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LF Units and the GP Units will be reduced by the Profits Participation LP Units as described below under "Distributions." Assuming that 1,000,000 Units are sold to Investors by March 31, 2007, and that the accrued dividends on the preferred limited partner units are paid in cash, KUE LLC, controlled by the Principals, will hold approximately 1,530,000 Common LP Units representing approximately 60% ownership in KUE (excluding Profits Participation LP Units) and 1,530,000 Class A Shares. The Common LP Units owned by KUE LLC will not be transferable, except to (i) the Principals; (fi) to affiliates of the Principals; and/or (iii) to family members and/or charitable organizations in connection with the Principals' estate planning, unless combined with the corresponding percentage of Class A Shares to form Units and transferred in the form of Units in accordance with the Limited Partnership Agreement. Knowledge Universe Holdings LLC, a Delaware limited liability company ("KUH LLC") controlled by the Principals, will hold 900 Class B ordinary shares of the General Partner (the "Class B Shares"). The Class B Shares held by the Principals and their affiliates will not be transferable, except to (i) the Principals; (ii) to the affiliates of the Principals; and/or (ili) to family members and/or charitable organizations in connection with the Principals’ estate planning. The Class B Shares will automatically convert to Class A Shares if the Principals’ aggregate direct and indirect economic interest in KUE is less than 15% of the outstanding Partnership Units (as defined below) of KUE. A limited liability company ("KULG LLC-1”), of which Knowledge Universe Learning Group LLC, a Delaware limited liability company that is controlled by the Principals ("KULG"), and certain other persons designated by KULG are members, will be the holder of the Profits Participation LP Units (the “Profits Participation Limited Partner") with the economic rights as set forth in "— Distributions” below. At each closing of any sale of Units to Investors where the aggregate purchase price of all Units acquired by Investors to date is less than or equal to $1.5 billion (during the Offering Period or thereafter), the Profits Participation Limited Pariner will be issued a number of Profits Participation LP Units such that the aggregate shall equal at least 9/11ths of the 11% of “Partnership Units” (Common LP Units, GP Units, and Profits Participation LP Units) that may be represented by Profits Participation LP Units. Additional Profits Participation LP Units will be issued to the Profits Participation Limited Partner, at such time and in such numbers as the Profits Participation Limited Partner will direct, based upon the issuance by the Profit Participation Limited Partner of interests to members of the Profits Participation Limited Partner (who may include employees, officers, directors, consultants and agents of KUE, its 29 HOUSE_OVERSIGHT_024462