Current through Register Vol. 30, No. 38, September 20, 2024
A. The following
definitions shall apply to this Section:
1.
"Securities Act" means the Securities Act of Arizona, A.R.S. §
44-1801
et seq.
2. "SEC" means the United
States Securities and Exchange Commission.
3. "Solicitation of Interest Form" means the
document used to solicit indications of interest in a security, which must
contain, in all material respects, the information set forth in subsection
(J).
B. An offer, but
not a sale, of a security made by an issuer, or on behalf of an issuer by a
dealer registered under Article 9 of the Securities Act, for the sole purpose
of soliciting an indication of interest in receiving a prospectus, or its
equivalent, for such security is exempt from A.R.S. §
44-1841,
and the issuer and its employees are exempt from A.R.S. §
44-1842,
if all of the following conditions are satisfied:
1. The issuer is, or will be, a business
entity organized under the laws of one of the states or possessions of the
United States or one of the provinces or territories of Canada or one of the
states of Mexico, and is not conducting or intending to conduct a blind pool
offering as defined in A.R.S. §
44-1801.
2. The issuer intends to register the
security in Arizona prior to sale or the securities will be sold under a valid
exemption in Arizona.
3. Ten
business days prior to the initial solicitation of interest under this Section,
the issuer files with the Commission a Solicitation of Interest Form along with
any other items to be used, directly or indirectly, to conduct solicitations of
interest, including, but not limited to, the script of any broadcast to be made
and a copy of any notice or advertisement to be published, and a nonrefundable
fee as prescribed by A.R.S. §
44-1861(G).
4. Five business days prior to usage, the
issuer files with the Commission any material amendments to the foregoing items
or additional items to be used to conduct solicitations of interest, except for
items provided to a particular offeree pursuant to a request by that
offeree.
5. The issuer does not use
any Solicitation of Interest Form, script, advertisement or other item to
solicit indications of interest, which the Securities Division has notified the
issuer not to distribute.
6. During
the solicitation of interest period, the issuer, or the dealer on behalf of the
issuer, does not solicit or accept money or a commitment to purchase
securities.
7. Any published
notice, published advertisement or script for broadcast must contain at least
the identity of the chief executive officer of the issuer, a brief general
description of the issuer's business and products, and the first paragraph of
the legend required in the Solicitation of Interest Form under subsection
(J)(2)(g).
8. All communications
with prospective investors made in reliance on this Section must cease after a
registration statement is filed in Arizona.
C. The issuer, or the dealer on behalf of the
issuer, may communicate with any offeree about the contemplated offering
provided the offeree is supplied the most current Solicitation of Interest Form
no later than five business days from the communication. The requirements of
this subsection do not apply to issuer communications made solely in the form
of scripted broadcasts, published notices or published
advertisements.
D. Unless the
disqualification is waived or ceases to exist under subsection (E), the
exemption of subsection (B) is not available if the issuer or any of its
predecessors, affiliates, directors, officers, general partners, or beneficial
owners of 10% or more of any class of its equity securities:
1. Has been convicted of a felony of which
fraud is an essential element, or which involves racketeering, or a transaction
in securities, or an offense listed in A.R.S. §
13-2301(D)(4).
2. Has been convicted within 10 years of the
date of the filing of the Solicitation of Interest Form of a misdemeanor of
which fraud or dishonesty is an essential element, or involving racketeering,
or a transaction in securities.
3.
Is subject to an order, judgment, or decree of any court of competent
jurisdiction entered within 10 years of the date of the filing of the
Solicitation of Interest Form, which temporarily, preliminarily or permanently
enjoins or restrains such person from engaging in, or continuing, any conduct
or practice in connection with the sale or purchase of securities, or involving
fraud, deceit, racketeering or consumer protection laws.
4. Has been subject to any state or federal
administrative order or judgment in connection with the purchase or sale of
securities entered within five years of the date of the filing of the
Solicitation of Interest Form.
5.
Is subject to the reporting requirements of the Securities Exchange Act of 1934
and has not filed all required reports during the 12 calendar months before the
filing of the Solicitation of Interest Form.
6. Is subject to an SEC order denying or
revoking registration as a broker or dealer in securities under the Securities
Exchange Act of 1934, or is subject to an order denying or revoking membership
in a national securities association registered under the Securities Exchange
Act of 1934, or has been suspended for a period exceeding six months, or
expelled from membership in a national securities exchange registered under the
Securities Exchange Act of 1934.
E. The Commission may, at its discretion,
waive any disqualification caused by subsection (D). In addition, a
disqualification under subsection (D) ceases to exist if:
1. The basis for the disqualification is
removed by the jurisdiction creating it;
2. The jurisdiction in which the
disqualifying event occurred issues a written waiver of the disqualification;
or
3. The jurisdiction in which the
disqualifying event occurred declines in writing to enforce the
disqualification.
F. A
failure to comply with all of the requirements of subsections (B) and (C) will
not result in the loss of the exemption from A.R.S. §§
44-1841
and
44-1842
for any offer to a particular individual or entity if the issuer shows all of
the following:
1. The failure to comply did
not pertain to a condition directly intended to protect that particular
individual or entity;
2. The
failure to comply was insignificant with respect to the offering as a whole;
and
3. A good faith and reasonable
attempt was made to comply with all applicable conditions of subsections (B)
and (C).
G. Any issuer,
or other person on behalf of an issuer, who solicits indications of interest
under this Section, may not make offers or sales in reliance on A.R.S. §
44-1844(A)(1)
or A.A.C. R14-4-126 until six months after
the last communication with a prospective investor made pursuant to this
Section.
H. All offers and
communications, including but not limited to, the Solicitation of Interest
Form, made in reliance on this Section are subject to the anti-fraud provisions
of the Securities Act.
I. The
Director of Securities may revoke the availability of this exemption prior to
any particular solicitation of interest with respect to a particular issuer or
transaction if the Director of Securities determines that there is a reasonable
likelihood that the solicitation of interest would tend to work a fraud or
deceit upon the offerees. In the event the Director of Securities makes such a
determination, the issuer of the solicitation of interest may request a hearing
in accordance with the provisions of Article 11 of the Securities Act by
notifying the Commission within 10 days after written notice of the Director's
determination.
J. The following
sets forth the minimum information that must be included in a Solicitation of
Interest Form. Additional information may be included. Except for the title,
the required information may be presented graphically in any manner.
1. The title of the Solicitation of Interest
Form must include the phrase: "Solicitation of Interest."
2. The Solicitation of Interest Form must
include each of the following items:
a. Name
of the issuer;
b. Street address of
the issuer's principal office;
c.
Issuer's telephone number;
d. Date
and place of organization of the issuer;
e. Dollar amount of the proposed
offering;
f. Name of the issuer's
chief executive officer or equivalent;
g. The following legend, or a legend which is
substantially equivalent in plain and concise language:
"THIS IS A SOLICITATION OF INTEREST ONLY. NO MONEY OR OTHER
CONSIDERATION IS BEING SOLICITED AND NONE WILL BE ACCEPTED.
NO SALES OF THE SECURITIES WILL BE MADE, OR COMMITMENT TO
PURCHASE ACCEPTED, UNTIL THE DELIVERY OF A FINAL OFFERING CIRCULAR [PROSPECTUS]
THAT INCLUDES COMPLETE INFORMATION ABOUT THE ISSUER AND THE OFFERING. AN
INDICATION OF INTEREST MADE BY A PROSPECTIVE INVESTOR INVOLVES NO OBLIGATION OR
COMMITMENT OF ANY KIND.
THIS OFFER IS BEING MADE PURSUANT TO AN EXEMPTION FROM
REGISTRATION UNDER FEDERAL AND STATE SECURITIES LAWS. NEITHER THE FEDERAL NOR
THE STATE AUTHORITIES HAVE CONFIRMED THE ACCURACY OR DETERMINED THE ADEQUACY OF
THIS DOCUMENT OR ANY OTHER DOCUMENT PRESENTED TO YOU IN CONNECTION WITH THIS
OFFER. NO SALE MAY BE MADE UNTIL THE OFFERING CIRCULAR [PROSPECTUS] IS
REGISTERED IN THIS STATE AND IS QUALIFIED OR REGISTERED BY THE SECURITIES AND
EXCHANGE COMMISSION."
h. A
statement indicating whether the issuer is in the development stage, is
conducting operations, has never conducted operations, or other applicable
description;
i. A general
description of the issuer's business or proposed business including the
products or goods that are, or will be, produced or services that are, or will
be, rendered, how these products or services are, or will be, produced or
rendered, and how and when the issuer intends to carry out its
activities;
j. A general
description of the purposes for which the issuer intends to use the proceeds of
the proposed offering;
k. The
following information for all executive officers and directors: name, title,
office, street address, telephone number, employment history (employers, titles
and dates of positions held during the past five years), and education if less
than five years of business experience (degrees, schools and dates).
