UNION PACIFIC CORPORATION
EXECUTIVE STOCK PURCHASE INCENTIVE PLAN
1. PURPOSE
The Union Pacific Executive Stock Purchase Incentive Plan (the "Plan") is
intended to (i) encourage and facilitate ownership of shares of the common stock
of Union Pacific Corporation (the "Company") by officers and other key
executives of the Company and its Subsidiaries, (ii) create a working
environment where participating executives of the Company and its Subsidiaries
share in the same risks and rewards as the Company's other shareholders, and
(iii) create a retention vehicle by:
o providing participating executives of the Company and its Subsidiaries
with an opportunity to significantly increase their ownership of common
stock of the Company coupled with incentive awards based on the
performance of the Company and its common stock and
o providing this opportunity in a manner that places participating
executives at risk in the event of inadequate Company performance.
2. DEFINITIONS
Except where the content otherwise indicates, the following definitions apply:
"Applied Dividends" means regular cash dividends on Common Stock purchased
pursuant to a Purchase Award which are to be applied to offset (partially or
wholly) interest accruing on the Purchase Loan as required pursuant to Section
7(d)(i) and which the Company's stock transfer agent shall be irrevocably
directed by each Participant to deliver directly to the Company for such purpose
to the extent required to comply with Section 7(d)(i).
"Board" means Board of Directors of the Company.
"Cause" means the deliberate, willful or gross misconduct of the Participant, as
determined by the Committee.
"Code" means the Internal Revenue Code of 1986, as amended.
"Combination Deferred Award" means the grant to a Participant, upon the
Participant's exercise of the Purchase Award, of Deferred Performance Award #1,
Deferred Performance Award #2, Deferred Performance Award #3 and Deferred
Service Incentive Award, as described in Section 8.
"Commission" means the Securities and Exchange Commission.
"Committee" means the Compensation and Benefits Committee of the Board or such
other committee of the Board as may be designated by the Board, the Committee
being composed of not less than two persons who qualify as "disinterested
persons" as defined in Rule 16b-3(c)(2), as promulgated by the Commission under
the 1934 Act, or any successor definition adopted by the Commission.
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"Common Stock" means the Common Stock, $2.50 par value per Share, of the
Company.
"Company" means Union Pacific Corporation, a Utah corporation, or any successor
corporation.
"Deferred Performance Awards" means the following awards, as described in
Section 8: Deferred Performance Award #1, Deferred Performance Award #2 and
Deferred Performance Award #3.
"Deferred Service Incentive Award" means the award so named and described in
Section 8.
"Designated Payment Date" means the date designated by the Company for a cash
payment to a Participant (or the estate of a deceased Participant) with respect
to any part or all of a Combination Deferred Award, which date shall be no later
than January 31, 2003 and, in the case of any cash payment with respect to a
Participant's Combination Deferred Award after the Participant's Termination of
Service because of death, no later than six months after such Termination of
Service.
"Effective Date" means the date the Plan is adopted by the Board.
"Interest Rate" means the "applicable federal rate" in effect on the Purchase
Date for loans with a final maturity date of January 31, 2006 with interest
compounded annually, as determined by Section 1274(d) of the Code.
"Market Price" with respect to a Share shall mean, for any given date (or in the
event such date is not a Trading Day with respect to the Share, the last Trading
Day prior to such date), the average of the high and low trading prices per
Share on such date, as reported in The Wall Street Journal listing of composite
transactions for New York Stock Exchange issues.
"1934 Act" means the Securities Exchange Act of 1934, as amended, and the rules
and regulations promulgated by the Commission thereunder.
"Participant" means each eligible employee of the Company or any of its
Subsidiaries who is designated by the Committee to receive a Purchase Award.
"Performance Criteria" means the following three criteria:
Criterion #1: For twenty consecutive calendar days during the
Performance Period the Market Price of a Share has increased at least
15% over the Purchase Price;
Criterion #2: Either of the following two events has occurred:
(i) The Company has achieved annual earnings per Share equal
to, or greater than, $5.00 per Share during any calendar year
in the Performance Period or
(ii) Criterion #3 has been achieved; and
Criterion #3: Either of the following two events has occurred:
(i) The Company has achieved annual earnings per Share equal
to, or greater than, $6.00 per Share during any calendar year
in the Performance Period or
(ii) The Market Price of a Share for twenty consecutive
calendar days during the Performance Period has equaled or
exceeded $85.00.
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"Performance Period" means, with respect to each Purchase Award, the period of
time beginning on the Purchase Date with respect to such Purchase Award and
ending on January 31, 2003.
"Plan" means this Union Pacific Corporation Executive Stock Purchase Incentive
Plan, as amended from time to time in accordance with the Plan's provisions.
"Purchase Award" means an award to a Participant permitting such Participant to
purchase Shares pursuant to Section 6 at the Purchase Price, together with
related Purchase Loan, Combination Deferred Award and Special Deferred Award
rights upon exercise of the Purchase Award.
"Purchase Date" means the date a Participant purchases Shares pursuant to a
Purchase Award.
"Purchase Loan" means an extension of credit to the Participant by the Company
evidenced by a Purchase Note.
"Purchase Note" means a full recourse promissory note with respect to the
Purchase Loan in substantially the same form as set forth on Exhibit A.
"Purchase Price" of a Share means fair market value of a Share on the Purchase
Date, as determined by the Committee.
"Remaining Balance" means the principal balance of the Purchase Loan (including
accrued but unpaid interest) outstanding immediately following the end of the
Performance Period and the making of any prepayments required by Section
7(d)(ii).
"Service" means employment with the Company or its Subsidiaries.
"Share" means a share of the Company's Common Stock.
"Special Criterion" means attaining a Market Price per Share which equals or
exceeds $100.00 for twenty consecutive calendar days during the Performance
Period.
"Special Deferred Award" means the grant to a Participant, upon the
Participant's exercise of the Purchase Award, of the Special Deferred Award, as
described in Section 9.
"Subsidiary" means a corporation (or partnership, joint venture, or other
enterprise) of which the Company owns or controls, directly or indirectly, 50%
or more of the outstanding shares of stock normally entitled to vote for the
election of directors (or comparable equity participation and voting power).
"Termination of Service" means a Participant's termination of Service such that
he or she is no longer an employee of either the Company or any of its
Subsidiaries for any reason whatsoever; provided, however, that, for purposes of
this Plan, a Participant who becomes subject to a long-term disability (within
the meaning of the Company's long-term disability plan (or the relevant
Subsidiary's long-term disability plan), as in effect from time to time) shall
be deemed to be continuing his or her Service during such period of long-term
disability.
"Total Purchase Price" means, with respect to each Participant, the Purchase
Price multiplied by the number of Shares purchased pursuant to the Participant's
Purchase Award.
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"Trading Day" means, with respect to the Common Stock, a day on which the Common
Stock is publicly traded on the New York Stock Exchange.
3. SHARES SUBJECT TO THE PLAN
The aggregate number of Shares that may be issued under the Plan shall not
exceed 1,100,000 Shares.
4. TERM OF THE PLAN
The Plan shall become effective upon adoption by the Board. The Plan shall be
terminated on January 31, 2003; provided, that Combination Deferred Awards,
Special Awards and Purchase Loans outstanding as of such date shall not be
affected or impaired by the termination of the Plan; provided further that no
Purchase Awards shall be granted after December 31, 1999.
5. ELIGIBLE EMPLOYEES
All officers of the Company and other key executives of the Company and its
Subsidiaries who, in the opinion of the Committee, can materially influence the
long-term performance of the Company and/or its Subsidiaries are eligible to
receive a Purchase Award. The Committee shall have the power and complete
discretion to select those eligible employees who are to receive Purchase
Awards.
6. STOCK PURCHASE
(a) Grant of Purchase Award. The number of Shares purchasable under a
Purchase Award for any Participant and the Purchase Date shall be
determined by the Committee. The Committee shall, with respect to each
Purchase Award, give written notice to each Participant receiving such
Purchase Award stating (i) the maximum and minimum number (which
numbers may be identical) of Shares that may be purchased under the
Purchase Award, (ii) the Purchase Date and (iii) the Interest Rate and
other terms pertaining to the Purchase Loan.
(b) Exercise of Purchase Award. A Participant shall exercise a Purchase
Award by delivering to the Company on the Purchase Date (or within a
reasonable time thereafter specified by the Company) (i) a notice
stating the number of Shares (not less than the minimum number and not
more than the maximum number specified in the Purchase Award) such
Participant elects to purchase on the Purchase Date, and (ii) an
executed Purchase Note and any other documents required pursuant to the
Plan. Any Participant who does not elect to purchase at least the
minimum number of Shares under the Purchase Award on the Purchase Date
(or within a reasonable time thereafter specified by the Company) shall
forfeit any rights under the Plan with respect to such Purchase Award,
including, without limitation, any right to receive a Purchase Loan,
Combination Deferred Award or Special Award related to such Purchase
Award.
(c) Closing Time. The exercise of the Purchase Award by a Participant, the
delivery of the Purchase Note and the issuance by the Company of the
Shares purchased pursuant to the Purchase Award shall be effective at
5:00 p.m., New York City time, on the Purchase Date
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(the "Closing Time"). After the Closing Time, such Participant shall be
a stockholder of the Company for all purposes. Notwithstanding anything
herein to the contrary, the Committee shall have the absolute right, in
its sole discretion, to revoke any Purchase Award, including, without
limitation, any right to receive a Purchase Loan, Combination Deferred
Award or Special Award related to such Purchase Award, prior to the
Closing Time.
7. LOAN PROVISIONS
(a) General. The Company shall extend a Purchase Loan to a Participant upon
exercise of a Purchase Award subject to the terms and conditions set
forth in this Section 7. The original principal amount of the Purchase
Loan, which shall be unsecured, shall be equal to the Total Purchase
Price. Such Purchase Loan shall be evidenced by a Purchase Note with
full recourse against the Participant as maker of the note. The
obligations of the Participant under the Purchase Note shall be
unconditional and absolute and, without limiting the generality of the
foregoing, shall not be released, discharged or otherwise affected by
any change in the existence, structure or ownership of the Company, or
any insolvency, bankruptcy, reorganization or other similar proceeding
affecting the Company or its assets or the market value of the Common
Stock or any resulting release or discharge of any obligation of the
Company or the existence of any claim, set-off or other rights which
the Participant may have at any time against the Company or any other
person, whether in connection with the Plan or with any unrelated
transactions, provided that nothing herein shall prevent the assertion
of any such claim by separate suit or counterclaim.
Notwithstanding anything to the contrary in this Section 7, the Company
shall not be required to make any Purchase Loan to a Participant if the
making of such Purchase Loan will (i) cause the Company to violate any
covenant or similar provision in any indenture, loan agreement or other
agreement, or (ii) violate any applicable federal, state or local law,
provided, that the failure to make such Purchase Loan shall be deemed
to revoke the exercise of the related Purchase Award unless otherwise
specified by the Participant or if the Company is not satisfied with
the creditworthiness of the Participant.
(b) Interest. Interest on the principal balance of the Purchase Loan shall
accrue annually, in arrears, at the Interest Rate.
(c) Term. The term of the Purchase Loan for any Participant shall begin on
such Participant's Purchase Date and, subject to prepayment as provided
in Sections 7(d) and 7(e), have a final maturity date of January 31,
2006. The Remaining Balance of the Purchase Loan shall be payable in
three equal annual installments on January 31, 2004, January 31, 2005
and January 31, 2006, with the interest accruing (offset by Applied
Dividends, if Criterion #1 was not achieved during the Performance
Period) on the unpaid Remaining Balance payable annually, in arrears,
on each such January 31.
(d) Prepayments Not Related to Termination of Service.
(i) Dividends. To the extent the Participant is entitled to
regular cash dividends on Common Stock purchased under the
Plan, until the earlier of the achievement of Performance
Criterion #1 or payment in full of the Purchase Loan
(including accrued and unpaid interest), such dividends shall
be delivered by the Company's stock transfer agent to the
Company to offset (wholly or partially) the accrued interest
on
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the Purchase Loan, pursuant to an irrevocable written
direction given by the Participant. Upon and after the
achievement of Performance Criterion #1, all such dividends
shall be paid directly to the Participant. If, prior to the
achievement of Performance Criterion #1, the Participant is
entitled to regular cash dividends which exceed the accrued
interest on the Purchase Loan, such excess shall be paid
directly to the Participant.
(ii) Cash Payments with respect to Combination Deferred Award. In
the event a Participant (or the estate of a deceased
Participant) receives any cash payments with respect to the
Participant's Deferred Performance Awards or Deferred Service
Incentive Award or any cash payments made by the Company under
Section 8(h)(i) after the earlier of (i) Termination of
Service due to death or (ii) the end of the Performance
Period, the Participant (or the Participant's estate) shall
immediately (partially or wholly) prepay the principal balance
of the Purchase Loan (or the accrued and unpaid interest
thereon in the case of a cash payment with respect to Deferred
Performance Award #1), to the extent, if any, that such
principal balance (or such interest in the case of a cash
payment with respect to Deferred Performance Award #1) remains
unpaid at such time, with an amount equal to the full amount
of all such cash payments upon receipt thereof.
(iii) Optional Prepayments. Any Participant (or the estate of a
deceased Participant) may prepay all of the Purchase Loan
(including accrued and unpaid interest) at any time, but
partial prepayments shall not be permitted.
(e) Prepayment Obligations Related to Termination of Service. In the event
of a Participant's Termination of Service because of death, any
outstanding balance (including accrued and unpaid interest) of the
Purchase Loan shall be due and payable in full six months from the date
of the Participant's death. In the event of a Participant's Termination
of Service for any reason other than death, any outstanding balance
(including accrued and unpaid interest) of the Purchase Loan shall be
due and payable in full on the later of (i) the 90th day following such
Termination of Service or (ii) the 90th day following the first date on
which the Participant may sell the Common Stock purchased under the
Plan without incurring liability under the federal securities laws,
including Section 16 of the 1934 Act (limited, in the case of Section
16, to liability relating to purchases or sale of Common Stock or any
derivative security occurring prior to the Termination of Service). If
(i) a Participant's Termination of Service is due to death during the
Performance Period or an involuntary Termination of Service without
Cause during the Performance Period, (ii) on the date the outstanding
balance of the Purchase Loan becomes due and payable pursuant to this
Section 7(e), the aggregate Market Price of the Shares acquired under
the Participant's Purchase Award is less than the sum of (x) the
outstanding balance of the Purchase Loan (including accrued and unpaid
interest) on such date, as reduced by any prepayment made pursuant to
Section 7(d), and (y) the income and employment tax liability resulting
from any cash payments with respect to the Combination Deferred Award,
and (iii) if all Shares so acquired are still held by the Participant
(or the Participant's estate), then, on such date (if so requested by
the Participant or the Participant's estate) the Company shall accept
from the Participant (or the Participant's estate) the surrender of all
Shares so acquired by the Participant in full satisfaction of the
outstanding balance of the Purchase Loan (including accrued and unpaid
interest).
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8. COMBINATION DEFERRED AWARD - DESCRIPTION, PAYMENT AND FORFEITURE
(a) Combination Deferred Award. Upon any Participant's exercise of the
Participant's Purchase Award, the Company shall grant the Participant a
Combination Deferred Award, consisting of Deferred Performance Award
#1, Deferred Performance Award #2, Deferred Performance Award #3 and
Deferred Service Incentive Award, subject to the terms and conditions
set forth in this Section 8. Any payment with respect to a
Participant's Combination Deferred Award shall be made by the Company
on its behalf and/or on behalf of the Subsidiary by which the
Participant was employed on the Designated Payment Date. Any Subsidiary
which so employed the Participant shall reimburse the Company for such
payment. No payment shall be made by the Company with respect to any
Participant's Combination Deferred Award until the Participant has made
arrangements with respect to any federal, state or local tax
withholding requirements applicable to such payment which are
satisfactory to the Company.
(b) Deferred Performance Award #1. In the event that Criterion #1 is
achieved, each Participant then holding a Deferred Performance Award #1
shall become entitled to a deferred cash payment with respect thereto,
subject to the terms and conditions set forth in this Section 8. On the
Designated Payment Date, the Company shall pay to the Participant, with
respect to Deferred Performance Award #1, a cash amount equal to the
interest accrued and remaining unpaid on the Purchase Loan (after any
application of Applied Dividends) as of the Designated Payment Date.
Further, if Criterion #1 has been achieved during the Performance
Period, but accrued interest on the Purchase Loan is payable on January
31, 2004, January 31, 2005 and /or January 31, 2006 pursuant to Section
7(c), then, on each such date, the Company shall pay to the
Participant, with respect to Deferred Performance Award #1, a cash
amount equal to the interest becoming payable on such date.
(c) Deferred Performance Award #2. In the event that Criterion #2 is
achieved, each Participant then holding a Deferred Performance Award #2
shall become entitled to a deferred cash payment with respect thereto,
subject to the terms and conditions set forth in this Section 8. On the
Designated Payment Date, the Company shall pay to the Participant, with
respect to Deferred Performance Award #2, a cash amount equal to
one-third of the outstanding principal balance of the Purchase Loan as
of the Designated Payment Date.
(d) Deferred Performance Award #3. In the event that Criterion #3 is
achieved, each Participant then holding a Deferred Performance Award #3
shall become entitled to a deferred cash payment with respect thereto,
subject to the terms and conditions set forth in this Section 8. On the
Designated Payment Date, the Company shall pay to the Participant, with
respect to Deferred Performance Award #3, a cash amount equal to
one-third of the outstanding principal balance of the Purchase Loan as
of the Designated Payment Date.
(e) Deferred Service Incentive Award. If the Service of a Participant who
holds a Deferred Service Incentive Award is continuous from the
Effective Date to the end of the Performance Period, the Participant
shall become entitled to a deferred cash payment with respect to such
award, subject to the terms and conditions set forth in this Section 8.
On the Designated Payment Date, the Company shall pay to the
Participant, with respect to the Deferred Service Incentive Award, a
cash amount equal to one-third of the outstanding principal balance of
the Purchase Loan as of the Designated Payment Date.
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(f) Forfeiture of Combination Deferred Award Upon Certain Sales of Shares
and Certain Prepayments of Purchase Loan. Notwithstanding any other
provision of this Section 8, a Participant's Combination Deferred Award
shall be immediately forfeited if the Participant, during the
Performance Period, either (i) sells any Shares acquired under a
Purchase Award or (ii) makes an optional prepayment on the Purchase
Loan described in Section 7(d)(iii). A transfer of a Participant's
Shares to a revocable trust as to which the Participant retains voting
and investment power (which powers of revocation, voting and investment
may be shared with the Participant's spouse) or a transfer to joint
ownership with such Participant's spouse shall not be deemed a sale for
purposes of this Section 8(f) and, solely for the purposes of this
Plan, such Shares shall be deemed to be owned by the Participant.
(g) Application of Payments Made Pursuant to Section 8. Notwithstanding any
other provision of this Section 8, an amount equal to the full amount
of any payment made by the Company pursuant to this Section 8 with
respect to a Deferred Performance Award and/or Deferred Service
Incentive Award shall be immediately applied in accordance with Section
7(d)(ii) to prepay (partially or wholly) the principal balance of the
Purchase Loan (or the accrued and unpaid interest thereon in the case
of a cash payment with respect to Deferred Performance Award #1), to
the extent, if any, that such principal balance (or such interest in
the case of a cash payment with respect to Deferred Performance Award
#1) remains unpaid on the Designated Payment Date.
(h) Change in Control. Upon an occurrence of a Change in Control (as
defined in the Union Pacific Corporation Key Employee Continuity Plan,
as amended from time to time (the "Continuity Plan")), all Performance
Criteria shall be deemed to have been satisfied. If, on or after the
occurrence of a Change in Control and prior to February 1, 2003, a
Participant's employment is involuntarily terminated by the Company
(other than for Cause, as defined in the Continuity Plan) or a
Participant terminates his or her employment for Good Reason (as
defined in the Continuity Plan), then such Participant shall be
entitled to a cash payment (to be made within ninety (90) days
following the date of termination but in no event later than the
Designated Payment Date) with respect to (i) the Deferred Service
Incentive Award calculated as if the Participant's Service had
continued though the end of the Performance Period and (ii) the
Deferred Performance Award.
(i) Treatment of a Termination of Service.
(i) Upon a Participant's Termination of Service during the
Performance Period for any reason except death, the
Participant shall forfeit the Combination Deferred Award. Upon
a Participant's Termination of Service during the Performance
Period due to death, unless the Participant shall have
previously forfeited the Combination Deferred Award pursuant
to Section 8(f), the Participant's estate shall be entitled to
a cash payment with respect to (i) the Deferred Service
Incentive Award calculated as if the Participant's Service had
continued through the end of the Performance Period and (ii)
any Deferred Performance Award as to which the related
Performance Criterion has been achieved before the
Participant's death. On the Designated Payment Date, the
Company shall pay, to the deceased Participant's estate, the
cash amount provided
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in this Section 8 with regard to each award described in the
immediately preceding sentence.
(ii) If a Participant's Termination of Service is due to death
during the Performance Period or an involuntary Termination of
Service without Cause during the Performance Period and the
Company accepts Shares acquired pursuant to the Participant's
Purchase Award in full satisfaction of the Purchase Loan in
accordance with the last sentence of Section 7(e), then, no
later than the fifth business day following such acceptance,
the Company shall pay to the Participant (or the Participant's
estate) the cash amount necessary for the reimbursement of any
income and employment taxes payable by the Participant (or the
Participant's estate) as a result of (i) the acceptance by the
Company of such Shares in satisfaction of the Purchase Loan,
(ii) any payment made with respect to the Combination Deferred
Award and (iii) the reimbursement payment made pursuant to
this Section 8(h)(ii).
9. SPECIAL DEFERRED AWARD
(a) Upon any Participant's exercise of the Participant's Purchase Award,
the Company shall grant the Participant a Special Deferred Award,
subject to the terms and conditions set forth in this Section 9. Any
payment with respect to a Participant's Special Deferred Award shall be
made by the Company on its behalf and/or on behalf of the Subsidiary by
which the Participant was employed on the Designated Payment Date. Any
Subsidiary which so employed the Participant shall reimburse the
Company for such payment.
(b) In the event that the Special Criterion is achieved, each Participant
then holding a Special Deferred Award shall be entitled to be
reimbursed by the Company on the Designated Payment Date for the
federal income tax payable on the amounts paid with respect to a
Combination Deferred Award pursuant to Section 8, subject to the terms
and conditions set forth in this Section 9. Such reimbursement shall be
computed using the maximum marginal rate for ordinary taxable income in
effect on the Designated Payment Date. The reimbursement for federal
income tax under this Section 9 shall not itself be grossed up for any
federal income tax payable as a result of this reimbursement.
(c) Notwithstanding any other provision of this Section 9, a Participant's
Special Deferred Award shall be immediately forfeited if the
Participant, during the Performance Period, either (i) sells any Shares
acquired under a Purchase Award or (ii) makes an optional prepayment on
the Purchase Loan described in Section 7(d)(iii). A transfer of a
Participant's Shares to a revocable trust as to which the Participant
retains voting and investment power (which powers of revocation, voting
and investment may be shared with the Participant's spouse) or a
transfer to joint ownership with such Participant's spouse shall not be
deemed a sale for purposes of this Section 9(iii) and, solely for the
purposes of this Plan, such Shares shall be deemed to be owned by the
Participant.
(d) Termination of Service.
Upon a Participant's Termination of Service during the Performance
Period for any reason except death, the Participant shall forfeit the
Special Deferred Award. Upon a Participant's Termination of Service
during the Performance Period due to death, unless the Participant
shall have previously forfeited the Special Deferred Award pursuant to
Section 9(c), the
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Participant's estate shall be entitled to be reimbursed by the Company
an amount calculated in accordance with Section 9(b) if the related
Special Criterion has been achieved before the Participant's death. On
the Designated Payment Date, the Company shall reimburse the deceased
Participant's estate the amount provided in this Section 9 with regard
to the Special Deferred Award described in the immediately preceding
sentence.
10. PLAN ADMINISTRATION
The Plan shall be administered by the Committee. If at any time no Committee
shall be in office, the functions of the Committee specified in the Plan shall
be exercised by the "disinterested directors" on the Board (as defined in Rule
16b-3(c)(2) under the 1934 Act). Subject to the provisions of the Plan, the
Committee shall interpret the Plan and make such rules as it deems necessary for
the proper administration of the Plan, shall make all other determinations
necessary or advisable for the administration of the Plan and shall correct any
defect or supply any omission or reconcile any inconsistency in the Plan in the
manner and to the extent that the Committee deems desirable to carry the Plan
into effect. Among other things, the Committee shall have the authority, subject
to the terms of the Plan, to determine (i) the individuals to whom the Purchase
Awards are granted, (ii) the time or times the Purchase Awards are granted,
(iii) the Purchase Dates for such Purchase Awards, (iv) the basis for any
Termination of Service, including whether or not it was for Cause or otherwise,
(v) the forms, terms and provisions of any documents under the Plan, including
amending or modifying the terms of the Plan. Without limiting the foregoing, in
the event of a recapitalization, stock split, stock dividend, combination or
exchange of shares, merger, consolidation, spin-off or any other change in the
corporate structure or shares of the Company, the Committee may make such
adjustments as it deems appropriate in the Performance Criteria and other terms
of the Plan. Any action taken or determination made by the Committee pursuant to
this paragraph and the other paragraphs of the Plan in which the Committee is
given discretion shall be final and conclusive on all parties. The act or
determination of a majority of the Committee shall be deemed to be the act or
determination of the entire Committee. The Committee may consult with counsel,
who may be counsel to the Company, and such other advisors as the Committee may
deem necessary and/or desirable, and the members of the Committee shall not
incur any liability for any action taken in good faith in reliance upon the
advice of counsel or any other advisor.
11. AMENDMENT AND DISCONTINUANCE OF THE PLAN
The Board, upon the recommendation of the Committee, may amend, suspend or
terminate the Plan at any time, subject to the provisions of this Section 11. No
amendment, suspension or termination of the Plan may, without the consent of a
Participant, adversely affect such Participant's rights under the Plan in any
material respect.
12. MISCELLANEOUS PROVISIONS
(a) Unsecured Status of Claim. Participants and their beneficiaries, heirs,
successors and assigns shall have no legal or equitable rights,
interests or claims in any specific property or assets of the Company.
No assets of the Company shall be held under any trust for the benefit
of Participants, their beneficiaries, heirs, successors or assigns, or
held in any way as collateral security for the fulfillment of the
Company's obligations under the Plan.
Any and all of the Company's assets shall be, and shall remain, the
general unpledged and unrestricted assets of the Company. The Company's
obligations under the Plan shall be
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merely that of an unfunded and unsecured promise of the Company to pay
employee compensation benefits in the future.
(b) Employment Not Guaranteed. Nothing contained in the Plan nor any action
taken in the administration of the Plan shall be construed as a
contract of employment or as giving a Participant any right to be
retained in the Service of the Company.
(c) Nonassignability. No person shall have any right to commute, sell,
assign, transfer, pledge, anticipate, mortgage or otherwise encumber,
hypothecate or convey in advance of actual receipt the deferred cash
incentive, if any, payable under the Plan, or any part thereof, or any
interest therein, which are, and all rights to which are, expressly
declared to be unassignable and nontransferable. No portion of the
amounts payable shall, prior to actual payment, be subject to seizure,
attachment, lien or sequestration for the payment of any debts,
judgments, alimony or separate maintenance owed by a Participant or any
other person, nor be transferable by operation of law in the event of
the Participant's or any other person's bankruptcy or insolvency. Any
such transfer or attempted transfer in violation of the preceding
provisions shall be considered null and void. In addition, no
derivative security (as defined in Rule 16a-1(c), as promulgated by the
Commission under the 1934 Act, or any successor definition adopted by
the Commission) issued under the Plan shall be transferable by a
Participant (to the extent transferable under the Plan) other than by
will or the laws of descent and distribution or pursuant to a qualified
domestic relations order as defined by the Code, or Title I of the
Employee Retirement Income Security Act of 1974 or the rules
promulgated thereunder.
(d) Separability, Validity. Transactions under this Plan are intended to
qualify under Rule 16b-3 of the 1934 Act. If any of the terms or
provisions of this Plan conflict with the requirements of Rule 16b-3,
then such terms and provisions shall be deemed inoperative to the
extent they so conflict with such requirements. In the event that any
provision of the Plan is held to be invalid, void or unenforceable, the
same shall not affect, in any respect whatsoever, the validity of any
other provision of the Plan.
(e) Withholding Tax. The Company shall, on its behalf and on behalf of its
Subsidiaries, withhold from all benefits due under the Plan an amount
sufficient to satisfy any federal, state and local tax withholding
requirements; provided, however, that each Participant shall make
arrangements satisfactory to the Company with respect to any such
withholding requirements applicable to the payments provided in Section
8 with respect to the Participant's Combination Deferred Award prior to
the making of such payments and any such withholding requirements
applicable to any acceptance by the Company of Shares in satisfaction
of a Participant's Purchase Loan pursuant to Section 7(e) prior to such
acceptance.
(f) Applicable Law. The Plan shall be governed in accordance with the laws
of the State of Utah without regard to the application of the conflicts
of law provisions thereof. The obligation of the Company with respect
to the grant and exercise of Purchase Awards shall be subject to all
applicable laws, rules and regulations and such approvals by any
governmental agencies as may be required, including, without
limitation, the effectiveness of any registration statement required
under the Securities Act of 1933, as amended, and the rules and
regulations of any securities exchange on which the Common Stock may be
listed.
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(g) Inurement of Rights and Obligations. The rights and obligations under
the Plan shall inure to the benefit of, and shall be binding upon, the
Company, its successors and assigns, and the Participants and their
beneficiaries.
(h) Notice. All notices and other communications required or permitted to
be given under this Plan shall be in writing and shall be deemed to
have been duly given if delivered personally or mailed first class,
postage prepaid, as follows: (A) if to the Company--at its principal
business address to the attention of the Secretary; (B) if to any
Participant--at the last address of the Participant known to the sender
at the time the notice or other communication is sent.
(i) Exclusion from Pension and other Benefit Plan Computation. By exercise
of a Purchase Award, each Participant shall be deemed to have agreed
that such Purchase Award and any amounts paid with respect to a
Deferred Performance Award or a Deferred Service Incentive Award under
Section 8, as applicable, or with respect to a Special Deferred Award
under Section 9, are special incentive compensation that will not be
taken into account, in any manner, as salary, compensation or bonus in
determining the amount of any payment under any pension, retirement or
other employee benefit plan of the Company or any of its Subsidiaries.
In addition, the estate and each beneficiary of a deceased Participant
shall be deemed to have agreed that such Purchase Award and any
Deferred Performance Award, Deferred Service Incentive Award or Special
Deferred Award, as applicable, will not affect the amount of any life
insurance coverage, if any, provided by the Company or any of its
Subsidiaries on the life of the Participant which is payable to such
estate or beneficiary under any life insurance plan covering employees
of the Company or any of its Subsidiaries.
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Executive Stock Purchase Incentive Plan - Union Pacific Corp.
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