109.13. Limited Offering Exemptions.
(a) Public solicitation,well-informed,andsophisticatedinvestor.Theofferforsale or saleofthe securitiesoftheissuerwouldnotinvolvetheuseofpublicsolicitationundertheAct,Section5.I, iftheissuer,afterhavingmadeareasonablefactualinquiryhasreasonablecausetobelieve,anddoes believe,thatthepurchasersofthesecuritiesaresophisticated, well-informedinvestorsor well-informed investorswhohavearelationshipwiththeissueroritsprincipals,executiveofficers,ordirectorsevincingtrust betweentheparties(namelyclosebusinessassociation,closefriendship,orclosefamily ties),andsuch purchasersacquirethesecuritiesasultimatepurchasersandnotasunderwritersorconduitstootherbeneficial ownersorsubsequentpurchasers.Theuseofaregistereddealerinasaleotherwisemeetingtherequirements ofSection5.Idoesnotnecessarily meanthatthetransaction involvestheuseofpublicsolicitation.Theoffer withoutadvertisingtoapersonwhodidnotcomewithintheclassofpersonsdescribedinthissubsectiondoes notaloneresultinpublicsolicitationiftheissuerhadareasonablecausetobelieveanddidbelievethatsuch person fell within the class of persons described, and that such offer was not made indiscriminately.
(1) Theterm“well-informed”couldbesatisfiedthroughthedisseminationof printed materialtoeachpurchaserpriortohisorherpurchase,whichbyafairandfactualpresentation disclosesthe planofbusiness, thehistory,andthefinancialstatements oftheissuer,including materialfactsnecessaryin orderthatthestatements made, inthelightofcircumstancesunderwhichtheyaremade,notbemisleading.
be considered.
(2)Indeterminingwhoisasophisticatedinvestoratleastthefollowingfactors should
(A) Thefinancialcapacity of the investor, to be of suchproportionthatthe totalcostofthatinvestor’scommitmentintheproposedinvestmentwouldnotbematerialwhencomparedwith histotal financial capacity. It may be presumed that if the investmentdoesnot exceed20%of the investor’s networth(or jointnetworthwiththeinvestor’sspouse)at thetimeofsalethattheamountinvestedis not material.
(B) Knowledgeoffinance,securities,andinvestments,generally.This criteria maybemetbytheinvestor’spurchaserrepresentativeifsuchpurchaserrepresentativehassuchknowledge, so long as such purchaser representative:
(i)has no business relationship with the issuer;
(ii)represents only the investor and not the issuer; and
(iii)is compensated only by the investor.
(C) Experienceandskillininvestments based on actual participation.This criteriamaybemetbytheinvestor’spurchaserrepresentativeifsuchpurchaserrepresentativehassuch experience and skill, so long as such purchaser representative:
(i)has no business relationship with the issuer;
(ii)represents only the investor and not the issuer; and
(iii)is compensated only by the investor.
(b) Advertisements.Theterm“advertisements”doesnotincludetheuseofthetype of printedmaterialassetoutinsubsection(a)of thissectionunderthediscussionoftheterm“well-informed.” Further,themainconcepttobeconsideredinadefinitionalanalysisoftheterm“advertisements,”asitisused inSection5.I,isthemethodofuseoftheprintedmaterial.Thefollowingcircumstances,thoughnotintended tobeexclusive,willbeconsidered indetermining whetherthemethod ofuseofanyprintedmaterialiswithin the limits of Section 5.I:
(1)limited printing of the material;
(2) limiteddistributionofthematerialonlytopersonswhotheissuer,after having madea reasonablefactualinquiryhas reasonablecausetobelieve anddoesbelieveare sophisticated investors, or to persons who have a relationship with the issuer asset forth in subsection (a) of this section, or to their purchaser representatives;
(3)control of the printing and distribution of the printed material;
(4) recognitionofthenecessityofcompliancewiththerequirementssetforthin this subsection on the part of the issuer and the investor. Suchrecognitionmightconsistof a printed prohibition onthefrontinlargetypethatthecircular is forthatindividual’sconfidentialuseonly,andmaynot be reproduced;and,theuseofastatementwarningthatanyactioncontrarytotheserestrictionsmayplacesuch individual and the issuer in violation of the Texas Securities Act.
(c) Numberofsecurityholders orpurchasersofsecurities.Incomputingthenumber of purchasers or security holders for Section 5.I, the following criteria shall be used.
(1) Thereshallbecountedasonepurchaserorsecurityholderanypurchaser or security holder together with:
(A) anyrelativeorspouseofsuchpurchaserorsecurityholderwhohas the samehomeassuchpurchaseror securityholder;anyrelativeofsuchspousewhohasthesamehomeas suchpurchaserorsecurityholder;anyrelativeorspouseorrelativeofsuchspousewhois adependentof such security holder;
(B) any trustorestateinwhichsuch purchaserorsecurityholder orany of thepersonsrelatedtohimasspecifiedinsubparagraph(A)or(C)ofthisparagraphcollectivelyhavemorethan
50% of the beneficial interest (excluding contingent interests); and
(C) anycorporationorotherorganizationofwhichsuchpurchaseror security holderoranyofthepersonsrelatedtohimasspecifiedinsubparagraph(A) orsubparagraph(B)ofthis paragraphcollectivelyarethebeneficialownersofmorethan50%oftheequitysecurities(excludingdirectors’ qualified shares) or equity interest.
(2) Thereshallbecountedasonepurchaserorsecurityholderany corporation, partnership,association,jointstockcompany,trust,or unincorporatedassociation,organizedandexisting otherthanforthepurposeofacquiringsecuritiesoftheissuerforwhichtheexemptionis claimedunder Section 5.I.
(3) Anygeneralpartnerofalimitedpartnership whoissubjecttogeneralliabilityfor theobligationsofthelimitedpartnershipandactivelyengagesinthecontrolandmanagementofthebusiness andaffairsofthelimitedpartnershiporofthemanaginggeneralpartnerofthepartnershipshallnotbecounted as a purchaser or security holder for purposes of Section 5.I.
(4) TheexemptionscontainedintheAct,Section5.I(a)and(c),asinterpreted in subsections(a)-(j)ofthissectionmaynotbecombinedwiththeexemptionspromulgatedpursuanttotheAct, Section5.T,containedinsubsections(k)and(l)of thissectiontoexceedsales to 35 unaccreditedinvestors in a 12-month period.
(5) “Securityholders”or“purchasersofsecurities,”asthosetermsareusedin the Act,Section5.I(a)and5.I(c),donotincludeholdersofanyoptionsgrantedpursuanttoaplanthatfallswithin the exemption for compensatory or benefit plans provided by the Act, Section 5.I(b).
(d) Totalnumberofsecurityholders. The phrase“the total number ofsecurityholdersof theissuer”inSection5.I(a)includesallsecurityholdersoftheissuerwithoutregardtotheirplacesofresidence (withinorwithouttheStateofTexas)andwithoutregardtowheretheyacquiredthesecurities.Indetermining thenumberofpersonsforpurposesofSection5.I(c),priorsalestopersonsresidingoutsidetheStateofTexas andprior salestoTexasresidentsconsummatedoutsidetheStateofTexasshallbeincludedunlesssuch sales were made in compliance with §139.7 of this title (relating to Sale of Securities to Nonresidents).
(e) Other exemptions.Thephrase“exemptunderotherprovisionsofthisSection5”in Section 5.I(c) means exempt under any provisions oftheAct,otherthanSection5.I(a), and subsections (k) and (l) of this section.
(f)Compensatoryorbenefitplans.
(1) NopublicsolicitationoradvertisementunderSection5.Ioccursbythe distribution toeligiblepersonsofa prospectusfiledunder theSecuritiesAct of1933with theSecuritiesandExchange Commissionfortheplanorany othermaterialrequiredorpermittedto be distributedbytheSecuritiesActof
1933in connectionwithsuch plan when the securities under the plan aresold or distributed in atransaction otherwise meeting the requirements of Section 5.I(b).
(2) Insuranceagentswhoareexclusiveagentsoftheissueroritssubsidiaryorderive morethan50%oftheirannualincomefromtheissueroritssubsidiaryaredeemed “employees”asthatterm is used in Section 5.I(b).
(g) Compensatory or benefit plan sales. Only the employer and its participating subsidiaries,parents,orsubsidiariesofsuchparents,ifany,mayofferorsellsecuritiesinconnectionwiththe employeeplanwithoutregistrationasdealers.ForpurposesoftheAct,Section5.I(b),theterm“issuer” includesageneralpartnerofalimitedpartnershipwithrespecttoasecuritysoldordistributedbysuchlimited partnership inatransaction otherwisemeetingtherequirementsofSection5.I(b).Anemployeeoftheissuer or its participating subsidiary who aids in offering or selling such securitiesinconnectionwiththe plan is not required to be registered as an agent provided the employee meets all of the following conditions:
(1)theemployeewasnothiredforthepurposeofofferingorsellingsuchsecurities; (2) theemployee’sactivityinvolvingtheofferandsaleofsuchsecuritiesisstrictly
incidental to his or her bona fide primary nonsecurities-related work duties; and
(3) theemployee’scompensationisbasedsolelyontheperformanceofsuch other duties,i.e.,theemployeedoesnotreceiveanycompensationforofferingforsale,selling,orotherwiseaiding the sale of securities.
(h) Compensatoryor benefit plans for countingpurposes.Anoncontributory stock ownershipplanorstockownershiptrustthatholdssecuritiesoftheissuerforthebenefitoftheparticipantsin thatissuer’splanshallbecountedasonesecurityholderunderSection5.I(a).Planparticipantsinsuchastock ownershipplanortrustwill notbedeemedsecurityholdersoftheissuerforpurposesofcountingsecurity holdersunderSection5.I(a)solelybecauseoftheirparticipationin theplanor trust. However,participants receivingdistributionsofsecuritiesfromtheplanortrustwill bedeemedsecurityholdersoftheissueron receipt of securities of the issuer from the plan or trust.
(b), or (c).
(i)Notices.ThereisnonoticefilingrequirementforsalesmadeundertheAct,Section5.I(a),
(j) Limitationsondisposition.Theissuerandanypersonactingonitsbehalfshallexercise reasonablecaretoassurethatthepurchasersareacquiringthesecuritiesasaninvestment.Suchreasonable care should include, but not be limited to, the following:
(1) makingreasonableinquirytodetermineifthepurchaserisacquiringthe securities for his or her own account or on behalf of other persons;
(2) placing a legend onthecertificateorother document evidencing the securities totheeffectthatthesecuritieshavenotbeenregisteredunderanysecuritieslawandsettingforthorreferring to the restrictions on transferability and sale of the securities;
(3) issuingstoptransferinstructionstotheissuer’stransferagent,ifany,withrespect to the securities, or, if the issuer transfers its ownsecurities, making anotationinthe appropriate records of the issuer;
(4) obtainingfromthepurchaserasignedwrittenagreementtotheeffectthat the securities willnot be sold without registration under applicable securitieslawsorexemptionstherefrom;and
(5) priortosale,writtendisclosuretoeachpurchaser,totheeffectthata purchaser ofthesecuritiesmustbeartheeconomicrisk oftheinvestmentforanindefiniteperiodoftime becausethe securitieshavenotbeenregisteredunderapplicablesecuritieslawsandthereforecannotbesoldunlessthey aresubsequentlyregisteredundersuchsecuritieslawsoranexemptionfromsuchregistrationis available; and that the securities are subject to the limitations set forth in paragraphs (2) - (4) of this subsection.
(k) Uniform limited offeringexemption.InadditiontosalesmadeundertheTexas SecuritiesAct,Section5.I,theStateSecuritiesBoard,pursuanttotheAct,Section5.T,exemptsfrom the registrationrequirementsoftheAct,Section7,anyofferorsaleofsecuritiesofferedorsoldincompliancewith theSecuritiesActof 1933,RegulationD, Rules230.505and/or230.506,includinganyofferor salemade exemptbyapplicationofRule508(a),asmadeeffectiveinUnitedStatesSecuritiesandExchangeCommission ReleaseNumber33-6389andasamendedinReleaseNumbers33-6437,33-6663,33-6758,33-6825,
33-6863, 33-6902,33-6949,33-6996,33-7470,33-8876, and 33-8891 and as adjusted by The Dodd-Frank WallStreetReformandConsumerProtectionAct,PublicLaw111-203,andwhichsatisfiesthefollowingfurther conditions and limitations.
(1) Nocommission,fee,orotherremunerationshallbepaidorgiven,directly or indirectly,toanypersonfor solicitinganyprospectivepurchaserin this stateunlesssuchpersonis appropriatelyregisteredinthisstate.It isa defensetoaviolationof thissubsectionifthe issuersustainsthe burdenofprooftoestablishthatheorshedidnotknowandintheexerciseofreasonablecarecouldnothave knownthatthepersonwhoreceivedacommission,fee,orotherremunerationwasnotappropriatelyregistered in this state.
(2) Noexemptionunderthissubsectionshallbeavailableforthe securities ofany issuerif anyofthepartiesdescribedintheSecuritiesAct of1933,RegulationA,Rule230.262,asmade effective in United States Securities and Exchange Commission Release Number 33-6949:
(A) hasfiledaregistrationstatementwhichissubjectofacurrently effective registrationstop order enteredpursuantto any state’ssecuritieslawwithinfiveyearspriorto the filingof the notice required under this exemption;
(B) hasbeenconvictedwithinfiveyearspriortothefilingofthe notice requiredunderthisexemptionofanyfelonyor misdemeanorin connectionwith theoffer,purchase,or sale ofany securityor anyfelonyinvolvingfraudor deceit,including,butnotlimitedto,forgery,embezzlement, obtaining money under false pretenses, larceny, or conspiracy to defraud;
(C) iscurrentlysubjecttoanystateadministrativeenforcementorder or judgmententeredbythatstate’ssecuritiesadministratorwithinfiveyearspriortothefilingofthenotice
requiredunderthisexemptionor issubjecttoanystate’sadministrativeenforcementorderorjudgmentin whichfraudordeceit,including,butnotlimitedto,makinguntruestatementsofmaterialfactsandomittingto statematerialfacts,wasfoundandtheorderorjudgmentwasenteredwithinfiveyearspriortothefilingofthe notice required under this exemption;
(D) issubjecttoanystate’sadministrativeenforcementorderor judgment whichprohibits,denies,or revokestheuseofanyexemptionfrom registrationin connectionwith theoffer, purchase, or sale of securities;
(E) iscurrentlysubjecttoanyorder,judgment,ordecreeofanycourt of competentjurisdictiontemporarilyorpreliminaryrestrainingorenjoining,orissubjecttoanyorder,judgment, ordecreeofanycourtofcompetentjurisdiction,permanentlyrestrainingorenjoining,suchpartyfromengaging inorcontinuinganyconductorpracticeinconnectionwiththepurchaseorsaleofanysecurityorinvolvingthe makingofanyfalsefilingwiththestateenteredwithinfiveyearspriortothefilingofthenoticerequiredunder this exemption.
(3) Theprohibitionsofparagraph(2)(A)-(C)and(E)ofthissubsectionshallnot apply ifthepersonsubjecttothedisqualificationisdulylicensedorregisteredtoconductsecurities-relatedbusiness in thestatein whichtheadministrativeorderor judgmentwas enteredagainstsuchpersonor if the broker/dealeremployingsuchpartyislicensedorregisteredinthisstateandtheFormBDfiledwiththisstate disclosestheorder,conviction,judgment,ordecreerelatingtosuchperson.Nopersondisqualifiedunderthis subsection may act in a capacity other than that for which the person is licensed or registered.
(4) Anydisqualificationcausedbythissubsectionisautomaticallywaivedifthe state securitiesadministratororAgencyofthestatewhichcreatedthebasisfordisqualificationdeterminesupona showingofgoodcausethatitisnotnecessaryunderthecircumstancesthattheexemption bedenied. Itisa defense to a violationofthis subsection if the issuer sustains the burden of proof to establish that he or she didnotknowandintheexerciseofreasonablecarecouldnothaveknownthatadisqualification underthis subsection existed.
(5)The issuer shall file with the Securities Commissioner a notice on Form D.
(A) Thenoticeshallbefilednolaterthan15daysafterthereceipt of considerationorthedeliveryofasubscriptionagreementbyaninvestorinthisstatewhichresultsfromanoffer beingmadeinrelianceuponthisexemptionandatsuchothertimesandintheformrequiredunderRegulation D, Rule 230.503 to be filed with the Securities and Exchange Commission.
(B)Thenoticeshallcontainanundertakingbytheissuertofurnishto the
Securities Commissioner, upon written request, the information furnished by the issuer to offerees.
(C) EverypersonfilingtheinitialnoticeonFormDshallpayafilingfeeof 1/10 of 1.0%of the aggregate amount of securities described as being offered for sale, but inno case morethan
$500.
(D) ThefilingofFormDandthepaymentofthefilingfeemustbe made electronically through the EFD System, when such system becomes available.
(6) Inallsalestononaccreditedinvestorsinthisstate,oneofthefollowing conditions mustbe satisfiedortheissuerandany personactingon itsbehalfshallhavereasonablegroundsto believe and after making reasonable inquiry shall believe that one of the following conditions is satisfied.
(A) Theinvestmentissuitableforthepurchaseruponthebasisofthe facts, ifany,disclosedbythepurchaserastothepurchaser’sothersecurityholdings,financialsituation,andneeds. Forthepurposeofthisconditiononly,itmaybepresumedthatiftheinvestmentdoesnotexceed10%ofthe investor’s net worth, it is suitable.
(B) The purchaser either alone or with his/her purchaserrepresentative(s) hassuchknowledgeand experience in financial andbusinessmattersthathe/sheisortheyarecapableof evaluating the merits and risks of the prospective investment.
(7) Afailuretocomplywithaterm,condition, orrequirementof paragraphs (1)and (6)ofthissubsectionwill notresultinlossoftheexemptionfromtherequirementsoftheAct,Section7,for any offer or sale to a particular individual or entity if the person relying on the exemption shows:
(A) thefailuretocomplydidnotpertaintoaterm,condition,or requirement directly intended to protect that particular individual or entity; and
whole; and
(B)thefailuretocomplywasinsignificantwithrespecttotheofferingasa
(C)agoodfaithandreasonableattemptwasmadetocomplywith all applicable terms, conditions, and requirements of paragraphs (1) and (6) of this subsection.
(8) Salesmadepursuanttothissubsectiontononaccreditedinvestorsmustcomply with the disclosure requirements of subsection (a)(1) of this section.
(9) Transactionswhichareexemptunderthissubsectionmaynotbecombined with offersandsalesexemptunderanyotherruleorsectionoftheAct;however,nothinginthislimitationshallact asanelection.Shouldforanyreason,theofferandsalefailtocomplywithalloftheconditionsforthis exemption, the issuer may claim the availability of any other applicable exemption.
(10) TheSecuritiesCommissionermay,byruleororder,increasethenumber of purchasers or waive other conditions of this exemption.
(11) Thislimitedofferingtransactionalexemptionisdesignedtofurthertheobjectives of compatibility with federal exemptions and uniformity among the states.
(12) Nothinginthisexemptionisintendedtoorshouldbeconstruedasinanyway relievingissuersorpersonsactingonbehalfofissuersfrom providingdisclosuretoprospectiveinvestors adequate to satisfy the anti-fraud provisions of the Texas Securities Act.
(13) Inviewoftheobjectiveofthissubsectionandthepurposesand policies underlyingtheTexasSecuritiesAct,theexemptionisnotavailabletoanyissuerwithrespecttoanytransaction which,althoughintechnicalcompliancewiththissubsection,ispartofaplanorschemetoevaderegistration or the conditions or limitations explicitly stated in this subsection.
(14) Nothinginthissubsectionisintendedtorelieveregistereddealers,salesmen, or agents fromtheduediligence, suitability,orknowyourcustomerstandards oranyotherrequirementsoflaw otherwise applicable to such registered persons.
(15)Review of Form D.
(A) ThestaffoftheStateSecuritiesBoardwillreviewallnoticefilings made underthis subsectionfor completenessof theinformationrequiredto befiledunderthis section.If thestaff determinesthatafilingisincompleteinanymaterialrespect,thestaffwillwithinfivedaysofreceiptoftheform issue a letter notifying the user of the form of the deficiency.
(B) Auserofthissectionwho receives noticefromthe staff of a deficiency inaformfiledunderthissectionmaycorrectthedeficiencywithin30daysofthedatethatthedeficiencyletter is issuedbythestaff.Ifatimelycorrectionismade,thefilingshallbedeemedtobecompleteandin compliance with the filing requirements as of the date the original filing was received.
(C) Inordertoassistvoluntarycompliancewithinthissubsectionandto aid usersinfilingnoticesrequiredunder paragraph(5)of thissubsection,thestaff of the StateSecurities Board is availabletoanswerquestionsaboutthisregulation.Inquiries shouldbeaddressedtotheDirectorofthe Registration Division.
(16) Ifthesecuritiescomplywiththissubsection(exceptforparagraphs(1)-(6),(8), and(10)ofthissubsection)andarefederalcoveredsecurities,asthattermis definedin§107.2ofthistitle (relatingtoDefinitions),theissuer shouldrefertoChapter114of thistitle(relatingtoFederalCovered Securities)fortheapplicablefilingandfeerequirements.(Issuersareadvisedoftheirobligationtocomplywith thedealerandagentregistrationrequirementsoftheTexasSecuritiesActandBoardrules.See§114.4(g)of this title (relating to Filings and Fees).)
(17) IssuersinRegulationDofferings. When an offering is madeincompliancewith RegulationDoftheSECandtheofferingwillbemadebyorthrougharegisteredsecuritiesdealer,theissuer anditsdirectors,officers,agents, andemployeesmaymakethemselvesavailabletoanswer questionsfrom offerees,as requiredby Rule 502(b)(2)(v) ofRegulationD, withoutbeingrequiredto registeras securities dealers or agents under the Act, Section 12.
(l)Intrastate limited offeringexemption.Inadditiontosalesmadeunderthe Texas
SecuritiesAct,Section5.I,theStateSecuritiesBoard,pursuanttotheAct,Section5.T,exemptsfromthe
registrationrequirementsof the Act, Section 7, any offer or sale of any securities by theissueritself, orbya registereddealeractingasagentfortheissuerprovidedalloffersandsalesaremadepursuanttoanoffering made andcompletedsolelywithinthisstateand allthe conditionsinparagraphs(1)-(11)ofthis subsection are satisfied.
(1)Thesaleismade,withouttheuseofanypublicsolicitationoradvertisements, as set forth in subsection (a) and subsection (b) of this section to:
(A) notmorethan35newsecurityholdersoftheissuerwhomeetthe criteria statedinsubsection(a)ofthissectionandwhobecamesecurityholdersduringtheperiodof12monthsending with the date of the sale in question (subject to paragraph (7) of this subsection); and
(B) otherwell-informedinvestorswhoare“accreditedinvestors”asdefined in §107.2 of this title (relating to Definitions).(Forpurposesof this subsection, the term “well informed”shall have the samemeaningassetoutinsubsection(a)(1)of this section, and the term “5.I”in such subsection shall include sales made pursuant to this subsection.)
(2)Neithertheissuernortheregistereddealer(assuchtermsaredefined in paragraph (4) of this subsection):
(A) iscurrentlysubjecttoanyadministrativeorderissuedbystateor federal authoritieswithinfiveyearsoftheexpectedofferandsaleofsecuritiesinrelianceuponthisexemption,which order:
fraudulent conduct; or
(i)isbaseduponafindingthatsuchpersonhasengaged in
(ii) hastheeffectofenjoiningsuchpersonfromactivitiessubject to federal or state statutes designed to protect investorsorconsumers against unlawful or deceptive practices involvingsecurities,insurance,commoditiesor commodityfutures,realestate,franchises,business opportunities, consumer goods, or other goods and services;
(B) hasbeenconvictedwithinfiveyearspriortocommencementof the offeringofanyfelonyormisdemeanorofwhichfraudis anessentialelement,orwhichis aviolationofthe securities lawsorregulationsof thisstate, orof any otherstateofthe United States,orofthe United States, oranyforeignjurisdiction;orwhichis acrime involvingmoralturpitude;orwhichis acriminalviolationof statutesdesignedtoprotectconsumersagainstunlawfulpracticesinvolvinginsurance,securities,commodities or commodityfutures,realestate,franchises,businessopportunities,consumergoods,or other goodsand services;
(C) issubjecttoanyorder,judgment,ordecreeenteredwithinfiveyears prior tocommencementoftheofferingby anycourtofcompetentjurisdictionwhich temporarilyor permanently restrainsorenjoinssuchpersonfromengaginginorcontinuinganyconductorpracticeinconnectionwiththe purchase orsaleofanysecurityorinvolvinganyfalsefilingwithanystate;orwhichrestrainsorenjoinssuch person from activities subject to federal or statestatutesdesigned to protect consumers against unlawful or
deceptivepracticesinvolvinginsurance,commoditiesorcommodityfutures,realestate,franchises,business opportunities, consumer goods, or other goods and services.
(3) Theprohibitionsofsubparagraphs(A)-(C)ofparagraph(2)shallnotapplyif the partysubjecttothedisqualifyingorderis dulylicensedtoconductsecurities-relatedbusinessinthestatein whichtheadministrativeorderor judgmentwasenteredagainstsuchparty or,if theorder or judgmentwas enteredbyfederalauthorities,theprohibitionsofsubparagraphs(A)-(C)ofparagraph(2) shallnotapplyif thepartysubjecttothedisqualifyingorderisdulylicensedtoconductsecurities-relatedbusinessbythe SecuritiesandExchangeCommission.Anydisqualificationcausedbyparagraph(2)isautomaticallywaived ifthestateorfederalauthoritieswhichcreatedthebasisfordisqualificationdetermineuponashowingofgood cause that it is not necessary under the circumstances that the exemption be denied.
(4) Forpurposesofparagraphs(2)and(3)only,“issuer”includesany directors, executiveofficers, generalpartners, or beneficial owners of10%ormoreof any classof itsequitysecurities (beneficial ownership meaning the power to vote or direct the vote and/or the powerto disposeordirect the dispositionofsuchsecurities),and“registereddealer”shallincludeanypartners,directors,executiveofficers, orbeneficialownerof10% ormoreofanyclassoftheequitysecuritiesoftheregistereddealer(beneficial ownershipmeaningthe power to vote ordirectthe vote and/orthe power to disposeordirectthe disposition of such securities).
(5) Uponapplication,andforgoodcauseshown,theCommissionermaywaive a disqualification contained in paragraph (2).
(6) Theofferingcomplieswithsubsections (a)-(d)and(j)ofthissection.However, personswho are“accreditedinvestors”asdefinedin§107.2of this title are deemedtobe “sophisticated”as defined in subsection (a)(2) of this section.
(7) This subsection may not be combinedwiththe Securities Act, Section 5.I(a) or Section 5.I(c), or subsection (k) of this section to makesalestomorethan35unaccreditedsecurityholders duringa12-monthperiod.Exceptforaccreditedinvestorswhobecamesecurityholderspursuanttothis subsection, security holders who purchase insales made incompliancewith this subsection are included in thecountofsecurityholdersunderSection5.I(a)orpurchasersunderSection5.I(c),butthissubsectionmay beusedtoexceedthenumbersofsecurityholdersorpurchasersallowedbysuchsectionsoveranextended period of time.
(8) Issuerswhoofferandsellsecuritiesunderthissubsectiononlythrough a securities dealer registered in Texas may do so without filing any notice with the State Securities Board.
(9)Notice filing requirements.
(A)Anissuerwhoisnotaregisteredsecuritiesdealerandwhodoesnot sell securities by or through a registered securities dealer shall file a sworn notice onForm133.29not lessthan
10businessdaysbeforeanysaleclaimedtobeexemptunderthissubsectionmaybeconsummatedforsales underparagraph(1)(B)of thissubsection,inwhole orinpart toindividualaccredited investors,asdefined in
§107.2 of this title.
(B) Forthe purposeof filingForm133.29,“businessdays”means ordinary business days and does not include Saturdays, Sundays, or state holidays.
(C) Nonoticeisrequiredforsalesmadeunderparagraph(1)(A)of this subsection orunderparagraph(1)(B)ofthissubsection wherethesalesaremadeexclusivelytoinstitutional accredited investors as defined in §107.2 of this title.
(D) TheissuermayberequiredbytheSecuritiesCommissionerto give details concerning any information requestedinForm133.29andmayberequiredtofurnishany additional informationdeemednecessarybytheSecuritiesCommissionertodeterminetheissuer’sbusinessreputeand qualifications.
(E) EveryissuerfilinganoticeonForm133.29shallpayafilingfeeof 1/10 of 1.0%of the aggregate amount of securities described as being offered for sale, but in no casemorethan
$500.
(10) Accreditedinvestorsecurityholderswhopurchaseinsalesmadeunder this exemptionare not countedas security holdersunderSection5.I(a)or purchasers under Section5.I(c) in determiningwhetheranyothersalestoothersecurityholdersorpurchasersareexemptunderSection5.I.That istosay,thisexemptionforsalestoaccreditedinvestorsiscumulativewithandinadditiontotheexemptions containedinSection5.I,andsalesmadeunderparagraph(1)(B) ofthissubsectionarenotconsideredin determiningwhethersalesmadeinrelianceonthe exemptions contained in Section 5.I wouldbewithinthe numerical limits on the number of security holders or purchasers contained in Section 5.I.
(11) “Accreditedinvestor”isdefinedin§107.2ofthistitleandforpurposesof this subsection,includesany person who the issuer reasonably believes comes within that definition at the time of the sale of the securities to that person.
SourceNote:Theprovisionsofthis§109.13adoptedtobeeffectiveMarch1,1985,10TexReg569;amended to beeffectiveAugust29,1985,10TexReg2999;amendedtobeeffectiveApril8, 1986, 11 TexReg 1508; amendedtobeeffectiveMarch10,1987,12TexReg601;amendedtobeeffectiveJanuary1,1988,TexReg
4470; amended to be effective October 31, 1988, 13 TexReg4851;amendedtobeeffective November 29,
1989,14TexReg6076;amendedto beeffectiveNovember15,1990,15TexReg6290;amended tobe effectiveJune8,1994,19TexReg4195;amendedtobeeffectiveAugust3,1995,20TexReg5381;amended tobeeffectiveApril 8,1997,22TexReg3218;amendedtobeeffectiveMarch14,1999,24TexReg1769; amendedtobeeffectiveAugust12,2001,26TexReg5788;amendedtobeeffectiveJune12,2002,27
TexReg 4934; amended to be effective June 21, 2011, 36 TexReg 3715.