Latham & Watkins operates as a limited liability partnership worldwide with affiliated limited liability partnerships conducting the practice in the United Kingdom, France and Italy and affiliated partnerships conducting the practice in Hong Kong and Japan. ©Copyright 2010 Latham & Watkins. All Rights Reserved. “Testing The Waters” Alexander F. Cohen, Latham & Watkins LLP March 25, 2010

2 What Are We Going to Cover Today? Revisions to Rule 163 C&DI No Rules 165/166

Revisions to Rule 163 Rule 163 – exemption from Section 5(c)’s prohibition on pre-filing “offers” for WKSIs But, only applies to issuers, not transaction participants SEC has proposed to revise the Rule to allow underwriters to make offers on behalf of WKSIs WKSI would have to authorize underwriter in writing WKSI would have to authorize any written or oral communication before it is made Prospectus would have to identify authorized underwriter making authorized communication

4 C&DI SEC Staff will not object to lock-up agreements or agreements to tender debt securities in an exchange offer entered into prior to filing a registration statement if: Lock ups signed only by AIs Persons signing lock-ups collectively own less than 100% outstanding principal amount of the series Tender offer will be made to all holders of the series All holders eligible to participate in the exchange offer will receive the same consideration

5 C&DI Some open questions What about a communication short of a lock-up? What about dealer-managers – is this only for issuers? Does “debt securities” include convertible bonds? Some informal SEC Staff responses No need to obtain a lock-up for C&DI to apply Staff is not focused on the precise form of agreement Dealer-managers and others acting on behalf of an issuer benefit from C&D Applies to all types of debt securities, including converts

6 Rules 165/166 Gun-jumping exemptions for certain communications in connection with “business combination transactions ” Definition includes “exchange offers” Not historically used for simple debt restructurings Only available to third-party exchanges? Not available to “capital-raising or resale transaction” Informal Staff view Rules 165 and 166 are available for all exchange offers, even outside traditional business combination context E.g., issuer self-tender otherwise subject to Rule 13e-4

7 Rules 165/166 Just to summarize how this works: Rule 166 applies prior to first public announcement; Rule 165 afterwards Under Rule 166 any communication prior to announcement is exempt from Section 5(c) (must take reasonable steps to prevent further distribution) Rule 165 exempts certain post-announcement communications from Section 5(c) (written communications must be filed)