Exemptions in the Post-Effective Period

Exemptions in thePost-Effective Period

Post-Effective Period • Section 4(1) of the 1933 Act • The provisions of section 5 shall not apply to – (1) transactions by any person other than an issuer, underwriter, or dealer

Post-Effective Period • Section 4(3) of the 1933 Act • [The provisions of section 5 shall not apply to] transactions by adealer (including an underwriter no longer acting as an underwriter in respect of the security involved in such transaction), except ... (B) transactions in a security as to which a registration statement has been filed taking placeprior to the expiration of forty days after the effective date of such registration statement... or such shorter period as the Commission may specify . . . and (C) transactions as to securities constituting the whole or a part of anunsold allotmentto or subscription by such dealer as a participant in the distribution ...

Post-Effective Period • Section 4(3) of the 1933 Act – cont. • With respect to transactions referred to in clause 4(3)(B), if securities of the issuer havenot previously been soldpursuant to an earlier effectiveregistration statementthe applicable period, instead of forty days, shall beninety days, or such shorter period as the Commission may specify ...

Post-Effective Period • Rule 174 • The obligations of adealerto deliver a prospectus in transactions in a security as to which a registration statement has been filed ... shall be subject to the following provisions: ... . (b) No prospectus need be delivered if theissueris subject, immediately prior to the time of filing the registration statement, [to1934 Act reporting requirements]; ... . (d) If (1) the registration statement relates to the security of an issuer that isnot subject[to1934 Act reporting requirements], immediately prior to the time of filing the registration statement ... , and (2) as of the offering date, the security islisted on [anexchange] or authorized for inclusion in [NASDAQ], no prospectus need be delivered after the expiration oftwenty-five calendar daysafter the offering date.

Post-Effective Period • Prospectus Delivery Requirements NO PRIOR OFFERING (§4(3)) Reporting company has no delivery requirements (Rule 174(b)) Underwriter sellingallotment? 4(3)(C) and Rule 174(f)) SEASONED OFFERING (§4(3)(B)) EXCHANGE LISTED (Rule 174(d)) 25 DAYS EFFECTIVEDATE 90 DAYS 40 DAYS broker transaction? (§4(4))

Post-Effective Period • Section 4(4) of the 1933 Act • Section 5 does not apply to: (4) brokers' transactions executed upon customers' orders on any exchange or in the over-the-counter market but not the solicitation of such orders.

Post-Effective Period • Rule 172 (a) & (b) • a. Sending confirmations and notices of allocations. After the effective date of a registration statement, the following are exempt from … section 5(b)(1) of the Act if the conditions set forth in paragraph (c) … are satisfied: • Written confirmations of sales of securities in an offering pursuant to a registration statement … • Transfer of the security. Any obligation under section 5(b)(2) of the Act to have a prospectus that satisfies the requirements of section 10(a) of the Act precede or accompany the carrying or delivery of a security in a registered offering is satisfiedif the conditions in paragraph (c) … are met.

Post-Effective Period • Rule 172 (c) • c. Conditions. 3. The issuer has filed with the Commission a prospectus with respect to the offering that satisfies the requirements of section 10(a) of the Act or the issuer will make a good faith and reasonable effort to file such a prospectus within the time required under Rule 424 (§230.424) and, in the event that the issuer fails to file timely such a prospectus, the issuer files the prospectus as soon as practicable thereafter.

Post-Effective Period • Rule 173(a) – In a transaction … where there is not an exclusion … pursuant to section 4(3) of the Act or Rule 174, each underwriter or dealer selling in such transaction shall provide to each purchaser from it … a notice to the effect that the sale was made pursuant to a registration statement or in a transaction in which a final prospectus would have been required to have been delivered in the absence of Rule 172. Rule 173(b) – If the sale was by the issuer and was not effected by or through an underwriter or dealer, the responsibility to send … such notice … shall be the issuer’s

Post-Effective Period • Rule 15c2-8(a) & (b) (a) It shall constitute a deceptive act or practice … for a broker or dealer to participate in a [public offering … unless he complies with the requirements … in paragraphs (b) through (g) (b) In connection with an issue of securities [for a non-reporting issuer], such broker or dealer shall deliver a copy of preliminary prospectus to any person who is expected to receive a confirmation of sale at least 48 hours prior to the sending of such confirmation.

Post-Effective Period • Rule 15c2-8(c) (c) Such broker or dealer shall take reasonable steps to comply promptly with the written request of any person for a copy of the final prospectus between the effective date of the registration statement and the later of either the termination of such distribution, or the expiration of the applicable 40- or 90-day period under Section 4(3) …

Post-Effective Period • Rule 15c2-8(h) If the broker or dealer is amanaging underwriterof such distribution, he shall takereasonable stepsto see thatany broker or dealer participatingin the distribution or trading in the registered security is furnishedreasonable quantities of the final prospectusrelating to such securities, as requested by him, in order to enable him to comply with the prospectus delivery requirements of Section 5(b)(1) and (2) of the Securities Act of 1933.

Post-Effective Period Village Bank • Smartway (Hypothetical 7, Scenario 1) confirmationof sale finalprospectus news stories

Post-Effective Period • Section 2(a)(10) of the 1933 Act • The term "prospectus" means any prospectus, notice, circular, advertisement, letter, or communication, written or by radio or television, which offers any security for sale or confirms the sale of any security; exceptthat ... (a) a communicationsent or givenafter the effective dateof the registration statement (other than a prospectuspermitted undersubsection 10(b)) shall not be deemed a prospectusif it is proved thatprior to or at the same timewith such communication a writtenprospectusmeeting the requirements of subsection10(a)at the time of such communicationwas sent or givento the person to whom the communication was made,

Post-Effective Period • Rule 172 (a) & (b) • a. Sending confirmations and notices of allocations. After the effective date of a registration statement, the following are exempt from … section 5(b)(1) of the Act if the conditions set forth in paragraph (c) … are satisfied: • Written confirmations of sales of securities in an offering pursuant to a registration statement … • Transfer of the security. Any obligation under section 5(b)(2) of the Act to have a prospectus that satisfies the requirements of section 10(a) of the Act precede or accompany the carrying or delivery of a security in a registered offering is satisfied if the conditions in paragraph (c) … are met.

Post-Effective Period MARXSECURITIES • Smartway (Hypothetical 7, Scenario 2) market maker no statutory prospectus

Post-Effective Period • Prospectus Delivery Requirements NO PRIOR OFFERING (§4(3)) Reporting company has no delivery requirements (Rule 174(b)) Underwriter sellingallotment? (4(3)(C) and Rule 174(f)) SEASONED OFFERING (§4(3)(B)) EXCHANGE LISTED (Rule 174(d)) 25 DAYS EFFECTIVEDATE 90 DAYS 40 DAYS broker transaction? (§4(4))

Post-Effective Period • Smartway (Hypothetical 7, Scenario 3) MARXSECURITIES written confirmationof sale no statutory prospectus broker

Post-Effective Period • Prospectus Delivery Requirements NO PRIOR OFFERING (§4(3)) Reporting company has no delivery requirements (Rule 174(b)) Underwriter sellingallotment? (4(3)(C) and Rule 174(f)) SEASONED OFFERING (§4(3)(B)) EXCHANGE LISTED (Rule 174(d)) 25 DAYS EFFECTIVEDATE 90 DAYS 40 DAYS broker transaction? (§4(4))

Post-Effective Period buy 1000 shares @ market price Village Bank written confirmation (no prospectus) • Smartway (Hypothetical 7, Scenario 5)

Updating

Non-Shelf Updating Reg. Stat. Updating Rule 424(b) “substantive changes from or additions to” § 11 liability? Rule 10b-5, § 12(a)(2) § 10(a)(3) Updating Effective Date Manor Nursing? Prospectus Updating

Post-Effective Period LAW PROFESSORSASSOCIATION OFAMERICA • Smartway (Hypothetical 8) discloses negotiationswith LPAA registration statementgoes effective LPAA goes bankrupt andnegotiations fall through professors sign withSmartway’s competitors

ShelfRegistration

Shelf Registration • Rule 415(a)(1) • The registration statement pertains only to: • (i) Securities which are to be offered or sold solely by or on behalf of a person or persons other than the registrant ... ; • (iv) Securities which are to be issued upon conversion of other outstanding securities; • (viii) Securities which are to be issued in connection with business combination transactions; • (ix) Securities the offering of which will be commenced promptly, will be made on a continuous basis and may continue for a period in excess of 30 days. ... • (x) Securities registered (or qualified to be registered) on Form S-3 … which are to be offered and sold on an immediate, continuous or delayed basis by or on behalf of the registrant

Shelf Registration • Rule 415(a)(2)-(3) • Securities in paragraph (a)(1)(viii) of this section and securities in paragraph (a)(1)(ix) of this section that are not registered on Form S-3 … may only be registered in an amount which, at the time the registration statement becomes effective, is reasonably expected to be offered and sold within two years from the initial effective date of the registration. • The registrant furnishes the undertakings required by Item 512(a) of Regulation S-K …

Shelf Registration • Item 512(a)(1) Undertakings • The undersigned registrant hereby undertakes ... [t]o file ... a post-effective amendment to this registration statement: (i) To include any prospectus required by Section 10(a)(3) of the Securities Act of 1933; (ii) To reflect in the prospectus any facts or events arising after the effective date ... which, individually or in the aggregate, represent a fundamental change in the information set forth in the registration statement; (iii) To include any material information with respect to the plan of distribution not previously disclosed in the registration statement ... ;

Shelf Registration • Rule 415(a)(5) Securities registered on an automatic shelf registration statement and securities described in paragraphs (a)(1)(vii), (ix), and (x) of this section may be offered and sold only if not more than three years have elapsed since the initial effective date of the registration statement under which they are being offered and sold

Shelf Registration Rule 415(a)(5) – Three year re-registration Rule 415(a)(6) – Carry forward of offers and filing fees to new registration statement

Shelf Registration • Smartway (Hypothetical 11, Scenario 1) $80 / share Smartway will issue $500 million of non-convertible bonds to be sold over the next six years, as dictated by Smartway’s cash flow needs Can Smartway structure its bond offering to achieve Sherry’s goal?

Shelf Registration • Rule 415(a)(5) Securities registered on an automatic shelf registration statement and securities described in paragraphs (a)(1)(vii), (ix), and (x) of this section may be offered and sold only if not more than three years have elapsed since the initial effective date of the registration statement under which they are being offered and sold

Shelf Registration • Smartway (Hypothetical 11, Scenario 2) 6 months after the initial effective date of the shelf registration, Sherry is indicted for insider trading and jailed, leading to a new CEO. If this were not a shelf registration what would Smartway have to do? What about with Rule 415(a)(3)? $80 / share

Shelf Registration • Item 512(a)(1) Undertakings • The undersigned registrant hereby undertakes ... [t]o file ... a post-effective amendment to this registration statement: (ii) To reflect in the prospectus any facts or events arising after the effective date ... which, individually or in the aggregate, represent a fundamental change in the information set forth in the registration statement; (iii) To include any material information with respect to the plan of distribution not previously disclosed in the registration statement ... ;

Shelf Registration • Prospectus Delivery Requirements NO PRIOR OFFERING (§4(3)) Reporting company has no delivery requirements (Rule 174(b)) Underwriter sellingallotment? (4(3)(C) and Rule 174(f)) SEASONED OFFERING (§4(3)(B)) EXCHANGE LISTED (Rule 174(d)) 25 DAYS EFFECTIVEDATE 90 DAYS 40 DAYS broker transaction? (§4(4))

Shelf Registration • Smartway (Hypothetical 11, Scenario 3) $80 / share Can Smartway issue $500 million of voting common stock through sales into Nasdaq over the next two years?(Smartway wants to avoid paying underwriter’s commission)

Shelf Registration • Rule 415(a)(4) In the case of a registration statement pertaining to an at the market offering of equity securities by or on behalf of the registrant, the offering must come within paragraph (a)(1)(x) of this section. As used in this paragraph, the term “at the market offering” means an offering of equity securities into an existing trading market for outstanding shares of the same class at other than a fixed price.

Shelf Registration • Rule 405 The term automatic shelf registration statement means a registration statement filed on Form S-3 … by a well-known seasoned issuer….

Rule 415(a)(1)(x) Shelf Comparison

Shelf Registration • Smartway (Hypothetical 11, Scenario 4) Nasdaq offering –Feb. 1: Base prospectus –June 1: $200 million takedown from the shelf –June 2: Prospectus supplement filed

Shelf Registration • Rule 430B(a) A form of prospectus filed as part of a registration statement for offerings pursuant to Rule 415(a)(1)(vii) or (a)(1)(x) may omit from the information required by the form to be in the prospectus information that is unknown or not reasonably available to the issuer pursuant to Rule 409. In addition, a form of prospectus filed as part of an automatic shelf registration statement for offerings pursuant to Rule 415(a), other than Rule 415(a)(1)(vii) or (viii), also may omit information as to whether the offering is a primary offering or an offering on behalf of persons other than the issuer, or a combination thereof, the plan of distribution for the securities, a description of the securities registered other than an identification of the name or class of such securities, and the identification of other issuers. …

Shelf Registration • Smartway (Hypothetical 11, Scenario 5) • $250 million of convertible bonds on a delayed basis over the next two years • – bonds can be converted into 1 share of voting common • – bonds’ term is 10 years $80 / share

Exemptions in the Post-Effective Period