REORGANIZATION OF THE BALTIMORE AND OHIO RAILROAD COMPANY 1 1 PLAN AND AGREEMENT [Dated June 22, 1908.] Reorganization Committee-Louis Fitzgerald, chairman, August Belmont, Edward R. Bacon, Henry Budge, Eugene Delano, William A. Read, Howland Davis. H. C. Deming, secretary. William C. Gulliver, counsel to Reorganization Committee. Reorganization Managers-Speyer Bros., 7 Lothbury, London. Speyer & Co., 30 Broad Street, New York. Kuhn, Loeb & Co., 27 Pine Street, New York. Counsel to Reorganization Managers-Seward, Guthrie & Steele, 40 Wall Street, New York. Evarts, Choate & Beaman, 52 Wall Street, New York. Freshfields & Williams, London. Advisory Committee-Louis Fitzgerald, Edward R. Bacon, Henry Budge, William A Read. Alvin W. Krech, secretary, 120 Broadway, New York. William C. Gulliver, counsel to Advisory Committee. Depositary-The Mercantile Trust Co., of New York. London and Westminster Bank, Limited, London agent. The undersigned committee, at the request of holders of a large amount of the securities, has been for a long time past engaged in an examination of the affairs of the Baltimore & Ohio system and the relative value and earning capacity of the various lines comprised therein, with a view to formulating a plan of reorganization therefor which should fairly recognize the rights of all security holders, and at the same time bring the fixed charges of the reorganized company safely within the net earning capacity of the system. Much time and attention have been devoted to acquiring full and accurate information as to all details, including a careful examination of the company's accounts for the period of nine years and six months, made by Mr. Stephen Little on behalf of the committee. The aim of the committee has been to formulate a plan for the reorganization of the system which should accomplish the following results: (a) The reduction of the fixed charges to a limit safely within the net earning capacity of the reorganized properties; (b) adequate capital for present and future requirements; (c) the payment of floating debt and provision for existing car-trust obligations; (d) the preservation of the integrity of the system as far as the same can be econ Reprinted in the so-called Congressional Money Trust Investigation Report of the Pujo Committee. omically and advantageously accomplished and such control of the reorganized company as shall secure a satisfactory management of the property for a period of years. Having these objects in view, the annexed plan has been prepared, and Messrs Speyer & Co. and Messrs Kuhn, Loeb & Co., of New York, and Messrs. Speyer Bros., of London, have been selected by the committee to act as reorganization managers to carry out the plan. Messrs. Louis Fitzgerald, Henry Budge, Edward R. Bacon, and William A Read have been appointed an advisory committee to continue and complete the work of the Reorganization Committee and to consult and cooperate with the reorganization managers. Any vacancy in the Advisory Committee occasioned by death, resignation, or otherwise may be filled by the joint action of the reorganization managers and of the remaining members of the Advisory Committee. PLAN FOR THE REORGANIZATION OF THE BALTIMORE & OHIO RAILROAD CO. CONDITIONS OF PARTICIPATION Participation under this plan of reorganization in any respect whatsoever is dependent upon the deposit of securities with the Mercantile Trust Co., of New York, the depositary named in the reorganization agreement, either at its office, No. 120 Broadway, in the city of New York, or at the London & Westminster Bank (Ltd.), its agency in the city of London, England, within such time as may be fixed by notice, and the plan will embrace only securities so deposited. No securities will be received on deposit unless in negotiable form, and bonds must carry all coupons (or claims for interest on registered bonds) maturing on or after July 1, 1898. The first-mortgage 6 per cent. bonds of the Washington City & Point Lookout Railroad Co. must also carry all matured and unpaid coupons. Pursuant to the offer of the syndicate hereinafter stated, holders of the first and second preferred and common stock of the Baltimore & Ohio Railroad Co. may purchase from the syndicate the new preferred and common stock by depositing their old stock with the Mer cantile Trust Co. or its agency in London as above stated, on the following terms: As consideration for shares of the new company, depositors of first preferred stock must pay $2 per share deposited for new preferred and common stock; depositors of second preferred stock must pay $20 per share deposited for new preferred and common stock; and depositors of common stock must pay $20 per share deposited for new preferred and common stock, all as hereinafter indicated on page 978. The payments by depositors of such preferred and common stocks must be made for account of the syndicate at the office of the Mercantile Trust Co., in New York, or at its agency in London above named, in not less than three installments at least thirty (30) days apart, when and as called for by advertisement published in each instance at least twice a week for two weeks in at least two of the daily newspapers of general circulation published in the cities of New York, Baltimore and London, respectively. All payments must be receipted for by the depositary or its London agent on the certificates of deposit. Failure to pay any installment when and as payable will subject the deposited stock and all rights on account of any prior payments to forfeiture to the syndicate as provided in the reorganization agreement. The depositary will issue proper receipts or certificates of deposit for all securities deposited. The following bonds, coupons, and stocks may be deposited on the terms hereinafter provided: Baltimore & Ohio Railroad Co. bonds, loan of 1853, extended to 1935 at 4 per cent. Baltimore & Ohio Railroad Co. 100-year 5 per cent. consolidated mortgage bonds of 1888. Baltimore & Ohio Railroad Co. sterling 6 per cent. loan of 1872, due March 1, 1902. Baltimore & Ohio Railroad Co. sterling 6 per cent. loan of 1874, due May 1, 1910. Baltimore & Ohio Railroad Co. 6 per cent. loan of 1879, due April 1, 1919 (account Parkersburg Branch Railroad Co.). Baltimore & Ohio Railroad Co. 5 per cent. bonds, loan of 1885 (account Pittsburgh & Connellsville Railroad Co.). Baltimore & Ohio Railroad Co. 4 per cent. terminal mortgage bonds of 1894. Baltimore & Ohio Railroad Co. sterling 4 per cent. loan of 1883, Philadelphia Branch. Baltimore & Ohio Railroad Co. sterling 5 per cent. loan of 1877, due June 1, 1927 (account Baltimore & Ohio & Chicago Railroad Co.). Baltimore & Ohio Railroad Co. first preferred stock. Baltimore & Ohio Railroad Co. second preferred stock. Pittsburgh & Connellsville Railroad Co. first-mortgage bonds, extended to 1945 at 4 per cent. Pittsburgh & Connellsville Railroad Co. first-mortgage 7 per cent. bonds, due July 1, 1898. Pittsburgh & Connellsville Railroad Co. 6 per cent. consolidated mortgage bonds. Akron & Chicago Junction Railroad Co. first-mortgage 5 per cent bonds. Akron & Chicago Junction Railroad Co. preferred stock. Washington City & Point Lookout Railroad Co. 6 per cent. bonds. Matured and unpaid coupons (and claims for interest on registered bonds), appertaining to any of the above-named bonds except those of the Washington City & Point Lookout Railroad Co. may be deposited separate from the bonds as hereinafter stated. NEW RAILROAD COMPANY Unless the reorganization managers shall decide to proceed without foreclosure or sale, the various properties will be sold under foreclosure of one or more of the existing mortgages, or otherwise dealt with, and a successor company or companies will be organized. The term "new company," as hereinafter used, is intended to mean either the existing company or the new proprietary company or companies which may be organized. DEPOSITED SECURITIES The securities deposited hereunder will be held by the depositary subject to the order and control of the reorganization managers as provided in the reorganization agreement. All securities deposited under the plan are to be kept alive so long as deemed necessary by the managers for the purposes of reorganization or the protection of the new company or its security holders. All matured and unpaid coupons and claims for interest on registered bonds (excepting the unpaid coupons on the first-mortgage 6 per cent bonds of the Washington City & Point Lookout Railroad Co., which matured and unpaid coupons, however, must be deposited with the bonds as above stated), may be deposited separate from the bonds, and the same will be paid in cash as soon as practicable after the plan is declared operative, with interest on such coupons (and claims for interest on registered bonds) at the rate of 5 per cent. per annum from the date of maturity up to the date when the same are finally paid. Interest will also be paid in cash upon the completion of the reorganization on all deposited bonds (excepting the first-mortgage 6 per cent. bonds of the Washington City & Point Lookout Railroad Co. above mentioned), at the rate provided in the old bonds, up to July 1, 1898, from the coupon date last preceding. The syndicate will purchase such coupons (and claims for interest on registered bonds) matured prior to July 1, 1898, from holders who do not desire to deposit the same under the plan (provided, and so soon as, the bonds to which such coupons, and claims for interest on registered bonds, appertain, have been deposited), at their face value with interest at the rate of 5 per cent. per annum from the respective dates of maturity of such coupons or claims for interest, to date of purchase, provided such coupons and claims for interest on registered bonds shall be presented for sale to the syndicate, at the office of the Mercantile Trust Co., in New York, or at its London agency above mentioned, on or before July 22, 1898. The syndicate has agreed to purchase for cash, upon the plan being declared operative, all Baltimore & Ohio Railroad Co. 100-year 5 per cent. consolidated mortgage bonds, deposited under the plan, whose holders prefer to accept cash rather than to take the new securities, at the price (in New York) of 110 and interest accrued and unpaid since the maturity of the last paid coupon, provided such holders shall signify their election to take cash in the manner and within the time hereinafter limited: Depositors electing to receive cash for their bonds must signify their election by presenting their Mercantile Trust Co. certificates of deposit at the office of that company in New York or at its London agency above specified, within 60 days from the time the plan shall be actually issued, to be stamped as electing to accept such cash payment, and will thereupon be entitled to receive such cash payment so soon as the plan is declared operative by the reorganization managers, upon surrender of their certificates of deposit so stamped. NEW STOCKS AND BONDS The new company is to authorize the following securities: First. $70,000,000 prior lien 31 per cent. gold bonds, due 1925. These bonds will bear interest from July 1, 1898, and are to be secured by a mortgage upon the main line and branches, Parkersburg Branch and Pittsburg Division (see appendix, Table C) when acquired by the new company, covering about 1,017 miles of first track, |