Safe Harbors . . .

refer to exemptions from the registration requirements of federal and state securities laws whose provisions are so explicit that they enable a company to offer and issue securities privately with less fear of running afoul of the securities laws’ registration requirements. The Reg D private placement exemptions and integration rules are examples of safe harbors. Whenever possible, companies should structure their offerings to fall within a safe harbor. By doing so, they reduce the risk that their offerings will be recharacterized as unregistered public offerings. Any such recharacterization could have disastrous effects upon the company’s ability to raise money and could subject it and management to serious liabilities. See: Integration, Private Placements, Reg D, 33 Act.