0706002 Informal Interpretation

From: (redacted)

Sent: Friday, June 01, 2007 4:05 PM

To: Verne, B. Michael

Subject: Request for InformalInterpretation - 802.65

Dear Mr. Verne:

We would appreciate yourconfirmation of the applicability of the exemption in Sec. 802.65 to thefollowing transaction.

An existing LLC is currently ownedby "B". B seeks a cash investment by Investor "A". A willmake a cash-only capital contribution in the LLC in exchange for Class Amembership units. Subject to the provisions of an Amended LLC Agreement, theseunits will entitle A to receive 95% of profit allocations until a "FlipPoint" is achieved. The Flip Point is defined as the date of realizationof a calculated rate of return for A (together with the satisfaction of certaindebt obligations by the LLC to a third party) or the later of the tenthanniversary of the capital contribution or the date that calculated rate ofreturn is realized, whichever comes first. After the Flip Point, A will nolonger control the LLC within the meaning of Sec. 801.1(b)(1)(ii), i.e., itwill have no right to 50% or more of either profit distributions or assetsallocated upon dissolution.

Because (i) A is contributing onlycash to the LLC; (ii) the purpose of the transaction is to provide for a cashinvestment by A in the LLC (i.e., financing); and (iii) the terms of theAmended LLC Agreement are such that A will no longer control the LLC after itrealizes its preferred return (or with the lapse of time), we believe that A'sacquisition of a membership interest in the LLC is exempt under Sec. 802.65.

Please let us know if you concurwith this analysis.

Thank you,

(redacted)