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other hand, that whatever li-kin is pledged for the security of this loan shall neither be decreased nor abolished except by previous arrangement with the Syndicate, and then only in so far as an equivalent is substituted for it in the shape of a first charge upon the increase of customs or other revenue consequent upon such revision.
6. All bonds and coupons and payments made and received in connection with the service of this loan shall be exempt from Chinese taxes and imposts for ever.
7. All details necessary for the prospectus and connected with the service to the bondholders of the interest and repayments of the principal of this loan, not herein explicitly provided for, shall be left to the arrangement of the Syndicate, who shall issue, and is hereby authorized to issue, a prospectus of the loan as soon as possible after the signing of this Agreement. The Chinese Ministers in London and Paris will be instructed to co-operate with the Syndicate in any matters requiring conjoint action, and they shall approve the prospectus of the loan.
8. The price of the loan shall be per cent. net of the nominal principal to the Viceroy, and the Syndicate will instruct the issuing banks to hold the net proceeds in Paris and London to the order of the Viceroy not later than three months after the issue of the loan.
The loan shall be issued to the public as soon as possible after the signature of this Agreement and the communication of the Imperial Edict in terms of Clause 11. But if, at the date of signature thereof, an unfavourable state of the market should render it impossible to issue the loan and pay its proceeds to the Viceroy on the terms named, then in such case the Syndicate shall thereafter, at such time as the Viceroy may decide, within a period not exceeding six months, issue the loan and pay the proceeds thereof to the Viceroy, deducting and retaining six points from the rate at which the loan is actually issued to the public, whatever that rate may be, i.e., if the issue price be 101, the Viceroy will receive 95, and so on.
9. The proceeds of this loan are to be applied to the carrying out of public works and to the improvement of communications in the Province of Hupei. For the supervision of these the Viceroy, in consultation with the Syndicate, shall appoint a British consulting engineer of capacity and experience, who must be approved by the Syndicate.
The salary and other terms of agreement of the consulting engineer shall be fixed in consultation with the Syndicate, and his salary shall be paid by the Viceroy. The form of his agreement shall conform to the usual practice.
If the services of the consulting engineer should prove unsatisfactory to the Viceroy he shall be entitled to dispense with his services, after due consultation with the Syndicate with regard to the appointment of a suitable successor; and in the event of the Syndicate desiring the removal of the consulting engineer for good cause, a like procedure shall be observed,
It shall be the duty of the consulting engineer to advise the Viceroy with regard to all public works to be paid for out of the proceeds of this loan, and to see that the same are efficiently and economically carried out. Orders to pay or transfer any sum from the proceeds of the loan must be countersigned by the consulting engineer, and be accompanied by his certificate stating the nature of the expenditure. He shall examine tenders and contracts for materials and work, and will advise the Viceroy with regard to their selection.
Under the directions of the consulting engineer the Syndicate will superintend the the purchase of all material of foreign origin required for the carrying out of the work. These shall be purchased on the open market at the lowest rate obtainable, it being understood that all such materials shall be of good and satisfactory quality. At equal rates, and provided the quality is the same, goods of British and French manu- facture shall be given preference over other goods of foreign origin. Invoices and inspectors' certificates are to be submitted to the Viceroy. For these services the Syndicate will receive a commission of 5 per cent. on the invoice cost of all materials so purchased.
With a view to encouraging Chinese industries, Chinese Government and other materials are to be preferred, provided prices and quality are suitable. No commission shall be allowed to the Syndicate on the purchase of materials of bond fide Chinese origin.
At the request of the Viceroy preference will be given, at equal rates and provided other conditions are satisfactory, to Japanese tenders for work in a total amount not exceeding 1,000,000 taels, to be paid for from the proceeds of this loan.
10. The Syndicate is hereby empowered to appoint, at its discretion, one or more of its members, or of the Companies of which it is composed, as trustce or trustees
for the bondholders; and in any future negotiations respecting this loan, or questions arising in connection therewith, such trustee or trustees shall be taken as representing the bondholders, and shall have power to act on their behalf. In view of the fact that this loan is for a small amount, no remuneration is asked in the present instance for these services; but in the event of further loans for similar objects being arranged between the Viceroy or the Imperial Chinese Government and the Syndicate, this shall not be claimed as a precedent, nor act as a bar to the discussion later of such remu. neration to the trustees as their increased responsibilities and trouble may appear to call for.
11. Immediately after the signature of this Agreement, and before the prospectus of the loan shall be issued to the public, the Viceroy shall memorialize the Throne for an Imperial Edict confirming and sanctioning the provisions of this Agreement; and the Imperial Edict so received shall be communicated officially and without delay by the Wai-wu Pu to the British and French Ministers in Peking.
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