routinely review the adequacy of regulatory and licensing requirements and may implement changes that significantly increase operating costs. For example, a change in the required ratio of child center staff personnel to enrolled children in a certain jurisdiction could increase KLC center or program staff operating expenses in that jurisdiction and therefore have a material adverse effect on KLC's operations.
There can be no assurance that the Company will be able to (i) obtain all required regulatory approvals that it does not yet have or that it may require in the future; (ii) obtain any necessary modifications to existing regulatory approvals; or (iii) maintain required regulatory approvals. Delay in obtaining or failure to obtain and mainiain in full force and effect any regulatory approvals, or amendments thereto, or delay or failure to satisfy any regulatory conditions or other applicable requirements, could prevent operation of the facility or sales to third parties, or could result in additional costs to the Company.
6.1.12 Conflicts of interest may arise with the Principals and their affiliates
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. See “The Structure of KUE and the General Partner — Investment in Subsidiaries and Joint Ventures.” In addition, existing companies in which KULG and/or its principals are investors along with other unrelated investors may invest in or acquire companies involved in areas relating to education.
Following the consummation of the offering, the Principals will control the General Partner other than with respect to certain actions requiring Investor approval as further described in “The Structure of KUE and the General Partner.” Conflicts could emerge between the Principals and the Company in the future, including conflicts due to the other business segments in which the Principals may have interests, separate from the Company. In addition, affiliates of the Principals will have certain financial interests in KUE and certain of its subsidiaries as described in “Related Party Transactions” following the consummation of the offering independent of their ownership of the Units, which may present conflicts of interest.
Certain other potential conflicts of interest include: « Other activities of management — the Principals and other senior management personnel of the Company are subject to a variety of prior and continuing obligations unrelated to the Company.
Accordingly, conflicts may arise in the allocation of management time and resources.
« Lack of separate counsel for Investors — no separate counsel has been engaged by the Company to act on behalf of Investors in fhe Company.
e For a description of existing arrangements between the Company and its affiliates, see “Related Party Transactions.”
e For a description of certain restrictions on one of the Principals and the Company, see “The Company may not engage in certain businesses” below.
By acquiring an interest in the Company, each Investor will be deemed to have acknowledged the existence of any such actual or potential conflicts of interest and to have waived any claim with respect to any liability arising from the existence of any such conflict of interest.
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