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Exhibit 10(d)
UNION PACIFIC CORPORATION AND SUBSIDIARY COMPANIES
CONVERSION AGREEMENT
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September 29, 1995
Mr. Drew Lewis:
Dear Mr. Lewis:
This Letter Agreement will evidence your agreement with Union Pacific
Resources Group Inc. (the "Company") and Union Pacific Corporation ("UPC") to
convert certain stock options ("UPC Stock Options") which have been awarded to
you under one or more of the following: the 1993 Stock Option and Retention
Stock Plan of Union Pacific Corporation, the 1988 Stock Option and Restricted
Stock Plan of Union Pacific Corporation and/or the 1982 Stock Option and
Restricted Stock Plan of Union Pacific Corporation (collectively, "UPC Plans").
In exchange for your surrender of UPC Stock Options, you will receive, in
accordance with the terms and conditions set forth below, a grant of
non-qualified stock options for Common Stock of the Company ("Common Stock")
under the 1995 Stock Option and Retention Stock Plan of the Company (the
"1995 Stock Option Plan"), a copy of which is attached hereto and made a part
hereof.
1. CONVERSION OF OPTIONS. In accordance with the 1995 Stock Option Plan,
you hereby agree to surrender to UPC all your rights under and interests in the
UPC Options below in exchange for a grant from the Company of stock options
("Rollover Options") under the 1995 Stock Option Plan upon completion of the
"Offerings" (described in the Preliminary Prospectus dated September 12, 1995).
Please indicate by marking the box below all UPC Options that will be converted
pursuant to the terms of this Agreement.
UPC Options
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Date Number Exercise Date
Of Grant of Shares Price NQ of Conversion
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12/15/94 116,666* $47.00 NQ IPO Date
* 58,333 shares become exercisable on 12/15/96
58,333 shares become exercisable on 12/15/97
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2. NUMBER AND EXERCISE PRICE OF ROLLOVER OPTIONS. All Rollover Options
will be non-qualified stock options. The exercise price of the Rollover Options
is based on a formula utilizing the initial public offering price of the Common
Stock in the Offerings ("IPO Price"). The exercise price applicable to each IPO
Rollover Option will be the product of (i) the IPO Price (the "Company
Calculation Price"), and (ii) the ratio of the per-share exercise price of the
applicable UPC Option to the Fair Market Value (as defined below) of common
stock, $2.50 par value, of Union Pacific Corporation ("UPC Common Stock") on the
date of commencement of the Offerings ("UPC Calculation Price"). Each IPO
Rollover Option issued upon such exchange will entitle the holder to purchase
the number of shares of Common Stock obtained by multiplying the number of
shares of UPC Common Stock underlying the applicable UPC Option by a fraction,
the numerator of which is the spread between the exercise price of the
applicable UPC Option and the UPC Calculation Price, and the denominator of
which is the spread between the exercise price of the Rollover Option and the
Company Calculation Price. Exercise prices will be rounded to the nearest
cent, or down if there is no nearest cent. The "Fair Market Value" of UPC
Common Stock shall be the average of the high and low trading prices (regular
way) of shares of UPC Common Stock as reported in The Wall Street Journal
listing of consolidated trading on the New York Stock Exchange. No Rollover
Options to purchase fractional shares of Common Stock will be granted. All
fractions of shares of Common Stock subject to Rollover Options will be
rounded up to the next whole number. Until the date that your UPC Options are
converted to Rollover Options, you may exercise any UPC Options that are
exercisable on the date of such exercise.
3. DURATION AND EXERCISE OF THE OPTIONS. The Rollover Options shall be
exercisable upon the terms and conditions of the 1995 Stock Option Plan, as
supplemented by this Agreement, and not otherwise. As provided in the
1995 Stock Option Plan, the vesting and expiration of Rollover Options shall be
determined as if the grant date were the date upon which the original UPC
Options were granted under the UPC Plans. The term of each Rollover Option
shall be a period ending at the close of business on the tenth anniversary of
the date of grant of the original UPC Option for which such Rollover Option was
exchanged, subject to earlier termination as provided below. The Rollover
Options must be exercised in portions of not less than 100 shares, or any
integral multiple thereof, except
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to complete the exercise of any Rollover Option. The Rollover Options are also
subject to forfeiture in the event of your termination of employment or
death, as contemplated in paragraphs (h) and (i) of Section 6 of the
1995 Stock Option Plan, except that any termination of your service as a
director of the Company, other than a termination for gross
misconduct, shall be deemed to be a "retirement under the provisions of the
Company's or a subsidiary's pension plan.".
4. METHOD OF EXERCISE. The Rollover Options may be exercised, during your
lifetime, only by you. Exercise of the Rollover Options shall be by appropriate
written notice delivered to the Secretary of the Company, at its principal
business office, (a) accompanied by a check payable to the order of the Company;
or (b) accompanied by shares of previously acquired Common Stock owned by you,
to the extent that such payment does not require the surrender of a fractional
share of such previously acquired stock, for the shares to be purchased; or (c)
if you are then eligible, through the withholding of shares equal to the
exercise price.
5. APPLICABILITY OF THE PLAN. This Agreement and the Rollover Options
granted hereunder are subject to all of the terms and conditions of the 1995
Stock Option Plan and may not be assigned or transferred, except by will or the
laws of descent and distribution in the case of the death of an optionee, as
provided in paragraph (i) of Section 6 of the 1995 Stock Option Plan.
6. WITHHOLDING TAXES. Upon exercise of a non-qualified Rollover Option,
you must arrange for the payment to the Company of all applicable withholding
taxes resulting from such exercise promptly after you have been notified of the
amount thereof by the Secretary of the Company. Shares will be withheld to pay
withholding taxes if you have made a proper election to pay withholding taxes in
this manner.
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To confirm your acceptance of the foregoing, kindly sign and promptly
return one copy of this Letter Agreement to the Company.
Sincerely,
UNION PACIFIC RESOURCES GROUP INC.
By /s/ Drew Lewis
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President and Chief Executive Officer
UNION PACIFIC CORPORATION
By /s/ Ursula F. Fairbairn
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Senior Vice President - Human Resources
Accepted:
/s/ Drew Lewis Date: October 2, 1995
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Participant