2
of the loan. This amount of 500,000/., or whatever portion thereof is actually advanced, together with interest thereon not exceeding a charge of 6 per cent, per annum, shall be deducted from the proceeds of the first sale of the bonds.
Art. 4. The rate of interest for the loan shall be 5 per cent. per annum on the nominal principal and shall be paid by the Imperial Chinese Government during the time of construction either from the proceeds of the loan or from other sources, and afterwards, in the first place, out of the revenue of the railway, and then from such other revenue as the Chinese Government may think fit to use for the purpose in quarterly instalments according to the amounts and dates of the schedule attached to this Agreement.
Art. 5. The term of the loan shall be thirty years. Except as provided for in Article 6, hereinafter, repayment of principal shall commence in the eleventh year from the date of the loan, and shall be made by a yearly sinking fund to the Syndicate banks in quarterly instalments out of the revenue of the line or such other revenues as the Chinese Government may think fit to use for the purpose according to the amounts and dates of the schedule attached to this Agreement.
Art. 6. If at any time after the lapse of ten years from the date of the loan the Imperial Chinese Government should desire to redeem the whole outstanding amount of the loan, or any part of it, not yet due for repayment in accordance with the schedule of repayments hereto attached, it may do so until the thirtieth year, by payment of a premium of 2 per cent, on the face value of the bonds (that is to say, by payment of 1027. 10s, for each 100 bond), and after the twentieth year without premium; but in each and every case of such extra redemption the Imperial Chinese Government shall give six months' notice in writing to the Syndicate banks, and such redemption shall be effected by additional drawings of bonds, to take place on the date of an ordinary drawing, as provided for in the prospectus of the loan.
Art. 7. The Deutsch-Asiatische Bank and the Hong Kong and Shanghae Banking Corporation are hereby appointed agents for the service of the loan and the quarterly payments due for amortization and interest-except as otherwise provided in Article 4-- shall be made in accordance with the amounts and dates of the schedule attached to this Agreement, to the said banks by the Director-General, who shall hand to the banks in Shanghac or in Tien-tsin on the dates named in the schedule, funds in Shanghae or Tien-tsin sycee sufficient to meet such payments in gold in Europe, exchange for which shall be settled with the said banks on the same day, the Railway Administration having, however, the option of settling exchange with the two banks at any date or dates within six months previous to any due date for the repayment of interest and principle. These payments may, however, be made in gold if the Imperial Chinese Government should happen to have gold funds bond fide at their disposal in Europe not remitted from China for the purpose and desire so to use them.
In reimbursement of expenses connected with the payment of interest and the repayment of principal of the loan the Hong Kong and Shanghae Bank and the Deutsch-Asiatische Bank will receive a commission of one-quarter per cent. on the annual loan service.
Art. 8. The Imperial Government of China hereby engages that the interest and principal of this loan shall duly be paid in full, and should the revenue of the railway, and or the proceeds of the loan not be sufficient to provide for the due and full payment of interest and repayment of principal, the Director-General shall memorialize the Throne and the Imperial Government of China will thereupon make arrangements to insure that the amount of deficiency shall be met from other sources and handed over to the banks on the date upon which funds are required to complete full payment of interest and repayment of principal.
Art. 9. The loan is hereby secured :—
1. By likin and internal revenues of the Province of Chihli to the amount of 1,200,000 Haikwan taels a-year ;
2. Li-kin and internal revenues of the Province of Shantung to the amount of 1,600,000 Haikwan taels a-year; and
3. Revenue of the Nanking Li-kin Collectorate (to the amount of 900,000 taels a-year), and of the Huai-an native customs (to the amount of 100,000 taels a-year) in the Province of Kiangsu.
The provincial revenues as above stated are hereby declared to be free from all other loans charges or mortgages.
So long as principal and interest of the loan are regularly paid there shall be no- interference with these provincial revenues; but if principal or interest of the loan be in
3
default at due date, then after a reasonable period of grace li-kin and suitable internal revenues of the three provinces sufficient to provide the amounts above stated shall forthwith be transferred to, and be administered by, the Imperial Maritime Customs, in the interests of the bondholders. And so long as this loan or any part thereof shall remain unredeemed it shall have priority both as regards principal and interest over all future loans, charges, and mortgages charged on the above-mentioned revenues of th three provinces. No loan, charge, or mortgage shall be raised or created which shall take precedence of, or be on equality with, this loan, or which shall in any manner lessen or impair its security over the revenues of the three provinces as above stated; and any future loan, charge, or mortgage charged on the said revenues of the three provinces shall be made subject to this loan, and it shall be so expressed in every Agreement for every such future loan charge or mortgage. It is understood and agreed that so long as this loan is unredeemed the railway shall under no circumstances be mortgaged nor its receipts given as security to any other party.
upon
In the event of the Chinese Government during the currency of this loan entering definite arrangements for the revision of Customs Tariff accompanied by stipula- tions for decrease or abolition of li-kin, it is hereby agreed, on the one hand, that such revision shall not be barred by the fact that this loan is secured by li-kin and provincial revenues, and, on the other hand, that whatever li-kin is required to provide 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 revenue consequent upon such revision.
Art. 10. The Syndicate will be authorized to issue to the subscribers to the loan bonds for the total amount of the loan for such amounts as may appear advisable to the Syndicate banks. The form of the bonds shall be settled by the Syndicate in con- sultation with the Director-General or the Chinese Ministers in London and Berlin, The bonds shall be engraved in English or German as may be required; they shall bear the facsimile of the signature of the Director-General and of his seal of office, in order to dispense with the necessity of siguing them all in person. But the Chinese Minister in London or Berlin, as the case may be, shall previous to the issue of any bonds, put his seal upon each bond with a facsimile of his signature, as a proof that the issue and sale of the bonds are duly authorized by, and binding upon, the Imperial Chinese Government, and the representatives of the Syndicate in Loudon and or Berlin shall countersign the bonds as agents for the issue of the loan.
In the event of bonds issued for this loan being lost stolen or destroyed, the Syndicate banks shall immediately notify the Director-General and the Chinese Minister in London aud or Berlin, as the case requires, who shall authorize the Syndicate to insert an advertisement in the public newspapers notifying that payment of the same has been stopped, and to take such other steps as may appear advisable or necessary according to the laws and customs of the country concerned; and should such bonds not be recovered after a lapse of time to be fixed by the Syndicate banks, the Director-General or the Chinese Minister in London or Berlin, as the case may be, shall seal and execute duplicate bonds for a like amount and haud them to the banks, by whom ail expenses in connection therewith shall be defrayed.
Art. 11. All bonds and coupons and payments made and received in connection with the service of this loan shall be exempt from all Chinese taxes and imposts during the currency or the loan.
Art. 12. All details necessary for the prospectus and connected with the payment of the interest and repayment of the principal of this loan, not herein explicitly provided for, shall be left to the arrangements of the Syndicate banks in consultation with the Chinese Ministers in London and Berlin. The Syndicate will be authorized to issue the prospectus of the loan as soon as possible after the signing of this Agreement, and the Imperial Chinese Government will instruct the Chinese Ministers in London and Berlin to co-operate with the Syndicate in any matters requiring conjoint action and to sign the prospectus of the loan.
Art. 13. The loan shall be issued to the public in two or more series of bonds, the first issue to be made to the amount of 3,000,0001. as soon as possible after the signature of this Agreement, and not later than twelve months from the date thereof. The price to the Imperial Chinese Government of the first series of bonds shall be 93 per cent. of their nominal value. The second and any subsequent series shall be issued in time to permit of uninterrupted continuance of the work of con- struction, in amounts to be determined by the Director-General, and the price payable to the Chinese Government in respect to these series shall be the actual rate of
[2768 ec-1]
B 2
413