amounts in cash and the same rights in respect of accruals of interest and accumulations of interest and dividends as if such issue of new securities had been dated, or the existing Terminal bonds had been extended, as of January 1, 1944. II. NEW CAPITALIZATION The capitalization of the reorganized company, upon consummation of the plan, as of its effective date, shall consist of approximately the following: Equipment obligations_-_ Terminal first-mortgage, 4-percent bonds-- Amount $452, 844 2, 000, 000 First and consolidated mortgage, 4-percent bonds, series A...---- 3, 000, 000 4, 000, 000 Preferred stock 5 percent_. Common stock, no par value, 35,000 shares, taken at $100 a share----- 3,500,000 3, 000, 000 Total--- III. THE REORGANIZED COMPANY 15, 952, 844 All or substantially all properties held by the trustee of the debtor, except certain noncarrier lands subject to the mortgage of the Paterson Extension Railroad Company hereinafter referred to, and all moneys held by the trustees under the debtor's Terminal first mortgage, the first mortgage of Midland Railroad Company of New Jersey, the debtor's first and refunding mortgage, the debtor's second mortgage, the debtor's general mortgage, and the first mortgage of the Paterson Extension Railroad Company, hereinafter referred to as the Terminal, the Midland, the refunding, the second, the general, and the Paterson Extension mortgages, respectively, are to be conveyed to the reorganized company, which, in the discretion of the reorganization managers may be either the debtor, with its articles of incorporation appropriately amended, or a new company (herein, in either event, called the reorganized company). Any such conveyance shall be made free of lien of any mortgage and of any equipment obligation except the rights of American Locomotive Company and its assignees under equipment obligations, and except, in the discretion of the reorganization managers, the rights of any vendor or lessor of equipment acquired by the trustee of the debtor. The noncarrier lands subject to the Paterson Extension Railroad Company mortgage, referred to in court order No. 251 of January 6, 1943, appraised, with the approval of the court, at $55,634.50, for the purposes of the plan, shall be conveyed free of the lien of any mortgage to a new corporation or to a trustee, as the reorganization managers shall determine, for the purposes of sale and the distribution of the proceeds ratably among the holders of the bonds of the Paterson Extension Railroad Company. In the discretion of the reorganization managers, all or substantially all, the properties now held by any of the following subsidiaries of the debtor are to be either retained by the present owner thereof or conveyed to any other of such subsidiaries or to the reorganized company or to any newly formed subsidiary of the reorganized company: The Hackensack and Lodi Railroad Company; The Lodi Branch Railroad Company; Passaic and New York Railroad Company; and Susquehanna Connecting Railroad Company. In addition to their above-mentioned powers with respect to all, or substantially all, the properties now held by the trustee of the debtor (except the noncarrier lands subject to the Paterson Extension mortgage above referred to) or by any of the afore-mentioned subsidiaries, the reorganization managers may, in their discretion, cause any part or parts of said properties to be retained by or conveyed to any of such subsidiaries or be conveyed to the reorganized company or to any newly formed subsidiary of the reorganized company. The foregoing sentence is intended to confer expressly upon the reorganization managers power to cause transfers of such parts of said properties to be made, to the extent which in their opinion may be necessary or desirable in effectuating the purposes of the plan. It is not intended to enable them to use the corporate entity of any of the afore-mentioned subsidiaries as the reorganized company. The reorganization managers may, in their discretion, dissolve any subsidiary of the debtor or the debtor itself. If any subsidiary is not dissolved, the reorganized company shall hold all the stock therein now held by the debtor or its trustee. In the event that, under the provisions of this paragraph or of the next preceding paragraph, title to any of said properties shall not become vested in the reorganized company, the title to such properties shall be so held and securities so pledged that the liens of the new mortgages hereinafter described shall attach directly or indirectly to all of the properties. IV. DEBT REDUCTION PRIOR TO CONSUMMATION OF PLAN In the event that part or all of any claim in respect of which new securities are to be issued under the plan, including interest up to the effective date of the plan as well as principal is satisfied prior to the consummation of the plan, the capitalization shall remain unchanged, and the additional securities thereby made available for distribution in respect of other claims shall be distributed in accordance wth a reapplication of the methods prescribed in the plan, except that, to the extent that the principal amount of Terminal bonds outstanding is reduced prior to the consummation of the plan, the total principal amount of new Terminal bonds and the total principal amount of new first and consolidated bonds, series A, to be reserved for the conversion of the new Terminal bonds shall each be reduced, and the total principal amount of new first and consolidated bonds, series A, to be issued at the time of the effectuation of the reorganization shall be increased to the same extent. Additional new common stock made available for distribution, representing mortgaged property, shall be allocated to the holders of general-mortgage bonds to the extent that the amount of common stock so made available makes such allocation practicable in the opinion of the reorganization managers, with appropriate adjustments of their participation with the unsecured creditors in the unmortgaged properties. V. NEW SECURITIES; GENERAL Subject to the approval of the court, the new securities shall be in such form as shall be determined by the reorganization managers, provided that they include, in addition to provisions usual under the circumstances, appropriate provisions to effect the aims hereinbelow indicated. The new securities may be issued in temporary form in the first instance, or interim certificates therefor may be issued. Scrip may be issued and distributed in lieu of fractional bonds or shares of stock. Such scrip will not entitle the holder to any interest or dividend payment or to any voting rights but shall be exchangeable, on or before January 2, 1949, for new securities (and for such interest and dividends in respect thereto as may be determined by the reorganization managers), when presented in proper multiples on terms and conditions approved by the reorganiza261 I. C. C. tion managers. After January 2, 1949, such scrip shall be void. Such adjustments as may be necessary to avoid the issuance of scrip in too small fractions may be made by the reorganization managers as they in their discretion shall determine. In the interest of simplicity and economy, the reorganization managers shall have authority to offer to the creditors who would receive small amounts of scrip entitling them to fractional amounts of new securities, the election to accept the proceeds of the sale of such scrip at the market price of the bonds and stock and, if not listed on an exchange, at a price to be approved by the court. The managers shall have power to appoint such agents as may, in their judgment, be necessary for the above purpose who would also be permitted to sell such scrip as may be desired by participating creditors. VI. NEW TERMINAL-MORTGAGE BONDS The words "new Terminal mortgage" are used herein to refer either to a new Terminal first mortgage or to the existing Terminal mortgage as extended, assumed, and amended by the extension agreement hereinafter mentioned. The words "new Terminal bonds" are similarly used herein. The word "issue" as used herein with respect to the new Terminal bonds, shall include the extension and assumption of the existing Terminal bonds. A new Terminal first mortgage shall be executed to secure an issue of $2,000,000 principal amount of 50-year 4-percent bonds, which, subject to the provisions of article IV hereof, shall be issued in exchange for Terminal bonds now outstanding, or, at the option of the reorganization managers, an extension agreement shall be executed whereby the existing Terminal mortgage, as modified by the extension agreement, shall be assumed by the reorganized company, the maturity of the existing Terminal bonds shall be extended to January 1, 1994, the interest rate shall be reduced to 4 percent per annum, and such other changes shall be made in conformity with the provisions and purposes of the new Terminal mortgage herein described, as to the reorganization managers shall appear appropriate. Subject to the provisions of article I hereof, the Terminal mortgage and bonds shall be dated as of the effective date of the plan and shall mature January 1, 1994, or 50 years from the date as of which issued, in the discretion of the reorganization managers. The bonds shall be fully registered or in coupon form registerable as to principal, or both, as may be determined by the reorganization managers. Interest thereon at the rate of 4 percent per annum shall be paid semiannually on January 1 and July 1, beginning July 1, 1944. The bonds shall be redeemable in whole or in part at any time, on 60 days' notice by publication, at their principal amount plus accrued and unpaid interest plus a premium of 3 percent if redeemed on or before January 1, 1952, 21⁄2 percent if redeemed thereafter and on or before January 1, 1960, 2 percent if redeemed thereafter and on or before January 1, 1968, 11⁄2 percent if redeemed thereafter and on or before January 1, 1976, 1 percent if redeemed thereafter and on or before January 1, 1984, one-half percent if redeemed thereafter and on or before January 1, 1992, and no premium if redeemed thereafter, provided that bonds called for redemption out of the sinking fund shall be redeemed at their principal amount plus accrued and unpaid interest. The bonds shall be convertible, at the option of the holders, at any time (in case of redemption, at any time prior to the date fixed for redemption) into an equal amount of first and consolidated mortgage 4-percent bonds, series A. The mortgage shall constitute a lien on substantially the same property as is now subject to the lien of the existing Teriniual mortgage, and with sub stantially the same priorities. It shall contain an after-acquired property clause which shall grant substantially the same rights in after-acquired property as are now granted by the existing Terminal mortgage, including a right to a first lien under circumstances where the existing Terminal mortgage would be entitled to a first lien, and a right to only a junior lien under circumstances where the existing Terminal mortgage would be entitled to only a junior lien. Said after-acquired property clause shall contain such provisions as the reorganization managers may determine to safeguard or clarify it in the event of consolidation, merger, sale, or lease. On May 1 in each year, beginning with May 1, 1945, so long as any Terminal bonds are outstanding, the reorganized company shall pay to the Terminal mortgage trustee the sum of $20,000 as a sinking fund for the retirement of the new Terminal bonds. Moneys in the sinking fund shall be applied by the mortgage trustee to the purchase or redemption at public or private sale or upon calls for tenders of Terminal bonds. Bonds purchased or redeemed by the use of the fund shall be deposited in the fund and shall continue to draw interest at the rate provided in the mortgage securing the bonds, which interest shall be added to the fund and used for the purposes thereof, provided that after all of the Terminal bonds shall have been purchased for the benefit of the reorganized company or redeemed, through the operation of the fund or otherwise, the Terminal bonds deposited in the fund shall be canceled. If, during the preceding calendar year, the reorganized company shall have made any charges for depreciation of roadway and structures, the amounts so charged shall be used to make said annual payments for the sinking fund to the extent permitted by law or by applicable government regulation and to the extent said amounts shall exceed the amounts to be applied to the additions and betterments fund as herein required, and the charge out of available net income for the sinking fund shall be reduced accordingly. The new Terminal mortgage shall contain provisions, in such form and substance as may be determined by the reorganization managers with the approval of the court, that, notwithstanding any other provision of the mortgage, the mortgage may at any time with the approval of the Commission or such other regulatory body as may at the time have jurisdiction in the premises, be modified by the concurrent action of the reorganized company and of the holders of not less than 75 percent in principal amount of all bonds of the mortgage outstanding at the time of such vote, so as to postpone the time or times of payment of any interest, either before or after the interest is due, or the principal of bonds of the mortgage, either before or after maturity, which at such time may be outstanding, provided that the payment of the principal of the bonds may not be postponed for a longer period than 20 years from the maturity date designated in the bonds and that the maturity of interest on the bonds may not be postponed for a longer period than 5 years, but in no event beyond the maturity date of the principal of the bonds designated in the bonds unless such maturity be postponed, in which event the maturity of interest on the bonds may not be postponed beyond the extended maturity date of the principal. The Terminal mortgage shall contain appropriate provisions relative to the requirements of the additions and betterments fund as described in article IX hereof and to the determination and application of available net income described in article X hereof, and shall contain the following miscellaneous covenants: (1) Such provisions, if any, as may be necessary or proper in the judgment of the reorganization managers, with due regard for the rights of the holders of new Terminal bonds in order to enable the board of directors to dispose of property in connection with coordination and pooling arrangements with other carriers. (2) Providing that no consolidation or merger, and no sale or lease of substantially all the properties of the reorganized company as an entirety, shall be made by the reorganized company except on the condition that the corporation which will thereafter operate said properties shall assume said mortgage and all covenants thereof and all the debts, obligations, and duties of the reorganized company with respect to the new Terminal bonds outstanding thereunder. (3) Providing, within conditions and limitations to be therein prescribed, for the modification or alteration, at any time, of said new Terminal mortgage and of any and all supplements thereto and of the rights and obligations thereunder of the reorganized company and of the holders of the new Terminal bonds by the concurrent action of the reorganized company and of the holders of not less than two-thirds in aggregate principal amount of the new Terminal bonds then outstanding; and, in the event that the reorganized company shall be unified with any other corporation by consolidation, merger, sale, lease, or otherwise, such modification or alteration may specifically include procedural provisions for ascertaining available net income without the maintenance of separate books of account; provided that no such modification or alteration shall (a) alter or impair the obligation of the reorganized company to pay the principal of, or interest on, any new Terminal bond at the time and place and at the rate and in the currency provided therein without the consent of the holder of such bond, or (b) permit the creation by the reorganized company of any mortgage or lien in the nature of a mortgage ranking prior to or pari passu with the lien of the new Terminal mortgage, except as may be in the new Terminal mortgage otherwise expressly provided, unless the creation of such mortgage or lien be consented to by the holders of all outstanding bonds, or (c) modify or alter such other provisions of said mortgage as may be prescribed by the reorganization managers, or (d) without the approval of this Commission or such other regulatory body as may at the time have jurisdiction in the premises, change or alter any provision of the mortgage relative to sinking funds. (4) The mortgage shall contain the usual additional provisions regarding maintenance, replacements, releases, insurance, payment of taxes, and the like. VII. NEW FIRST AND CONSOLIDATED MORTGAGE BONDS A new first and consolidated mortgage shall be executed to secure an issue of $7,000,000 principal amount of bonds, issuable in series, of which approximately $3,000,000 principal amount of series A bonds shall be issued at reorganization. The series A bonds shall bear interest at the rate of 4 percent per annum, shall, subject to the provisions of article I hereof, be dated as of the effective date of the plan, shall mature January 1, 2004, or 60 years from the date as of which issued, in the discretion of the reorganization managers, shall be in such denominations, and shall be fully registered or in coupon form registerable as to principal, or both, as may be determined by the reorganization managers. Series A bonds shall be redeemable at any time, on 60 days' notice by publication, at their principal amount plus accrued and unpaid interest plus a premium of 4 percent if redeemed on or before January 1, 1951, 31⁄2 percent if redeemed thereafter and on or before January 1, 1958, 3 percent if redeemed thereafter and on or before January 1, 1965, 21⁄2 percent if redeemed thereafter and on or before January 1, 1972, 2 percent if redeemed thereafter and on or before January 1, 1979, 12 percent if redeemed thereafter and on or before January 1, 1986, 1 percent if redeemed thereafter and on or before January 1, 1993, one-half percent if redeemed thereafter and on or before January 1, 2000, and no premium |