Strict compliance with supervision provisions Lessee to provide facilities for inspection scribe, shall, upon the requirement of the Commission, be reserved by the Comptroller for a reasonable time as security to the City against such claims. CHAPTER V SUPERVISION, INSPECTION AND DETERMINATION OF COST ARTICLE XXI. Inasmuch as the City's returns from its investment in the Railroad and its exercise of its right to take over the Railroad as provided in the Lease will be affected by the amount of the Lessee's expenditures on account of its contribution toward the cost of construction of the Railroad and the cost of equipping, maintaining and operating the Railroad and of reconstructing and equipping and maintaining and operating the Existing Railroads, the Lessee shall strictly comply with the provisions hereof for assuring to the Commission supervision by it of all operations of the Lessee. The Lessee shall, therefore, in addition to proViding facilities for inspection as hereinafter provided, provide the Commission with all facilities necessary or convenient to afford the Commission full and complete supervision of all operations of the Lessee in or about the enterprise of contributing to the cost of construction of the Railroad and of equipping, maintaining and operating the Railroad, and of reconstructing, extending, equipping, maintaining and operating the ExistLessee to keep ing Railroads. The Lessee and any construction or supply company conrecords of all trolled by the Lessee or by any company directly or indirectly controlling operations the Lessee or affiliated with the Lessee, shall keep suitable and proper books, records and memoranda of all operations with contractors, bankers, or persons furnishing labor, material, money or supplies and all contracts directly or indirectly affecting the Lessee's contribution toward the cost of construction of the Railroad, the cost of equipment, the actual cost of the plant and property of the extensions and additional tracks authorized by said certificates, the Reconstruction of the Existing Railroad for Initial Operation and Additions and directly or indirectly affecting the equipment, maintenance or operation of the Railroad and the Existing Railroads, showing in detail such cost to the Lessee, or to any such construction company, including any Additions constructed or provided from time to time, and shall afford access to and permit the examination, use and production of any such books, records, memoranda or contracts to the extent that the same have to do therewith. Examination of books, etc. Contracts for construction or equipment to be approved ARTICLE XXII. The Lessee shall (except in such cases where permission to do otherwise is expressly granted from time to time by the Commission by a resolution evidenced by entries in its minutes) before entering into any contract, agreement, mortgage or undertaking having to do with the enterprise of contributing toward the cost of construction of the Railroad or equipping the Railroad, or reconstructing, extending or equipping the Existing Railroads, submit the same to the Commission for its approval and the Commission may as a condition of its approval require the insertion of such terms and conditions therein as it may deem necessary. The Commission may further require the Lessee before entering into any agreement having to do with the enterprise of contributing toward the cost of construction of the Railroad or equipping the Railroad or reconstructing, or equipment extending or equipping the Existing Railroads to ask for proposals upon Proposals upon contracts for construction forms of contracts satisfactory to the Commission, in a specific manner and for a specified time. or operation ARTICLE XXIII. Any contract, agreement or undertaking having to do Contracts for with the maintenance or operation of the Railroad and the Existing Rail- maintenance roads extending beyond a period of one year or involving an expenditure in excess of Fifty thousand ($50,000) Dollars (and any other contract, agreement or undertaking having to do with the maintenance or operation Approval of of the Railroad and the Existing Railroads which the Lessee shall desire Commission to make subject to the approval of the Commission) shall be entered into by the Lessee subject to the approval of the Commission, which approval shall be evidenced by entries in its minutes. Any payments made under Fayments any such contract so approved by the Commission shall not be subject to objection under Article XXVII unless the payments thereunder shall not be in accordance with the terms of such contract. The provisions of this Article shall also apply to all contracts, agreements or undertakings of the character specified above entered into after the date hereof which are to continue in force after the beginning of operation. No contract, agreement or undertaking affecting the maintenance or operation of the Railroad or Existing Railroads (except mortgages, assignments, leases, trackage agreements, power and advertising contracts, agreements amending or supplementing this contract or the certificates for extensions and additional tracks hereinbefore referred to, and contracts, agreements or undertakings amending, supplementing or extending any such instruments) shall extend over a period in excess of five (5) years. under Contracts limited to five years accounts ARTICLE XXIV. The Commission may, whenever it deems advisable, System of establish a system of accounts to be used by the Lessee in connection with the construction, equipment, maintenance and operation of the Railroad and the reconstruction, equipment, maintenance and operation of the Existing Railroads and may prescribe the manner in which such accounts shall be kept. It may also in its discretion prescribe the forms of accounts, records and memoranda to be kept by the Lessee in connection with such enterprise, including the accounts, records and memoranda of the movements of traffic as well as the receipts and expenditures of moneys. Reasonable notice of alterations by the Commission in the required method or form of keeping a system of accounts shall be given to the Lessee by the Commission. The Commission shall at all times have access to all such accounts, records and memoranda kept by the Lessee and may designate any of its officers or employees who shall thereupon have authority under the order of the Commission to inspect and examine Examination any and all accounts, records and memoranda kept by the Lessee. The Commission may, after hearing, prescribe by order the accounts in which particular outlays and receipts shall be entered, charged or credited. ARTICLE XXV. The Commission may from time to time adopt regulations, which shall be evidenced by entries in its minutes, which the Lessee shall strictly comply with, as to the form of all vouchers and payrolls having to do with the Lessee's contribution toward the cost of construction of the Railroad, the cost of equipment, the actual cost of the plant and of accounts Regulations Filing of vouchers, etc. Commission may object to expenditures Procedure in case of objection property of the extensions and additional tracks authorized by said certificates, the cost of the Reconstruction of the Existing Railroads for Initial Operation, the cost of Additions and with the cost of maintaining and operating the Railroad and the Existing Railroads, to the end that the cost data relating to various divisions of the enterprise of contributing toward the cost of construction of the Railroad and of equipping, maintaining and operating the Railroad and of reconstructing, extending, equipping, maintaining and operating the Existing Railroads can, at all times, be promptly and accurately determined and the property identified. ARTICLE XXVI. No payment, credit, compensation or concession of whatsoever character having in any way to do with the cost of construction or the cost of equipment shall be determined to be part of the cost of construction or the cost of equipment unless the Lessee upon making such payment, credit, compensation or concession shall forthwith file with the Commission a duplicate voucher, credit slip or other original evidence thereof. The Commission may from time to time (by resolution evidenced by entries in its minutes) relieve the Lessee from the obligation to file the vouchers, credit slips or other original evidences to such extent as it may deem advisable. ARTICLE XXVII. The Commission may object to any expenditure, as unreasonable or improper, made or to be made by the Lessee in connection with maintaining and operating the Railroad and the Existing Railroads by notice thereof to the Lessee. If the objection by the Commission refers to an expenditure already made, the Lessee forthwith upon receipt of notice shall remove the amount from the account or accounts to which it had been charged and hold the same in a suspense account until the item in dispute is adjudicated. If the objection refers to an expenditure to be made, the Lessee, if it makes such expenditure, shall charge to and hold the same in a suspense account until the item in dispute is adjudicated. In case the Commission and the Lessee are unable to agree within five (5) days after the delivery of such notice (Saturdays, Sundays and Holidays excepted) to agree upon the reasonableness and propriety of such expenditure, the same shall be determined by arbitration or by the court. Such arbitration shall be conducted in accordance with the provisions of Chapter VI of Part First except that the periods for the appointment of arbitrators as therein prescribed shall for the purposes of all arbitrations under this article be reduced to five (5) days - Saturdays, Sundays and Holidays excepted. Such notice of objection shall be given by the Commission within thirty (30) days after the Commission has become cognizant of such expenditure, unless satisfactory reasons are given for any delay. Any such delay shall not excuse the Lessee from complying with the provisions hereof in respect of the money to be held in suspense, but such delay may be set up by the Lessee as a defense to the objection, and the adequacy of the reason given for such delay shall be determined by arbitration or by the court. If it be agreed by the Commission and the Lessee or determined by arbitration or by the court that If expenditure the expenditure so objected to is reasonable and proper, the amount thereof shall be charged to operating expenses, and the interest thereon, if any, Arbitration Notice of objection, when to be given reasonable and proper shall be charged against the interest revenue. If, on the other hand, it be If expenditure so agreed or so determined that such expenditure is unreasonable or im- unreasonable proper, the amount thereof with interest shall be borne by the Lessee. or improper Similarly, if any such expenditure shall be so agreed or so determined to be unreasonable or improper in part, the charges for such parts shall be adjusted in the same manner as the charges for the whole amounts as hereinbefore provided. materials ARTICLE XXVIII. The Commission contemplates, and the Lessee hereby Inspection of approves, the most thorough and minute inspection by the Commission work and and the Engineer, and by their representatives or subordinates, of all work and materials (and of the manufacture or preparation of such materials) entering into Equipment and the reconstructing, extending and equipping of the Existing Railroads. The Lessee shall, therefore, at all times give Facilities for to the Commission and its members, to the Engineer and his assistants and inspection subordinates, and to any person designated by the Commission or its Chairman, all facilities, whether necessary or convenient, for inspecting the materials to be furnished and the work to be done in and about the same. The members of the Commission, the Engineer and any assistant or other person bearing his authorization or the authorization of the Commission or its Chairman, shall be admitted at any time summarily and without delay to any part of the work or to the inspection of materials at any place or stage of their manufacture, preparation, shipment or delivery. as to past work work ARTICLE XXIX. The cost of construction and the cost of equipment Determinashall be determined as follows: The Engineer shall within six (6) tion of cost months after the date of this contract render a determination in writing in duplicate to the Commission and to the Lessee of the cost of construction and of the cost of equipment paid or accrued prior to the date of this contract. In the case of all work done after the date of this contract the Engineer shall, on or about the first days of January, April, July and as to current October, in each year during Construction or during the provision of Equipment (including the construction or provision of Additions to the Railroad or to the Equipment) render a determination in writing, in Determinaduplicate, to the Commission and to the Lessee of the cost of construction tions and of the cost of equipment, to the date of the last day of the preceding quarter, including therein separately a determination of the cost of construction and the cost of equipment during the quarter year immediately preceding the date of such determination. If either the Commission or If Commission the Lessee shall be dissatisfied with the determination of the cost of construction or cost of equipment paid or accrued prior to the date of this contract or shall be dissatisfied with any such quarterly determination or any item or items thereof it shall within thirty (30) days after the receipt of any such determination file with the Engineer a statement in Statement of objection writing of the item or items objected to and the reasons for such objection. If within such period of thirty (30) days the Commission or the Lessee shall fail to file such statement with the Engineer, the determination shall be final and conclusive upon the party so failing. If such statement of objections be so filed with respect to the determination of the cost of construction or the cost of equipment paid or accrued prior to the date or Lessee be dissatisfied Final, if not objected to Redetermination Final, if not objected to Arbitration Dates of of this contract, the Engineer shall thereupon reconsider such determination, or any such item or items thereof so objected to, and shall, within thirty (30) days after the filing of such statement, render a redetermination stating his conclusions as to the item or items so objected to. If such statement of objections be so filed with respect to any quarterly determination of the cost of construction or cost of equipment paid or accrued after the date of this contract the Engineer shall thereupon reconsider such determination, or any such item or items thereof, so objected to, and shall state his conclusions thereon in, or at the time of, his determination for the quarter year succeeding the quarter year for which the determination so objected to was made. Any such redetermination shall be final and conclusive unless the Commission or the Lessee shall within thirty (30) days after the receipt thereof give written notice to the other that it requires the same to be submitted to arbitration or the court as hereinafter provided. In the case of Additions, the Engineer shall, in the same manner and subject to the same review as is provided in the case of determination as to cost, determine the respective dates at which Additions are put into operation. Any period of time specified in this Article may be extended with the written consent of the Commission and the Lessee. Arbitration How conducted Appointment CHAPTER VI ARTICLE XXX. If the Commission or the Lessee shall desire to submit to arbitration any matter of difference arising under any provision of this contract in respect of which it is therein provided that arbitration may be had, then such matter of difference may be submitted to arbitration. Such arbitration shall be conducted as follows: Either the City, acting by the Commission, or the Lessee, may give written notice to the other that it requires the matter arising hereunder to be submitted to arbitration, and shall at the same time name a disinterested person as an arbitrator, and accompany the notice by a written acceptance by the arbitrator of the nomination. Within thirty (30) days after the receipt of of arbitrators such notice, the party receiving the same shall name a disinterested person as an arbitrator, and give written notice of such nomination to the other party, the notice to be accompanied by a written acceptance by the arbitrator of the nomination. If the party to whom notice of arbitration is given shall not so nominate an arbitrator, who shall so accept, then the arbitrator named by the party giving the first notice shall be the sole arbitrator. The Commission and the Lessee shall, upon the nomination of the second arbitrator, select a third arbitrator; but if they fail to agree upon such third arbitrator within thirty (30) days after the date of the nomination of the second arbitrator nominated, the third arbitrator shall be nominated by the Chief Judge of the Court of Appeals of the State of New York; or if within fifteen (15) days after being requested by either the Commission or the Lessee to make such nomination, the said Chief Judge shall decline or fail to make a nomination, then an arbitrator shall be nominated upon the request of either the Commission or the Lessee and Selection of third arbitrator by agreement by Chief |