CONFIDENTIAL
AND PART 1 OF ANNEX C. IN THE EVENT OF DELAY IN MEETING THE RELEASE DATES THE SITUATION WILL BE REVIEWED BY THE TWO GOVERNMENTS AND IF THE REASONS FOR THE DELAY ARE THE RESPONSIBILITY OF THE UNITED KINGDOM GOVERNMENT, INSTALMENTS OF THE HONG KONG GOVERNMENT CONTRIBUTION WILL BE PAYABLE AT THE PREVIOUS LEVEL UNTIL THE RELEASE OF THE LAND IS COMPLETED.
3. THIS AGREEMENT SHALL RUN. FOR A PERIOD OF 7 YEARS IN THE FIRST INSTANCE AND SHALL DE RENEWED ON THE SAME TERMS FOR FURTHER PERIODS OF 5 YEARS THEREAFTER UNLESS EITHER GOVERNMENT GIVES NOTICE A YEAR BEFORE THE END OF ANY SUCH PERIOD THAT IT WISHES TO VARY THE
TERMS.
4. THE COST OF THE GARRISON IS BASED ON PRICE LEVELS AT SEPTEMBER 1975. THE HONG KONG GOVERNMENT CONTRIBUTION AS PROVIDED FOR IN PARAGRAPH 2, WILL, AFTER SETTING OFF THE UK GOVERNMENT'S SHARE OF EXPENDITURE ON WORKS SERVICES IN THE MANNER DESCRIBED IN PARAGRAPH 6 BE PAID BY QUARTERLY INSTALMENTS ON THE LAST DAY OF EACH QUARTER OF THE FINANCIAL YEAR, WITH ADJUSTMENTS FOR CHANGES IN THE PRICE LEVELS RULING IN HONG KONG AND THE UNITED KINGDOM BEING MADE AS FOLLOWS. BEFORE EACH QUARTERLY PAYMENT BECOMES DUE, A CALCULATION WILL BE AGREED BETWEEN THE HONG KONG AND UK GOVERNMENTS OF THE CHANGES NECESSARY TO ADJUST EACH OF THE SEPARATE COMPONENTS OF THE COST OF THE GARRISON (OTHER THAN WORKS SERVICES) LISTED IN ANNEX B TO THE PRICE LEVELS RULING AT THE BEGINNING OF THAT QUARTER. THE INDICES OR OTHER MEASURES TO BE USED IN CALCULATING THESE ADJUSTMENTS ARE SET OUT IN ANNEX B, AND THE ADJUSTMENTS WILL BE CALCULATED BY REFERENCES TO THE MONTH BY MONTH MOVEMENTS IN THE INDICES AND OTHER MEASURES, ASSUMING. THAT ONE TWELFTH OF THE ANNUAL COST OF THE GARRISON FALLS IN EACH MONTH OF THE YEAR. THE INSTALMENT TO BE PAID AT THE END OF JUNE 1976 WILL INCLUDE THE ADJUSTMENTS SO CALCULATED UP TO 1ST APRIL 1976. SUBSEQUENT INSTALMENTS WILL INCLUDE THE ADJUSTMENTS IN RELATION TO BOTH THE QUARTER OF PAYMENT AND THE IMMEDIATELY PRECEDING QUARTER. AFTER THE END OF THE PERIOD OF THE AGREEMENT, A CALCULATION WILL BE MADE OF ANY FURTHER ADJUSTMENTS NEEDED AND A FINAL SETTLEMENT WILL
TAKE PLACE.
5. ALL PAYMENTS BY THE HONG KONG GOVERNMENT WILL BE MADE IN HONG KONG DOLLARS. WHERE THESE PAYMENTS RELATE TO COMPONENTS OF COST EXPRESSED IN STERLING IN ANNEX B, THE CONVERSION WILL BE MADE AT THE AVERAGE RATE OF EXCHANGE FOR THE QUARTER, DETAILED PROVISIONS FOR THE CALCULATION AND PAYMENT OF THE HONG KONG
-2- CONFIDENTIAL
/GOVERNMENT