Every indexed document

union organization efforts in the child care industry have received considerable

wages and benefits than KLC currently does as a

KLC is increasing expenditures on IT systems and accounting and IT

2004 and 2003"" in Appendix B. To address these issues

or (c) contracting with an independent child care operator to care

these tax incentives are subject to change.

as amended (referred to herein as the ""Code"")

thereby reducing the amount of funds available to other families

which are designed to assist low-income families

2005. These funds are primarily from the Child Care

may not continue. Other factors beyond the Company's control

as well as trends in the preference of working parents and

certain demographic trends which are favorable to the Company's

may adversely impact the Company because out-of-work parents tend to stop using

which will depend on the factors described above.

conditions in the child care industry more

existing companies in which KULG and/or its principals are

see The Operating Company (KLC OpCo) — Licensing and

which may include representatives of other investors with whom the

the Company will rely significantly on the existing management and boards of