transfer of the non-rail assets of the B & O into a corporation not subject to the jurisdiction of the Interstate Commerce Commission so that, inter alia, they would not be subject to the ICC's ban on transportations by a rail carrier of goods manufactured by the carrier or its subsidiaries and the ICC requirement that it must approve all securities issued by a carrier. This requirement renders impossible any joint venture for the purpose of development of real estate by the B & O such as the development of its Georgetown property.
(12) The properties selected for transfer by the Committee were those with potential for development.
(13) In deciding the method of transferring the non-rail properties to a non-rail subsidiary, consideration was given to selling the properties.
(14) The sale method of transfer was rejected because it would have required expensive and time-consuming appraisals (as much as two years for the coal properties alone) and would have required the transfer of substantial amounts of cash and the payment by the B & O of substantial transfer taxes with the risk that the price for the sale would be unfair to the minority shareowners.
(15) The method of transfer of the non-rail properties chosen by the Committee was transferral into a wholly-owned subsidiary of the B & O followed by the declaration of a dividend in its shares to the common shareowners of the B & O.
(16) Whenever any properties were transferred that had rail facilities of any nature, the B & O was granted a permanent easement for the use of those rail facilities.
(17) On December 13, 1977, the B & O declared a dividend in the shares of MAC. This dividend was part of the corporate restructuring program of the entire Chessie System which had begun in 1973 with the formation of Chessie.
(18) The effect of the transfer of the non-rail properties by the dividend route was that the B & O shareholders each retained their same proportionate interests in both the rail properties retained by the B & O and the non-rail properties transferred to MAC.
(19) Prior to the B & O dividend of the MAC stock in December, 1977, the B & O had not paid any dividend since 1961.
(20) The B & O had not paid any dividends during the period from 1961 to 1977 in part because of its weak financial condition and the need to replace a substantial amount of its operating equipment, in part because of substantial bond maturities and in part because of a requirement in the convertible income bond indenture that the B & O pay an amount equal to any dividend into the surplus income sinking fund.
(21) During that same period and even before the C & O had acquired a controlling interest in the B & O, the C & O had provided the B & O with a significant infusion of capital, without which the B & O could not have remained in operation.
(22) Because it was difficult, if not impossible, to value the MAC dividend in terms of fair market value, the decision was made to call the convertible income bonds, since without calling the bonds, it would not have been possible to pay the MAC dividend.
(23) The convertible income bonds were called at a price of $ 105 per $ 100 face value during the summer of 1977 at a time when the bonds were being thinly traded at a price of $ 60 per $ 100 face value.
(24) At the time of the call of the convertible income bonds, not all of the properties had been selected for transfer by way of the MAC dividend.
(25) The convertible 41/2% debentures, Series A, due January 1, 2010, held by plaintiffs and involved in this suit were issued in 1956 on an offer of exchange for outstanding B & O convertible 41/2% bonds.
(26) On or about January 1, 1956 the B & O had entered into an indenture with the Chase Manhattan Bank pursuant to which Chase acted as trustee for the debenture issue.
A. Defendants did not file with the Chase Manhattan Bank as Trustees of the Indenture dated 1/1/1956 for the issue of debentures a copy of any published notice concerning the declaration of the MAC dividend on December 13, 1977.
B. Defendants did not advertise notice of the proposed declaration of the dividend in MAC shares on the B & O common stock in a newspaper of general circulation in the Borough of Manhattan, City and State of New York printed in the English language.
(27) Under the terms of the indenture each $ 1,000 principal amount of debentures could be converted to 10 shares of common stock of B & O. In this respect the indenture provides inter alia:
At the election of the holder thereof, any outstanding debentures of Series A may (subject to the provisions of this Article Five) be converted at their principal amount into shares (fully paid and non-assessable and of the par value of one hundred dollars each) of common stock of the company, at any time up to fifteen days prior to the date of the stated maturity of such debentures, or if such debentures shall be called for redemption, up to fifteen days prior to the date fixed for such redemption at the conversion price of $ 100 per share.
(28) In March, 1956, the B & O entered into a "listing agreement" with the New York Stock Exchange relating to the listing of these debentures with the Exchange. The B & O's listing agreement provided:
The listing agreements set forth in the company's listing application A 12653 and A-15928 are incorporated herein by reference and made a part hereof...