Art. 5.-The term of the loan shall be thirty years. Repayment of principal shall commence after the expiry of ten years from the date of the loan and, except as provided in Article 6 hereinafter, shall be made by yearly amortization to the Deutsch-Asiatische Bank and the Hong Kong and Shanghae Banking Corporation in half-yearly 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 specified in the Schedule attached to this Agreement, but fourteen days before their due dates, Western calendar, as calculated half-yearly from the date on which the loan is issued to the public.
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 reduce 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 twentieth year, by payment of a premium of 2 per cent, on the face value of the bonds (that is to say, by payment of 102l. 10s. for each 100l. 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, 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 having been appointed, by the German and British parties of the Syndicate respectively, agents for the service of the loan, the half-yearly payments due for amortization and interest, referred to in Articles 4 and 5, shall be made, in accordance with the amounts of the Schedule attached to this Agreement and fourteen days before their due dates as fixed by Articles 4 and 5, to these banks by the Director-General of the railway, who shall hand to the said banks in Shanghae or in Tien-tsin fourteen days before the said due dates, in shares to be arranged by the banks, 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 principal. 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 Banking Corporation and 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 li-kin and internal revenues of the Province of Chihli to the amount of 1,200,000 Haikwan taels a-year;
2. By li-kin and internal revenues of the Province of Shantung to the amount of 1,600,000 Haikwan taels a-year; and
3. By the revenue of the Nanking Li-kin Collectorate (to the amount of 900,000 Haikwan taels a-year) and of the Huai-an Native Customs (to the amount of 100,000 Haikwan 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 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
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the interest 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 the 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.
In the event of the Chinese Government during the currency of this loan entering upon definite arrangements for the revision of Customs Tariff accompanied by stipulations 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 is hereby 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. The form of the bonds shall be settled by the Syndicate in consultation with the Director-General or the Chinese Ministers in London and Berlin. The bonds shall be engraved in Chinese and English or Chinese and German, as may be required; they shall bear the fac-simile of the signature of the Director-General and of his seal of office, in order to dispense with the necessity of signing 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 fac-simile 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 London 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 shall immediately notify the Director-General and the Chinese Minister in London and [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, 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 hand them to the Syndicate, by whom all 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 of this 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 arrangement of the Syndicate in consultation with the Chinese Ministers in London and Berlin. The Syndicate is hereby authorized to issue the prospectus of the loan as soon as possible after the signing of this Agreement, and the Imperial 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 3,000,000l. 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 construction, in amounts to be determined by the Director-General, and the price payable to the Chinese Government in respect of these series shall be the actual rate of their issue to the public, less flotation charges of 5 points retainable by the Syndicate (that is to say, a charge of 5l. 10s. for every 100l. bond issued). Subscriptions will be invited by the Syndicate in Europe and in China both from Chinese and Europeans on equal conditions, preference
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