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1. EXECUTIVE SUMMARY

The following summary is qualified in its entirety by the more detailed information appearing elsewhere in this Memorandum. You should carefully consider the information set forth under "Risk Factors". The term "KUE" refers only to Knowledge Universe Education L.P., a Cayman Islands exempted limited partnership. The terms "Knowledge Universe Education", the "Company", "we", "us" and "our" refer to KUE and, where applicable, its subsidiaries, and do not refer to the Agents. In November 2005, KLC separated its education operations ("KLC OpCo") from its real estate assets ("KLC PropCo").

1.1. Company Overview

KUE is the third largest for-profit education company in the world and the largest for-profit education company in the pre-school to 12th grade segment ("pre-K-12") in the world. While the Company's operations are currently based within the U.S., the proceeds from this transaction will be used primarily to expand KUE's education platform both globally and across the pre-K-12 education continuum. KUE's existing portfolio of assets consists of:

(i) KLC OpCo, the leading early childhood education ("ECE") company with 2,507 locations in 39 states and the District of Columbia and nearly two and a half times larger than its next closest competitor in terms of revenue;

(ii) KLC PropCo, one of the largest education based real estate portfolios in the U.S. consisting of 845 early childhood centers located in 37 states; and

(iii) A significant interest in k12, an online curriculum provider and kindergarten through 12th grade management company, currently serving over 25,000 students as the largest operator of online virtual schools in the U.S.

[Chart Text]
Knowledge Universe Education LP
87.6%¹
KUE Management Inc. (General Partner)
17.9% to 40.0%²
Knowledge Learning Corporation (KLC)
k12 Inc.
Real Estate

The principal owners of KUE 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, 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 Company represents the Principals' sole vehicle for equity investment opportunities in the pre-K-12 sector going forward.

The Principals founded the Company and its affiliated companies over the past decade based on their vision of a world where competition for human capital³ is becoming the driving force of economic prosperity. To remain competitive in the world economy, countries will be forced to invest heavily in the development of their human capital. The Principals believe that an investment made in an individual's education, especially at a young age, is the most effective way to build human capital and thereby increase that individual's lifelong productivity. As the largest for-profit provider of ECE in the world, the Company is well positioned to capitalize on these trends.

¹ The 12.4% minority position is held by various investors.
² 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."
³ The economic theory of Human Capital Policy was first published by University of Chicago professor James Heckman in Human Capital Policy, dated August 2002.

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