File No. 70-9185
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Amendment No. 1 to FORM U-1
APPLICATION /DECLARATION
under the
PUBLIC UTILITY HOLDING COMPANY ACT OF 1935
***
Northeast Utilities
Western Massachusetts Electric Company
Holyoke Water Power Company
174 Brush Hill Avenue
West Springfield, Massachusetts 01090-0010
Northeast Utilities Service Company
The Connecticut Light and Power Company
Northeast Nuclear Energy Company
107 Selden Street
Berlin, Connecticut 06037
Public Service Company of New Hampshire
North Atlantic Energy Service Corporation
1000 Elm Street
Manchester, New Hampshire 03105
(Name of companies filing this statement and address of principal executive
offices)
***
Northeast Utilities
(Name of top registered holding company parent of each applicant or
declarant)
***
Robert P. Wax, Esq.
Senior Vice President, Secretary and General Counsel
Northeast Utilities
P.O. Box 270
Hartford, CT 06141-0270
(Name and address of agent for service)
The Commission is requested to mail signed copies of all orders, notices, and
communications to:
Richard M. Early
Senior Counsel
Northeast Utilities Service Company
P.O. Box 270
Hartford, CT 06141-0270
A. Paragraphs 1, 2, 5, 6, 8, 10 and 11 of Item 1, Description of Proposed
Transaction, are hereby amended to read as follows:
1. Northeast Utilities (NU), a registered holding company, Northeast
Utilities Service Company (NUSCO), a wholly-owned subsidiary service company
of NU, and certain of NU's subsidiaries, namely The Connecticut Light and
Power Company, Holyoke Water Power Company, North Atlantic Energy Service
Corporation, Northeast Nuclear Energy Company, Public Service Company of New
Hampshire, and Western Massachusetts Electric Company (together, the
Applicants), hereby submit to the Commission an application/declaration (the
Application) pursuant to Sections 6(a), 7, 9(a), 10 and 12(e) of the Public
Utility Holding Company Act of 1935 (the Act) and Rules 42, 62 and 65
thereunder. NU seeks Commission approval for:
(a) the solicitation of proxies from NU's common shareholders seeking the
approval of the adoption of the Northeast Utilities Incentive Plan (the
Incentive Plan) and the Northeast Utilities Employee Share Purchase Plan (the
Employee Share Purchase Plan, and with the Incentive Plan, collectively, the
Plans), which contemplate the issuance of NU's Common Shares, $5.00 par
value (NU Common Shares) and derivative securities thereof for use as awards
and grants thereunder, subject to the limitations set forth therein, and
(b) the issuance each year (including issuance of shares resulting from
exercise of options granted under the Plans), during the ten-year term of the
Plans, of NU Common Shares (either authorized but previously unissued shares
or reacquired shares) not to exceed in the aggregate one and one-half percent
(1.5%) of the number of shares outstanding as of the end of the preceding
year (subject to appropriate adjustment in the event of recapitalizations,
mergers, splits or similar corporate transactions), and derivatives of such
shares, in accordance with the terms of the Plans.
The other Applicants seek Commission approval to acquire through open market
purchases up to 1.3 million NU Common Shares in the years 1998 through 2007
for use as employee incentive compensation from time to time, as described
in paragraph 11 below.
2. The Incentive Plan and the Employee Share Purchase Plan were adopted by
action of NU's Board of Trustees (the Board) on January 13, 1998, subject to
shareholder approval at the Annual Meeting of Shareholders to be held May 12,
1998. The purpose of the Incentive Plan is to provide incentive compensation
that will assist in the recruitment and retention of talented employees and
Trustees, and to further align their economic interests with those of NU's
shareholders. If approved by the shareholders, the Incentive Plan will be
effective as of January 1, 1998. The Employee Share Purchase Plan will be
effective on July 1, 1998, assuming shareholder approval. A draft of the
proposed proxy statement disclosure regarding the Plans is filed herewith as
Exhibit A.2. Copies of the Incentive Plan and the Employee Share Purchase
Plan are filed herewith as Exhibits A.3 and A.4, respectively.
5. The Incentive Plan also provides for the grant to each non-employee
Trustee of NU, upon election to the Board of Trustees and annually
thereafter, of non-qualified options to purchase 2,500 NU Common Shares at a
price equal to fair market value as of the date of the grant. Such options
will have a term of ten years from the date of grant. Half of each such
grant will be exercisable immediately following grant, while the other half
will become exercisable on the first anniversary of the grant, if the
non-employee Trustee still holds office on that date.
6. The Incentive Plan authorizes NU, if NU Common Shares are to be included
in any award or grant, to obtain shares for such purpose through open market
purchases, through issuance of treasury shares or authorized but unissued
shares, or through some combination thereof. The maximum number of NU Common
Shares that may be issued for or otherwise made subject to share-based awards
or grants under the Incentive Plan in any calendar year is one percent of the
outstanding NU Common Shares as of the end of the preceding calendar year.
Based on the issued and outstanding NU Common Shares on December 31, 1997,
this restriction would permit 1,368,421 NU Common Shares to be used for
awards and grants to participants in 1998 under all programs under the
Incentive Plan. This share limit is subject to adjustment in the event of a
recapitalization, stock split, merger, combination, exchange or similar
corporate transaction. Shares that are eligible to be used for awards and
grants under the Incentive Plan but are not so used, or shares that are so
used but are forfeited by the recipient or that underlie options or SARs that
terminate, expire, or are canceled, forfeited, exchanged or surrendered
without having been exercised cumulate and may be used for awards or grants
in subsequent years in addition to those shares made available under the
limit described above. No more than thirty percent of the shares available
for use under the Incentive Plan in any calendar year may be used with
respect to grants of restricted stock or performance units under the
Incentive Plan in such year. Based on the issued and outstanding NU Common
Shares on December 31, 1997, this restriction would permit 410,526 NU Common
Shares to be used for restricted stock or performance unit grants in 1998.
8. The purpose of the Employee Share Purchase Plan is to increase employee
ownership of NU Common Shares, which the NU Board of Trustees believes is in
the mutual interest of the employees and the NU system. Under the Employee
Share Purchase Plan, which is to be administered by the Committee (as defined
above), eligible employees of participating subsidiaries of NU will be given
the opportunity to purchase NU Common Shares periodically through payroll
deduction. Purchases will be made on the last day of each purchase period as
established by the Committee, at a discounted price. The price will be 85
percent of the lower of the closing market price on the first day or the last
day of the purchase period, unless a higher price (not to exceed the lower of
the closing market price on the first day or the last day of the purchase
period) is set by the Committee prior to the commencement of the purchase
period. Officers who receive stock option grants under the Incentive Plan
described above will not be eligible for the discounted price but may
purchase shares under the Employee Share Purchase Plan at a price equal to
the lower of the fair market value of an NU Common Share on the first or last
day of the purchase period. The Employee Share Purchase Plan is intended to
be an "employee stock purchase plan" as described in Section 423 of the Code.
10. The Employee Share Purchase Plan will terminate ten years from its
effective date, unless terminated earlier by the Board. The maximum number
of NU Common Shares, which may be authorized but previously unissued shares
and/or shares that are reacquired by NU on the open market, that may be
issued for purchases under the Employee Share Purchase Plan in any calendar
year is one-half of one percent of the number of shares outstanding as of the
last day of the previous calendar year. This limitation is subject to
adjustment in the event of a recapitalization, stock split, merger,
combination, exchange or similar corporate transaction. Shares that are
eligible to be used for purchases under the Employee Share Purchase Plan but
are not so used cumulate and may be used for purchases in subsequent years in
addition to those shares made available under the limit described above.
Based on the issued and outstanding NU Common Shares on December 31, 1997,
this restriction would permit 684,210 NU Common Shares to be issued to fund
purchases by Employee Share Purchase Plan Participants in 1998.
11. The Applicants other than NU also request authorization to acquire on
the open market up to an additional 1.3 million NU Common Shares (less than
one percent of the shares outstanding as of December 31, 1997) during the
years 1998 through 2007 to be used to provide incentive compensation to
employees other than through grants and awards under the Incentive Plan.
Certain of the Applicants have from time to time provided certain new and
other key employees with incentive grants of NU Common Shares from time to
time, subject to certain restrictions on ownership and transfer (See Holding
Co. Act Rel. No. 26204, dated December 28, 1994, in File No. 70-8515).
Non-employee Trustees of NU have received compensation in the form of NU
Common Shares (See Holding Co. Act Rel. Nos. 25842, dated June 30, 1993 and
26368, dated September 5, 1995, in File No. 70-8080). When such shares are
issued for such purposes, they have been acquired by NUSCO for itself and as
agent for NU and the other Applicants on the open market for the respective
accounts of the recipient employees and Trustees. Applicants intend to
continue this practice of providing compensation in the form of NU Common
Shares to eligible employees and non-employee Trustees. One intended use of
such shares is to provide employer matching contributions pursuant to Section
4.3 of the Northeast Utilities Deferred Compensation Plan for Executives (the
Deferred Compensation Plan), adopted by the Board on January 13, 1998. A copy
of the Deferred Compensation Plan is filed herewith as Exhibit A.5. Other
intended uses of such shares are to fund bonuses upon commencement of
employment and awards under periodic incentive plans. Such shares may be
issued subject to such limitations or restrictions as may be deemed
appropriate by the Applicants.
B. Item 3, Applicable Statutory Provisions, is hereby amended to read as
follows:
ITEM 3. APPLICABLE STATUTORY PROVISIONS.
Sections 6(a) and 7 of the Act and Rule 50 thereunder apply to the issuance
by NU from time to time of authorized but unissued shares and treasury shares
in connection with the Plans as described above and may apply to the use by
NUSCO and other Applicants of NU Common Shares in compensation programs
described in paragraph 11 above. Sections 9(a) and 10 of the Act apply to
NU's acquisition of NU Common Shares on the open market to satisfy the
funding requirements of the Plans and from Plan participants upon the
forfeiture thereof if applicable vesting requirements or forfeiture
restrictions are not satisfied, but such acquisitions are exempt under Rule
42. Sections 9(a) and 10 of the Act apply to the acquisition of NU Common
Shares by the Applicants other than NU as described in paragraph 11 above.
Section 12(e) of the Act and Rules 62 and 65 thereunder apply to the proxy
solicitation as described above.
SIGNATURE
Pursuant to the requirements of the Public Utility Holding Company Act of
1935, the undersigned companies have duly caused this Amendment to be signed
on their behalf by the undersigned hereunto duly authorized.
NORTHEAST UTILITIES
NORTHEAST UTILITIES SERVICE COMPANY
THE CONNECTICUT LIGHT AND POWER COMPANY
HOLYOKE WATER POWER COMPANY
PUBLIC SERVICE COMPANY OF NEW HAMPSHIRE
WESTERN MASSACHUSETTS ELECTRIC COMPANY
NORTHEAST NUCLEAR ENERGY COMPANY
NORTH ATLANTIC ENERGY SERVICE CORPORATION
By /s/ Richard M. Early
Richard M. Early
Their Attorney
Dated: March 26, 1998
