Dear LLC member, The _____________ LLC ("LLC") has reached significant benchmarks in its development and growth. To date the company has accomplished ____________. The business has experienced extreme market conditions and the Board of Managers ("Board") has implemented changes to keep pace with a fast moving industry. These changes are more clearly defined later in this communication. In evaluating the future of LLC, the Board determined that completion and further growth of the company is restricted without additional equity injection. The Board considered several options, including industry alliances and calling upon existing members to meet the shortfall. We now need your approval of our action plan as well as your questions and comments. The Board of Managers of LLC has had detailed discussions with the principals of ___________ ("Investor"). The management and ownership of Investor have approved a proposal to invest $_______ in LLC in exchange for ____ percent capital interest, which includes _____ percent of net profits or losses. The terms of investment are as follows: 1. LLC and Investor must enter into long term agreement as long as Investor is competitive in price and performance, and for as long as Investor is a member of LLC. 2. Our Bank is required to submit a statement to Investor defining: a) the status and planned restructuring of all LLC loans and b) the impact of the $__________ investment on LLC's previously approved line of credit. 3. LLC is required to establish a clearer determination of questions related to future management. 4. Investor will complete, and their investment is contingent upon, a due diligence review of LLC in the following areas: a) financial/accounting, b) environmental, c) corporate records, and d) other areas as deemed necessary by Investor. 5. Investor must be given its share of representation on the Board of Managers. Investor considers the optimum size of the Board to be __________ managers, and may require that ______ seats on the Board are reserved for Investor's representatives.
If the transaction is approved as outlined above, will be given ____ percent capital interest, which includes _____ percent of LLC's net profits or losses. All existing investors will hold the remaining percent of LLC, in percentage interests proportionate to their original investments and contributed preferred returns. On a mathematical basis, Investor's proposed investment is approximately ______ percent of _____ year end equity and approximately _____ percent of original equity. Please note that when compared to original equity, Investor is receiving an ownership enhancement of approximately _____ percent. Conversely, existing members' percentage interests are reduced by a combined total of _____ percent. This investment provides LLC with a higher level of operating flexibility due to increased liquidity, a consistent and reliable, and a potential for increased sales due to Investor's interest in our product. Under the Operating Agreement of LLC, acceptance of new members requires the approval of at least 2/3 of the capital and profits interests. Enclosed with this letter is a "Membership Ballot," which gives you the opportunity to vote FOR or AGAINST accepting Investor as and investor in LLC on terms substantially similar to those outlined above. While there are always unknowns and the ultimate decision belongs exclusively to each member, the Board has carefully considered the addition of Investor as a member of LLC. The Board has achieved a desirable comfort level in allowing Investor to become a member of LLC and hold _____ percent ownership of interest. The Board therefore recommends voting FOR Investor becoming a member of LLC. Due to the time constraints under which LLC and Investor are currently operating, please cast your vote on the enclosed ballot and immediately return the signed ballot to: It is important that you give your consideration to this matter as quickly as possible and VOTE, as LLC must obtain at least 2/3 approval to accept Investor as a member. If your membership ballot is not received by _________, _____, the votes attributable to your percentage interest will be counted FOR Investor becoming a member of LLC. Best Regards,