61560 Federal Register / Vol. 62, No. 222 / Tuesday, November 18, 1997 / Notices

1As used in this release, the term ‘‘Portfolio’’

refers to any series of a registered open-end

management investment company relying on any

order granting the application or, if the company

relying on any such order has a single investment

portfolio, the company itself.

of the municipal security has

undertaken to provide prior to

recommending a transaction in the

municipal security.

These disclosure and recordkeeping

requirements will ensure that investors

have adequate access to official

disclosure documents that contain

details about the value and risks of

particular municipal securities at the

time of issuance while the existence of

compulsory repositories will ensure that

investors have continued access to

terms and provisions relating to certain

static features of those municipal

securities. The provisions of Rule 15c2–

12 regarding an issuer’s continuing

disclosure requirements assist investors

by ensuring that information about an

issue or issuer remains available after

the issuance.

Municipal offerings of less than $1

million are exempt from the rule, as are

offerings of municipal securities issued

in large denominations that are sold to

no more than 35 sophisticated investors,

have short-term maturities, or have

short-term tender or put features. It is

estimated that approximately 12,000

brokers, dealers, municipal securities

dealers, issues of municipal securities,

and nationally recognized municipal

securities information repositories will

spend a total of 123,850 hours per year

complying with Rule 15c2–12. Based on

average cost per hour of $50, the total

cost of compliance with Rule 15c2–12 is

$6,192,500.

An agency may not conduct or

sponsor, and a person is not required to

respond to, a collection of information

unless it displays a currently valid

control number.

General comments regarding the

above information should be directed to

the following persons: (i) Desk Officer

for the Securities and Exchange

Commission, Office of Information and

Regulatory Affairs, Office of

Management and Budget, Room 3208,

New Executive Office Building,

Washington, D.C. 20503; and (ii)

Michael E. Bartell, Associate Executive

Director, Office of Information

Technology, Securities and Exchange

Commission, 450 Fifth Street, N.W.,

Washington, D.C. 20549. Comments

must be submitted to OMB within 30

days of this notice.

Dated: November 10, 1997.

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 97–30177 Filed 11–17–97; 8:45 am]

BILLING CODE 8010–01–M

SECURITIES AND EXCHANGE

COMMISSION

[Rel. No. IC–22882/812–10050]

The Benchmark Funds, et al.; Notice of

Application

November 12, 1997.

AGENCY: Securities and Exchange

Commission (‘‘SEC’’).

ACTION: Notice of Application for

Exemption under the Investment

Company Act of 1940 (the ‘‘Act’’).

SUMMARY OF APPLICATION: Applicants

request an order under sections 6(c),

10(f) and 17(b) of the Act for an

exemption from the provisions of

sections 10(f) and 17(a) of the Act. The

order would permit principal

transactions effected in the ordinary

course of business between the

Benchmark Funds, The Commerce

Funds, and Goldman, Sachs & Co.

APPLICANTS: The Benchmark Funds, The

Commerce Funds (collectively, the

‘‘Funds’’), and Goldman, Sachs & Co.

(‘‘Goldman Sachs’’).

FILING DATES: The application was filed

on March 19, 1996 and amended on

October 15, 1996, and September 18,

1997.

HEARING OR NOTIFICATION OF HEARING: An

order granting the application will be

issued unless the SEC orders a hearing.

Interested persons may request a

hearing by writing to the SEC’s

Secretary and serving applicants with a

copy of the request, personally or by

mail. Hearing requests should be

received by the SEC by 5:30 p.m. on

December 8, 1997, and should be

accompanied by proof of service on

applicant, in the form of an affidavit or,

for lawyers, a certificate of service.

Hearing requests should state the nature

of the writer’s interest, the reason for the

request, and the issues contested.

Persons who wish to be notified of a

hearing may request notification by

writing to the SEC’s Secretary.

ADDRESSES: Secretary, SEC, 450 Fifth

Street, NW., Washington, DC 20549. The

Benchmark Funds, 4900 Sears Tower,

Chicago, Illinois 60606–6303, The

Commerce Funds, PO Box 16391, St.

Louis, Missouri 63105, Goldman, Sachs

& Co., 85 Broad Street, New York, New

York 10004.

FOR FURTHER INFORMATION CONTACT:

Deepak T. Pai, Staff Attorney, at (202)

942–0574, or Mary Kay Frech, Branch

Chief at (202) 942–0564 (Division of

Investment Management, Office of

Investment Company Regulation).

SUPPLEMENTARY INFORMATION: The

following is a summary of the

application. The complete application

may be obtained for a fee at the SEC’s

Public Reference Branch, 450 Fifth

Street, NW., Washington, DC 20549 (tel.

202–942–8090).

Applicants’ Representations

1. The Benchmark Funds is a

Massachusetts business trust that is

registered under the Act as an open-end

management investment company. The

Benchmark Funds currently offers to

institutional investors 17 equity, fixed

income and money market Portfolios.1

The Benchmark Funds is the proprietary

fund of the Northern Trust Company

(‘‘Northern’’), which serves as

investment adviser, transfer agent and

custodian for each of the Benchmark

Funds’ Portfolios. Northern, a member

of the Federal Reserve System, is an

Illinois state-chartered commercial bank

and the principal subsidiary of Northern

Trust Corporation, a bank holding

company.

2. The Commerce Funds is a Delaware

business trust that is registered under

the Act of an open-end management

investment company. The Commerce

Funds currently consists of nine

Portfolios, which are offered to both

individual and institutional investors.

The Commerce Funds is the proprietary

fund of the Commerce Bank, N.A. (St.

Louis) and Commerce Bank, N.A.

(Kansas City), which serve as the

investment advisers to the Commerce

Funds. Each of these banks is a

subsidiary of Commerce Bancshares,

Inc., a registered multi-bank holding

company (collectively, ‘‘Commerce

Bank’’ and together with Northern, the

‘‘Banks’’).

3. At present, federal banking laws

and regulations are interpreted to

restrict the ability of banks and bank

holding companies, directly or through

affiliated persons, to act as distributors

for mutual funds or to provide

personnel to act as officers and

employees of the funds. Consistent with

these requirements, bank proprietary

funds must find a third party,

independent of the bank, to act as the

nominal ‘‘distributor,’’ and retain

officers who are not affiliated with the

bank to perform certain administrative

functions not associated with the

selection of investments or brokerdealers through which trades may be

effected.

4. Goldman Sachs is a registered

broker-dealer that was founded in 1869.
Federal Register / Vol. 62, No. 222 / Tuesday, November 18, 1997 / Notices 61561

2The Commerce Funds is forming a class of

shares that is expected to bear a distribution fee

pursuant to rule 12b–1 under the Act at a rate of

0.25% of the class’ net asset value. Although

Goldman Sachs would be the initial recipient of the

fee because it is the Funds’ distributor, the fee is

expected to be used primarily to make ‘‘trail

commission’’ or shareholder service payments to

third parties. If unsolicited trades are effected for

which Goldman Sachs is broker of record, Goldman

Sachs may retain the trail commissions attributable

to those trades to help defray the cost of Fund

advertisements and other distribution expenses. In

the future, the Funds may create classes of shares

that bear different distribution fees or may change

the distribution fees attributable to their existing

classes.

3Section 17(b) applies to a specific proposed

transaction, rather than an ongoing series of future

transactions. Keystone Custodian Funds, 21 S.E.C.

295, 298–99 (1945). Section 6(c), along with section

17(b), frequently is used to grant relief from section

17(a) to permit an ongoing series of future

transactions.

It is one of the oldest and largest

international investment banking and

brokerage firms, with offices in New

York and other financial capitals of the

world.

5. Goldman Sachs has acted as

principal underwriter/distributor and

administrator for the Funds since their

inception. The primary consideration

for using Goldman Sachs is its capacity

as an administrator. Goldman Sachs is

entitled to a fee from each Portfolio of

the Funds for its administrative

services, but generally receives no fee

for its distribution activities.2

6. It its capacity as administrator,

Goldman Sachs supplies each Fund

with administrative officers, including

an employee who serves as president of

one of the Funds, who are responsible

for performing administrative functions

on behalf of the Funds. These officers

are also officers and/or employees of

Goldman Sachs. No administrative

officer of a Fund who is an affiliated

person of Goldman Sachs serves as a

director of the Fund, sets fund policies,

or currently is affiliated with any

investment adviser to any Portfolio of a

Fund. Such administrative officers have

no involvement in, or influence over,

the selection of any investment for the

Fund or any broker or dealer through

whom transactions may be effected.

7. The Funds rely upon Goldman

Sachs to perform the distribution tasks

that the federal banking regulators

presently may restrict them from

undertaking. These tasks include:

Entering into distribution agreements

with the Funds; being named as the

distributor in Fund prospectuses and

sales literature; at the direction of the

Banks, entering into agreements with

broker-dealers selling the Funds; acting

as broker of record for unsolicited direct

sales of shares of the Funds; paying the

costs of printing and distributing the

Funds’ prospectuses to potential

investors; providing sales compliance

training; consulting with the Funds’

investment advisers about new market

and product opportunities; and

monitoring advertising and sales

literature compliance. Goldman Sachs

does not solicit any trades or provide

any telemarketing services, and has no

sales personnel dedicated to the Funds.

Shares of each Fund are made available

through a bank or its affiliated persons

to their customers, or through other

intermediaries that are not affiliated

with Goldman Sachs. If investors are

permitted to purchase shares by

contacting the Funds’ distributor,

Goldman Sachs acts as the broker of

record for unsolicited trades, and takes

phone orders and redemption requests.

Goldman Sachs does not locate

customers for the Funds, does not

instruct its clients to purchase shares

from the Funds, and does not

accompany Fund salespersons in

meetings with potential investors.

8. Applicants request an order under

sections 6(c), 10(f), and 17(b) of the Act

that would exempt applicants from

sections 10(f) and 17(a). The order

would permit principal transactions in

the ordinary course of business between

any Portfolio and Goldman Sachs or any

entity controlled by, controlling, or

under common control with Goldman

Sachs. Applicants request that the order

also apply to any registered open-end

management investment company (i) for

which officers or employees of Goldman

Sachs in the future act as officers as

described in the application, or (ii) for

which Goldman Sachs in the future

provides distribution services as

described in the application.

Applicants’ Legal Analysis

1. Sections 17(a) of the Act generally

prohibits any affiliated person or

principal underwriter for a registered

investment company, or any affiliated

person of such affiliated person or

principal underwriter (a ‘‘second-tier

affiliate’’), acting as principal, from

knowingly selling any security or other

property to such registered investment

company and from knowingly

purchasing any security or other

property from the registered investment

company. Goldman Sachs may not

knowingly engage in principal

transactions with a Fund absent an

exemptive order, because Goldman

Sachs is the principal underwriter for

the Funds.

2. Section 17(b) of the Act authorizes

the SEC to issue an order of exemption

from one or more of the provisions of

section 17(a) if evidence establishes that

the terms of the proposed transaction

are reasonable and fair and do not

involve overreaching on the part of any

person concerned, the proposed

transaction is consistent with the policy

of each registered investment company

concerned, and the proposed

transaction is consistent with the

general purposes of the Act.

3. Section 6(c) of the Act provides that

the SEC may exempt persons or

transactions from any provision of the

Act if such exemption is necessary or

appropriate in the public interest and

consistent with the protection of

investors and the purposes fairly

intended by the policy and provisions of

the Act. Applicants request an

exemption under sections 6(c) and 17(b)

to allow the above transactions.3

4. Applicants state that Congress

enacted section 17(a) of the Act to

address the problems associated with

transactions of affiliated persons and

underwriters or distributors that are able

to control or influence the investment

decisions of investment companies.

Applicants assert that the prohibitions

of section 17(a) were applied to

distributors of investment company

shares because, at the time of the

enactment of the Act, distributors

possessed enormous control over

investment companies.

5. Applicants argue that the

prohibitions of section 17(a) apply to

distributors of the shares of open-end

investment companies in recognition of

the extent of control and influence a

distributor in many circumstances is in

a position to assert over an open-end

investment company. Applicants note

that when a distributor serves as the

focal point for the purchase and sale of

shares of an open-end investment

company, an investment company may

be pressured to enter into arrangements

with the distributor that may not be

benefical to the company in order to

assure the continued sale of the

company’s securities. Applicants also

note that the provisions of section 17(a)

relating to distributors of shares of openend companies reflect a recognition that

an open-end company’s distributor is

often affiliated with the company’s

investment adviser.

6. Applicants contend that Goldman

Sachs’ role as distributor of the Funds

does not raise the types of problems that

section 17(a) is designed to address.

Applicants argue that the Funds are not

captives of Goldman Sachs as a matter

of either contract of de facto influence.

Applicants state that Goldman Sachs

has been chosen as the Funds’

distributor primarily because federal

banking laws and regulations have been

interpreted to prohibit the Banks from
61562 Federal Register / Vol. 62, No. 222 / Tuesday, November 18, 1997 / Notices

4Applicants cite OCC Interpretive Letter No. 648

(May 4, 1994) and Melanie L. Fein, Securities

Activities of Banks § 9.07 (1995).

5Although Goldman represents that it provides

nominal distribution services to the Funds,

Goldman acknowledges that it continues to retain

responsibility as principal underwriter for all

purposes under the federal securities laws.

6See North American Security Trust, Investment

Company Act Release Nos. 18860 (July 22, 1992)

(notice) and 18899 (Aug. 18, 1992) (order); The One

Group, Investment Company Act Release Nos.

19410 (Apr. 15, 1993) (notice) and 19470 (May 11,

1993) (order) (the ‘‘Sub-Adviser Orders’’). Under

these orders, Goldman Sachs is permitted to engage

in principal transactions with portfolios of any

registered investment company of which Goldman

Sachs may be deemed to be an affiliated person of

an affiliated person solely because of its subadvisory relationship with other portfolios of that

investment company. Goldman Sachs intends to

reply on these orders in conjunction with the

exemptive order requested by this application.

7Salomon Brothers Inc., SEC No-Act. Letter (pub.

avail. May 26, 1995).

distributing Fund shares. Applicants

note that although banks are permitted

to engage in most distribution activities,

interpretations of the federal banking

regulations prevent full participation by

banks in the underwriting process.4

Applicants assert that the Banks retain

the services of an entity such as

Goldman Sachs to provide

administrative and nominal distribution

services consistent with these

interpretations.5

7. Applicants assert that Goldman

Sachs does not serve as the focal point

for the purchase and sale of Fund

shares. Applicants state that Goldman

Sachs plays no role in promoting the

Funds to retail or institutional

customers. Sales of investment company

shares are instead conducted by each of

the respective Banks and/or bank

holding company organizations with

which the Funds are affiliated and have

advisory relationships or broker-dealers

identified by those Banks. Applicants

state that all sales of the Funds since

inception have resulted from the

institutional and retail relationships of

the Banks. Applicants emphasize that it

is these institutions, and not Goldman

Sachs, that provide the organizational

structures that actively promote the

Funds. Applicants state that if Goldman

Sachs was replaced as principal

underwriter, the Banks and brokerdealers would merely enter into

agreements with a new underwriter,

because the broker-dealers’ substantive

relationship is with the Banks and/or

bank holding company organizations

with which the Funds are affiliated and

not with Goldman Sachs.

8. Applicants state that investment

decisions for each of the Portfolios are

made exclusively by the Banks or other

investment advisers that are not

affiliated with Goldman Sachs.

Applicants assert that it has always been

the intent of the Banks and their parent

banks and/or bank holding companies

to retain control over the investment

decisions of the Funds which they

advise, except to the extent that third

parties are to act as investment advisers

or sub-advisers to the Portfolios.

Applicants also state that although not

presently intended, Goldman Sachs

could become a sub-adviser or adviser

to a Portfolio of a Fund in the future. If

Goldman Sachs became a sub-adviser or

adviser to any Portfolio, it would engage

in principal transactions in reliance on

any order granting the application only

with Portfolios advised by parties other

than Goldman Sachs or its affiliated

persons, and would do so only in

conformity with applicable exemptive

orders 6 or no-action letters.7 Applicants

assert that the section 17(a) concern

regarding affiliated distributors would

not arise in applicants’ case because in

no instance will Goldman Sachs engage

in principal transactions with portfolios

for which it acts as adviser or subadviser except as permitted under

condition 1.

9. Applicants state that although

Goldman Sachs’ officers or employees

serve as officers of the Funds, none of

such persons are responsible for the

formulation or establishment of the

Portfolios’ investment objectives,

policies or restrictions. The officers and

employees function only as

administrative officers of the Funds,

handling administrative tasks necessary

to maintain the Funds as going

concerns. Applicants contend that the

performance of these functions by

Goldman Sachs’ personnel does not

result in any opportunity for control of

the Funds. The policy-making functions

of each Fund rest with its respective

independent board of directors, which

have been and will continue to be

responsible for the selection and review

of the major contractors to the Funds,

including the advisers and the

distributor. Goldman Sachs’ officers and

employees do not and will not serve as

members of the Funds’ boards of

directors and, consequently, will not be

engaged in considering and approving

the Funds’ advisory and distribution

arrangements.

10. Applicants contend that since the

proposed principal transactions would

not implicate the principal concerns

reflected in section 17(a), the inability of

the Portfolios to engage in these

transactions with a major financial

institution imposes opportunity and

execution costs on the investment

company. Applicants contend that the

prohibitions of section 17(a) and the

resulting costs to the Portfolios are

neither required nor appropriate

because an independent third party,

with a vested interest in each Portfolio’s

performance, is making all investment

decisions for the Portfolio and the

Funds are in no way dependent on the

distribution services of Goldman Sachs.

11. Section 10(f) of the Act, in

relevant part, prohibits a registered

investment company from knowingly

purchasing or otherwise acquiring any

security, during its underwriting or

syndication, the principal underwriter

of which is a person who is an officer

or employee of the investment company

or is a person affiliated with an officer

or employee of the investment

company. Section 10(f) authorizes the

SEC to exempt any transactions or

classes of transactions from the

prohibitions of section 10(f) if the

exemption is consistent with the

protection of investors.

12. Under section 10(f), the Portfolios

are restricted from acquiring securities

from Goldman Sachs during the

securities’ underwriting or syndication

period when Goldman Sachs serves as

underwriter of the securities. Applicants

note that the only reason that section

10(f) applies is because officers and

employees of Goldman Sachs serve as

officers of the Funds. Applicants argue

that the reason for applying this

prohibition to officers of the Funds—the

control and influence that an officer

may have over the investment decisions

of a Portfolio—does not apply for the

same reasons described above in

connection with section 17(a).

Applicants contend that the Portfolios

presently are deprived of full access to

the many securities (especially in the

fixed-income arena) of which Goldman

Sachs is an underwriter. Applicants

assert that the terms and conditions set

forth in the proposed relief are

reasonable and fair and do not involve

overreaching on the part of any person;

they are consistent with the general

purposes of the Act, in general, and

sections 17(a) and 10(f), in particular,

and the requested exemption is

appropriate in the public interest and

consistent with the protection of

investors and the purposes fairly

intended by the policy and provisions of

the Act.

Applicants’ Conditions

Applicants agree that any order of the

SEC granting the requested relief will be

subject to the following conditions:

1. Neither Goldman Sachs nor its

affiliated persons will engage in

principal transactions with a Portfolio

for which Goldman Sachs or any of its

affiliated persons act as investment
Federal Register / Vol. 62, No. 222 / Tuesday, November 18, 1997 / Notices 61563

1The Prior Orders were issued for Energy

Initiatives, Inc. (‘‘EII’’). GPU International is the

entity which succeeded EII.

adviser except to the extent permitted

by the Act, the rules under the Act, noaction letter, or any exemptive order

granted after the date of an order

granting this application, provided that

the application requesting the

subsequent order refers specifically to

this application.

2. Goldman Sachs and its affiliated

persons will engage in principal

transactions with a Portfolio in reliance

on any order granting this application

only if (i) Goldman Sachs is not

affiliated with any investment adviser to

the Portfolio, (ii) neither Goldman Sachs

nor any affiliated person of Goldman

Sachs is responsible for the selection of

particular securities to be acquired for

the Portfolio, and (iii) neither Goldman

Sachs nor any affiliated person of

Goldman Sachs is responsible for the

selection of any particular broker-dealer

or other counterparty for transactions

effected by the Portfolio.

3. Goldman Sachs and its affiliated

persons will engage in principal

transactions with a Portfolio in reliance

on any order granting this application

only if no affiliated person of Goldman

Sachs is serving as a director of the

Fund of which the Portfolio is a part.

4. Transactions between Goldman

Sachs or its affiliated persons and any

Portfolio made in reliance on any order

granting this application will be effected

only pursuant to arm’s length

negotiations with the Portfolio, acting

through its investment adviser or other

person unaffiliated with Goldman

Sachs, and will be consistent with the

policy of the Portfolio.

By the Commission.

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 97–30179 Filed 11–17–97; 8:45 am]

BILLING CODE 8010–01–M

SECURITIES AND EXCHANGE

COMMISSION

[Release No. 35–26777]

Filings Under the Public Utility Holding

Company Act of 1935, as amended

(‘‘Act’’)

November 10, 1997.

Notice is hereby given that the

following filing(s) has/have been made

with the Commission pursuant to

provisions of the Act and rules

promulgated thereunder. All interested

persons are referred to the application(s)

and/or declaration(s) for complete

statements of the proposed

transaction(s) summarized below. The

application(s) and/or declaration(s) and

any amendments thereto is/are available

for public inspection through the

Commission’s Office of Public

Reference.

Interested persons wishing to

comment or request a hearing on the

application(s) and/or declaration(s)

should submit their views in writing by

December 4, 1997, to the Secretary,

Securities and Exchange Commission,

Washington, DC 20549, and serve a

copy on the relevant applicant(s) and/or

declarant(s) at the address(es) specified

below. Proof of service (by affidavit or,

in case of an attorney at law, by

certificate) should be filed with the

request. Any request for 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 the matter.

After said date, the application(s) and/

or declaration(s), as filed or as amended,

may be granted and/or permitted to

become effective.

GPU, Inc. and GPU International, Inc.

(70–7727)

GPU, Inc. (‘‘GPU’’), 100 Interpace

Parkway, Parsippany, New Jersey 07054,

a registered holding company, and GPU

International, Inc. (‘‘GPU

International’’), One Upper Pond Road,

Parsippany, New Jersey 07054, a

nonutility subsidiary of GPU, have filed

a post-effective amendment under

sections 6(a), 7, 9(a), 10 and 12(b) of the

Act and rules 45, 53 and 54 under the

Act to their application-declaration filed

under sections 6(a), 7, 9(a), 10, 12(b),

12(c) and 13(b) of the Act and rules 45,

50, 51, 90 and 91 under the Act.

By orders dated November 16, 1995,

June 14, 1995, December 28, 1994,

September 12, 1994, December 18, 1992,

and June 26, 1990 (HCAR Nos. 26409,

26307, 26205, 26123, 25715, and 25108)

(‘‘Prior Orders’’), GPU International 1

was authorized to engage in preliminary

project development and administrative

activities (‘‘Project Activities’’) for its

investments in: (i) Qualifying facilities

(‘‘QFs’’), as defined in the Public Utility

Regulatory Policies Act of 1978, as

amended (‘‘PURPA’’); (ii) exempt

wholesale generators (‘‘EWGs’’), as

defined in section 32 of the Act; and (iii)

foreign utility companies (‘‘FUCOs’’), as

defined in section 33 of the Act.

The Prior Orders also authorized GPU

from time to time through December 31,

1997 to: (i) Enter into guarantees,

support instruments, and bank letters of

credit reimbursement agreements or

similar financial instruments or

undertakings (‘‘Guarantees’’) to secure

GPU International’s agreement with any

person (including without limitation

project lenders) in connection with GPU

International’s Project Activities and the

acquisition of ownership or

participation interests in QF, EWG, or

FUCO projects; (ii) guarantee the

securities or other obligations of EWGs

and FUCOs; and (iii) assume liabilities

of EWGs and FUCOs, in an amount of

up to $500 million. The Prior Orders

also authorized GPU International to

enter into guarantees, and to assume

liabilities of EWGs and FUCOs, in an

aggregate amount of up to $50 million

from time to time through December 31,

1997.

GPU and GPU International

(‘‘Applicants’’) propose to: (i) Expand

the purposes for which GPU may enter

into Guarantees on behalf of GPU

International to include Guarantees of

any security or other obligation of GPU

International or a subsidiary of GPU

International (‘‘GPUI Subsidiary’’),

provided the issuance and sale of any

such security is exempt from the

requirement of prior Commission

approval under section 6(a) of the Act

or has been otherwise authorized by the

Commission; (ii) to increase to $150

million the aggregate principal amount

of Guarantees which GPU International

may have outstanding hereunder and to

expand the purposes for which GPU

International may enter into Guarantees

to include guarantees of the securities or

other obligations of GPUI Subsidiaries,

provided the issuance and sale of any

such security is exempt from the

requirement of prior Commission

approval under section 6(a) of the Act

or has been otherwise authorized by the

Commission; (iii) to extend until

December 31, 2000 the period during

which Applicants may enter into

Guarantees; and (iv) to permit any GPUI

Subsidiary which is not an EWG or

FUCO to guarantee the securities or

other obligations of their direct or

indirect subsidiaries from time to time

through December 31, 2000 in an

aggregate amount not to exceed, together

with the aggregate amount of GPU

International Guarantees outstanding,

$150 million, provided the issue and

sale of any such security is exempt from

the requirement of prior Commission

approval under section 6(a) of the Act

or has been otherwise authorized by the

Commission.

The term of each Guarantee and any

letter of credit (‘‘L/C’’) reimbursement

agreement, would not exceed 35 years.

L/C fees would not exceed 1% annually

of the face amount of the L/C. Drawings

under each L/C would bear interest at

not more than 5% above the prime rate