HOUSE_OVERSIGHT_024506.jpg

9. KNOWLEDGE UNIVERSE EDUCATION (“KUE”)

KUE is the third largest for-profit education company in the world. KUE currently operates in the U.S. and is the indirect parent company (87.6% ownership³⁴) of KLC and also a major shareholder (owns 17.9% to 40.0%³⁵ of equity) of k12. In November 2005, KLC divided its business, with substantially all of its real estate owned by special purpose subsidiaries (KLC PropCo) and all of its customer contracts and operations remaining at KLC and certain other subsidiaries (KLC OpCo).

The controlling shareholders of the General Partner are Michael Milken, Lowell Milken and Steven Green (collectively the “Principals”). Michael Milken and Lowell Milken each has more than two decades of experience in the education sector through involvement in several for-profit and not-for-profit initiatives. Steven Green, a former U.S. ambassador to Singapore, has more than two decades of experience as an international industrialist leading major corporate restructurings and expansions in manufacturing, housing, consumer products, retail and real estate enterprises. The Principals founded KUE and its affiliated companies over the past decade based on their vision of a world where competition for human capital is becoming the driving force of economic prosperity. KUE represents the Principals’ sole vehicle for equity investment opportunities in the early education through secondary school sector going forward.

The Company has an accomplished and internationally recognized leadership team. Led by the Principals, the Company has a prominent management team and advisory board with significant financial resources and substantial experience in the fields of education and real estate management. Additionally, through its past experiences at KLC, the Company has demonstrated the ability to acquire and integrate education assets. The Company’s management consists of people with diverse backgrounds in operations, corporate finance, real estate, government relations and education. KUE’s role will be to oversee the portfolio of operating businesses, identify acquisition candidates, hire top level management of the operating businesses and help the portfolio companies navigate some of the legislative and regulatory matters that exist in K-12 education. These services will be performed for the Company by KULG, for which KUE will pay $20.0 million annually to KULG in quarterly installments beginning July 1, 2006 pursuant to the Fixed Overhead Payment Agreement. See “Related Party Transactions.”

The General Partner plans to have a Board of Directors (the “Board”) with representatives from some of the countries KUE plans to expand into, public policy experts and independent directors with complementary backgrounds. KUE expects to benefit from the breadth and depth of the knowledge, experience and expertise of the Board. At the final closing of this offering, at least two members of the Board will be Independent Directors. After the Initial Listing of the Units and so long as consistent with contractual and licensing obligations, the General Partner will have a majority independent board.

9.1. KUE Management and Advisory Board Members

The following table sets forth KUE’s management and current advisory board members. Detailed biographies can be found in Appendix A.

³⁴ The 12.4% minority position is held by various investors.
³⁵ KUE's ownership varies depending on the liquidation value or sale value of k12 and according to the preference of the various securities KUE owns. At higher valuations, KUE's percentage ownership is lower. See “k12 Inc (k12) – k12 Equity.”

73
HOUSE_OVERSIGHT_024506