For additions

(2) For additions, as the word additions is hereinbefore defined, to the railroads, or to either of the Railroads as to which the authorization or license is terminated, the percentage of the actual cost of such of said additions as may have been completed or put in operation within less than thirty-nine (39) years, indicated in the schedule following according to the age of each item as there indicated:

Basis of computation of

schedule

The above schedule is computed upon the basis of the investment of the deductions from the revenue for amortization in five per cent. (5%) bonds of the Subway Company at one hundred and seven and one-half per centum (1072%) and seven and one-half per centum (7%) has been added to each outstanding amount to cover premiums that may be payable by the Subway Company as a condition for calling in outstanding bonds. Reduction of If the amortization funds are invested at a more favorable rate than that price above assumed, or if the premiums payable upon outstanding bonds are less than seven and one-half per centum (7%) then the amount to be paid by the City shall be correspondingly reduced.

(3) From the sum of the percentages so determined there shall be de- Amount to ducted such amount of money as shall be necessary to put such plant and be deducted structure in the condition provided for by Article VII of this certificate,

to be ascertained in the absence of agreement by arbitration or by the

Court as hereinafter provided in Article XIII.

operator

At the option of the City either at the expiration of a full term of the Transfer may grant or at the earlier termination thereof, pursuant to notice as afore- be to new said, the Subway Company may be required to transfer the title, if any, to and possession of the plant and property directly to a new grantee upon his paying the amount to the Subway Company which the City would have been required to pay as aforesaid.

In case the City itself shall take over the plant and property such payment shall be made by a City warrant drawn by the Comptroller, or other

Payment by City

how made

By new operator

If amounts not paid

Bond to be given

Lessee to execute title papers

By whom exercised

When payments shall cease

wise, as may then be provided by law. In case the plant and property shall be taken over directly by a new grantee such payment shall be made by a certified check upon a solvent bank or trust company having its main office in New York, drawn by such new grantee, to the order of the Subway Company or by lawful money of the United States of America.

If the amounts to be paid to the Subway Company at the expiration of a full term of a grant or upon any such termination shall not have been finally determined or paid prior to or at the time when a full term is according to this certificate to end or the termination is under the said notice given to take effect, the title, if any, to and right of possession of the plant and property of the lines of the Railroads shall nevertheless pass to the City or to a new grantee, free and clear of all liens or other incumbrances, and the City or such new grantee shall pay to the Subway Company the amount so determined with interest from the date of taking possession, provided, however, that the possession of such plant and property shall not pass to the City or to such new grantee in advance of payment as aforesaid unless the City or such new grantee shall give to the Subway Company a satisfactory bond or bonds in an amount at least equal to the difference between the actual cost of the plant and property and the amount thereof that should be amortized as indicated in the schedules contained herein, and in addition an amount sufficient adequately to protect the Subway Company, which latter amount, if not agreed upon by the Commission and the Subway Company, shall be determined by arbitration or by the court.

Upon the expiration of a full term of the grant, or a termination by notice as aforesaid, the Subway Company shall execute and deliver such instruments as may be either necessary or convenient to assure and perfect the title and the possession of the City or such new grantee in and to the plant and property free and clear of all liens and incumbrances as aforesaid.

The privilege of termination herein reserved by the City may be exercised on its behalf by the Commission, with the approval of the Board of Estimate, or by such other authority representing the City as is now or may hereafter be vested with the necessary power. Upon the exercise of such privilege, the plant and property shall forthwith vest in the City or the new grantee free from all leases, mortgages or other incumbrances whatsoever; and all right, title and interest of the Subway Company therein, shall at once cease and terminate.

In case the City shall terminate an authorization or license or a portion thereof under the privileges herein reserved all payments by way of compensation or otherwise required to be made by the Subway Company, applicable thereto, except for damages for failure to perform any covenants herein required to be performed by the Subway Company, shall cease upon the date of such termination, and upon payment in full of all compensation up to the date of such termination, the Subway Company shall be relieved from any further payment of compensation in respect to such line or portion thereof except as aforesaid.

It is the intention of the parties that the amount to be paid for plant and property to be ascertained as hereinbefore provided shall be the measure of any payment the City may be called upon to make therefor,

but in pursuance of the provisions of Subdivision 1 of Section 34 of the Rapid Transit Act, as it now exists, it is further provided that if at any time in ascertaining the amount to be paid by the City as a condition of a termination of any authorization or license or portion thereof as herein provided or at the expiration of a full term, it shall be necessary that a valuation of any plant, property, equipment, construction or any investment in any part thereof shall be determined, such valuation shall in default of agreement be determined by arbitration or by the court.

XII

Valuation of plant, etc.

Upon expiration all rights hereunder to

cease

Upon the expiration of a full term of any authorization or license fixed therein, the authorization or license shall end and upon such termination thereof all the rights of property of the Subway Company in the streets, avenues, parkways, highways and public places shall cease and terminate without compensation, and further, upon such expiration, the plant and property, together with the appurtenances thereto of the Subway Company constructed pursuant to this certificate, except additions as hereinbefore defined, shall become the property of the City without further or other compensation to the Subway Company, and additions as hereinbefore defined shall be and become the property of the City on its paying to the Subway Company for such of said additions as may have been completed for certain or put in operation within less than thirty-nine (39) years the percentage of the actual cost of said additions indicated in the schedule following according to the age of each item as there indicated. Such schedule is as follows:

Railroads be

come property of City City to pay

additions

Basis of computation of above schedule

Reduction of price

Amount to be deducted

The above schedule is computed upon the basis of the investment of the deductions from the revenue for amortization in five per cent. (5%) bonds of the Subway Company at one hundred and seven and one-half per centum (1072%). If the amortization funds are invested at a more favorable rate than that above assumed, then the amount to be paid by the City shall be correspondingly reduced.

From the percentage so determined there shall be deducted such amount of money as shall be necessary to put such plant and property in the condition provided for by Article VII of this certificate, to be ascertained in the absence of agreement by arbitration or by the court as provided in Article XIII.

Method of conducting arbitration

XIII

In case it shall be necessary to submit to arbitration any question arising under any provision of this certificate in respect of which it is therein provided an arbitration may be had, such arbitration shall be conducted as follows: Either the City, acting by the Commission, or the Subway Company 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 an arbitrator, and accompany the notice by a written acceptance by the arbitrator of the nomination. Within thirty (30) days after the Appointment receipt of such notice, the party receiving the same shall name 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. Any

of arbitrators