Exhibit 10(b)
-------------
UNION PACIFIC CORPORATION AND SUBSIDIARY COMPANIES
LETTER AGREEMENT BETWEEN UNION PACIFIC CORPORATION AND XXXXX X. XXXXX
August 30,1996
Xx. Xxxxx X. Xxxxx:
Dear Xxxxx:
We are pleased that commencing with the merger of Southern Pacific Rail
Corporation ("SP Rail") into a subsidiary of Union Pacific Corporation,
currently expected to occur on September 11, 1996, you will continue in the
employment of Union Pacific Railroad Company ("UPRR") and its affiliates as
President Southern Pacific Rail Operations.
You will receive an annual base salary of $600,000 and participate after
January, 1997 in the Executive Incentive Plan of Union Pacific Corporation and
Subsidiaries, and participate after the effective date of the merger in other
compensation programs generally available to UPRR's senior executives. Union
Pacific Corporation's officers will recommend to the Compensation, Benefits
and Nominating Committee of Union Pacific Corporation's Board during the 1996
fall compensation cycle that you receive 30,000 options under Union Pacific
Corporation's 1993 Stock Option and Retention Stock Plan at the then market
price vesting two years from grant date. Upon the effective date of the
merger you will be entitled to the balance ($560,000) of your Management
Continuity Payment whether or not you become a Union Pacific employee.
The terms set forth in the letter agreement, dated February 20, 1995
(the "Employment Agreement"), with respect to the remaining outstanding amount
of the loan extended to you by SP Rail to purchase a residence in Denver will
continue to apply, with Union Pacific Railroad Company ("UPRR") as the obligee
of the loan and the employer. If you are required to move prior to March 1,
1998, the remainder of the home loan balance will be forgiven on the day of
closing of your residence. If you are required to move and subsequently
resign prior to March 1, 1998, you will be required to repay any loan
forgiveness accelerated by the move, which would not have been forgiven on the
current schedule. Recognizing that the acceptance of employment at UPRR may
require you to move, you will be eligible for the Union Pacific Relocation
Program.
If your employment by UPRR is terminated or your title or duties at UPRR
are materially downgraded, you will be entitled to severance benefits if and
to the extent that you would have been entitled to benefits under the
Employment Agreement upon termination of employment or change in title or
duties at SP Rail, as such benefits may be enhanced by the Enhanced Severance
Program described in the Amended and Restated Agreement and Plan of Merger by
and among Union Pacific Corporation, UPRR, SP Rail, UP Holding Company, Inc.
and Union Pacific Merger Co., dated as of July 12, 1996, except that you will
not be entitled to any stock bonus based on the achievement of a stated
operating ratio. In accordance with the preceding sentence (1) if you
are terminated, other than for cause, prior to September 11, 1997 you will be
entitled to the Enhanced Severance payment of $1,600,000 less applicable taxes
and other withholdings, (2) if you are terminated, other than for cause,
between September 11, 1997 and March 1, 1998 you will be entitled to
$1,000,000 Severance, as described in your SP Employment Agreement, less any
applicable taxes and other required withholdings. If terminated after March
1, 1998 you will not be entitled to any severance payments.
Additionally, UPRR will purchase and convey to you the automobile SP
Rail leased for you under the terms of the Employment Agreement. The fair
market value of the automobile will be grossed up for income tax purposes.
You are vested in Union Pacific Corporation's pension plans. As of
January 1, 1998, your credited service will include all Union Pacific service
and Southern Pacific service. As of the effective date of the merger you will
become eligible for the more favorable early retirement factors and the full
50% survivor annuity for your spouse under Union Pacific's pension plans based
on your earnings history through July 1, 1989. On February 1, 1998, your
three-year SP earnings history will become the basis for your pension benefit.
While you are employed by UPRR you will devote your full energies,
efforts and productive time exclusively to the business and affairs of UPRR,
and you will do your utmost to promote its interest. You will not, without
UPRR's prior written consent, render to others services of any kind for
compensation, and you will not engage in any other business activity that
would interfere with the performance of your duties for UPRR.
In the event that your employment with UPRR is terminated by UPRR for
"cause" (as defined in the Employment Agreement) or is terminated by your
resignation, you agree that, for a period of three years, commencing on the
date of such termination, without the approval of the Chief Executive Officer
of Union Pacific Corporation, you will not compete (as a proprietor, partner,
shareholder, director, employee, agent, consultant, or in any other capacity
of manner) with any business in which UPRR or its affiliated companies is
involved on the date of such termination, except that the foregoing shall not
apply to ownership by you of a 5% or less equity interest in a publicly-traded
entity if you have no other interest in or involvement with such entity. UPRR
and you intend that the provisions of this paragraph be enforceable to the
fullest extent permitted by law and public policy applied in each jurisdiction
where enforcement is sought. If a particular portion of this paragraph shall
be adjudicated to be unenforceable, such adjudication shall apply only with
respect to your activities in the particular jurisdiction in which such
adjudication is made. In addition, you agree that you will not, while you are
employed by UPRR or at any time prior to the end of the third year after your
employment with UPRR has terminated, without the approval of the Chief
Executive Officer of Union Pacific Corporation, solicit the employment of any
person, who, at the time of such solicitation, is an employee of UPRR or any
of its affiliates.
You acknowledge that as an employee of UPRR, you will have access to
proprietary and confidential information that directly or indirectly relates
to the business of UPRR and its affiliates. For purposes of this Agreement,
"Confidential Information" means all information about UPRR and its affiliates
obtained or developed by you while an employee of UPRR including, but not
limited to, information regarding the officers and other key personnel of UPRR
and its affiliates and financial or business information, strategy or plans,
which UPRR or one of its affiliates has requested be held in confidence or
could reasonably be expected to desire to be held in confidence, or the
disclosure of which would likely be disparaging or damaging, to any
substantial extent, to UPRR or one of its affiliates or any of their employees
and directors, but shall not include information already in the public domain.
You agree that you will not, without the prior written consent of UPRR or
except pursuant to lawful process, disclose to any person any Confidential
Information or use Confidential Information in any way detrimental to UPRR or
its affiliates.
None of the foregoing provisions is intended to give you any right to
continued employment with UPRR or its affiliates, and UPRR may terminate your
employment at any time, with or without cause or notice, subject only to
payment of amounts provided above for certain terminations. You acknowledge
that this Agreement contains the entire agreement between you and UPRR
concerning the terms of your employment.
Except as specifically provided in this Agreement, the Employment
Agreement is hereby terminated.
This agreement will be governed by the laws of the Commonwealth of
Pennsylvania.
This agreement is subject to approval by the Board of Directors of Union
Pacific Corporation.
If you are in agreement with the terms and conditions of employment
contained herein, please execute this Agreement by signing a copy and
returning it to the undersigned.
Sincerely,
UNION PACIFIC CORPORATION
/s/ Xxxxxxx X. Xxxxxxxx
------------------------------------
By: Xxxxxxx X. Xxxxxxxx
President and Chief Operating Officer
Agreed to this 30th day of August, 1996
/s/ Xxxxx X. Xxxxx
---------------------------------------
Xxxxx X. Xxxxx
