3 AAC 08.190. Impoundment of proceeds

(a) If an offering is not firmly underwritten, the administrator will, in the administrator's discretion, require, as a condition of registration, that a specific minimum amount of proceeds from a sale of securities be impounded to assure receipt of necessary money to finance the proposed undertaking as described in the application.

(b) If the administrator orders an impoundment agreement, the proceeds from the sale of the securities must be deposited in an interest bearing escrow or trust account under an impoundment agreement with an impoundment agent. The impoundment agent may not be affiliated with the issuer, the issuer's affiliates, the issuer's officers or directors, the issuer's underwriters, or any promoter.

(c) The impoundment agreement must be signed by an officer of the issuer, an officer of the underwriter, if applicable, and an officer of the impoundment agent, who must each warrant that they have the authority to sign the documents. A signed copy of the agreement must be filed with the administrator and, together with a summary of the principal terms of the agreement, becomes part of the registration statement.

(d) The impoundment agreement must provide that the impounded proceeds are not subject to claims by creditors until the proceeds have been released to the issuer and that the administrator has the right to inspect and make copies of the records of the impoundment agent at any reasonable time wherever the records are located. For purposes of this subsection, "creditors" means creditors of the

(1) issuer;

(2) issuer's affiliates;

(3) issuer's associates; or

(4) underwriters of the issuer's offering.

(e) The impoundment agent shall notify the administrator in writing upon the release of the proceeds. If the proceeds are insufficient to attain, within the time prescribed by the impoundment agreement, the minimum amount of proceeds set under 3 AAC 08.135(f) , the impoundment agent shall release and return the proceeds directly to the investors without deduction for expenses, including impoundment agent fees, and shall distribute all interest earned pro rata to the investors along with the proceeds.

(f) If a person who is an underwriter for the issuer's offering or an officer, director, promoter, affiliate, or associate of the issuer purchases securities that are a part of the public offering being sold under the registration statement, and if the proceeds from that purchase are used to attain the minimum amount of proceeds set under 3 AAC 08.135(f) ,

(1) the purchase of the securities must be on the same terms as purchases by unaffiliated public investors; and

(2) the prospectus must contain a disclosure that those persons may purchase securities of the issuer for purposes of completing the impoundment requirements imposed by this section.

History: Eff. 2/20/72, Register 41; am 4/19/2000, Register 154

Authority: AS 45.55.110

AS 45.55.950

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