STANDBYSËNIORITY MERGER

IMPLEMENTINGAGREEMENT

between theUNIONPACIFICRAILROADCOMPANY

SOUTHERNPACIFICTRANSPORTATION COMPANY

and theBROTHERHOODOF LOCOMOTIVEENGINEERS

(for the Houston Hub and Spoke)

PREAMBLE

The U.S. Department of Transportation, Surface Transportation Board ("STB")approvedthe merger of the Union Pacific Corporation ("UPC"),UnionPacific RailroadCompany/MissouriPacificRailroadCompany (collectivelyreferredtoas "UP")and SouthemPacific Rail Corporation,Southem Pacific Transportation Company ("SPT"),St. LouisSouthwestem Railway Company ("SSW"), SPCSL Corp., and the Denver& Rio GrandeWestem Railroad Company("DRGW")(collectivelyreferredtoas "SP") in Finance Docket32760.

The parties recognize that the size and complexityof thismergercreates uniquechallengesin achievingorderlyconsolidationand rearrangementof forces. While theoperatingplan is premised in large part on "hub and spoke"consolidationsanddirectionaloperations,the integralpieces ofthe overalloperatingplan mustbe phased in overtimetoaccommodateTCS implementation, crossover, connection,siding and other similarconstructionprojects,line upgrades, and a varietyofothersuchfactors. Because of thesetimingissues, thepartieshave concludedthat in ordertoaddressseniorityconsolidationina specificterritorywhichcomprisesone or more"spokes"ofa largerhub, it is necessary toresolvethefundamentalseniorityissues for the entirehub.

Therefore, in orderto provide for the orderlyconsolidationof seniorityin all of theterritorycomprisingthe HoustonHub,

ITISAGREED:

L HOUSTONHUS

Anewseniorityterritoryshallbe created that is withinthe followingarea:

e The entireterminalof Houston.

A.moTo70s.nswto -1-

• All territorybetween Houston and Alexandria via Kinder.

• All territorybetween Houston and Avondale (New Orleans) via both UP arSP, includingterritorybetween LivoniaandAnchorage and between Addis ans

- 4..ettsworth, including LobdellJunction to Baton Rouge

• Allterritorybetween Houston and Shreveport onSP, and onthe UP line fromHouston to Longview.

• All territorybetween Houston and Heame on SP and between HoustonandValley Junction on UP.

• Allterritorybetween Heame and Port Lavaca, includingVictoriaand ColetoCreek onthe SP.

• Allterritorybetween Houston and Brownsvilleon both the UP and the SP,including Corpus Christi,McAllen and Angleton to Freeport.

• Allterritoryonboth UP and SP between HoustonandG.alveston.

• Allterritoryon both UP and SP between Houstonand Baytown.

• All territorybetween Houston and Victoriavia Flatoniaand betweenHouston and Glidden.

II. SENIORITYCONSOLIDATION

To achievethe workefficienciesand allocationofforces thatare necessaryto makethe Houston Hub operate efficientlyas a unifiedsystem, a new senioritydistrict willbeformed and a masterEngineerSeniorityRoster-UP/BLE HoustonHub Merged Roster #1-willbe created for the employeesassignedin the Houston Hubon December 1, 1996. Thenewrosterwillbe createdas follows:

A. The new UPIBLEHouston Hub Merged Roster #1 senioritydistrictwillbedividedintothe followingfive (5) zones:

1. Zone 1 willinclude Avondale to Lafayette (includingLafayette)andAvondale to Livonia(including Livonia)andAvondale Terminal. Thisincludes all Livoniato Anchorage and Addisto Lettsworth,includingLobdellto Baton Rouge.

2. Zone 2 willinclude Houston to Alexandria(notincluding Houston andnotincludingAlexandria)andHoustonto Livonia(notincludingHoustonand not including Livonia)and Houston to Lafayette (not includingHouston and not includingLafayette) and Houston to Baytown(notincluding Houston)and Houston to Kemahonthe SP Galveston LineandAlexandriato Lake Charles (notincludingAlexandria).

A:WMGTO708.RBW °Ë¯

3. Zone 3 willinclude Houston to Longview (not including Houston and notincluding Longview) and Houston to SP Shreveport (not includingHouston and not including SP Shreveport).

4. Zone 4 willinclude Houston-to Valley Junction, Texas (not includingHouston and not includingValley Junction,Texas) and HoustontoSPHearne (not including Houston and not including SP Heame) andHouston to Brownsville,Texas (not including Houston but includingOdem to Corpus Christi and Angleton to Freeport) and Houston toVictoriavia Flatonia (not including Houston) and Heame to Victoria (notincluding SP Hearne) and Houston to Galveston on the UP Branch(including Galveston, Texas) and Kemah to Galveston on the SPBranch (including Galveston, Texas).

5. Zone 5 willinclude allofthe HoustonTerminal.

B. Priorrightsseniorityrosters willbe formedcoveringeach ofthe five(5)zonesoutlinedabove. Placement on these rostersand awardingofprior rights totheirrespective zones shallbe based onthe following:

.

1. Zone 1 - thisrosterwillconsistofformer SP engineerswithpriorrightson the Morgan, Louisiana and Texas District(Roster #31) and formerUP engineers on the Avondale (Roster #16101), DeQuincy(Roster#05101) and TPMP (Roster #17101).

2. Zone 2 - this roster willconsist of former SP engineers with priorrightsonthe Houston-Lafayette District,T&NO(Roster#01) and former UPengineers on the DeQuincy(Roster #05101), Lake Charles/LouisianaDivision(Roster #35101) and Baytown(Roster#04101).

3. Zone 3 - this roster willconsistofformer SP engineers withpriorrightsonthe Houston-Shreveport,HE&WT-H&S(Roster#03) and former UPengineers, Houston-Longview,on the Merged 10 Palestine (Roster#14111).

4. Zone 4 - thisrosterwillconsistofformerSP engineerswithpriorrightsonthe Houston-Heame District- H&TC(Roster#01),Houston-LafayetteDistrict,T&NO(Roster #01), the Houston to Victoria/DelRio District,GH&SA(Roster #26), and former UP engineerson the Merged 8 Ft.WorthSouth (Roster #06111), Kingsville(Roster#03101), and Merged10 Palestine (Roster #14111).

5. M - this rosterwillconsistofthose engineersin the finalHoustonHubwho hold dual (roadlyard)oryard priorrightsseniority.

6. Entitlementto assignmenttoone ormorepriorrightsrosters shallbe onthe followingorderofpriority:

a. Engineers with prior rights on the interested pre-merged rosters.

b. Engineers working on the SPT Engineer's System Seniorit,Roster with no prior rights status on the interested pre-merge.

- rosters.

7. Any engineer workingin one ofzoneson orbefore December 1, 1996,but currently reduced from the engineers workinglist, shall also be

.given a place on the roster and prior rights in the appropriatezone.Engineerscurrentlyforced to the Houston Hub willbe givena place onthe roster and prior rights in the zone in whichworking if so desired;otherwise,they willbe released when their servicesare no longerrequired and willnot establisha place onthe new roster.

8. Union Pacific engineers currentlyon an inactive roster pursuant topreviousmergeragreementsand otherUP or SP engineerswhoare onlong termleaveofabsence shallnot participatein the rosterformulationprocess described above;however, in the eventtheyretum to activeservice,they willtake the appropriateequityslot.towhichtheywouldhave been entitledat time of formulationof said roster and standimmediately ahead ofthe engineer assignedthatslot. The CarrierandOrganizationshalljointlyagree on allnamesofemployees whichareexcludedfrom the roster formulation process and placedon an inactiveroster.

C. Each ofthe priorrightsrosterswillbe consolidatedbased uponworkequity.The sourceofdeveloping such equityand the actualrosterconsolidationshallbe determined more precisely by the terms of the merger implementingagreementfor that particularterritory.That process, by whatevermeans it isconducted,willresult in one consolidated priorrightsrosterfor eachzone,withno otherseniorityrestrictionswithinthat zone or roster. Once an engineerisaffordedseniorityon oneormore ofthe primarypriorrightsrostersset forth inthisagreement,that engineerwillforfeitanyotherengineerseniorityoutsidethe UP/BLEHouston HubMerged Roster #1, exceptas specificallyprovidedforinSide LetterNo.5. (See Side LetterNo. 2 withregardtotrainman/firemanseniority.)

D. Engineerson each ofthe priorrights rostersdescribed above willbe affordedcommonseniorityon the otherzones outside theirpriorrightszone(s). Allsuchcommonseniorityshallbe based uponthe currentdate ofseniorityas alocomotiveengineer. If this process results in employeeshaving identicalcommonsenioritydates, senioritywillbe determined by the employee'sfireman's date and ifthereare stillidentical dates, senioritywillbe determinedby the employee'searliestcontinuoushire date withtheirGarrier.

E. Engineer trainees assigned to the new merged rosterafter implementationshallbe assignedto a zonebased onthe Carrier'sdetermination ofthe needsof serviceat that time in the Houston Hub but withoutpriorrights. Student

A:vuero7os.asw(4)

engineersin trainingon or before December 1, 1996, will be assigned a zonebased on the area designated in the bulletin seeking applicationfor engineservice.

F. The purpose ofcreatingzones is twofold:First,toprovidemeniorityin an areawhereemployeeshad senioritypriorto themergeror contributedequityto theterritoryinvolved afterthe merger,and thus preference to someoftheirpriorworkover employees in otherzones. Second, to provide a defined territorywherean engineercan become familiar withits trackage andtrainoperations,so as not to be required to cover a multitudeofdifferentsectionsof trackona dailybasis. As suchthe following willgovem:

1. Engineers willbe allowedto makeapplicationfor an assignmentin adifferent zone as vacancies arise. Ifreduced from the workinglist, theengineermaydisplace anyjuniorengineernotholdingpriorrightsto anassignmentinany of the remainingfourzones.

Engineers maynotholda reserveorsupplementalboard outsidetheirzone.

3. Engineers whomoveto anotherzonebyapplicationmustremainin thatzone, senioritypermitting,pursuant to applicableagreements.

G. Allengineervacancies withinthe Hubmust be filledpriortoanyengineerbeingreducedfrom the workinglist orpriorto engineersbeingpermittedto exerciseto anyreserve or supplementalboards. Priorrights engineersin theirpriorrightszonemust displace anycommonengineersworkingin thatzoneprior tobeing permitted to exercise to any reserve or supplementalboards.

H. The totalnumber ofengineers given rosterslots in the HoustonHub willbemutuallyagreed upon by the parties based upon anticipatedservicerequirementsprior to formulationofthe mergedrosters.

III. EXTRABOARDS

This Agreementdoes not address the subjectof extra boards, and shall not beconstruedas constitutingany precedent as to where, howmany,or in whatmanner extraboards maybe established,nor does it stand for thepremise that extraboards may onlyprotectworkinonedefined zone.

IV. AGREEMENTAPPLICATION

A. ThisAgreement constitutestheagreedtosenioritydistrictfor theHouston Hub,andthe methodby whichthat senioritydistrictwillbe created. It is intendedthatwhenindividualmergernegotiationsareundertakencoveringoneor moreportionsofthe territorieswithinthe HoustonHub,thisStandbyAgreement willapplyregardingthe methodand scopeofseniorityintegration. Ifnegotiationscoveringany specificterritorywithinthe HoustonHub requirearbitration,the

kWlAGTO70BASW(5)

parties intend that the Arbitrator be govemed by thisAgreement withregard toseniority integration.

8. This StandbyAgreement is not intended to constitutea precedent, nor doesit prejudicethe positions ofany party in any othernegotiationor proceeding .

- withregard to the method of integration of seniority.-th

.

Signedat78m ŸRRn<is<<! thisRdayof TAm:ÅR .1997.

FOR THE BROTHERHOOD FOR THE CARRIERS:OF LOCOMOTIVEENGINEERS:

D. E. Penning M. A. HartmanGeneralChairman,BL . General Director-LaborRelations

R. Aoe W. E. LoomisGeneralChairman,BLE Director-LaborRelations

Southem PacificTransportationCo.

M. L. Royal, Jr. È /GeneralChairman,BLE

APPROVED:

D. M. Hahsresident,BLE

. L.Mc'Coy//Vice President, BLE

A:ViAGTO709.RBW(8)

Januaiy 17, 1997Side Letter No. 1Mr.M. L Royal. Jr.Mr.R. A. PoePage 2 -

2. Mediation Agreement Case No. A-32ß7

A. Concurrentwiththeeffective(implementation)dateof a merger implementing agreementfor the territorydescribed in Article ll.A.3.,4. and 5. of the StandbySeniorityMergerImplementingAgreement, MediationAgreementCase No. A-3297, dated March31, 1950,shall be extinguishedandshallhave no furtherforceor effect.

8. Allformer HBTemployeeswho transferto UnionPacific as a resultof UP assumptionof operationofSettegastYard shallbe entitledto protectionbenefitscontainedin themerger implementingagreementfortheterritorycoveredby Zones 3, 4 and 5 on an equalbasis with allotherUnion Pacific engineersin thoseterritories. Length of serviceon the HBT shallbeincludedindetermininglength ofprotection undertheNew York Dock conditions.

C. The BLEGeneral ChairmanandtheappropriateDirectorofLabor Relations shallendeavorto reach acompromisesettlement of all outstandingdisputedtimeclaimsunder MediationAgreement Case No. A-3297. ln the event they are unable to do so, theclaimsmaybe progressëd to arbitrationfor finalandbindingadjudicationandthis Agreement shallnotbecitedby eitherpartyin such proceedings.

Iftheforegoingadequatelyand accuratelysets forth ouragreementin thismatter,pleaseso indicateby signingin thespaceprovided for thatpurpose below.

Yours Truly,

M.A. HartmanGeneral Director- LaborRelations

MRAGTO708.RBW(B) •$•

January 17, 1997 Side Letter No. 1

Mr.M.L Royal, Jr. Mr.R. A. PoeGeneral ChairmanBLE General ChairmanSLE413 West Texas 515 NorthbeltEast Suite 120Sherman, TX75092-3755 Houston,TX77060

Gentlemen:

This has referencetothe Standby SeniorityMergerImplementingAgreemententeredinto thisdate.

Throughoutournegotiationsthere has existeda co-dependencybetweenthisStandbySeniorityMerger ImplementingAgreement for the entire Houston Hub and the.MergerImplementingAgreementforthe territorybetween HoustonandAvondaleand HoustonandAlexandria(Zones 1 and 2). The relationshipbetween these twoagreementsrequires theparties to reach certainagreementsprospectively regardingthe followingmatters:

1. InterimProtection

A. . AIIengineers whose assignmentscomprehendperformance of servicein the territorydescribed inArticleII.A.3.,4.and 5. ofthe Standby SeniorityMergerImplementing Agreement shall be certifiedfor wageprotection purposes as a resultoftheconsummationof said Agreement. This protection shallCommenceonthe effective(implementation)date ofthe StandbySeniority Merger Implementing Agreement, andterminateuponconsummationand implementationofa merger implementingagreementfor thisterritory.

B. This protection appliesto wages only,and hours. willnot be taken into account.The purpose of thisarrangement is to provideengineersin the territoryinvolvedwithan interimprotectionperiod forthetimeframe between implementation of the StandbySeniorityMerger Implementing Agreement and theconsummationofa mergerimplementingagreementfor theterritoriescoveredbyZones3, 4 and5.

C. Iftheinterimprotectionperiod is less thanone (1)year, whenthe interim period terminates,engineerscertifiedas part of this agreement will have theirprotection period startover. Ifthe interimperiod is inexcess of one,year the engineers' final protectionperiod willbegin afterone year.

RAaro7os.aswm -7-

January 17, 1997Side Letter No. 1Mr.M.L Royal, Jr.Mr.R. A. PoePage 3

AGREED:

M.L Royal,Jr AGeneralChairman,BLE

R.A.PoeGeneralChairman,BLE

cc: D. M.HahsVice President BLE

J. L McCoyVice President BLE

MRAGTO709.RBW(9) -Û•

January 17, 1997

Side Letter No. 1Mr.M. L Royal,Jr.Mr.R. A. PoePage 2

2. MediationAgreement Case No. A-3297

A. Concurrentwiththe effective(irnplementation)date' ofa mergerimplementing agreementfor the territorydescribed in Article II.A.3.,4. and 5. of the StandbySeniorityMergerimplementingAgreement, MediationAgreement Case No. A-3297, dated March31, 1950,shall be extinguishedandshallhave no furtherforceoreffect.

B. AIIformer HBTemployeeswho transferto UnionPacific as a resultofUP assumptionofoperationofSettegastYardshall be entitledto protectionbenefitscontainedin the merger implementingagreementfortheterritorycoveredby Zones 3, 4 and5 on an equalbasis withallotherUnion Pacificengineers in thoseterritories. Length of serviceon the HBTshallbeincludedindetermininglength ofprotection under theNewYorkDockconditíons.

C. The BLEGeneral Chairmanandthe appropriateDirectorofLabor Relations shallendeavorto reachacompromisesettlement of all outstandingdisputedtimeclaimsunder Mediation Agreement Case No.A-3297. ln the eventthey are unable to do so, theclaimsmaybe progressëd to arbitrationfor finalandbindingadjudicationand this Agreement shallnot becitedby eitherparty in such proceedings.

Iftheforegoingadequatelyandaccuratelysets forthouragreementin thismatter,pleaseso indicateby signingin thespaceprovided for thatpurposebelow.

Yours Truly,

M.A. HartmanGeneral Director- LaborRelations

MRAGTo7os.newle) -8-

January 17, 1997Side Letter No. 2

Mr.M.L Royal,Jr. - - Mr.R. A. PoeGeneral ChairmanBLE General ChairmanBLE413 West Texas 515 NorthbeltEast Suite 120Sherman, TX75092-3755 Houston,TX77060

Mr.D. E. Penning°

General ChairmanBLE12531 MissouriBottomRoadHazelwood,MO63042

Gentlemen:

This has referenceto the Standby SeniorityMergerImplementingAgreemententered into thisdate.

Duringthe negotiationstherewas concernexpressedregardingthedispositionoftrainman/firemanseniorityofemployeeswhose seniorityterritoryas engineer is beingmodifiedby thisAgreement.

Thiswillconfirmmyadviceto the OrganizationthatCarrieris currentlyengagedinsimilarnegotiationswiththe otheroperatingcraft,and everyeffortwillbe made toachieveagreementswiththat craftwhich results in seniorityterritorychangeswhichmatchthoseset forthherein as closelyas possible in orderto avoidengineersbeingrequiredtogo great distances in order to exercisesaidtrainman/firemanseniority.

When thosenegotiations have been concluded, CarrierwilladviseyourOrganizationfurther regarding thismatter.

Yours truly,

M.A. Hartman

ec: D.M.HahsVicePresident BLE

J. L.McCoyVicePresident BLE

A4tAGTO70B.RBWOO)

January 17, 1997

Side Letter No. 4

Mr.M.L Royal,Jr. Mr. R.A. PoeGeneral ChairmanBLE General ChairmanBLE413 West Texas 515 NorthbeltEast Suite 120Sherman,TX75092-3755 Houston, TX77060

Gentlemen:

Thishas referenceto the StandbySeniorityMergerImplementingAgreement enteredintothisdate.

ThemannerofconsolidationofseniorityandaccesstoassignmentswithintheHoustonTerminalwas extraordinarilycomplexbecause some ofthe formerinterested rosters did nothave combinationroadlyardrights and one former roster had onlyyard rights. After muchdiscussionregardinghow senioritywouldbe consolidatedintheHoustonTerminal,thepartiesreachedconceptualagreement that Zone 5 would be protected by a prior rights rosterconsistingofthe five(5)former rostershaving yard priorrights,i.e.

UP-former PalestineUP - former HBTSP -former T#NOSP -former HE&WTST - former H&TC

Engineerson allotherformer rosters in theHoustonHubwouldbe placed at the footof thepriorrightsrosterdescribed above in senioritydate orderto form the commonroster.

Aseparate(6th)dovetailed roster composedofthe priorrightsrosters of allfive(5)zones in the Houston Hub would be formulated for use in assignmentofengineersto theZone 5 ExtraBoard.

The partiesalsoagreedthatthe fillingofregularassignmentswithinZone 5 wouldbeaccomplishedbyapplyingthe priorrightsroster described aboveto an orderofselectionlistwhichincorporates the relativeequitiesofthe formerrosters.

The details offormulationofthe rosters,developingthe orderofselectionlist, orderofboards,andotherproceduralissues necessaryto implement thisconceptwillbe resolvedbya workingcommitteecomposedoftwoCarrier representatives from the HarrimanCenterand twoBLErepresentativesto be appointed by your Committees.Thiscommitteewillhavean agreed-toworkproduct to present to the parties to this agreement priorto agreementimplementation.

«vuoro7oa.aswp -12-

January 17, 1997 Side Letter No. 3

Mr.M. L Royal,Jr. Mr.R. A. PoeGeneralChairmanBLE General ChairmanSLE413 West Texas 515 NorthbeltEast $uite120Sherman,TX 75092-3755 Houston, TX77060

Gentlemen:

This has reference to the Standby SeniorityMerger ImplementingAgreemententeredinto thisdate.

Duringthenegotiationsthere was concernexpressedthatin pursuingimplementingagreementnegotiationscoveringthebalance ofthe territoryinthe HoustonHub(Zones 3,4 and5) theCarriermaybe unwillingto replicatesome ofthe agreementprovisionswhichwere negotiated for Zones 1 and 2. Carrier expressed the same concem regardingoperationalconsolidationsfor the balance ofthe Houston Hub.

Thisletter willconfirmCarrier's commitmenttoyou that it intends thattherebe bothoperationaland contractualconformitythroughoutthe consolidatedHouston Hub, andCarrierintends to pursue an implementing agreementfor the balance ofthe Houston Hubwhich achievesthat result. The parties both understand, of course, that automaticcertificationforprotectionbenefits is dependent upon fulfillingtherequirements oftheMarch8, 1996 commitmentletter as supplemented.

Yourstruly

M. A. Hartman

ec: D.M.HahsVicePresidentBLE

J. L McCoyVicePresidentBLE

A:wmamos.aswan -11-

January 17, 1997

Side Letter No. 4

Mr.M.L Royal,Jr. Mr. R.A. PoeGeneral ChairmanBLE GeneralChairmanBLE .413 West Texas 515 NorthbeltEast Suite 120Sherman,TX 75092-3755 Houston, TX77060

Gentlemen:

Thishas referenceto the StandbySeniorityMergerimplementingAgreement enteredinto thisdate.

ThemannerofconsolidationofseniorityandaccesstoassignmentswithintheHoustonTerminalwas extraordinarilycomplexbecause some ofthe formerinterested rosters did nothave combinationroadlyardrights and one former roster had onlyyard rights. Aftermuchdiscussionregardinghow senioritywouldbe consolidatedintheHoustonTerminal,thepartiesreached conceptualagreement that Zone 5 wouldbe protected by a prior rights rosterconsistingofthe five(5)former rostershaving yard priorrights,i.e.,

UP - former PalestineUP - former HBTSP -former T#NOSP -former HE&WTST - former H&TC

Engineerson allother former rosters in theHouston Hubwould be placed at the footofthepriorrights roster described above in senioritydate orderto form the commonroster.

Aseparate(Sth)dovetailed roster composedofthe priorrights rostersofallfive(5)zones in the HoustonHub would be formulated for use in assignmentofengineersto theZone5 ExtraBoard.

Thepartiesalsoagreedthatthe fillingofregularassignmentswithinZone 5 wouldbeaccomplishedbyapplyingthe priorrightsroster described aboveto an orderofselectionlistwhichincorporates the relativeequitiesofthe formerrosters.

The details offormulationofthe rosters,developingthe orderofselectionlist, orderofboards,and otherproceduralissues necessaryto implementthisconceptwillbe resolvedbya workingcommitteecomposedoftwoCarrier representatives from the Harriman CenterandtwoBLErepresentativesto be appointed by your Committees.Thiscommitteewillhavean agreed-toworkproduct to present to the parties to thisagreementpriorto agreementimplementation.

GTO708.RBWO

January 17, 1997

Side Letter No. 4Mr. M. L Royal, Jr.Mr.R. A. PoePage 2

Finally, it was understoodthat this compromise resolution of our differencessurroundingZone 5 was with the understandingthat such arrangementwillin no waycompromisethe Carrier'srightto operate the Houston Terminalas a consolidatedterminalas set forth in the implementing Agreement.

Ifthe foregoingadequatelyand accuratelysets forth ouragreementin this matter,please so indicate by signingin the space provided for thatpurpose below.

Respectfully,

M.A. HartmanGeneral Director-LaborRelations

AGREED:

M.L Royal,JrGeneral Chairman,BLE

R. A.PoeGeneralChairman,BLE

cc: D.M.HahsVice President BLE

J. L McCoyVicePresident BLE

A:iRAGTO708.RBWO3) -O-

J

February 27, 1997

Side Letter No. 5

Mr.M.L Royal,Jr. Mr.R. A. PoeGeneralChairman BLE General ChairmanBLE413 West Texas 515 NorthbeltEast Suite 120Sherman,TX75092-3755 Houston,TX77060

Mr.D.E.PenningGeneral Chairman BLE12531 MissouriBottomRoadHazelwood, MO63042

Gentlemen:

Thishas referencetothe Standby SeniorityMergerImplementingAgreemententeredintoJanuary 17, 1997. Withregard to ArticleII.C.,and particularJythe last sentencethereof,thefollowingshallapply:

1) Engineerspresentlyworkingin the Houston Hubwhoelectnotto stayand participate in.the formulation of new rosters for theHouston Hub willforfeit allexistingsenioritytheymayhold in anyportion ofthe Houston Hub.

2) Engineerspresently working outside the Houston Hubwhohold existingseniority in any portion of the Houston Hub whoelect notto participate in the formulation ofnewrosters for theHouston Hub willforfeit all existing seniorityinanyportionoftheHoustonHub.

3) Engineersparticipatingin the rosterformulationprocessfortheHoustonHubwhopresently holdengineserviceseniorityoutsidethe HoustonHubwillbe handled as follows:

a)Allengineservice seniorityoutsidethe HoustonHub will be held in abeyance and may not beutilizedfor anypurposes exceptas outlinedbelow:

b)Whensubsequentimplementingagreementsareconcluded in other hubs which encompassthe

. senioritydescribed in a) above, which has beenheldin abeyance,suchsenioritymay be exercisedin the roster formulation process for such hub(s)subjeöttcithefolloWinglirnitations:

waTo7os.aswt14) 4+

February 27, 1997Side LetterNo. 5Mr.D.E. PenningMr.R.A. PoeMr.M.L Royal,Jr.Page 2

,

1) The exercise of such optionshallbe considered a senioritymove andshall be at the engineer's ownexpense.

2) Anengineerutilizingthisprovisionto select a differenthub willforfeitallseniorityin the Houston Hub.

4) The rightsset forth in (b) above may onlybe exercised to theextentthatthere is an unfilledneed for engineersat suchhub atthe timerosters for such hub are formulated. Carrierreservesthe rightto limitthe numberofsuch requestsmadebased uponmanpower requirements and the numberaccepted willbe. inseniorityorder. Inthe event suchmove willcreatea shortageofengineers withinthe Houston Hub the.Carriermay hold suchapplicant for a reasonable amount of time to allowfor areplacement.

5) If applicationsare declined under (4) above,they willbeconsideredin the future on a seniorityorderbasis priorto theCarrier posting a bulletin or advertisementfor new engineertrainees.

6) Engineers acceptingthe option.set forth in (5)abovewillbeplaced at the bottom ofthe commonroster at the newhub wítha new,senioritydate.

Itis understoodthisAgreementis made withoutprejudicetothepositionof anyparty,does notconstitutea precedent, and maynotbe citedor referredtobyanypartyinanyothernegotiationsor proceedings.

Ifthe foregoingadequatelyand accuratelysets forthouragreementin this matter,please so indicateby signinginthe space providedfor thatpurpose below.

Respectfully,

M.A. HartmanGeneral Director-LaborRelations

A:URGTO708.RBWO5) -1 $•

February i ¾997Side Lener No. 5Mr D. E PenntqMr. R. A, PoeMr. M. L Royat JrPage 3

R. A PoeGenera Chairman,BLE

M. L Royal JrýGenera Chahman, BLE

cc: M, Hanse Pigsidept SŒ

J. L McCoyVice President BΠ-

MRACTC708.PSW(1bS)

- April23, 1997

- - Side Letter No. 6

Mr.M.L. Royal, Jr. Mr.R. A. PoeGeneralChairmanBLE General ChairmanBLE413 West Texas 515 NorthbeltEast Suite 120Sherman, TX75092-3755 Houston,TX77060

Mr.D.E. Penning .GeneralChairmanBLE12531 MissouriBottomRdHazelwood,MO 63042

Gentlemen:

This has referenceto the Standby SeniorityMergerImplementing Agreement datedJanuary17, 1997.

During our continuingmergernegotiationson the HoustonHub consolidationsthepartiesreachedfurtherclarificationandagreement onthe applicationof Side LetterNo. 5 tothisStandbySeniorityImplementingAgreement. Specifically,itwas agreed thatan engineerwho participates in the formulatiort of rosters in the Houston Hub,whethervoluntaryor byforce-assignment, and who applies for and receives relocationbenefits, shall be precludedfrom exercisingtheoptionset forth in Item 3) of Side Letter No. 5, i.e., rightsto participationintheformulationofrosters inother hubs in whichseniorityrnaybe heldshallbe consideredforfeited.

If the foregoing adequately and accuratelysets forth ouragreementin this matter,pleane so indicate by signingin the space providedfor thatpurpose below.

Respectfully,

M.A. HartmanGeneral Director-LaborRelations

A:\RAGTO70B.RBW(17) "i 7-

April23, 1997Side LetterNo. -

Mr.M.L. Royal,Jr.Mr.R.A.PoeMr.D. E. PenningPage 2

AGREED:

M. L Royal, Jr /GeneralChairman,BLE

R.A. oeGeneralChairman,BLE

D.E. PenningGeneralChairman,BLEV

cc: D.M.HahsVice President BLE .

J. L.McCoyVice President BLE

A:\RAGTO708.RBWOS) -18-

Mr.R. A. Poe ·

Mr.D. E. PenningPage 2 -

faith effortto resolve imbalances in manpower resultingfrom mis-sizing of rosters whenoriginallyconsolidated.

Finally, whether or not the above process results in a voluntary agreement whichaddresses these niatters, Carrierwilljoinwiththe Organization,withinninety(90) days ofimplementation of the last of those merged Hubs described above, to executea one-timeupward"ratcheting"ofallrosters in allsuch Hubswhichhave been consolidatedon thebasisofwork equity. This adjustment,whichconsists of assigningallvacant equityrosterslotstoengineerswho are occupyingidentical, Iowerequityslots on thatsame roster,willresolve anypossible loss of equityroster slots whichmay have occurredas a result of the phasedconsolidationofthe Hubs andexercises of movesbetween Hubs whichmightoccurunderSideLetterNo. 5 tothisStandbySeniorityImplementing Agreement. It is clearlyunderstoodthatuponcompletionofthisone-timeupwardratchetingofmerged rosters, suchrosters areconsideredclosed to any futuresuchadjustments.

If the foregoing adequatelyand accurately sets forth ouragreementin thismatter,please so indicate by signingin the space providedfor that purpose below.

Respectfully,

R A. HartmanGeneral Director-Labor Relations

A:iRAGTO708.REW(20) ~ Û-

April23, 1997

Side Letter No. 7

Mr.M. L. Royal,Jr. Mr.R. A. PoeGeneral Chairman BLE General Chairman BLE413 West Texas $15 NorthbeltEast Suite 120Sherman, TX75092-3755

. Houston, TX 77060

Mr.D. E. PenningGeneral ChairmanBLE12531 MissouriBottomRdHazelwood, MO 63042

Gentlemen:

This has reference to the Standby SeniorityMerger Implementing Agreement datedJanuary 17, 1997.

Throughout our negotiations we have discussed the difficultiesinherent in mergingoperations and seniorityin phases due to the size and complexityof the merger. Theagreement providesfor consolidationof seniorityand formulation of merged rosters in theHouston Hub on a one-time,finalbasis, witha limitedopportunityfor engineerswithseniorityoutsidethe Houston Hub to use thatseniorityto participatein merger consolidationsin otherHubs, but the rosters in the Houston HLib do notever"re-open"(Side LetterNo. 5).

The Organizationsuggeststhatsomesortoffinalseniorityrationalizationshouldoccurupon completionof all the merger consolidationsinvolving the committeesparty to thisAgreement (i.e., Houston,Longview, Dallas-FortWorth, San Antonio and El Paso). TheCarrier has obviousconcemsregardingthis request because it wouldperpetuate workforce .

instabilityin the merged Hubs and postpone finality inthe merger process, because itcouldgenerate senioritydisputes, because it could result in additionalrelocationclaims, andbecause it would place an additionalburden on those who administerseniorityrosters.

Despite theseconcemsofthe Carrier,it is clear the potentialexists,upon completionofthemergeragreementimplementations,for the needto makeseniorityrosteradjustmentsbetween hubs to resolve perceivedinequities, correct mis-sizingof rosters, and otherissueswhich the parties did not anticipatewhen theyentered into these agreements. Therefore,Carrier commits to a process which will become effective after completion of mergeragreements and implementations at all five of the Hubs referenced in the precedingparagraph. Under the process, whichmay be initiated by the Organizationupon service ofa thirty(30)day noticeuponCarrier'shighest designated officer(s),Carriercommitstoengagein negotiations regarding themattersdescribed above and make a good faith effortto reachagreement to resolve outstanding issues which have arisen out of the rostir consolidationprödess In ietúth, Cafriëféxþeöts the Organizationwillmake an equal good

April23, 1997Side Letter No. 7Mr. M. L Royal, Jr.

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April 23, 1997 °

Side Letter No. 7Mr M. L Royal, dr. -

Mr. R. A. PoeMr.D. E. PenningPage 3

AGREED:

M.L. Royal,Jr /General Chairman, BLE

R. A. PoeGeneral Chairman BLE

D. E. PenningGeneral Chairman,BLE

cc: D.M. HahsVice President BLE

J. L. McCoyVice President BLE

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UNION PACIFIC RAILROAÒCOMPANY1416 DODGE STREET

OMAHA NEBRASKA 66179

Side Letter No. 8

Mr. M. L. Royal, Jr. Mr. Robert A. PoeGeneral Chairman, BLE General Chairman,BLE413 West Texas 515 North Belt, Suite #120Sherrnan, TX 75092-3755 Houston, TX 77060

Mr. D. E. PenningGeneral Chairrnan, BLE12531 Missouri Bottom RoadHazelwood, MO 63042

Gentlemen:

This has reference to the StandbySeniorityMerger Implementing Agreement entered inta onJanuary 17, 1997.

Prior to the consummation of Irnplementing Agreements covering the merger of SP and UPin the Houston Hub, an ImplernentingAgreement was entered into between the BLE, the HBT andthe UP pursuant to the Oremon Short Line Conditions. This Agreement, dated July 31, 1997,implemented the decision of the I.C.C. in Docket No. AB-423 (Sub-No, IX) of April 26, 1995,authorizing HBT's terminationof their Settegast Yard lease and transfer of operation and control ofSettegast Yard to UP.

The method ofintegration of BRT engineers with UP engineers on the seniority rosters wasto be by "top and bottom"; i.e., it was agreed that UP Palestine Seniority District engineers wouldbe placed at the bottom of the list of transferring HBT engineers, and the list of transferring HBTengineers would be placed at the bottom of the UP Palestine Seniority District engineers.

Additionally, it was agreed that in anticipation of a second phase of dissolution of HBToperations (which is presently pending before the Surface Transportation Board), roster slots on thetwo (2) "top and bottom" tosters describedabove would be reservedfor the additional group of HBTengineers who will transfer to the UP as a result of that transaction. When that transaction isapproved and an implementing agreement executed, such additional HBT engineers will be placedon the reserved slots as though they had participated in the original seniority consolidation under theJuly 31, 1997 Implementing Agreement. In addition, said BBT engineers win be appropriatelyplaced, via a dovetailing of their engineer seniority, on all applicable cornmon seniority rosterscomprising or involved in the Houston Hub

Side Letter No. 4 to the Standby Seniority Merger Unplementing Agreernent describes themethod by which assignments will be accessed within the Houston Terminal, and it is the intent ofthe parties that the two rosters described above will be used in the exercise of prior rights seniorityto prior rights HBT and Palestine assignments within Zone 5.

If the foregoing adequately and accurately describes our agreement in this matter, please soindicate by signing in the space provided for that purpose below.

Respectfully,

M. A. Hartman NNGeneral Director - Labor Relations

AGREED:

M. L. Royal, Jr.General Chairman, BLE

D. E. PenningGeneral Chairman, BLE

R. A. PoeGeneral Chairman, BLE

cc: Mr. D. M. HahsVice President, BLE

Mr. J. L. McCoyVice President, BLE

STANDBYSENIORITYMERGER IMPLEMENTINGAGREEMENTAGREED UPON QUESTIONS & ANSWERS

General Questions

Q. 1. What is the purpose of entering into a "Standby"Agreement regardingHouston Hub seniority?

A. 1, in implementing the merger agreementfor the territorybetween Houston andAvondale and Houston and Alexandria, employeesmakingseniorityelectionsmay be better informed as to the overall seniority structure of the eventualHouston Hub, how prior rights rosters in each of the zones willoperate inrelation to the whole, and how common seniority will be establishedthroughout the Houston Hub.

ARTICLEII - SeniorityConsolidation

O. 1. In Article II.B.7.what does the phrase "when theirservices are no longerrequired" mean?

A. 1. It is the parties intent to release forced/borrow out employeesas soon aspractical but without causing an added burden on those employees whoremain in the territory. If the change in operations results in surplusemployees thenthe forced/borrow out employees services willno longer berequired and they willbe released on a one for one basis.

Q. 2. Mayan engineer end up witha prior rightsslot on morethan one zone rosterin the Houston Hub?

A. 2. This can onlyoccur where an engineerholds existingrights to both road andyard work. In that instance, the engineer willhold a sloton the relevant priorrights road roster, as well as on the prior rights yard (Zone 5) roster.

Q. 3. May an engineer who, priortothe rosterconsolidation,held onlyyard seniorityacquire prior rights seniorityon one ofthe prior rights road rosters (Zones 1,2, 3, or 4)?

A. 3. No, in that instance the engineer wouldacquire prior rights to the Zone 5roster only,but would acquire common road seniorityon the otherfour (4)zones in accordance with Section D. of Article II.

Q. 4, Does the last sentenceof Section C of Article Il mean that engineers whosecurrent seniority (eitherprior rights or common) extends to territories outsidethe newly defined Houston Hub willno longer retain that seniority?

A. 4. Yes. By virtue of acquiring new seniority (both prior rights and common)throughouttheentireterritorycomprising the new Houston Hub, an engineerelecting a roster slot under thisAgreement would forfeitseniorityon that otherterritory.

Q. 5, Suppose an SP engineer,for example,held prior rightsseniority at El Paso,but was working in Houston under his system (common) seniority. What arehis options?

A. 5. Ifthat engineerchose to stay and work in the new Houston Hub, by electinga roster slot in the Houston Hub, that engineer would be giving up theseniorityat El Paso, Inthatparticular case, the seniority date used to selecta roster slot wouldbe the common(system)date. Conversely, ifthe engineerdesired to retain the seniority at El Paso, be wouldhe required to exercisesuch prior rights seniority back to that location and elect not to participate inthe formulation of new rosters in the Houston Hub.

Q. 6. If the engineerdescribed above elected to return to El Paso and notparticipate in the formulationof new rosters in the Houston Hub, would thatelection affect previous common (system) seniorityheld on some of theterritorynow comprising the Houston Hub?

A. 6. Yes, since the Houston Hub rosters are newlyformed, former senioritywhichmay have attached to some portion of that trackageprior to the merger doesnot surviveor attachto the new Houston Hub rosters. That is why thepartiesagreedunder Article ll.B.6not to limitbidding for roster slots to only thoseengineers working in the territoriescomprisingthe newHouston Hub.

Q. 7. How would thiselectionprocess affecteligibilityfor relocation benefits?A. 7. In these negotiations it is significant to note the parties anticipate no surplus

engineers after consolidations,and possible shortages maystillexist whencompleted. Due to these particular facts, and since an engineer presentlyworkingoutsidethe Houston Hub must "choose or lose" seniority within theHub, an election from outside the Hub to take a rosterslot in the Hub whichrequired a change in residence wouldbe covered by the relocation benefits.Conversely, an employeepresently working in the Houston Hub electing notto stay and participate in the roster formulation process would be makingavoluntary seniority move out of the Hub and would not be eligible for suchrelocation benefits.

Q. 8. InArticlell.G.what does it mean when it refers to protecting allengineer vacancieswithina zone?

A. 8. If a vacancy exists in a zone, it must be filled by a prior rights employee prior toplacing employees on reserve or supplemental boards. If a non prior rightsemployee is working in a zone then a prior rights employeemust displace thatperson priorto goingto a reserve or supplementalboard. Ifa vacancyexists in onezone and an employee in another zone is on a reserve or supplementalboard thatperson willbe recalled prior to the Carrier promoting additional engineers.

jSIDELETTERNO.1

Q. 1, Can you give an example of how the interim protection for the balance of theHouston Hub and regular protection willoperate?

A. 1. The following examplescover employees with less than six years of service and

more than si×years of service.

Example 1: Employee A has eight years of servicewhen the agreement isimplemented on April1, 1997. The interim period runs until January 1, 1998.The employee willreceive interim protection untilJanuary 1, 1998 and on thatdate willreceive six years New York Dock protection.

Example 2: EmployeeB has threeyears ofserviceunderthe same facts asExample 1. EmployeeBwillhave interimprotection untilJanuary 1, 1998 andwillthen have three years nine monthsNewYork Dock protection.

Example 3: EmployeeA has eight years of servicewhen the agreement isimplemented on April1, 1997. The interim period runs untilJune 1, 1998.The employeewillreceive interim protection untilApril1, 1998 and will beginregular protection on April1, 1998 for sixyears.

Example 4: EmployeeBhas three years ofservice underthe same facts asExample 3. EmployeeBwillhave interim protection until April1, 1998 andwillbegin four years New York Dock protection on that date.

SIDE LETTERNO. 2

Q. 1. What is the status of trainmen/firemenseniority?A. 1. Those will be determined in negotiations/arbitrationwith the other organization.

Employees with pre November 1, 1985 firemen rights will be treated as firemenshould they not be able to hold as an engineer.