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If any of the bonds herein mentioned are lost or destroyed, a reissue of any thereof is to be made in the amounts respectively called for by such lost or destroyed bonds, but proper proof of the loss or destruction must be given in the usual form to the Corporation and the Chinese Minister in London for examination and record, and the requisite guarantee is to be obtained by the Corporation from the respective claimants concerned, who shall defray all expenses connected with such reissue of bonds lost or destroyed, and who under the said guarantee shall undertake to indemnify the Imperial Chinese Government and/or the Corporation for any loss sustained by reason of the issue of bonds in place of bonds lost or destroyed.
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 Corporation, in consultation with the Chinese Minister in London. The Corporation 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 Minister in London to co-operate with the Corporation 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 one series of bonds, as soon as possible after signature of this agreement, and not later than twelve months from the date thereof. The price to the Imperial Chinese Government shall be 93 per cent of the nominal value of the bonds. Subscriptions will be invited by the Corporation in England and in China, both from Chinese and Europeans on equal conditions, preference being given to the application by the Chinese Government, provided that such application be made before the issue of the prospectus to the public.
Art. 14. The proceeds of the loan shall be paid to the credit of the Yuchnan Pu with the Hong Kong and Shanghae Banking Corporation in China or London, as the case may be. Payments of the loan proceeds into the credit of this account shall be made in instalments and on dates conforming to the conditions allowed to the subscribers to the loan. Interest at the rate of 4 per cent per annum shall be granted on the credit balance of the portion of this account kept in London; and interest on the credit balance of the portion kept in China will be allowed at the bank's rates for current account or fixed deposits, as the case may be, to be arranged.
The bank will hold the net proceeds of the loan with accrued interest to the order of the Yuchuan Pu, or its duly authorized representative, who, in ordering payment of any sums exceeding £20,000, shall give notice to the bank ten days before the day on which they are required. Requisitions on the loan funds will be drawn in amounts to suit the progress of construction of the railway by orders on the Hong Kong and Shanghae Banking Corporation, signed by the Yuchuan Pu, or its duly authorized representative, and accompanied by his certificates or those of the said Board, stating the nature and cost of the work to be paid for.
Such amounts as may be required for expenditure in China may be transferred under the instructions of the Yuchuan Pu, at their discretion, to Shanghae, the transfers being effected through the Hong Kong and Shanghae Banking Corporation, and the transferred funds shall remain on deposit with that bank until required for railway purposes.
The Yuchuan Pu will cause to be published annually, upon the close of the railway's financial year, a Report in the Chinese and English languages, showing the working accounts and traffic receipts of the railway, which Report shall be procurable by the public on application.
Art. 15. If, during the time of construction, the net proceeds of the present loan with accrued interest should not be sufficient to complete the construction and equipment of the railway line, the amount of deficiency shall be provided in the first place from such Chinese funds as may be available, so as to permit of the uninterrupted continuance of the work of construction, any balance then uncovered being supplemented by a further foreign loan for the amount required, to be issued by the Corporation. The interest and other conditions of such supplementary loan will be the same as in the present agreement, and the price payable to the Imperial Chinese Government will be the actual rate of its issue to the public, less flotation charges of 5¼ points, retainable by the Corporation, that is to say, £57 10s. for every £100 bond issued.
If, after completion of the line, there should remain a balance of loan funds at the credit of the railway account, such unused balance shall be at the disposal of the Yuchuan Pu, to be used either for the purpose of paying interest on the loan or for the equipment of the railway, or for the construction and equipment of branch lines beneficial to the railway.
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Art. 16. If, before the publication of the prospectus for the issue of the loan, any political or financial crisis should take place by which the market and the prices of existing Chinese Government stocks are so affected as to render, in the opinion of the Corporation, the successful issue of the loan impossible on the terms herein named, the Corporation shall be granted further extension of time, but not beyond eighteen months from the date of this agreement, for the performance of their contract. If, within this time limit, the loan shall not have been issued, this contract shall become null and void, and any advances made by the Corporation under the provisions of Article 3 shall be repaid by the Chinese Government with accrued interest, but without any other compensation or remuneration whatsoever.
Art. 17. The construction and control of the railway will be entirely vested in the Imperial Chinese Government. For the work of construction, the Yuchuan Pu or its duly appointed Managing Director will select and appoint a British Chief Engineer, who shall be a professional man of established reputation, to be selected either in England or from the staff of one of the existing Chinese Government railways. The Chief Engineer will be under the orders of the Managing Director, or, in his absence, of his duly authorized representative. In his general conduct, he shall pay all due respect to the Managing Director. The terms of the Chief Engineer's agreement will be arranged by the Yuchuan Pu or its duly appointed Managing Director.
Whenever appointments are to be made or functions are to be defined of the technical employés on the railway staff, as well as in the case of their dismissal, the Managing Director, or, in his absence, his duly appointed representative, will act in consultation with the Chief Engineer, and, in the case of disagreement, the matter will be referred to the Yuchuan Pu, whose decision shall be final. After completion of construction, the Imperial Chinese Government will retain the services of an Engineer-in-chief, who during the period of the loan shall be a British subject.
Art. 18. During the construction of the railway, the Corporation will act as its agents for the purchase of all materials, plant, and goods required to be imported from abroad. For all important purchases of such materials, tenders shall be called for by the Managing Director; in the case of all tenders, indents, and orders for the importation of goods and materials from abroad, the said agents shall purchase the materials required on the terms most advantageous to the railway. It is understood that no orders for materials shall be executed or any expenditure incurred without due authorization by the Managing Director.
As remuneration for its services as agents of the railway during construction, the Corporation shall receive the sum of £35,000, half of which shall be paid when the construction work is half completed, but not later than eighteen months from the date of this agreement, and the other half upon completion of the line. This amount shall be regarded as commutation of all commissions to which the Corporation and its agents would properly be entitled and of payments for all services rendered in the construction and equipment of the railway in respect of the present loan; but in the event of a further loan being required under the provisions of Article 15 hereinabove, then a further payment of commuted commission, proportionate to the amount of such supplementary loan and calculated at the same rate as the commutation hereinabove mentioned, shall be made to the Corporation as commutation of its commission for all services in respect of construction.
In return for this commuted commission, the Corporation as agents shall be prepared to superintend the purchase of all foreign materials required for the construction and equipment of the railway, which shall be purchased in 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 qualities, goods of British manufacture shall be given preference over other goods of foreign origin. The Managing Director shall have the right, while paying the above stipulated commutation of commission to the said agents, in respect of all purchases of foreign materials, to avail himself of the services of other agents in China or abroad, should he see fit to do so.
Original invoices and inspectors' certificates are to be submitted to the Managing Director; all return commissions and rebates of every description shall be credited to the railway; and all purchases made by the agents on behalf of the railway shall be supported by manufacturers' original invoices and Inspectors' certificates.
(2972 6-2)
C
594