FIRST AMENDMENT TO EMPLOYMENT AGREEMENT

This First Amendment to Employment Agreement (the “First Amendment”) is made and entered into by and between KENNEDY-WILSON, INC., a Delaware corporation (the “Company”), and Donald J. Herrema, an individual (“Employee”). This amendment will become effective at the times set forth below, including the time at which KW Merger Sub Corp., a subsidiary of Prospect Acquisition Corp. (“PAX”), is merged into the Company (the “Effective Time”).

RECITALS

WHEREAS, Company and Employee have agreed that the terms of the Employment Agreement shall be modified as set forth below and that, except as modified, the Agreement shall remain in full force and effect.

WHEREAS, Company and Employee have agreed that the modifications set forth below that are effective as of the Effective Time shall be conditioned upon the consummation of the merger of PAX into the Company.

AMENDMENT TO AGREEMENT

NOW, THEREFORE , for good and valuable consideration the receipt and sufficiency of which are hereby acknowledged, the parties hereby amend the Agreement, as follows:

1. Section 3 is amended as of the Effective Time to read as follows:

(a) Employee shall be employed by the Company pursuant to this Agreement for a term (the “Term”) beginning on June 15, 2009, and continuing through to, and terminating at the close of business on January 31, 2014 (unless earlier terminated pursuant to Section 11).

2. Section 5(c) is deleted effective as of the Effective Time.

3. Section 11(a) is deleted effective as of the Effective Time by deleting the words “eighteen (18) month.”

4. Section 11(c) is amended as of the Effective Time to read as follows:

If the Employee is terminated by Company prior to the end of the Term without cause, then Company shall continue to pay Employee the basic salary described in Section 5(a) for the remainder of the Term of the Agreement on the Company’s ordinary payroll dates applicable to similarly situated employees of the Company, together with such other employee benefits (other than continued participation under the Company’s Section 401(k) plan) as Employee may be entitled to under the provisions of Section 6 (or if such benefits cannot be provided to Employee pursuant to the terms of the applicable plans, comparable benefits, provided, however, that the provision of comparable benefits shall be made following Employee’s termination of employment only if and to the extent that such

benefits may be provided at no additional cost to the Company above what was previously paid by the Company). Notwithstanding Section 2, if Company instructs Employee to work full-time or substantially full-time at any location not acceptable to Employee (other than the Company’s main headquarters) that is more than 50 miles from Employee’s then principal place of work and more than 50 miles from Employee’s then principal residence, or eliminates or materially reduces his duties as a senior executive level manager and supervisor of projects, personnel and budgets, then Employee may elect to deem such action(s) a constructive termination by Company and resign his employment, provided that (i) such resignation occurs within one year of such action(s); (ii) Employee provides written notice to the Company of such action(s) within 90 days thereof; and (iii) the Company fails to cure the action(s) constituting such constructive termination within 30 days of receipt of the notice. In the event of such a resignation, Company shall continue to pay or provide the compensation and benefits described in this Section 11(c) for the remainder of the Term and Employee’s employment shall be terminated.

5. The old Section 12 captioned “Miscellaneous” shall be renumbered as Section 15.

6. A new Section 12 is added, effective as of the Effective Time:

15. Restricted Shares.

(a) Immediately after the Effective Time and subject to the conditions set forth herein, Employee shall be issued 900,000 restricted shares of common stock of PAX. The restricted shares are conditioned on (1) approval by the PAX Compensation Committee of the issuance and terms of the restricted shares under the Kennedy-Wilson Holdings, Inc. 2009 Equity Participation Plan (the “Plan”), subject to the conditions set forth below in (b) and (c), (2) approval of the Plan by the shareholders of PAX,

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