(1) By the
authority delegated to the commissioner in T.C.A. §§
48-1-103(b)(11)
and 48-1-116, the following non-issuer
transaction is exempt from the registration requirement provided in T.C.A.
§
48-1-104.
(2) Any non-issuer transaction by a
registered agent of a registered broker-dealer, and any resale transaction by a
sponsor of a unit investment trust registered under the Investment Company Act
of 1940, in a security of a class that has been outstanding in the hands of the
public for at least ninety (90) days, provided, at the time of the transaction:
(a) The issuer of the security is actually
engaged in business and not in the organizational stage or in bankruptcy or
receivership and is not a blank check, blind pool or shell company whose
primary plan of business is to engage in a merger or combination of the
business with, or an acquisition of, an unidentified person or
persons;
(b) The security is sold
at a price reasonably related to the current market price of the
security;
(c) The security does not
constitute the whole or part of an unsold allotment to, or a subscription or
participation by, the broker-dealer as an underwriter of the
security;
(d) There exists a
nationally recognized securities manual or its electronic equivalent designated
by rule or order of the commissioner or a document filed with the U.S.
Securities & Exchange Commission (SEC) which is publicly available through
the SEC's Electronic Data Gathering and Retrieval System (EDGAR), containing:
1. A description of the business and
operations of the issuer,
2. The
names of the issuer's officers and the names of the issuer's directors, if any,
or, in the case of a non-U.S. issuer, the corporate equivalents of such persons
in the issuer's country of domicile,
3. An audited balance sheet of the issuer as
of a date within eighteen (18) months, or in the case of a reorganization or
merger where parties to the reorganization or merger had such audited balance
sheet, a pro forma balance sheet, and
4. An audited income statement for each of
the issuer's immediately preceding two (2) fiscal years, or for the period of
existence of the issuer, if in existence for less than two (2) years or, in the
case of a reorganization or merger where the parties to the reorganization or
merger had such audited income statement, a pro forma income statement;
and
(e) The issuer of
the security has a class of equity securities listed on a national securities
exchange registered under the Securities Exchange Act of 1934, or designated
for trading on the National Association of Securities Dealers Automated
Quotation System (NASDAQ), unless:
1. The
issuer of the security is a unit investment trust registered under the
Investment Company Act of 1940, or
2. The issuer of the security has been
engaged in continuous business (including predecessors) for at least three (3)
years, or
3. The issuer of the
security has total assets of at least two million dollars ($2,000,000) based on
an audited balance sheet as of a date within eighteen (18) months or, in the
case of a reorganization or merger where parties to the reorganization or
merger had such audited balance sheet, a pro forma balance sheet.
(3) Definition. For the
purposes of this Manual Exemption rule, "nationally recognized securities
manuals or its electronic equivalent" shall include: Mergent's Investor
Service, and OTC Markets Group Inc. with respect to securities included in the
OTCQX and OTCQB markets.
