Ariz. Admin. Code § 14-4-106

Current through Register Vol. 30, No. 25, June 21, 2024

Section R14-4-106 - Options, Warrants, and Rights to Purchase

A. The grant of options, warrants and rights to purchase to officers, directors and other employees in the form of incentive stock options, warrants or rights to purchase in accordance with Sec. 422A of the Internal Revenue Code of 1954, as amended, will be considered justified.

B. The grant of options, warrants and rights to purchase to officers, directors and promoters not in accordance with Sec. 422A of the Internal Revenue Code of 1954, as amended, will be considered justified if all of the following conditions are met:

1. A certificate or instrument in evidence thereof is issued prior to the commencement of the proposed public offering.

2. The number of shares covered thereby does not exceed 20% of the number of securities to be outstanding at the completion of the proposed public offering.

3. The initial exercise price is reasonably related to the public offering price.

4. They do not exceed 10 years in duration.

5. The prospectus to be used in connection with the proposed public offering contains a full disclosure as to the terms and reasons for their grant.

Ariz. Admin. Code § R14-4-106

Former Order S-6; Amended effective July 18, 1985 (Supp. 85-4).