income previously allocated to the General Partner pursuant to this bullet; 
• Second, to the Common Limited Partners and the General Partner in proportion to and to the 
extent of the excess of their unreturned capital contributions over their adjusted capital account 
balances; 
• Third, pursuant to subsections (a) and (b) in proportion as follows: (a) to the Common Limited 
Partners and the General Partner in proportion to and to the extent of the excess of: (i) the sum of 
their unreturned capital contributions and their undistributed Preferred Returns; over (i) their 
adjusted capital account balances; and (b) to the Profits Participation Limited Partner an amount 
of income such that the amount of Income allocated pursuant to Subsections (a) and (b) of this 
bullet are in the same proportions as the distributions pursuant to Subsections (a) and (b) of the 
second bullet of 14.9 above would be in if cash, in the same amount as the income, were being 
distributed pursuant to the second bullet of 14.9 above; 
• Fourth, to the Profits Participation Limited Partner in the amount necessary to ensure, as 
promptly as possible and to the extent feasible, that the cumulative net income of KUE for all 
periods since its inception shall have been allocated to the Common Limited Partners, the Profits 
Participation Limited Partner, and the General Partner in proportion to the number of Units held 
by each such Partner; and 
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• Fifth, to the Common Limited Partners, the Profits Participation Limited Partner, and the General 
Partner in proportion to the number of Units held by each such Partner. 
In general (and subject to certain special tax and regulatory allocations), losses and deductions of KUE 
will be allocated to the Partners in the following priority: 
• First, to the Common Limited Partners, the Profits Participation Limited Partner, and the General 
Partner in proportion to and to the extent of their positive adjusted capital account balances; 
• Second, to the Common Limited Partners, the Profits Participation Limited Partner, and the 
General Partner in proportion to the number of Units held by each such Partner; and 
• Third, to the General Partner. 
To the extent, at the time of any distribution or income or loss allocation pursuant to the Partnership 
Agreement, the 2/11ths portion of the Profits Participation LP Units has not then been fully allocated by 
KULG LLC-1 to employees, officers, directors, consultants and agents of KUE, its subsidiaries or joint 
ventures, then the distribution or income or loss allocation that would otherwise be attributable to such 
unallocated portion of the Profits Participation LP Units shall be reallocated among the Common Limited 
Partners and the General Partner in proportion to their Units for purposes of such distribution or income 
or loss allocation (including in connection with their Preferred Return). 
Notwithstanding the foregoing, the Limited Partnership Agreement gives the General Partner the authority 
to override the distribution provisions of the Limitation Partnership Agreement described above in order to 
achieve the desired economic arrangement of KUE, which is: (i) first, to return the Partners' Capital 
Contributions to them; (ii) second, for the Common Limited Partners and the General Partner to receive 
their Preferred Return while the Profits Participation Limited Partner concurrently receives an amount 
equal to a fraction of the amount the Common Limited Partners and the General Partner received 
pursuant to their Preferred Return (such fraction to be equal to the portion of the Units held by the Profits 
Participation Limited Partner attributable to members of the Profits Participation Limited Partner other 
than the Principals), multiplied by the number of Units held by the Profits Participation Limited Partner 
divided by the number of outstanding Units other than those Units held by the Profits Participation Limited 
Partner; (Hi) third, for the Profits Participation Limited Partner to receive an amount equal to a fraction of 
the amount the Common Limited Partners and the General Partner received pursuant to their Preferred 
Return (such fraction to be equal to the portion of the Units held by the Profits Participation Limited 
Partner attributable to members of the Profits Participation Limited Partner who are Principals), multiplied 
by the number of Units held by the Profits Participation Limited Partner divided by the number of 
outstanding Units other than those Units held by the Profits Participation Limited Partner; and (iv) finally, 
for all Partners (including the Profits Participation Limited Partner) to share in the profits of the 
Partnership in proportion to the number of Units held by them. 
14.11. Tax Distributions 
The General Partner may decide to make a tax distribution from KUE on or before April 1st of any year 
following a taxable year in which net taxable income was allocated to any Partner. If the General Partner 
decides to make a tax distribution, then KUE will distribute cash available for distribution, if any, to those 
Partners receiving an allocation of net taxable income, regardless of whether such net taxable income is 
actually subject to tax. The amount of net taxable income upon which such a tax distribution will be made 
will be based on cumulative calculation of net taxable income and net taxable loss which have been 
allocated to each such Partner from the inception of KUE. Any tax distributions received by a Partner will 
be treated as an advance and will offset against any other distributions such Partner is entitled to receive 
from KUE. 
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Certain Partners contributed appreciated property to KUE in exchange for their interests in KUE. Under 
the Limited Partnership Agreement, and in accordance with Section 704(c) of the Code and the Treasury 
regulations thereunder, income, gain, loss, and deduction with respect to any property contributed to KUE 
must be allocated for tax purposes among the Partners in a manner that takes into account the variation 
between the adjusted basis of such property to KUE and its fair market value at the time the property was 
contributed to KUE. As a result of this requirement, it is possible the Partners who contributed 
appreciated property to KUE will be allocated more income and gains, and therefore be entitled to receive 
larger tax distributions under the Limited Partnership Agreement, than Partners who acquired their 
interests in KUE pursuant to this offering. 
14.12. Fixed Overhead Payment 
KUE, and/or one or more of its subsidiaries will pay $20 million annually to KULG in quarterly installments 
beginning July 1, 2006 pursuant to the Fixed Overhead Payment Agreement as an agreed upon payment 
to provide for the reimbursement of expenses and other costs incurred by KULG on behalf of KUE and its 
subsidiaries (including, but not limited to, salaries and bonuses of KULG employees providing services to 
KUE and its subsidiaries, fees and expenses relating to financing transactions and acquisitions, 
professional fees and other administrative expenses). To the extent that the U.S. $2,500,000 fee payable 
pursuant to an existing management services agreement with Knowledge Learning Corporation is paid to 
any person or entity other than a subsidiary of KUE, the amount payable to KULG by KUE will be reduced 
by the amount of such payment to such other person or entity. The $20 million annual fee will terminate 
upon the Initial Listing or the sale of KUE to a person or entity that is not a KUE LLC Entity. 
14.13. Illiquidity Period 
KUE will operate for a period of seven years from the date of the first closing of this offering. If there has 
not been an Initial Listing by the end of seven years from the date of the first closing of this offering, the 
Board of Directors of the General Partner will determine whether to pursue a sale of KUE or an Initial 
Listing (or a dual track process); provided, however, in the event that not less than 75% of the value of 
KUE at that time is represented by shares of securities listed on one or more recognized international 
securities exchanges and such shares have been or will be distributed as soon as reasonably practicable 
thereafter to the Investors and the Investors have received distributions of cash and/or such securities 
valued at amounts equal to or in excess of their original capital contributions, then there will be two 
extensions of one year's duration each (as determined by the Board of Directors of the General Partner) 
in order for KUE to complete either an Initial Listing or to have the remaining value of KUE represented by 
shares of securities listed on a recognized international securities exchange and to distribute such shares 
to the Investors. 
If the Board determines to pursue a sale of KUE (or an Initial Listing or a dual track process), then the 
Principals must determine at such time whether they intend to participate as a potential bidder in the sale 
process. 
If the Principals elect not to participate as a potential bidder in a sale process, then they will not be 
allowed to subsequently elect to participate as a potential bidder unless the sale process does not result 
in a buyer at a price the Independent Committee deems to be "fair." If the sale process results in a 
transaction that the Independent Committee deems to be "fair", the Principals will be required to sell their 
entire stake in KUE (Common LP Units and Profits Participation LP Units on an "as converted" basis) on 
the same terms as the Investors. 
If the Principals elect to participate as a potential bidder in a sale process, then the sale process will be 
managed by the Independent Committee and the Principals will be precluded from participating in Board 
deliberations regarding the sale process. In addition, the Principals will be required to sell their entire 
stake in KUE on the same terms as the Investors to the winning bidder in the event the Principals do not 
submit the most attractive bid. 
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In the event that a sale of KUE or an Initial Listing has not occurred within nine years from the date the 
first Investors are admitted to KUE, the Independent Committee shall determine whether to pursue a sale 
of KUE (or an Initial Listing or a dual track process). A majority vote of the Independent Committee on 
this issue shall be binding on the Board of Directors of the General Partner and will require the Board of 
Directors of the General Partner to pursue such action within ninety (90) days. 
14.14. Equal Merger Consideration Provision 
The Principals (through KUE LLC) and the Investors will receive the same consideration per Common LP 
Unit and/or Class A/Class B Shares in connection with a sale, merger, recapitalization, share repurchase, 
dividend, or any other transaction where all holders of Common LP Units or shares in the General Partner 
receive consideration with respect to their Common LP Units or shares, other than with respect to 
corporate restructuring transactions, such as a holding company merger, conversion of KUE from an 
exempted limited partnership to a corporation or other entity, change of domicile, or any other transaction 
that the Independent Committee determines is a "corporate restructuring." In any such corporate 
restructuring transaction, the Principals (through KUE LLC) may receive securities with high-voting rights 
and the Investors may receive securities with limited or no voting rights so long as the consideration 
received by the Principals (through KUE LLC) and the other Partners per Common LP Unit have 
substantially equivalent economic provisions, it being understood that securities with high-voting rights 
shall not be deemed to have a higher economic value than securities with limited or no voting rights solely 
by reason of the disparity in voting rights. 
14.15. Related Party Transactions 
Related party transactions include transactions between (1) any of the Principals or any affiliates or any 
entity controlled by any of the Principals, and (2) KUE or any direct or indirect subsidiary or joint venture 
of KUE involving more than $1 million (including, for the avoidance of doubt, any merger, acquisition, 
asset purchase or similar transaction between KUE, its subsidiaries or joint ventures, on the one hand, 
and any person of which fifteen percent (15%) or more of the voting stock (or similar voting interests) is 
owned by KUE LLC or its affiliates, on the other hand). Related party transactions do not include (a) any 
transaction solely between or among KUE and any of its direct or indirect subsidiaries or joint ventures in 
which the Principals do not have any direct or indirect ownership interest (other than as a result of their 
ownership in the General Partner and KUE), (b) reasonable and customary director, advisory board 
member, or consultant compensation and benefits (including, without limitation, retirement, health, stock 
option and other benefit plans) as approved by the Independent Committee, provided that any such 
compensation, benefits and arrangements to the Principals that do not exceed $1 million in the aggregate 
annually shall not be subject to such approval and customary indemnification arrangements, (c) 
transactions and arrangements pursuant to or contemplated by express terms of the Limited Partnership 
Agreement of KUE, including the "Investment in Subsidiaries" and "Co-Invest Right' described below, and 
any payments pursuant thereto, (d) agreements, transactions and arrangements described in "Related 
Party Transactions" in this Private Placement Memorandum (including any indemnification arrangements, 
the Fixed Overhead Payment described above and other arrangements and transactions described 
therein) and any amendment thereto (so long as such amendment is not disadvantageous to the 
Investors as a whole in any material respect) or any transaction contemplated thereby and any payments 
pursuant thereto, and (e) admissions of any affiliate of the Principals to KUE as a Limited Partner on 
terms substantially equivalent to concurrent admissions of persons that are not affiliates of the Principals. 
If the size of the related party transaction is greater than $1 million and equal to or less than $50 million, 
then either (a) the Independent Committee must approve the transaction or (b) the transaction must be 
approved by the holders of a majority of the Common LP Units unaffiliated with the Principals. 
If the size of the related party transaction is greater than $50 million, then the transaction must be 
approved by both (a) the Independent Committee and (b) the holders of a majority of the Common LP 
Units unaffiliated with the Principals. 
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14.16. Investment in Subsidiaries and Joint Ventures 
The Principals will agree (on behalf of themselves and their affiliates) that KUE will be their exclusive 
vehicle for equity investment opportunities in and acquisitions of for-profit companies engaged primarily in 
the business of pre-K through 12th grade education of children (other than companies in which the 
Principals or their affiliates directly or indirectly owns fifteen percent (15%) or more of the voting stock (or 
similar voting interests) as of the date of the first closing of the offering, which are LeapFrog Enterprises, 
Inc. and Nobel Learning Communities, Inc.). The Principals will not acquire or make an equity investment 
in such companies unless such acquisition or investment opportunity has been first presented to the 
Independent Committee and subsequently declined by the Independent Committee or initially pursued but 
later abandoned by KUE. For purposes of the foregoing limitation on investment, an equity investment 
shall not include equity securities that are (a) issued in respect of debt securities in connection with a 
restructuring, reorganization, sale or other similar transaction in respect of a company; (b) issued in 
connection with an exchange offer for debt securities; or (c) indirectly owned through a fund or other 
investment vehicle managed by a person other than any Principal or affiliate of a Principal. The Principals 
may co-invest with KUE in such companies, subject to the approval of the Independent Committee and 
the co-investment rights of Investors in the Limited Partnership Agreement. 
Not in limitation of any commitments or restrictions the Principals may have entered into, prior to an Initial 
Listing, KUE may not permit any of its subsidiaries or controlled joint ventures (which shall not include, for 
the avoidance of doubt, certain exempt companies contemplated by the above paragraph) to issue or 
grant any equity interests in such subsidiaries or controlled joint ventures to any of the Principals or any of 
their affiliates (other than KUE, its subsidiaries and controlled joint ventures) unless (i) the Independent 
Committee has approved and the Investors who are accredited investors (as such term is defined in 
Regulation D) or otherwise legally eligible to participate are offered the opportunity to participate on the 
same terms as the Principals and their affiliates and in proportion to their economic ownership of KUE or 
(ii) such subsidiary or joint venture of KUE has completed an initial listing on a recognized international 
securities exchange. The foregoing restrictions will not apply to the Principals and/or their affiliates: (a) 
exercising co-investment, purchase or other similar rights in respect of securities of K12 Inc. (including 
warrants and options) held by them on the first closing of this offering and in respect of securities of K12 
Inc. acquired pursuant to co-investment, purchase or other similar rights exercised in accordance with this 
clause (a); (b) receiving securities of K12 Inc. (including warrants and options) as compensation for 
services in their capacity as directors (or advisory board members) of K12 Inc.; or (c) exercising or 
converting any warrants or options (or other securities) held as of the first closing of this offering or 
acquired pursuant to clause (a) or (b). 
The General Partner may offer co-investment opportunities to any person (except for the Principals and 
their affiliates other than KUE's subsidiaries and joint ventures) to invest with KUE or to invest in a 
subsidiary or joint venture of KUE. 
14.17. Transferability 
The Common LP Units and the Class A Shares comprising the Units owned by the Investors will not be 
separately transferable, and the Units are to be transferred as a whole unless otherwise approved by the 
Board of Directors of the General Partner and the Independent Committee. 
Units held by an Investor may not be sold, transferred or assigned without the prior written consent of the 
General Partner, not to be unreasonably withheld. During the first two years after the applicable closing 
of the offering, the General Partner intends to approve transfers of Units to an affiliate of the Investor in 
compliance with applicable law. After such time, the General Partner intends to approve transfers of the 
Units to an affiliate of the Investor or to another Investor (and affiliates thereof), in each case in 
compliance with applicable law. The General Partner also intends to approve transfers pursuant to the 
Tag-Along Right and Drag-Along Right provisions described below. 
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Although the Limited Partnership Agreement of KUE and the organizational documents of the General 
Partner permit the foregoing transfers and the General Partner has agreed with certain investors to 
approve such transfers, applicable Caymans Island law gives the General Partner full discretion to 
approve or disapprove transfers of Units in KUE. Nevertheless, if the General Partner does not approve a 
permitted transfer, the parties seeking to effect such transfer may have a claim against the General 
Partner and KUE. 
14.18. Co-Invest Right 
Prior to the Initial Listing, if KUE proposes to issue for cash any Units or securities convertible into Units, 
then KUE is required to offer to each Investor that is an accredited investor (as such term is defined in 
Regulation D) or is otherwise legally eligible to participate in the offering the right to purchase a pro rata 
portion of such securities. This purchase right does not apply to (i) the first 1.5 million Units (including 
such number of Units issued at the first closing of this offering) issued by KUE to Investors through March 
31, 2007, (ii) any public offering of Units or other securities by KUE; (iii) any issuance of Units in 
connection with a merger, consolidation, transfer of assets or other business combination involving KUE 
(or its subsidiaries or joint ventures); (iv) any issuance of Units pursuant to any unit option plan, restricted 
unit plan or other benefit plan, the terms of which are approved by the General Partner, provided that the 
aggregate amount of all Units issued pursuant to this clause (iv) (which does not include any Profits 
Participation LP Units) shall not exceed 10% of all Units outstanding on a fully diluted basis on the date of 
such issuance without the approval of the Independent Committee and shall in no event exceed 20% of 
all Units outstanding on a fully diluted basis on the date of such issuance; (v) any issuance of Units in 
connection with any loan transaction and/or equipment lease, the terms of which are approved by the 
General Partner; (vi) any issuance of Units pursuant to any transactions, the terms of which are approved 
by the General Partner primarily for the purpose of (a) joint ventures or strategic alliances, (b) 
development, production or distribution of the products or services of KUE, its subsidiaries or joint 
ventures, (c) purchase or licensing of technology, or (d) any other transactions that are primarily for 
purposes other than raising capital, or (vii) any issuance of Units upon conversion or exercise of any Units 
issued in compliance with this co-invest right provision; or (viii) any issuance of Units in connection with 
Unit splits or Unit dividends or reclassifications. 
Prior to the Initial Listing, Investors have substantially equivalent rights with respect to issuances of 
securities by the General Partner (with the additional exemption on the issuance of up to 10,000 
additional Class B Shares to the Principals or any of their Affiliates). 
14.19. Tag-Along Right 
A "Tag-Along Transfer" means a sale or other transfer for economic value of the Common LP Units held 
by KUE LLC and its affiliates (and, unless otherwise approved by the Board of Directors and the 
Independent Committee of the General Partner, a corresponding percentage of Class A Shares held by 
KUE LLC) to a Person that is not KUE LLC or an affiliate ("KUE LLC Entity"). 
Unless an Initial Listing occurred, a Tag-Along Transfer may not be consummated unless the proposed 
purchaser offers to each Investor the opportunity to include a pro rata portion of such Investor's Units in 
the Tag-Along Transfer (at the same consideration per Unit received by the KUE LLC Entity). If the total 
number of Units and corresponding Class A Shares proposed to be sold to the proposed purchaser 
exceeds the number of Units and corresponding Class A Shares which the proposed purchaser is willing 
to purchase, the number of Units and corresponding Class A Shares to be sold will be reduced pro rata 
based on the total number of Units held by the transferor(s) initiating the Tag-Along Transfer and each 
participating Investor. 
Following the Initial Listing, the tag-along right will continue for certain Investors with respect to transfers 
for value of the Units (or units of the listed entity as the case may be) by the Principals or their affiliates to 
non-affiliates (excluding transfers on a recognized international securities exchange) above the following 
126 
thresholds in one or more transactions: (i) 15% of the Principals' original KUE holdings to any single 
buyer (or affiliates of that buyer) or (ii) 33% of the Principals' original KUE holdings in the aggregate. 
14.20. Drag-Along Right 
A "Drag-Along Transfer' means a sale or other transfer for economic value of a majority of the Common 
LP Units held by KUE LLC or its affiliates (and, unless otherwise approved by the Board of Directors and 
the Independent Committee of the General Partner, a corresponding percentage of Class A Shares held 
by KUE LLC). Prior to the Initial Listing, in the event of a Drag-Along Transfer of Common LP Units and 
corresponding Class A Shares to a proposed purchaser that is not a KUE LLC Entity (a "Proposed Drag-
Along Transfer"), KUE LLC may require Investors to sell a pro rata portion (based on the percentage of 
Units held by KUE LLC being sold in the Proposed Drag-Along Transfer) of their Units and Class A 
Shares in the Proposed Drag-Along Transfer to the proposed purchaser on the same terms and 
conditions as KUE LLC in the Proposed Drag-Along Transfer. 
14.21. Additional Listing of Investors' Units 
Beginning any time after six months after the Initial Listing, one or more holders holding an aggregate of 
$100 million of more of the Units (calculated based on the issue price) may request KUE and the General 
Partner to take such action as may be necessary (including regulatory and legal actions) for their Units to 
be freely tradable and not subject to volume restrictions on the international securities exchange on which 
the Initial Listing occurred; provided that no more than one such action may be required in any 12 month 
period and customary cut-back and other provisions will apply in any such listing or underwritten 
transaction, as the case may be. KUE will use its commercially reasonable efforts to cause such action to 
cover such holders and the securities of any other holders legally eligible to participate in such action. 
14.22. Subsequent Capital Raising Activities 
Subsequent to the completion of this offering, KUE may raise additional capital through the sale of equity 
or debt securities. KUE will not have any preferred limited partner units outstanding upon completion of 
this offering but KUE may issue limited partner units with preferences over the Common LP Units in the 
future and may amend the Limited Partnership Agreement accordingly. 
14.23. Periodic Reporting; Books and Records 
As soon as practicable after the end of each fiscal year but in no event more than 180 days thereafter, 
each Partner will be sent audited financial statements of KUE for the prior year. These financial 
statements will include: (i) profit and loss statements and (ii) a balance sheet showing KUE's financial 
position as of the end of that fiscal year. KUE will also provide to each Partner on a semi-annual basis a 
report concerning KUE's operations. As soon as practicable after the end of each fiscal year, each 
Partner will be furnished with all information necessary for the preparation of each Partner's U.S. Federal 
income tax return and a copy of KUE's federal, state, and local tax or information returns for the year. 
KUE will maintain at its principal place of business full and complete books and records for KUE including 
the following: (1) a current list of the full name and last known business or residence address of each 
Partner set forth in alphabetical order, together with the capital contribution and share of income and 
losses of each Partner; (2) a copy of the Statement filed under to Section 9 of the ELP Law and all 
amendments thereto; (3) copies of KUE's federal, state, and local income tax returns and reports, if any, 
for the six most recent taxable years, to the extent that such exist; (4) copies of the Limited Partnership 
Agreement and all amendments thereto; and (5) any other information required to be maintained by the 
ELP Law. Upon the request of a Partner, the General Partner will promptly deliver to the requesting 
Partner, at the expense of KUE, a copy of the information listed in the foregoing sentence. 
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The General Partner will provide such periodic reports if engaged in any business other than acting as 
General Partner of KUE or if it owns any material assets other than an interest in KUE. 
14.24. Indemnification 
KUE will indemnify, to the fullest extent permitted by applicable law, the General Partner, and its 
members, officers, directors, and employees, and at the General Partner's discretion, any other person 
providing services to KUE, its subsidiaries or joint ventures, (Indemnified Persons") from and against loss 
because of any action performed by them on behalf of KUE or of the failure to take any action on behalf of 
KUE, unless such loss resulted from the Indemnified Person acting in bad faith or the willful misconduct, 
fraud or gross negligence of such Indemnified Person, or a material breach of the Limited Partnership 
Agreement by such Indemnified Person. Indemnified persons may receive advances or be reimbursed 
for their expenses. 
14.25. Amendment of the Limited Partnership Agreement 
Generally, the Limited Partnership Agreement may be amended with the consent of the General Partner. 
Subject to the exceptions specified in the Limited Partnership Agreement, amendments adversely 
affecting the Common LP Units may not be effected without a majority of the votes represented by Units 
held by Investors. 
Notwithstanding the foregoing, the General Partner, acting reasonably and in good faith, may amend the 
Limited Partnership Agreement without the consent of any Limited Partner (a) to correct any typographical 
or similar ministerial errors; (b) to delete or add any provision required to be so deleted or added by 
applicable law or any government official having jurisdiction over KUE; (c) to cure any mistake or 
ambiguity, to correct or supplement any provision herein which may be inconsistent with any other 
provision herein; (d) to take such actions as may be necessary Cif any) to ensure that KUE will be treated 
as a partnership for U.S. federal income tax purposes; (e) to reflect the admission of any additional 
Limited Partner and otherwise to reflect such admission or an additional investment by a Limited Partner 
on the books and records of KUE pursuant to the General Partner's power of attorney; (f) to take such 
actions as may be necessary (if any) to ensure that neither of KUE or the General Partner (or any 
subsidiary of the foregoing) will be subject to regulation under ERISA or the Investment Company Act; (g) 
to take such actions as may be necessary (if any) to ensure that the General Partner (or any Subsidiary) 
will not be subject to the Investment Advisers Act; (h) to reflect any increase in the number of Profits 
Participation LP Units approved by the Independent Committee and related changes in allocation and 
distribution provision; (i) to make changes negotiated with Limited Partners admitted in any subsequent 
closing of the offering, so long as such changes do not, in the good faith determination of the General 
Partner and with the approval of the Independent Committee, adversely affect the rights, obligations and 
economic interests of the existing Limited Partners; and a) to the extent necessary to give effect to 
partnership interests issued to additional Limited Partners after the Offering Period. The General Partner 
shall provide prompt written notice of any such amendments to the Limited Partners. 
14.26. Confidentiality 
Each Investor is subject to an obligation to keep KUE related information confidential, subject to limited 
exceptions. KUE or the General Partner will be entitled to enforce such obligations and take such actions 
to maintain the confidentiality of KUE related information, including without limitation withholding any 
periodic or financial reports (with the approval of the Independent Committee) from an Investor that has 
violated its confidentiality obligations. 
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14.27. Jurisdiction 
Any actions or proceedings under the Limited Partnership Agreement or with respect to the General 
Partners or this offering and the related agreements are subject to binding arbitration in London, United 
Kingdom. 
14.28. Limitation of Participation 
Under circumstances where the continuing participation in KUE by an Investor would have a material 
adverse effect on KUE or a subsidiary, the General Partner may cause an Investor's interest in KUE to be 
redeemed or transferred. 
14.29. United States Trade or Business 
The General Partner will use its reasonable best efforts not to cause or allow KUE to engage in or invest 
(other than through an entity that is not a pass-through entity) in a pass-through entity (for U.S. federal 
income tax purposes) that engages in: (i) any commercial activities within the meaning of Section 
892(a)(2) of the Code, or (fi) any activity which constitutes the conduct of a trade or business in the United 
States and generates income which constitutes "effectively connected income" in the hands of a non-U.S. 
Limited Partner. KUE will not take a position in any United States federal or state income tax return that 
KUE is engaged in a trade or business in the United States that causes the non-U.S. Limited Partners to 
have income which constitutes "effectively connected income" in the hands of non-U.S. Limited Partners. 
In addition, the General Partner will use its reasonable best efforts to cause KUE not to invest in a U.S. 
real property interest described in Section 897(c)(1 )(A)(i) or the Code. 
The General Partner may, in its discretion, form a separate investment entity to pursue any investment 
opportunity that is unavailable to KUE by reason of the foregoing, and may offer co-investment 
opportunities to the Partners eligible to participate in such opportunities in proportion to their Units or on 
such other reasonable basis as the General Partner may determine. 
EACH PROSPECTIVE NON-U.S. LIMITED PARTNER SHOULD REVIEW THE SECTION ENTITLED 
"CERTAIN INCOME TAX CONSEQUENCES" AND CONSULT ITS TAX AND OTHER ADVISORS IN 
DETERMINING THE POSSIBLE TAX, EXCHANGE CONTROL OR OTHER CONSEQUENCES TO IT 
UNDER THE LAWS OF THE U.S. AND OTHER JURISDICTIONS OF WHICH IT IS A CITIZEN, 
RESIDENT OR DOMICILIARY, IN WHICH IT CONDUCTS BUSINESS OR IN WHICH IT OTHERWISE 
MAY BE SUBJECT TO TAX, OF THE PURCHASE AND OWNERSHIP OF UNITS. 
14.30. Term of KUE; Term of the General Partner 
The term of KUE will be indefinite, unless terminated earlier as provided for below. The term of the 
General Partner will be indefinite, unless terminated earlier in accordance with the Organizational 
Documents. 
The following events will cause the dissolution of KUE: 
• The withdrawal, dissolution, bankruptcy, or resignation of a General Partner, unless the business 
of KUE is continued by the election of a new General Partner by the vote of a majority in number 
of the Units held by Common Limited Partners within 90 days of the happening of such event; 
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• The agreement of the General Partner and the holders of a majority of the Units held by the 
Limited Partners holding Common LP Units; 
• The sale or distribution of all or substantially all of KUE's assets; or 
• As otherwise provided by law. 
If KUE is dissolved and not reconstituted and continued, the General Partner is then required to wind up 
the affairs of KUE and to liquidate and sell its assets in an orderly manner. Upon the winding up and 
termination of the business and affairs of KUE, its assets (other than cash) will be sold, its liabilities and 
obligations to creditors and all expenses incurred in its liquidation will be paid. The net proceeds from 
such sales (after deducting all selling costs and expenses in connection therewith) and any released 
reserves will then be distributed to the Partners in accordance with "— Distributions" by the later of the end 
of the taxable year of KUE which includes the liquidation date or the 90th day following the liquidation 
date. KUE property will not be distributed in kind to the Partners upon the dissolution and termination of 
KUE unless otherwise agreed by the General Partner. 
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15. MANAGEMENT INCENTIVE PLANS AND EMPLOYMENT 
AGREEMENTS 
Certain key terms of the following incentive plans and employment agreements of the Company, which 
are subject to and qualified in their entirety by reference to any underlying documentation as applicable, 
are outlined below. Copies of such documentation have been provided or are available upon request and 
the summaries below are qualified in their entirety by reference to such documentation. 
15.1. Long Term Incentive Plan and Agreements of Knowledge Learning Corporation 
Effective as of December 6, 2005, KLC put in place a long term incentive plan ("LTIP") for officers, 
employees or consultants, providing for incentive compensation payments based upon the achievement 
of certain performance criteria determined by KLC's Compensation Committee. Under the terms of the 
long term incentive award agreements entered into with eligible recipients pursuant to the LTIP, if the 
recipient is terminated by KLC without cause after the first year of any 3-year performance cycle, the first 
of which begins in 2006, or upon death, permanent disability or retirement after the first 6 months of any 
performance cycle, the recipient is eligible to receive a pro rata portion of any incentive award earned. 
The recipient is also eligible to receive a pro rata portion of any incentive award earned in the event of a 
sale of KLC or a termination of the LTIP. 
15.2. Profits Interest Grants 
KUE expects to grant profits interests in KUE to its (or its subsidiary's) present and future officers, 
directors, employees and consultants, aggregating up to 2% of KUE's aggregate profits, subject to 
increases approved by the Independent Committee. Such grants would be dilutive to the holders of Units. 
15.3. Stock Appreciation Rights Plan of Knowledge Schools, Inc. 
KSI established a stock appreciation rights ("SAR") plan for directors, officers, employees or consultants 
of KSI and its subsidiaries on April 25, 2004, pursuant to which a maximum number of 18,410 phantom 
shares (which may be converted to options) may be granted and an equivalent of 4,353.860 phantom 
shares are issued and outstanding. SARs may be granted under the plan until April 24, 2014 and shall 
vest and become exercisable as set forth in the holder's SAR agreement. These phantom shares will 
provide the holders with the appreciation in value of the equivalent of 1.6% of KSI's equity (after payment 
of $7.8 million to KLC's departing chief executive officer in settlement of his SARs, and based on 
273,904.89884 shares as of April 28, 2006). Beginning in 2006, incentive compensation at the KLC level 
to management will be made through the LTIP described above, while directors of KSI may continue to be 
granted SAR. 
15.4. Stock Option Grants by Knowledge Schools, Inc. 
Les Biller and Stephen Goldsmith have been granted options to purchase an aggregate of 3,412.6 shares 
of common stock of KSI. Les Biller is on the Advisory Board of KUE and a director of KSI. Stephen 
Goldsmith is the Senior Vice President of Strategic Planning & Worldwide Government Programs for KUE 
and a director of KS!. KSI may issue similar options from time to time. 
15.5. Employment Agreements 
With one exception, the Company's executives do not have long-term employment agreements. KLC 
entered into an employment agreement with Elanna Yalow as of August 1, 2004 with an employment term 
131 
of three years, unless terminated earlier. She serves as KLC's President and COO with a fixed annual 
base salary of $300,000 plus bonuses, as well as stock appreciation rights. If KLC terminates Ms. 
Yalow's employment at any time, other than for death, disability or cause, KLC is required to pay as 
severance, Ms. Yalow's base compensation for the balance of the severance period. In case of 
termination after expiration of the employment term, KLC is required to pay, in addition to the severance 
pay, unpaid base compensation earned as of the date of termination. 
In connection with employment arrangements for newly hired officers (including Peter Maslen, Derek 
Feng and Kal Raman), the Company is providing equity-based compensation in amounts to be agreed, 
which will be subject to customary terms and conditions. 
15.6. KULG Arrangements 
Certain of the executives providing services to KUE and its subsidiaries are employees and officers of, or 
consultants to, KULG. Stephen Goldsmith, Senior Vice President of KULG, has a three-year employment 
agreement beginning February 1, 2005, terminable at will by KULG or Mr. Goldsmith, subject to 
severance benefits in certain circumstances and death and disability benefits. The agreement provides 
for a $500,000 annual salary and targeted $250,000 discretionary bonus. Nina Rees, Vice President of 
Strategic Initiatives of KULG, has an employment agreement terminable by her or KULG with 90 days' 
notice and providing an annual salary of $180,000 plus a discretionary bonus. Ted Sanders has a 24-
month consulting agreement with KULG beginning March 1, 2005 pursuant to which he receives 
consulting fees at a $25,000 annual rate for the first 12 months and a $35,000 annual rate for the second 
12 months. All of these amounts, together with the compensation of other KULG employees providing 
services to KUE will be paid from the annual overhead expense payment KUE will pay to KULG, as 
described in "Related Party Transactions." 
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16. RELATED PARTY TRANSACTIONS 
Certain key terms of the following related party transactions of the Company, which are subject to and 
qualified in their entirety by reference to their respective underlying documentation as applicable, are 
outlined below. Copies of such documentation have been provided or are available upon request, and 
the summaries below are qualified in their entirety by reference to such documentation. 
16.1. Real Estate Support Management Agreement of Knowledge Learning Corporation 
KLC entered into a Real Estate Support Management Agreement with Greenstreet Real Estate Partners 
(formerly Greenstreet Realty Partners, L.P.), an entity controlled by the Principals, on January 4, 2006, 
pursuant to which KLC obtains certain real property support services from Greenstreet Real Estate 
Partners. The Agreement is non-exclusive and the Company may consider and solicit proposals from 
other entities. Payment obligations are to be provided for in separate agreements, none of which have 
been entered into as of the date of this Memorandum. The initial term of the Agreement expires on 
December 31, 2016 (with automatic one-year extensions unless notice is given to the other party). The 
Agreement can be terminated by either party for convenience on December 31 in any year or for breach 
with prior written notice. 
16.2. Fixed Overhead Payment Agreement 
As reimbursement of expenses incurred by KULG, an affiliate of the Company controlled by the 
Principals, on behalf of KUE and its subsidiaries (including salaries and bonuses of KULG employees 
providing services to KUE and its subsidiaries, fees and expenses relating to financing transactions and 
acquisitions, professional fees and other administrative expenses), KUE has an obligation to pay $20 
million annually to KULG in quarterly installments beginning July 1,2006 pursuant to the Fixed Overhead 
Payment Agreement. Of this amount, $2.5 million will be paid to KUE by KLC pursuant to the existing 
Management Services Agreement described below. 
16.3. Note Payable to KULG by KU Education, Inc. 
On January 6, 2005, KUE Inc. executed a promissory note in favor of KULG, an entity controlled by the 
Principals, in the amount of $200.0 million, the proceeds of which were used in connection with the 
acquisition of KinderCare by KLC. This note has a seven year maturity and accrues interest at the 
"reference rate" set by Bank of America plus 1.25% per annum. The note may be prepaid, in whole or in 
part, without any premium or penalty. KUE Inc. currently owes approximately $183.9 million under the 
note. 
16.4. Asset Management Agreements with Greenstreet Real Estate Partners (formerly 
Greenstreet Realty Partners, L.P.) 
Greenstreet Real Estate Partners (formerly Greenstreet Realty Partners, L.P.), an entity controlled by the 
Principals, entered into asset management agreements dated as of November 9, 2005 with each of KC 
PropCo Holding I LLC ("PropCo Holding"), KC PropCo, LLC ("PropCo") and Mini-Skools Limited ("MSL"), 
each an indirect wholly owned subsidiary of KLC, pursuant to which Greenstreet Real Estate Partners 
provides asset management and consulting services to PropCo Holding, PropCo and MSL with respect to 
the real property each company respectively owns, in return for a total annual fee of $8,250,000 payable 
in 12 equal monthly installments starting December 1, 2005. The initial term expires on December 31, 
2016 (with automatic one-year extensions unless notice is given to the other party), and the Agreement 
can be terminated for breach with prior written notice. 
133 
16.5. Management Services Agreement 
KLC is a party to a management services agreement with Knowledge Universe Limited LLC, one of our 
affiliates controlled by the Principals, pursuant to which Knowledge Universe Limited LLC has agreed to 
provide management, consulting and financial planning services on an ongoing basis to KLC and its 
subsidiaries. In consideration of these services, KLC is obligated to pay Knowledge Universe Limited 
LLC an annual management fee of $2.5 million payable in equal quarterly installments on the first day of 
each calendar quarter in advance, effective January 1, 2005. However, in the event of a payment default 
under KLC's senior credit agreement or the indenture governing the notes, or a bankruptcy, liquidation or 
winding-up of KLC, the payment of all accrued and unpaid management fees is subordinated to the prior 
payment in full of all amounts due and owing under KLC's senior credit facility and the indenture 
governing the Senior Subordinated Notes. 
The management services agreement has a ten-year term which extends automatically on each 
anniversary of the agreement for one additional year unless either party gives prior notice that the term 
will not be extended. In addition, the management services agreement provides for the payment to 
Knowledge Universe Limited LLC of customary fees for services provided in connection with 
extraordinary services and reimbursement of reasonable out-of-pocket expenses, with limited exceptions. 
16.6. KinderCare Acquisition Financing 
Affiliates purchased a majority of the $250.0 million of senior subordinated bridge notes that we issued as 
part of the financing of the KinderCare acquisition, which were repaid with the net proceeds of the Senior 
Subordinated Notes. In connection with the KinderCare merger and related transactions, KLC paid 
affiliates of KULG commitment fees, expense reimbursements and other amounts totaling approximately 
$15.9 million. 
16.7. Maron & Sandler 
The law firm of Maron & Sandler serves as outside general counsel to us and our affiliates. Messrs. 
Maron and Sandler are shareholders of Maron & Sandler. Mr. Sandler is a member of the board of 
directors of KSI and is the General Counsel of KUE. Mr. Maron is a member of the board of directors of 
both KLC and its parent, KS!. In addition, Mr. Maron holds an interest in an entity that holds common 
stock of KSI. These shares of common stock amount to a less than 0.1% economic interest in KSI. 
16.8. RFG Financial Group, Inc. 
RFG Financial Group, Inc., an entity controlled by Ralph Finerman, a member of the boards of directors of 
KLC and Nextera Enterprises, Inc. and an officer or director of other privately-held affiliates of KLC and 
Krest LLC, periodically provides financial consulting services to KULG and its affiliates. In addition, Mr. 
Finerman holds an interest in an entity that holds common stock of KSI. These shares of common stock 
amount to a less than 0.1% economic interest in KSI. 
16.9. Purchase of EdSolutions, Inc. 
In November 2004, one of KSI's affiliates acquired ESI in a cash merger transaction for $5.5 million, of 
which $2.2 million was paid to another of our affiliates in respect of its preferred stock ownership in ESI. 
Following the closing, the buyer contributed the stock of ESI to KSI in exchange for $5.5 million of 
preferred stock of KSI, and KSI contributed ESI to KLC. In connection with the KinderCare acquisition, 
KSI redeemed the preferred stock (including accrued dividends) for $5.6 million. 
134 
16.10. Indebtedness of KUE with affiliates 
The proceeds of the $150 million term loan facility that KUE entered into on March 29, 2006 with an 
affiliate of Credit Suisse, one of the Agents (as described in "Knowledge Universe Education (KUE) — 
Term Loan Facility"), were used to repay existing debt of KUE to entities controlled by Michael Milken. 
16.11. k12 
An affiliate of Michael Milken and Lowell Milken owns the k12 trademark and related domain names, and 
licenses them to k12 for $25,000 annually pursuant to a perpetual license. 
An affiliate of Michael Milken and Lowell Milken owns (i) 3,106,774 shares of common stock of k12, (ii) 
warrants to purchase 53,364 shares of k12 common stock at $1.60 per share and (iii) warrants to 
purchase 1,164,179 shares of k12 Series B Preferred Stock at $1.34 per share. 
16.12. Condors LLC 
Condors LLC, substantially all of which is owned by the Principals, is the lender under the Junior 
Mezzanine Loan entered into in connection with the new CMBS financing. 
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17. ELIGIBLE INVESTORS 
17.1. UNITED STATES SECURITIES ACT OF 1933 
The Units will not be registered under the Securities Act, in reliance upon the exemption from registration 
provided by Section 4(2) of the Securities Act and will not be registered under the securities laws of any 
jurisdiction. 
Accordingly, the Units are initially being offered and sold only to "accredited investors." 
Each investor is required to enter into a Subscription Agreement to purchase the Units. In the 
Subscription Agreement, it will be required to represent, among other customary private placement 
representations, as follows: 
• that it is an "accredited investor" (as such term is defined in Regulation D under the Securities 
Act); 
• that it has carefully read and understood this Memorandum and the organizational documents of 
KUE in their entirety and that it has relied on such documents in making its investment decision; 
• that it has had an opportunity to receive answers from KUE to its questions regarding the Units 
and other matters pertaining to its investment, and it has obtained all additional information it has 
requested from KUE to verify the accuracy of the information furnished to it; 
• that it is capable of evaluating the merits and risks of purchasing the Units and of making an 
informed investment decision with respect thereto; 
• that its financial situation is such that it can afford to bear the economic risk of holding the Units 
as an illiquid investment for an indefinite period of time, and it can afford to suffer the complete 
loss of its investment; 
• that it is acquiring the Units for its own account for investment purposes only and not with a view 
to resale or distribution; and 
• that it understands that it must bear the economic risk of an investment in the Units for an 
indefinite period of time. 
In the Subscription Agreement, each investor will be required to represent whether or not it is a U.S. 
Person or non-U.S. Person (as such terms are defined in Regulation S under the Securities Act). Each 
non-U.S. Person will be required to represent: 
• whether it is purchasing the Units in an offshore transaction within the meaning of Regulation S; 
and 
• that it is eligible to purchase the Units under the laws applicable to it. 
136 
A copy of the form of the Subscription Agreement will be provided. Each investor should carefully read 
the Subscription Agreement in its entirety so as to fully understand the representations and warranties it is 
required to make pursuant to the Subscription Agreement. 
The Units cannot be resold or otherwise transferred unless they are subsequently registered under the 
Securities Act and other applicable securities laws, or exemptions from such registration requirements are 
available. It is not contemplated that registration of the Units under the Securities Act or other securities 
laws will ever be effected. There is no public market for the Units, and none is expected to develop. 
Therefore, an investor that purchases the Units may be required to hold the Units for an indefinite period 
of time. The Units, if certificated, will bear a legend describing such transfer limitations. 
17.2. United States Employment Retirement Income Security Act of 1974 
An investment in the Units and the underlying Common LP Units and Class A Shares by certain U.S. 
employee benefit plans is subject to additional considerations because the investments of such plans are 
subject to the fiduciary responsibility and prohibited transaction provisions of the U.S. Employee 
Retirement Income Security Act of 1974, as amended ("ERISA"), and restrictions imposed by Section 
4975 of the U.S. Internal Revenue Code of 1986, as amended (the "IRC"). For these purposes the term 
"employee benefit plan" includes, but is not limited to, qualified pension, profit-sharing and stock bonus 
plans, Keogh plans, simplified employee pension plans and tax deferred annuities or IRAs established or 
maintained by an employer or employee organization. Among other things, such employee benefit plans 
should give consideration to: 
• whether the investment is prudent under ERISA. 
• whether in making the investment, that plan will satisfy the diversification requirements of ERISA; 
and 
• whether the investment will result in recognition of unrelated business taxable income by the plan 
and, if so, the potential after-tax investment return. 
The person with investment discretion with respect to the assets of an employee benefit plan, often called 
a fiduciary, should also determine whether an investment in the Units and the underlying Common LP 
Units and Class A Shares is authorized by the appropriate governing instrument and is a proper 
investment for the plan. 
Section 406 of ERISA and Section 4975 of the IRC also prohibit employee benefit plans, and also IRAs 
that are not considered part of an employee benefit plan, from engaging in specified transactions 
involving "plan assets" with parties that are "parties in interest" under ERISA or "disqualified persons" 
under the IRC with respect to the plan. 
In addition to considering whether the purchase of Units and the Common LP Units and Class A Shares is 
a prohibited transaction, a fiduciary of an employee benefit plan should consider whether the plan will, by 
making such an investment, be deemed to own an undivided interest in the assets of KUE or the General 
Partner, with the result that KUE or the General Partner would be subject to the regulatory restrictions of 
ERISA, including its prohibited transaction rules, as well as the prohibited transaction rules of the IRC. 
The U.S. Department of Labor regulations under ERISA provide guidance with respect to whether the 
assets of an entity in which employee benefit plans acquire equity interests would be deemed "plan 
assets" under some circumstances. Under these regulations, an entity's assets would not be considered 
to be "plan assets" if, among other things: 
(a) the equity interests acquired by employee benefit plans are publicly offered securities, 
i.e., the equity interests are widely held by 100 or more investors independent of the 
137 
issuer and each other, freely transferable and registered under some provisions of the 
federal securities laws; 
(b) the entity is an "operating company," meaning it is primarily engaged in the production or 
sale of a product or service other than the investment of capital either directly or through 
a majority-owned subsidiary or subsidiaries; or 
(c) the entity is a "venture capital operating company," meaning that at least 50% of its 
assets, determined on certain testing dates, are invested in operating companies with 
respect to which the entity has contractual management rights which the entity actually 
exercises in the ordinary course of its business; or 
(d) there is no significant investment by benefit plan investors, which is defined to mean that 
less than 25% of the value of each class of equity interest is held by the employee benefit 
plans referred to above, IRAs and other employee benefit plans not subject to ERISA, 
including U.S. and non-U.S. governmental plans. 
The General Partner intends to operate the General Partner and KUE in such fashion that, for purposes 
of the plan asset regulations, the assets of KUE and the General Partner will not be considered assets of 
any plan investing in KUE and the General Partner. The Limited Partnership Agreement (and the 
organizational documents of the General Partner) will confer on the General Partner (and the Principals) 
the authority to take any action necessary or desirable in order to prevent Company assets and General 
Partner assets from being considered to be plan assets, including the authority to restructure any aspects 
of KUE and the authority to cause the redemption or sale of Units held by some or all plan investors. 
KUE is considering whether and to what extent to permit plan investors to invest in the Units. Due to the 
complexity of the applicable rules and the penalties imposed upon persons involved in prohibited 
transactions, it is particularly important that potential purchasers that are plans consult with their counsel 
regarding the consequences under ERISA of their acquisition and ownership of the Units. Employee 
benefit plans that are governmental plans (as defined in Section 3(32) of ERISA) and certain church plans 
(as defined in Section 3(33) of ERISA) are not subject to ERISA requirements but may be subject to 
analogous provisions under applicable state, local or non-U.S. law. 
17.3. Anti-Money Laundering — Cayman Islands 
In order to comply with regulations aimed at the prevention of money laundering in any applicable 
jurisdictions, the General Partner and KUE are required to adopt and maintain anti-money laundering 
procedures, and may require prospective investors to provide evidence to verify their identity. 
Accordingly, the General Partner (and its directors) reserve the right to request such information as they 
consider necessary to verify the identity of a prospective investor. Where permitted, and subject to 
certain conditions, the General Partner and KUE may also delegate the maintenance of its anti-money 
laundering procedures (including the acquisition of due diligence information) to a suitable person. The 
General Partner (and its directors) may refuse to accept any subscription application if a prospective 
investor delays in producing or fails to produce any information required by the General Partner (and its 
directors) for the purpose of verification and, in that event, any funds received will be returned without 
interest to the account from which the moneys were originally debited. 
The General Partner and KUE also reserve the right to refuse to make any redemption payment to a 
shareholder of the General Partner or a partner of KUE, as applicable, if they suspect or are advised that 
the payment of redemption proceeds to such person might result in a breach of applicable anti-money 
laundering or other laws or regulations by any person in any relevant jurisdiction, or if such refusal is 
considered necessary or appropriate to ensure the compliance by the General Partner and KUE with any 
such laws or regulations in any applicable jurisdiction. 
138 
If any person resident in the Cayman Islands knows or suspects that another person is engaged in money 
laundering or is involved with terrorism or terrorist property and the information for that knowledge or 
suspicion came to their attention in the course of their business the person will be required to report such 
belief or suspicion to either the Financial Reporting Authority of the Cayman Islands, pursuant to the 
Proceeds of Criminal Conduct Law (2005 Revision) if the disclosure relates to money laundering or to a 
police officer of the rank of constable or higher if the disclosure relates to involvement with terrorism or 
terrorist property, pursuant to the Terrorism Law. Such a report shall not be treated as a breach of 
confidence or of any restriction upon the disclosure of information imposed by any enactment or 
otherwise. 
17.4. Foreign Corrupt Practices Act 
The General Partner, KUE, its subsidiaries and joint ventures intend to comply with applicable provisions 
of the Foreign Corrupt Practices Act ("FCPA") in connection with their business activities worldwide. The 
FCPA prohibits corrupt payments to foreign officials, (including any officer or employee of a foreign 
government, a public international organization, or any department or agency thereof, or any person 
acting in an official capacity, regardless of rank or position), parties or candidates to obtain or retain 
business or securing any improper advantage and the FCPA prohibits paying, offering, promising to pay, 
directly or indirectly, money or anything of value in connection therewith. 
Investors will be required to provide information on whether they are foreign officials, and confirm that 
they have not paid, offered to pay or promised to pay and do not intend to pay, offer to pay or promise to 
pay, directly or indirectly, money or anything of value to any foreign official, party or candidate to obtain or 
retain business (whether with a government or agency or instrumentality thereof or otherwise) for or on 
behalf of KUE, its subsidiaries or joint ventures or to secure an improper advantage for KUE or its 
subsidiaries or joint ventures in any country. 
139 
18. CERTAIN INCOME TAX CONSEQUENCES 
The following summary of the taxation of KUE and the taxation of the Partners of KUE is based 
upon current law and does not purport to be a comprehensive discussion of all the tax 
considerations that may be relevant to a decision to purchase Units. Legislative, judicial or 
administrative changes may be forthcoming that could affect this summary. 
TO ENSURE COMPLIANCE WITH U.S. TREASURY DEPARTMENT REGULATIONS, WE 
ADVISE YOU THAT: (i) ANY DISCUSSION OF U.S. FEDERAL TAX ISSUES CONTAINED 
HEREIN IS NOT INTENDED OR WRITTEN TO BE RELIED UPON, AND CANNOT BE 
RELIED UPON, BY INVESTORS FOR THE PURPOSE OF AVOIDING TAX-RELATED 
PENALTIES UNDER THE U.S. INTERNAL REVENUE CODE OR APPLICABLE STATE OR 
LOCAL TAX LAW PROVISIONS; (ii) SUCH DISCUSSION IS BEING USED IN CONNECTION 
WITH THE PROMOTION OR MARKETING (WITHIN THE MEANING OF TREASURY 
REGULATIONS) BY THE COMPANY OF THE TRANSACTIONS OR MATTERS 
ADDRESSED HEREIN; (iii) INVESTORS SHOULD SEEK ADVICE BASED ON THEIR 
PARTICULAR CIRCUMSTANCES FROM AN INDEPENDENT TAX ADVISOR. 
PROSPECTIVE INVESTORS (INCLUDING ALL NON-U.S. PERSONS AS DEFINED BELOW) 
SHOULD CONSULT THEIR TAX ADVISORS CONCERNING THE U.S. FEDERAL, STATE, 
LOCAL, AND FOREIGN TAX CONSEQUENCES OF OWNING COMMON LP UNITS UNDER 
THE LAWS OF THEIR COUNTRIES OF CITIZENSHIP, RESIDENCE, ORDINARY 
RESIDENCE, OR DOMICILE. 
18.1. Cayman Taxation 
There is, at present, no direct taxation in the Cayman Islands. The Government of the Cayman Islands, 
will not, under existing legislation, impose any income, corporate or capital gains tax, estate duty, 
inheritance tax, gift tax, or withholding tax upon KUE, its partners, the General Partner, or its 
shareholders. Similarly interest, dividends and gains payable to KUE and all distributions by KUE to its 
partners will be received free of any Cayman Islands income or withholding taxes. 
KUE has registered as an exempted limited partnership under Cayman Islands law and KUE has 
received an undertaking from the Governor-in-Cabinet of the Cayman Islands to the effect that, for a 
period of 50 years from the date of the undertaking, no law which is enacted in the Cayman Islands 
imposing any tax to be levied on profits or income or gains or appreciations shall apply to KUE or to any 
partner of KUE in respect of the operations or assets of KUE or the interest of a partner in KUE; and may 
further provide that any such taxes or any tax in the nature of estate duty or inheritance tax shall not be 
payable in respect of the obligations of KUE or the interests of the partners in KUE. 
The General Partner of KUE has registered as an exempted company under Cayman Islands law and the 
General Partner has received an undertaking from the Governor-in-Cabinet of the Cayman Islands that, in 
accordance with section 6 of the Tax Concessions Law (1999 Revision) of the Cayman Islands, for a 
period of 20 years from the date of the undertaking, no law which is enacted in the Cayman Islands 
imposing any tax to be levied on profits, income, gains or appreciations or which is in the nature of estate 
duty or inheritance tax shall be payable (i) on the shares of the General Partner or (fi) by way of the 
withholding in whole or in part of a payment of dividend or other distribution of income or capital by the 
General Partner to its shareholders. 
The Cayman Islands does not have a double tax treaty with the United States or any other country. 
140 
18.2. United States Federal Income Taxation 
The following summary sets forth the material U.S. federal income tax considerations related to the 
purchase, ownership, and disposition of Common LP Units. Unless otherwise stated, this summary deals 
only with partners that are U.S. Persons (as defined below) who purchase their Common LP Units in this 
offering and who hold their Common LP Units as capital assets within the meaning of Section 1221 of the 
Code. The following discussion is only a discussion of the material U.S. federal income tax matters as 
described herein and does not purport to address all of the U.S. federal income tax consequences that 
may be relevant to a particular Limited Partner of KUE ("Limited Partner") in light of such Limited Partner's 
specific circumstances. In addition, except as expressly stated, the following summary does not address 
the U.S. federal income tax consequences that may be relevant to special classes of Limited Partners 
who may be subject to special rules or treatment under the Code, such as financial institutions, insurance 
companies, regulated investment companies, real estate investment trusts, partnerships, or other pass-
through entities, dealers or traders in securities, tax-exempt organizations, expatriates, any person who 
owns or is deemed to own, for U.S. federal income tax purpose, 10% or more of the total combined voting 
power of all classes of voting stock of the corporate subsidiaries of KUE, persons that have a "functional 
currency" other than the United States dollar, and any individual who is a non-U.S. Person (as defined 
below) and who is present in the U.S. for 183 days or more in a taxable year. This discussion does not 
include any description of the tax laws of any state or local governments within the U.S. No ruling has 
been or will be sought from the IRS regarding any matter discussed herein. Counsel to KUE has not 
rendered any legal opinion regarding any tax consequences relating to KUE or an investment in KUE. No 
assurance can be given that the IRS would not assert, or that a court would not sustain, a position 
contrary to any of the positions taken by KUE as set forth below. 
For purposes of this discussion, the term "U.S. Person" means (1) a citizen or resident of the U.S., (2) a 
corporation created or organized in or under the laws of any State of the U.S. (including the District of 
Columbia), (3) an estate the income of which is subject to U.S. federal income taxation regardless of its 
source, (4) a trust if either (a) a court within the U.S. is able to exercise primary supervision over the 
administration of such trust and one or more U.S. Persons have the authority to control all substantial 
decisions of such trust or (b) the trust has a valid election in effect to be treated as a U.S. Person for U.S. 
federal income tax purposes, or (5) any other person or entity that is treated for U.S. federal income tax 
purposes as if it were one of the foregoing. The term "non-U.S. Person" means any person other than a 
U.S. Person. 
18.2.1 United States Federal Income Taxation of KUE and its Subsidiaries 
Partnership Status of KUE. KUE believes that it should be classified as a partnership for United States 
federal income tax purposes. Accordingly, KUE is not a taxable entity and incurs no U.S. federal income 
tax liability. Instead, each Partner will be allocated its share of KUE's income or loss, as the case may be, 
for United States federal income tax purposes as set forth in the Limited Partnership Agreement. In 
addition, each U.S. Partner's share of income or loss from KUE generally will be required to be includable 
in income for state and local tax purposes in the jurisdiction in which the investor is a resident and in the 
jurisdictions in which KUE operates. Each U.S. Partner will be responsible for paying the income tax on 
that portion of KUE's income allocated to such investor. No assurances can be given that any cash 
distribution will be made from KUE to the partners to pay such income tax liabilities. 
Under the Code, certain non-U.S corporations may be treated as U.S. corporations for U.S. federal 
income tax purposes, thereby subjecting such non-U.S. corporations to U.S. federal income tax on their 
income. Recently enacted U.S. tax legislation includes one such provision. Under this legislation, 
referred to as the anti-inversion legislation, non-U.S. corporations that acquire interests in a U.S. 
corporation or partnership and meet certain ownership, operational and other tests may be treated as U.S. 
corporations for federal income tax purposes. The legislation grants broad regulatory authority to the U.S. 
Secretary of Treasury to provide such regulations as may be appropriate to determine whether a non-U.S. 
corporation is treated as a U.S. corporation or as are necessary to carry out the intent of the provision, 
including adjusting its application as necessary to prevent the avoidance of its purpose. Recently issued 
141 
Treasury regulations provide that the anti-inversion legislation is applicable to a foreign partnership that is 
or becomes a "publicly traded partnership" within two years of the acquisition by it of a U.S. corporation. 
A "publicly traded partnership" is any partnership (i) interests in which are traded on an established 
securities market, or (ii) interests in which are readily tradable on a secondary market (or the substantial 
equivalent thereof). KUE believes that it is not currently a publicly traded partnership and does not intend 
to become a publicly traded partnership within two years of this offering or the acquisition of KLC and k12. 
As a result, KUE does not believe the anti-inversion legislation or any regulations promulgated within the 
scope of the legislation's regulatory authority should apply to KUE although no assurance can be given in 
this regard or with respect to any new acquisitions of or investment in U.S. corporations. In addition, KUE 
does not believe that any other Code provision subjecting non-U.S. corporations to U.S. federal income 
tax should apply to KUE or its subsidiaries, although no assurance can be given in this regards. The 
promulgation of contrary regulations or a successful challenge of either of these positions by the Internal 
Revenue Service could materially reduce a holder's after-tax return and, thus, could result in a substantial 
reduction of the value of the Units. 
The remainder of this section assumes that KUE will be treated as a partnership for U.S. federal income 
tax purposes. 
18.2.2 United States Federal Income Taxation of Partners 
U.S. Persons 
Allocation of Purchase Price. You will be treated as purchasing a Unit consisting of two components, one 
Common LP Unit and one GP Share. Your purchase price for each Unit will be allocated between one 
Common LP Unit and one GP Share in proportion to their relative fair market values at the time of your 
purchase, and this allocation will establish your initial tax basis in both your ownership interest in the 
Common LP Unit and your GP Share. We will treat the fair market value of each Common LP Share at 
$999 and the fair market value of each GP Share as $1. 
Flow-Through of Taxable Income. KUE will not pay any U.S. federal income tax. Instead, each Partner 
will be required to report on its income tax return its allocable share (as determined pursuant to the 
Limited Partnership Agreement) of KUE's income, gains, losses, and deductions without regard to 
whether corresponding cash distributions are made. The Limited Partnership Agreement authorizes the 
General Partner to override the allocation provisions of the Limited Partnership Agreement and allocate 
income, gains, losses and deductions of KUE to the Partners in a manner that achieves the desired 
economic arrangement of KUE, which is to return each Partner's capital contribution and then for all 
Partners (including the holder of Profits Participation LP Units) to share in the profits of KUE in proportion 
to the number of Units held by them. 
The IRS may challenge the manner in which income, gains, losses and deductions are allocated to 
holders of Common LP Units, the General Partner and holders of the Profits Participation LP Units under 
the Limited Partnership Agreement. For U.S. federal income tax purposes, allocation of any item of 
income, gain, loss or deduction to a partner in a partnership will be given effect so long as the allocation 
has "substantial economic effect," or is otherwise in accordance with the partner's interest in the 
partnership. If an allocation of an item pursuant to the Limited Partnership Agreement does not satisfy 
this standard or is deemed not to satisfy this standard by the IRS, it will be reallocated by the IRS among 
the Partners on the basis of their respective interests in KUE (as determined by the IRS), taking into 
account all facts and circumstances. In such a case, holders of Common LP Units could have additional 
tax liabilities or suffer adverse tax consequences. 
Treatment of Cash Distributions. KUE's distributions to a Partner generally will not be taxable to the 
Partner for U.S. federal income tax purposes to the extent of such Partner's adjusted tax basis in its 
Common LP Units immediately before the distribution. Cash distributions in excess of a Limited Partner's 
adjusted tax basis generally will be considered to be gain from the sale or exchange of the Common LP 
Units. Any reduction in a Limited Partner's share of KUE's liabilities, if any, for which no Partner bears the 
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economic risk of loss, known as "nonrecourse liabilities," will be treated as a deemed distribution of cash 
to that Partner. A decrease in a Partner's percentage interest in KUE because of KUE's issuance of 
additional limited partner units ("Limited Partner Units") would decrease such Partner's share of Company 
nonrecourse liabilities, if any, and thus would result in a corresponding deemed distribution of cash. 
Treatment of In-Kind Distributions. KUE's distribution of property (other than cash) to a Partner generally 
will not be taxable to the Partner unless the property is a "marketable security" and the exceptions to the 
requirement for recognition of gain upon distributions of marketable securities do not apply. Marketable 
securities, for these purposes, include actively traded securities or equity interests in another entity that 
are readily convertible into or exchangeable for cash or other marketable securities. If the distributed 
property constitutes a marketable security, the property would be treated as cash and the Partner would 
recognize gain, but not loss, to the extent described above. 
Basis of Common LP Units. A Limited Partner will have an initial tax basis for its Common LP Units equal 
to the amount it paid for the Common LP Units plus its share of Company nonrecourse liabilities, if any. 
That basis will be increased by the Limited Partner's share of Company income and by any increases in 
its share of Company nonrecourse liabilities, if any. That basis will be decreased, but not below zero, by 
distributions from KUE, by the Limited Partner's share of KUE losses, by any decrease in its share of 
Company nonrecourse liabilities, if any, and by its share of Company expenditures that are not deductible 
in computing KUE's taxable income and are not required to be capitalized. 
Limitations on Deductibility of Company Losses. The deduction by a Limited Partner of its share of 
Company losses will be limited to the adjusted tax basis in its Common LP Units. Limited Partners should 
be aware that they could be subject to various other limitations on their ability to deduct their allocable 
shares of Company losses (or items of deductions). Such limitations include, but are not limited to, those 
relating to "investment interest" expense under Section 163(d) of the Code, "miscellaneous itemized 
deductions" under Section 67 of the Code, certain other itemized deductions of high income individuals 
under Section 68 of the Code, the "at risk" rules under Section 465 of the Code, and the deductibility of 
capital losses under the Code. Prospective investors should consult their tax advisors with respect to the 
potential application of such rules to their particular situation. 
Allocation of Income, Gain, Loss, and Deduction. If KUE has a net profit or net loss, its items of income, 
gain, loss, and deduction will be allocated among the Partners in accordance with the provisions of the 
Limited Partnership Agreement. 
Dispositions of Common LP Units — Recognition of Gain or Loss. A Limited Partner will recognize gain or 
loss on a sale of Common LP Units equal to the difference between the amount realized and the Limited 
Partner's adjusted tax basis for the Common LP Units sold. A Limited Partner's amount realized will be 
measured by the sum of cash or the fair market value of other property received plus its share of 
Company nonrecourse liabilities, if any. Generally, gain or loss recognized by a Limited Partner on the 
sale or exchange of Common LP Units will be taxable as capital gain or loss and as long-term capital gain 
or loss if the Common LP Units were held for more than twelve months. 
Non-U.S. Persons 
Withholding. Ownership of Common LP Units by non-U.S. Persons raises special U.S. federal income 
tax considerations. To the extent that KUE receives dividends from a U.S. subsidiary, distributions of 
such dividend income to Limited Partners who are non-U.S. Persons will be subject to U.S. withholding at 
a rate of 30%. Certain countries have tax treaties with the U.S. that reduce or eliminate the withholding 
requirement. To the extent that KUE receives dividends from a non-U.S. subsidiary, distributions of such 
dividend income to Limited Partners who are non-U.S. Persons will not be subject to U.S. tax, unless 
such income were deemed to be effectively connected with a trade or business conducted by KUE in the 
U.S. KUE will be required to pay withholding tax with respect to the portion of KUE's income that is 
"effectively connected" with the conduct of a U.S. trade or business and which is allocable to non-U.S. 
Persons. Any amounts KUE is required to remit to taxing authorities will be treated as a distribution to the 
Partner on whose behalf the withholding is being paid and will be charged against current and/or future 
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distributions such Partner would otherwise be entitled to. If KUE is required to withhold on amounts in 
excess of cash distributions, Partners shall be required to contribute to KUE cash in an amount by which 
such required withholding exceeds any such distributions. 
Gain on Sale. A Limited Partner that is a non-U.S. Person will be subject to U.S. federal income tax upon 
the sale or exchange of its Common LP Units to the extent that such Limited Partner recognizes gain 
upon such sale or exchange and such gain is effectively connected with a U.S. trade or business. 
U.S. Real Property Holding Corporation. If a direct U.S. subsidiary of KUE is or were to become a 
"United States Real Property Holding Corporation," or "USRPHC" (as defined below), certain disposition 
of Common LP Units by a Limited Partner that is a non-U.S. Person would result in such Limited Partner 
being subject to U.S. federal income tax in respect of the portion of the gain recognized on such 
disposition that is attributable to such subsidiary. In addition, if a direct U.S. subsidiary of KUE is or were 
to become a USRPHC, certain dispositions of such subsidiary by KUE would result in Limited Partners 
who are non-U.S. Persons being subject to U.S. federal income tax in respect of their allocable share of 
the gain recognized by KUE on such disposition. Generally, a corporation is a USRPHC if the fair market 
value of its "U.S. real property interests" equals or exceeds 50% of the sum of the fair market value of its 
worldwide real property interests and its other assets used or held for use in a trade or business. KUE 
believes that each of its direct U.S. subsidiaries is not currently a USRPHC for U.S. federal income tax 
purposes. However, no assurances can be given in this regard. Furthermore, it is possible that in the 
future one of KUE's subsidiaries may become a USRPHC if, for example, the value of the U.S. real estate 
holdings of such subsidiary increases sufficiently. Limited Partners that are non-U.S. Persons are urged 
to consult their tax advisors regarding the potential application of the USRPHC rules to their investment in 
KUE. 
Administrative Matters 
Backup Withholding. For each calendar year, KUE will report to its U.S. Partners and to the Internal 
Revenue Service the amount of distributions that it pays, and the amount of tax (if any) that it withholds 
on these distributions. Under the backup withholding rules, a U.S. Limited Partner may be subject to 
backup withholding tax with respect to distributions unless a Limited Partner: (i) is a corporation or comes 
within another exempt category and demonstrates this fact when required or (U) provides a taxpayer 
identification number, certifies as to no loss of exemption from backup withholding tax and otherwise 
complies with the applicable requirements of the backup withholding tax rules. Exempt Limited Partners 
who are U.S. Persons should indicate their exempt status on a properly completed IRS Form W-8BEN. 
Backup withholding is not an additional tax, the amount of any backup withholding from a payment to a 
Limited Partner will be allowed as a credit against such Limited Partner's U.S. federal income tax liability. 
Nominee Reporting. Persons who hold an interest in KUE as a nominee for another Person are required 
to furnish to KUE: 
(a) the name, address, and taxpayer identification number of the beneficial owner and the 
nominee, 
(b) whether the beneficial owner is: 
(1) a person that is not a U.S. Person, 
(2) a foreign government, an international organization, or any wholly-owned agency 
or instrumentality of either of the foregoing, or 
(3) a tax-exempt entity; 
(c) the amount and description of the Limited Partner Units held, acquired, or transferred for 
the beneficial owner, and 
144 
(d) specific information including the dates of acquisitions and transfers, means of 
acquisitions and transfers, and acquisition cost for purchases, as well as the amount of 
net proceeds from sales. 
Filing Requirements. Limited Partners who are U.S. Persons will be required to file an IRS Form 8865 
with the Partner's U.S. Federal Income tax return for the taxable year in which the Limited Partner 
purchases the Common LP Units. Investors who are U.S. Persons may, depending upon the size of their 
investment in the General Partner, be required to file an IRS Form 5471 with the investor's U.S. federal 
income tax return for the taxable year in which the investor purchases Common LP ordinary shares in the 
General Partner. Additionally, depending on the type of non-U.S. investments KUE makes, investors who 
are U.S. Persons may be required to file additional IRS Forms such as a Form 5471 in subsequent years. 
This discussion of tax consequences and tax withholding is a general discussion and is not intended to be 
all inclusive nor a substitute for careful tax planning. Accordingly, each prospective purchaser of Common 
LP Units is urged to consult with their own tax advisors with specific reference to their own tax situation. 
145 
19. APPENDICES 
INDEX TO THE APPENDICES 
19.1. APPENDIX A: DETAILED BIOGRAPHIES 
KUE MANAGEMENT 148 
KUE ADVISORY BOARD 152 
KLC MANAGEMENT 153 
REAL ESTATE MANAGEMENT TEAM! GREENSTREET REAL ESTATE PARTNERS 155 
KSI BOARD OF DIRECTORS 156 
k12 MANAGEMENT 157 
19.2 APPENDIX B: KLC MD&A FOR 2005, 2004 AND 2003 
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND 158 
RESULTS OF OPERATIONS FOR THE FISCAL YEARS ENDED DECEMBER 31, 
2005, 2004 AND 2003 
19.3 APPENDIX C: KLC MD&A FOR FIRST QUARTER 2006 
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND 179 
RESULTS OF OPERATIONS FOR THE QUARTERLY PERIOD ENDED APRIL 1, 2006 
19.4 APPENDIX D: KLC MD&A FOR SECOND QUARTER 2006 
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND 197 
RESULTS OF OPERATIONS FOR THE QUARTERLY PERIOD ENDED JULY 1, 2006 
19.5 APPENDIX E: FINANCIAL STATEMENTS 
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS 222 
146 
19.1. Appendix A: Detailed Biographies 
147 
KUE Management 
At the conclusion of this offering, the KUE management team will consist of the following 
individuals. 
Principals  
Michael Milken, Co-Founder and Chairman 
Mr. Milken is Co-Founder and Chairman of KUE. One of America's leading philanthropists, he was called 
"The Man Who Changed Medicine" in a Fortune magazine cover story that chronicled his three decades 
of efforts to accelerate medical solutions. He Co-Founded the Milken Family Foundation in 1982 to 
advance programs in medical research and education. In 1993, Mr. Milken expanded his medical 
philanthropy by launching the Prostate Cancer Foundation, the world's largest private source of funding 
for research on that disease. A decade later, he concluded that progress wasn't coming fast enough, so 
he founded FasterCures, which seeks to shorten the path to breakthroughs for all deadly diseases. Mr. 
Milken also chairs the Milken Institute, a think tank who conferences feature opinion leaders and 
government officials from around the world. Among the many awards Mr. Milken has received is the 
Marcus Garvey Award for major contributions to the formation and inspiration of African-American 
businesses. He earned his bachelor's degree at the University of California at Berkeley, and his MBA 
from the University of Pennsylvania's Wharton School. 
Steven Green, Vice Chairman 
Steven Green, who served as the 12th U.S. Ambassador to the Republic of Singapore from 1997 to 2001, 
is Vice Chairman of KUE and Chairman and CEO of Greenstreet Real Estate Partners, a professional 
real estate firm. Ambassador Green previously served as Chairman and CEO of Samsonite Corporation, 
which was the major operating subsidiary of Astrum International Corporation. As Chairman of Astrum, 
Ambassador Green spearheaded the operating company's expansion into emerging markets in Eastern 
Europe, the CIS, Asia and the Middle East In 1992, he opened the first American retailing center on Red 
Square. In 1995, President Clinton appointed him to the President's Export Council, where he served on 
the Executive Committee and chaired the Strategic Communications Committee. Ambassador Green is 
also Chairman and Chief Executive Officer of K1 Ventures Limited, a publicly traded investment company 
in Singapore, and is a board member of Greenstreet Realty, a company that manages a large portfolio of 
education-related real estate. In addition to his corporate responsibilities, he has been active in U.S. civic 
affairs, serving as a contributing trustee and director for a number of community and national 
organizations, including the University of Miami, the U.S. Chamber of Commerce and serves as Honorary 
Consul General of Singapore in Miami, Florida. The Green Family Foundation endows special projects in 
community and national service. 
Lowell Milken, Co-Founder, President and Chief Executive Officer 
Lowell Milken is President and Chief Executive Officer of KUE. He is also Chairman of London-based 
Heron International, a worldwide leader in property development and investment; Chairman of KU 
Education, Inc., a leading company in ECE and K-9 educational programs and services; and Chairman 
and Co-Founder of the Milken Family Foundation. Under his leadership, the Milken Family Foundation 
has become one of the most innovative private foundations in the U.S., developing groundbreaking 
programs in K-12 education. Mr. Milken created the Foundation's National Educator Award program, 
which today is the largest teacher-recognition program in the U.S. Dubbed the "Oscars of Teaching" by 
Teacher Magazine, it has awarded more than $50 million to honor more than 2,100 K-12 teachers and 
principals. Mr. Milken also launched the Teacher Advancement Program ("TAP") in 1999 as a 
comprehensive school reform to attract, develop, motivate and retain high quality teachers for America's 
schools. Today TAP schools are operating in 12 states impacting thousands of teachers and ten of 
thousands of students. Mr. Milken serves as Chairman of the Institute for Excellence in Teaching which 
among its many activities is the operation of the Teacher Advancement Program. Widely known as an 
educational pioneer and innovator, Mr. Milken has been recognized by numerous awards from such 
148 
organizations as the National Association of State Boards of Education, the Horace Mann League, and 
the National Association of Secondary School Principals. Mr. Milken earned his bachelor's degree from 
the University of California at Berkeley, and his law degree from the University of California, Los Angeles. 
Other Executives  
Ted Sanders, Vice Chairman 
Ted Sanders is Vice Chairman of KUE, as well as the Executive Chairman of Cardean Learning Group, 
which develops online post-secondary education and degree programs. Mr. Sanders previously served 
as the President of the Education Commission of the States and as Deputy U.S. Secretary of Education 
under President George H.W. Bush. He has been the Chief State School Officer in three U.S. states 
(Nevada, Illinois and Ohio) and University President at Southern Illinois University. He serves as an 
advisor to the School Evaluation Services Division of Standard and Poor's, the PDK Gallup Poll, 
MetaMetrics Inc., and the Government Accountability Office. He holds a doctor of education degree in 
educational administration and higher education from the University of Nevada at Reno. 
Stephen Goldsmith, Senior Vice President, Strategic Planning and Worldwide Government 
Programs 
Stephen Goldsmith is the Senior Vice President of Strategic Planning & Worldwide Government Programs 
for KUE. Mr. Goldsmith is also a Milken Institute Senior Fellow and the Dan Paul Professor of 
Government at Harvard University's Kennedy School of Government, is a nationally recognized expert on 
government management, reform and innovation. He is the author of several books, most recently, 
Governing by Network: The New Face of the Public Sector, and his columns have frequently been 
published in such papers as The Wall Street Journal and The New York Times. While serving two terms 
as Mayor of Indianapolis, he earned a national reputation for innovations in government as he reduced 
the city's bureaucracy, taxes, and counter-productive regulations, all while identifying more than $400 
million in savings, which he then reinvested in a transformation of downtown Indianapolis and its urban 
neighborhoods. His work in Indianapolis has been cited as a national model. Prior to his two terms as 
Mayor, he was Marion County District Attorney for 12 years. Mr. Goldsmith formerly served as Special 
Advisor to President Bush, and Chief Domestic Policy advisor to President Bush in the 2000 presidential 
campaign. 
Nina Shokraii Rees, Senior Vice President, Strategic Initiatives 
Nina Rees is Senior Vice President of Strategic Initiatives for KUE, where she is responsible for furthering 
the company's goals of providing the highest-quality and most effective early childhood education and on 
finding innovative ways to improve K-12 educational outcomes. Before joining KUE, Ms. Rees had nearly 
15 years of relevant experience in Washington, D.C., most recently as the Assistant Deputy Secretary for 
Innovation and Improvement at the U.S. Department of Education. In this post, she oversaw the 
administration of 28 grant programs and coordinated the implementation of several provisions of the No 
Child Left Behind Act. Prior to joining the Education Department, Ms. Rees served as a Domestic-Policy 
Adviser to Vice President Dick Cheney, and was involved in the effort to enact No Child Left Behind. She 
also served as the Senior Education Analyst at the Heritage Foundation. Ms. Rees spent two years on 
the staff of Rep. Porter Goss, R-Florida., while earning her master's degree in international transactions 
from George Mason University, and received her bachelor's degree in psychology from Virginia 
Polytechnic Institute and State University. Ms. Rees is fluent in French and Persian. 
149 
Jeffrey Safchik, Chief Financial Officer 
Jeffrey Safchik is the Chief Financial Officer of KUE. Mr. Safchik is also Managing Director and Chief 
Financial Officer of Greenstreet Real Estate Partners and also is one of its founders. He serves in a 
similar capacity for all the Greenstreet financial companies. Mr. Safchik is also Chief Operating Officer 
and Chief Financial Officer of k1Ventures, a publicly traded Singapore-based investment company. 
Previously, Mr. Safchik was CFO of a real-estate company that managed more than 11 million square feet 
of retail and commercial property across the U.S. He has served as CFO for a billion-dollar retailer, 
where he managed the company's financial affairs and was directly involved in its restructuring and 
strategic planning. Mr. Safchik graduated from Pace University in New York, received his master's 
degree in taxation from St. John's University, and has attended advanced finance and real estate courses 
at the Massachusetts Institute of Technology and New York University. He serves as a Trustee for the 
Green Family Foundation, is Chairman of the University of Miami Department of Pediatrics Children's 
Council and is active in a number of charities including the Marian Center for Under-privileged Children 
and the United Way. 
Richard Sandler, General Counsel 
Richard Sandler is General Counsel for KUE. Mr. Sandler is also Executive Vice President of the Milken 
Family Foundation and has been involved with the Foundation since its inception. A shareholder in the 
law firm of Maron & Sandler, he has practiced law since 1973, and specializes in real estate transactions 
and general securities and business law. He has also been involved since 1983 in consulting with 
respect to business acquisitions. Mr. Sandler is a member of the State Bar of California and has served 
on various boards of educational and philanthropic institutions, including the Executive Board of Heal 
L.A., as a Trustee of Brentwood School, and on the Board of the Foundations of the Milken Families. Mr. 
Sandler received a bachelor's degree from the University of California, Berkeley, and his juris doctorate 
degree from the UCLA School of Law. 
Adam Cohn, Senior Vice President, Business Development 
Adam Cohn is Senior Vice President of Business Development at KUE where he is responsible for 
investments, financings and business development for Knowledge Universe and its portfolio companies. 
Mr. Cohn has been at KUE, or related entities, since March of 2000. He has overseen the acquisitions 
and related financings of KinderCare Learning Centers Inc. and Aramark Educational Resources by 
Knowledge Learning Corporation. Previously, Mr. Cohn was with Whitney & Co., a leading private equity 
firm. Prior to Whitney & Co., Mr. Cohn was an investment banker in the Financial Sponsors Group at 
Bankers Trust Company and Deutsche Bank. Mr. Cohn serves on several private and public company 
board of directors. Mr. Cohn has a BS in Business from Skidmore College and a MBA from Columbia 
University. 
Geoffrey Moore, Senior Vice President, Corporate Communications 
Geoffrey Moore is Senior Vice President of Communications at KUE. He has also provided 
communications counsel to FasterCures, the Milken Institute, the Prostate Cancer Foundation and related 
organizations for several years. Prior to joining Knowledge Universe in 1998, Mr. Moore was Senior Vice 
President of Strategic Communications for Dow Jones Markets, a unit of Dow Jones, publisher of The 
Wall Street Journal. He served for 22 years in a wide range of communications management and 
speechwriting positions for IBM in the U.S. and Japan. Earlier, he was an Assistant to New York 
Governor Nelson Rockefeller, Press Secretary to U.S. Senate Minority Leader Hugh Scott, and Director of 
Public Information for the U.S. Equal Employment Opportunity Commission. His opinion articles have 
been published in The New York Times and other major publications. He graduated with a degree in 
political science from the University of Pennsylvania and studied law and public policy at that university's 
law school. 
Michael Neumann, Vice President, Business Development 
Michael Neumann is a Vice President of Business Development at KUE, where he works on investments, 
financings and business development for Knowledge Universe and its portfolio companies. Mr. Neumann 
has been at KUE, or related entities, since 2002. He has worked on the acquisitions and related