HOUSE_OVERSIGHT_024478.jpg

The initial closing of this offering will require a minimum investment (including the amount attributable to KUE LLC through conversion of its preferred limited partner units, including accrued dividends at the option of KUE LLC, into Common LP Units) of U.S. $280.0 million, There can be no assurance of additional closings after the Initial closing of the offering, whether before the completion of the Offering Period on March 31, 2007 or thereafter. Unless there are subsequent closings or offerings, cash available for acquisitions and expansion would be limited to available cash of KLC and KUE and proceeds of future financings of KLC and KUE. 6.1.2 The Company plans to acquire or invest in non-U.S. companies. This international expansion strategy is untested, and may include acquisitions or developments in countries where for-profit education is not well established Foreign acquisitions involve certain risks not typically associated with U.S. acquisitions, including risks relating to (i) currency exchange matters, including fluctuations in the rate of exchange between the U.S. doilar and the various foreign currencies in which the Company’s non-U.S. interests are denominated, and costs associated with conversion from one currency into another; (ii) differences between the ULS. and foreign securities markets, including potential price volatility in and relative illiquidity of some foreign securities markets, the absence of uniform accounting and financial reporting standards and disclosure requirements and less governmental supervision and regulation; (fi) certain economic and political risks, including potential restrictions on foreign acquisition and repatriation of capital, and the risks of political, economic or social instability and the possibility of expropriation or confiscatory taxation; {iv) the possible imposition of foreign taxes on income and gains; and (v} differences in applicable legal systems, including the possibility that the Company may experience difficulty in asserting legal claims or obtaining legal remedies against sellers of businesses in foreign jurisdictions. The Company's prior operating history is limited to its U.S.-based businesses. Historical results may not be indicative of future performance outside the U.S. The Company's non-U.S. businesses may operate in couniries in which the legal and regulatory frameworks, customary business models, education practices and philosophies and political and social norms are substantially different from those in the U.S. International expansion may also involve significant market risks, and opportunities to realize synergies may be limited. There can be no assurance that the Company will be successful in its international expansion strategy. In addition, the Company may acquire businesses or pursue business development opportunities in countries where for-profit education is not weil-established, which may involve greater risks than those associated with similar U.S. acquisitions and developments. For example, the performance of a for-profit education company located in a country where for-profit education is in an embryonic stage may be volatile. Such a company also may be unable to achieve the growth or success achieved by education businesses in countries, such as the U.S., where for-profit education is more established. In addition, there can be no assurance that for-profit education will ever become well-established or maintain viability in any given country. If any of the above events occur, the Company may suffer a partial or tota! joss of capital invested in that business or development. 6.1.3. The Company's success depends on its ability to attract and retain skilled employees The success of the Company will depend in part on continued employment of senior management and other key personnel, particularly the Principals. See the discussion under the heading “The Company may not engage in certain businesses" below. If one or mare senior management or key personnel become unable or unwilling to continue in their present positions, the business and operations of the Company would be disrupted. The success of the Company also depends on attracting and retaining highly trained financial, marketing and other personnel. The Company will need to continue to hire additional personnel as its business grows. The market for hiring such personnel is competitive and hiring such personnel may require increased salaries and enhanced benefits under certain circumstances. A shortage in the number of 45 HOUSE_OVERSIGHT_024478