Company declares that it specially assigns, preferentially for the payment of interest and capital of the present loan, and consequently cedes and delegates in favor of said bonds all the net revenue of the line from Lu-kou-chiao (Peking) to Hankow, after the regular payment of all expenses of administration and operation, the whole, as is furthermore set forth in a treaty for operating (the line) concluded between the Chinese Railway Company and the Société d'Étude de Chemins de fer en Chine, treaty hereto annexed and forming an integral part of this contract.

This assignment (affectation) is made exclusively and irrevocably until complete refunding of the bonds of the present loan.

ARTICLE 8.

The Chinese Railway Company directs the Société d'Etude to deposit the funds from the net revenue of the traffic with the Société Générale pour favoriser l'Industrie Nationale, established at Brussels, or with the company designated by it.

This latter shall convert into gold, and to the best interest of the Imperial Chinese Government and the Chinese Railway Company, and up to the full amount of the sum necessary to insure the service of the loan at the following semi-annual payment, the deposits made with it by the Société d'Etude empowered by the Chinese Railway Company to make them.

These deposits by the Société d'Etude 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 semi-annual payment has been completed in gold, and in such manner that said service is insured three months at least before said semi-annual 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 twenty days before date of semi-annual payment with the sum necessary for the service of the loan, interest, amortization, expenses and commissions.

ARTICLE 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.

ARTICLE 10.

So as to insure the guarantee just mentioned for the bonds of the present contract, the Chinese Railway Company recognizes for these bonds a prior special lien on the railway from Lu-kou-chiao (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'Etude. In case of non-execution of the obligations assumed by the Chinese Railway Company in the present contract, the Société d'Etude 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.

ARTICLE 11.

The preceeding 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 Lu-kou-chiao (Peking) to Hankow, and paid by the Société d'Etude, entrusted with this service by the Chinese Railway Company, 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 semi-annual payment, the amount sufficient to cover said service.

In this case, and upon the request maae it, the mperial 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.

ARTICLE 12.

Out of the sums coming from the payments made by the Société d'Etude 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 preceeding half-year.

ARTICLE 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.

ARTICLE 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.

ARTICLE 15.

Coupons which shall not have been presented for cashing within five years following their falling due, shall revert to the Imperial Chinese Government; thirty 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.

ARTICLE 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.

ARTICLE 17.

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

ARTICLE 18.

The Société d'Etude de Chemins de fer en Chine shall deposit the amount of this purchase, as follows: 8,600,000 francs in the RussoChinese Bank at Shanghai, and the remainder in a bank designated by common accord by the Director General of the Chinese Railway Company and the Société d'Etude and against receipt by the Russo-Chinese

Bank in Paris of definitive 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 Company and the Société d'Etude shall credit the Chinese Railway Company 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 Company.

ARTICLE 19.

The Chinese Railway Company declares that it has resources amounting to thirteen million taels.

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

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 Company 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 Company 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.

ARTICLE 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 Company and the Société d'Etude, shall deposit each month with the Chinese Railway Company, 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 Company 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 Company.

ARTICLE 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% nominal, plus the accrued fraction due on the coupon. 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 RussoChinese Bank in Paris; the final bonds shall be delivered within a month dating from the telegraphic notification to the Management of the Chinese Railway Company.

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

ARTICLE 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 Company to determine upon the sections (of line) to be built with its new funds.