necessary to insure the service of the loan at the following semiannual payment, the deposits made with it by the Société d'Etude empowered by the Chinese Railway Co. to make them.

These deposits by the Société d'Étude with the Société Générale Belge or the company designated by it shall continue to be made until the sum necessary for the full service of the loan at the date of the next semiannual payment has been completed in gold, and in such manner that said service is insured three months at least before said semiannual payment falls due. The depositories shall utilize these sums in the manner the most advantageous for the Chinese company.

The account on which these sums are borne shall be charged 20 days before date of semiannual payment with the sum necessary for the service of the loan, interest, amortization, expenses, and commissions.

ART. 9. The bank having received in deposit the funds shall have the right to take, without new authorization, from such funds on deposit, the amount of the coupons to be paid during the period of construction.

ART. 10. So as to insure the guaranty just mentioned for the bonds of the present contract, the Chinese Railway Co. recognizes for these bonds a prior special lien on the railway from Lukowkiao (Peking) to Hankow: line, stationary and rolling stock, and receipts.

This special assignment is accepted in the name of the bondholders by the Société d'Étude. In case of nonexecution of the obligations assumed by the Chinese Railway Co. in the present contract, the Société d'Étude or the Belgian company designated by it, shall have full power to enjoy as to said property all the rights and powers resulting from said special assignment.

ART. 11. The preceding provisions do not relieve the Imperial Chinese Government from personal responsibility relative to the present loan, as this responsibility is specified in article 7.

Consequently, the Imperial Chinese Government agrees to make up the necessary amount for the service, in gold, of the loan, in case the sums accruing from the net proceeds of the line from Lukowkiao (Peking) to Hankow, and paid by the Société d'Etude, entrusted with this service by the Chinese Railway Co., to the Société Générale Belge, or to the company which it may designate, should not have reached, after their conversion in gold, and at least three months before the following semiannual payment, the amount sufficient to cover said service.

In this case, and upon the request made it, the Imperial Chinese Government must hold at the disposal of the Société Générale Belge or of the company designated by it 60 days before the next semiannual payment, gold or securities deemed sufficient to realize the amount in gold, which the company shall have notified the Government is necessary to complete the payment.

ART. 12. Out of the sums coming from the payments made by the Société d'Étude or the payments made by the Imperial Chinese Government, the Société Générale Belge or the company designated by it, shall in due time place at the disposal of the firms entrusted with the service of the loan, the necessary amounts, according to the needs as ascertained during the preceding half year.

ART. 13. The Imperial Chinese Government will pay to the firms entrusted with the service of the loan, a commission of per cent on the amount of paid coupons and a commission of per cent on the amount of the bonds drawn or redeemed by anticipated reimbursement. The amount of this allowance shall be deducted every six months from the surplus of the available exploitation receipts, and, in case of insufficiency, it shall be immediately paid by the Imperial Chinese Government. ART. 14. The Imperial Chinese Government binds itself by the present conventions to observe and cause to be observed the privilege stipulated in favor of the bonds in article 9, and to maintain, free and exempt from all tax whatsoever, the bonds and coupons, as well as all transactions of whatsoever nature connected with the service of the loan.

ART. 15. Coupons which shall not have been presented for cashing within five years following their falling due, shall revert to the Imperial Chinese Government; 30 years shall be the limit for redeemed bonds.

On the death of any bondholder of the present loan, the bonds shall be transferred and shall belong to his heirs, according to the inheritance laws in force in the country of which the deceased bondholder was citizen.

Payments of coupons and the redemption of bonds shall be made in time of war, as in time of peace, to the bearers whether they be subjects of friendly or hostile States.

In case of loss, of theft, or destruction of bonds of the present loan, the Chinese Government shall replace them, after having been furnished satisfactory proof of their loss or of the destruction of the title deeds and of the rights of the claimants.

ART. 16. The Imperial Chinese Government through its representatives in Europe shall immediately take the necessary steps and furnish the necessary documents for the official listing of the present loan in the bourses of Brussels and Paris.

ART. 17. Out of the total amount of the present loan, representing as nominal capital a sum of 112,500,000 francs, the Société d'Étude de Chemins de fer en Chine purchases outright ("achete ferme") 39,000,000 francs of nominal capital, or 78,000 bonds of 500 francs, at 90 per cent for the total sum of 35,100,000 francs, delivery to date from the payment to the banks designated in the following article:

ART. 18. The Société d'Étude de Chemins de fer en Chine shall deposit the amount of this purchase, as follows: 8,600,000 francs in the Russo-Chinese Bank at Shanghai, and the remainder in a bank designated by common accord by the director general of the Chinese Railway Co. and the Société d'Etude and against receipt by the Russo-Chinese Bank in Paris of definite bonds for 78,000 bonds bought outright ("achetés ferme") and deposit in the same bank of the definitive bonds for 147,000 bonds forming the surplus of the loan.

The Russo-Chinese Bank and the bank, designated by common accord_by_the Chinese Railway Co. and the Société d'Etude shall credit the Chinese Railway Co. with the sums deposited with them, it being understood that these depository establishments shall not be obliged to deliver these sums, except under the conditions and under the reservations indicated in undermentioned article 20.

The depository banks shall use these sums to the best advantage of the Chinese Railway Co.

ART. 19. The Chinese Railway Co. declares that it has resources amounting to 13,000,000 taels.

The construction of the railroad from Lukowkiao (Peking) to Hankow being limited provisionally to the section from Lukowkiao (Peking) to Paoting (145 kilometers) and to the Hankow-Sinyang section (247 kilometers) which must be constructed first; it is understood that the 13,000,000 taels above mentioned shall in the first place be applied to the construction and to putting in complete working order of the Lukowkiao-Paoting section.

The construction of the entire line (not including the Peking-Paoting section) shall be done under the direction of the Société d'Etude de Chemins de Fer en Chine or its representatives, but for the account of the Chinese Railway Co.

The Société d'Etude shall make the studies, plans, surveys, estimates for the whole line, direct the execution of all the work and order the materials, machinery, and furniture necessary to insure the regular operation of the line. However, the director general of the Chinese Railway Co. reserves to himself the right to approve the building plans and contracts for supplies.

Except for supplies of materials and expenses of all kinds paid in Europe, the Chinese Railway Co. must place at the disposal of the Société d'Etude the necessary sums for settling all payments without exception necessitated in the carrying out of the work, as well as the payment of the staff under the orders of the Société d'Etude and, in general, all expenses whatsoever.

Consequently, the Société (d'Etude) shall not be obliged to pay any expenses from its own funds.

It shall endeavor to complete the construction of the line within three years. ART. 20. On the Hankow-Sinyang section and eventually on the other sections between Paoting and Sinyang, the Russo-Chinese Bank in the first place and afterwards the bank designated by common accord by the Chinese Railway Co. and the Société d'Etude, shall deposit each month with the Chinese Railway Co., out of the available funds in their hands, the amounts necessary to settle the payments for the ensuing month, according to the estimates prepared by the Société d'Etude or its delegates.

A first transfer equivalent to the estimated value of the work already executed on the Hankow-Sinyang section shall be made as a first credit.

The price paid for the above-mentioned bonds being exclusively affected to the construction of the line from Hankow to Paoting, the Russo-Chinese Bank and the bank referred to in the first paragraph of the present article, would have the right not to pay the funds in case one of their payments were diverted from the purpose stipulated, as well as in case the representatives of the Société d'Etude were not empowered by the Chinese Railway Co. to continue the management of the construction works with which this company is exclusively entrusted.

The balance, if there be one, shall be held subject to the order of the Chinese Railway Co.

ÅRT. 21. The Chinese Government cedes to the Société d'Etude an option till December 31, 1901, to purchase the surplus of the loan, to wit: 73,500,000 francs at 90 per cent nominal, plus the accrued fraction due on the coupon.

106229°-19-19

This option can be availed of one or several times, without regard to the amortizations made, but each notice must be for a sum not less than 25,000,000 francs net.

The delivery of the bonds taken on the options shall be to the Russo-Chinese Bank in Paris; the final bonds shall be delivered within a month dating from the telegraphic notification to the management of the Chinese Railway Co.

The price of these bonds shall be deposited in the bank designated, by common accord, by the Chinese Railway Co. and the Société d'Etude, and it shall not surrender them except under the conditions stipulated in the above article 20.

ART. 22. If the Société d'Etude takes advantage of the right granted it to purchase all or part of the bonds on which it holds an option, it shall each time confer with the Chinese Railway Co. to determine upon the sections (of line) to be built with its new funds.

ART. 23. The surveys of the line, dating from the signing of the present contract, are to be made at the expense of the Chinese Railway Co.; the Hankow-Sinyang sections shall first be surveyed, and then successively each of the other sections, for building which an agreement may be had before the Société d'Etude avails itself of the right of option conceded it by article 21.

It is henceforth understood that the section to be built with the funds derived from the first option shall be the one from Paoting toward the Yellow River, and the survey shall be begun during the first year.

ART. 24. La Société d'Etude reserves the right to make one or more issues by public subscription or otherwise, of all or any part of the bonds whether bought outright ("achetés ferme ") or included in the option.

Should the issue be by public subscription, the Société d'Etude shall have the right to include in the total offered for subscription, exclusive of the 78,000 bonds taken outright ("prises ferme"), all or any part of the bonds covered by the option, without on that account being committed to take outright (“prendre ferme") any part whatever of the bonds covered by the options.

It shall be allowed 15 days, counting from the closing of the public subscription, to inform by registered telegram addressed to His Excellency Sheng, director general of the Chinese Railway Co. at Shanghai, the number of bonds it has taken, and that at the price and under the conditions above specified.

The payment and the delivery of the bonds taken by the Société d'Etude following the public subscription shali take place under the conditions specified in the abovementioned articles.

ART. 25. The present contract shall only be binding on the Société d'Etude inasmuch as it shall have the promise that, with the exception of what can be supplied by the Hanyang works, all the materials and supplies necessary for the construction and working of the railroad from Lukowkiao (Peking) to Hankow will be ordered from the Société d'Etude, which will fill the orders under the best possible terms.

Exception is made for the material necessary for the equipment ("armement") of the line from Lukowkiao to Paoting, as this material is almost entirely ready. Compliance with the provisions of this clause by the Chinese Railway Co. shall result from the ordering of material for each of the sections undertaken.

Material ordered from the Société d'Etude shall be exempt from all customs and likin duties on entering or crossing Chinese territory.

If this franchise is not made good before the expiration of the month following the date on which the Belgian Government shall have notified the Société Belge of the receipt of the notifications stipulated in article 29, it (the Société d'Etude) reserves the right not to hold itself bound.

It reserves the same right and within the same time if extraordinary events should arise, as for instance war, or if the French debt ("rente française") should fall below

par.

If, on its side, the Société Belge should not keep the terms of the present contract, it shall be annulled; the Chinese Railway Co. shall be free to enter into contract with whomsoever it may see fit, and to dispense with the services of the engineer in chief. ART. 26. In case of controversies or differences between the Société d'Etude or its representatives and the Imperial Chinese Government or the Chinese Railway Co., these controversies or differences shall be submitted to the judgment of a member of the Tsung Li Yamên and the Belgian Minister in China.

In case of disagreement between these latter, the Tsung Li Yamên and the Belgian Minister shall designate an arbitrator who shall decide finally.

ART. 27. As guaranty for the financial execution of the present contract, the Société d'Etude has already deposited in the Russo-Chinese Bank £20,000 as security.

It shall take full possession of this sum as soon as it shall have fulfilled the provisions stipulated in the first two paragraphs of article 18 here above.

It is understood that the payment of 8,600,000 francs to the Russo-Chinese Bank at Shanghai must be made within the month following the date of the signing of the present contract.

ART. 28. The Tsung Li Yamên shall be bound in case the Belgian Minister at Peking request it to give cognizance of the title to the minister of the foreign country, indicated by him, as subscriber to the issue of stock.a

ART. 29. The present contract is made in triplicate, one copy for the Chinese Government, one for the Chinese Railway Co., and the third for the Société d'Etude de Chemins de Fer en Chine.

In case of doubt or disagreement, the French text alone shall be used to interpret the contract.

The present contract must be submitted through the proper channel for imperial sanction, and when said sanction has been obtained, the Tsung Li Yamên must advise the Belgian representative at Peking by official dispatch and eventually the representative in Peking of the foreign country to whom it may give cognizance of the title ("le representant à Pekin du pays étranger auquel le titre sera notifié"). These formalities shall be complied with within the month following the signing of the contract. The provisions of the contract signed at Wuchang May 27, 1897, and of the protocol signed July 21, 1897, which do not conflict with the present contract, especially those of article 14 of the Wuchang contract and article 2 of the Shanghai protocol, are and remain in force. The Société Générale of Brussels and the Russo-Chinese Bank are parties to the present contract, and they, after having examined the preceding contract, declare that they, as far as necessary, accept the duties imposed. According to article 14 of the above-mentioned Wuchang contract, the Chinese Railway Co. will only recognize the Société Belge as contracting party.

Done at Shanghai, the twenty-sixth day of the month of June, one thousand eight hundred ninety-eight.

The Engineer representing the Société d'Etude de Chemins de fer en Chine,
The Director General of the Chinese

Railway Company.

The Viceroy of Chihli.

The Representatives of the Imperial Chinese Government:

The Viceroy of Hupeh,

OPERATING CONTRACT.

Between the undersigned:

1. The Imperial Chinese Government, represented by Their Excellencies, the Viceroys of Chihli and of Hupeh;

2. The Chinese Railway Co., represented by His Excellency Sheng Hsüan-huaï, its director general, office of the company at Shanghai;

And the Société d'Etude de Chemins de Fer en Chine, whose office is at Brussels, Has been agreed as follows:

ART. 1. The Chinese Railway Co., in accord with the Imperial Chinese Government, entrusts the Société d'Etude de Chemins de Fer en Chine, which shall appoint representatives for that purpose, with the direction, administration, and operating of the line from Hankow to Lukowkiao (Peking), for which it holds a concession, under the terms of an edict of His Majesty the Emperor of China dated October 20, 1896, and of which a copy is annexed to the present contract.

ART. 2. The Société d'Etude shall take over the working of the line as soon as each section is completed, following final acceptance by the Imperial Administration of Chinese Railways. Each section must be completely and previously equipped and provided with all the material necessary for its working, as well as with the supplies of tools, furniture, and a fund for running expenses. The Société d'Etude or the representatives it shall appoint under the provisions of article 1, shall organize the various services, shall have the right to hire the personnel, which it shall have absolute right to dismiss, or disband, and to fix its salaries according to a fixed schedule previously communicated to the director general of the Chinese Railway Co. It shall make all purchases necessary for operating, maintaining, or repairing the road; it shall fix the schedule of rates in the terms of concession contracts, collect revenues of all kinds, and pay the operating and management expenses of the company. The foregoing measures, taken for the purpose of operating the line, shall be submitted, for consultative purposes, to the director general of Chinese Railways.

The Chinese Railway Co., which will appoint delegates for that purpose, shall have absolute right of control over the receipts and expenses.

The purchase of all new material or works for the improvement or extension of the regular road, or of stations, which may be found necessary after the opening of each

a Si le Ministre de Belgique à Pékin en faisait la demande au Tsung Li Yamen, celui-ci, serait tenu de notifier le titre au Ministre du pays étranger qu'il lui désignerait, comme prenant part à la souscription des titres.

section of the line to traffic, shall be at the sole expense of the Chinese Railway Co. As far as possible the supplies necessary for the maintenance and repairing of the road shall be ordered from the works and mines under the control of the director general of the Chinese Railway Co.

ART. 3. In case of war or revolution in China, the transportation of troops, munitions, and of the supplies of the Chinese army shall have right of way over all commercial transportation. The rate for such transportation shall be 50 per cent of the tariff; and it shall be carried according to the instructions of the director general of the Chinese Railway Co. The transportation of anything of a nature to injure the Imperial Chinese Government shall, moreover, be forbidden.

ART. 4. Out of the receipts from operation available, after payment of all expenses, the Société d'Etude shall retain the necessary sum to insure the payment, every six months, and at least three months before its date of payment, of the service of the loan of 112,500,000 francs contracted by the Imperial Chinese Government.

This reserve shall be made as long as said loan is not entirely paid off.

The amount of this reserve shall be deposited monthly with the Société Générale Belge pour favoriser l'Industrie Nationale, or with the company designated by it. The latter shall convert into gold on the best terms procurable the sums paid to it for the service of the loan.

When, by means of the sums thus paid in, the service in gold of the loan shall have been insured, the Société d'Etude shall deduct 10 per cent of the surplus, which shall be applied to the creation of a reserve fund for rebuilding or making extraordinary repairs necessary to insure the working of the lines.

It shall then pay the balance remaining available out of the operating revenues to the Chinese Railway Co.

ART. 5. The duration of the present operating contract is fixed at 30 years dating from the signing of the contract.

However, this period would be fully entitled to extension in case the loan of 112,500,000 francs should not at that time be wholly paid off; this extension would continue as long as the complete amortization had not been made. But if the refunding of the loan should be made before the dates on which they fall due, the present working contract will be annulled from the date of the total refunding of the loan.

ART. 6. During the entire period of the working of the line by the Société Belge, the Chinese Railway Co. grants it 20 per cent of the net profits of the railroad from Peking to Hankow, as agreed upon by mutual consent, after the closing of each fiscal term ('exercice"), taking into account, naturally, the sums necessary for the service of the interest and the amortization of the loans.

ART. 7. In case of contentions or disagreement between the Société d'Etude and the management of the Chinese Railway or the Imperial Chinese Government, said contentions and disagreements shall be settled as specified in article 26 of the loan contract.

ART. 8. If the revenues from operating the lines are not sufficient to cover the expenses, the Chinese Railway Co. must supply the Société d'Etude with the necessary means to insure the operating of the lines under normal conditions.

ART. 9. All materials and supplies needed by the Société d'Etude for the working of the line, as well as for the maintenance and repair of the line, shall, when imported from abroad, be exempt from all customs or likin dues.

ART. 10. The present contract is made in triplicate; one copy for the Imperial Chinese Government, one for the Chinese Railway Co., and the third for the Société d'Etude de Chemins de Fer en Chine.

In case of doubt or disagreement the French text shall alone be accepted for the interpretation of the contract.

The present contract must be submitted through the proper channel for imperial sanction, and, when said sanction shall have been obtained, the Tsung Li Yamên must advise, by official dispatch, the Belgian representative at Peking and eventually the representative at Peking of the foreign government to which the title may be officially notified (“auquel le titre sera notifié”).

Done in Shanghai, the twenty-sixth of the month of June, eighteen hundred ninetyeight.

The Engineer representing the Société d'Etude de Chemins de fer en Chine.
The Director-General of the Chinese Railway Co.

HUBERT.

SHENG-HSUAN-HUAI.

Seen for authentication:

Witnesses: