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20 MARINE REVI EW. [May 29 THE SHIPPING AGREEMENT. FULL TEXT OF THE DOCUMENT AS DRAWN BY MR. J. PIERPONT MORGAN AND. THE OWNERS OF THE WHITE STAR AND DOMINION LINES. Below is given in fairly complete form the full text of the agreements with and terms of purchase of the various steamship lines in the Morgan shipping combination. The agreement was made on Feb. 4 last. The following is the phraseology of the provisional agreement: ; Ismay, Imrie & Co., of No. 30 James street, in the city of Liverpool (hereinafter called the White Star vendors); Richards, Mills & Co., of No. 24 James street, in the city of Liverpool (hereinafter called the Dominion vendors); Peter A. B. Widener and Clement A. Griscom. (hereinafter called the American vendors), and Bernard N. Baker (hereinafter called the Atlantic vendor), parties of the first part (hereinafter called the vend- ors), and J. P. Morgan & Co. (hereinafter called the bankers), parties of the second _part:. ° f Sent ; The object and purpose .of this agreement are the acquisition on of before Dec. 31, 1902, of the maritime properties and businesses. hereinafter described, by a corporation (hereinafter called the corporation), to be organized under the direction of the vendors to the satisfaction of the bankers, under the laws of the state of New York, or such other state as shall be selected by them, for and in consideration of the issue therefor to the vendors or their representative of the total capital stock of the corporation, being $120,000,000, of which $60,000,000 .shall be preferred stock, entitled and limited to cumulative dividends (in the same manner as the preferred stock of the United States Steel Corporation), at. the rate of 6 per cent per annum, payable semi-annually, and $60,000,000 com- mon stock, limited to dividends of 10 per cent per annum, so long as there shall: be outstanding any of the debentures, hereinafter mentioned, and also $50,000,000. of collateral trust debentures, bearing interest at-the rate of 41% per cent per annum, payable semi-annually, the principal to be pay- able in twenty years, with the right to the corporation at any time after five years to redeem the same at 105. The maritime properties and busi- nesses to be acquired by the corporation are the following: . . Seven hundred and fifty shares of one thousand pounds. (£1,000) each, all fully paid up, of the Oceanic Steam Navigation Co., Ltd., of No. 30 James street, in the city of Liverpool: (hereinafter called the White Star line), including the new vessels building for said company, and including | all rights in the name of the White Star line and' in the flag of such line. The business, good will, assets and property of the firm or partner- . ship of Ismay, Imrie & Co., as carried on by them in the cities of Liv- erpool, London or elsewhere, including, so far as the White Star vendors | can sell and dispose thereof, the position of managers of the Oceanic . Steam Navigation Co., Ltd.; but excluding therefrom all of the proper- ties-and rights mentioned in the special c6ntracts or agreements collateral hereto between the White Star vendors and the bankers, to which con- tracts reference is made for a statement of the terms, conditions, consid- eration and extent of the transaction agreed upon in respect of such shares, © business; good will, assets and property. All the shares of the British & North Atlantic Steam Navigation Co., : Ltd. (hereinafter called the Dominion line), including all shares of the: Mississippi & Dominion Steamship Co., Ltd., including all the new ves- sels building for said companies, and including all rights in the name of Dominion line and in.the flag of such line. . The business, assets and good will of the partnership or firm of Rich- ards, Mills & Co., as managers' agents, forwarding agents, master porters » or otherwise, in connection with the business of the British & North At- | lantic Steam Navigation Co., Ltd., and the Mississippi & Dominion Steamship Co., Ltd., as carried on by them, whether in Great Britain or abroad; but excluding therefrom all of the properties and rights men- tioned in the special contracts or agreements collateral hereto between the Dominion vendors and the bankers, to which contracts reference is made > for a statement of the terms, conditions, consideration and extent of the | transaction agreed upon in respect of such shares, business, assets and . good will. 7 » . The capital stock, properties and assets of the International Naviga- tion Co. (hereinafter called the American line), including the new vessels building for said company. -The capital stock, properties and assets of the Atlantic Transport Co., . of West Virginia (hereinafter called the Atlantic Transport line), includ- ing the. new vessels building for said company. j One hundred and eighteen thousand, four hundred and sixty-three ordinary shares and 58,703 preference shares of the capital stock of Fred- erick Leyland & Co., 1900, Ltd. (hereinafter called the Leyland line), The date as of which such acquisition of the White Star line and business, and of the Dominion line and business is to be made in Jan. 1, 1901, so that the corporation shall be entitled to all of the profits of the operations of the said lines and business acquired as aforesaid from and after Jan. 1, 1901, and shall be bound to pay upon the several pur- chase prices interest at the rate of 5 per cent per annum from Jan. 1, 1901, until the date from which cumulative dividends shall begin to accrue | upon the preferred stock of the corporation. _The relative valuations of the several properties for the purposes hereof are to be as follows: The valuation of the shares of the White | _ Star line shall be a sum equal to ten times the net profits of the company for the year 1900, such profits to be taken as shown by the company's | books, subject to the deductions and exceptions, and with the' further conditions shown and stated in the collateral agreement, with respect to the method of the ascertainment of the price and property of the White -Star line involved hereunder, it being expressly understood that all calcu- lations necessary to arrive at the exact sum to be paid or to be accounted for by the White Star vendors or by the corporation, respectively, under - any of the provisions of this agreement, are, if the parties shall be unable » to agree thereon, to be made by Messrs. Price, Waterhouse & Co., ofthe city of London, chartered accountants, and each party shall accept their | - calculations and decision thereon as final and binding, and act accordingly, | _and pay one-half of their charges. The same basis is also used as a valuation forthe busines¢'of the firm _ oe of Ismay, Imrie & 'Co. in. any way connected with shipping: and also for | the Dominion line and the shipping business. of. Richards, Mills..& Co., | vwhoaré the' owners' of the Dominion' Wine. ' provisions' in-the'agreement: "Then comes the following | The aggregate valuation of the American line and of the Atlantic Transport line, including new tonnage, and as to the American line, sub- ject to $19,686,000 of the 5 per cent bonds of that line, shall be $34,158,000, The valuation of the shares of the Leyland line shall be $11,736,000, it being understood that there are or will be outstanding £815,000 5 per cent. preference shares, and £500,000 4 per cent debentures of the said line, not included hereunder. ' : i The price and the method of payment of the price for the said sev- eral properties referred to above as collateral agreements, to be conveyed to the corporation shall be as follows: | oe For the total valuation of the White Star line, and the business of Ismay, Imrie & Co. determined, as aforesaid (exclusive of new. tonnage and except as otherwise provided in said collateral agreements), 25 per cent thereof in cash, 75 per cent thereof in preferred stock at par, anda sum equal to 37% per cent thereof in common stock at par of the corpora- tion. aS : ad For the total valuation of the Dominion line and the business. of Richards, Mills & 'Co. determined as aforesaid (exclusive of new tonnage and except as otherwise provided in said collateral agreements), 25 per cent thereof in cash, 75 per cent thereof in preferred stock at par, and a sum equal to 3714 per cent thereof in common stock at par of the cor- ion. : eee the total valuation of the American line and the Atlantic Trans- port line (exclusive of new tonnage and also exclusive of proper interest adjustment), $18,314,000 in the preferred stock at par and $9,157,000 in the common stock at par of the corporation, and, also, as and when required, $15,844,000 in cash for new tonnage and indebtedness, and such further cash as may be required for proper adjustment of interest at a rate not exceeding 6 per. cent per annum. For the said ordinary shares and preference shares of the Leyland line, $11,736,000 in cash, with a proper addition thereto for. interest at a rate. not exceeding 6 per cent per annum. All the remainder and residue of the preferred stock and the common stock of the corporation, and also its said collateral trust bonds for $50,000,- 000, are to be retained by and are to belong to the vendors,: who, however, are to contribute to the corporation, as working capital, $786,000 in pre- . ferred stock and. $6,643,000 in common stock, and are to transfer to the syndicate (if-and when. formed by the bankers) for $50,000,000 cash, and in full payment for its services, the said $50,000,000 -debentures and $2,500,- 000 of preferred stock and $25,000,000 common stock of the corporation. It is understood that if so determined by the: bankers (who are hereby vested with power to make such determination in the exercise of their unrestricted discretion), the corporation either may. take 'or may decline to take any one or more of the said lines (except as otherwise provided in the collateral agreement), of which less than three-fourths interest shall be delivered to the corporation at the time that it shall complete its purchase as aforesaid on or before Dec. 31, 1902. Notwithstanding the exclusion of any one or more of said lines or businesses (if so determined by the bankers), the corporation may take any or all of the other lines or businesses hereinabove described. In the event any of said lines or businesses shall be so excluded from the transfer herein proposed, then and in every such case the indebtedness and capitalization of the corpora- tion shall be reduced correspondingly. Ee . ae The bankers were to form a syndicate to purchase from the vendors for $50,000,000 in cash the debentures mentioned above, the $25,000,000 in common stock and $2,500,000 in preferred stock; but in case the syn- dicate was not formed by April 30, 1902, the obligations in the provisional agreements ceased. : hee The accompanying letter, signed by J. P. Morgan & Co., and dated New York, Feb. 5, 1902, was' addressed to Messrs. Ismay, Imrie & Co., Richards, Mills & Co., P. A. B. Widener, Clement A. Griscom and Ber- nard A. Baker: "Gentlemen: Referring to the agreement entered into by the under- signed with your good selves, under date of Feb. 4, 1902, we beg to con- firm the statement already made to you orally that, in our judgment, it may be an essential condition to the completion of said contract that the majority of the shares of the new corporation should at the outset 'be held in America. As the contract and capitalization are now arranged, this might not be the case. As we have stated to you, under stich con- ditions, we do not think it would be practicable to bring out the company successfully in America. We think it likely, however, that arrangements can be made, outside of the contract, which will avoid this difficulty, and having made this explanation we are quite willing to execute the agreement, our only desire being that you should be in full possession of our views on the subject, so that in case it should prove impossible to avoid the difficulty which we now hope to overcome, you might not be disappointed if we should be compelled to advise you that we are unable to successfully carry out the contract." : Each of the sellers entered into the following agreement: "The sellers, and each of them, hereby agrees that they will not, nor will any of them, except with the consent of the purchasers or its successors or assigns, as the case may be, for a period of fourteen years from the date hereof, directly or indirectly be interested, whether as principal, agent, manager, or otherwise, in the steam or shipping trade between the sea- board of the United States, of Canada, of the West Indian islands, and of the Gulf of Mexico and ports in the United Kingdom, or on the con- tinent of Europe, or in any steam or shipping trade in' which the 'steamers of the Oceanic Steam Navigation Co., Ltd., have hitherto traded, or to or from ports adjacent thereto. This restriction is not to prevent the sellers, or any of them, from being shareholders merely in any company owning vessels trading in the prohibited areas. Nothing herein contained shall prevent the sellers, or any of them, from continuing to act as a di- rector or manager of the company, or any other company which the purchasers form for carrying on shipping business." fae __. The following agreement is made with Harland & Wolff, the Belfast firth of ship builders. It is probably, to'American ship builders, the most - interesting provision in the whole agreement:: _ Whereas, the purchasers desire, in case said principal contract is carried out, to-arrange with the builders for the construction and repair of ships for the purchasers, now, this' agreement witnesseth: - "Tn consideration of the undéttakines given b ilders i us ie wa eit ie Tine € ngs given the builders in clauses 2 and 3: of 'this'a'reeméat! the iBurthaserd bind and oblige' themselves to tees caluse tobe placed with"the builders, 6n_ cOthittission, 'terms 'As set férth in clause"4 of this agreement, all ordérs' for new' steamers' 'or