{"id":38427,"date":"2015-09-17T11:25:58","date_gmt":"2015-09-17T16:25:58","guid":{"rendered":"https:\/\/content.findlaw-admin.com\/ability-legal\/contracts\/uncategorized\/2001-long-term-plan-stock-unit-and-cash-award-agreement-union.html"},"modified":"2015-09-17T11:25:58","modified_gmt":"2015-09-17T16:25:58","slug":"2001-long-term-plan-stock-unit-and-cash-award-agreement-union","status":"publish","type":"corporate_contracts","link":"https:\/\/corporate.findlaw.com\/contracts\/compensation\/2001-long-term-plan-stock-unit-and-cash-award-agreement-union.html","title":{"rendered":"2001 Long Term Plan Stock Unit and Cash Award Agreement – Union Pacific Corp."},"content":{"rendered":"\n UNION PACIFIC CORPORATION\n\n [UNION PACIFIC LOGO]\n\n\n 2001 LONG TERM PLAN\n\n STOCK UNIT AND CASH AWARD AGREEMENT\n\n\n\n Dated: January 25, 2001\n\n\n\nDear Award Recipient:\n\n This Letter Agreement will confirm (1) an award to you of stock units\n(\"Stock Units\"), as of the date hereof, by Union Pacific Corporation (the\n\"Company\"), under the 1993 Stock Option and Retention Stock Plan of the Company\n(the \"Plan\"), a copy of which is included in this mailing packet and made a part\nthereof, and (2) provided some or all of such Stock Units are paid to you\npursuant to this Agreement, the opportunity for you to receive a Cash Award as\nprovided herein.\n\n STOCK UNITS\n\n 1. GRANT OF UNITS. The Company hereby awards to you the number of Stock\nUnits, as shown on Exhibit A of this Agreement, each evidencing the right to\nreceive, upon the terms and subject to the conditions set forth in this\nAgreement and the Plan, one share of Union Pacific Corporation Common Stock,\n$2.50 par value per share (\"Common Stock\"). As shown on Exhibit A, you are\ngranted a Stock Unit Target Award and may receive at the end of the Restriction\nPeriod described below all or a portion of your Stock Unit Target Award,\nprovided the applicable Performance Criteria have been satisfied.\n\n 2. RESTRICTION PERIOD. The period during which the restrictions set\nforth herein and in the Plan shall apply to the Stock Units granted to you shall\ncommence on the date hereof and expire on January 31, 2004 if the Performance\nCriteria described below for such Stock Units have been satisfied (the\n\"Restriction Period\").\n\n 3. PERFORMANCE CRITERIA. As shown on Exhibit A, Performance Criteria\ninclude (i) Cumulative Earnings Per Share of the Company as set forth on Exhibit\nA, and (ii) Fair Market Value of the Common Stock of the Company, which is the\naverage of the high and low trading prices per share of the Common Stock as\nreported in The Wall Street Journal listing of composite transactions for New\nYork Stock Exchange Issues. As used herein, Cumulative Earnings Per Share means\nthe sum of the\n\n\n 2\n\nannual diluted earnings per share of the Company for the fiscal years ending\nDecember 31, 2001, 2002, and 2003 based on net income (including income from\nboth continuing and discontinued operations) as reported in the Company's Annual\nReports to Shareholders, provided that in calculating Cumulative Earnings Per\nShare the Committee (as defined in the Plan) may, in its sole discretion,\nexclude special charges or extraordinary items reported by the Company. The\nCumulative Earnings Per Share Performance Criterion will be satisfied if\nCumulative Earnings Per Share meet or exceed the target set forth in Exhibit A.\nThe Fair Market Value Performance Criterion will be satisfied if the Fair Market\nValue of the Common Stock of the Company is equal to or greater than the\napplicable Stock Price Target as shown on Exhibit A for 20 consecutive calendar\ndays beginning on January 1, 2001 through January 31, 2004. In order to earn a\nspecified portion of your Stock Unit Target Award or Cash Target Award pursuant\nto Section 9 below, only one of the Performance Criteria (e.g., Cumulative\nEarnings Per Share or Stock Price Target) must be satisfied. There is no\ninterpolation between target amounts.\n\n 4. RESTRICTIONS. The above award of Stock Units is subject to the\nfollowing restrictions: (i) no dividends or cash in lieu of dividends shall be\npaid on the Stock Units during the Restriction Period; (ii) subject to Sections\n17 and 22 below, you shall not be entitled to delivery of shares of Common Stock\nuntil the expiration of the Restriction Period; (iii) none of such Stock Units\nmay be sold, transferred, assigned, pledged, or otherwise encumbered or disposed\nof during the Restriction Period; and (iv) all of the Stock Units shall be\nforfeited and all of your rights to such units shall terminate without further\nobligation on the part of the Company unless (I) you remain in the continuous\nemployment of the Company or a Subsidiary for the entire Restriction Period,\nexcept as provided in Section 17 or 22 below, and (II) the applicable\nPerformance Criteria for such units are satisfied on or prior to January 31,\n2004. Any shares of Common Stock or other securities or rights received as a\nresult of a transaction listed in Section 11 of the Plan shall be subject to the\nsame restrictions as such Stock Units.\n\n 5. PAYMENT OF STOCK UNITS. At the end of the Restriction Period or at\nsuch earlier time as provided for in Section 17 or 22 below, and subject to\nSection 6 hereof, all restrictions applicable to such Stock Units shall lapse,\nand shares of Common Stock equal to the sum of the number of Stock Units which\nhave met the applicable Performance Criteria shown on Exhibit A, free of all\nrestrictions, shall be delivered to you (through your account at the Company's\nthird party stock administrator, if applicable) or your beneficiary or estate,\nas the case may be.\n\n\n 3\n\n 6. DEFERRAL. You may elect to defer receipt of payment of any Award of\nStock Units pursuant to the Deferral of Stock Award Gains Program. If you are or\nshould you become a \"named executive officer\", as defined in Item 402 of\nRegulation S-K promulgated by the Securities and Exchange Commission, at any\ntime during calendar year 2003 you must defer receipt of payment of any Award of\nStock Units until termination of your employment if requested by a committee of\nthe Board of Directors of the Company pursuant to the provisions of Section 10\nof the Plan.\n\n 7. WITHHOLDING. Upon the lapse of the restrictions applicable to the\nStock Units, you must arrange for the payment to the Company of all applicable\nwithholding taxes resulting therefrom promptly after you have been notified of\nthe amount thereof by the Secretary of the Company. Shares will be withheld to\npay withholding taxes if you have made a proper election to pay withholding\ntaxes in this manner.\n\n 8. APPLICABILITY OF THE PLAN. This Agreement and the award of Stock\nUnits hereunder are subject to all of the terms and conditions of the Plan.\n\n CASH AWARD\n\n 9. PAYMENT OF CASH AWARD. You are eligible to receive a Cash Award\nequal to all or a portion of your Cash Target Award as shown on Exhibit A,\nprovided (I) you remain in the continuous employment of the Company or a\nSubsidiary for the entire Restriction Period, except as provided in Section 17\nor 22 below, and (II) the applicable Performance Criteria for such Cash Award\nare satisfied on or prior to January 31, 2004, payable at the expiration of the\nRestriction Period.\n\n 10. ADDITIONAL CASH PAYMENT. If the Fair Market Value of the Common\nStock equals or exceeds $100 for 20 consecutive calendar days on or prior to\nJanuary 31, 2004, or Cumulative Earnings Per Share equals or exceeds $20, you\nshall be entitled to receive an additional cash payment from the Company. Such\nadditional cash payment shall be computed by applying the maximum marginal\nfederal income tax rate in effect at the expiration of the Restriction Period to\nthe value of the maximum award of any Stock Units and Cash Award paid to you\npursuant to this Agreement.\n\n PROTECTION OF CONFIDENTIALITY\n\n 11. CONFIDENTIAL INFORMATION; TRADE SECRETS. By signing Exhibit A to\nthis Agreement, you acknowledge that the Company regards certain information\nrelating to its business and operations as confidential. This includes all\ninformation that the Company could reasonably be expected to keep confidential\nand whose disclosure to third parties would likely be disparaging or detrimental\nto the Company (\"Confidential Information\"). Your signature also acknowledges\nthat the \n\n\n 4\n\nCompany has certain information that derives economic value from not being known\nto the general public or to others who could obtain economic value from its\ndisclosure or use, which the Company takes reasonable efforts to protect the\nsecrecy of (\"Trade Secrets\").\n\n 12. TYPES OF CONFIDENTIAL INFORMATION OR TRADE SECRETS. By signing\nExhibit A, you acknowledge that you developed or have had or will have access to\none or more of the following types of Confidential Information or Trade Secrets:\ninformation about rates or costs; customer or supplier agreements and\nnegotiations; business opportunities; scheduling and delivery methods; business\nand marketing plans; financial information or plans; communications within the\nattorney-client privilege or other privileges; operating procedures and methods;\nconstruction methods and plans; proprietary computer systems design, programming\nor software; strategic plans; succession plans; proprietary company training\nprograms; employee performance, compensation or benefits; negotiations or\nstrategies relating to collective bargaining agreements and\/or labor disputes;\nand internal or external claims or complaints regarding personal injuries,\nemployment laws or policies, environmental protection, or hazardous materials.\nBy signing Exhibit A, you agree that any disclosures by you to any third party\nof such Confidential Information or Trade Secrets would constitute gross\nmisconduct within the meaning of the Plan.\n\n 13. PRIOR CONSENT REQUIRED. By signing Exhibit A, you agree that you\nwill not, unless you receive prior consent from the Company's Senior Vice\nPresident of Human Resources (\"Sr. VP-HR\") or unless ordered by a court or\ngovernment agency, (i) disclose to any subsequent employer or unauthorized\nperson any Confidential Information or Trade Secrets, or (ii) retain or take\nwith you when you leave the Company any property of the Company or any documents\n(including any electronic or computer records) relating to any Confidential\nInformation or Trade Secrets.\n\n 14. PRIOR NOTICE OF EMPLOYMENT, ETC. By signing Exhibit A, you\nacknowledge that if you become an employee, contractor, or consultant for any\nother railroad, this would create a substantial risk that you would,\nintentionally or unintentionally, disclose or rely upon the Company's\nConfidential Information or Trade Secrets for the benefit of the other railroad\nto the detriment of the Company. You further acknowledge that such disclosures\nwould be particularly damaging if made shortly after you leave the Company.\nTherefore, by signing Exhibit A, you agree that for a period of one year after\nyou leave the Company, before accepting any employment or affiliation with\nanother railroad you will give written notice to the Sr. VP-HR of your intention\nto accept such employment or affiliation. You also agree to confer in good faith\nwith the Sr. \n\n\n 5\n\nVP-HR concerning whether your proposed employment or affiliation could\nreasonably be expected to be performed without improper disclosure of\nConfidential Information or Trade Secrets. If the Sr. VP-HR and you are unable\nto reach agreement on this issue, you agree to submit this issue to arbitration,\nto be conducted under the rules of the American Arbitration Association, for\nfinal resolution. You also agree that you will not begin to work for another\nrailroad until the Sr. VP-HR or an arbitrator has determined that such\nemployment could reasonably be expected to be performed without improper\ndisclosure of the Company's Confidential Information or Trade Secrets.\n\n 15. FAILURE TO COMPLY. By signing Exhibit A, you agree that, if you\nfail to comply with any of the promises that you made in Section 13 or 14 above,\nyou will return to the Company any shares of Common Stock (or the market value\nof any shares of Common Stock received) and any Cash Award (including any\nadditional cash payment) granted to you by this Agreement which you received at\nany time from 180 days prior to the earlier of (i) the date when you leave the\nCompany or (ii) the date you fail to comply with any such promise you made in\nSection 13 or 14 to 180 days after the date when the Company learns that you\nhave not complied with any such promise. You agree that you will return such\nshares of Common Stock or Cash Award (including any additional cash payment) to\nthe Company on such terms and conditions as may be required by the Company. You\nfurther agree that the Company will be entitled to set off any such Cash Award\nand the market value of any such shares of Common Stock against any amount that\nmight be owed to you by the Company.\n\n CHANGE IN CONTROL\n\n 16. OCCURRENCE OF CHANGE IN CONTROL. If a Change in Control shall be\ndeemed to have occurred under the Plan, then the Performance Criteria shall be\ndeemed to have been satisfied at the $70 Stock Price Target award level,\nprovided that if a greater Performance Criteria shall have been satisfied prior\nto the occurrence of such Change in Control then such greater Performance\nCriteria shall be applicable. In either event following the Change in Control\n(i) no greater Performance Criteria may be earned under this Agreement, and (ii)\nyou must remain in the continuous employment of the Company or a Subsidiary for\nthe entire Restriction Period, except as provided in Section 17 or 22 below.\n\"Change in Control\" shall have the meaning provided in the Plan.\n\n 17. SEVERANCE FOLLOWING CHANGE IN CONTROL. In the event your employment\nis involuntarily terminated by the Company within two years following the date\nof a Change in Control, you shall be entitled to receive the Stock Units and\nCash Award earned under this Agreement.\n\n\n 6\n\n 18. GENERAL. Nothing herein shall limit or restrict the right of the\nCompany to amend or terminate the Plan subject to the terms thereof.\n\n NO DIRECT COMPETITION\n\n 19. SOLICITATION OF CUSTOMERS; NO EMPLOYMENT WITH WESTERN ROADS. By\nsigning Exhibit A, you agree that for a period of 18 months following your\ndeparture from the Company, you will not (directly or in association with\nothers) call on or solicit the business of any of the Company's customers with\nwhom you actually did business and had personal contact while you were employed\nby the Company, for the purpose of providing the customers with goods and\/or\nservices similar in nature to those provided by the Company in the states in\nwhich the Company now operates. You further agree that for the same time period,\nyou will not become an employee, contractor or consultant for any of the\nfollowing companies, which compete directly with the Company: Burlington\nNorthern Santa Fe Corporation; Kansas City Southern Industries, Inc.; Dakota,\nMinnesota & Eastern Railway Company; Illinois Central Corporation; and Texas\nMexican Railway Company (including their respective affiliates and subsidiaries\nor any company which is acquiring or being acquired by any such company) (the\n\"Western Roads\"). This Section 19 is not intended to prevent you from working\nfor any employer other than a Western Road. This Section does not apply to\nemployees who work in California at the time when this Agreement is signed or\nwhen their employment with the Company ends.\n\n 20. ACKNOWLEDGMENT; INJUNCTIVE RELIEF. By signing Exhibit A, you\nacknowledge that Section 19 will not prevent you from being gainfully employed\nafter you leave the Company, because you will remain free to work in any\noccupation, profession, trade, or business so long as you comply with your\npromises in Section 19. You also agree that because money damages would not be\nadequate to compensate the Company if you violate any of your promises in\nSection 19, the Company would be entitled to an injunction from a Court to\nenforce those promises.\n\n 21. VIOLATION OF PROMISES. By signing Exhibit A, you agree that if you\nviolate any of your promises in Section 19, then you will return to the Company\nany shares of Common Stock (or the fair market value thereof), and any Cash\nAward (including any additional cash payment) granted to you by this Agreement\nwhich you received at any time from 180 days prior to the date when you leave\nthe Company to 180 days after the date when the Company learns that you have not\ncomplied with the promises you made in Section 19. You agree that you will\nreturn such shares of Common Stock (or the fair market value thereof) or Cash\nAward (including any additional cash payment) to the Company on such terms and\nconditions as may be \n\n\n 7\n\nrequired by the Company. You further agree that the Company will be entitled to\nset off any such Cash Award and the market value of any such stock certificates\nagainst any amount that might be owed to you by the Company.\n\n GENERAL\n\n 22. DEATH, DISABILITY AND RETIREMENT. If you die during the Restriction\nPeriod, then the Performance Criteria shall be deemed to have been satisfied at\nthe minimum Stock Unit Target Award and Cash Target Award ($13.50 Cumulative\nEarnings Per Share), provided that if prior to your death one of the Stock Price\nTargets on Exhibit A has been achieved (or deemed satisfied pursuant to Section\n16) then that Performance Criterion shall be applicable, and your estate or\nbeneficiary shall be entitled to receive the Stock Units and Cash Award earned\nunder this Agreement. You shall not be entitled to any Stock Units or Cash Award\nhereunder if you shall become disabled or retire prior to the end of the\nRestriction Period.\n\n 23. SEVERABILITY. If any provision of this Agreement is, becomes, or is\ndeemed to be invalid, illegal, or unenforceable in any jurisdiction, such\nprovision shall be construed or deemed amended or limited in scope to conform to\napplicable laws or, in the discretion of the Company, it shall be stricken and\nthe remainder of the Agreement shall remain in force and effect.\n\n 24. CHOICE OF LAW. All questions pertaining to the construction,\nregulation, validity, and effect of this Agreement shall be determined in\naccordance with the laws of the State of Utah, without regard to the conflict of\nlaws doctrine.\n\n To confirm acceptance of the foregoing, kindly sign and promptly return\none copy of Exhibit A of this Letter Agreement to the Company.\n\n\n\n Sincerely,\n\n UNION PACIFIC CORPORATION\n\n By \/s\/ DICK DAVIDSON\n Chairman, President & Chief Executive Officer\n\n\n\n\n 8\n\n EXHIBIT A\n\n\n LTP RETENTION UNIT AND CASH AWARD\n\n\n JANUARY 25, 2001\n\n\n\nSTOCK UNIT AWARD\nGRANTED TO: S.S. NO.:\n\n\n\nMAXIMUM NUMBER OF RETENTION UNITS GRANTED*: 1,000(1)\n*SUBJECT TO SATISFACTION OF PERFORMANCE CRITERIA\n\n\n\nMAXIMUM CASH AWARD**: $70,000(1)\n**PLUS CASH PAYMENT EQUAL TO THE MAXIMUM MARGINAL FEDERAL INCOME TAX RATE ON\nVALUE OF MAXIMUM AWARD LEVEL OF UNITS AND CASH IF PERFORMANCE CRITERIA IS\nSATISFIED.\n\n\n\nRESTRICTION COMMENCEMENT DATE: January 25, 2001\nRESTRICTION TERMINATION DATE: January 31, 2004\n\n\n\nFor general tax purposes, LTP Retention Units are valued at the time of vesting.\nWhen preparing tax calculations at the time of vesting, the Fair Market Value\n(FMV), the average of the high and low trading prices of the stock on the day\nafter the restrictions lapse as reported in The Wall Street Journal listing of\ncomposite transactions for New York Stock Exchange issues, is used.\n\n(1) The maximum number of shares and maximum amount of cash award is for\nillustrative purposes only.\n\n\n 9\n\n<\/pre>\n
\n\n PERFORMANCE CRITERIA PAYMENTS
\n——————————————— ————————————
\n CUMULATIVE EPS EQUAL TO OR STOCK STOCK UNIT
\n GREATER THAN: PRICE TARGET * AWARD EARNED CASH AWARD EARNED
\n ————————– ————– ———— —————–
\n
\n less than $13.50 — 0 $ 0
\n $13.50 — 400 $ 28,000
\n $13.67 — 440 $ 30,800
\n $13.83 — 480 $ 33,600
\n $14.00 — 520 $ 36,400
\n $14.16 — 560 $ 39,200
\n $14.33 — 600 $ 42,000
\n $14.49 — 640 $ 44,800
\n $14.66 — 680 $ 47,600
\n $14.82 — 720 $ 50,400
\n $14.99 — 760 $ 53,200
\n $15.15 $ 70 800 $ 56,000
\n $15.24 — 820 $ 57,400
\n $15.32 — 840 $ 58,800
\n $15.41 — 860 $ 60,200
\n $15.49 — 880 $ 61,600
\n $15.58 — 900 $ 63,000
\n $15.66 — 920 $ 64,400
\n $15.75 — 940 $ 65,800
\n $15.83 — 960 $ 67,200
\n $15.92 — 980 $ 68,600
\n $16.00 $ 85 1,000 $ 70,000
\n $20.00 $ 100 1,000 $ 70,000<\/p>\n AND cash payment equal to the maximum marginal
\n federal income tax rate on value of maximum award
\n level of units and cash.
\n<\/c><\/c><\/c><\/s><\/caption>\n<\/table>\n
* The stock price targets must be achieved and maintained for 20 consecutive
\ncalendar days.<\/p>\n
By executing this Exhibit A, I acknowledge that I am bound by all of
\nthe terms of the Union Pacific Corporation 1993 Stock Option and Retention Stock
\nPlan and the Letter Agreement delivered herewith, each of which is incorporated
\nby reference in this Exhibit A.<\/p>\n
Accepted:<\/p>\n
——————————
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