Current through Register Vol. 48, No. 38, September 20, 2024
a) The
solicitation of indications of interest to purchase a security made by or on
behalf of an issuer for the sole purpose of soliciting an indication of
interest in receiving a prospectus (or its equivalent) for such security does
not constitute an offer under Section 5 of the Act provided that 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, is engaged in or proposes to engage in a business other
than petroleum exploration or production or mining or other extractive
industries and is not a blind pool offering or other offering for which the
specific business or properties cannot now be described. For purposes of this
Section, the term "blind pool" means, without limitation, a development stage
company that has generally disclosed its business plan or purpose, but such
business plan or purpose has not identified specific properties or products to
be purchased, constructed or developed;
2) The solicitor intends to register the
security under Section 5 of the Act;
3) At least ten business days prior to the
initial solicitation of interest under this Section, the solicitor files with
the Securities Department a Solicitation of Interest Form together with any
other materials or communications which are to be utilized in the solicitation
of interest, including, without limitation, the script of any broadcast to be
made, the text of any electronic dissemination through such media as the
Internet or other data networks, and any similar documents together with a copy
of any notice or materials to be published or circulated;
4) At least five business days prior to its
usage, the solicitor files with the Securities Department any amendments or
supplements to the foregoing materials or additional materials to be utilized
in the solicitation of interest, except for materials provided to a particular
solicitee pursuant to a request by that person;
5) No Solicitation of Interest Form, script,
advertisement or other material which the solicitor has been notified by the
Securities Department not to distribute is utilized to solicit indications of
interest;
6) Except for scripted
broadcasts and published notices, the solicitor does not communicate with any
solicitee about the contemplated offering unless the solicitee is provided with
the most current Solicitation of Interest Form at or before the time of the
communication but no later than five days from the date of
communication;
7) During the
solicitation of interest period, the solicitor does not solicit or accept money
or a commitment to purchase securities;
8) No sale is made until seven days after
delivery to the purchaser of a final prospectus, offering circular or
disclosure document as the case may be, or in those instances hereunder in
which delivery of a preliminary prospectus is allowed, a preliminary
prospectus; and
9) The solicitor
does not know, and in the exercise of reasonable care, could not know that the
issuer or any of the issuer's officers, directors, ten percent shareholders,
partners, members or promoters (or any person performing a similar function):
A) Has filed a registration statement or an
application for registration of securities which is the subject of a currently
effective registration stop order entered pursuant to any federal or state
securities law within five years prior to the filing of the Solicitation of
Interest Form.
B) Has been
convicted within five years prior to the filing of the Solicitation of Interest
Form of any felony or misdemeanor in connection with the offer, purchase or
sale of any security, or any felony involving fraud or deceit, including,
without limitation, forgery, embezzlement, obtaining money under false
pretenses, larceny, or conspiracy to defraud.
C) Is currently subject to any federal or
state administrative enforcement order or judgment entered by any state
securities administrator or the Securities and Exchange Commission within five
years prior to the filing of the Solicitation of Interest Form or is subject to
any federal or state administrative enforcement order or judgment entered
within five years prior to the filing of the Solicitation of Interest Form in
which fraud or deceit, including, without limitation, making untrue statements
of material facts or omitting to state material facts, was found.
D) Is subject to any federal or state
administrative enforcement order or judgment which prohibits, denies, or
revokes the use of any exemption from registration in connection with the
offer, purchase or sale of securities.
E) Is currently subject to any order,
judgment, or decree of any court of competent jurisdiction temporarily or
preliminarily restraining or enjoining such party from engaging in or
continuing any conduct or practice in connection with the purchase or sale of
any security or involving the making of any false filing with the State entered
within five years prior to the filing of the Solicitation of Interest Form.
The prohibitions listed above in subsections (a)(9)(A)
through (E) of this Section shall not apply if the person subject to the
disqualification is duly licensed or registered to conduct securities related
business in the state in which the administrative order or judgment was entered
against such person or if the dealer employing such party is registered in this
State and the Form BD filed with this State discloses the order, conviction,
judgment or decree relating to such person. No person disqualified under this
Section may act in a capacity other than that for which the person is
registered. Any disqualification caused by this Section is automatically waived
if the agency which created the basis for the disqualification determines upon
a showing of good cause that it is not necessary under the circumstances that
the exemption be denied.
b) A failure to comply with any condition of
subsection (a) of this Section will not result in the offer of a security
provided that the solicitor demonstrates that:
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 subsection (a) of this
Section.
Where a solicitation of interest is established only through
reliance upon this subsection (b), the failure to comply shall nonetheless be
actionable by the Securities Department as a violation of Section 12 of the
Act.
c) The
solicitor shall comply with the requirements set forth below:
1) Any published notice, script for broadcast
or electronic dissemination through such media as the Internet or other data
networks or similar means of communication shall contain at least the identity
of the chief executive officer of the issuer, a brief and general description
of its business and products, and the following legends:
A) THIS IS A SOLICITATION OF INTEREST ONLY.
NO MONEY OR OTHER CONSIDERATION IS BEING SOLICITED AND NONE WILL BE
ACCEPTED;
B) NO SALES OF THE
SECURITIES WILL BE MADE OR COMMITMENT TO PURCHASE ACCEPTED UNTIL THE DELIVERY
OF A FINAL OFFERING STATEMENT THAT INCLUDES COMPLETE INFORMATION ABOUT THE
ISSUER AND THE OFFERING;
C) AN
INDICATION OF INTEREST MADE BY A PROSPECTIVE INVESTOR INVOLVES NO OBLIGATION OR
COMMITMENT OF ANY KIND;
D) THIS
SOLICITATION OF INTEREST IS BEING MADE PURSUANT TO AN EXEMPTION FROM
REGISTRATION UNDER THE FEDERAL AND STATE SECURITIES LAWS. NO SALE MAY BE MADE
UNTIL THE OFFERING STATEMENT IS QUALIFIED BY THE SEC AND IS REGISTERED IN THIS
STATE; AND
E) 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 SOLICITATION OF INTEREST.
2) All communications with prospective
investors made in reliance on this Section must cease after an application for
registration of securities is filed in this State, and no sale may be made
until at least twenty days after the last communication made in reliance on
this Section.
3) A preliminary
prospectus (or its equivalent) may only be used in connection with an offering
for which indications of interest have been solicited under this Section
provided that the offering is conducted by a registered dealer in this
State.
d) The Securities
Director, or his or her designee, may waive in writing any provision of this
Section, upon written application by the solicitor and due cause having been
shown. Neither compliance nor attempted compliance with this Section, nor the
absence of any objection or proceeding instituted or Order issued by the
Secretary of State under Section 11 of the Act with respect to any solicitation
of interest to purchase securities undertaken pursuant to this Section, shall
be deemed to be a waiver of any provision of this Section or deemed to be a
confirmation by the Securities Department of the availability of this
Section.
e) Issuers on whose behalf
indications of interest are solicited under this Section may not make offers or
sales in reliance upon subsection D, G, H, R or S of Section 4 of the Act until
twelve months after the last communication with a solicitee made pursuant to
this Section.
