This excerpt taken from the RDN 8-K filed Sep 19, 2006.
Reclassification of Sherman
On September 14, 2006, we and MGIC each agreed to restructure our respective options as discussed below under Exercise of Restructured Option. In order to accommodate this restructuring, the equity interests of Sherman were reclassified, effective July 1, 2006, from a single class of equity interests into Class A Common Units (representing 94% of total equity) and a combination of Preferred Units and Class B Common Units (together representing 6% of total equity). As part of the reclassification, all of the authorized Class B Common Units were granted to an entity controlled by Shermans management.
The Class B Common Units entitle Shermans management to 3% of Shermans pre-tax earnings above $200 million (on an annual basis) and a right in liquidation of up to 6% of any amounts remaining after satisfaction of a liquidation preference on the Preferred Units. The actual percentage received by the holders of Class B Common Units upon a liquidation or sale of Sherman will depend on when the sale or liquidation occurs and the value of Sherman at that time.