NATIONAL RAILWAY LABOR CONFERENCE
1901 L STREET, N.W., WASHINGTON, D.C. 20036-3514/AREA CODE: 202-862-7200 FAX: 202-862-7230

                                                                                                                    November 1, 2004

Mr. Paul C. Thompson
President
United Transportation Union
14600 Detroit Avenue
Cleveland, OH 44107

Dear Mr. Thompson:

From time to time during the periodic meetings of the joint National Wage and Rules Panel, we pave discussed the organization's concerns regarding the substantial financial and administrative burdens it incurs from representing and protecting the rights and interests of employees working (or holding seniority in) train service who do not provide any financial support to the United Transportation Union ("UTU"). As the lawfully designated collective bargaining representative or a craft under the Railway Labor Act, the UTU must represent every employee working (or holding seniority) in the craft with respect to contract bargaining/administration and claim and grievance handling, including non-members. In recent meetings the UTU has advanced specific proposals that, consistent with applicable legal authority, would amend certain existing agreements governing tram service seniority to ensure that the organization would receive financial support from all employees whose seniority rights and interests it is required by law to represent. After considerable discussion, the parties have reached this Letter of Intent, which may be implemented as provided in Paragraph 6 below.

1. Exclusive Representation. The UTU and its duly designated officers shall have the exclusive right to represent employees in the craft(s) for which the UTU is the lawfully recognized or certified collective bargaining representative under the Railway Labor Act in carrier-level grievance, claim and disciplinary proceedings.

2. Seniority Maintenance.

(a) Each employee in a train service class/craft (including locomotive engineer trainees) represented (for RLA purposes) by the UTU who does not hold membership in that organization will be required to pay a monthly seniority maintenance ("SM") fee to UTU in order to continue to accumulate train service seniority. The SM fee shall be based on the costs of negotiations, claim/grievance/discipline handling, and internal governance as indicated in UTU's Fees Objector Policy and/or the most recent LM-2 Report filed by UTU with the United States Department of Laboi-but in no event shall it exceed the full amount of monthly dues payable to UTU and its subordinate units by a member of such organization. The SM fee required under this paragraph will be payable by an employee on a monthly basis beginning with the first full calendar month that immediately follows completion of his/her SM service period. An employee's SM service period for this purpose shall mean the thirty (30) calendar day period that commences with his/her first day of compensated service in a UTU-represented train service class/craft (including locomotive engineer trainees) that occurs after the date this provision is implemented at the location involved. If an employee covered by this paragraph is promoted to engine service and is subsequently set back to train service at a location where this provision has been implemented, a new SM service period (as defined above) will be applicable to such employee.

(b) The UTU shall furnish to the carrier written notification of the amount of the applicable SM fee(s) due under this paragraph by July 1 of each calendar, year, which amount will remain in effect until the succeeding July 1. The initial notification of the SM fee amount(s) under this paragraph will be made within thirty (30) calendar days of the date this Letter of Intent is implemented at any location and will remain in effect until the succeeding July 1. The applicable SM fee will be payable at the same time as dues are payable by a UTU member. Any non-member of UTU in train service who fails to pay the SM fee when due shall be promptly notified of that non-payment by the UTU by certified mail If such default has not been cured within thirty (30) calendar days after the date of such notice, the UTU shall provide the carrier written notification of the non-payment and that individual's seniority in the train service class/craft involved shall be frozen effective on the first calendar day after expiration of the 30-day notice period.

3. Seniority Retention

(a) If arrangements are in effect at any location on a carrier that require payment of a service fee by any employee in engine service who does not belong to the Brotherhood of Locomotive Engineers and Trainmen in order to continue to accumulate and/or retain engine service seniority, the provisions set forth in section (b) of this paragraph shall be applicable at such location.

(b) Any employee in engine service (except locomotive engineer trainees) who holds train service seniority but does not belong to the UTU shall be required to pay a monthly seniority retention ("SR") fee to the UTU, in an amount equal to the full monthly dues payable to UTU and its subordinate units by a member of that organization in order to retain train service seniority. Such fee shall be payable at the same time as monthly dues are payable by a UTU member. Any non-member who fails to pay the SR fee when due shall be promptly notified of that non-payment by the UTU by certified mail. If such default has not been cured within thirty (30) calendar days after the date of such notice, the UTU shall provide the earner written notification of the non-payment and that individual's seniority in the train service class/craft involved shall be extinguished effective on the first calendar day after expiration of the 30-day notice period, subject to subparagraph (d) below.

(c) The SR fee required under this paragraph will be payable by an employee on a monthly basis beginning with the first full calendar month that immediately follows completion of his/her SR service period. An employee's SR service period for this purpose shall mean the thirty (30) calendar day period that commences with Ms/her first day of compensated service in engine service that occurs after the date this provision is implemented at the location involved. If an employee covered by this paragraph is set back to train service and is subsequently promoted to engine service at a location where this provision has been implemented, a new SR service period (as defined above) will be applicable to such employee.

(d) If an employee whose train service seniority has been extinguished pursuant to subparagraph (b) is subsequently set back to train service because of insufficient seniority to hold an engine service position, he/she shall be placed at the bottom of the seniority roster involved. Such employee:

(i) shall be deemed to have forfeited all agreement-based rights and/or benefits for which he/she was entitled or eligible based upon his/her former train service seniority; and

(ii) who is or becomes subject to statutory-based employee protective conditions, for the duration of the applicable protective period, shall be treated as having all of his/her former train service seniority rights.

4. Existing Pro visions. Article EX - Seniority Accumulation of the May 8. 1996 National UTU Agreement, Document A (and any arrangements now in effect pursuant to its terms) and any existing arrangements granting exclusive representation to UTU shall be suspended on the date this Letter of Intent is implemented at the location involved. Such suspension shall be rescinded on the date this Letter of Intent is terminated under Paragraph 7.

5. Covered Carriers. The carriers covered by this Letter of Intent are listed in Attachment A hereto.

6. Implementation.

(a) The provisions of this Letter of Intent may be implemented by any duly authorized UTU General Committee at such locations J on the earner as the General Committee may elect. Implementation shall be made effective on the first day of a calendar month immediately following the date of written notification of ratification, as provided in subparagraph (b) below, which shall be given by the General Committee(s) involved to the highest designated labor relations officer of the carrier. Implementation of this Letter of Intent may not be effectuated in any manner other than as provided in this Paragraph, absent mutual agreement of the parties.

(b) For purposes of this paragraph, a location shall mean a defined territory no smaller than one or more entire seniority districts within the jurisdiction of one or more General Committees and shall encompass all UTU seniority rosters therein. Implementation at a location will be subject to ratification by majority vote of all affected Local Chairmen, all of whom will be bound by an affirmative vote.

(c) If an employee is working at a location where the Letter of Intent has been implemented and fails to pay the SM or the SR fee as provided in Paragraphs 2 and 3 above, his/her seniority on all train service rosters on the carrier shall be treated as provided therein.

(d) If an employee not previously subject to the Letter of Intent exercises seniority to a location where such Letter has been implemented and fails to pay the SM or the SR fee as provided in Paragraphs 2 and 3 above, his/her seniority on all train service rosters on the earner shall be treated as provided therein.

7. Term. This Letter of Intent is made effective November 1, 2004 and shall remain in effect until January 31, 2006. The Letter of Intent shall automatically terminate at that time unless extended by mutual written agreement of the parties. Either party may request commencement of discussions to extend the term of the Letter of Intent at any time within ninety (90) calendar days of such Termination Date. If such request is made, both parties commit to good faith discussions.

8. Indemnification. The UTU shall indemnify and hold any carrier party hereto harmless from and against any claim, demand, cause of action, damage, liability, cost or expense (including court costs and reasonable attorneys' fees) incurred by the carrier to or involving third parties (including but not limited to employees) and arising out of or in any way resulting from this Letter of Intent. The carrier(s) shall consult with the UTU with respect to selection of the carrier(s)' attorney in any such litigation.

9. Reservation of Rights. This Letter of Intent is not intended to restrict any of the existing rights of a carrier or the UTU or to create additional carrier or UTU responsibilities except as specifically provided herein.  Please acknowledge your concurrence by signing your name in the space provided below.

                                                                                                           Very truly yours,

                                                                                                            Robert F. Allen

I concur:

Paul C. Thompson

___________________________________________________________________________________________________________

Attachment A

COVERED CARRIERS

The Burlington Northern and Santa Fe Ry. Co.

CSX Transportation, Inc.

Atlanta & West Point R.R. (former)
The Baltimore & Ohio Chicago Term. R.R. Co. (former)
The Baltimore and Ohio R.R. Co. (former)
The Chesapeake and Ohio Ry. Co. (former)
CSXT Northern (former Conrail)
Gainesville Midland Railroad Co.
Louisville & Nashville R.R. Co. (former)
Nashville, Chattanooga & St. Louis Ry. Co. (former)
Seaboard Coast Line R.R. Co. (former)
Western Railway of Alabama

Kansas City Southern

Kansas City Southern
Louisiana & Arkansas
Mid South
Southrail
Tennrail
Gateway
Western Mid Louisiana
Joint Agency

Norfolk Southern Railway Company

The Alabama Great Sou. R.R. Co.
Atlantic & East Car. Ry. Co. 
Central of Georgia R.R. Co. 
The Cinn., N.O. & Tex. Pac. Ry. Co. 
Georgia Sou. and Fla. Ry. Co. 
Tenn., Ala. and Georgia Ry. Co. 
Tennessee Railway Co.

Union Pacific Railroad