        A representative of Prospect will tabulate votes cast by proxy and be appointed to act as the inspector of elections and tabulate votes cast in person at both the special meeting of Prospect warrantholders and the special meeting of Prospect stockholders.

What should I do with my stock certificates?

        Prospect stockholders who do not elect to have their shares converted into the pro rata share of the Trust Account should not submit their stock certificates now or after the Merger, because their shares will not be converted or exchanged in the Merger. Prospect stockholders who vote against the Merger and exercise their conversion rights must deliver their stock to Prospect's transfer agent (either physically or electronically) as instructed by Prospect and set forth in this proxy statement/prospectus on page 74.

What should I do if I receive more than one set of voting materials?

        You may receive more than one set of voting materials, including multiple copies of this proxy statement/prospectus and multiple proxy cards or voting instruction cards. For example, if you hold your shares or warrants in more than one brokerage account, you will receive a separate voting instruction card for each brokerage account in which you hold shares or warrants. If you are a holder of record and your shares or warrants are registered in more than one name, you will receive more than one proxy card. Please complete, sign, date and return each proxy card and voting instruction card that you receive in order to cast a vote with respect to all of your Prospect shares or warrants.

Who can help answer my questions?

        If you have questions about the Merger or if you need additional copies of the proxy statement/prospectus or the enclosed proxy card, please contact:

        To obtain timely delivery, Prospect stockholders and Prospect warrantholders must request the materials no later than                         , 2009.

        You may also obtain additional information about Prospect from documents filed with the U.S. Securities and Exchange Commission ("SEC") by following the instructions in the section entitled "Where You Can Find More Information." If you intend to vote against the Merger and seek conversion of your shares, you will need to deliver your stock (either physically or electronically) to Prospect's transfer agent at the address below after the special meeting of Prospect stockholders and after receiving delivery instructions from or on behalf of Prospect. If you have questions regarding the certification of your position or delivery of your stock, please contact:

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FORWARD-LOOKING STATEMENTS

        Prospect and Kennedy-Wilson believe that some of the information in this proxy statement/prospectus constitutes forward-looking statements within the definition of the Private Securities Litigation Reform Act of 1995. However, because Prospect is a "blank check" company, the safe-harbor provisions of that act do not apply to statements made in this proxy statement/prospectus. You can identify these statements by forward-looking words such as "may,""expect," "anticipate," "contemplate," "believe," "estimate," "intend," "seek" and "continue" or similar words. You should read statements that contain these words carefully because they:

        Prospect and Kennedy-Wilson believe it is important to communicate their expectations to their stockholders. However, there may be events in the future that they are not able to predict accurately or over which they have no control. The risk factors and cautionary language discussed in this proxy statement/prospectus provide examples of risks, uncertainties and events that may cause actual results to differ materially from the expectations described by Prospect or by Kennedy-Wilson in such forward-looking statements, including among other things:

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        You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this proxy statement/prospectus.

        All forward-looking statements included herein attributable to any of Prospect, Kennedy-Wilson or any person acting on either party's behalf are expressly qualified in their entirety by the cautionary statements contained or referred to in this section. Except to the extent required by applicable laws and regulations, Prospect and Kennedy-Wilson undertake no obligations to update these forward-looking statements to reflect events or circumstances after the date of this proxy statement/prospectus or to reflect the occurrence of unanticipated events.

        Before you grant your proxy or instruct how your vote should be cast or vote on the Merger Proposal or any of the other proposals, you should be aware that the occurrence of the events described in the "Risk Factors" section and elsewhere in this proxy statement/prospectus may adversely affect Prospect and/or Kennedy-Wilson.

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SUMMARY OF THE PROXY STATEMENT/PROSPECTUS

        This summary highlights selected information from this proxy statement/prospectus and does not contain all of the information that is important to you. To better understand the Merger, you should read this entire document carefully, including "Risk Factors," the Merger Agreement attached as Annex A, and all annexes and exhibits attached to this proxy statement/prospectus. The Merger Agreement is the legal document that governs the Merger and the other transactions that will be undertaken in connection with the Merger. It is also described in detail elsewhere in this proxy statement/prospectus.

        This proxy statement/prospectus is:

The Parties

Prospect

        Prospect is a blank check company formed on July 9, 2007 as a vehicle to effect a merger, capital stock exchange, asset acquisition or other similar business combination with an operating business.

        The funds deposited in the Trust Account, with the interest earned thereon, will be released to Prospect upon consummation of the Merger, and used to pay any amounts payable to Prospect stockholders who vote against the Merger and exercise their conversion rights, to pay warrantholders in connection with the Cash Exchange, and to pay expenses incurred in connection with the business combination, including deferred underwriting compensation of $6,000,000 (the underwriters have agreed to forgo $4,000,000 of deferred underwriting compensation otherwise payable to them in connection with, and in accordance with, the terms of the underwriting agreement for the IPO), a $3,000,000 cash fee, plus the reimbursement of reasonable out-of-pocket expenses not to exceed $30,000, to Citigroup for acting as Prospect's financial advisor in connection with the Merger, a cash fee to De Guardiola of $1,500,000, plus the reimbursement of reasonable out-of-pocket expenses, as well as 375,000 shares of Prospect common stock (to be held by its parent company, De Guardiola Holdings, Inc.) for acting as Prospect's financial advisor in connection with the Merger, and $85,000 that will be paid to Houlihan Smith, plus the reimbursement of reasonable out-of-pocket expenses not to exceed $5,000, for the fairness opinion issued in connection with the Merger. Remaining proceeds will be used for working capital and general corporate purposes.

        If Prospect does not complete the Merger by November 14, 2009, its corporate existence will terminate and it will liquidate and promptly distribute to its public stockholders the amount in the Trust Account plus any remaining non-Trust Account funds after payment of its liabilities.

        The Prospect common stock, Public Warrants to purchase common stock and units are quoted on AMEX under the symbols "PAX" for the common stock, "PAX.W," for the Public Warrants and "PAX.U" for the units. Prospect intends to apply for re-listing on AMEX upon the consummation of the Merger. If Prospect's securities are re-listed on AMEX, the symbols may change to symbols that are reasonably representative of the post-Merger company's corporate name.

        The mailing address of Prospect's principal executive office is 9130 Galleria Court, Suite 318, Naples, FL 34109. Its telephone number is (239) 254-4481 and its website is http://www.prospectac.com. After the consummation of the Merger, the post-Merger company's principal executive office will be located at 9701 Wilshire Blvd., Suite 700, Beverly Hills, CA 90210 and its telephone number will be (310) 887-6400.

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Merger Sub

        Merger Sub, a corporation organized under the laws of the State of Delaware on September 2, 2009, is a wholly-owned subsidiary of Prospect. Merger Sub was formed by Prospect to consummate the Merger. In the Merger, Merger Sub will merge with and into Kennedy-Wilson with Kennedy-Wilson continuing as the surviving corporation and becoming a direct wholly-owned subsidiary of Prospect. Merger Sub will cease to exist upon the consummation of the Merger.

        The mailing address of Merger Sub's principal executive office is 9130 Galleria Court, Suite 318, Naples, Florida 34109.

Kennedy-Wilson

        Founded in 1977, Kennedy-Wilson is a diversified, international real estate company that provides investment and real estate services. Kennedy-Wilson has grown from an auction business in one office into a vertically-integrated operating company with over 300 professionals in 21 offices throughout the U.S. and Japan. Kennedy-Wilson is an industry leader, currently owning real estate (through its closed-end funds and joint ventures) representing $2.9 billion in aggregate value and managing over 40 million square feet of residential, multifamily and commercial real estate, including 10,000 apartment units, throughout the U.S. and Japan.

        In June 2009, a joint venture of which Kennedy-Wilson's Residential Condominium Group has a 51.6% ownership interest, acquired 149 unsold units in a Los Angeles condominium property. As of September 21, 2009, the joint venture sold and closed escrow on 76 units generating a net gain on sale after expenses of $9.5 million. As of the same date, an additional 36 units are under contract. Although no assurances can be provided, Kennedy-Wilson anticipates that all or substantially all of the remaining units will be sold.

        In August 2009, a joint venture in which Kennedy-Wilson's Japanese Multi-family Group has a 35% interest, reduced the balance outstanding of a portfolio loan in the amount of $16 million with a payoff of the loan for $10 million, generating a net benefit to Kennedy-Wilson of $2.1 million.

        Kennedy-Wilson's principal executive offices are located at 9601 Wilshire Blvd., Suite 220, Beverly Hills, CA 90210 and its telephone number is (310) 887-6400. Kennedy-Wilson will be moving its executive officers sometime between October 15, 2009 and November 15, 2009 to 9701 Wilshire Blvd., Suite 700, Beverly Hills, CA 90210. Kennedy-Wilson's website is http://www.KennedyWilson.com. The information contained in, or that can be accessed through, its website is not part of this proxy statement/prospectus and should not be relied upon in determining whether to vote in favor of the proposals.

The Warrant Amendment Proposal

        Prospect proposes the Warrant Amendment to the Warrant Agreement governing all of Prospect's Warrants to allow (1) each Prospect warrantholder to elect to receive for each Public Warrant, either (i) the Cash Amount of $0.55, or (ii) an Amended and Restated Public Warrant with an exercise price of $12.50, a redemption trigger price of $19.50 and an expiration date of November 14, 2013, subject to adjustment and proration as described in this proxy statement/prospectus and (2) amend and restate the Sponsors Warrants to provide for an exercise price of $12.50, a redemption trigger price of $19.50 and an expiration date of November 14, 2013 (the "Amended and Restated Sponsors Warrants"). If the Merger is consummated, any warrantholder who votes against the approval of the Warrant Amendment Proposal or who makes no election will receive the Cash Amount in exchange for its Public Warrants. We refer to the elections by holders of Public Warrants to receive the Cash Amount or the Amended and Restated Public Warrants as the "Warrant Election." We also refer to the exchange of the Public Warrants for the Cash Amount as the Cash Exchange and the exchange of the Public Warrants for the Amended and Restated Public Warrants as the Warrant Exchange.

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        The form of Warrant Amendment is attached to this proxy statement/prospectus as Annex B and the form of Amended and Restated Warrant Agreement, which will be in effect upon consummation of the Merger, is attached to this proxy statement/prospectus as Annex C and both are incorporated into this proxy statement/prospectus by reference. You are encouraged to read the Warrant Amendment in its entirety. See the section entitled "The Warrant Amendment Proposal" for additional information.

        If the Warrant Amendment Proposal is not approved at the special meeting of Prospect warrantholders, the Merger Proposal will not be presented to Prospect stockholders for a vote. If the Merger is not consummated and Prospect does not consummate any other business combination by November 14, 2009, Prospect will be required to liquidate and the Prospect warrants will expire and become worthless.

The Warrantholder Adjournment Proposal

        If, based on the tabulated vote, there are not sufficient votes at the time of the special meeting of Prospect warrantholders to approve the Warrant Amendment Proposal, the Warrantholder Adjournment Proposal allows Prospect's board of directors to adjourn the special meeting of Prospect warrantholders to a later date or dates, if necessary, to permit further solicitation and vote of proxies to approve the Warrant Amendment Proposal. See the section entitled "The Warrantholder Adjournment Proposal" for additional information.

The Merger and the Merger Proposal

        The Merger Agreement provides for a business combination transaction by means of the Merger of Merger Sub with and into Kennedy-Wilson, with Kennedy-Wilson continuing as the surviving corporation and becoming a direct wholly-owned subsidiary of Prospect. At the closing, the Kennedy-Wilson Holders will receive an aggregate of 26 million shares of Prospect common stock (each share of Kennedy-Wilson common stock shall automatically convert in to the right to receive 3.8031 shares of Prospect common stock and each share of Kennedy-Wilson preferred stock shall automatically convert into the right to receive 105.6412 shares of Prospect common stock) minus any Dissenting Shares. Based on the closing market price of $9.79 per share on September 8, 2009, the last trading day of Prospect common stock prior to the announcement of the Merger Agreement, the Initial Shares had an aggregate value of $254.5 million. Based on the closing market price of Prospect common stock of $                         per share on                          (the record date), the Initial Shares had an aggregate value of $                        . If a fractional share is required to be issued to a Kennedy-Wilson Holder, Prospect will round up to the nearest whole share in lieu of issuing fractional shares. Each outstanding Public Warrant will be converted into either (i) $0.55 in cash, or the Cash Amount, or (ii) the right to receive one Amended and Restated Public Warrant, subject to adjustment and proration as described in this proxy statement/prospectus. Based on the closing market price of $0.28 per Public Warrant on September 8, 2009, the last trading day prior to the announcement of the Merger Agreement, the Public Warrants had an aggregate value of $7,000,000. Based on the closing market price of $                         per Public Warrant on                         , 2009, the Public Warrants had an aggregate value of $                        .

        Prospect and Kennedy-Wilson plan to complete the Merger promptly after the special meetings of Prospect stockholders and warrantholders, so long as, among other things:

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        After consideration of the factors identified and discussed in the section entitled "The Merger Proposal—Prospect's Board of Directors' Reasons for the Approval of the Merger," Prospect's board of directors concluded that the Merger met all of the requirements disclosed in Prospect's Registration Statement on Form S-1 (Reg. No. 333-145110), that became effective on November 14, 2007, including that Kennedy-Wilson has a fair market value of at least 80% of the balance of Prospect's Trust Account (excluding the amount held in the Trust Account representing a portion of the underwriters' discount).

        Upon completion of the Merger, assuming that none of the holders of Public Shares elects to convert such shares into cash, the Kennedy-Wilson Holders will own approximately 44.2% of the shares of Prospect common stock outstanding immediately after the closing of the Merger, the current Prospect stockholders will own approximately 48.8% and the other new Prospect stockholders (including recipients of awards under the 2009 Plan) will own approximately 7.0% of Prospect's outstanding common stock. If 29.99% of the holders of Public Shares elect to convert their shares into cash, such percentages would be 50.7%, 41.3% and 8%, respectively. The following table illustrates the relative ownership of Prospect shares:

 
  Post Merger Ownership Percentage  
 
  Kennedy-Wilson
Holders
Ownership
  Current Prospect
Stockholders
Ownership
  Other New Prospect
Stockholders(1)
Ownership
 

No Public Shares Elect Cash Conversion

    44.2 %   48.8 %   7.0 %

29.99% of Public Shares Elect Cash Conversion

    50.7 %   41.3 %   8.0 %

(1)
Includes recipients of awards under the 2009 Plan.

        If the Merger Proposal is not approved by Prospect's stockholders at the special meeting of Prospect stockholders, none of the stockholder proposals (other than the Stockholder Adjournment Proposal, as discussed below) will be presented at the special meeting of Prospect stockholders.

Fairness Opinion

        Prospect engaged Houlihan Smith to render an opinion that the consideration to be paid by Prospect in connection with the Merger with Kennedy-Wilson on the terms and conditions set forth in the Merger Agreement is fair to Prospect stockholders from a financial point of view and that the fair market value of Kennedy-Wilson is at least 80% of the balance of Prospect's Trust Account (excluding the amount held in the Trust Account representing a portion of the underwriters' discount). Houlihan Smith is an investment banking firm that regularly is engaged in the evaluation of businesses and their securities in connection with acquisitions, corporate restructurings, private placements and for other purposes. Prospect's board of directors decided to use the services of Houlihan Smith because it is a

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recognized investment banking firm that has substantial experience in similar matters. The engagement letter provides that Prospect will pay Houlihan Smith a fee of $85,000 and will reimburse Houlihan Smith for its reasonable out-of-pocket expenses, which will not exceed $5,000. Prospect also agreed to indemnify Houlihan Smith in the event Houlihan Smith were to incur certain losses as a result of its engagement by Prospect. No material relationship exists or has existed in the past between Houlihan Smith and Prospect or Kennedy-Wilson.

        Houlihan Smith delivered a presentation in conjunction with its written opinion to the board of directors of Prospect on September 5, 2009, which stated that, as of September 5, 2009, and based upon and subject to the assumptions made, matters considered, and limitations on its review as set forth in the fairness opinion, (i) the Merger consideration to be paid by Prospect for Kennedy-Wilson in conjunction with the Merger is fair from a financial point of view to the stockholders of Prospect, and (ii) the fair market value of Kennedy-Wilson is at least equal to 80% of the balance in Prospect's Trust Account (excluding the amount held in the Trust Account representing a portion of the underwriters' discount).

        The amount of the Merger consideration was determined pursuant to negotiations between Prospect and Kennedy-Wilson and not pursuant to recommendations of Houlihan Smith. The full text of the written opinion of Houlihan Smith is attached as Annex F and is incorporated by reference into this proxy statement/prospectus. You are urged to read the Houlihan Smith opinion carefully and in its entirety for a description of the assumptions made, matters considered, procedures followed and limitations on the review undertaken by Houlihan Smith in rendering its opinion. The summary of the Houlihan Smith opinion set forth in this proxy statement/prospectus is qualified in its entirety by reference to the full text of the opinion. See the section entitled "The Merger Proposal—Fairness Opinion" for additional information.

The Charter Amendment Proposal

        If the Charter Amendment Proposal is not approved by Prospect's stockholders at the special meeting of Prospect stockholders, the Merger will not be consummated. If the Merger is not consummated and Prospect does not consummate any other business combination by November 14, 2009, Prospect will be required to liquidate. The amendment and restatement of Prospect's amended and restated certificate of incorporation addressed by the Charter Amendment Proposal would, upon consummation of the Merger, (i) change Prospect's corporate name to "Kennedy-Wilson Holdings, Inc.," (ii) increase the number of authorized shares of Prospect capital stock from 73,000,000 to 81,000,000, (iii) provide for Prospect's perpetual existence, (iv) delete and replace Article Sixth of Prospect's current amended and restated certificate of incorporation and renumber accordingly, and (v) make certain other changes in tense and numbers that Prospect's board of directors believes are immaterial. Prospect's second amended and restated certificate of incorporation, as it is proposed to be amended and restated, is attached as Annex D to this proxy statement/prospectus. Prospect encourages you to read it in its entirety. See the section entitled "The Charter Amendment Proposal" for additional information.

The Equity Participation Plan Proposal

        If the Equity Participation Plan Proposal is approved, 4,000,000 shares of Prospect common stock would be reserved for issuance to executive officers (including executive officers who are also directors), employees, directors and consultants in accordance with the terms of the 2009 Plan. The purpose of the 2009 Plan is to provide Prospect's directors, executive officers and other employees as well as consultants who, by their position, ability and diligence are able to make important contributions to Prospect's growth and profitability, with an incentive to assist Prospect in achieving its long-term corporate objectives, to attract and retain executive officers and other employees of outstanding competence and to provide such persons with an opportunity to acquire an equity interest

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in Prospect. The 2009 Plan is attached as Annex E to this proxy statement/prospectus. Prospect encourages you to read the 2009 Plan in its entirety. See the section entitled "The Equity Participation Plan Proposal" for additional information.

The Director Election Proposal

        At the special meeting of Prospect stockholders, stockholders will be asked to vote to elect seven directors to Prospect's board of directors effective immediately following and contingent upon closing of the Merger, of whom two will serve until the annual meeting of Prospect stockholders to be held in 2010, two will serve until the annual meeting of Prospect stockholders to be held in 2011 and three will serve until the annual meeting of Prospect stockholders to be held in 2012 and, in each case, until their successors are elected and qualified.

        Following the consummation of the Merger, if management's nominees are elected, the directors of Prospect will be classified as follows:

        Following the consummation of the Merger, the executive officers of Prospect will be William J. McMorrow, Chief Executive Officer and Freeman A. Lyle, Executive Vice President and Chief Financial Officer. In addition, following consummation of the Merger, Barry S. Schlesinger, Co-CEO of KW Commercial Investment Group, Mary Ricks, Co-CEO of KW Commercial Investment Group, James A. Rosten, President of Kennedy-Wilson Properties, Donald J. Herrema, CEO of KW Capital Markets, and Robert E. Hart, President of KW Multi-Family Management Group, will continue to be employed with the combined company. Each of such persons is currently an executive officer of Kennedy-Wilson. See the section entitled "Executive Compensation—Kennedy-Wilson Executive Compensation" for additional information.

        If either the Merger Proposal or the Charter Amendment Proposal is not approved by Prospect's stockholders at the special meeting of Prospect stockholders, the Director Election Proposal and the Equity Participation Plan Proposal (but not the Stockholder Adjournment Proposal, as discussed below) will not be presented to the special meeting of stockholders for a vote and Prospect's current directors and executive officers will continue in office.

The Stockholder Adjournment Proposal

        If, based on the tabulated vote, there are not sufficient votes at the time of the special meeting of Prospect stockholders to authorize Prospect to consummate the Merger (because either the Merger Proposal or the Charter Amendment Proposal is not approved or if holders of 30% or more of the Public Shares vote against the Merger Proposal and elect to convert their Public Shares into cash), Prospect's board of directors may submit a proposal to adjourn the special meeting of Prospect stockholders to a later date or dates, if necessary, to permit further solicitation of proxies. See the section entitled "The Stockholder Adjournment Proposal" for additional information.

Vote of Prospect's Founders

        As of                         , 2009, the record date for the special meeting of Prospect stockholders, Michael Castine, a Prospect director, in his personal capacity, Daniel Gressel, a Prospect director, in his personal capacity, Michael Downey, a Prospect director, in his personal capacity, James Merchant, a Prospect director, in his personal capacity, James J. Cahill, Prospect's Secretary and Chief Financial Officer, in his personal capacity, Flat Ridge Investments LLC, an entity affiliated with David A.

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Minella, Prospect's Chairman and Chief Executive Officer, LLM Structured Equity Fund L.P. and LLM Investors L.P., entities affiliated with Patrick J. Landers, a director and President of Prospect, CMS Platinum Fund, L.P. (formerly Capital Management Systems, Inc.), a corporation affiliated with William Landman, one of Prospect's directors, and SJC Capital LLC, an entity affiliated with William Cvengros, a Prospect director, who are collectively referred to herein as the Prospect "founders," beneficially owned and were entitled to vote 6,250,000 shares which were issued to them prior to the IPO, referred to herein as the "founders shares." The founders shares issued to the Prospect founders constituted approximately 20% of the outstanding shares of Prospect common stock immediately after the IPO.

        In connection with the IPO, Prospect and Citigroup entered into agreements with each of the Prospect founders (including its officers and directors) pursuant to which each Prospect founder agreed to (i) vote his or its founders shares on the Merger Proposal in accordance with the majority of the votes cast by the holders of Public Shares and (ii) waive any right to receive a liquidation distribution with respect to the founders shares in the event Prospect fails to consummate the initial business combination. The Prospect founders (including its officers and directors) have also indicated that they intend to vote their founders shares in favor of all other proposals being presented at the special meeting of Prospect stockholders. The founders shares have no liquidation rights and will be worthless if no business combination is effected by Prospect. The Prospect founders have also indicated that they intend to vote their Sponsors Warrants in favor of all the proposals being presented at the special meeting of Prospect warrantholders. The warrants will be worthless if no business combination is effected by Prospect. In connection with the IPO, the Prospect founders entered into agreements with Citigroup restricting the sale of their founders shares until one year after the date of the completion of the initial business combination or earlier if, subsequent to the initial business combination, (i) the closing price of Prospect's common stock equals or exceeds $14.50 per share for any 20 trading days within any 30 trading day period or (ii) Prospect consummates a subsequent liquidation, merger, stock exchange or other similar transaction which results in all of Prospect's stockholders having the right to exchange their shares of common stock for cash, securities or other property; provided, however, that transfers can be made to permitted transferees who agree in writing to be bound by the same restrictions, agree to vote in the same manner as a majority of the public stockholders who vote at the special or annual meeting called for the purpose of approving Prospect's initial business combination and waive any rights to participate in any liquidating distribution if Prospect fails to consummate its initial business combination. For so long as the founders shares are subject to such transfer restrictions they will be held in an escrow account maintained by Continental Stock Transfer & Trust Company.

        As of the record date, the percentage of outstanding shares of Prospect common stock held by directors, executive officers and their affiliates was 20%. Of these shares, 6,250,000 (20% of the outstanding shares of common stock) are founders shares which must be voted in accordance with the majority of the votes case by the holders of Public Shares. Immediately prior to and subject to consummation of the Merger, 2,575,000 founder shares will be cancelled and forfeited. As a result of this forfeiture, at the consummation of the Merger, the founders will own 3,675,000 shares of Prospect common stock. As of the record date, the percentage of outstanding warrants held by directors, executive officers and affiliates was 18% of which 200,000 Public Warrants are held by a founder and 5,250,000 are Sponsors Warrants held by the sponsors, which are expected to be voted in favor of the Warrant Amendment Proposal and Warrant Adjournment Proposal.

Date, Time and Place of the Special Meeting of Prospect Warrantholders and the Special Meeting of Prospect Stockholders

        The special meeting of Prospect warrantholders and the special meeting of Prospect stockholders will be held at 8:30 a.m., Eastern time, on                         , 2009 at 9130 Galleria Court, Suite 318, Naples, FL 34109, or such other date, time and place to which such meetings may be adjourned or postponed to consider and vote upon the proposals. A proposal to adjourn the special meeting of Prospect stockholders to a later date or dates may be presented if, based upon the tabulated vote at

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the time of the special meeting of Prospect stockholders, Prospect is not authorized to consummate the Merger. A proposal to adjourn the special meeting of Prospect warrantholders to a later date or dates may be presented if, based upon the tabulated vote at the time of the special meeting of Prospect warrantholders, Prospect is not authorized to approve the Warrant Amendment Proposal.

Voting Power; Record Date

        You are entitled to vote or direct votes to be cast at the special meeting of Prospect stockholders or special meeting of Prospect warrantholders, as the case may be, if you owned shares of Prospect common stock or Prospect warrants at the close of business on                         , 2009, which is the record date for the special meeting of Prospect stockholders and the special meeting of Prospect warrantholders. You will have one vote for each share of Prospect common stock you owned and one vote for each share of common stock issuable upon exercise of your Prospect warrants (with respect to the special meeting of Prospect warrantholders) at the close of business on the record date. If your shares or warrants are held in "street name" or are in a margin or similar account, you should contact your broker, bank or nominee to ensure that votes related to the shares or warrants you beneficially own are properly counted. On the record date, there were 31,250,000 shares of Prospect common stock outstanding, of which 25,000,000 are Public Shares and 6,250,000 are shares held by the Prospect founders that were acquired prior to the IPO. On the record date, there were 30,250,000 Prospect warrants outstanding, of which 25,000,000 are Public Warrants (of which 200,000 are held by a Prospect founder) and 5,250,000 are Sponsors Warrants held by the sponsors. Immediately prior to and subject to consummation of the Merger, 2,575,000 founder shares will be cancelled and forfeited. As a result of this forfeiture, at the consummation of the Merger, the founders will own 3,675,000 shares of Prospect common stock.

Quorum and Required Vote for Warrantholder Proposals

        A quorum of Prospect warrantholders is necessary to hold a valid meeting. A quorum will be present at the special meeting of Prospect warrantholders if a majority of the shares underlying the warrants entitled to vote at the meeting are represented in person or by proxy. Abstentions and broker non-votes will count as present for purposes of establishing a quorum.

        Approval of the Warrant Amendment Proposal requires the affirmative vote of a majority in interest of the shares of Prospect common stock issuable upon exercise of the Prospect warrants affected by the Warrant Amendment and entitled to vote thereon as of the record date.

        Approval of the Warrantholder Adjournment Proposal requires the affirmative vote of a majority in interest of the shares of Prospect common stock issuable upon exercise of the Prospect warrants represented in person or by proxy at the special meeting of Prospect warrantholders and entitled to vote thereon as of the record date.

        Abstentions will have the same effect as a vote "AGAINST" the Warrant Amendment Proposal and the Warrantholder Adjournment Proposal. Broker non-votes will have the same effect as a vote "AGAINST" the Warrant Amendment Proposal and will have no effect on the Warrantholder Adjournment Proposal.

        The Merger is conditioned upon approval of the Warrant Amendment Proposal. The stockholder proposals will not be presented at the special meeting of Prospect stockholders unless the Warrant Amendment Proposal is approved.

Quorum and Required Vote for Stockholder Proposals

        A quorum of Prospect stockholders is necessary to hold a valid meeting. A quorum will be present at the special meeting of Prospect stockholders if a majority of the outstanding shares entitled to vote at the meeting are represented in person or by proxy. Abstentions and broker non-votes will count as

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present for purposes of establishing a quorum. As of the record date, the Prospect founders hold 6,250,000 founders shares, which represents approximately 20% of the outstanding shares of Prospect common stock. The founders shares will be voted on the Merger Proposal in accordance with the majority of the votes cast by the holders of Public Shares and in favor of all of the other proposals and for the election as directors of management's nominees.

        Abstentions, while considered present for the purposes of establishing a quorum, will have the same effect as a vote "AGAINST" the Merger Proposal, the Charter Amendment Proposal, the Equity Participation Plan Proposal, and the Stockholder Adjournment Proposal, if the latter is presented. Broker non-votes, while considered present for the purposes of establishing a quorum, will have the same effect as a vote "AGAINST" the Charter Amendment Proposal, but will have no effect on the Merger Proposal, the Equity Participation Plan Proposal, the Director Election Proposal and the Stockholder Adjournment Proposal, if the latter is presented. Please note that you cannot seek conversion of your shares unless you affirmatively vote against the Merger Proposal.

        The Merger is conditioned upon approval of the Merger Proposal and the Charter Amendment Proposal, but not upon the approval of the Equity Participation Plan Proposal or the Director Election Proposal. The Equity Participation Plan Proposal and the Director Election Proposals will not be presented for a vote at the special meeting of Prospect stockholders unless both the Merger Proposal and the Charter Amendment Proposal are approved.

Conversion Rights

        Pursuant to Prospect's amended and restated certificate of incorporation, a holder of Public Shares may, if the holder affirmatively votes against the Merger, demand that Prospect convert its shares into cash if the Merger is consummated. See the section entitled "Special Meeting of Warrantholders and

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Special Meeting of Prospect Stockholders—Conversion Rights" for the procedures to be followed if you wish to convert your shares into cash. If properly demanded, Prospect will convert each Public Share into a pro rata portion of the Trust Account, calculated as of two business days prior to the anticipated consummation of the Merger. As of                         , 2009 (the record date), this would amount to approximately $                         per share. If you exercise your conversion rights, then you will be exchanging your shares of Prospect common stock for cash and will no longer own the shares. You will be entitled to receive cash for these shares only if you (i) affirmatively vote against the Merger Proposal by proxy or in person at the special meeting of Prospect stockholders, (ii) present written instructions to Prospect's transfer agent no later than one business day prior to the vote on the Merger Proposal stating that you wish to convert your shares into cash and that you will continue to hold your shares through the closing date of the Merger, (iii) continue to hold your shares through the closing date of the Merger, and (iv) tender your shares to Prospect's transfer agent within the period specified in a notice you will receive from or on behalf of Prospect, which period will be not less than 20 days. You may tender your shares by either delivering your stock certificate to the transfer agent or by delivering your shares electronically using the Depository Trust Company's DWAC (Deposit/Withdrawal At Custodian) System. If the Merger is not completed, these shares will not be converted into cash.

        If Prospect is unable to complete the Merger by November 14, 2009, its corporate existence will terminate and, upon its resulting liquidation, the holders of shares issued in the IPO will receive an amount equal to the amount of funds in the Trust Account at the time of the liquidation distribution divided by the number of Public Shares. Although both the per share liquidation price and the per share conversion price are equal to the amount of funds in the Trust Account divided by the number of Public Shares, the amount a holder of Public Shares would receive at liquidation may be more or less than the amount such a holder would have received had it sought conversion of its shares in connection with the Merger because (i) there may be greater earned interest in the Trust Account at the time of a liquidation distribution since it may occur at a later date than a conversion and (ii) Prospect may incur expenses that it would otherwise would not incur if Prospect consummates the Merger, including, potentially, claims requiring payment from the Trust Account by creditors who have not waived their rights against the Trust Account. David A. Minella, Prospect's Chairman and Chief Executive Officer, LLM Structured Equity Fund L.P. and LLM Investors L.P., entities affiliated with Patrick J. Landers, a director and Prospect's President, have agreed, pursuant to an agreement with Prospect and Citigroup, the representative of the underwriters in the IPO, that if Prospect liquidates prior to the consummation of a business combination, they will be jointly liable to ensure that the proceeds in the Trust Account are not reduced by the claims of target businesses or vendors or other entities that are owed money by Prospect for services rendered or contracted for or products sold to Prospect, other than with respect to amounts claimed by any third-party who executed a waiver (even if such waiver is subsequently found to be invalid and unenforceable). Pursuant to the underwriting agreement between Prospect and Citigroup, Prospect agreed not to commence its due diligence investigation of any operating business which it sought to acquire or obtain the services of any vendor without using its best efforts to obtain an agreement pursuant to which such party would waive any claims against the Trust Account. As of the date of this proxy statement/prospectus, Prospect has received waiver agreements from each of its vendors other than its independent registered accounting firm and Kennedy-Wilson with respect to certain provisions of the Merger Agreement. There is currently an outstanding balance to Prospect's independent registered accounting firm of approximately $112,000 and Prospect intends to pay such fees in full in accordance with its past practices. Further, under the Merger Agreement, Kennedy-Wilson agreed to waive all rights, title and claims to the Trust Account, except for $10,000,000, in case of breach by Prospect of its no-shop/non-solicit provision. See the section entitled "Information Related to Prospect—Liquidation if No Business Combination" for additional information.

        The Merger will not be consummated if the holders of 30% or more of the Public Shares (7,500,000 shares or more) properly demand conversion of their shares into cash.

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Appraisal Rights

        Prospect stockholders do not have appraisal rights in connection with the Merger under the DGCL.

        Kennedy-Wilson Holders who do not vote in favor of adopting the Merger, and who otherwise comply with the applicable provisions of Section 262 of the DGCL ("Section 262") will be entitled to exercise appraisal rights under Section 262. Any shares held by a Kennedy-Wilson Holder who has not voted in favor of the Merger and who has demanded appraisal for such shares in accordance with the DGCL will not be converted into a right to receive the Merger consideration, unless such Kennedy-Wilson Holder fails to perfect, withdraws or otherwise loses such Kennedy-Wilson Holder's right to appraisal under the DGCL. If, after the consummation of the Merger, such Kennedy-Wilson Holder fails to perfect, withdraws or otherwise loses such Kennedy-Wilson Holder's right to appraisal, each such share will be treated as if it had been converted as of the consummation of the Merger into a right to receive the Merger consideration. Under the Merger Agreement, if more than 10% of the outstanding shares of Kennedy-Wilson common stock or 10% of the outstanding shares of Kennedy-Wilson preferred stock exercise appraisal rights, Prospect is not required to effect the Merger. Prospect shall not waive this condition if the number of outstanding shares of Kennedy-Wilson common stock or preferred stock for which holders exercise appraisal rights is such that, pursuant to the transactions contemplated by the Merger Agreement, Prospect will not be acquiring "control" of Kennedy-Wilson as defined in Section 368(c) of the Code solely in exchange for Prospect common stock.

        Kennedy-Wilson's holders of common stock may also have appraisal rights under Chapter 13 of the CGCL. Any stockholder who does not vote in favor of the Merger and remains a holder of Kennedy-Wilson common stock at the effective time of the Merger may, by complying with the procedures set forth in Chapter 13 of the CGCL and sending Kennedy-Wilson a written demand for appraisal before the vote is taken by Kennedy-Wilson stockholders on the Merger Agreement, be entitled to seek appraisal of the fair value of their shares as determined by the proper California superior court. These dissenter's rights are contingent upon consummation of the Merger.

        See the section entitled "Appraisal Rights" for additional information.

Rescission Rights

        A Prospect securityholder at the time of the closing of the Merger that purchased Prospect units in the IPO (an "IPO Purchaser"), may have securities law claims against Prospect for rescission or damages on the basis, for example, that the IPO Prospectus, did not disclose that Prospect may seek to amend the terms of the Warrant Agreement and exchange a portion of its outstanding Public Warrants for cash proceeds released from the Trust Account. Rescission would give a successful IPO Purchaser claimant the right to receive the total amount paid for his or her securities pursuant to an allegedly deficient prospectus, plus interest and less any income earned on the securities, in exchange for surrender of the securities. An IPO Purchaser who has properly exercised its conversion rights or dissenter's rights will not be eligible for rescission in connection with any securities law claims it may have against Prospect in connection with Prospect units purchased in the IPO. In addition, an IPO Purchaser who purchased Prospect units in the IPO but who has separated its Prospect units into the component common stock and warrants and no longer owns the common stock or warrants included in such Prospect units may not be entitled to rescission in connection with any such securities law claims.

        A successful IPO Purchaser claimant for damages under federal or state law could be awarded an amount to compensate for the decrease in value of his or her securities caused by the alleged violation (including, possibly, punitive damages), together with interest, while retaining such securities. Such claims may entitle IPO Purchasers asserting them to up to $10.00 per Prospect unit, based on the initial offering price of the Prospect units sold in the IPO, or $10.00 per share less any amount received from the sale or fair market value of the original Public Warrants purchased as part of the Prospect units,

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plus interest from the date of the IPO. In the case of IPO Purchasers, this amount may be more than the cash to which they are entitled upon exercise of their conversion rights or dissenters' rights or upon liquidation of Prospect.

        In general, a person who contends that he or she purchased a security pursuant to a prospectus that contains a material misstatement or omission must make a claim for rescission within the applicable statute of limitations period, which, for claims made under Section 12 of the Securities Act of 1933, as amended (the "Securities Act") and some state statutes, is one year from the time the claimant discovered or reasonably should have discovered the facts giving rise to the claim, but not more than three years from the occurrence of the event giving rise to the claim. Claims under the anti-fraud provisions of the federal securities laws must generally be brought within two years of discovery, but not more than five years after occurrence. Rescission and damages claims would not necessarily be finally adjudicated by the time the Merger is completed, and such claims would not be extinguished by consummation of that transaction. See the section entitled "The Merger Proposal—Rescission Rights" for additional information about rescission rights.

Proxies

        Proxies may be solicited by mail, telephone or in person. If you grant a proxy, you may still vote your shares or warrants in person if you revoke your proxy before the special meeting of Prospect stockholders or special meeting of Prospect warrantholders. You may also change your vote by submitting a later-dated proxy as described in the section entitled "Special Meeting of Prospect Warrantholders and Prospect Stockholders—Revoking Your Proxy."

Comparison of Rights of Stockholders of Prospect and Kennedy-Wilson

        Prospect and Kennedy-Wilson are incorporated under the laws of the State of Delaware. Upon consummation of the Merger, Kennedy-Wilson stockholders will become stockholders of Prospect. Prospect's amended and restated certificate of incorporation that will be in effect at the closing of the Merger differs from Kennedy-Wilson's amended and restated certificate of incorporation. For a more complete description of the differences between the rights of the stockholders of Prospect and the rights of stockholders of Kennedy-Wilson, please refer to the section entitled "Comparison of Rights of Prospect and Kennedy-Wilson Holders."

Interests of Kennedy-Wilson's Directors and Executive Officers in the Merger

        When you consider the recommendation to vote in favor of approval of the Merger Proposal, you should be aware that certain members of the Kennedy-Wilson board and certain executive officers of Kennedy-Wilson have agreements or arrangements that provide them with interests in the Merger.

        If the Merger is consummated, William J. McMorrow and Mary Ricks will be potentially entitled to receive certain cash bonus payments of up to $11.7 million and $4.0 million, respectively. The cash bonus payments will be payable as follows: (i) Mr. McMorrow and Ms. Ricks will be entitled to receive $4.85 million and $2.0 million, respectively, on October 15, 2009, provided, however, that such payments will be repaid to Kennedy-Wilson in the event the Merger is not consummated by November 15, 2009 or the executive is not employed by Kennedy-Wilson on the effective date of the Merger (these employment requirements will not apply, however, in the case of a termination of employment due to death or disability); (ii) Mr. McMorrow and Ms. Ricks will receive "performance unit awards" under the 2009 Plan which will entitle them to receive $2.425 million and $1.0 million, respectively, on April 1, 2010, provided that the Performance Target is met as of March 31, 2010 (in the event that the Performance Target is not met as of March 31, 2010, the bonus otherwise due April 1, 2010 shall, nevertheless, be paid on July 1, 2010, October 1, 2010, or January 1, 2011, respectively, if the Performance Target is satisfied as of the earliest of June 30, 2010, September 30,

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2010, or December 31, 2010, respectively), and the executive remains employed through the date on which the Performance Target is satisfied; and (iii) Mr. McMorrow and Ms. Ricks will receive additional "performance unit awards" under the 2009 Plan which will entitle them to receive cash payments in the amounts of $4.425 and $1.0 million, respectively, on January 1, 2011, provided that the Performance Target is met as of December 31, 2010 and he or she, as applicable, remains employed by the post-Merger company through January 1, 2011. Notwithstanding the foregoing, in the event that the Merger is consummated and the employment of Mr. McMorrow or Ms. Ricks is terminated by the post-Merger company without cause or he or she, as applicable, resigns from his or her, as applicable, employment with the post-Merger company for good reason, the payments referred to in clauses (ii) and (iii) above will still be payable on the applicable payment dates if the Performance Target is met. The "Performance Target" is met as of a particular date if Kennedy-Wilson's assets under management plus the cost of properties subject to property management contracts are at least $3.0 billion as of such date. The Performance Target was established by an independent committee of Prospect and is subject to the approval of the compensation committee of the post-Merger company following the consummation of the Merger.

        On April 10, 2006, William J. McMorrow borrowed $3,543,127 from Kennedy-Wilson evidenced by a Promissory Note bearing simple interest at a rate of 7.5% per annum and scheduled to mature on April 9, 2011 (the "McMorrow Note"). Mr. McMorrow's employment agreement has been amended to provide that the McMorrow Note will be forgiven if the Merger is consummated.

        If the Merger is consummated, certain of Kennedy-Wilson's executive officers will continue to be employed with the post-Merger company, including William J. McMorrow, Freeman A. Lyle, Barry S. Schlesigner, Mary Ricks, James A. Rosten, Robert E. Hart and Donald J. Herrema. In addition, it is proposed that six members of the board of directors of Kennedy-Wilson will be elected to serve as directors of the post-Merger company. To reward and incentivize Kennedy-Wilson's key employees and management after the Merger, up to 4,000,000 shares of Prospect common stock will be reserved for issuance under the 2009 Plan. If the Merger is consummated, certain Kennedy-Wilson officers, directors and key employees will be issued an aggregate of 3,740,000 restricted shares of Prospect common stock under the 2009 Plan upon the closing of the Merger as set forth in the table below:

Name of Group
  Dollar ($)   Number of Shares
of Restricted Stock
 

William McMorrow, Chief Executive Officer

  $     900,000  

Freeman Lyle, Chief Financial Officer

  $     50,000  

Mary Ricks, Co-CEO of KW Commercial Investment Group

  $     900,000  

Barry Schlesinger, Co-CEO of KW Commercial Investment Group

  $     125,000  

Robert Hart, President of KW Multi-Family Management Group

  $     125,000  

James Rosten, President of Kennedy-Wilson Properties

  $     125,000  

All executive officers, as a group

  $     3,495,000  

All directors who are not executive officers, as a group

  $     25,000  

All employees, including all current officers who are not executive officers, as a group

  $     220,000  

        In the event that the recipient of the restricted shares remains employed by (or continues to perform services as a director for) the post-Merger company through the relevant vesting date, 1/5 of the restricted shares will vest on each of the first five anniversaries of the date of issuance, provided that the Performance Target is met as of the September 30 immediately preceding the applicable anniversary date (in the case of the installments vesting on the fourth and fifth anniversary dates, the Performance Target must be met as of the September 30 immediately preceding the third anniversary date). The Performance Target was established by an independent committee of Prospect and is subject to the approval of the compensation committee of the post-Merger company following the consummation of the Merger. Notwithstanding the foregoing, in the event the employment with the

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post-Merger company of an employee who has been granted restricted shares is terminated without cause or if the employee resigns from his employment with the combined company for good reason, the restricted shares will continue to vest on the applicable anniversary dates (subject to the satisfaction of the Performance Target), subject to certain limitations. In addition, in the event of a "Change of Control" as defined in the 2009 Plan (see "The Equity Participation Plan Proposal—"Change of Control"), any unvested restricted shares of Prospect common stock that have not previously been forfeited will become vested, subject to certain limitations. See section "The Equity Participation Plan Proposal—Awards to Particular Officers, Directors and Employees" for additional information.

        In connection with the Merger, Mr. McMorrow and Ms. Ricks have entered into amendments to their employment agreements which provide for, among other things, (i) the removal of certain benefits in the event of a change in control; (ii) the addition of certain severance benefits if the executive resigns on account of a change in location or a material reduction in duties; (iii) the grant to each executive of 900,000 shares of restricted stock of Prospect pursuant to the 2009 Plan and upon the terms and conditions set forth above; (iv) the cash bonus payments set forth above and (v) in the case of Mr. McMorrow, the McMorrow Note forgiveness described above. Mr. Herrema has also entered into an amendment to his employment agreement which provides for the extension of his employment term from December 31, 2010 to January 31, 2014 as well as clauses (ii)—(iii) above. In addition, each of the employment agreements for Messrs. McMorrow and Herrema and Ms. Ricks have been amended to include language intended (i) to provide for a reduction in the amount of payments or benefits payable or provided to them under their respective employment agreements or otherwise to ensure that no payment or benefit is subject to the excise tax imposed by Section 4999 of the Code (certain golden parachute payments) which reduction may, in certain circumstances, result in the repayment of certain previously paid amounts (plus earnings) to the post-Merger company and (ii) to achieve compliance with Section 409A of the Code.

Interests of Prospect's Directors and Officers in the Merger

        When you consider the recommendation of Prospect's board of directors in favor of approval of the Merger Proposal, you should keep in mind that Prospect's executive officers and members of Prospect's board have interests in the Merger that are different from, or in addition to, your interests as a stockholder or warrantholder. These interests include, among other things:

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        In addition, at any time prior to the special meeting of Prospect stockholders and special meeting of Prospect warrantholders, during a period when they are not then aware of any material nonpublic information regarding Prospect or its securities, the Prospect founders, Kennedy-Wilson and Kennedy-Wilson Holders and/or their respective affiliates may purchase shares or Public Warrants from institutional and other investors, or execute agreements to purchase such shares of common stock or Public Warrants from them in the future, or they may enter into transactions with such persons and others to provide them with incentives to acquire shares of Prospect common stock or Public Warrants

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or vote their shares or Public Warrants in favor of the Merger Proposal and the Warrant Amendment Proposal, as applicable. The purpose of such Public Warrant purchases and other transactions would be to increase the likelihood that holders of a majority of shares underlying the warrants is present and voting at the special meeting of Prospect warrantholders. The purpose of such share purchases and other transactions would be to increase the likelihood of satisfaction of the requirements that the holders of a majority of the Public Shares present in person or by proxy and eligible to vote at the special meeting of Prospect stockholders vote in favor of the Merger Proposal, and that holders of fewer than 30% of the Public Shares vote against the Merger Proposal and demand conversion of their Public Shares into cash where it appears that such requirements would otherwise not be met.

        While the exact nature of any incentives that would be provided by the Prospect founders, Kennedy-Wilson and Kennedy-Wilson Holders and/or their respective affiliates has not been determined as of the date of this proxy statement/prospectus, they might include, without limitation, arrangements to protect such investors or holders against potential loss in value of their shares or Public Warrants, including the granting of put options and the transfer to such investors or holders of shares or Public Warrants owned by the Prospect founders for nominal value. Prospect will not enter into any such arrangement, either prior to or after the consummation of the Merger, and no funds in its Trust Account will be used to make such purchases or to fund other such arrangements. Entering into any such arrangements may have a depressive effect on Prospect's stock and Public Warrants.

        If such transactions are effected, the consequence could be to cause the Merger Proposal or the Warrant Amendment Proposal to be approved in circumstances where such approval could not otherwise be obtained. Purchases of shares of common stock or Public Warrants by the persons described above would allow them to exert more influence over the approval of the Merger Proposal or the Warrant Amendment Proposal and other proposals and would likely increase the chances that such proposals would be approved. Moreover, any such purchases may make it less likely that the holders of 30% or more of the Public Shares will vote against the Merger Proposal and exercise their conversion shares.

        As of the date of this proxy statement/prospectus, there have been no such discussions with respect to any such transaction and no agreements to such effect have been entered into with any such investor or holder. Prospect will file a Current Report on Form 8-K to disclose any arrangements entered into or significant purchases made by any of the aforementioned persons that would affect the vote on the Merger Proposal, the Warrant Amendment Proposal, the Charter Amendment Proposal, or the conversion threshold.

Recommendations to Prospect Warrantholders

        Prospect's board of directors believes that each of the Warrant Amendment Proposal and the Warrantholder Adjournment Proposal to be presented at the special meeting of Prospect warrantholders are fair to and in the best interest of Prospect's warrantholders and unanimously recommends that its warrantholders vote "FOR" each of the proposals.

Recommendation to Prospect Stockholders

        Prospect's board of directors believes that each of the Merger Proposal, the Charter Amendment Proposal, the Equity Participation Plan Proposal, the Director Election Proposal and the Stockholder Adjournment Proposal to be presented at the special meeting of Prospect stockholders are fair to and in the best interest of Prospect's stockholders and unanimously recommends that its stockholders vote "FOR" each of the proposals.

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Conditions to Closing of the Merger

General Conditions

        Consummation of the Merger by Prospect and Kennedy-Wilson is conditioned upon, among other things:

        Either party may waive one or more conditions to the consummation of the Merger. However, to the extent a material condition is waived by one of the parties, which waiver would render any prior disclosure materially misleading, Prospect intends to resolicit the approval of its stockholders of the Merger.

Kennedy-Wilson's Conditions to Closing

        The obligations of Kennedy-Wilson to consummate the transactions contemplated by the Merger Agreement also are conditioned upon the following, among other things:

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Prospect's Conditions to Closing

        The obligations of Prospect to consummate the transactions contemplated by the Merger Agreement also are conditioned upon the following, among other things:

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Termination

        The Merger Agreement may be terminated prior to closing:

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Effect of Termination

        Except as otherwise provided in the Merger Agreement, in the event of proper termination of the Merger Agreement by either Prospect or Kennedy-Wilson, the Merger Agreement will have no further force and effect, without any liability or obligation on the part of Prospect or Kennedy-Wilson and each party will destroy all documents, work papers and materials of the other party relating to the transactions contemplated; provided, however, that those provisions which survive the termination of the Merger Agreement, including that Kennedy-Wilson will not seek recourse against the Trust Account except for a claim for damages if Prospect breaches its no shop/non-solicit provision, shall not be void and that such termination will not terminate the rights or remedies of any party against another party that has violated or breached the Merger Agreement prior to such termination.

        If the Merger Agreement is terminated by either party should Kennedy-Wilson fail to receive its common stockholder approval, Kennedy-Wilson shall be obligated to pay Prospect $10,000,000. If such amount is not paid within 30 days after termination of the Merger Agreement, interest will begin to accrue on this amount.

Fees and Expenses

        All fees and expenses incurred in connection with the Merger Agreement and the transactions contemplated thereby will be paid by the party incurring such expenses, except that the parties will each pay one-half of fees related to filings under the HSR Act.

Certain United States Federal Income Tax Consequences

        For United States federal income tax purposes:

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        Furthermore, the Merger is intended to qualify as a reorganization within the meaning of Section 368(a) of Code.

        If the Merger qualifies as a reorganization within the meaning of Section 368(a) of the Code, no gain or loss will be recognized by United States Holders of Kennedy-Wilson common stock or preferred stock who receive solely shares of Prospect common stock in exchange for shares of Kennedy-Wilson stock pursuant to the Merger. However, a United States Holder of Kennedy-Wilson common stock or preferred stock who exercises its appraisal rights and who receives cash in exchange for its shares of Kennedy-Wilson common stock or preferred stock generally will recognize capital gain or loss if such shares were held as a capital asset at the time of the exchange. Such gain or loss is generally measured by the difference between the amount of cash received and the tax basis of that stockholder's shares of Kennedy-Wilson common stock or preferred stock transferred.

        For a further description of these material United States federal income tax consequences of the Merger, please see the information set forth in "The Merger Proposal—Material United States Federal Income Tax Consequences" for additional information.

Anticipated Accounting Treatment

        The acquisition will be accounted for as a "reverse merger" and recapitalization since immediately following the completion of the transaction, the stockholders of Kennedy-Wilson immediately prior to the business combination will have effective control of Prospect through its approximately 44.2% stockholder interest in the combined entity, assuming no share conversions (50.7% in the event of maximum share conversion), which includes its largest principal stockholder owning approximately 24.8% of the Kennedy-Wilson stockholder interest in the combined company. In addition, through Kennedy-Wilson's 44.2% stockholder interest, Kennedy-Wilson will maintain effective control of the combined entity through control of a substantial portion of the board of directors by maintaining six of the seven board seats for an expected term ranging from one to of three years. Additionally, all of Kennedy-Wilson's senior executive positions will continue on as management of the post-Merger company after consummation of the Merger. For accounting purposes, Kennedy-Wilson will be deemed to be the accounting acquirer in the Merger and, consequently, the Merger will be treated as a recapitalization of Kennedy-Wilson. Accordingly, Kennedy-Wilson's assets, liabilities and results of operations will become the historical financial statements of the registrant, and Prospect's assets, liabilities and results of operations will become consolidated with Kennedy-Wilson effective as of the acquisition date. No step-up in basis or intangible assets or goodwill will be recorded in this transaction. All direct costs of the Merger will be charged to operations in the period that such costs are incurred.

Regulatory Matters

        Prospect and Kennedy-Wilson do not expect that the Merger will be subject to any state or federal regulatory requirements other than (i) filings under applicable securities laws and the effectiveness of the registration statement of which this proxy statement/prospectus is a part, (ii) expiration or early termination of any applicable waiting periods under the HSR Act, and (iii) the filing of certain merger documents with the Secretary of State of the State of Delaware. Prospect and Kennedy-Wilson intend to comply with all such requirements.

Risk Factors

        In evaluating the Merger Proposal, the Charter Amendment Proposal, the Equity Participation Plan Proposal, the Director Election Proposal and the Stockholder Adjournment Proposal, stockholders

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should carefully read this proxy statement/prospectus and especially consider the factors discussed in the section entitled "Risk Factors."

        In evaluating the Warrant Amendment Proposal and the Warrant Adjournment Proposal, warrantholders should carefully read this proxy statement/prospectus and especially consider the factors discussed in the section entitled "Risk Factors."

Selected Historical Financial Information

        To assist you in your analysis of the financial aspects of the Merger, please see the financial information set forth in the section "Selected Historical Financial Information" on page 129.

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SELECTED UNAUDITED PRO FORMA CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS

        The selected unaudited pro forma condensed consolidated financial statements are presented on a pro forma basis for Kennedy-Wilson after giving effect to the reverse merger with Prospect.

Anticipated Accounting Treatment

        The acquisition will be accounted for as a "reverse merger" and recapitalization since immediately following the completion of the transaction, the stockholders of Kennedy-Wilson immediately prior to the business combination will have effective control of Prospect through its approximately 44.2% stockholder interest in the combined entity, assuming no share conversions (50.7% in the event of maximum share conversion), which includes its largest principal stockholder owning approximately 24.8% of the Kennedy-Wilson stockholder interest in the combined company. In addition, through Kennedy-Wilson's 44.2% stockholder interest, Kennedy-Wilson will maintain effective control of the combined entity through control of a substantial portion of the board of directors by maintaining six of the seven board seats for an expected term ranging from one to of three years. Additionally, all of Kennedy-Wilson's senior executive positions will continue on as management of the post-Merger company after consummation of the Merger. For accounting purposes, Kennedy-Wilson will be deemed to be the accounting acquirer in the Merger and, consequently, the Merger will be treated as a recapitalization of Kennedy-Wilson. Accordingly, Kennedy-Wilson's assets, liabilities and results of operations will become the historical financial statements of the registrant, and Prospect's assets, liabilities and results of operations will become consolidated with Kennedy-Wilson effective as of the acquisition date. No step-up in basis or intangible assets or goodwill will be recorded in this transaction. All direct costs of the Merger will be charged to operations in the period that such costs are incurred.

Selected Unaudited Pro Forma Condensed Consolidated Financial Information

        The following unaudited pro forma condensed consolidated financial information has been prepared assuming that the Merger had occurred (i) at the beginning of the pro forma statements of operations for the year ended December 31, 2008 and for the six months ended June 30, 2009, and (ii) at June 30, 2009 for the pro forma balance sheet.

        Pursuant to Prospect's amended and restated certificate of incorporation, Prospect will not proceed with a transaction if stockholders owning 30% or more of the Public Shares vote against the transaction and exercise their conversion rights. Accordingly, Prospect may effect a transaction if stockholders owning up to one share less than 30% of the Public Shares exercise their conversion rights. If this occurred, Prospect would be required to convert for cash up to one share less than 30% of the 25,000,000 shares of common stock included in the units sold in the IPO, or 7,499,999 shares of common stock.

        Furthermore, as a condition of the proposed transaction, each holder of the 25,000,000 Public Warrants must elect either to be redeemed for the Cash Amount of $0.55 per Public Warrant at closing, or to exchange its Public Warrants for Amended and Restated Public Warrants, with each such Amended and Restated Public Warrant entitling the holder thereof to purchase one share of Prospect common stock at an exercise price of $12.50 per share, with a redemption trigger price of $19.50 per share, and an expiration date of November 14, 2013. No more than 50% of the outstanding Public Warrants may exchanged for Amended and Restated Public Warrants. Accordingly, Prospect will be required to redeem a minimum of 12,500,000 Public Warrants and a maximum of 25,000,000 Public Warrants for an aggregate Cash Amount at closing ranging from $6,875,000 to $13,750,000, respectively.

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        Accordingly, the unaudited pro forma condensed consolidated financial information presents two possible scenarios for the approval of the Merger by the stockholders of Prospect, as follows:

        The unaudited pro forma condensed consolidated financial information is provided for illustrative purposes only. The historical financial information in the unaudited pro forma condensed consolidated balance sheet has been adjusted to give effect to pro forma events that are directly attributable to the Merger and are factually supportable. The historical financial information in the unaudited pro forma condensed consolidated statements of operations has been adjusted to give effect to pro forma events that are directly attributable to the Merger, are factually supportable, and are expected to have a continuing impact on the consolidated results. Actual results could differ from the pro forma information presented herein.

        The unaudited pro forma condensed consolidated balance sheet data reflects the acquisition of Kennedy-Wilson, as discussed in greater detail in the section entitled "Summary of the Material Terms of the Merger." The historical balance sheet of Prospect at June 30, 2009 used in the preparation of the unaudited pro forma condensed consolidated financial information has been derived from the unaudited balance sheet of Prospect at June 30, 2009. For more detailed financial information, see the section entitled "Unaudited Pro Forma Condensed Consolidated Financial Information."

        The selected unaudited pro forma condensed balance sheet as of June 30, 2009 is based on the unaudited historical consolidated balance sheets as of June 30, 2009 for Prospect and Kennedy-Wilson and gives effect to the Merger. The selected unaudited pro forma condensed consolidated statement of operations for the year ended December 31, 2008 has been derived from audited consolidated financial statements for the year ended December 31, 2008. The selected unaudited pro forma condensed consolidated statement of operations for the six months ended June 30, 2009 has been derived from the selected unaudited consolidated financial statements of Prospect and Kennedy-Wilson for the six months ended June 30, 2009. The selected unaudited pro forma condensed statements of operations give effect to the Merger as if it occurred on the first day of the period presented.

        The following selected unaudited pro forma combined financial information has been derived from, and should be read in conjunction with, the unaudited pro forma condensed combined financial statements and related notes thereto included elsewhere in this proxy statement/prospectus, each of Prospect's and Kennedy-Wilson's historical consolidated financial statements and related notes, each of Prospect's and Kennedy-Wilson's "Management's Discussion and Analysis of Financial Condition and Results of Operations" section and other financial information contained in this proxy statement/prospectus. The selected unaudited pro forma information presented herein is not intended to represent or be indicative of the financial position or results of operations that would have actually occurred had the Merger occurred on the dates indicated and should not be taken as representative of the future consolidated financial position or results operations.

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KENNEDY-WILSON HOLDINGS, INC.
Pro Forma Summary Unaudited Financial Information
(In thousands of U.S. Dollars, except per share amounts)

 
  Years Ended December 31,   Six Months Ended
June 30,
 
 
  2007   2008   2009  
 
  Pro Forma
Consolidated
Companies
(with No
Stock
Conversion and
Minimum
Warrant
Repurchase)
  Pro Forma
Consolidated
Companies
(with Maximum
Stock
Conversion and
Maximum
Warrant
Repurchase)
  Pro Forma
Consolidated
Companies
(with No
Stock
Conversion and
Minimum
Warrant
Repurchase)
  Pro Forma
Consolidated
Companies
(with Maximum
Stock
Conversion and
Maximum
Warrant
Repurchase)
  Pro Forma
Consolidated
Companies
(with No
Stock
Conversion and
Minimum
Warrant
Repurchase)
  Pro Forma
Consolidated
Companies
(with Maximum
Stock
Conversion and
Maximum
Warrant
Repurchase)
 

Revenue

  $ 34,065   $ 34,065   $ 32,528   $ 32,528   $ 19,352   $ 19,352  

Net income (loss) attributable to common stockholders

  $ 5,747   $ 5,747   $ (3,583 ) $ (3,583 ) $ (6,261 ) $ (6,261 )

Net income (loss) available to common stockholders

  $ 5,747   $ 5,747   $ (3,583 ) $ (3,583 ) $ (6,261 ) $ (6,261 )

Net income per common share—

                                     
 

Basic

  $ 0.11   $ 0.13   $ (0.06 ) $ (0.07 ) $ (0.11 ) $ (0.13 )
 

Diluted

  $ 0.11   $ 0.13   $ (0.06 ) $ (0.07 ) $ (0.11 ) $ (0.13 )

Cash dividends per common share

  $   $   $   $   $   $  

Total assets

  $ 371,134   $ 290,159   $ 480,798   $ 399,756   $ 507,640   $ 426,589  

Total liabilities

  $ 96,064   $ 96,064   $ 158,775   $ 158,775   $ 186,401   $ 186,401  

Total equity

  $ 275,070   $ 194,095   $ 322,023   $ 240,981   $ 321,239   $ 240,188  

        Pro forma summary unaudited financial information is not presented for the year ended December 31, 2006 since Prospect was not formed until July 9, 2007.

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HISTORICAL AND UNAUDITED COMPARATIVE PRO FORMA PER SHARE DATA

        The following table sets forth selected historical equity ownership information for Prospect and Kennedy-Wilson and unaudited pro forma combined per share ownership information after giving effect to the Merger, assuming: (i) that no holders of Public Shares exercise their conversion rights and that 12,500,000 Public Warrants are purchased for cash; and (ii) that holders of 7,499,999 Public Shares (29.99%) exercise their conversions rights and that 25,000,000 Public Warrants are repurchased for cash. Prospect is providing this information to aid you in your analysis of the financial aspects of the Merger. The historical information should be read in conjunction with "Selected Historical Financial Information" included elsewhere in this proxy statement/prospectus and the historical consolidated financial statements of Prospect and Kennedy-Wilson and the related notes thereto included elsewhere in this proxy statement/prospectus. The unaudited pro forma per share information is derived from, and should be read in conjunction with, the unaudited condensed combined pro forma financial data and related notes included elsewhere in this proxy statement/prospectus.

        The unaudited pro forma consolidated per share information does not purport to represent what the actual results of operations of Prospect or Kennedy-Wilson would have been had the Merger been completed or to project Prospect's or Kennedy-Wilson's results of operations that may be achieved after the Merger. The unaudited pro forma book value per share information below does not purport to represent what the value of Prospect and Kennedy-Wilson would have been had the Merger been completed nor the book value per share for any future date or period.

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KENNEDY-WILSON HOLDINGS, INC.
Comparative Per Share Information

 
  Prospect
Acquisition
Corp.
  Kennedy-
Wilson,
Inc.
  Pro Forma
Consolidated
Companies
(with No
Stock
Conversion and
Minimum
Warrant
Repurchase)
  Pro Forma
Consolidated
Companies
(with Maximum
Stock
Conversion and
Maximum
Warrant
Repurchase)
 

Historical Information—

                         
 

Number of common shares issued and outstanding—

                         
   

December 31, 2008

    31,250,000     5,466,150          
   

June 30, 2009

    31,250,000     5,387,997          
 

Basic net income (loss) per common share from continuing operations—

                         
   

Year ended December 31, 2006

    NA (1) $ 1.23          
   

Year ended December 31, 2007

  $ 0.05 (1) $ 1.49          
   

Year ended December 31, 2008

  $ 0.05   $ (0.32 )        
   

Six months ended June 30, 2009

  $ (0.01 ) $ (1.24 )        
 

Diluted net income (loss) per common share from continuing operations—

                         
   

Year ended December 31, 2006

    NA (1) $ 1.07          
   

Year ended December 31, 2007

  $ 0.05 (1) $ 1.35          
   

Year ended December 31, 2008

  $ 0.05   $ (0.32 )        
   

Six months ended June 30, 2009

  $ (0.01 ) $ (1.24 )        
 

Net assets at book value per common share—December 31, 2008

 
$

7.65

(2)

$

18.80
   
   
 
   

June 30, 2009

  $ 7.65 (2) $ 19.30          

Pro Forma Information—

                         
 

Number of common shares issued and outstanding at closing—

                         
   

Under no conversion assumption

    29,050,000     26,000,000     55,050,000        
     

(% of total)

    52.77 %   47.23 %   100.00 %      
   

Under maximum conversion assumption

    21,550,001     26,000,000         47,550,001  
     

(% of total)

    45.32 %   54.68 %       100.00 %
 

Basic net income (loss) per common share from continuing operations—

                         
   

Year ended December 31, 2007

          $ 0.11   $ 0.13  
   

Year ended December 31, 2008

          $ (0.06 ) $ (0.07 )
   

Six months ended June 30, 2009

          $ (0.11 ) $ (0.13 )
 

Diluted net income (loss) per common share from continuing operations—

                         
   

Year ended December 31, 2007

          $ 0.11   $ 0.13  
   

Year ended December 31, 2008

          $ (0.06 ) $ (0.07 )
   

Six months ended June 30, 2009

          $ (0.11 ) $ (0.13 )
 

Net assets at book value per common share—

                         
   

December 31, 2008

          $ 5.85   $ 5.07  
   

June 30, 2009

          $ 5.84   $ 5.05  

(1)
Historical and pro forma basic and diluted net income (loss) per common share for Prospect is presented from Prospect's date of inception, July 9, 2007.

(2)
Net assets used to calculated Prospect's historical book value per share includes the value of common stock subject to possible conversion.

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RISK FACTORS

        You should carefully consider the following risk factors, together with all of the other information included in this proxy statement/prospectus, before you decide whether to vote or instruct your vote to be cast to approve the proposals described in this proxy statement/prospectus.

Risks Related to Kennedy-Wilson's Business and Operations Following the Merger

The success of Kennedy-Wilson's business is significantly related to general economic conditions and the real estate industry and, accordingly, its business has been and could continue to be harmed by the economic slowdown and downturn in real estate asset values, property sales and leasing activities.

        Kennedy-Wilson's business is closely tied to general economic conditions and the real estate industry. As a result, Kennedy-Wilson's economic performance, the value of its real estate and real estate secured notes, and its ability to implement its business strategies may be affected by changes in national and local economic conditions. The condition of the real estate markets in which Kennedy-Wilson operates tends to be cyclical and related to the condition of the economy in the U.S. and Japan as a whole and to the perceptions of investors of the overall economic outlook. Rising interest rates, declining demand for real estate or periods of general economic slowdown or recession have had a direct negative impact on the real estate market in the past and a recurrence of these conditions in the U.S. or a deeper recession in Japan could result in a reduction in Kennedy-Wilson's revenues. In addition, the economic condition of each local market where Kennedy-Wilson operates may be dependent on one or more industries. Kennedy-Wilson's ability to change its portfolio promptly in response to economic or other conditions is limited. Certain significant expenditures, such as debt service costs, real estate taxes, and operating and maintenance costs are generally not reduced when market conditions are poor. These factors would impede Kennedy-Wilson from responding quickly to changes in the performance of its investments and could adversely impact its business, financial condition and results of operations. Kennedy-Wilson has experienced in past years, is currently experiencing, and expects in the future to be negatively impacted by, periods of economic slowdown or recession, and corresponding declines in the demand for real estate and related services, within the markets in which it operates. The current economic recession has been extraordinary for its worldwide scope, its severity and its impact on major financial institutions, among other aspects. The current recession and the downturn in the real estate market have resulted in and/or may continue to result in:

Kennedy-Wilson's real estate investments involve risk of losses and fluctuations in operating results.

        Kennedy-Wilson participates as a principal in real estate investments, and the timing of its purchases and sales of those investments could result in significant fluctuations in its net operating results and cash flow. Kennedy-Wilson may experience one or more quarters without acquiring or

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disposing of real estate, which could have a material adverse effect on its business, financial condition and results of operations.

        There is the inherent possibility in all of Kennedy-Wilson's real estate investments that it could lose all or part of its investment. Real estate investments are generally illiquid, which may affect Kennedy-Wilson's ability to change its portfolio in response to changes in economic and other conditions. Moreover, in its joint ventures and funds that invest in real estate, Kennedy-Wilson may not be able to unilaterally decide the timing of the disposition of an investment, and as a result, may not control when and whether any gain will be realized or loss avoided. The value of Kennedy-Wilson's investments can also be diminished by:

        Part of Kennedy-Wilson's investment strategy is to locate and acquire real estate assets that it believes are undervalued and to improve them to increase their resale value. Kennedy-Wilson faces risks arising from the acquisition of properties not yet fully developed or in need of substantial renovation or redevelopment, particularly the risk that Kennedy-Wilson overestimates the value of the property and the risk that the cost or time to complete the renovation or redevelopment will exceed the budgeted amount. Such delays or cost overruns may arise from:

        Any failure to complete a redevelopment project in a timely manner and within budget or to sell or lease the project after completion could have a material adverse effect upon Kennedy-Wilson's business, results of operation and financial condition.

        Kennedy-Wilson also has made and expects to continue to make or acquire mezzanine loans, which are loans that are secured by real property, but are subject to the interests of lenders who are senior to Kennedy-Wilson. These mezzanine loans are considered to involve a high degree of risk compared to other types of loans secured by real property. This is due to a variety of factors, including that a foreclosure by the holder of the senior loan could result in its mezzanine loan becoming uncollectible. Accordingly, Kennedy-Wilson may not recover the full amount, or any, of its investment in mezzanine loans. In addition, mezzanine loans may have higher loan to value ratios than conventional term loans.

If Kennedy-Wilson is unable to raise additional debt and equity capital, its results of operations could suffer.

        Kennedy-Wilson's operations are dependent upon its ability to raise additional capital, particularly with respect to third-party equity and debt financings used in connection with real estate investments.

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Kennedy-Wilson's access to capital funding is uncertain. The current global economic crisis has resulted in a severe tightening of the credit markets as well as other sources of capital. Kennedy-Wilson's inability to raise additional capital on terms reasonably acceptable to it could jeopardize the future success of its business.

Kennedy-Wilson may be subject to additional risks resulting from increased operations in Japan.

        One of Kennedy-Wilson's strategies for the future is to continue its operations and investments in Asia, particularly in Japan. In furtherance of this strategy, Kennedy-Wilson expects to commit additional resources to expand its sales and marketing activities in Japan and expand its service offerings and products in selected markets throughout Asia. If Kennedy-Wilson is successful in implementing this strategy, the increased scope of its international operations may lead to more volatile financial results and difficulties in managing its businesses. This volatility and difficulty could be caused by, among other things, the following:

        The current economic downturn has significantly affected countries throughout Asia, including Japan. The worldwide recession has led to falling stock prices and asset values in Asia and reduced economic growth prospects in Asia. Several property markets in Asia have been affected by real estate developments that resulted in an oversupply of completed or partially completed space. Property prices have fallen along with prices of other investments and asset values.

Kennedy-Wilson's revenues and earnings may be affected by foreign currency fluctuations.

        Kennedy-Wilson's revenues from non-U.S. operations have been primarily denominated in the local currency where the associated revenues were earned. Thus, Kennedy-Wilson may experience significant fluctuations in revenues and earnings because of corresponding fluctuations in foreign currency exchange rates. To date, Kennedy-Wilson's foreign currency exposure has been limited to the Japanese Yen. Due to the constantly changing currency exposures to which Kennedy-Wilson will be subject and the volatility of currency exchange rates, there can be no assurance that Kennedy-Wilson will not experience currency losses in the future, nor can Kennedy-Wilson predict the effect of exchange rate fluctuations upon future operating results. Kennedy-Wilson's management may decide to use currency hedging instruments from time to time including foreign currency forward contracts, purchased currency options (where applicable) and foreign currency borrowings. The economic risks associated

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with these hedging instruments include unexpected fluctuations in inflation rates, which could impact cash flow relative to paying down debt, and unexpected changes in Kennedy-Wilson's underlying net asset position. There can be no assurance that any hedging will be effective.

Kennedy-Wilson's joint venture activities involve unique risks.

        Kennedy-Wilson has utilized joint ventures for large commercial investments and real estate developments. Kennedy-Wilson plans to continue to acquire interests in additional limited and general partnerships, joint ventures and other enterprises (collectively, "Joint Ventures") formed to own or develop real property or interests in real property or note pools. It is Kennedy-Wilson's strategy in Japan to invest primarily through Joint Ventures. Kennedy-Wilson has acquired and may acquire minority interests in Joint Ventures and it may also acquire interests as a passive investor without rights to actively participate in management of the Joint Ventures. Investments in Joint Ventures involve additional risks, including the possibility that the other participants may become bankrupt or have economic or other business interests or goals which are inconsistent with Kennedy-Wilson's, that Kennedy-Wilson will not have the right or power to direct the management and policies of the Joint Ventures and that other participants may take action contrary to its instructions or requests and against its policies and objectives. Should a participant in a material Joint Venture act contrary to its interest, it could have a material adverse effect upon Kennedy-Wilson's business, results of operations and financial condition. Moreover, Kennedy-Wilson cannot be certain that it will continue these investments, or that it can identify suitable Joint Venture partners and form new Joint Ventures in the future.

Kennedy-Wilson may incur losses on its note investments.

        Kennedy-Wilson may purchase notes that are unsecured or secured by real or personal property. These notes are generally non-performing or sub-performing, and often are in default at the time of purchase. In general, the distressed notes Kennedy-Wilson acquires are highly speculative investments and have a greater than normal risk of future defaults and delinquencies as compared to newly originated loans. Returns on loan investments depend on the borrower's ability to make required payments or, in the event of default, Kennedy-Wilson's security interests, if any, and its ability to foreclose and liquidate whatever property may be securing the note. Kennedy-Wilson cannot be sure that it will be able to collect on a defaulted loan or foreclose on security successfully or in a timely fashion. There may also be instances when Kennedy-Wilson is able to acquire title to an underlying property and sell it, but not make a profit on its investment.

Kennedy-Wilson's operating results may vary from quarter to quarter.

        Kennedy-Wilson has experienced a fluctuation in its financial performance from quarter to quarter due in part to the significance of revenues from the sales of real estate on overall performance. The timing of purchases and sales of its real estate investments has varied, and will continue to vary, widely from quarter to quarter due to variability in market opportunities, changes in interest rates, and the overall demand for residential and commercial real estate, among other things. While these factors have contributed to Kennedy-Wilson experiencing increased operating income and earnings in the fourth quarter in past years, there can be no assurance that Kennedy-Wilson will continue to perform better in the fourth quarter.

        In addition, the timing and magnitude of brokerage commissions paid to Kennedy-Wilson may vary widely from quarter to quarter depending upon overall activity in the general real estate market and the nature of its brokerage assignments, among other things.

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The real estate services and investment businesses are highly competitive.

        Real estate services and investment businesses are highly competitive. Kennedy-Wilson's principal competitors include both large multinational companies and national and regional firms, such as Jones Lang LaSalle, Inc., and CB Richard Ellis, Inc. Many of its competitors have greater financial resources and broader global presences than Kennedy-Wilson. Kennedy-Wilson competes with companies in the U.S., and to a limited extent, in Japan, with respect to:

        Kennedy-Wilson's property management operations must compete with a growing number of national firms seeking to expand market share. There can be no assurance that it will be able to continue to compete effectively, maintain current fee levels or arrangements, continue to purchase investment property profitably or avoid increased competition.

Kennedy-Wilson may lose property management agreements or client relationships.

        Kennedy-Wilson is highly dependent on long-term client relationships and on revenues received for services under various property management and leasing agreements with third-party owners of properties. A considerable amount of Kennedy-Wilson's revenues are derived from fees related to these agreements.

        The majority of Kennedy-Wilson's property management agreements are cancelable prior to their expiration by the client for any reason on as little as 30 to 60 days' notice. These contracts also may not be renewed when their respective terms expire. Kennedy-Wilson believes many of its clients will continue to use its services for their current holdings and will engage Kennedy-Wilson for newly acquired properties. If, however, Kennedy-Wilson fails to maintain existing relationships, fails to develop and maintain new client relationships or otherwise loses a substantial number of management agreements, Kennedy-Wilson could experience a material adverse change in its business, financial condition and results of operations.

        Kennedy-Wilson's property management fees are generally structured as a percentage of the revenues generated by the properties that it manages. Similarly, its leasing commissions typically are based on the value of the lease commitments. As a result, Kennedy-Wilson's revenues are adversely affected by decreases in the performance of the properties it manages and declines in rental value. Property performance will depend upon Kennedy-Wilson's ability to attract and retain creditworthy tenants, its ability to control operating expenses (some of which are beyond its control), financial conditions generally and in the specific areas where properties are located and the condition of the real estate market generally.

The growth of Kennedy-Wilson's business depends on its ability to renew leases or secure new tenants.

        A significant portion of Kennedy-Wilson's property management business involves facilitating the leasing of commercial space. In certain areas of operation, there may be inadequate commercial space to meet demand and there is a potential for a decline in the number of overall lease and brokerage transactions. In areas where the supply of commercial space exceeds demand, Kennedy-Wilson may not be able to renew leases or obtain new tenants for its owned and managed rental properties as leases expire. Moreover, the terms of new leases and renewals (including renovation costs or costs of

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concessions to tenants) may be less favorable than current leases. Kennedy-Wilson's revenues may be adversely affected by the failure to promptly find tenants for substantial amounts of vacant space, if rental rates on new or renewal leases are significantly lower than expected, or if reserves for costs of re-leasing prove inadequate. Kennedy-Wilson cannot be sure that it can continue to lease properties for its clients and for its own account in a profitable manner.

        Kennedy-Wilson's ability to lease properties also depends on:

The growth of Kennedy-Wilson's business depends on its ability to integrate acquisitions into existing operations.

        Acquisitions and expansion have been, and will continue to be, a significant component of Kennedy-Wilson's growth strategy for the future. While maintaining its existing business lines, Kennedy-Wilson intends to continue to pursue a sustained growth strategy by increasing revenues from existing clients, expanding the breadth of its service offerings, seeking selective co-investment opportunities and pursuing strategic acquisitions.

        Kennedy-Wilson's ability to manage its growth will require it to effectively integrate new acquisitions into its existing operations while managing development of principal properties. Kennedy-Wilson expects that significant growth in several business lines occurring simultaneously will place substantial demands on its managerial, administrative, operational and financial resources. Kennedy-Wilson's future success and profitability will depend, in part, on its ability to attract, retain and motivate qualified managers and other personnel, and successfully implement enhancements to management and operating systems. In addition, expansion will likely require increased financing from third-party lenders. Kennedy-Wilson cannot be sure that it will be able to successfully manage all factors necessary for a successful expansion of its business. Moreover, Kennedy-Wilson's strategy of growth depends on the existence of and its ability to identify attractive and synergistic acquisition targets. The unavailability of suitable acquisition targets, or Kennedy-Wilson's inability to find them, may result in a decline in business, financial condition and results of operations.

Kennedy-Wilson depends on key personnel whose continued service is not guaranteed.

        Kennedy-Wilson's continued success is dependent to a significant degree upon the efforts of its senior executives, who have each been essential to its business. Certain of its executives have employment contracts with Kennedy-Wilson that are renewable annually. The departure of all or any of its executives for whatever reason or the inability of all or any of them to continue to serve in their present capacities or Kennedy-Wilson's inability to attract and retain other qualified personnel could have a material adverse effect upon its business, financial condition and results of operations. Kennedy-Wilson's executives have built highly regarded reputations in the real estate industry. Its executives attract business opportunities and assist both in negotiations with lenders and potential joint venture partners and in the representation of large and institutional clients. If Kennedy-Wilson lost their services, its relationships with lenders, joint venturers and clients would diminish significantly.

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        In addition, certain of Kennedy-Wilson's officers have strong regional reputations and they aid in attracting and identifying opportunities and negotiating for Kennedy-Wilson and on behalf of its clients. In particular, Kennedy-Wilson views the establishment and maintenance of strong relationships through certain officers as critical to its success in the Japanese market. As Kennedy-Wilson continues to grow, its success will be largely dependent upon its ability to attract and retain qualified personnel in all areas of business. Kennedy-Wilson cannot be sure that it will be able to continue to hire and retain a sufficient number of qualified personnel to support or keep pace with planned growth.

Kennedy-Wilson is highly dependent upon the economy and real estate market in California.

        Kennedy-Wilson has a high concentration of its business activities in California. Consequently, its business, results of operations and financial condition are dependent upon general trends in the Californian economy and real estate market. The California economy has experienced a significant downturn in the current recession and a sustained decline in the value of California real estate. Real estate market declines in California have become so severe that the market value of a number of properties securing loans has become significantly less than the outstanding balances of those loans. Real estate market declines may negatively affect Kennedy-Wilson's ability to sell property at a profit. In addition, California historically has been vulnerable to certain natural disaster risks, such as earthquakes, floods, wild fires and erosion-caused mudslides. The existence of adverse economic conditions or the occurrence of natural disasters in California could have a material adverse effect on Kennedy-Wilson's business, financial condition and results of operations.

Kennedy-Wilson's use of debt to finance acquisitions could adversely impact its results.

        Kennedy-Wilson has historically financed new acquisitions and property purchases with cash derived from secured and unsecured loans and lines of credit. For instance, it typically purchases real property with loans secured by a mortgage on the property acquired. Kennedy-Wilson anticipates continuing this trend. It does not have a policy limiting the amount of debt that it may incur. Accordingly, Kennedy-Wilson's management and board of directors have discretion to increase the amount of its outstanding debt at any time. Kennedy-Wilson could become more highly leveraged, resulting in an increase in debt service costs that could adversely affect results of operations and increase the risk of default on debt.

        Much of Kennedy-Wilson's debt bears interest at variable rates. As a result, Kennedy-Wilson is subject to fluctuating interest rates that may impact, adversely or otherwise, results of operations and cash flows. Kennedy-Wilson may be subject to risks normally associated with debt financing, including the risk that cash flow will be insufficient to make required payments of principal and interest, and the risk that existing indebtedness on its properties will not be able to be refinanced or that the terms of available new financing will not be as favorable as the terms of existing indebtedness. If Kennedy-Wilson is unable to satisfy the obligations owed to any lender with a lien on one of its properties, the lender could foreclose on the real property or other assets securing the loan and Kennedy-Wilson would lose that property or asset. The loss of any property or asset to foreclosure could have a material adverse effect on Kennedy-Wilson's business, financial condition and results of operations.

Kennedy-Wilson has guaranteed a number of loans in connection with various joint venture partnerships which may result in it being obligated to make substantial payments.

        Kennedy-Wilson has provided guarantees associated with loans secured by assets held in various joint venture partnerships. The maximum potential amount of future payments (undiscounted) Kennedy-Wilson could be required to make under the guarantees was approximately $68.5 million at June 30, 2009. Subsequent to June 30, 2009, several loans have been paid down, which reduced the maximum potential amount of future payments (undiscounted) Kennedy-Wilson could be required to make under the guarantees to approximately $41.5 million. The guarantees expire by the year end of

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2011 and Kennedy-Wilson's performance under the guarantees would be required to the extent there is a shortfall in liquidation between the principal amount of the loan and the net sales proceeds of the property. If Kennedy-Wilson were to become obligated to perform on these guarantees, it could have an adverse effect on its financial condition.

Kennedy-Wilson's auction services business has historically been countercyclical, and as a result, its operating results may be adversely affected when general economic conditions are improving.

        Kennedy-Wilson's results of operations are dependent on the performance of its auction services group, which historically has been countercyclical. Kennedy-Wilson's auction services group has recently experienced an increase in revenues due to, among other things, the substantial increase in the number of foreclosures stemming from the current economic crisis. Improvements in general economic conditions may cause auction service revenues to decrease, which could cause a material adverse impact on Kennedy-Wilson's results of operations.

Kennedy-Wilson may have liabilities in connection with real estate brokerage and property management activities.

        As a licensed real estate broker, Kennedy-Wilson and its licensed employees are subject to certain statutory due diligence, disclosure and standard-of-care obligations. Failure to fulfill these obligations could subject Kennedy-Wilson or its employees to litigation from parties who purchased, sold or leased properties they brokered or managed. In addition, Kennedy-Wilson may become subject to claims by participants in real estate sales claiming that it did not fulfill its statutory obligations as a broker.

        In Kennedy-Wilson's property management capacity, it hires and supervises third-party contractors to provide construction and engineering services for its properties. While Kennedy-Wilson's role is limited to that of a supervisor, it cannot be sure that it will not be subjected to claims for construction defects or other similar actions. Adverse outcomes of property management litigation could have a material adverse effect on Kennedy-Wilson's business, financial condition and results of operations.

Kennedy-Wilson's properties may subject it to potential environmental liability.

        Under various federal, state and local laws, ordinances and regulations, a current or previous owner or operator of real estate may be liable for the clean up of hazardous or toxic substances and may be liable to a governmental entity or to third parties for property damage and for investigation and clean-up costs incurred by governmental entities or third parties in connection with the contamination. Such laws typically impose liability without regard to whether the owner or operator knew of, or was responsible for, the presence of the hazardous or toxic substances, even when the contaminants were associated with previous owners or operators. The costs of investigation, remediation or removal of hazardous or toxic substances may be substantial, and the presence of those substances, or the failure to properly remediate those substances, may adversely affect the owner's or operator's ability to sell or rent the affected property or to borrow using the property as collateral. The presence of contamination at a property can impair the value of the property even if the contamination is migrating onto the property from an adjoining property. Additionally, the owner of a site may be subject to claims by parties who have no relation to the property based on damages and costs resulting from environmental contamination emanating from the site.

        In connection with the direct or indirect ownership, operation, management and development of real properties, Kennedy-Wilson may be considered an owner or operator of those properties or as having arranged for the disposal or treatment of hazardous or toxic substances. Therefore, Kennedy-Wilson may be potentially liable for removal or remediation costs.

        Certain federal, state and local laws, regulations and ordinances also govern the removal, encapsulation or disturbance of asbestos-containing materials during construction, remodeling,

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renovation or demolition of a building. Such laws may impose liability for release of asbestos-containing materials, and third parties may seek recovery from owners or operators of real properties for personal injuries associated with asbestos-containing materials. Kennedy-Wilson may be potentially liable for those costs for properties that it owns. In the past, Kennedy-Wilson has been required to remove asbestos from certain buildings that it owns. There can be no assurance that in the future Kennedy-Wilson will not be required to remove asbestos from its buildings or incur other substantial costs of environmental remediation.

        Before consummating the acquisition of a particular piece of property, it is Kennedy-Wilson's policy to retain independent environmental consultants to conduct a thorough environmental review of the property to check for contaminants, including performing a Phase I environmental review. These assessments have included, among other things, a visual inspection of the properties and the surrounding area and a review of relevant federal, state and historical documents. To date, the assessments Kennedy-Wilson has had done have not revealed any environmental liability that Kennedy-Wilson believes would have a material adverse effect on its business, assets or results of operations as a whole, nor is it aware of any material environmental liability of the types described. Nevertheless, it is possible that the assessments Kennedy-Wilson commissioned do not reveal all environmental liabilities or that there are material environmental liabilities of which Kennedy-Wilson is currently unaware. There can be no assurance that future laws, ordinances or regulations will not impose any material environmental liability or that the current environmental condition of its properties will not be affected by tenants, by the condition of land or operations in the vicinity of those properties, or by unrelated third parties. Kennedy-Wilson believes that its properties are in substantial compliance in all material respects with all federal, state and local laws, ordinances and regulations regarding hazardous or toxic substances. Kennedy-Wilson has not been notified by any governmental authority, and is not otherwise aware of any material noncompliance, liability or claim relating to hazardous or toxic substances in connection with any of its properties. There can be no assurance that federal, state and local agencies or private plaintiffs will not bring these types of actions in the future, or that those actions, if adversely resolved, would not have a material adverse effect on Kennedy-Wilson's business, financial condition and results of operations.

Kennedy-Wilson may incur unanticipated expenses relating to laws benefiting disabled persons.

        The Americans with Disabilities Act (the "ADA") generally requires that public accommodations such as hotels and office buildings be accessible to disabled people. Kennedy-Wilson believes that its properties are in substantial compliance with the ADA and that it will not be required to make substantial capital expenditures to address the requirements of the ADA. If, however, its properties are not in compliance with the ADA, the U.S. federal government could fine Kennedy-Wilson or private litigants could be awarded money damages. If Kennedy-Wilson is required to make substantial alterations to one or more of its properties, its results of operations could be materially adversely affected.

Kennedy-Wilson may incur significant costs complying with laws, regulations and covenants that are applicable to its properties and operations.

        The properties in Kennedy-Wilson's portfolio and its operations are subject to various covenants and federal, state and local laws and regulatory requirements, including permitting and licensing requirements. Such laws and regulations, including municipal or local ordinances, zoning restrictions and restrictive covenants imposed by community developers may restrict Kennedy-Wilson's use of its properties and may require it to obtain approval from local officials or community standards organizations at any time with respect to its properties, including prior to acquiring a property or when undertaking renovations of any of its existing properties. Among other things, these restrictions may relate to fire and safety, seismic, asbestos-cleanup or hazardous material abatement requirements.

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There can be no assurance that existing laws and regulations will not adversely affect Kennedy-Wilson or the timing or cost of any future acquisitions or renovations, or that additional regulations will not be adopted that increase such delays or result in additional costs. Kennedy-Wilson's failure to obtain required permits, licenses and zoning relief or to comply with applicable laws could have a material adverse effect on its business, financial condition and results of operations.

Kennedy-Wilson has insurance coverage limitations.

        Kennedy-Wilson carries comprehensive general liability coverage and umbrella coverage on all of its properties of which it owns more than 50% with limits of liability which Kennedy-Wilson deems adequate and appropriate under the circumstances (subject to deductibles) to insure against liability claims and provide for the cost of legal defense. There are, however, certain types of extraordinary losses that may be either uninsurable, or that are not generally insured because it is not economically feasible to insure against those losses. Should any uninsured loss occur, Kennedy-Wilson could lose its investment in, and anticipated revenues from, a property, which loss or losses could have a material adverse effect on its operations. Currently, Kennedy-Wilson also insures some of its properties for loss caused by earthquake in levels it deems appropriate and, where it believes necessary, for loss caused by flood. Kennedy-Wilson cannot be sure that the occurrence of an earthquake, flood or other natural disaster will not have a materially adverse effect on its business, financial condition and results of operations.

Risks Related to the Merger

If holders of 30% or more of the Public Shares vote against the proposed Merger, Prospect will be forced to liquidate, and Prospect stockholders may receive less than $9.88 per share and the warrants will expire and be worthless.

        Pursuant to Prospect's amended and restated certificate of incorporation, if holders of 30% or more of the Public Shares vote against the proposed Merger and elect to convert their shares to cash, Prospect will not be able to close the Merger with Kennedy-Wilson and will be forced to liquidate in accordance with the terms of its amended and restated certificate of incorporation because it will not be able to consummate a business combination by November 14, 2009. In any liquidation, the net proceeds of Prospect's IPO held in the Trust Account, plus any interest earned thereon, less up to $2,750,000 of interest which has been drawn for working capital purposes and less taxes, will be distributed on a pro rata basis to the holders of Public Shares. As of                         , 2009 (the record date), there was approximately $                         per share in the Trust Account after accounting for taxes owing and Prospect's working capital. Upon liquidation there will be no distribution with respect to Prospect's outstanding warrants and, accordingly, the warrants will expire and be worthless.

Working capital will be reduced if any of Prospect's holders of Public Shares exercise their right to convert their common stock into cash and a reduction in working capital may adversely affect the post-Merger company's business and future operations.

        Pursuant to Prospect's amended and restated certificate of incorporation, holders of Public Shares may vote against the Merger Proposal and demand that Prospect convert their shares into a pro rata share of the Trust Account, calculated as of two business days prior to the anticipated consummation of the Merger. Prospect and Kennedy-Wilson will not consummate the Merger if holders of 30% or more of the Public Shares exercise these conversion rights. If no holders elect to convert their Public Shares, the Trust Account will be approximately $                         million at closing. If the Merger is consummated and holders of Public Shares have demanded to convert their shares, there will be a corresponding reduction in the amount of funds available to the post-Merger company's business and future operations. If conversion rights are exercised with respect to 7,499,999 shares, which is one share

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less than the 30% of the Public Shares, the maximum potential conversion cost would be approximately $                         million.

Prospect's outstanding Sponsors Warrants may be exercised in the future, which would increase the number of shares eligible for future resale in the public market and result in dilution to Prospect's stockholders.

        Outstanding redeemable Sponsors Warrants to purchase an aggregate of 5,250,000 shares of common stock issued to the Prospect founders in a private placement concurrent with the IPO will become exercisable upon the consummation of the Merger, assuming it is completed. These Sponsors Warrants likely will be exercised only if the exercise price is below the market price of Prospect common stock. To the extent such Sponsors Warrants are exercised, additional shares of Prospect common stock will be issued, which will result in dilution to Prospect's stockholders and increase the number of shares of common stock eligible for resale in the public market. Sales of such shares of common stock, as well as the sale of common stock issued pursuant to the 2009 Plan, in the public market could adversely affect the market price of Prospect common stock.

Prospect's founders, including its officers and directors, control a substantial interest in Prospect and thus may influence certain actions requiring a stockholder or warrantholder vote.

        The Prospect founders (including all of its officers and directors) collectively own 20% of its issued and outstanding shares of common stock as of the record date. Immediately prior to and subject to consummation of the Merger, 2,575,000 founder shares will be cancelled and forfeited. As a result of this forfeiture, at the consummation of the Merger, the founders will own 3,675,000 shares of Prospect common stock. Prospect's founders, because of their ownership position, will continue to exert control at least until the consummation of the Merger. In the event that Prospect's sponsors, initial stockholders, officers or directors purchase additional shares of Prospect's common stock or Prospect's Public Warrants in the open market, Prospect believes that they will vote any such shares acquired by them in favor of the Merger Proposal and in favor of the Charter Amendment Proposal and will vote any Public Warrants acquired by them in favor of the Warrant Amendment Proposal. The sponsors are also expected to vote their Sponsor's Warrants in favor of the Warrant Amendment Proposal as well. Thus, any additional purchase of shares of Prospect's common stock or Public Warrants by its sponsors, initial stockholders, officers or directors would likely allow them to exert additional influence over the approval of these proposals.

Prospect's management's ability to require holders of its warrants to exercise such warrants on a cashless basis will cause holders to receive fewer shares of common stock upon their exercise of the warrants than they would have received had they been able to exercise their warrants for cash.

        If Prospect calls its warrants for redemption after the redemption criteria have been satisfied, Prospect's management will have the option to require any holder that wishes to exercise his warrant to do so on a "cashless basis." In such event, each holder would pay the exercise price by surrendering the warrants for that number of shares of common stock equal to the quotient obtained by dividing (x) the product of the number of shares of common stock underlying the warrants, multiplied by the difference between the exercise price of the warrants and the "fair market value" and (y) the fair market value. The "fair market value" shall mean the average reported last sale prices of Prospect common stock for the 10 trading days ending on the third trading day prior to the date on which notice of redemption is sent to the holders of the warrants. If Prospect's management chooses to require holders to exercise their warrants on a cashless basis, the number of shares of common stock received by a holder upon exercise will be fewer than it would have been had such holder exercised his warrants for cash. This will have the effect of reducing the potential "upside" of the holder's investment in Prospect.

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Prospect may redeem a warrantholder's unexpired warrants prior to their exercise at a time that is disadvantageous to them, thereby making such warrants worthless.

        Assuming approval of the Warrant Amendment Proposal, Prospect will have the ability to redeem outstanding warrants (other than warrants held by Prospect founders or their permitted transferees) at any time after they become exercisable and prior to their expiration, at a price of $0.01 per warrant, provided that the last reported sales price of Prospect common stock equals or exceeds $19.50 per share for any 20 trading days within a 30 trading day period ending on the third business day prior to proper notice of such redemption provided that on the date Prospect gives notice of redemption and during the entire period thereafter until the time Prospect redeems the warrants, Prospect has an effective registration statement under the Securities Act covering the shares of common stock issuable upon exercise of the warrants and a current prospectus relating to them is available. Redemption of the outstanding warrants could force a warrant holder (i) to exercise its warrants and pay the exercise price therefor at a time when it may be disadvantageous for it to do so, (ii) to sell its warrants at the then-current market price when it might otherwise wish to hold such warrants, or (iii) to accept the nominal redemption price that, at the time the outstanding warrants are called for redemption, is likely to be substantially less than the market value of the warrants.

If Prospect's founders or its sponsors or their permitted transferees exercise their registration rights with respect to the founders shares or Sponsors Warrants and underlying securities, it may have an adverse effect on the market price of Prospect's common stock.

        The Prospect founders or their permitted transferees are entitled to up to three demands that Prospect register the resale of the founders shares at any time generally commencing nine months after the consummation of the Merger. Additionally, Prospect's sponsors or their permitted transferees are entitled to up to three demands that it register the resale of their Sponsors Warrants and underlying shares of common stock at any time after Prospect consummates the Merger. Prospect will bear the cost of registering these securities. If such individuals exercise their registration rights with respect to all of their securities, then there will be an additional 3,675,000 shares of common stock and 5,250,000 warrants (as well as the 5,250,000 shares of common stock underlying the warrants) eligible for trading in the public market. The presence of these additional securities trading in the public market may have an adverse effect on the market price of Prospect's common stock. In addition, the existence of these rights may make it more difficult to effectuate the Merger or increase the cost of acquiring Kennedy-Wilson as their stockholders may be discouraged from approving the Merger with Prospect because of the potential negative effect the exercise of such rights may have on the trading market for Prospect's common stock.

If you do not vote your Public Shares at the special meeting of Prospect stockholders AGAINST the Merger or give instructions to your broker to vote AGAINST the Merger and demand that Prospect convert your shares into cash you will NOT be eligible to exercise your conversion rights and receive a portion of the Trust Account upon consummation of the Merger.

        If you are a holder of Public Shares, you have the right to vote against the Merger Proposal and demand that Prospect convert your shares into a pro rata portion of the Trust Account. To exercise your conversion rights, you must (i) affirmatively vote against the Merger Proposal by proxy or in person at the special meeting of Prospect stockholders, (ii) present written instructions to Prospect's transfer agent no later than one business day prior to the vote on the Merger Proposal stating that you wish to convert your shares into cash, (iii) continue to hold your shares through the closing date of the Merger, and (iv) tender your shares to Prospect's transfer agent within the period specified in a notice you will receive from or on behalf of Prospect, which period will be not be less than 20 days. You may tender your shares by either delivering your stock certificate to the transfer agent or by delivering your shares electronically using the Depository Trust Company's DWAC (Deposit/Withdrawal At Custodian)

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System. Any action that does not include an affirmative vote AGAINST the Merger will prevent you from exercising your conversion rights. You may exercise your conversion rights either by checking the box on the proxy card or by submitting your request in writing to James J. Cahill, Prospect's secretary, at the address listed in this proxy statement/prospectus.

        If, notwithstanding your negative vote, the Merger is completed, then, if you have properly exercised your conversion rights, you will be entitled to receive a pro rata portion of the Trust Account, including any interest earned thereon, calculated as of two business days prior to the date of the consummation of the Merger. If you exercise your conversion rights, then you will be exchanging your shares of Prospect common stock for cash and you will no longer own these shares. However, if the Merger is not completed, then these shares will not be converted into cash. Your vote on any proposal other than the Merger Proposal will have no impact on your right to seek conversion. If no more than 30% of the outstanding Public Shares (minus one share) are converted (7,499,999 shares), Prospect may still consummate the Merger. If Prospect does not consummate a business combination by November 14, 2009, Prospect will liquidate and stockholders will receive their per-share distribution from the Trust Account.

The post-Merger company may incur expenses associated with defending law suits filed by Kennedy-Wilson Holders.

        Kennedy-Wilson's common stock is currently traded on the Pink Sheets Electronic OTC, and a small percentage of Kennedy-Wilson's outstanding common stock is owned by holders who are not known to Kennedy-Wilson's management. If one or more of these holders were to bring a claim alleging that members of Kennedy-Wilson's board of directors breached their fiduciary duties in connection with approving the Merger, Kennedy-Wilson and the post-Merger company would incur costs defending and/or settling such claim.

Upon consummation of the Merger, the post-Merger company's directors and officers and their affiliates will be significant stockholders, which will make it possible for them to have significant influence over the outcome of all matters submitted to stockholders for approval and which influence may be alleged to conflict with the post-Merger company's interests and the interests of its other stockholders.

        Upon the consummation of the Merger, the post-Merger company's directors and executive officers and their respective affiliates will own an aggregate of approximately 38.2% of the outstanding shares of Prospect common stock assuming no Public Shares are converted upon consummation of the Merger. The post-Merger company's directors and executive officers and their respective affiliates also will hold warrants, which if exercised, will give them greater control of the post-Merger company. These stockholders will have significant influence over the outcome of all matters submitted for stockholder approval, including the election of the post-Merger company's directors and other corporate actions. In addition, such influence by one or more of these affiliates could have the effect of discouraging others from attempting to purchase or take over the post-Merger company and/or reducing the market price offered for Prospect common stock in such an event.

Prospect's current directors, executive officers and/or affiliates beneficially own shares of common stock and warrants that will be worthless if the Merger is not consummated by November 14, 2009. Such interests may have influenced their decision to approve the business combination with Kennedy-Wilson.

        Certain Prospect directors, executive officers and/or their affiliates beneficially own common stock in Prospect that they purchased prior to Prospect's IPO. Additionally, some of Prospect's founders, who also serve as Prospect's directors and executive officers, or their affiliates, purchased 5,250,000 Sponsors Warrants in a private placement that occurred simultaneously with Prospect's IPO. Additionally, a

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founder purchased 200,000 Public Warrants on the open market after the IPO. Prospect's directors, executive officers and their affiliates are not entitled to receive any of the cash proceeds that will be distributed upon Prospect's liquidation with respect to common stock these individuals acquired prior to Prospect's IPO. Therefore, if the Merger is not consummated prior to November 14, 2009 and Prospect is forced to liquidate, such shares held by such persons will be worthless. This will also be true with respect to their Sponsors Warrants. As of                         , 2009 (the record date), Prospect's directors, executive officers and their affiliates held $                         in common stock (based on a market price of $                        ) and 5,250,000 Sponsors Warrants, which are not publicly traded and will have an exercise price of $12.50 per warrant (assuming approval of the Warrant Amendment Proposal) and 200,000 Public Warrants, which are publicly traded.

        These financial interests of Prospect's directors, executive officers and their affiliates may have influenced their decision to approve the Merger and to continue to pursue the Merger. In considering the recommendations of Prospect's board of directors to vote for the Merger Proposal and other proposals, you should consider these interests.

Prospect's Chairman and Chief Executive Officer, David A. Minella and each of LLM Structured Equity Fund L.P. and LLM Investors L.P., entities affiliated with Patrick J. Landers, a director and Prospect's President, are jointly liable to ensure that proceeds of the Trust Account are not reduced by vendor claims in the event the business combination is not consummated. Such liability may have influenced their decision to approve the business combination with Kennedy-Wilson.

        If Prospect liquidates prior to the consummation of the Merger, David A. Minella, and each of LLM Structured Equity Fund L.P. and LLM Investors L.P., have agreed, pursuant to an agreement with Prospect and Citigroup, the representative of the underwriters in the IPO, that if Prospect liquidates prior to the consummation of a business combination, they will be jointly liable to ensure that the proceeds in the Trust Account are not reduced by the claims of target businesses or vendors or other entities that are owed money by Prospect for services rendered or contracted for or products sold to Prospect, other than with respect to amounts claimed by any third-party who executed a waiver (even if such waiver is subsequently found to be invalid and unenforceable). Prospect cannot assure you that they would be able to satisfy those obligations. Pursuant to the underwriting agreement between Prospect and Citigroup, Prospect agreed not to commence its due diligence investigation of any operating business which it sought to acquire or obtain the services of any vendor without using its best efforts to obtain an agreement pursuant to which such party would waive any claims against the Trust Account. As of the date of this proxy statement/prospectus, Prospect has received waiver agreements from each of its vendors other than its independent registered accounting firm and Kennedy-Wilson with respect to certain provisions of the Merger Agreement. There is currently an outstanding balance to Prospect's independent registered accounting firm of approximately $112,000 and Prospect intends to pay such fees in full in accordance with its past practices. Further, under the Merger Agreement, Kennedy-Wilson agreed to waive all rights, title and claims to the Trust Account, except for $10,000,000, in case of breach by Prospect of its no-shop/non-solicit provision.

If Prospect is unable to complete the Merger by November 14, 2009, Prospect's corporate existence will terminate and Prospect will be forced to liquidate. In such event, third parties may bring claims against Prospect and, as a result, the proceeds held in trust could be reduced and the per-share liquidation price received by stockholders could be less than $9.88 per share.

        Prospect must complete the Merger with Kennedy-Wilson by November 14, 2009, when Prospect's corporate existence will terminate and Prospect will be required to liquidate. In such event, third parties may bring claims against Prospect, although Prospect has obtained waiver agreements from certain vendors and service providers. Prospect has engaged, and owes money to, third-party vendors and other entities in connection with the negotiation with prospective target businesses. While most

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parties have waived any right, title, interest or claim of any kind they may have in or to any monies held in the Trust Account, there is no guarantee that they or other vendors who did not execute such waivers will not seek recourse against the Trust Account notwithstanding such agreements. Furthermore, there is no guarantee that a court will uphold the validity of such agreements. Accordingly, the proceeds held in the Trust Account could be subject to claims that could take priority over those of Prospect's stockholders. Additionally, if Prospect is forced to file a bankruptcy case or an involuntary bankruptcy case is filed against Prospect which is not dismissed, the proceeds held in the Trust Account could be subject to applicable bankruptcy law, and may be included in Prospect's bankruptcy estate and subject to the claims of third parties with priority over the claims of Prospect's stockholders. If any bankruptcy or other claims deplete the Trust Account, Prospect cannot assure you that it will be able to return to Prospect's stockholders at least $9.88 per share.

Prospect's stockholders may be held liable for claims by third parties against Prospect to the extent of distributions received by Prospect's stockholders.

        If Prospect is unable to complete the Merger with Kennedy-Wilson by November 14, 2009, Prospect will be liquidated. Under Sections 280 through 282 of the DGCL, stockholders may be liable for claims by third parties against a corporation to the extent of distributions received by them. Pursuant to Section 280, if the corporation complies with certain procedures intended to ensure that it makes reasonable provisions for all claims against it, including a 60 day notice period during which any third-party claims can be brought against the corporation, a 90 day period during which the corporation may reject any claim brought and an additional 150 day waiting period before any liquidating distributions are made to stockholders, any liability of a stockholder with respect to a liquidating distribution is limited to the lesser of such stockholder's pro rata share of the claim or the amount distributed to the stockholder, and any liability of the stockholder would be barred after the third anniversary of the liquidation. Prospect will seek to conclude the process as soon as possible and as a result does not intend to comply with those procedures.

        Because Prospect will not be complying with those procedures, Prospect is required, pursuant to Section 281 of the DGCL, to adopt a plan that will provide for Prospect's payment, based on facts known to Prospect at such time, of (i) all existing claims, (ii) all pending claims, and (iii) all claims that may be potentially brought against Prospect within the subsequent 10 years. Accordingly, Prospect would be required to provide for any creditors known to Prospect at that time or those that Prospect believes could be potentially brought against Prospect within the subsequent 10 years prior to distributing the funds held in the Trust Account to Prospect's stockholders. All claims that may be potentially brought against Prospect may not be properly assessed. As such, Prospect's stockholders could potentially be liable for any claims to the extent of distributions received by them in a liquidation and any liability of Prospect's stockholders may extend well beyond the third anniversary of such liquidation. Accordingly, third parties may seek to recover from Prospect's stockholders amounts owed to them by Prospect.

        Additionally, if Prospect is forced to file a bankruptcy case or an involuntary bankruptcy case is filed against Prospect that is not dismissed, any distributions received by Prospect's stockholders in Prospect's liquidation might be viewed under applicable debtor/creditor and/or bankruptcy laws as either a "preferential transfer" or a "fraudulent conveyance." As a result, a bankruptcy court could seek to recover all amounts received by Prospect's stockholders in Prospect's liquidation. Furthermore, because Prospect intends to distribute the proceeds held in the Trust Account to Prospect's stockholders as soon as possible after Prospect's liquidation, this may be viewed or interpreted as giving preference to Prospect's stockholders over any potential creditors with respect to access to or distributions from Prospect's assets. Furthermore, Prospect's board of directors may be viewed as having breached their fiduciary duties to Prospect's creditors and/or may have acted in bad faith, thereby exposing Prospect's board of directors and Prospect to claims of punitive damages, by paying

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Prospect's stockholders from the Trust Account prior to addressing the claims of creditors and/or complying with certain provisions of the DGCL with respect to Prospect's liquidation. Claims may be brought against Prospect for these reasons.

Neither Prospect nor its stockholders will have the protection of any practical indemnification, escrow, price adjustment or other provisions that allow for recourse in the event that any of the representations and warranties made by Kennedy-Wilson in the Merger Agreement prove to be inaccurate or incorrect.

        The representations and warranties made by Prospect and Kennedy-Wilson to each other in the Merger Agreement generally will survive the completion of the Merger for a period of twelve months. Only Kennedy-Wilson, which will be a wholly-owned subsidiary of Prospect, and not Kennedy-Wilson's stockholders, is providing indemnification to Prospect for breaches of Kennedy-Wilson's representations and warranties in the Merger Agreement. This means Prospect would be seeking to recover damages from its own subsidiary. Kennedy-Wilson's liability is capped at $10,000,000 with a $1,000,000 deductible. In addition, there is no escrow for indemnification and no purchase price adjustment if Kennedy-Wilson's financial position is different than what was represented to Prospect. As a result, Prospect and its stockholders will not have the protection of additional escrow, price adjustment or other provisions that present a real opportunity to recover damages or for a post-closing adjustment to be made to the Merger consideration if any representation or warranty made by Kennedy-Wilson in the Merger Agreement proves to be inaccurate or incorrect.

Prospect and Kennedy-Wilson expect to incur significant costs associated with the Merger, whether or not the Merger is completed, which will reduce the amount of cash available for other corporate purposes.

        Both Prospect and Kennedy-Wilson expect to incur significant costs associated with the Merger, whether or not the Merger is completed. These costs will reduce the amount of cash available for other corporate purposes. Prospect estimates that it will incur direct transaction costs of approximately $3.3 million associated with the Merger, which will be recorded as financing expense for accounting purposes if the Merger is completed. Kennedy-Wilson estimates that it will incur direct transaction costs of approximately $4.8 million, which will be recorded as share issuance costs for accounting purposes if the Merger is completed. In addition, upon completion of the Merger, Prospect will be required to pay $6,000,000 of previously accrued deferred underwriting fees to Citigroup (the underwriters have agreed to forgo $4,000,000 of deferred underwriting compensation otherwise payable to them in connection with, and in accordance with the terms of, the underwriting agreement for the IPO), plus $3,000,000 in cash fees for acting as Prospect's financial advisor in connection with the Merger. The actual costs may exceed these estimates. In addition, the post-Merger company may incur additional material charges reflecting additional costs associated with the arrangement in fiscal quarters subsequent to the quarter in which the Merger is completed. There is no assurance that the significant costs associated with the Merger will prove to be justified in light of the benefits ultimately realized.

Kennedy-Wilson has not waived its right to proceed against the assets in the Trust Account in the event of a breach by Prospect or its representatives of certain no-shop/non-solicit provisions in the Merger Agreement and Kennedy-Wilson may be liable for a break-up fee if it should fail to receive stockholder approval for the Merger.

        Pursuant to the Merger Agreement, Kennedy-Wilson has generally agreed that it may not proceed against the Trust Account to the extent it may have claims for damages arising out of the proposed Merger and the Merger Agreement. However, this waiver does not extend to damages arising from Prospect's or its representatives' breach of an agreement not to seek to consummate a different business combination. If Prospect or its representatives should breach this provision, Kennedy-Wilson

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would have the right to proceed against assets in the Trust Account, up to a maximum of $10,000,000, which would reduce the amount of cash available in the Trust Account. In addition, if either party terminates the Merger Agreement because Kennedy-Wilson fails to receive its common stockholder approval for the Merger by November 14, 2009, Kennedy-Wilson is obligated to pay to Prospect $10,000,000 as liquidated damages. If such amount is not paid within 30 days after termination of the Merger Agreement, interest will begin to accrue on this amount. This payment would reduce the amount of working capital available to Kennedy-Wilson.

As a result of the Merger, the ownership interest of Prospect's current stockholders will be substantially reduced, resulting in a dilution of Prospect's current stockholders' voting power.

        In connection with the consummation of the Merger, Prospect will issue 30.115 million shares of Prospect common stock, including 26 million shares to be issued to Kennedy-Wilson stockholders, 375,000 shares to be issued to DGA, and 3,740,000 shares to be issued to employees of Kennedy-Wilson under the 2009 Plan. The issuance of these 30.115 million shares of Prospect common stock (offset in part by the forfeiture of 2.575 million shares by the Prospect founders), will dilute Prospect's existing stockholders' voting interest from 100% to approximately 48.8% of the post-Merger company's voting interests (assuming none of Prospect's stockholders exercise their conversion rights), and approximately 41.3% of the post-Merger company's voting interests (assuming 29.99% of Prospect's stockholders exercise their conversion rights).

        While a majority of the proposed members of the post-Merger board of directors are considered "independent" under the listing standards of AMEX, the post-Merger company's board will contain six members of Kennedy-Wilson's existing board of directors and one member of Prospect's existing board of directors. In addition, certain officers of Kennedy-Wilson will become officers of Prospect. The directors who were formerly directors of Kennedy-Wilson and the officers who were formerly officers of Kennedy-Wilson may align their interests with those of the former stockholders of Kennedy-Wilson rather than those of the stockholders of Prospect prior to the Merger.

        In addition, following the Merger, Prospect's outstanding common stock will be subject to substantial potential dilution by outstanding Prospect warrants and, if the Equity Participation Plan Proposal is approved, by future awards granted under the 2009 Plan.

The post-Merger company may issue additional equity securities which may dilute your interest in the post-Merger company.

        In order to expand the post-Merger company's business, the post-Merger company may consider offering and issuing additional equity or equity-based securities. Holders of the post-Merger company's securities may experience a dilution in the net tangible book value per share held by them if this occurs. The number of shares that the post-Merger company may issue for cash without stockholder approval will be limited by the rules of the exchange on which the post-Merger company's securities are then listed. However, there are generally exceptions which allow companies to issue a limited number of equity securities which would dilute your ownership.

The ownership interest of Prospect's current stockholders will be substantially diluted with the assumption of the Guardian Note.

        In connection with the Merger, Prospect has agreed to assume the Guardian Note which bears interest at a fixed rate of 7% payable quarterly, the outstanding balance of which is due on November 3, 2010. Under the terms of the Guardian Note, Guardian may convert, in whole or in part, the outstanding principal balance and accrued interest into common stock at a conversion price of $10.52 per share any time prior to the tenth anniversary of the original issue date. To the extent the Guardian Note is converted, additional shares of the post-Merger company's common stock will be

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issued, which will result in dilution to the post-Merger company's stockholders and increase the number of shares of common stock eligible for resale into the public market. Sales of such shares of common stock could adversely affect the market price of the post-Merger company's common stock.

If the Merger's benefits do not meet the expectations of financial or industry analysts, the market price of the post-Merger company's common stock may decline.

        The market price of the post-Merger company's common stock may decline as a result of the Merger if:

        Accordingly, the post-Merger company's stockholders may experience a loss as a result of a decline in the market price of Prospect common stock. In addition, a decline in the market price of the post-Merger company common stock could adversely affect the post-Merger company's ability to issue additional securities and the post-Merger company's ability to obtain additional financing in the future.

The price of the post-Merger company's common stock after the consummation of the Merger may be volatile.

        The price of the post-Merger company's common stock after the consummation of the Merger may be volatile, and may fluctuate due to factors such as:

If Prospect is unable to consummate the Merger or another business combination, Prospect's holders of Public Shares will be forced to wait before receiving liquidation distributions.

        Prospect has until November 14, 2009 to consummate the Merger or another business combination. If Prospect does not consummate the Merger or another business combination during such time period, Prospect will liquidate in accordance with its amended and restated certificate of incorporation. Prospect has no obligation to return funds to Prospect's stockholders prior to such date unless Prospect consummates the Merger or another business combination prior thereto and only then in cases where Prospect's stockholders have sought conversion of their shares. Only after the expiration of this period will Prospect's stockholders be entitled to liquidation distributions if Prospect is unable to complete the Merger or another business combination. Further, Prospect may not be able to disburse

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the funds in the Trust Account immediately following November 14, 2009, until it has commenced the liquidation process in accordance with its amended and restated certificate of incorporation and the DGCL. If Prospect has not consummated the Merger or another business combination by November 14, 2009, Prospect will automatically liquidate without the need for a stockholder vote.

If the Merger is not consummated, time and resources spent by Prospect in pursuit of the Merger will have been wasted, and Prospect likely will not have time to locate and acquire or merge with another business.

        The investigation of Kennedy-Wilson and the negotiation, drafting, and execution of relevant agreements, disclosure documents, and other instruments in connection with the Merger have required substantial management time and attention, along with substantial costs for accountants, attorneys and others. If a decision is made to not complete the Merger, the costs incurred up to that point for the Merger likely would not be recoverable. Furthermore, Prospect may fail to consummate the Merger for any number of reasons including those beyond Prospect's control, such as if the number of Prospect's stockholders who vote against the Merger Proposal and properly exercise their conversion rights represent more than 30% (minus one share) of the outstanding Public Shares. Such an event would result in a loss to Prospect of the related costs incurred which could materially adversely affect Prospect's subsequent attempts to locate and acquire or merge with another business.

Prospect's holders of Public Shares could vote against the Merger Proposal and exercise their conversion rights and a large number of warrantholders could opt for the Cash Exchange, resulting in less working capital for the post-Merger company.

        If some of the current Prospect holders of Public Shares vote against the Merger Proposal and decide to convert their shares of Prospect common stock for cash upon consummation of the Merger and if up to one hundred percent of the Prospect warrantholders elect the Cash Exchange in the context of the Warrant Amendment Proposal, it would deplete the amount of cash available to the post-Merger company upon consummation of the Merger. The post-Merger company may be unable to implement its business plan if the maximum number of Prospect's holders of Public Shares exercised their conversion rights and one hundred percent of Prospect warrantholders elect the Cash Exchange option.

Prospect does not have any operations and Kennedy-Wilson has not recently operated as a "reporting company". Fulfilling the post-Merger company's obligations as a "reporting company" after the Merger will be expensive and time consuming.

        Kennedy-Wilson has not been a public reporting company since 2004 and since that time has not been required to document and assess the effectiveness of its internal control procedures in order to satisfy the requirements of Section 404 of the Sarbanes-Oxley Act of 2002. Although Prospect has maintained disclosure controls and procedures and internal control over financial reporting as required under the federal securities laws with respect to its activities, Kennedy-Wilson has not been required to establish and maintain such disclosure controls and procedures and internal controls over financial reporting as will be required with respect to a public company with substantial operations. Under the Sarbanes-Oxley Act of 2002 and the related rules and regulations of the SEC, Kennedy-Wilson will be required to implement additional corporate governance practices and to adhere to a variety of reporting requirements and accounting rules. Compliance with these obligations will require significant time and resources from Kennedy-Wilson's management, finance and accounting staff and will significantly increase Kennedy-Wilson's legal, insurance and financial compliance costs. As a result of the increased costs associated with being a "reporting company," Kennedy-Wilson's operating income as a percentage of revenue is likely to be lower.

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The completion of the Merger could result in disruptions in business, loss of customers or contracts or other adverse effects.

        The completion of the Merger may cause disruptions, including potential loss of customers and other business partners, and have material adverse effects on the post-Merger company's business and operations. It is possible that Kennedy-Wilson's pre-Merger customers and other business partners, in response to the completion of the Merger, may adversely change or terminate their relationships with the post-Merger company, which could have a material adverse effect on the business of the post-Merger company.

The pro forma condensed combined financial statements are not an indication of the post-Merger company's financial condition or results of operations following the Merger.

        The pro forma condensed combined financial statements contained in this proxy statement/prospectus are not an indication of the post-Merger company's financial condition or results of operations following the Merger. The pro forma condensed combined financial statements have been derived from the historical financial statements of Prospect and Kennedy-Wilson and many adjustments and assumptions have been made regarding the post-Merger company after giving effect to the Merger. The information upon which these adjustments and assumptions have been made is preliminary, and these kinds of adjustments and assumptions are difficult to make with complete accuracy. As a result, the actual financial condition and results of operations of the post-Merger company may not be consistent with, or evident from, these pro forma financial statements. In addition, the actual earnings per share ("EPS"), of the post-Merger company may decrease below that reflected in the pro forma condensed combined financial statements for several reasons. The assumptions used in preparing the pro forma financial statements may not prove to be accurate and other factors may affect the post-Merger company's actual EPS following the Merger.

AMEX may delist Prospect's securities from quotation on its exchange, which could limit your ability to trade Prospect securities and subject Prospect to additional trading restrictions.

        Prospect's securities are listed on AMEX, a national securities exchange. Although Prospect currently satisfies the minimum listing standards set forth in Section 101 of the AMEX Company Guide, which only requires that it meet certain requirements relating to stockholders' equity, market capitalization, aggregate market value of publicly held shares and distribution requirements, Prospect cannot assure you that its or the post-Merger company's securities will continue to be listed on AMEX in the future. Additionally, in connection with the Merger, it is likely that AMEX will require Prospect to file a new initial listing application and meet its initial listing requirements as opposed to its more lenient continued listing requirements. Even if such application is accepted, the post-Merger company may be unable to maintain the listing of its securities in the future.

        If AMEX delists Prospect's or the post-Merger company's securities from trading on its exchange, Prospect could face significant material adverse consequences, including:

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Activities taken by existing Prospect's stockholders to increase the likelihood of approval of the Merger Proposal and other proposals could have a depressive effect on the value of Prospect common stock.

        At any time prior to the special meeting of Prospect stockholders, during a period when they are not then aware of any material non-public information regarding Prospect or its securities, the Prospect founders, Kennedy-Wilson and Kennedy-Wilson Holders and/or their respective affiliates may purchase shares of Prospect common stock or Public Warrants from institutional and other investors, or execute agreements to purchase such shares or Public Warrants from them in the future, or they may enter into transactions with such persons and others to provide them with incentives to acquire shares of Prospect common stock or Public Warrants and vote the acquired shares or Public Warrants in favor of the Merger Proposal or the Warrant Amendment Proposal, as applicable. The purposes of such common stock or Public Warrant purchases and other transactions would be (i) to increase the likelihood of satisfaction of the requirements that holders of a majority of the Public Shares present at the special meeting of Prospect stockholders in person or by proxy and eligible to vote thereon vote in favor of the Merger Proposal, (ii) to increase the likelihood that holders of fewer than 30% of the Public Shares vote against the Merger Proposal and demand conversion of their Public Shares into cash or (iii) to increase the likelihood that the holders of a majority of Public Warrants vote in favor of the Warrant Amendment Proposal. Entering into any such arrangements may have a depressive effect on the value of Prospect common stock or Public Warrants. Prospect will not enter into any such arrangement, either prior to or after the consummation of the Merger, and no funds in its Trust Account will be used to make such purchases or to fund other such arrangements.

An investor will only be able to exercise a Prospect warrant if the issuance of Prospect common stock upon such exercise has been registered or qualified or is deemed exempt under the securities laws of the state of residence of the holder of the warrants.

        No Prospect warrants will be exercisable, and Prospect is not required to issue shares of Prospect common stock, unless the Prospect common stock issuable upon such exercise has been registered or qualified or deemed to be exempt under the securities laws of the state of residence of the holder of the warrants. Because the exemptions from qualification in certain states for resales of warrants and for issuances of common stock by the issuer upon exercise of a warrant may be different, a warrant may be held by a holder in a state where an exemption is not available for issuance of Prospect common stock upon exercise and the holder will be precluded from exercise of the warrant. After the closing of the Merger, the Prospect warrants will be exercisable and Prospect expects the Prospect common stock and warrants to be listed on a national securities exchange, which would provide an exemption from registration in every state. If Prospect's securities are not so listed or another exemption is not available, Prospect would be required to register the warrants in every state. Accordingly, Prospect believes holders in every state will be able to exercise their warrants as long as Prospect's prospectus relating to the Prospect common stock issuable upon exercise of the Prospect warrants is current. However, the market for the Prospect warrants may be limited and the holders of the Prospect warrants may not be able to exercise their warrants if the Prospect common stock issuable upon such exercise is not qualified or exempt from qualification in the jurisdictions in which the holders of the Prospect warrants reside.

Although Prospect has agreed to maintain the effectiveness of the registration statement registering the shares of Prospect common stock issuable upon exercise of Prospect warrants, an effective registration statement may not be in place when an investor desires to exercise warrants, thus precluding such investor from being able to exercise its warrants.

        Prospect is not required to issue shares of Prospect common stock unless, at the time such holder seeks to exercise such warrant, Prospect has a registration statement under the Securities Act in effect covering the shares of Prospect common stock issuable upon the exercise of the warrants and a current

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prospectus relating to the common stock. Under the terms of the Warrant Agreement, as amended, Prospect has agreed to use its best efforts to have a registration statement in effect covering the shares of Prospect common stock issuable upon exercise of the Prospect warrants from the date of the closing until the expiration of the warrants and to maintain a current prospectus relating to the common stock issuable upon exercise of the warrants. However, Prospect cannot assure holders of the Prospect warrants that it will be able to do so, and if it does not maintain a current prospectus related to the common stock issuable upon exercise of Prospect warrants, holders will be unable to exercise their warrants. If the prospectus relating to the common stock issuable upon the exercise of Prospect warrants is not current, Prospect will have no obligation to settle the warrants for cash or by net settlement, and in such event the market for such warrants may be limited. While Prospect intends to list the warrants on AMEX and to maintain such listing during the period in which the warrants are exercisable, there can be no assurance that the listing will be approved or that Prospect will be successful in maintaining the listing.

Prospect's staggered board may entrench management and discourage unsolicited stockholder proposals that may be in the best interests of stockholders and certain anti-takeover provisions in Prospect's organizational documents may discourage a change in control.

        Prospect's proposed amended and restated certificate of incorporation provides that its board of directors will be divided into three classes, each of which will generally serve for a term of three years with only one class of directors being elected in each year. As a result, at any annual meeting only a minority of the board of directors will be considered for election. Since this "staggered board" would prevent its stockholders from replacing a majority of its board of directors at any annual meeting, it may entrench management and discourage unsolicited stockholder proposals that may be in the best interests of stockholders. Additionally, following the consummation of the Merger, certain provisions of Prospect's second amended and restated certificate of incorporation and Prospect's amended and restated bylaws may have an anti-takeover effect and may delay, defer or prevent a tender offer or takeover attempt that a stockholder might consider in its best interest, including those attempts that might result in a premium over the market price for the shares held by stockholders.

        These provisions provide for, among other things:

        In addition, Section 203 of the DGCL may, under certain circumstances, make it more difficult for a person who would be an "interested stockholder," which is defined generally as a person with 15% or more of a corporation's outstanding voting stock, to effect a "business combination" with the corporation for a three-year period. A "business combination" is defined generally as mergers, consolidations and certain other transactions, including sales, leases or other dispositions of assets with an aggregate market value equal to 10% or more of the aggregate market value of the corporation.

        These anti-takeover provisions could make it more difficult for a third party to acquire Prospect, even if the third party's offer may be considered beneficial by many stockholders. As a result, stockholders may be limited in their ability to obtain a premium for their shares.

The receipt of Prospect common stock by Kennedy-Wilson stockholders may be taxable if the Merger does not qualify as a tax-free reorganization.

        It is intended that the Merger will qualify as a reorganization for United States federal income tax purposes within the meaning of Section 368(a) of the Code. If the Merger is treated as such a reorganization, no gain or loss will be recognized by United States Holders (as such term is defined in

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"The Merger Proposal—Material United States Federal Income Tax ConsequencesGeneral") of Kennedy-Wilson common stock or preferred stock who receive solely shares of Prospect common stock in exchange for Kennedy-Wilson stock pursuant to the Merger. If the Merger should fail to qualify as a reorganization within the meaning of Section 368(a) of the Code, a United States Holder of Kennedy-Wilson common stock or preferred stock generally will recognize capital gain or loss with respect to its Kennedy-Wilson common stock or preferred stock if such shares are held as a capital asset at the time of the exchange. Such gain or loss generally will be equal to the difference, if any, between the United States Holder's tax basis in its Kennedy-Wilson common stock or preferred stock and the fair market value of the Prospect common stock received in the Merger. See "The Merger Proposal—Material United States Federal Income Tax Consequences—Tax Consequences of the Merger to United States Holders of Kennedy-Wilson Stock" for additional information.

If Prospect's due diligence investigation of Kennedy-Wilson was inadequate, then stockholders of Prospect following the Merger could lose some or all of their investment.

        Even though Prospect conducted a due diligence investigation of Kennedy-Wilson, it cannot be sure that this diligence investigation surfaced all material issues that may be present inside Kennedy-Wilson or its business, or that it would be possible to uncover all material issues through a customary amount of due diligence, or that factors outside of Kennedy-Wilson and its business and outside of its control will not later arise. In particular, given the number of properties in which Kennedy-Wilson has an interest, Prospect did only limited environmental due diligence. Even if Prospect's due diligence successfully identifies certain risks, unexpected risks may arise and previously known risks may materialize in a manner not consistent with Prospect's preliminary risk analysis.

Prospect may waive one or more of the conditions to the closing of the Merger without resoliciting stockholder or warrantholder approval.

        Prospect may agree to waive, in whole or in part, some of the conditions to its obligations to complete the Merger, to the extent permitted by applicable laws. Prospect's board of directors will evaluate the materiality of any waiver to determine whether amendment of this proxy statement/prospectus and resolicitation of proxies is warranted. In some instances, if Prospect's board of directors determines that a waiver is not sufficiently material to warrant resolicitation of stockholders or warrantholders, Prospect has the discretion to complete the Merger without seeking further stockholder or warrantholder approval.

The financial statements included in this proxy statement/prospectus do not take into account the consequences to Prospect of a failure to consummate a business combination by November 14, 2009.

        The financial statements included in this proxy statement/prospectus have been prepared assuming that Prospect would continue as a going concern. As discussed in Note 1 to the Notes to Prospect's Audited Financial Statements beginning on page F-8, Prospect is required to consummate an initial business combination by November 14, 2009. The possibility of the Merger or another business combination not being consummated raises substantial doubt as to Prospect's ability to continue as a going concern and the financial statements do not include any adjustments that might result from the outcome of this uncertainty.

Prospect securityholders at the time of the Merger who purchased Prospect units in the IPO and do not properly exercise their conversion rights with respect to their Public Shares may have rescission rights and related claims.

        There are several aspects of the Merger and the other matters described in this proxy statement/prospectus which were not described in the prospectus issued by Prospect in connection with its IPO. These include that Prospect may seek to amend the terms of the Warrant Agreement and exchange its

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outstanding Public Warrants for cash proceeds released from the Trust Account. Consequently, Prospect's exchange of a portion of the outstanding Public Warrants for cash might be grounds for a Prospect stockholder, unitholder or warrantholder who purchased Prospect units, shares or Public Warrants in the IPO, excluding the founders, and who still holds their Prospect units at the time of the Merger, or an IPO Purchaser, without seeking to convert their Public Shares into a pro rata portion of the Trust Account to seek rescission of their purchase of the Prospect units (or shares or Public Warrants) that such Prospect stockholder acquired in the IPO. A successful IPO Purchaser claimant for damages under federal or state law could be awarded an amount to compensate for the decrease in value of such securityholder's securities caused by the alleged violation (including, possibly, punitive damages), together with interest, while retaining the securities.

Risks If the Stockholder Adjournment Proposal Is Not Approved

If the Stockholder Adjournment Proposal is not approved, and an insufficient number of votes is obtained to authorize the consummation of the Merger, Prospect's board of directors will not have the ability to adjourn the special meeting of Prospect stockholders to a later date in order to solicit further votes, and, therefore, the Merger will not be approved and Prospect will be required to liquidate.

        Prospect's board of directors is seeking approval to adjourn the special meeting of Prospect stockholders to a later date or dates if, at the special meeting of Prospect stockholders, based upon the tabulated votes, there are insufficient votes to approve the consummation of the Merger. If the Stockholder Adjournment Proposal is not approved, Prospect's board of directors will not have the ability to adjourn the special meeting of Prospect stockholders to a later date and, therefore, will not have more time to solicit additional votes to approve the consummation of the Merger. In such event, the Merger would not be completed and Prospect will be required to liquidate if Prospect does not consummate a business combination by November 14, 2009.

Risks If the Warrantholder Adjournment Proposal Is Not Approved

If the Warrantholder Adjournment Proposal is not approved, and an insufficient number of votes is obtained to approve the Warrant Amendment Proposal, Prospect's board of directors will not have the ability to adjourn the special meeting of Prospect warrantholders to a later date in order to solicit further votes, and, therefore, the Merger will not be approved and Prospect will be required to liquidate.

        Prospect's board of directors is seeking approval to adjourn the special meeting of Prospect warrantholders to a later date or dates if, at the special meeting of Prospect warrantholders, based upon the tabulated votes, there are insufficient votes to approve the Warrant Amendment Proposal. If the Warrantholders Adjournment Proposal is not approved, Prospect's board of directors will not have the ability to adjourn the special meeting of Prospect warrantholders to a later date and, therefore, will not have more time to solicit additional votes to approve the Warrant Amendment Proposal. In such event, the Merger would not be completed and Prospect will be required to liquidate if Prospect does not consummate a business combination by November 14, 2009.

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SPECIAL MEETING OF PROSPECT WARRANTHOLDERS AND
SPECIAL MEETING OF PROSPECT STOCKHOLDERS

General

        Prospect is furnishing this proxy statement/prospectus to its warrantholders and stockholders as part of the solicitation of proxies by its board of directors for use at the special meeting of Prospect warrantholders and the special meeting of Prospect stockholders to be held on                          , 2009 and at any adjournment or postponement thereof. This proxy statement/prospectus is first being furnished to Prospect warrantholders and stockholders on or about                         , 2009. This proxy statement/prospectus provides you with information you need to know to be able to vote or instruct your vote to be cast at the special meeting of Prospect warrantholders and special meeting of Prospect stockholders, as applicable.

Date, Time and Place

        The special meeting of Prospect warrantholders will be held on                         , 2009, at 8:30 a.m. Eastern time, at 9130 Galleria Court, Suite 318, Naples, Florida 34109, or such other date, time and place to which such meeting may be adjourned or postponed. The special meeting of Prospect stockholders will be held immediately following the special meeting of Prospect warrantholders at 8:30 a.m., Eastern time, at 9130 Galleria Court, Suite 318, Naples, Florida 34109, or such other date, time and place to which such meeting may be adjourned or postponed.

Purpose of Special Meeting of Prospect Warrantholders

        At the special meeting of Prospect warrantholders, Prospect is asking holders of its warrants to:

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Purpose of Special Meeting of Prospect Stockholders

        At the special meeting of Prospect stockholders, Prospect is asking holders of its common stock to:

Recommendation of Prospect Board of Directors

        After careful consideration of each of the proposals for the special meeting of warrant holders, Prospect's board of directors has determined that each of the Warrant Amendment Proposal and the Warrantholder Adjournment Proposal is fair to, and in the best interests of, Prospect and Prospect warrantholders and recommends that Prospect warrantholders vote "FOR" the Warrant Amendment Proposal and "FOR" the Warrantholder Adjournment Proposal.

        After careful consideration of each of the proposals for the special meeting of stockholders, Prospect's board of directors has determined that each of the Merger Proposal, the Charter Amendment Proposal, the Equity Participation Plan Proposal, the Director Election Proposal and the Stockholder Adjournment Proposal is fair to, and in the best interests of, Prospect and Prospect stockholders and recommends that Prospect stockholders vote "FOR" the Merger Proposal, "FOR" the Charter Amendment Proposal, "FOR" the Equity Participation Plan Proposal, "FOR" the Director Election Proposal and "FOR" the Stockholder Adjournment Proposal.

Record Date; Who is Entitled to Vote

        Prospect has fixed the close of business on                         , 2009, as the record date for determining the Prospect warrantholders and the Prospect stockholders entitled to notice of and to attend and vote at the special meeting of Prospect warrantholders and the special meeting of Prospect stockholders, respectively. As of the close of business on                         , 2009, there were 30,250,000 Prospect warrants outstanding and entitled to vote, of which 25,000,000 are Public Warrants. Each Prospect warrant is entitled to one vote for each share of Prospect common stock issuable upon exercise of the warrants at the special meeting of Prospect warrantholders. As of the close of business on                         , 2009, there were 31,250,000 shares of Prospect common stock outstanding and entitled

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to vote, of which 25,000,000 are Public Shares. Each share of Prospect common stock is entitled to one vote per share at the special meeting of Prospect stockholders.

Quorum

        A quorum of Prospect stockholders and a quorum of Prospect warrantholders are necessary to hold valid special meetings. The presence, in person or by proxy, of a majority of all the outstanding shares of common stock entitled to vote constitutes a quorum at the special meeting of Prospect stockholders. Abstentions and broker non-votes, as defined below, will count as present for purposes of establishing a quorum.

        The presence, in person or by proxy, of a majority of all the outstanding shares of common stock underlying the warrants entitled to vote constitutes a quorum at the special meeting of Prospect warrantholders. Abstentions and broker non-votes will count as present for purposes of establishing a quorum.

Abstentions and Broker Non-Votes

        Under the rules of various national and regional securities exchanges, your broker, bank or nominee cannot vote your shares or warrants with respect to non-discretionary matters unless you provide instructions on how to vote in accordance with the information and procedures provided to you by your broker, bank or nominee. Proxies that are marked "abstain" and proxies relating to "street name" shares that are returned to Prospect, but marked by brokers as "not voted" will be treated as shares present for purposes of determining the presence of a quorum on all matters. The latter will not be treated as shares entitled to vote on the matter as to which authority to vote is withheld from the broker. Prospect believes that all proposals presented to the stockholders at the special meeting of Prospect stockholders, with the exception of the Director Election Proposal, and all proposals presented to the warrantholders at the special meeting of Prospect warrantholders, will be considered non-discretionary and therefore your broker, bank or nominee cannot vote your shares or warrants without your instruction. If you do not provide instructions with your proxy, your bank, broker or nominee may deliver a proxy card expressly indicating that it is NOT voting your shares; this indication that a bank, broker or nominee is not voting your shares is referred to as a "broker non-vote." Broker non-votes will be counted for the purpose of determining the existence of a quorum at the special meetings of stockholders and warrantholders, as applicable, but will not count for purposes of determining the number of votes cast at the special meetings, and your broker may not vote your shares or warrants on the proposals. Your bank, broker or nominee can vote your shares or warrants only if you provide instructions on how to vote. You should instruct your broker to vote your shares or warrants in accordance with directions you provide. Since a stockholder must affirmatively vote "AGAINST" the Merger Proposal to have conversion rights, individuals who fail to vote or who abstain from voting may not exercise their conversion rights. See the information set forth in "Special Meeting of Prospect Warrantholders and Special Meeting of Prospect Stockholders—Conversion Rights" for additional information.

        Abstentions, while considered present for the purposes of establishing a quorum, will have the same effect as a vote "AGAINST" the Merger Proposal, the Charter Amendment Proposal, the Equity Participation Plan Proposal, and the Stockholder Adjournment Proposal, if the latter is presented. Broker non-votes, while considered present for the purposes of establishing a quorum, will have the same effect as a vote "AGAINST" the Charter Amendment Proposal. Abstentions, while considered present for the purposes of establishing a quorum, will have the same effect as a vote "AGAINST" the Warrant Amendment Proposal and the Warrantholder Adjournment Proposal, if the latter is presented. Broker non-votes, while considered present for the purposes of establishing a quorum, will have the same effect as a vote "AGAINST" the Warrant Amendment Proposal.

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Vote of Prospect's Stockholders Required

        The Merger Proposal will require the affirmative vote of a majority of the issued and outstanding Public Shares represented at the special meeting of Prospect stockholders in person or by proxy and entitled to vote thereon as of the record date. There are 31,250,000 shares of Prospect common stock outstanding as of the record date for the special meeting of Prospect stockholders, of which 25,000,000 are Public Shares. The Merger will not be consummated if the holders of 30% or more of the Public Shares (7,500,000 shares or more) properly demand conversion of their Public Shares into cash. Abstentions will have the same effect as a vote "AGAINST" this proposal.

        The Charter Amendment Proposal will require the affirmative vote of a majority of the issued and outstanding shares of Prospect common stock entitled to vote thereon as of the record date. Abstentions and broker non-votes will have the same effect as a vote "AGAINST" this proposal.

        Directors are elected by a plurality of all votes cast in person or by proxy at the special meeting of Prospect stockholders and entitled to vote thereon as of the record date. "Plurality" means that the individuals who receive the largest number of votes cast "FOR" are elected as directors.

        The approval of the Equity Participation Plan Proposal and the Stockholder Adjournment Proposal, if presented, will require the affirmative vote of a majority of the issued and outstanding shares of Prospect common stock represented at the special meeting of Prospect stockholders in person or by proxy and entitled to vote thereon as of the record date. Abstentions will have the same effect as a vote "AGAINST" either proposal.

Vote of Prospect's Warrantholders Required

        Approval of the Warrant Amendment Proposal will require the affirmative vote of a majority in interest of the shares of Prospect common stock issuable upon exercise of the Prospect warrants affected by the Warrant Amendment and entitled to vote thereon as of the record date. Abstentions and broker non-votes will have the same effect as a vote "AGAINST" this proposal.

        Approval of the Warrantholder Adjournment Proposal will require the affirmative vote of a majority in interest of the shares of Prospect common stock issuable upon exercise of the Prospect warrants represented in person or by proxy at the special meeting of Prospect warrantholders and entitled to vote thereon as of the record date. Abstentions will have the same effect as a vote "AGAINST" this proposal.

Voting Your Warrants or Shares

        Each Prospect warrant or share of Prospect common stock that you own in your name entitles you to one vote on the applicable proposals. Your proxy card shows the number of shares of Prospect common stock or Prospect warrants that you own. If your shares or warrants are held in "street name" or are in a margin or similar account, you should contact your broker, bank or nominee to ensure that votes related to the shares or warrants you beneficially own are properly counted.

        There are two ways to vote your shares of Prospect common stock and Prospect warrants:

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IF YOU RETURN YOUR PROXY CARD WITHOUT AN INDICATION OF HOW YOU WISH TO VOTE, YOUR SHARES WILL BE VOTED IN FAVOR OF EACH OF THE STOCKHOLDER PROPOSALS AND YOU WILL NOT BE ELIGIBLE TO HAVE YOUR SHARES CONVERTED INTO A PRO RATA PORTION OF THE TRUST ACCOUNT IN WHICH A SUBSTANTIAL PORTION OF THE NET PROCEEDS OF PROSPECT'S INITIAL PUBLIC OFFERING ARE HELD. IN ORDER TO PROPERLY EXERCISE YOUR CONVERSION RIGHTS, YOU MUST (I) AFFIRMATIVELY VOTE AGAINST THE MERGER PROPOSAL BY PROXY OR IN PERSON AT THE SPECIAL MEETING OF PROSPECT STOCKHOLDERS, (II) PRESENT WRITTEN INSTRUCTIONS TO PROSPECT'S TRANSFER AGENT NO LATER THAN ONE BUSINESS DAY PRIOR TO THE VOTE ON THE MERGER PROPOSAL STATING THAT YOU WISH TO CONVERT YOUR SHARES INTO CASH AND THAT YOU WILL CONTINUE TO HOLD YOUR SHARES THROUGH THE CLOSING DATE OF THE MERGER, (III) CONTINUE TO HOLD YOUR SHARES THROUGH THE CLOSING DATE OF THE MERGER AND (IV) TENDER YOUR SHARES TO PROSPECT'S TRANSFER AGENT WITHIN THE PERIOD SPECIFIED IN A NOTICE YOU WILL RECEIVE FROM OR ON BEHALF OF PROSPECT, WHICH PERIOD WILL NOT BE LESS THAN 20 DAYS. YOU MAY TENDER YOUR SHARES BY EITHER DELIVERING YOUR STOCK CERTIFICATE TO THE TRANSFER AGENT OR BY DELIVERING YOUR SHARES ELECTRONICALLY USING THE DEPOSITORY TRUST COMPANY'S DWAC (DEPOSIT/WITHDRAWAL AT CUSTODIAN) SYSTEM. IF THE MERGER IS NOT COMPLETED, THEN THESE SHARES WILL NOT BE CONVERTED INTO CASH. IF YOU HOLD THE SHARES IN STREET NAME, YOU WILL NEED TO INSTRUCT THE ACCOUNT EXECUTIVE AT YOUR BANK, BROKER OR NOMINEE TO WITHDRAW THE SHARES FROM YOUR ACCOUNT IN ORDER TO EXERCISE YOUR CONVERSION RIGHTS. SEE "SPECIAL MEETING OF PROSPECT WARRANTHOLDERS AND SPECIAL MEETING OF PROSPECT STOCKHOLDERS—CONVERSION RIGHTS" FOR MORE SPECIFIC INSTRUCTIONS.

Revoking Your Proxy

        If you give a proxy, you may revoke it at any time before it is exercised by doing any one of the following:

Who Can Answer Your Questions About Voting Your Warrants or Shares

        If you have any questions about how to vote or direct a vote in respect of your warrants or shares, you may call James J. Cahill, Prospect's secretary, at (239) 254-4481.

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No Additional Matters May Be Presented at the Special Meetings

        The special meeting of Prospect warrantholders has been called only to consider the approval of the Warrant Amendment Proposal and the Warrantholder Adjournment Proposal, if necessary. The special meeting of Prospect stockholders has been called only to consider the Merger Proposal, the Charter Amendment Proposal, the Equity Participation Plan Proposal, the Director Election Proposal and the Stockholder Adjournment Proposal, if necessary. Under Prospect's bylaws, other than procedural matters incident to the conduct of the meetings, no other matters may be considered at either special meeting if they are not included in the notice of the applicable special meeting.

Conversion Rights

        Stockholders holding Public Shares as of the record date of the special meeting of Prospect stockholders who affirmatively vote their Public Shares against the Merger Proposal may also demand that Prospect convert such shares into a pro rata portion of the Trust Account, calculated as of two business days prior to the consummation of the Merger. If demand is properly made and the Merger is consummated, Prospect will convert these shares into a pro rata portion of the funds in the Trust Account plus interest, calculated as of such date.

        If you are a holder of Public Shares and wish to exercise your conversion rights, you must (i) affirmatively vote against the Merger Proposal by proxy or in person at the special meeting of Prospect stockholders (abstentions and broker non-votes do not satisfy this requirement), (ii) present written instructions to Prospect's transfer agent no later than one business day prior to the vote on the Merger Proposal stating that you wish to convert your shares into cash and that you will continue to hold your shares through the closing date of the Merger, (iii) continue to hold your shares through the closing date of the Merger, and (iv) tender your shares to Prospect's transfer agent within the period specified in a notice you will receive from or on behalf of Prospect, which period will not be less than 20 days. You may tender your shares by either delivering your stock certificate to the transfer agent or by delivering your shares electronically using the Depository Trust Company's DWAC (Deposit/Withdrawal At Custodian) System. If you hold the shares in street name, you will have to coordinate with your broker to have your shares certificated or delivered electronically. Certificates that have not been tendered (either physically or electronically) in accordance with these procedures will not be converted into cash.

        You may exercise your conversion rights either by checking the box on the proxy card or by submitting your request in writing to Prospect's secretary at its principal executive office, 9130 Galleria Court, Suite 318, Naples, Florida. If you (i) initially vote for the Merger Proposal but then wish to vote against it and exercise your conversion rights or (ii) initially vote against the Merger Proposal and wish to exercise your conversion rights but do not check the box on the proxy card providing for the exercise of your conversion rights or do not send a written request to Prospect to exercise your conversion rights or (iii) initially vote against the Merger, but later wish to vote for it, you may request that Prospect send you another proxy card on which you may indicate your intended vote. You may make such request by contacting Prospect at its address at 9130 Galleria Court, Suite 318, Naples, Florida 34109, or by telephone at (239) 254-4481.

        Any corrected or changed proxy card or written demand of conversion rights must be received by Prospect's secretary no later than the business day prior to the special meeting of Prospect stockholders.

        If, notwithstanding your negative vote, the Merger is completed, then, if you have also properly exercised your conversion rights, you will be entitled to receive a pro rata portion of the Trust Account, including any interest earned thereon, calculated as of two business days prior to the date of the consummation of the Merger. As of                         , 2009 (the record date for the special meeting of Prospect stockholders), there was approximately $                         in the Trust Account, or approximately

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$                         per Public Share. If you exercise your conversion rights, then you will be exchanging your shares of Prospect common stock for cash and will no longer own these shares.

        Exercise of your conversion rights does not result in either the exercise or loss of any Prospect warrants that you may hold. Your warrants will continue to be outstanding following a conversion of your common stock and will become exercisable upon consummation of the Merger, in accordance with the terms of the Warrant Amendment. A registration statement must be in effect to allow you to exercise any warrants you may hold or to allow Prospect to call the warrants for redemption if the redemption conditions are satisfied. If the Merger is not consummated and Prospect does not consummate an acquisition by November 14, 2009, the warrants will not become exercisable and will be worthless.

        Prior to exercising conversion rights, stockholders should verify the market price of Prospect common stock as they may receive higher proceeds from the sale of their common stock in the public market than from exercising their conversion rights if the market price per share is higher than the conversion price. Prospect cannot assure its stockholders that they will be able to sell their shares of Prospect common stock in the open market, even if the market price per share is higher than the conversion price stated above, as there may not be sufficient liquidity in Prospect securities when Prospect stockholders wish to sell their shares.

        If the holders of at least 7,500,000 or more Public Shares (an amount equal to 30% or more of the Public Shares), vote against the Merger Proposal and properly demand conversion of their shares, Prospect will not be able to consummate the Merger. If the Merger is not completed, then these shares will not be converted into cash. Any action that does not include an affirmative vote against the Merger will prevent you from exercising your conversion rights. Your vote on any proposal other than the Merger Proposal will have no impact on your right to seek conversion.

Appraisal Rights

        Prospect stockholders do not have appraisal rights in connection with the Merger under the DGCL.

        Kennedy-Wilson Holders who do not vote in favor of adopting the Merger, and who otherwise comply with the applicable provisions of Section 262 will be entitled to exercise appraisal rights under Section 262. Any shares held by a Kennedy-Wilson Holder who has not voted in favor of the Merger and who has demanded appraisal for such shares in accordance with the DGCL will not be converted into a right to receive the Merger consideration, unless such Kennedy-Wilson Holder fails to perfect, withdraws or otherwise loses such Kennedy-Wilson Holder's right to appraisal under the DGCL. If, after the consummation of the Merger, such Kennedy-Wilson Holder fails to perfect, withdraws or otherwise loses such Kennedy-Wilson Holder's right to appraisal, each such share will be treated as if it had been converted as of the consummation of the Merger into a right to receive the Merger consideration. Under the Merger Agreement, if more than 10% of the outstanding shares of Kennedy-Wilson common stock or 10% of the outstanding shares of Kennedy-Wilson preferred stock exercise appraisal rights, Prospect is not required to effect the Merger. Prospect shall not waive this condition if the number of outstanding shares of Kennedy-Wilson common stock or preferred stock for which holders exercise appraisal rights is such that, pursuant to the transactions contemplated by the Merger Agreement, Prospect will not be acquiring "control" of Kennedy-Wilson as defined in Section 368(c) of the Code solely in exchange for Prospect common stock. See the section entitled "Appraisal Rights" for additional information.

        Kennedy-Wilson's holders of common stock may also have appraisal rights under Chapter 13 of the CGCL. Any stockholder who does not vote in favor of the Merger and remains a holder of Kennedy-Wilson common stock at the effective time of the Merger may, by complying with the procedures set forth in Chapter 13 of the CGCL and sending Kennedy-Wilson a written demand for appraisal before

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the vote is taken by Kennedy-Wilson stockholders on the Merger Agreement, be entitled to seek appraisal of the fair value of their shares as determined by the proper California superior court. These dissenters' rights are contingent upon consummation of the Merger.

        See the section entitled "Appraisal Rights" for additional information.

Proxy Solicitation Costs

        Prospect is soliciting proxies on behalf of its board of directors and will pay the cost of this proxy solicitation. This solicitation is being made by mail, but also may be made by telephone or in person. Prospect and its directors, officers and employees may also solicit proxies in person, by telephone or by other electronic means.

        Prospect will ask banks, brokers and other institutions, nominees and fiduciaries to forward proxy materials to their principals and to obtain their authority to execute proxies and voting instructions. Prospect will reimburse them for their reasonable expenses.

Prospect Founders

        As of                         , 2009, the record date, the Prospect founders beneficially owned and were entitled to vote 6,250,000 founders shares. The founders shares issued to the Prospect founders constituted approximately 20% of the outstanding shares of Prospect common stock immediately after the IPO. In connection with the IPO, Prospect and Citigroup entered into agreements with each of the Prospect founders (including its officers and directors) pursuant to which each Prospect founder agreed to (i) vote his or its founders shares on the Merger Proposal in accordance with the majority of the votes cast by the holders of Public Shares and (ii) waive any right to receive a liquidation distribution with respect to the founders shares in the event Prospect fails to consummate an initial business combination. The Prospect founders (including its officers and directors) have also indicated that they intend to vote their founders shares in favor of all other proposals being presented at the special meeting of Prospect stockholders. The founders shares have no liquidation rights and will be worthless if no business combination is effected by Prospect. In connection with the IPO, the Prospect founders entered into agreements with Citigroup restricting the sale of their founders shares until one year after the date of the completion of the initial business combination or earlier if, subsequent to the initial business combination, (i) the closing price of Prospect's common stock equals or exceeds $14.50 per share for any 20 trading days within any 30 trading day period or (ii) Prospect consummates a subsequent liquidation, merger, stock exchange or other similar transaction which results in all of Prospect's stockholders having the right to exchange their shares of common stock for cash, securities or other property; provided, however, that transfers can be made to permitted transferees who agree in writing to be bound by the same restrictions, agree to vote in the same manner as a majority of the holders of Public Shares who vote at the special or annual meeting called for the purpose of approving Prospect's initial business combination and waive any rights to participate in any liquidation distribution if Prospect fails to consummate its initial business combination. For so long as the founders shares are subject to such transfer restrictions they will be held in an escrow account maintained by Continental Stock Transfer & Trust Company. Immediately prior to and subject to consummation of the Merger, 2,575,000 founder shares will be cancelled and forfeited. As a result of this forfeiture, at the consummation of the Merger, the founders will own 3,675,000 shares of Prospect common stock.

        In addition, at any time prior to the special meeting of Prospect stockholders and special meeting of Prospect warrantholders, during a period when they are not then aware of any material nonpublic information regarding Prospect or its securities, the Prospect founders, Kennedy-Wilson and Kennedy-Wilson Holders and/or their respective affiliates may purchase shares or Public Warrants from institutional and other investors, or execute agreements to purchase such shares of common stock or Public Warrants from them in the future, or they may enter into transactions with such persons and

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others to provide them with incentives to acquire shares of Prospect common stock or Public Warrants or vote their shares of common stock or Public Warrants in favor of the Merger Proposal and the Warrant Amendment Proposal, as applicable. The purpose of such Public Warrant purchases and other transactions would be to increase the likelihood that holders of a majority of shares underlying the warrants is present and voting at the special meeting of Prospect warrantholders. The purpose of such share purchases and other transactions would be to increase the likelihood of satisfaction of the requirements that the holders of a majority of the Public Shares present in person or by proxy and eligible to vote at the special meeting of Prospect stockholders vote in favor of, and that holders of fewer than 30% of the Public Shares vote against, the Merger Proposal and demand conversion of their Public Shares into cash where it appears that such requirements would otherwise not be met.

        While the exact nature of any incentives that would be provided by the Prospect founders, Kennedy-Wilson and Kennedy-Wilson Holders and/or their respective affiliates has not been determined as of the date of this proxy statement/prospectus, they might include, without limitation, arrangements to protect such investors or holders against potential loss in value of their shares or Public Warrants, including the granting of put options and the transfer to such investors or holders of shares of common stock or Public Warrants owned by the Prospect founders for nominal value. Prospect will not enter into any such arrangement, either prior to or after the consummation of the Merger, and no funds in its Trust Account will be used to make such purchases or to fund other such arrangements. Entering into any such arrangements may have a depressive effect on Prospect's common stock.

        If such transactions are effected, the consequence could be to cause the Merger Proposal or the Warrant Amendment Proposal to be approved in circumstances where such approval could not otherwise be obtained. Purchases of shares of common stock or Public Warrants by the persons described above would allow them to exert more influence over the approval of the Merger Proposal or the Warrant Amendment Proposal and other proposals and would likely increase the chances that such proposals would be approved. Moreover, any such purchases may make it less likely that the holders of 30% or more of the Public Shares will vote against the Merger Proposal and exercise their conversion shares.

        As of the date of this proxy statement/prospectus, there have been no such discussions with respect to any such transaction and no agreements to such effect have been entered into with any such investor or holder. Prospect will file a Current Report on Form 8-K to disclose any arrangements entered into or significant purchases made by any of the aforementioned persons that would affect the vote on the Merger Proposal, the Warrant Amendment Proposal, the Charter Amendment Proposal or the conversion threshold.

Outstanding Public Warrants

        The closing price as reported by AMEX of Prospect Public Warrants on                         , 2009 (the record date for the special meeting of Prospect warrantholders) was $                        . Prior to voting on the Warrant Amendment Proposal, holders of Public Warrants should verify the market price of the Prospect Public Warrants as they may receive higher proceeds from the sale of their Public Warrants in the public market than from Prospect's exchange of the Public Warrants for cash in connection with the Merger if the market price per warrant is higher than the Cash Exchange price of $0.55 per warrant. Prospect cannot assure its holders of Public Warrants that they will be able to sell their Public Warrants in the open market, even if the market price per warrant is higher than the exchange price stated above, as there may not be sufficient liquidity in Prospect's securities when holders of Public Warrants wish to sell their Public Warrants. Based on the closing market price of $0.28 per Public Warrant on September 8, 2009, the last trading day prior to the announcement of the Merger Agreement, the Public Warrants had an aggregate value of $7,000,000. Based on the closing market price of $                         per Public Warrant on                         , 2009 (the record date), the Public Warrants had an aggregate value of $                        .

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        If you elect to participate in the Cash Exchange, you will be exchanging your Public Warrants for cash and will no longer own those warrants. You will be entitled to receive cash for these Public Warrants only if you deliver your warrant certificate (either physically or electronically) to Prospect's transfer agent in accordance with the procedures outlined in the section entitled "The Warrant Amendment Proposal." Additionally, if you select the Warrant Exchange, you will be exchanging your Public Warrants for the Amended and Restated Public Warrants and must exchange your Public Warrants in accordance with the procedures outlined in the section entitled "The Warrant Amendment Proposal."

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THE WARRANT AMENDMENT PROPOSAL

Purpose of the Warrant Amendment

        In connection with the proposed Merger, Prospect is proposing an amendment to the Warrant Agreement governing all of the Prospect warrants, which we refer to as the Warrant Amendment, in order to, among other things, (1) allow each Prospect warrantholder to elect to receive upon the closing of the Merger, for each Public Warrant held by such holder, either (i) the Cash Amount of $0.55, or (ii) an Amended and Restated Public Warrant with an exercise price of $12.50, a redemption trigger price of $19.50 and an expiration date of November 14, 2013, subject to adjustment and proration as described below and (2) provide that the terms of the Sponsors Warrants be amended and restated to provide for an exercise price of $12.50, a redemption trigger price of $19.50 and an expiration date of November 14, 2013. If the Merger is consummated, any holder of Public Warrants who votes against the approval of the Warrant Amendment Proposal or who makes no election will receive the Cash Amount in exchange for its Public Warrants. We refer to the elections by Prospect warrantholders to receive the Cash Amount or the Amended and Restated Public Warrants as the Warrant Election. We further refer to the exchange of Public Warrants for the Cash Amount as the Cash Exchange and the exchange of Public Warrants for the Amended and Restated Public Warrants and the amendment of the Sponsor Warrants as the Warrant Exchange.

        Prospect will exchange up to fifty percent (or 12,500,000) of the Public Warrants outstanding immediately prior to the consummation of the Merger for Amended and Restated Public Warrants, which we refer to as the "Warrant Limit." If Prospect warrantholders elect to receive in the aggregate more Amended and Restated Public Warrants than the Warrant Limit, the total Amended and Restated Public Warrants exchanged will be apportioned among the Prospect warrantholders who make a Warrant Election by multiplying the number of Amended and Restated Public Warrants evidenced by a specific Warrant Election by a fraction (x) the numerator of which is the Warrant Limit and (y) the denominator of which is the aggregate number of Amended and Restated Public Warrants evidenced by all Warrant Elections. Further, Public Warrants for which Prospect warrantholders make no election will be converted into the right to receive the Cash Exchange. There is no limit on the number of Public Warrants that may be exchanged for cash. In the event that the Warrant Amendment Proposal is approved, Prospect warrantholders who voted against the Warrant Amendment Proposal will receive the Cash Amount.

        The terms of the Amended and Restated Public Warrants will be substantially similar to the terms of the Public Warrants, except that the Amended and Restated Public Warrants:

        The terms of the Amended and Restated Sponsors Warrants will be substantially similar to the terms of the Sponsors Warrants, except that the Amended and Restated Sponsors Warrants:

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        Pursuant to Section 18 of the Warrant Agreement, Prospect and its Warrant Agent (as therein defined) may amend any provision of the Warrant Agreement with the consent of the holders of Prospect warrants exercisable for a majority in interest of the shares of Prospect common stock issuable upon exercise of all outstanding Prospect warrants that would be affected by such amendment. Approval of the Warrant Amendment Proposal requires the affirmative vote of the holders of a majority in interest of the shares of Prospect common stock issuable upon exercise of the Prospect warrants as of the record date for the special meeting of Prospect warrantholders. The approval of the Warrant Amendment Proposal is a condition to the consummation of the Merger. If the Prospect warrantholders approve the Warrant Amendment Proposal, then the Warrant Agreement will be amended and the holders of Public Warrants will be permitted to receive the Cash Amount or an Amended and Restated Public Warrant upon consummation of the Merger.

        Prospect believes the Cash Exchange and Warrant Exchange will provide benefits to Prospect and its warrantholders, including the following:

        In the event the Warrant Amendment Proposal is not approved, the Merger Proposal will not be presented to Prospect stockholders for a vote. If the Merger is not consummated and Prospect does not consummate another business combination by November 14, 2009, Prospect will be required to liquidate and all Prospect warrants will expire and become worthless.

        United States Holders of Public Warrants should note that they will recognize gain or loss for United States federal income tax purposes if the Warrant Amendment Proposal is approved and the Cash Exchange is consummated, while United States Holders of Public Warrants who elect the Warrant Exchange, and United States Holders of Sponsor Warrants, should not recognize any gain or loss with respect to the Warrant Exchange. For a discussion of the United States federal income tax consequences of the Warrant Election for United States Holders of Public Warrants and Sponsor Warrants, please see the sections entitled "The Merger Proposal—Material United States Federal Income Tax Consequences—Tax Consequences of the Warrant Amendment to United States Holders of Prospect Warrants" for additional information.

Certain Effects of the Cash Exchange

        A minimum of $6,875,000 will be required to purchase Public Warrants in the Cash Exchange, plus an estimate of approximately $12,000 of related fees and expenses. The Cash Exchange will be funded from the funds released to Prospect from the Trust Account in connection with the consummation of the Merger.

Warrant Election/Exchange Procedures

        Continental Stock Transfer & Trust Company (the "Exchange Agent") has been appointed by Prospect to receive elections ("Elections") by holders of Public Warrants to receive either the Cash Amount or the Amended and Restated Public Warrants, and to act as exchange agent with respect to the Merger. Prospect will prepare a form of election, pursuant to which each holder of Public Warrants may make its Election. An Election will have been properly made only if a properly completed and

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signed form of election, accompanied by the Public Warrant certificate or certificates to which such form of election relates (if any), (i) is received by the Exchange Agent prior to the date and time of the special meeting of Prospect warrantholders (the "Election Date") or (ii) is delivered to the Exchange Agent at the special meeting of Prospect warrantholders.

        Any Public Warrant holder may at any time prior to the Election Date change such holder's election if the Exchange Agent receives (i) prior to the Election Date written notice of such change accompanied by a new properly completed form of election or (ii) at the special meeting of Prospect warrantholders a new, properly completed form of election. Prospect will have the right in its sole discretion to permit changes in Elections after the Election Date.

        In connection with the above procedures, (i) the holders of warrant certificates evidencing Public Warrants will surrender such certificates to the Exchange Agent, (ii) upon surrender of a warrant certificate the holder thereof will be entitled to receive the Cash Amount or an Amended and Restated Public Warrant, as applicable, and (iii) the warrant certificates surrendered will be canceled. The Cash Amount is substantially less than the market price of the shares of Prospect common stock issuable upon exercise of the Public Warrants, but the Cash Amount is substantially more than the price that could be obtained upon the sale of Public Warrants in the open market. See the section entitled "Price Range of Securities and Dividends" herein for information on the historical market prices for Prospect Public Warrants and Prospect common stock on AMEX.

        To physically surrender Public Warrants for exchange, holders should deliver certificates representing their Public Warrants to the Exchange Agent, at the following address:

Recommendation and Required Vote

        Approval of the Warrant Amendment Proposal requires the affirmative vote of a majority in interest of the shares of Prospect common stock issuable upon exercise of the Prospect warrants affected by the Warrant Amendment and entitled to vote thereon as of the record date. Approval of the Warrant Amendment Proposal is a condition to the Merger and to the presentation of the stockholder proposals at the special meeting of Prospect stockholders.

PROSPECT'S BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT PROSPECT'S WARRANTHOLDERS VOTE "FOR" THE APPROVAL OF THE WARRANT AMENDMENT PROPOSAL.

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THE WARRANTHOLDER ADJOURNMENT PROPOSAL

        The Warrantholder Adjournment Proposal, if adopted, will allow Prospect's board of directors to adjourn the special meeting of Prospect warrantholders to a later date or dates to permit further solicitation of proxies in the event, based on the tabulated votes, there are not sufficient votes at the time of the special meeting to approve the Warrant Amendment Proposal. The Warrantholder Adjournment Proposal will only be presented to Prospect warrantholders in the event, based on the tabulated votes, there are not sufficient votes at the time of the special meeting of Prospect warrantholders to approve the Warrant Amendment Proposal.

Consequences if the Warrantholder Adjournment Proposal is Not Approved

        If the Warrantholder Adjournment Proposal is not approved by the warrantholders, Prospect's board of directors may not be able to adjourn the special meeting of Prospect warrantholders to a later date in the event, based on the tabulated votes, there are not sufficient votes at the time of the special meeting to approve the Warrant Amendment Proposal. In such event, the Cash Exchange and the Warrant Exchange would not be approved, the Merger could not be consummated and, unless Prospect were able to consummate another business combination by November 14, 2009, it would be required to dissolve and liquidate and all Prospect warrants would expire worthless.

Recommendation and Required Vote

        Adoption of the Warrantholder Adjournment Proposal requires the affirmative vote of a majority in interest of the shares of Prospect common stock issuable upon exercise of the Prospect warrants represented in person or by proxy at the special meeting of Prospect warrantholders and entitled to vote thereon as of the record date. Adoption of the Warrantholder Adjournment Proposal is not a condition to the adoption of any of the other proposals.

PROSPECT'S BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT PROSPECT'S WARRANTHOLDERS VOTE "FOR" THE APPROVAL OF THE WARRANTHOLDER ADJOURNMENT PROPOSAL.

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THE MERGER PROPOSAL

        The discussion in this proxy statement/prospectus of the Merger and the principal terms of the Merger Agreement by and among Prospect, Merger Sub and Kennedy-Wilson is subject to, and is qualified in its entirety by reference to, the Merger Agreement. A copy of the Merger Agreement is attached as Annex A to this proxy statement/prospectus and incorporated herein by reference.

Structure of the Merger

        The Merger Agreement provides for the merger of Merger Sub with and into Kennedy-Wilson, with Kennedy-Wilson continuing as the surviving corporation and becoming a direct wholly-owned subsidiary of Prospect.

Merger Consideration

        Pursuant to the Merger Agreement, in the Merger, the Kennedy-Wilson Holders will receive an aggregate of 26 million shares of Prospect common stock (each share of Kennedy-Wilson common stock shall automatically convert into the right to receive 3.8031 shares of Prospect common stock and each share of Kennedy-Wilson preferred stock shall automatically convert into the right to receive 105.6412 shares of Prospect common stock), minus any Dissenting Shares.

        If a fractional share is required to be issued to a Kennedy-Wilson Holder, Prospect will round up to the nearest whole share in lieu of issuing fractional shares.

Prospect Warrant Amendment

        In addition, each outstanding Public Warrant will be exchanged, at the election of each holder of Public Warrants, for either (i) $0.55 in cash or (ii) an Amended and Restated Public Warrant with an exercise price of $12.50, a redemption trigger price of $19.50 and an expiration date of November 14, 2013; provided that the aggregate number of Amended and Restated Public Warrants issuable upon the closing of the Merger is capped at 50% (or 12,500,000) of the Public Warrants outstanding on the date of the Merger, which we refer to as the "Warrant Limit." If holders of Public Warrants elect to receive in the aggregate more Amended and Restated Public Warrants than the Warrant Limit, the total Amended and Restated Public Warrants exchanged will be apportioned among the holders of Public Warrants who make a Warrant Election by multiplying the number of Amended and Restated Public Warrants evidenced by a specific Warrant Election by a fraction (x) the numerator of which is the Warrant Limit and (y) the denominator of which is the aggregate number of Amended and Restated Public Warrants evidenced by all Warrant Elections. Further, Public Warrants for which holders of Public Warrants make no election will be converted into the right to receive the Cash Exchange. There is, however, no limit on the number of Public Warrants that may be exchanged for cash.

        Also, each Sponsor Warrant will be amended and restated to provide for an exercise price of $12.50, a redemption trigger price of $19.50 and an expiration date of November 14, 2013.

Forfeiture of Founder Shares

        Immediately prior to the Merger, 2,575,000 founder shares held by the founders will be cancelled and forfeited. As a result of this forfeiture, at the consummation of the Merger, the founders will own 3,675,000 shares of Prospect common stock.

Management Incentive Shares

        To reward and incentivize Kennedy-Wilson's key employees and management after the Merger, up to 4,000,000 shares of Prospect common stock will be reserved for issuance under the 2009 Plan. If the Merger is consummated, certain Kennedy-Wilson officers, directors and key employees will be issued an

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aggregate of 3,740,000 restricted shares of Prospect common stock under the 2009 Plan upon the closing of the Merger as set forth in the table below:

Name of Group
  Dollar ($)   Number of Shares
of Restricted Stock
 

William McMorrow, Chief Executive Officer

  $     900,000  

Freeman Lyle, Chief Financial Officer

  $     50,000  

Mary Ricks, Co-CEO of KW Commercial Investment Group

  $     900,000  

Barry Schlesinger, Co-CEO of KW Commercial Investment Group

  $     125,000  

Robert Hart, President of KW Multi-Family Management Group

  $     125,000  

James Rosten, President of Kennedy-Wilson Properties

  $     125,000  

All executive officers, as a group

  $     3,495,000  

All directors who are not executive officers, as a group

  $     25,000  

All employees, including all current officers who are not executive officers, as a group

  $     220,000  

        In the event that the recipient of the restricted shares remains employed by (or continues to perform services as a director for) the post-Merger company through the relevant vesting date, 1/5 of the restricted shares will vest on each of the first five anniversaries of the date of issuance, provided that the Performance Target is met as of the September 30 immediately preceding the applicable anniversary date (in the case of the installments vesting on the fourth and fifth anniversary dates, the Performance Target must be met as of the September 30 immediately preceding the third anniversary date). The Performance Target was established by an independent committee of Prospect and is subject to the approval of the compensation committee of the post-Merger company following the consummation of the Merger. Notwithstanding the foregoing, in the event the employment with the post-Merger company of an employee who has been granted restricted shares is terminated without cause or if the employee resigns from his employment with the post-Merger company for good reason, the restricted shares will continue to vest on the applicable anniversary dates (subject to the satisfaction of the Performance Target), subject to certain limitations. In addition, in the event of a "Change of Control" as defined in the 2009 Plan (see "The Equity Participation Plan Proposal—Change of Control"), any unvested restricted shares of Prospect common stock that have not previously been forfeited will become vested, subject to certain limitations. See section "The Equity Participation Plan Proposal—Awards to Particular Officers, Directors and Employees" for additional information.

Management Bonuses

        If the Merger is consummated, William J. McMorrow and Mary Ricks will be potentially entitled to receive certain cash bonus payments of up to $11.7 million and $4.0 million, respectively. The cash bonus payments will be payable as follows: (i) Mr. McMorrow and Ms. Ricks will be entitled to receive $4.85 million and $2.0 million, respectively, on October 15, 2009, provided, however, that such payments will be repaid to Kennedy-Wilson in the event the Merger is not consummated by November 15, 2009 or the executive is not employed by Kennedy-Wilson on the effective date of the Merger (these employment requirements will not apply, however, in the case of a termination of employment due to death or disability); (ii) Mr. McMorrow and Ms. Ricks will receive "performance unit awards" under the 2009 Plan which will entitle them to receive $2.425 million and $1.0 million, respectively, on April 1, 2010, provided that the Performance Target is met as of March 31, 2010 (in the event that the Performance Target is not met as of March 31, 2010, the bonus otherwise due April 1, 2010 shall, nevertheless, be paid on July 1, 2010, October 1, 2010, or January 1, 2011, respectively, if the Performance Target is satisfied as of the earliest of June 30, 2010, September 30, 2010, or December 31, 2010, respectively), and the executive remains employed through the date on which the Performance Target is satisfied; and (iii) Mr. McMorrow and Ms. Ricks will receive additional "performance unit awards" under the 2009 Plan which will entitle them to receive cash

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payments in the amounts of $4.425 and $1.0 million, respectively, on January 1, 2011, provided that the Performance Target is met as of December 31, 2010 and he or she, as applicable, remains employed by the post-Merger company through January 1, 2011. Notwithstanding the foregoing, in the event that the Merger is consummated and the employment of Mr. McMorrow or Ms. Ricks is terminated by the post-Merger company without cause or he or she, as applicable, resigns from his or her, as applicable, employment with the post-Merger company for good reason, the payments referred to in clauses (ii) and (iii) above will still be payable on the applicable payment dates if the Performance Target is met. The Performance Target was established by an independent committee of Prospect and is subject to the approval of the compensation committee of the post-Merger company following the consummation of the Merger.

Note Forgiveness

        On April 10, 2006, William J. McMorrow borrowed $3,543,127 from Kennedy-Wilson evidenced by a Promissory Note bearing simple interest at a rate of 7.5% per annum and scheduled to mature on April 9, 2011. Mr. McMorrow's employment agreement has been amended to provide that the McMorrow Note will be forgiven if the Merger is consummated.

Amendments to Employment Agreements

        In connection with the Merger, Mr. McMorrow and Ms. Ricks have entered into amendments to their employment agreements which provide for, among other things, (i) the removal of certain benefits in the event of a change in control; (ii) the addition of certain severance benefits if the executive resigns on account of a change in location or a material reduction in duties; (iii) the grant to each executive of 900,000 shares of restricted stock of Prospect pursuant to the 2009 Plan and upon the terms and conditions set forth above; (iv) the cash bonus payments set forth above and (v) in the case of Mr. McMorrow, the McMorrow Note forgiveness described above. Mr. Herrema has also entered into an amendment to his employment agreement which provides for the extension of his employment term from December 31, 2010 to January 31, 2014 as well as clauses (ii)—(iii) above. In addition, the employment agreements for Messrs. McMorrow and Herrema and Ms. Ricks have been amended to include language intended (i) to provide for a reduction in the amount of payments or benefits payable or provided to them under their respective employment agreements or otherwise to ensure that no payment or benefit is subject to the excise tax imposed by Section 4999 of the Code (certain golden parachute payments) which reduction may, in certain circumstances, result in the repayment of certain previously paid amounts (plus earnings) to the post-Merger company, and (ii) to achieve compliance with Section 409A of the Code.

Assumption of Guardian Note

        In connection with the Merger, Prospect has agreed to assume a convertible subordinated note with a principal amount of $30 million that was issued to Guardian Life Insurance Company of America ("Guardian") in November 2008 (the "Guardian Note"). The Guardian Note bears interest at a fixed rate of 7%, payable quarterly, and the outstanding principal is due on November 3, 2018. Under the terms of the Merger Agreement, Prospect will assume the Guardian Note and Guardian may convert, in whole or in part, the outstanding principal balance and accrued interest into common stock at a conversion price of $10.52 per share any time prior to the tenth anniversary of the original issue date. At any time on or after the ninth anniversary of the original issue date of the note and prior to the due date, Prospect (as successor) may demand that Guardian convert the note in accordance with its terms.

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Fractional Shares

        No fractional shares of Prospect common stock will be issued in the Merger. In lieu thereof, the number of shares of Prospect common stock to be delivered to each Kennedy-Wilson Holder shall be rounded up to the nearest whole share.

Appraisal Rights

        Prospect stockholders do not have appraisal rights in connection with the Merger under the DGCL. Kennedy-Wilson Holders with outstanding common stock and preferred stock immediately prior to the effective time of the Merger who do not vote in favor of adopting the Merger, and who otherwise comply with the applicable provisions of Section 262 will be entitled to exercise appraisal rights under Section 262. Any shares held by such Kennedy-Wilson Holder who demands appraisal for such shares in accordance with the DGCL will not be converted into the right to receive shares of Prospect common stock, unless such Holder fails to perfect, withdraws or otherwise loses such Holder's right to appraisal under the DGCL. If, such Holder fails to perfect, withdraws or otherwise loses such Holder's right to appraisal, each such share will be treated as if it had been converted as of the consummation of the Merger into a right to receive the Prospect common stock. Prospect is not required to effect the Merger in the event that either (i) holders of more than 10% of the outstanding shares of Kennedy-Wilson common stock or (ii) the holders of more than 10% of the outstanding shares of Kennedy-Wilson preferred stock exercise their appraisal rights. Prospect shall not waive this condition if the number of outstanding shares of Kennedy-Wilson common stock or preferred stock for which holders exercise appraisal rights is such that, pursuant to the transactions contemplated by the Merger Agreement, Prospect will not be acquiring "control" of Kennedy-Wilson as defined in Section 368(c) of the Code, solely in exchange for Prospect common stock.

        Kennedy-Wilson's holders of common stock may also have appraisal rights under Chapter 13 of the CGCL. Any stockholder who does not vote in favor of the Merger and remains a holder of Kennedy-Wilson common stock at the effective time of the Merger may, by complying with the procedures set forth in Chapter 13 of the CGCL and sending Kennedy-Wilson a written demand for appraisal, be entitled to seek appraisal of the fair value of their shares as determined by the proper California superior court. These dissenters' rights are contingent upon consummation of the Merger.

        See the section entitled "Appraisal Rights" for additional information.

Indemnification of Directors and Officers

        Prospect has agreed that the post-Merger company will, for six years from the date of closing the Merger, maintain in effect the provisions in its amended and restated certificate of incorporation and amended and restated bylaws providing for indemnification of its current and former directors and officers with respect to the facts and circumstances occurring at or prior to the Merger to the fullest extent permitted by the DGCL.

        Prospect has agreed that the post-Merger company will, for six years from the date of the closing of the Merger, provide each current and former director or officer of Prospect with insurance for acts or omissions occurring prior to the Merger covering each such person on terms not materially less favorable than those currently covered by Prospect's officers' and directors' liability insurance policy; provided that the premium for such coverage shall not exceed $200,000.

Indemnification

        Prospect will indemnify, defend and hold harmless Kennedy-Wilson, including Kennedy-Wilson's successors and permitted assigns, and Kennedy-Wilson will indemnify, defend and hold harmless Prospect, including Prospect's successors and permitted assigns, from and against all liabilities, loss,

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claims, damages, fines, penalties and expenses, including the costs of investigation and defense and reasonable attorneys' fees and court costs, arising from (i) any breach of any representation or warranty made by Prospect or Kennedy-Wilson in the Merger Agreement or in any certificate delivered by Prospect or Kennedy-Wilson pursuant to the Merger Agreement or (ii) any breach by Prospect or Kennedy-Wilson of its covenants or obligations in the Merger Agreement to be performed or complied with by Prospect or Kennedy-Wilson at or prior to Closing. Neither party is entitled to indemnification as so described unless the aggregate amount of damages exceeds $1,000,000. The aggregate amount of damages for which either party may be liable shall not exceed $10,000,000 and in any event, the practical benefits of this indemnification are limited since Kennedy-Wilson will be a direct, wholly-owned subsidiary of Prospect.

Name; Headquarters; Stock Symbols

        After completion of the Merger:

Lock-Up Agreements

        In connection with the Merger, William J. McMorrow, Mary Ricks, Freeman Lyle, and Donald Herrema, executive officers of Kennedy-Wilson, have entered into Lock-Up Agreements with Prospect whereby each have agreed to not offer, sell, pledge or otherwise transfer (i) any of the shares of Prospect common stock received as merger consideration for three months after the Merger and (ii) 90% of the shares of Prospect common stock received as merger consideration and 100% of the shares of Prospect common stock received as management incentive shares in connection with grants to executives under the 2009 Plan, in each case, for one year after the Merger. The stockholders subject to such Lock-Up Agreements may transfer their shares to any controlled affiliate, to any partner, stockholder or member of the stockholder, or for estate planning purposes only; provided in each case that any transferee agrees to be bound to the terms of the Lock-Up Agreement prior to any transfer.

Background of the Merger

        The terms of the Merger Agreement are the result of arm's-length negotiations between representatives of Prospect and Kennedy-Wilson. The following is a brief discussion of the background of these negotiations, the Merger Agreement and related transactions. Prospect is a blank check company incorporated in Delaware on July 9, 2007 in order to serve as a vehicle for the acquisition of an operating business. A registration statement for Prospect's IPO was declared effective on November 14, 2007. On November 20, 2007, Prospect sold 25,000,000 units. Each of Prospect's units consists of one share of common stock, $0.0001 par value per share, and one warrant. Each warrant sold in the IPO entitles the holder to purchase one share of common stock at an exercise price of $7.50. Prospect's units began publicly trading on November 15, 2007. Prospect's Public Warrants and common stock have traded separately since December 3, 2007. The public offering price of each unit

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was $10.00, and the IPO raised gross proceeds of $250,000,000. Of the gross proceeds: (i) Prospect deposited $241,750,000 into a Trust Account at JP Morgan Chase Bank, NA, maintained by Continental Stock Transfer & Trust Company, as trustee, which included $10,000,000 of contingent underwriting discount (the underwriters have agreed to forgo $4,000,000 of deferred underwriting compensation otherwise payable to them in connection with, and in accordance with, the terms of the underwriting agreement for the IPO); (ii) the underwriters received $7,500,000 as underwriting discount (excluding the contingent underwriting discount); and (iii) Prospect retained $700,000 for offering expenses, plus $50,000 for working capital. In addition, Prospect deposited into the Trust Account $5,250,000 that it received from the private placement of 5,250,000 Sponsors Warrants to Flat Ridge Investments LLC, an entity affiliated with David A. Minella, Prospect's Chairman and Chief Executive Officer, LLM Structured Equity Fund L.P. and LLM Investors L.P., entities affiliated with Patrick J. Landers, Prospect's President and a director, and Capital Management Systems, Inc., a corporation affiliated with William Landman, one of Prospect's directors.

        During the period from November 2007 through August 2009, Prospect was involved in sourcing and evaluating prospective businesses in search of a potential business combination. To minimize potential conflicts of interest which may have arisen from multiple corporate affiliations, each of Prospect's officers and directors agreed, until the earliest of a business combination, liquidation or such time as he ceases to be an officer or director, to present to Prospect prior to any other entity, any business opportunity which may reasonably be required to be presented to Prospect under the DGCL, in accordance with his fiduciary obligations. In general, officers and directors of a corporation incorporated under the DGCL are required to present business opportunities to a corporation if:

        Prospect was created to serve as a vehicle to effect a merger, capital stock exchange, asset acquisition or other similar business combination with an operating business. As such, its officers and directors are responsible for identifying, evaluating and selecting a target business and in their capacity as officers and directors of Prospect have focused their work on finding and analyzing potential acquisition targets, analyzing valuation work, negotiating potential transaction terms with potential target companies and reviewing various business case scenarios. In addition, they have assisted Prospect by preparing investment materials, analyzing market and industry research, coordinating and reviewing due diligence work, providing technical financial modeling, including pro forma financial statements, coordinating, conducting and analyzing business plans and assisting in the preparation of applicable SEC financial information and documentation. Prospect attempted to source opportunities both proactively and reactively, and given the mandate to find a suitable business combination partner, did not limit itself to any one transaction structure (i.e. cash versus stock issued to seller, straight merger, corporate spin-out or management buy-out). Proactive sourcing involved Prospect management, among other things:

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        Reactive sourcing involved fielding inquiries or responding to solicitations by either (i) companies looking for capital or investment alternatives, (ii) lenders or equity investors which had portfolio companies for which they had a desire to engage in a sale or fundraising process or (iii) investment bankers or other similar professionals who represented a company engaged in a sale or fundraising process.

        The efforts of the officers and directors of Prospect also included discussions with other board members that highlighted general trends and opportunities in the financial services sector, profiled companies which might be attractive business combination candidates and provided introductions to the management teams of such companies where they had relevant contacts.

        Promptly following Prospect's IPO, Prospect contacted over 100 investment bankers, private equity firms, consulting firms, legal and accounting firms, as well as numerous other business relationships. In addition, Prospect directly solicited owners and executives of privately and publicly owned businesses and communicated the fact that Prospect was looking to acquire or merge with a company which had a profile that met Prospect's criteria. Through these efforts, Prospect identified and reviewed information with respect to more than 150 potential target companies.

        Between December 2007 and August 2009, based on Prospect's screening efforts and criteria evaluation, approximately 34 companies were determined as appropriate targets to advance to the next phase of the selection process. Non-disclosure agreements (and trust waivers) were signed with these potential targets and preliminary discussions were initiated. From this universe of potential targets, nine companies were further pursued to the extent that Prospect held substantive discussions regarding the type, timing and amount of consideration to be provided in a potential transaction, conducted due diligence and engaged the potential seller in a negotiation process. In each of these cases, Prospect pursued the transaction because it believed the target company represented a favorable opportunity for Prospect stockholders. Furthermore, in the cases of the targets in the asset management industries, Prospect's management had experience in managing and/or acquiring businesses similar to these, and it had been Prospect's intention to focus on these businesses from its inception. However, except for Kennedy-Wilson, in each case, Prospect was unable to reach a mutually acceptable transaction value and structure with the target.

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        The following table highlights the target businesses on which Prospect advanced to the negotiation stage, but which were ultimately dismissed as a business combination candidate:

Target Company Business
  Activity Period   Reason not Pursued

Asset Management

  December 2007 - March 2008   Executed letter of intent; could not agree on valuation

Asset Management

 

January 2008 - March 2008

 

Executed letter of intent; did not win auction process

Asset Management

 

February 2008 - April 2008

 

Executed letter of intent; seller decided not to sell

Mortgage processing

 

June 2008 - September 2008

 

Executed letter of intent; could not agree on valuation

Specialty finance

 

November 2008 - March 2009

 

Seller decided to pursue alternative transaction

Investment company

 

April 2009 - June 2009

 

Executed letter of intent; could not agree on valuation

Mortgage processing

 

April 2009 - June 2009

 

Executed letter of intent; insufficient audited financials of seller

Mortgage insurance

 

July 2009 - August 2009

 

Executed letter of intent; did not win auction process

        On June 15, 2009, David A. Minella, Chairman and Chief Executive Officer of Prospect, was contacted by Roberto De Guardiola of De Guardiola. Mr. De Guardiola explained that Kennedy-Wilson was seeking to raise equity capital to enable it to expand its real estate investment activities, and that a special purpose acquisition company, such as Prospect, could address Kennedy-Wilson's equity raising goals while also achieving another objective of listing on a United States securities exchange.

        On June 17, 2009, De Guardiola prepared some non-confidential information which outlined the business and management team at Kennedy-Wilson, in preparation for a teleconference between Prospect and Kennedy-Wilson management which was held on June 18, 2009.

        On June 18, 2009, Prospect and Kennedy-Wilson entered into a non-disclosure agreement and Prospect received certain confidential information from Kennedy-Wilson. The Prospect team reviewed the materials and began gathering industry research with the assistance of De Guardiola. An initial meeting of Messrs. Minella and Cahill with the Kennedy-Wilson management team was held on June 23, 2009 at the offices of De Guardiola to discuss the Kennedy-Wilson business in more detail and how a potential transaction between the two organizations could be mutually beneficial.

        On June 24, 2009, Prospect submitted a preliminary business due diligence request list to Kennedy-Wilson, and began to receive and review information related to the Kennedy-Wilson business, financial history and prospective growth objectives.

        At this time, Prospect began to focus more closely on Kennedy-Wilson as a potential target because Prospect management believed that the Kennedy-Wilson business was well positioned to capitalize on growth opportunities in its business, and that the goals of Kennedy-Wilson current owners were strongly aligned with the special purpose acquisition company structure. Specifically, the existing Kennedy-Wilson's owners were interested in retaining their existing equity interest, becoming a public company listed on United States securities exchange, and using Prospect's cash to take advantage of distressed and other real estate investment opportunities. Prospect's management found this type of

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transaction structure to be very attractive because it aligned the interests of Prospect's stockholder base with those of Kennedy-Wilson's existing owners and also because Prospect's initial due diligence reflected that the real estate investment opportunities available to Kennedy-Wilson could generate significant returns for stockholders.

        Continuing throughout the early part of July 2009, Prospect continued to review and consider the Kennedy-Wilson opportunity, while also continuing to investigate various other opportunities. Prospect executive management continued to speak with Kennedy-Wilson management regarding the prospective transaction and why it represented a compelling opportunity for both Prospect and Kennedy-Wilson stockholders.

        The Prospect team, led by Mr. Minella, with the help of Prospect's financial advisors, Citigroup and De Guardiola, analyzed the current real estate investment environment, precedent merger and acquisition transaction valuations, and publicly available comparable company valuations. The team also considered Kennedy-Wilson's business plan, including the opportunity to grow both its investments and services businesses, both of which Prospect believed had strong growth potential.

        On July 7, 2009, Mr. Minella had a follow-up meeting with William McMorrow and Donald Herrema of Kennedy-Wilson and Mr. De Guardiola, during which the parties shared their preliminary views on general terms that might be attractive to each regarding a transaction. Over the next several days, Prospect and Kennedy-Wilson continued to discuss potential transaction terms.

        On July 13, 2009, the acquisition committee of the board of directors of Prospect held a telephonic meeting to discuss Prospect's progress in its discussions with Kennedy-Wilson and to seek approval to submit a non-binding letter of intent. The committee reviewed the general terms of a proposed transaction and unanimously approved execution of a non-binding letter of intent with Kennedy-Wilson.

        On July 13, 2009, Prospect submitted a written proposal to Kennedy-Wilson. This proposal contemplated that Prospect would issue to Kennedy-Wilson's existing stockholders a total of 25.5 million shares of Prospect common stock, including common shares to be issued to Kennedy-Wilson's existing convertible preferred stockholders who would be required to convert the shares into common stock. This provided a total value to Kennedy-Wilson's shares of approximately $255 million assuming a Prospect common stock price of $10.00. The proposal also contemplated an allocation of an additional 2.2 million shares to a management incentive plan, as well as the issuance of 0.375 million shares being issued De Guardiola as partial payment of its advisory fee. The proposal also called for the Prospect founders to forfeit 2.575 million shares. In addition, the proposal called for Kennedy-Wilson, and potentially Prospect and De Guardiola, to purchase Prospect Public Warrants subsequent to the execution and announcement of the definitive Merger Agreement and for the existing Kennedy-Wilson management option plan to be cancelled. In connection with the option plan, the parties subsequently agreed that all Public Warrants purchased up to 50% of the amount currently held by the public would be retired, and any additional Public Warrants purchased would be set aside in a management incentive pool.

        On July 13, 2009, Prospect and Kennedy-Wilson, executed a non-binding letter of intent which outlined the terms under which both sides agreed to work towards a definitive agreement and provided limitations on Kennedy-Wilson's ability to pursue alternative transactions.

        On July 13, 2009, and subsequent to the execution of the non-binding letter of intent, Prospect provided an additional business due diligence request list to Kennedy-Wilson. Over the next several weeks Kennedy-Wilson provided business due diligence information to Prospect and its advisors, including Citigroup and De Guardiola, all of whom continued to review these materials.

        On July 14, 2009, Messrs. Minella and Cahill, along with representatives from Citigroup and De Guardiola, met with Kennedy-Wilson's management team at Kennedy-Wilson's headquarters in Beverly Hills, California and discussed in more detail specific opportunities related to the Kennedy-Wilson business lines and how a potential transaction could help it achieve those objectives.

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        On August 1, 2009, Loeb and Loeb LLP, on behalf of Kennedy-Wilson, provided Prospect with a draft Merger Agreement which formed the basis for the negotiation of a definitive agreement between Prospect and Kennedy-Wilson.

        On August 8, 2009, Prospect provided a legal due diligence list to Kennedy-Wilson, and over the following several weeks Prospect and its legal counsel, Bingham McCutchen LLP, reviewed the information provided and continued to conduct legal due diligence and revise and negotiate the definitive Merger Agreement with Kennedy-Wilson and its legal representatives.

        In the course of negotiating the definitive Merger Agreement, Prospect and Kennedy-Wilson sought to address each party's concerns about deal certainty. Because of logistical issues, obtaining an agreement from a majority of Kennedy-Wilson's common stockholders to vote in favor of the Merger might have precluded Prospect from registering the offering of its shares of common stock issued in the Merger. Accordingly, Prospect and Kennedy-Wilson agreed that Kennedy-Wilson would pay Prospect a break up fee of $10 million if less than a majority of the shares of Kennedy-Wilson common stock approve the Merger. Prospect and Kennedy-Wilson also agreed to an exception to Kennedy-Wilson's blanket waiver of claims against the Trust Account that will permit Kennedy-Wilson to recover its damages up to $10 million if it prevails in a claim that Prospect breached Prospect's no-shop covenant in the Merger Agreement.

        On August 20, 2009, Prospect engaged Houlihan Smith to render a fairness opinion to the board of directors as to whether, on the date of such opinion, the purchase price was fair, from a financial point of view, to Prospect's stockholders, and to opine on whether the fair market value of Kennedy-Wilson was at least equal to 80% of the balance of Prospect's Trust Account (excluding the amount held in the Trust Account representing a portion of the underwriters' discount). Representatives of Houlihan Smith held discussions with Prospect and the management team of Kennedy-Wilson, reviewed materials, including a draft of the Merger Agreement, dated September 2, 2009, financial statements of Kennedy-Wilson, internal financial statements and financial projections prepared by Kennedy-Wilson, as well as other due diligence materials concerning both Kennedy-Wilson and its industry.

        On August 23, 2009, Prospect engaged RSM McGladrey ("RSM") to conduct limited scope financial and tax due diligence on Kennedy-Wilson. After the audit committee approval noted below, Representatives from RSM met with Kennedy-Wilson's management at its headquarters in Beverly Hills, California, performed limited scope financial due diligence, held discussions with management, met with Kennedy-Wilson's tax preparer and performed limited scope tax due diligence. During the period of its limited scope due diligence, RSM provided updates regarding its findings and analysis to Prospect on a regular basis.

        On August 24, 2009, Prospect held a telephonic meeting of the audit committee of its board of directors, at which the audit committee approved the engagement of RSM to perform limited scope financial and tax due diligence on Kennedy-Wilson. Prospect also held an update call with its board of directors on August 24, 2009 to discuss the status of the negotiations regarding the definitive Merger Agreement with Kennedy-Wilson.

        On August 31, 2009 Messrs. Minella and Cahill met with the Kennedy-Wilson management team at the offices of Citigroup, along with representatives from De Guardiola and Deutsche Bank, Kennedy-Wilson's financial advisor. The parties discussed the relative benefits of retiring any and all warrants that might be repurchased prior to or after the closing of the potential transaction as opposed to setting those aside for a management incentive pool. In place of the warrants that would have been set aside, the parties agreed to increase the number of management incentive shares to 4.0 million from 2.2 million. In addition, it was agreed that certain executive officer change of control payments which might have been triggered by the transaction, totaling approximately $15.7 million, would be foregone, and instead an incentive bonus arrangement of an equivalent amount would be established. This arrangement called for the payment of $6.9 million prior to closing, (to be returned if the transaction

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does not close), and an additional $3.4 million during fiscal 2010 and $5.4 million during fiscal 2011, subject to certain performance measures being attained. In addition, it was agreed that a note receivable owed to Kennedy-Wilson by Mr. McMorrow, totaling $4.1 million, including accrued interest through June 30, 2009, would be forgiven. In addition, based upon the current momentum of the business as compared to what had been previously discussed, it was also agreed that the 25.5 million shares to be issued to Kennedy-Wilson common stockholders and convertible preferred stockholders would be increased to 26.0 million, valuing those shares at approximately $260 million, assuming a Prospect common stock price of $10.00.

        On September 4, 2009, Prospect convened a telephonic meeting of the acquisition committee of its board of directors and Prospect's executive management presented the transaction to the committee. Citigroup, one of Prospect's financial advisors, presented an overview of the valuation analysis related to the pending transaction. RSM presented its limited scope financial and tax due diligence findings and Bingham McCutchen presented its legal due diligence findings to the acquisition committee. After extensive discussions, the acquisition committee approved making a recommendation to the board of directors that it adopt the Merger Agreement in substantially the form presented to the acquisition committee and authorize and empower certain Prospect officers to execute and deliver the Merger Agreement on behalf of Prospect.

        On September 4, 2009, Kennedy-Wilson convened a telephonic meeting of its board of directors to discuss the Merger Agreement and related agreements. Kennedy-Wilson's executive management presented to the board of directors various aspects of the proposed Merger and Berkshire Capital Securities LLC, one of Kennedy-Wilson's financial advisors, delivered a presentation in which it opined that the purchase price was fair, from a financial point of view, to the stockholders of Kennedy-Wilson. In addition, Deutsche Bank Securities Inc., another Kennedy-Wilson financial advisor, provided an overview of the equity markets and the expected process. Finally, Frederic Cook & Co., Kennedy-Wilson's compensation consultant, presented on the 2009 Plan and other related compensation issues involved in the Merger. After a detailed discussion and question and answer session, the board of directors unanimously approved the Merger Agreement and other related documents substantially in the form presented to the board of directors and authorized and empowered certain Kennedy-Wilson officers to execute and deliver the Merger Agreement on behalf of Kennedy-Wilson.

        On September 5, 2009, Prospect convened a telephonic meeting of its board of directors to discuss the Merger Agreement and related agreements. Prospect's executive management presented to the board of directors various aspects of the proposed Merger and Houlihan Smith delivered its opinion that the purchase price was fair, from a financial point of view, to the stockholders of Prospect, and that the fair market value of Kennedy-Wilson was equal to at least 80% of the balance in Prospect's Trust Account (excluding the amount held in the Trust Account representing a portion of the underwriters' discount). Bingham McCutchen LLP provided an overview of board fiduciary duties in the context of a transaction, and summarized material terms of the Merger Agreement and ancillary agreements. After extensive discussions, the board of directors approved the Merger Agreement and ancillary documents substantially in the forms presented to the board of directors and authorized and empowered certain Prospect officers to execute and deliver such agreements on behalf of Prospect. The board of directors further determined that the Merger was fair to and in the best interests of Prospect's stockholders and that the fair market value of Kennedy-Wilson was equal to at least 80% of the balance in Prospect's Trust Account (excluding the amount held in the Trust Account representing a portion of the underwriters' discount) and resolved to recommend to the stockholders of Prospect that they approve and adopt the Merger Agreement.

        Prospect and Kennedy-Wilson continued to finalize the Merger Agreement and ancillary agreements through September 7, 2009.

        On September 8, 2009, Prospect again convened a telephonic meeting of its board of directors to establish a special independent committee to review certain post-closing compensation arrangements,

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which were presented to the committee by Prospect's executive management and legal representatives. After extensive discussions, the independent committee of the board of directors unanimously approved the post-closing compensation arrangements for Kennedy-Wilson management substantially in the forms presented to the committee.

        On the night of September 8, 2009, the parties executed the Merger Agreement and jointly announced the agreement by means of a press release on the morning of September 9, 2009.

        On September 11, 2009, Prospect and Kennedy-Wilson filed a Form 8-K containing an investor presentation which provided further public disclosure on the Merger. A joint public conference call was held the morning of September 14, 2009 regarding the Merger.

Prospect's Board of Directors' Reasons for the Approval of the Merger

        The Prospect board of directors has concluded that the Merger with Kennedy-Wilson is in the best interests of Prospect's stockholders and unanimously recommends that you vote "FOR" the Merger Proposal.

        In arriving at its determination to approve the Merger and the Merger Agreement with Kennedy-Wilson, the board of directors of Prospect relied on information (including financial information) relating to Kennedy-Wilson, the regulatory environment, industry dynamics, the reports of outside due diligence consultants and its own collective experience in investing in, managing and financing growth companies.

        The Prospect board of directors also confirmed that the Merger with Kennedy-Wilson would satisfy the conditions for a merger candidate as set forth in the Prospect final prospectus dated November 14, 2007 for Prospect's IPO, including the requirement that Kennedy-Wilson's fair market value as the target business equal at least 80% of the balance of Prospect's Trust Account (excluding the amount held in the Trust Account representing a portion of the underwriters' discount). The fair market value of Kennedy-Wilson was determined by the board of directors based on a variety of factors generally accepted by the financial community in valuing companies, including a comparative company analysis in which the board of directors analyzed other real estate services companies. The board of directors also considered the opinion of Houlihan Smith dated September 5, 2009 that the Merger is fair from a financial point of view to the Prospect stockholders and to the effect that, as of such date, the fair market value of Kennedy-Wilson as indicated by Houlihan Smith's financial analyses was at least equal to $194 million. A copy of Houlihan Smith's opinion, which sets forth the procedures followed, assumptions made, qualifications and limitations on the review undertaken and other matters considered by Houlihan Smith in preparing its opinion is attached as Annex E and is discussed below under the section entitled "The Merger Proposal—Fairness Opinion."

        The Prospect board of directors considered financial data for selected companies with publicly traded securities that it deemed similar to Kennedy-Wilson in one or more financial, operating or other respects as part of its analysis, as well as similar analyses which Houlihan Smith reviewed with the board of directors in connection with rendering its opinion.

        The Prospect board of directors considered a wide variety of factors in connection with its evaluation of the Merger. In light of the complexity of those factors, the Prospect board of directors did not consider it practicable to, nor did it attempt to, quantify or otherwise assign relative weights to the specific factors it considered in reaching its decision. In addition, individual members of the Prospect board may have given different weight to different factors. Such factors included, among other things:

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        The analysis of Prospect's board of directors in reaching this conclusion is described in more detail below. In considering the Merger, Prospect's board gave considerable weight to the following positive factors:

        Prospect's board of directors' belief that Kennedy-Wilson has the ability to continue its growth because opportunities exist to:

The Experience of Kennedy-Wilson's Management

        An important consideration of Prospect's board of directors in approving the Merger was Kennedy-Wilson's seasoned management team, which has acquired, developed and managed more than $15 billion of real estate. On average, the members of Kennedy-Wilson's senior management team have more than 25 years of real estate experience and have worked together for more than a decade. Kennedy-Wilson's executives have built highly regarded reputations in the real estate industry, which they have utilized to attract large institutional clients, execute successful, high return real estate

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transactions, negotiate with lenders and potential joint venture partners and develop a diversified real estate services firm. Prospect's board of directors believes that the experience of Kennedy-Wilson's management team provides it with a competitive advantage in this regard.

Comparable Company and Comparable Transaction Valuation Metrics

        The Prospect board of directors reviewed valuation metrics from management's analysis and that of third-party investment banks for companies that it believed were somewhat representative of Kennedy-Wilson's services and asset management business lines and, in that regard, within the context of the proposed Merger. Comparable asset management and real estate companies considered included:

The Terms of the Merger Agreement

        The terms of the Merger Agreement, including the closing conditions, restrictions on each party's ability to respond to competing proposals and the termination provisions are customary and reasonable.

Additional Factors

        Prospect's board of directors believes that the above factors strongly supported its determination and recommendation to approve the Merger. The Prospect board of directors did, however, consider potentially negative factors, among others, including the risk factors included in this proxy statement/prospectus, in its deliberations concerning the Merger.

        Prospect's board of directors also considered the risk that the current public stockholders of Prospect would vote against the Merger and demand to convert their shares for cash upon consummation of the Merger, thereby depleting the amount of cash available to the combined company following the Merger. For the reasons stated below, Prospect's board of directors deemed this risk to be less with regard to Kennedy-Wilson than it would be for other target companies and believes that Kennedy-Wilson will still be able to implement its business plan even if the maximum number of public stockholders exercise their conversion rights and the post-Merger company receives only approximately 70% of the funds deposited in the Trust Account.

        Prospect's board of directors also believes that a transaction with Kennedy-Wilson presents less risk than other investments based on the quantitative and qualitative analysis conducted by Prospect's board. The quantitative analysis focused on Kennedy-Wilson's balance sheet and past results of operations and Kennedy-Wilson's management's projections and expected growth opportunities given its market position. The qualitative analysis of the investment includes the potential value represented by Kennedy-Wilson's strong management team and industry fundamentals that support Kennedy-Wilson's ability to leverage its industry relationships to raise additional funds and identify and consummate successful, off-market real estate transactions.

        Prospect's board of directors also considered the fact that certain officers and directors of Prospect may have interests in the Merger that are different from, or are in addition to, the interests of Prospect stockholders generally, including the matters described below under the section entitled "The Merger Proposal—Interests of Prospect's Directors and Officers in the Merger." However, this fact would exist with respect to a merger with any target company.

        After deliberation, the Prospect board of directors determined that these potentially negative factors were outweighed by the potential benefits of the Merger, including the opportunity for Prospect stockholders to share in Kennedy-Wilson's future possible growth prospects. Prospect expects Kennedy-

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Wilson to benefit from strong organic growth in raising significant additional assets for investment and realizing strong investment returns through its real estate investment transactions.

Satisfaction of 80% Test

        It is a requirement that any business acquired by Prospect have a fair market value equal to at least 80% of the balance of Prospect's Trust Account (excluding the amount held in the Trust Account representing a portion of the underwriters' discount). Based on the financial analysis Prospect generally used to approve the transaction, including a comparison of comparable companies, the Prospect board of directors determined that this requirement was met. The board also determined that the consideration being paid in the Merger, which amount was negotiated at arms-length, was fair to and in the best interests of Prospect and its stockholders and appropriately reflected Kennedy-Wilson's value. In reaching this determination, the board concluded that it was appropriate to base such valuation on qualitative factors such as management strength and depth, competitive positioning, marketing relationships and investment skills as well as quantitative factors such as Kennedy-Wilson's potential for future growth in revenues and profits and the historical return on investment realized by its separate account investors. The Prospect board of directors believes because of the financial skills and background of several of its members, it was qualified to conclude that the acquisition of Kennedy-Wilson met this requirement. Prospect has also received an opinion from Houlihan Smith that the 80% test has been met which was based on a comparison of comparable companies, comparable transactions and a discounted cash flow analysis.

Interests of Prospect's Directors and Officers in the Merger

        When you consider the recommendation of Prospect's board of directors in favor of approval of the Merger Proposal, you should keep in mind that Prospect's executive officers and members of Prospect's board have interests in the Merger that are different from, or in addition to, your interests as a stockholder or warrantholder. These interests include, among other things:

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        In addition, at any time prior to the special meeting of Prospect stockholders and special meeting of Prospect warrantholders, during a period when they are not then aware of any material nonpublic information regarding Prospect or its securities, the Prospect founders, Kennedy-Wilson and Kennedy-Wilson Holders and/or their respective affiliates may purchase shares of common stock or Public Warrants from institutional and other investors, or execute agreements to purchase such shares of common stock or Public Warrants from them in the future, or they may enter into transactions with such persons and others to provide them with incentives to acquire shares of Prospect common stock or Public Warrants or vote their shares of common stock or Public Warrants in favor of the Merger Proposal and the Warrant Amendment Proposal, as applicable. The purpose of such Public Warrant purchases and other transactions would be to increase the likelihood that holders of a majority of shares underlying the warrants is present and voting at the special meeting of Prospect warrantholders. The purpose of such share purchases and other transactions would be to increase the likelihood of satisfaction of the requirements that the holders of a majority of the Public Shares present in person or by proxy and eligible to vote at the special meeting of Prospect stockholders vote in favor of, and that holders of fewer than 30% of the Public Shares vote against, the Merger Proposal and demand conversion of their Public Shares into cash where it appears that such requirements would otherwise not be met.

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        While the exact nature of any incentives that would be provided by the Prospect founders, Kennedy-Wilson and Kennedy-Wilson Holders and/or their respective affiliates has not been determined as of the date of this proxy statement/prospectus, they might include, without limitation, arrangements to protect such investors or holders against potential loss in value of their shares of common stock or Public Warrants, including the granting of put options and the transfer to such investors or holders of shares of common stock or Public Warrants owned by the Prospect founders for nominal value. Prospect will not enter into any such arrangement, either prior to or after the consummation of the Merger, and no funds in its Trust Account will be used to make such purchases or to fund other such arrangements. Entering into any such arrangements may have a depressive effect on Prospect's common stock and Public Warrants.

        If such transactions are effected, the consequence could be to cause the Merger Proposal or the Warrant Amendment Proposal to be approved in circumstances where such approval could not otherwise be obtained. Purchases of shares of common stock or Public Warrants by the persons described above would allow them to exert more influence over the approval of the Merger Proposal or the Warrant Amendment Proposal and other proposals and would likely increase the chances that such proposals would be approved. Moreover, any such purchases may make it less likely that the holders of 30% or more of the Public Shares will vote against the Merger Proposal and exercise their conversion shares.

        As of the date of this proxy statement/prospectus, there have been no such discussions with respect to any such transactions and no agreements to such effect have been entered into with any such investor or holder. Prospect will file a Current Report on Form 8-K to disclose any arrangements entered into or significant purchases made by any of the aforementioned persons that would affect the vote on the Merger Proposal, the Warrant Amendment Proposal, the Charter Amendment Proposal, or the conversion threshold.

Recommendation of Prospect's Board of Directors

        After careful consideration of the matters described above, particularly Kennedy-Wilson's record of high return on investments, potential for growth and profitability, the experience of Kennedy-Wilson's management, its competitive positioning, its customer and employee relationships, and its significant fund raising potential, Prospect's board of directors determined unanimously that each of the Merger Proposal, the Charter Amendment Proposal, the Director Election Proposal, the Equity Participation Plan Proposal and the Stockholder Adjournment Proposal is fair to and in the best interests of Prospect and its stockholders. Prospect's board of directors has approved and declared advisable and unanimously recommends that you vote or give instructions to vote "FOR" each of these proposals.

        The foregoing discussion of the information and factors considered by the Prospect board of directors is not meant to be exhaustive, but includes the material information and factors considered by the Prospect board of directors.

Kennedy-Wilson Board of Directors' Reasons for Approving the Merger

        Kennedy-Wilson's board of directors believes the Merger is in the best interests of Kennedy-Wilson and its stockholders. In reaching its determination to adopt the Merger Agreement, Kennedy-Wilson's board of directors consulted with its management and its financial and legal advisors, and considered a number of factors. The following is a description of some of the material factors that Kennedy-Wilson's board believes favor the Merger:

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        In the course of its deliberations regarding the Merger, Kennedy-Wilson's board of directors also considered the following factors that Kennedy-Wilson's board of directors determined did not outweigh the benefits to Kennedy-Wilson and its stockholders expected to be generated by the Merger:

        Kennedy-Wilson's board of directors did not assign any relative or specific weights to the factors considered in reaching that determination, and individual directors may have given differing weights to different factors.

Interests of Kennedy-Wilson's Directors and Executive Officers in the Merger

        You should be aware that certain members of the Kennedy-Wilson board and certain executive officers of Kennedy-Wilson have agreements or arrangements that provide them with interests in the Merger.

        If the Merger is consummated, William J. McMorrow and Mary Ricks will be potentially entitled to receive certain cash bonus payments of up to $11.7 million and $4.0 million, respectively. The cash bonus payments will be payable as follows: (i) Mr. McMorrow and Ms. Ricks will receive "performance unit awards" under the 2009 Plan which will entitle them to receive $4.85 million and $2.0 million, respectively, on October 15, 2009, provided, however, that such payments will be repaid to Kennedy-

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Wilson in the event the Merger is not consummated by November 15, 2009 or the executive is not employed by Kennedy-Wilson on the effective date of the Merger (these employment requirements will not apply, however, in the case of a termination of employment due to death or disability); (ii) Mr. McMorrow and Ms. Ricks will be entitled to receive $2.425 million and $1.0 million, respectively, on April 1, 2010, provided that the Performance Target is met as of March 31, 2010 (in the event that the Performance Target is not met as of March 31, 2010, the bonus otherwise due April 1, 2010 shall, nevertheless, be paid on July 1, 2010, October 1, 2010, or January 1, 2011, respectively, if the Performance Target is satisfied as of the earliest of June 30, 2010, September 30, 2010, or December 31, 2010, respectively), and the executive remains employed through the date on which the Performance Target is satisfied; and (iii) Mr. McMorrow and Ms. Ricks will receive additional "performance unit awards" under the 2009 Plan which will entitle them to receive cash payments in the amounts of $4.425 and $1.0 million, respectively, on January 1, 2011, provided that the Performance Target is met as of December 31, 2010 and he or she, as applicable, remains employed by the post-Merger company through January 1, 2011. Notwithstanding the foregoing, in the event that the Merger is consummated and the employment of Mr. McMorrow or Ms. Ricks is terminated by the post-Merger company without cause or he or she, as applicable, resigns from his or her, as applicable, employment with the post-Merger company for good reason, the payments referred to in clauses (ii) and (iii) above will still be payable on the applicable payment dates if the Performance Target is met. The Performance Target was established by an independent committee of Prospect and is subject to the approval of the compensation committee of the post-Merger company following the consummation of the Merger.

        On April 10, 2006, William J. McMorrow borrowed $3,543,127 from Kennedy-Wilson evidenced by a Promissory Note bearing simple interest at a rate of 7.5% per annum and scheduled to mature on April 9, 2011. Mr. McMorrow's employment agreement has been amended to provide that the McMorrow Note will be forgiven if the Merger is consummated.

        If the Merger is consummated, certain of Kennedy-Wilson's executive officers will continue to be employed with the post-Merger company, including William J. McMorrow, Freeman A. Lyle, Barry S. Schlesinger, Mary Ricks, James A. Rosten, Robert E. Hart and Donald J. Herrema. In addition, it is proposed that six members of the board of directors of Kennedy-Wilson will be elected to serve as directors of the post-Merger company. To reward and incentivize Kennedy-Wilson's key employees and management after the Merger, up to 4,000,000 shares of Prospect common stock will be reserved for issuance under the 2009 Plan. If the Merger is consummated, certain Kennedy-Wilson officers, directors and key employees will be issued an aggregate of 3,740,000 restricted shares of Prospect common stock under the 2009 Plan upon the closing of the Merger as set forth in the table below:

Name of Group
  Dollar ($)   Number of Shares
of Restricted Stock
 

William McMorrow, Chief Executive Officer

  $     900,000  

Freeman Lyle, Chief Financial Officer

  $     50,000  

Mary Ricks, Co-CEO of KW Commercial Investment Group

  $     900,000  

Barry Schlesinger, Co-CEO of KW Commercial Investment Group

  $     125,000  

Robert Hart, President of KW Multi-Family Management Group

  $     125,000  

James Rosten, President of Kennedy-Wilson Properties

  $     125,000  

All executive officers, as a group

  $     3,495,000  

All directors who are not executive officers, as a group

  $     25,000  

All employees, including all current officers who are not executive officers, as a group

  $     220,000  

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        In the event that the recipient of the restricted shares remains employed by (or continues to perform services as a director for) the post-Merger company through the relevant vesting date, 1/5 of the restricted shares will vest on each of the first five anniversaries of the date of issuance, provided that the Performance Target is met as of the September 30 immediately preceding the applicable anniversary date (in the case of the installments vesting on the fourth and fifth anniversary dates, the Performance Target must be met as of the September 30 immediately preceding the third anniversary date). The Performance Target was established by an independent committee of Prospect and is subject to the approval of the compensation committee of the post-Merger company following the consummation of the Merger. Notwithstanding the foregoing, in the event the employment with the post-Merger company of an employee who has been granted restricted shares is terminated without cause or if the employee resigns from his employment with the post-Merger company for good reason, the restricted shares will continue to vest on the applicable anniversary dates (subject to the satisfaction of the Performance Target), subject to certain limitations. In addition, in the event of a "Change of Control" as defined in the 2009 Plan (see "The Equity Participation Plan Proposal—"Change of Control"), any unvested restricted shares of Prospect common stock that have not previously been forfeited will become vested, subject to certain limitations. See section "The Equity Participation Plan Proposal—Awards to Particular Officers, Directors and Employees" for additional information.

        In connection with the Merger, Mr. McMorrow and Ms. Ricks have entered into amendments to their employment agreements which provide for, among other things, (i) the removal of certain benefits in the event of a change in control; (ii) the addition of certain severance benefits if the executive resigns on account of a change in location or a material reduction in duties; (iii) the grant to each executive of 900,000 shares of restricted stock of Prospect pursuant to the 2009 Plan and upon the terms and conditions set forth above; (iv) the cash bonus payments set forth above and (v) in the case of Mr. McMorrow, the McMorrow Note forgiveness described above. Mr. Herrema has also entered into an amendment to his employment agreement which provides for the extension of his employment term from December 31, 2010 to January 31, 2014 as well as clauses (ii) - (iii) above. In addition, the employment agreements for Messrs. McMorrow and Herrema and Ms. Ricks have been amended to include language intended (i) to provide for a reduction in the amount of payments or benefits payable or provided to them under their respective employment agreements or otherwise to ensure that no payment or benefit is subject to the excise tax imposed by Section 4999 of the Code (certain golden parachute payments) which reduction may, in certain circumstances, result in the repayment of certain previously paid amounts (plus earnings) to the post-Merger company, and (ii) to achieve compliance with Section 409A of the Code.

Fairness Opinion

        Houlihan Smith delivered a presentation in conjunction with its written opinion to the board of directors of Prospect on September 5, 2009, which stated that, as of September 5, 2009, and based upon and subject to the assumptions made, matters considered, and limitations on its review as set forth in the fairness opinion, (i) the Merger consideration to be paid by Prospect for Kennedy-Wilson in conjunction with the Merger is fair from a financial point of view to the stockholders of Prospect, and (ii) the fair market value of Kennedy-Wilson is at least equal to 80% of the balance in Prospect's Trust Account (excluding the amount held in the Trust Account representing a portion of the underwriters' discount). The amount of the Merger consideration was determined pursuant to negotiations between Prospect and Kennedy-Wilson and not pursuant to recommendations of Houlihan Smith. The full text of the written opinion of Houlihan Smith is attached as Annex F and is incorporated by reference into this proxy statement/prospectus. Prospect paid Houlihan Smith a non-contingent, non-refundable fee in the amount of $85,000 for its services in rendering the fairness opinion, plus the reimbursement of reasonable out-of-pocket expenses up to $5,000. Prospect also agreed to indemnify Houlihan Smith in the event Houlihan Smith were to incur certain losses as a

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result of its engagement by Prospect. No material relationship exists or has existed within the past between Houlihan Smith and Prospect, or Kennedy-Wilson.

        You are urged to read the Houlihan Smith opinion carefully and in its entirety for a description of the assumptions made, matters considered, procedures followed and limitations on the review undertaken by Houlihan Smith in rendering its opinion. The summary of the Houlihan Smith opinion set forth in this proxy statement/prospectus is qualified in its entirety by reference to the full text of the opinion attached as Annex F. Prospect will make available the fairness opinion for inspection and copying at its principal executive office during regular business hours to any interested security holder or an authorized representative. A copy of the fairness opinion will also be mailed to any interested security holder or authorized representative upon written request to Prospect's secretary and at the expense of the requesting security holder.

        The Houlihan Smith opinion is for the use and benefit of Prospect's board of directors in connection with its consideration of the Merger and is not intended to be and does not constitute a recommendation to you as to how you should vote or proceed with respect to the Merger. Houlihan Smith was not requested to opine as to, and its opinion does not in any manner address, the relative merits of the transaction as compared to any alternative business strategy that might exist for Prospect, its underlying business decision to proceed with or effect the Merger, and other alternatives to the Merger that might exist for Prospect. Houlihan Smith does not express any opinion as to the underlying valuation or future performance of Kennedy-Wilson or the price at which Prospect's securities might trade at any time in the future.

        In arriving at its opinion, Houlihan Smith took into account an assessment of general economic, market and financial conditions, as well as its experience in connection with similar transactions and securities valuations generally. In so doing, among other things, Houlihan Smith:

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        In arriving at its opinion, Houlihan Smith relied upon and assumed, without independent verification, the accuracy, completeness and reasonableness of the financial, legal, tax, and other

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information discussed with or reviewed by Houlihan Smith and assumed such accuracy and completeness for purposes of rendering its opinion. In addition, Houlihan Smith did not make any independent evaluation or appraisal of any of the assets or liabilities (contingent or otherwise) of Kennedy-Wilson, nor was Houlihan Smith furnished with any such evaluation or appraisal. In addition, Houlihan Smith did not attempt to confirm whether Kennedy-Wilson had good title to its assets. Further, Houlihan Smith relied upon the assurances of both Prospect's management and Kennedy-Wilson's management that they were not aware of any facts or circumstances that would make any such information inaccurate or misleading. With respect to the financial information and projections utilized, Houlihan Smith assumed that such information has been reasonably prepared on a basis reflecting the best currently available estimates and judgments, and that such information provides a reasonable basis upon which it could make an analysis and form an opinion. The projections were prepared by Kennedy-Wilson's management and are not to be interpreted as projections of future performance (or "guidance") by Prospect's management. Houlihan Smith did not receive any instructions from Prospect or Kennedy-Wilson on how to use or rely on the projections used in rendering its fairness opinion. Houlihan Smith did not evaluate the solvency or fair value of Kennedy-Wilson under any foreign, state or federal laws relating to bankruptcy, insolvency or similar matters.

        Houlihan Smith assumed that the transaction will be consummated in a manner that complies in all respects with the applicable provisions of the Securities Act, the Securities Exchange Act of 1934 (the "Exchange Act") and all other applicable foreign, federal and state statutes, rules and regulations. Houlihan Smith assumed that the transaction will be consummated substantially in accordance with the terms set forth in the Merger Agreement as in effect as of the date of its opinion, without any further amendments thereto, and that any amendments, revisions or waivers thereto will not be detrimental to Prospect's stockholders.

        Further, Houlihan Smith's analysis and opinion are necessarily based upon information made available to Houlihan Smith, as well as the economic, monetary, market, financial, and other conditions as they existed as of the date of its opinion. Accordingly, although subsequent developments may affect its opinion, Houlihan Smith has not assumed any obligation to update, review or reaffirm its opinion.

        In connection with rendering its opinion, Houlihan Smith performed certain financial, comparative and other analyses as summarized below. Each of the analyses conducted by Houlihan Smith was carried out to provide a different perspective on the transaction, and to enhance the total mix of information available. Houlihan Smith did not form a conclusion as to whether any individual analysis, considered in isolation, supported or failed to support an opinion as to the fairness from a financial point of view, of the Merger consideration to be paid by Prospect for Kennedy-Wilson in conjunction with the Merger to Prospect's stockholders. The summary below describes the material information in Houlihan Smith's opinion, including the material analyses performed and the material factors considered by Houlihan Smith. However, the preparation of a fairness opinion is a complex process involving various determinations as to the most appropriate and relevant methods of financial analysis and the application of those methods to the particular circumstances and, therefore, a fairness opinion is not readily susceptible to partial analysis or summary description. In arriving at its opinion, Houlihan Smith made qualitative judgments as to the relevance of each analysis and factors that it considered. In addition, Houlihan Smith may have given various analyses more or less weight than other analyses, and may have deemed various assumptions more or less probable than other assumptions, so that the range of valuations resulting from any particular analysis described above should not be taken to be Houlihan Smith's view of the value of Kennedy-Wilson's assets. The estimates contained in Houlihan Smith's analyses and the ranges of valuations resulting from any particular analysis are not necessarily indicative of actual values or actual future results, which may be significantly more or less favorable than suggested by such analyses. In addition, analyses relating to the value of businesses or assets neither purports to be appraisals nor do they necessarily reflect the prices at which businesses or assets may actually be sold. Accordingly, Houlihan Smith's analyses and estimates are inherently subject to

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substantial uncertainty. Houlihan Smith believes that its analyses must be considered as a whole and that selecting portions of its analyses or the factors it considered, without considering all analyses and factors collectively, could create an incomplete and misleading view of the process underlying the analyses performed by Houlihan Smith in connection with the preparation of its opinion. The summaries of the financial reviews and analyses include information presented in tabular format. In order to fully understand Houlihan Smith's financial reviews and analyses, the tables must be read together with the accompanying text of each summary. The tables alone do not constitute a complete description of the financial analyses, including the methodologies and assumptions underlying the analyses, and if viewed in isolation could create a misleading or incomplete view of the financial analyses performed by Houlihan Smith. The analyses performed were prepared solely as part of Houlihan Smith's analysis of (i) the fairness, from a financial point of view, of the Merger consideration to be paid by Prospect for Kennedy-Wilson in conjunction with the Merger to Prospect's stockholders, and (ii) the fair market value of Kennedy-Wilson as at least equal to 80% of the balance in Prospect's Trust Account (excluding the amount held in the Trust Account representing a portion of the underwriters' discount), and were provided to Prospect's board of directors in connection with the delivery of Houlihan Smith's opinion. The opinion of Houlihan Smith was just one of the many factors taken into account by Prospect's board of directors in making its determination to approve the transaction, including those described elsewhere in this proxy statement/prospectus.

        Houlihan Smith's opinion did not constitute a recommendation to proceed with the Merger. Houlihan Smith's opinion relates solely to the question of (i) the fairness, from a financial point of view, to Prospect's stockholders of the Merger Consideration to be paid by Prospect for Kennedy-Wilson in conjunction with the Merger, and (ii) the fair market value of Kennedy-Wilson as at least equal to 80% of the balance in Prospect's Trust Account (excluding the amount held in the Trust Account representing a portion of the underwriters' discount). Houlihan Smith expressed no opinion as to the income tax consequences of the acquisition to the stockholders of Prospect.

Valuation Overview

        Based on a review of the historical and projected financial data and certain other qualitative data for Kennedy-Wilson, Houlihan Smith utilized the income valuation approach, applying the discounted cash flow method, and the market valuation approach, applying the guideline public company method and the comparable transactions method.

Income Approach—Discounted Cash Flow Method

        A discounted cash flow analysis estimates present value based upon a company's projected future free cash flow discounted at a rate reflecting risks inherent in its business and capital structure. Unlevered free cash flow represents the amount of cash generated and available for principal, interest and dividend payments after providing for ongoing business operations. Kennedy-Wilson's management prepared and provided Houlihan Smith with financial projections for Kennedy-Wilson through Kennedy-Wilson's 2014 fiscal year. Houlihan Smith used the projections for Kennedy-Wilson's 2009 fiscal year, adjusted for the last four months, through 2012 fiscal year in its discounted cash flow analysis. Houlihan Smith used the financial projections to determine the enterprise net cash flows of Kennedy-Wilson over the projected period.

        To calculate the fair market equity value of Kennedy-Wilson applying the discounted cash flow method, Houlihan Smith determined the present value of Kennedy-Wilson's enterprise net cash flows by applying a discount rate of 13% to the enterprise net cash flows for each year in the projected period as well as to a terminal enterprise net cash flow value. Houlihan Smith used this discount rate based on the weighted average cost of capital for Kennedy-Wilson, which was determined by Houlihan Smith by taking into consideration the estimated cost of equity capital in Kennedy-Wilson on a capital-structure weighted basis, the risk-free rate of return for long-term United States Treasury securities,

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rates of return for relevant corporate debt and equity securities, and specific industry risks and company risks as they relate to Kennedy-Wilson. Houlihan Smith used a build-up method to determine the cost of equity. The 30-year U.S. Treasury Coupon Bond yield of 4.18% was added to the equity risk premium 5.25% (2009 Ibbotson Stocks, Bonds, Bills and Inflation Valuation Yearbook), the industry risk premium of 4.49% (2009 Ibbotson Stocks, Bonds, Bills and Inflation Valuation Yearbook), and a size premium of 5.81% (2009 Ibbotson Stocks, Bonds, Bills and Inflation Valuation Yearbook). These items result in a cost of equity of 19.73%. Houlihan Smith assumed a cost of debt of 9% and a tax rate of 40%, resulting in an after-tax cost of debt of 5.40%. Assuming a capital structure of 50% equity and 50% debt, Houlihan Smith determined the weighted average cost of capital was 13.0%.

        Houlihan Smith subtracted Kennedy-Wilson's net interest bearing debt (excluding debt attributable to minority interest) from the present value of Kennedy-Wilson's enterprise value indicated by the discounted cash flow method to calculate the equity value of Kennedy-Wilson.

        Based on such assumptions and methodology, and after performing a series of sensitivity analyses to measure the impact of changes in the underlying assumptions and discount rate, Houlihan Smith calculated an equity value range based on the discounted cash flow analysis for Kennedy-Wilson of between $167.7 million and $273.3 million. On September 22, 2009, Prospect held a subsequent meeting of its board of directors (the "Update Meeting") to discuss matters related to the S-4. During the Update Meeting, Houlihan presented an updated range of equity value to reflect revised information regarding depreciation and capital expenditures. The range of equity value presented after incorporating that revised information was $206.8 million to $323.9 million.

Market Approach

        Houlihan Smith determined that Kennedy-Wilson has two main streams of revenue based on its segmented operations, including direct real estate ownership and fund management. Due to the significant size of the direct real estate segment, Houlihan Smith modeled these two segments separately and applied the guideline public company method to the fund management segment. Houlihan Smith valued the direct real estate segment by determining the properties' total asset value, which was reduced by debt and applied to Kennedy-Wilson's ownership percent to calculate the indicated equity value of the direct real estate segment. Houlihan Smith determined the equity value to be allocated to Kennedy-Wilson based on the following methodologies: divided the properties' net operating income by the appropriate overall capitalization rate (based on PricewaterhouseCoopers' Korpacz Real Estate Investor Survey for 2nd quarter 2009), appraisal values, value from units sold applied to the number of remaining units, recent purchase price, book value, or company estimates from previous sales. Based on these methodologies, Houlihan Smith arrived at a fair market value of the direct real estate segment of $90.4 million.

Guideline Public Company Method

        The guideline public company method applies the trading multiples of publicly-traded companies to the subject company to derive an indication of value. The analyst searches for guideline public companies in industries similar to the subject company with operating structures and target customers as similar to the subject company as possible.

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        Houlihan Smith found eight companies within the real estate services and real estate management industries that met the criteria for guideline public companies of Kennedy-Wilson's fund management segment. The companies that Houlihan Smith analyzed were as follows:

Company
  Ticker Symbol
CB Richard Ellis Group, Inc.    NYSE:CBG
Jones Lang Lasalle, Inc.    NYSE:JLL
FirstService Corp.    TSX:FSV
Grubb & Ellis Company   NYSE:GBE
Stratus Properties, Inc.    NasdaqGS:STRS
Century21 Real Estate of Japan Ltd.    JASDAQ:8898
AEONMALL Co. Ltd.    TSE:8905
Sumitomo Real Estate Sales Co. Ltd.    TSE:8870

        Houlihan Smith determined that the valuations derived from revenue and EBITDA (Earnings Before Interest Taxes Depreciation and Amortization) multiples of the guideline public companies would provide the most meaningful indication of value of Kennedy-Wilson's fund management segment. Houlihan Smith determined the indicated equity values for each multiple to derive the minimum and maximum values for the fund management segment.

        The median multiples derived from this analysis were enterprise value to revenue of 1.9 times and enterprise value to EBITDA of 10.5 times. Houlihan Smith applied these median multiples to Kennedy-Wilson's estimated 2009 revenue and EBITDA, which was discounted to the present value based on Kennedy-Wilson's weighted average cost of capital. Houlihan Smith added the fair market value of the direct real estate segment and reduced this value by net interest bearing debt to conclude a range of equity value of $101.4 million (based on revenue multiple) to $262.1 million (based on EBITDA multiple).

        At the Update Meeting, Houlihan also presented an estimated equity value for Prospect pro forma for the Merger of $555.1 million, excluding approximately $182 million in net proceeds from the transaction, based on Kennedy-Wilson's estimated 2010 EBITDA.

Comparable Transactions Method

        The comparable transactions method is a market approach which analyzes transactions involving companies operating in industries similar to Kennedy-Wilson's fund management segment. While it is known that no two companies are exactly alike, nor are any two transactions structured exactly the same, consideration is given to the similarity in size and profitability, as well as other operating characteristics of a company.

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        Houlihan Smith found six transactions within the real estate services and real estate management industries that met the criteria of Kennedy-Wilson's fund management segment. The transactions that Houlihan Smith analyzed were as follows:

Announced/
Initial Filing Date
  Target/Issuer   Total
Transaction
Value ($mm)
  Buyers/Investors
10/23/2008   Nihon Housing Co. Ltd.   $ 34.1   Relo Holdings, Inc.
04/30/2008   Bank Building Corp.   $ 38.1   Carter Bank & Trust
04/26/2008   Century Properties Fund XIV   $ 13.0   Sutter Capital Management LLC; MacKenzie Patterson Fuller, LP
09/06/2007   Bay Equities, Inc.   $ 8.7   Individual Investors
08/16/2007   Diamond City Co Ltd.   $ 1,929.0   AEONMALL Co. Ltd.
04/10/2007   Realogy Corp.   $ 9,261.9   Apollo Investment Fund VI LP; Apollo Management LP

        Houlihan Smith determined that the valuations derived from revenue and EBITDA multiples of the comparable transactions would provide the most meaningful indication of value of Kennedy-Wilson's fund management segment. Houlihan Smith determined the indicated equity values for each multiple to derive the minimum and maximum values for the fund management segment.

        The median multiples derived from this analysis were enterprise value to revenue of 2.9 times and enterprise value to EBITDA of 10.3 times. Houlihan Smith applied these median multiples to Kennedy-Wilson's estimated 2009 revenue and EBITDA, which was discounted to the present value based on Kennedy-Wilson's weighted average cost of capital. Houlihan Smith added the fair market value of the direct real estate segment and reduced this value by net interest bearing debt to conclude a range of equity value of $158.1 million (based on revenue multiple) to $256.0 million (based on EBITDA multiple).

        At the Update Meeting, Houlihan also presented an estimated equity value for Prospect pro forma for the Merger of $621.6 million, excluding approximately $182 million in net proceeds from the transaction, based on Kennedy-Wilson's estimated 2010 EBITDA.

80% Test

        Prospect's initial business combination must be with a target business whose fair market value is at least equal to 80% of the balance in Prospect's Trust Account (excluding the amount held in the Trust Account representing a portion of the underwriters' discount) at the time of such acquisition. In support of its opinion that, as of the date of its opinion, the fair market value of Kennedy-Wilson is at least equal to 80% of the balance in Prospect's Trust Account (excluding the amount held in the Trust Account representing a portion of the underwriters' discount), Houlihan Smith reviewed and estimated Prospect's net Trust Account based on its balance as of June 30, 2009, which was approximately $242.5 million, 80% of which is approximately $194.0 million. Houlihan Smith compared this threshold to Kennedy-Wilson's indicated range of fair market value from Houlihan Smith's three valuation methodologies: discounted cash flow method, guideline public company method, and comparable transactions method. Based on such analysis, Houlihan Smith concluded that the midpoint of the fair market value indicated by these methodologies (approximately $203.1 million) exceeds 80% of the balance in Prospect's Trust Account (excluding the amount held in the Trust Account representing a portion of the underwriters' discount). While Prospect's board of directors considered the opinion and analysis of Houlihan Smith in approving the Kennedy-Wilson acquisition, prior to completing the acquisition, the board of directors will make its definitive determination of whether the 80% test is satisfied as of the date of the acquisition.

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        Based on the information and analyses set forth above, Houlihan Smith delivered its written opinion to Prospect's board of directors, which stated that, as of September 5, 2009, based upon and subject to the assumptions made, matters considered, and limitations on its review as set forth in the opinion, (i) the Merger consideration to be paid by Prospect for Kennedy-Wilson in conjunction with the Merger is fair from a financial point of view to the stockholders of Prospect, and (ii) the fair market value of Kennedy-Wilson is at least equal to 80% of the balance in Prospect's Trust Account (excluding the amount held in the Trust Account representing a portion of the underwriters' discount).

        Houlihan Smith is an investment banking firm that, as part of its investment banking business, regularly is engaged in the evaluation of businesses and their securities in connection with mergers, acquisitions, corporate restructurings, private placements, and for other purposes. Prospect's board of directors determined to use the services of Houlihan Smith because it is a recognized investment banking firm that has substantial experience in similar matters. Houlihan Smith has received a fee in connection with the preparation and issuance of its opinion and will be reimbursed for its reasonable out-of-pocket expenses, including attorneys' fees up to $5,000. In addition, Prospect has agreed to indemnify Houlihan Smith for certain liabilities that may arise out of the rendering of its opinion. Houlihan Smith does not beneficially own any interest in Prospect or Kennedy-Wilson and has not provided any such company with any other services.

Material United States Federal Income Tax Consequences

General

        The following section is a summary description of the material United States federal income tax consequences of the Merger to Prospect and to the United States Holders (as that term is defined below) of Kennedy-Wilson common stock and preferred stock (sometimes referred to as "KW Securities") and to the United States Holders of Prospect common stock, and of the Warrant Amendment to United States Holders of Public Warrants and Sponsor Warrants. This discussion addresses only those United States Holders of KW Securities and United States Holders of Prospect common stock, Public Warrants and Sponsor Warrants that hold their stock or warrants, as applicable, as capital assets within the meaning of Section 1221 of the Code, and does not address all the United States federal income tax consequences that may be relevant to Prospect or any United States Holders of KW Securities or Prospect common stock or warrants in light of their individual circumstances. This discussion also does not address the potential application of the alternative minimum tax or the United States federal income tax consequences to holders that are subject to special rules, such as:

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        This summary is based upon the Code, applicable treasury regulations thereunder, published rulings and court decisions, all as currently in effect as of the date hereof, and all of which are subject to change, possibly with retroactive effect. Tax considerations under state, local and foreign laws, or federal laws other than those pertaining to the income tax, are not addressed.

        For purposes of this discussion, a United States Holder is a beneficial owner of KW Securities, Prospect common stock, Public Warrants or Sponsor Warrants that is for United States federal income tax purposes:

        If a partnership (or other entity classified as a partnership for United States federal income purposes) holds Prospect common stock or warrants, or KW Securities, the tax treatment of a partner generally depends upon the status of the partner and the activities of the partnership. A partner of a partnership holding such stock or warrants should consult their own tax advisor.

        Neither Prospect nor Kennedy-Wilson has requested, or intends to request, any ruling from the Internal Revenue Service as to the United States federal income tax consequences described herein. The Internal Revenue Service may disagree with the discussion herein, and its determination may be upheld by a court. Moreover, there can be no assurance that future legislation, regulation, administrative rulings or court decisions will not adversely affect the accuracy of the statements un this discussion.

Tax Consequences of the Merger to United States Holders of Kennedy-Wilson Stock

        It is intended that the Merger will qualify as a reorganization within the meaning of Section 368(a) of the Code. If the Merger is treated as such a reorganization:

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        If the Merger should fail to qualify as a reorganization within the meaning of Section 368(a) of the Code, a United States Holder of KW Securities generally will recognize a gain or loss with respect to its shares of KW Securities in an amount equal to the difference, if any, between the United States Holder's adjusted tax basis in its KW Securities and the fair market value of the Prospect common stock received in the Merger. In such an event, the United States Holder's adjusted tax basis in the Prospect common stock generally will equal the fair market value of such Prospect common stock, and the United States Holder's holding period for the Prospect common stock generally will begin on the day following the date of the Merger.

Tax Consequences of the Merger to Prospect and United States Holders of Prospect Common Stock

        No gain or loss will be recognized by Prospect as a result of the Merger. No gain or loss will be recognized by the United States Holders of Prospect common stock as a result of the Merger if their conversion rights are not exercised.

        A United States Holder of Prospect common stock who exercises conversion rights and effects a complete termination of such stockholder's interest in Prospect (including any actual or constructive interest in Prospect) generally will be required to recognize gain or loss upon the exchange of that stockholder's shares of common stock of Prospect for cash. Such gain or loss will be measured by the difference between the amount of cash received and the tax basis of that stockholder's shares of Prospect common stock. This gain or loss will be a capital gain or loss if such shares were held as a capital asset at the time of the exchange and will be a long-term capital gain or loss if the holding period for the shares of Prospect common stock is more than one year at such time. There are limitations on the extent to which United States Holders may deduct capital losses from ordinary income. If a United States Holder of Prospect common stock who receives cash in exchange for all of the United States Holder's shares of Prospect common stock actually or constructively owns Prospect common stock after the conversion (as the result of prior actual or constructive ownership of Prospect common stock or otherwise), all or a portion of the cash received by the United States Holders of common stock may be taxed as a dividend, and those United States Holders should consult their tax advisors to determine the amount and character of the income recognized in connection with the exercise of such holder's conversion rights.

Tax Consequences of the Warrant Amendment to United States Holders of Prospect Warrants

        In the event that a United States Holder of Public Warrants elects the Cash Exchange, such holder will recognize capital gain or loss with respect to the Public Warrants equal to the difference between the amount of cash received for the Public Warrants and the holder's adjusted basis in the Public Warrants. A United States Holder of Public Warrants who elects the Warrant Exchange and a holder of Sponsor Warrants will be treated as exchanging his or her "old" warrants for "new" warrants in connection with the merger transaction. As such, a United States Holder of Public Warrants and a United States Holder of Sponsor Warrants should not recognize any gain or loss on the Warrant Exchange, and such holder's adjusted tax basis and holding period in the "new" warrants received (or deemed received) in the Warrant Exchange should be the same as such holder's adjusted tax basis and holding period in the "old" warrants exchanged or deemed exchanged in the Warrant Exchange.

Information Reporting and Backup Withholding

        A United States Holder of KW Securities who exercises its appraisal rights or a United States Holder of Prospect common stock who exercises its conversion rights may be subject to information reporting. In addition, such holder may be subject to backup withholding on the proceeds from the exchange of shares for cash unless such holder is an exempt recipient (such as a corporation) or provides to the paying agent such holder's correct taxpayer identification number and certifies that such holder is exempt from or otherwise is not subject to backup withholding. Backup withholding is not an

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additional tax. The amount of any backup withholding will be refunded (or allowed as a credit against the U.S. federal income tax liability of the United States Holder) provided that the required information is furnished to the Internal Revenue Service.

Comparison of Rights of Stockholders of Prospect and Kennedy-Wilson

        Prospect and Kennedy-Wilson are incorporated under the laws of the State of Delaware. Upon consummation of the Merger, Kennedy-Wilson stockholders will become stockholders of Prospect. Prospect's amended and restated certificate of incorporation that will be in effect at the closing of the Merger differs from Kennedy-Wilson's amended and restated certificate of incorporation. For a more complete description of the differences between the rights of the stockholders of Prospect and the rights of stockholders of Kennedy-Wilson, please refer to the section entitled "Comparison of Rights of Prospect and Kennedy-Wilson Holders."

Rescission Rights

        A Prospect securityholder at the time of the closing of the Merger that purchased Prospect units in the IPO (an IPO Purchaser), may have securities law claims against Prospect for rescission or damages on the basis, for example, that the IPO Prospectus, did not disclose that Prospect may seek to amend the terms of the Warrant Agreement and exchange a portion of its outstanding Public Warrants for cash proceeds released from the Trust Account. Rescission would give a successful IPO Purchaser claimant the right to receive the total amount paid for his or her securities pursuant to an allegedly deficient prospectus, plus interest and less any income earned on the securities, in exchange for surrender of the securities. An IPO Purchaser who has properly exercised its conversion rights or dissenters' rights will not be eligible for rescission in connection with any securities law claims it may have against Prospect in connection with Prospect units purchased in the IPO. In addition, an IPO Purchaser who purchased Prospect units in the IPO but who has separated its Prospect units into the component common stock and Public Warrants and no longer owns the common stock or Public Warrants included in such Prospect units may not be entitled to rescission in connection with any such securities law claims.

        A successful IPO Purchaser claimant for damages under federal or state law could be awarded an amount to compensate for the decrease in value of his or her securities caused by the alleged violation (including, possibly, punitive damages), together with interest, while retaining such securities. Such claims may entitle IPO Purchasers asserting them to up to $10.00 per Prospect unit, based on the initial offering price of the Prospect units sold in the IPO, or $10.00 per share less any amount received from the sale or fair market value of the original Public Warrants purchased as part of the Prospect units, plus interest from the date of the IPO. In the case of IPO Purchasers, this amount may be more than the cash to which they are entitled upon exercise of their conversion rights or dissenters' rights or upon liquidation of Prospect.

        In general, a person who contends that he or she purchased a security pursuant to a prospectus that contains a material misstatement or omission must make a claim for rescission within the applicable statute of limitations period, which, for claims made under Section 12 of the Securities Act and some state statutes, is one year from the time the claimant discovered or reasonably should have discovered the facts giving rise to the claim, but not more than three years from the occurrence of the event giving rise to the claim. Claims under the anti-fraud provisions of the federal securities laws must generally be brought within two years of discovery, but not more than five years after occurrence. Rescission and damages claims would not necessarily be finally adjudicated by the time the Merger is completed, and such claims would not be extinguished by consummation of that transaction.

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Anticipated Accounting Treatment

        The acquisition will be accounted for as a "reverse merger" and recapitalization since immediately following the completion of the transaction, the stockholders of Kennedy-Wilson immediately prior to the business combination will have effective control of Prospect through its approximately 44.2% stockholder interest in the combined entity, assuming no share conversions (50.7% in the event of maximum share conversion), which includes its largest principal stockholder owning approximately 24.8% of the Kennedy-Wilson stockholder interest in the combined company. In addition, through Kennedy-Wilson's 44.2% stockholder interest, Kennedy-Wilson will maintain effective control of the combined entity through control of a substantial portion of the board of directors by maintaining six of the seven board seats for an expected term ranging from one to of three years. Additionally, all of Kennedy-Wilson's senior executive positions will continue on as management of the post-Merger company after consummation of the Merger. For accounting purposes, Kennedy-Wilson will be deemed to be the accounting acquirer in the Merger and, consequently, the Merger will be treated as a recapitalization of Kennedy-Wilson. Accordingly, Kennedy-Wilson's assets, liabilities and results of operations will become the historical financial statements of the registrant, and Prospect's assets, liabilities and results of operations will become consolidated with Kennedy-Wilson effective as of the acquisition date. No step-up in basis or intangible assets or goodwill will be recorded in this transaction. All direct costs of the Merger will be charged to operations in the period that such costs are incurred.

Regulatory Matters

        Prospect and Kennedy-Wilson do not expect that the Merger will be subject to any state or federal regulatory requirements other than (i) filings under applicable securities laws and the effectiveness of the registration statement of which this proxy statement/prospectus is part, (ii) expiration or early termination of any applicable waiting periods under the HSR Act, and (iii) the filing of certain merger documents with the Secretary of State of the State of Delaware. Prospect and Kennedy-Wilson intend to comply with all such requirements.

Recommendation and Vote Required

        The approval of the Merger Proposal requires the affirmative vote of a majority of the issued and outstanding Public Shares represented in person or by proxy at the special meeting of Prospect stockholders and entitled to vote thereon as of the record date. Adoption of the Merger Proposal is a condition to the consummation of the Merger and a condition to the presentation of the other stockholder proposals.

PROSPECT'S BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT PROSPECT'S STOCKHOLDERS VOTE "FOR" THE MERGER PROPOSAL.

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THE MERGER AGREEMENT

        For a discussion of the Merger structure and merger consideration, see the section entitled "The Merger Proposal" for additional information. Such discussion and the following summary of other material provisions of the Merger Agreement are qualified by reference to the complete text of the Merger Agreement which is attached as Annex A to this proxy statement/prospectus and incorporated herein by reference. All stockholders are encouraged to read the Merger Agreement in its entirety for a more complete description of the terms and conditions of the Merger.

Closing and Effective Time of the Merger

        The closing of the Merger will take place as soon as practicable following the satisfaction or waiver of the last of the conditions described below under the subsection entitled "Conditions to Closing of the Merger." The Merger is expected to be consummated as soon as practicable after the special meeting of Prospect's stockholders and the special meeting of Prospect warrantholders described in this proxy statement/prospectus. The Merger will become effective at the time designated in the Certificate of Merger as the effective time of the Merger that the Parties have agreed upon and designated, or if no such time has been designated, the Merger will be effective on the filing of the Certificate of Merger with the Secretary of State of the State of Delaware.

Merger Consideration

        Pursuant to the Merger Agreement, in the Merger, the Kennedy-Wilson Holders will receive an aggregate of 26 million shares of Prospect common stock (each share of Kennedy-Wilson common stock shall automatically convert into the right to receive 3.8031 shares of Prospect common stock and each share of Kennedy-Wilson preferred stock shall automatically convert into the right to receive 105.6412 shares of Prospect common stock), minus any Dissenting Shares.

        If a fractional share is required to be issued to a Kennedy-Wilson Holder, Prospect will round up to the nearest whole share in lieu of issuing fractional shares.

Prospect Warrant Amendment

        In addition, each outstanding Public Warrant will be exchanged, at the election of each holder of Public Warrants, for either (i) $0.55 in cash or (ii) an Amended and Restated Public Warrant with an exercise price of $12.50, a redemption trigger price of $19.50 and an expiration date of November 14, 2013; provided that the aggregate number of Amended and Restated Public Warrants issuable upon the closing of the Merger is capped at 50% of the Public Warrants outstanding on the date of the Merger, which we refer to as the Warrant Limit. If holders of Public Warrants elect to receive in the aggregate more Amended and Restated Public Warrants than the Warrant Limit, the total Amended and Restated Public Warrants exchanged will be apportioned among the holders of Public Warrants who make a Warrant Election by multiplying the number of Amended and Restated Public Warrants evidenced by a specific Warrant Election by a fraction (x) the numerator of which is the Warrant Limit and (y) the denominator of which is the aggregate number of Amended and Restated Public Warrants evidenced by all Warrant Elections. Further, Public warrants for which holders of Public Warrants make no election will be converted into the right to receive the Cash Exchange. There is, however, no limit on the number of Public Warrants that may be exchanged for cash.

        Also, each Sponsor Warrant will be amended and restated to provide for an exercise price of $12.50, a redemption trigger price of $19.50 and an expiration date of November 14, 2013.

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Forfeiture of Founder Shares

        Immediately prior to the Merger, 2,575,000 founder shares held by the founders will be cancelled and forfeited. As a result of this forfeiture, at the consummation of the Merger, the founders will own 3,675,000 shares of Prospect common stock.

Management Incentive Shares

        To reward and incentivize Kennedy-Wilson's key employees and management after the Merger, up to 4,000,000 shares of Prospect common stock will be reserved for issuance under the 2009 Plan. If the Merger is consummated, certain Kennedy-Wilson officers, directors and key employees will be issued an aggregate of 3,740,000 restricted shares of Prospect common stock under the 2009 Plan upon the closing of the Merger as set forth in the table below:

Name of Group
  Dollar ($)   Number of Shares
of Restricted Stock
 

William McMorrow, Chief Executive Officer

  $     900,000  

Freeman Lyle, Chief Financial Officer

  $     50,000  

Mary Ricks, Co-CEO of KW Commercial Investment Group

  $     900,000  

Barry Schlesinger, Co-CEO of KW Commercial Investment Group

  $     125,000  

Robert Hart, President of KW Multi-Family Management Group

  $     125,000  

James Rosten, President of Kennedy-Wilson Properties

  $     125,000  

All executive officers, as a group

  $     3,495,000  

All directors who are not executive officers, as a group

  $     25,000  

All employees, including all current officers who are not executive officers, as a group

  $     220,000  

        In the event that the recipient of the restricted shares remains employed by (or continues to perform services as a director for) the post-Merger company through the relevant vesting date, 1/5 of the restricted shares will vest on each of the first five anniversaries of the date of issuance, provided that the Performance Target is met as of the September 30 immediately preceding the applicable anniversary date (in the case of the installments vesting on the fourth and fifth anniversary dates, the Performance Target must be met as of the September 30 immediately preceding the third anniversary date). The Performance Target was established by an independent committee of Prospect and is subject to the approval of the compensation committee of the post-Merger company following the consummation of the Merger. Notwithstanding the foregoing, in the event the employment with the post-Merger company of an employee who has been granted restricted shares is terminated without cause or if the employee resigns from his employment with the post-Merger company for good reason, the restricted shares will continue to vest on the applicable anniversary dates (subject to the satisfaction of the Performance Target), subject to certain limitations. In addition, in the event of a "Change of Control" as defined in the 2009 Plan (see "The Equity Participation Plan Proposal—Change of Control"), any unvested restricted shares of Prospect common stock that have not previously been forfeited will become vested, subject to certain limitations. See section "The Equity Participation Plan Proposal—Awards to Particular Officers, Directors and Employees" for additional information.

Management Bonuses

        If the Merger is consummated, William J. McMorrow and Mary Ricks will be potentially entitled to receive certain cash bonus payments of up to $11.7 million and $4.0 million, respectively. The cash bonus payments will be payable as follows: (i) Mr. McMorrow and Ms. Ricks will be entitled to receive $4.85 million and $2.0 million, respectively, on October 15, 2009, provided, however, that such payments will be repaid to Kennedy-Wilson in the event the Merger is not consummated by November 15, 2009 or the executive is not employed by Kennedy-Wilson on the effective date of the

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Merger (these employment requirements will not apply, however, in the case of a termination of employment due to death or disability); (ii) Mr. McMorrow and Ms. Ricks will receive "performance unit awards" under the 2009 Plan which will entitle them to receive $2.425 million and $1.0 million, respectively, on April 1, 2010, provided that the Performance Target is met as of March 31, 2010 (in the event that the Performance Target is not met as of March 31, 2010, the bonus otherwise due April 1, 2010 shall, nevertheless, be paid on July 1, 2010, October 1, 2010, or January 1, 2011, respectively, if the Performance Target is satisfied as of the earliest of June 30, 2010, September 30, 2010, or December 31, 2010, respectively), and the executive remains employed through the date on which the Performance Target is satisfied; and (iii) Mr. McMorrow and Ms. Ricks will receive additional "performance unit awards" under the 2009 Plan which will entitle them to receive cash payments in the amounts of $4.425 and $1.0 million, respectively, on January 1, 2011, provided that the Performance Target is met as of December 31, 2010 and he or she, as applicable, remains employed by the post-Merger company through January 1, 2011. Notwithstanding the foregoing, in the event that the Merger is consummated and the employment of Mr. McMorrow or Ms. Ricks is terminated by the post-Merger company without cause or he or she, as applicable, resigns from his or her, as applicable, employment with the post-Merger company for good reason, the payments referred to in clauses (ii) and (iii) above will still be payable on the applicable payment dates if the Performance Target is met. The Performance Target was established by an independent committee of Prospect and is subject to the approval of the compensation committee of the post-Merger company following the consummation of the Merger.

Note Forgiveness

        On April 10, 2006, William J. McMorrow borrowed $3,543,127 from Kennedy-Wilson evidenced by a Promissory Note bearing simple interest at a rate of 7.5% per annum and scheduled to mature on April 9, 2011. Mr. McMorrow's employment agreement has been amended to provide that the McMorrow Note will be forgiven if the Merger is consummated.

Amendments to Employment Agreements

        In connection with the Merger, Mr. McMorrow and Ms. Ricks have entered into amendments to their employment agreements which provide for, among other things, (i) the removal of certain benefits in the event of a change in control; (ii) the addition of certain severance benefits if the executive resigns on account of a change in location or a material reduction in duties; (iii) the grant to each executive of 900,000 shares of restricted stock of Prospect pursuant to the 2009 Plan and upon the terms and conditions set forth above; (iv) the cash bonus payments set forth above and (v) in the case of Mr. McMorrow, the McMorrow Note forgiveness described above. Mr. Herrema has also entered into an amendment to his employment agreement which provides for the extension of his employment term from December 31, 2010 to January 31, 2014 as well as clauses (ii) - (iii) above. In addition, the employment agreements for Messrs. McMorrow and Herrema and Ms. Ricks have been amended to include language intended (i) to provide for a reduction in the amount of payments or benefits payable or provided to them under their respective employment agreements or otherwise to ensure that no payment or benefit is subject to the excise tax imposed by Section 4999 of the Code (certain golden parachute payments) which reduction may, in certain circumstances, result in the repayment of certain previously paid amounts (plus earnings) to the post-Merger company, and (ii) to achieve compliance with Section 409A of the Code.

Lock-Up Agreements

        In connection with the Merger, William J. McMorrow, Mary Ricks, Freeman Lyle, and Donald Herrema, executive officers of Kennedy-Wilson, have entered into Lock-Up Agreements with Prospect whereby each have agreed to not offer, sell, pledge or otherwise transfer (i) any of the shares of

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Prospect common stock received as merger consideration for three months after the Merger and (ii) 90% of the shares of Prospect common stock received as merger consideration and 100% of the shares of Prospect common stock received as management incentive shares in connection with grants to executives under the 2009 Plan, in each case, for one year after the Merger. The stockholders subject to such Lock-Up Agreements may transfer their shares to any controlled affiliate, to any partner, stockholder or member of the stockholder, or for estate planning purposes only; provided in each case that any transferee agrees to be bound to the terms of the Lock-Up Agreement prior to any transfer.

Assumption of Guardian Note

        In connection with the Merger, Prospect has agreed to assume the Guardian Note. The Guardian Note bears interest at a fixed rate of 7%, payable quarterly, and the outstanding principal is due on November 3, 2018. Under the terms of the Merger Agreement, Prospect will assume the Guardian Note and Guardian may convert, in whole or in part, the outstanding principal balance and accrued interest into common stock at a conversion price of $10.52 per share any time prior to the tenth anniversary of the original issue date. At any time on or after the ninth anniversary of the original issue date of the note and prior to the due date, Prospect (as successor) may demand that Guardian convert the note in accordance with its terms.

Representations and Warranties

        The Merger Agreement contains representations and warranties of each of Prospect and Merger Sub and Kennedy-Wilson relating, among other things, to:

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Materiality and Material Adverse Effect

        Certain of the representations and warranties are qualified by the concept of "material adverse effect." For purposes of the Merger Agreement, a "material adverse effect" as to Kennedy-Wilson means a material adverse effect to the condition (financial or otherwise), properties, assets, liabilities, business, operations or results of operations of Kennedy-Wilson and its subsidiaries taken as a whole. A material adverse effect on Prospect means a material adverse effect to the condition (financial or otherwise), properties, assets, liabilities, business, operations or results of operations of Prospect taken as a whole.

        None of the following will constitute, either alone or in combination, or will be taken into account in determining whether there has been or would be, a material adverse effect with respect to Kennedy-Wilson or Prospect, respectively:

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Mutual Covenants

        The parties to the Merger Agreement have agreed to various mutual covenants regarding general matters which include, but are not limited to:

Covenants Relating to Interim Operations

        Prospect and Kennedy-Wilson have agreed to continue to operate their respective businesses in the ordinary course prior to the closing of the Merger and not to take the following actions, among others, without the prior written consent of the other party:

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        In addition, Prospect will not fail to timely file or furnish with the SEC all reports, schedules, forms, statements and other documents required to be filed or furnished that would have a material adverse effect on Prospect or its ability to consummate the Merger without the prior written consent of Kennedy-Wilson.

        In addition, Kennedy-Wilson will not take any of the following actions without the prior written consent of Prospect:

Additional Kennedy-Wilson Covenants

        The additional covenants that Kennedy-Wilson has made in the Merger Agreement include, but are not limited to the following:

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Additional Prospect Covenants

        The additional covenants that Prospect has made in the Merger Agreement include, but are not limited to the following:

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Prospect No Shop/Non-Solicit Provision

        The Merger Agreement provides that from September 8, 2009 until the earlier of the (x) termination of the Merger Agreement in accordance with its terms or (y) the effective time of the Merger, Prospect:

        For purposes of the Merger Agreement, a Prospect third-party acquisition means:

Kennedy-Wilson No Shop/Non-Solicit Provision

        The Merger Agreement provides that from September 8, 2009 until the earlier of the (x) termination of the Merger Agreement in accordance with its terms or (y) the effective time of the Merger, Kennedy-Wilson:

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        For purposes of the Merger Agreement, a Kennedy-Wilson third-party acquisition means:

Conditions to Closing of the Merger

General Conditions

        Consummation of the Merger by Prospect and Kennedy-Wilson is conditioned upon, among other things:

        Either party may waive one or more conditions to the consummation of the Merger. However, to the extent a material condition is waived by one of the parties, which waiver would render any prior disclosure materially misleading, Prospect intends to resolicit the approval of its stockholders of the Merger.

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Kennedy-Wilson's Conditions to Closing

        The obligations of Kennedy-Wilson to consummate the transactions contemplated by the Merger Agreement also are conditioned upon the following, among other things:

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Prospect's Conditions to Closing

        The obligations of Prospect to consummate the transactions contemplated by the Merger Agreement also are conditioned upon the following, among other things:

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Termination

        The Merger Agreement may be terminated prior to closing:

Effect of Termination

        Except as otherwise provided in the Merger Agreement, in the event of proper termination of the Merger Agreement by either Prospect or Kennedy-Wilson, the Merger Agreement will have no further force and effect, without any liability or obligation on the part of Prospect or Kennedy-Wilson and each party will destroy all documents, work papers and materials of the other party relating to the transactions contemplated; provided, however, that those provisions which survive the termination of the Merger Agreement, including that Kennedy-Wilson will not seek recourse against the Trust Account except for a claim for damages if Prospect breaches its no shop/non-solicit provision, shall not be void and that such termination will not terminate the rights or remedies of any party against another party that has violated or breached the Merger Agreement prior to such termination.

        If the Merger Agreement is terminated by either party should Kennedy-Wilson fail to receive its common stockholder approval, Kennedy-Wilson shall be obligated to pay Prospect $10,000,000. If such amount is not paid within 30 days after termination of the Merger Agreement, interest will begin to accrue on this amount.

Indemnification of Directors and Officers

        Prospect has agreed that the post-Merger company will, for six years from the date of closing the Merger, maintain in effect the provisions in its amended and restated certificate of incorporation and amended and restated bylaws providing for indemnification of its current and former directors and officers with respect to the facts and circumstances occurring at or prior to the Merger to the fullest extent permitted by the DGCL.

        Prospect has agreed that the post-Merger company will, for six years from the date of the closing of the Merger, provide each current and former director or officer of Prospect with insurance for acts or omissions occurring prior to the Merger covering each such person on terms not materially less favorable than those currently covered by Prospect's officers' and directors' liability insurance policy; provided that the premium for such coverage shall not exceed $200,000.

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Indemnification

        Prospect will indemnify, defend and hold harmless Kennedy-Wilson, including Kennedy-Wilson's successors and permitted assigns, and Kennedy-Wilson will indemnify, defend and hold harmless Prospect, including Prospect's successors and permitted assigns, from and against all liabilities, loss, claims, damages, fines, penalties, expenses, including the costs of investigation and defense and reasonable attorneys' fees and court costs, arising from (i) any breach of any representation or warranty made by Prospect or Kennedy-Wilson in the Merger Agreement or in any certificate delivered by Prospect or Kennedy-Wilson pursuant to the Merger Agreement or (ii) any breach by Prospect or Kennedy-Wilson of its covenants or obligations in the Merger Agreement to be performed or complied with by Prospect or Kennedy-Wilson at or prior to Closing. Neither party is entitled to indemnification as so described unless the aggregate amount of damages exceeds $1,000,000. The aggregate amount of damages for which either party may be liable shall not exceed $10,000,000 and in any event, the practical benefits of this indemnification are limited since Kennedy-Wilson will be a direct, wholly-owned subsidiary of Prospect.

Fees and Expenses

        All fees and expenses incurred in connection with the Merger Agreement and the transactions contemplated thereby will be paid by the party incurring such expenses, except that the parties will each pay one-half of fees related to filings under the HSR Act.

Confidentiality; Access to Information

        Prospect and Kennedy-Wilson will afford to the other party and its financial advisors, accountants, counsel and other representatives prior to the completion of the Merger reasonable access during normal business hours, upon reasonable notice, to all of their respective properties, books, records and personnel to obtain all information concerning the business, including the status of properties, results of operations and personnel, as each party may reasonably request. Prospect and Kennedy-Wilson will maintain in strict confidence any non-public information received from the other party, and use such non-public information only for purposes of consummating the transactions contemplated by the Merger Agreement.

Amendments

        The Merger Agreement may be amended by the parties at any time in writing signed by each of the parties.

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SELECTED HISTORICAL FINANCIAL INFORMATION

        The following financial information is being provided to assist you in your analysis of the financial aspects of the Merger. The information is only a summary and should be read in conjunction with each company's audited historical consolidated financial statements and related notes contained elsewhere herein. The historical results included below and elsewhere in this proxy statement/prospectus are not indicative of the future performance of Kennedy-Wilson or Prospect.

Kennedy-Wilson Selected Financial Data

        The following table sets forth selected historical financial data of Kennedy-Wilson. The information presented below was derived from Kennedy-Wilson's unaudited financial statements for the six months ended June 30, 2009 and 2008 and Kennedy-Wilson's audited financial statements for each of the years ended December 31, 2008, 2007, 2006, 2005 and 2004. This information is only a summary. You should read this information together with Kennedy-Wilson's historical financial statements and accompanying notes contained elsewhere in this proxy statement/prospectus.

 
  Six Months Ended
June 30,
  Year Ended December 31,  
 
  2009   2008   2008   2007   2006   2005   2004  
 
  (Unaudited)
   
   
   
   
   
   
 

Revenue:

                                           
 

Management and leasing fees

  $ 9,266,000   $ 8,346,000   $ 19,051,000   $ 20,142,000   $ 16,578,000   $ 15,217,000   $ 18,077,000  
 

Commissions

    2,462,000     7,082,000     10,201,000     13,153,000     9,920,000     8,190,000     8,407,000  
 

Sale of real estate

    6,272,000                     18,346,000     12,055,000  
 

Interest and other

    1,482,000     1,587,000     3,535,000     963,000     646,000     1,057,000     3,497,000  
                               
   

Total revenue

    19,482,000     17,015,000     32,787,000     34,258,000     27,144,000     42,810,000     42,036,000  
                               

Operating expense:

                                           
 

Compensation and related expenses

    9,997,000     9,667,000     21,292,000     34,151,000     24,892,000     32,035,000     20,079,000  
 

Cost of real estate sold

    5,752,000                     14,410,000     10,408,000  
 

General and administrative

    3,696,000     4,238,000     8,901,000     8,490,000     9,026,000     9,341,000     10,812,000  
 

Other operating expense

    1,157,000     818,000     2,378,000     539,000     688,000     1,570,000     2,193,000  
                               
   

Total operating expense

    20,602,000     14,723,000     32,571,000     43,180,000     34,606,000     57,356,000     43,492,000  
                               

Equity in joint venture income

    (461,000 )   1,533,000     10,097,000     27,433,000     14,689,000     35,855,000     11,520,000  
                               
   

Total operating income

    (1,581,000 )   3,825,000     10,313,000     18,511,000     7,227,000     21,309,000     10,064,000  

Non-operating income (expense)

    (3,169,000 )   (3,591,000 )   (9,646,000 )   (9,474,000 )   (686,000 )   (10,319,000 )   (5,703,000 )
                               
   

Income from continuing operations

    (4,750,000 )   234,000     667,000     9,037,000     6,541,000     10,990,000     4,361,000  

Income from discontinued operations, net of tax

                2,797,000             (246,000 )
                               
   

Net income

    (4,750,000 )   234,000     667,000     11,834,000     6,541,000     10,990,000     4,115,000  

Net income attributable to the noncontrolling interest

    267,000     (50,000 )   (54,000 )   (2,441,000 )   (586,000 )        

Preferred stock dividends

    (1,964,000 )   (394,000 )   (2,264,000 )                
                               
   

Net (loss) income attributable to Kennedy-Wilson, Inc. common shareholders

  $ (6,447,000 ) $ (210,000 ) $ (1,651,000 ) $ 9,393,000   $ 5,955,000   $ 10,990,000   $ 4,115,000  
                               

Other Financial Data:

                                           

Net cash provided by (used in):

                                           
 

Operating activities

  $ (3,009,000 ) $ (13,021,000 ) $ (14,669,000 ) $ (14,809,000 ) $ (7,026,000 ) $ (13,422,000 ) $ (2,328,000 )
 

Investing activities

    (38,491,000 )   (74,999,000 )   (96,373,000 )   5,839,000     (3,614,000 )   47,255,000     45,269,000  
 

Financing activities

    31,875,000     77,295,000     112,625,000     17,886,000     6,548,000     (24,985,000 )   (38,658,000 )

 

 
  As of June 30,   As of December 31,  
 
  2009   2008   2008   2007   2006   2005   2004  
 
  (Unaudited)
   
   
   
   
   
 

Balance sheet data:

                                           

Cash and cash equivalents

  $ 16,206,000   $ 13,523,000   $ 25,831,000   $ 24,248,000   $ 15,332,000   $ 19,424,000   $ 10,576,000  

Investments in real estate and joint ventures

    222,459,000     160,671,000     190,915,000     80,026,000     57,744,000     36,847,000     43,923,000  

Total assets

    283,416,000     214,959,000     255,883,000     145,814,000     107,746,000     93,461,000     99,831,000  

Debt

    146,399,000     94,940,000     131,423,000     65,084,000     40,517,000     33,746,000     49,519,000  

Total equity

    103,966,000     106,265,000     105,802,000     57,076,000     49,603,000     42,120,000     38,559,000  

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Prospect Selected Financial Data

        The following table sets forth selected historical financial data of Prospect. The information presented below was derived from Prospect's audited financial statements for the years ended and as of December 31, 2008 and 2007 and from its unaudited financial statements for the six months ended June 30, 2009 and 2008. This information is only a summary. You should read this information together with Prospect's historical financial statements and accompanying notes contained elsewhere in this proxy statement/prospectus.

 
  June 30, 2009
(Unaudited)
  December 31,
2008
  December 31,
2007
 

Selected Balance Sheet Data:

                   

Cash

  $ 9,425   $ 28,678   $ 58,075  

Investments held in Trust Account

    248,535,987     248,924,201     247,340,887  

Total assets

    249,116,069     249,449,560     248,161,221  

Total liabilities

    10,177,138     10,253,245     10,476,121  

Common stock, subject to possible conversion

    74,099,990     74,099,990     74,099,990  

Total stockholders' equity

  $ 164,838,941   $ 165,096,325   $ 163,585,110  

 

 
  For the six
months ended
June 30, 2009
  For the six
months ended
June 30, 2008
  For the period
from July 9, 2007
(date of inception)
through
June 30,
2009
  For the year ended
December 31,
2008
  For the period
from July 9, 2007
(date of inception)
through
December 31,
2007
 

Statement of Operations Data:

                               

Net interest income

  $ 41,150   $ 2,528,586   $ 4,930,379   $ 3,808,688   $ 1,080,541  

Operating expenses

    449,707     383,135     1,202,213     679,661     72,845  

State capital based tax provision

        184,156     816,301     740,724     75,577  

Federal income tax (benefit) provision

   
(151,173

)
 
693,110
   
1,042,836
   
877,088
   
316,921
 

Net (loss) income

    (257,384 )   1,268,185     1,869,029     1,511,215     615,198  

Net (loss) income per common share

 
$

(0.01

)

$

0.04
 
$

0.07
 
$

0.05
 
$

0.05
 

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UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL INFORMATION

        The following unaudited pro forma condensed consolidated financial information has been prepared assuming that the acquisition of Kennedy-Wilson by Prospect had occurred (i) at the beginning of the period for the pro forma statements of operations for the year ended December 31, 2008 and for the six months ended June 30, 2009, and (ii) at June 30, 2009 for the pro forma balance sheet.

        Pursuant to Prospect's amended and restated certificate of incorporation, Prospect will not proceed with a transaction if public stockholders owning 30% or more of the Public Shares vote against the transaction and exercise their conversion rights. Accordingly, Prospect may effect a transaction if stockholders owning up to one share less than 30% of the Public Shares exercise their conversion rights. If this occurred, Prospect would be required to convert for cash up to one share less than 30% of the 25,000,000 shares of common stock included in the units sold in the IPO, or 7,499,999 shares of common stock.

        Furthermore, as a condition of the proposed transaction, each of the 25,000,000 Public Warrants will either be redeemed for a cash payment of $0.55 per warrant at closing, or each holder of Public Warrants must agree to exchange its Public Warrants for Amended and Restated Public Warrants, with each such Amended and Restated Public Warrant entitling the holder thereof to purchase one share of common stock at an exercise price of $12.50 per share, with a redemption price of $19.50 per share, and an expiration date of November 14, 2013. No more than 50% of the outstanding Public Warrants may be exchanged for Amended and Restated Public Warrants. Accordingly, Prospect will be required to redeem a minimum of 12,500,000 Public Warrants and a maximum of 25,000,000 Public Warrants for an aggregate cash payment at closing ranging from $6,875,000 to $13,750,000, respectively.

        Accordingly, the unaudited pro forma condensed consolidated financial information presents two possible scenarios for the approval of the Merger by the stockholders of Prospect, as follows:

        The unaudited pro forma condensed consolidated financial information is provided for illustrative purposes only. The historical financial information in the unaudited pro forma condensed consolidated balance sheet has been adjusted to give effect to pro forma events that are directly attributable to the Merger and are factually supportable. The historical financial information in the unaudited pro forma condensed consolidated statements of operations has been adjusted to give effect to pro forma events that are directly attributable to the Merger, are factually supportable, and are expected to have a continuing impact on the consolidated results.

        You should not rely on the unaudited pro forma condensed consolidated balance sheet as being indicative of the historical financial position that would have been achieved had the Merger been consummated as of June 30, 2009, or the unaudited pro forma condensed consolidated statements of operations for the year ended December 31, 2008 or for the six months ended June 30, 2009, as being indicative of the historical financial results of operations that would have been achieved had the Merger been consummated at the beginning of each of such periods. Actual results could differ from the pro forma information presented herein. See the section entitled "Risk Factors—Risks Related to the Merger."

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        The following information is being provided to aid in the analysis of the financial aspects of the Merger. The historical financial information of Prospect was derived from the audited financial statements of Prospect for the year ended December 31, 2008 and the unaudited financial statements of Prospect for the six months ended June 30, 2009 included elsewhere in this proxy statement/prospectus. The historical financial information of Kennedy-Wilson was derived from the audited financial statements of Kennedy-Wilson for the year ended December 31, 2008 and the unaudited consolidated financial statements of Kennedy-Wilson for the six months ended June 30, 2009 included elsewhere in this proxy statement/prospectus. This information should be read together with Prospect's and Kennedy-Wilson's audited and unaudited financial statements and related notes, "Management's Discussion and Analysis of Financial Condition and Results of Operations" for Prospect and Kennedy-Wilson, and other financial information included elsewhere in this proxy statement/prospectus.

        The Merger will be accounted for as a reverse recapitalization since, immediately following completion of the Merger, the stockholders of Kennedy-Wilson immediately prior to the consummation of the Merger will have effective control of Prospect through: (1) their stockholder interest comprising the largest single control block of shares in the combined entity, (2) a majority of the members of the board of directors of the combined company being comprised of current Kennedy-Wilson directors (initially, six directors of Kennedy-Wilson and one director of Prospect), and (3) all of the senior executive officers of the combined company being comprised of current Kennedy-Wilson executive officers. For accounting purposes, Kennedy-Wilson will be deemed to be the accounting acquirer in the Merger and, consequently, the Merger will be treated as a recapitalization of Kennedy-Wilson, i.e., a capital transaction involving the issuance of stock by Prospect for the stock of Kennedy-Wilson. Accordingly, the assets, liabilities and results of operations of Kennedy-Wilson will become the historical financial statements of Prospect at the closing of the Merger, and Prospect's assets (primarily cash and cash equivalents), liabilities and results of operations will be consolidated with Kennedy-Wilson beginning on the acquisition date. No step-up in basis or intangible assets or goodwill will be recorded in the Merger. All direct costs of the Merger will be charged to operations in the period that such costs are incurred.

        The unaudited pro forma condensed consolidated financial information does not include the impact from the expected pay-down of $22,000,000 of Kennedy-Wilson's outstanding debt at the closing of the Merger, nor any adjustments for incremental general and administrative costs which are anticipated to be incurred by Kennedy-Wilson as a fully reporting public company.

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        The following tables set forth certain of the pro forma financial information about the post-Merger company after giving effect to the Merger.


KENNEDY-WILSON HOLDINGS, INC.
Unaudited Pro Forma Condensed Consolidated Balance Sheet
June 30, 2009
(In thousands of U.S. Dollars, except per share amounts)

 
   
   
   
   
   
  Pro Forma
Adjustments
for Conversion
of 7,499,999
Shares of
Common Stock
and Maximum
Repurchase of
Warrants
   
 
 
   
   
   
   
  Pro Forma
Consolidated
Companies
(with No
Stock
Conversion and
Minimum
Warrant
Repurchase—
See Notes)
  Pro Forma
Consolidated
Companies
(with Maximum
Stock
Conversion and
Maximum
Warrant
Repurchase—
See Notes)
 
 
   
   
  Pro Forma
Adjustments
 
 
  Prospect
Acquisition
Corp.
  Kennedy-
Wilson,
Inc.
 
 
  Debit   Credit   Debit   Credit  

Assets

                                                 

Cash and cash equivalents

  $ 9   $ 16,206     248,539 (1)   6,000 (13) $ 239,541           74,176 (10) $ 158,490  

                54 (15)   11,095 (4)               6,875 (12)      

                      6,875 (12)                        

                      1,297 (18)                        

Investments held in Trust Account

    248,536               248,536 (1)                    

Accrued interest income on Trust Account

    3               3 (1)                    

Accounts receivable

        2,886                 2,886                 2,886  

Accounts receivable from related parties

        4,813           661 (14)   4,152                 4,152  

Notes receivable

        541                 541                 541  

Notes receivable from related parties

        6,118           3,455 (14)   2,663                 2,663  

Investments in real estate available for sale

        34,260                 34,260                 34,260  

Investments in real estate, net

        40,618                 40,618                 40,618  

Investments in joint ventures

        147,581                 147,581                 147,581  

Other assets, net

    252     6,428                 6,680                 6,680  

Deferred income tax asset

    316