SEC Forms, Filings and Disclosures

CenterPoint Subsidiary Offers Bonds Supported by Transition Property

2012-01-18T18:45:00.000-05:00

CenterPoint Energy Transition Bond Co. IV, LLC is issuing $1.695 billion of senior secured transition bonds in multiple tranches. A wholly-owned subsidiary of public utility holding co. CenterPoint Energy, Inc., serves as the seller, initial servicer and sponsor. The bonds are secured by transition property, which includes the right to a special, irrevocable nonbypassable charge, known as a transition charge, paid by all retail electric customers in the certificated service territory.

The transition property is not a static pool of receivables or assets. The utility restructuring provisions of the Public Utility Regulatory Act mandate and the Public Utility Commission of Texas requires that transition charges be adjusted at least annually, and semi-annually as necessary, to ensure the expected recovery of amounts sufficient to timely provide all scheduled payments of principal, interest and other required amounts and charges in connection with the bonds. Credit enhancement for the bonds will be provided by such statutory true-up mechanism, as well as by general and capital subaccounts held under the indenture.

Goldman, Sachs & Co., Citigroup Global Markets and Morgan Stanley & Co. are acting as representatives of the underwriters. The prospectus supplement was filed on Form 424B2 filed 1/12/12 (SEC file no. 333-177662). The underlying registration on Form S-3 includes the Texas PUC financing order as Exhibit 99.5. The Form 8-K filed on 1/18/12 under file no. 001-03187 includes as exhibits the forms of indenture, transition property servicing agreement, transition property sale agreement, administration and intercreditor agreements.

SEC Adopts Dodd-Frank Mine Safety Disclosure Requirements

2011-12-23T15:17:00.001-05:00

By Final Rule dated December 21, the SEC has adopted new rules outlining how mining companies must disclose the mine safety information required by the Dodd-Frank Act, including the addition of Item 1.04 to Current Report Form 8-K. Section 1503 Dodd-Frank requires mining companies to include information about mine safety and health in the quarterly and annual reports filed with the SEC. The Dodd-Frank Act disclosure requirements are based on the safety and health requirements that apply to mines under the Federal Mine Safety and Health Act of 1977, which is administered by the Mine Safety and Health Administration (MSHA).

The SEC adopted amendments to periodic Forms 10-K, 10-Q, 20-F and 40-F to require the disclosure mandated by Section 1503(a) of the Dodd-Frank Act; adopted new Item 104 of Regulation S-K, which sets forth the disclosure requirements for Forms 10-K and 10-Q, and amended Item 601 of Regulation S-K to add a new exhibit to Forms 10-K and 10-Q for provision of this information. The new Form 8-K Item 1.04 implements the requirements imposed by Section 1503(b) of Dodd-Frank, and the SEC amended Form S-3 to add the new item to the list of Form 8-K items the untimely filing of which will not result in loss of Form S-3 eligibility.

The SEC estimates that, of the approximately 13,500 Form 10-Ks filed annually, approximately 100 are filed by companies that operate, or have a subsidiary that operates, a mine subject to the Mine Act, and that therefore will be affected by the rule and form amendments. Of the 942 Form 20-F and 205 Form 40-F annual reports filed by foreign private issuers, approximately 30 are filed by companies that would be affected by the rule and form amendments. The final rules, which require disclosure on a mine-by-mine basis, take effect 30 days after publication in the Federal Register.

SEC Restricts Confidential Filing by Foreign Private Issuers

2011-12-19T17:19:00.002-05:00

In order to promote transparency and investor protection, the SEC’s Division of Corporation Finance announced on December 8 a change to its traditional policy with respect to the confidential non-public submission of initial registration statements by foreign private issuers. The longstanding policy was the reason that non-U.S. issuers generally were able to go public not long after they filed their registration statements.

Foreign companies were allowed to file their registrations confidentially with the SEC, and to go through several rounds of comments without publicly registering. By completing the rounds of comments before filing publicly, non-U.S. issuers usually spent very little time in registration before making their debuts.

New Policy: the staff will review initial registration statements of foreign issuers that are submitted on a non-public basis only where the registrant is a foreign government registering its debt securities, a foreign private issuer listed on a non-U.S. exchange, a foreign private issuer that is being privatized by a foreign government, or a foreign private issuer that can demonstrate that the public filing of an initial registration statement would conflict with the law of an applicable foreign jurisdiction. In addition, shell companies, blank check companies and issuers with no, or substantially no, business operations will not be permitted to use the non-public submission procedure.

The previous policy was partially based on the fact that, historically, the majority of foreign private issuers registering securities with the SEC were also having their securities traded on a foreign securities exchange, and the foreign market ordinarily did not have a practice of requiring public disclosure of the registration statement before completion of review. More recently, however, the vast majority of foreign private issuers using this non-public review procedure have not contemplated listing securities outside the U.S.

EDGAR System Upgraded, Supports Schedule 14N Filings & 8-K Item 5.08

2011-12-02T17:42:00.006-05:00

As reported in this space on August 30, 2010, the SEC adopted new rules to require companies to include shareholder-nominated director candidates in their proxy materials under certain circumstances. The final rules were published in the Federal Register on September 16, 2010, with the effective date of November 15, 2010. However, by order on October 4, 2010, the SEC issued a stay on their effectiveness until resolution of a legal challenge to the validity of the proxy access rules in the United States Court of Appeals.

The SEC's final rule release published in the Federal Register on September 20, 2011, noted that the Court's mandate concluded the litigation, did not affect the amendment to the shareholder proposal rule (Exchange Act 14a-8, which was not challenged in the litigation), and the stay expired by its terms.

On September 26, 2011, the Schedule 14N submission form types (SC 14N, SC 14N-S, and their amendments) were made available for use on EDGARLink Online. Form 8-K Item 5.08 (Shareholder Director Nominations) was also made available for use on submission form types 8-K, 8-K12B, 8-K12G3 and 8-K15D5. By Final Rule dated November dated November 21 and effective November 29, 2011, the SEC adopted revisions to the EDGAR Filer Manual to reflect the updates to the EDGAR system.

Going Private Transactions using Combined Schedules TO and 13E-3

2011-11-09T16:25:00.029-05:00

The board of directors of Kiewit Investment Fund LLLP, a non-diversified, closed-end management investment company that operates as an "employees' securities company" under the Investment Company Act of 1940 Act, voted unanimously on June 28 to dissolve and liquidate the Fund. The Fund was designed as a long-term investment vehicle primarily for participants in the Peter Kiewit Sons', Inc. Employee Ownership Plan. A wholly-owned subsidiary of Peter Kiewit Sons' offers to purchase all outstanding limited partnership units of the Fund at at the Net Asset Value per Unit less $35 per Unit.

The Kiewit tender offer filing on November 1 is the fourth combined Tender Offer Statement and Rule 13e-3 Transaction Statement to be filed in the past year. A $560 million cash tender offer by an affiliate of Apollo Global Management to purchase all outstanding common shares of CKx, Inc. was filed May 17. In connection with the related merger agreement, an Apollo affiliate obtained support agreements from two significant stockholders of CKx, The Promenade Trust, the sole beneficiary of which is Lisa Marie Presley and which is CKx’s partner in Elvis Presley Enterprises, and Robert F.X. Sillerman, CKx’s largest stockholder.

The Kiewit and CKx transactions are deemed to be third-party tender offers subject to Rule 14d-1. Combination Schedules TO and 13E-3 filed by NovaStar Financial, Inc. on 12/10/10 and by IDT Corp. on 12/3/10 are deemed to be issuer tender offers subject to Rule 13e-4. The NovaStar filing relates to a plan to recapitalize its publicly-held 8.9% Ser. C cumulative redeemable preferred stock and its privately-held 9% Ser. D1 mandatory convertible preferred stock. The exchange offer and consent solicitation for holders of the NovaStar Ser. C preferred was concurrently filed on Form S-4 (SEC file no. 333-171115).

IDT initiated an offer to exchange shares of its outstanding common stock for shares of Cl. B common stock on a one-for-one basis. The company stated that the exchange offer was being made to address the limited liquidity in the market for the common stock and the resulting disparity in the trading prices between the two classes -- despite the fact that the equity rights associated with the shares of each class are nearly identical. Following the completion of the exchange offer, the common stock was delisted from the New York Stock Exchange. The Cl. B common stock remains listed on the NYSE under the “IDT” ticker symbol.

Risk Reporting on Form PF Required by Certain Private Fund Advisers in 2012

2011-11-02T19:44:00.002-04:00

By Final Rule under the Investment Advisers Act of 1940 dated October 31, 2011, the SEC will require advisers to hedge funds and other private funds to report systemic risk data for use by the Financial Stability Oversight Council (“FSOC”) in monitoring risks to the U.S. financial system. The rule, which implements Sections 404 and 406 of the Dodd-Frank Act, requires SEC-registered investment advisers with at least $150 million in private fund assets under management to periodically file a new reporting form electronically on a confidential basis (Form PF).

For hedge funds, private equity funds and liquidity funds, the information required on Form PF is tiered so that more detailed information is required from larger private fund advisers. The rule requires heightened reporting from advisers managing at least $1.5 billion in hedge fund assets. Although this threshold applies only to about 230 U.S.-based hedge fund advisers, those advisers manage more than 80% of the industry’s assets under management.

There will be a two-stage phase-in period for compliance with Form PF filing requirements. Most private fund advisers will be required to begin filing Form PF following the end of their first fiscal year or fiscal quarter, as applicable, to end on or after Dec. 15, 2012. Those with $5 billion or more in private fund assets must begin filing Form PF following the end of their first fiscal year or fiscal quarter, as applicable, to end on or after June 15, 2012.

Form PF is a joint effort of the SEC and the Commodity Futures Trading Commission. Staff consulted with the U.K.’s Financial Services Authority and other members of the International Organization of Securities Commissions. The resulting Form PF is similar in many respects to the European Securities and Markets Authority’s proposed private fund reporting template and surveys of large hedge fund advisers conducted by foreign financial regulators.

SEC Staff Legal Bulletin addresses Legality and Tax Opinions in Registered Offerings

2011-10-19T17:18:00.010-04:00

Staff Legal Bulletin No. 19, published on October 14 by the SEC's Division of Corporation Finance, provides guidance on legality and tax opinions issued in connection with registered offerings of securities under the Securities Act of 1933. The bulletin covers the requirements for such opinions, the Division's views regarding the required elements for these opinions and the filing of consents to include these opinions in registration statements.

Legality Opinions

Item 601(b)(5)(i) of Regulation S-K requires that all 1933 Act filings include an opinion of counsel regarding the legality of the securities being offered and sold pursuant to the registration statement. As a general rule, counsel’s signed legality opinion must be filed as an exhibit to the registration statement before it becomes effective, and the opinion may not be subject to any unacceptable qualifications, conditions or assumptions. In general, legality opinions must state that the securities are legally (or validly) issued, fully paid, non-assessable and, if debt securities, binding obligations of the registrant.

Among other things, the bulletin:

confirms the Division will not accelerate the effectiveness of a registration statement if counsel does not opine that the securities will be legally issued, but if counsel opines that the securities are not fully paid or are assessable, the effectiveness of the registration statement may be accelerated as long as the disclosures about partial payment or assessability are adequate;
states that when a foreign corporate registrant registers the offer and sale of shares, foreign counsel or U.S. counsel that is competent to opine on the applicable foreign law must provide a legal opinion in the same manner as for a U.S. registrant, and that counsel must opine on the laws of the registrant’s jurisdiction of incorporation, including whether the shares are legally issued, fully paid and non-assessable as those terms are understood under U.S. law;
notes Counsel must opine on the legality of registered offers of options, warrants or rights to purchase securities, as well as on the legality of the underlying securities;
clarifies that when the registrant registers the offer and sale of units comprised of two or more underlying securities, the opinion must address the legality of each component of the unit, as well as the unit itself; and
affirms that purchasers of securities in registered offerings are entitled to rely on the opinion, and that the Division does not accept any limitation on reliance.

Tax Opinions

Regulation S-K requires opinions on tax matters for filings on Form S-11, filings to which 1933 Act Industry Guide 5 applies, roll-up transactions and other registered offerings where the tax consequences are material to an investor and a representation about the tax consequences is included in the filing. Legal counsel or an independent public or certified accountant can provide the Item 601(b)(8) tax opinion, which supports the tax matters and the consequences to shareholders. A revenue ruling from the Internal Revenue Service also will satisfy the requirement. Among other things, the bulletin:

indicates that tax opinions only have to address material federal tax consequences, and the registrant may recommend in the prospectus that investors seek the advice of their tax counsel or an adviser with respect to any state tax consequences;
advises that a tax opinion should address and express a conclusion for each material federal tax consequence, should identify the applicable IRS provision, regulation or revenue ruling, and if counsel or the accountant is unable to opine on a material tax consequence, the opinion should state that fact, provide the reason and discuss possible alternatives and risks to investors;
agrees that a tax opinion may be conditioned or qualified as long as the disclosure is adequate, that counsel or the accountant must disclose the assumptions on which the opinion is based, and that assumptions about future facts or conduct, if limited and reasonable, are acceptable;
explains that counsel or an accountant may issue a “should” or “more likely than not” opinion if there is a lack of authority that directly addresses the tax consequence of the transaction, conflicting authority or significant doubt about the tax consequences, and that in these instances the staff expects an explanation, including a description of the degree of uncertainty.

Issuers Discuss Impact of Dodd-Frank Durbin Amendment

2011-10-05T16:13:00.008-04:00

On October 1, new Federal Reserve Board guidelines went into effect to implement interchange fee reform provisions of Dodd-Frank Act Section 1075 (the Durbin Amendment). As a result, banks with holdings of $10 billion or more now have a rate cap on what they can charge merchants for processing debit card transactions (21 cents plus 0.05% of the transaction, compared to the current average of 44 cents per transaction). Affected companies have been striving to project the impact of the new rules on their business in SEC filings.

USA Technologies, Inc. (NASDAQ: USAT), which has a 19 year history in the small ticket electronic payments industry and the unattended Point of Sale market, has been notified by its U.S. credit and debit card processor that Visa and MasterCard will significantly raise their interchange fees for small ticket category transactions paid for through debit cards issued by regulated banks as defined under the Durbin Amendment. In its Form 10-K filed 9/27/11, USAT states the interchange rate would increase on October 1 from 1.55% of a transaction plus 4 cents, to 0.5% of a transaction plus 22 cents, which represents an increase of approximately 247% based on a transaction of $1.67, which was the average transaction experienced by USAT during the fiscal year ended June 30, 2011. Approximately 82% of the transactions handled by the USAT network in FY11 consisted of small ticket debit card transactions. Of such transactions, USAT estimates that 70% were debit transactions from regulated banks. USAT and its card processor are currently in discussions with the card associations to analyze the impact of the rate increases and to negotiate a viable rate structure.

The Toronto-Dominion Bank (NYSE: TD) strived to quantify the impact of the new Federal Reserve rules in the “How Our Businesses Performed” section of its 3Q11 earnings news release filed with a Form 6-K on September 1. "As a result of the Durbin Amendment, revenue at U.S. Personal and Commercial Banking is expected to decline by approximately US$50-60 million pre-tax per quarter, excluding mitigation strategies. One third of that impact is expected in the fourth quarter of fiscal 2011 and the first full quarter impact is expected in the first quarter of fiscal 2012. We are formulating plans to recover this lost revenue over the next 2 years, but not specifically in the debit product."

In addition to the interchange fee cap, Durbin contains a provision that prevents card networks from contractually requiring that their debit cards be transacted exclusively on one debit network. This will free merchants up to choose a network from a pool of competitors, potentially resulting in a lower per-transaction cost on their side and a further hit to interchange fee revenue on the bank’s side. PSB Holdings Inc. (OTCBB: PSBQ) touched on this facet of the legislation in the MD&A section of Form 10-Q filed 8/15/11: “While the new rules technically do not apply to us as a smaller bank, the impacts are expected to become uniform for the industry over time as merchants use their new authority and options to process customer card activity across a wider number of providers. While the timing is uncertain, these fully implemented changes could lower our annualized debit card interchange revenue by approximately $234, down approximately 36% from current revenue levels.”

Resale of Preferred issued pursuant to the Small Business Lending Fund

2011-09-30T17:09:00.000-04:00

First Bancorp/NC Form S-3 on 9/30/2011 (SEC file no. 333-177096)
First PacTrust Bancorp, Inc. Form S-3 on 9/29/11 (file no. 333-177055)
Horizon Bancorp Form S-3 on 9/26/11 (file no. 333-177007)

The Treasury Department is the initial selling securityholder of senior non-cumulative perpetual preferred shares recently registered by issuers that have participated in the Small Business Lending Fund (SBLF). Enacted into law as part of the Small Business Jobs Act of 2010, the SBLF is a $30 billion fund that encourages lending to small businesses by providing capital to qualified community banks with assets of less than $10 billion. By press release dated September 28, the Treasury Department states that the final wave of funding through the SBLF has brought the total funding for the program to more than $4 billion going to 332 banks across the country.

First Bancorp, a bank holding company headquartered in Troy, North Carolina, received an investment of $63.5 million in the company’s preferred stock on September 1. The initial dividend rate on the preferred stock was 5% and can fluctuate on a quarterly basis during the first 10 quarters during which the preferred stock is outstanding, based upon changes in the amount of the issuer's “Qualified Small Business Lending" as compared to a baseline level. The First Bancorp preferred stock qualifies as Tier 1 capital, is non-voting except in limited circumstances and may be redeemed at any time at the company’s option.

The issuances of the preferred stock were completed in private placements to Treasury exempt from registration pursuant to Section 4(2) of the Securities Act of 1933. First Bancorp filed the corresponding securities purchase agreement on Form 8-K dated September 6. First PacTrust Bancorp ($32 million) and Horizon Bancorp ($12.5 million) filed their securities purchase agreements with the Secretary of Treasury on Form 8-Ks dated August 30 and August 26, respectively.

Registrant to Offer IPO Shares by Modified Dutch Auction

2011-09-20T16:56:00.007-04:00

WhiteGlove Health, Inc., which on September 16 filed Amendment No 9 to its Form S-1, would be the first issuer to use the “OpenIPO” distribution method since 2007. “OpenIPO” is WR Hambrecht + Co.’s trademarked name for an auction-based approach to the determination of public offering price and share allocation in which all investors, including company insiders, have an equal opportunity to receive an allocation of shares at the same price. The investment bank was an underwriter in the eleven auction method IPOs that have closed since 2005.

For issuers using "OpenIPO", the underwriters solicit bids from potential investors that specify both the price and the number of securities the bidder wishes to purchase. Prospective investors must open a brokerage account with one of the underwriters and deposit money into it. These funds back the bids made in the auction. The auction begins as soon as a preliminary prospectus is available and closes after the registration is declared effective. At any point within that window, bids can be canceled or modified and investors can make multiple bids at multiple prices.

At the close of the auction, the underwriters determine a “clearing price,” or the highest price at which all offered shares can be sold. Once a clearing price is set, the issuer and the underwriters establish the public offering price. The public offering price may be less than, but cannot exceed, the clearing price. All of an investor’s bids at or above the clearing price will be considered and cumulated at the close of the auction. The public offering price determines the allocation of shares to potential investors, with all valid bids submitted at or above the public offering price receiving a pro rata portion of the shares bid for. Each of an investor’s successful bids will be treated separately for purposes of allocation and rounding of lots to multiples of 100 or 1,000 shares.

Benihana Inc. to Resubmit Reclassification Proposal

2011-09-15T13:26:00.003-04:00

Benihana's special meeting proposal to simplify its capital structure by reclassifying each Class A common share into one share of common stock (previously reported in this space on June 10) did not receive the required approval by a majority of the outstanding common shares on September 12. All other classes of stock voted a majority of shares outstanding in favor of the proposal. The reclassification proposal required the higher burden of not just a majority of shares voting, but a majority of all outstanding common shares.

Benihana of Tokyo, Inc. ("BOT"), the company's largest shareholder owning approximately 36.8% of the common shares and 26.8% of the voting power, expressed concerns about the reclassification proposal in a letter to the Benihana Inc. board of directors that is included as an exhibit to the Schedule 13D filed June 22 (SEC file no. 005-48717). On August 5, BOT filed a Proxy Statement on Form DEFC14A to solicit votes against the proposed reclassification, stating it "would benefit certain of the Company’s insiders...while diluting and disenfranchising the vast majority" of the common stockholders.

In a press release filed by Benihana with a Form 8-K on September 12, the company indicated that it would re-file an S-4 Registration Statement to enable stockholders to vote again on the reclassification proposal as soon as possible. Regarding such vote, the company said that it has been informed by BFC Financial Corporation that it intends to convert additional shares of its Series B preferred stock into common stock prior to the new record date to help obtain shareholder approval. The new Form S-4 was filed on September 14, file no. 333-176842.

Mid-Year 2011 IPO Proceeds Exceed $26 Billion, Near 2007 Level

2011-07-20T16:35:00.003-04:00

With 93 completed offerings in the first six months of 2011, the IPO market is comfortably ahead of last year’s pace of 70 IPOs through the first half of the year. Companies have generated more than $26 billion in IPO proceeds through the end of June, compared to $9.8 billion in the same period last year. Further, 2011’s six-month total exceeds the total for all of 2009 ($24.8 billion) and nearly matches 2008’s yearly total of $28.14 billion.

At its current pace, the 2011 market may approach the aggregate proceeds reached in the 2007 IPO market. In that year, 282 IPOs generated $60.59 billion in proceeds, the highest annual total of any year since 2000. The six-month total in 2007 was $29.28 billion, very close to what this year’s market has achieved so far.

This year the market has already seen five IPOs top $1 billion in proceeds. Only two offerings surpassed the $1 billion mark in all of 2010, although one was General Motors’ $15.77 billion mega-deal. The largest IPO in the first half of 2011 was the HCA Holdings’ $3.78 billion offering on March 9th. Of 2011’s 93 IPOs, 28 were completed by non-U.S. companies, which is close to last year’s pace when 57 issuers incorporated outside the U.S. went public in the U.S. Chinese companies account for more than half (15 of 28) of this year’s deals by foreign issuers.

The information reported herein was gathered using IPO Vital Signs, a Web-based system that includes all SEC registered IPOs, including REITs and those non-U.S. IPO filers seeking to list in the U.S. markets. IPO Vital Signs does not track closed-end funds, best efforts or non-underwritten deals, or IPO offerings for amounts less than $5 million.

Exchange Offer by Accounting Successor Following Reverse Spin-Off

2011-07-15T19:00:00.002-04:00

Universal American Corp. (New UAM) was formed pursuant to a separation agreement dated December 30, 2010, whereby all of the businesses of the predecessor Universal American Corp. (Old UAM) other than its Medicare prescription drug business were transferred to New UAM. Simultaneously with execution of the the separation agreement, Old UAM entered into an agreement and plan of merger which, among other things, provided for the acquisition of the Medicare prescription drug business by CVS Caremark Corp. for cash consideration of approximately $1.25 billion.

To accomplish the split-off from Old UAM, New UAM registered common stock valued at $623.7 million and non-voting common stock valued at $31 million on Form S-4 (SEC file no. 333-172691, declared effective on 4/4/11). The merger agreement and separation agreements are included as Annex A and Annex B, respectively. Paul, Weiss, Rifkind, Wharton & Garrison served as counsel to Universal American, and Davis Polk & Wardwell advised CVS Caremark. The Registration Statement presents unaudited combined condensed financial statements that represent a "carve-out" of the historical results of operations, assets, and liabilities attributable to UAM's Medicare prescription drug business. New UAM is considered as divesting the Medicare Part D Business of Old UAM and is treated as the "accounting successor" to Old UAM for financial reporting purposes in accordance with Accounting Standard Codification (ASC) No. 505-60, Spin-offs and Reverse Spin-offs (ASC 205-2-45).

When the reverse spin-off was consummated on April 29, Old UAM sold 1.6 million 8.5% Ser. A mandatorily redeemable preferred shares in a private placement for $40 million. Proceeds from this issuance were used in part to finance the cash consideration to Old UAM shareholders in the sale of the Medicare prescription drug business. New UAM filed a Form S-4 on July 15 to offer shares in exchange for the Ser. A preferred shares that are substantially identical to the outstanding shares except that they are registered under the 1933 Act and have no transfer restrictions or registration rights (file no. 333-175591).

SEC Provides More Guidance and Exemptions for Security-Based Swaps

2011-07-06T17:17:00.002-04:00

Title VII of the Dodd-Frank Act created a new regulatory framework for over-the-counter derivatives, authorizing the SEC to regulate security-based swaps and the Commodity Futures Trading Commission to regulate other swaps. Under Dodd-Frank, starting July 16, 2011, security-based swaps are defined as “securities” subject to existing federal securities laws, including the Securities Act of 1933 and the Securities Exchange Act of 1934.

The SEC provided additional guidance on July 1 to clarify which U.S. securities laws will apply to security-based swaps starting July 16. Interim final rules provide certain conditional exemptions under the Securities Act (Rule 240), the Exchange Act (Rule 12a-11 and Rule 12h-1(i)), the Trust Indenture Act (Rule 4d-12) and other provisions of the federal securities laws to allow certain security-based swaps to continue to trade and be cleared as they have pre-Dodd-Frank. This interim relief will remain in effect until the compliance date for final rules that the SEC may adopt further defining the terms “security-based swap” and “eligible contract participant.”

By Exemptive Order effective on July 1, the SEC granted temporary relief clarifying that a substantial number of the requirements of the Exchange Act applicable to securities will not apply to security-based swaps when the revised definition of security goes into effect on July 16. The prohibitions on fraud and manipulation will continue to apply to security-based swaps after that date. To enhance legal certainty for market participants, the SEC also provided temporary relief from provisions of U.S. securities laws that allow the voiding of contracts made in violation of those laws.

The purpose of the exemptions is to allow market participants to continue to enter into those security-based swaps that under current law are defined as security-based swap agreements as they do today, and to minimize disruptions and costs to the security-based swap markets that could otherwise occur on July 16. The SEC intends to monitor closely the transition of the derivatives markets to regulated markets and to determine to what extent, if any, additional regulatory action may be necessary. Public comments on the exemptions are due July 15.

SEC Requires Private Fund Advisers to Register by March 30, 2012

2011-06-27T17:32:00.002-04:00

By a split 3-2 vote with two Republican commissioners opposing, the SEC adopted a Final Rule on June 22 that that requires advisers to hedge funds and other private funds to register with the SEC, and require reporting by certain investment advisers that are exempt from registration. Under amended Form ADV, advisers to private funds will have to provide basic organizational and operational information about each fund they manage, general information about the size and ownership of the fund and the adviser's services to the fund. They also will have to identify five categories of "gatekeepers" - auditors, prime brokers, custodians, administrators and marketers - that perform critical roles for advisers and the funds they manage.

For many years, private fund advisers generally have avoided registering with the SEC based on an exemption for advisers with fewer than 15 clients - an exemption that counted each fund as a client, as opposed to each investor in a fund. The exemption, which was eliminated by Title IV of the Dodd-Frank Act, enabled advisers handling large sums of money to avoid SEC oversight.

By unanimous vote, the SEC also adopted a Final Rule which becomes effective July 21, 2011, that establishes new exemptions from SEC registration and reporting requirements for certain advisers, and reallocates regulatory responsibility for advisers between the SEC and states. Advisers will not have to register if they qualify for one of three new exemptions specified in the Dodd-Frank Act:

Advisers solely to venture capital funds.
Advisers solely to private funds with less than $150 million in assets under management in the U.S.
Certain foreign advisers without a place of business in the U.S.

The rules define "venture capital fund" as a private fund that invests primarily in "qualifying investments" (generally, private, operating companies that do not distribute proceeds from debt financing in exchange for the fund's investment in the company), but may hold certain short-term investments. It also states that a venture capital fund is one that is not leveraged except for a minimal amount on a short-term basis, does not offer redemption rights to investors and represents itself to investors as pursuing a venture capital strategy.

The new rules also address the allocation of regulatory responsibility between the SEC and states. Regulation of investment advisers is divided between the two based primarily on the amount of money an adviser manages for its clients. Prior to Dodd-Frank, advisers could not register with the SEC unless they managed at least $25 million for their clients.

Dodd-Frank raised the threshold for SEC registration to $100 million by creating a new category of advisers called "mid sized advisers." A mid-sized adviser, which will not have to register with the SEC and will be subject to state registration, is one that manages between $25 million and $100 million for its clients, is required to be registered in the state where it maintains its principal office and place of business, and would be subject to examination by that state, if required to register.

The SEC also voted unanimously to adopt a Final Rule that provides for "family offices" to be excluded from the Investment Advisers Act. Family offices are entities established by wealthy families to manage their wealth and provide services to family members, such as tax and estate planning services. Family offices that do not meet the terms of the exemption will have to register with the SEC by March 30, 2012.

Procter & Gamble Uses Reverse Morris Trust Structure to Sell Pringles Line

2011-06-22T18:34:00.004-04:00

Similar to a 2008 deal where Procter & Gamble Co. sold its Folgers Coffee business to J. M. Smucker Co. (see SEC Registration Statement file nos. 333-152451 & 333-152453), a P&G wholly-owned subsidiary and Diamond Foods, Inc. have registered common shares in connection with transactions whereby P&G will sell its Pringles snack business in a reverse Morris Trust transaction valued at approximately $2.35 billion, including the assumption of approximately $850 million of Pringles debt.

A reverse Morris Trust transaction is an M&A strategy for a company to essentially sell assets without incurring any corporate tax, whereas typical deal structures would be taxable to the seller. As a first step, P&G transferred all assets that comprise the target snack business to a stand-alone subsidiary named The Wimble Co. (see the Separation Agreement filed as Exhibit 2.2 to the Diamond Foods Form 8-K on 4/5/11). P&G was represented by Jones Day of New York in the separation agreement, and Diamond by the San Francisco office of Fenwick & West LLP.

On June 20, Wimble Co. registered common shares for the purpose of its split-off from P&G (333-175029). The combination Form S-4/Form S-1 is comprised of an offer by P&G to exchange all Wimble common shares that are owned by P&G and will be converted into Diamond Foods common shares for P&G common shares that are validly tendered. Prior to the distribution, and in partial consideration for the assets of the Pringles snack business transferred from P&G, Wimble will be recapitalized and will borrow funds to distribute to P&G or its affiliates.

Immediately following consummation of the exchange offer, Wimble Co. ("the Pringles Co.") will merge with and into a direct wholly owned subsidiary of Diamond Foods. Each Wimble common share will be automatically converted into the right to receive one fully paid and nonassessable share of Diamond common stock. Diamond registered common shares for the merger on Form S-4 also filed on June 20 (333-175025). The shares of Diamond common stock issued in connection with the conversion of shares of Pringles Co. common stock in the merger will represent approximately 57% of the shares of Diamond common stock that will be outstanding immediately after the merger.

Blank Check Issuers Returning to IPO Market

2011-06-17T18:38:00.001-04:00

Special purpose acquisition companies (SPACs, also known as blank check companies) were the leading industry group within the underwritten IPO market in the United States prior to the global financial crisis of 2008. Sixty five SPACs went public in calendar year 2007, representing 23 percent of the deals completed. In sharp contrast, from August 1, 2008, through the end of 2009 only one blank check launched an underwritten IPO in the U.S. among the 64 new offerings during this period.

Beginning in late 2010 and continuing this year, SPACs have seen a resurgence in IPO activity. Through June 16, there have been ten SPAC IPOs in 2011, already surpassing the 2010 and 2009 full-year totals. Twenty of the year’s 151 new registrations have been filed by blank checks, compared to 12 in all of 2010. The return of SPACs has been good for the business of EarlyBirdCapital and other smaller or boutique underwriters, but a few of this year’s SPAC IPOs were led by Citi.

The information reported herein was gathered using IPO Vital Signs, a Web-based system that includes all SEC registered IPOs, including REITs and those non-U.S. IPO filers seeking to list in the U.S. markets. IPO Vital Signs does not track closed-end funds, best efforts or non-underwritten deals, or IPO offerings for amounts less than $5 million.

Benihana Inc. to Eliminate Dual-Class Common Stock Structure

2011-06-10T18:39:00.006-04:00

The restaurant operator has registered $109.8 million of common shares on Form S-4 filed June 9 in connection with a special meeting proposal to holders of common, Class A common and Series B convertible preferred stock of the company. Benihana proposes to amend and restate the company's certificate of incorporation by reclassifying one of the two existing classes of common stock into the other class, which would remain as the only class outstanding.

In reaching its decision to recommend the reclassification proposal, the board of directors considered the following material factors:

Improved liquidity and trading efficiencies (greater liquidity of the common stock following the reclassification may allow investors to buy and sell larger positions in that class with less impact on the stock price than would otherwise be the case).
Alignment of voting rights with economic ownership (the reclassification would eliminate the disparity between voting interests and economic interests by establishing a simplified common stock capital structure whereby each share of common stock is entitled to one vote).
Increased attractiveness to institutional investors (the company believes that simplifying our capital structure could address complexity and liquidity concerns that institutional investors typically express and will allow common shares to be held by certain institutional investors whose investment policies do not permit them to invest in companies that have disparate voting rights).
Elimination of investor confusion and improved transparency. (the company believes that some investors may not understand the differences between our two classes of common stock, including confusion as to the calculation of our total market capitalization, shares outstanding and earnings per share).
Increased strategic flexibility (the company believes that the simplified common stock capital structure could provide increased flexibility to structure acquisitions and equity financings by using equity as acquisition currency and for possible future offerings of our capital stock to potential investors).
Dilution to the common stock (the board recognized that, pursuant to the reclassification proposal, the reclassification will be dilutive to holders of common stock with respect to voting power).

Benihana will account for the reclassification by adjusting its capital stock account based on the aggregate par value of the shares outstanding immediately following the reclassification. The change in capital stock will be offset by a decrease in paid-in capital. The Company expects that all of the shares following the reclassification will be listed on The Nasdaq Global Select Market under the symbol “BNHN”. The Benihana board has amended the company’s shareholder rights plan to expire automatically when and if the reclassification of the Class A common Stock becomes effective.

Conversions to REIT Status by Merger

2011-06-03T19:57:00.002-04:00

In connection with a plan to reorganize the business operations of American Tower Corp.(NYSE: AMT) to allow the Delaware corporation to be taxed as a real estate investment trust, American Tower REIT, Inc. registered common shares valued at $21.89 billion on June 3 (Form S-4, SEC file no. 333-174684). The REIT conversion will be implemented through a series of steps including, among other things, the merger of AMT into American Tower REIT, a recently-formed wholly-owned subsidiary. For accounting purposes, the merger will be treated as a transfer of assets and exchange of shares between entities under common control.

A REIT is not permitted to retain earnings and profits accumulated during years when the company or its predecessor was taxed as a C corporation. To elect REIT status for the taxable year beginning January 1, 2012, AMT must distribute to its stockholders on or before December 31, 2012 previously undistributed earnings and profits attributable to the taxable period ending prior to January 1, 2012. AMT plans to distribute these pre-REIT accumulated earnings and profits by paying a one-time special cash distribution to stockholders, estimated to be be no more than $200 million.

Summit Hotel Properties, Inc. (NYSE: INN) converted to REIT status concurrently with its IPO on February 9, 2011 (Form S-11, 333-168686). The issuer's predecessor, Summit Hotel Properties, LLC, formed Summit Hotel OP, LP to serve as the operating partnership of the REIT ("OP"). In connection with the merger of the LLC into the OP, the OP registered units of limited partnership interest valued at $149.9 million to be issued as merger consideration for the membership interests in the LLC (Form S-4, 333-168685).

Prior to the merger of the LLC into the OP, the OP was treated as an entity disregarded for federal income tax purposes as separate from the REIT. Although for state law purposes the OP was the surviving entity in the merger, the OP is treated as a continuation of the LLC for federal income tax purposes. In the reorganization transactions, the REIT will be treated as contributing the cash proceeds of the IPO to the OP in exchange for OP units, except to the extent the payment of accrued and unpaid priority returns on the LLC membership interests as part of the reorganization transactions is recharacterized by the IRS as a “disguised sale” for federal income tax purposes. The opinion of Hunton & Williams LLP that the payment of the accrued and unpaid priority returns should not be treated as a disguised sale for federal income tax purposes in included as Exhibit 8.1 to the Form S-4.

Registrant Engages Qualified Independent Underwriter to Comply with FINRA Rule

2011-05-27T18:17:00.005-04:00

Committed Capital Acquisition Corp., a Delaware-incorporated blank check company that had a Form 10 Registration go effective in May 2007, has registered five million units of one common share and one warrant for a firm-commitment underwritten public offering (Form S-1 filed May 27, SEC File No. 333-174599). Unlike most other blank check companies, the board of directors will have the sole discretion and authority to approve and consummate the initial business transaction without seeking stockholder approval.

The sole book-running manager and underwriters' representative for the deal is Broadband Capital Management LLC ("BCM"), a boutique investment bank and broker-dealer. Three Committed Capital insiders, who collectively own approximately 42.5% of the issued and outstanding shares before this offering, all serve as management of BCM. As a member of the Financial Industry Regulatory Authority, BCM may be deemed to have a “conflict of interest” under Rule 5121(f)(5) of the Conduct Rules of FINRA.

Compliance with Rule 5121(f)(5) of FINRA’s Conduct Rules requires that a “qualified independent underwriter” as defined by FINRA participate in the preparation of the registration statement and exercise the usual standard of due diligence. The registrant has engaged Rodman & Renshaw to be the qualified independent underwriter and will pay Rodman a fee of $50,000 from the proceeds of a loan provided by BCM. Rodman & Renshaw will receive no other compensation.

Offering proceeds of $25 million, or $28.750 million if the underwriters’ over-allotment option is exercised in full, will be deposited into a trust account. The officers and directors have agreed that the company will have 21 months from the date of the prospectus (or 24 months if a letter of intent or a definitive agreement has been executed) to consummate the initial business transaction. If the transaction has not been completed within such time, the company will (i) cease all operations except for the purpose of winding up, (ii) as promptly as possible, but not more than five business days thereafter, redeem public shares for cash equal to their pro rata share of the aggregate amount then on deposit in the trust account, less taxes and amounts released for working capital purposes, subject to applicable law, and (iii) as promptly as possible following such redemption, dissolve and liquidate as part of the plan of dissolution and liquidation.

Contractual Rights Offered to Major Investors in T3 Motion, Inc.

2011-05-18T11:58:00.005-04:00

T3 Motion, a manufacturer of personal mobility vehicles powered by electric motors that had been listed on the OTC Bulletin Board, initiated trading on the NYSE Amex with an underwritten offering units consisting of one common share, one Class H warrant and one Class I warrant (Form 424B4 filed May 17, SEC File No. 333-171163). Each warrant entitles the holder to purchase one common share but cannot be exercised until three months after issuance. The common shares and warrants will trade only as a part of a unit for 90 days following the closing of the offering.

T3 also offers 25 contractual rights to the purchasers of at least $500,000 of units in this offering as well as certain insiders converting their debt into units in a private placement concurrent with this prospectus (collectively, "$500,000 Investors"), which relate to Class H and Class I warrants. In connection with such rights, the company plans to enter into agreements with the $500,000 Investors whereby, subject to certain exceptions, T3 may not sell or issue any common stock or equivalents at a per share price lower than the exercise price of the Class H or Class I warrants without prior written consent from such $500,000 Investors that hold at least 67% of all Class H and Class I warrants originally acquired by the $500,000 Investors.

These negative covenant agreements also restrict T3 from engaging in certain types of change of control transactions in which common stock is exchanged for all cash or non-publicly traded securities without prior written consent from the $500,000 Investors (and permitted assigns). The $500,000 Investors may assign their rights under these agreements in whole, but not in part, to a purchaser of their Class H or Class I warrants. An agreement terminates with respect to any $500,000 Investor upon the earlier of the date that Class H and Class I warrants are no longer outstanding or at such time that such investor no longer holds Class H or Class I warrants. The form of letter agreement was filed as Exhibit 4.6 to the Form S-1 on May 13.

Underwriting or Commissions Expense Listed in Registration Statement Part II

2011-05-13T18:50:00.002-04:00

Item 511 of Regulation S-K requires the issuer to furnish a reasonably itemized statement of all expenses in connection with the issuance and distribution of the securities to be registered, other than underwriting discounts and commissions. The General Instructions of registration statement Form S-1 instructs registrants to furnish the information required by Item 511 in Part II, Item 13 (Other Expenses of Issuance and Distribution).

Although the Item 511 requirement explicitly excludes underwriting expenses from mandatory disclosure, and the blank Form S-1 reserves Part II for disclosure of information not required in the prospectus (which constitutes the Part I disclosure), recent filers have included underwriting or commission expenses in the list of fees found in Item 13. It might be that SEC comment letters called for this disclosure, but any comment letters for the offers discussed below are not yet publically available.

NGL Energy Partners LP went public on May 12 and began trading on the NYSE (ticker: NGL). The initial Form S-1 for the offering was filed February 11 (SEC file no. 333-172186), but it was not until Amendment No. 3 on April 28 that NGL disclosed a structuring fee equal to 0.5% of the gross proceeds payable to Wells Fargo Securities, LLC, one of the joint book-running managers for the deal. Such disclosure was made as a footnote regarding underwriting discounts and commissions on the red-herring prospectus cover page and reference is made to it in Use of Proceeds discussions in Part I. That is not unusual, but what is unusual is that this fee is quantified ($350,000) and listed as an expense in Part II, Item 13.

Other recent registrants report offering expenses on the prospectus cover page and in other Part I disclosures, but take the further step of quantifying the dollar amount and listing it in Item 13. Juhl Wind, Inc. has registered $15M of common stock on a shelf basis and estimates up to $875,000 payable as commissions or discounts for a best efforts offering (file no. 333-173791). On May 13, Vanguard Energy Corporation registered 7,000,000 units for an IPO (333-174194). Vanguard has agreed to pay Paulson Investment Company, Inc., the representative of the underwriters, a non-accountable expense allowance equal to 3% of the total public offering price, and includes the $283,500 expense allowance with the other expenses of issuance and distribution listed in Part II.

Application of Push Down Accounting

2011-05-04T18:51:00.003-04:00

Alto Palermo S.A. ("APSA") is a Buenos Aires-headquartered operator of ten shopping centers in Argentina with a limited trading market of American Depositary Shares listed on the NASDAQ Global Market. In connection with the registration of common shares for concurrent Argentine and international offerings, APSA has applied push down accounting for US GAAP purposes in the Form F-1 filed on May 2 (SEC file no. 333-173838). For Argentine GAAP purposes, push down accounting is not applied.

IRSA Inversiones y Representaciones Sociedad Anónima increased its equity interest in APSA to over 94% of the voting capital on October 15, 2010. Pursuant to FASB ASC No. 805 and Codification of SEC Staff Accounting Bulletins Topic 5.J “New Basis of Accounting Required in Certain Circumstances”, when a purchase transaction results in an entity becoming substantially wholly-owned, push down accounting is applied in the acquired entity´s separate financial statements. Push down accounting requires that the fair value adjustments and goodwill or negative goodwill identified by the acquiring entity be pushed down and reflected in the financial statements of the acquired entity.

Accordingly, the selected consolidated US GAAP income data statement data for the six-month period ended 12/31/10 prior to 10/15/10 reflect the historical accounting basis in APSA assets and liabilities and are labeled “Predecessor Company”. The selected consolidated US GAAP income data statement data for the six-month period ended 12/31/10 subsequent to 10/15/10 are labeled “Successor Company” and reflect the push down basis of accounting for the new fair values in APSA's consolidated financial statements. Consequently, the amounts shown for the periods prior to and subsequent to 10/15/10 are not comparable. Note 14 to the unaudited six-month consolidated financial statements provide a description of the adjustment related to push down accounting.

Charters Amended to Declassify Board of Directors

2011-04-29T14:55:00.003-04:00

At the annual meeting of stockholders held this week for three Delaware-incorporated issuers, amended and restated articles of incorporation were approved to provide for the phased-in declassification of the board of directors. Avery Dennison Corp. and Life Technologies Corp. also made corresponding amendments to restated bylaws, which are included as exhibits to the respective Form 8-K filings dated 4/29 and 4/28/11 (SEC file nos. 1-07685 and 0-25317).

First Niagara Financial Group, Inc. (0-23975) filed the restated articles with the Form 8-K dated April 27 that reports stockholder approval of the board declassification. Previously, First Niagara directors were elected for staggered terms of three years. In the declassification proposal presented in the Schedule 14A proxy statement filed March 21, the board indicates that it considered the corporate governance trend towards annual election of directors, as well as the view of many corporate governance experts and institutional shareholders that a classified board has the effect of insulating directors from a corporation’s stockholders.

Commencing with the First Niagara board class standing for election at the 2012 annual meeting, directors will stand for election for one-year terms, expiring at the next succeeding annual meeting of stockholders. The class of directors that stood for election at this year’s annual meeting for a term ending in 2014 and the class of directors whose term ends in 2013 will continue to hold office until the end of the terms for which they are elected and will stand for election for one year terms thereafter. Commencing in 2014, all directors will be elected on an annual basis.

Avery Dennison and Life Technologies also had three classes of directors with staggered three year terms. The proposals to phase out the board classification and gradually move to one year terms are presented in the proxy statements filed on 3/17 and 3/18/11, respectively.

Issuer No Longer Eligible to Use Form S-3, Files S-1 and Post-Effective Amendment

2011-04-19T16:18:00.004-04:00

Cytomedix, Inc. securities were delisted from the NYSE Amex on January 25, 2011, and began to be quoted on the OTC Bulletin Board. By Form 8-K filed January 21, the company reported that it had withdrawn its appeal of the determination that it had not timely regained compliance with the Exchange’s continued listing standards because stockholders’ equity is less than $6M. Consequently, Cytomedix is no longer eligible to use Form S-3.

The company filed a universal shelf registration on Form S-3 on 12/3/07 that was declared effective on 3/28/08 (SEC File No. 333-147793). To maintain the registration of these previously registered securities, Cytomedix filed a Form S-1 on 4/12/11 and a registration fee in respect of the common shares was paid concurrently with the filing (333-173463).

A subsequent Form S-3 filed by Cytomedix which registered common shares for resale, from time to time, on behalf of certain selling shareholders was declared effective on 11/3/10 (333-168936). On 4/12/11, the company filed Post-Effective Amendment No. 1 to Form S-3 on Form S-1 to convert its registration statement on Form S-3 to Form S-1. All filing fees payable in connection with the registration of these securities were previously paid in connection with the filing of the original registration statement.

Amended Rule 19b-4 Defines Business Day in Event of Government Shutdown

2011-04-14T11:56:00.005-04:00

By Final Rule that became effective on April 13, 2011, the SEC has amended 1934 Act Rule 19b-4 so that references to “business day” in Section 19(b) of the Exchange Act and Rule 19b-4 thereunder refer to a day other than a Saturday, Sunday, Federal holiday, a day that the U.S. Office of Personnel Management has announced that Federal agencies in the Washington, DC area are closed to the public, a day on which the SEC is subject to a Federal government shutdown in the event of a lapse in appropriations, or a day on which the Commission’s Washington, DC office is otherwise not open for regular business.

Section 19(b) provides the time frames within which the SEC must act in connection with the review and processing of self-regulatory organization proposed rule changes. In particular, Section 19(b)(10)(B) of the Exchange Act provides that the SEC may, within seven business days after receipt of a filing, reject as improperly filed a filing that does not comply with SEC rules relating to the required form of a proposed rule change. Rule 19b-4 did not previously define what constitutes a business day.

The SEC explained that, by excluding as business days those days on which it is not open for regular business, during which it lacks personnel to review the proposed rule changes, the amendment facilitates the statutory purposes and requirements for a full and adequate review. Without the rule change, an SRO proposal might go into effect in the absence of a review, publication in the Federal Register or an opportunity for public comment, all of which are contemplated by the 1934 Act.

Because the amendment was technical in nature and pertains to the SEC’s organization, procedure or practice, it was not necessary to publish it for comment. The SEC found good cause for the technical amendment to take effect immediately.

SEC Publishes Small Entity Compliance Guide for Exchange Act Section 14A

2011-04-06T14:29:00.000-04:00

As reported in this blog on January 31, 2011, the SEC adopted amendments to its disclosure rules and forms on January 25 for public companies that are subject to federal proxy rules. Such amendments, inserted as Section 14A to the Securities Exchange Act of 1934 and relating to shareholder approval of executive compensation, took effect on April 4.

The new rules implement Section 951 of the Dodd-Frank Reform Act, which allows the SEC to exempt smaller issuers from its requirements. All public companies other than smaller reporting companies, must hold say-on-pay and frequency votes at shareholder meetings starting January 21, 2011. Smaller reporting companies will be subject to the votes at annual meetings starting on January 21, 2013. The SEC has published a small entity compliance guide to assist registrants with compliance.

Companies are required to disclose preliminary vote results within four business days of the completion of the shareholder meeting and final voting results within four business days after those results are known on Form 8-K. Companies other than smaller reporting companies are required to address in the Compensation Discussion and Analysis (CD&A) whether and, if so, how their compensation policies and decisions have taken into account the results of the most recent say-on-pay vote. Smaller reporting companies are not required to provide a CD&A.

A smaller reporting company is one that has a common equity public float of less than $75 million as of the last business day of its most recently completed second fiscal quarter or one that is unable to calculate its public float and has annual revenue of $50 million or less upon entering the system.

Oil & Gas Independent Engages M&A Consultant for Russian Project

2011-04-01T18:32:00.002-04:00

Arcland Energy Corp., a Utah-incorporated exploration and development company headquartered in Dallas, has entered into a consulting agreement for mergers and acquisition services with Digital Associates Capital Limited, a United Kingdom limited liability company engaged in investment banking services. The agreement provides for Digital to render financing services for asset acquisitions in the oil and gas production and refinery industry in oil fields located in or related to the Russian Federation, including without limitation, securing and evaluating acquisition opportunities and financing options.

The agreement has an initial term of 364 days from the effective date with automatic one year renewals provided neither party has provided written notice of termination not later than six months before the automatic renewal. In connection with and at the Arcland's closing of an oil and natural gas transaction in or related to the Russian Federation, Arcland shall pay a fee to Digital equal to 3% of the total purchase price of the applicable oil and natural gas assets acquired by the company. The agreement is dated March 30 and is Exhibit 10.1 to the Form 8-K filed on April 1 (SEC file no. 0-10315).

Arcland executed a Letter of Intent on March 7 with Switzerland's Linnem Development Corporation SA to acquire a 75 percent interest in a Russian oilfield. Subject to a formal definitive agreement to be entered into within 90 days of the execution of the letter of intent, Arcland will acquire a 75% stake plus one share in the existing Kumskaya Neft project upon, among other things, completion of financing of at least $125,000,000 to develop and operate the oilfields. Upon the prospective closing, the Kumskaya Neft project would become a wholly-owned subsidiary of the company.

Notice Concerning March 11 Earthquake in Japan

2011-03-23T20:39:00.000-04:00

Although it is too early for many issuers to assess the potential impact from the recent magnitude 9.0 earthquake in Japan, some companies have made disclosures in the aftermath.

Toyota Motor Corp. filed a Form 6-K on 3/15 reporting it suspended production at all plants and all subsidiary vehicle-manufacturing plants on March 14, 15 and 16. Toyota was able to confirm that the team members of Toyota and their family members were safe.

By Form 8-K filed on 3/15, Utah-headquartered Nu Skin Enterprises Inc. reported that no significant damage was sustained by the company’s offices, warehouses or inventory in Japan and that Nu Skin was working to normalize operations as soon as possible despite ongoing challenges with power outages and transportation shutdowns. Japan accounts for approximately 30% of the company’s revenue globally and the area of Japan most severely impacted by the catastrophes represents slightly less than 10% of Nu Skin revenue in Japan.

Finish issuer Nokia Corp. filed a press release on Form 6-K on 3/21 about the preliminary view of the earthquake impact. Nokia expects some disruption to the ability of its Devices & Services unit to supply a number of products due to the currently anticipated industry-wide shortage of relevant components and raw materials sourced from Japan. However, Nokia does not expect any material impact on its 1Q11 results due to this event.

Casino Operator Offers Common Stock as an Award for Patronage

2011-03-17T13:26:00.003-04:00

Pinnacle Entertainment Inc. (NYSE: PNK) has registered 20 million common shares valued at $2.49M in connection with the company's Owner’s Club Stock Program (Form S-3 filed 3/16/11, file 333-172884). Pinnacle created the program within its "mychoice" customer loyalty program to provide customers who are individuals and who meet certain eligibility standards the opportunity to receive common stock as an award for their patronage of its casinos and as an incentive to continue such patronage. The company states that the program presents an opportunity for customers to develop a greater proprietary interest in the casinos.

Participants in the mychoice customer loyalty program earn points based on money spent on specified gambling activities at Pinnacle casinos. The points accumulate in each participant’s mychoice account. Customers who have earned or obtained 175,000 points under the mychoice customer loyalty program are eligible to apply for membership in the Owner’s Club Stock Program. Customers who are accepted as members are granted a one-time award of common shares, either in a fixed amount or based on a fixed value, as selected by the President and CEO in his sole discretion. At the commencement of the program, it is contemplated that new members will be awarded either 100 shares or a number of shares valued at $1,500.

There are three ways in which members may receive common stock under the Owner’s Club Stock Program once admitted as a member. If a member already has a brokerage account, the member may instruct the broker to contact Pinnacle's transfer agent to request that the shares to be issued under the program be deposited into the brokerage account. If a member does not already have a brokerage account, the member may establish a brokerage account with a registered broker-dealer and follow the procedure in the foregoing sentence, or the member may contact the transfer agent and elect to hold the shares in book entry form in an account with the transfer agent. Members may sell common shares received under the Owner’s Club Stock Program at any time in privately negotiated transactions in compliance with applicable securities laws or into the public market.

Election Between Dual Classes of Common Offered in Reverse Merger

2011-03-08T17:41:00.001-05:00

DSW Inc. filed a Form S-4 on March 7 to register equal numbers of Class A common and Class B common shares to be issued in the proposed reverse merger with its majority owner, Retail Ventures, Inc. (SEC file no. 333-172631). The common control transaction would be accounted for as an equity transaction whereby accounting acquirer Retail Ventures acquires a noncontrolling interest in acquiree DSW, and will not require purchase accounting. The proposed maximum aggregate offering price is $905M.

In the merger, each outstanding Retail Ventures common share will be converted into the right to receive 0.435 DSW Class A common shares, unless the holder elects to receive an equal number of DSW Class B common shares instead. The DSW Class A common have one vote per share while the Class B common have eight votes per share. It is a condition to the merger that all DSW Class A common shares, including those received in exchange for Retail Ventures common shares at the time of closing, will continue to trade on the NYSE under the symbol “DSW.” DSW does not plan to list the DSW Class B common shares on the NYSE or any other securities exchange and therefore does not expect there to be a liquid trading market for such shares. Holders of DSW Class B common shares will have the right to convert such shares into DSW Class A common shares at any time on a one-for-one basis.

Goldman, Sachs & Co. provided the opinion to the DSW special committee as to the fairness from a financial point of view to DSW of the merger exchange ratio, and Houlihan Lokey Capital, Inc. provided the opinion to the Retail Ventures board of directors regarding the fairness to unaffiliated shareholders. For DSW, the proposed merger would simplify the company's corporate structure and enhance the trading liquidity of DSW Class A common shares. The Retail Ventures board also has determined that the merger is in the best interests of shareholders and unanimously recommends approval of the merger agreement.

Equity Registered Pursuant to Incentive Plan Evergreen Provisions

2011-03-04T19:17:00.004-05:00

Most benefit plans cap the maximum number of units or shares that may be issued or sold under the plan, but an "evergreen" provision allows this number to increase annually. Such increase typically happens on the first day of each fiscal year, often by an amount specified by formula. Issuers that recently have registered additional shares pursuant to such evergreen provisions include:

athenahealth, Inc. Form S-8 on March 4 (SEC file no. 333-172619, Counsel: Goodwin Procter LLP, Boston)

LoopNet, Inc. Form S-8 on March 3 (333-172589, Counsel: Orrick, Herington and Sutcliffe, LLP, San Francisco)

Blackstone Group L.P. S-8 on February 25 (333-172451, Counsel: Simpson Thacher & Bartlett LLP, New York)

Closed-End Fund Seeks to Convert to Open-End Form

2011-02-24T19:58:00.001-05:00

When Global Real Estate Investments Fund was organized in 2009, the closed-end interval fund structure was chosen as most appropriate for the Fund’s investment objective and intended method of operation. The Fund's Adviser believed that the closed-end interval fund structure would help minimize the potential negative impact of unexpected net redemptions due to short-term trading resulting from day to day volatility in the market. Nonetheless, the Fund’s initial prospectus contemplated that the Fund’s Board of Trustees would eventually consider the conversion of the Fund into an open-end investment company on or about December 31, 2016.

In light of changes in market conditions and investor sentiment, in particular the desire of many investors to have immediate access to their invested capital, the Adviser believes that by converting to an open-end fund structure the Fund could experience significant growth without impairing the Adviser’s ability to effectively manage the Fund’s portfolio with an eye toward long-term appreciation. The preliminary proxy material for the special meeting of shareholders to be held March 24 was filed on Form PRE 14A dated 2/14/11 (SEC file no. 811-22322).

Proxy Proposal #4 seeks shareholder approval to a) change the subclassification of the Fund from that of a closed-end investment company to that of an open-end investment company, (b) eliminate the Fund’s fundamental policy regarding quarterly repurchases, and (c) eliminate provisions in the Fund’s Declaration which discuss potential conversion of the Fund to an open-end investment company. Global Real Estate filed a Form N-1A on 2/23/11 to register Class A shares under the 1933 Act. The proposed conversion will not be implemented until after the Registration allowing the continuous offering of shares becomes effective.

8-K Filings Reporting Revocation of Auditor Registration by PCAOB

2011-02-16T15:58:00.005-05:00

View Systems, Inc. Form 8-K filed 2/16/11 (SEC file no. 0-30178):
SEC Staff had advised View Systems that the Public Company Accounting Oversight Board (“PCAOB”) registration of the company's former independent accountant, Larry O’Donnell, CPA, P.C., had been revoked effective December 14, 2010. Because the company has a registration statement on Form S-1 pending with the SEC containing audit reports prepared by Larry O’Donnell, CPA, P.C., it must obtain a re-audit of the financial statements for the year ended December 31, 2009 before the Form S-1 registration statement will be declared effective. On January 19, View Systems engaged Robert L. White & Associates, Inc. to audit the financial statements for the years ended December 31, 2010 and 2009.

Imperial Resources, Inc. Form 8-K filed 2/7/11 (SEC file no. 0-53332):
On January 27, Imperial Resources was notified by the SEC that the PCAOB had revoked the registration of J. Crane CPA, P.C. (“J. Crane”) on January 19, 2011. J. Crane was the company’s former independent registered public accounting firm, and rendered an opinion on the Annual Report for the year ended March 31, 2009. On June 17, 2009, the company dismissed J. Crane as auditor and engaged Madsen & Associates. In regards to the financial statements for FY09, Madsen relied entirely upon the audit and report previously issued by J. Crane. Madsen will re-audit the FY09 financials and will include an audit report for all periods presented in an amended 10K for the FY10 and FY09, of which the company anticipates filing on or before April 15, 2011.

Add-on Exchange, Inc. Form 8-K filed 1/27/11 (SEC file no. 0-52867):
The company received a letter from the SEC on January 6 advising that effective October 22, 2010, the PCAOB revoked the registration of Gately & Associates LLC ("Gately") and that, since Gately was no longer registered with the PCAOB, Add-on Exchange may not include Gately's audit reports in SEC filings. Accordingly, the financial statements for the fiscal year ended September 30, 2009, must be re-audited by an independent public accounting firm registered with the PCAOB. Add-on engaged Sherb & Co. on January 14 to conduct this audit.

Issuers Implementing Clawback Policies and Plan Provisions

2011-02-10T15:46:00.001-05:00

Section 954 of The Dodd-Frank Wall Street Reform and Consumer Protection Act requires the SEC to create a rule requiring public companies to recover incentive-based executive compensation that was paid out based on inaccurate financial statements. These "clawback" or recoupment provisions are more stringent than under Section 304 of the Sarbanes-Oxley Act of 2002, which extends only to the CEO and CFO and which requires misconduct on the part of the executives or other employees rather than financial restatement due to erroneous data or material noncompliance.

Some companies or their respective board compensation committees have signaled their intent to implement a clawback policy or to modify existing compensation recoupment provisions following the SEC’s final rulemaking (see DEF14A proxy filings on February 2 by Analog Devices, Inc. and Ciena Corp.) Others are forging ahead.

GameStop Corp. filed a Form 8-K on February 8 reporting a new Clawback Policy under Item 8 (Other Events). The policy provides for reimbursement of annual incentive payments or long-term incentive payments to a current or former executive officer of the Company where the payment was based on inaccurate financials over a three-year look-back period.

DGT Holdings Corp. filed an amended and restated 2007 Incentive Stock Plan with its DEF14A filed on January 26, seeking to increase the number of shares under the plan. Certain changes to the plan approved by the board will be effective upon shareholder approval of the plan proposal, including a clawback provision that was added to reflect Dodd-Frank legislation. The new Clawback provision is Section 18 of the amended and restated plan.

Central Pacific Financial Corp. issued preferred shares and a ten-year warrant to the U.S. Treasury in 2009 under the Troubled Asset Relief Program Capital Purchase Program. In the Compensation Disclosure & Analysis section of the PRE14A filed on February 3, Central Pacific notes that although it does not have a separate policy regarding clawback of incentive awards in the event of misstated or restated financials results, the company's participation in the Capital Purchase Program requires it to ensure that any executive incentive compensation plan does include such a provision for inaccurate financial statements or incentive criteria.

Secured Notes Offered to Members of U-Haul Investors Club

2011-02-04T14:45:00.003-05:00

AMERCO filed four prospectus supplements on February 3 under a universal shelf registration statement (file no. 333-169832), each relating to a series of asset-backed notes with maturities ranging from three to 25 years. Prospective investors must become a member of the U-Haul Investors Club and comply with the instructions available at http://www.uhaulinvestorsclub.com/. Principal and interest on the notes will be credited to each holder’s U-Haul Investors Club account in arrears every three months, beginning three months from the issue date, until the maturity date.

Prospective investors are required to complete a membership application, complete a note subscription offer, set up a U-Haul Investors Club online account through which members pay for the notes, and receive and deliver in electronic format any and all documents, statements and communications related to the offering. To begin investing, a Club account must have a balance of at least $100. Members can then add or withdraw funds in any denomination through a checking or savings account that is linked to the Club account and processed through ACH (Automated Clearing House).

The offerings of fully amortized notes are comprised of:

$2,000,000 aggregate principal amount of 7% notes secured by a first priority lien and deed to secure debt on real property and improvements thereon located in Clayton County, Georgia consisting of a 650-unit U-Haul operated rental center and self-storage facility, together with approximately 4.43 acres of adjacent bare land.
$500,000 aggregate principal amount of 5% notes secured by a first priority lien on 1,250 designated U-Haul portable storage containers.
$500,000 aggregate principal amount of 6% notes secured by a first priority lien on 500 designated U-Haul tow dollies.
$254,800 aggregate principal amount of 4.5% notes secured by a first priority lien on 2,548 designated U-Haul appliance dollies.

The notes are being issued in uncertificated book-entry form only, through the U-Haul Investors Club website. The notes are not transferable except between Club members through privately negotiated transactions. AMERCO, a Nevada corporation traded on the NASDAQ Global Select Market, is the holding company for U-Haul International, Inc.

SEC Adopts Rules on Say-on-Pay and Golden Parachute Compensation

2011-01-31T14:49:00.003-05:00

The Final Rule adopted by the SEC on January 25 implements Dodd-Frank Act Section 951 requirements relating to shareholder votes on executive compensation ("say-on-pay") and "golden parachute" compensation granted to officers in connection with mergers, acquisitions, consolidations or other change in control transactions. The rules increase the required disclosures while creating exceptions for smaller companies. All relevant shareholder votes would be advisory.

The say-on-pay votes are required at least once every three years beginning with the first annual shareholders’ meeting that takes place on or after January 21, 2011. Companies must disclose whether the vote is non-binding and whether they considered the results of the most recent say-on-pay vote. Also, at least once every six years shareholders are to be allowed to vote on how often the “say on pay” vote will be taken: every year, every other year, or once every three years. In order to implement the requirement for such a "frequency" vote, the rules revises the proxy rules to permit these three choices on the proxy card.

Several recent Form DEF14A proxy filings reflect these new provisions for non-binding advisory votes, including on January 27:

Alberto-Culver Co.
Applied Materials, Inc.
Biodel Inc.
Innovative Solutions and Support, Inc.
OMNOVA Solutions Inc.

Form 8-K has been revised to allow shareholders to learn how often a company will provide the say-on-pay vote. The Form 8-K must be filed no later than 150 calendar days after the date of the annual meeting in which the vote took place, and no later than 60 calendar days before the deadline for submitting a shareholder proposal under Rule 14a-8 for the subsequent annual meeting.

Rescission Offers

2011-01-25T15:09:00.003-05:00

A rescission offer is an attempt from a company to redress an error made in the offering of securities. Contract law defines a rescission as the unmaking of a contract between parties. The purpose of the rescission is to bring both parties back to where they were before the contract.

In the two most recent rescission offers filed with the Securities & Exchange Commission, previous offerings were found after the registration to be in violation of one or more laws. The rescission offer gives purchasers of those securities and option to return them for the price they paid. Often, if the purchaser refuses the rescission offer, the securities are re-registered with the legal ommissions/errors having been corrected.

Prosper Marketplace Inc., provider of a peer-to-peer online credit platform, had allowed its registration in Florida to offer and sell Borrower Payment Dependent Notes to expire. The Florida Office of Financial Regulation informed the company that it was required to make a rescission offer to any Florida resident that purchased a Note from Prosper between July 10 and August 5, 2010. The rescission offer was filed 1/24/11 on Form S-1, file no. 333-171837. Purchasers that accept the offer will receive the price they paid for the notes plus 6% (per annum) interest.

Common shares of Brenham Oil & Gas Corp. were spun-off as a dividend distribution to shareholders of American International Industries, Inc. on July 21, 2010. However, the registration statement pertaining to the Brenham shares was not filed until September 21 (Form S-1, file no. 333-169507). Because the shares were issued prior to the registration being declared effective by the SEC, the distribution was not in compliance with federal and state securities laws. The registration was converted to a rescission offer on the Amendment filed 1/6/11.

The Brenham rescission offer expires on January 31. Individuals who accept the rescission offer will receive no consideration because the shares were issued as a dividend without any shareholder consideration. If the offer is not accepted, the shares can be sold after the effective date of the registration without limitation as to the number or manner of sale, but remain subject to any of Brenham’s insider trading policy requirements.

New Disclosure Rules Intended to Revitalize Securitization Market

2011-01-21T16:27:00.007-05:00

To improve transparency in asset-backed securities ("ABS") in the wake of significant losses suffered by investors during the financial crisis, the SEC has adopted new rules that require expanded issuer disclosure of information regarding the underlying assets. The requirements and new Form ABS-15G that were adopted in the Final Rule implement the requirements of Section 943 of the Dodd-Frank Wall Street Reform and Consumer Protection Act, and also conform disclosure requirements for prospectuses and ongoing reports for ABS sold in registered transactions.

The final rules require ABS issuers to file with the SEC, in tabular format, the history of the requests they received and asset repurchases they made relating to their outstanding ABS. The table will provide comparable disclosures so that investors may identify originators with clear underwriting deficiencies. Specifically, issuers are required to disclose the last three years of repurchase history in an initial filing on EDGAR due by Feb. 14, 2012, and additional disclosures will be required quarterly thereafter.

Disclosures also will be required in prospectuses for new ABS. Each prospectus must include the repurchase history for the last three years for the issuer’s ABS of the same asset class as the offered securities. This requirement also is effective Feb. 14, 2012. In its ongoing reports, an issuer will be required to provide updated repurchase history for the particular, related asset pool beginning with distribution reports required to be filed on Form 10-D after Dec. 31, 2011.

In addition, the final rules require Nationally Recognized Statistical Rating Organizations (NRSROs) to provide a description of the representations, warranties and enforcement mechanisms available to investors in an ABS offering, and to disclose how these differ from those of similar ABS. NRSROs will be required to make the disclosures in any report accompanying a credit rating, including in presale reports that are distributed prior to the sale of the security. NRSROs will be required to provide this information for any report issued on or after six months after the effective date of the rules (which is 60 days after their publication in the Federal Register.)

SEC Adopts New Rules For Issuer Review of Assets in ABS Offerings

2011-01-20T19:30:00.001-05:00

By Final Rule adopted January 20 and to be effective 60 days after publication in the Federal Register, the SEC has approved new requirements in order to implement Section 945 of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, and new Rule 193 (17 CFR 230.193) under the Securities Act of 1933 to require any issuer registering the offer and sale of an asset-backed security (“ABS”) to perform a review of the assets underlying the ABS.

Rule 193, which implements Securities Act Section 7(d)(1), applies to all registered asset-backed securities, regardless of the assets that comprise the bundle. However, the type of review may vary depending on such circumstances as the nature of the assets being securitized. Under the final rules, the review must, at a minimum, be designed and effected to provide reasonable assurance that the prospectus disclosure about the assets is accurate in all material respects.

The rule permits issuers to perform the review themselves or hire third parties to perform the review. If an issuer obtains assistance from a third party to perform the review, and attributes, in the prospectus, the findings and conclusions of the review to the third party, the issuer may rely on the third-party's review to satisfy the review requirement provided the third party is named in the registration statement and consents to being named as an "expert" under federal securities laws.

The SEC also adopted amendments to Item 1111 (17 CFR 229.1111) of Regulation AB (17 CFR 229.1100 through 17 CFR 229.1123) to require an ABS issuer to disclose the nature of its review of the assets and the findings and conclusions of the issuer’s review of the assets. Issuers will be required to disclose:

Information about how the loans in the pool differ from the loan underwriting criteria disclosed in the prospectus.
Information about loans that did not meet the disclosed underwriting criteria but were nonetheless included in the pool.
Information about the entity that made the determination that such loans should be included in the pool, despite not having met the disclosed underwriting standards.

The final rule provides a phase-in period to allow market participants to adjust their practices to comply with the new requirements. Any registered offering of ABS commencing with an initial bona fide offer after December 31, 2011, must comply with the new rules.

Updated EDGAR Filer Manual to be Effective January 11, 2011

2011-01-10T15:12:00.004-05:00

By Final Rule adopted January 5, the SEC adopted revisions to the Electronic Data Gathering, Analysis, and Retrieval System (EDGAR) Filer Manual to reflect updates to the EDGAR system. The revisions:

implement the new EDGARLink Online Application to allow filers to submit EDGARLink submission form types online without the use of the offline EDGARLink Tool;
support the electronic filing of submission form type ABS 15G and its amendment (See Proposing Release No. 33-9148, Disclosure for Asset-Backed Securities Required by Section 943 of the Dodd-Frank Wall Street Reform and Consumer Protection Act, relating to to representations and warranties in ABS offerings);
add new Form 8-K Item 6.10 (Alternative Filings of Asset-Backed Issuers), which requires a PDF attachment to be included as Exhibit 99;
support minor changes in XBRL validations for filings containing Exhibit 101 attachments.

The filer manual is also being revised to address changes previously made in EDGAR to support the electronic filing of new submission form types SC 14N, SC 14N-S, and the new Form 8-K Item 5.08 (Shareholder Director Nominations). However, use of SC 14N, SC 14N-S and 8-K Item 5.08 is delayed until further notice. See Order Rel. No. 33-9149 (Order Granting Stay) for more information.

Registrants Disclosing Amendments or Waiver of a Code of Ethics Provision

2011-01-07T20:38:00.000-05:00

Item 5.05 of Form 8-K is reserved for disclosure of amendments to or waiver of a provision of a registrant's code of ethics (this had been Item 10 prior to the Final Rule that reorganized 8-K items effective 8/23/04). Companies reporting a new, revised or amended code of ethics or conduct under 8-K Item 5.05 are common, including Alliqua Inc., Autoliv Inc., Christopher & Banks Corp. and Symmetricom Inc. all filing on January 5, 2011.

Filings disclosing the waiver of code provisions are much less frequent. The most recent example would be the Form 8-K filed on 9/3/10 by Nautilus, Inc. when it granted a waiver to their Chairman & CEO regarding his control and interest of purchasers of notes being offered by the company. The waiver was granted "to the extent that [his control] may constitute a 'conflict of interest' within the meaning of" the code.

Sometimes these waivers are discussed using Item 8.01 (Other Events) rather than Item 5.05. Gran Tierra Energy Inc.'s 8-K on 7/6/10 reported a waiver that permitted its management to negotiate and execute a proposed agreement notwithstanding that one of Gran Tierra's directors was also the CEO of the other company. In its Form 8-K filed on 3/13/09, Power Integrations, Inc. reported a waiver granted to a newly appointed director regarding his options and stock holdings of a direct competitor that had been a previous employer.

The likely reason that 8-Ks reporting waivers are so few is that filers are not required to provide any information pursuant to Item 5.05 when they have published the information on their website and it has been disclosed in their most recently filed annual report. However, it must be available on the website for at least twelve months and must be retained by the company for a minimum of five years.

Banks Seeking to Repurchase TARP Preferred

2010-12-21T18:41:00.006-05:00

First Horizon National Corporation (NYSE: FHN) has filed concurrent, underwritten public offerings of securities for combined proceeds to the company of approximately $738 million, such proceeds to be used with other funds to repurchase in full the Fixed Rate Cumulative Perpetual Preferred Stock issued to the U.S. Treasury under the Troubled Asset Relief Program Capital Purchase Program (TARP CPP) in November 2008.

Both offers are takedowns from the shelf registration on Form S-3ASR initially filed by FHN on 4/25/08 (SEC file no. 333-150448). The equity offering of 23.8 million common shares at $10.50 per share was filed December 15 and the prospectus for $500 million of 5.375% senior notes was filed Dec. 17, both on Form 424B5. Goldman Sachs, J.P. Morgan and Morgan Stanley are joint book-running managers for both deals.

Huntington Bancshares Inc. (NasdaqGS: HBAN) issued $1.398 billion of Fixed Rate Cumulative Perpetual Preferred Stock to the Treasury Department in November 2008 as part of the TARP CPP (see Form 8-K filed 11/14/08, file no. 1-34073). To fund the repurchase, HBAN has filed concurrent offers on Form 424B2 for common stock and $300 of 7% subordinated notes (December 15 and 16, respectively). If the repurchase is completed, HBAN may seek to repurchase the common stock warrant it had issued to the U.S. Treasury.

Liberty Media Registers Shares to Split-Off Liberty Capital and Liberty Starz

2010-12-17T15:04:00.001-05:00

Liberty Media Corp. currently has three sets of tracking stock outstanding, each tied to the economic performance of a particular business or "group" rather than the economic performance of the company as a whole. The Liberty Interactive tracking stock, outstanding since May 2006, reflects assets and businesses engaged in video and on-line commerce, including subsidiary QVC Inc. and interests in Expedia Inc. The holders of Liberty Interactive common stock are not being asked to vote on the split-off proposals at a special meeting of shareholders to be held in 2011.

The proposed split-off will be effected by the redemption of all the outstanding shares of Liberty Capital tracking stock and Liberty Starz tracking stock in exchange for shares that are being registered on Form S-4 filed 12/16/10 by the newly-formed Liberty Splitco, Inc. (file no. 333-171201). Splitco will hold substantially all the assets and be subject to substantially all the liabilities currently attributed to the Liberty Capital and Liberty Starz tracking stock groups of Liberty Media Corp. If the split-off is completed, Liberty Media will have a pure play, asset-backed stock.

The assets and businesses attributed to the Liberty Capital group include controlling interests in Atlanta National League Baseball Club, Inc. and TruePosition, Inc., as well as minority investments in Sirius XM Radio Inc., Live Nation Entertainment, Inc., Time Warner Inc., Time Warner Cable Inc., and Sprint Nextel Corp. Currently, the Starz Group includes Liberty Media's interests in Starz Entertainment, LLC, Starz Media, LLC and Liberty Sports Interactive, Inc.

Liberty Capital tracking stock and Liberty Starz tracking stock (formerly Liberty Entertainment tracking stock) have been outstanding since March 2008 when each share of the previous Liberty Capital tracking stock was reclassified into one share of the same series of new Liberty Capital and four shares of the same series of Liberty Entertainment (see SEC file no. 333-145936). On November 19, 2009, Liberty Media completed the split off of its Liberty Entertainment, Inc. ("LEI") subsidiary. The split-off was accomplished by a redemption of 90% of the outstanding shares of Liberty Entertainment common stock in exchange for all of the outstanding shares of common stock of LEI. LEI had been attributed to the Entertainment Group. Subsequent to the split-off, the Entertainment Group was renamed the Starz Group (see file no. 333-158795).

Argentina Offers Exchange to Holders of Brady Bonds for New Securities and Cash

2010-12-08T21:33:00.000-05:00

In 1989, Treasury Secretary Nicholas F. Brady was associated with a new strategy for dealing with developing country debt. The Brady Plan focused on debt and debt service reduction by commercial bank creditors for those debtors who agreed to implement substantial economic reform programs. In April 1992, Argentina announced a refinancing agreement under the Brady Plan relating to medium- and long-term debt owed to commercial banks. The Brady Plan applied to an estimated U.S.$28.5 billion in Argentine debt, including an estimated U.S.$9.3 billion in interest arrears, representing over 96% of the commercial bank debt then outstanding.

Argentina serviced the Brady Bonds until its default in 2001. In January 2005, Argentina launched an invitation to holders of 152 different series of securities on which it had defaulted in 2001, including certain Brady Bonds, to exchange their defaulted debt for new securities (see Form 424B5 filed by the Republic of Argentina on 1/12/05, file no. 333-117111). In April 2010, Argentina launched an invitation to holders of the securities issued in the 2005 Debt Exchange and of 149 different series of securities on which it had defaulted in 2001 to exchange such debt for the new securities and, in certain cases, a cash payment (see Form 424B5 on 4/28/10, file no. 333-163784).

Although many holders of Brady Bonds strongly expressed their desire to participate in the April 2010 exchange offer, Argentina could not include Brady Bonds in the April 2010 exchange offer on similar terms to its 2005 exchange offer, when holders of Brady Bonds received proceeds of the collateral securing those bonds as part of the offer, because of litigation. Holders of certain Brady Bonds and Argentina have since obtained court relief that permits an extension of the April 2010 exchange offer to the holders of the Brady Bonds, subject to bondholder approval of proposed amendments to applicable collateral pledge and fiscal agency agreements. The invitation to holders of eligible series of bonds is filed as a prospectus supplement on Form 424B5 filed 12/6/10, file no. 333-163784.

Wells Fargo Subsidiary Resumes CMO Offering Activity

2010-12-03T17:58:00.000-05:00

Wells Fargo Asset Securities Corp., a steady issuer of pass-through certificates through 2007, has filed a shelf Registration Statement on Form S-3 to offer a new series of collateralized mortgage obligations. When SEC file no. 333-170946 is declared effective, the subsequent prospectus supplement will be the first one filed by the subsidiary since a $216.8 million offering underwritten by Lehman Brothers dated 3/4/08.

Acting as depositor, WFASC has registered CMO certificates for a proposed maximum aggregate offering of $33.2 billion. Pursuant to 1933 Act Rule 415(a)(6), $22.1 billion of unsold securities from prior Registrations (333-150038 and 333-151061) are included in the new Registration.

Seventeen classes of senior certificates and six classes of subordinated certificates are expected to be offered at varying prices to be determined at the time of sale. The assets of the issuing entity will include a pool of fully amortizing, one- to four-family, fixed interest rate, non-relocation, residential first mortgage loans.

Reporting Requirements Regarding Coal or Other Mine Safety

2010-11-29T15:46:00.000-05:00

Section 1503(b) of the Dodd-Frank Wall Street Reform and Consumer Protection Act contains new reporting requirements regarding mine safety in certain circumstances. Issuers that are operators of a coal or other mine are required to file a current report on Form 8-K upon the receipt of an imminent danger order under section 107(a) of the Federal Mine Safety and Health Act of 1977 (the “Mine Act”) issued by the Mine Safety and Health Administration ("MSHA"). Recent 8-K filings with such disclosure include:

Massey Energy Co. on 11/26/10 (SEC file no. 1-7775)
Patriot Coal Corp. on 11/12/10 (file no. 1-33466)
Alpha Natural Resources, Inc. on 10/25/10 (file no. 1-32331)

Dodd-Frank Section 1503(b) also requires Form 8-K disclosure upon the receipt of written notice from MSHA that the coal or other mine has a pattern of violations of mandatory health or safety standards under Section 104(e) of the Mine Act, or the potential to have such a pattern. Recent 8-K filings with such disclosure include:

FirstEnergy Corp. on 11/26/10 (SEC file no. 333-21011)
James River Coal Co. on 11/24/10 (file no. 0-51129)
Rhino Resource Partners LP on 11/24/10 (file no. 1-34892)

Section 1503(a) of Dodd-Frank requires reporting companies that operate mines to provide certain safety information in their periodic reports filed with the SEC. Such information includes the total number of mining-related fatalities, the total number of violations or citations under various sections of the Mine Act, and the total dollar value of proposed assessments from the MSHA. Recent Form 10-Q filings provide examples in Part II, Item 5:

Molycorp, Inc. on 11/15/10 (SEC file no. 1-34827)
Granite Construction Inc. on 11/9/10 (file no. 1-12911)
3M Co. on 11/5/10 (file no. 1-3285)

Reverse Stock Splits to Ensure Minimum Bid Price for Nasdaq Listing

2010-11-17T15:27:00.003-05:00

XO Holdings, Inc. PRE 14C on 11/17/10 (SEC file no. 0-30900)
OXiGENE, Inc. DEF14A on 11/12/10 (SEC file no. 0-21990)
Atrinsic, Inc. DEF14A on 10/25/10 (SEC file no. 1-12555)

Telecom services provider XO Holdings, which trades on the OTC Bulletin Board at a price per share below $1 for the past two years, intends to apply for listing on the Nasdaq Global Market. In order to increase the minimum bid price of the common stock to above the $4 minimum bid price required to apply for listing, the XO board of directors on November 16 unanimously authorized an amendment to its certificate of incorporation to effect a one-for-twenty reverse stock split. The preliminary information statement reports that stockholders affiliated with XO chairman Carl C. Icahn who collectively own more than 50% of the total voting power of the outstanding capital stock have consented to the amendment, which under Delaware law is sufficient for approval.

OXiGENE and Atrinsic already trade on the Nasdaq Global Market under the ticker symbols OXGN and ATRN, respectively. Both issuers had received notice that for the last 30 consecutive business days, the bid price of the common shares closed below the minimum $1 per share requirement pursuant to Nasdaq Listing Rule 5450(a)(1) for continued inclusion on the Nasdaq Global Market. In order to increase the market price per share and regain compliance with the minimum bid price requirement, OXiGENE and Atrinsic seek shareholder approval to amend their respective certificates of incorporation to effect a reverse stock split at the discretion of the board of directors at a ratio within a specified range.

Merger Parties Rely on IRS "Signing Date Rule" for Intended Tax Treatment

2010-11-10T16:56:00.000-05:00

Robbins & Myers, Inc. has registered common stock valued at approximately $386 million in connection with a proposed merger with T-3 Energy Services, Inc. (Form S-4 on 11/10/10, SEC file no. 333-170502). If the merger is completed, T-3 stockholders will receive 0.894 issuer common shares plus $7.95 in cash, without interest, for each T-3 common share. This exchange ratio is fixed and will not be adjusted to reflect stock price changes prior to the closing of the merger.

In order to qualify as a tax-free reorganization, the merger must comply with certain requirements under Section 368(a) of the Internal Revenue Code, including that at least 40% of the total consideration received by target stockholders in the merger must consist of Robbins common stock. Because the terms of the merger agreement provide for a fixed number of common shares to be transferred to T-3 stockholders, it is unknown at the time of the special meetings whether the 40% continuity of interest test will be met if such calculation is based on the value of the Robbins stock on the closing date of the merger.

The Treasury Department has provided guidance in the form of temporary and proposed treasury regulations, whereby if a binding contract that provides for fixed consideration is entered into, fluctuations in the value of the stock consideration subsequent to the entry into the contract will not affect the determination of whether the transaction qualifies as a Section 368(a) reorganization. Robbins and T-3 will use this "signing date rule" for purposes of applying the continuity of interest test. Even though the temporary treasury regulations expired on March 19, 2010, Notice 2010-25, 2010-14 I.R.B. provides that the proposed treasury regulations may be relied on by certain parties involved in the transactions if all such parties elect to apply the provisions under the regulations.

Issuer Share Repurchases Through "Dutch Auction" Self-Tender Offers

2010-11-08T21:54:00.000-05:00

iMergent, Inc. Schedule TO dated 11/3/10 (SEC file no. 005-59275)
Premiere Global Services, Inc. Schedule TO on 10/27/10 (005-47353)
Silgan Holdings Inc. Schedule TO dated 10/8/10 (file no. 005-53165)
Scholastic Corp. Schedule TO dated 9/28/10 (file no. 005-42284)

Each of the companies listed above filed Tender Offer Statements to purchase a specified number of its common shares for cash by means of a modified “Dutch auction.” This procedure allows tendering shareholders to select a price within a price range specified by the company at which such shareholders are willing to sell shares. After the tender offer expires, the company selects the lowest purchase price per share within the range that will allow it to purchase the desired number of shares. All shares are purchased at the same price, even if tendered at a lower price.

The Offer to Purchase is the first exhibit to each filing and includes the background and purpose of the offer. The offers provide shareholders an opportunity to obtain liquidity with respect to all or a portion of their shares without potential disruption to the stock price and the usual transaction costs associated with open market sales, while at the same time increasing non-tendering shareholders’ proportionate interest in the company. It is common for such offers to give priority to holders of fewer than 100 shares (odd lots) in order to reduce the administrative costs of mailing securities filings and notices to such shareholders.

Companies in the Wind Power Industry Going Public

2010-11-05T16:35:00.002-04:00

Development stage company WildCap Energy Inc. filed a Form S-1 on November 5 for the resale of common stock by selling shareholders (SEC file no. 333-170377). WildCap seeks to commercialize technology developed at the University of Arizona for vertical axis wind turbines using active flow control. The option agreement signed on 1/10/10 by the company and The Arizona Board of Regents is filed as Exhibit 10.1. The parties are presently negotiating a license agreement that will be subject to any rights of the U.S. Government to utilize the technology royalty free.

First Wind Holdings Inc. has been in registration for an initial public offering since July 2008. The independent wind energy company focuses on development and operation of utility-scale wind energy projects in the United States. First Wind set the price range for its underwritten $200 million IPO in the S-1 Amendment filed on 10/13/10 (file no. 333-152671). The Registration Statement was declared effective and the shares approved for listing on the Nasdaq Global Select Market as of October 27.

China Ming Yang Wind Power Group Limited completed its $350 million IPO on October 4 with American Depositary Shares trading on the NYSE under the symbol "MY" (file no. 333-169256). The manufacturer of megawatt-class wind turbines is incorporated in the Cayman Islands and is the largest non-state owned or controlled wind turbine manufacturer in China. China Ming Yang filed a Form 6-K on 10/13/10 to discuss the results of a national bidding process for four offshore wind farm concession projects in China.

Issuers Amending Bylaws to Reflect Possibility of Dual Record Dates

2010-11-02T19:20:00.000-04:00

First Niagara Financial Group, Inc. Form 8-K on 9/23/10 (SEC file no. 0-23975)
News Corp. Form 10-K on 8/6/10 (file no. 1-32352)
Standard Parking Corp. Form 8-K on 1/27/10 (file no. 0-50796)

Companies set a date — known as the “record date” — on which persons who are shareholders on such date are entitled to receive notice of a meeting and to vote at the meeting. If a shareholder sells after the record date, that person (who no longer holds the shares) still has the right to vote. This can mean that holders without an economic stake in the matter can influence the outcome of a vote.

Effective in August 2009, changes to the Delaware General Corporation Law allow boards to fix one record date for determining stockholders entitled to notice of a stockholder meeting and a separate record date for determining the stockholders entitled to vote at the meeting. Each of the filings listed above report amendments to the company's bylaws approved by the board of directors, and each present the restated bylaws as an exhibit.

Banks Review Foreclosure Affidavit Procedures in Wake of Investigation

2010-10-28T18:08:00.007-04:00

On October 13, attorneys general in 50 states and the District of Columbia announced a joint investigation of the procedures followed by banks and mortgage companies in connection with completing affidavits relating to home foreclosures. In addition, a number of major companies that service mortgages suspended home foreclosures in those states that handle foreclosures through the court system to address allegations of irregularities in foreclosure documents.

Wells Fargo & Co. outlined its process for the generation of foreclosure affidavits in a press release filed with the Form 8-K on 10/28/10 (SEC file no. 1-2979). As part of its review of these procedures, the company identified instances where a final step in its processes relating to the execution of the foreclosure affidavits did not strictly adhere to the required procedures. "Out of an abundance of caution and to provide an additional level of assurance regarding its processes," Wells Fargo has elected to submit supplemental affidavits for approximately 55,000 foreclosures which are pending before courts in 23 judicial foreclosure states. The company does not believe that any of these instances led to foreclosures which should not have otherwise occurred, and it reaffirms that it does not plan to institute a moratorium on foreclosure sales.

Bank of America Corp. is also conducting a voluntary internal review of foreclosure process, with a particular focus on controls in place for competing affidavits and notarizations. The company is amending and re-filing 102,000 foreclosure affidavits in the 23 judicial states and has suspended foreclosure sales until its assessment in complete, anticipating that less than 30,000 foreclosure sales will be delayed as a result. This information was provided in select earnings related slides for use in connection with Q3 financial results, filed as an exhibit to the Bank of America Form 8-K on 10/19/10 (file no. 1-6523).

JPMorgan Chase & Co. notes a risk that it "may incur additional costs and expenses in remediating deficient home foreclosure procedures." That risk factor is included with a prospectus supplement for an underwritten notes offering (Form 424B2 dated 10/18/10, file no. 333-169900). The company disclosed it has suspended the foreclosure process with respect to approximately 115,000 delinquent mortgage loans, is developing new processes to satisfy all procedural requirements, and is cooperating with information requests from several state attorneys general.

DJSP Enterprises, Inc., the largest provider of processing services for the mortgage and real estate industries in Florida, announced on October 15 that the audit committee of its board of directors has commenced an internal investigation with respect to compliance with applicable legal requirements of the company’s mortgage foreclosure processing procedures. The audit committee has retained Greenberg Traurig, P.A. as independent counsel to assist in the conduct of the investigation. DJSP also announced that it has instituted 10% staff reductions as a result of reduced file volumes. DJSP notes that file referrals from the company’s principal client, The Law Offices of David J. Stern, P.A. have declined dramatically, and that the law firm is the subject of an investigation announced by the Attorney General of the State of Florida in August 2010. DJSP made these disclosures in Form 6-K (file no. 1-34149) Form 424B3 prospectus supplement (333-164907) each filed 10/18/10.

Supplemental Proxy Materials Noting Addition of Third Party Solicitor

2010-10-26T19:22:00.005-04:00

SonicWALL, Inc. Form DEFA14A filed on 6/30/10 (SEC file no. 0-37723):
Security products manufacturer SonicWALL filed a special meeting proxy on June 22 pertaining to a negotiated cash merger transaction, naming The Proxy Advisory Group, LLC as proxy solicitor. The supplemental proxy filing discloses that the company had engaged MacKenzie Partners, Inc. to assist as an additional proxy solicitor.

United Online, Inc. DEFA14A filed on 5/24/10 (file no. 0-33367):
Subsequent to filing and mailing the proxy statement for its 2010 annual meeting of shareholders, Nasdaq-listed United Online retained MacKenzie Partners, Inc. to act as proxy solicitor and advisor. The one paragraph disclosure notes the fee amount (up to $12,500) and reports that United agreed to indemnify MacKenzie against certain liabilities.

USA Technologies, Inc. DEFA14A filed on 11/20/09 (file no. 1-33365):
After USA Technologies had filed and mailed its annual meeting proxy statement, two dissident shareholders launched a proxy contest seeking to elect three candidates to the board over the company's three independent director nominees. The first supplemental proxy filing by the company is comprised of a press release which provides the complete text of an open letter to shareholders. The letter concludes with news that the company had retained a third party as proxy solicitors for the annual meeting.

8-K Filings Reporting Intent to Restate Financial Statements

2010-10-22T19:06:00.004-04:00

WikiLoan Inc. Form 8-K filed 10/22/10 (SEC file no. 033-26828):
In Item 4.02, WikiLoan reports that it has concluded that the financial statements included in its most recent Form 10-K and the two subsequent Form 10-Q filings should not be relied upon because those financial statements did not adequately account for beneficial conversion features in certain convertible debt agreements, as required by GAAP. As the result of the error, the company will be restating the financial statements for the subject periods. An agreement letter from WikiLoan's independent audit firm is included as an exhibit.

Doral Energy Corp. Form 8-K filed 10/21/10 (file no. 000-52738):
Doral has determined that the accounting treatment of the “assets held for sale” reported in the Company’s unaudited financial statements for the interim period ended April 30, 2010 to be the incorrect accounting treatment. Management has determined that under Full Cost accounting, the sale of the properties reported for the period ended April 30, 2010 does not meet the criteria for “assets held for sale” or “discontinued operations”. In the press release exhibit, Doral states it will restate the financials for the reporting period as soon as practicable.

Green Energy Live, Inc. Form 8-K filed 10/6/10 (file no. 000-53216):
Due to misstatements regarding the classification of convertible promissory notes as derivative liabilities, classification of cash/accrued expenses, and common stock subscriptions, Green Energy's auditor of record advised the management and board of directors that the financial statements filed the year ended 12/31/09 and the quarter ended 3/31/10 should no longer be relied upon as presented. The errors resulted in an understatement of liabilities, an overstatement of additional paid in capital account, and an overstatement of the company’s net loss. Green Energy intends to file amended periodic reports with the SEC by November 5.

Equity Resale by Former Shell Companies Following Change in Control

2010-10-19T13:28:00.008-04:00

One way for issuers to attain SEC-reporting status is to engage in a share exchange agreement with an already registered "shell company" as defined in Rule 12b-2 under the Exchange Act of 1934. In such reverse merger or reverse acquisition transactions, it is common for the shell to continue only as the legal entity and for the target to be treated as the accounting acquirer.

China Electronics Holdings, Inc. Form S-1 dated 10/15/10 (SEC file no. 333-169968):

The selling stockholders of this shelf offering acquired the issuer common stock pursuant to share exchange and subscription agreements dated July 9. The share exchange agreement between the former shell Buyonate, Inc. and the Delaware corporation China Electronic Holdings, Inc. (now a subsidiary of the Nevada-incorporated Registrant), as well as the subscription agreement between Buyonate and certain of the selling stockholders are exhibits to the Form 8-K dated 7/22/10 (file no. 333-152535).

Compass Acquisition Corp. Form S-1 dated 10/12/10 (SEC file no. 333-169877):

This reoffer of ordinary shares is the first public offering of the former blank check company, which is organized in the Cayman Islands. On May 24, Compass acquired Tsing Da Century Education Technology Co. Ltd., a provider of on-line and off-line educational services in China. The transaction was treated for accounting purposes as a capital transaction and recapitalization by Tsingda, the accounting acquirer, and as a re-organization by Compass, the accounting acquiree.

Linda Illumination, Inc. Form S-1 dated 9/16/10 (SEC file no. 333-169431):

The former China Real Estate Acquisition Corp. registers common shares for resale that had been initially sold in a July private placement. On April 28, the company acquired Linda International Lighting Co., Ltd by way of a share exchange agreement that is reported in Form 8-K filed on 4/30/10 (file no. 0-53842). Pursuant to the requirements of Item 2.01(a)(f) of Form 8-K, the company sets forth therein the information that would be required if it were filing a general form for registration of securities on Form 10 under the Exchange Act giving effect to the transaction.

Successor Issuer Granted Accelerated Filer Status

2010-10-15T13:25:00.003-04:00

At a November 4 special meeting, Sun Healthcare Group, Inc. ("Old Sun") will seek shareholder approval to restructure its business by splitting into two separate publicly-traded companies. Sabra Health Care REIT, Inc. would control real property assets following a REIT conversion merger and SHG Services, Inc. ("New Sun") will control operating assets. SHG Services, which would continue to conduct the historical operations and business of Old Sun, would be renamed Sun Healthcare Group, Inc. and begin trading under Old Sun's ticker symbol (SUNH). The separation/spin-off of New Sun was detailed in a Form S-1 filed by SHG Services (SEC File No. 333-167041) and shares for the REIT conversion were registered on a Form S-4 filed by Sabra Health Care REIT (333-167044). The definitive proxy statement was filed on 9/29/10 (File No. 001-12040).

In connection with the restructuring, Old Sun sought a No Action letter from the SEC on September 28 (WSB No.: 1004201001). The letter asked the SEC to not take enforcement actions on several key issues regarding the restructuring. First, the company asked that New Sun, as a successor, be deemed an accelerated filer immediately. Second, that filers of Schedules 13D and 13G will not be required to make any additional filings. Third, that New Sun can use the reporting history of Old Sun to determine 1933 Act eligibility. Fourth, exemption from Section 4(3) and Rule 174 regarding prospectus delivery requirements. Fifth, to use Old Sun's periodic report history to determine New Sun's compliance with Rule 144(c)(1). Sixth, to allow New Sun to file post-effective amendments as a successor issuer to registrations filed by Old Sun. Seventh, that New Sun will continue to use the 1934 file number (001-12040) and EDGAR access codes of Old Sun.

In making its case to the SEC, the company referenced several No-Action letters where SEC Staff has taken similar positions with respect to successors in similar restructurings. Such examples include: GulfMark Offshore, Inc. (available 1/11/10), Tim Hortons Inc. (available 9/9/09), Willbros Group, Inc. (available 2/27/09), Hungarian Telephone and Cable Corp. (available 2/27/09), and Weatherford International Ltd. (available 1/14/09). In a brief reply, the SEC staff agreed to all of the requests for non-enforcement that had been laid out by the company. The S-1 and S-3 Registrations Statements were each declared effective on 9/28/10.

Market Makers Shifting Orders from OTCBB to OTCQB Electronic Platform

2010-10-13T12:21:00.006-04:00

OTC Bulletin Board market markers are billed participation fees by The Financial Industry Regulatory Authority (FINRA) based on the number of positions during a given month. Because such fees have made it challenging for market maker firms to maintain markets in stocks that are not active, such firms are increasingly moving market making in OTCBB stocks from the OTCBB, which is a telephonic only market, to a new electronic interdealer quotation system created by Pink OTC Markets, Inc. that lacks any participation fees.

In Forms 8-K filed on 10/13/10 and 10/8/10, respectively, National Asset Recovery Corp. (SEC file no. 333-150135) and Infinity Capital Group, Inc. (000-30999) each report that its stock quotation symbol had been deleted from the OTCBB as a result of not having a sufficient number of market makers providing quotes on the company's common stock for four consecutive days, thereby being deemed to be deficient in maintaining a listing standard at the OTCBB pursuant to Rule 15c2-11. Both issuers now trade on the OTCQB, a new market for OTC-traded companies that are registered and current in their reporting obligations to the SEC or a U.S. banking or insurance regulator.

Pink OTC Markets segments OTC securities into three tiers: the quality-controlled OTCQX platform that requires a minimum bid price and other listing standards, the mid-tier OTCQB, and the Pink Sheets speculative trading marketplace that has no financial standards or reporting requirements. The firm quotes nearly 10,000 stocks, making it the largest marketplace in shares of companies that don't list on exchanges.

Other SEC filers that report they now trade on OTCQB due to failure to meet minimum bid requirements of an exchange or NASDAQ include Allied Defense Group (as of 9/21), Pinnacle Gas Resources, Inc. (9/16), MACC Private Equities Inc. (9/14), Nextwave Wireless Inc (7/22) and PC Group, Inc. (7/21).

Going Private Merger Transactions

2010-10-08T12:09:00.008-04:00

Rubios Restaurant Inc. Schedule 14A dated 7/22/10 (SEC file no. 005-57387):
Rubios entered into an agreement with affiliates of private equity firm Mill Road Capital on May 9 which provides for the merger of a Mill Road subsidiary into the company for cash consideration of approximately $100 million. The source of funds for the transaction consisted of the issuance of preferred shares of a Mill Road subsidiary to Mill Road, Ralph Rubio and other co-investors; credit facilities arranged by GCI Capital Markets, LLC, and issuer cash on hand.

Life Quotes, Inc. Schedule 13E-3 dated 6/28/10 (SEC file no. 005-56673):
A company owned and controlled by the president and CEO launched a tender offer that expired on August 12 to acquire all outstanding common shares of Life Quotes at $4 per share, an aggregate of approximately $19 million. LQ Acquisition Corp. obtained the use of the issuer's cash on hand to fund the offer through the execution of the promissory note that is Exhibit (b)(1) of the Schedule TO filed on 6/10/10. Following the tender offer, a short-form merger was consummated under Delaware law whereby any remaining shares were cancelled for the same tender offer price.

Emmis Communications Corp. Schedule 13E-3 dated 6/2/2010 (File no. 005-43521):
Seeking the flexibility of being privately-held and to escape the burdens associated with being a public company, Emmis entered into an agreement and plan of merger on May 25 with two entities formed by the chairman and CEO. The merger agreement, which was filed as Appendix IV to the Proxy Statement on Schedule 14A dated 7/6/10, provides for a first-step cash tender offer for common shares and an exchange offer of notes for preferred shares held by Jersey-based private asset management company Alden Global Capital Limited.

Alden announced on September 9 that the proposed revised terms of the deal to take Emmis private were not acceptable. The revised terms were proposed by Emmis and a group of holders of Emmis preferred shares who had objected to the terms agreed between Alden and JS Acquisition, Inc. The tender offer and exchange offer each terminated on September 9 with no common shares purchased and no preferred shares exchanged. Alden filed the notice of termination of the securities purchase agreement as Exhibit 17 to the Schedule 13D dated 9/29/10. The notice of termination of the merger agreement is Exhibit 2.1 to the Emmis Form 8-K dated 9/29/10.

Treasury Department to Sell $2.2 Billion of Citigroup Trust Preferred

2010-10-06T12:46:00.003-04:00

Citigroup filed a Form 424B2 Prospectus on 10/4/10 in connection with the underwritten offer of 7.875% Fixed Rate/Floating Rate Trust Preferred Securities (TruPS®) held by the government (SEC file no. 333-157459). The United States Department of the Treasury acquired the capital securities from Citigroup in connection with Citigroup’s participation in the Troubled Asset Relief Program (TARP).

On January 15, 2009, Citigroup entered into a loss-sharing arrangement with Treasury, the FDIC and the Federal Reserve related to a pool of $301 billion of assets (see Exhibit 10.1 of the Citigroup Form 8-K filed 1/16/09, file no. 1-9924). Citigroup paid the Treasury and the FDIC a premium in the form of securities for their willingness to share potential losses over a five to ten year period. The loss-sharing arrangement was terminated on December 23, 2009 at the request of Citigroup (see Exhibit 10.1 of the Form 8-K filed 12/24/09). Treasury kept $2.2 billion of the premium, which was originally $4 billion in securities.

The underwriting agreement pertaining to the trust preferred shares was filed with the Citigroup Form 8-K filed October 5, 2010. Each share represents an undivided beneficial interest in the assets of Citigroup Capital XIII, which consist of junior subordinated debt securities of Citigroup. In the tax opinion filed with the 8-K, Skadden, Arps, Slate, Meagher & Flom LLP states that "while there is no authority directly on point and the issue is not free from doubt, the Junior Subordinated Debt Securities held by the Trust will be classified for United States federal income tax purposes as indebtedness of (Citigroup Inc.)".

SEC Commissioner Remarks on Diversity Policy Disclosure

2010-10-04T12:06:00.006-04:00

By Final Rule that became effective on February 28, 2010, the SEC adopted amendments to Item 407(c) of Regulation S-K to require disclosure of whether, and if so how, a nominating committee considers diversity in identifying nominees for director. In addition, if the nominating committee (or the board) has a policy with regard to the consideration of diversity in identifying director nominees, disclosure would be required of how this policy is implemented, as well as how the company assesses the effectiveness of its policy.

In a speech at the SAIS Center for Transatlantic Relations on September 16, Commissioner Luis A. Aguilar reported that some companies have done a good job with the new disclosure while others have a great deal of room for improvement. Aguilar applauds disclosure that not only talks about the company's diversity policy and how it is implemented, but also gives investors actual facts that show the results of the company's efforts with a break down of board composition by race, sex and citizenship. Though not identified in the speech, examples of Proxy Statements with such disclosure include the following:

Alcoa Inc. DEF14A filed on 3/2/10 (SEC file no. 001-03610)
Century Aluminum Co. DEF14A on 4/21/10 (file no. 001-34474)
Ingersoll-Rand plc DEF14A on 4/20/10 (file no. 001-34400)
Procter & Gamble Co. DEF14A on 8/27/10 (file no. 001-00434)

Some companies have provided only abstract disclosure, according to Aguilar, such as a statement that diversity was considered as part of an informal policy. Aguilar has asked the staff to follow up with some of the companies that did not include any discussion of concrete steps taken to give real meaning to efforts to create a diverse board, and he expects disclosure to improve as a result.

In describing how diversity is considered in identifying director nominees, Aguilar recommends that companies focus on specific steps taken to develop a diverse slate, possibly including a "policy of interviewing one or more candidates who are a minority and/or a woman, retaining a search firm that has been specifically instructed to seek (such candidates), or soliciting recommendations from organizations with a reputation for identifying candidates with a diverse background."

Though not identified in the speech, comment letters filed by companies that respond to SEC Staff requests for expanded disclosure on diversity matters include the following:

DTE Energy Co. Form CORRESP dated 6/18/10 (available 8/27)
Biogen Idec Inc. Form CORRESP dated 7/2/10 (available 9/21)
Calgene Corp. Form CORRESP dated 6/4/10 (available 8/10)
Baxter International Form CORRESP dated 4/30/10 (available 7/13)

Issuers Proposing Non-Public Offerings under Nasdaq Marketplace Rule 5635

2010-09-30T14:05:00.013-04:00

Companies with stock listed on the Nasdaq Global Select Market are subject to the Nasdaq Marketplace Rules. Rule 5635 sets forth the circumstances under which shareholder approval is required prior to the issuance of securities in connection with various matters, including non-public offerings. In the case of private placements, Rule 5635(d) requires shareholder approval for the issuance of shares equal to 20 percent or more of the common stock or 20 percent or more of the voting power outstanding before the issuance for less than the greater of book or market value of the stock.

In April of 2010, BNC Bancorp, Inc. (SEC file no. 0-50128) and Intervest Bancshares Corp. (0-23377) filed definitive Proxy Statements (Forms DEF14A) seeking approval to issue shares in one or more non-public offerings although neither company had any firm plans with respect to a specific deal. The published interpretive guidance of Nasdaq indicates that, in those circumstances where a company has not obtained approval for a specific transaction, a general authorization will only be effective if it contains parameters specifying the maximum number of shares to be issued, the maximum dollar amount of any issuance, the maximum discount to market, and the duration of shareholder approval. BNC and Intervest each note that the proposals would enable them to raise capital in a timely and cost effective manner.

Ruth’s Hospitality Group, Inc. on 1/21/10 (0-51485) and First PacTrust Bancorp, Inc. on 9/17/10 (0-49806) also seek shareholder approval to issue shares under Nasdaq Rule 5635, but in connection with a securities purchase agreement and subscription agreements, respectively. Ruth's seeks to issue a new class of preferred shares to a private equity firm for $25 million in a transaction that would result in a change of control under applicable Rule 5635(b). First PacTrust proposes to raise approximately $60 million through a private placement to selected institutional and other accredited investors of common stock priced at a 37.5% premium to the closing price of the stock as of July 26. The primary purpose of the capital raise is to redeem preferred stock issued to the U.S. Treasury under the TARP Capital Purchase Program and to pursue growth opportunities.

Exclusivity Agreements filed with Third Party Tender Offers

2010-09-28T21:21:00.001-04:00

In addition to the merger agreement, most negotiated or friendly tender offer filings will include as exhibits any confidentiality agreement or exclusivity agreement that had been entered into between the parties. Once the parties have commenced preliminary discussions regarding a possible strategic transaction, it is common for the issuer to grant a period of exclusivity to the bidder for detailed due diligence and the negotiation of definitive agreements.

Hewlett-Packard Co. filed the initial Schedule TO in connection with its $1.52 billion all-cash tender offer for ArcSight, Inc. on September 22 (SEC file no. 005-83836). The formal exclusivity agreement, which provided for an exclusive negotiation period of at least two weeks, was filed as Exhibit 99(d)(7). Hewlett-Packard was represented by Gibson, Dunn & Crutcher during merger negotiations and ArcSight by Fenwick & West.

Dell Inc. and 3PAR Inc. entered into a confidentiality agreement on July 17 to facilitate the further contemplation of a possible transaction. On August 1, Dell submitted an indication of interest for a combination whereby 3PAR stockholders would receive cash consideration of $18 per share. The indication of interest stated that 3PAR would be required to negotiate exclusively with Dell for two weeks, and the parties entered into an exclusivity agreement on the same day. Dell initially filed its Schedule TO on August 23 (file no. 005-83579), with the confidentiality and exclusivity agreements filed as Exhibits 99(d)(3) and 99(d)(31), respectively.

The exclusive negotiation period will vary among exclusivity agreements, as appropriate for the parties involved. A 3-day period was agreed to for the deal between issuer ADC Telecommunications, Inc. and bidder Tyco Electronics, Inc. The letter agreement is Exhibit 99(d)(4) to the Schedule TO filed July 26 (005-19057). By contrast, American Italian Pasta Co. agreed to an exclusivity period that lasted from May 24 until a termination date of June 30. The subject letter agreement was filed as Exhibit 99(d)(3) to the Schedule TO filed by Ralcorp Holdings, Inc. on June 24 (005-53419).

Master Limited Partnerships Eliminating IDRs to Lower Cost of Equity

2010-09-23T21:00:00.001-04:00

Most master limited partnerships have a tiered structure for sharing available cash between the general and limited partners, with the general partner working from an initial two percent up to a potential 50% payout of available cash. Incentive distribution rights (IDRs) give a LP's general partner the right to an increasing share of the incremental distributable cash flow generated by the partnership. As the cash distribution per unit increases, the IDRs allow the general partner to receive an increasing percentage of the available cash flow. IDRs are used to motivate the general partner to rapidly grow the distributions to the limited partners.

Natural Resource Partners L.P. has eliminated all of the IDRs held by its general partner and affiliates of the general partner, issuing 32 million common units to the contributing IDR-holders as consideration. The contribution agreement was filed as Exhibit 10.1 to the Form 8-K filed on 9/21/10 (SEC file no. 001-31465). Prior to the transaction, the IDRs received approximately 24% of the quarterly distribution and 48% of any increase in the distribution. NRP states that elimination of the IDRs will improve its cost of capital through enhanced competitive position in the acquisition markets and increased returns to limited partner unitholders from acquisitions and growth projects.

Several other natural resource partnerships intend to eliminate IDRs in connection with proposed mergers between the limited partnership and the parent of the general partner. In addition to eliminating IDRs, decreasing the cost of capital and improving the ability to accelerate growth in distributable cash flow, each of the mergers agreements proposed or disclosed in the filings listed below are intended to simplify the partnership's capital structure, increase the public float and increase trading liquidity of the market for the LP units:

Penn Virginia GP Holdings, L.P. Form 8-K filed 9/22/10 (001-33171)
Buckeye Partners, L.P. Form S-4 filed 9/14/10 (file no. 333-168090)
Enterprise Products Partners L.P. Form 8-K filed 9/7/10 (001-14323)

SEC Amends Auditor Attestation Requirements of Non-Accelerated Filers

2010-09-21T20:06:00.003-04:00

By Final Rule adopted September 15 and to be effective upon publication in the Federal Register, the SEC has amended its forms and rules to provide that Section 404(b) of the Sarbanes-Oxley Act will not apply to the audit reports prepared for issuers that are neither accelerated nor large accelerated filers as defined under Exchange Act Rule 12b-2. Section 989G of the Dodd-Frank Wall Street Reform and Consumer Protection Act added Section 404(c) to Sarbanes-Oxley to exempt smaller public companies from the auditor attestation requirement of the Act.

An accelerated filer is an issuer that had an aggregate worldwide market value of the voting and non-voting common equity held by non-affiliates of $75 million or more, but less than $700 million, as of the last business day of the most recently completed second fiscal quarter. A large accelerated filer is an issuer that had an aggregate worldwide market value of the voting and non-voting common equity held by non-affiliates of $700 million or more as of the last business day of the most recently completed second fiscal quarter. SEC rules do not define non-accelerated filers, but the term refers to a reporting company that does not meet the definitions of accelerated or large accelerated filers.

Prior to the adoption of the Dodd-Frank Act, non-accelerated filers would have been required to include an attestation report by their registered public accounting firms on internal control over financial reporting in their annual reports filed with the SEC on or after June 15, 2010. All issuers continue to be subject to Sarbanes-Oxley Act Section 404(a), which requires that the annual report include a report by management on the issuer’s internal control over financial reporting.

Recent filers have made note of the new rules in Item 9A Controls and Procedures of Form 10-K: USA Technologies, Inc. on September 21 (SEC file no. 0-50054) and Bio-Matrix Scientific Group, Inc. on September 22 (0-32201). Drinks Americas Holdings, Ltd. referenced the changes in the notes to consolidated financial statements of its Form 10-Q filed September 20 (0-19086).

The Energy Smart Grid: Opportunities and Risks

2010-09-17T23:17:00.006-04:00

There is no uniform definition of "smart grid" but the term generally conveys the notion of integrating information technologies with current energy infrastructure. The need to decrease fossil fuel consumption has led to strong public and private initiatives to develop energy-efficient technologies and to extend the useful life of aging infrastructure. The smart grid initiative got a boost with the passage of the American Recovery and Reinvestment Act of 2009 (ARRA), which includes over $4.3 billion of funding for smart grid technology investment, including energy storage systems. SEC filers that have reported grants under ARRA in support of smart grid initiatives include Black Hills Power, Inc. (SEC file no. 1-7978), FirstEnergy Corp. (333-21011), Progress Energy, Inc. (1-15929), and Southern Co. (1-3526).

Elster Group SE, which offers integrated metering products and solutions to the gas, electricity and water industries, is seeking to list on the NYSE. The European public limited liability company headquartered in Germany filed the Form F-1 Registration Statement for its initial public offering on September 13 (333-169347). In 2009, smart grid-related products, components and services accounted for approximately 26% of Elster Group revenues, compared to 19% in 2008.

Elster discusses several risk factors that have a bearing on the emerging smart grid industry, including the prospect that some utilities and utility contractors may continue to defer investment due to economic uncertainty or financing difficulties. The company notes that success of new smart grid technology and products will require acceptance by the energy industry, regulators and end-users alike. The industry is also exposed to the risk of, and public concern about, the increased threat of "cyber attacks" on power infrastructure as smart grid technologies become more prevalent.

Bruker Energy & Supercon Technologies Inc., another company targeting high growth markets that are still evolving, filed its Form S-1 IPO registration on September 3 (333-169178). Bruker is developing inductive superconducting fault current limiters, or iSFCLs, for use in the electrical grid, including for smart grid applications. Bruker states that the markets it is targeting rely on the availability and size of government subsidies and economic incentives, including tax credits, to promote industry development.

Clean energy company Comverge Inc.has invested over $14 million in R&D costs associated with its smart grid products between 2001 and 2009. In the past, Comverge has incurred significant costs to develop a specific product for large commercial and industrial customers that has found limited market acceptance. Continued losses may make it difficult for the company to obtain additional financing. Moreover, an existing loan agreement contains restrictions on Comverge's ability to incur additional indebtedness which, if not waived, could prevent the company from obtaining needed capital.

Tax Benefits Preservation Plan Seeks to Preserve Net Operating Losses

2010-09-15T20:06:00.000-04:00

As of June 30, 2010, Leap Wireless International Inc. had net operating loss carryforwards (NOLs) of approximately $1.7 billion. Leap's ability to use these NOLs to offset future taxable income obligations could be substantially limited if it were to experience an “ownership change” as defined under Section 382 of the Internal Revenue Code. In short, an ownership change occurs if the percentage of stock owned by a "five percent stockholder" increases by more than 50% over the lowest percentage owned by that stockholder during the previous three years.

To protect its ability to carry forward net operating losses, the Leap board of directors adopted a Tax Benefit Preservation Plan on Sept. 13 which is included as Exhibit 4.1 to the Form 8-K filed by the company on 9/14/10 (SEC file no. 000-29752). Similar to the mechanics of a "poison pill" shareholder rights plan that seeks to deter takeover bids, the Board has declared a dividend of one preferred stock purchase right on each outstanding Leap common share. If any person or group acquires 4.99% or more of Leap common stock, or if any 4.99% holder acquires additional shares, the rights become exercisable for common stock having a market value equal to twice the exercise price, resulting in significant dilution to the ownership interests.

Several companies have enacted similar tax benefit preservation plans in the past year, including the Form 8-K filers listed below. Like Leap, each also filed a Form 8-A on the same day to register the preferred stock purchase rights under the Securities Exchange Act of 1934.

PMI Group Inc. on 8/13/10 (SEC file number 001-13664)
Autobytel Inc. on 6/2/10 (SEC file number 001-34761)
Radian Group Inc. on 5/4/10 (SEC file number 001-11356)

Issuers Entering Into Forward Sales Agreements for Shelf Offerings

2010-09-13T20:27:00.002-04:00

NiSource Inc. Form 424B2 on 9/9/10 (SEC file no. 333-148239)
Xcel Energy Inc. Form 424B2 on 8/4/10 (file no. 333-161521)
Regency Centers Corp. Form 424B5 on 12/7/09 (file no. 333-158635)

In connection with equity shelf takedown offerings of common stock, each filer of the prospectus supplements listed above entered into forward sales agreements with affiliates of the underwriters (the "forward purchaser"). At the request of the issuer, the underwriter, acting as agent for the forward purchaser (the "forward seller" in such agency capacity), borrows a fixed number of common shares from third parties which are sold to underwriters. If the forward sellers are unable to borrow all of these shares of common stock, the company will issue and sell a number of shares equal to the number of shares that the forward sellers do not borrow and sell.

Before any issuance of common stock upon physical settlement of the forward sale agreements, the forward sale agreements will be reflected in diluted earnings per share calculations using the treasury stock method. Under this method, the number of shares of common stock used in calculating diluted earnings per share is deemed to be increased by the excess, if any, of the number of shares that would be issued upon physical settlement of the forward sale agreements over the number of shares that could be purchased by the issuer in the market (based on the average market price during the period) using the proceeds receivable upon settlement (based on the adjusted forward sale price).

If the issuer elects to cash or net share settle the forward sale agreement, the forward purchaser or its affiliate would be expected to purchase shares of common stock in secondary market transactions for delivery to stock lenders in order to close out its short position (in the case of net share settlement, taking into account the shares of common stock, if any, the issuer is required to deliver to the forward purchaser) and, if applicable in connection with net share settlement, to deliver shares to the company.

Peer-To-Peer Social Lending Platform Seeks to Offer Notes to Lender Members

2010-09-09T15:29:00.003-04:00

Seeking to become the third P2P Internet-based platform to complete registration of notes with the SEC, United Power and Media, Inc. (UPM) filed Form S-1 on Sept. 3 (SEC file no. 333-169240).

UPM lender members would be eligible to buy Borrower Member Payment Dependent Notes issued by the company. By making an offer on a borrower member loan request posted on the UPM platform, a lender member is committing to purchase a Note equal in principal amount to the dollar value of that offer at the stated interest rate and term, if the loan is funded and subsequently originated by UPM, or by an alternate institution to be selected in the future. The proceeds of the Notes will be designated by the lender members to fund corresponding borrower loans and subsequently allocated to a trust account for the benefit of the borrower.

LendingClub Corp. was the first P2P company to have its registration of Member Payment Dependent Notes declared effective in October 2008 (file no. 333-151827). Once registered, P2P sites must daily report detailed information about the loans they originate. On its website as of 9/10/10, Lending Club indicates it has issued $155.4 million in loans since 5/1/07, and has declined loan requests for $1.5 billion.

In November of 2008, the SEC instituted cease and desist proceedings, pursuant to Section 8A of the Securities Act, against Prosper Marketplace, Inc. The SEC labeled the loan notes that Prosper issued to investors as securities and said the company violated the Securities Act between January 2006 and mid-October 2008, by selling securities without an effective registration statement or valid exemption from registration. Prosper agreed to a settlement with the SEC and consented to the entry of a Cease and Desist order, in which it neither admitted nor denied liability, which was approved by the SEC on 11/20/08. The order cited the definition of a security under two Supreme Court cases as the basis of its judgment that Prosper's notes qualify as securities.

Community Development Banks Exchange TARP Preferred With U.S. Treasury

2010-09-07T21:37:00.000-04:00

Carver Bancorp, Inc. Form 8-K on 9/2/10 (SEC file no. 001-13007)
M&F Bancorp, Inc /NC/ Form 8-K on 8/23/10 (file no. 000-27307)
Citizens Bancshares Corp /GA/ Form 8-K on 8/18/10 (001-14913)

Each of the bank holding companies has exchanged preferred stock previously issued under the Troubled Asset Relief Program Capital Purchase Program (TARP CPP) for an equivalent amount under the Community Development Capital Initiative (CDCI). The CPP program carried a preferred dividend rate of 5% for 5 years, after which the dividend rate increased to 9%. Under the CDCI program, the preferred dividend rate is 2% for 8 years.

The Treasury Department established the CDCI program in February 2010 to invest lower cost capital in Community Development Financial Institutions (CDFI), supporting their lending activities to small businesses or disadvantaged communities. Participation in TARP CDCI is limited to financial institutions certified by the Community Development Financial Institution Fund as a CDFI. The Letter Agreement and Exchange Agreement with the United States Department of the Treasury is included as Exhibit 10.1 of each Form 8-K listed above.

IPO Auditing Fees In the Third Year of Market Uncertainty

2010-09-03T20:51:00.000-04:00

Average auditor fees paid by issuers that have completed initial public offerings on U.S. exchanges or the OTC Bulletin Board have been on a steady rise since 2005. Despite economic turmoil, the average amount paid to accounting firms by issuers that completed IPOs in 2008 and 2009 exceeded $1 million. Through August, however, 2010 is shaping up to look more like 2007 when the average cost of getting the IPO books in order was $892,000.

Among underwritten IPOs launched this year, the $5.55 million auditor fee paid to Ernst & Young Hua Ming by China Hydroelectric Corp. in connection with its $96 million offer is the largest (SEC file no. 333-163558). However, it is the only deal so far this year where the auditor fee has exceed $3 million. In 2009, eight of the 63 companies that completed IPOs in U.S. markets paid auditor fees above $3 million.

Prior to China Hyro, the last IPO with a larger auditor fee was Visa Inc.'s $17.86 billion deal in 2008, for which KPMG earned $13 million (file no. 333-147296). 2008 saw an unusual concentration of IPO auditor fees below the $200,000 threshold, encompassing approximately 45% of the companies that went public. By contrast approximately 24% of the 2009 and 21% of 2010 deals have auditor fees that fall below the $200K level, which is more in line with recent historical experience.

The information reported herein was gathered using IPO Vital Signs, a Web-based system that includes all SEC registered IPOs, including REITs and those non-U.S. IPO filers seeking to list in the U.S. markets. IPO Vital Signs does not track closed-end funds, best efforts or non-underwritten deals, or IPO offerings for amounts less than $5 million.

AbitibiBowater Inc. to Withdraw NAFTA Notice of Arbitration

2010-09-01T19:41:00.006-04:00

Following AbitibiBowater's December 2008 announcement of the permanent closure of its Grand Falls newsprint mill, the Government of Newfoundland and Labrador, Canada passed legislation to expropriate all of the company's timber rights, water rights, leases and hydroelectric assets in the province, whether partially or wholly owned through subsidiaries and affiliated entities. As a result of the expropriation, in the fourth quarter of 2008, the company recorded, as an extraordinary loss, a non-cash write-off of the carrying value of the expropriated assets of $256 million.

AbitibiBowater filed a Form 8-K on August 30, 2010 (SEC file no. 001-33776) to announce a formal settlement agreement with the government of Canada whereby the government has agreed to pay the company’s post-emergence Canadian operating entity CAD$130 million (approximately USD$123 million) following the emergence from the creditor protection proceedings under Chapter 11 of the U.S. Bankruptcy Code and the Companies’ Creditors Arrangement Act (Canada), as applicable. The settlement agreement is subject to approval by each of the U.S. Bankruptcy Court for the District of Delaware and the Superior Court of Quebec in Canada, and the Courts’ approval of the company’s plans of reorganization.

On February 25, 2010, the company had filed a Notice of Arbitration under the North American Free Trade Agreement asserting that the assets expropriation was arbitrary, discriminatory and illegal. As part of the settlement agreement, AbitibiBowater has agreed to waive its legal actions and claims against the government of Canada under NAFTA.

The Montreal-based company, the world's largest newsprint maker, was formed in 2007 when Abitibi-Consolidated Inc. and Bowater Inc. combined in a "merger of equals" with each becoming a subsidiary of AbitibiBowater Inc. Bowater was deemed to be the “acquirer” of Abitibi for accounting purposes and AbitibiBowater Inc. was deemed to be the successor to Bowater for purposes of U.S. securities laws and financial reporting. The Combination Agreement and Agreement and Plan of Merger was filed as Exhibit 2.1 to the Form 8-K filed January 29, 2007 (file no. 001-08712).

SEC Adopts New Rules to Facilitate Director Nominations by Shareholders

2010-08-30T19:15:00.001-04:00

By Final Rule adopted August 25 and to be effective 60 days after publication in the Federal Register, companies will be required to include a shareholder nominee for director in company proxy materials if the nominating shareholder or shareholders acting together own at least 3% of the voting power of securities that are entitled to vote and the shares have been continuously held for at least three years. Shareholders may not use the rule for the purpose of changing control of the company or in an attempt to obtain a number of seats on the board that exceeds that number allowable under new Exchange Act Rule 14a-11.

The rule applies to all Exchange Act reporting companies, including investment companies, other than companies whose only public securities are debt securities. "Smaller reporting companies" are subject to the rule, but it does not apply to them until after a three-year phase-in period. Foreign companies that come within the definition of "foreign private issuer" are not currently subject to the SEC's proxy rules and would not be subject to these new rules. Foreign companies that do not qualify as foreign private issuers would be subject to the rules.

The nominating shareholder or group will be required to file with the Commission and submit to the company a new Schedule 14N, which would be publicly available on EDGAR, the SEC's electronic filing system. The Schedule 14N will require, among other things, disclosure of the amount and percentage of the voting power of the securities owned by the nominating shareholder, the length of ownership, and a statement that the nominating shareholder intends to continue to hold the securities through the date of the meeting.

The nominating shareholder must file and transmit the notice on Schedule 14N no earlier than 150, and no later than 120, calendar days before the anniversary of the date that the company mailed its proxy materials for the prior year’s annual meeting. If the company did not hold an annual meeting during the prior year, or if the date of the meeting has changed more than 30 days from the prior year, then the nominating shareholder will be required to provide notice a reasonable time before the company mails its proxy materials, as specified by the company in a Form 8-K filed pursuant to new Item 5.08 of Form 8-K.

Companies Prepare for Dodd-Frank Clawback Provisions

2010-08-26T22:45:00.000-04:00

Title II of the Dodd-Frank Wall Street Reform and Consumer Protection Act (Sections 201 et seq.) establishes a mechanism for the orderly liquidation of large, failing financial institutions that threaten U.S. financial stability. Section 210(s) of the Dodd-Frank Act authorizes the FDIC to recoup compensation from senior executives and directors who were responsible for the failure of the covered financial company. The FDIC has yet to promulgate regulations to implement the requirements of this subsection.

Argo Group International Holdings, Ltd. executed an employment agreement with its president and CEO on August 10 which includes a clawback provision that explicitly references the requirements of the Dodd-Frank Act. Section 23 of the agreement provides that the payments and benefits provided under the agreement shall be subject to a clawback to the extent necessary to comply with the requirements of Dodd-Frank or any Securities and Exchange Commission rule. The executive employment agreement is filed as Exhibit 10.1 to the Form 8-K filed on August 13 (file no. 001-15259).

In Item 11 Executive Compensation disclosure of the Form 10-K Amendment filed by ADPT Corp. on July 28 (SEC file no. 000-15071), ADPT notes that the compensation committee of the board of directors will be re-evaluating its compensation policies going forward and plans to consider the potential merits of early implementation of a clawback policy, consistent with Dodd-Frank provisions.

Employment Offer Letters filed with Dell's Cash Tender Offer for 3Par Inc.

2010-08-24T20:59:00.000-04:00

Pursuant to an Agreement and Plan of Merger dated August 15, Dell Inc. is offering to purchase for cash all outstanding common shares of 3Par at $18 per share, or an aggregate of approximately $1.14 billion. On the same day that Dell filed its formal tender offer, Hewlett-Packard Co. (HP) announced an unsolicited proposal to acquire 3PAR for $24 per share in cash pursuant to a tender offer followed by a merger. The Dell and HP Schedule TO filings on August 23 bear SEC file no. 005-83579.

Dell and each of twelve executive or other officers of 3PAR have entered into offer letters describing the terms and conditions of their employment following the completion of Dell’s prospective acquisition of 3PAR. The offer letters state the job title to be held by each individual upon completion of the merger, as well as the annual base salary, annual target bonus (expressed as a percentage of base salary), and value of projected Dell long-term incentive grants expected to be granted in March 2012 (as applicable). In addition, Dell has promised to grant seven executives new Dell restricted stock units upon the closing of the merger, and to grant five executives cash awards upon closing.

Each of the offer letters is included as an exhibit to Dell's Schedule TO, as well as a form of employment agreement that all employees of Dell sign regardless of position. The form employment agreement includes a number of acknowledgments by the transferred employee regarding (among other things) (i) at-will employment status, (ii) obligations regarding the use and development of intellectual property, inventions and copyrightable materials and (iii) responsibilities relating to the non-disclosure of confidential information, proprietary information and controlled technology and software.

BHP Billiton Launches $40 Billion Hostile Takeover Bid for Potash Corp.

2010-08-20T21:57:00.004-04:00

BHP, the world’s largest diversified natural resources company, has offered to purchase all outstanding common shares of fertilizer producer Potash Corporation of Saskatchewan Inc. at $130 in cash per share. The tender offer and circular is the first exhibit to the Schedule TO filed on August 20 (SEC file no. 005-44283).

The offer is conditioned on certain regulatory approvals, waiver or invalidation of the Potash poison pill (shareholders rights plan), and a sufficient number of shares being tendered by the expiration date that enables BHP to obtain control of the issuer. The offer is not subject to any financing condition.

On August 18, BHP entered into a new multicurrency term and revolving facility and subscription agreement with the original lenders to, among other things, meet the potential funding requirements in relation to the tender offer. The facility and subscription agreement is included as Exhibit (b)(i) to the Schedule TO.

The facility agreement is in a form commonly used for loans arranged in the international loan market. It contains representations and warranties, covenants and events of default, each with applicable qualifications or carve-outs. The covenants include requirements relating to the financial indebtedness of Potash Corp. and, among other matters, place certain restrictions on the ability of the BHP Billiton Group to dispose of its assets or incur financial indebtedness in BHP subsidiaries.

Coal Companies Note Increased Exposure to Black Lung Benefit Liabilities

2010-08-18T15:56:00.002-04:00

The Patient Protection and Affordable Care Act enacted in March 2010 contained an amendment to the Black Lung Benefits Act (BLBA) which reinstates provisions that had been removed in 1981. The amendment provides that an eligible miner can be awarded total disability benefits if he can prove he worked 15 or more years in or around coal mines and has a totally disabling respiratory impairment. In addition, the amendment provides for an automatic survivor benefit to be paid upon the death of a miner with an awarded federal black lung claim without the requirement to prove that the miner’s death was due to black lung disease.

Form 10-Qs filed by mining companies in August to report the fiscal quarter ended June 30 discuss the new legislation in the Risk Factors section, including Patriot Coal Corp. (SEC file no. 001-33466), Westmoreland Coal Co. (001-11155) and James River Coal. Co. (000-51129).

Patriot Coal states it has evaluated the changes to the BLBA that provide for automatic extension of awarded lifetime benefits to surviving spouses and the changes to the legal criteria used to assess and award claims. Patriot Coal estimates the impact to its current population of beneficiaries and claimants results in an estimated $11.5 million increase to its benefit obligation.

Westmoreland indicates that through the first three months of the amendment’s effectiveness, it has experienced an increase in black lung claims over similar periods, including the automatic award of certain widow claims that fall under the new provisions. Westmoreland states it has incomplete information to determine whether this increase in claims constitutes a one-time spike or represents a future trend in black lung claims and eventual awards.

James River accrues amounts for benefit obligations based on the present value of expected future costs. At June 30, an independent actuary estimates James River obligations of $43.9 million for coal workers’ black lung benefits and $60.8 million for workers’ compensation benefits. These obligations are unfunded and the company notes it could be required to expend greater amounts than anticipated if its assumptions are incorrect.

Arkansas Utility Offers Bonds Secured by Storm Recovery Property

2010-08-16T17:18:00.002-04:00

In January 2009, Arkansas was struck by an ice storm which caused widespread damage to infrastructure and power outages throughout Entergy Arkansas Inc.'s service territory. In response to the damage to the utility infrastructure the Arkansas legislature passed the Arkansas Electric Utility Storm Recovery Securitization Act authorizing the Arkansas Public Service Commission to issue financing orders allowing for the securitization of storm recovery costs.

Entergy Arkansas Restoration Funding, LLC is issuing $124 million of senior secured storm recovery bonds, with Entergy Arkansas as the seller, initial servicer and sponsor. The bonds are secured by storm recovery property, which includes the right to a special, irrevocable nonbypassable charge, known as a storm recovery charge, paid by all retail electric customers in the certificated service territory. Credit enhancement for the bonds will be provided by such statutory true-up mechanism as well as by general, excess funds and capital subaccounts held under the indenture.

Morgan Stanley & Co. has agreed to purchase all of the bonds as underwriter. The prospectus supplement was filed on Form 424B5 filed 8/13/10 (file no. 333-168010). The underlying registration on Form S-3 includes as exhibits the forms of indenture, storm recovery property servicing agreement, storm recovery property purchase and sale agreement, and the Financing Order issued by the Arkansas PSC.

IPOs in U.S. Markets Spending Less Time in Registration

2010-08-12T16:18:00.002-04:00

The average number of days in registration by companies that have completed initial public offerings on U.S. exchanges or the OTC Bulletin Board through July 2010 has fallen to 125, a sharp drop from the 2009 average of 216 days in registration. The 2009 average was no doubt exaggerated by dire market conditions, but the average over the prior 3-year period ranged from 134 to 140 days in registration.

Fifty-seven of the 81 underwritten deals that made it to market in the first seven months of this year spent over 90 days in the registration mill, roughly in line with the five-year average since 2005 whereby two-thirds of IPO issuers take at least 90 days.

Nine IPO issuers so far this year and ten last year managed to take 30 days or less to move from the initial registration filing to the final Form 424. Sixteen of these 19 companies are headquartered in China. Of the 100 issuers since January 2006 that spent 30 days or less in registration prior to the IPO, only STR Holdings, Inc. is a U.S.-based company.

The information reported herein was gathered using IPO Vital Signs, a Web-based system that includes all SEC registered IPOs, including REITs and those non-U.S. IPO filers seeking to list in the U.S. markets. IPO Vital Signs does not track closed-end funds, best efforts or non-underwritten deals, or IPO offerings for amounts less than $5 million.

Merger Consideration Includes New Class of Non-Voting Shares

2010-08-10T17:33:00.000-04:00

Grifols S.A., a foreign private issuer and Spain-based company engaged in the healthcare sector, will issue cash and newly-created, non-voting (Class B) ordinary shares in connection with the proposed merger of a wholly-owned subsidiary with Talecris Biotherapeutics Holdings Corp. Grifols registered a proposed maximum of $444.59 million of the Cl. B shares on the Form F-4 filed on August 10 (SEC file no. 333-168701).

It is a condition of the merger agreement that the non-voting shares are admitted to listing on the Spanish Stock Exchanges and are approved for listing on the NASDAQ Stock Market in the form of new American Depositary Shares (ADSs), evidenced by American Depositary Receipts. Section 8.05 of the merger agreement authorizes the parties to waive compliance with any of the conditions contained therein.

The joint proxy statement/prospectus warns there is no assurance that a market for the Cl. B shares or for the new ADSs will develop, nor that the trading value or liquidity of those securities will be equivalent or similar to the trading value or liquidity of existing (Class A) ordinary shares or the existing ADSs of Grifols.

Private equity firms Cerberus Capital Management and Ampersand Ventures formed Talecris in 2005 upon the acquisition of the Bayer Plasma Products Business Group, an indirect subsidiary of Bayer AG. The firms, which took Talecris public in an October 2009 IPO (file no. 333-144941), own 49.7% of the merger target.

ABS Issuers Discuss Impact of Dodd-Frank Financial Reform Act

2010-08-06T17:18:00.004-04:00

Prior to July 22, Rule 436(g) under the Securities Act of 1933 provided nationally recognized statistical rating organizations (NRSROs) with an exemption from expert liability under the Securities Act for ratings information included in registration statements. When the Dodd-Frank Wall Street Reform and Consumer Protection Act was signed into law on July 21, Section 939G of Dodd-Frank repealed Rule 436(g) of the 1933 Act.

In the MD&A section of its Form 10-Q filed on August 6, American Express Co. notes this circumstance is of particular significance in offerings of asset-backed securities (ABS), which require ratings disclosure that, subsequent to Dodd-Frank, can be made only with rating agency consent. Following enactment of Dodd-Frank, the three principal NRSROs announced that they would not consent to the inclusion of their ratings in registered public offerings of securities.

In order to facilitate a transition for asset-backed issuers, the SEC Division of Corporation Finance issued a no-action letter on July 22 to temporarily allow ABS issuers to omit the credit rating disclosure required under Regulation AB (see Ford Motor Credit Co., WSB File No. 0726201001). Items 1103(a)(9) and 1120 of Reg AB require disclosure of whether an issuance or sale of any class of offered ABS is conditioned on the assignment of a rating by one or more rating agencies. The disclosure of a rating in a registration statement now requires the consent of a rating agency to be named as an expert. The no-action position will expire with respect to any registered offerings of ABSs commencing with an initial bona fide offer on or after January 24, 2011.

Ally Financial Inc. (formerly GMAC Inc.) notes in the Risk Factors section of its Form 10-Q filed on August 5 that NRSROs have refused to permit their ratings to be used pending more clarity related to potential legal exposure. Ally also notes it is unclear whether the SEC will extend the six-month period to omit credit ratings from ABS registration statements. Ally states that if the repeal of Rule 436(g) stands without further action, it would likely be limited to only private securitizations, which could have an adverse impact on its liquidity and cost of funds. American Express also indicates it may have to rely on private offerings to raise funding through its ABS program.

Carlyle Private Equity Firm Sponsors Prospective IPOs

2010-08-04T18:50:00.000-04:00

UCI International, Inc. Form S-1 filed on 7/27/10 (SEC file no. 333-168336):
UCI was formed at the direction of The Carlyle Group ("TCG") in 2006 as the holding company of United Components, Inc., a supplier to the vehicle replacement parts market. United had acquired all of its then-existing operating units in June 2003 for a purchase price of $808 million. The acquisition was financed through a combination of debt and $260 million in cash contributed through Carlyle limited partnerships. UCI proposes a $200 million IPO in an underwritten deal led by Merrill Lynch and Deutsche Securities.

Booz Allen Hamilton Holding Corp. S-1 filed on 6/21/10 (SEC file no. 333-167645):
Booz Allen Hamilton Inc. completed the separation of its U.S. government consulting business from its commercial and international consulting business, the spin off of the commercial and international business, and the sale of 100% of its outstanding common stock to Booz Allen Holding, which was majority owned by Carlyle, in July 2008. The Registrant is the successor to the government business of Booz Allen Hamilton following the separation. Following the spin off, Booz Allen Hamilton was indirectly acquired by TCG by merger for total consideration of $1,828 million. The merger and spin-off agreements are Exhibits 2.1 and 2.2, respectively.

Biopharm Co. Offers Tradable CVRs as Part of Merger Package

2010-08-02T17:32:00.002-04:00

In connection with a reverse triangular merger whereby Abraxis BioScience, Inc. will become a wholly-owned subsidiary, Celgene Corp. registered common stock and contingent value rights, or CVRs, on a Form S-4 dated July 29 (file no. 333-168369). Pursuant to the merger agreement, each Abraxis common share will be converted into the right to receive an upfront payment of $58.00 in cash and 0.2617 shares of Celgene common stock. The upfront payment values Abraxis BioScience at approximately $2.9 billion, net of cash.

Each Abraxis share will also receive one CVR that will entitle its holder to receive additional cash payments if certain U.S. regulatory approval milestones are achieved and/or annual net sales figures are met by certain Abraxis products. Celgene has agreed to attempt to list the CVRs on The NASDAQ Global Select Market.

The July 2008 merger (333-152690) between Fresenius Kabi Pharmaceuticals and APP Pharmaceuticals, Inc. also included CVRs with merger consideration that was otherwise all cash. The Fresenius CVRs, which are tied to the “Adjusted EBITDA” of APP, trade on NASDAQ under the symbol “APCVZ”. The September 2009 merger (333-162238) between Ligand Pharmaceuticals Inc. and Neurogen Corp offered Neurogen shareholders both equity and CVRs as consideration, but the CVRs are not listed on any exchange and are subject to general transfer restrictions.

SEC Adopts Amendments to Part 2 of Form ADV

2010-07-29T13:52:00.000-04:00

By Final Rule dated July 28 and to be effective 60 days after publication in the Federal Register, registered investment advisers will be required to provide new and prospective clients with a brochure and brochure supplements written in plain English. Advisers must file their brochures electronically, and the SEC will make them available to the public through the Investment Adviser Public Disclosure website.

Since 1979, the SEC has required IAs to deliver a written disclosure statement to clients pursuant to rule 204-3 under The Investment Advisers Act of 1940. Part 2 of Form ADV sets out minimum requirements for this disclosure statement, which is commonly referred to as the "brochure." In the past, Part 2 has required IAs to respond to a series of multiple-choice and fill-in-the-blank questions organized in a “check-the-box” format, supplemented in some cases with brief narrative responses. IAs have had the option of providing information required by Part 2 in an entirely narrative format, but few have done so.

The revised Part 2 requirements include two sub-parts, Part 2A and Part 2B. Part 2A contains 18 disclosure items about the advisory firm that must be included in the brochure, including disclosure of the adviser’s business, fees and compensation, conflicts of interest, disciplinary history, brokerage practices and other information that help clients make an informed decision about whether to hire or retain that adviser. The Part 2B "brochure supplement" includes information about certain advisory personnel on whom clients rely for investment advice.

Reorganized Auto Parts Manufacturer Registers Securities for Reoffer

2010-07-28T16:59:00.000-04:00

Michigan-based Cooper-Standard Holdings Inc. emerged from Chapter 11 bankruptcy on May 27 through a series of transactions contemplated by the Plan of Reorganization, including a private placement to certain creditors. The Form S-1 filed by Cooper-Standard on July 26 (file no. 333-168316) was filed in connection with a registration rights agreement that was filed as an exhibit to the Form 8-K filed on June 3.

Under the reorganization, prepetition noteholders were permitted to participate in a common stock rights offering conducted during the solicitation of votes to accept or reject the Plan. Additional common shares as well as 7% cumulative participating convertible preferred shares were issued to certain creditors pursuant to a commitment agreement that provided for the backstop of the rights offering.

The Chapter 11 Plan of reorganization was filed as an exhibit to the Form 8-K filed by Cooper-Standard on May 24, and the Commitment Agreement with the backstop creditors was filed as Exhibit 10.49 to the Form 10-K for FY09 filed on 3/31/10 (file no. 333-123708).

Commodity Pools Designed as Short-Term Trading Vehicles Emerge

2010-07-22T16:01:00.007-04:00

Direxion Shares ETF Trust II intends to offer a series of exchange traded funds that seek daily leveraged investment results that correlate positively (or negatively) to 300% the daily return (or inverse return) of a target benchmark, generally a commodity-based or currency-based instrument. The Delaware statutory trust is organized into separate series that are subject to regulations as commodity pools under the Commodity Exchange Act, and their sponsor is subject to regulation as a commodity pool operator. None of the ETFs are a mutual fund or any other type of investment company under the Investment Company Act of 1940.

Direxion II filed its Form S-1 on July 20 (file no. 333-168227), registering common units of beneficial interest that will be separately offered for each fund. ETFS Collateralized Commodities Trust filed a Form S-1 on May 27 (333-167167) in connection with 18 initial ETFs that are intended to be used as short-term trading vehicles. The ETFS funds seek daily investment results which correspond to 100% or 200% of the daily performance of the specified commodity index.

The emergence of ETFs organized as a trust of commodity pools is a fairly recent experience. More commonly, an ETF trust has tended to be an open-end management investment company registered under the 1940 Act. Direxion Shares ETF Trust, a non-diversified series of mutual funds that seek to provide daily investment results much like Direxion II, filed a Registration Statement on Form N-1A on 9/16/08, file no. 811-22201.

J.P. Morgan Chase Subsidiary Resumes CMO Offering Activity

2010-07-20T14:48:00.004-04:00

J.P. Morgan Chase Commercial Mortgage Securities Corp., a steady issuer of pass-through certificates through 2007, has filed a shelf Registration Statement on Form S-3 to offer a new series of collateralized mortgage obligations. When SEC file no. 333-165147 is declared effective, the subsequent prospectus supplement will be the first one filed by the subsidiary since a $993.9 million offering dated 4/30/08.

JPMCCMSC has registered CMO certificates for a proposed maximum aggregate offering of $58.3 billion. Pursuant to 1933 Act Rule 415(a)(6), $39.6 billion of unsold securities from its prior Registration (333-140804) are included in the new Registration.

The new Registration also relates to the Form S-3 filed by Bear Stearns Commercial Mortgage Securities Inc. (file no. 333-146993). The former Bear Stearns Companies' subsidiary was merged into the J.P. Morgan subsidiary on 12/22/09. Pursuant to 1933 Act Rule 429, the $18.6 billion of registered and unsold mortgage pass-through certificates under the BSCMI Registration will be offered under the same prospectus.

Former IPO Candidates Return with New Registrations

2010-07-16T17:48:00.003-04:00

After a robust IPO market in 2007 (the most since 2000), initial public offerings fell off the cliff in 2008 and only in 2010 have resumed sustained activity. A total of 113 IPO Registration Statements were withdrawn in 2008 as were another 58 in 2009, with most would-be issuers citing adverse market conditions as the reason for not proceeding with the offering.

With 70 completed deals in the first half of 2010, the IPO market is clearly in recovery mode. Among recent IPO registrants, several are making a second attempt after a previous withdrawal, including:

Epocrates, Inc. Form S-1 filed on 7/16/10 (file no. 333-168176)
AMC Entertainment Holdings, Inc. filed on 7/15/2010 (333-168105)
Affinion Group Holdings, Inc. Form S-1 filed on 5-21-10 (333-166993)
KKR & Co. L.P. Form S-1 filed on 5-10-10 (file no. 333-166687)

Weyerhaeuser Co. Plans REIT Conversion, Declares Special Dividend

2010-07-14T15:19:00.002-04:00

Weyerhaeuser's board of directors has declared a special dividend of $5.6 billion payable on Sept. 1 to shareholders of record as of July 22 in connection with a planned conversion to a real estate investment trust. To be eligible to elect REIT status for fiscal 2010 for federal income tax purposes, the company must distribute to its shareholders, on or before December 31, previously undistributed earnings and profits attributable to taxable periods ending prior to January 1, 2010. The special dividend is intended to satisfy this requirement.

Shareholders can elect stock or cash for the special dividend, with the total cash payment limited to 10 percent, or $560 million, of the total distribution. In addition, the number of common shares a shareholder may receive in the special dividend may be limited by the ownership limitations in the company's Articles of Incorporation. The board has granted an exemption from the ownership limitations to one existing shareholder which currently owns common shares in excess of the ownership limit.

Weyerhaeuser filed a prospectus supplement on Form 424B4 dated 7/13/10 to cover the securities that will be issued in the special dividend, and announced the special dividend in a Form 8-K filing on 7/12/10.

IPOs by Companies Converting from “S” Corporation to "C" Corp. Status

2010-07-08T16:35:00.001-04:00

Vera Bradley, Inc. Form S-1 filed on 7/1/10 (file no. 333-167934)
LINC Logistics Co. Form S-1 filed on 6/29/10 (file no. 333-167934)

Prior to the offerings, both issuers have been treated as an S-corporation under Subchapter S of Chapter 1 of the Internal Revenue Code and thus generally have not been subject to income taxes. The Summary and the Selected Consolidation Financial Data tables presented in both Registration Statements reflect pro forma income tax data as if the companies had been treated as C-corporations, which will be their tax status once they are public.

Both filings discuss the risk relating to C-corporation conversion, noting that claims of taxing authorities related to the prior status as an S-corporation could be harmful. Vera Bradley intends to use a portion of its IPO proceeds to fund its final S-Corporation distribution. Historically, Vera Bradley has distributed annually to its shareholders an amount no less than 40.5% of the prior year’s taxable income.

Carve-Out Financial Statements

2010-07-06T17:55:00.001-04:00

Oxford Resource Partners LP Form S-1 filed on 7/2/10 (SEC file no. 333-165662):
Oxford acquired all of the active western Kentucky surface mining operations of Phoenix Coal Inc. on September 30, 2009. The Carved-Out Surface Mining Operations of Phoenix Coal Inc. are included with the combined financial statements filed in Oxford's IPO Registration Statement.

Internet Media Services, Inc. Form S-1 filed on 6/30/10 (SEC file no. 333-165972):
On October 8, 2009, Internet Media completed the asset purchase of the Web property LegalStore.com from Document Security Systems, Inc. in exchange for 7,500,000 common shares which IMS agreed to issue pro rata to the shareholders of DSS. The carve-out financial statements for Legalstore.com are presented on a carve-out basis from the consolidated financial statements of DSS.

International CCE Inc. Form S-4 filed on 5/25/10 (SEC file no. 333-167067):
In connection with the separation of North American businesses from Coca-Cola Enterprises (CCE), International CCE, Inc. (New CCE) registered $8.4 billion of common stock for the merger of a wholly-owned subsidiary of Coca-Cola Co. into CCE. New CCE’s financial statements have been prepared in accordance with U.S. GAAP on a “carve-out” basis from CCE’s consolidated financial statements using the historical results of operations, assets, and liabilities attributable to the legal entities that comprise New CCE.

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

2010-06-30T18:25:00.001-04:00

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

2010-06-28T14:13:00.002-04:00

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

2010-06-21T15:31:00.005-04:00

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

2010-06-04T09:51:00.002-04:00

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)

Companies Reporting the Gulf of Mexico Oil Spill

2010-05-20T13:21:00.001-04:00

Although 10-Qs filed in May predominantly relate to fiscal quarters ending March 31, several companies have made reference to the late April explosion of the Deepwater Horizon drilling rig and subsequent oil spill in the Gulf of Mexico. In addition to filings by companies in the hydrocarbon production industry, 10-Qs filed by Landrys Restaurants Inc., Omega Protein Corp. (fish oil and fish meal products), St Joe Co. (real estate development), Teledyne Technologies (electronic components) and Winn-Dixie Stores have made reference to the incident in the Risk Factors, MD&A and/or Forward Looking Statements sections.

BP p.l.c., which had been leasing the drilling platform from its owner, Transocean Ltd., has been filing updated information on Form 6-K nearly every day since the April 22 sinking of the rig.

Form N-MFP Required for Open-End Investment Companies on Monthly Basis

2010-04-30T19:59:00.001-04:00

SEC Form N-MFP will become effective May 5 for open-end investment companies to report holdings of money market funds each month. This new form was precipitated by the run on money market funds after The Reserve Primary Fund “broke the buck” and re-priced its securities at $0.97 per share in September 2008. Form N-MFP must be filed electronically through the SEC’s EDGAR system in an eXtensible Markup Language (“XML”) tagged data format. Rule 30b1-7 requires money market funds to file Form N-MFP within five business days after the end of each month. The SEC Final Rule pertaining to Form N-MFP is available in Release No. IC-29132.

Disclosure of Shareholder Voting Results Required on New 8-K Item 5.07

2010-03-01T13:22:00.001-05:00

A new item number for Form 8-K became effective on Feb 28. Item 5.07 is reserved for disclosure of voting results of matters presented to shareholders, to be filed within four business days after the meeting. The SEC initially contemplated a corresponding re-designation of Form 10-K and 10-Q item numbers, but decided against such change to avoid confusion that might otherwise arise from references to the current numbering in professional literature. Instead, Item 4 of Form 10-K and Part II, Item 4 of Form 10-Q, previously used to report voting results, have been removed and reserved. The SEC Final Rule pertaining to new item 5.07 is available in Release Nos. 33-9089 and 33-9089A.