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1993
STOCK OPTION AND RETENTION STOCK PLAN
OF
UNION PACIFIC CORPORATION
(EFFECTIVE APRIL 16, 1993 -
AS AMENDED SEPTEMBER 30, 1993,
JULY 28, 1994, APRIL 24, 1997,
NOVEMBER 20, 1997, SEPTEMBER 24, 1998, MAY 27, 1999,
MAY 25, 2000, NOVEMBER 16, 2000 AND JANUARY 25, 2001)
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1993 STOCK OPTION AND RETENTION STOCK PLAN
OF UNION PACIFIC CORPORATION
1. PURPOSE
The purpose of the 1993 Stock Option and Retention Stock Plan of Union
Pacific Corporation is to promote and closely align the interests of employees
of Union Pacific Corporation and its shareholders by providing stock based
compensation. The Plan is intended to strengthen Union Pacific Corporation's
ability to reward performance which enhances long term shareholder value; to
increase employee stock ownership through performance based compensation plans;
and to strengthen the company's ability to attract and retain an outstanding
employee and executive team.
2. DEFINITIONS
The following terms shall have the following meanings:
"Act" means the Securities Exchange Act of 1934, as amended.
"Affiliate" shall have the meaning set forth in Rule 12b-2 under
Section 12 of the Act.
"Approved Leave of Absence" means a leave of absence of definite length
approved by the Senior Vice President - Human Resources of the Company, or by
any other officer of the Company to whom the Committee delegates such authority.
"Award" means an award of Retention Shares or Stock Units pursuant to
the Plan.
"Beneficial Owner" shall have the meaning set forth in Rule 13d-3 under
the Act.
"Beneficiary" means any person or persons designated in writing by a
Participant to the Committee on a form prescribed by it for that purpose, which
designation shall be revocable at any time by the Participant prior to his or
her death, provided that, in the absence of such a designation or the failure of
the person or persons so designated to survive the Participant, "Beneficiary"
shall mean such Participant's estate; and further provided that no designation
of Beneficiary shall be effective unless it is received by the Company before
the Participant's death.
"Board" means the Board of Directors of the Company.
"Change in Control" means the occurrence of any one of the following:
(i) any Person is or becomes the Beneficial Owner, directly or indirectly,
of securities of the Company (not including in the securities
beneficially owned by such Person any securities acquired directly from
the Company or its Affiliates) representing 20% or more of the combined
voting power of the Company's then outstanding securities, excluding
any Person who becomes such a Beneficial Owner in connection with a
transaction described in clause (A) of paragraph (iii) below; or
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(ii) the following individuals cease for any reason to constitute a majority
of the number of directors then serving: individuals who, on November
16, 2000, constitute the Board and any new director (other than a
director whose initial assumption of office is in connection with an
actual or threatened election contest, including but not limited to a
consent solicitation, relating to the election of directors of the
Company) whose appointment or election by the Board or nomination for
election by the Company's shareholders was approved or recommended by a
vote of at least two-thirds (2/3) of the directors then still in office
who either were directors on the date hereof or whose appointment,
election or nomination for election was previously so approved or
recommended; or
(iii) there is consummated a merger or consolidation of the Company or any
direct or indirect subsidiary of the Company with any other
corporation, other than (A) a merger or consolidation which would
result in the voting securities of the Company outstanding immediately
prior to such merger or consolidation continuing to represent (either
by remaining outstanding or by being converted into voting securities
of the surviving entity or any parent thereof) more than 50% of the
combined voting power of the securities of the Company or such
surviving entity or any parent thereof outstanding immediately after
such merger or consolidation or (B) a merger or consolidation effected
to implement a recapitalization of the Company (or similar transaction)
in which no Person is or becomes the Beneficial Owner, directly or
indirectly, of securities of the Company (not including in the
securities Beneficially Owned by such Person any securities acquired
directly from the Company or its Affiliates) representing 20% or more
of the combined voting power of the Company's then outstanding
securities; or
(iv) the shareholders of the Company approve a plan of complete liquidation
or dissolution of the Company or there is consummated an agreement for
the sale or disposition by the Company of all or substantially all of
the Company's assets, other than a sale or disposition by the Company
of all or substantially all of the Company's assets to an entity, more
than 50% of the combined voting power of the voting securities of which
is owned by shareholders of the Company in substantially the same
proportions as their ownership of the Company immediately prior to such
sale.
"Code" means the Internal Revenue Code of 1986, as amended, or the
corresponding provisions of any successor statute.
"Committee" means the Committee designated by the Board to administer
the Plan pursuant to Section 3.
"Common Stock" means the Common Stock, par value $2.50 per share, of
the Company.
"Company" means Union Pacific Corporation, a Utah corporation, or any
successor corporation.
"Option" means each non-qualified stock option, incentive stock option
and stock appreciation right granted under the Plan.
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"Optionee" means any employee of the Company or a Subsidiary (including
directors who are also such employees) who is granted an Option under the Plan.
"Participant" means any employee of the Company or a Subsidiary
(including directors who are also such employees) who is granted an Award under
the Plan.
"Person" shall have the meaning given in Section 3(a)(9) of the Act, as
modified and used in Sections 13(d) and 14(d) thereof, except that such term
shall not include (i) the Company or any of its Affiliates, (ii) a trustee or
other fiduciary holding securities under an employee benefit plan of the Company
or any of its subsidiaries, (iii) an underwriter temporarily holding securities
pursuant to an offering of such securities or (iv) a corporation owned, directly
or indirectly, by the shareholders of the Company in substantially the same
proportions as their ownership of stock of the Company.
"Plan" means this 1993 Stock Option and Retention Stock Plan, as
amended from time to time.
"Retention Shares" means shares of Common Stock subject to an Award
granted under the Plan.
"Restriction Period" means the period defined in Section 9(a).
"Stock Unit" means the right to receive in the future a share of Common
Stock.
"Subsidiary" means any corporation of which the Company owns directly
or indirectly at least a majority of the outstanding shares of voting stock.
"Unit Restriction Period" means the period defined in Section 10.
"Unit Vesting Condition" means any condition to the vesting of Stock
Units established by the Committee pursuant to Section 10.
"Vesting Condition" means any condition to the vesting of Retention
Shares established by the Committee pursuant to Section 9.
3. ADMINISTRATION
The Plan shall be administered by the Committee, which shall be
comprised of not less than three members of the Board, none of whom shall be
employees of the Company or any Subsidiary. The Committee shall (i) grant
Options to Optionees and make Awards of Retention Shares and Stock Units to
Participants, and (ii) determine the terms and conditions of such Options and
Awards of Retention Shares and Stock Units, all in accordance with the
provisions of the Plan. The Committee shall have full authority to construe and
interpret the Plan, to establish, amend and rescind rules and regulations
relating to the Plan, to administer the Plan, and to take all such steps and
make all such determinations in connection with the Plan and Options and Awards
granted thereunder as it may deem necessary or advisable. Each Option and grant
of Retention Shares or Stock Units shall, if required by the Committee, be
evidenced by an
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agreement to be executed by the Company and the Optionee or Participant,
respectively, and contain provisions not inconsistent with the Plan. All
determinations of the Committee shall be by a majority of its members and shall
be evidenced by resolution, written consent or other appropriate action, and the
Committee's determinations shall be final. Each member of the Committee, while
serving as such, shall be considered to be acting in his or her capacity as a
director of the Company.
4. ELIGIBILITY
To be eligible for selection by the Committee to participate in the
Plan an individual must be an employee of the Company or a Subsidiary. Directors
who are not full-time salaried employees shall not be eligible. In granting
Options or Awards of Retention Shares or Stock Units to eligible employees, the
Committee shall take into account the duties of the respective employees, their
present and potential contributions to the success of the Company or a
Subsidiary, and such other factors as the Committee shall deem relevant in
connection with accomplishing the purpose of the Plan.
5. STOCK SUBJECT TO THE PLAN
Subject to the provisions of Section 13 hereof, the maximum number and
kind of shares as to which Options, or Retention Shares or Stock Units may at
any time be granted under the Plan are 16 million shares of Common Stock. Shares
of Common Stock subject to Options or Awards under the Plan may be either
authorized but unissued shares or shares previously issued and reacquired by the
Company. Upon the expiration, termination or cancellation (in whole or in part)
of unexercised Options, shares of Common Stock subject thereto shall again be
available for option or grant as Retention Shares or Stock Units under the Plan.
Shares of Common Stock covered by an Option, or portion thereof, which is
surrendered upon the exercise of a stock appreciation right, shall thereafter be
unavailable for option or grant as Retention Shares or Stock Units under the
Plan. Upon the forfeiture (in whole or in part) of a grant of Retention Shares
or Stock Units, the shares of Common Stock subject to such forfeiture shall
again be available for option or grant as Retention Shares or Stock Units under
the Plan if no dividends have been paid on the forfeited shares, and otherwise
shall be unavailable for such an option or grant.
6. TERMS AND CONDITIONS OF NON-QUALIFIED OPTIONS
All non-qualified options under the Plan shall be granted subject to
the following terms and conditions:
a. Option Price. The option price per share with respect to each option
shall be determined by the Committee but shall not be less than 100% of the fair
market value of the Common Stock on the date the option is granted, such fair
market value to be determined in accordance with the procedures to be
established by the Committee.
b. Duration of Options. Options shall be exercisable at such time or
times and under such conditions as set forth in the written agreement evidencing
such option, but in no event
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shall any option be exercisable subsequent to the tenth anniversary of the date
on which the option is granted.
c. Exercise of Option. Except as provided in Section 6(h), 6(i), 8(c)
or 8(d), the shares of Common Stock covered by an option may not be purchased
prior to the first anniversary of the date on which the option is granted
(unless the Committee shall determine otherwise), or such longer period or
periods, and subject to such conditions, as the Committee may determine, but
thereafter may be purchased at one time or in such installments over the balance
of the option period as may be provided in the option. Any shares not purchased
on the applicable installment date may, unless the Committee shall have
determined otherwise, be purchased thereafter at any time prior to the final
expiration of the option. To the extent that the right to purchase shares has
accrued thereunder, options may be exercised from time to time by notice to the
Company stating the number of shares with respect to which the option is being
exercised.
d. Payment. Shares of Common Stock purchased under options shall, at
the time of purchase, be paid for in full. All, or any portion, of the option
exercise price may, at the discretion of the Committee, be paid by the surrender
to the Company, at the time of exercise, of shares of previously acquired Common
Stock owned by the Optionee, to the extent that such payment does not require
the surrender of a fractional share of such previously acquired Common Stock. In
addition, to the extent permitted by the Committee, the option exercise price
may be paid by authorizing the Company to withhold Common Stock otherwise
issuable on exercise of the option. Such shares previously acquired or shares
withheld to pay the option exercise price shall be valued at fair market value
on the date the option is exercised in accordance with the procedures to be
established by the Committee. A holder of an option shall have none of the
rights of a stockholder until the shares of Common Stock are issued to him or
her. If an amount is payable by an Optionee to the Company or a Subsidiary under
applicable withholding tax laws in connection with the exercise of non-qualified
options, the Committee may, in its discretion and subject to such rules as it
may adopt, permit the Optionee to make such payment, in whole or in part, by
electing to authorize the Company to withhold or accept shares of Common Stock
having a fair market value equal to the amount to be paid under such withholding
tax laws.
e. Restrictions. The Committee shall determine, with respect to each
option, the nature and extent of the restrictions, if any, to be imposed on the
shares of Common Stock that may be purchased thereunder including restrictions
on the transferability of such shares acquired through the exercise of such
option. Without limiting the generality of the foregoing, the Committee may
impose conditions restricting absolutely or conditionally the transferability of
shares acquired through the exercise of options for such periods, and subject to
such conditions, including continued employment of the Optionee by the Company
or a Subsidiary, as the Committee may determine.
f. Purchase for Investment. The Committee shall have the right to
require that each Optionee or other person who shall exercise an option under
the Plan represent and agree that any shares of Common Stock purchased pursuant
to such option will be purchased for investment and not with a view to the
distribution or resale thereof or that such shares will not be
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sold except in accordance with such restrictions or limitations as may be set
forth in the written agreement granting such option.
g. Non-Transferability of Options. During an Optionee's lifetime, the
option may be exercised only by the Optionee. Options shall not be transferable,
except for exercise by the Optionee's legal representatives or heirs.
h. Termination of Employment. Upon the termination of an Optionee's
employment for any reason other than death, then, except as provided below, the
option shall be exercisable only as to those shares of Common Stock which were
then subject to the exercise of such option (provided that the Committee may
determine that particular limitations and restrictions under the Plan shall not
apply) and such option shall expire according to the following schedule (unless
the Committee shall provide for shorter periods at the time the option is
granted):
(i) Retirement. Option shall expire, unless exercised,
five (5) years after the Optionee's retirement from
the Company or any Subsidiary under the provisions of
the Company's or a Subsidiary's pension plan.
(ii) Disability. Any holding period required by Section
6(c) shall automatically be deemed to be satisfied
and Option shall expire, unless exercised, five (5)
years after the date the Optionee is eligible to
receive disability benefits under the provisions of
the Company's or a Subsidiary's long-term disability
plan.
(iii) Disposition of Business. In the case of a termination
resulting from the disposition by the Company or any
of its Subsidiaries of all or a part of its interest
in, or the discontinuance of a business of, a
subsidiary, division or other business unit, unvested
options shall not be forfeited, but any holding
period required by Section 6(c) shall be satisfied in
accordance with its original schedule (including any
holding period associated with an option that becomes
a non-qualified option in accordance with Section
8(c)) and Option shall expire, unless exercised, five
(5) years after the date of termination;
(iv) Force Reduction Program. In the case of a termination
(other than retirement) resulting from a force
reduction program instituted by the Company or any of
its Subsidiaries, the Option shall expire, unless
exercised, three (3) years from the date of
termination.
(v) Gross Misconduct. Option shall expire upon receipt by
the Optionee of the notice of termination if he or
she is terminated for deliberate, willful or gross
misconduct as determined by the Company.
(vi) Change in Control. In the event an Optionee's
employment is involuntarily terminated by the Company
(other than termination as a result of disability or
gross misconduct, but including a termination
described in subsection (iii) and (iv) above) within
two years following a
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Change in Control all options shall become fully
vested and the option shall remain exercisable for a
period of three (3) years following such termination
(or five (5) years following such termination in the
case of a termination described in Subsection (i),
(iii) or (iv) above) but in no event after the
expiration of the option, and the option shall expire
thereafter.
(vii) All Other Terminations. Option shall expire, unless
exercised, three (3) months after the date of such
termination.
i. Death of Optionee. Upon the death of an Optionee during his or her
period of employment, the option shall be exercisable only as to those shares of
Common Stock which were subject to the exercise of such option at the time of
his or her death, provided that (i) any holding period required by Section 6(c)
shall automatically be deemed to be satisfied and (ii) the Committee may
determine that particular limitations and restrictions under the Plan shall not
apply, and such option shall expire, unless exercised by the Optionee's legal
representatives or heirs, five (5) years after the date of death (unless the
Committee shall provide for a shorter period at the time the option is granted).
j. Deferral. The Committee may permit an Optionee to elect to defer
receipt of all or part of the Common Stock issuable upon the exercise of an
option, pursuant to rules and regulations adopted by the Committee. The
Committee may not permit the payment of cash in lieu of Common Stock upon
payment of the deferred amount.
In no event, however, shall any option be exercisable pursuant to Sections 6(h)
or (i) subsequent to the tenth anniversary of the date on which it is granted.
7. TERMS AND CONDITIONS OF STOCK APPRECIATION RIGHTS
a. General. The Committee may also grant a stock appreciation right in
connection with a non-qualified option, either at the time of grant or by
amendment. Such stock appreciation right shall cover the same shares covered by
such option (or such lesser number of shares of Common Stock as the Committee
may determine) and shall, except for the provisions of Section 6(d) hereof, be
subject to the same terms and conditions as the related non-qualified option.
b. Exercise and Payment. Each stock appreciation right shall entitle
the Optionee to surrender to the Company unexercised the related option, or any
portion thereof, and to receive from the Company in exchange therefor an amount
equal to the excess of the fair market value of one share of Common Stock over
the option price per share times the number of shares covered by the option, or
portion thereof, which is surrendered. Payment shall be made in shares of Common
Stock valued at fair market value, or in cash, or partly in shares and partly in
cash, all as shall be determined by the Committee. The fair market value shall
be the value determined in accordance with procedures established by the
Committee. Stock appreciation rights may be exercised from time to time upon
actual receipt by the Company of written notice stating the number of shares of
Common Stock with respect to which the stock appreciation right is being
exercised, provided that if a stock appreciation right expires unexercised, it
shall be deemed exercised on the expiration date if any amount would be payable
with respect thereto. No
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fractional shares shall be issued but instead cash shall be paid for a fraction
or, if the Committee should so determine, the number of shares shall be rounded
downward to the next whole share. If an amount is payable by an Optionee to the
Company or a Subsidiary under applicable withholding tax laws in connection with
the exercise of stock appreciation rights, the Committee may, in its discretion
and subject to such rules as it may adopt, permit the Optionee to make such
payment, in whole or in part, by electing to authorize the Company to withhold
or accept shares of Common Stock having a fair market value equal to the amount
to be paid under such withholding tax laws.
c. Restrictions. The obligation of the Company to satisfy any stock
appreciation right exercised by an Optionee subject to Section 16 of the Act
shall be conditioned upon the prior receipt by the Company of an opinion of
counsel to the Company that any such satisfaction will not create an obligation
on the part of such Optionee pursuant to Section 16(b) of the Act to reimburse
the Company for any statutory profit which might be held to result from such
satisfaction.
8. TERMS AND CONDITIONS OF INCENTIVE STOCK OPTIONS.
a. General. The Committee may also grant incentive stock options as
defined under Section 422 of the Code. All incentive stock options issued under
the Plan shall, except for the provisions of Sections 6(h) and (i) and Section 7
hereof, be subject to the same terms and conditions as the non-qualified options
granted under the Plan. In addition, incentive stock options shall be subject to
the conditions of Sections 8(b), (c), (d) and (e).
b. Limitation of Exercise. The aggregate fair market value (determined
as of the date the incentive stock option is granted) of the shares of stock
with respect to which incentive stock options are exercisable for the first time
by such Optionee during any calendar year, under this Plan or any other stock
option plans adopted by the Company, its Subsidiaries or any predecessor
companies thereof, shall not exceed $100,000. If any incentive stock options
become exercisable in any year in excess of the $100,000 limitation, options
representing such excess shall become non-qualified options exercisable pursuant
to the terms of Section 6 hereof and shall not be exercisable as incentive stock
options.
c. Termination of Employment. Upon the termination of an Optionee's
employment, for any reason other than death, his or her incentive stock option
shall be exercisable only as to those shares of Common Stock which were then
subject to the exercise of such option except as provided below (provided that
the Committee may determine that particular limitations and restrictions under
the Plan shall not apply) and such option shall expire as an incentive stock
option according to the following schedule (unless the Committee shall provide
for shorter periods at the time the incentive stock option is granted) but
shall, in all cases other than 8(c)(iii) and 8(c)(iv), at the end of the period
referred to below become a non-qualified option exercisable pursuant to the
terms of Section 6 hereof (including Sections 6(h) and (i)) less the period
already elapsed under such Section:
(i) Retirement. An incentive stock option shall expire,
unless exercised, three (3) months after the
Optionee's retirement from the Company or any
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Subsidiary under the provisions of the Company's or a
Subsidiary's pension plan.
(ii) Disability. In the case of an Optionee who is
disabled within the meaning of Section 22(e)(3) of
the Code, any holding period required by Section 6(c)
shall automatically be deemed to be satisfied and an
incentive stock option shall expire, unless
exercised, one (1) year after the earlier of the date
the Optionee terminates employment or the date the
Optionee is eligible to receive disability benefits
under the provisions of the Company's or a
Subsidiary's long-term disability plan.
(iii) Gross Misconduct. An incentive stock option shall
expire upon receipt by the Optionee of the notice of
termination if he or she is terminated for
deliberate, willful or gross misconduct as determined
by the Company.
(iv) All Other Terminations. An incentive stock option
shall expire, unless exercised, three (3) months
after the date of such termination.
d. Incentive Stock Options Granted On and After May 25, 2000. In the
case of an incentive stock option granted on or after May 25, 2000, the
following additional provisions shall apply:
(i) Disposition of Business. Subject to Section 8(e), in
the case of a termination resulting from the
disposition by the Company or any of its Subsidiaries
of all or a part of its interest in, or the
discontinuance of a business of, a subsidiary,
division or other business unit, unvested options
shall not be forfeited, but any holding period
required by Section 6(c) shall be satisfied in
accordance with its original schedule and the Option
shall expire, unless exercised, three (3) months
after the date of termination, but shall at the end
of such three month period become a non-qualified
option exercisable pursuant to the terms of Section 6
hereof (including Section 6(h)(iii), less the period
already elapsed hereunder);
(ii) Force Reduction Program. Subject to Section 8(e), in
the case of a termination (other than retirement)
resulting from a force reduction program instituted
by the Company or any of its Subsidiaries, the Option
shall expire, unless exercised, three (3) months
after the date of termination, but shall at the end
of such three (3) month period become a non-qualified
option exercisable pursuant to the terms of Section 6
hereof (including Section 6(h)(iv), less the period
already elapsed hereunder).
e. Additional Provisions Regarding Incentive Stock Options Granted On
Or After November 16, 2000. In the case of an incentive stock option granted on
or after November 16, 2000, the following additional provisions shall apply:
In the event an Optionee's employment is involuntarily terminated by
the Company (other than termination as a result of disability or gross
misconduct, but including a
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termination described in subsections (d)(i) or (d)(ii) above) within
two years following a Change in Control, all options shall become fully
vested and the option shall remain exercisable for a period of three
(3) months following such termination (but in no event after the
expiration of the option) and shall at the end of such three (3) month
period become a non-qualified option exercisable pursuant to the terms
of Section 6 hereof (including Section 6(h)(vii), less the period
already elapsed hereunder).
f. Additional Provisions Regarding Certain Incentive Stock Options
Granted Before May 25, 2000. In the case of an incentive stock option granted
before May 25, 2000, the following additional provisions shall apply:
(i) Disposition of Business. In the case of incentive
stock options granted after September 24, 1998 and
before May 25, 2000, in the event that a termination
results from the disposition by the Company of all or
a part of its interest in, or the discontinuance of
the business of, a subsidiary, division or other
business unit of the Company, the Committee may
extend the period during which an incentive stock
option may be exercised as a non-qualified option to
up to five (5) years from the date of such
termination.
(ii) Other Terminations. In the case of incentive stock
options granted after April 24, 1997 and before May
25, 2000, the Committee may extend the period during
which an incentive stock option may be exercised as a
non-qualified stock option to up to three (3) years
from the date of a termination not due to retirement,
disability or gross misconduct or, if later, three
(3) years from the date the option becomes
exercisable but not more than five years after the
date of such termination.
g. Death of Optionee. Upon the death of an Optionee during his or her
period of employment, the incentive stock option shall be exercisable as an
incentive stock option only as to those shares of Common Stock which were
subject to the exercise of such option at the time of death, provided that (i)
any holding period required by Section 6(c) shall automatically be deemed to be
satisfied, and (ii) the Committee may determine that particular limitations and
restrictions under the Plan shall not apply, and such option shall expire,
unless exercised by the Optionee's legal representatives or heirs, five (5)
years after the date of death (unless the Committee shall provide for a shorter
period at the time the option is granted).
h. Leave of Absence. A leave of absence, whether or not an Approved
Leave of Absence, shall be deemed a termination of employment for purposes of
Section 8.
In no event, however, shall any incentive stock option be exercisable pursuant
to Sections 8(c) or (d) subsequent to the tenth anniversary of the date on which
it was granted.
9. TERMS AND CONDITIONS OF AWARDS OF RETENTION STOCK
a. General. Retention Shares may be granted only to reward the
attainment of individual, Company or Subsidiary goals, or to attract or retain
officers or other employees of the
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Company or any Subsidiary, and shall be granted subject to the attainment of
performance goals unless the Committee shall determine otherwise. With respect
to each grant of Retention Shares under the Plan, the Committee shall determine
the period or periods, including any conditions for determining such period or
periods, during which the restrictions set forth in Section 9(b) shall apply,
provided that in no event, other than as provided in Section 9(c) or in the next
sentence, shall such restrictions terminate prior to 3 years after the date of
grant (the "Restriction Period"), and may also specify any other terms or
conditions to the right of the Participant to receive such Retention Shares
("Vesting Conditions"). The Committee may determine in its sole discretion to
waive any or all of such restrictions prior to end of the Restriction Period or
the satisfaction of any Vesting Condition. Subject to Section 9(c) and any such
Vesting Condition, a grant of Retention Shares shall be effective for the
Restriction Period and may not be revoked; provided, however, in the event of a
Change in Control of the Company (i) with respect to Retention Shares (other
than Retention Shares granted pursuant to the Executive Incentive Premium
Exchange Program ("PEP Plan") or the 2001 Long Term Plan (the "LTP")), the
Restricted Period shall end with respect to that number of such Retention Shares
calculated by multiplying such Retention Shares by the fraction obtained by
dividing the number of full months during such Restricted Period through the
date of such Change in Control by the total number of months contained in such
Restricted Period (determined without regard to this proviso), (ii) with respect
to Retention Shares granted to such Participant pursuant to the PEP Plan, the
Restricted Period shall end with respect to that number of such Retention Shares
equal to (x) that number of such Retention Shares with a fair market value (as
of the date of grant) equal to the amount of incentive award such Participant
elected to forego in exchange for such Retention Shares (the "Original Retention
Shares"), and (y) number of Retention Shares which the Participant received as a
premium under the PEP Plan (the "Premium Retention Shares") calculated by
multiplying such Premium Retention Shares by the fraction obtained by dividing
the number of full months during such Restricted Period through the date of such
Change in Control by the total number of months contained in such Restricted
Period, and (iii) Retention Shares granted to such Participant pursuant to the
LTP shall be subject to the terms of the applicable agreement issued under the
LTP. In the event a payment becomes due, the Committee may, in its sole
discretion, elect to make such payment either in cash, in shares of Common
Stock, in shares of equity securities of the entity (or its parent) resulting
from such Change in Control or in any combination of the foregoing.
b. Restrictions. At the time of grant of Retention Shares to a
Participant, a certificate representing the number of shares of Common Stock
granted shall be registered in the Participant's name but shall be held by the
Company for his or her account. The Participant shall have the entire beneficial
ownership interest in, and all rights and privileges of a stockholder as to,
such Retention Shares, including the right to vote such Retention Shares and,
unless the Committee shall determine otherwise, the right to receive dividends
thereon, subject to the following: (i) subject to Section 9(c), the Participant
shall not be entitled to delivery of the stock certificate until the expiration
of the Restriction Period and the satisfaction of any Vesting Conditions; (ii)
none of the Retention Shares may be sold, transferred, assigned, pledged, or
otherwise encumbered or disposed of during the Restriction Period or prior to
the satisfaction of any Vesting Conditions; and (iii) all of the Retention
Shares shall be forfeited and all rights of the Participant to such Retention
Shares shall terminate without further obligation on the part of the Company
unless the Participant remains in the continuous employment of the Company or a
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Subsidiary for the entire Restriction Period, except as provided by Sections
9(a) and 9(c), and any applicable Vesting Conditions have been satisfied. Any
shares of Common Stock or other securities or property received as a result of a
transaction listed in Section 13 shall be subject to the same restrictions as
such Retention Shares unless the Committee shall determine otherwise.
c. Termination of Employment.
(i) Disability and Retirement. Unless the Committee shall
determine otherwise at the time of grant of Retention
Shares, if (A) a Participant ceases to be an employee
of the Company or a Subsidiary prior to the end of a
Restriction Period, by reason of disability under the
provisions of the Company's or a Subsidiary's
long-term disability plan or retirement under the
provisions of the Company's or a Subsidiary's pension
plan either (i) at age 65 or (ii) prior to age 65 at
the request of the Company or a Subsidiary, and (B)
all Vesting Conditions have been satisfied, the
Retention Shares granted to such Participant shall
immediately vest and all restrictions applicable to
such shares shall lapse. A certificate for such
shares shall be delivered to the Participant in
accordance with the provisions of Section 9(d).
(ii) Death. Unless the Committee shall determine otherwise
at the time of grant of Retention Shares, if (A) a
Participant ceases to be an employee of the Company
or a Subsidiary prior to the end of a Restriction
Period by reason of death, and (B) all Vesting
Conditions have been satisfied, the Retention Shares
granted to such Participant shall immediately vest in
his or her Beneficiary, and all restrictions
applicable to such shares shall lapse. A certificate
for such shares shall be delivered to the
Participant's Beneficiary in accordance with the
provisions of Section 9(d).
(iii) All Other Terminations. If a Participant ceases to be
an employee of the Company or a Subsidiary prior to
the end of a Restriction Period for any reason other
than death, disability or retirement as provided in
Section 9(c)(i) and (ii) or a termination pursuant to
Section 9(c)(v), the Participant shall immediately
forfeit all Retention Shares then subject to the
restrictions of Section 9(b) in accordance with the
provisions thereof, except that the Committee may, if
it finds that the circumstances in the particular
case so warrant, allow a Participant whose employment
has so terminated to retain any or all of the
Retention Shares then subject to the restrictions of
Section 9(b) and all restrictions applicable to such
retained shares shall lapse. A certificate for such
retained shares shall be delivered to the Participant
in accordance with the provisions of Section 9(d).
(iv) Vesting Conditions. Unless the Committee shall
determine otherwise at the time of grant of Retention
Shares, if a Participant ceases to be an employee of
the Company for any reason prior to the satisfaction
of any Vesting Conditions, the Participant shall
immediately forfeit all Retention Shares then subject
to the restrictions of Section 9(b) in accordance
with
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the provisions thereof, except that the Committee
may, if it finds that the circumstances in the
particular case so warrant, allow a Participant whose
employment has so terminated to retain any or all of
the Retention Shares then subject to the restrictions
of Section 9(b) and all restrictions applicable to
such retained shares shall lapse. A certificate for
such retained shares shall be delivered to the
Participant in accordance with the provisions of
Section 9(d).
(v) Change in Control. In the event a Participant's
employment is involuntarily terminated by the Company
(other than a termination as a result of death,
disability, retirement or gross misconduct) within
two years following a Change in Control, the
remaining restrictions with respect to all Original
Retention Shares and all Premium Retention Shares
shall lapse and the Committee may, in its sole
discretion, elect to make such payment either in
cash, in shares of Common Stock, in shares of equity
securities of the entity (or its parent) resulting
from such Change in Control or in any combination of
the foregoing.
d. Payment of Retention Shares. At the end of the Restriction Period
and after all Vesting Conditions have been satisfied, or at such earlier time as
provided for in Section 9(c) or as the Committee, in its sole discretion, may
otherwise determine, all restrictions applicable to the Retention Shares shall
lapse, and a stock certificate for a number of shares of Common Stock equal to
the number of Retention Shares, free of all restrictions, shall be delivered to
the Participant or his or her Beneficiary, as the case may be. If an amount is
payable by a Participant to the Company or a Subsidiary under applicable
withholding tax laws in connection with the lapse of such restrictions, the
Committee, in its sole discretion, may permit the Participant to make such
payment, in whole or in part, by authorizing the Company to transfer to the
Company Retention Shares otherwise deliverable to the Participant having a fair
market value equal to the amount to be paid under such withholding tax laws.
e. Deferral. The Committee may permit a Participant to elect to defer
receipt of all or part of any Retention Shares that would otherwise be
delivered, pursuant to rules and regulations adopted by the Committee. The
Committee may permit the payment of cash in lieu of Common Stock upon payment of
the deferred amount.
10. STOCK UNITS
The Committee may also grant Awards of Stock Units under the Plan. The
vesting of Awards of Stock Units shall be subject to the requirement that a
Participant continue employment with the Company or a Subsidiary for a certain
period of no less than three years (the "Unit Restriction Period"), and may be
subject to the satisfaction of other conditions or contingencies ("Unit Vesting
Condition"), in order for a Participant to receive payment of such Award, as
established by the Committee at the time of the Award. The Committee may
determine in its sole discretion to waive any such requirement, condition or
contingency. Awards of Stock Units shall be payable in shares of Common Stock.
The Committee may permit a Participant to elect to defer receipt of payment of
all or part of any Award of Stock Units pursuant to rules and regulations
adopted by the Committee. Unless the Committee
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provides otherwise at the time an Award of Stock Units to a Participant is made,
the provisions of Section 9(c) of the Plan relating to the vesting and
forfeiture of Retention Stock upon termination of employment shall apply to any
termination of employment by such Participant during the Unit Restricted Period
or prior to the satisfaction of any Unit Vesting Condition for such Award.
11. DIVIDENDS AND DIVIDEND EQUIVALENTS
Any Option or Award of Stock Units may provide the Participant with the
right to receive dividend payments or dividend equivalent payments on the Common
Stock subject to the Option or Award, whether or not such Option or Award has
been exercised or is vested. Such payments may be made in cash or may be
credited to a Participant's account and later settled in cash or Common Stock or
a combination thereof, as determined by the Committee. Such payments and credits
may be subject to such conditions and contingencies as the Committee may
establish.
12. REGULATORY APPROVALS AND LISTING
The Company shall not be required to issue to an Optionee, Participant
or a Beneficiary, as the case may be, any certificate for any shares of Common
Stock upon exercise of an option or for any Retention Shares granted under the
Plan or to make any payment with respect to any Stock Unit granted under the
Plan prior to (i) the obtaining of any approval from any governmental agency
which the Company, in its sole discretion, shall determine to be necessary or
advisable, (ii) the admission of such shares to listing on any stock exchange on
which the Common Stock may then be listed, and (iii) the completion of any
registration or other qualification of such shares or units under any state or
federal law or rulings or regulations of any governmental body which the
Company, in its sole discretion, shall determine to be necessary or advisable.
13. ADJUSTMENT IN EVENT OF CHANGES IN CAPITALIZATION
In the event of a recapitalization, stock split, stock dividend,
combination or exchange of shares, merger, consolidation, rights offering,
separation, spin-off, reorganization or liquidation, or any other change in the
corporate structure or shares of the Company, the Board, upon recommendation of
the Committee, may make such equitable adjustments as it may deem appropriate in
the number and kind of shares and Stock Units authorized by the Plan, in the
option price of outstanding Options, and in the number and kind of shares, Stock
Units or other securities or property subject to Options or covered by
outstanding Awards.
14. TERM OF THE PLAN
No Options, or Retention Shares or Stock Units shall be granted
pursuant to the Plan after April 16, 2003, but grants of Options, or Retention
Shares or Stock Units theretofore granted may extend beyond that date and the
terms and conditions of the Plan shall continue to apply thereto.
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15. TERMINATION OR AMENDMENT OF THE PLAN
The Board may at any time terminate the Plan with respect to any shares
of Common Stock or Stock Units not at that time subject to outstanding Options
or Awards, and may from time to time alter or amend the Plan or any part thereof
(including, but without limiting the generality of the foregoing, any amendment
deemed necessary to ensure that the Company may obtain any approval referred to
in Section 12 or to ensure that the grant of Options or Awards, the exercise of
Options, the payment of Retention Shares or the payment with respect to Stock
Units or any other provision of the Plan complies with Section 16(b) of the
Act), provided that no change with respect to any Options, Retention Shares or
Stock Units theretofore granted may be made which would impair the rights of an
Optionee or Participant without the consent of such Optionee or Participant and,
further, that without the approval of stockholders, no alteration or amendment
may be made which would (i) increase the maximum number of shares of Common
Stock and Stock Units subject to the Plan as set forth in Section 5 (except by
operation of Section 13), (ii) extend the term of the Plan or (iii) change the
class of eligible persons who may receive Options or Awards of Retention Shares
or Stock Units under the Plan. The Committee may amend the Plan to extend the
exercise period following an optionee's termination of an option granted prior
to September 24, 1998, but not beyond: (i) in the case of a termination
resulting from the disposition by the Company of all or a part of its interest
in, or the discontinuance of the business of, a subsidiary, division or other
business unit of the Company, five years from the date of termination and (ii)
in the case of all other terminations, not more than three years from the date
of termination, or, if later, three years from the date the option becomes
exercisable, but not more than five years after the date of such termination.
16. LEAVE OF ABSENCE
Unless the Committee shall determine otherwise, a leave of absence
other than an Approved Leave of Absence shall be deemed a termination of
employment for purposes of the Plan. An Approved Leave of Absence shall not be
deemed a termination of employment for purposes of the Plan (except for purposes
of Section 8), but the period of such Leave of Absence shall not be counted
toward satisfaction of any Restriction Period or Unit Restriction Period or any
holding period described in Section 6(c).
17. GENERAL PROVISIONS
a. Neither the Plan nor the grant of any Option or Award nor any action
by the Company, any Subsidiary or the Committee shall be held or construed to
confer upon any person any right to be continued in the employ of the Company or
a Subsidiary. The Company and each Subsidiary expressly reserve the right to
discharge, without liability but subject to his or her rights under the Plan,
any Optionee or Participant whenever in the sole discretion of the Company or a
Subsidiary, as the case may be, its interest may so require.
b. All questions pertaining to the construction, regulation, validity
and effect of the Plan shall be determined in accordance with the laws of the
State of Utah, without regard to conflict of laws doctrine.
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18. EFFECTIVE DATE
The Plan shall become effective upon approval of the stockholders of
the Company.
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1993 Stock Option and Retention Stock Plan - Union Pacific Corp.
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