NUMBER 1910/4. GERMANY (Deutsch-Asiatische Bank), GREAT BRITAIN (Chinese Central Supplementary loan agreement for the Tientsin-Pukow Railway.*— WHEREAS by an agreement made at Peking on the 10th day of the 12th month of the 33rd year of Kuang Hsu corresponding to the 13th day of January 1908,† between HIS EXCELLENCY LIANG TUN YEN, Acting Junior VicePresident of the Waiwupu, duly authorised to act on behalf of the Imperial Government of China, of the one part, and, A. THE DEUTSCH ASIATISCHE BANK, SHANGHAI, B. THE CHINESE CENTRAL RAILWAYS LIMITED, LONDON, thereinafter termed the Syndicate, of the other part, the Syndicate were authorised to issue, and did issue, a 5% Gold Loan for £5,000,000 for the construction and equipment of a line of railway from Tientsin to Pukow in the Empire of China: and WHEREAS, in order to permit of the uninterrupted continuance of the work of construction provision was made in Article 15 of the aforesaid Loan Agreement, hereinafter called the Original Loan Agreement, for the issue by the Syndicate of a Supplementary Loan of which the interest and other conditions as well as the price payable to the Chinese Government should be governed by the terms of the original loan agreement which still remains in full force and effect; This Agreement is now made at Peking this twenty fifth day of the eighth month of the second year of Hsuan Tung, corresponding to the twenty eighth day of September 1910, between The Director General and Assistant Director General of the Tientsin-Pukow Railway, Their Excellencies The Grand Councillor and Assistant Grand Secretary Hsu Shih Chang, and the Acting President and Senior Vice-President of the Board of Posts and Communications Shen Yün Pei, duly authorised to act on behalf of the Imperial Government of China, of the one part, and A. THE DEUTSCH ASIATISCHE BANK, SHANGHAI, B. THE CHINESE CENTRAL RAILWAYS LIMITED, LONDON, hereinafter called the Syndicate of the other part. ARTICLE 1.-The Imperial Government of China authorises the Syndicate to issue a 5% Gold Loan for an amount of four million eight hundred thousand pounds sterling (£4,800,000). The Loan shall be of the date on which the first *Text as printed in Wang, p. 421. With the text as there given are also printed the letters of agreement in regard to advances given in the Note to this document, post, p. 824. † No. 1908/1, ante. series of bonds is issued to the public and shall be called "The Imperial Chinese Government 5% Tientsin-Pukow Railway Supplementary Loan." ARTICLE 2.-The Loan is designed to provide further capital for the construction of a Government Railway line from a point connecting the Imperial Railways of North-China at or near Tientsin through Techow and Tsinanfu to Ihsien near the Southern frontier of Shantung, hereinafter known as the Northern Section of the Tientsin-Pukow Railway line, and from Ihsien to a point at or near Pukow (opposite Nanking on the Yangtsze Kiang), hereinafter known as the Southern Section of the Tientsin-Pukow Railway line, the total length of these two sections being about 1,085 kilometers, equal to about 2,170 Chinese li. ARTICLE 3.-The capital so provided shall be solely devoted to the construction of the Railway line including the purchase of land, rolling stock and other equipment, and to the working of the line and to the payment of interest on the loan during the period of construction, which is estimated at 2 years from the signature of this agreement. ARTICLE 4.-The rate of interest for the loan shall be 5% per annum on the nominal principal and shall be paid to the bondholders 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 revenue of the Railway, 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 (14) days before their due dates, Western Calendar, as calculated half-yearly from the date on which the loan is issued to the public. ARTICLE 5.-The term of the loan shall be thirty (30) years. Repayment of principal shall commence after the expiry of ten (10) years from the date of the loan, and, except as provided in Article 6 hereinafter, shall be made by yearly amortisation to the Deutsch Asiatische Bank and the Hongkong and Shanghai Banking Corporation 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 (14) days before their due dates, Western Calendar, as calculated from the date on which the loan is issued to the public. ARTICLE 6.—If at any time after the lapse of the ten (10) 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 twentieth (20th) year, by payment of a premium of two and one-half (22%) per cent on the face value of the bonds (that is to say by payment of a hundred and two pounds and ten shillings (£102.10) for each £100 bond) and after the twentieth (20th) year without premium; but in each and every case of such extra redemption, the Imperial Chinese Government shall give six (6) 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. ARTICLE 7.-The Deutsch Asiatische Bank and the Hongkong and Shanghai Banking Corporation having been appointed, by the German and British parties of the Syndicate, respectively, Agents for the service of the loan the 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 (14) 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 Shanghai or in Tientsin fourteen (14) days before the said due dates, funds in Shanghai or Tientsin 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 (6) 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 "bona 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 Hongkong and Shanghai Banking Corporation and the Deutsch Asiatische Bank will receive a commission of onequarter (4) per cent. on the annual loan service. ARTICLE 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 the 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. ARTICLE 9.-The loan is hereby secured : 1. By a second charge on the likin and internal revenues of the three provinces enumerated in Article 9 of the Original Tientsin-Pukow Railway Loan Agreement amounting to Haikuan Taels 3,800,000 a year, after satisfaction of all the obligations contained in the said Article. 2. By a first charge on the following additional revenues, calculated on the basis of the maximum annual payments of principal and interest due:— A. Likin and internal revenues of the Province of Chihli to the amount of Haikuan Tls. 1,000,000 a year; B. Likin and internal revenues of the Province of Shantung to the amount of Haikuan Tls. 1,200,000 a year; C. Revenue of the Nanking Likin Collectorate (to the amount of Haikuan Tls. 600,000 a year) and of the Huai-an Native Customs (to the amount of Haikuan Tls. 100,000 a year) in the Province of Kiangsu; D. Likin and internal revenues of the Province of Anhui to the amount of Haikuan Tls. 700,000 a year. With the exception of the first charge created by the Original Loan Agreement 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, likin and suitable internal revenues of the four provinces sufficient to provide the amount above stated shall forthwith be transferred to, and be administered by, the Imperial Maritime Customs, in 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, subject to the obligations created by Article 9 of the original loan agreement over all future loans, charges and mortgages charged on the above-mentioned revenues of the four 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 four provinces as above stated; and any future loan, charge or mortgage charged on the said revenues of the four 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 likin, it is hereby agreed, on the one hand, that such revision shall not be barred by the fact that this loan is secured by likin and provincial revenues, and, on the other hand, that whatever likin 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. ARTICLE 10-The Syndicate is hereby authorised to issue to 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 facsimile 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; and it is hereby agreed that the Chinese Minister in London 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 authorised by, and binding upon, the Imperial Chinese Government, and the representatives of the Syndicate in London 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 authorise 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, 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. ARTICLE 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. ARTICLE 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 authorised 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. ARTICLE 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 three million pounds sterling (£3,000,000) as soon as possible after the signature of this agreement, and not later than six (6) months from the date thereof. The price to the Imperial Chinese Government of the bonds shall be the actual rate of their issue to the public, less flotation charges of five and a half (5%) points retainable by the Syndicate (that is to say, a charge of five pounds ten shillings (£5/10/-) for every £100 bond issued). Subscriptions will be invited by the Syndicate in Europe and in China both from Chinese and Europeans on equal conditions, preference being given to the application of the Chinese Government, provided such application be made before the issue of the prospectus to the public. If before the issue of this loan has been completed and during the period of construction it is found that the capital to be provided under Article 3 is already sufficient the Director General shall have the power at his discretion, to dispense with the issue of further bonds. ARTICLE 14. The proceeds of the loan shall be paid to the credit of a Tientsin-Pukow Government Railway Supplementary Loan Account with the Hongkong and Shanghai Banking Corporation and the Deutsch Asiatische Bank in China, London or Berlin, as the case may be. Payments of 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 four (4) per cent per annum shall be granted on the credit balance of the portion of this account kept in London and Berlin, and interest on the credit balance of the portion kept in China will be allowed at the Banks' rates for current accounts, or fixed deposits, as the case may be, to be arranged. After deduction of the |