IX

UNITED STATES SHIPBUILDING COMPANY1

INCORPORATION

HE United States Shipbuilding Company was incorporated.

ΤΗ

on June 17, 1902, under the laws of the state of New Jersey. The incorporators were Howard K. Wood, Horace S. Gould, and Kenneth K. McLaren. . . . The incorporators collectively subscribed for fifteen shares of the preferred and fifteen shares of the common stock of the company.

On June 24, 1902, the incorporators above named, constituting the stockholders of the company, held their first meeting. . At this meeting Frederic K. Seward was elected a director for one year, Raymond Newman was elected a director for two years, and Louis B. Dailey was elected a director for three years, the minutes of the company reciting that Howard K. Wood, one of the incorporators and subscribers to the stock, had assigned his right to one share of common stock to each of the persons above named to qualify them as directors. No stock of the United States Shipbuilding Company, however, was issued to or placed in the name of these directors, so far as the records. of the company disclose.

On the said 24th day of June, 1902, the first meeting of the directors of the United States Shipbuilding Company was held. At this meeting there were present Louis B. Dailey, Raymond Newman, and Frederic K. Seward, being all of the directors. The minutes recite that the Board proceeded to the election of officers for the ensuing year, and, ballots having been cast and counted, it was found that Raymond Newman had been elected

1 From Report of James Smith, Jr., Receiver, filed Oct. 31, 1903; United States Circuit Court, District of New Jersey, R. R. Conklin, et al v. United States Shipbuilding Co. [Condensed by omission of immaterial parts and legal repetitions.]

president; Louis B. Dailey, vice-president; and Frederic K. Seward, secretary and treasurer. The persons above named as incorporators were . . . all connected with the Corporation Trust Company of New Jersey as officers or otherwise, and the place of residence above stated being the New Jersey office of said Trust Company. The directors were also employees of said company.

At this meeting of the directors an offer was received from one John W. Young, of which the following is a copy:

OFFER OF PROMOTERS

TO THE BOARD OF DIRECTORS, etc.,

NEW YORK, June 24, 1902.

unto your Company for the

I hereby offer to convey, sell, etc., consideration hereinafter stated, the following property, viz. :

(1) All of the capital stock of the Union Iron Works of San Francisco, Cal., . . . together with all of its property, real and personal, business and good will as a going concern, I hereby agreeing that this corporation has no bonds out and no indebtedness except current accounts, etc.

Messrs. Henry T. Scott and Irving M. Scott have agreed with me to enter into the usual contract with your Company not to compete with it in its business, and not to employ their capital . . . for the period of ten years.

This offer of the stock and property of the Union Iron Works is made also upon the following express conditions, viz.: That your Company shall enter into a contract extending over a period of five years with Messrs. . . ., now connected with the management of the Union Iron Works, to act as officers or managers . . . for this period of five years at an annual salary to be paid to each of $10,000, etc.

(2) The entire capital stock of the Harlan & Hollingsworth Company of Wilmington, Del., etc.

(3) Also the entire capital stock of the Eastern Shipbuilding Company, etc.

(4) All of the real estate of the Canda Manufacturing Company, etc. (5) Also the entire capital stock of the Crescent Shipyard Company . . and the business of the Crescent shipyards heretofore conducted by Lewis Nixon.

(6) Also the entire capital stock of the Samuel L. Moore & Sons' Company. . . .

(7) Also the entire capital stock of the Bath Iron Works of the Hyde Windlass Company. .

and

(8) Also 300,000 shares out of an entire issue of 300,000 shares of the capital stock of the Bethlehem Steel Company . . . engaged in the business of manufacturing and dealing in iron and steel and the products thereof.

I will also pay, or cause to be paid, to your Company $1,500,000 for working capital, and will also deliver, or cause to be paid and delivered to your Treasurer or other nominee, the following securities, viz. : $1,500,000 in par value 5 per cent, thirty-year gold bonds of United States Shipbuilding Company, the same to be held as Treasury assets and disposed of for working capital or other purposes of the Company as your Board of Directors shall hereafter determine.

It is a further condition of this offer that in cases where your Company shall acquire both capital stock and properties of any of the corporations included in this offer, you shall guarantee, or otherwise assume, any promissory notes or other obligations which it may be necessary or desirable to put into the treasuries of such corporation or corporations for the protection of their creditors, or to avoid violation of the statutes of any state or states.

I will accept in full consideration for the conveyances . . . above offered to be made $19,998,500 in par value of the full paid and nonassessable preferred stock of your Company, $24,998,500 in par value of the full paid and non-assessable common stock of your Company, $16,000,000 par value of the first mortgage five per cent sinking fund thirty-year gold bonds, Series A, of your Company secured by a mortgage which will be a first lien upon all the property and plants of the Union Iron Works, etc. (above named companies); also $10,000,000 par value of the 5 per cent twenty-year gold bonds to be made by your Company and to be secured by a mortgage upon the shares of stock of the Bethlehem Steel Company and otherwise, as hereinafter stated.

In case you accept the offer of the stock of the Bethlehem Steel Company the purchase must be made upon the following conditions:

(1) The stock . . . is to be deposited with the New York Security & Trust Company under a mortgage or deed of trust which shall be a first lien upon the stock so acquired, and, subject to the priority of the mortgage to secure said $16,000,000 of bonds, shall be a lien upon the property and plants covered by said $16,000,000 mortgage. . . . The holders of each $1,000 par value of said bonds to have the same voting power as the holders of each $1,000 par value of the stock of your Company.

(2) For the purpose of further securing said issue of $10,000,000 of bonds, your Company shall also procure to be executed and delivered to the New York Security & Trust Company, the single bond of the Bethlehem Steel Company payable to said Trust Company for the sum of $10,000,000 gold coin, with interest thereon at the rate of five per centum. . ., conditioned for the due payment of the principal and interest of said issue of $10,000,000 of bonds, etc.

(3) That an agreement shall be executed between the Bethlehem Steel Company and your Company, by which said agreement your company shall undertake to guarantee so long as any of said issue of $10,000,000 bonds are outstanding, that the Bethlehem Steel Company shall pay dividends upon its capital stock at the rate of Three Dollars per share per year, aggregating an annual dividend contribution of $900,000, and for that purpose that your Company will supply and furnish said Bethlehem Steel Company . . . business and . . . means of earning to enable it to pay said annual dividends . . . or advance sufficient money . . . to make such annual dividend payments which may be credited on any business or work which said Bethlehem Steel Company may thereafter have for or on account of your Company. Said agreement shall further provide that so long as any of said issue of $10,000,000 bonds remain outstanding, said Bethlehem Steel Company shall be protected in keeping on hand and maintaining cash or cash assets of not less than $4,000,000 cash value over and above its current business liabilities (not including its present and projected issue of bonds) as its working capital, no part of which shall at any time be used or applied towards the payments of dividends or for purposes other than the operation and conduct of the business of said Bethlehem Steel Company.

(4) That so long as any of said $10,000,000 bonds are outstanding said Bethlehem Steel Company shall always remain an independent and distinct corporation, and shall not be merged in or consolidated . . . unless. . . requested or consented to by the holders of not less than 75 per cent of said outstanding bonds.

(5) That your Company may at any time pay all of said outstanding bonds as an entirety by depositing a sum equal to the par value ... with interest . . . to the New York Security & Trust Company as

trustee.

I will cause to be delivered to your Company suitable deeds, bills of sale and transfers, etc.

Upon the receipt of this offer the directors above named, holding no stock whatever in the Company, but at most a mere subscriptive right, by assignment, to one share each, adopted the following resolution:

ACCEPTANCE BY COMPANY

Whereas, John W. Young has offered to convey, sell, etc., .; and,

Whereas, In the judgment of this Board the value of the properties so offered . . . is at least the par value of the stocks and bonds of this Company proposed to be issued therefor, to wit, the sum of $70,997,000, and said properties are necessary for the business of this Company;

Resolved, That said offer be and the same is hereby accepted, etc., . .

...

Further resolved, That for the purpose of enabling this Company to accept the foregoing offer, it shall as soon as practicable take the steps required by law for the increase of its authorized capital stock from thirty shares of $100 each . . . to four hundred and fifty thousand shares of $100 each, two hundred thousand shares of which shall be preferred stock, and two hundred and fifty thousand shares of which shall be common stock, making a total authorized capital stock of $45,000,000. . . . Further resolyed, That the officers of this Company be, and they hereby are authorized and directed to make . . . to the Mercantile Trust Company as Trustee, a mortgage or deed of trust upon the properties purchased pursuant to the offer of said John W. Young (exclusive of the shares of stock of the Bethlehem Steel Company), to secure the payment of $16,000,000 par value of first mortgage 5 per cent thirty-year sinking fund gold bonds, etc., . . .

Further resolved, That the proper officers of this Company be and they hereby are authorized and directed to make . . . a mortgage or deed of trust to the New York Security & Trust Company as Trustee, of the shares of the capital stock of the Bethlehem Steel Company . . . to secure the payment of $10,000,000 par value of the 5 per cent twenty-year gold bonds of this Company, which mortgage shall contain the provisions required under the terms of said offer, etc., .