Full opinion text
ORDER ON MOTION FOR SUMMARY JUDGMENT KOVACHEVICH, District Judge. The cause is before the Court on the following motions, responses, and supporting documentation: 1. Plaintiffs’ motion for summary judgment on Count VI (Oklahoma non-registration claim), filed January 6, 1989. 2. Affidavit Martin T. Fletcher, Sr. in support of Plaintiffs’ motion for summary judgment on Count VI, filed January 6, 1989. 3. Defendant E.F. Hutton & Company’s motion for partial summary judgment on Count VI and memorandum of law in support thereof, filed January 9, 1989. 4. Plaintiffs’ memorandum of law in support of motion for summary judgment on Count VI, filed January 11, 1989. 5. Defendant E.F. Hutton & Company’s memorandum of law in opposition to Plaintiffs’ motion for summary judgment on Count VI, filed February 6, 1989. 6. Defendant Viking Energy Management Company, Inc.’s joinder in E.F. Hutton and Company’s opposition to Plaintiffs’ motion for summary judgment on Count VI, filed February 3, 1989. 7. Supplementary affidavit of Douglas R. Pappas, filed February 10, 1989. 8. Plaintiffs’ memorandum in opposition to E.F. Hutton and Company’s motion for summary judgment on Count VI, filed February 13, 1989. 9. Plaintiffs’ motion for summary adjudication that Oklahoma Securities Act applies to sales and for summary judgment on E.F. Hutton and Company’s affirmative defenses 12 and 22, filed December 2, 1988. 10. Plaintiffs’ memorandum of law in support of motion for summary judgment that Oklahoma Securities Act applies to sales, filed December 2, 1988. 11. Defendant E.F. Hutton and Company’s memorandum of law in opposition to Plaintiffs’ motion for summary judgment that the Oklahoma Securities Act applies to sales, filed December 22, 1988. 12. Defendant Viking Energy Management Company, Inc.’s joinder in opposition to Plaintiffs’ motion for summary judgment that Oklahoma Securities Act applies to sales, filed December 27, 1988. 13. Plaintiffs’ reply to E.F. Hutton and Company’s “Conflict of Laws” argument, filed January 1, 1989. 14. Plaintiffs’ supplemental authority in support of their motion for summary judgment that the Oklahoma Securities Act applies to sales, filed February 27, 1989. 15. Defendant E.F. Hutton & Company’s supplemental memorandum in support of motion for summary Judgment on conflict of laws, filed March 1, 1989. 16. Plaintiff John M. Miller’s motion for summary judgment on Count I (non-registration under Section 517.07, Florida Statutes) and memorandum in support thereof, filed January 4, 1989. 17. Defendant E.F. Hutton & Company’s motion for partial summary judgment on Count I, filed January 9, 1989. 18. Defendant E.F. Hutton & Company’s memorandum in support of their motion for partial summary judgment on Count I and in opposition to Plaintiff John M. Miller’s motion for summary judgment on Count I, filed January 20, 1989. 19. Affidavit of James Mofsky, filed January 20, 1989. 20. Affidavit of Mark E. Segall, filed January 20, 1989. 21. Defendant Viking Energy Management Company, Inc.’s joinder in support of Defendant E.F. Hutton & Company’s motion for partial summary judgment on Count I and in opposition to Plaintiff John M. Miller’s motion for summary judgment on Count I, filed January 20, 1989. 22. Plaintiffs’ motion to strike affidavit of Professor James Mofsky and memorandum of law in support thereof, filed February 3, 1989. 23. Affidavit of Martin Fletcher, filed February 8, 1989. 24. Plaintiffs’ reply to E.F. Hutton & Company’s motion for summary judgment on Count I, filed February 8, 1989. 25. Defendants’ memorandum in opposition to Plaintiffs’ motion to strike affidavit, filed February 22, 1989. 26. Defendant E.F. Hutton & Company’s motion for summary judgment on alleged oral misrepresentations and memorandum of law in support thereof, filed January 9, 1989. 27. Plaintiffs’ memorandum in opposition to motion for summary judgment on alleged oral misrepresentations, filed February 3, 1989. 28. Affidavit of Martin Fletcher, filed February 3, 1989. 29. Plaintiffs’ motion for summary judgment as to Defendants’ counterclaims and memorandum of law in support thereof, filed December 12, 1988. 30. Defendant E.F. Hutton & Company’s memorandum in opposition to motion for summary judgment as to counterclaims, filed January 12, 1989. 31. Plaintiffs’ motion for summary judgment as to certain affirmative defenses, filed January 6, 1989. 32. Plaintiffs’ memorandum of law in support of motion for summary judgment as to certain affirmative defenses, filed January 11, 1989. 33. Defendant E.F. Hutton & Company’s memorandum in opposition to motion for summary judgment as to certain affirmative defenses, filed February 13, 1989. 34. Defendant Viking Energy Management Company, Inc.’s joinder in memorandum in opposition to motion for summary judgment as to certain affirmative defenses, filed February 18, 1989. 35. Defendant E.F. Hutton & Company’s motion for partial summary judgment against Plaintiffs Barne-bey, Griffins, and Summit Bank and memorandum of law in support thereof, filed January 9, 1989. 36. Plaintiffs’ memorandum in opposition to motion for summary judgment as to Plaintiffs Barnebey, Griffins and Summit Bank, filed February 3, 1989. 37. Affidavit of Martin Fletcher of February 9, 1989. 38. Affidavit of Douglas R. Pappas, filed January 9, 1989. 39. Affidavit of John M. Miller, filed January 4, 1989. 40. Affidavit of Mark E. Segall, filed December 22, 1988. 41. Affidavit of William Turchyn, Jr. and four (4) volume appendix thereto, filed December 22, 1988. 42. Two volume appendix to Plaintiffs’ motions for summary judgment, filed December 22, 1988. 43. Plaintiffs’ motion to submit supplemental authority in opposition to motion for summary judgment on alleged oral misrepresentations, filed March 29, 1989. 44. Defendant Hutton’s response to motion to submit supplemental authority, filed April 4, 1989. 45.Plaintiffs’ objection to Hutton’s “Response to Plaintiff’s Motion to Submit Supplemental Authority”, filed April 19, 1989. This circuit clearly holds that summary judgment should only be entered when the moving party has sustained its burden of showing the absence of a genuine issue as to any material fact when all the evidence is viewed in the light most favorable to the nonmoving party. Sweat v. The Miller Brewing Co., 708 F.2d 655 (11th Cir.1983). All doubt as to the existence of a genuine issue of material fact must be resolved against the moving party. Hayden v. First National Bank of Mt. Pleasant, 595 F.2d 994, 996-7 (5th Cir.1979), quoting Gross v. Southern Railroad Co., 414 F.2d 292 (5th Cir.1969). Factual disputes preclude summary judgment. The Supreme Court of the United States held, in Celotex Corp. v. Catrett, 477 U.S. 317, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986), In our view the plain language of Rule 56(c) mandates the entry of summary judgment, after adequate time for discovery and upon motion, against a party who fails to establish the existence of an element essential to that party’s case, and on which that party will bear the burden of proof at trial. Id. at 322, 106 S.Ct. at 2552-53, at 273. The Court also said, “Rule 56(e) therefore requires that nonmoving party to go beyond the pleadings and by her own affidavits, or by the ‘depositions, answers to interrogatories, and admissions on file,’ designate ‘specific facts showing there is a genuine issue for trial.’ ” Celotex Corp., at 324, 106 S.Ct. at 2553, at p. 274. This cause of action was removed to this Court on September 22, 1987. Plaintiffs filed an amended complaint on January 15, 1988. The complaint alleged the following facts as relevant to the causes of action asserted: 1. Defendant Viking Energy Management Company, Inc. (VEMCO or Viking) was the sole general partner in VEMCO 1981 Private Drilling Program (VEMCO 1981). 2. Defendant E.F. Hutton & Company (Hutton) owned sixteen percent (16%) of the stock of Viking. Through its ownership of stock in Viking and its position as exclusive sales agent for Viking’s various limited partnerships, including VEM-CO 1981, Hutton had direct and/or indirect control over Viking. 3. On or about March 13, 1981, Hutton entered into an agreement with Viking, wherein Hutton agreed to act, and did thereafter act, as the exclusive sales agent for Viking and VEMCO 1981, for the purpose of selling limited partnership interests in the limited partnership to the public. 4. Each Plaintiff purchased thirty (30) units of the limited partnership, through the same Hutton account executive in Sarasota, Florida, for an aggregate initial consideration of $150,000.00 each, of which $50,000.00 was paid in cash, and $100,000.00 was to be paid by the assumption of a portion of a capital loan to VEMCO 1981, supported by a letter of credit. 5. The units of the limited partnership were securities pursuant to 15 U.S.C. 77b. In connection with the sales Defendants utilized and delivered to Plaintiffs a private offering memorandum dated March 1, 1981, and other documents and letters. Also in connection with the sale, Hutton utilized and delivered a document known as a “Blue Top”, or communicated the substance of the Blue Top to Plaintiffs orally. 6. The documents used or given to Plaintiffs contained untrue statements of material fact and/or failed to disclose material facts necessary to make the statements made not misleading. 7. In connection with the sales, Hutton, for itself and as agent of Viking, made certain oral representations to Plaintiffs. These oral representations were untrue. 8. Under the terms of the limited partnership agreement Viking/and or VEM-CO 1981 had the right to call for limited partners to pay certain additional assessments, subject to review by Hutton in accordance with the terms of the sales agency agreement. Failure to pay an assessment would result in a reduction in proportionate ownership. Assessments were made starting in November, 1981, and through January, 1982, in a sum equal to twenty-five percent (25%) of the original investments, or $37,500.00 for each Plaintiff. All Plaintiffs paid the assessment. 9. In connection with the assessments, Defendants made untrue statements of material fact and/or omitted to disclose material facts. 10. Plaintiffs exercised reasonable diligence and due care in investing, but were unaware of the false statements and failure to disclose material facts. 11. Each Plaintiff retains all the units of VEMCO 1981 purchased and each hereby tenders such units to Defendants. The amended complaint contained the following cause of actions against Defendants: I. Violation of Florida Securities and Investor Protection Act (failure to register), Chapter 517, Florida Statutes. Plaintiffs seek rescission of the sales. II. Violation of Florida Securities and Investor Protection Act, specifically Section 517.301, Florida Statutes. Plaintiffs seek rescission of the sales. III. Common law fraud under Florida law. Plaintiffs seek rescission of the sales. (This count was voluntarily dismissed by Plaintiffs and approved by the Court, by order of March 1, 1989.) IV. Violation of 15 U.S.C. Section 77Z(2). Plaintiffs seek rescission of the sales. V. Violation of Indiana Code Annotated Section 23-2-1-12 in connection with sale to Sidney Hutner. Personal representative Summit Bank seeks rescission of the sale to the deceased Hutner. VI. Violation of Oklahoma Securities Act. Plaintiffs seek rescission of the sales. VII. Violation of 15 U.S.C. Section 78j(b) and Rule 10b-5. (This count was voluntarily dismissed by Plaintiffs and approved by the Court by order of March 1, 1989.) On June 30 and July 1, 1988, Defendants Hutton and Viking respectively filed answers, affirmative defenses, and counterclaims against Plaintiffs Kenneth Barne-bey, John M. Miller, Lloyd Griffin, Marcel-ene Griffin, and Summit Bank as Personal Representative of the Estate of Sidney Hutner. The counter-complaints contained the following counts: 1. Indemnification based on the subscription agreements signed by Plaintiffs and agreement to indemnify for damages, costs, and fees incurred by reason of representations and warranties in agreement. 2. Fraud based on representations of the subscription agreement being misrepresentations and omission of material facts. I. MOTION FOR SUMMARY JUDGMENT ON COUNTERCLAIMS FINDINGS OF FACT 1. Counts I of the counterclaims seeks indemnity from all Plaintiffs for any judgment which Plaintiffs might recover herein and is based on the express indemnity provisions contained in the Subscription Agreements signed by each Plaintiff (in the case of Plaintiff Summit Bank the agreement was signed by the deceased Sidney M. Hutner). The Subscription Agreements were signed in April and May of 1981. The specific indemnity clauses in the agreements read: Indemnification. The undersigned acknowledges that he understands the meaning and legal consequences of the representations, warranties and covenants in paragraphs 4, 6 and 7 hereof and the Partnership, the General Partner, and the Sales Agent who has solicited this subscription have relied upon such representations, warranties and covenants, and he hereby agrees to indemnify and hold harmless the Partnership, each Limited Partner thereof, the General Partner, the Sales Agent and their respective officers, directors, controlling persons, agents and employees, from and against any and all loss, damage or liability together with all costs and expenses (including attorneys’ fees and disbursements), which any of them may incur by reason of (a) any breach of any representation, warranty, covenant or agreement of the undersigned contained in this Agreement, (b) any false, misleading or inaccurate information contained in, or any breach of the representations, warranties, covenants and agreements of the undersigned in the Offeree Questionnaire executed by the undersigned, or (c) any breach of any covenant or agreement of the undersigned contained in the Partnership Agreement. Notwithstanding the foregoing, however, no representation, warranty, acknowl-edgement or agreement made herein by the undersigned shall in any manner be deemed to constitute a waiver of any rights granted to him under federal or state securities laws. All representations, warranties and covenants contained in this paragraph 5, shall survive the acceptance of this subscription and the formation of the Partnership. 2. Count II of the counterclaims seek damages for fraud based on the theory that Plaintiffs made certain false representations and warranties in the Subscription Agreements. 3. It is undisputed that each Plaintiff (or in the case of Summit Bank, the deceased Sidney M. Hutner) made certain representations to Defendants in the Subscription Agreement, including: a. The undersigned has such knowledge and experience in financial and business matters that he is capable of evaluating the merits and risks of an investment in the Partnership or (if applicable) the undersigned and his Offeree Representative together have such knowledge and experience in financial and business matters that they are capable of evaluating the merits and risks of the prospective investment. b. The undersigned has received and read and is familiar with the Private Offering Memorandum, including the exhibits thereto, and any amendments or supplements thereto, and he confirms that he and (if applicable) his Offeree Representative have been furnished all materials relating to the Partnership and its proposed activities, the offering of Units or anything set forth in the Private Offering Memorandum which they have requested and have been afforded the opportunity to obtain any additional information necessary to verify the accuracy of any representations or information set forth in the Private Offering Memorandum. c. The undersigned and (if applicable) his Offeree Representative have had a full opportunity to ask questions of and receive satisfactory answers from the General Partner, or any person or persons acting on the General Partner’s behalf, concerning the terms and conditions of this investment, and all such questions have been answered to the full satisfaction of the undersigned. d. The undersigned represents that (i) it has been called to his attention, both in the Private Offering Memorandum and by those individuals with whom he has dealt in connection with his investment in the Partnership, that the Partnership is newly organized and has no history of operation or earnings, and that the undersigned’s investment in the Partnership involves a very high degree of risk which may result in the loss of the total amount of his investment, and (ii) no assurances are or have been made regarding the tax advantages which may inure to the benefit of the Limited Partners of the Partnership, nor has any assurance been made that existing tax laws and regulations will not be modified in the future, thus denying to the Limited Partners of the Partnership all or a portion of the tax benefits which may presently be available under existing tax laws and regulations. e. The undersigned has received no representations or warranties (other that any contained in the Private Offering Memorandum) from the General Partner or its affiliates, or its employees or agents, including the Sales Agent, and, in making his investment decision, he is relying solely on the information contained in the Private Offering Memorandum and investigations made by him or (if applicable) his Offeree Representative. 4. Plaintiffs’ claims in this cause include claims that Plaintiffs were induced to purchase limited partnership interests in VEMCO 1981 by oral misrepresentations and other misrepresentations, from sources other than the Private Offering Memorandum. The claims are asserted pursuant to 15 U.S.C. § 77i(2), the Oklahoma Securities Act, and the Florida Securities Act. 5. Based on the representations of Plaintiffs and the indemnification clause of the Subscription Agreement, Defendants conclude that: 1) Plaintiffs represented that they had not received nor relied on anything outside the Private Offering Memorandum in deciding to invest in VEM-CO 1981; 2) the complaint asserts receipt and reliance on representations beyond the offering; 3) if Plaintiffs prevail on the “other representation claims” they have breached the representations of the Subscription Agreement; and 4) therefore, Plaintiffs are liable to Defendants on the two counts of the counterclaim. 6. Plaintiffs in their motion assert that summary judgment is appropriate because: 1) enforcement of the indemnity clause would be contrary to public policy; 2) the parties agreed that Plaintiffs’ representations would not be used as a basis for Plaintiffs’ waiver of rights under securities laws; 3) enforcement of Plaintiffs’ representations as a basis for the counterclaims is prohibited by the anti-waiver provisions of the securities laws; and 4) enforcement of the indemnity clause would be contrary to the special provisions of the statutes which regulate imposition of litigation costs and attorney fees. 7. The Court notes at this juncture that Defendants, contrary to Plaintiffs’ interpretation of the counterclaims, state clearly in their memorandum that “assuming ar-guendo that plaintiffs successfully maintain an action on oral misrepresentations, there would be no indemnification. Defendants only seek indemnity for fees and costs incurred in defending against plaintiffs’ non-meritorious claims which have triggered the indemnity clause.” Insofar as the language of the counterclaims may be inartfully drafted on this point, the Court considers this statement as an amendment to the counterclaims. 8. The counterclaims seek indemnification only for attorneys’ fees and costs on any unsuccessful claims of oral misrepresentation. As Defendants concede that they only seek indemnity for fees and costs on unsuccessfully claims of oral misrepresentation, the Court does not have to address the question of whether or not the indemnity clause, as to complete indemnification, is against public policy and/or unenforceable as to any judgment obtained by Plaintiffs. The question before the Court is whether or not Defendants’ counterclaims for indemnity of attorneys’ fees and costs are to go to the finder of fact. DISCUSSION PUBLIC POLICY Plaintiffs rely on the case of Doody v. E.F. Hutton & Co., Inc., 587 F.Supp. 829 (D.Minn.1984), for the proposition that the enforcement of the indemnity clause here would violate public policy. In Doody plaintiffs purchased limited partnership interests in private oil and gas tax shelters, one shelter involved there, as here, was YEMCO 1981, and signed subscription agreements containing integration and indemnity clauses. The integration clauses there, as here, essentially stated that no information beyond the partnership agreement had been relied on in making the investment and that no inconsistent oral representations had been made. The Doody court had under consideration plaintiffs’ motion for summary judgment on defendants’ counterclaims. That court granted the motion and stated: The Court finds that enforcing an indemnity provision such as the one in the instant action would discourage prospective plaintiffs from bringing securities fraud actions whenever there is an integration clause in a subscription agreement. Prospective plaintiffs would be discouraged because the plaintiffs would be running the risk of incurring substantial liability for attorneys’ fees and costs. Since the securities laws are a remedial measure intended to encourage the prosecution of securities fraud actions, the Court refuses to enforce this indemnity provision. Of course, as stated herein the subscription agreement may be used at trial as evidence of plaintiffs’ non-reliance on the alleged oral misrepresentations. Id., at 833. Defendants oppose the dismissal of their counterclaims on the grounds of public policy and cite Zissu v. Bear, Stearns & Co., 627 F.Supp. 687 (S.D.N.Y.1986); aff'd on other grounds, 805 F.2d 75 (2nd Cir.1986), in support of their position. Plaintiff in Zissu was a senior partner in a New York City law firm who had engaged extensively in security transactions. In 1981, the plaintiff purchased shares in a limited partnership which engaged in drilling for oil and gas. In making the purchases, the plaintiff executed a series of documents wherein he: 1) set forth his experience in making such purchases; 2) represented he had the requisite experience and knowledge to evaluate the risks involved; 3) represented he could bear the economic risk; and 4) represented he knew that the partnership was newly organized, had no history, and was speculative. In the subscription agreement, the plaintiff agreed to indemnify the partnership from loss, damage or liability “due to or arising out of a breach of any representation or warranty.” Subsequently, the purchaser brought suit charging that “he was induced to execute a subscription agreement to purchase ... by untrue statements of material fact and omissions of material facts in original and supplemental selling documents.” At trial the jury verdict was in favor of defendants. Plaintiff filed a motion for a judgment notwithstanding the verdict, based on several arguments, including that the indemnity agreement was in violation of public policy. In considering the public policy question, the court found that the indemnification clause did not deter the plaintiff from filing suit nor need it deter others from suing to protect their rights under the security laws. The court went on to state: The only potential chilling effect is on those investors who make representations in a subscription agreement which they later repudiate. It would discourage such investors from using their own fraudulent conduct in order to bring unjustified lawsuits. The indemnification provision does not permit the defendants to recover attorneys’ fees because Zissu sued them for alleged violations of the securities laws. It was triggered, as already noted, by plaintiffs own conduct when he breached the representations which caused loss and damage to the defendants. It was his representations upon which defendants relied in selling the limited partnership shares to plaintiffs. Zissu was the one who made the counterclaims possible ... [Not] only is enforcement of this indemnification clause not contrary to securities law policies, but the securities laws authorize courts to award attorneys’ fees on these facts ... Where an investor repudiates warranties previously made for the purpose of bringing suit, enforcement of the indemnification clause comports with existing policies of the securities laws. Finally, as defendants note, SEC Rule 146 required them to ascertain whether plaintiff was capable of evaluating the risks of investment or financially able to bear the risk ... If this indemnification agreement is not enforceable, it would undermine the securities laws to the extent that investors would be free to make misrepresentations with impunity and issuers would be wholly unable to accurately assess the qualifications of potential investors in risky ventures such as this one. (footnotes omitted) Id., at 693. The court of appeals did not address the question of the public policy vitiation of the indemnity clause because it found the contract clause was not specific enough, under New York law, to assess attorneys’ fees. The trial court assessment of attorneys’ fees was affirmed based on finding the lawsuit frivolous, pursuant to Section 11(e) of the 1933 Securities Act. The Court has reviewed the motion for summary judgment and response, and, in particular, the two cases cited previously. The Court finds the reasoning of the Zissu to be more persuasive on the issue of public policy. Therefore, the motion for summary judgment based on a public policy argument is denied. ENFORCEABILITY OF CLAUSE As to this assertion, Plaintiff alleges that the first portion of the indemnification clause conflicts with the latter portion of the clause, wherein the agreement states that “no representation, warranty, ac-knowledgement or agreement made herein by the undersigned shall in any manner be deemed to constitute a waiver of any rights granted to him under federal or state securities laws,” and that it constitutes an unenforceable waiver of rights under the securities laws. As pointed out by the trial judge in the Zissu case, enforcement of this indemnity clause need not, and indeed in this case did not, deter, investors from suing to enforce rights. Rather Judge Weinfeld stated such indemnity clauses would discourage plaintiffs utilization of fraudulent conduct in order to bring an unjustified suit. Judge Weinfeld further concluded that, rather than being contrary to securities laws policy, the awarding of fees and costs may be authorized by 15 U.S.C. § 77k(e). The Court, as it has stated earlier finds the Zissu opinion well reasoned and persuasive authority. The allegations that the indemnity clause is prohibited by law or agreement are unpersuasive. FRAUD (COUNT II) Plaintiffs final argument in the motion is that Count II of the counterclaims for common law fraud are contrary to public policy, contrary to the Subscription Agreements, and prohibited by statutory anti-waiver provisions. The requisite elements of common law fraud are 1) a material misrepresentation which is 2) false, 3) which is known to be false, is 4) made with the intention that it be acted upon, and 5) it is relied on with 6) resulting damages. Community Bank v. Bank of Hallandale, 482 F.2d 1124, 1127 (5th Cir.1973). These elements have been sufficiently pled in the counterclaims. The Court finds the motion for summary judgment as to Count II to be without merit. Therefore, the motion for summary judgment on the counterclaims is denied on all remaining issues. II. MOTION FOR SUMMARY JUDGMENT ON AFFIRMATIVE DEFENSES On March 1, 1989, this Court granted Plaintiffs’ motion to voluntarily dismiss Counts III and VII of the amended complaint. Count III alleged common law fraud under Florida law and Count VII alleged violation of 15 U.S.C. Section 78j(b) and Rule 10b-5 (federal anti-fraud). In this motion for summary judgment Plaintiffs seek a ruling that as a matter of law, the following affirmative defenses are not defenses to the remaining claims of the amended complaint: 1. Both defendants’ first affirmative defenses, failure to state a claim. 2. Both defendants’ third affirmative defenses, estoppel by admissions in subscription agreements. 3. Defendant Hutton’s fourth affirmative defense, disclaimer of representation by Hutton. 4. Defendant Hutton’s fifth affirmative defense, disclaimer of intent to warrant. 5. Defendant Hutton’s seventh and Defendant Viking’s fourth affirmative defenses, Plaintiffs by reasonable care ought to have known of false statements and omissions. 6. Defendant Hutton’s eighth and Defendant Viking’s fifth affirmative defenses, Plaintiffs barred by receipt of tax benefits with knowledge of their claim. 7. Defendant Hutton’s eleventh affirmative defense, good faith defense of Section 15 of the Securities Act. 8. Defendant Hutton’s thirteenth and twenty-first affirmative defenses, Hutton was not a seller of the units. (Defendants withdrew these affirmative defenses; therefore, this issue is moot). 9. Defendant Hutton’s sixteenth and Defendant Viking’s thirteenth affirmative defenses, Plaintiffs failed to mitigate damages. 10. Defendant Hutton’s eighteenth and Defendant Viking’s ninth affirmative defenses, decline in value was not caused by false statements and omissions. 11. Defendant Hutton’s nineteenth and Defendant Viking’s tenth affirmative defenses, offering was exempt under Section 4(2) of the Securities Act of 1933. 12. Defendant Hutton’s twenty-third affirmative defense, no knowledge of facts pertaining to the allegations as to violation of registration provisions of Oklahoma Securities Act. (Defendant withdrew this affirmative defenses; therefore, this issue is moot.) In their response to this motion for summary judgment, Defendants withdrew certain affirmative defenses and mooted two of the issues raised in the motion for summary judgment. Defendants affirmative defenses numbers one state that the amended complaint fails to state a claim upon which relief can be granted. Defendants had a choice bringing this defense by separate motion or as an affirmative defense. Defendants chose to state a general denial of the amended complaint. The Court does not find the affirmative defenses in question, as a matter of law, to be inappropriate defenses. Defendants third affirmative defense asserts Plaintiffs’ admissions in the subscription agreements estop them from claiming they “justifiably relied” upon any purported oral or written representations outside the Private Offering Memorandum. Insofar as these defenses assert the subscription agreements as evidence of non-reliance on representations beyond the offering memo, these affirmative defenses are appropriate. Insofar as these defenses might be an attempt to state that Plaintiffs waived, merely by the signing of the agreements, any rights under the securities laws and are precluded from bringing suit, they should be dismissed. Defendant Hutton’s affirmative defenses four and five state that the all representations in the offering memorandum were those of Viking and that Plaintiffs are estopped from asserting claims against Hutton because of the express notice given to them in the memorandum that the representations were not warranted by Hutton. Pursuant to 15 U.S.C. § 771, liability is imposed on one who sells a security by use of a prospectus or oral statement containing an untrue statement of a material fact. The one employing such a prospectus has the burden of proving that “he did not know, and in the exercise of reasonable care could not have known, of such untruth or omission.” Defendant Hutton asserts that these two defenses relate to their contention that Plaintiffs are barred by the statute of limitations from recovering for alleged misstatements in the offering memorandum and to the claim that the inconsistent oral statements are “trumped” by the written disclosures. The Court finds affirmative defenses four and five, as much expressions of evi-dentiary proof relevant to other defenses; statute of limitations and effect of inconsistent oral statements are separate affirmative defenses. The Court agrees that the mere disclaiming of any intent to warrant the truthfulness of the prospectus is insufficient to carry the burden established by 15 U.S.C. § 771. With those caveats in mind, the Court will grant the motion for summary judgment as to the fourth and fifth affirmative defense of Defendant Hutton. Defendant Hutton’s seventh and Viking’s fourth affirmative defenses assert that Plaintiffs knew, or with reasonable care should have known, of any untruth or omission in the offering memorandum. Plaintiffs only seek summary judgment as to the second assertion, that “in the exercise of reasonable care” they should have known of the untruths and omissions. Plaintiffs contend that there is no duty under Section 12(2) of the 1933 Securities Act or the Oklahoma Act that a plaintiff exercise reasonable care to discover if the information is false. Defendants do not dispute this contention, but state the disputed section of affirmative defenses seven is relevant to the issue of the statute of limitations defenses asserted. Since there is no dispute that the cited part of defenses four and seven is irrelevant to proof of a claim under Section 12(2) and the Oklahoma Act, language to which objection is made is found to be inapplicable to those issues. Insofar as that portion of these defenses relate to the issue of statute of limitations, summary judgment is inappropriate. The next defenses at issue are Defendant Hutton’s defense eight and Defendant Viking’s defense five. These affirmative defenses assert that rescission is not available to Plaintiffs because they continued to exercise the incidents of ownership by benefitting from tax losses after they knew or should have known of their alleged claims. The Court has previously addressed the issue of tax benefits and the claim for rescission. This Court’s order of September 7, 1988, concluded that tax benefit evidence is irrelevant to a claim for recessionary damages, but is relevant to whether or not rescission is an appropriate remedy and the Court is entitled to consider the role of the tax benefits in the investment decision. The relevant defense is appropriate only insofar as it asserts the acceptance of tax benefits as an element in the Court’s determination of whether or not rescission is an appropriate remedy; otherwise, the motion for summary judgment is well-taken. Plaintiffs next seek summary judgment on Defendant Hutton’s eleventh affirmative defense, which states that Hutton maintained and enforced adequate systems of training and internal control to prevent its account executives and other employees from making unauthorized oral representations or committing violations of the securities laws. The defense further states that Hutton acted in good faith, did not directly induce the acts constituting the alleged violations, and had no knowledge or reasonable grounds to believe in the existence of the alleged facts by reason of which its liability for acts of its employees is alleged to exist. Plaintiffs assert that this defense is an attempt to state an affirmative defense pursuant to the controlling person “good faith” defense of 15 U.S.C. Section 77o. Defendants assert that the defense is not directed to the good faith defense of Section 77o, but that it is related to Plaintiffs’ section 12(2) claims (and analogous state claims), and questions as to whether or not Hutton employees were acting beyond the scope of their authority thus negating re-spondeat superior liability. Therefore, insofar as defense eleven makes an attempt to assert a good faith defense pursuant to 15 U.S.C. Section 77o the motion for summary judgment should be granted. Affirmative defenses sixteen (Defendant Hutton) and thirteen (Defendant Viking) assert that Plaintiffs failed to take reasonable steps to mitigate their damages. Defendant Hutton’s eighteenth and Defendant Viking’s ninth affirmative defenses states that decline in the value of VEMCO 1981 units did not result from the alleged defects in the offering memorandum or other alleged misstatements or omissions. Defendants state in their opposition to the motion that these defenses go to Counts III (Florida common law fraud) and VII (violation of Rule 10b(5)) and that if those counts were dismissed the defenses would be withdrawn. As noted previously, Counts III and VII were dismissed on March 1, 1989, on Plaintiffs’ voluntary motion. Therefore, the motion of summary judgment on these defenses should be granted. The final issue of this motion for summary judgment goes to Defendant Hutton’s nineteenth and Defendant Viking’s tenth affirmative defenses. Those defenses assert that the offering of the VEMCO partnership units was exempt from registration with the Securities and Exchange Commission by virtue of Section 4(2) of the Securities Act of 1933 and/or by virtue of Rule 146. The Court finds that Defendants’ assertion that these defenses are pertinent to claims of non-registration under Oklahoma law (which are the subject of separate motions for summary judgment discussion found at Section VII of this order) to be well taken and the motion for summary judgment should be denied. III. MOTION FOR SUMMARY JUDGMENT ON ALLEGED ORAL MISREPRESENTATIONS Defendant Hutton’s motion seeks summary judgment on all counts of the amended complaint insofar as they allege oral misrepresentations in connection with the VEMCO 1981 investments on the grounds that: 1) they are barred by the statute of limitations; 2) they are nonactionable as a matter of law; and 3) Plaintiffs are es-topped by their subscription warranties from alleging oral misrepresentations. STATUTE OF LIMITATIONS The applicable statute of limitations have been established for the remaining individual counts as follows: 1. Counts I and II, violation of the Florida Securities Act, two years from the date when Plaintiffs discovered, or should have discovered, with the exercise of due diligence, but in all events not more than five years from the occurrence of such violation. 2. Count IV, violation of Section 12(2) of the Securities Act, one year from discovery, or from when one should have discovered, with exercise of due diligence, but in all events no more than three years from the date of the sale of the securities. 3. Count V, violation of Indiana Code Ann. Section 23-2-l-19(e), three years from date Plaintiff discovered the facts giving rise to the violation. 4. Count VI, violation of Oklahoma Securities Act in fraud and non-registration, fraud-two years from date when Plaintiffs discovered, or should have discovered with reasonable diligence, and non-registration-three years from the date of the sale. Initially Defendants assert that, if they can demonstrate that Plaintiffs were on notice of the facts giving rise to their claims more than two years prior to the filing of this action, Counts I, II, and IV should be dismissed in their entirety and Count VI should be dismissed insofar as it alleges material misrepresentation and omissions. It is further the position of Defendants that the alleged oral misrepresentations were expressly contradicted by the offering memorandum and, thereby, Plaintiffs were put on notice as soon as they received the offering memorandum. Defendants assert that Plaintiffs received their offering memorandums before the execution of the subscription agreements, which were executed as follows: Kenneth Barnebey on May 1, 1981; John M. Miller, April 22, 1981; Lloyd and Marcelene Griffin on April 17, 1981; and Sidney Hutner on May 1, 1981. The Court has previously addressed the issue of statute of limitations in its ORDER ON MOTION FOR SUMMARY JUDGMENT OR IN THE ALTERNATIVE FOR A STAY, filed May 5, 1988. The Court made the following findings of fact which are relevant to this motion: 1. Each Plaintiff purchased a limited partnership interest in VEMCO ’81. Plaintiffs subscribed to make their original purchases in the period March to April, 1981. Viking executed the acceptance portions of the subscription agreements on June 18, 1981, and the offering closed on June 22, 1981. 2. Each Plaintiff also paid a voluntary assessment, requested by Viking, during the period November, 1981 to January, 1982. 3. On May 17, 1983, an action was filed in the United States District Court for the Southern District of Indiana. The case is Klawans, et al. v. E.F. Hutton & Co., Inc., et al., Case No. IP 83-680-C. The Klawans suit has continuously asserted putative class claims under certain counts of the complaint. 4. The Klawans action was filed more than one (1) year but less than two (2) years after the Plaintiffs’ original investment in VEMCO ’81. Defendants assert that the only “tolling” available to Plaintiffs Barnebey, the Griffins, and Summit Bank is tolling pursuant to American Pipe & Const. Co. v. Utah, 414 U.S. 538, 94 S.Ct. 756, 38 L.Ed.2d 713 (1974). The American Pipe doctrine states that the commencement of a class action suspends the applicable statute of limitations as to all asserted members of the class, who would have been parties had the suit been permitted to continue as a class action, if the statute had not already run. Crown, Cork & Seal v. Parker, 462 U.S. 345, 103 S.Ct. 2392, 76 L.Ed.2d 628 (1983). Defendants assert that even assuming the filing of the Klawans action would otherwise toll the limitations periods, all of the statutes had run prior to that filing because Plaintiffs had notice of their claims as of May 16, 1981. As to Counts I and II, alleging violations of the Florida Securities Act, where a security is sold by contract the “contract of sale” is the sale. The trigger for the “violation” of the Florida securities act occurs when the purchaser contracts to buy the security. Armbrister v. Roland International Corp., 667 F.Supp. 802, 823 (M.D.Fla.1987). The sale of these securities occurred with the acceptance of the subscriptions by Viking on June 18, 1981. Defendants have previously told this Court to assume that the filing of the Klawans action tolled the limitations periods which had not already expired. Therefore, taking the date of sale as June 18, 1981, if the Klawans action was filed before June 18, 1983, Counts I and II are not barred by the statute of limitations. The Klawans action was in fact filed May 17, 1983, less than two years from the sales of the securities. Therefore, for the purposes of this motion for summary judgment the Court finds that Counts I and II of the complaint are not time-barred. Count V of the complaint relates to the claims of Summit Bank, as personal representative for Sidney Hutner. Mr. Hutner subscribed on May 1, 1981. The applicable statute of limitations for Count V is three years from the date of discovery of the facts giving rising to the violation. Even assuming, only as to Count V, that the deceased Mr. Hutner discovered the facts on the date of his subscription, he had three years or until May 1, 1984, to file suit. If the Court further accepts Defendants assumption that the filing of the Klawans action tolled the running of the statute, it is again clear that Count V is not time-barred in this cause. The remaining counts in question are IV and VI. Count VI is governed by two limitations periods: as to the fraud it is two years from discovery, or when one should have discovered; and, for the non-registration claims, it is three years from the date of sale. Armbrister, at 823. As the Court has previously stated, the date of sale was June 18, 1981, and the filing of Klawans was less than two years from that date. Making the same assumptions as previously in this order, the Court concludes that Count VI is not time-barred. Count IV is governed by a one year statute of limitations from the date of discovery, or from when the violation should have been discovered with the exercise of due diligence, but not more than three years from the sale. As in the Florida securities statute, the limitations period commences on the date of the sale of the securities, June 18, 1981. Therefore, if Plaintiffs knew or should of have known, at the time of purchase, of the facts giving rise to the violation, the statute would have run on June 18, 1982, and would not have been tolled by the filing of Klawans because it would have been expired at that time. The question, as to Count IV, and all other counts, if the time period concerning them were not otherwise assumed to be tolled by the filing of the Klawans action, is whether or not the applicable statute of limitations had run at the time of the filing of the Klawans action, which revolves around when the facts giving rise to the claims were discovered or should have been discovered by the exercise of due diligence. The extent to which a plaintiff exercised due diligence in discovering alleged violations is tested by an objective, rather than subjective, standard. Volk v. D.A. Davidson & Co., 816 F.2d 1406, 1417 (9th Cir.1987). Generally it is recognized that in most cases the question of the exercise of reasonable or due diligence is a question of fact and not amenable to summary disposition. However, summary judgment may be appropriate where uncontroverted evidence irrefutably demonstrates that a plaintiff discovered or should have discovered the fraud. Id., at 1417. One way to meet the objective standard may be to show that the oral representations were in material and direct conflict with the written representations in the prospectus or offering memorandum. Armbrister v. Roland International Corp., 667 F.Supp. 802 (M.D.Fla.1987); Kennedy v. Josephthal & Co., 814 F.2d 798 (1st Cir.1987). This Court in Armbrister found that the record as a whole clearly established that with any diligence plaintiffs should have known their purchases were suspect. The record in that case was so complete that the Court had no trouble finding that no rational trier of fact could find for the nonmoving party and in granting summary judgment for lack of existence of a genuine issue of material fact. Defendants here assert that the oral representations were flatly contradicted by the offering memorandum and, therefore, under the reasoning of Acme Propane, Inc. v. Tenexco, Inc., 844 F.2d 1317 (7th Cir.1988), are non-actionable as a matter of law. Acme Propane holds that where a seller of a security fully discloses all material information in writing, conflicting oral misrepresentations are not actionable under Section 12(2). This Court, upon due consideration, finds that there are genuine issues raised by Plaintiffs which preclude this Court from finding that summary judgment is appropriate. Defendants also assert that the fact that Plaintiffs signed subscription agreements bar this suit on contract law principles, in that the Plaintiffs signed a disclaimer of reliance on any oral representations. As the Court stated in its consideration of the motion for summary judgment on the counterclaims, this waiver is not dispositive of the question of reliance on representations, but made be used at trial as evidence of non-reliance. The question of reliance is a factual question and is material to the claims raised in this cause of action. IV. MOTION FOR PARTIAL SUMMARY JUDGMENT AGAINST PLAINTIFFS BARNEBEY, GRIFFINS, AND SUMMIT BANK In this fourth motion for summary-judgment, Defendants seek summary judgment against Plaintiffs Bamebey, the Griffins, and Summit Bank on the grounds that their claims were filed after the expiration of the applicable statute of limitations and that as to Counts I, II, III (this count was voluntarily dismissed), and V they failed to raise a triable issue of fact concerning claims that the statute of limitations was tolled. The statute of limitations for the relevant counts are as follows: 1. Counts I and II, violation of the Florida Securities Act, two years from the date when Plaintiffs discovered, or should have discovered with the exercise of due diligence, but in all events not more that five years from the occurrence of such violation. 2. Count V, violation of Indiana Code Ann. Section 23-2-l-19(e), three years from date Plaintiff discovered the facts giving rise to the violation. Defendants assert that beginning on or about May 27, 1982, each Plaintiff was aware that VEMCO 1981 would not produce the results they expected. Further, that despite the notice of problems, Plaintiffs did not file this action until August 1987, and that the statute of limitations on Counts I, II and V have not been tolled by either the filing of the Klawans action or by the execution of tolling agreements. Defendants assert that the American Pipe tolling doctrine does not apply to these “new” state individual claims that are not asserted in Klawans as class-wide claims. Plaintiffs, on the other hand, urge this Court to find that where the substantive law is essentially identical, and, the fact that the class action claims were based on federal statutes, American Pipe tolling is appropriate for the “new” state law claims. Passage of statutory limitation periods assist in promoting justice by “preventing surprises through the revival of claims that have been allowed to slumber until evidence has been lost, memories have faded, and witnesses have disappeared ...” American Pipe, 414 U.S. at 554, 94 S.Ct. at 766. The aim of statute of limitations is met when a class action is filed: Class members who do not file suit while the class action is pending cannot be accused of sleeping on their rights; ... And a class complaint “notifies the defendants not only of the substantive claims being brought against them, but also of the number and generic identities of the potential plaintiffs who may participate in the judgment.” (cites omitted) The defendant will be aware of the need to preserve evidence and witnesses respecting the claims of all the members of the class. Tolling the statute of limitations thus creates no potential for unfair surprise, regardless of the method class members choose to enforce their rights upon denial of class certification. Crown, Cork & Seal v. Parker, 462 U.S. 345, 103 S.Ct. 2392, 76 L.Ed.2d 628 (1983). The tolling of the statute of limitations remains in effect for all members of the putative class until class certification is denied. Crown, Cork, at 354, 103 S.Ct. at 2398. Counts I, II, and V assert claims pursuant to the Florida Securities Act and the Indiana Code. The Klawans action contained both class-wide and individual claims. There are no class-wide claims in Klawans asserted pursuant to the Florida or Indiana securities acts, but, some plaintiffs in that action did assert individual claims under the Florida and Indiana statutes. (Ex. H-Pappas Affidavit, Count XII). This Court agrees with the reasoning of the Second Circuit in Cullen v. Margiotta, 811 F.2d 698 (2nd Cir.1987), and finds that the American Pipe tolling is properly extended where as here the individual claims involve the same “evidence, memories, and witnesses” as are involved in the putative class action. Id., at 720. Defendants in the Klawans action were on notice to preserve evidence concerning the securities act violations, failure to register and misrepresentation, of both Florida and Indiana by the inclusion in that action of claims materially of the same legal identity. The Court incorporates by reference Plaintiffs’ memorandum in opposition on these points, specifically pages B through 9 and 11 through 15. (This incorporated material is appended to this order as Exhibit A). The Court finds that the filing of the Klawans action tolled the statute of limitations related to Counts I, II, and V unless the statute had previously expired. The Klawans action was filed May 17, 1983. The Court has now found that the filing of that action tolled the statute of limitations if not previously expired, therefore, the conclusions of this Court in regard to motion for summary judgment on oral misrepresentations may be reinforced. The commencement date for the running of the statute in regard to Counts I and II was the sale of the securities on June 18, 1981, thereby, requiring Plaintiffs to file suit on or before June 18, 1983. The statute of limitations of Counts I and II had not run at the time of the filing of the Klawans action and was tolled during the pendency of the putative class action therein. The relevant statute of limitations on Count V is three years from the date of discovery of the facts giving rise to the violation. As the Court stated previously, even if the Court assumed that discovery of the facts occurred at the time of Mr. Hutner’s subscription for purchase, May 1, 1981, the statute would have expired on May 1, 1984. Therefore, the limitations period on Count V had not run at the time of the filing of the class action and was tolled. Because the Court has determined that the statute of limitations on Counts I, II, and V were tolled by the filing of the Klawans action, it is not incumbent upon it to address the issue of whether or not there is a question of fact relating to the existence of tolling agreements. V. PLAINTIFF JOHN MILLER’S MOTION FOR SUMMARY JUDGMENT AS TO COUNT I AND DEFENDANTS’ MOTION FOR PARTIAL SUMMARY JUDGMENT ON COUNT I Before addressing the motions for summary judgment, the Court must resolve Plaintiffs’ motion to strike the affidavit of Professor James Mofsky. Professor Mofsky is a Professor of Law at the University of Miami Law School and is offered as an expert in the area of securities regulation and in particular the Florida Securities Act. Professor Mofsky’s affidavit specifically addressed the issue of whether or not Plaintiff John Miller was properly notified of his right to void this security purchase within three (3) days, pursuant to Section 517.061(ll)(a)(5), Florida Statutes (1987). Plaintiffs assert that the affidavit does not present admissible evidence, in that the affidavit is an attempt to instruct the Court on the application of the law, Section 517.-061, to the undisputed facts of this case and the consequent ultimate conclusion as to whether or not the statutory requirements have been satisfied. Upon due consideration of the motion to strike and response, the Court finds Plaintiffs’ arguments persuasive and the affidavit of James Mofsky will be stricken. The primary issue in consideration of the fifth and sixth cross-motions for summary judgment is whether or not Plaintiffs, and in particular John Miller, were properly apprised of their right under the Florida securities laws to void their purchases within three days. The parties agree that there are no disputed issues of fact. In addition to the facts previously set forth in this order, the following facts are relevant to the Court’s resolution of the issue: 1. In connection with the purchases of YEMCO 1981 units, each Plaintiff executed subscription agreements. At the time of subscribing Plaintiffs Barnebey, Miller, and the Griffins resided in Florida. Plaintiff Hutner subscribed in Florida. After review of the subscription agreements by both Hutton and Viking, Viking accepted the subscriptions of all Plaintiffs on or about June 18, 1981. 2. At the time of Plaintiffs subscribing, Florida law provided for exemption from the registration requirements of Section 517.07, Fla.Stat. for certain transactions. Relevant to the securities herein was Section 517.061(12), Fla.Stat. (1981), [recodified as Section 517.061(11)] [hereinafter reference will be to Section 517.061(12) only] which read in relevant part: (a) The offer or sale, by or on behalf of an issuer, of its own securities that is part of an offering made in accordance with all of the following conditions: 1. There are no more than 35 purchasers of the securities of the issuer in this state in any consecutive 12-month period during an offering made in reliance upon this subsection. 2. Neither the issuer nor any person acting on behalf of the issuer shall offer or sell securities pursuant to this subsection by means of any form of general solicitation or general advertising in this state. 3. Prior to the sale, each purchaser or his representative is provided with, or given reasonable access to, full and fair disclosure of all material information. 4. No person defined as a dealer in this chapter shall be paid a commission or compensation for the sale of the issuer’s securities unless such person in registered as a dealer under this chapter. 5. When sales are made to five or more persons, any sale made pursuant to this subsection shall be voidable by the purchaser either within 3 days after the first tender of consideration is made by the purchaser to the issuer, an agent of the issuer, or an escrow agent or within 3 days after the availability of that privilege is communicated to the purchaser, whichever occurs later, (emphasis supplied). 3. Also in effect at the time of the VEMCO offering was a rule adopted by the Securities Division of the Controller’s Office. The rule required private offering memoranda, such as in the VEMCO 1981 program, contain “[a] statement indicating that the sale shall be voidable by the purchaser within three days of sale, as required by Section 517.061(12)(a)(5).” 4. On or about April 22, 1981, Plaintiff John M. Miller delivered to Defendant Hutton, along with the executed subscription agreement, a check in the amount of $50,-000.00 and an executed promissory note in the principal amount of $100,000.00. Miller’s check was deposited into an escrow account established pursuant to the Sales Agency Agreement. 5. Pursuant to the Sales Agency Agreement, Defendant Hutton had the right to review the tendered subscription agreements. After such review, Hutton forwarded Plaintiff Miller’s subscription agreement to Defendant Viking, who accepted the agreement on June 18, 1981. 6. On or about July 4, 1981, Defendant Viking sent to each Plaintiff, including Plaintiff John Miller, a copy of their executed and accepted subscription agreements. 7. The VEMCO 1981 units were a “security” as defined in the Florida Securities Act, Section 517.021. 8. The VEMCO 1981 program units were not registered under the Florida Securities Act at the time of their offer and sale to Plaintiffs. Defendants assert that the offer and sale were exempt from registration by virtue of the exemption provided by Section 517.061(12). 9. The private offering memorandum received by Plaintiffs in the VEMCO offering contained the following statement at page 31: Rights of Voidability or Withdrawal for Florida Subscribers If five or more residents of Florida subscribe for Units, each subscription will be voidable by each Florida subscriber within 3 days after submission of his Subscription Agreement to the General Partner. Notice of a Florida subscriber’s intent to void or withdraw his subscription should be given in writing to the General Partner at 2761 East Skelly Drive, Tulsa, Oklahoma 74015. Such notice will be effective if it is in writing and within the two-day or three-day period, as the case may be, is (a) actually received by the General Partner, (b) delivered to a telegraph or other service for transmittal, or (c) deposited in the United States mail, sent by registered or certified mail, and all necessary fees are paid by the sender. 10. There are no other statements, either oral or written, asserted by Defendants to be sufficient to meet the statutory notification requirement as to voidability. DISCUSSION To be entitled to the exemption for non-registered securities, the offer and sale herein had to comply with all