New Mexico Administrative Code › Title 12 - TRADE, COMMERCE AND BANKING › Chapter 11 - SECURITIES › Part 9 - STANDARDS APPLICABLE TO REGISTERED OFFERINGS › Section 12.11.9.15 - UNDERWRITING EXPENSES, UNDERWRITER'S WARRANTS, SELLING EXPENSES AND SELLING SECURITY HOLDERS

Current through Register Vol. 35, No. 13, July 16, 2024
A. An offer or
				sale of securities may be disallowed by the director if the underwriting
				expenses to be incurred exceed 17 percent of the gross proceeds from the public
				offering.
B. Underwriting expenses
				include, but are not limited to:
(1)
				commissions to underwriters or broker-dealers;
(2) non-accountable fees or expenses to be
				paid to the underwriters or broker-dealers;
(3) underwriter's warrants, which shall be
				valued using the following formula: .5 multiplied by ((165 percent of the
				offering price) minus (the exercise price multiplied by the number of shares
				offered to the public)) multiplied by (the number of shares underlying the
				warrants divided by the number of shares offered to the public) equals Warrant
				Value; the value may be reduced by 20 percent if the exercise period of the
				warrants is extended from one year after the public offering to two years after
				the public offering and by 40 percent if the exercise period of the warrants is
				extended from one year after the public offering to three years after the
				public offering; warrants granted to underwriters are subject to the following
				restrictions:
(a) the underwriter is a
				managing underwriter;
(b) the
				public offering is either a firmly underwritten offering or a "minimum-maximum"
				offering; options or warrants may be issued in a "minimum-maximum" public
				offering only if:
(i) the options or warrants
				are issued on a pro rata basis;
(ii) the "minimum" amount of securities has
				been sold;
(iii) the exercise price
				of the warrants is at least equal to the public offering price;
(iv) the number of shares covered by
				underwriter's options or warrants does not exceed ten percent of the shares of
				common stock actually sold in the public offering;
(v) the life of the options or warrants does
				not exceed a period of five years from the completion date of the public
				offering;
(vi) the options or
				warrants are not exercisable for the first year after the completion date of
				the public offering; and
(c) options or warrants are not transferred,
				except:
(i) to partners of the underwriter, if
				the underwriter is a partnership;
(ii) to officers and employees of the
				underwriter, who are also shareholders of the underwriter if the underwriter is
				a corporation; or
(iii) by will,
				pursuant to the laws of descent and distribution, or by the operation of
				law;
(d) the warrant
				agreement does not allow for a reduction in the exercise price of the options
				or warrants resulting from the subsequent issuance of shares by the issuer
				except where such issuances are pursuant to a:
(i) stock dividend or stock split;
				or
(ii) merger, consolidation,
				reclassification, reorganization, recapitalization or sale of assets;
(4) right of first
				refusal, which shall be valued at 1 percent of the public offering or the
				amount payable to the underwriter if the issuer terminates the right of first
				refusal;
(5) solicitation fees
				payable to the underwriter, which shall be valued at the lesser of actual cost
				or one percent of the public offering if the fees are payable within one year
				of the offering;
(6) financial
				consulting or financial advisory agreements with an underwriter or any other
				similar type of agreement or fees, however designated, which shall be valued at
				actual cost;
(7) underwriter's due
				diligence expenses;
(8) payments
				made either six months prior to or required to be made six months following the
				public offering to investor relations firms designated by the underwriter;
				and
(9) other underwriting expenses
				incurred in connection with the public offering of securities as determined by
				the director.