or undertakings amending, supplementing or extending any such instruments) shall extend over a period in excess of five (5) 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 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 any and all such 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 enterprise of contributing toward the cost of construction of the Railroad and of equipping the Railroad and 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 the Railroad and of maintaining and operating the Railroad and 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 orginal 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 such vouchers, credit slips or other original evidences to such extent as it may deem advisable.

Regulations as to

Vouchers and pay rolls

Filing of vouchers,

etc.

ARTICLE XXVII. The Commission may object to any expenditure, as Commission unreasonable or improper, made or to be made by the Lessee in connection may object to expendiwith maintaining and operating the Railroad and the Existing Railroads tures 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

Procedurein case of objection

When notice of objection to be given

If deter

mined to be reasonable and proper

If determined to be unreasonable or improper

Inspection

Determination of cost by Engineer

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 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 Lessee are unable within five (5) days, (Saturdays, Sundays and Holidays excepted) after the delivery of such notice 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 the expenditure so objected to is reasonable and proper, the amount thereof shall be charged to operating expenses or to such other account as may be proper and the interest, if any, thereon, shall be charged against the 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 Lessee. 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.

ARTICLE XXVIII. The Commission contemplates, and the Lessee 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 Equipment. The Lessee 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 Equipment under this contract. 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.

ARTICLE XXIX. The cost of construction and the cost of equipment shall be determined as follows: The Engineer shall within six months after the date of this contract render a determination in writing in dupli

If Commis

tions

Icate 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 October, in At what each year during construction or the provision of Equipment (including times the Construction or provision of Additions to the Railroad or to the Equipment), render a determination in writing, in duplicate, to the Commission Method and to the Lessee of the cost of construction and of the cost of equipment to the date of the last day of the last 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 the Lessee shall be dissatisfied with the determination of the cost of construction or cost of equipment sion or Lessee dispaid or accrued prior to the date of this contract or shall be dissatisfied satisfied 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 writing of the item or items objected Statement to and the reasons for such objection. If within such period of thirty of objec(30) days the Commission or the Lessee shall fail to file such statement Final, if not with the Engineer, the determination shall be final and conclusive upon the objected to 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 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 Redetermi statement, render a redetermination stating his conclusions as to the items nation so objected to. If such statement of objections be so filed with respect to any quarterly determination the Engineer shall thereupon reconsider such determination, or any 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 objected to after its receipt of such redetermination give written notice to the other that it requires the same to be submitted to arbitration or the court as Arbitration hereinafter provided. In the case of Additions, the Engineer shall, in the Dates of same manner and subject to the same review as is provided in the case of Additions determinations as to cost, determine the respective dates at which Additions are put into operation. Any period of time specified in this Article Extensions may be extended with the written consent of the Commission and the Lessee. of time

CHAPTER VI

ARBITRATION

Final, if not

ARTICLE XXX. If the Commission or the Lessee shall desire to submit Arbitration to arbitration any matter of difference arising under any provision of this contract in respect of which it is therein provided an arbitration may be had, then such matter of difference may be submitted to arbitration. Such Method of 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

conducting arbitration

Appointment of arbitrators

Selection of third arbitrator by agreement

By Chief

Judge of
Court of
Appeals

By Associ

ate Judge of Court of Appeals

By President of

Chamber of
Commerce

How

brought on for hearing

Time for determina

tion

In case of vacancy

Majority decides

Fees and expenses

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 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 the Commission or the Lessee and within a period of fifteen (15) days by any Associate Judge of said Court of Appeals in order of seniority; or if within such periods the said Judges shall decline or fail to make a nomination, then the third arbitrator shall be nominated by the President or Acting President for the time being of the Chamber of Commerce of the State of New York. The arbitrators shall hear the parties and their counsel or any statements or evidence which the parties or either of them desire to submit. The failure to give the notice provided for in Article XXIX shall not preclude the party failing to give such notice from setting up counterclaims growing out of or incident to the matter as to which the other party shall have given such notice. Either party may, upon two (2) days' notice (Saturdays, Sundays and Holidays excepted) to the other, bring on the subject in dispute for hearing before the arbitrators. Within thirty (30) days after such hearing commences, unless such time shall be extended for good cause by written order of the arbitrators or a majority of them, the arbitrators shall make their determination in writing in duplicate, one to be delivered to the Commission and the other to the Lessee. In case any vacancy shall at any time occur by reason of the death, resignation or inability to serve of any arbitrator, his successor shall be nominated in the same manner and within the same times (during which times the other periods of time prescribed for or in the course of the arbitration shall be suspended) as above provided for in case of the original nomination of such arbitrator and in case the successor arbitrator shall not be nominated within such times the remaining arbitrator or arbitrators shall be the sole arbitrator or arbitrators. Any determination by a majority of the arbitrators shall be final and conclusive. Every such arbitrator shall be deemed to be employed both by the City and the Lessee. The fees and expenses of the arbitrators (including necessary expenses for stenographic and clerical services) and the expenses of the parties shall be assessed as the arbitrators consider equitable and as they direct in their award, but such assessments so made shall not be charged to cost of construction, cost of equipment or to operating expenses. Every such arbitrator shall,

before proceeding to consider the matter, be sworn as nearly as may be in the same manner as referees in actions at law are required to be sworn. Provided, however, that if in any case, or for any reason an arbitration cannot validly be had as aforesaid, then the City or the Lessee, if in no way responsible for the failure of the arbitration, may bring such action, suit or proceeding as either of them may be advised for the purpose of determining any of the matters for which an arbitration is herein provided.

In case arbi

tration can

not be had

CHAPTER VII

MISCELLANEOUS

how

ARTICLE XXXI. No correction or change in this contract shall be made Contract, except by written instrument duly authorized by the Commission, and changed approved by the Board of Estimate and consented to by the Lessee, and by the sureties upon its bond; but this provision shall not limit or affect the right to prescribe variations whether of construction or location of route as provided in Articles VI and VIII.

claims

ARTICLE XXXII. No claim shall be made by the Lessee against any No personal member or members of the Commission or the Board of Estimate or by the City against any officer or director of the Lessee personally by reason of this contract or of any of its articles or provisions.

ARTICLE XXXIII. This contract shall not be assigned, sublet or mort- Assignment gaged without the written consent of the Commission.

view

ARTICLE XXXIV. The provisions of Articles XVI, XXII, XXIII, XXIV, Court reXXV, XXXIX, LXVII, LXX and LXXXIX (wherein no review by arbitration is provided) shall not deprive the Lessee of any right it may have to review the action of the Commission thereunder by suit for injunction or by any other proper action, suit or proceeding.

ARTICLE XXXV. It is the intent and understanding of the parties to Every necessary legal this agreement that each and every provision of law now required to be provision inserted in this contract should be and is inserted herein. Furthermore, inserted deemed it is hereby stipulated that every such provision is to be deemed to be inserted herein; and if, through mistake or otherwise, any such provision is omitted or is not inserted in correct form, then the contract shall forthwith, upon the application of either party, be amended by such insertion so as to comply strictly with the law and without prejudice to the rights of either party hereunder.

ARTICLE XXXVI. If this contract contains any unlawful provision not en essential part of the general structure of the contract and which shall not appear to have been a controlling or very material inducement to the making thereof the same shall be deemed of no effect, and shall upon the application of either party be stricken from the contract without affecting the binding force of the contract as it shall remain after omitting such provision.

In case of any unlawful pro

vision