CO129-372 - Public Offices - 1910 — Page 247

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the Canton-Hankow railway line," being about 1,800 Chinese li, or 900 kilom., and of

A Government railway main line from Ichang, in the province of Hupei, through Ching-men-chou and Hsiangyang, to a point at or near Kuangchui, connecting it) with the Peking-Hankow railway line, and a branch line from Ching-men-chou, on the aforesaid main line, through Sha-si to Hanyang, the combined length of these two lines, hereinafter known as "The Hupei section of the Szechuan-Hankow railway line," being about 1,600 Chinese li, or 800 kilom.

The survey lines shall be open to revision by the director-general of the railways. The Chinese Imperial Government undertakes to call in, after having received from the banks application in writing to do so, the aforesaid gold bonds, and the banks will apply the amount necessary for the said redemption out of the proceeds of the loan, and will deliver the redeemed bonds to the Chinese Government after having made the bonds valueless. The Chinese Imperial Government will, after receipt of the redeemed bonds, cancel the inscription of the pledge of the Cantan-Hankow railway line in their archives, and will advise the banks in writing after having done this.

It is understood that the allotment of the aforesaid total nominal capital of 5,500,000%, will be in the proportion of 2,500,000l. to the Hupei-Hunan section of the Canton-Hankow railway line, and 2,500,000l. to the Hupei section of the Szechuan- Hankow railway line, and that any surplus of the nominal amount of 500,0001. hereby allotted for the redemption of the gold bonds issued by the American China Develop- ment Company, aforesaid, which may remain after complete redemption of those bonds, shall be added to the amount allotted to the Hupei-Hunan section of the Canton- Hankow railway line.

Art. 3. After deduction of the amount required for the redemption of the gold bouds referred to in article 2 of this agreement, the balance of the loan proceeds shall be solely devoted to the construction of the aforesaid railway lines, including the purchase of land, rolling stock and other equipment, and to the working of the lines, and to payment of interest on the loan during the period of construction, which is estimated at four years from the actual beginning of the works. The commencement of the works shall not be delayed beyond six months after this agreement has been signed, within which period the banks shall notify the director-general that the sum of 510,0001. has been placed at his disposal, in case funds should be required for survey or construction purposes, or for the ordering of materials, the said sum to be held in Europe or remitted to China as he may direct, as a first instalment on account of the proceeds of the loan. This amount of 510,000%, 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 first proceeds of the 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 to the bond-holders half-yearly. The said interest shall be calculated from the date on which the loan is issued to the public, 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 revenues of the railways, and then from such other revenues as the Chinese Government may think fit to use for the purpose, in half-yearly instalments according to the amounts specified in the schedule attached to this agreement, and 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. 5. The term of the loan shall be twenty-five 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 equal yearly amortisation to the banks in half-yearly instalments out of the revenues of the lines, 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 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 up to the end of the seventeenth year by payment of a premium of 24 per cent. on the face value of the bonds, that is

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to say, by the payment of 102. 10s, for each 1007. bond, and after the lapse of seventeen years without premium; but in each and every case of such extra redemption the Imperial Chinese Government will give six months' previous notice in writing to the 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 half-yearly payments due for amortisation 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, in equal shares to the banks by the director-general of the railways, who shall hand to the banks in Shanghae or in Hankow, fourteen days before the said due dates, funds in Shanghae (Kuei-yuan) sycee or Ilankow "Yang-li" sycee sufficient to meet such payments in gold in Europe, exchange for which shall be settled with the banks on the same day, the railway administration having, however, the option of settling exchange with the banks simultaneously at any date or dates within six months previous to any due date for the payment of interest and (or) principal. These payments may, however, be made in gold in Europe 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 repayment of principal of the loan the banks will receive from the Chinese Government a commission of 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 revenues of the railways 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 memorialise the Throne and the Imperial Government of China will thereupon make arrangements to ensure 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 present loan, in respect to both principal and interest, is hereby secured by-

1. Hupei general li-kin amounting to 2,000,000 Haikwan taels a-year.

2. Hupei additional salt tax for river defence amounting to 400,000 Haikwan taels a-year.

3. Hupei new additional 2 cash salt tax of September 1908 amounting to 300,000 Haikwan taels a-year.

4. Hupei collection of Hukuang inter-provincial tax on imported rice to the amount of 250,000 Haikwan taels a-year.

5. Hunan general li-kin amounting to 2,000,000 Haikwan taels a-year.

6. Hunan salt commissioner's treasury regular salt li-kin to the amount of 250,000 Haikwan taels a-year.

The above provincial revenues are hereby declared to be free from all other loans, charges, or mortgages.

So long as principal and interest of this loan are regularly paid there shall be no interference with these provincial revenues; but if principal or interest of the li-kin and grace, loan be in default at due date, then, after a reasonable period of other suitable internal revenues of the provinces of Hupei and Hunan suflicient to provide the amounts above stated shall forthwith be transferred to and 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 aforesaid provincial revenues. No loan, charge, or mortgage shall be raised or created which shall take precedence of, or be on an equality with, this loan, or shall in any manner lessen or impair its security over the aforesaid provincial revenues, and any future loan, charge, or mortgage charged on the said provincial revenues shall be made subject to this loan, and it shall be so expressed in every agreement for every such future loan, charge, or mortgage.

After redemption of the existing gold bonds referred to in article 2 of this agreement, it is understood and agreed that, so long as this loan is unredeemed, the railways shall under no circumstances be mortgaged nor their receipts given as security to any other party.

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