a very good, high demand."
On this same subjectmatterMr. Doughty statedon page 14:
"Many of these certificateowners,having completed their payments,continuouslyrequestedof us that they be Issued stock."
Again, on page 15 Mr. Doughty stated: II. . . We felt, and the holdersof the certificates felt, too, that their positionwould be improvedif they could be permittedto become stockholders."
The nature of the transactionis furtherdiscussedby Mr. Doughty on page 15 when he was asked whetherthe certificateholderswere sur- renderingtheir certificatesand taking out stockunder the option called for in the certificate,and Mr. Doughtyrepliedthat they were not obtain- ing their certificatesunder the optionbut in additionto the option, and furtherstated in responseto a questionas to whether or not the exchangewas made on the same basis of the option,as follows:
"Alteredonly by the fact that the stock--theten sharesof no par stock had been authorizedand issuedfor each share previouslyissuedand authorizedpar stock and givingthem full . . .I'
He affirmedthat the certificateholderswere getting60 shares of no-par stock in exchangefor the certificateand that the company was givingthe certificateholdersthe opportunityof obtainingSix ad- ditionalshares if they had previouslypaid in full or would now pay in full the amount of their certificate.
Mr. Doughtyfurtherstatedon page 1.6 that a subsequentoffer to the certificateholderswas made purely on the basis of the certifi- cate holders'optionscontainedin the certificate.
Again, on page 20 Mr. Doughty,in explainingthe purposeof the charteramendment,stated: Hon. WilliamM. King, page 11 (WW-504)
"In order to be of assistanceto them and at the same time the company,to relievethe companyof the burden of payingthem interestand payingthem this participationin the bonus pool, the stockholders,the directors,and the officersof the companyfelt that we shoulddo both these things,go to no-par stock and at the same time offer these people the opportunityto become shareholders."
We are of the opinionthat under the facts surroundingthe issuanceof the stock in questionthat the transactiondoes not consti- tute a reorganization as that term is used in Section5(F) for the rea- son that the principalpurposeof the distributionappearsto be the honoringof contractualcommitmentsmade by the companyto Its certifi- cate holdersto allow them the privilegeof becomingstockholders.None of the ordinaryor usual elementsgiving rise to a need for the organi- zation appearsto be predominant. There are no facts to indicatethat the transactionis motivatedby the financialdietressof the corpora- tion, nor does it appear that the primarymotive is the lesseningof the financialburden of the companybecauseof its obligationsto the holdersof the certificates.It shouldheLnotedthat in the ordinary circumstances one of the primarypurposesof reorganization is the pro- tectionof the equity of the present stockholders.That this purpose is not entirelythe purposeof the'presenttransactionis evidencedby the fact that the offer of the companyto certificateholderswho have not paid in full the amount of their certificateis not simplyan offer of stock equal to the presentvalue of their certificatebut ratherunder the plan advancedby the companythe companyhas offeredthese people the opportunityto exchangetheir advisoryboard certificatesfor sub- scriptioncontracts. Clearly,from this point of view the transaction in questiondoes not constitutea reorganization under the terms of Sec- tion 5(F). The holdersof the advisoryboard certificatesthat are not fully paid are only securityholdersor creditor6of the companyto the extentthat they have paid on