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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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