Source: https://www.law.cornell.edu/uscode/text/45/726?quicktabs_8=3
Timestamp: 2016-02-06 08:05:18
Document Index: 258907218

Matched Legal Cases: ['§ 726', '§ 726', '§ 726', '§ 216', '§ 605', '§ 2', '§ 118', '§ 405', '§ 703', '§ 504', '§ 4011', '§ 2', '§ 7203', '§ 101', '§ 231', '§ 151', '§ 102', '§ 703', '§ 405', '§ 703', '§ 118', '§ 118', '§ 703', '§ 2', '§ 2', '§ 2']

45 U.S. Code § 726 - Debentures and series A preferred stock | US Law | LII / Legal Information Institute
U.S. Code › Title 45 › Chapter 16 › Subchapter II › § 726 45 U.S. Code § 726 - Debentures and series A preferred stock
The contingent interest notes issued pursuant to this section shall bear interest compounded annually at the rate of 8 percent per annum and such notes and the accumulated interest thereon shall be payable only in the event of bankruptcy, reorganization, or receivership of the Corporation occurring prior to the repayment and redemption of all outstanding debentures and accumulated series A preferred stock of the Corporation. The contingent interest notes and the accumulated interest thereon shall have the same priority in bankruptcy, reorganization, or receivership as the debentures of the Corporation. The other terms and conditions of the contingent interest notes shall be as set forth in an agreement to be entered into between the Association and the Corporation prior to issuance of any debentures.
Modifications, waivers, and conversions (1)
The Board of Directors of the Association and the Finance Committee, acting jointly, may agree with the Corporation to modify any of the terms and conditions governing the purchase by the Association of securities of the Corporation, upon a finding that such action is necessary or appropriate to achieve the purposes of this chapter or the goals of the final system plan.
The Finance Committee may, in its discretion and upon a finding that such action is necessary or appropriate to achieve the purposes of this chapter or the goals of the final system plan, waive compliance with any term, condition, provision, or covenant of the securities of the Corporation held by the Association, including any provision of such securities with respect to redemption of principal or issuance price, payment of interest or dividends, or any term or condition governing the purchase of such securities.
Notwithstanding any provision of State law, there shall be no conversion of the debentures of the Corporation into series A preferred stock of the Corporation, as provided in the terms and conditions of the debentures and pursuant to the final system plan, unless the Board of Directors of the Association and the Finance Committee jointly determine to effect such conversion.
The Association shall not invest the final $345,000,000 of the additional investment in the Corporation authorized by the Regional Rail Reorganization Act Amendments of 1978 unless and until (A) the Corporation has in effect an employee stock ownership plan which satisfies the requirements of paragraphs (2) and (3), and (B) the requirements of the other paragraphs of this subsection have been satisfied.
The employee stock ownership plan shall:
for a transfer to the plan and allocation to the accounts of plan participants in periodic installments of Series A preferred stock of the Corporation with a stated redemption value of at least $345,000,000 or any other securities in an amount determined by the Association, with the concurrence of the Finance Committee, as constituting a meaningful interest in the Corporation, or any combination thereof so determined by the Association, with the concurrence of the Finance Committee. The use of Series A preferred stock to fund the Employee Stock Ownership Plan shall not be interpreted to relieve ConRail of the responsibility for repaying in full to the United States Railway Association its indebtedness as represented by all shares originally issued under Public Law 94–210 and this chapter;
for immediate vesting of the rights of participants to such securities upon allocation, subject to defeasance as a result of the plan’s termination which termination shall occur in the event that, by the end of the 120th month beginning after the month in which securities or interests therein are first allocated to participants’ accounts, the Corporation has not attained for two consecutive quarters positive net income and a freight labor cost to freight revenue ratio equal to the average such ratio for all Class I railroads in 1977, as determined pursuant to procedures adopted by the Corporation pursuant to regulations promulgated by the Association with the concurrence of the Finance Committee;
be an employee benefit plan which is designed to invest primarily in employer securities;
meets such other requirements (similar to requirements applicable to employee stock ownership plans as defined in section 4975
(e)(7) of title 26) as the Secretary of the Treasury or his delegate may describe;
have been approved by the Board of Directors of the Corporation to the extent and in the manner which may be required by the Corporation’s articles of incorporation and bylaws then in effect; and
have been prepared in consultation with, and been approved by, the Association and the Finance Committee.
Notwithstanding any other provision of law, if a plan does not meet the requirements of section 401 of title 26—
stock transferred under paragraph (2) and allocated to the account of any participant under paragraph (2) shall not be considered income of the participant or his beneficiary under title 26 until such stock or dividends are actually distributed or made available to the participant or his beneficiary and, at such time, shall be taxable under section 72 of title 26 (treating the participant or his beneficiary as having a basis of 0 in the stock);
no amount shall be allocated to any participant under the plan in excess of the amount which might be allocated if the plan met the requirements of section 401 of title 26; and
the plan must meet the requirements of sections 410 and 415 of title 26.
The Corporation shall adopt such terms and conditions governing the securities of interests therein to be transferred to the plan (including limitations on voting rights) as the Association, with the concurrence of the Finance Committee, determines are necessary to protect reasonably the interests of the United States in the litigation pursuant to section 743
(c) of this title and in the event of any action to further reorganize or restructure the Corporation’s assets or capital structure.
The Corporation, the Association, and a representative appointed by the Chairman of the Railway Labor Executives’ Association as representative of all the classes or crafts of employees of the Corporation shall engage in negotiations to agree upon a plan in accordance with the provisions of this subsection. For purposes of this subsection, the Railway Labor Executives’ Association shall be deemed to represent all of the representatives of crafts or classes of employees of the Corporation and its subsidiaries as though that organization held powers of attorney from each representative of a craft or class for the limited purposes of negotiating and agreeing upon an employee stock ownership plan. The parties shall incorporate their agreement into a written plan instrument specifying the terms and conditions set forth in this subsection and such other terms and conditions as they may decide upon, with the concurrence of the Finance Committee, unless the parties are unable to reach on [2]
an agreement on the plan following the exertion of every reasonable effort to do so, in accordance with the Railway Labor Act [45 U.S.C. 151 et seq.], in which event, the Corporation and the Association, with the concurrence of the Finance Committee, shall establish a written plan with such terms and conditions as they may agree upon in accordance with this subsection. The plan shall not be subject to change under the provisions of section 6 of the Railway Labor Act [45 U.S.C. 156] until after such time as securities have been distributed from the plan to the participants in the plan or their beneficiaries pursuant to the terms of the plan. Within one year after November 1, 1978, the Corporation shall transmit a draft of such plan to the Congress and shall report on its progress in establishing and administering the plan. The report shall include recommendations of contractual and statutory provisions necessary to reasonably (A)
exempt any Trustee of the plan, the Corporation, the Association, any member of the Finance Committee, and any other person from any fiduciary duty, responsibility or liability for the acquisition of, investment in, or retention of any security or interest therein of the Corporation or for any other transaction contemplated by this subsection and (B)
provide for the United States to indemnify, defend, and hold harmless such persons against any and all liabilities, claims, actions, judgments, amounts paid in settlement, and costs and expenses actually incurred in connection with any matter so exempted in which it is determined that such persons were acting in good faith and in a manner they believed to not be opposed to the best interests of the plan.
Within fourteen months of November 1, 1978, the Association shall report to the Congress on the draft plan and on any legal obstacle to the ability of the Corporation to effectuate and implement an employee stock ownership plan of the nature contemplated by this subsection, including specific recommendations on amendments to this subsection and other relevant laws which would harmonize the requirements of this subsection with those other laws. The Department of Transportation and the Department of the Treasury, as each finds appropriate, shall provide separate comments to the Association for inclusion with such report.
For the purposes of this subsection, the officers of each duly authorized representative of the crafts or classes of the employees of the Corporation who have been given leaves of absence by the Corporation to serve as such officers, are to be eligible to participate in such plan on the same basis as are employees whose employment is governed by a collective bargaining agreement with the Corporation.
Except as provided in subparagraph (B) of this paragraph, no person described in subparagraph (C) of this paragraph shall have or be subject to any fiduciary responsibility, obligation, or duty, nor shall any such person be subject to civil liability, under any Federal or State law, as a fiduciary or otherwise—
in connection with the employee stock ownership plan and related trust established by the Corporation pursuant to the requirements of this subsection or with ConRail Equity Corporation (I)
on account of any reorganization or restructuring of the Corporation, its successors or assigns, or their assets or capital structure, or (II)
on account of any action taken or not taken by the Corporation which may affect its ability to attain the performance levels established in connection with the plan pursuant to paragraph (2)(A)(ii) of this subsection;
for or in connection with the establishment, continuation or implementation of the plan and related trust or of ConRail Equity Corporation or the acquisition of, investment in or retention of any security of the Corporation or ConRail Equity Corporation, or of any of their successors and assigns, by the plan or ConRail Equity Corporation, or the disposition of any such security to the extent that such disposition is made in connection with a reorganization or restructuring of the Corporation, its successors and assigns, or their assets or capital structure, as directed or approved by or on behalf of the Association or the United States, or the acquisition or retention of any cash, security or other property received in connection with any such reorganization or restructuring; or
for or in connection with any other action taken or not taken pursuant to any term or condition of the plan or related trust agreement or of the articles of incorporation or bylaws of ConRail Equity Corporation.
Subparagraph (A) of this paragraph shall not be interpreted to relieve any person from any fiduciary or other responsibility, obligation or duty under any Federal or State law to take or not to take actions with respect to the plan in connection with (i)
receiving contributions, (ii)
exercising custodial responsibilities, (iii)
determining eligibility to participate in the plan, (iv)
calculating, determining and paying benefits, (v)
processing and deciding claims, (vi)
preparing and distributing plan information, benefit statements, returns and reports, (vii)
maintaining plan records, (viii)
appointing plan fiduciaries and other persons to advise or assist in plan administration and (ix)
other than as provided in subparagraph (A), acquiring, holding or disposing of plan assets.
For purposes of subparagraph (A) of this paragraph, the term “person” includes each of the following:
the trustee or trustees of the plan, the Corporation and its subsidiaries, ConRail Equity Corporation, the Association, and any of their successors and assigns;
each director, officer, employee and agent of the Corporation of [3]
any of its subsidiaries, of ConRail Equity Corporation, of the plan, of the Association or of any of their successors and assigns; and
each member of the Finance Committee and any of their employees and agents.
Neither this paragraph nor paragraph (9) of this subsection shall be construed to grant immunity from any criminal law of the United States or of any State or the District of Columbia.
The United States shall indemnify, defend, and hold harmless the persons described in paragraph (8)(C) of this subsection from and against any and all liabilities, claims, actions, judgments, amounts paid in settlement, and costs and expenses (including reasonable fees of accountants, experts, and attorneys) actually incurred in connection with the establishment, implementation, or operation of the plan or ConRail Equity Corporation or with any transaction which is required by or is appropriate to effectuate fully the provisions of this subsection, except as may arise in connection with the execution of a responsibility, obligation, or duty excluded from paragraph (8)(A) by paragraph (8)(B), if it is determined that such persons were acting in good faith. The indemnity provided in this paragraph shall be a full faith and credit obligation of the United States.
All securities of the Corporation, all securities of any subsidiary of the Corporation and of ConRail Equity Corporation, and all interests in the employee stock ownership plan which are issued or transferred in connection with the employee stock ownership plan established by the Corporation pursuant to the requirements of this subsection shall be deemed for all purposes to have been issued subject to and authorized and approved pursuant to section 11301
of title 49 and any corresponding provision of any successor statute.
Authorization of appropriations; reappropriation of funds (1)
There is authorized to be appropriated to the Association $3,629,000,000 to be used for the purchase of securities of the Corporation in accordance with this section. All sums received by the Association on account of the holding or disposition of any such securities shall be deposited in the general fund of the Treasury.
To the extent provided in appropriation Acts, any funds appropriated under the authority of paragraph (1) of this subsection prior to January 14, 1983, may be reappropriated to the Secretary, to facilitate the transfer of rail commuter services from the Corporation to other operators, for distribution under the statutory provisions of section 1139(b) of the Northeast Rail Service Act of 1981.
(Pub. L. 93–236, title II, § 216, as added Pub. L. 94–210, title VI, § 605,Feb. 5, 1976, 90 Stat. 89; amended Pub. L. 95–565, §§ 2, 3,Nov. 1, 1978, 92 Stat. 2397; Pub. L. 96–254, title I, § 118,May 30, 1980, 94 Stat. 406; Pub. L. 96–448, title IV, § 405(b)(2), title VII, § 703(e), (f)(1), (2),Oct. 14, 1980, 94 Stat. 1946, 1964, 1965; Pub. L. 97–468, title V, § 504(b),Jan. 14, 1983, 96 Stat. 2552; Pub. L. 99–509, title IV, § 4011(d),Oct. 21, 1986, 100 Stat. 1896; Pub. L. 99–514, § 2,Oct. 22, 1986, 100 Stat. 2095.)
Section 509 of the Railroad Revitalization and Regulatory Reform Act of 1976, referred to in subsec. (b)(3)(A), was classified to section 829 of this title prior to repeal by Pub. L. 105–178, title VII, § 7203(a)(2),June 9, 1998, 112 Stat. 477.
The Railroad Retirement Act of 1974, referred to in subsec. (b)(3)(B), is act Aug. 29, 1935, ch. 812, as amended generally by Pub. L. 93–445, title I, § 101,Oct. 16, 1974, 88 Stat. 1305, which is classified generally to subchapter IV (§ 231 et seq.) of chapter 9 of this title. For further details and complete classification of this Act to the Code, see Codification note set out preceding section 231 of this title, section 231t of this title, and Tables.
The Railway Labor Act, referred to in subsec. (f)(5), is act May 20, 1926, ch. 347, 44 Stat. 577, as amended, which is classified principally to chapter 8 (§ 151 et seq.) of this title. For complete classification of this Act to the Code, see section 151 of this title and Tables.
Section 11301
(b) of title 49, referred to in subsec. (f)(10), was omitted and a new section 11301 enacted in the general amendment of subtitle IV of Title 49, Transportation, by Pub. L. 104–88, title I, § 102(a),Dec. 29, 1995, 109 Stat. 804, 837. The new section 11301 does not relate to issuance of securities.
Section 1139(b) of the Northeast Rail Service Act of 1981, referred to in subsec. (g)(2), is section 1139(b) ofPub. L. 97–35, title XI, Aug. 13, 1981, 95 Stat. 652, which is set out as a note under section 744a of this title.
In subsec. (c)(2), “section 688 of title 2” and “section 682
1986—Subsec. (b)(5). Pub. L. 99–509added par. (5).
Subsec. (f)(2)(C), (3). Pub. L. 99–514substituted “Internal Revenue Code of 1986” for “Internal Revenue Code of 1954” wherever appearing, which for purposes of codification was translated as “title 26” thus requiring no change in text.
1983—Subsec. (g). Pub. L. 97–468designated existing provisions as par. (1) and added par. (2).
1980—Subsec. (a). Pub. L. 96–448, § 703(f)(1), substituted “$2,629,000,000” for “$2,300,000,000”.
Subsec. (b)(3). Pub. L. 96–448, § 405(b)(2), added par. (3).
Subsec. (b)(4). Pub. L. 96–448, § 703(e), added par. (4).
Subsec. (f)(5). Pub. L. 96–254, § 118(a), (b), inserted provisions that the plan not be subject to change under the provisions of section 6 of the Railway Labor Act until after such time as securities have been distributed from the plan to the participants in the plan or their beneficiaries pursuant to the terms of the plan and that, for purposes of this subsection, the Railway Labor Executives’ Association shall be deemed to represent all of the representatives of crafts or classes of employees of the Corporation and its subsidiaries as though that organization held powers of attorney from each representative of a craft or class for the limited purposes of negotiating and agreeing upon an employee stock ownership plan.
Subsec. (f)(8) to (10). Pub. L. 96–254, § 118(c), added pars. (8) to (10).
Subsec. (g). Pub. L. 96–448, § 703(f)(2), substituted “$3,629,000,000” for “$3,300,000,000”.
1978—Subsec. (a). Pub. L. 95–565, § 2(a), substituted “$2,300,000,000” for “$1,100,000,000”.
Subsec. (b)(2). Pub. L. 95–565, § 2(b), substituted “$2,300,000,000” for “$1,100,000,000”.
Subsecs. (f), (g). Pub. L. 95–565, §§ 2(c), 3, added subsec. (f), redesignated former subsec. (f) as (g), and substituted “$3,300,000,000” for “$2,100,000,000”.