Such plan may constitute managers of the re organization or readjustment under it and pro vide for their compensation and expenses and the members of the committee, or any of them or the members of any other committee of the holders of the stocks, bonds, obligations, or liabilities of the railroad company, or representative of such stocks or of the stocks or securities of any other corporation or corporations, may act as such managers or may be members of any committee constituted by said plan.
Such plan may make provision for the payment of the compensation, disbursements and expenses of the committee and of any other committee or committees representing the holders of stock, bonds, obligations or indebtedness of the com pany or of any other corporation or corpora tions, or of certificates representative thereof, and may charge with the payment thereof or of any part thereof, as well as of all or any part of the indebtedness, liabilities, and obligations in curred by the committee and any such other com mittee or committees, the shares of stock, bonds, obligations, securities and property or any part thereof at any time subject to such plan; and may confer upon the committee or any other committee or committees constituted thereby or provided for therein or upon the managers thereunder, any powers and discretion which the committee, in its uncontrolled discretion, may deem proper and expedient, although not expressed or contemplated in this agreement.
On depositing his bonds with the desig nated depository trust company the bond holder will be given a certificate of deposit, which will read somewhat as,follows: Certificate of deposit of five per cent general mortgage bonds of the X. Y. & Z. Railroad Company, under deposit agreement dated May W3, 1916, between Thomas Brown, Henry Robinson, John Jones, Robert Smith, and Richard Ames and the holders of the five per cent general mortgage bonds of the X.Y. & Z. Railroad Company.
The Manhattan Trust Company of New York hereby certifies that it has received from five per cent ieneral mortgage, bonds as above stated, subject to the terms and conditions stated in the above-mentioned deposit agreement. The holder hereof assents to and is bound by the pro visions of said agreement by receiving this cer tificate and is entitled to receive all the securities, benefits and advantages to which the depositor of said shares is or may become entitled, pursuant to the provisions of said agreement. The interest represented by this certificate is assignable, sub ject to the terms and conditions of said agree ment, by transfer upon the books kept by this company for that purpose by the holder hereof in person or by attorney, upon the surrender of this certificate duly indorsed for transfer.
Though the form given shows a registered certificate transferable only by change of registration, such receipts may be issued to run to "bearer." The registered form is usual,
however, and an endorsement of the power of attorney in blank makes it sufficiently negotiable.
Of course, the purpose of issuing these certificates, besides their immediate service as a receipt, is to supply the bondholder with something he can sell. If the issue now in default had a market when it was not in default, the course of dealings will continue after the default at prices representing the condition and prospects of the security. Dealings will take place in the deposit certif icates just the same as in the security itself. Note the statement in the protective com mittee announcement shown a little later that: "Application will be promptly made for listing the certificates of deposit on the New York Stock Exchange. In fact a course of dealings will go on side by side in the deposit certificates and in the undeposited securities, and a slight difference in the quo tations may arise depending on an opinion as whether it is more advantageous to have deposited or not to have deposited.
Though the bondholder who does not at once deposit his bonds may be taking a posi tion which somewhat resembles that of the dog in the manger, he is nevertheless making a fairly good speculation in not depositing quickly. Every protective committee neces sarily involves some expenditures which the depositing bondholder will have to bear in the proportion that the number of bonds he deposits bears to the total number of bonds deposited. The members of the protective committee are entitled to some compensation for their services. The depository agreement should specifically provide for the amount of this compensation, or the means of determin ing what the compensation should be. Prob ably they will have counsel fees to pay. There will be incidental expenses of printing, clerical assistance, postage, the fee of the trust com pany for acting as depository, etc. The vari ous expenses may run to a considerable total. Though the amount apportionable to each bond deposited will not be great, it will nevertheless amount to something, perhaps from one half to one and a half per cent. If the committee is not able to bring about a reorganization and dissolves without ac complishing anything substantial, those who have deposited will have to bear this expense and will be no better off than those who did not deposit. Usually the desire of the com mittee to get as many bonds deposited as possible leads to its allowing a considerable period at the very start within which to deposit, and from time to time to announcing an extension of the original time for deposit. So the bondholder who does not deposit at once is likely to have the opportunity open to him for a considerable period, and as time elapses he may be able to see more clearly whether it is desirable for him to deposit or not.