Regulation D1 under the Securities Act of 1933, as amended (the “Securities Act”), sets forth a safe harbor from the registration requirement of the Securities Act for certain private placements of securities, including those to “accredited investors.” The Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”) amended the standard for accredited investor status on July 21, 2010, to exclude the value of a natural person’s primary residence in determining whether the individual net worth of that person (or joint net worth with his or her spouse) exceeds the $1 million net worth test. Recently the Securities and Exchange Commission (the “SEC”) released a final rule conforming to the Dodd-Frank Act requirement that will be effective on February 27, 2012, fully 586 days after Congress changed the net worth test in the definition of accredited investor.

Under the amended definition as required by the Dodd-Frank Act, the value of an individual’s primary residence may not be included as an asset of such individual in calculating his or her net worth for purposes of determining accredited investor status. The rule also excludes the value of any mortgage or other debt secured by an individual’s primary residence as a liability to be deducted from such investor’s net worth, provided that the debt does not exceed the fair market value of the primary residence. To the extent the debt exceeds the fair market value of the investor’s primary residence, the excess must be included as a liability in calculating the individual’s net worth.