SEC File No. 70-
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM U-1
APPLICATION
UNDER
THE PUBLIC UTILITY HOLDING COMPANY ACT OF 1935 ("Act")
GPU, INC. ("GPU")
100 Interpace Parkway
Parsippany, New Jersey 07054
_________________________________________
(Name of company filing this statement and
address of principal executive office)
M.J. Connolly, Esq., Assistant Douglas E. Davidson, Esq.
General Counsel Berlack, Israels & Liberman LLP
M. A. Nalewako, Secretary 120 West 45th Street
GPU Service, Inc. New York, New York 10036
100 Interpace Parkway
Parsippany, New Jersey 07054
(Names and addresses of agents for service)<PAGE>
Item 1. Description of Proposed Transactions.
A. GPU currently has in effect a Retirement Plan for
Outside Directors (the "Retirement Plan") which provides that
each director who is not an employee of GPU or its subsidiaries
(an "Outside Director") and who completes 54 months of service
prior to retirement (or death) is entitled to receive monthly
retirement benefits equal to one-twelfth of the sum of (x) the
then annual retainer paid to the director at the time of
retirement and (y) the cash value of the last award under GPU s
Restricted Stock Plan for Outside Directors. The benefits are
generally payable commencing at the later of age 60 or retirement
over a period equal to the number of months the Outside Director
served as such.
B. In addition, by Order dated March 30, 1989 (HCAR
No. 35-24851) in SEC File No. 70-7607, the Commission, among
other things, authorized GPU to issue up to 20,000 shares of
common stock, $2.50 par value per share (the "Common Stock"),
under a Restricted Stock Plan for Outside Directors (the "1989
Plan"). The 1989 Plan was approved by GPU's stockholders at the
1989 Annual Meeting of Stockholders. Under the 1989 Plan, as
amended, each Outside Director receives a portion of his or her
annual compensation in the form of 300 shares of Common Stock.
An Outside Director may not sell or otherwise dispose of shares
of Common Stock awarded under the 1989 Plan except following: (i)
death or disability, (ii) failure to stand for reelection at the
end of the term during which the Outside Director reaches age 70;
(iii) resignation or failure to stand for reelection with the
consent of the Board; (iv) failure to be reelected to the Board
after being duly nominated; or (v) a change in control of GPU.
However, an Outside Director has all other rights of a
shareholder with respect to shares of Common Stock awarded under
the 1989 Plan, including voting rights and the right to receive
and retain all cash dividends paid and other distributions made
with respect to such shares. Shares of Common Stock held by an
Outside Director who fails to satisfy the above conditions when
he or she ceases to be a director are subject to forfeiture.
C. GPU has determined that in order more closely to
align the interests of its directors with those of its
stockholders, it is desirable to pay a greater portion of the
Outside Directors compensation in the form of Common Stock.
Accordingly, GPU now proposes to cease the further accrual of
service under the Retirement Plan and provide for the issuance of
additional Common Stock to Outside Directors under a new Deferred
Unit Stock Plan for Outside Directors (the "New Plan"). In
connection therewith, GPU requests authorization to issue up to
an additional 200,000 shares of Common Stock under the New Plan
from time to time through December 31, 2007.(1)
___________________________
1 The New Plan would not alter the automatic award of 300
shares annually to Outside Directors under the 1989 Plan. The
authorization requested herein would be in addition to the
authorization in the March 30, 1989 Order to issue up to 20,000
shares under the 1989 Plan.<PAGE>
D. Under the New Plan, each Outside Director would
receive an annual grant of units based on a multiple (initially
anticipated to be 1.5 but which may be changed from time to time)
of the amount of the annual cash retainer paid to such Outside
Director. As is presently the case, the amount of the annual
retainer will be set by the Board and may be increased or
decreased at any time by Board resolution. Each unit represents
one share of Common Stock. For example, based on the current
annual retainer of $20,000 paid to Outside Directors, and the
closing price of GPU Common Stock on December 31, 1996 ($33 5/8),
each Outside Director would receive units for 892 shares of
Common Stock (i.e., $20,000 multiplied by 1.5 with the product
divided by $33 5/8). The number of units granted each year will
thus vary based on (i) the price of the Common Stock, (ii) the
amount of the annual cash retainer and (iii) the multiplier used.
Units would vest upon the Outside Director's retirement from the
Board, provided that the Outside Director has completed at least
54 months of service as an Outside Director, or upon death.
Units which have not vested at the time of an Outside Director's
retirement would be forfeited. An Outside Director may elect to
receive a lump-sum distribution of all shares represented by
vested units in his or her plan account or installment
distributions over a specified period. Each unit will be
entitled to dividend equivalents which will be credited quarterly
and reinvested in additional units.
E. In the event of a "change in control" of GPU(2),
all units previously granted would immediately and automatically
vest, and the Outside Director would be entitled to receive a
distribution of the Common Stock represented by units in the New
Plan at that time.
F. Shares of Common Stock issued pursuant to the New
Plan will be from authorized but unissued shares or previously
reacquired shares. The New Plan will also provide that the
maximum number of shares issuable thereunder may be adjusted to
give effect to stock dividends, splits, recapitalizations and
other similar events.
G. GPU intends to request that its stockholders
approve the New Plan at the 1997 Annual Meeting of Stockholders,
as required by Rule 312.03 of The New York Stock Exchange Listed
Company Manual and, accordingly, also requests authorization to
solicit proxies from its stockholders at the 1997 Annual Meeting.
The related proxy materials are expected be mailed to GPU's
stockholders prior to March 31, 1997. Subject to stockholder
___________________________
2 "Change in control" is defined generally as (i) the
acquisition by any person or group (as defined in Section
13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934) of
beneficial ownership of or the right to vote, more than 20% of
GPU's outstanding Common Stock, subject to certain exceptions
such as acquisitions by employee benefit plans maintained by the
Company; (ii) a change in the composition of GPU s Board which
results in the members of the Incumbent Board (as defined)
ceasing to constitute at least 70% of the members of the Board;
or (iii) certain mergers, consolidations or reorganizations.
2<PAGE>
approval and receipt of the authorization requested herein, the
New Plan would be effective as of July 1, 1997. Upon such
effectiveness, service would no longer be accrued under the
Retirement Plan; benefits under the Retirement Plan will be paid
in accordance with the terms of that plan for service prior to
July 1, 1997.
H. GPU submits that all of the criteria of Rule 54
under the Act with respect to the proposed transactions are
satisfied:
(i) The average consolidated retained earnings for GPU
and its subsidiaries, as reported for the four most recent
quarterly periods in GPU's Annual Report on Form 10-K for the
year ended December 31, 1995 and Quarterly Reports on Form 10-Q
for the quarters ended March 31, 1996, June 30, 1996, and
September 30, 1996, as filed under the Securities Exchange Act of
1934, was approximately $2.07 billion. As of September 30, 1996,
GPU had invested, or committed to invest, directly or indirectly,
an aggregate of approximately $244 million in EWGs and $679
million in FUCOs. GPU's aggregate investment in EWGs and FUCOs,
including amounts invested pursuant to all other outstanding or
pending authorizations to make investments in EWGs or FUCOs, will
not at any time exceed the "safe harbor" limitation imposed by
Rule 53 without prior Commission authorization.(3)
(ii) GPU maintains books and records to identify
investments in, and earnings from, each EWG and FUCO in which it
directly or indirectly holds an interest.
(A) For each United States EWG in which GPU
directly or indirectly holds an interest:
(1) the books and records for such EWG will
be kept in conformity with United States generally accepted
accounting principles ("GAAP");
(2) the financial statements will be
prepared in accordance with the GAAP; and
(3) GPU directly or through its subsidiaries
undertakes to provide the Commission access to such books and
records and financial statements as the Commission may request.
(B) For each FUCO or foreign EWG which is a
majority owned subsidiary of GPU:
(1) the books and records for such
subsidiary will be kept in accordance with GAAP;
(2) the financial statements for such
subsidiary will be prepared in accordance with GAAP; and
(3) GPU directly or through its subsidiaries
undertakes to provide the Commission access to such books and
records and financial statements, or copies thereof in English,
as the Commission may request.
(C) For each FUCO or foreign EWG in which GPU
owns 50% or less of the voting securities, GPU directly or
through its subsidiaries will proceed in good faith, to the
extent reasonable
_______________________________
3 GPU has filed with the Commission a Post-Effective Amendment
to its Application on Form U-1 in SEC File No. 70-8593 requesting
authorization to increase this limitation to 100% of GPU's
"consolidated retained earnings."
3
<PAGE>
under the circumstances, to cause
(1) such entity to maintain books and
records in accordance with GAAP;
(2) the financial statements of such entity
to be prepared in accordance with GAAP; and
(3) access by the Commission to such books
and records and financial statements (or copies thereof) in
English as the Commission may request and, in any event, GPU will
provide the Commission on request copies of such materials as are
made available to GPU and its subsidiaries. If and to the extent
that such entity's books, records or financial statements are not
maintained in accordance with GAAP, GPU will, upon request of the
Commission, describe and quantify each material variation
therefrom as and to the extent required by subparagraphs (a) (2)
(iii) (A) and (a) (2) (iii) (B) of Rule 53.
(iii) No more than 2% of GPU's domestic public utility
subsidiary employees will render any services, directly or
indirectly, to any EWG and FUCO in which GPU directly or
indirectly holds an interest.
(iv) Copies of this Application on Form U-1 are being
provided to the New Jersey Board of Public Utilities and the
Pennsylvania Public Utility Commission, the only federal, state
or local regulatory agencies having jurisdiction over the retail
rates of GPU's electric utility subsidiaries.(4) In addition,
GPU will submit to each such commission copies of any Rule 24
certificates required hereunder, as well as a copy of Item 9 of
GPU's Form U5S and Exhibits H and I thereof (commencing with the
Form U5S to be filed for the calendar year in which the
authorization herein requested is granted).
(v) None of the provisions of paragraph (b) of Rule 53
render paragraph (a) of that Rule unavailable for the proposed
transactions.
(A) Neither GPU nor any subsidiary of GPU is the
subject of any pending bankruptcy or similar proceeding.
(B) GPU's average consolidated retained earnings
for the four most recent quarterly periods (approximately $2.07
billion) represented an increase of approximately $70 million in
the average consolidated retained earnings for the previous four
quarterly periods (approximately $2.0 billion).
(C) GPU did not incur operating losses from direct
or indirect investments in EWGs and FUCOs in 1995 in excess of 5%
of GPU's December 31, 1995 consolidated retained earnings.
(vi) In accordance with Rule 54, the requirements of
Rule 53(a), (b) and (c) are fulfilled.
__________________________________
4 Pennsylvania Electric Company ("Penelec") is also subject to
retail rate regulation by the New York Public Service Commission
with respect to retail service to approximately 11,300 customers
in Waverly, New York served by Waverly Electric Power & Light
Company, a Penelec subsidiary. Waverly Electric's revenues are
immaterial, accounting for less than 1% of Penelec's total
operating revenues.
4
<PAGE>
Item 2.Fees , Commissions and Expenses.
The estimated fees, commissions and expenses to be incurred by
GPU in connection with the proposed transactions will be filed by
amendment.
Item 3.Applicable Statutory Provisions.
GPU believes that Sections 6(a), 7, 9(a), 10, 12(c) and 12(e) of
the Act and Rules 42, 54 and 62 are applicable to the proposed
transactions.
Item 4.Regulatory Approval.
No Federal or State Commission, other than your Commission, has
jurisdiction with respect to the proposed transactions.
Item 5.Procedure.
It is requested that the Commission issue an order with respect
to the transactions proposed herein at the earliest practicable
date but, in any event, not later than March 10, 1997. It is
further requested that (i) there not be a recommended decision by
an Administrative Law Judge or other responsible officer of the
Commission, (ii) the Office of Public Utility Regulation be
permitted to assist in the preparation of the Commission's
decision, and (iii) there be no waiting period between the
issuance of the Commission's order and the date on which it is to
become effective.
Item 6.Exhibits and Financial Statements.
(a) Exhibits.
A - Form of New Plan -- to be filed by amendment.
B - Proxy Statement for 1997 Annual Meeting of
Stockholders -- to be filed by amendment.
C - Not applicable.
D - Not applicable.
E - Not applicable.
F-1 - Opinion of Berlack, Israels & Liberman LLP -- to
be filed by amendment.
F-2 - Opinion of Ballard Spahr Andrews & Ingersoll -- to
be filed by amendment.
G - Financial Data Schedule -- to be filed by amendment.
H - Proposed form of public notice.
(b) Financial Statements.
1 - Financial statements have been omitted because the
proposed transactions will not have a material
effect thereon.
2 - Financial statements have been omitted because the
proposed transactions will not have a material
effect thereon.
3 - Not Applicable.
4 - None.
5
<PAGE>
Item 7.Information as to Environmental Effects.
(a) The issuance of an order by your Commission with respect to
the proposed transaction is not a major Federal action
significantly affecting the quality of the human environment.
(b) No Federal agency has prepared or is preparing an
environmental impact statement with respect to the various
proposed transactions which are the subject hereof. Reference is
made to Item 4 hereof regarding regulatory approvals with respect
to the proposed transactions.
6
<PAGE>
SIGNATURE
Pursuant to the requirements of the Public Utility Holding
Company Act of 1935, the undersigned company has duly caused this
statement to be signed on its behalf by the undersigned thereunto
duly authorized.
GPU, INC.
By:
Name: T. G. Howson
Vice President and Treasurer
Date: January 13, 1997<PAGE>
EXHIBITS TO BE FILED BY EDGAR
Item 6.Exhibits and Financial Statements.
(a) Exhibits.
H - Proposed form of public notice.<PAGE>
EXHIBIT H
SECURITIES AND EXCHANGE COMMISSION
(RELEASE NO. 35-__________; 70-__________)
GPU INC.
GPU, Inc. ("GPU"), 100 Interpace Parkway, Parsippany,
New Jersey 07054, a registered holding company, has filed an
application with the Commission pursuant to Sections 6(a), 7,
9(a), 10, 12(c) and 12(e) of the Public Utility Holding Company
Act of 1935 (the "Act") and Rules 42, 54 and 62 thereunder.
GPU currently has in effect a Retirement Plan for
Outside Directors (the "Retirement Plan") which provides that
each director who is not an employee of GPU or its subsidiaries
(an "Outside Director") and who completes 54 months of service
prior to retirement (or death) is entitled to receive monthly
retirement benefits equal to one-twelfth of the sum of (x) the
then annual retainer paid to the director at the time of
retirement and (y) the cash value of the last award under GPU s
Restricted Stock Plan for Outside Directors. The benefits are
generally payable commencing at the later of age 60 or retirement
over a period equal to the number of months the Outside Director
served as such.
In addition, by Order dated March 30, 1989 (HCAR No.
35-24851) in SEC File No. 70-7607, the Commission, among other
things, authorized GPU to issue up to 20,000 shares of common
stock, $2.50 par value per share (the "Common Stock"), under a
Restricted Stock Plan for Outside Directors (the "1989 Plan").
The 1989 Plan was approved by GPU's stockholders at the 1989
Annual Meeting of Stockholders. Under the 1989 Plan, as amended,
each Outside Director receives a portion of his or her annual
compensation in the form of 300 shares of Common Stock. An
Outside Director may not sell or otherwise dispose of shares of
Common Stock awarded under the 1989 Plan except following: (i)
death or disability, (ii) failure to stand for reelection at the
end of the term during which the Outside Director reaches age 70;
(iii) resignation or failure to stand for reelection with the
consent of the Board; (iv) failure to be reelected to the Board
after being duly nominated; or (v) a change in control of GPU.
However, an Outside Director has all other rights of a
shareholder with respect to shares of Common Stock awarded under
the 1989 Plan, including voting rights and the right to receive
and retain all cash dividends paid and other distributions made
with respect to such shares. Shares of Common Stock held by an
Outside Director who fails to satisfy the above conditions when
he or she ceases to be a director are subject to forfeiture.
GPU has determined that in order more closely to align
the interests of its directors with those of its stockholders, it
is desirable to pay a greater portion of the Outside Directors
compensation in the form of Common Stock. Accordingly, GPU now
proposes to cease the further accrual of service under the
Retirement Plan and provide for the issuance of additional Common
Stock to Outside Directors under a new Deferred Unit Stock Plan
for Outside Directors (the "New Plan"). In connection therewith,
GPU requests authorization to issue up to an additional 200,000
shares of Common Stock under the New Plan from time to time through
<PAGE>
December 31, 2007.(1)
Under the New Plan, each Outside Director would receive
an annual grant of units based on a multiple (initially
anticipated to be 1.5 but which may be changed from time to time)
of the amount of the annual cash retainer paid to such Outside
Director. As is presently the case, the amount of the annual
retainer will be set by the Board and may be increased or
decreased at any time by Board resolution. Each unit represents
one share of Common Stock. For example, based on the current
annual retainer of $20,000 paid to Outside Directors, and the
closing price of GPU Common Stock on December 31, 1996 ($33 5/8),
each Outside Director would receive units for 892 shares of
Common Stock (i.e., $20,000 multiplied by 1.5 with the product
divided by $33 5/8). The number of units granted each year will
thus vary based on (i) the price of the Common Stock, (ii) the
amount of the annual cash retainer and (iii) the multiplier used.
Units would vest upon the Outside Director's retirement from the
Board, provided that the Outside Director has completed at least
54 months of service as an Outside Director, or upon death.
Units which have not vested at the time of an Outside Director's
retirement would be forfeited. An Outside Director may elect to
receive a lump-sum distribution of all shares represented by
vested units in his or her plan account or installment
distributions over a specified period. Each unit will be
entitled to dividend equivalents which will be credited quarterly
and reinvested in additional units.
In the event of a "change in control" of GPU, as
defined, all units previously granted would immediately and
automatically vest, and the Outside Director would be entitled to
receive a distribution of the Common Stock represented by units
in the New Plan at that time.
Shares of Common Stock issued pursuant to the New Plan
will be from authorized but unissued shares or previously
reacquired shares. The New Plan will also provide that the
maximum number of shares issuable thereunder may be adjusted to
give effect to stock dividends, splits, recapitalizations and
other similar events.
GPU intends to request that its stockholders approve the New
Plan at the 1997 Annual Meeting of Stockholders, as required by
Rule 312.03 of The New York Stock Exchange Listed Company Manual
and, accordingly, also requests authorization to solicit proxies
from its stockholders at the 1997 Annual Meeting. The related
proxy materials are expected be mailed to GPU's stockholders
prior to March 31, 1997. Subject to stockholder approval and
receipt of the authorization requested herein, the New Plan would
be effective as of July 1, 1997. Upon such effectiveness,
service would no longer be accrued under the Retirement Plan;
benefits under the Retirement
Plan will be paid in accordance with the terms of that plan for
service prior to July 1, 1997.
The Application and any amendments thereto are
available for public inspection through the Commission's Office
of Public
_____________________
1 The New Plan would not alter the automatic award of 300
shares annually to Outside Directors under the 1989 Plan. The
authorization requested herein would be in addition to the
authorization in the March 30, 1989 Order to issue up to 20,000
shares under the 1989 Plan.<PAGE>
Reference. Interested persons wishing to comment or request a
hearing should submit their views in writing by ________________,
1997 to the Secretary, Securities and Exchange Commission,
Washington, D.C. 20549, and serve a copy on the applicant at the
address specified above. Proof of service (by affidavit, or in
case of an attorney at law, by certificate) should be filed with
the request. Any request for a hearing shall identify
specifically the issues of fact or law that are disputed. A
person who so requests will be notified of any hearing, if
ordered, and will receive a copy of any notice or order issued in
this matter. After said date, said Application, as it may be
amended, may be granted.<PAGE>
