On page 13, line 4, strike out the quotation marks.

On page 13, after line 4, insert the following:

"SEC. 20c. (1) All proceedings under section 77 of the Bankruptcy Act, as amended, which are pending on the date of enactment of this section, whether before the Interstate Commerce Commission or United States courts, relating to the preparation or effectuation of plans of reorganization of each carrier by railroad as defined in said section 20a (1) whose properties on the effective date of this section are in the custody of the United States courts, shall be forthwith suspended and discontinued as of the effective date of this section

"If, for the period of seven calendar years from 1939 to 1945, inclusive, the total of the income reported to the Commission as income available for fixed charges, plus (a) the total of any amounts so reported as a deficit for fixed charges in any of said seven years to the extent of the total of any amounts reported for Federal income and excess-profits taxes in any of said years, and (b) amounts deducted in any year for amortization of emergency facilities under section 124 of the Internal Revenue Code in excess of 20 per centum of the cost of such facilities, of such carrier, or, on a joint or consolidated basis, of the carriers in the system of which such carrier is a part, or of such carrier and other carriers, directly or indirectly controlled by it, through direct or indirect ownership of at least a majority of their stock, is at least equal to the reported total fixed charges (other than charges on intercompany obligations) of such carrier or carriers for such period.

"(2) Carriers to which paragraph (1) of this section is applicable shall institute proceedings and file application under section 20b of this act as expeditiously as practicable but in no event later than eighteen months after the effective date of this section, or such longer period as the Commission, on application, may approve: Provided, That this paragraph (2) shall not be construed to require the filing of such application if the proceedings under section 77 of the Bankruptcy Act as to any such carrier shall have been dismissed in accordance with the provisions of paragraph (4) of this section.

"(3) The properties of any carrier specified in paragraph (1) of this section shall continue in the custody of the United States courts having custody of them; except that the following portions of said section 77 shall not be applicable in any such case:

"(a) The first two paragraphs of subsection (b).

"(b) Paragraph (1) of subsection (c).

"(c) The first five sentences, and the first seven words and the last twentytwo words of the sixth sentence, of paragraph (2) of subsection (c): Provided, That for the purposes of this section there shall be substituted for the said last twenty-two words of said sixth sentence, the words 'custody and supervision of the judge'.

"(d) Subsections (d), (e), (f), and (k).

"From and after the termination of the trusteeships pursuant to paragraph (5) of this section, and during the pendency of proceedings under section 20b, the word 'debtor' shall be substituted for the words 'trustee or trustees' wherever such latter words occur in subdivisions (3), (5), (9), and (10) of subsection (c), and subsections (i) and (0), of said section 77.

"The Commission and the court shall promptly determine the final allowances as of the effective date of this section, to be paid out of the estate of each carrier to which paragraph (1) of this section is applicable, pursuant to the provisions of paragraph (12) of subsection (c) of said section 77, and each such carrier shall pay and discharge such allowances, respectively, as may be fixed upon final adjudication thereof in accordance with paragraph (12) of subsection (c) of said section 77; and no further allowances shall be made or determined pursuant to the provisions of paragraph (12) of subsection (c) of said section 77, as compensation or fees for services rendered or in payment of espenses incurred after the effective date of this section. The final determination heretofore or hereafter made in the United States courts with respect to the relative priorities as between the respective classes of security holders, the subordination of the interest of a creditor or security holder of the debtor to the interest of other creditors or security holders, or the validity, amount, and priority of any claim as of the date of the filing of the peitition by the affected carrier under section 77 of the Bankruptcy Act, shall continue in full force and effect. Nothing contained in this section is intended or shall be construed to modify or rescind any such determination or to prevent or delay the prosecution to final determination of any such issue now pending, and not yet finally determined, in the United States courts. Nothing in this section shall be deemed to limit, qualify, or restrict the right of the debtor (which right

of the debtor is hereby confirmed), with the approval of the court (a) to purchase in whole or in part any bond issues or other obligations of the debtor (including bonds or other obligations guaranteed or assumed by the debtor), at a discount or otherwise, provided that the court's approval of the debtor's purchase of any such obligations junior in lien to first lien mortgage bonds shall be granted only if the court finds, after hearing, that such purchase will be for the best interests of the estate of the carrier and will not deprive the holders of obligations senior in lien to the obligations proposed to be purchased of adequate security and protection; (b) to hold or to retire and cancel any of its bonds or other obligations now held or hereafter acquired by the debtor; and (c) to make voluntary agreements or compromises with any creditor or creditors as to either principal or interest of his or their claims or the security therefor, provided that the court shall find, after hearing, that any such agreement or compromise will be in the best interests of the estate of the carrier and will not unjustly or inequitably affect the claims or security of other creditors.

"(4) The proceedings with respect to any such carrier specified in paragraph (1) of this section under section 77 of the Bankruptcy Act shall be dismissed upon consummation of proceedings affecting such carrier under section 20b of this Act, or upon payment of its matured, unpaid obligations, or the making of other arrangements with reference to such obligations satisfactory to the owners of the claims therefor; and such proceedings may be dismissed under the conditions and in the manner prescribed in subsection (g) of section 77 of the Bankruptcy Act: Provided, That in the event there has been a determination by the United States courts with respect to subordination of any claim, or the issue thereon has not been finally determined, the determination of that one issue, and only that issue, shall be continued and prosecuted to completion and shall be binding on the security holders of such company; but such continuance of the determination of that sole issue shall not delay the dismissal of the proceedings in any and every other respect.

"(5) Whenever the court shall enter an order finding that in accordance with the provisions of paragraph (11) of this section a qualified board of directors has been duly elected by the stockholders of any carrier to which paragraph (1) of this section is applicable, the appointment, term of office, powers, authority, compensation and fees of each trustee theretofore appointed by the court in said bankruptcy proceedings, and of each counsel of such trustee, shall thereupon be terminated: Provided, That if no such order has been entered by the court within four calendar months after the effective date of this section, the appointment, term of office, powers, authority, compensation and fees of such trustee appointed by the court, and of each counsel of such trustee, shall nevertheless be terminated upon the expiration of said four-month period, and the board of directors of such carrier then purportedly elected shall exercise full power and authority until a board of electors qualified under paragraph (11) of this section has been found by the court to have been duly elected.

"No appeal from any order of the court finding that in accordance with the provisions of paragraph (11) of this section a qualified board of directors has been duly elected by the stockholders of any carrier to which paragraph (1) of this section is applicable, and no judicial review of any such order, shall operate as a supersedeas or stay the effect of any such order or the termination of such trusteeship as aforesaid.

(6) If the United States of America, or any agency thereof, or any corporation (other than the Reconstruction Finance Corporation) the majority of the stock of which is owned by the United States of America, is a creditor or stockholder of any such carrier, the President of the United States or any officer or agency he may designate, is hereby authorized to act in respect of the interest or claims of the United States or of such agency or other corporation.

"(7) The Commission shall designate one or more qualified members of its staff to serve as mediator or mediators in each of the proceedings under section 20b with respect to carriers specified under paragraph (1) of this section for the purpose of bringing the different classes of creditors and other security holders, together, of being available to advise with them, of assisting in the effectuation of changes, compromises, arrangements, negotiations, and dealings with the various classes of creditors and other security holders and with individuals, groups, and committees representing creditors or other security holders, of assisting in expediting all stages of the proceedings and the early termination and the consummation of all transactions hereunder, including all steps requisite for the effectuation thereof. "(8) In proceedings under section 20b with respect to a carrier specified in paragraph (1) of this section the Commission shall have the power, in its discretion,

to submit to holders of obligations, any proposed alteration or modification affecting them which the Commission has caused the carrier to submit to such holders under the provisions of paragraph (2) of section 20b hereof; in the event that it is satisfied that such alteration or modification has been accepted by or on behalf of creditors of each class to which submission is required under section 20b holding more than two-thirds in amount of the total of the allowed claims of such class which have voted on said alteration or modification, the Commission shall enter an order approving and authorizing the proposed alteration of modification as provided in said paragraph (2) of section 20b hereof: Provided, That it shall enter such order in any case in which such alteration or modification has not been so accepted by the creditors of any class or classes if it finds, after hearing, that the alteration or modification makes adequate provisions for fair and equitable treatment for the claims of those rejecting it; that such rejection is not reasonably justified in the light of the respective rights and interests of those rejecting them and all the relevant facts; and that the alteration or modification is fair and equitable, affords due recognition to the rights of each class of creditors and stockholders, and will conform to the requirements of the law of the land.

"(9) If after having submitted a proposed alteration or modification to holders of affected obligations as provided in paragraph (8), the Commission shall not have entered an order approving and authorizing such proposed alteration or modification within a period of twelve months following the date of the filing of an application in accordance with paragraph (2) of this section, or such extended periods as the Commission on application therefor may approve, then the Commission, after hearings, shall formulate and submit to holders of affected obligations such alteration or modification as in its opinion meets the standards set forth in section 20b above. In applying such standards of section 20b for the purpose of any such alteration or modification under this paragraph, the Commission shall give full effect to all changes, facts, and developments since 1940, including, without limitation, for such period total railway operating revenues, operating expenses, and other charges, net earnings, the full effect of amortization deductions on earnings of past and future years, improvements to the property, the effect of the released collateral through past or future payment of loans, cash and net current assets, retirements and purchases of debt, including retirements and purchases at a discount that have been made or that can reasonably be made, and adjustment and reduction of interest rates on outstanidng debt that may be made. In the event the Commission is satisfied that such alteration or modification has been accepted by the percentages required for acceptance under the provisions of section 20b or of paragraph (8) of this section, it shall enter an order approving and authorizing such alteration or modification, unless it finds that, prior to the entry of such order, the alteration or modification submitted under paragraph (8) has been accepted by the percentages required by the provisions of that paragraph or of section 20b, in which event it shall enter an order approving and authorizing such alteration or modification submitted under paragraph (8). "(10) In the exercise of its powers under this Act with respect to any carrier to which paragraph (1) of this section is applicable, the Commission shall accept as the amount of the respective obligations of such carrier the principal thereof plus interest at the rate specified in the instruments evidencing such respective obligations accrued to the date on which the carrier filed its petition (subsequently approved) in a United States district court pursuant to section 77 of the Bankruptcy Act; and only such consideration or recognition shall be given to the allowance of compensation in the nature of interest (whether in cash or securities or otherwise) on any such obligations during any period or periods subsequent to the date of the filing of such petition as equity and the law of the land may require, having due regard to the earnings or deficits in earnings fairly applicable to the properties of the carrier upon which liens may exist to secure the payment of any such obligations, the rates of interest paid or incurred on comparable obligations of carriers not in bankruptcy or receivership proceedings, the amount and trend of rediscount rates of the Federal Reserve bank in the applicable district or districts, and all other relevant facts. Appropriate adjustments shall be made for any payments on account of principal or interest on any such obligations made during the pendency of such proceedings under section 77 of the Bankruptcy Act.

“(11) (a) Every carrier to which paragraph (1) of this section is applicable shall call a special meeting of stockholders for the election of directors to be held within sixty days after the effective date of this section. Written notice of such meeting, containing a statement that directors are to be elected thereat in accordance with the provisions of this section, shall be mailed to all stockholders of record at least

thirty days prior to such meeting. No proxies or authorizations to vote any shares of stock for directors at such meeting shall be valid or effective unless executed within thirty days prior to such meeting.

"The terms of office of all directors and officers of such carrier who are in office on the effective date of this section shall terminate upon the election and qualification of their successors, as herein provided, notwithstanding any provision of the charter or bylaws of such carrier or of any State law to the contrary. The terms of office of all directors elected at such special meeting shall be the unexpired terms of their predecessors: Provided, That if the unexpired terms of such predecessors be less than four calendar months from the date of such election, then the terms of office of the directors to be elected at such special meeting shall not expire until one year following the date on which the terms of their predecessors would have expired. The subsequent terms of office of said directors shall be as provided by the charter or bylaws of such carrier or by State law.

"In order for a board of directors elected at such a meeting to qualify to exercise the powers of such board during the pendency of proceedings under section 20b (except to the extent and under the conditions provided in paragraph (5) of this section), each of a majority of such directors so elected shall reside, and for the last seven or more years shall have resided, in communities located on or within 100 miles of the line of the carrier, and shall be, and for the last seven or more years shall have been either (a) a stockholder of record of the carrier, or (b) actively connected with the management of the carrier as officer, director, local or general counsel, or with the reorganization proceedings as a member of protective groups or committees admitted to the proceedings by the court or as an inindividual party in interest.

"Within ten day following the election of directors hereunder, the carrier shall cause to be filed in the United States district court in the pending proceedings for the reorganization of such carrier under section 77 of the Bankruptcy Act, a report of the results of such election of directors. Said report shall include a statement of the following:

"1. The date and place of such election; the notice thereof given to stockholders of record; and the date as of which said stockholders were determined; "2. The number of directors who were to be elected;

"3. The total number of shares of stock authorized to vote and the total number or votes authorized to be cast at said meeting for such directors pursuant to the charter and bylaws of such carrier, and whether and to what extent and in what manner said votes may be cumulated for one or more directors;

"4. The name and residence address of each person for whom votes were cast at such election of directors and the number of votes received by him; "5. Facts showing whether each such person for whom votes were cast at such election does or does not meet each of the qualifications hereinabove required of a majority of such directors; and

"6. The names and addresses of each holder of record of 10 per centum or more of the total number of shares of the carrier's voting stock, and (if known to such carrier) the names and addresses of any individual, corporation, or other entity to which subparagraph (b) or (c) of this paragraph (11) is applicable; the total number of shares voted by each such holder, individual, corporation, or other entity and any proof submitted to establish the right to vote such stock; the number of the votes counted in such election which were cast by each such holder, individual, corporation, or other entity; and the names and addresses of each of the persons for whom such votes were cast for directors.

"A copy of said report shall be mailed by such carrier to all parties of record in said bankruptcy proceedings not later than the date on which said report is filed in said court.

"Within ten days of the filing of said report, the court shall hold a summary hearing thereon, giving such notice thereof as the court may determine. Any party in interest may appear and be heard and submit evidence relevant to the conduct of such election and the qualifications of the persons for whom votes were cast for directors.

If the court shall find upon such hearing that a qualified board of directors has been elected in accordance with the provisions of this paragraph (11), he shall forthwith enter an order accordingly, naming the directors so elected.

"If the court shall find upon such hearing that a qualified board of directors has not been elected in accordance with the provisions of this paragraph (11), he shall enter an order accordingly, giving his reasons therefor and expressly finding

which persons, for whom votes were cast at such election, fail to meet one or more of the qualifications hereinabove required of a majority of such directors.

"In case the court shall find that each of a majority of those who were purportedly elected directors does not meet such qualifications but that such election was otherwise lawful, the court shall have the power and authority either (a) to void the election of as many of such persons not so qualified (in the order in which they received the lowest number of votes, and in case of tie votes the court shall designate which of such persons receiving tie votes) as may be necessary to make each of a majority of those remaining so qualified (provided, that the number of directors shall not thus be reduced to less than a quorum of the full board of directors), or (b) to direct that another special meeting of stockholders be held for the election of directors within thirty days of the date of such order.

"Whenever the court shall order a second special meeting of stockholders to be held for the election of directors and the court shall thereafter find that a qualified board was not duly elected at such second meeting, the court shall have the power and authority to void the election (in the manner above provided) of as many purportedly elected directors who do not meet the qualifications hereinabove required of a majority of such directors and to appoint as many persons who are so qualified as may be necessary to make each of a majority of such directors so qualified.

"No appeal from any order of the court finding that in accordance with the provisions of this paragraph (11) a qualified board of directors has been duly elected by the stockholders of any carrier to which paragraph (1) of this section is applicable, and no judicial review of such order, shall operate as a supersedeas or stay the effect of any such order or limit the power and authority of such board of directors.

"From and after the effective date of this section and during the pendency of proceedings under section 20b, all elections of directors of any carrier to which paragraph (1) of this section is applicable shall be subject to and shall be held in conformity with the provisions of this paragraph (11), and no elected board of directors shall be empowered to act until and unless such board is found by the court to be qualified in accordance herewith, except under the conditions and to the extent provided in paragraph (5) of this section. Nothing herein is intended

or shall be construed so as to prohibit such carrier from designating any such special meeting of stockholders as the annual meeting thereof or from transacting any business (in addition to the election of directors in accordance with this paragraph (11)) which may lawfully be transacted at an annual meeting of stockholders of such carrier: Provided, That such procedure otherwise conforms to the requirements of the charter and bylaws of such carrier and to the laws of the United States and of any State applicable thereto.

"During the interim between the elections of qualified boards of directors hereunder, any vacancies occurring on such boards may be filled in the manner provided by the charter or bylaws of such carrier or by State law, subject, nevertheless, to the requirements hereof as to the qualifications of a majority of said directors.

"(b) No holding company, individual, group, partnership, association, corporation, or other entity (excluding any operating common carrier subject to part I of this Act, but not excluding any holding company or other nonoperating corporation which has been held or which may be held to be a common carrier within the meaning of said Act) which upon the effective date of this section or hereafter"(A) exercises direct or indirect control of one or more railroad corporations the properties of which are not in the custody of a court in proceedings under section 77 of the Bankruptcy Act, and also owns, holds, or controls, directly or indirectly, shares of voting stock of any railroad corporation to which paragraph (1) of this section is applicable, in sufficient number to control such carrier, or

"(B) owns, holds, or controls, directly or indirectly, or possesses the right to vote or cause to be voted, any shares of stock of a carrier to which paragraph (1) of this section is applicable, in a total amount equal to 10 per centum or more of the total outstanding stock of such carrier having the right to vote for directors,

shall, during the period such carrier shall be in possession of its properties and in control of the management and operation thereof under this section, vote such shares or cause such shares to be voted for the election of more than that number of directors representing the proportion of the total number of directors of such carrier which the number of such shares of stock bears to the total number of shares of stock entitled to vote for directors of such carrier, and in no event shall