[Code of Federal Regulations]
[Title 17, Volume 2]
[Revised as of April 1, 2001]
From the U.S. Government Printing Office via GPO Access
[CITE: 17CFR228.508]

[Page 338-339]
 
              TITLE 17--COMMODITY AND SECURITIES EXCHANGES
 
             CHAPTER II--SECURITIES AND EXCHANGE COMMISSION
 
PART 228--INTEGRATED DISCLOSURE SYSTEM FOR SMALL BUSINESS ISSUERS--Table of Contents
 
                        Subpart A--Regulation S-B
 
Sec. 228.508  (Item 508) Plan of Distribution.

    (a) Underwriters and underwriting obligations. If the securities are 
to be offered through underwriters, name the principal underwriters, and 
state the respective amounts underwritten. Identify each such 
underwriter having a material relationship with the small business 
issuer and state the nature of the relationship. State the nature of the 
obligation of the underwriter(s) to take the securities, i.e., firm 
commitment, best efforts. The small business issuer must disclose the 
offering expenses specified in Item 511 of this Regulation S-B (17 CFR 
228.511). If there is an arrangement under which the underwriter may 
purchase additional shares in connection with the offering, such as an 
over-allotment option, describe that arrangement and disclose 
information on the total offering price, underwriting discounts and 
commissions, and total proceeds assuming the underwriter purchases all 
of the shares subject to that arrangement.
    (b) New underwriters. Describe the business experience of managing 
or principal underwriters that have been in business less than three 
years, state their principal business function and identify any material 
relationships between the promoters of the issuer and the 
underwriter(s). This information need not be given if:
    (1) The issuer is a reporting company; and
    (2) An offering has no material risks.
    (c) Other distributions. Outline briefly the plan of distribution of 
any securities to be registered that are to be offered otherwise than 
through underwriters.
    (d) Underwriter's representative on the board of directors. Describe 
any arrangement whereby the underwriter has the right to designate or 
nominate a member or members of the board of directors of the small 
business issuer. Identify any director so designated or nominated and 
indicate any relationship with the small business issuer.
    (e) Indemnification of underwriters. If the underwriting agreement 
provides for indemnification by the small business issuer of the 
underwriters or their controlling persons against any liability arising 
under the Securities Act, furnish a brief description of such 
indemnification provisions.
    (f) Dealers' compensation. State briefly the discounts and 
commissions to be allowed or paid to dealers, including all cash, 
securities, contracts or other considerations to be received by any 
dealer in connection with the sale of the securities.
    (g) Finders. Identify any finder and describe the nature of any 
material relationship between such finder and the small business issuer 
or associates or affiliates of the small business issuer.
    (h) Discretionary accounts. If the small business issuer is not a 
reporting company, identify any principal underwriter that intends to 
sell to any discretionary accounts and include an estimate of the amount 
of securities so intended to be sold. The response to this paragraph 
shall be contained in a pre-effective amendment which shall be 
circulated if the information is not available when the registration 
statement is filed.

[[Page 339]]

    (i) Passive market making. If the underwriters or any selling group 
members intend to engage in passive market making transactions as 
permitted by Rule 103 of Regulation M (Sec. 242.103 of this chapter), 
indicate such intention and briefly describe passive market making.
    (j) Stabilization and other transactions. (1) Briefly describe any 
transaction that the underwriter intends to conduct during the offering 
that stabilizes, maintains, or otherwise affects the market price of the 
offered securities. Include information on stabilizing transactions, 
syndicate short covering transactions, penalty bids, or any other 
transaction that affects the offered security's price. Describe the 
nature of the transactions clearly and explain how the transactions 
affect the offered security's price. Identify the exchange or other 
market on which these transactions may occur. If true, disclose that the 
underwriter may discontinue these transactions at any time;
    (2) If the stabilizing began before the effective date of the 
registration statement, disclose the amount of securities bought, the 
prices at which they were bought, and the period within which they were 
bought. If you use Sec. 230.430A of this chapter, the final prospectus 
must contain information on the stabilizing transactions that took place 
before the public offering price was set; and
    (3) If you are making a warrant or rights offering of securities to 
existing security holders and the securities not purchased by existing 
security holders are to be reoffered to the public, disclose the 
following information in the reoffer prospectus:
    (i) The amount of securities bought in stabilization activities 
during the offering period and the price or range of prices at which the 
securities were bought;
    (ii) The amount of the offered securities subscribed for during the 
offering period;
    (iii) The amount of the offered securities purchased by the 
underwriter during the offering period;
    (iv) The amount of the offered securities sold by the underwriter 
during the offering period and the price or range of prices at which the 
securities were sold; and
    (v) The amount of the offered securities that will be reoffered to 
the public and the offering price.

[57 FR 36449, Aug. 13, 1992, as amended at 58 FR 19605, Apr. 15, 1993; 
62 FR 543, Jan. 3, 1997; 62 FR 11323, Mar. 12, 1997; 63 FR 6380, Feb. 6, 
1998]