EXHIBIT No. 329

AGREEMENT made this third day of September 1936, between THE PULLMAN COMPANY and UNION PACIFIC RAILROAD COMPANY, hereinafter called the "RAILROAD COMPANY";

Whereas an agreement between the parties hereto (hereinafter called the “principal agreement"), effective April 1, 1929, provides that The Pullman Company shall furnish and operate sleeping and parlor cars to meet the requirements of travel over the lines of railroad of the Railroad Company, as described in said agreement; and

Whereas the parties hereto desire to make a special or supplemental agreement whereby The Pullman Company will also furnish to the Railroad Company, in addition to cars of the type contemplated by said principal agreement, new-type lightweight sleeping cars (hereinafter referred to as "new-type lightweight cars"), for operation in new-type lightweight trains of special design and construction as arranged for by the Railroad Company;

Now, therefore, it is understood and agreed between the parties as follows:

ARTICLE I

The Pullman Company will furnish to the Railroad Company, in addition to sleeping and/or parlor cars of the type furnished under the principal agreement, nineteen (19) new-type lightweight cars (equipped for air conditioning) named as follows:

to equip five new-type lightweight trains for operation by the Railroad Company and connecting lines, Chicago & North Western and Southern Pacific, and such other connecting lines as may be mutually agreed upon.

In the event any new-type lightweight car so furnished by The Pullman Company is destroyed or damaged beyond repair, The Pullman Company will replace the same as promptly as possible with a similar car, which shall be substituted with respect to all provisions of this agreement for the car so destroyed or damaged. With respect to any car so destroyed or damaged beyond repair on the lines of the Railroad Company it will assume seventy-five percent (75%) and The Pullman Company twenty-five percent (25%) of an amount represented by the "Excess Construction Cost" hereinafter provided for depreciated at the rate of 8% per annum from the time such car was placed in service less salvage and any sums recoverable from other sources apportionable to "Excess Construction Cost": Provided, however, That if the damage is caused by directly traceable negligence of one of the parties hereto, the party negligent will assume such entire irrecoverable net loss. All additional loss resulting from such destruction or damage to such car shall be borne in accordance with the provisions of the Principal Agreement. This agreement shall continue in effect with respect to the new substitute car for a period of twelve and one-half (12%) years from the date it is placed in revenue service.

ARTICLE II

In ascertaining under section 5 of Article IV of the principal agreement the number of standard cars operated in any contract year the Railroad Company's car mileage proportion of the total days of actual service of the new-type lightweight cars, plus 20% of such proportion, shall be added to the car-days of the present type standard cars determined as provided in said section 5.

Except as herein otherwise provided, the new-type lightweight cars shall be considered, insofar as the provisions of the principal agreement are concerned, as of the class of standard sleeping cars therein provided for, and except as herein otherwise provided, the terms and conditions of the principal agreement to the extent appropriate shall apply to the new-type lightweight cars with the same force and effect as if said cars had been originally included in said class.

ARTICLE III

"Expenses of Operation" as defined in section 11 of Article IV of the principal agreement shall include for depreciation on each of the new-type lightweight cars an amount equal to five percent (5%) on the agreed cost as hereinafter stated of a present-type standard sleeping car and such "Expenses of Operation" shall include no other or different amount for depreciation on the new-type lightweight cars, nor shall they include any amount for taxes on "Excess Construction Cost."

ARTICLE IV

There are elements of "Excess Cost" of the new-type lightweight cars provided for in this agreement which shall be apportioned between The Pullman Company and the railroad companies over whose lines the cars are operated substantially in accordance with the benefits accruing measured in receipts from Pullman fares and railroad fares, respectively, which for the purpose of this agreement are agreed to be twenty-five percent (25%) and seventy-five percent (75%), respectively. These "Excess Costs" comprise the following:

(1) "Excess Construction Cost" representing the difference between the cost of the new-type lightweight cars, which is agreed to be Eighty Thousand Dollars ($80,000.00) each, and the cost of present-type standard sleeping cars, which is agreed to be Thirty-one Thousand Dollars ($31,000.00) each, or a difference of Forty-nine Thousand Dollars ($49,000.00) each.

(2) "Excess Taxes." For the purpose of this agreement an amount equal to three-fourths (4) of one per cent (1%) of the "Excess Construction Cost" of the new-type lightweight cars, amounting to Three Hundred Sixty-seven Dollars Fifty Cents ($367.50) per car per annum is agreed to be "Excess Taxes" on such "Excess Construction Cost."

(3) "Excess Depreciation." As the life expectancy of the new-type lightweight cars is agreed to be twelve and one-half (12%1⁄2) years as compared with twenty (20) years for the present-type standard sleeping cars now furnished, an amount representing three per cent (3%) per annum on the agreed cost $31,000.00 each) of the present-type standard sleeping cars, or Nine Hundred Thirty Dollars ($930.00) per annum per car is agreed to as representing "Excess Depreciation."

The Railroad Company will assume that portion of seventy-five per cent (75%) of the "Excess Costs" that the mileage made by the new-type lightweight cars on the lines of the Railroad Company bears to the total mileage made by such cars on all lines over which they are operated.

"Excess Construction Cost" shall be divided into equal monthly installments over a period of twelve and one-half (12%) years, computing such period for each car from the date upon which it is placed in revenue service; and "Excess Taxes" and "Excess Depreciation" shall be prorated on a monthly basis. The Railroad Company shall pay to The Pullman Company monthly over a period of twelve and one-half (122) years (except as herein otherwise provided) its proportion, determined within twenty days after the first of each month on the basis of our mileage made in the next preceding month in which car mileage was made, of seventy-five per cent (75%) of one monthly installment of each of the following:

(1) "Excess Construction Cost" with interest at the rate of 5% per annum on deferred payments;

(2) "Excess Taxes"; and

(3) "Excess Depreciation.”.

The Railroad Company shall have the right at any time to make a payment or payments in excess of said monthly obligations on account of the "Excess Construction Cost" for which the Railroad Company is responsible under the terms of this Article.

If by reason of obsolescence or for any other reason except accident, fire, or other casualty new-type lightweight cars covered by this agreement are retired from revenue service prior to expiration of this agreement, then the Railroad Company will pay to The Pullman Company with respect to each car so retired an amount equal to seventy-five per cent (75%) (less any sums that the Railroad Company may have previously paid in excess of its monthly obligations for "Excess Construction Costs" as provided for in this Article) of an amount arrived at by deducting from the agreed cost of $80,000.00 per car (a) depreciation at the

rate of 8% per annum from the time the car was placed in operation until removed from service and (b) salvage recovered.

It is mutually agreed that a proportion of the total cost of any additions and betterments to said new-type lightweight cars, incurred subsequent to June 30, 1936, and approved by the Railroad Company, not including additions and betterments of a kind made to present type standard cars, shall be allocated to the Railroad Company during the remaining unexpired term of this agreement on the same percentage basis that it participates in the "Excess Costs", as hereinbefore provided, and the Railroad Commpany agrees to pay its proportion of the cost of such additions and betterments monthly, or the Railroad Company may at any time make a payment or payments in excess of said monthly obligation on account of said additions and betterments.

If upon the expiration of the term of this agreement with respect to each newtype lightweight car the Railroad Company, having preformed all of its obligations hereunder, elects to continue the operation of these new-type lightweight cars it shall not be obligated to make any further payments to The Pullman Company under this Article IV, except its proportion of "Excess Taxes", and no depreciation or "Excess Taxes" for these new-type lightweight cars shall be included in “Expenses of Operation" of all cars operated on the lines of the Railroad Company.

ARTICLE V

Expense of inspection, maintenance and operation of that part of the air condi tioning system contained in the new-type lightweight cars shall be accounted for and distributed separately and no part thereof shall be included in "Expenses of Operation" as defined in Section 11 of Article IV of the principal agreement. The Railroad Company shall perform all required inspection, operation and maintenance of that part of the train air conditioning system contained in the new-type lightweight cars, while such cars are in its possession, and bill shall be rendered against The Pullman Company for the expense so incurred by the Railroad Company during each month. The amount of such monthly bill shall be added to the expense incurred during the same month for inspection, maintenance and operation of the apparatus by The Pullman Company and by other railroads over which the new-type lightweight cars are operated, and the Railroad Company shall pay to The Pullman Company its said car mileage proportion of seventy-five per cent (75%) of the aggregate amount.

ARTICLE VI

This agreement shall be supplemental to the principal agreement hereinbefore mentioned or any extension, amendment or renewal thereof as to cars provided for herein for a term of twelve and one-half (121⁄2) years from the date each new-type lightweight car is placed in revenue service; PROVIDED, however, that upon the expiration of the said principal agreement on December 31, 1939, in the event it is not extended, renewed, or a new agreement is not entered into in place thereof which will otherwise include the terms under which these cars are to be operated, the Railroad Company shall have the right to acquire the full ownership of the cars, free from encumbrance, by payment to The Pullman Company of the agreed cost of Eighty Thousand Dollars ($80,000) per car, less

(a) Depreciation at the rate of eight per cent (8%) per annum from the time the cars were placed in operation until the date of such purchase: and (b) Any sums that the Railroad Company may have previously paid in excess of its monthly obligations for "Excess Construction Cost", as provided for in Article IV;

and upon such acquisition of full ownership by the Railroad Company this agree ment shall terminate except the provisions of the next succeeding paragraph hereof.

It is agreed that in the event the Railroad Company shall so acquire full ownership it shall have the right to operate the cars so acquired on its own lines and in through service over the lines of connecting railroads under such arrangements as it shall make with such connections. It is understood that in such event cars furnished by The Pullman Company to such connecting railroads under agreement with them may, while said new-type lightweight cars are so operated in through service, be operated over the lines of the Railroad Company in through service for a mileage equivalent to the mileage made by new-type lightweight cars so owned by the Railroad Company on the lines of such connecting railroads in through service; each company shall be entitled to all the revenue from the sale of seats,

berths and other accommodations on the new-type lightweight cars of the Railroad Company and on the cars of The Pullman Company earned on its respective territory and settlement as between the Railroad Company and The Pullman Company shall be made at the close of each month.

If upon expiration of the said principal agreement in case it is not extended, renewed, or a new agreement is not entered into in place thereof which will otherwise include the terms under which the new-type lightweight cars are to be operated and the Railroad Company does not acquire ownership of the new-type lightweight cars covered by this agreement under conditions provided for in the first paragraph of this Article, it is agreed between the parties hereto that during the remaining term of this agreement the new-type lightweight cars shall be used and operated in sleeping car service under the conditions of Article IV of this agreement and the terms of the principal agreement, except that in lieu of the provisions of Sections 1 to 10, both inclusive, of Article IV of the principal agreement, The Pullman Company shall pay to the Railroad Company at the close of each contract year one-half (1⁄2) of the earnings from the sale of seats, berths, and other accommodations in the new-eype lightweight cars in excess of The Pullman Company's "Expenses of Operation" (ascertained as provided for in the principal agreement except as to the depreciation on cars which will be computed at the rate of five per cent (5%) per annum on the agreed cost of Thirty-one Thousand Dollars ($31,000.00) per car) plus an initial return of five per cent (5%) per annum on said agreed cost of present-type standard sleeping cars as to each new-type lightweight car.

IN WINESS WHEREOF the parties hereto have caused this agreement to be executed in duplicate as of the date first herein written.

What would you gentlemen think of providing in a contract with the granger group of roads, in response to their insistent demand for an “out” in case they cannot agree with us on the basis for furnishing new-type cars, that if such mutual agreement cannot be reached, the railroad shall have the right to cancel the principal agreement on six months' notice and upon payment of the unamortized part of air conditioning or other betterments installed in Pullman cars assigned to operation on the lines of that railroad, upon their request for such betterments.

I think any sort of half and half operation, with the roads providing new-type cars or getting them from some source other than Pullman, leaving the Pullman pool to supply the sleeping car service on the remainder of that railroad's lines, would not be a workable plan or one that Pullman should be willing to undertake. I think that if a road wants to have the benefits of the Pullman pool, access to extra cars, etc., it should stay in the pool and turn all of its sleeping-car business over to the pool. If they want to have the benefit of new-type individually controlled sleeping cars, that would in effect compete with the Pullman pool, they should not expect to have the benefits of the pocl. It seems to me that a provision that Pullman will furnish cars of new types, other than the existing standard types, if mutually agreeable provision therefor can be made with due regard to the type of car desired, the construction and operating costs thereof, and the traffic available therefor, and if such mutually agreeable basis cannot be reached, then the railroad can and will have to withdraw entirely from the Pullman pool, would be quite a powerful inducement to the road to reach an agreement with Pullman on any new-type cars that they wish and whose operation can be justified on the traffic available or on the traffic volume that would be guaranteed by the railroad. An arrangement of this kind would preserve the historic character of the Pullman pool, as furnishing all of the service required by participating roads

(ignoring such departures from that principle as are exhibited by the St. Paul and Great Northern cases, where they are left to operate a remnant of a preexisting service).

I wish you would try your hand at drafting a provision of this kind. It would be desirable if we could state in such a provision the general basis upon which new-type cars would be furnished, but in the present state of knowledge, or rather lack of knowledge, as to what sort of new types might be required, what the costs would be or what revenue would be available, it makes the statement of a basis very difficult. I think we might properly say in a supplemental letter just what our present ideas are as to the basis on which Pullman could properly furnish new-type cars, by lots or lines. My idea is that we could say that it is our idea that the Pullman pool seeking to serve all the railroads with all their requirements for sleeping cars shall continue to furnish equipment that will maintain the competitive position of the roads. This does not mean, of course, that each road will get the same contract revenue basis as all other roads, without regard to the character and amount of the traffic it puts in the Pullman cars. The road with thin traffic generally, desiring to put special-type cars on particular thin earning lines, may expect to have to pay something, in the shape of mileage or annual revenue guarantee, that will justify the Pullman investment in the new equipment required.

I suggest that Mr. Taylor try his hand at drafting a contract provision that will contain the mutual agreement clause on new equipment and the alternative of cancellation of principal agreement with payment for unamortized betterments made at the railroad's request. In our covering letter I think we can properly state the business principles that will govern Pullman in negotiating the proposed supplemental agreements for new-type equipment that may be desired by the railroads. D. A. CRAWFORD.

Mr. CHAMP CARRY:

EXHIBIT No. 331

CHICAGO, January 7, 1939.

Referring to your memorandum of January 6th.

Apparently we are all in agreement on action to take in connection with the Burlington inquiry as to what we propose to do about a new contract and their possible interest in some new-type sleeping cars or modernized present-type equipment. With that being the case, I concur in your proposal to open up discussion of the matter with Mr. Gurley.

I assume with Mr. Taylor's memorandum to me of January 3rd (copy of which you received) you also received copy of his draft of 12-31-38 for a proposed new operating agreement with the Burlington.

It seems to me that the objection expressed in Mr. Taylor's memorandum of January 3rd, to giving the Railroad a 5-year call on new-type lightweight equipment, does not take into account that the call can only be made good by mutual agreement. It is true that we would probably be fixed as to the terms in case we had no other reason for not making the mutual agreement mentioned in Section 3 of Article I, but the fact remains that the Burlington is asking us now on what basis we would furnish new-type sleepers and I do not think we ought to hesitate to say what that basis will be. The opening up of this matter with the Burlington may bring up pretty promptly what, if anything, we want to say and do in the way of a partial service arrangement provided the Burlington wanted to get some more Budd-built sleepers to put in on another line, in addition to those now in the Denver line by especial agreement. You know the status of opinion that has thus far been developed here in connection with the question of partial service, and you probably ought to get a definite conclusion of the General Contract Committee before you are faced with the issue on the Burlington.

D. A. CRAWFORD.

P. S.-With the mutual agreement provision in I would think that we would always be in position to ask for a new deal on lightweight car terms if the situation should have changed materially and the terms outlined in the principal agreement had become unacceptable to either party.

D. A. C.