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APPENDIX I

Section 13 (a). Redemption of preferred stock when articles of incorporation do not provide for redemption-dissenting stockholders.

Any corporation which heretofore shall have issued preferred shares, the issued certificates evidencing which shares contain no provision for redemption, and which corporation has no provision in its articles of incorporation providing for the redemption of such shares, may redeem all of said shares at the par or stated value thereof, provided, that said corporation shall proceed in the following manner:

(a) The board of directors shall adopt a resolution recommending such redemption and directing the submission of such resolution for approval or rejection by a vote of all the shareholders of the corporation, which may be at either an annual or a special meeting.

(b) Written or printed notice stating that the purpose, or one of the purposes, of such meeting is to consider and vote upon the adoption or rejection of a resolution providing for the redemption of said preferred shares, shall be given to each shareholder of record within the time and in the manner provided by this Act for the giving of notice of meetings of shareholders: if such meeting be an annual meeting, such purpose shall be included in the notice of said annual meeting.

(c) At such meeting the shareholders may adopt the resolution for the redemption of all of said preferred shares, and may authorize the board of directors to fix the terms and conditions thereof. Such authorization shall require the affirmative vote of three-fifths of all the shareholders. In the event that the redemption of said preferred shares is authorized by a vote of the shareholders of the corporation, any holder of a preferred share or of preferred shares who shall not have voted in favor thereof, and who, at or prior to the meeting at which said redemption was submitted to a vote of the shareholders, shall file with the corporation written objections thereto, may, within 20 days after the vote was taken, make written demands on the corporation for the payment to him of the fair value of his said preferred shares as of the day prior to the date on which the vote was taken authorizing such redemption. Such demand shall state the number of preferred shares owned by such dissenting shareholder. Any shareholder failing to make demand within the twenty day period shall be conclusively presumed to have consented to the redemption of said preferred shares at their par or stated value, and shall be bound by the terms of said resolution.

If, within thirty days after the date on which such vote was taken, the value of such preferred shares is agreed upon between the dissenting shareholder and the corporation, the corporation shall make payment of the agreed value within ninety days after the date on which the vote was taken authorizing such redemption, upon the surrender of the certificate or certificates representing such shares. Upon payment of the agreed value, the dissenting sharebolder shall cease to have any interest in such shares.

If, within such period of thirty days, the shareholder and the corporation do not so agree, then the dissenting shareholder may, within sixty days after the expiration of the thirty day period, file a petition in any court of compebent jurisdiction within the county in which the registered office of the corperation is situated, asking for a finding and determination of the fair value of such shares, and shall be entitled to judgment against the corporation for the amount of such fair value as of the day prior to the date upon which

said vote was taken, together with interest thereon to the date of such judgment. The judgment shall be payable only upon and simultaneously with the surrender to the corporation of the certificate or certificates representing said shares. Upon the payment of the judgment, the dissenting shareholder shall cease to have any interest in said shares. Unless the dissenting shareholder shall file said petition within the time limited, such shareholder and all persons claiming under him shall be conclusively presumed to have approved and ratified the resolution for redemption voted for by a majority of the shareholders, as herein provided for, and shall be bound by the terms thereof.

APPENDIX II

ST. JOSEPH LIGHT & POWER COMPANY

(Formerly St. Joseph Railway, Light, Heat & Power Company)
Balance sheets as at December 31, 1944

per books, and pro forma, giving effect to proposed transactions
and the contemplated reduction in first mortgage bonds

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5% cumulative preferred $100 par value-new Class A.

5% cumulative preferred $100 par value-presently

outstanding...

Common, $100 par value-new_

Common, $100 par value-old..

Funded and other long-term debt:

$1,305,600

$1,860,000

2,219,400

3,500,000

5,360,000 3,525,000

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⚫ The coupon rate on the proposed new bonds cannot at this time definitely be determined.

• No cash dividends may be declared on the common stock while any of the 4%% first mortgage bonds

due 1947 remain outstanding, except out of earned surplus arising after September 30, 1937. The earned surplus balance at that time amounted to $835,262.

[No. 2394]

IN THE MATter of

THE ROCKY MOUNTAIN FUEL COMPANY

A Corporation, Debtor

Promulgated July 18, 1945

REPORT OF THE COMMISSION

(On the Trustee's Plan of Reorganization)

REPORT OF THE SECURITIES AND EXCHANGE COMMISSION ON THE TRUSTEE'S PLAN OF REORGANIZATION

This is an advisory report on a plan for the reorganization of The Rocky Mountain Fuel Company filed by Wilbur Newton, trustee, on April 21, 1945, and subsequently amended. By order dated May 23, 1945, the district court referred said plan, as amended, to the Commission for examination and report pursuant to Section 172 of the Bankruptcy Act, as amended.

In our opinion the plan is feasible and will be fair within the applicable statutory and judicial standards, provided it is amended to explain clearly to the present bondholders that, although the new company is to be primarily a liquidation and realization company, under the proposed plan, the board of directors will have the power to borrow and expend money for the purpose of engaging in new mining operations which, in their discretion, they may do without a vote of the stockholders.

1. BRIEF HISTORY OF THE DEBTOR

The Rocky Mountain Fuel Company was organized as a Wyoming corporation in 1910 to succeed a Colorado corporation of the same name which had been formed in 1890 under a 20-year charter. The business of the debtor is that of mining and selling at wholesale subbituminous coal, leasing upon a royalty basis its smaller coal properties, and leasing other of its properties for farming and grazing. For a number of years the debtor was a substantial producer of coal in the Colorado fields, and its name and that of its predecessor have been known locally and to the industry for the past 50 years.

The properties of the debtor consist principally of extensive

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holdings of coal lands and other real estate in 12 counties in Colorado, which it acquired in 1910 from the predecessor company and in 1911 by purchase from the Northern Coal & Coke Company. For the properties acquired from the predecessor company with a book value of $1,500,000, the debtor issued $1,500,000 of first mortgage bonds (later first and refunding mortgage bonds were issued in lieu of these bonds, par for par) and $1,500,000 par value each of its preferred and common stock. The debtor purchased the Northern Coal & Coke Company property for $1,375,000 cash through the exercise of an option for which it issued $2,500,000 par value of preferred and a like amount of common stock. The debtor, for the purpose of raising cash to acquire the property of the Northern Coal & Coke Company and to provide adequate working capital, issued its first and refunding mortgage bonds under an indenture dated April 1, 1913. These bonds were sold at 85 and for each $1,000 bond purchased for $850 the purchaser received 10 shares of preferred stock with a par value of $100 per share and 10 shares of common stock with a par value of $100 per share. The bonds provide for an interest rate of 5 percent per annum and a maturity date of April 1, 1943. A total of $3,814,600 principal amount are now outstanding.

The presently outstanding stock of the debtor consists of 34,855.2 shares of preferred with a par value of $100 a share, and 37,425.2 shares of common having a par value of $100 a share. As indicated in the trustee's report under Section 167, it is apparent that the debtor received little or no value for any of its outstanding preferred and common stock.

In 1928, Miss Josephine Roche became associated with the debtor as a member of its board of directors and subsequently held the offices of president and general manager. Miss Roche adopted a management policy friendly to labor and the unionization of coal miners in Colorado. The report of the trustee states that "As a result of this friendly attitude toward labor, . . . the debtor corporation enjoyed very cordial relationships with the United Mine Workers of America. Through Miss Roche's efforts, the debtor has been able to borrow money from Lewmurken, Inc., a corporation which was organized by the United Mine Workers to handle the investment of union funds."

In June, 1939, the debtor company entered into a management contract with Coal Mine Management, Inc., which led to the mechanization of the two mines, then operated by the debtor, known as the Columbine mine and Industrial mine. In connection with the mechanization program, equipment was acquired from the Joy Manufacturing Company, the purchase being financed by the

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