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Employment Agreement - Union Pacific Railroad Co. and Robert Starzel

                              September 11, 1996

Personal & Confidential

Mr. Robert Starzel
Vice Chairman
Southern Pacific Rail Corporation
One Market Plaza, 8th Floor
San Francisco, CA 94105

Dear Bob:

We are pleased that commencing with the merger (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 Vice President, Western Region, based in San Francisco, CA.

     You will receive an annual base salary of $350,000 (less applicable taxes
and withholding) and, after January, 1997, will participate in the Executive
Incentive Plan of Union Pacific Corporation and Subsidiaries with a 1997 bonus
guaranteed in the amount of $200,000 (less applicable taxes and withholding) if
employed by UPRR on December 31, 1997. Union Pacific Corporation's officers will
recommend to the Compensation, Benefits and Nominating Committee of Union
Pacific Corporation's Board (the 'Committee') during the 1996 fall compensation
cycle that you receive 10,000 Union Pacific Corporation Retention Shares,
subject to the terms and conditions of Union Pacific Corporation's 1993 Stock
Option and Retention Stock Plan (the 'Plan') and further subject to the number
being adjusted following Resources' Spin-Off in the same manner as other
outstanding Retention Shares under the Plan.  These shares will vest three years
from grant date, or, if earlier, upon your death or upon disability under the
provisions of UPRR's long-term disability plan as in effect from time to time.
If prior to vesting, your working relationship with UPRR changes in a mutually
agreed upon manner, UPRR may recommend early vesting to the Committee as
permitted by the Plan; however, your Retention Shares shall be forfeited
automatically in the event you receive the $700,000 severance payment referred
to in the second following paragraph.  Dividends will be held in escrow and
paid, net of applicable taxes and withholding, upon vesting.  Upon the effective
date of the Merger (as defined below), you will be entitled to the balance of
the Management Continuity Payment described in the Merger Agreement.

     The terms set forth in the letter agreement, dated October 26, 1994,
between you and SP Rail, as amended (the 'SP Employment Agreement') with respect
to the remaining outstanding amount of the loan extended to you by SP Rail to
purchase a residence in San Francisco will continue to apply, with Union Pacific
Railroad Company ('UPRR') as the obligee of the loan and the employer.

     You will receive $350,000 (less applicable taxes and withholding) upon the
effective date of this agreement.  In lieu of the severance provisions set forth
in the SP Employment Agreement and 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 (the 'Merger Agreement'), you will be entitled to
the following: (1) if, prior to September 11, 1998, your employment with UPRR
terminates, other than for 'cause' as defined in the Employment Agreement, you
will be entitled to a severance payment of $700,000 less applicable taxes and
other withholdings reduced by any bonuses received prior to such termination,
and (2) if your employment with UPRR terminates for 'cause' at any time, or your
employment with UPRR terminates for any reason on or after September 11, 1998,
you will not be entitled to any severance payment.  In no event will you be
entitled to receive any severance payment if your Retention Shares referred to
above have vested.

     If the compensation outlined in this agreement or previously paid by SP
Rail results in your being subject to IRS Excise Tax, Union Pacific Corporation
will reimburse you for or pay on your behalf the 20% Excise Tax and related Tax
Gross-up on such items, upon the terms and conditions described in Annex A.

     As of January 1, 1998, your Southern Pacific service will be combined with
your continued Union Pacific service toward vesting and credited service in
Union Pacific Corporation's pension plans as in effect from time to time,
subject to any offset with respect to accrued benefits under the Southern
Pacific pension plan.  Union Pacific will also continue to honor the terms of
your supplemental pension as provided for in the SP Employment Agreement.  Prior
to January 1, 1998, you will continue to be covered by the Southern Pacific
pension plan and your supplemental pension.

     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
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 any
reason, you agree that, for a period of one year, 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 UPRR's railroad, fiber optic or real estate businesses or with
other material businesses of UPRR or its affiliated companies with which you
were involved at any time (including prior to the date of this Agreement), in
the geographical areas where such businesses are conducted on the date of such
termination, unless neither UPRR nor any of its affiliated companies is involved
in such business 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 first 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 SP Rail or 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 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. For purposes of
this paragraph, affiliates of UPRR include SP Rail.

     You agree that money damages may not be adequate to compensate UPRR and its
affiliates for your breach of the immediately preceding three paragraphs and
that UPRR will be entitled to a decree for specific performance or other
appropriate remedy to enforce your performance under such paragraphs.

     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 SP Employment
Agreement is hereby terminated and neither SP Rail or UPRR or any of its
subsidiaries or affiliates will have any obligation thereunder.

     This agreement will be governed by the laws of the State of Utah.

     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.


                              UNION PACIFIC CORPORATION

                                /s/ Richard K. Davidson
                              By:    Richard K. Davidson
                                     President and Chief Operating 

Agreed to this 11th day of September, 1996.

 /s/ Robert Starzel
      Robert Starzel
                                                                         Annex A

Dear Mr. Starzel:


Pursuant to the provisions of the Amended and Restated Agreement and Plan of
Merger dated as of July 12, 1996, by and among Union Pacific Corporation
('UPC'), Union Pacific Railroad Company ('UPRR'), Southern Pacific Rail
Corporation ('SPRC'), UP Holding Company, Inc. and Union Pacific Merger Co. (the
'Amended Merger Agreement'), SPRC is to be merged with a subsidiary of Union
Pacific Corporation (the 'Merger').  As of the date hereof, you have entered
into an employment agreement (the 'Employment Agreement') with UPC concerning
your continued employment with UPRR and its affiliates.  In connection with the
Merger, and in certain instances your termination of employment from UPRR, you
may become entitled to certain compensation from UPC or one or more of its
affiliates (collectively the 'Company').

     In consideration of your prior services to SPRC and the Company, and the
undertakings and agreements contained herein, the Company hereby agrees, subject
to the consummation of the Merger and to the extent set forth in this Agreement
and in the Employment Agreement, including the limitations and conditions set
forth in the fifth paragraph of the Employment Agreement, to indemnify and
protect you against any excise tax pursuant to Section 4999 of the Internal
Revenue Code of 1986, as amended (the 'Code') and potential interest or
penalties that could be associated with that tax incurred in connection with the
transactions contemplated by the Amended Merger Agreement, including but not
limited to the Merger.

     In the event it shall be determined that any compensation, payment or
distribution, made on account of a change in the ownership or effective control
of SPRC, within the meaning of Section 280G of the Code (a 'Change of Control'),
by SPRC or one or more of its subsidiaries or affiliates or by the Company to
you or for your benefit (determined without regard to any additional payments
required under this Agreement) (each a 'Payment') would be subject to the excise
tax imposed by Section 4999 of the Code, or any interest or penalties are
incurred by you with respect to such excise tax (such excise tax, together with
any such interest and penalties, are hereinafter collectively referred to as the
'Excise Tax'), then you shall be entitled to an additional payment (a 'Gross-Up
Payment') in an amount representing the Company's good faith estimate of the
amount necessary to compensate you on an after-tax basis for the Excise Tax, but
only in the event that you are entitled to such Gross-Up Payment pursuant to the
terms of the fifth paragraph of the Employment Agreement.

     The Gross-Up Payment will be made on your behalf within a reasonable period
of time prior to the date that the obligation to remit the applicable Excise Tax
is due.  However, as a result of the uncertainty in the application of Section
4999 of the Code at the time of the initial determination, it is possible that
certain payments (the 'Underpayment') that have not been made by the Company
should have been made to compensate you on an after-tax basis for the Excise
Tax; provided, however that the Underpayment shall not include any costs,
expenses, taxes, penalties or other liabilities (a) incurred as a result of your
failure to timely remit taxes (other than the Excise Tax, except as otherwise
provided in clause (b)) otherwise due by you or with respect to you, (b)
incurred as a result of your failure to timely remit to the Internal Revenue
Service or any other taxing authority any amounts of Excise Tax that were paid
to you by the Company, or (c) resulting from your negligence or failure to
comply with the terms of this Agreement.  In the event that the Company exhausts
its remedies pursuant to the immediately following paragraphs, and you
thereafter are required to make a payment of any Excise Tax, any such
Underpayment shall be paid by the Company to or for your benefit within a
reasonable period of time following such time as the obligation to make such
Underpayment is finally resolved.

     You shall notify the Company in writing of any claim by the Internal
Revenue Service that, if successful, would require the payment by the Company of
any Underpayment.  Such notification shall be given by you in a timely fashion,
but in no event later than ten business days after you are informed in writing
of such claim and shall apprise the Company of the nature of such claim and the
date on which such claim is requested to be paid.  Notwithstanding any other
provision in this Agreement to the contrary, if you fail to timely notify the
Company of any Underpayment or claim relating thereto, the Company shall not be
obligated to pay any costs, expenses, taxes or penalties associated therewith.
If the Company notifies you within 30 days following receipt of notice from you,
in writing, that it desires to contest such claim, you shall:

               (i)   give the Company any and all information reasonably
     requested by the Company relating to such claim,

               (ii)  take any and all such actions in connection with contesting
     such claim as the Company shall reasonably request in writing from time to
     time, including, without limitation, accepting legal representation with
     respect to such claim by an attorney reasonably selected by the Company,

               (iii) cooperate with the Company in good faith in order
     effectively to contest such claim, and

               (iv)  permit the Company to participate in any proceedings
     relating to such claim;

provided, however, that the Company shall bear and pay directly all costs and
expenses (including additional interest and penalties) incurred by you in
connection with such contest and shall indemnify and hold you harmless, on an
after-tax basis, for any Excise Tax or income tax (including interest and
penalties with respect thereto) imposed as a result of such representation and
payment of costs and expenses.  Without limitation on the foregoing provisions
of this Agreement, the Company shall control all proceedings taken in connection
with such contest and, at its sole option, may pursue or forego any and all
administrative appeals, proceedings, hearings and conferences with the taxing
authority in respect of such claim and may, at its sole option, either direct
you to pay the tax claimed and sue for a refund or to contest the claim in any
permissible manner, and you agree to prosecute such contest to a determination
before any administrative tribunal, in a court of initial jurisdiction and in
one or more appellate courts, as the Company may determine; provided further,
however, that if the Company directs you to pay such claim and sue for a refund,
the Company shall advance the amount of such payment to you, on an interest-free
basis and shall indemnify and hold you harmless, on an after-tax basis, from any
Excise Tax or income tax (including interest or penalties with respect thereto)
imposed with respect to such advance or with respect to any imputed income with
respect to such advance; and further provided that any extension of the statute
of limitations relating to payment of taxes for your taxable year with respect
to which such contested amount is claimed to be due is limited solely to such
contested amount.  Furthermore, the Company's control of the contest shall be
limited to issues with respect to which the Gross-Up Payment or Underpayment
would be payable hereunder and you shall be entitled, at your own cost and
expense, to settle or contest, as the case may be, any other issue raised by the
Internal Revenue Service or any other taxing authority.

     If (a) after your receipt of an amount advanced by the Company hereunder,
you, for any reason, become entitled to receive any refund with respect to such
claim or amount, or (b) if any amount paid to you or on your behalf pursuant to
this Agreement exceeds the amount finally determined to compensate you on an
after-tax basis for the Excise Tax, taking into account the limitations on such
compensation described in this Agreement, then you shall promptly pay to the
Company the amount of such refund or excess (together with any interest or
penalties paid or credited thereon after taxes applicable thereto).

     You and the Company shall each cooperate with the other in connection with
any administrative or judicial proceedings concerning the foregoing provisions
of this Agreement, and you agree to timely furnish the Company with all
documentation that the Company may reasonably request, including income tax
returns and all schedules thereto.

     The provisions of this Agreement and the indemnities contained herein shall
continue for so long as may be necessary in order to fully protect you against
any Excise Tax with respect to the Payments.  The provisions of this Agreement
may only be modified through a written instrument signed by you and the Company.
This Agreement shall be binding upon you and the Company and its successors,
assigns and transferees.  This Agreement shall be governed by and construed in
accordance with the laws of the State of Utah, without regard to its conflict of
law rules.

     Any notice given hereunder shall be in writing and shall be deemed to have
been given when delivered by messenger or courier service (against appropriate
receipt), or mailed by registered or certified mail (return receipt requested),
addressed as follows:

     If to the Company:          Union Pacific Corporation
                                 Eighth and Eaton Avenues
                                 Bethlehem, Pennsylvania 18018

                                 Attn: Senior Vice President,
                                 Human Resources;

     If to you:                  At the address hereabove provided;

or at such other address as shall be indicated to either party in writing.
Notice of change of address shall be effective only upon receipt.
     If you are in agreement with the foregoing provisions of this Agreement,
please sign both copies of this letter and return one signed copy to the

                              UNION PACIFIC CORPORATION

                                    Richard K. Davidson
                                    President and Chief Operation Officer


Robert Starzel

Dated: _________________________

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