their certificate.Particularnote must be given of the qualifyingclauseto Section5(F) which providesthat before the exchangein reorganization may be exempt,it must be a trans- action in which the "securityholdersor creditorsdo not pay or give or promiseand are not obligatedto pay or give any consideration for the securitiesso issuedother than the securitiesof or claimsagainst said company . . . then held or owned by them."
The certificateholder6who have not fully paid for their cer- tificatesby acceptingsubscriptioncontractswould be bound to pay fur- ther considerationfor the stock of the companyother than the simple surrenderof the certificatethat they held.
We are of the opinionalso that the transactionin question does not qualifyas an exempt transactionunder Section5(F) for the additionalreasonthat some of the stock to be issued is in the form of a bonus for early paymentor prior paymentof the face amount of Hon..WilliamM. King, page 12 (WW-504)
their certificates.Clearly,such certificateholdershave given con- siderationin the form of early otiprior paymentwhich is in addition to and in excess of the simplesurrenderof the certificatewhich they hold.
In the course of this opinionwe have of necessitymade cer- tain factualconclusionsbased on the materialwhich you have furnished this office and from the materialcollectedby the State Board of Insur- ance in connectionwith the charteramendmentapplicationof the company. The fact findingauthorityunder The SecuritiesAct rest6,withyou and you are at libertyto arrive at differentfactualconclusionsfrom those utilizedin this opinion.
Issuanceof stockto holdersof advisory board certificatesunder circumstancesin questionis not exempt from registration either under the provisionsof Section 5(D), 5(E), .5(F) or 5(G) of The Securities Act of 1957.
Yours very truly,
WILL WILSON Attorney-.General of Texas
-" Fred B. Werkenthin Aaeistant
. APPROVED: 'OPINION COMMITTEE:
Geo. P. Blackburn,Chairman
John Reeves Morgan Neebitt
REVIEWEDFORTKE ATTORNEYGENERAL BY Riley Eugene FlCtcher