(a) Available net income shall on May 1 be set aside to the extent, but only to the extent, required (when added to the credit, if any, from roadway and structures depreciation reserve as set forth in article IX hereof) for the addi tions and betterments fund as hereinbefore provided.

(b) Any then remaining available net income shall on May 1 be set aside to make up any deficiency not exceeding $150,000 in the amounts credited in the preceding 28 months to the additions and betterments fund, and to reimburse said fund for moneys that may have been taken from said fund and used for the payment of interest on fixed-interest debt.

(c) Any then remaining available net income shall on May 1 be applied to provide for the payment to the sinking fund provided in articles VI and VII hereof first for the benefit of the new Terminal bonds, and second, in the event all of the new Terminal bonds are redeemed, refunded, converted, or othewise retired, for the benefit of the first and consolidated bonds, series A.

(d) Any then remaining available net income shall on May 1 be applied to provide any amount which may be necessary to service any sinking funds which may be created in connection with any future issues of first and consolidated bonds.

(e) Any then remaining available net income shall on May 1 be applied to the payment of any contingent interest on income bonds accruing during the last preceding calendar year and of any accumulated unpaid interest thereon.

(f) Any then remaining available net income shall on May 1 be applied to provide any amount which may be necessary to service any sinking funds for the benefit of income bonds.

(g) Any then remaining available net income may be applied as the board of directors may determine to general corporate purposes or dividends on the several classes of stock in the order of their priority, provided that no dividends on the common stock shall be declared, set aside, or paid unless and until amounts equal to 20 percent of such dividends intended to be declared, set aside, and paid shall be paid into a fund, to be known as the security-retirement fund, to be used and applied in the manner of a sinking fund for the retirement of generalmortgage income bonds, series A, and, after retirement of all of such bonds, to the retirement of the preferred stock.

XI. PREFERRED STOCK AND PREFERRED-STOCK VOTING TRUST

Approximately 30,000 shares of preferred stock, having a par value of $100 a share shall be authorized, approximately all of which shall be issued in the reorganization.

The holders of preferred stock shall be entitled to receive, or to have declared and set apart for payment, dividends out of available net income as provided in article X hereof, when and as declared by the board of directors, at the rate of 5 percent per annum in respect of each calendar year before any dividends shall be paid or declared and set apart for payment on the common stock. Such dividends of 5 percent per annum on the preferred stock shall be cumulative to the extent earned in respect of any calendar year and not paid but shall not be otherwise cumulative. Dividends on the preferred stock shall be deemed to have been earned in respect of any year to the extent covered by available net income pursuant to article X hereof after deducting the amounts to be applied out of available net income pursuant to subparagraphs (a) to (f), inclusive, of paragraph 3 of article X hereof. In the event that the reorganized company shall be unified with any other corporation by consolidation, merger, sale, lease, or otherwise, then by vote or consent of the holders of at least two-thirds in par value of the preferred stock then outstanding, procedural provisions may be

made for ascertaining available net income without the maintenance of separate books of account, and such provision shall be binding on all the holders of preferred stock.

In any liquidation or winding up of the reorganized company, whether voluntary or involuntary, the preferred stock shall be entitled to receive out of the assets of the reorganized company, its par value, plus any accumulated and unpaid dividends thereon, before any distribution shall be made on the common stock, but shall not be entitled to any further participation in such assets. The preferred stock shall be redeemable, in whole or in part, at any time, on 60 days' notice by publication, at $100 per share plus any accumulated unpaid dividends. The holders of the preferred stock shall have no conversion rights and shall not have any preemptive right to subscribe to any additional issues of stock of any class or of securities convertible into stock of any class.

Holders of the preferred stock shall be entitled to one vote per share upon all matters except to the extent that provision is made herein for the election of one director by holders of income bonds and except to the extent that the right of the holders of preferred stock to vote for members of the board of directors of the reorganized company is limited as hereinafter provided. Voting separately as a class, the holders of the preferred stock shall be entitled to elect onehalf (if one-half involves a fraction, then the next larger whole number) of the membership of the board of directors of the reorganized company less one, and one of the directors so elected shall be a member of any executive committee and of any other committee exercising general or financial powers of the board of directors of the reorganized company, provided that this right of the preferred stockholders to elect one-half less one of the board of directors shall not apply after all of the general-mortgage income bonds have been retired through operation of the security-retirement fund or otherwise. Holders of the preferred stock, voting as a class, shall have the right to elect not less than two directors after default of the equivalent of six quarterly dividends, whether or not such dividends are earned and whether or not the defaults are consecutive. The affirmative vote of at least two-thirds of the preferred stock shall be required as a prerequisite to any charter or bylaw amendment altering materially any existing provision of such preferred stock.

All shares of preferred stock shall be deposited under a voting-trust agreement and preferred-stock voting-trust certificates shall be issued to persons otherwise entitled to receive such preferred stock under the plan.

There shall be three voting trustees under such trust, whose appointments, whether initial or to fill vacancies, shall be subject to the approval of the court. Subject to such approval, the trustees under the existing Terminal and Midland mortgages shall appoint the trustee for the first position, the trustee under the existing first and refunding mortgage jointly with the New York Life Insurance Company, the Prudential Insurance Company of America, and the Mutual Benefit Life Insurance Company of New Jersey shall appoint the trustee for the second position, and the trustees under the existing second and general mortgages jointly shall appoint the trustee for the third position, provided, however, that in case of a vacancy in any of the positions after the initial trustees have been approved by the court and the voting trust certificates issued, an appointment to fill a vacancy in the first position shall be made by the trustee under the new general mortgage, an appointment to fill a vacancy in the second position shall be made by the holders of the preferred stock voting-trust certificates which are not so owned, controlled, or held that instructions as to voting trusteed stock represented thereby would have to be disregarded pursuant to subsequent

provisions herein, and an appointment to fill a vacancy in the third position shall be made by the holders of the common stock voting-trust certificates which are not so owned, controlled, or held that instructions as to voting trusteed stock represented thereby would have to be disregarded pursuant to subsequent provisions herein, and provided further, that should any of the parties or interests fail to make appointment of a trustee, either the initial trustee, or to fill a vacancy, within such time as the court shall consider reasonable, the court shall appoint such trustee. Should such occasion for the filling of a vacancy by the court or for the approval of an appointment by the court under the provisions of this paragraph arise after the termination of these reorganization proceedings, the appointment or the approval shall be made by the senior judge of the United States District Court of the district in which these proceedings are now pending. The terms of the voting-trust agreement shall be determined by the reorganization managers and approved by the court but shall include appropriate provisions to effect the following purposes:

(a) The period of the trust shall be 5 years beginning as of the date of the order of court directing consummation of the plan; it shall, however, terminate upon the sale in accordance with the terms of the trust of at least 51 percent of the stock held in the trust and may be terminated at any time by the voting trustees with the consent of the holders of a majority in interest of the preferred-stock voting-trust certificates then outstanding and with the consent of the voting trustees under the common-stock voting trust;

(b) The voting trustees shall have power in their sole discretion (but only with the approval of the Commission and the consent of the holders of a majority in interest of the preferred-stock voting-trust certificates then outstanding and the consent of the voting trustees under the common-stock voting trust hereinafter referred to) to sell 51 percent or more (but not less than 51 percent) of the stock held in the trust at any time prior to the termination of the trust for such consideration as they may deem expedient (as a part of which consideration they may take into account any agreements which the purchaser or purchasers may make by way of traffic agreements, guaranties, offers of exchange of securities, or otherwise, which in the judgment of the voting trustees will be of value to the holders of bonds issued in reorganization or of the preferred-stock voting-trust certificates); provided, however, that the purchaser or purchasers shall be required, for a reasonable period after the termination of the preferred-stock voting trust, to purchase such additional shares of preferred stock theretofore held under the trust as may be tendered at the same “price per share of preferred stock" as was paid in respect of said 51 percent or more of said preferred stock (the phrase "price per share of preferred stock" as used in this article XI being intended to relate only to that part of the aforesaid consideration which reasonably may be and shall be intended to be divided and distributed among the holders of preferred-stock voting-trust certificates, including in particular, but without limiting the generality of the foregoing, cash and securities); and provided fur ther, that the purchaser or purchasers shall be required, as a part of the same transaction, to buy 51 percent or more (but not less than 51 percent) of the common stock of the reorganized company and to make an offer to buy all of said common stock as will be set forth in the common-stock voting-trust agreement and holders of all preferred-stock voting-trust certificates shall be bound by the

terms of sale.

(c) In the event that the sale of 51 percent or more of said trusteed preferred stock shall be effected prior to the termination of the trust, that part of the consideration which is the basis for determining the price per share of preferred

stock, as defined in subdivision (b) supra, and the balance of the trusteed stock, if any, shall be distributed pro rata to the holders of preferred-stock voting-trust certificates against the surrender of said certificates;

(d) The voting trustees shall possess and shall be entitled to exercise all rights and powers of absolute owners of the preferred stock held in the trust, including the right (1) to vote in respect thereof for every purpose and to consent to any corporate act of the reorganized company, it being expressly stipulated that, except as herein specified, no voting right shall pass by or under the preferred. stock voting-trust certificates or by or under any agreement express or implied, and (2) to sell, exchange, or otherwise dispose of such preferred stock, all subject to the provisions of the voting-trust agreement.

The voting-trust agreement shall provide in substance that a copy of every notice of a stockholders' meeting of the reorganized company shall be mailed to each registered holder of a preferred-stock voting-trust certificate and that in case the voting trustees shall receive from the holder of a preferred-stock votingtrust certificate, within such reasonable number of days prior to the date of the meeting as shall be set forth in such notice, a written request to vote in the manner stated in such request at any such meeting upon any matters to come before such meeting, the voting trustees shall vote at such meeting in accordance with such request in respect of the number of full shares of preferred stock represented by said voting-trust certificate, except that the voting trustees shall disregard any instructions as to voting the shares of preferred stock represented by the preferred-stock voting-trust certificate, if the written request to vote does not expressly state that the preferred-stock voting-trust certificate with respect to which request to vote is made is not owned or controlled by, or held for the benefit of, a person, firm, association, or corporation which owns or operates, or controls a corporation which owns or operates, or is controlled by a corporation which owns or operates, or is in any way directly or indirectly, affiliated with a corporation which owns or operates, a line or lines of railroad, or by two or more such persons, firms, associations, and/or corporations acting jointly.

The voting trustees, in determining whether or not they have been authorized by the consent of the holders of a given percentage in interest of the preferredstock voting-trust certificates then outstanding, in any case where such consent is required, (a) shall treat as not outstanding preferred-stock voting-trust certificates so owned, controlled, or held that instructions as to voting trusteed stock represented thereby would have to be disregarded pursuant to the next preceding paragraph, and (b) shall disregard any such consent by any holder or holders of such preferred-stock voting-trust certificates.

(e) The preferred stock held in the trust shall not be voted in favor of the merger or consolidation of the reorganized company with or into any other corporation or the sale or lease of all or substantially all of the assets of the reorganized company before obtaining the consent thereto of the holders of a majority in interest of the preferred-stock voting-trust certificates then outstanding and of the voting trustees under the common-stock voting trust.

(f) Whenever the consent of the voting trustees under the preferred-stock voting trust is required under the plan as a condition precedent to action by the voting trustees under the common-stock voting trust hereinafter described, such consent may be given only with the favorable vote or consent of the holders of a majority in interest of the preferred-stock voting-trust certificates then outstanding.

(g) The reasonable expenses of such voting trustees, including counsel fees, shall be paid by the reorganized company.

(h) The voting trustees shall act in accordance with the vote of a majority of said trustees.

XII. COMMON STOCK AND COMMON-STOCK VOTING TRUST

There shall be authorized approximately 35,000 shares of common stock without par value, approximately all of which shall be issued at reorganization. Holders of common stock shall be entitled to one vote per share on all matters except (1) to the extent that provision is made herein for the election of one director by holders of series A income bonds, with the right of such director to be a member of any executive committee and of any other committee exercising general or financial powers of the board of directors, (2) to the extent that provision is made herein that, voting separately as a class, the holders of the preferred stock until all of the general-mortgage income bonds have been retired shall be entitled to elect one-half of the membership of the board of directors less one and that one of the directors so elected shall be a member of any executive committee and of any other committee exercising general or financial powers of the board of directors, and (3) to the extent that provision is made herein that the preferred stock, voting as a class, shall have the right to elect not less than two directors after default of the equivalent of six quarterly dividends whether or not earned and whether or not the defaults are consecutive, and that the affirmative vote of at least two-thirds of the preferred stock shall be required as a prerequisite to any charter or bylaw amendment altering materially any existing provision of such preferred stock. The holders of common stock shall not have any preemptive right to subscribe to any additional issues of stock of any class or of securities convertible into stock of any class.

All shares of common stock shall be deposited under a voting-trust agreement and common-stock voting-trust certificates shall be issued to the persons otherwise entitled to receive such common stock under the plan.

There shall be three voting trustees under such trust, all designated in the same manner and subject to the same approval as in the case of the preferredstock voting trustees.

The terms of the voting-trust agreement shall be determined by the reorganization managers and approved by the court but shall include appropriate provision to effect the following purposes:

(a) The period of the trust shall be 5 years beginning as of the date of the order of court directing consummation of the plan; it shall, however, terminate upon the sale in accordance with the terms of the trust of at least 51 percent of the stock held in the trust and may be terminated at any time by the voting trustees with the consent of the holders of a majority in interest of the commonstock voting-trust certificates then outstanding and with the consent of the voting trustees under the preferred-stock voting trust.

(b) The voting trustees shall have power in their sole discretion (but only with the approval of the Commission and the consent of the holders of a majority in interest of the common-stock voting-trust certificates then outstanding and the consent of the voting trustees under the preferred-stock voting trust) to sell 51 percent or more (but not less than 51 percent) of the stock held in the trust at any time prior to the termination of the trust for such consideration as they may deem expedient (as a part of which consideration they may take into account any agreement which the purchaser or purchasers may make by way of traffic agreements, guaranties, offers of exchange of securities, or otherwise, which in the judgment of the voting trustees will be of value to the holders of bonds issued in reorganization or of the preferred-stock voting-trust certificates or of the common-stock voting-trust certificates); provided, however, that the purchaser 261 I. C. C.