"Art. 5.-The notices of the Company appear with legal validity by publishing them once in the Deutscher Reichs-Anzeiger,' unless other forms or more frequent publication are stipulated by these rules. The Company, however, reserves to itself the right to publish them in addition in other papers at the decision of the Supervisory Committee, the validity however of the notices not being dependent on this publication. When time limits are published the day of the issue of the paper is not included.

"II.-CAPITAL.

"Art. 6.—The capital of the Company amounts to Marks 12,000,000.-equal to Francs 15,000,000.-equal to Pounds Sterling 600,000.-divided into 60,000 shares of the value of Marks 200. each-equal to Francs 250.-equal to Pounds Sterling 10. On each share 25% are paid up in Marks.

"Further payments or full payment of the shares in Marks shall, with approval of the Supervisory Committee, be called in by the Board of Directors giving four weeks notice of such calls. The Supervisory Committee is authorised to lay down the conditions, under which the full payment of shares before due date will be allowed.

'An increase of the capital can only be decided upon by a General Meeting. The resolution shall also contain the conditions, under which the new shares will be issued.

‘Art. 7.—The original subscribers of the shares to be issued and thereafter their successors or assigns form the Company. The shares are indivisible; they possess the quality of movable property. Individual members may not sue for divisions of property.

"Art. 8.-For the obligations of the Company, the Company's assets will only be liable to the creditors.

Art. 9.-The original subscriber of a share is responsible for the payment of the full face value thereof.

Beyond the full payment no further responsibility rests on the members of the Company. "Art. 10.-The share certificates are made out to bearer; they will be issued in denominations of one, five or ten shares, according to the decision of the Supervisory Committee.

"The share certificates will be issued only after payment of the full face value. For the instalment-payments receipts will be given on an interim certificate bearing the name of the holder.

"The interim certificates are transferable by endorsement, without prejudice to the responsibility laid on the subscriber of the share by virtue of Art. 9; by a resolution of the Supervisory Committee however interim certificates for the first instalment of 25% may be transfered in such a way that the new owners take the place of the original subscribers. Wherever in these rules shares of the Company are mentioned, interim certificates take their place until the share certificates have been issued.

"Art. 11.-Dividend coupons for ten years with renewal slips shall be attached to the shares.

"At the end of the last year new dividend coupons for ten years will be issued against delivery of the renewal slips. If a profit is divided before issue of the shares, the interim certificates will be stamped accordingly upon payment of such dividends.

"Art. 12.-Those liable, but failing to render part payments due, shall be requested by the Board of Directors by notice stating the numbers of the shares on which payment is overdue, to pay same together with interest at 5% within a time to be fixed at not less than four weeks.

"Whoever allows this time to elapse without making payment as aforesaid, forfeits a fine of 10% of the amount due besides the interest, and the Board of Directors may force him by legal proceedings to pay the instalment due together with interest, fine and costs. "Instead of this procedure the Board of Directors, after having given once more a notice to the defaulting subscribers to complete the overdue payments within a further delay of four weeks and after having warned them at the same time that they will be excluded, if they do not comply with the request, may pass, after this period has ineffectually elapsed, a resolution that the subscribers shall lose in favour of the Company the privileges arising from the subscription as well as all payments made. Such declaration shall be advertised publicly, and new scripts will be issued in place of that which is declared to be cancelled, such scripts to include the part payments made already and the instalment last asked for. The defaulter shall remain responsible for any loss suffered by the Company in the sale of such shares.

66

Art. 13.-The original subscribers of the share capital described in Art. 6, Section 1, who have floated the enterprise, shall receive one bonus share on every one share subscribed, i. e., 60,000 bonus shares in all. They shall be issued in the name of the owner in denominations of one, five or ten bonus shares. The privileges of the bonus shares are laid down in Art. 18, Art. 39 and Art. 40.

At the formation of other mining companies in accordance with Par. 5 of the Concession dated 1st June 1899 and Article 2, ad. 9 of these Rules, the aforesaid original sub

scribers are entitled to participate, proportionately to their share of capital in the Schantung Bergbau Gesellschaft, as original subscribers in raising of the share capital of each of those companies up to one half, by taking over the shares at par, plus the proportionate foundation costs. The original subscribers of the share capital of those companies shall receive one bonus share on every one share subscribed. On these bonus shares a share of the profits shall be distributed in the same ratio in which the proprietors of the bonus shares of the Schantung Bergbau Gesellschaft participate according to Art. 18.

66

Art. 14.-By resolution of the General Meeting and with approval of the controlling authorities, the Company is authorised to issue debentures payable to bearer.

"The nominal value of the debentures, the rate of interest, the conditions of recall and repayment shall be fixed and made public in every instance by the Supervisory Committee with approval of the controlling authorities. The recall of the debenture requires the approval of the Supervisory Committee.

"Art. 15.-When shares or other documents issued in accordance with the regulations of Art. 10, 11, 13 and 14 have become damaged or otherwise unserviceable, but preserved in their essential parts to such an extent as to admit no doubts as to their genuineness, then the Board of Directors is authorised to draw up and hand out new equivalent documents in exchange for the damaged documents, costs to be borne by the owner.

'Excepting this contingency, new documents may be prepared and delivered in place of those damaged or lost only after judicial invalidation of the latter.

"Dividend coupons are not cancelled judicially: they become invalid, unless collected within four years, counted from the 31st March of that year in which they have become due, the respective dividends revert to the Company. To such one, however, who gives notice to the Board of Directors of the loss of dividend coupons before expiry of the said term of four years, and who proves their former possession by production of the share certificates or otherwise in a reliable way, the amount due on such coupons (given notice of and not yet presented) shall be paid against receipt after lapse of the said term. "No judicial declaration of invalidity shall take place as well for damaged or lost renewal slips.

"When the owner of a share before the issue of new dividend coupons protests against the delivery thereof to the presenter of the renewal slips and this presenter however insists upon delivery the dispute shall be carried to Court for a decision, the new series of dividend coupons shall be withheld until the case has been decided.

"When a renewal slip has been lost, the dividend coupons shall be delivered against receipt to the owner of the respective share after expiry of the date set for payment of the third of those dividend coupons which should have been received against delivery of the renewal slip. The possession of the respective renewal slip does in this case not entitle to the receipt of the dividend coupons.

"Art. 16.-By subscription or purchase of shares, interim certificates and bonus shares, the members submit to the jurisdiction of the competent lower Court for commercial matters in Berlin for all disputes arising between the Company and themselves in consequence of their business relation. (Par. 1).

"III.-FINANCIAL STATEMENT, ASCERTAINING ANd Disposal of the Proceeds, Reserve Fund.

"Art. 17.-The business year begins on 1st April and ends on 31st March of the fcllowing year. The first business year in accordance with these rules ends on 31st March 1900.

"The financial statement shall be drawn up by the Board of Directors as for 31st March for the business year last passed. It shall be presented to the General Meeting annually not later than 30th September together with the Profit and Loss Account and with a report of the Board of Directors showing the property and the situation of the Company, and also with the audit to be brought in by the Supervisory Committee.

"It is understood that net profits mean, profits in hand after the writing off on the property has taken place to such an extent as the case may require.

"Five per centum per annum interest may be debited to Development Account during the development period, but not beyond the business year 1903/4; possible working profits during the development period shall however in this case be credited to Development Account. The Development Account shall also be debited by the remuneration due to the Supervisory Committee in accordance with the conditions of Art. 46.

By

"The approval of the financial statement is reserved to the General Meeting. giving the approval, the executive bodies of the Company are discharged regarding their management during the respective year.

Art. 18.-On proposal of the Supervisory Committee the General Meeting decides on the amount of net profit resulting from the financial statement.

"Of the sum to be calculcated on not less than 5% and no more than 15% have to go to the Reserve Fund.

"Of the remaining sum a dividend of 5% on the paid-up share capital shall be allowed to the members of the Company.

"The balance shall be distributed as follows:

33% per centum to the bonus shares

66% per centum on the paid-up share capital as super-dividend,

after having deducted as well 10% for the Supervisory Committee and the contribution to the Government provided for in Par. 8 of the instrument of Concession of 1st June 1899. "The General Meeting may not pass a higher amount as net profit to the members of the Company nor a lower contribution to the Reserve Fund than proposed by the Supervisory Committee. Within four weeks after the resolution of the General Meeting the members of the Company will receive the dividend due to them, and the owners of the bonus shares their share of profit, and also the contribution to the Government provided for in Par. 8 of the instrument of Concession of 1st June 1899 has to be paid.

"In the event of the dividend to the members and the share of profit to the owners of the bonus shares being paid in Francs or Pounds Sterling, the amount of the dividend or of the share of profit due in Marks shall be calculated at the rate of 81.— Marks = 100 Francs and 20.40 Marks 1 Pound Sterling.

"Art. 19.—The Reserve Fund serves to cover extraordinary expenses or losses. Its disposition is decided on by the Supervisory Committee.

"After the Reserve Fund will have reached 15% of the share capital, further contributions thereto shall cease. Upon proposal of the Supervisory Committee, however, the General Meeting may resolve a further increase of the Reserve Fund, if extraordinary circumstances occur. In the event of payments out of the Reserve Fund, further contributions have to be made thereto until it reaches again the amount fixed.

"IV.-ADMINISTRATION.

"a) Board of Directors.

"Art. 20.-The Board represents the Company and acts on its behalf in all legal and other affairs including those requiring a special power of attorney by law. The Board is independent in question of administration, save in those for which by these rules cooperátion of the General Meeting or Supervisory Committee is required. In transacting affairs the Board is bound to follow the instruction given by the Supervisory Committee or such of its members as have been delegated by it. This restriction, however, has no legal effect toward third parties.

Art. 21.-The Board of Directors consists of two or more Directors, appointed upon conditions settled by the Supervisory Committee.

"The Supervisory Committee regulates the distribution of business amongst the Directors, their relations to each other, as well as the rules for their joint deliberations and resolutions. It nominates substitutes if required and may appoint from its midst a member as substitute. Such substitute shall not act on the Supervisory Committee while cooperating with the Board of Directors.

66

Art. 22. By resolution of the Supervisory Committee Directors may temporarily be ordered to China for inspection of the administration there and other purposes.

66

Art. 23.-Documents and declarations of the Board are binding on the Company, if they are signed under the name of Schantung Bergbau Gesellschaft' by two Directors or by one Director and one Acting Director (substitute) or by two Acting Directors (substitutes) or by one Director or Acting Director (substitute) and by one officer of the Company authorised by the Supervisory Committee to sign conjointly.

Art. 24.-The nomination of Directors, of their substitutes (Acting Directors) and the officers of the Company authorised to sign documents conjointly, shall be recorded notarially and made public. The record serves as legitimation.

"b) Supervisory Committee.

"Art. 25.-The Supervisory Committee consists of not less than 12 but not more than 25 members to be elected by the General Meeting from the number of the shareholders. At least five members of this Committee shall reside in Berlin and including those at least three quarters of all members at the time shall be German subjects residing in the German Empire.

“As a rule the election shall take place at the ordinary General Meeting for a term up to the fourth ordinary meeting following.

66

Every year at least three members resign in as regular succession as possible and are replaced by new elections. Until a rotation has been formed for the resignations, they shall be decided by lots. The resigning members are re-eligible. If a member retires in the meantime, the remaining members are authorised to elect a substitute with validity till the next ordinary General Meeting. The final election of a substitute will be done by the General Meeting holding good for the unexpired term of the resigning members.

"If an election of members to the Committee should have taken place in an extraordinary General Meeting, the time from the date of the latter to the next ordinary General Meeting shall count as a full year, as far as the term of office of those elected is concerned.

"As long as the number of the members of the Supervisory Committee remains twelve or more both a new election and a replacement may be dispensed with.

The elections for the Supervisory Committee shall be recorded before a notary. "Art. 26.-The Supervisory Committee elects a president and a vice-president immediately after every General Meeting in a session, at which the members present meet without being specially called. The president shall be a German subject residing in Berlin.

"The president shall convene the Committee as often as business requires, stating at the same time the agenda for the meeting. A meeting has to be called in within a fortnight if applied for in writing by at least three members of the Committee or by the Board of Directors.

The Supervisory Committee forms a quorum when not less than half of its members are present. All its members have equal votes. Resolutions are passed by a majority of votes. Votes being equal the president shall have a casting vote.

"The Committee may give a valid decision on a matter not enumerated in the agenda, if the decision is approved by every member present. At the request of the president the Supervisory Committee may pass resolutions by written voting without a meeting being called; such resolutions only to be valid however if passed unanimously by all its members. "In this case the taking of the votes of single members may be omitted, when and as long as they are living outside the German Empire.

"If at an election by the Supervisory Committee, no absolute majority of votes is obtained for one of the candidates in the first ballot, then a second ballot shall take place among those two persons, who have received the highest number of votes. If each then obtains an even number of votes, lots will be drawn for a decision.

"Art. 27.-The Supervisory Committee decides on its order of business.

Art. 28.-The members of the Supervisory Committee draw no salaries, but they receive reimbursement of the outlays resulting from the execution of their duty and a share of profit or a bonus according to Par. 18 of these rules. The distribution of the share of profit or of the bonus to the members takes place in accordance with regulations to be decided upon by the Supervisory Committee.

"Art 29.-All declarations of the Supervisory Committee are legally executed if they are done under the style 'Der Verwaltungsrat der Schantung-Bergbau-Gesellschaft' with the signature of the names of the president-or the vice-president as the case may be-and one of the members of the Committee. The Supervisory Committee is legitimated by a notarial certificate of election giving the names of its members at the time and also of its president and vice-president.

Art. 30.-Besides the general supervision of the management through the Board of Directors and other powers given to the Supervisory Committee by these rules this Committee may particularly decide:

1) on the principles according to which landed property shall be acquired, made use of, and realised,

2) on the principles according to which mining and other industrial enterprises shall be carried on,

3) on the establishment of branch undertakings,

4) on the appointment of the higher officers of the Company in China, and also of those officers receiving an annual salary of more than 5000 Marks or taken on for more than three years and on the contracts to be closed with them and also on their dismissal,

5) on the administration in China, more particularly on the regulations made with respect to financial matters and accounting,

6) on the budget of income and expenditure of the Company to be drawn up annually, 7) on contracts, if the object exceeds 30,000 Marks or if obligations are imposed on the Company, for a term exceeding three years,

8) on the principles for the drawing up of the annual financial statement, as well as its presentation to the General Meeting and proposals regarding the use and distribution of profit balances,

9) on other matters to be brought before the General Meeting,

10) on the discharge to be granted annually to the administration in China, 11) on the delegation of one or more members of the Committee for certain commissions, more particularly for examination of the books and of cash in hand kept by the Board of Directors and for examination of the annual financial statement, 12) on the appointment of one or more special committees from among the members of the Committee and the transfer of special business affairs or classes of such to these special committees by special powers of attorney.

Art. 31. Of the transactions and resolutions of the Supervisory Committee minutes shall be written and signed by the participating members.

"c) General Meeting.

"Art. 32.-The General Meeting, properly constituted, represents the total of the Company's members.

66

Its resolutions and elections are binding on all members.

Art. 33.-The General Meetings are to be held in Berlin. To these the Board of Directors or the Supervisory Committee shall call the members at least fourteen days before the fixed date, the latter not included, by notice stating the business to be transacted.

“There may be represented: commercial firms by employees authorised by legal notification to sign per procuration; wives by their husbands; widows by their sons, if of age; minors or the persons otherwise under guardianship by their guardians or curators; corporations, institutes, limited liability companies by one of the Directors or a person authorised to sign per procuration. In all other cases a member may only be represented by another member taking part in the General Meeting by virtue of a written proxy. Proxies are to be submitted to the examination of the Board of Directors at latest on the day before the meeting and the Board may require an official or other satisfactory authentication of signatures.

"Art. 34.-At the General Meeting each share entitles to one vote. Voting can be exercised only by those members who have deposited their shares against_receipts not less than five days before the date of the General Meeting with the Board of Directors or at such place as the Board may have designated in the notice, and leave them there till the end of the General Meeting.

Art. 35.-At the General Meeting the chair shall be taken by the president of the Supervisory Committee or, in case of his being prevented, by the vice-president, or if he also either can not or will not do so, by another one of the members present of the Committee, of whom always the senior in age shall have precedence to take the chair. The chairman conducts the discussion, fixes the succession of the items on the agenda as well as the modus of voting, and appoints the scrutineers, when necessary.

"Without prejudice to the regulation in Art. 37, positions 3 and 4, the General Meeting shall only discuss and pass resolutions on items, which have been placed on the agenda at the time of calling it.

"Members, entitled to hold between them at least the tenth part of the total votes possible at a General Meeting may apply in a request, signed by them, that matters, being within the competency of General Meetings, be announced for resolution at the next meeting. The convener is then bound to place such matters on the agenda of the next General Meeting.

"If the request is however made after the General Meeting has already been called such suggestions to amplify the agenda must be in the hands of the Board of Directors not less than ten days prior to the day of the meeting.

"When this is the case, these matters are to be appointed on the agenda of the General Meeting convened, and this shall be notified not less than six days before the day of the meeting.

Art. 36.-An ordinary General Meeting shall annually take place before the end of the month of September.

66

An extraordinary General Meeting shall be convened:

1) if a resolution to that effect has been passed by a General Meeting (Art. 38),

2) if members, who are entitled to hold between them the fourth part of the total number of votes, require the convening and hand to the Board of Directors in writing a motion the object of which lies within the competency of the General Meeting,

3) if a resolution has to be passed with reference to the dissolution of the Company or its amalgamation with another Company or the alteration of its legal form, 4) if the Supervisory Committee decided on its convening for any other special cause. "Art. 37.-At the ordinary General Meeting the financial statement with the profit and loss account for the past business year as well as the reports rendered by the Board of Directors and the Supervisory Committee shall be brought forward for information and discussion, and the resolution as to the approval of the financial statement and also as to the discharge of the administration, shall be passed. Afterwards the necessary elections (Art. 25) shall take place.

"The financial statement with the profit and loss account and the reports of the Board of Directors and of the Supervisory Committee shall be open for inspection of every member during two weeks preceding the meeting on such business premises in Berlin as are announced at the time of convening the meeting.

"The General Meeting is authorised to appoint a committee of revision, if the accounts are not passed forthwith.

'It is authorized to pass resolution on the enforcement of the responsibility to the Company of the members of the Board of Directors and of the Supervisory Committee and on the measures to be taken for this purpose, and to appoint attorneys for the execution of same.

"In addition the ordinary General Meeting is entitled to pass resolutions on every proposal, which is not assigned to the extraordinary General Meeting in conformity with Art. 36, No. 3, more particularly:

a) on the issue of further shares,