(a) Investments may be made in the following railroad obligations:

(1) Obligations issued, assumed or guaranteed as to principal and interest by endorsement, or so guaranteed, which guaranty has been assumed;

(2) Obligations for the payment of the principal and interest of which a railroad corporation such as is described in this section is obligated under the terms of a lease made or assumed; or

(3) Equipment trust obligations in respect of which liability has been incurred by a railroad corporation incorporated under the laws of the United States, or any state of the United States, and owning and operating within the United States not less than five hundred (500) miles of standard-gauge railroad line, exclusive of sidings, or if the mileage so owned is less than five hundred (500) miles, the railroad operating revenues from the operation of all railroads operated by it, including the revenues from the operation of all railroads controlled through ownership of all, except directors' qualifying shares, of the voting stock of the owning corporation, was not less than ten million dollars ($10,000,000) each year for at least five (5) of the six (6) fiscal years next preceding the investment.

(b) Provided, that:

(1) In each year for at least five (5) of the six (6) fiscal years and in the last fiscal year next preceding the investment, the amount of income of such railroad corporation available for its fixed charges, as defined in subsection (c), was not less than one and one-half (1½) times its fixed charges, as defined in subsection (c);

(2) In each year for at least five (5) of the six (6) fiscal years next preceding the investment, the railroad corporation has paid dividends in cash upon its capital stock equivalent to at least one fourth (¼) of its fixed charges, or if the railroad corporation has not paid such dividends, that the amount of income available for its fixed charges was not less than one and one half (1½) times its fixed charges for at least nine (9) of the ten (10) fiscal years and in the last fiscal year next preceding the investment;

(3) At no time within the period of six (6) years has the railroad corporation failed regularly and punctually to pay the matured principal and interest of all its mortgage indebtedness; and

(4) The security, if any, for the obligations shall be property wholly or in part within the United States and the obligations shall be:

(A) Fixed interest-bearing bonds secured by direct mortgage on railroad owned or operated by the railroad corporation;

(B) Bonds secured by first mortgage upon terminal, depot or tunnel property, including lands, buildings and appurtenances, used in the service of transportation by one (1) or more railroad corporations; provided, that the bonds are the direct obligation of, or that payment of principal and interest of the bonds are guaranteed by, endorsement by or guaranteed by endorsement, which guaranty has been assumed by, one (1) or more railroad corporations;

(C) Equipment trust obligations, comprising bonds, notes and certificates, issued in connection with the purchase for use on railroads of new standard-gauge rolling stock through the medium of an equipment trust agreement, and which obligations, so long as any of them are outstanding and unpaid or unprovided for, shall be secured by an instrument:

(i) Vesting title to the equipment in a trustee free of encumbrance; or

(ii) Creating a first lien on the equipment, or, pending the vesting of title, by the deposit of cash in trust to an amount equal to the face amount of the obligations issued in respect of the equipment, title to which is not yet so vested; provided, that the maximum amount of the obligations so issuable shall not exceed eighty percent (80%) of the cost of the equipment; and provided further, that the owner, purchaser or lessee, or the owners, purchasers or lessees, of the equipment shall be obligated by the terms of the obligations or of the instrument to:

(a) Maintain the equipment in proper repair;

(b) Replace any of the equipment that may be destroyed or released with other equipment of equal value, or, if released in connection with a sale of the equipment, to deposit the proceeds of the sale in trust for the benefit of the holders of the obligations pending replacement of the equipment;

(c) Pay any and all taxes or other governmental charges that may be required by law to be paid upon the equipment;

(d) Pay, in accordance with the provisions of the obligations or of the instrument, to holders, or to the trustee for the benefit of holders, of the obligations the amount of interest due on the obligations or of the dividends payable in respect of the obligations; and

(e) Pay the amount of the entire issue of the obligations in annual or semiannual installments each year throughout a period of not exceeding fifteen (15) years from the first date of issue of any of the obligations that the amount of the respective unmatured installments at any time outstanding shall be approximately equal; provided, that unless the owner, purchaser or lessee of the equipment, or one (1) or more of the owners, purchasers or lessees shall be a railroad corporation as is described in and meets the requirements of this section preceding subdivision (b)(4)(A), the obligations shall be guaranteed by endorsements as to principal and as to interest or dividends by the railroad corporation;

(D) Bonds of the railroad corporation secured by irrevocable pledge as collateral under a trust agreement of other railroad bonds that are legal investment for fiduciaries under this section, have a maturity not earlier than the bonds that they secure and of a total face amount not less than the total face amount of the bonds that they secure; or

(E) Fixed interest-bearing mortgage bonds other than those described in subdivisions (b)(4)(A) and (B), income mortgage bonds, collateral trust bonds or obligations other than those described in subdivision (b)(4)(D), or unsecured bonds or obligations, issued, assumed or guaranteed as to principal and interest by endorsement by, or so guaranteed, which guaranty has been assumed by, the railroad corporation; provided, that in each year for at least five (5) of the six (6) fiscal years and in the last fiscal year next preceding the investment:

(i) The amount of income of the railroad corporation available for its fixed charges, as defined in subsection (c), was not less than twice the sum of:

(a) Its fixed charges, as defined in subsection (c); and

(b) Full interest on the income mortgage bonds, if any;

(ii) The net income of which after deductions was not less than ten thousand dollars ($10,000); and

(iii) The railroad corporation has made the dividend and principal and interest payments required by subdivisions (b)(4)(C)(ii)(d) and (e).

(c) The amount of income available for fixed charges shall be the amount obtained by deducting from gross income all items deductible in ascertaining net income other than contingent income interest and those constituting fixed charges. Fixed charges shall be rent for leased roads, miscellaneous rents, fixed interest on funded debt, interest on unfunded debt and amortization of discount on funded debt.

(d) Accounting terms used in this section shall be deemed to refer to those used in the accounting reports prescribed by the accounting regulations for common carriers subject to the Interstate Commerce Act (U.S.C. Title 49). If the interstate commerce commission prescribes accounting regulations in which are defined the terms “income available for fixed charges” and “fixed charges,” the definitions of those terms as so prescribed shall be taken and used in lieu of the definitions set forth in subsection (c) for all purposes.

(e) For purposes of this section, the revenues, earnings, income and fixed charges of, and dividends paid by, any railroad corporation, all or substantially all of the railroad lines of which have been acquired through merger, consolidations, conveyance or lease by another railroad corporation and remain in its possession, shall be deemed to be revenues, earnings, income and fixed charges of, and dividends paid by, the latter corporation.

(f) Not more than twenty-five percent (25%) of the assets of any trust shall be loaned or invested in the bonds, notes and certificates in this section defined, and not more than ten percent (10%) of the assets shall be invested in such bonds, notes and certificates for which any one (1) railroad corporation shall be obligated.