Subway Company may open streets, etc.

Permits

Right of inspection

Sanitary and police jurisdiction

Real estate

Physical damages

Care of surface and subsurface structures

Rate of fare

of access to the Railroads and all other structures appurtenant thereto encroaching upon the surface of the streets.

The Subway Company shall be authorized to open and occupy so much of the surface of the street or streets affected by this grant and to erect thereon such temporary supports as may be necessary for the purpose of building the said railroad structures; but the Commission may, whenever it deems it advisable, prescribe the manner in which the said work shall be performed. All necessary permits for opening of streets, and other necessary departmental permits, shall be obtained from the President of the Borough, or other officer as provided by law.

The City, the Commission and all duly authorized representatives of the City and the Commission, shall have the right at all reasonable times to inspect the Railroads herein authorized, and any part thereof, as well during construction as afterwards, and to enter thereon when necessary, for the examination, supervision or care of any property of the City, or of abutting property owners, or for any proper purpose. Such inspection shall include the inspection and approval of all materials, and the erection thereof, used in the construction of the Railroads. Nothing in this franchise shall be deemed to diminish or affect the sanitary or police jurisdiction which the public authorities shall lawfully have over property in the City.

V

The Subway Company shall procure all necessary easements and rights, titles and interests in real estate for the construction of the Railroads.

The Subway Company shall make good to the City all physical but not consequential damage which shall be done to the property of the City by the construction or operation of the Railroads, and shall make good to every owner of property abutting upon the Railroads, or which shall be injured by the work of constructing or operating the same, all physical damage which shall be done to such abutting or injured property, through any act or omission of the Subway Company, its successors, assigns, or lessees, or any contractor, sub-contractor or other person employed upon the construction or operation of the Railroads, or any part thereof.

The Subway Company shall in the course of construction at its own expense maintain the care of all street surfaces and surface and subsurface structures which may be interfered with, and any necessary interference therewith shall be subject to reasonable regulation by the department of the government of the City in control or charge thereof.

VI

The Subway Company (during the period of joint operation with the Subway Railroads) shall be entitled to charge for a single fare for each passenger for one continuous trip in the same general direction over the Railroads and the additional tracks authorized by a certificate granted by the Commission to the Subway Company bearing even date herewith (hereinafter referred to as the "additional tracks "), the existing railroads and Subway Railroads the sum of five (5) cents but not more, except as otherwise provided in Article LXII of the subway contract. After the end of such period of joint operation the Subway Company shall be entitled to

charge for a single fare for each passenger for one continuous trip in the same general direction over the Railroads, the additional tracks and the existing railroads the sum of five (5) cents but not more.

VII

The Railroads shall be carefully and skillfully operated, according to the Skillful highest standards of railroad operation, and with due regard to the safety operation of the passengers and employees and of all other persons. The Subway Maintenance Company shall during the term of the grant keep the plant and property

(as the words "plant and property are hereinafter defined) of the Railroads and each and every part thereof in thorough repair, and shall restore and replace every necessary part thereof which may wear out or cease to be useful, so that at all times and at the termination of the grants such plant and property of the Railroads shall be in thoroughly good and solid condition.

used

The power to be used shall be electricity or compressed air so used as Power to be to involve no combustion or impurity of air in cars or any other power of like description approved by the Commission.

The Subway Company may transport over the Railroads passengers and property, provided, however, that the use of the Railroads for the transportation of property shall not to any extent or in any way interfere with the use of the Railroads to their fullest capacity, if required, for the carriage of passengers.

May transport passenproperty

gers and

roads

nor trade, traffic or

occupation newspapers,

No part of the Railroads, or stations or other appurtenances thereof, No advertisshall be used for advertising purposes, except that the Subway Company ing on Railmay use the structure for posting necessary information for the public relative to the running of trains and to the operation of the Railroads; nor shall any trade, traffic or occupation, other than required for the operation of the Railroads, be permitted thereon or in the stations thereof, except such sale of newspapers and periodicals as may, from time to time, always with the right of revocation, be permitted by the Commission. In case the present provisions of the Rapid Transit Act in respect of. advertising or the carrying on of any trade, traffic or occupation are amended, the Commission, under rules and regulations to be prescribed by it, may permit the Subway Company to carry on such advertising or such trade, traffic or occupation in accordance with the Rapid Transit Act as it may be amended from time to time.

VIII

etc.

If Rapid

Transit Act be amended

City's compensation

and exercise

of right to

take over affected by

Inasmuch as the City's compensation for the authorizations or liecnses hereby given and its exercise of its right to take over the plant and property of the Railroads will be affected by the amount of the Subway Company's expenditures on account of constructing, equipping, maintaining and operating the Railroads, the Subway Company shall strictly comply with expenditures the provisions hereof for assuring to the Commission supervision by it of all operations of the Subway Company. The Subway Company shall, therefore, in addition to providing facilities for inspection as hereinbefore Subway Company to proprovided, provide the Commission with all facilities necessary or convide facilities venient to afford the Commission full and complete supervision of all for superoperations of the Subway Company in or about the enterprise of construct

vision

Proper

books, etc., to be kept

Contracts for construction or equipment to be submitted to Commission

What contracts for maintenance or operation to be submitted

Payments thereunder not subject to objection

Certain contracts not to extend over five years

Commission may establish system of accounts

ing, equipping, maintaining and operating the Railroads. The Subway Company and any construction or supply company controlled by the Subway Company or by any company directly or indirectly controlling the Subway Company or affiliated with the Subway Company 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 actual cost of the plant and property of the Railroads and directly or indirectly affecting the equipment, maintenance or operation of the Railroads, showing in detail such cost to the Subway Company, 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.

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 entered in its minutes) before entering into any contract, agreement, mortgage or undertaking having to do with the constructing or equipping of the 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 Subway Company before entering into any agreement having to do with the construction or equipment of the Railroads to ask for proposals upon form of contracts satisfactory to the Commission, in a specific manner and for a specified time.

Any contract, agreement or undertaking having to do with the maintenance or operation of the Railroads 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 of the Railroads which the Subway Company shall desire to make subject to the approval of the Commission) shall be entered into by the Subway Company subject to the approval of the Commission, which approval shall be evidenced by entries in its minutes. Any payments made under any such contract so approved by the Commission shall not be subject to objection under the provisions hereinafter contained unless the payments thereunder shall not be in accordance with the terms of such contract. The provisions of this paragraph shall also apply to all contracts, agreements or undertakings of the character specified in this paragraph 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 Railroads (except mortgages, assignments, leases, trackage agreements, power and advertising contracts, agreements amending or sup plementing this certificate, or the Subway Contract or the certificate for additional tracks bearing even date herewith, and any contracts, agreements or undertakings amending, supplementing or extending any such instruments) shall extend over a period in excess of five (5) years.

The Commission may, whenever it deems advisable, establish a system of accounts to be used by the Subway Company in connection with the construction, equipment, maintenance and operation of the Railroads and may

prescribe the manner in which such accounts shall be kept. It may also in its discretion prescribe the form of accounts, records and memoranda to be kept by the Subway Company in connection with the construction or equipment, maintenance and operation of the Railroads, 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 Alterations the Commission in the required method or form of keeping a system of accounts shall be given to the Subway Company by the Commission. The Commission shall at all times have access to all such accounts, records and memoranda kept by the Subway Company and may designate any of its officers or employees who shall thereupon have authority under the order of the Commission to inspect and examine any and all accounts, records and memoranda kept by the Subway Company. The Commission may, after hearing, prescribe by order the accounts in which particular outlays and receipts shall be entered, charged or credited.

ers and

The Commission may from time to time adopt regulations, which shall Regulations be evidenced by entries in its minutes, which the Subway Company shall as to vouchstrictly comply with, as to the form of all vouchers and payrolls having pay-rolls to do with the actual cost of the plant and property of the Railroads, and with the cost of maintaining and operating the Railroads, to the end that the cost data relating to various divisions of the enterprise of constructing, equipping, maintaining and operating the Railroads can, at all times, be promptly and accurately determined and the property identified.

etc., to be

filed

No payment, credit, compensation or concession of whatsoever character Vouchers, having in any way to do with the actual cost of the plant and structure and equipment of the Railroads shall be determined to be part of the actual cost of the plant and structure and equipment unless the Subway Company upon making such payment, credit, compensation or concession shall forthwith file with the Commission a duplicate voucher credit slip or other original evidence thereof.

Procedure in tion

case of objec

The Commission may object to any expenditure, as unreasonable or Commission may object to improper, made or to be made by the Subway Company in connection with expenditures maintaining and operating the Railroads by notice thereof to the Subway Company. If the objection by the Commission refers to an expenditure already made, the Subway Company 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 Subway Company, if it make 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 Subway Company are unable 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 hereinafter Arbitration contained except that the period for the appointment of arbitrators as hereinafter prescribed shall for the purposes of all arbitration under this paragraph 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 Subway Company from complying with the provisions hereof in respect of the money to be held in reserve, but such delay may be set up by the Subway Company 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 Subway Company or determined by arbitration or by the court that the expenditure so objected to is reasonable and proper, the amount thereof shall be charged to operating expenses and the interest thereon, if any, shall be charged against interest revenue. If, on the other hand, it be so agreed or so determined that such expenditure is unreasonable or improper, the amount thereof with interest shall be borne by the Subway Company. Similarly, if any expenditure shall be so agreed or so determined to be unreasonable or improper in part, the charges for such part shall be adjusted in the same manner as the charges for the whole amounts as hereinbefore provided.

The Commission contemplates, and the Subway Company hereby approves, the most thorough and minute inspection by the Commission 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 the construction and equipment of the Railroads. The Subway Company shall, therefore, at all times give to the Commission and its members, to the Engineer and his assistants and 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.

The provisions of this article in so far as they provide for supervision of operation shall be inoperative for so long as the compensation to be paid for the Railroads shall not be a portion or percentage of income, earnings or profits.

IX

The actual cost of the plant and property of the Railroads shall be determined as follows:

The words "PLANT AND PROPERTY as used herein mean as to any of the Railroads, the equipment and the plant and structure thereof.

The word "EQUIPMENT" means as to any of the Railroads, all cars, rolling stock, motors, power sub-stations and the real estate upon which they are built and all wires, cables and conduits suitable to and necessarily provided and used for the purposes of the Railroads not affixed to the railroad structure in streets or on rights of way (including additions), provided, however, that the cars, rolling stock and motors shall be such only as are specially purchased or constructed for use upon the Railroads, which shall at the time of purchase or construction be identified by suitable marking as "extension equipment."