SEC Staff Responses to Questions about Form N-MFP and Rule 30b1-7

The Division of Investment Management has issued guidance pertaining to the new form that became effective on May 5 for open-end investment companies to report portfolio information (see WSB Blog entry dated April 30, 2010).  The SEC makes the information filed on Form N-MFP available to the public 60 days after the end of the month to which the information applies. 

Rule 30b1-7 requires every registered fund that is regulated as a money market fund under Rule 2a-7 to file Form N-MFP.  Responses to questions regarding rule 2a-7 ( the “money market fund rule” under the Investment Company Act of 1940) are included in a separate document at the SEC website.

Management Retention Agreements filed with Airlines Merger Registration Statement

UAL Corporation's Form S-4 filed on June 25 registers $4.24 billion of common stock for a proposed merger with Continental Airlines (SEC file no. 333-167801).  The business combination is described as a "merger of equals" but UAL is being considered the acquirer of Continental for accounting purposes. 

The form of Management Retention Agreement for UAL's executive officers is filed as Exhibit 10.2 to the registration.  Exhibit 10.3 is a separate retention agreement for a specific VP with terms slightly different from Exh. 10.2. 

The Management Retention Agreements are designed to be consistent with current market practices and to establish a degree of comparability with the programs offered to similarly-situated executive officers at Continental. The agreements do not provide for “single-trigger” payments or benefits (i.e., payments or benefits that will be provided automatically upon completion of the merger). Instead, each agreement provides for compensation and benefits in the event the executive officer’s employment is terminated without “cause” or for “good reason” within the two-year period following completion of the merger.

U.S. Geothermal Inc. Discloses Power Plant Financing Developments

In equity reoffer prospectus supplements filed June 16, U.S. Geothermal reports it has been offered a conditional commitment for a $102.2 million loan guarantee from the U.S. Department of Energy (“DOE”) to construct the planned 22-megawatt-net power plant in Eastern Oregon.  The Neal Hot Springs development is the first geothermal project to be offered a conditional commitment for a loan guarantee under DOE’s Title XVII loan guarantee program, which was created by the Energy Policy Act of 2005.  When issued, the loan guarantee will guarantee the loan to the Neal Hot Springs project from the U.S. Treasury’s Federal Financing Bank. 

On Form 8-K filed 3/9/10, U.S. Geothermal announced it had entered into a $8.5 million private placement to further develop the Neal Hot Springs project, agreeing to issue 8,209,519 common shares to institutional investors at a price of $1.05 per share.  Exhibits to the Form 8-K include the forms of securities purchase agreement, registration rights agreement and common stock purchase warrant.  An amendment to the Form 8-K filed on 3/17/10 confirms the closing of the private placement, and identifies the institutional investors in Schedule A of the form of lock-up agreement that is included as an exhibit.

On December 11, Idacorp, Inc.’s  Idaho Power Company subsidiary signed a 25-year power purchase agreement with U.S. Geothermal's wholly owned subsidiary, USG Oregon LLC, for up to 25 megawatts of power per year generated at the Neal Hot Springs project.  U.S. Geothermal announced the PPA agreement in the Form 8-K filed 12/16/09, and the executed agreement was filed as Exhibit 10.43 to the company’s Form 10-Q filed 2/9/10.

Treasury Department Unwinding TARP Investments in U.S. Banks

The United States Department of the Treasury acquired equity securities from numerous financial institutions as part of the Troubled Assets Relief Program (TARP) established pursuant to the Emergency Economic Stabilization Act of 2008 (ESSA).  ESSA required the Secretary of the Treasury to acquire warrants in connection with certain purchases from a financial institution, subject to certain exceptions. 

The Treasury Dept. recently has priced secondary public offerings of such warrants through modified Dutch auctions with Deutsche Bank Securities as the lead or sole underwriter.  The warrants were offered pursuant to effective shelf registration statements filed by the issuer companies.  Prospectus pricing supplements relating to such offerings can be found on Form 424B5 filings by the following banks:

First Financial Bancorp /OH/ on 6/3/10 (SEC file no. 333-156841)

Wells Fargo & Co/MN on 5/21/10 (SEC file no. 333-159736)

Valley National Bancorp on 5/19/10 (SEC file no. 333-159736)