9. That in working, the order of precedence shall be as follows:--The passenger trains of the Kingston Company shall have precedence of passenger trains of the Napanee Company; passenger trains of the Napanee Company shall have precedence over mixed trains of the Kingston Company; mixed trains of the Kingston Company shall have precedence over mixed trains of the Napanee Company,. and mixed trains of the Napanee Company shall have precedence over freight trains of the Kingston Company, and freight trains of the Kingston Company shall have prece-dence over freight trains of the Napanee Company; but each. party shall in all cases use their best exertions to so work as to cause to the other the least possible inconvenience.

10. That from time to time the superintendents of both. lines or other proper officers shall agree upon the time tables. upon which the trains in so far as they relate to the Napanee Company between Harrowsmith and Kingston shall be worked, and shall make regulations for the safe and convenient working of the trains between the points aforesaid,. which shall be obeyed and observed by their respective servants and agents.

11. For the purposes of this agreement the employees of the Kingston Company shall be regarded as the employees of the Napanee Company, and the employees of the Napanee Company shall be regarded as the employees of the Kingston Company, and the section of the Kingston Company's railway between Harrowsmith and Kingston, both places included for all purposes, shall be regarded as the rail-way of the Napanee Company as well as that of the Kingston Company; and each party hereto assumes for itself all loss arising from damage or injury from any cause to its own passengers, freight, employees or property, and all liabilities to third persons arising from its acts or the acts of its employees so defined. Any employee of either company on the line between Kingston and Harrow smith, both places included, shall be removed on the reasonable complaint and request of one company to the other.

12. The Kingston Company further agree to keep and maintain their line and facilities herein before mentioned,. at and between the said points on which said running powers are to be exercised, in good working order: Provided, however, the Napanee Company shall, in case any defect comes to their knowledge, at once give notice thereof to the Kingston Company.

13. That if the Napanee Company at any time choose to do so they may establish and provide for themselves passenger stations, freight sheds, sidings and other conveniences, or any of them in the city of Kingston and between Harrowsmith and Kingston; and in such case, from the time they cease to use said Kingston Company's sidings and freight sheds or passenger stations or any of them, a reasonable and proper reduction in the compensation herein.

agreed upon shall be made to the Napanee Company; if the amount of such reduction is not agreed upon, then the same shall be fixed by arbitration as hereinafter provided. 14. The Napanee Company may provide a line of their own to Kingston and may continue to use the terminal facilities in Kingston of the Kingston Company, and in that case, to the extent the said line between Harrowsmith and Kingston stations or other facilities of the Kingston Company are not used, the compensation to be paid as herein provided shall be reduced to such extent as may be agreed upon, or failing agreement, as may be fixed by arbitration as hereinafter provided.

15. That the Napanee Company shall not carry local traffic, freight or passengers passing between Kingston and Harrowsmith or either way or to and from points between ; the only traffic the Napanee Company shall take on the Kingston Company's line shall be traffic coming from and going to points beyond Harrowsmith and which, but for this agreement, would change cars at Harrowsmith Provided however, that if by accident or mistake any passenger or passengers take the train or trains of the Napanee Company between said local points, or either of said local points, in every such case the Napanee Company shali pay over to the Kingston ('ompany such proportion of the fare as may be in such case reasonable, and as the parties shall, from time to time, agree upon.

1. It is further agreed that the compensation to be made and paid by the Napanee Company to the Kingston Company for the services so rendered, and the rights and facilities so granted as in this agreement contained, shall be ascertained and fixed thus: For the purposes of this agreement, the rates and fares received by the Napanee Company for all passengers and freight from any point on their line to Kingston, or to any point between Harrowsmith and Kingston or from Kingston or any point between Kingston and Harrowsmith to any point on the Napanee Company's line, shall be divided. on an equal or mileage rate for the distance carried, and that part thereof which at said rate may be earned on the Kingston Company's line, shall be charged with the following payments: The Napanee Company thereout shall pay towards the maintenance of the Kingston Company's line between Kingston and Harrowsmith, and the stations, sidings and terminal facilities of the Kingston Company which they the Napanee Company may, from time to time, use, such proportion of the whole cost of said maintenance of the line and stations and facilities used as aforesaid, as the mileage of the Napanee Company's engines and cars shall bear to the whole mileage of engines and cars which may for the same time pass over the said section of the Kingston Company's line; but in making such calculation a reasonable reduction shall be made from said whole mile.

age, for the non-user of any of said stations and facilities not used by the Napanee Company. And in case of the Kingston Company handling freight and booking passengers and traffic of and for the Napanee Company, the latter company, from said portion of said receipts calculated as aforesaid on the said mileage basis, shall pay the Kingston Company a sum per passenger and per ton for said handled freight, which shall be the actual cost of handling said freight and booking said passengers and traffic, at the several stations between Kingston and Harrowsmith, Kingston included, and points between used by the Napanee Company, such cost to be the proportion of the whole cost of handling the freight and booking passengers and traffic at said stations, which the passengers and freight and traffic handled and booked for the Napanee Company bears to the whole freight and passengers and traffic handled and booked at said stations, the intention being that the Napanee Company, for business done for them in the respects aforesaid, shall only be charged actual and proper cost for the work done. And that for the use of the Kingston Company's line or such part thereof as may be used by the Napanee Company between Kingston and Harrowsmith, both places included, and for the use of such of the stations and all other the facilities above mentioned used by the Napanee Company from time to time, they, the Napanee Company, out of the balance of said portion of said earnings of the Napanee Company on the Kingston Company's line, will pay to the Kingston Company such proportion as may, from time to time, be agreed upon by the Napanee Company and the Kingston Company, and failing agreement as shall be fixed by arbitration as in this agreement provided; but in fixing such compensation the capital account of either party and the interest on capital account, or the salaries of the officers of either party, shall not be considered or form any element in the calculation; and for the convenience of the said parties hereto the arbitrators shall fix the compensation to be paid out of the said portion of the balance of income applicable to the said section of the Kingston Company's line under this agreement as above specified at a rate per ton per mile on freight, and a rate per passenger per mile, or upon the wheel basis as the arbitrators may deem just or elect between said companies, parties hereto. The provisions above contained shall apply, from time to time, as and according to the use for the time being the Napanee Company may make of the line, stations and facilities of all kinds of the Kingston Company at and between the points aforesaid.

17. That for all matters pertaining to this agreement each party shall keep correct accounts and shall give to the other full and free access to all papers, books and accounts, and give each to the other all reasonable information necessary to enable each party to see that all business is carried

on properly and that all accounts are correctly kept and rendered.

18. That in case of dispute as to the observance of this agreement by either company, in each of such cases, unless the parties can agree otherwise the same shall be settled by arbitration as hereinafter provided.

19. The compensation for the use of the line and facilities above agreed upon, unless it is thought proper in the meantime by mutual consent to change the same, shall continue in force for five years when if either party so desire, a re-adjustment shall be made, but if neither party so desire, then the same shall continue for the further period of five years - but no adjustment made shall continue for a longer period than five years unless by mutual consent,--the intention being, that if from time to time the then existing adjustment as to compensation for the use of the line and facilities works unjustly or unfairly to either party, and that re-adjustment is not agreed upon, the then existing rate of said compensation shall not be binding for more than five years but must be re-adjusted.

20. That this agreement shall be binding upon the Kingston Company, their successors and assigns, or any company with which they may amalgamate, and upon any person or persons or corporations whatsoever, which may, from time to time, and for the time being, own or work the railway and works of the Kingston Company mentioned above, now used or owned, or which may hereafter be used or owned, by the Kingston Company, or any part thereof, for the purposes of traffic to and from and on said railway: Provided however, and it is hereby agreed, that in the event of any said property owned or used as aforesaid ceasing to be required for the purposes of the two companies aforesaid, in such case nothing herein contained shall prevent the Kingston Company from selling or disposing thereof as they shall think proper.

21. The City and the Napanee Company mutually covenant and agree each with the other as follows. that is to say: That they, the Napanee Company, will build and complete the said connection of their line from a point at or near Yarker, within the limits of the second concession of the Township of Camden, to the line of the Kingston Company at or near Harrowsmith and not further nortn than the gravel pit on lots seven and eight, in the fifth concession of the township of Portland, within fifteen months from the thirty-first day of December. one thousand eight hundred and eighty-eight, and the said connection shall be made in such manner that a train can pass directly through from Tamworth to Kingston and vice versa without the use of a Y or turntable or reversing either engine or cars; and also that they will complete their line ready for use from Tamworth to Tweed above named, in the manner above in this agreement mentioned within twenty-four

months from the thirty-first day of December, one thousand eight hundred and eighty-eight.

22. That the Kingston Company, their successors and assigns and the owner or owners for the time being of the property, railway and facilities now owned or used by the Kingston Company, or any part thereof required for the purpose of carrying out this agreement in good faith, keeping and performing this agreement and affording the running powers and other facilities, present and future, above provided for between said junction and the city of Kingston as aforesaid and points between, to the extent in the said city by-law and in this agreement above mentioned, in the manner and on the terms above expressed, the Napanee Company will as soon as the said extensions are completed as above provided and according as the same are so completed, from thenceforth maintain a train service between Tamworth and Kingston and between Tweed and Kingston as aforesaid, with not less than one passenger and freight train, that is, not less than one mixed train for the accommodation of local passenger and merchandise traffic, daily (Sundays excepted) from Tamworth and Tweed aforesaid, timed to arrive at Kingston aforesaid between the hours of 8 and 10 in the forenoon, and one such train timed to leave Kingston aforesaid between the hours of one and eight in the afternoon: Provided however, that a train such as above mentioned from Tweed stopping at Tamworth and way stations and a like train to Tweed stopping at Tamworth and way stations shall be a compliance with this covenant; and it is hereby further agreed that the Kingston Company in all things keeping their agreement with the Napanee Company as above expressed, in case of default by the Napanee Company, the city may by injunction or otherwise compel the maintenance of such efficient train service besides having any further satisfaction that may be open to the said the city, and further that they the Napanee Company will not charge any less rate per mile for passengers and freight between points on their line and Napanee or any extension beyond Napanee, than between said points and Kingston Provided however, and it is hereby declared that in case by any means the Napanee Company are deprived, without default on their part of the facilities above agreed to be provided by the Kingston Company, no such injunction or remedy shall exist as against the Napanee Company. 23. And in consideration of the covenants above expressed, and the covenants, stipulations and provisions hereinafter contained the city covenant and agree with the Napanee Company that they the city shall and will pay the Napanee Company the sum of seventy-five thousand dollars by way of bonus and not as a loan, in the manner and on the terms following, that is to say:

24. The sum of twenty-five thousand dollars on the completion of the said extension from at or near Yarker