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when constructed.
between Peking and Shan-hai-Kuan, and on the freights and earnings of the line the bondholders of the principal and interest of the loan, the Hong Kong and Shanghae Banking Corporation, Tien-tsin, shall receive from the Railway Administration a commission of per cent. on the annual loan service, which will be included in the yearly Schedule for the same.
9. The term of the loan shall be forty-five years, and, subject to the modification mentioned hereinafter, repayment of principal shall be made, so far as regards the bondholders, in forty equal annual instalments, commencing with the sixth year.
10. Interest on the loan shall be charged at the rate of 5 per cent. per annum. Should it be decided hereafter to construct branch lines or extensions connecting with the lines herein named, their construction shall be undertaken by the Railway Administration, and should the funds of the Railway Administration be insufficient for that purpose, it shall apply to the Corporation for the same.
10. The loan will be redeemed by annual drawings in London as provided for in the prospectus. Besides the drawings as provided for, the Administrator-General may, giving three months' notice to the Corporation, call for extra drawings to be held, for amount, Bonds so drawn to be redeemed by the Railway Administration at per cent, premium on their par value. Any such extra drawings must take place on the date of the ordinary drawing provided by the prospectus.
4. The principal and interest of this loan are guaranteed by the Imperial Government of China, and in the event of default in payment of interest or repayment of principal at due date, the Corporation shall immediately notify the Imperial Government of China thereof, and the Imperial Government of China will thereupon provide the funds necessary to meet such payment in sterling in London. In the event of the Imperial Government of China being unable to provide the funds necessary to meet payment of interest or principal when called upon by the Corporation to do so in terms of this clause, the said railway lines and entire property shall thereupon be handed over to representatives deputed by the Corporation to manage, on their behalf, until principal and interest of the loan have been redeemed in full, when the managers will revert to the Railway Administration.
It is provided that should arrears of interest or principal be for a small sum, and it appear desirable to the Corporation to continue unaltered in terms of clause 9 of this Agreement until the loan is redeemed or converted otherwise than as herein provided, it shall be open to the Corporation to extend the due date of their payment for a term not exceeding three months.
In the event of such extra drawings taking place, subsequent payments of interest shall be adjusted in the yearly Schedule to be provided, but repayments of principal shall remain unaltered.
This arrangement, which differs from other contracts in that the Administrator-General retains control of the railway lines so long as the principal and interest of the loan are regularly paid, has been agreed to in consequence of the friendly relations which have long existed between the Contracting Parties.
5. No further loan shall be charged upon the security named above, except through the Corporation, until this loan is redeemed. And the Tsung-li Yamén undertakes on behalf of the Imperial Government of China that the railway lines named in this Agreement shall never be alienated or parted with.
6. During the currency of this loan the Chief Engineer of the railways shall be a British subject. The principal members of the railway staff shall be capable and experienced Europeans, who shall be, as at present, appointed by the Administrator-General of the Railways, and may be, in the event of their misconduct or incompetency, dismissed after consultation with the Chief Engineer.
If there are Chinese with sufficient engineering or traffic experience they may be appointed as well as Europeans.
Should it be necessary to appoint a new Chief Engineer, such appointment shall be made in consultation with the Corporation,
In addition to the above, a capable and efficient European Railway Accountant shall be appointed, with full powers to organize and direct the keeping of the railway accounts, and to act with the Administrator-General and the Chief Engineer of the railway in the supervision of receipts and expenditure.
The Imperial Government of China hereby engages that this loan shall not be redeemed or converted otherwise than as herein provided.
12. The price agreed upon for this loan is 90 per cent. net of the nominal principal, but should an unfavourable state of the market prevail at the time of issuing the prospectus, the Corporation is hereby authorized to reduce the price of the loan, at its own discretion, to not less than 85 per cent. net to the Railway Administration.
13. The Corporation are hereby authorized to issue to subscribers to the loan bonds for the total amount of the loan in pounds sterling, in such form and for such amounts as shall appear desirable to the Corporation, and the Minister for China in London will seal all such bonds with his official seal, as evidence that the Imperial Government of China is bound thereby. Each such bond shall bear the following wording:-
"The Imperial Government of China, pursuant to an Imperial Edict, dated ... , unconditionally guarantees and declares itself responsible for the payment of the principal moneys and interest hereby secured, and in faith thereof has specially authorized the Chinese Minister in London to seal this bond with his official seal."
14. All bonds and coupons and payments made and received in connection with the loan shall be exempt from Chinese taxes and imposts for ever.
15. All details necessary for the prospectus and connected with the service of the loan, not herein explicitly provided for, shall be left to the arrangement of the Corporation, who are hereby authorized to issue a prospectus of the loan as soon as possible after the signing of this Agreement.
7. The railway lines named in this Agreement being Imperial Chinese Government lines, in the event of war or famine, Chinese Government troops and grain may be transported over the lines free.
The Tsung-li Yamen will instruct the Chinese Minister in London to co-operate with the Hong Kong and Shanghae Banking Corporation in any matters requiring conjoint action.
16. The loan shall be issued to the public as soon as possible after the signing of this Agreement, and shall date from the first day of the month of its issue. Payment of the entire proceeds will be made in London to the order of the Administrator-General not later than the 31st day of March, 1899; of the above proceeds, the Corporation will advance to the order of the Administrator-General in London, on or before the 31st day of October next, the sum of £250,000; this advance will bear interest at the rate of 5½ per cent. per annum until such time as the first instalment of loan proceeds shall be available, when it shall be deducted from those proceeds.
All expenses of working and maintaining the lines will be paid from their revenue and earnings, the remainder of which, together with the provincial funds above mentioned, shall then be charged with the service of this loan. Payments of interest and repayments of principal shall be made in equal monthly instalments, and in accordance with the amounts and dates of a yearly Schedule, which will be furnished to the Corporation by the Administrator-General.
These payments shall be made by the Administrator-General to the Hong Kong and Shanghae Banking Corporation, Tien-tsin, together with 50,000 taels annually, payable under the Revenue's arrangement approved by the Throne, by each of the Provinces of Shensi, Honan, and Anhui, for railway purposes for ten years.
In the event of an unfavourable state of the market rendering the issue of the loan, and the payment of its proceeds to the Railway Administration impossible on the terms named without loss to the Corporation, the Corporation shall be granted an extension of time for the performance of its contract with the Administrator-General, as the circumstances demand, any advances or instalments of proceeds already made to the Railway Administration being in that case treated as regards payment of interest and reimbursement of expenses incurred in connection with the distribution of the loan.
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