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3. Compensation. TMC agrees to reimburse Railroad during the Term for any and all <br />necessary costs incurred by Railroad to maintain Railroad's track and facilities overlying <br />the Project Area in proper operating condition during the period set forth in Section 4(k) <br />below for costs incurred in connection with any additional aligning and/or surfacing work <br />of such tracks, to the extent such costs are necessitated by subsidence caused or <br />exacerbated by the Project. Costs Railroad expects to incur include, but are not limited <br />to, the following: <br />a. Railroad's direct labor costs of Maintenance of Way ("MOW") employees involved <br />in inspection of track; dumping, tamping and dressing fill and ballast; operation of <br />equipment; handling material; completion of reports; and any other necessary work <br />on right-of-way and/or track structure in accordance with existing working <br />agreements between Railroad and its employees plus the additive amounts described <br />in Section 3(b) below; <br />b. The total MOW labor costs for Railroad work will be determined by multiplying <br />MOW direct labor costs by Railroad's standard additive rate at the time MOW <br />employees perform their work (currently 178.30%) and then adding that amount to <br />the direct labor cost to determine the total MOW labor costs owed by TMC; <br />c. Railroad's standard direct labor charges for the use of a work train crew ("TE&Y") as <br />required in dumping fill and ballast, plus the additive amounts described in Section <br />3(d) below; <br />d. The total TE&Y labor costs for Railroad work will be determined by multiplying <br />TE&Y direct labor costs by Railroad's standard additive rate (which includes <br />insurance) at the time TE&Y performs its work (currently 207.9%) and then adding <br />that amount to the direct labor cost to determine the total TE&Y labor costs owed by <br />TMC; <br />e. Material handling charges for providing the ballast and other material to the project <br />location which are currently billed at a rate of 3.5 cents per ton mile; <br />f. Direct costs of any materials, such as ballast, to be furnished by Railroad, plus to the <br />extent that Railroad furnishes ballast in connection with the Project, the Material <br />Store Expense ("MSE") rate of 1% shall apply; <br />g. Railroad's actual charges for short term equipment rental from outside suppliers; <br />h. Railroad's charges for use of MOW equipment operated by Railroad's forces which <br />are determined by multiplying the total MOW labor costs in connection with the <br />operation of such MOW equipment by the Railroad's standard additive rate at the <br />time of such operation (currently 90.20%); <br />L Transportation charges, if any, to transport equipment on Railroad's tracks to and <br />from the Project location. If any equipment is transported by a Railroad train, a <br />2 <br />Subsidence Agreement TMC -UP <br />DEC -1781676-9 <br />