KW-FinalProspectus
PROSPECTUS    
Filed pursuant to Rule 424(b)(3)
Registration Statement No. 333-186690    

$100,000,000
Kennedy-Wilson, Inc.
Exchange Offer for
8.750% Senior Notes due 2019

We are offering to issue up to $100.0 million aggregate principal amount of our 8.750% Senior Notes due 2019, which will be fully and unconditionally guaranteed by Kennedy-Wilson Holdings, Inc., our parent company, and certain subsidiaries of Kennedy-Wilson, Inc. (the “exchange notes”), in an exchange offer that will be registered under the Securities Act of 1933, as amended (the “Securities Act”), in exchange for any and all of our $100.0 million aggregate principal amount of outstanding 8.750% Senior Notes due 2019 that we issued on December 6, 2012, which are fully and unconditionally guaranteed by Kennedy-Wilson Holdings, Inc. and certain subsidiaries of Kennedy-Wilson, Inc. (the “outstanding notes”). We are offering to exchange the outstanding notes for the exchange notes to satisfy our obligations in the registration rights agreement that we entered into when the outstanding notes were sold pursuant to Rule 144A and Regulation S under the Securities Act. The outstanding notes were issued in a private placement as additional notes under an indenture pursuant to which we originally issued $200.0 million aggregate principal amount of our 8.750% Senior Notes due 2019 on April 5, 2011 and an additional $50.0 million aggregate principal amount of such notes on April 12, 2011 (together, the “initial notes”). In February 2012, we consummated an exchange offer pursuant to which all initial notes were exchanged for newly issued notes, which we refer to as the “initial exchange notes.” The exchange offer we are making pursuant to this prospectus does not extend to the initial notes or the initial exchange notes. However, when issued, the exchange notes will be fungible with the initial exchange notes.
The Exchange Offer
We will exchange all outstanding notes that are validly tendered and not validly withdrawn for an equal principal amount of exchange notes that are freely tradable, except in limited circumstances as described below.
You may withdraw tenders of your outstanding notes at any time prior to the expiration date of the exchange offer.
The exchange offer expires at midnight, New York City time, in the evening of June 25, 2013, unless extended. We do not currently intend to extend the expiration date.
The exchange of the outstanding notes for exchange notes in the exchange offer will not be a taxable event for U.S. federal income tax purposes.
We will not receive any proceeds from the exchange offer.
The Exchange Notes
The terms of the exchange notes to be issued in the exchange offer are identical in all material respects to the outstanding notes, except that the exchange notes will be freely tradable, except in limited circumstances as described below.
Resales of the Exchange Notes
The exchange notes may be resold in the over-the-counter market, in negotiated transactions or through a combination of such methods. We do not plan to list the notes on any securities exchange or market.
All untendered outstanding notes will continue to be subject to the restrictions on transfer set forth in the outstanding notes and in the related indenture. In general, the outstanding notes may not be offered or sold, except in transactions that are registered under the Securities Act or pursuant to an exemption from, or in a transaction not subject to, the Securities Act and applicable state securities laws. We currently do not anticipate that we will register the resale of the outstanding notes under the Securities Act.
See “Risk Factors” beginning on page 15 for a discussion of certain risks that you should consider before participating in the exchange offer.
Each broker-dealer that receives exchange notes for its own account pursuant to the exchange offer must acknowledge that it will deliver a prospectus in connection with any resale of such exchange notes. The letter of transmittal states that by so acknowledging and delivering a prospectus, a broker-dealer will not be deemed to admit that it is an “underwriter” within the meaning of the Securities Act. This prospectus, as it may be amended or supplemented from time to time, may be used by a broker-dealer in connection with resales of exchange notes received in exchange for outstanding notes where such outstanding notes were acquired by such broker-dealer as a result of market-making activities or other trading activities. In addition, all dealers effecting transactions in the exchange notes may be required to deliver a prospectus. We have agreed that, for a period of 180 days after the date of this prospectus, we will make this prospectus available to any broker-dealer for use in connection with such resales. See “Plan of Distribution.”
If you are an affiliate of ours or any guarantor, or are engaged in, or intend to engage in, or have an agreement or understanding to participate in, a distribution of the exchange notes, then you cannot rely on the applicable interpretations of the Securities and Exchange Commission and you must comply with the registration requirements of the Securities Act in connection with any resale of the exchange notes.
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 prospectus. Any representation to the contrary is a criminal offense.
The date of this prospectus is May 29, 2013.

        



TABLE OF CONTENTS
    
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
You should rely only on the information contained or incorporated by reference in this prospectus or in any additional written communication prepared by or authorized by us. We have not authorized anyone to provide you with any information or represent anything about us, our financial results or the exchange offer that is not contained in or incorporated by reference into this prospectus or in any additional written communication prepared by or on behalf of us. If given or made, any such other information or representation should not be relied upon as having been authorized by us. We are not making an offer to exchange the outstanding notes in any jurisdiction where the offer or sale is not permitted. You should assume that the information in this prospectus or in any additional written communication prepared by or on behalf of us is accurate only as of the date on its cover page and that any information incorporated by reference herein is accurate only as of the date of the document containing such information incorporated by reference.



As used in this prospectus, references to “company,” “we,” “us” and “our” and similar expressions refer to Kennedy-Wilson Holdings, Inc., and its subsidiaries, including Kennedy-Wilson, Inc., the issuer of the outstanding notes and the exchange notes, unless otherwise stated or the context otherwise requires. However, in the cover page of this prospectus and the sections of this prospectus titled “Prospectus Summary—The Exchange Offer,” “Prospectus Summary—The Exchange Notes,” “The Exchange Offer” and “Description of the Notes,” references to “company,” “we,” “us” and “our” and similar expressions refer only to Kennedy-Wilson, Inc. and not to its subsidiaries or Kennedy-Wilson Holdings, Inc.

i



WHERE YOU CAN FIND MORE INFORMATION
Kennedy-Wilson Holdings, Inc., Kennedy-Wilson, Inc. and certain subsidiaries of Kennedy-Wilson, Inc., have filed with the United States Securities and Exchange Commission, or the SEC, a registration statement on Form S-4 under the Securities Act with respect to the exchange offer. This prospectus, which forms a part of the registration statement, does not contain all of the information set forth in the registration statement. For further information with respect to us and the exchange notes, we refer you to the registration statement. Statements contained in this prospectus as to the contents of any contract or other document are not necessarily complete and, to the extent that contract or document is filed or incorporated as an exhibit to the registration statement, we refer you to the that exhibit.
Kennedy-Wilson Holdings, Inc. is subject to the reporting requirements of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and files periodic reports, proxy statements and other information with the SEC. Materials that it files with the SEC may be read and copied at the SEC’s Public Reference Room at 100 F Street, N.E., Washington, D.C. 20549. Information on the operation of the Public Reference Room may be obtained by calling the SEC at 1-800-SEC-0330. In addition, the SEC maintains an Internet website at http://www.sec.gov from which interested persons can electronically access reports, proxy statements and other information relating to SEC registrants, including our company. Kennedy-Wilson Holdings, Inc.’s common stock is listed on the New York Stock Exchange, and reports, proxy statements and other information that it provides to the New York Stock Exchange can be inspected at the offices of the New York Stock Exchange, 20 Broad Street, New York, New York 10005.
Our Internet website at http://www.kennedywilson.com contains information concerning us. On the Investor Relations page of that website, we provide access to all of Kennedy-Wilson Holdings, Inc.’s SEC filings free of charge, as soon as reasonably practicable after filing with the SEC. The information on, or that can be accessed through, our Internet website is not incorporated in this prospectus by reference, and you should not consider it a part of this prospectus.

ii


INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The SEC allows certain issuers, including us, to “incorporate by reference” information into this prospectus, which means that we can disclose important information about us by referring you to those documents that are considered part of this prospectus but are filed separately with the SEC. Any statement in a document incorporated or deemed to be incorporated by reference in this prospectus is deemed to be modified or superseded to the extent that a statement contained in this prospectus, or in any other document subsequently filed with the SEC and incorporated by reference, modifies or supersedes that statement. If any statement is so modified or superseded, it does not constitute a part of this prospectus, except as modified or superseded. Information that is “furnished to” the SEC shall not be deemed “filed with” the SEC and shall not be deemed incorporated by reference into this prospectus or the registration statement of which this prospectus is a part. The following documents of Kennedy-Wilson Holdings are deemed to be incorporated by reference:
our Annual Report on Form 10-K for the year ended December 31, 2012, filed with the SEC on March 12, 2013 (File No. 001-33824), as amended by the amendment to such Annual Report filed with the SEC on April 1, 2013 (File No. 001-33824);
the information specifically incorporated by reference in Part III of our Annual Report referred to above from our Definitive Proxy Statement on Schedule 14A, filed with the SEC on April 30, 2013 (File No. 001-33824);
our Quarterly Report on Form 10-Q for the quarter ended March 31, 2013, filed with the SEC on May 9, 2013 (File No. 001-33824);
our Current Reports on Form 8-K, filed with the SEC on February 14, 2013 and March 20, 2013 (File No. 001-33824);
any future filings of Kennedy-Wilson Holdings with the SEC under Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act on or after the date of the initial registration statement of which this prospectus forms a part and prior to the effectiveness of such registration statement, and on or after the date of this prospectus and on or prior to the completion or termination of the exchange offer (or, in the case of the reoffering of exchange notes by broker-dealers as described in this prospectus, the termination of such reoffering).

See “Where You Can Find More Information” above for further information concerning how to obtain copies of these SEC filings.
This prospectus incorporates by reference important business and financial information about us that is not included in or delivered with this prospectus. We will provide without charge to each person to whom a copy of this prospectus has been delivered, upon the written or oral request of such person, a copy of any and all of the documents that have been or may be incorporated by reference into this prospectus. Requests for copies of any such document should be directed to the Secretary, Kennedy-Wilson Holdings, Inc., 9701 Wilshire Boulevard, Suite 700, Beverly Hills, California 90212, phone: (310) 887-6400.
IN ORDER TO OBTAIN TIMELY DELIVERY, YOU MUST REQUEST THE INFORMATION NO LATER THAN JUNE 18, 2013, WHICH IS FIVE BUSINESS DAYS BEFORE THE EXPIRATION OF THE EXCHANGE OFFER.

iii


 
 
 
 
 
 
 
 
 
 
 
PROSPECTUS SUMMARY
 
 
 
 
 
 
 
This summary highlights selected information contained elsewhere, or incorporated by reference, in this prospectus and may not contain all of the information that may be important to you. You should carefully read this together with the entire prospectus, and the documents incorporated by reference, including the “Risk Factors” section, the historical financial statements and the notes to those financial statements. As used in this section of the prospectus, the terms “we,” “us” and “our” and similar expressions refer only to Kennedy-Wilson, Inc. and not to its subsidiaries or Kennedy-Wilson Holdings, Inc., unless otherwise stated or the context otherwise requires.
 
 
 
 
 
 
 
Our Company
 
 
 
 
 
 
 
 
 
Founded in 1977, we are an international real estate investment and services firm. We are a vertically integrated real estate operating company with approximately 390 professionals in 24 offices throughout the United States, United Kingdom, Ireland, Spain and Japan. Based on management’s estimate of fair value as of March 31, 2013, we have approximately $12.3 billion of real estate and real estate related assets under our management, or AUM, totaling over 62.2 million square feet of properties throughout the United States, Europe and Japan. This includes ownership in 14,764 multifamily apartment units, of which 1,580 units are owned by our consolidated subsidiaries and 13,184 are held in joint ventures.
 
 
 
 
 
 
 
AUM generally refers to the properties and other assets with respect to which we provide (or participate in) oversight, investment management services and other advice, and which generally consist of real estate properties or loans, and investments in joint ventures. Our AUM is intended principally to reflect the extent of our presence in the real estate market, not the basis for determining our management fees. Our AUM consist of the total estimated fair value of the real estate properties and other assets either owned by third parties, wholly owned by us or held by joint ventures and other entities in which our sponsored funds or investment vehicles and client accounts have invested. Committed (but unfunded) capital from investors in our sponsored funds is not included in our AUM. The estimated value of development properties is included at estimated completion cost.
 
 
 
 
 
 
 
Our Business Segments
 
 
 
 
 
 
 
 
 
Our operations are defined by two core business units: KW Investments and KW Services. KW Investments invests our capital in most cases alongside partners’ capital in real estate-related assets including multifamily properties, loans secured by real estate and office and residential properties. KW Services provides a full array of real estate-related services to investors and lenders, with a strong focus on financial institution based clients.
 
 
 
 
 
 
 
KW Investments
 
 
 
 
 
 
 
 
 
We invest our capital and our equity partners’ capital in real estate assets and loans secured by real estate through joint ventures, separate accounts, commingled funds, and wholly owned investments. We are typically the general partner in these investment vehicles with ownership interests ranging from approximately 5% to 50%. Our equity partners include financial institutions, foundations, endowments, high net worth individuals and other institutional investors. In many cases we get a promoted interest in the profits of our investments beyond our ownership percentage.
 
 
 
 
 
 
 
Our investment philosophy is based on three core fundamentals:
l significant proprietary deal flow from an established network of industry relationships, particularly with financial institutions;
l focus on a systematic research process with a disciplined approach to investing; and
l superior in-house operating execution.
 
 
 
 
 
 
 
Our primary investment markets include California, Washington, Hawaii, the United Kingdom, Ireland and Japan, which we have identified as areas with dense populations, high barriers to entry, scarcity of land and supply constraints. We typically focus on the following opportunities:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

1


 

l real estate owners or lenders seeking liquidity;
l under-managed or under-leased assets; and
l positioning opportunities.
 
 
The following table describes our investment account, which includes the following financial statement captions below, and is derived from our unaudited interim consolidated balance sheet as of March 31, 2013 (dollars in millions):
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
March 31, 2013
 
 
Investment in joint ventures
$
575.3

 
 
Real estate, net of depreciation
403.6

 
 
Mortgage debt
(251.1
)
 
 
Notes receivable
22.1

 
 
Acquired in-place lease value, net of amortization
9.0

 
 
Loan pool participations
84.2

 
 
Total net investment account
843.1

 
 
Add back:
 
 
 
Accumulated depreciation and amortization
17.9

 
 
Kennedy Wilson’s share of accumulated depreciation and
 amortization included in investment in joint venture
68.6

 
 
Total gross investment account
$
929.6

 
 
 
 
 
 
 
 
 
 
The following table breaks down our investment account information derived from our unaudited interim consolidated balance sheet by investment type and geographic location as of March 31, 2013 (dollars in millions):
 
 
 
 
 
 
 
 
 
 
 
Multifamily
Loans Secured by Real Estate
Commercial
Residential, Hotel and Other(1)
Total
 
 
Western U.S.
$
195.0

$
74.4

$
163.7

$
112.7

$
545.8

 
 
Other U.S.
0.4


3.2

9.4

13.0

 
 
Japan
83.7


7.6


91.3

 
 
United Kingdom

99.8

19.2


119.0

 
 
Ireland
21.5

43.6

8.9


74.0

 
 
Total
$
300.6

$
217.8

$
202.6

$
122.1

$
843.1

 
 
─────────
(1) Includes for-sale residential properties, condominiums and residential land.
 
 
 
 
 
 
 
 
 
 
KW Services
 
 
 
 
 
KW Services offers a comprehensive line of real estate services for the full lifecycle of real estate ownership and investment to clients that include financial institutions, developers, builders and government agencies. KW Services has three business lines: investment management, property services and auction and conventional sales. These three business lines generate revenue for us through commissions and fees.

 
 
 
 
 
 
 
 
 
 
Since our inception, we have sold more than $10 billion of real estate through our auction platform and have extensive experience in auction marketing and conducting live and online auctions. The auction group executes accelerated marketing programs for all types of residential and commercial real estate.

 
 
 
 
 
 
 
 
 


2


 
 
 
 
 
 
 
 
Through our investment management business, we provide acquisition, asset management and disposition services to our equity partners as well as to third parties.

 
 
We manage over 62 million square feet of properties for institutional clients and individual investors in the United States, Europe and Japan. With 24 offices throughout the United States, the United Kingdom, Ireland, Spain and Japan, we have the capabilities and resources to provide property services to real estate owners as well as the experience, as a real estate investor, to understand client concerns.

 
 
Additionally, KW Services plays a critical role in supporting the company’s investment strategy by providing local market intelligence and real-time data for evaluating investments, generating proprietary transaction flow and creating value through efficient implementation of asset management or repositioning strategies.

 
 
 
 
 
 
 
 
 
Our Competitive Strengths
 
 
 
 
 
 
 
 
 
 
 
 
We believe the combination of a service business and an investment platform provides us with significant competitive advantages and allows us to generate superior risk-adjusted returns. We use our service platform to facilitate the origination of investment opportunities, enhance the investment process and ensure the alignment of interests with our investors’ interests. Our competitive strengths include:
 
 
l     Transaction experience: Our Executive Committee has more than 125 years of combined real estate experience and has been working and investing together on average for over 15 years. Members of the Executive Committee have collectively acquired, developed and managed in excess of $20 billion of real estate investments in the United States, the United Kingdom, Ireland and Japan throughout various economic cycles, both at our company and throughout their careers.
l    Extensive relationship and sourcing network: We leverage our services business in order to source off-market deals. In addition, the Executive Committee and our acquisition team have transacted deals in nearly every major metropolitan market on the West Coast of the United States, as well as in the United Kingdom, Ireland and Japan. Their local presence and reputation in these markets have enabled them to cultivate key relationships with major holders of property inventory, particularly in financial institutions, throughout the real estate community.
l     Structuring expertise and speed of execution: Prior acquisitions we completed have taken a variety of forms, including direct property investments, joint ventures, exchanges involving stock or operating partnership units, participating loans and investments in performing and non-performing mortgages with the objective of long-term ownership. We believe we have developed a reputation of being able to quickly execute, as well as originate and creatively structure acquisitions, dispositions and financing transactions.
l        Vertically integrated platform for operational enhancement: We have approximately 390 employees in both KW Investments and KW Services, with 24 regional offices throughout the United States, the United Kingdom, Ireland, Spain and Japan. We have a hands-on approach to real estate investing and possess the local expertise in property management, leasing, construction management, development and investment sales, which we believe enable us to invest successfully in selected submarkets.
l      Risk protection and investment discipline: We underwrite our investments based upon a thorough examination of property economics and a critical understanding of market dynamics and risk management strategies. We conduct an in-depth sensitivity analysis on each of our acquisitions. This analysis applies various economic scenarios that include changes to rental rates, absorption periods, operating expenses, interest rates, exit values and holding periods. We use this analysis to develop our disciplined acquisition strategies.
 
 
 
 
 
 
 
 
 
Recent Developments
 
 
 
 
 
 
Offering of Common Stock
 
 
 
 
 
In March and April 2013, we issued and sold an aggregate of 10,350,000 shares of our common stock in an underwritten public offering, generating estimated net proceeds to us of approximately $153.9 million, after deducting underwriting discounts and commissions and the estimated offering expenses payable by us.
 
 
 
 
 
 
 
 
 
Dividends
 
 
 
 
 
 
On April 2, 2013, we paid a dividend of $0.07 per share of our common stock to common shareholders of record as of March 22, 2013. The declaration and payment of any future dividends is at the sole discretion of our Board of Directors.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

3


 
 
 
 
 
 
 
 
UK Loan Pool Distributions
 
 
 
 
 
In December 2011, we and our institutional partners, acquired a loan portfolio in the United Kingdom consisting of 58 performing loans. The 58 loans are secured by more than 170 properties comprised of the following product types: commercial, multifamily, retail, industrial, hotel and land. We, through a 50/50 joint venture with one of our partners, acquired a 25% participation interest in the pool for $440.9 million, of which $323.4 million was funded with debt, which was paid off on March 21, 2013. As of March 31, 2013, the unpaid principal balance of the loans was $417.4 million due to collections of $1.7 billion, representing 80% of the pool.
 
 
Subsequent to March 31, 2013, we received $33.4 million in distributions related to resolutions on the pool. We expect to accrete $22.7 million in interest income on this loan pool over the total estimated collection period (excluding asset management fees) and as of March 31, 2013, we have accreted $11.5 million.
 
 
 
 
 
 
 
 
 
Corporate Information
 
 
 
 
 
Kennedy-Wilson Holdings, Inc. is a Delaware corporation. Our corporate headquarters is located at 9701 Wilshire Blvd., Suite 700, Beverly Hills, California 90212, and our telephone number is (310) 887-6400.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 


4


 
 
 
 
 
The Exchange Offer
 
 
 
 
 
In this prospectus, (1) the term “outstanding notes” refers to our outstanding 8.750% Senior Notes due 2019 and the related guarantees issued in a private placement on December 6, 2012, for a total aggregate principal amount of $100.0 million; (2) the term “exchange notes” refers to our 8.750% Senior Notes due 2019 and the related guarantees offered by this prospectus in exchange for the outstanding notes; (3) the term “initial notes” refers to the $250.0 million aggregate principal amount of our 8.750% Senior Notes due 2019 issued in April 2011; (4) the term “initial exchange notes” refers to the notes we issued in exchange for the initial notes in February 2012; and (5) the term “notes” refers, collectively, to the outstanding notes, the exchange notes, the initial notes and the initial exchange notes. As used in this section of the prospectus, the terms “we,” “us” and “our” and similar expressions refer only to Kennedy-Wilson, Inc. and not to its subsidiaries or Kennedy-Wilson Holdings, Inc.

The summary below describes the principal terms of the exchange offer. See also the section of this prospectus titled “The Exchange Offer,” which contains a more detailed description of the terms and conditions of the exchange offer.
 
 
 
 
 
 
General
In connection with a private placement, we entered into a registration rights agreement with the purchasers of the outstanding notes in which we agreed, among other things, to use our reasonable best efforts to cause the exchange offer described in this prospectus to be consummated on the earliest practicable date after the registration statement of which this prospectus forms a part has become effective, but in no event later than July 5, 2013. You are entitled to exchange in the exchange offer your outstanding notes for exchange notes, which are identical in all material respects to the outstanding notes except:
•    the offer and sale of the exchange notes will have been registered under the Securities Act;
•    the exchange notes are not entitled to any registration rights that are applicable to the outstanding notes under the registration rights agreement; and
•    the provisions of the registration rights agreement that provide for payment of additional amounts upon a registration default are no longer applicable.
 
 
The Exchange Offer
We are offering to exchange up to $100.0 million aggregate principal amount of our 8.750% Senior Notes due 2019 and the related guarantees, the offer and sale of which have been registered under the Securities Act, for any and all of our outstanding 8.750% Senior Notes due 2019 and the related guarantees.
Outstanding notes may be exchanged only in denominations of $2,000 and in integral multiples of $1,000 in excess thereof.
Subject to the satisfaction or waiver of specified conditions, we will exchange the exchange notes for all outstanding notes that are validly tendered and not validly withdrawn prior to the expiration of the exchange offer. We will cause the exchange to be effected promptly after the expiration of the exchange offer.
 
 
Resale
Based on interpretations by the staff of the SEC set forth in no-action letters issued to third parties, we believe that the exchange notes issued pursuant to the exchange offer in exchange for outstanding notes may be offered for resale, resold and otherwise transferred by you (unless you are our “affiliate” within the meaning of Rule 405 under the Securities Act) without the requirement to comply with the registration and prospectus-delivery provisions of the Securities Act, provided that:
•    you are acquiring the exchange notes in the ordinary course of your business; and
•    you have not engaged in, do not intend to engage in, and have no arrangement or understanding with any person to participate in, a distribution of the exchange notes.
If you are a broker-dealer and receive exchange notes for your own account in exchange for outstanding notes that you acquired as a result of market-making activities or other trading activities, you must acknowledge that you will deliver this prospectus in connection with any resale of the exchange notes. See “Plan of Distribution.”
 
 
Expiration Date
The exchange offer expires at midnight, New York City time, in the evening of June 25, 2013, unless extended by us. We do not currently intend to extend the expiration date.
 
 
 
 
 

5


 
 
 
 
 
Withdrawal
You may withdraw any tender of your outstanding notes at any time prior to the expiration of the exchange offer. We will return to you any of your outstanding notes that are not accepted for any reason for exchange, without expense to you, promptly after the expiration or termination of the exchange offer.
 
 
Interest on the Exchange Notes and the Outstanding Notes
Each exchange note bears interest at the rate of 8.750% per annum from the most recent date on which interest has been paid on the notes or, if no interest has been paid, from October 1, 2012. The interest on the notes is payable on April 1 and October 1 of each year, commencing on April 1, 2013. No interest will be paid on outstanding notes following their acceptance for exchange.
 
 
Conditions to the Exchange Offer
The exchange offer is subject to customary conditions, which we may assert or waive. See “The Exchange Offer—Conditions to the Exchange Offer.”
 
 
Procedures for Tendering Outstanding Notes
If you wish to participate in the exchange offer, you must complete, sign and date the accompanying letter of transmittal, or a facsimile of the letter of transmittal, according to the instructions contained in this prospectus and the letter of transmittal. You must then mail or otherwise deliver the letter of transmittal, or a facsimile of the letter of transmittal, together with the outstanding notes and any other required documents, to the exchange agent at the address set forth on the cover page of the letter of transmittal.
If you hold outstanding notes through The Depository Trust Company (“DTC”) and wish to participate in the exchange offer, you must comply with the procedures under DTC’s Automated Tender Offer Program by which you will agree to be bound by the letter of transmittal. By signing, or agreeing to be bound by, the letter of transmittal, you will represent to us that, among other things:
•      you do not have an arrangement or understanding with any person or entity to participate in the distribution of the exchange notes;
•    you are not an “affiliate” of ours or of any guarantor within the meaning of Rule 405 under the Securities Act;
•    you are not engaged in, and do not intend to engage in, a distribution of the exchange notes;
•    you are acquiring the exchange notes in the ordinary course of your business; and
•    if you are a broker-dealer that receives exchange notes for your own account in exchange for outstanding notes that were acquired as a result of market-making activities or other trading activities, that you will deliver a prospectus, as required by law, in connection with any resale of such exchange notes.
 
 
Special Procedures for Beneficial Owners
If you are a beneficial owner of outstanding notes that are registered in the name of a broker, dealer, commercial bank, trust company or other nominee, and you wish to tender those outstanding notes in the exchange offer, you should contact the registered holder promptly and instruct the registered holder to tender those outstanding notes on your behalf. If you wish to tender on your own behalf, you must, prior to completing and executing the letter of transmittal and delivering your outstanding notes, either make appropriate arrangements to register ownership of the outstanding notes in your name or obtain a properly completed bond power from the registered holder. The transfer of registered ownership may take considerable time and may not be able to be completed prior to the expiration date.
 
 
Guaranteed Delivery Procedures
If you wish to tender your outstanding notes and your outstanding notes are not immediately available or you cannot deliver your outstanding notes, the letter of transmittal or any other required documents, or you cannot comply with the procedures under DTC’s Automated Tender Offer Program for transfer of book-entry interests, prior to the expiration date, you must tender your outstanding notes according to the guaranteed delivery procedures described under “The Exchange Offer—Guaranteed Delivery Procedures.”
 
 
 
 
 
 
 
 
 
 
 
 
 


6


 
 
 
 
 
Effect on Holders of Outstanding Notes
As a result of the making of, and upon acceptance for exchange of all validly tendered outstanding notes pursuant to the terms of, the exchange offer, we will have fulfilled a covenant under the registration rights agreement. Accordingly, there will be no increase in the interest rate on the outstanding notes under the circumstances described in the registration rights agreement. If you do not tender your outstanding notes in the exchange offer, you will continue to be entitled to all the rights and limitations applicable to the outstanding notes as set forth in the indenture under which the outstanding notes were issued, except we will not have any further obligation to you to provide for the exchange and registration of the outstanding notes and related guarantees under the registration rights agreement. To the extent that outstanding notes are tendered and accepted in the exchange offer, the trading market for outstanding notes could be adversely affected.
 
 
Consequences of Failure to Exchange
All untendered outstanding notes will continue to be subject to the restrictions on transfer set forth in the outstanding notes and in the indenture under which the outstanding notes were issued. In general, the outstanding notes may not be offered or sold, except in a transaction that is registered under the Securities Act or pursuant to an exemption from, or in a transaction not subject to, the Securities Act and applicable state securities laws. Other than in connection with the exchange offer, we do not anticipate that we will register the offer and sale of the outstanding notes under the Securities Act.
 
 
U.S. Federal Income Tax Consequences of the Exchange Offer
The exchange of outstanding notes for exchange notes in the exchange offer will not be a taxable event for United States federal income tax purposes. See “United States Federal Income Tax Considerations.”
 
 
Use of Proceeds
We will not receive any cash proceeds from the issuance of exchange notes in the exchange offer. See “Use of Proceeds.”
 
 
Exchange Agent
Wilmington Trust, National Association, is the exchange agent for the exchange offer. The addresses and telephone numbers of the exchange agent are set forth under “The Exchange Offer—Exchange Agent.”
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 


7


 
 
 
 
 
The Exchange Notes
 
 
The summary below describes the principal terms of the exchange notes. Certain of the terms and conditions described below are subject to important limitations and exceptions. The “Description of the Notes” section of this prospectus contains more detailed descriptions of the terms and conditions of the outstanding notes and the exchange notes. The exchange notes will have terms identical in all material respects to the outstanding notes, except that the offer and sale of the exchange notes will be registered under the Securities Act and the exchange notes will not contain terms with respect to transfer restrictions, registration rights and additional payments upon a failure to fulfill certain of our obligations under the registration rights agreement. Unless otherwise stated or the context otherwise requires, as used in this section of the prospectus, (1) the terms “Kennedy-Wilson,” “we,” “us” and “our” and similar expressions refer only to Kennedy-Wilson, Inc. and not to its subsidiaries or Kennedy-Wilson Holdings, Inc.; and (2) the term “Kennedy-Wilson Holdings” refers to Kennedy-Wilson Holdings, Inc. and its subsidiaries.
 
 
Issuer
Kennedy-Wilson, Inc.
 
 
Securities Offered
$100.0 million in aggregate principal amount of 8.750% Senior Notes due 2019 and the related guarantees.
 
 
Initial Exchange Notes
We issued $200.0 million aggregate principal amount of 8.750% Senior Notes due 2019 on April 5, 2011 and an additional $50.0 million aggregate principal amount of such notes on April 12, 2011, which notes we refer to as the initial notes. In February 2012, we consummated an exchange offer pursuant to which all initial notes were exchanged for registered notes, which we refer to as the initial exchange notes.
The exchange notes will be fungible with the initial exchange notes and will be treated as a single series with the initial exchange notes and any outstanding notes under the indenture governing the same. Holders of the exchange notes, the outstanding notes and the initial exchange notes will vote as one class under the indenture.
 
 
Maturity
April 1, 2019
 
 
Interest Rate
The exchange notes bear interest at a rate of 8.750% per annum.
 
 
Interest Payment Dates
The interest on the notes is payable on April 1 and October 1 of each year, beginning on April 1, 2013. Interest accrues from the most recent date on which interest has been paid on the outstanding notes or the exchange notes or, if no interest has been paid, from October 1, 2012.
 
 
Guarantees
The exchange notes will be guaranteed by Kennedy-Wilson Holdings, Inc. and, subject to certain exceptions, each material existing and future domestic subsidiary of Kennedy-Wilson, Inc. The guarantees by the guarantors of the notes will rank equally in right of payment to all existing and future senior indebtedness of the guarantors and senior in right of payment to any of the guarantor’s existing and future subordinated indebtedness.
 
 
Ranking
The exchange notes will be our senior unsecured obligations and will:
• rank senior in right of payment to all of our future subordinated indebtedness;
• rank equally in right of payment with all our future senior indebtedness;
• be effectively subordinated in right of payment to all of our secured indebtedness to the extent of the value of the assets securing such debt; and
• be structurally subordinated in right of payment to all existing and future indebtedness of any of our subsidiaries that do not guarantee the notes.
As of March 31, 2013:
• we and our subsidiaries that are guarantors had approximately $442.9 million of total senior indebtedness outstanding, of which:
• $33.4 million was secured non-recourse mortgage indebtedness; and

 
 
 
 
 



8


 
 
 
 
 
 
• $409.5 (including $4.5 million of net unamortized premium) million was senior unsecured indebtedness, consisting of the $100.0 million aggregate principal amount of outstanding notes to which the exchange offer relates, $250.0 million aggregate principal amount of the initial exchange notes and $55.0 million aggregate principal amount of our 7.75% Senior Notes due 2042, which we refer to as the “2042 notes”; and
• we had no indebtedness outstanding under our unsecured revolving credit facility and ha $100 million of availability thereunder.
As of March 31, 2013, we had $40.0 million of subordinated indebtedness consisting entirely of our junior subordinated debentures due 2037, which we refer to as the “2037 debentures.”
In addition, as of March 31, 2013, we and the guarantors had $46.8 million aggregate principal amount of guarantees that we and our guarantors provided in connection with loans secured by assets held in various joint ventures that have recourse to us and our guarantors.
For the three months ended March 31, 2013 and the year ended December 31, 2012, the revenues of our non-guarantor subsidiaries constituted approximately 50.5% and 54.8%, respectively, of Kennedy-Wilson Holding’s consolidated revenues, and the operating income of our non-guarantor subsidiaries for those periods was approximately $0.8 million and $16.5 million, respectively. As of March 31, 2013, the total assets of those subsidiaries constituted approximately 33.1% of Kennedy-Wilson Holding’s consolidated total assets, and those subsidiaries had $217.7 million of secured non-recourse mortgage indebtedness, of which none has recourse to us. However, these figures are as of March 31, 2013 and do not reflect transactions that we have entered into after that date or future transactions that we may enter into. Depending on the particular terms of any acquisition or other transaction that one or more of our subsidiaries may enter into, those subsidiaries may not be required by the terms of the indenture governing the notes to guarantee the notes. Accordingly, these figures may fluctuate from time to time, and these figures may increase or decrease materially in future periods. For example, the instruments governing our acquisitions (such as the relevant loan agreement, or the terms of the relevant partnership agreement, limited liability company operating agreement or other governing document of the borrower, or any related joint venture agreement or the terms of any relevant co-investment vehicle or separate account or investment program) may prohibit the relevant subsidiary from guaranteeing the notes. In many such cases, the indenture does not require our subsidiaries, including those described above, to guarantee the notes.
 
 
Optional Redemption
At any time prior to April 1, 2015, we may redeem the notes, in whole or in part, at a price equal to 100% of the principal amount, plus an applicable “make-whole” premium and accrued and unpaid interest, if any, to the redemption date, as described under the caption “Description of the Notes—Optional Redemption.”
At any time and from time to time on or after April 1, 2015, we may redeem the notes, in whole or in part, at the redemption prices specified under the caption “Description of the Notes—Optional Redemption,” plus accrued and unpaid interest, if any, to the date of redemption.
Until April 1, 2014, we can choose to redeem the notes in an amount not to exceed in aggregate 35% of the original principal amount of the notes and any other additional notes issued under the indenture with money we or Kennedy-Wilson Holdings, Inc. raise in certain equity offerings as described under the caption “Description of the Notes—Optional Redemption.”
 
 
Fundamental Change
Upon a fundamental change (as defined under “Description of the Notes”), we will be required to make an offer to purchase the notes. The purchase price will equal 101% of the principal amount of the notes being purchased on the date of purchase plus accrued and unpaid interest. We may not have sufficient funds available at the time of any fundamental change to make any required debt repayment (including repurchases of the notes). See “Risk Factors – Risks Related to the Notes – We may not have the ability to raise the funds necessary to finance a fundamental change offer.”
 
 
Certain Covenants
The indenture governing the exchange notes contains covenants that limit our ability and the ability of certain of our subsidiaries to:
•    incur or guarantee additional indebtedness;
•    pay dividends or distributions on capital stock or redeem or repurchase capital stock;
 


9


 
 
 
 
 
 
•    make investments;
•    create restrictions on the payment of dividends or other amounts to us;
•    sell the stock of our subsidiaries;
•    transfer or sell assets;
•    create liens;
•    enter into sale/leaseback transactions;
•    enter into transactions with affiliates; and
•    enter into mergers or consolidations.
However, these limitations are subject to a number of important qualifications and exceptions. See “Description of the Notes – Certain Covenants.”
 
 
Book-Entry
The exchange notes will be issued in book-entry form and will be represented by global certificates deposited with, or on behalf of, DTC and registered in the name of Cede & Co., DTC’s nominee. Beneficial interests in the exchange notes will be shown on, and transfers will be effected only through, records maintained by DTC or its nominee; and these interests may not be exchanged for certificated notes, except in limited circumstances. See “Description of the Notes—Book-Entry, Delivery and Form” and “Description of the Notes—Exchange of Global Notes for Certificated Notes.”
 
 
No Listing
The exchange notes will not be listed on any securities exchange or market.
 
 
 
 
 
 
Risk Factors
 
 
You should carefully consider all of the information included and incorporated by reference in this prospectus. See “Risk Factors” included in this prospectus beginning on page 15. In addition, you should review the information set forth under “Forward-Looking Statements” before deciding to tender your outstanding notes in the exchange offer.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 


10


 
 
 
 
 
 
 
 
 
SUMMARY HISTORICAL CONSOLIDATED FINANCIAL AND OTHER DATA 
As used in this section of the prospectus, the terms “company,” “we,” “us” and “our” and similar expressions refer to Kennedy-Wilson Holdings, Inc. and its subsidiaries, unless otherwise stated or the context otherwise requires.
The following summary historical consolidated financial data for each of the years in the three-year period ended December 31, 2012 and summary historical consolidated balance sheet data as of December 31, 2011 and 2012 have been derived from our audited consolidated financial statements incorporated by reference in this prospectus. The summary historical consolidated financial data for the three-month periods ended March 31, 2013 and 2012 and summary balance sheet data as of March 31, 2013 have been derived from our unaudited interim condensed consolidated financial statements incorporated by reference in this prospectus. The summary historical balance sheet data as of December 31, 2010 have been derived from our audited consolidated financial statements not included or incorporated by reference in this prospectus.
The financial data set forth in the tables below are not necessarily indicative of the results of future operations and should be read in conjunction with “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our consolidated financial statements and accompanying notes thereto included in our annual report on Form 10-K for the fiscal year ended December 31, 2012, as amended, and our quarterly report on Form 10-Q for the quarter ended March 31, 2013, each of which is incorporated by reference in this prospectus.
Some of the financial data contained or incorporated by reference in this prospectus reflects the effects of, and may not total due to, rounding.
 
 
 
 
 
 
 
 
 
 
 
For the Years Ended December 31,
For the Three Months Ended March 31,
 
 
 
2010
2011
2012
2012
2013
 
 
Statement of Operations:
 
 
 
(unaudited)
(unaudited)
 
 
Revenue
 
 
 
 
 
 
 
Management and leasing fees
$
8,913,000

$
12,570,000

$
15,795,000

$
3,156,000

$
4,709,000

 
 
Management and leasing fees--related parties
12,417,000

14,546,000

24,509,000

5,585,000

7,957,000

 
 
Commissions
6,359,000

5,777,000

5,023,000

666,000

524,000

 
 
Commissions--related parties
5,375,000

24,183,000

7,932,000

953,000

392,000

 
 
Sale of real estate
3,937,000

417,000

2,271,000


2,418,000

 
 
Sale of real estate--related parties
9,535,000





 
 
Rental and other income
4,000,000

5,140,000

8,526,000

1,470,000

6,397,000

 
 
Total revenue
50,536,000

62,633,000

64,056,000

11,830,000

22,397,000

 
 
Operating expenses
 
 
 
 
 
 
 
Commission and marketing expenses
3,186,000

3,965,000

4,550,000

965,000

498,000

 
 
Compensation and related expenses
38,155,000

41,129,000

55,834,000

9,000,000

13,620,000

 
 
Merger-related compensation and related expenses
2,225,000





 
 
Cost of real estate sold
2,714,000

397,000

2,230,000


1,872,000

 
 
Cost of real estate sold--related parties
8,812,000





 
 
General and administrative
11,314,000

14,455,000

19,448,000

3,669,000

5,427,000

 
 
Depreciation and amortization
1,618,000

2,798,000

4,937,000

937,000

3,057,000

 
 
Rental operating expense
1,913,000

3,308,000

4,496,000

870,000

3,103,000

 
 
Total operating expenses
69,937,000

66,052,000

91,495,000

15,441,000

27,577,000

 
 
Equity in joint venture income (loss)
10,548,000

12,507,000

21,527,000

5,516,000

(344,000
)
 
 
Interest income from loan pool participations and notes receivable
11,855,000

7,886,000

9,256,000

538,000

2,945,000

 
 
Operating income (loss)
3,002,000

16,974,000

3,344,000

2,443,000

(2,579,000
)
 
 
 
 
 
 
 
 
 

11


 
 
 
 
 
 
 
 
 
Non-operating income (expense)
 
 
 
 
 
 
 
Interest income
192,000

285,000

133,000

30,000

40,000

 
 
Interest income--related parties
662,000

2,021,000

2,805,000

1,087,000


 
 
Acquisition-related gain
2,108,000

6,348,000

25,476,000


9,459,000

 
 
Acquisition-related expenses


(675,000
)


 
 
Gain on sale of marketable securities


4,353,000

2,931,000


 
 
Realized foreign currency exchange loss



(112,000
)

 
 
Gain on early extinguishment of mortgage debt
16,670,000





 
 
Loss on early extinguishment of corporate debt
(4,788,000
)




 
 
Interest expense
(7,634,000
)
(20,507,000
)
(28,595,000
)
(6,170,000
)
(11,432,000
)
 
 
Income (loss) from continuing operations before (provision for) benefit from income taxes
10,212,000

5,121,000

6,841,000

209,000

(4,512,000
)
 
 
(Provision for) benefit from income taxes
(3,727,000
)
2,014,000

208,000

1,483,000

1,703,000

 
 
Income (loss) from continuing operations
6,485,000

7,135,000

7,049,000

1,692,000

(2,809,000
)
 
 
Discontinued operations
 
 
 
 
 
 
 
Income (loss) from discontinued operations, net of income taxes

8,000

2,000

2,000

(3,000
)
 
 
Gain (loss) from sale of real estate, net of income taxes

335,000

(212,000
)
(212,000
)
217,000

 
 
Net income (loss)
6,485,000

7,478,000

6,839,000

1,482,000

(2,595,000
)
 
 
Net (income) loss attributable to the non-controlling interests
(2,979,000
)
(1,132,000
)
(2,589,000
)
(2,798,000
)
999,000

 
 
Net income (loss) attributable to Kennedy-Wilson Holdings, Inc.
$
3,506,000

$
6,346,000

$
4,250,000

$
(1,316,000
)
$
(1,596,000
)
 
 
 
 
 
 
 
 
 
 
 
For the Years Ended December 31,
For the Three Months Ended March 31,
 
 
 
2010
2011
2012
2012
2013
 
 
 
 
 
 
(unaudited)

(unaudited)

 
 
Statement of Cash Flow Data:
 
 
 
 
 
 
 
Cash flow provided by (used in):
 
 
 
 
 
 
 
Operating activities
$
2,157,000

$
(6,011,000
)
$
6,767,000

$
(6,035,000
)
$
(27,565,000
)
 
 
Investing activities
(114,836,000
)
(198,134,000
)
(389,728,000
)
21,535,000

(16,940,000
)
 
 
Financing activities
91,160,000

272,617,000

388,418,000

(9,070,000
)
126,188,000

 
 
Other Selected Data
 
 
 
 
 
 
 
EBITDA(1)
$
48,108,000

$
66,122,000

$
92,174,000

$
18,291,000

$
30,118,000

 
 
Adjusted EBITDA(2)
58,427,000

71,177,000

100,321,000

19,162,000

31,887,000

 
 
 
 
 
 
 
 
 
 
 
As of December 31,
 
As of
March 31,
 
 
 
2010
2011
2012
 
2013
 
 
 
 
 
 
 
(unaudited)
 
 
Balance Sheet Data(3)
 
 
 
 
 
 
 
Cash and cash equivalents
$
46,968,000

$
115,926,000

$
120,855,000

 
$
198,448,000

 
 
Investment Account(3)(4)
363,700,000

584,446,000

837,611,000

 
843,100,000

 
 
Total assets
487,848,000

792,776,000

1,283,789,000

 
1,386,101,000

 
 
Total debt
127,782,000

320,133,000

686,178,000

 
700,632,000

 
 
Total Kennedy-Wilson Holdings, Inc. stockholders’ equity
300,192,000

410,235,000

509,644,000

 
630,404,000

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 



12



 
 
 
 
 
 
 
 
 
────────
(1) EBITDA represents net income (loss) before interest expense, our share of interest expense included in income from investments in joint ventures and loan pool participations, depreciation and amortization, our share of depreciation and amortization included in income from investments in joint ventures, loss on early extinguishment of corporate debt and income taxes. We do not adjust EBITDA for gains or losses on the extinguishment of mortgage debt, as we are in the business of purchasing discounted notes secured by real estate, and, in connection with these note purchases, we may resolve these loans through discounted payoffs with the borrowers. EBITDA is not a recognized term under generally accepted accounting principles, or GAAP, and does not purport to be an alternative to net earnings as a measure of operating performance or to cash flows from operating activities as a measure of liquidity. Additionally, EBITDA is not intended to be a measure of free cash flow available for management’s discretionary use, as it does not consider certain cash requirements such as interest payments, tax payments and debt service requirements. Our presentation of EBITDA has limitations as an analytical tool, and you should not consider it in isolation or as a substitute for analysis of our results as reported under GAAP. EBITDA is not calculated under GAAP and should not be considered in isolation or as a substitute for net income, cash flows or other financial data prepared in accordance with GAAP or as a measure of our overall profitability or liquidity. This definition of EBITDA is different from the definition of EBITDA in the section entitled “Description of the Notes.” Our management believes EBITDA is useful in evaluating our operating performance compared to that of other companies in our industry because the calculation of EBITDA generally eliminates the effects of financing and income taxes and the accounting effects of capital spending and acquisitions. Such items may vary for different companies for reasons unrelated to overall operating performance. Additionally, we believe EBITDA is useful to investors to assist them in getting a more accurate picture of our results from operations.
(2) Adjusted EBITDA represents EBITDA, as defined above, adjusted to exclude merger related expenses and stock based compensation expense. Our management uses Adjusted EBITDA to analyze our business because it adjusts EBITDA for items we believe do not have an accurate reflection of the nature of our business going forward or are non-cash in nature. Such items may vary for different companies for reasons unrelated to overall operating performance. Additionally, we believe Adjusted EBITDA is useful to investors to assist them in getting a more accurate picture of our results from operations. However, EBITDA and Adjusted EBITDA are not recognized measurements under GAAP, and, when analyzing our operating performance, readers should use EBITDA and Adjusted EBITDA in addition to, and not as an alternative for, net income as determined in accordance with GAAP. Because not all companies use identical calculations, our presentation of EBITDA and Adjusted EBITDA may not be comparable to similarly titled measures of other companies. Furthermore, EBITDA and Adjusted EBITDA are not intended to be a measure of free cash flow for our management’s discretionary use, as it does not consider certain cash requirements such as tax and debt service payments. The amounts shown for EBITDA and Adjusted EBITDA also differ from the amounts calculated under similarly titled definitions in our debt instruments, which are further adjusted to reflect certain other cash and non-cash charges and are used to determine compliance with financial covenants and our ability to engage in certain activities, such as incurring additional debt and making certain restricted payments.
(3) This data is presented as of the end of the fiscal period referred to in the applicable column heading.
(4) Investment Account is defined as investments in joint ventures plus real estate, net plus notes receivable plus loan pool participations plus marketable securities plus acquired in-place lease values, net less mortgage debt.
 
 
 
 
 
 
 
 
 
 
The following table sets forth a reconciliation of EBITDA and Adjusted EBITDA to net income (loss), the most directly comparable GAAP financial measure, for each of the periods indicated:
 
 
 
 
 
 
 
 
 
 
For the Years Ended December 31,
For the Three Months Ended March 31,
 
 
 
2010
2011
2012
2012
2013
 
 
 
 
 
 
(unaudited)
(unaudited)
 
 
Net income (loss)
$
6,485,000

$
7,478,000

$
6,839,000

$
1,482,000

$
(2,595,000
)
 
 
     Add back:
 
 
 
 
 
 
 
Interest expense
7,634,000

20,507,000

28,595,000

6,170,000

11,432,000

 
 
Kennedy Wilson’s share of interest expense included in joint ventures and loan pool participants
13,802,000

23,453,000

29,412,000

7,285,000

10,617,000

 
 
Depreciation and amortization
1,618,000

2,798,000

4,937,000

937,000

3,057,000

 
 
Kennedy Wilson’s share of depreciation and amortization included in investment in joint ventures
10,054,000

13,900,000

22,599,000

3,900,000

9,310,000

 
 
Loss on early extinguishment of corporate debt
4,788,000





 
 
Provision (benefit from) for income taxes
3,727,000

(2,014,000
)
(208,000
)
(1,483,000
)
(1,703,000
)
 
 
EBITDA
48,108,000

66,122,000

92,174,000

18,291,000

30,118,000

 
 
Add back:
 
 
 
 
 
 
 
Merger related expenses, including compensation related and general and administrative(1)
2,225,000





 
 
Stock based compensation expense(2)
8,094,000

5,055,000

8,147,000

871,000

1,769,000

 
 
Adjusted EBITDA
$
58,427,000

$
71,177,000

$
100,321,000

$
19,162,000

$
31,887,000

 
 
 
 
(1) Expenses incurred in connection with our merger with a wholly owned subsidiary of Prospect Acquisition Company in 2009.
(2) Expenses related to stock-based compensation pursuant to our equity participation plan and the award of restricted stock to certain of our executive officers and employees.

13


 
 
 
 
 
 
 
 
 
 
Ratio Of Earnings To Fixed Charges
The following table sets forth Kennedy-Wilson Holdings’ ratio of earnings to fixed charges for the periods indicated:
 
 
 
 
 
 
 
 
 
 
 
 
For the Years Ended December 31,
For the Three Months Ended March 31,
 
 
 
2008
2009
2010
2011
2012
2013
 
 
Ratio of earnings to fixed charges(1)
n/a(2)
n/a(2)
1.51
n/a(2)
1.41
1.12
 
 
────────
(1) The ratio of earnings to fixed charges is calculated by dividing earnings, as defined, by fixed charges. For this purpose, earnings consist of pretax income from continuing operations before non-controlling interest and our equity in income of joint ventures plus operating distributions from equity investees, and fixed charges consist of interest expense, whether capitalized or expensed, amortization related to indebtedness and premiums or discounts of stock issuances and an estimate of interest expense within rental expense.
(2) For the years ended December 31, 2008, 2009 and 2011, Kennedy-Wilson Holdings’ earnings were insufficient to cover fixed charges, and the deficiency of earnings was $9.5 million, $21.1 million and $6.5 million.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 


14


RISK FACTORS
Before deciding to tender your outstanding notes in the exchange offer, you should consider the risks described below and the other information included or incorporated by reference in this prospectus, including the risks under the heading “Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2012, as amended, and in our Quarterly Report on Form 10-Q for the quarter ended March 31, 2013, as well as the other reports we file from time to time with the SEC that are incorporated by reference in this prospectus. The risks and uncertainties described below and in the incorporated documents are not the only risks and uncertainties that we face. The occurrence of any of the following risks could materially and adversely affect our business, financial condition or results of operations. Additional risks and uncertainties not currently known to us or those we currently view to be immaterial may also materially and adversely affect our business, financial condition or results of operations. In any such case, the market price of the exchange notes could decline and you could lose part or all of your investment. In addition, we may not be able to make payments of interest and principal on the exchange notes. The risks discussed below also include forward-looking statements, and our actual results may differ substantially from those we describe in these forward-looking statements. See “Forward-Looking Statements” in this prospectus. In addition to the risk factors incorporated by reference in this prospectus, you should consider the additional risk factors below.
Unless otherwise stated or the context otherwise requires, as used in this section of the prospectus, (1) the terms “company,” “we,” “us” and “our” and similar expressions refer to Kennedy-Wilson Holdings, Inc. and its subsidiaries, and (2) the term “Kennedy-Wilson” refers to Kennedy-Wilson, Inc. (excluding its subsidiaries), a wholly owned subsidiary of Kennedy-Wilson Holdings, Inc. and the issuer of the notes.
Risks Relating to the Exchange Offer
If you do not exchange your outstanding notes in the exchange offer, the transfer restrictions currently applicable to your outstanding notes will remain in force and the market price of your outstanding notes could decline.
If you do not exchange your outstanding notes for exchange notes in the exchange offer, then you will continue to be subject to the transfer restrictions on the outstanding notes as set forth in the offering memoranda distributed in connection with the private offerings of the outstanding notes. In general, the outstanding notes may not be offered or sold unless in transactions that are registered, or exempt from registration, under, or not subject to, the Securities Act (including pursuant to Rule 144 under the Securities Act, if and when available) and applicable state securities laws. Except as required by the registration rights agreement relating to the outstanding notes, we do not intend to register resales of the outstanding notes under the Securities Act. You should refer to “Prospectus Summary—The Exchange Offer” and “The Exchange Offer” for information on how to tender your outstanding notes.
The tender of outstanding notes under the exchange offer will reduce the aggregate principal amount of the outstanding notes, which may have an adverse effect upon, and increase the volatility of, the market prices of the outstanding notes due to reduction in liquidity. In addition, if you do not exchange your outstanding notes in the exchange offer, you will no longer be entitled to exchange your outstanding notes for exchange notes registered under the Securities Act and you will not be entitled to have your outstanding notes registered for resale under the Securities Act.
Your ability to transfer the exchange notes may be limited by the absence of an active trading market, and an active trading market may never develop for the exchange notes.
We do not intend to apply to list the exchange notes on any securities exchange or market. The initial purchasers in the private offering of the outstanding notes may make a market in the exchange notes as permitted by applicable laws and regulations. However, the initial purchasers are not obligated to make a market in any of the exchange notes, and they may discontinue their market-making activities at any time without notice. In addition, such market-making activity may be limited during the pendency of the exchange offer. Therefore, an active market for any of the exchange notes may not develop or, if developed, may not continue. In addition, subsequent to their initial issuance, the trading price of the exchange notes may decline, depending on prevailing interest rates, the market for similar notes, our performance and other factors.

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Risks Relating to the Notes
Ratings of the notes may affect the market price and marketability of the notes.
Any ratings of the outstanding notes or the initial exchange notes are limited in scope and do not address all material risks relating to an investment in the exchange notes, but rather reflect only the view of each rating agency at the time the rating is issued. An explanation of the significance of such rating may be obtained from such rating agency. There is no assurance that such credit ratings will be issued or remain in effect for any given period of time or that those ratings will not be lowered, suspended or withdrawn entirely by the rating agencies, if, in each rating agency’s judgment, circumstances so warrant. It is also possible that these ratings may be lowered in connection with future events, such as future acquisitions. Holders of notes will have no recourse against us or any other parties in the event of a change in or suspension or withdrawal of such ratings. Any lowering, suspension or withdrawal of such ratings may have an adverse effect on the market price or marketability of the notes.
Our substantial indebtedness could adversely affect our financial condition and prevent us from fulfilling our obligations under the notes.
As of March 31, 2013, Kennedy-Wilson and its subsidiaries that are guarantors had $442.9 million of outstanding senior indebtedness, of which $33.4 million was non-recourse mortgage indebtedness and $409.5 million (including $4.5 million of net unamortized premium) was senior unsecured indebtedness, consisting of the $100.0 million aggregate principal amount of outstanding notes to which the exchange offer relates, $250.0 million aggregate principal amount of the initial exchange notes and $55.0 million aggregate principal amount of the 2042 notes. As of March 31, 2013, Kennedy-Wilson and its subsidiaries that are guarantors had $40.0 million of indebtedness that is subordinated in right of payment to the outstanding notes and the initial exchange notes and will be subordinated to the exchange notes. In addition, as of such date, we had $46.8 million aggregate principal amount of guarantees that we provided in connection with loans secured by assets held in various joint ventures that have recourse to us. Our substantial indebtedness could have important consequences for you including the following:
it may limit our ability to borrow money or sell stock to fund our working capital, capital expenditures and debt service requirements;
it may limit our flexibility in planning for, or reacting to, changes in our business;
we may be more highly leveraged than some of our competitors, which may place us at a competitive disadvantage;
it may make us more vulnerable to a downturn in our business or the economy;
the debt service requirements of our other indebtedness could make it more difficult for us to make payments on our indebtedness, including the notes;
a substantial portion of our cash flow from operations could be dedicated to the repayment of our indebtedness and would not be available for other purposes; and
there would be a material adverse effect on our business and financial condition if we were unable to service our indebtedness, including the notes, or obtain additional financing, as needed.
In addition, each of the indenture governing the notes, the indenture governing the 2042 notes, the indenture governing the 2037 debentures and our unsecured revolving credit facility contain financial and restrictive covenants that limit our ability to engage in activities that may be in our long-term best interest. Our failure to comply with those covenants could result in an event of default that, if not cured or waived, could result in the acceleration of all of our debts.
Despite our substantial indebtedness, we may still incur significantly more debt. This could exacerbate the risks described above.
Each of the indenture governing the notes, the indenture governing the 2042 notes and our unsecured revolving credit facility permits us and our subsidiaries to incur significant additional indebtedness in the future. As of March 31, 2013, we had

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no outstanding indebtedness under our unsecured revolving credit facility and $100 million available for additional borrowing under that facility, subject to certain conditions.
We may not have the ability to raise the funds necessary to finance a fundamental change offer.
Upon the occurrence of a fundamental change (as defined in the indenture governing the notes and the indenture governing the 2042 notes), which includes a change of control event or delisting of our common stock, we will be required to offer to repurchase all of the notes and the 2042 notes. There may be insufficient funds available for us to make any required repurchases of the notes or the 2042 notes upon a change of control. In addition, our unsecured revolving credit facility provides that the occurrence of a change of control constitutes a default. Our failure to purchase tendered notes and 2042 notes would constitute a default under the relevant indenture governing the same, which, in turn, would constitute a default under the credit facility. See “Description of the Notes—Fundamental Change.”
In the event of a change of control or termination of trading of our common stock, our Series A and Series B preferred stock will be redeemable at the option of the stockholders thereof.
Under the indentures governing the notes and the 2042 notes, upon the occurrence of a fundamental change (as defined in those indentures), which includes a change of control event or a delisting of our common stock, each noteholder will have the right to require us to purchase such noteholder’s notes at a purchase price equal to 101% of their principal amount, plus accrued and unpaid interest, if any, to the repurchase date. The occurrence of a fundamental change will also trigger a redemption right held by the holders of our Series A and Series B preferred stock under the applicable certificate of designation. Under the terms of these indentures, Kennedy-Wilson may not make any restricted payment to facilitate a redemption of the Series A and Series B preferred stock unless Kennedy-Wilson has restricted payment capacity or has previously made an offer to noteholders to purchase their notes and 2042 notes. If the noteholders, however, fail for any reason to tender all of their notes and 2042 notes under the offer to purchase them, and our preferred stockholders accept the offer to purchase the Series A and Series B preferred stock, we will be required to use cash to fund the purchase of our Series A and Series B preferred stock. In the event this occurs, it may make it more difficult for us to make scheduled payments on the untendered notes and 2042 notes. See “Description of the Notes—Fundamental Change.” In addition, we may not redeem the Series A and Series B preferred stock without the consent of the lenders under our unsecured revolving credit facility. Our failure to purchase the Series A and B preferred stock when required could give the holders thereof a legal claim against us.
A subsidiary guarantee could be voided if it constitutes a fraudulent transfer under U.S. bankruptcy or similar state law, which would prevent the holders of the notes from relying on that subsidiary to satisfy claims.
Under U.S. bankruptcy law and comparable provisions of state fraudulent transfer laws, a subsidiary guarantee can be voided, or claims under the subsidiary guarantee may be subordinated to all other debts of that subsidiary guarantor, if, among other things, the subsidiary guarantor, at the time it incurred the indebtedness evidenced by its subsidiary guarantee or, in some states, when payments become due under the subsidiary guarantee, received less than reasonably equivalent value or fair consideration for the incurrence of the subsidiary guarantee and:
was insolvent or rendered insolvent by reason of such incurrence;
was engaged in a business or transaction for which the subsidiary guarantor’s remaining assets constituted unreasonably small capital; or
intended to incur, or believed that it would incur, debts beyond its ability to pay those debts as they mature.
A subsidiary guarantee may also be voided, without regard to the above factors, if a court finds that the subsidiary guarantor entered into the subsidiary guarantee with the actual intent to hinder, delay or defraud its creditors.
A court would likely find that a subsidiary guarantor did not receive reasonably equivalent value or fair consideration for its subsidiary guarantee if the subsidiary guarantor did not substantially benefit directly or indirectly from the issuance of the notes. If a court were to void a subsidiary guarantee, you would no longer have a claim against the subsidiary guarantor. Sufficient funds to repay the notes may not be available from other sources, including the remaining guarantors, if any. In addition, the court might direct you to repay any amounts that you already received from the subsidiary guarantor.

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The measures of insolvency for purposes of fraudulent transfer laws vary depending on the governing law. Generally, a subsidiary guarantor would be considered insolvent if:
the sum of its debts, including contingent liabilities, was greater than the fair saleable value of all its assets;
the present fair saleable value of its assets was less than the amount that would be required to pay its probable liability on its existing debts, including contingent liabilities, as they became absolute and mature; or
it could not pay its debts as they became due.
Each subsidiary guarantee will contain a provision intended to limit the subsidiary guarantor’s liability to the maximum amount that it could incur without causing the incurrence of its obligations under its subsidiary guarantee to be a fraudulent transfer. This provision may not be effective to protect the subsidiary guarantees from being voided under fraudulent transfer law.
The notes will not be guaranteed by all of our subsidiaries.
The notes are not and will not be guaranteed by a number of our subsidiaries. To the extent that any of our subsidiaries do not guarantee the notes, the notes will be structurally subordinated to all existing and future obligations, including indebtedness, of those non-guarantor subsidiaries. The claims of creditors of the non-guarantor subsidiaries, including trade creditors, will have priority as to the assets of those subsidiaries. As a result, if we default on our obligations under the notes, you will not have any claims against any of our subsidiaries that do not guarantee the notes. For the three months ended March 31, 2013 and the year ended December 31, 2012, the revenues of our non-guarantor subsidiaries constituted approximately 50.5% and 54.8%, respectively, of our consolidated revenues, and the operating income of our non-guarantor subsidiaries for those periods was approximately $0.8 million and $16.5 million, respectively. As of March 31, 2013, the total assets of those subsidiaries constituted approximately 33.1% of our consolidated total assets, and those subsidiaries had $217.7 million of secured non-recourse mortgage indebtedness, of which none has recourse to us. However, these figures are as of March 31, 2013 and do not reflect transactions that we have entered into after that date or future transactions that we may enter into. Depending on the particular terms of any acquisition or other transaction that one or more of our subsidiaries may enter into, those subsidiaries may not be required by the terms of the indenture governing the notes to guarantee the notes. Accordingly, these figures may fluctuate from time to time, and these figures may increase or decrease materially in future periods. For example, the instruments governing our acquisitions (such as the relevant loan agreement, or the terms of the relevant partnership agreement, limited liability company operating agreement or other governing document of the borrower, or any related joint venture agreement or the terms of any relevant co-investment vehicle or separate account or investment program) may prohibit the relevant subsidiary from guaranteeing the notes. In many such cases, the indenture does not require our subsidiaries, including those described above, to guarantee the notes.
We may not have access to the cash flow and other assets of our subsidiaries and our joint ventures that may be needed to make payment on the notes.
Although our operations are conducted through our subsidiaries and joint ventures, our subsidiaries and joint ventures are not obligated to make funds available to us for payment on the notes. Accordingly, our ability to make payments on the notes depends on the earnings of, and the distribution of funds from, our subsidiaries and joint ventures. Furthermore, our subsidiaries will be permitted under the terms of the indenture governing the notes, the indenture governing the 2042 notes, our unsecured revolving credit facility and the instruments governing other indebtedness to incur additional indebtedness that may severely restrict or prohibit the making of distributions, the payment of dividends or the making of loans by those subsidiaries to us. The agreements governing the future indebtedness of our subsidiaries may not permit our subsidiaries to provide us with sufficient dividends, distributions or loans to fund scheduled interest and principal payments on the notes when due. See “Description of Other Indebtedness.”



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To service our indebtedness, including the notes, we will require a significant amount of cash. The ability to generate cash depends on many factors beyond our control.
Our ability to make payments on and to refinance our indebtedness, including the notes, and to fund planned capital expenditures will depend on our ability to generate cash in the future. This, to a certain extent, is subject to general economic, financial, competitive, legislative, regulatory and other factors that are beyond our control.
However, our business may not generate sufficient cash flow from operations, current capital spending projects may require significant additional funds to complete or be successful and future borrowings may not be available to us in an amount sufficient to enable us to pay our indebtedness, including the notes, or to fund our other liquidity needs. If we consummate an acquisition, our debt service requirements could increase. We may need to refinance all or a portion of our indebtedness, including the notes, on or before maturity. We may be unable to refinance any of our indebtedness, including our unsecured revolving credit facility, the notes and the 2042 notes, on commercially reasonable terms or at all.
An active trading market for the notes may not develop.
Prior to this exchange offer, there was no public market for the outstanding notes and only a limited public market for the initial exchange notes. The initial purchasers of the outstanding notes may make a market in the outstanding notes or the initial exchange notes. However, the initial purchasers may cease their market-making activities at any time. In addition, the liquidity of the trading market in the notes and the market price quoted for the notes may be adversely affected by changes in the overall market for high yield securities and by changes in our financial performance or prospects or in the financial performance or prospects of companies in our industry generally. As a result, an active trading market may not develop or be maintained for the notes. If an active market does not develop or is not maintained, the market price of the notes may decline and the liquidity of the notes may be limited.
Furthermore, if you do not tender your outstanding notes for exchange, you will not receive any exchange notes and your outstanding notes will not be fungible with the initial exchange notes or the exchange notes. If other holders tender their outstanding notes and you do not, then the market for the outstanding notes will also likely be adversely affected due to the reduction in the amount of outstanding notes. Each of these events will adversely affect the market and liquidity of the outstanding notes and your ability to resell your outstanding notes at a favorable price, if at all.
Our debt agreements contain restrictions that will limit our flexibility in operating our business.
Each of the indenture governing the notes, the indenture governing the 2042 notes and the agreement governing our unsecured revolving credit facility contains various covenants that limit our ability to engage in specified types of transactions. These covenants limit the ability of Kennedy-Wilson and its restricted subsidiaries to, among other things:
incur or guarantee additional indebtedness;
pay dividends or distributions on capital stock or redeem or repurchase capital stock;
make investments;
create restrictions on the payment of dividends or other amounts to us;
sell the stock of our subsidiaries;
transfer or sell assets;
create liens;
enter into sale/leaseback transactions;
enter into transactions with affiliates; and
enter into mergers or consolidations.

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Additionally, the agreement governing our unsecured revolving credit facility requires us to maintain certain financial ratios. A breach of any of these covenants could result in a default under the indentures governing the notes and the 2042 notes and the agreement governing our unsecured revolving credit facility. We may also be unable to take advantage of business opportunities that arise because of the limitations imposed on us by the restrictive covenants under our indebtedness. See “Description of Other Indebtedness.”

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FORWARD-LOOKING STATEMENTS
As used in this section of the prospectus, the terms “we,” “us” and “our” and similar expressions refer only to Kennedy-Wilson, Inc. and not to its subsidiaries or Kennedy-Wilson Holdings, Inc., unless otherwise stated or the context otherwise requires.
Statements made by us in this prospectus and in other reports and statements released by us that are not historical facts constitute “forward-looking statements” within the meaning of Section 27A of the Securities Act and Section 21 of the Securities Exchange Act. These forward-looking statements are necessary estimates reflecting the judgment of our senior management based on our current estimates, expectations, forecasts and projections and include comments that express our current opinions about trends and factors that may impact future operating results. Disclosures that use words such as “believe,” “anticipate,” “estimate,” “intend,” “could,” “plan,” “expect,” “project” or the negative of these, as well as similar expressions, are intended to identify forward-looking statements.
Forward-looking statements are not guarantees of future performance, rely on a number of assumptions concerning future events, many of which are outside of our control, and involve known and unknown risks and uncertainties that could cause our actual results, performance or achievement, or industry results, to differ materially from any future results, performance or achievements, expressed or implied by such forward-looking statements. For a discussion of factors that could impact our future results, performance or transactions, please carefully read the risks factors included or referred to in the section entitled “Risk Factors” above. These factors include:

disruptions in general economic and business conditions, particularly in geographic areas where our business may be concentrated;
the continued volatility and disruption of the capital and credit markets, higher interest rates, higher loan costs, less desirable loan terms, and a reduction in the availability of mortgage loans and mezzanine financing, all of which could increase costs and could limit our ability to acquire additional real estate assets;
continued high levels of, or increases in, unemployment and a general slowdown in commercial activity;
our leverage and ability to refinance existing indebtedness or incur additional indebtedness;
an increase in our debt service obligations;
our ability to generate a sufficient amount of cash from operations to satisfy working capital requirements and to service our existing and future indebtedness;
our ability to achieve improvements in operating efficiency;
foreign currency fluctuations;
adverse changes in the securities markets;
our ability to retain our senior management and attract and retain qualified and experienced employees;
our ability to attract new user and investor clients;
our ability to retain major clients and renew related contracts;
trends in the use of large, full-service commercial real estate providers;
changes in tax laws in the United States, Europe or Japan that reduce or eliminate our deductions or other tax benefits;
future acquisitions may not be available at favorable prices or with advantageous terms and conditions; and
costs relating to the acquisition of assets we may acquire could be higher than anticipated.
Each forward-looking statements, whether made in this prospectus or elsewhere, should be considered in the context of the various disclosures we make about our business, including, without limitation, the risk factors discussed or referred to

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above. Except as required by law, we do not have any intention or obligation to update publicly any forward-looking statements, whether as a result of new information, future events, changes in assumptions, or otherwise.

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CAPITALIZATION
As used in this section of the prospectus, the terms “we,” “us” and “our” and similar expressions refer to Kennedy-Wilson Holdings, Inc. and its subsidiaries, unless otherwise stated or the context otherwise requires.
The following table sets forth our cash and cash equivalents and our consolidated capitalization as of March 31, 2013.
No adjustments have been made to reflect normal course operations by us or other developments with our business after March 31, 2013. You should read this table in conjunction with our Annual Report on Form 10-K, as amended, and our Quarterly Report on Form 10-Q that are incorporated by reference in this prospectus.
 
As of
March 31, 2013
Cash and cash equivalents
$
198,448,000

Debt:
 
Secured mortgage loans and note payable(1)
$
251,136,000

Unsecured revolving credit facility(2)

Outstanding notes and the initial exchange notes(3)
350,000,000

2042 notes(4)
55,000,000

2037 debentures
40,000,000

Total Debt
696,136,000

Total Kennedy-Wilson Holdings, Inc. stockholders’ equity(5)
630,404,000

Non-controlling interest
9,931,000

Total capitalization
$
640,335,000

(1) The secured mortgage loans and note payable are presented at their carrying value which includes $5.9 million of unamortized loan premium, which reflects fair value adjustments. The face value of the secured mortgage loans and note payable was $245.2 million as of March 31, 2013.
(2)
Total availability, as of March 31, 2013, of $100.0 million to finance the acquisition of commercial real property or pools of notes secured by commercial real property and for general business purposes, including working capital needs and equity investments. The average amount of revolver borrowings fluctuates during the year.
(3)
The outstanding notes and the initial exchange notes are presented at their face amount and do not reflect the estimated amount of net proceeds from the sale of the outstanding notes of approximately $105.0 million and the net proceeds from the sale of the initial notes for which the initial exchange notes were exchange of approximately $242.3 million.
(4)
The $55.0 million of the 2042 notes are presented at their face amount and do not reflect the estimated amount of net proceeds from the 2042 notes of approximate $53.0 million.
(5)
Includes $99.8 million of Series A mandatory convertible preferred with a May 19, 2015 conversion date at $12.41 per share and $32.5 million of Series B mandatory convertible preferred with a November 3, 2018 conversion date at $10.70 per share.

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USE OF PROCEEDS
None of Kennedy-Wilson, Inc. or the guarantors will receive any cash proceeds from the issuance of the exchange notes pursuant to the exchange offer. In consideration for issuing the exchange notes as contemplated in this prospectus, Kennedy-Wilson, Inc. will receive in exchange a like principal amount of outstanding notes, the terms of which are identical in all material respects to the exchange notes, except that the exchange notes will not contain certain terms with respect to transfer restrictions, registration rights or additional interest upon a failure to fulfill certain obligations under the registration rights agreement. The outstanding notes surrendered in exchange for the exchange notes will be retired and cancelled and cannot be reissued.

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THE EXCHANGE OFFER
As used in this section of the prospectus, the terms “we,” “us” and “our” and similar expressions refer only to Kennedy-Wilson, Inc. and not to its subsidiaries or Kennedy-Wilson Holdings, Inc., unless otherwise stated or the context otherwise requires.

General
We are offering to exchange a like principal amount of exchange notes for any or all outstanding notes on the terms and subject to the conditions set forth in this prospectus and accompanying letter of transmittal. We refer to the offer as the “exchange offer.” You may tender some or all of your outstanding notes pursuant to the exchange offer, in permitted denominations.
As of the date of this prospectus, $100.0 million aggregate principal amount of 8.750% Senior Notes due 2019 that we issued on December 6, 2012, which refer to as the outstanding notes, is outstanding. This prospectus, together with the letter of transmittal, is first being sent to all registered holders of outstanding notes known to us on or about May 29, 2013. Our obligation to accept outstanding notes for exchange pursuant to the exchange offer is subject to the satisfaction or waiver of certain conditions set forth under “—Conditions to the Exchange Offer” below. We anticipate that each of the conditions will be satisfied and that no waivers will be necessary.
Purpose and Effect of the Exchange Offer
We issued $100.0 million in aggregate principal amount of the outstanding notes on December 6, 2012 (the “original issue date”). In connection with the private offering and sale of the outstanding notes, we and the guarantors of the notes entered into a registration rights agreement with the initial purchasers of the outstanding notes in which we agreed, under certain circumstances, to file a registration statement relating to an offer to exchange the outstanding notes for exchange notes. The following description of the registration rights agreement is only a brief summary of the agreement. It does not purport to be complete and is qualified in its entirety by reference to all of the terms, conditions and provisions of the registration rights agreement. For further information, please refer to the registration rights agreement attached as exhibits to our Current Reports on Form 8-K filed with the SEC on December 7, 2012 and listed in the exhibit index in the registration statement of which this prospectus forms a part. Pursuant to the registration rights agreement, we agreed to use our reasonable best efforts to cause the registration statement of which this prospectus forms a party to become effective and to cause the exchange offer to be consummated on the earliest practicable date after the date the registration statement has become effective, but in no event later than July 5, 2013. The form and terms of the exchange notes will be identical in all material respects to the form and terms of the outstanding notes, except that the offer and sale of the exchange notes will be registered under the Securities Act, and the exchange notes will not contain terms with respect to transfer restrictions, registration rights and additional payments upon a failure to fulfill certain of our obligations under the registration rights agreement.
Pursuant to the registration rights agreement and under the circumstances set forth below, we and the guarantors of the notes agreed to use our reasonable best efforts to cause the SEC to declare effective a shelf registration statement with respect to the resale of the outstanding notes within the time periods specified in the registration rights agreement and to keep the shelf registration statement effective for up to one year after the effective date of the shelf registration statement. These circumstances include:
if applicable interpretations of the staff of the SEC do not permit us to effect the exchange offer;
if, for any other reason, we do not consummate the exchange offer on or before July 5, 2013;
if an initial purchaser of the outstanding notifies us following consummation of the exchange offer that outstanding notes held by it are not eligible to be exchanged for exchange notes in the exchange offer; or
certain holders are prohibited by law or SEC policy from participating in the exchange offer or may not resell the exchange notes acquired by them in the exchange offer to the public without delivering a prospectus.

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If we fail to comply with specified obligations under the registration rights agreement, we will be required to pay additional interest to holders of the outstanding notes. Such additional interest will generally be required to be paid if:
we fail to consummate the exchange offer on or before July 5, 2013;
we are required to file a shelf registration statement because applicable interpretations of the SEC staff do not permit the us to effect the exchange offer, and we fail to file such shelf registration statement with the SEC on or before April 5, 2013 or the shelf registration statement does not become effective under the Securities Act on or before June 4, 2013;
we are required to file a shelf registration statement for any reason other than the fact that applicable interpretations of the SEC staff do not permit us to effect the exchange offer, and we fail to file the shelf registration statement with the SEC on or before the 90th day after the date on which the shelf registration statement is required to be filed;
after the registration statement of which this prospectus forms a part or the shelf registration statement, as the case may be, is effective, such registration statement thereafter ceases to be effective or usable (subject to certain exceptions).
If you wish to exchange your outstanding notes for exchange notes in the exchange offer, you will be required to make the following written representations:
you will acquire the exchange notes in the ordinary course of your business;
at the time of the commencement of the exchange offer, you have no arrangement or understanding with any person to participate in the distribution (within the meaning of the Securities Act) of the exchange notes in violation of the provisions of the Securities Act;
you are not our “affiliate” or an “affiliate” of any guarantor of the notes, as defined by Rule 405 of the Securities Act, or if you are an “affiliate,” you will comply with the registration and prospectus-delivery requirements of the Securities Act to the extent applicable; and
you are not engaged in, and do not intend to engage in, a distribution of exchange notes.
Each broker-dealer that receives exchange notes for its own account in exchange for outstanding notes, where the broker-dealer acquired the outstanding notes as a result of market-making activities or other trading activities, must acknowledge that it will deliver a prospectus in connection with any resale of such exchange notes. See “Plan of Distribution.”
Resale of Exchange Notes
Based on interpretations by the SEC set forth in no-action letters issued to third parties, we believe that you may resell or otherwise transfer exchange notes issued in the exchange offer without complying with the registration and prospectus-delivery provisions of the Securities Act, if:
you are acquiring the exchange notes in the ordinary course of your business;
you do not have an arrangement or understanding with any person to participate in a distribution of the exchange notes;
you are not our “affiliate” or an “affiliate” of any guarantor of the notes as defined by Rule 405 of the Securities Act; and
you are not engaged in, and do not intend to engage in, a distribution of the exchange notes.

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If you are our “affiliate,” or are engaging in, or intend to engage in, or have any arrangement or understanding with any person to participate in, a distribution of the exchange notes, or are not acquiring the exchange notes in the ordinary course of your business, then:
you cannot rely on the position of the SEC set forth in Morgan Stanley & Co. Incorporated (available June 5, 1991) and Exxon Capital Holdings Corporation (available May 13, 1988), as interpreted in the SEC’s letter to Shearman & Sterling, dated July 2, 1993, or similar no-action letters; and
in the absence of an exception from the position stated immediately above, you must comply with the registration and prospectus-delivery requirements of the Securities Act in connection with any resale of the exchange notes.
This prospectus may be used for an offer to resell, or for the resale or other transfer of exchange notes only as specifically set forth in this prospectus. With regard to broker-dealers, only broker-dealers that acquired the outstanding notes as a result of market-making activities or other trading activities may participate in the exchange offer. Each broker-dealer that receives exchange notes for its own account in exchange for outstanding notes where such outstanding notes were acquired by such broker-dealer as a result of market-making activities or other trading activities must acknowledge that it will deliver a prospectus in connection with any resale of the exchange notes. Please read “Plan of Distribution” for more details regarding the transfer of exchange notes.
Terms of the Exchange Offer
On the terms and subject to the conditions set forth in this prospectus and in the accompanying letters of transmittal, we will accept for exchange in the exchange offer any outstanding notes that are validly tendered and not validly withdrawn prior to the expiration date. Outstanding notes may only be tendered in denominations of $2,000 and integral multiples of $1,000 in excess of $2,000. We will issue $2,000 principal amount or an integral multiple of $1,000 in excess thereof of exchange notes in exchange for a corresponding principal amount of outstanding notes surrendered in the exchange offer. In exchange for each outstanding note surrendered in the exchange offer, we will issue exchange notes with a like principal amount.
The form and terms of the exchange notes will be identical in all material respects to the form and terms of the outstanding notes, except that the offer and sale of the exchange notes will be registered under the Securities Act and the exchange notes will not contain terms with respect to transfer restrictions, registration rights and additional payments upon a failure to fulfill certain of our obligations under the registration rights agreement. The exchange notes will be issued under and entitled to the benefits of the indenture that authorized the issuance of the outstanding notes. For a description of the indenture, see “Description of the Notes.”
The exchange offer is not conditioned upon any minimum aggregate principal amount of outstanding notes being tendered for exchange.
As of the date of this prospectus, $100.0 million aggregate principal amount of the outstanding notes is outstanding. This prospectus and the letters of transmittal are being sent to all registered holders of outstanding notes. There will be no fixed record date for determining registered holders of outstanding notes entitled to participate in the exchange offer.
We intend to conduct the exchange offer in accordance with the provisions of the registration rights agreement, the applicable requirements of the Securities Act and the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and the rules and regulations of the SEC. Outstanding notes that are not tendered for exchange in the exchange offer will remain outstanding and continue to accrue interest and be entitled to the rights and benefits that such holders have under the indenture relating to such holders’ series of outstanding notes and the registration rights agreement, except we will not have any further obligations to provide for the registration of the outstanding notes under the registration rights agreement.
We will be deemed to have accepted for exchange properly tendered outstanding notes when we have given written notice of the acceptance to the exchange agent. The exchange agent will act as agent for the tendering holders for the purposes of receiving the exchange notes from us and delivering exchange notes to holders. Subject to the terms of the registration rights agreement, we expressly reserve the right to amend or terminate the exchange offer and to refuse to accept outstanding notes for exchange upon the occurrence of any of the conditions specified below under “—Conditions to the Exchange Offer.”

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If you tender your outstanding notes in the exchange offer, you will not be required to pay brokerage commissions or fees or, subject to the instructions in the letter of transmittal, transfer taxes with respect to the exchange of outstanding notes. We will pay all charges and expenses, other than certain applicable taxes described below, in connection with the exchange offer. It is important that you read the information under the caption “—Fees and Expenses” below for more details regarding fees and expenses incurred in the exchange offer.
Expiration Date; Extensions, Amendments
As used in this prospectus, the term “expiration date” means midnight, New York City time, in the evening of June 25, 2013. However, if we, in our sole discretion, extend the period of time for which the exchange offer is open, the term “expiration date” will mean the latest time and date to which we shall have extended the expiration of such exchange offer.
To extend the period of time during which an exchange offer is open, we will notify the exchange agent of any extension by written notice, followed by notification by press release or other public announcement to the registered holders of the outstanding notes no later than 9:00 a.m., New York City time, on the next business day after the previously scheduled expiration date. The notification will set forth, among other things, the approximate number of outstanding notes tendered to date.
We reserve the right, in our sole discretion:
to delay accepting for exchange any outstanding notes (only in the case that we amend or extend the exchange offer);
to extend the exchange offer or to terminate the exchange offer if any of the conditions set forth below under “—Conditions to the Exchange Offer” have not been satisfied by giving written notice of such delay, extension or termination to the exchange agent; and
subject to the terms of the registration rights agreement, to amend the terms of the exchange offer in any manner. In the event of a material change in the exchange offer, including the waiver of a material condition, we will extend the offer period, if necessary, so that at least five business days remain in such offer period following notice of the material change.
Any delay in acceptance, extension, termination or amendment will be followed as promptly as practicable by written notice to the registered holders of the outstanding notes. If we amend an exchange offer in a manner that we determine to constitute a material change, we will promptly disclose the amendment in a manner reasonably calculated to inform the holders of applicable outstanding notes of that amendment.
Conditions to the Exchange Offer
Despite any other term of the exchange offer, we will not be required to accept for exchange, or to issue exchange notes in exchange for, any outstanding notes, and we may terminate or amend the exchange offer as provided in this prospectus prior to the expiration date if in our reasonable judgment:
the exchange offer, or the making of any exchange by a holder violates any applicable law or interpretation of the SEC; or
any action or proceeding has been instituted or threatened in writing in any court or by or before any governmental agency with respect to the exchange offer that, in our judgment, would reasonably be expected to impair our ability to proceed with the exchange offer.
In addition, we will not be obligated to accept for exchange the outstanding notes of any holder that has not made to us:
the representations described under “—Purpose and Effect of the Exchange Offer” and “—Procedures for Tendering Outstanding Notes” and “Plan of Distribution;” and

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any other representations as may be reasonably necessary under applicable SEC rules, regulations, or interpretations to make available to us an appropriate form for registration of the offer and sale of the exchange notes under the Securities Act.
We expressly reserve the right at any time or at various times to extend the period of time during which the exchange offer is open. Consequently, we may delay acceptance of any outstanding notes by giving oral or written notice of such extension to their holders. We will return any outstanding notes that we do not accept for exchange for any reason without expense to their tendering holder promptly after the expiration or termination of the exchange offer.
We expressly reserve the right to amend or terminate the exchange offer and to reject for exchange any outstanding notes not previously accepted for exchange upon the occurrence of any of the conditions of the exchange offer specified above. We will give oral or written notice of any extension, amendment, non-acceptance or termination to the holders of the outstanding notes as promptly as practicable. In the case of any extension, such notice will be issued no later than 9:00 a.m., New York City time, on the next business day after the previously scheduled expiration date.
These conditions are for our sole benefit, and we may assert them regardless of the circumstances that may give rise to them or waive them in whole or in part at any or at various times prior to the expiration date in our sole discretion. If we fail at any time to exercise any of the foregoing rights, this failure will not constitute a waiver of such right. Each such right will be deemed an ongoing right that we may assert at any time or at various times prior to the expiration date.
In addition, we will not accept for exchange any outstanding notes tendered, and will not issue exchange notes in exchange for any such outstanding notes, if at such time any stop order is threatened or in effect with respect to the registration statement of which this prospectus constitutes a part or the qualification of the indenture under the Trust Indenture Act of 1939, as amended.
Procedures for Tendering Outstanding Notes
To tender your outstanding notes in the exchange offer, you must comply with either of the following:
complete, sign and date the letter of transmittal or a facsimile of the letter of transmittal, have the signature(s) on the letter of transmittal guaranteed if required by the letter of transmittal and mail or deliver such letter of transmittal or facsimile thereof to the exchange agent at the address set forth below under “—Exchange Agent” prior to the expiration date; or
comply with DTC’s Automated Tender Offer Program procedures described below.
In addition, you must comply with either of the following conditions:
the exchange agent must receive certificates for outstanding notes along with the letter of transmittal prior to the expiration date;
the exchange agent must receive a timely confirmation of book-entry transfer of outstanding notes into the exchange agent’s account at DTC according to the procedures for book-entry transfer described below or a properly transmitted agent’s message prior to the expiration date; or
you must comply with the guaranteed delivery procedures described below.
Your tender, if not withdrawn prior to the expiration date, constitutes an agreement between us and you upon the terms and subject to the conditions described in this prospectus and the letter of transmittal.
The method of delivery of outstanding notes, letters of transmittal and all other required documents to the exchange agent is at your election and risk. We recommend that instead of delivery by mail, you use an overnight or hand delivery service, properly insured. In all cases, you should allow sufficient time to assure timely delivery to the exchange agent before the

29


expiration date. You should not send letters of transmittal or certificates representing outstanding notes to us. You may request that your broker, dealer, commercial bank, trust company or nominee effect the above transactions for you.
If you are a beneficial owner whose outstanding notes are held in the name of a broker, dealer, commercial bank, trust company or other nominee and you wish to tender your outstanding notes, you should promptly instruct the registered holder to tender outstanding notes on your behalf. If you wish to tender the outstanding notes yourself, you must, prior to completing and executing the letter of transmittal and delivering your outstanding notes, either:
make appropriate arrangements to register ownership of the outstanding notes in your name; or
obtain a properly completed bond power from the registered holder of outstanding notes.
The transfer of registered ownership may take considerable time and may not be able to be completed prior to the expiration date. We are not responsible for any delays in any such transfer.
Signatures on the letter of transmittal or a notice of withdrawal, as the case may be, must be guaranteed by a member firm of a registered national securities exchange or of the Financial Industry Regulatory Authority, Inc., a commercial bank or trust company having an office or correspondent in the United States or another “eligible guarantor institution” within the meaning of Rule 17A(d)-15 under the Exchange Act, unless the outstanding notes surrendered for exchange are tendered:
by a registered holder of the outstanding notes who has not completed the box entitled “Special Registration Instructions” or “Special Delivery Instructions” on the letter of transmittal; or
for the account of an eligible guarantor institution.
If the letter of transmittal is signed by a person other than the registered holder of any outstanding notes listed on the outstanding notes, such outstanding notes must be endorsed or accompanied by a properly completed bond power. The bond power must be signed by the registered holder as the registered holder’s name appears on the outstanding notes and an eligible guarantor institution must guarantee the signature on the bond power.
If the letter of transmittal or any certificates representing outstanding notes or bond powers are signed by trustees, executors, administrators, guardians, attorneys-in-fact, officers of corporations, or others acting in a fiduciary or representative capacity, those persons should also so indicate when signing and, unless waived by us, they should also submit evidence satisfactory to us of their authority to so act.
Any financial institution that is a participant in DTC’s system may use DTC’s Automated Tender Offer Program to tender. Participants in the program may, instead of physically completing and signing the letter of transmittal and delivering it to the exchange agent, electronically transmit their acceptance of the exchange by causing DTC to transfer the outstanding notes to the exchange agent in accordance with DTC’s Automated Tender Offer Program procedures for transfer. DTC will then send an agent’s message to the exchange agent. The term “agent’s message” means a message transmitted by DTC, received by the exchange agent and forming part of the book-entry confirmation, which states that:
DTC has received an express acknowledgment from a participant in its Automated Tender Offer Program that is tendering outstanding notes that are the subject of the book-entry confirmation;
the participant has received and agrees to be bound by the terms of the letter of transmittal, or in the case of an agent’s message relating to guaranteed delivery, that such participant has received and agrees to be bound by the notice of guaranteed delivery; and
we may enforce that agreement against such participant.
DTC is referred to herein as a “book-entry transfer facility.”


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Acceptance of Exchange Notes
In all cases, we will promptly issue exchange notes for outstanding notes that we have accepted for exchange under the exchange offer only after the exchange agent timely receives:
outstanding notes or a timely book-entry confirmation of such outstanding notes into the exchange agent’s account at the book-entry transfer facility; and
a properly completed and duly executed letter of transmittal and all other required documents or a properly transmitted agent’s message.
By tendering outstanding notes pursuant to the exchange offer, you will represent to us that, among other things:
you are not our “affiliate” or an “affiliate” of any guarantor of the notes within the meaning of Rule 405 under the Securities Act;
you do not have an arrangement or understanding with any person or entity to participate in a distribution of the exchange notes; and
you are acquiring the exchange notes in the ordinary course of your business.
In addition, each broker-dealer that is to receive exchange notes for its own account in exchange for outstanding notes must represent that such outstanding notes were acquired by that broker-dealer as a result of market-making activities or other trading activities and must acknowledge that it will deliver a prospectus that meets the requirements of the Securities Act in connection with any resale of the exchange notes. The letter of transmittal states that by so acknowledging and by delivering a prospectus, a broker-dealer will not be deemed to admit that it is an “underwriter” within the meaning of the Securities Act. See “Plan of Distribution.”
Our interpretation of the terms and conditions of the exchange offer, including the letters of transmittal and the instructions to the letters of transmittal, and our resolution of all questions as to the validity, form, eligibility, including time of receipt, and acceptance of outstanding notes tendered for exchange will be final and binding on all parties. We reserve the absolute right to reject any and all tenders of any particular outstanding notes not properly tendered or to not accept any particular outstanding notes if the acceptance might, in our or our counsel’s judgment, be unlawful. We also reserve the absolute right to waive any defects or irregularities as to any particular outstanding notes prior to the expiration date.
Unless waived, any defects or irregularities in connection with tenders of outstanding notes for exchange must be cured before the expiration date. Neither we, the exchange agent, nor any other person will be under any duty to give notification of any defect or irregularity with respect to any tender of outstanding notes for exchange, nor will we or any of them incur any liability for any failure to give notification. Any outstanding notes received by the exchange agent that are not properly tendered and as to which the irregularities have not been cured or waived will be returned by the exchange agent to the tendering holder, unless otherwise provided in the letter of transmittal, promptly after the expiration date.
Book-Entry Delivery Procedures
Promptly after the date of this prospectus, the exchange agent will establish an account with respect to the outstanding notes at DTC and, as the book-entry transfer facility, for purposes of the exchange offer. Any financial institution that is a participant in the book-entry transfer facility’s system may make book-entry delivery of the outstanding notes by causing the book-entry transfer facility to transfer those outstanding notes into the exchange agent’s account at the facility in accordance with the facility’s procedures for such transfer. To be timely, book-entry delivery of outstanding notes requires receipt of a confirmation of a book-entry transfer, which we refer to as a “book-entry confirmation,” prior to the expiration date. In addition, although delivery of outstanding notes may be effected through book-entry transfer into the exchange agent’s account at the book-entry transfer facility, the letter of transmittal or a manually signed facsimile thereof, together with any required signature guarantees and any other required documents, or an “agent’s message,” as defined below, in connection with a book-entry transfer, must, in any case, be delivered or transmitted to and received by the exchange agent at its address set forth on the cover

31


page of the letter of transmittal prior to the expiration date to receive exchange notes for tendered outstanding notes, or the guaranteed delivery procedure described below must be complied with. Tender will not be deemed made until such documents are received by the exchange agent. Delivery of documents to the book-entry transfer facility does not constitute delivery to the exchange agent.
Holders of outstanding notes who are unable to deliver confirmation of the book-entry tender of their outstanding notes into the exchange agent’s account at the book-entry transfer facility or all other documents required by the letter of transmittal to the exchange agent on or prior to the expiration date must tender their outstanding notes according to the guaranteed delivery procedures described below.
Guaranteed Delivery Procedures
If you wish to tender your outstanding notes, but your outstanding notes are not immediately available or you cannot deliver your outstanding notes, the letter of transmittal or any other required documents to the exchange agent or comply with the procedures under DTC’s Automatic Tender Offer Program, prior to the expiration date, you may still tender if:
the tender is made through an eligible guarantor institution;
prior to the expiration date, the exchange agent receives from such eligible guarantor institution either a properly completed and duly executed notice of guaranteed delivery, by facsimile transmission, mail or hand delivery or a properly transmitted agent’s message and notice of guaranteed delivery, that (1) sets forth your name and address, the certificate number(s) of such outstanding notes and the principal amount of outstanding notes tendered; (2) states that the tender is being made thereby; and (3) guarantees that, within three New York Stock Exchange trading days after the expiration date, the letter of transmittal, or facsimile thereof, together with the outstanding notes or a book-entry confirmation, and any other documents required by the letter of transmittal, will be deposited by the eligible guarantor institution with the exchange agent; and
the exchange agent receives the properly completed and executed letter of transmittal or facsimile thereof, as well as certificate(s) representing all tendered outstanding notes in proper form for transfer or a book-entry confirmation of transfer of the outstanding notes into the exchange agent’s account at DTC and all other documents required by the letter of transmittal, within three New York Stock Exchange trading days after the expiration date.
Upon request, the exchange agent will send to you a notice of guaranteed delivery if you wish to tender your outstanding notes according to the guaranteed delivery procedures.
Withdrawal Rights
Except as otherwise provided in this prospectus, you may withdraw your tender of outstanding notes at any time prior to the expiration date. For a withdrawal to be effective:
the exchange agent must receive a written notice, which may be by telegram, telex, facsimile or letter, of withdrawal at its address set forth below under “—Exchange Agent;” or
you must comply with the appropriate procedures of DTC’s Automated Tender Offer Program system.
Any notice of withdrawal must:
specify the name of the person who tendered the outstanding notes to be withdrawn;
identify the outstanding notes to be withdrawn, including the certificate numbers and principal amount of the outstanding notes; and
where certificates for outstanding notes have been transmitted, specify the name in which such outstanding notes were registered, if different from that of the withdrawing holder.

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If certificates for outstanding notes have been delivered or otherwise identified to the exchange agent, then, prior to the release of such certificates, you must also submit:
the certificate numbers of the particular certificates to be withdrawn; and
a signed notice of withdrawal with signatures guaranteed by an eligible guarantor institution, unless you are an eligible guarantor institution.
If outstanding notes have been tendered pursuant to the procedures for book-entry transfer described above, any notice of withdrawal must specify the name and number of the account at the book-entry transfer facility to be credited with the withdrawn outstanding notes and otherwise comply with the procedures of the facility. We will determine, in our reasonable discretion, all questions as to the validity, form and eligibility, including time of receipt of notices of withdrawal, and our determination will be final and binding on all parties. Any outstanding notes so withdrawn will be deemed not to have been validly tendered for exchange for purposes of the exchange offer. Any outstanding notes that have been tendered for exchange but that are not exchanged for any reason will be returned to their holder, without cost to the holder, or, in the case of book-entry transfer, the outstanding notes will be credited to an account at the book-entry transfer facility, promptly after withdrawal, rejection of tender or termination of the exchange offer. Properly withdrawn outstanding notes may be retendered by following the procedures described under “—Procedures for Tendering Outstanding Notes” above at any time on or prior to the expiration date.
Exchange Agent
Wilmington Trust, National Association has been appointed as the exchange agent for the exchange offer. Wilmington Trust, National Association (as successor by merger to Wilmington Trust FSB), also acts as trustee under the indenture governing the notes. You should direct all executed letters of transmittal and all questions and requests for assistance, requests for additional copies of this prospectus or of the letters of transmittal, and requests for notices of guaranteed delivery to the exchange agent addressed as follows:
By Overnight Courier or Mail:
Wilmington Trust, National Association
c/o Wilmington Trust Company
Rodney Square North
1100 North Market Street
Wilmington, DE 19890-1626
Attention: Sam Hamed
By Registered or Certified Mail:
Wilmington Trust, National Association
c/o Wilmington Trust Company
Rodney Square North
1100 North Market Street
Wilmington, DE 19890-1626
Attention: Sam Hamed
By Hand:
Wilmington Trust, National Association
c/o Wilmington Trust Company
Rodney Square North
1100 North Market Street
Wilmington, DE 19890-1626
Attention: Sam Hamed
(if by mail, registered or certified recommended)
By Facsimile:
(302) 636-4139
Attention: Sam Hamed
To Confirm by Telephone:
(302) 636-6181

If you deliver the letter of transmittal to an address other than the one set forth above or transmit instructions via facsimile other than the one set forth above, that delivery or those instructions will not be effective.
Fees and Expenses
The registration rights agreement provide that we will bear all expenses in connection with the performance of our obligations relating to the registration of the exchange notes and the conduct of the exchange offer. These expenses include registration and filing fees, accounting and legal fees and printing costs, among others. We will pay the exchange agent reasonable and customary fees for its services and reasonable out-of-pocket expenses. We will also reimburse brokerage houses and other

33


custodians, nominees and fiduciaries for customary mailing and handling expenses incurred by them in forwarding this prospectus and related documents to their clients that are holders of outstanding notes and for handling or tendering for such clients.
We have not retained any dealer-manager in connection with the exchange offer and will not pay any fee or commission to any broker, dealer, nominee or other person for soliciting tenders of outstanding notes pursuant to the exchange offer.
Accounting Treatment
We will record the exchange notes in our accounting records at the same carrying value as the outstanding notes, which is the aggregate principal amount as reflected in our accounting records on the date of exchange. Accordingly, we will not recognize any gain or loss for accounting purposes upon the consummation of the exchange offer. We will capitalize the expenses of the exchange offer and amortize them over the life of the notes.
Transfer Taxes
We will pay all transfer taxes, if any, applicable to the exchanges of outstanding notes under the exchange offer. The tendering holder, however, will be required to pay any transfer taxes, whether imposed on the registered holder or any other person, if:
certificates representing outstanding notes for principal amounts not tendered or accepted for exchange are to be delivered to, or are to be issued in the name of, any person other than the registered holder of outstanding notes tendered;
tendered outstanding notes are registered in the name of any person other than the person signing the letter of transmittal; or
a transfer tax is imposed for any reason other than the exchange of outstanding notes under the exchange offer.
If satisfactory evidence of payment of such taxes is not submitted with the letter of transmittal, the amount of such transfer taxes will be billed to that tendering holder.
Holders who tender their outstanding notes for exchange will not be required to pay any transfer taxes. However, holders who instruct us to register exchange notes in the name of, or request that outstanding notes not tendered or not accepted in the exchange offer be returned to, a person other than the registered tendering holder will be required to pay any applicable transfer tax.
Consequences of Failure to Exchange
If you do not exchange your outstanding notes for exchange notes under the exchange offer, your outstanding notes will remain subject to the restrictions on transfer of such outstanding notes:
as set forth in the legend printed on the outstanding notes as a consequence of the issuance of the outstanding notes pursuant to the exemptions from, or in transactions not subject to, the registration requirements of the Securities Act and applicable state securities laws; and
as otherwise set forth in the offering memorandum distributed in connection with the private offering of the outstanding notes.
In general, you may not offer or sell your outstanding notes except in transactions that are registered under the Securities Act or if the offer or sale is exempt from, or not subject to, the registration requirements of the Securities Act and applicable state securities laws. Except as required by the registration rights agreement, we do not intend to register resales of the outstanding notes under the Securities Act.


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Other
Participating in the exchange offer is voluntary, and you should carefully consider whether to participate. You are urged to consult your financial and tax advisors in making your own decision on what action to take.
We may in the future seek to acquire untendered outstanding notes in open market or privately negotiated transactions, through subsequent exchange offers or otherwise. We have no present plans to acquire any outstanding notes that are not tendered in the exchange offer or to file a registration statement to permit resales of any untendered outstanding notes.


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DESCRIPTION OF OTHER INDEBTEDNESS
Unless otherwise stated or the context otherwise requires, as used in this section, the words “we,” “us,” “our,” “company” or “Kennedy-Wilson” refer to Kennedy-Wilson, Inc. and its subsidiaries.

Unsecured Revolving Credit Facility with U.S. Bank and East-West Bank

Since 2008, we have maintained an unsecured revolving credit facility with U.S. Bank and East-West Bank. The borrower under the unsecured revolving credit facility is Kennedy-Wilson, Inc., and Kennedy-Wilson Holdings, Inc. is the sole guarantor.
Under the revolving loan agreement, we have: (a) a $75.0 million senior unsecured facility to finance our or our subsidiaries’ or affiliates’ acquisition of commercial real property or pools of notes secured by commercial real property, so long as we have management control of those subsidiaries or affiliates (“Facility A”); and (b) a $25 million senior unsecured facility for general business purposes, including working capital needs and equity investments (“Facility B”). Both Facility A and Facility B bear interest at the London Interbank Offered Rate (“LIBOR”) plus 2.75%. All principal and other amounts owing with respect to advances made under the revolving credit agreement will be due and payable in full on June 30, 2015.
On November 16, 2012, U.S. Bank National Association and East-West Bank, as lenders under this facility, executed and delivered a letter agreement consenting to our issuance of certain notes, including the outstanding notes and the 2042 notes. This consent letter also provides that (i) the lenders must consent to any change to the notes that would have a material adverse effect on our ability to repay our obligations under the unsecured revolving credit facility and (ii) if there occurs an event of default, as that term is defined in the indenture governing the notes, that event will constitute an event of default under this facility.
During 2011, 2012 and the three months ended March 31, 2013, the average outstanding borrowings under the unsecured revolving credit facility were $13.6 million, $11.2 million and $1.1 million, respectively, with the high and low outstanding balances during each of those periods being $55.0 million and $0.0 million, $40.0 million and $0.0 million, and $35.0 million and $0.0 million, respectively. The borrowings under Facility A had an annual interest rate of 2.9537% during the three months ended March 31, 2013, 2.9587% during the year ended December 31, 2012 and 4.00% during the year ended December 31, 2011. The borrowings under Facility B had an annual interest rate of 2.9537% during the three months ended March 31, 2013 and 2.9587% and 4.00% during the years ended December 31, 2012 and 2011, respectively. As of March 31, 2013, December 31, 2012 and December 31, 2011, the principal amount outstanding under this unsecured revolving credit facility was $0.0 million, $0.0 million and $0.0 million, respectively. As of March 31, 2013, we had $100.0 million of availability under this facility, and we had no letters of credit outstanding thereunder.
The unsecured revolving credit facility contains customary financial, affirmative and negative covenants. The financial covenants under the revolving credit facility require us:
to maintain a minimum rent-adjusted fixed charge coverage ratio (as defined in the unsecured revolving credit facility) of not less than 1.50 to 1.00, measured on a four-quarter rolling average basis;
to maintain unrestricted cash, cash equivalents and publicly traded marketable securities in the aggregate amount of at least $40.0 million, tested quarterly;
to maintain a maximum balance sheet leverage (as defined in the unsecured revolving credit facility) of not greater than 1.50 to 1.00, measured at the end of each calendar quarter; and
to maintain an effective tangible net worth (as defined in the unsecured revolving credit facility) equal to or greater than $250.0 million, measured at the end of each calendar quarter.
In addition to customary reporting and compliance requirements, the principal negative and affirmative covenants under the revolving credit facility require us, among other things:

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not to incur indebtedness, other than those permitted by the revolving credit facility, without the prior written consent of the lenders;
not to permit any incurrence of liens, other than those permitted by the revolving credit facility;
not to purchase or acquire capital stock or make other investments in another entity, except as permitted by the revolving credit facility;
not to enter into a merger, consolidation, reorganization or recapitalization or to reincorporate in a different jurisdiction, liquidate or sell substantially all of our assets;
not to dispose of assets other than in the ordinary course of business;
not to (i) permit a person or group (other than William McMorrow, Fairfax Financial Holdings Limited and its affiliates, the heirs, assigns and successors of the foregoing, certain employee benefit plans and certain other persons) to acquire more than 35% of Kennedy-Wilson Holdings, Inc.’s equity securities entitled to vote for members of its board of directors on a fully diluted basis; or (ii) otherwise suffer a change in control (as defined in the revolving credit facility);
not to engage in transactions with affiliates, except in the ordinary course of business and upon fair and reasonable terms that are no less favorable than that which we would have obtained in an arms-length transaction with non-affiliates;
not to guaranty or otherwise become in any way liable with respect to the obligations of any third person, other than as permitted by the revolving credit facility;
not to make corporate acquisitions in excess of $5.0 million without the prior written consent of the lenders; provided, that any such acquisitions approved by the lenders satisfy all other applicable requirements of the revolving credit facility;
not to prepay, redeem, retire, defease, purchase or otherwise acquire any indebtedness owing to any third person, other than (i) pursuant to a permitted refinancing, (ii) a purchase (for investment or sale) of pools of notes secured by commercial real property and (iii) the obligations under the revolving credit facility;
not to amend, modify, alter, increase or change, materially and adversely, any of the terms or conditions of any agreement, instrument, document, indenture or writing evidencing or concerning certain indebtedness permitted to be incurred under the revolving credit facility;
not to declare or pay corporate dividends without the prior written consent of the lenders, except as permitted by the revolving credit facility;
to maintain insurance policies with certain minimum coverage; and
not to make a change in the principal nature of our business;
As of March 31, 2013, we were in compliance with such covenants. We pay customary fees to the agent and the revolving lenders under our unsecured revolving credit facility.

7.75% Senior Notes due 2042

In November 2012, we completed a public offering of $50.0 million aggregate principal amount of Kennedy-Wilson’s 7.75% Senior Notes due 2042 (the “2042 notes”), and in December 2012, the underwriters exercised their over-allotment option of $5.0 million aggregate principal amount of the 2042 notes. The 2042 notes will mature on December 1, 2042 and bear interest at a rate of 7.75% per annum, payable quarterly in arrears on March 1, June 1, September 1 and December 1 of each year, commencing on March 1, 2013.
The 2042 notes are Kennedy-Wilson’s unsecured senior obligations and rank equally in right of payment with all of Kennedy-Wilson’s existing and future unsecured and unsubordinated indebtedness and are guaranteed on a senior unsecured basis by Kennedy-Wilson Holdings, Inc. and the same subsidiaries that guarantee the notes. The 2042 notes contain substantially

37


similar restrictive covenants as those contained in the indenture governing the notes, including, among others, limitations on Kennedy-Wilson’s ability and the ability of certain of its subsidiaries to incur or guarantee additional indebtedness, make restricted payments, pay dividends or make any other distributions from restricted subsidiaries, redeem or repurchase capital stock, sell assets or subsidiary stock, engage in transactions with affiliates, create or permit liens on assets, enter into sale/leaseback transactions and enter into consolidations or mergers.

At any time prior to December 1, 2017, Kennedy-Wilson may redeem the 2042 notes, in whole or in part, at a redemption price equal to 100% of their principal amount, plus an applicable “make-whole” premium and accrued and unpaid interest, if any, to the redemption date. At any time and from time to time on or after December 1, 2017, Kennedy-Wilson may redeem the 2042 notes, in whole or in part, at a redemption price equal to 100% of their principal amount, plus accrued and unpaid interest, if any, to the redemption date.
8.750% Senior Notes due 2019

We issued $200.0 million in aggregate principal amount of initial notes with an effective yield of 8.875% in a private placement on April 5, 2011 and an additional $50.0 million in aggregate principal amount of initial notes with an effective yield of 8.486% on April 12, 2011. Interest on the notes is payable on April 1 and October 1 of each year. In December 2011, we commenced a registered exchange offer for the outstanding initial notes. The exchange offer was completed in February 2012, and all initial notes issued in the private placements were exchanged for initial exchange notes.

The initial exchange notes have substantially identical terms as the outstanding notes and the exchange notes, as described under “Description of the Notes,” and will be treated as a single series with the outstanding notes and the exchange notes. Holders of the initial exchange notes, the outstanding notes and the exchange notes will vote as one class under the indenture.

Junior Subordinated Debentures

In 2007, we issued junior subordinated debentures (the “2037 debentures”) in the amount of $40.0 million. The 2037 debentures were issued to a trust established by us, which contemporaneously issued $40.0 million of trust preferred securities to Merrill Lynch International. The interest rate on the 2037 debentures is fixed for the first ten years at 9.06%, and variable thereafter at LIBOR plus 3.70%. Interest is payable quarterly with the principal due in April 30, 2037.
Prior to April 30, 2012, we were permitted to redeem the 2037 debentures, upon a Special Event, as defined in the indenture, at a redemption price equal to 107.5% of the outstanding principal amount. After April 30, 2012, we may redeem the 2037 debentures, in whole or in part, on any interest payment date at par plus accrued and unpaid interest, if any.
The indenture governing the 2037 debentures require us to be in compliance with certain financial covenants, including, among others:
a fixed charge coverage ratio not less than 1.75 to 1.00;
a ratio of total debt to net worth not to exceed 3.0 to 1.00;
a Tangible Net Worth (as defined in the indenture) not less than the sum of (i) $15.0 million, plus (ii) 60% of any net income (but only if a positive number) for each completed fiscal quarter beginning with the fiscal quarter ended March 31, 2007 until such time as our Net Worth equals or exceeds $75.0 million and then 50% of any net income for each completed fiscal quarter thereafter, plus (iii) 50% of all proceeds of equity interests issued by us or our subsidiaries after the date hereof; and
a Net Worth (as defined in the indenture) not less than the sum of (i) $40.0 million, plus (ii) 60% of any net income (but only if a positive number) for each completed fiscal quarter beginning with the fiscal quarter ended March 31, 2007 until such time as our Net Worth equals or exceeds $75.0 million and then 50% of any net income for each completed fiscal quarter thereafter, plus (iii) 50% of all proceeds of equity interests issued by us or our subsidiaries after the date hereof.

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As of March 31, 2013, we were in compliance with all such covenants.
If an event of default occurs and is continuing, we are prohibited from (i) declaring or paying any dividends or distributions on, or redeeming or purchasing any of our equity interest, (ii) allowing any of our subsidiaries to declare or pay any dividends or distributions on, or redeem, purchase or otherwise retire any shares of any such subsidiary’s preferred stock or other equity interests entitling the holders thereof to a stated rate of return, or (iii) making any payment of principal of or any interest or premium, if any, on or repaying, repurchasing or redeeming any of our debt securities that rank pari passu with, or junior to, our 2037 debentures.
Mortgage Loans and Note Payable
Mortgage loans and note payable as of March 31, 2013 consist of the following:
 
 
 
 
Carrying amount of mortgage notes as of (1)
 
 
 
Property Pledged as Collateral
 
Region
 
March 31, 2013
 
Interest Rate
 
Maturity Date
Multi-family property (1)
 
Western U.S.
 
$
72,993,000

 
4.31%
 
2020
Multi-family property (1)
 
Western U.S.
 
20,499,000

 
4.64%
 
2020
Multi-family property (1)
 
Western U.S.
 
27,835,000

 
4.71%
 
2020
Multi-family property (1)
 
Western U.S.
 
5,793,000

 
5.43%
 
2020
Commercial building
 
Western U.S.
 
29,000,000

 
LIBOR + 2.00%
 
2017
Multi-family property
 
Western U.S.
 
26,000,000

 
3.35%
 
2023
Multi-family property
 
Western U.S.
 
23,475,000

 
Adjustable rate + 2.07%
 
2022
Multi-family property
 
Western U.S.
 
14,357,000

 
4.19%
 
2018
Commercial building
 
Western U.S.
 
12,000,000

 
6.75%
 
2016
Commercial building
 
Western U.S.
 
7,032,000

 
LIBOR + 3.50%
 
2014
Commercial building/Warehouse
 
Western U.S.
 
4,391,000

 
Prime + 1.00%
 
2013
Commercial building
 
Western U.S.
 
1,873,000

 
5.72%
 
2013
Total mortgage loans payable
 
 
 
245,248,000

 
 
 
 
 
 
 
 
 
 
 
 
 
Note Payable
 
 
 
5,888,000

 
15%
 
2013
Total note payable
 
 
 
5,888,000

 
 
 
 
 
 
 
 
 
 
 
 
 
Total mortgage and note payable
 
 
 
$
251,136,000

 
 
 
 
(1) The mortgage loan payable balances include the unamortized debt premiums. Debt premiums represent the excess of the fair value of debt over the principal value of debt assumed in various acquisitions and are amortized into interest expense over the remaining term of the related debt in a manner that approximates the effective interest method. The unamortized loan premium as of March 31, 2013 was $5.9 million.

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DESCRIPTION OF OUTSTANDING PREFERRED STOCK
Unless otherwise stated or the context otherwise requires, as used in this section, the words “we,” “us,” “our” or the “company” refer to Kennedy-Wilson Holdings, Inc. and its subsidiaries.
In 2010, we entered into a 6.0% Convertible Series A Preferred Stock Purchase Agreement (the “Series A Purchase Agreement”) with Fairfax Financial Holdings Limited (“Fairfax”) for the issuance and sale in a private placement of up to 100,000 shares of series A Preferred Stock, par value $0.0001 per share (the “Series A Preferred Stock”), at a purchase price of $1,000 per share. We sold and issued to certain affiliates of Fairfax a total of 100,000 shares of Series A Preferred Stock for a total purchase price of $100.0 million. In accordance with the terms of the Series A Purchase Agreement, we also entered into a Registration Rights Agreement with Fairfax (the “Series A Registration Rights Agreement”). Under the Series A Registration Rights Agreement, the holders of the Series A Preferred Stock have certain demand and piggy-back registration rights with respect to the Series A Preferred Stock and the shares of our common stock issuable upon conversion of the Series A Preferred Stock.
The Series A Preferred Stock has the rights, privileges, preferences and restrictions set forth in the Certificate of Designation (the “Series A Certificate of Designation”) we filed with the Secretary of State of the state of Delaware. Under the Series A Certificate of Designation, prior to May 19, 2015, each share of Series A Preferred Stock is convertible, at the option of the holder at any time, into approximately 81 shares of our common stock, subject to adjustment under certain circumstances. On May 19, 2015, each outstanding share of Series A Preferred Stock will automatically be converted into shares of our common stock. Cumulative dividends on the Series A Preferred Stock accrue at an annual rate of 6% per $1,000 of shares of Series A Preferred Stock. The dividends are payable quarterly in arrears. Subject to limited exceptions, holders of the Series A Preferred Stock will have no voting or management rights. The Series A Certificate of Designation contains customary anti-dilution protection.
We also entered into a Convertible Series B Preferred Stock Purchase Agreement (the “Series B Purchase Agreement”) with Fairfax, for the issuance and sale in a private placement of 32,550 shares of Series B Preferred Stock, par value $0.0001 per share (the “Series B Preferred Stock,” and together with the Series A Preferred Stock, the “Preferred Stock”), at a purchase price of $1,000 per share or a total purchase price of $32.6 million. The Series B Preferred Stock is convertible into approximately 3 million shares of our common stock. In accordance with the terms of the Series B Purchase Agreement, we also entered into a Registration Rights Agreement (the “Series B Registration Rights Agreement”) and Shareholders Agreement with Fairfax. Under the Series B Registration Rights Agreement, the holders of the Series B Preferred Stock have certain demand and piggy-back registration rights with respect to the Series B Preferred Stock and the shares of our common stock issuable upon conversion of the Series B Preferred Stock. Under the Shareholders Agreement, certain of our stockholders have agreed to vote all of the shares of voting stock held by such stockholders in favor of Fairfax’s designee to our Board of Directors. We also agreed to nominate Fairfax’s designee as a member of the Board of Directors.
The Series B Preferred Stock has the rights, privileges, preferences and restrictions set forth in the Certificate of Designation (the “Series B Certificate of Designation,” and, together with the Series A Certificate of Designation, the “Certificates of Designation”) we filed with the Secretary of State of the state of Delaware. Under the Series B Certificate of Designation, prior to November 3, 2018, each share of Series B Preferred Stock is convertible, at the option of the holder at any time, into approximately 93 shares of our common stock, subject to adjustments under certain circumstances (the “Series B Conversion Rate”). At any time on or after May 3, 2017 and prior to November 3, 2018, we have the option to convert all or part of the outstanding shares of Series B Preferred Stock into shares of our common stock at the Series B Conversion Rate. On November 3, 2018, each outstanding share of Series B Preferred Stock will automatically be converted into shares of our common stock at the Series B Conversion Rate. Cumulative dividends on the Series B Preferred Stock accrue at an annual rate of $64.52 per share. The dividends are payable quarterly in arrears. Subject to limited exceptions, holders of the Series B Preferred Stock will have no voting rights. The Series B Certificate of Designation contains customary anti-dilution protection.
Under the Certificates of Designation, upon a change of control of or a delisting of our common stock (as such terms are defined in the Certificates of Designation), a fundamental change will have deemed to have occurred. In the event a fundamental change occurs, we must offer to purchase all of the outstanding Series A Preferred Stock and Series B Preferred Stock immediately prior to the change of control or delisting of our common stock at a purchase price per share equal to $1,150 plus all accumulated and accrued dividends to the effective date of such fundamental change. On November 30, 2012, in

40


connection with this offering, Fairfax waived the requirement set forth in the Certificates of Designation that provides that the offer to purchase upon a fundamental change be made at least 20 business days prior to the effective date (as such term is defined in the Certificates of Designation) of the fundamental change. Instead, we are required to complete such an offer within 90 days following completion of the fundamental change offer made to holders of the notes.
Preferred Stock converted after a fundamental change will automatically receive a number of shares of our common stock as provided for in the applicable Certificates of Designation.

41


DESCRIPTION OF THE NOTES
In this description, (1) the words “we,” “us,” “our” and “Issuer” refer to Kennedy-Wilson, Inc. and not to any of its subsidiaries; and (2) “Kennedy-Wilson Holdings” refers to Kennedy-Wilson Holdings, Inc. and its subsidiaries. In addition, certain terms used in this description are defined under the subheading “—Certain Definitions.”
The Issuer issued $200.0 million aggregate principal amount of Notes on April 5, 2011 and an additional $50.0 million aggregate principal amount of Notes on April 12, 2011 (together, the “Initial Notes”) under an Indenture dated as of April 5, 2011 (the “Indenture”) by and among the Issuer, the Guarantors party thereto and Wilmington Trust, National Association (as successor by merger to Wilmington Trust FSB), as trustee (the “Trustee”).
The terms of the Notes include those stated in the Indenture and those made part of the Indenture by reference to the Trust Indenture Act of 1939 (the “Trust Indenture Act”). The following description is only a summary of the material provisions of the Indenture. We urge you to read the Indenture because that agreement, and not this description, defines your rights as holders of these Notes. You may request a copy of the Indenture at our address set forth under the heading “Incorporation of Certain Documents by Reference.”
Brief Description of the Notes

The Notes:
are unsecured senior obligations of the Issuer;
are senior in right of payment to all existing and any future Subordinated Obligations of the Issuer; and
are guaranteed by Kennedy-Wilson Holdings, Inc. (“Parent”) and each Subsidiary Guarantor on a senior basis.
Principal, Maturity and Interest

$350.0 million aggregate principal amount of Notes are currently outstanding. Notes are issuable only in denominations of $2,000 and any greater integral multiple of $1,000. The Notes will mature on April 1, 2019. Subject to our compliance with the covenant described under the subheading “—Certain Covenants—Limitation on Indebtedness,” we are permitted to issue more notes under the Indenture in an unlimited aggregate principal amount (the “Additional Notes”), provided that if the Additional Notes are not fungible with the Notes for United States federal income tax purposes, the Additional Notes will have a separate CUSIP number. The outstanding notes to which the exchange offer relates constitute Additional Notes. The Initial Notes and any Additional Notes subsequently issued under the Indenture will be treated as a single series of Notes for all purposes under the Indenture, including, without limitation, waivers, amendments, redemptions and offers to purchase. Holders of the Initial Notes and any the Additional Notes will vote as one class under the Indenture.
Unless the context otherwise requires, for all purposes of the Indenture and this “Description of the Notes,” references to the Notes include any Additional Notes actually issued, including the outstanding notes to which the exchange offer relates, and “Original Issue Date” refers to April 5, 2011, the date the Notes were initially issued.
Interest on the Notes will accrue at the rate of 8.750% per annum and, in the case of the outstanding notes to which the exchange offer relates and any exchange notes issued pursuant to the exchange offer, will accrue from, and including, October 1, 2012. Interest on the Notes is payable semiannually in arrears on April 1 and October 1, commencing, in the case of such outstanding notes and exchange notes, on April 1, 2013. We will make each interest payment to the holders of record of the Notes on the immediately preceding March 15 and September 15. Interest will be computed on the basis of a 360-day year comprised of twelve 30-day months.
Additional interest may accrue on the Notes in certain circumstances pursuant to the Registration Rights Agreement.
Optional Redemption

Except as set forth below, we will not be entitled to redeem the Notes at our option.

42


On and after April 1, 2015, we will be entitled at our option to redeem all or a portion of these Notes upon not less than 30 nor more than 60 days’ notice, at the redemption prices (expressed in percentages of principal amount on the redemption date), plus accrued and unpaid interest, if any, to the redemption date (subject to the right of holders of record on the relevant record date to receive interest due on the related interest payment date), if redeemed during the 12-month period commencing on April 1 of the years set forth below:
Period
Redemption Price

2015
104.375
%
2016
102.188
%
2017 and thereafter
100.000
%

In addition, before April 1, 2014, we will be entitled at our option on one or more occasions to redeem Notes (which includes Additional Notes, if any) in an aggregate principal amount not to exceed 35% of the aggregate principal amount of the Notes (which includes Additional Notes, if any) originally issued at a redemption price (expressed as a percentage of principal amount ) of 108.750%, plus accrued and unpaid interest, if any, to the redemption date, with an amount not to exceed the net cash proceeds from one or more Equity Offerings (provided that if the Equity Offering is an offering by Parent, a portion of the Net Cash Proceeds thereof equal to the amount required to redeem any such Notes is contributed to the equity capital of the Issuer); provided that:
(1)    at least 65% of such aggregate principal amount of Notes (which includes Additional Notes, if any) remains outstanding immediately after the occurrence of each such redemption (other than Notes held, directly or indirectly, by the Issuer or its Affiliates); and
(2)    each such redemption occurs within 90 days after the date of the related Equity Offering.
Notice of any redemption upon any Equity Offering may be given prior to the completion thereof, and any such redemption or notice, may, at the Issuer’s discretion, be subject to the completion of the related Equity Offering.
Prior to April 1, 2015, we will be entitled, at our option, to redeem all or a portion of the Notes at a redemption price equal to 100% of the principal amount of the Notes plus the Applicable Premium as of, and accrued and unpaid interest, if any, to, the redemption date (subject to the right of holders on the relevant record date to receive interest due on the relevant interest payment date). Notice of such redemption must be mailed by first-class mail to each holder’s registered address, not less than 30 nor more than 60 days prior to the redemption date.
Applicable Premium” means with respect to a Note at any redemption date, as provided by the Issuer, the greater of (1) 1.00% of the principal amount of such Note and (2) the excess of (A) the present value at such redemption date of (i) the redemption price of such Note on April 1, 2015 (such redemption price being described in the second paragraph in this “—Optional Redemption” section exclusive of any accrued and unpaid interest) plus (ii) all required remaining scheduled interest payments due on such Note through April 1, 2015 (but excluding accrued and unpaid interest, if any, to the redemption date), computed using a discount rate equal to the Adjusted Treasury Rate, over (B) the principal amount of such Note on such redemption date.
Adjusted Treasury Rate” means, with respect to any redemption date and as provided by the Issuer, (1) the yield, under the heading which represents the average for the immediately preceding week, appearing in the most recently published statistical release designated “H. 15(519)” or any successor publication which is published weekly by the Board of Governors of the Federal Reserve System and which establishes yields on actively traded United States Treasury securities adjusted to constant maturity under the caption “Treasury Constant Maturities,” for the maturity corresponding to the Comparable Treasury Issue (if no maturity is within three months before or after April 1, 2015, yields for the two published maturities most closely corresponding to the Comparable Treasury Issue shall be determined and the Adjusted Treasury Rate shall be interpolated or extrapolated from such yields on a straight line basis, rounding to the nearest month) or (2) if such release (or any successor release) is not published during the week preceding the calculation date or does not contain such yields, the rate per year equal to the semi-annual equivalent yield to maturity of the Comparable Treasury Issue (expressed as a percentage of its principal

43


amount) equal to the Comparable Treasury Price for such redemption date, in each case calculated on the third Business Day immediately preceding the date that the applicable redemption notice is first mailed, in each case, plus 0.50%.
Comparable Treasury Issue” means the United States Treasury security selected by the Quotation Agent as having a maturity comparable to the remaining term of the Notes from the redemption date to April 1, 2015, that would be utilized, at the time of selection and in accordance with customary financial practice, in pricing new issues of corporate debt securities of a maturity most nearly equal to April 1, 2015.
Comparable Treasury Price” means, with respect to any redemption date, if clause (2) of the Adjusted Treasury Rate definition is applicable, the average of three, or such lesser number as is obtained by the Issuer, Reference Treasury Dealer Quotations for such redemption date.
Quotation Agent” means the Reference Treasury Dealer selected by the Issuer.
Reference Treasury Dealer” means Merrill Lynch, Pierce, Fenner & Smith Incorporated and its successors and assigns and Morgan Stanley & Co. LLC (formerly Morgan Stanley & Co. Incorporated) and its successors and assigns.
Reference Treasury Dealer Quotations” means with respect to each Reference Treasury Dealer and any redemption date, the average, as determined by the Issuer, of the bid and asked prices for the Comparable Treasury Issue, expressed in each case as a percentage of its principal amount, quoted in writing to the Issuer by such Reference Treasury Dealer at 5:00 p.m., New York City time, on the third Business Day immediately preceding date that the applicable redemption notice is first mailed.
Selection and Notice of Redemption

If we are redeeming less than all the Notes at any time, the Trustee will select Notes on a pro rata basis, by lot or by such other method in accordance with the procedures of DTC.
We will redeem Notes of $2,000 or less in whole and not in part. We will cause notices of redemption to be mailed by first-class mail at least 30 but not more than 60 days before the redemption date to each holder of Notes to be redeemed at its registered address.
If any Note is to be redeemed in part only, the notice of redemption that relates to that Note will state the portion of the principal amount thereof to be redeemed. We will issue a new Note in a principal amount equal to the unredeemed portion of the original Note in the name of the holder thereof upon cancellation of the original Note. Notes called for redemption become due on the date fixed for redemption. On and after the redemption date, interest ceases to accrue on Notes or portions of them called for redemption.
No Sinking Fund; Open Market Purchases

We are not required to make any sinking fund payments with respect to the Notes. However, under certain circumstances, we may be required to offer to purchase Notes as described under the captions “—Fundamental Change” and “—Certain Covenants—Limitation on Sales of Assets and Subsidiary Stock.” We may at any time and from time to time purchase Notes in the open market or otherwise.
Guaranties

Parent and each Subsidiary Guarantor of the Issuer jointly and severally guarantee, on a senior unsecured basis, our obligations under the Indenture and the Notes. The obligations of each Subsidiary Guarantor under its Subsidiary Guaranty are designed to be limited as necessary to prevent such Subsidiary Guaranty from constituting a fraudulent conveyance under applicable law and, therefore, is be expressly limited to the maximum amount that such Subsidiary Guaranty could guarantee without such Subsidiary Guaranty constituting a fraudulent conveyance. This limitation, however, may not be effective to prevent such Subsidiary Guaranty from constituting a fraudulent conveyance. See “Risk Factors—Risks Related to the Notes—A subsidiary guarantee could be voided if it constitutes a fraudulent transfer under U.S. bankruptcy or similar state law, which would prevent the holders of the Notes from relying on that subsidiary to satisfy claims.”

44


If a Subsidiary Guaranty were rendered voidable, it could be subordinated by a court to all other indebtedness (including guarantees and other contingent liabilities) of the applicable Subsidiary Guarantor, and, depending on the amount of such indebtedness, a Subsidiary Guarantor’s liability on its Subsidiary Guaranty could be reduced to zero. See “Risk Factors—Risks Related to the Notes—A subsidiary guarantee could be voided if it constitutes a fraudulent transfer under U.S. bankruptcy or similar state law, which would prevent the holders of the Notes from relying on that subsidiary to satisfy claims.”
The Subsidiary Guaranty of a Subsidiary Guarantor will be released:
(1)    upon the sale or other disposition (including by way of consolidation or merger) of a Subsidiary Guarantor;
(2)    upon the sale or disposition of all or substantially all the assets of a Subsidiary Guarantor;
(3)    upon the designation of such Subsidiary Guarantor as an Unrestricted Subsidiary pursuant to the terms of the Indenture;
(4)    upon the defeasance of the Notes, as provided under “—Defeasance and Satisfaction and Discharge”; or
(5)    as described under “—Amendments and Waivers,”
in the case of clause (1) or (2), other than to the Issuer or a Restricted Subsidiary and as permitted by the Indenture.
Not all of our Subsidiaries will guarantee the Notes. Also, the joint venture and fund entities in which we have investments and their respective Subsidiaries (which are not Subsidiaries of the Issuer as of the date of the Indenture) are not guarantors and are not subject to any of the obligations and covenants described hereunder. In the event of a bankruptcy, liquidation or reorganization of any of these non-guarantor Subsidiaries, the non-guarantor Subsidiaries will pay the holders of their debt and their trade creditors before they will be able to distribute any of their assets to us. For the three months ended March 31, 2013 and the year ended December 31, 2012, the revenues of our non-guarantor subsidiaries constituted approximately 50.5% and 54.8%, respectively, of Kennedy-Wilson Holding’s consolidated revenues, and the operating income of our non-guarantor subsidiaries for those periods was approximately $0.8 million and $16.5 million, respectively. As of March 31, 2013, the total assets of those subsidiaries constituted approximately 33.1% of Kennedy- Wilson Holding’s consolidated total assets, and those subsidiaries had $217.7 million of secured non-recourse mortgage indebtedness, of which none has recourse to us. However, these figures are as of March 31, 2013 and do not reflect transactions that we have entered into after that date or future transactions that we may enter into. Depending on the particular terms of any acquisition or other transaction that one or more of our subsidiaries may enter into, those subsidiaries may not be required by the terms of the Indenture to guarantee the Notes. Accordingly, these figures may fluctuate from time to time, and these figures may increase or decrease materially in future periods. For example, the instruments governing our acquisitions (such as the relevant loan agreement, or the terms of the relevant partnership agreement, limited liability company operating agreement or other governing document of the borrower, or any related joint venture agreement or the terms of any relevant Co-investment Vehicle or separate account or investment program) may prohibit the relevant subsidiary from guaranteeing the Notes. In many such cases, the Indenture does not require our subsidiaries, including those described above, to guarantee the Notes.
Ranking

The indebtedness evidenced by the Notes and the Guaranties will be senior unsecured obligations and will rank pari passu in right of payment with all other unsecured Senior Indebtedness of the Issuer or the applicable Guarantor, as the case may be.
As of March 31, 2013:
(a)    the Issuer and the Subsidiary Guarantors had approximately $442.9 million of outstanding Senior Indebtedness, of which:

45


(1)
$33.4 million was secured non-recourse mortgage indebtedness; and
(2)
$409.5 million was unsecured Senior Indebtedness, consisting of the $100.0 million aggregate principal amount of outstanding notes to which the exchange offer relates, $250.0 million aggregate principal amount of the Exchange Notes outstanding as of the date of this prospectus and $55.0 million aggregate principal amount of the 2042 notes;
(b)    the Issuer had no indebtedness outstanding under the Credit Facility and had $100.0 million of availability thereunder; and
(c)    the Issuer had $40.0 million of subordinated Indebtedness, consisting entirely of the Subordinated Debentures.
In addition, as of such date, the Issuer and the Guarantors would have had $46.8 million aggregate principal amount of Guarantees that the Issuer and the Guarantors provided in connection with loans secured by assets held in various joint ventures and that are recourse to the Issuer and the Guarantors.
The Notes and the Guaranties are unsecured obligations of the Issuer and the Guarantors, as the case may be. Secured debt and other secured obligations of the Issuer and the Guarantors will be effectively senior to the Notes and the Guaranties to the extent of the value of the assets securing such debt or other obligations. In addition, all Indebtedness and trade payables of non-guarantor Subsidiaries will be effectively senior to the Notes and the Guaranties.
Not all of our subsidiaries will guarantee the notes. See “Risk Factors—Risks Related to the Notes—The notes will not be guaranteed by all of our subsidiaries.”
Although the Indenture contains limitations on the amount of additional Indebtedness that the Issuer and the Restricted Subsidiaries may incur, under certain circumstances the amount of such Indebtedness could be substantial and, subject to the limitations set forth in the covenants described under “—Certain Covenants—Limitation on Liens,” such Indebtedness may be secured Indebtedness. See “—Certain Covenants—Limitation on Indebtedness” and “—Limitation on Liens.”
Fundamental Change

Upon the occurrence of a Fundamental Change, each noteholder shall have the right to require that the Issuer purchase such noteholder’s Notes at a purchase price in cash equal to 101% of the principal amount thereof on the date of purchase plus accrued and unpaid interest, if any, to the date of purchase (subject to the right of holders of record on the relevant record date to receive interest due on the relevant interest payment date).
Within 30 days following any Fundamental Change, unless we have exercised our option to redeem all the Notes as described under “—Optional Redemption,” we will mail a notice to each noteholder with a copy to the Trustee (the “Fundamental Change Offer”) stating:
(1)    that a Fundamental Change has occurred and that such noteholder has the right to require us to purchase such noteholder’s Notes at a purchase price in cash equal to 101% of the principal amount thereof on the date of purchase, plus accrued and unpaid interest, if any, to the date of purchase (subject to the right of noteholders of record on the relevant record date to receive interest on the relevant interest payment date);
(2)    the circumstances and relevant facts regarding such Fundamental Change (including information with respect to pro forma historical income, cash flow and capitalization, in each case after giving effect to such Fundamental Change);
(3)    the purchase date (which shall be no earlier than 30 days nor later than 60 days from the date such notice is mailed); and
(4)    the instructions, as determined by us, consistent with the covenant described hereunder, that a noteholder must follow in order to have its Notes purchased.

46


We will not be required to make a Fundamental Change Offer following a Fundamental Change if a third party makes the Fundamental Change Offer in the manner, at the times and otherwise in compliance with the requirements set forth in the Indenture applicable to a Fundamental Change Offer made by us and purchases all Notes validly tendered and not withdrawn under such Fundamental Change Offer or if we have exercised our option to redeem all the Notes pursuant to the provisions described under “—Optional Redemption.”
We will comply, to the extent applicable, with the requirements of Section 14(e) of the Exchange Act and any other securities laws or regulations in connection with the purchase of Notes as a result of a Fundamental Change. To the extent that the provisions of any securities laws or regulations conflict with the provisions of the covenant described hereunder, we will comply with the applicable securities laws and regulations and shall not be deemed to have breached our obligations under the covenant described hereunder by virtue of our compliance with such securities laws or regulations.
The Fundamental Change purchase feature of the Notes may in certain circumstances make more difficult or discourage a sale or takeover of the Issuer and, thus, the removal of incumbent management. The Fundamental Change purchase feature is a result of negotiations between the Issuer and the Initial Purchasers. We have no present intention to engage in a transaction involving a Change of Control and we do not foresee the occurrence of a Termination of Trading, although it is possible that, in the future, we could decide to engage in a transaction involving a Change of Control or a Termination of Trading occurs. Subject to the limitations discussed below, we could, in the future, enter into certain transactions, including acquisitions, refinancings or other recapitalizations, that would not constitute a Change of Control under the Indenture or result in a Termination of Trading, but that could increase the amount of indebtedness outstanding at such time or otherwise affect our capital structure or credit ratings. Restrictions on our ability to Incur additional Indebtedness are contained in the covenants described under “—Certain Covenants—Limitation on Indebtedness,” and “—Limitation on Liens,” which limitations may terminate as described under “—Defeasance and Satisfaction and Discharge” below. Such restrictions can only be waived with the consent of the holders of a majority in principal amount of the Notes then outstanding. Except for the limitations contained in such covenant, however, the Indenture will not contain any covenants or provisions that may afford holders of the Notes protection in the event of a highly leveraged transaction.
Holders may not be entitled to require us to purchase their Notes in certain circumstances involving a significant change in the composition of our Board of Directors, including in connection with a proxy contest where our Board of Directors does not approve a dissident slate of directors but approves them as continuing directors, even if our Board of Directors initially opposed the directors.
The Credit Agreement provides that the occurrence of certain change of control events with respect to the Issuer would constitute a default thereunder. Future indebtedness that we may incur may contain prohibitions on the occurrence of certain events that would constitute a Fundamental Change or require the purchase of such indebtedness upon a Fundamental Change. Moreover, the exercise by the holders of their right to require us to purchase the Notes could cause a default under such indebtedness, even if the Fundamental Change itself does not, due to the financial effect of such purchase on us. Our ability to pay cash to the holders of Notes following the occurrence of a Fundamental Change may be limited by our then existing financial resources. There can be no assurance that sufficient funds will be available when necessary to make any required purchases. See “Risk Factors—Risks Related to the Notes—We may not have the ability to raise the funds necessary to finance a fundamental change offer.”
The occurrence of a Fundamental Change will also trigger a redemption right held by the holders of Parent’s Series A Preferred Stock and Series B Preferred Stock under their respective certificates of designation. Pursuant to paragraph (a) and clause (11) of paragraph (b) under the covenant described under “—Certain Covenants—Limitation on Restricted Payments,” we may not make any Restricted Payment to redeem or repurchase Parent’s Series A Preferred Stock and Series B Preferred Stock, unless we have sufficient restricted payment capacity or we have previously made an offer to noteholders to repurchase the Notes. If the noteholders, however, reject our Fundamental Change Offer or fail for any reason to tender all of their Notes, and the stockholders of Parent’s Series A Preferred Stock and Series B Preferred Stock accept Parent’s offer to repurchase such shares of Series A Preferred Stock and Series B Preferred Stock, we may have to pay dividends or make other payments to Parent so that it can use cash to fund the repurchase or redemption of its Series A Preferred Stock and Series B Preferred Stock. In the event this occurs, it may be it more difficult for us to make scheduled payments on the untendered Notes. See “Risk Factors—Risks Related to the Notes—In the event of a change of control or termination of trading of our common stock, our Series A and Series B preferred stock will be redeemable at the option of the stockholders thereof.”

47


Notwithstanding anything to the contrary herein, a Fundamental Change Offer may be made in advance of a Change of Control, conditional upon such Change of Control, if a definitive agreement is in place for the Change of Control at the time of making of such Fundamental Change Offer.
The phrase “all or substantially all,” as used with respect to the assets of the Issuer in the definition of “Change of Control,” is subject to interpretation under applicable state law, and its applicability in a given instance would depend upon the facts and circumstances. As a result, there may be a degree of uncertainty in ascertaining whether a sale or transfer of “all or substantially all” the assets of the Issuer has occurred in a particular instance, in which case a holder’s ability to obtain the benefit of these provisions could be unclear.
The provisions under the Indenture relative to our obligation to make an offer to purchase the Notes as a result of a Fundamental Change may be waived or modified with the written consent of the holders of a majority in principal amount of the Notes.
For purposes of this discussion of a repurchase of the Notes following a Fundamental Change “Change of Control” means the occurrence of any of the following:
(1)    any “person” or “group” (as such term is used in Sections 13(d) and 14(d) of the Exchange Act), is or becomes the “beneficial owner” (as defined in Rules 13d-3 and 13d-5 under the Exchange Act), directly or indirectly, of more than 35% (or, in the case of any Permitted Holder, 50%) of the total voting power of the Voting Stock of the Parent;
(2)    individuals who on the Original Issue Date constituted the Board of Directors (together with any new directors whose election by such Board of Directors or whose nomination for election by the shareholders of the Parent was approved by a vote of a majority of the directors of the Parent then still in office who were either directors on the Original Issue Date or whose election or nomination for election was previously so approved) cease for any reason to constitute a majority of the Board of Directors of Parent then in office;
(3)    the adoption of a plan relating to the liquidation or dissolution of the Parent;
(4)    the merger or consolidation of the Parent with or into another Person or the merger of another Person with or into the Parent, or the sale of all or substantially all the consolidated assets of Parent (but in any event, upon the sale of more than 35% of the consolidated assets of the Parent), to another Person, other than a transaction following which (A) in the case of a merger or consolidation transaction, holders of securities that represented 100% of the Voting Stock of the Parent immediately prior to such transaction (or other securities into which such securities are converted as part of such merger or consolidation transaction) own, directly or indirectly, at least a majority of the voting power of the Voting Stock of the surviving Person in such merger or consolidation transaction immediately after such transaction and (B) in the case of a sale of assets transaction, the transferee Person becomes the obligor in respect of the Notes and a Subsidiary of the transferor of such assets; or
(5)    the Parent ceases to own, directly, 100% of the Capital Stock of the Issuer.
For the avoidance of doubt, for purposes of determining beneficial ownership under clause (1) above, no Permitted Holder shall be deemed to be a “person” or “group” (as such term is used in Sections 13(d) and 14(d) of the Exchange Act) with Fairfax.
Fundamental Change” shall mean the occurrence of a Change of Control or a Termination of Trading.
Termination of Trading” shall mean the termination (but not the temporary suspension) of trading of the Common Stock of Parent, which will be deemed to have occurred if the Common Stock or other securities into which the Parent’s Series A Preferred Stock and Series B Preferred Stock are convertible are not, or are not permitted to be, listed for trading on the New York Stock Exchange or any other U.S. national securities exchange.
Certain Covenants

The Indenture contains, among others, the following covenants:

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Limitation on Indebtedness

(a)    The Issuer will not, and will not permit any Restricted Subsidiary to, Incur, directly or indirectly, any Indebtedness; provided, however, that the Issuer and the Restricted Subsidiaries will be entitled to Incur Indebtedness (including revolving credit Indebtedness) if, on the date of such Incurrence and after giving effect thereto, no Default has occurred and is continuing and the Maximum Balance Sheet Leverage Ratio is no greater than 1.5 to 1.0.
(b)    Notwithstanding the foregoing paragraph (a), the Issuer and the Restricted Subsidiaries will be entitled to Incur any or all of the following Indebtedness:
(1)    Indebtedness Incurred by the Issuer pursuant to any Credit Facility (including the Credit Agreement); provided, however, that, immediately after giving effect to any such Incurrence, the aggregate principal amount of all Indebtedness Incurred under this clause (1) and then outstanding does not exceed $100.0 million;
(2)    Indebtedness owed to and held by the Issuer or a Restricted Subsidiary; provided, however, that (A) any subsequent issuance or transfer of any Capital Stock which results in any such Restricted Subsidiary ceasing to be a Restricted Subsidiary or any subsequent transfer of such Indebtedness (other than to the Issuer or a Restricted Subsidiary) shall be deemed, in each case, to constitute the Incurrence of such Indebtedness by the obligor thereon and (B) if the Issuer is the obligor on such Indebtedness, such Indebtedness is expressly subordinated to the prior payment in full in cash of all obligations with respect to the Notes;
(3)    the Notes and the Exchange Notes (other than any Additional Notes);
(4)    Indebtedness of the Issuer and its Subsidiaries outstanding on the Original Issue Date (other than Indebtedness described in clause (1), (2) or (3) of this covenant);
(5)    Indebtedness of a Restricted Subsidiary Incurred and outstanding on or prior to the date on which such Subsidiary was acquired by the Issuer (other than Indebtedness Incurred in connection with, or to provide all or any portion of the funds or credit support utilized to consummate, the transaction or series of related transactions pursuant to which such Subsidiary became a Subsidiary or was acquired by the Issuer); provided, however, at the time of such acquisition and after giving effect thereto, the aggregate principal amount of all Indebtedness Incurred pursuant to this clause (5) and then outstanding does not exceed $15.0 million;
(6)    Refinancing Indebtedness in respect of Indebtedness Incurred pursuant to paragraph (a) or pursuant to clause (3), (4), (5), or this clause (6); provided, however, that to the extent such Refinancing Indebtedness directly or indirectly Refinances Indebtedness of a Subsidiary Incurred pursuant to clause (5), such Refinancing Indebtedness shall be Incurred only by such Subsidiary;
(7)    Hedging Obligations of the Issuer or any Restricted Subsidiary entered into in the ordinary course of business and not for the purpose of speculation;
(8)    obligations in respect of letters of credit, performance, bid and surety bonds, completion guarantees, budget guarantees, payment obligations in connection with self-insurance or similar requirements provided by the Issuer or any Restricted Subsidiary in the ordinary course of business;
(9)    Indebtedness arising from the honoring by a bank or other financial institution of a check, draft or similar instrument drawn against insufficient funds in the ordinary course of business; provided, however, that such Indebtedness is extinguished within five Business Days of its Incurrence;
(10)    Indebtedness with respect to workers’ compensation claims in the ordinary course of business;
(11)    any Guarantee (including the Subsidiary Guaranties) by the Issuer or a Restricted Subsidiary of Indebtedness or other obligations of the Issuer or any of its Restricted Subsidiaries so long as the Incurrence of such Indebtedness by the Issuer or such Restricted Subsidiary is permitted under the terms of the Indenture;

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(12)    Indebtedness arising from agreements providing for indemnification, deposits, adjustment of purchase price or similar obligations, in each case, Incurred or assumed in connection with the acquisition or disposition of any business, assets or a Subsidiary; provided, however, that (A) such Indebtedness is not reflected on the balance sheet of the Issuer or any Restricted Subsidiary (contingent obligations referred to in a footnote or footnotes to financial statements and not otherwise reflected on the balance sheet will not be deemed to be reflected on such balance sheet for purposes of this clause (A)) and (B) in the case of a disposition, the maximum liability in respect of such Indebtedness shall at no time exceed the gross proceeds including noncash proceeds (the fair market value of such noncash proceeds being determined at the time received and without giving effect to any subsequent changes in value) actually received by the Issuer or such Restricted Subsidiary in connection with such disposition;
(13)    Non-Recourse Indebtedness, Permitted Non-Recourse Carve-Out Guarantees and Permitted Co-investments;
(14)    Indebtedness constituting Subordinated Obligations, the net cash proceeds of which are used to purchase, repurchase, redeem, defease or otherwise acquire or retire for value the Subordinated Debentures and with a Stated Maturity that is no earlier than 180 days after the Stated Maturity of the Notes; and
(15)    Indebtedness of the Issuer or any Restricted Subsidiary (together with any refinancing thereof) in an aggregate principal amount which, when taken together with all other Indebtedness of the Issuer and the Restricted Subsidiaries outstanding on the date of such Incurrence (other than Indebtedness permitted by clauses (1) through (14) above or paragraph (a)), does not exceed $25.0 million.
(c)    Notwithstanding the foregoing (except to the extent provided in the foregoing clause (14)), none of the Issuer or any Subsidiary Guarantor will Incur any Indebtedness pursuant to the foregoing paragraph (b) if the proceeds thereof are used, directly or indirectly, to Refinance any Subordinated Obligations of the Issuer or any Subsidiary Guarantor unless such Indebtedness shall be subordinated to the Notes or the applicable Subsidiary Guaranty to at least the same extent as such Subordinated Obligations.
(d)    For purposes of determining compliance with this covenant: (1) any Indebtedness outstanding under the Credit Agreement on the Original Issue Date will be treated as having been incurred on the Original Issue Date under clause (1) of paragraph (b) above; (2) in the event that an item of Indebtedness meets the criteria of more than one of the types of Indebtedness described above, the Issuer, in its sole discretion, will be permitted to classify all or a portion of such item of Indebtedness at the time of Incurrence, or later reclassify all or a portion of such item of Indebtedness, in one of the above clauses in any manner that complies with the covenant; and (3) the Issuer will be entitled to divide and classify an item of Indebtedness in more than one of the types of Indebtedness described above. Notwithstanding the foregoing, Indebtedness incurred under the Credit Agreement will be deemed to have been incurred under clause (1) of paragraph (b) above and the Issuer shall not be permitted to reclassify all or any portion of such Indebtedness. Indebtedness permitted by this covenant need not be permitted solely by reference to one provision permitting such Indebtedness, but may be permitted in part by one such provision and in part by one or more other provisions of this covenant permitting such Indebtedness. For the avoidance of doubt, the outstanding principal amount of any particular Indebtedness shall be counted only once and any obligations arising under any Guarantee, Lien, letter of credit or similar instrument supporting such Indebtedness shall not be double counted.
(e)    For purposes of determining compliance with any U.S. dollar restriction on the Incurrence of Indebtedness where the Indebtedness Incurred is denominated in a different currency, the amount of such Indebtedness will be the U.S. Dollar Equivalent determined on the date of the Incurrence of such Indebtedness, provided, however, that if any such Indebtedness denominated in a different currency is subject to a Currency Agreement with respect to U.S. dollars covering all principal, premium, if any, and interest payable on such Indebtedness, the amount of such Indebtedness expressed in U.S. dollars will be as provided in such Currency Agreement. The principal amount of any Refinancing Indebtedness Incurred in the same currency as the Indebtedness being Refinanced will be the U.S. Dollar Equivalent of the Indebtedness Refinanced, except to the extent that (1) such U.S. Dollar Equivalent was determined based on a Currency Agreement, in which case the Refinancing Indebtedness will be determined in accordance with the preceding sentence, and (2) the principal amount of the Refinancing Indebtedness exceeds the principal amount of the Indebtedness being Refinanced, in which case the U.S. Dollar Equivalent of such excess will be determined on the date such Refinancing Indebtedness is Incurred.

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Limitation on Restricted Payments

(a)    The Issuer will not, and will not permit any Restricted Subsidiary, directly or indirectly, to make a Restricted Payment if at the time the Issuer or such Restricted Subsidiary makes such Restricted Payment:
(1)    a Default shall have occurred and be continuing (or would result therefrom);
(2)    the Issuer is not entitled to Incur an additional $1.00 of Indebtedness pursuant to paragraph (a) of the covenant described under “—Limitation on Indebtedness”; or
(3)    the aggregate amount of such Restricted Payment and all other Restricted Payments made on or after the Original Issue Date would exceed the sum of (without duplication):
(A)    50% of the Consolidated Net Income accrued during the period (treated as one accounting period) from April 1, 2011 to the end of the most recent fiscal quarter ended for which internal financial statements are available prior to the date of such Restricted Payment (or, in case such Consolidated Net Income shall be a deficit, minus 100% of such deficit); plus
(B)    100% of the aggregate Net Cash Proceeds received by the Issuer from the issuance or sale of its Capital Stock (other than Disqualified Stock) subsequent to Original Issue Date (other than an issuance or sale to a Subsidiary of the Issuer and other than an issuance or sale to an employee stock ownership plan or to a trust established by the Issuer or any of its Subsidiaries for the benefit of their employees) and 100% of any cash capital contribution received by the Issuer from its shareholders subsequent to the Original Issue Date; plus
(C)    the amount by which Indebtedness of the Issuer is reduced on the Issuer’s balance sheet upon the conversion or exchange (other than by a Subsidiary of the Issuer) subsequent to the Original Issue Date of any Indebtedness of the Issuer convertible or exchangeable for Capital Stock (other than Disqualified Stock) of the Issuer (less the amount of any cash, or the fair value of any other property, distributed by the Issuer upon such conversion or exchange).
(b)    The preceding provisions will not prohibit:
(1)    (A) any Restricted Payment made out of the Net Cash Proceeds of the substantially concurrent sale of, or made by exchange for, Capital Stock of the Issuer (other than Disqualified Stock and other than Capital Stock issued or sold to a Subsidiary of the Issuer or an employee stock ownership plan or to a trust established by the Issuer or any of its Subsidiaries for the benefit of their employees) subsequent to the Original Issue Date or (B) any Restricted Payment made out of a substantially concurrent cash capital contribution received by the Issuer from its shareholders subsequent to the Original Issue Date; provided, however, that (i) such Restricted Payment shall be excluded in the calculation of the amount of Restricted Payments and (ii) the Net Cash Proceeds from such sale or such cash capital contribution (to the extent so used for such Restricted Payment) shall be excluded from the calculation of amounts under clause (3)(B) of paragraph (a) above;
(2)    any purchase, repurchase, redemption, defeasance or other acquisition or retirement for value of Subordinated Obligations of the Issuer or a Subsidiary Guarantor made by exchange for, or out of the proceeds of the substantially concurrent sale of, Subordinated Obligations which is permitted to be Incurred pursuant to the covenant described under “—Limitation on Indebtedness”; provided, however, that such purchase, repurchase, redemption, defeasance or other acquisition or retirement for value shall be excluded in the calculation of the amount of Restricted Payments;
(3)    dividends paid within 60 days after the date of declaration thereof if at such date of declaration such dividend would have complied with this covenant; provided, however, that such dividend shall be included in the calculation of the amount of Restricted Payments;

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(4)    (A) payments or distributions to employees of Parent, the Issuer or any Restricted Subsidiary pursuant to incentive plans designed to pay employees amounts reflecting incentive compensation in recognition of performance thresholds achieved by such employees or (B) payments or distributions to employees of Parent, the Issuer or any Restricted Subsidiary of “co-investment return,” “carried interest” or other form of incentive compensation or performance fees or any distribution of an equity interest in respect thereof, or any other incentive distributions from Investment Subsidiaries or Co-investment Vehicles; provided, however, that such payments or distributions shall be excluded in the calculation of the amount of Restricted Payments;
(5)    so long as no Default has occurred and is continuing, the repurchase or other acquisition of shares of Capital Stock of Parent or the Issuer or any of the Issuer’s Subsidiaries from employees (including substantially full-time independent contractors), former employees, directors, former directors or