EXHIBIT 10(a)
SUPPLEMENTAL PENSION PLAN
FOR OFFICERS AND MANAGERS
OF
UNION PACIFIC CORPORATION
AND
AFFILIATES
(AS AMENDED AND RESTATED IN ITS ENTIRETY
EFFECTIVE AS OF JANUARY 1, 1989, INCLUDING ALL AMENDMENTS
ADOPTED THROUGH JULY 25, 2002)
TABLE OF CONTENTS
<Table>
<Caption>
Article Page
- ------- ----
ONE SCOPE OF SUPPLEMENTAL PLAN AND DEFINITIONS.......... 1
TWO AMOUNT AND PAYMENT OF PENSION....................... 6
THREE MANNER OF PAYMENT.................................. 25
FOUR VESTING............................................ 26
FIVE CERTAIN EMPLOYEE TRANSFERS......................... 29
SIX PRE-RETIREMENT SURVIVOR'S BENEFIT.................. 30
SEVEN FUNDING............................................ 33
EIGHT ADMINISTRATION..................................... 34
NINE AMENDMENT OR TERMINATION........................... 36
TEN GENERAL PROVISIONS................................. 37
ELEVEN TRANSFERS TO NON-COVERED EMPLOYMENT................ 39
TWELVE CLAIMS PROCEDURE................................... 40
</Table>
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ARTICLE ONE
SCOPE OF SUPPLEMENTAL PLAN AND DEFINITIONS
1.1 Introduction. This "Supplemental Plan," amended and restated
effective as of January 1, 1989, and as it may hereafter be amended from time to
time, establishes the rights to specified benefits for certain officers and
managers or highly compensated employees who retire or otherwise terminate their
Employment on or after January 1, 1989. The rights of any such individual who
retired or otherwise terminated Employment prior to January 1, 1989 shall be
subject to the terms of the Supplemental Plan as in effect at the date of
retirement or termination, except to the extent otherwise provided herein. This
Supplemental Plan is intended to be a non-qualified supplemental retirement plan
which is unfunded and maintained primarily for the purpose of providing deferred
compensation for a select group of management or highly compensated employees of
the Company, pursuant to sections 201, 301 and 401 of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA") and, as such, to be exempt
from the provisions of Parts 2, 3 and 4 of Subtitle B of Title I of ERISA.
1.2 Definitions. As used in this Supplemental Plan, the following terms
have the meanings set forth below, unless a different meaning is plainly
required by the context:
(a) "Administrator" means the Senior Vice President-Human
Resources of Union Pacific or, if there is no such Senior Vice
President - Human Resources, such person or persons appointed by the
Board of Directors of Union Pacific or, in the absence of any such
appointment, Union Pacific, who shall administer this Supplemental
Plan.
(b) "Change in Control":
(i) prior to November 16, 2000, means:
(A) any person (within the meaning of
Section 13(d) of the Securities Exchange Act of 1934 (the "Act")), other than
Union Pacific or a subsidiary or any employee benefit plan sponsored by Union
Pacific or a subsidiary, becomes the beneficial owner (as such term is defined
in Rule 13d-3 under the Act) directly or indirectly of 30% or more of the
outstanding stock of Union Pacific (calculated as provided in Rule 13d-3(d)
under the Act in the case of rights to acquire common stock);
(B) the shareholders of Union Pacific
approve (I) any consolidation or merger of Union Pacific in which Union Pacific
is not the continuing or surviving corporation or pursuant to which shares of
common stock of Union Pacific would be converted into cash, securities or other
property, other than a merger of Union Pacific in which holders of common stock
of Union Pacific immediately prior to the merger have the same proportionate
ownership of common stock of the surviving corporation immediately after the
merger as immediately before or (II) any sale, lease, exchange or other transfer
(in one transaction or a series of related transactions) of all or substantially
all the assets of Union Pacific; or
(C) there shall have been a change in the
composition of the Board of Directors of Union Pacific such that within any
period of two consecutive years or less
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individuals who at the beginning of such period constituted such Board, together
with any new directors whose election, or nomination for election by Union
Pacific's shareholders, was approved by a vote of at least two-thirds of the
directors then in office who were directors at the beginning of such period,
shall for any reason no longer constitute a majority of the directors of Union
Pacific.
(ii) on or after November 16, 2000, means a "Change
in Control" as defined in the Union Pacific Corporation Key Employee Continuity
Plan adopted November 16, 2000, as may be amended from time to time.
(c) "Company" means Union Pacific and any Affiliated Company
which is included in the Supplemental Plan by written action of (i) its board of
directors and (ii) either the Board of Directors of Union Pacific or the
Administrator acting on behalf of the Board of Directors of Union Pacific;
provided, however, that if an Affiliated Company (other than an Affiliated
Company that would remain such if the phrase "100 percent" were substituted for
the phrase "at least 80 percent" in section 1563(a)(1) of the Code, which is
then incorporated by reference in sections 414(b) and (c) of the Code) is
included in the Supplemental Plan by virtue of action by the Administrator,
unless the Board of Directors of Union Pacific ratifies such action not later
than its first regularly scheduled meeting held subsequent to the taking of such
action by the Administrator, such Affiliated Company shall cease to be so
included as of the close of business on the last day of the month in which such
meeting occurs and no employee of such Affiliated Company shall accrue a benefit
under the Supplemental Plan.
(d) "Early Supplemental Pension Retirement Date" means,
subject to Sections 2.10(a)(ii)(B) and (b)(ii)(B), Section 2.11(b)(ii) and
Section 2.13(b)(ii), the date of a Participant's termination of Employment after
he becomes vested in his Supplemental Plan benefit under Section 4.2, before his
Normal Retirement Date, and after either attainment of age 55 and completion of
10 years of Vesting Service or attainment of age 65, determined after taking
into account (i) additional service credited under Section 1.2(p) and/or (ii)
additional years of age, not exceeding five (5), as may be approved by the Chief
Executive Officer of Union Pacific prior to the Participant's termination of
Employment or as may be credited to the Participant pursuant to Section 2.5,
2.8, 2.10. 2.11, 2.12 or 2.13; provided, however that such date does not qualify
as an Early Retirement Date under the terms of the Pension Plan.
(e) "Early Supplemental Pension" means the pension provided
for in Section 2.2.
(f) "Effective Date" means January 1, 1989, the effective date
of this amendment and restatement; provided, however, that when a provision of
this Supplemental Plan states an effective date other than January 1, 1989, such
stated special effective date shall apply as to that provision.
(g) "Incentive Compensation" means:
(i) incentive compensation awarded a Participant
under the Executive Incentive Plan of Union Pacific Corporation and
Subsidiaries, as amended and restated as of
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April 15, 1988 and as it may thereafter be amended from time to time (the
"Executive Incentive Plan");
(ii) for 1999 and later years, incentive compensation
foregone by a Participant for an award under the Executive Incentive Premium
Exchange Program of Union Pacific Corporation and Subsidiaries;
(iii) such other incentive compensation as may be
included in Incentive Compensation for a Participant at the discretion of the
Board of Directors of Union Pacific; or
(iv) the amount of retention stock (or retention
units) awarded a Participant by the Compensation and Benefits Committee of the
Company's Board of Directors (or any successor thereto) in lieu of a cash award
under the Executive Incentive Plan,
but only to the extent that such incentive compensation or retention stock (or
retention units) is not taken into account in computing the Participant's Final
Average Compensation under the Pension Plan for reasons other than the annual
compensation limit under section 401(a)(17) of the Code or the provisions of
Alternative II-D set forth in Section 3.01(c) of the Pension Plan. Awards of
Incentive Compensation shall be taken into account at the time such awards would
have been paid but for the Participant's election to forego or defer payment
under a plan of the Company or an Affiliated Company; provided, however, that
for purposes of calculating a Participant's benefit under this Supplemental Plan
no more than the three highest awards of Incentive Compensation shall be counted
in the Participant's highest 36 consecutive months of Compensation determined
taking all Incentive Compensation into account.
(h) "Involuntary Termination Supplemental Pension" means the
pension provided for in Section 2.5.
(i) "Normal Supplemental Pension" means the pension provided
for in Section 2.1.
(j) "Participant" means any Employee of the Company on or
after the Effective Date who is or once was a Covered Employee under the Pension
Plan and:
(i) whose Total Credited Service under Section 1.2(p)
includes years that are not taken into account as Credited Service under the
Pension Plan (including years not taken into account due to application of the
provisions of Alternative II-D set forth in Section 3.01(c) of the Pension
Plan);
(ii) who has Incentive Compensation within the
120-calendar-month period immediately preceding the date on which the
Participant ceases to be a Covered Employee;
(iii) whose Final Average Compensation is not fully
recognized under the Pension Plan due to application of the annual compensation
limit under section 401(a)(17) of the Code or the provisions of Alternative II-D
set forth in Section 3.01(c) of the Pension Plan;
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(iv) whose benefit under the Pension Plan is reduced
as a result of the limitation described in Section 5.02 of the Pension Plan; or
(v) who is credited with additional years of age as
described in Section 1.2(d)(ii), and
who has been designated by the Administrator as eligible to participate in the
Supplemental Plan. In the event of the death or incompetency of a Participant,
the term shall mean the Participant's personal representative or guardian for
whatever amounts remain payable to the Participant under the terms of the
Supplemental Plan.
(k) "Pension Plan" means the Pension Plan for Salaried
Employees of Union Pacific Corporation and Affiliates, as amended from time to
time.
(l) "Postponed Supplemental Pension" means the pension
provided for in Section 2.3.
(m) "Special 1990-1992 Window Participant" means a Pension
Plan participant who retired under an early retirement window program described
in Section 6.07 or 6.09 of the Pension Plan and who was prohibited under Section
6.12 (prior to 1999, Section 6.11) of the Pension Plan from receiving the
benefits of the window program in any payment from the Pension Plan made for a
month prior to November 1, 1994.
(n) "Surviving Spouse" means:
(i) where payments to the Participant have not begun
under the Supplemental Plan at the time of the Participant's death, the spouse
who was legally married to the Participant continuously during the 12 months
ending on the date of the Participant's death;
(ii) where payments to the Participant have begun
under the Supplemental Plan prior to January 1, 1995 and prior to the
Participant's death, the spouse who was legally married to the Participant
continuously during the 12 months ending on the date that such payments began or
who was legally married to the Participant on the date such payments began and
for a period of at least 12 months ending on or before the date of the
Participant's death;
(iii) where payments to the Participant have begun
under the Supplemental Plan on or after January 1, 1995 but prior to the
Participant's death:
(A) in the case of a Participant whose
Supplemental Plan and Pension Plan benefit began on the same date or who is not
vested in a Pension Plan benefit, the spouse who was legally married to the
Participant on the date that his Supplemental Plan payments began;
(B) in the case of a Participant whose
Supplemental Plan benefits began on a date earlier than the date on which his
Pension Plan benefits began, the spouse who was legally married to the
Participant on the date his Pension Plan benefits began; or
4
(C) in the case of a Participant whose
Supplemental Plan benefits began but whose vested Pension Plan benefits had not
started prior to this death, the spouse who was legally married to the
Participant on the date of his death;
provided, however, that, for benefits starting before July 25, 2002, the
Surviving Spouse shall be determined as described in this paragraph (iii) unless
the Administrator advised the Participant to the contrary.
(o) "Surviving Spouse's Pension" means the pension provided
for in Section 2.4.
(p) "Total Credited Service" means:
(i) all years of Credited Service (and portions
thereof) as set forth in the Article IV of the Pension Plan, including Credited
Service for years of Employment that are not taken into account under the
Pension Plan solely due to application of the provisions of Alternative II-D set
forth in Section 3.01(c) of the Pension Plan;
(ii) such additional years of training prior to the
Participant's Employment Commencement Date, as may have especially qualified the
Participant for service with the Company, as determined by the Board of
Directors, in its sole discretion;
(iii) such additional years of service, not exceeding
five (5), as may be approved by the Chief Executive Officer of Union Pacific
prior to the Participant's termination of Employment; and
(iv) such additional years of service as may be
credited to the Participant pursuant to Section 2.5, 2.8, 2.10, 2.11, 2.12 or
2.13.
(q) "Total Offset Service" means (i) all years of "offset
service" (including portions thereof) as set forth in Article V of the Pension
Plan, including years of offset service for years of Employment that are not
taken into account under the Pension Plan solely due to application of the
provisions of Alternative II-D set forth in Section 3.01(c) of the Pension Plan;
and (ii) any additional years as credited in accordance with Section 1.2(p)(ii),
(iii) or (iv).
(r) "Union Pacific" means Union Pacific Corporation, or any
successor to that corporation.
(s) "Vesting Service" means (i) all years of Vesting Service
(including portions thereof) as set forth in Article IV of the Pension Plan; and
(ii) any additional years as credited in accordance with Section 1.2(p)(ii),
(iii) or (iv).
(t) All other capitalized terms shall have the respective
meanings set forth in the definition provisions of Article II of the Pension
Plan.
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ARTICLE TWO
AMOUNT AND PAYMENT OF PENSION
2.1 Normal Supplemental Pension. Subject to the provisions of Articles
Three, Five and Eleven, a Participant retiring on a Normal Retirement Date under
the Pension Plan (including a Participant who has become a Disabled Participant
under the Pension Plan and who ceases to be such on the Normal Retirement Date)
shall be entitled to receive a Normal Supplemental Pension, in the form of a
single life annuity commencing on the Participant's Normal Retirement Date,
equal to the excess, if any, of:
(a) the annual Accrued Benefit payable at Normal Retirement
Date computed on the basis of the formula provided in Section 5.01 of the
Pension Plan, determined without regard to the limitation described in Section
5.02 of the Pension Plan, and including under such formula any amounts of Final
Average Compensation that were excluded from consideration for the Participant
under the Pension Plan and all Incentive Compensation payable to the Participant
within the 120-calendar-month period immediately preceding the date on which the
Participant ceases to be a Covered Employee, and utilizing Total Credited
Service up to 40 years in place of Credited Service under Article IV of the
Pension Plan and Total Offset Service up to 40 years in place of "offset
service" under Article V of the Pension Plan, over
(b) the annual nonforfeitable Accrued Benefit payable at
Normal Retirement Date actually determined to be due under the Pension Plan.
For purposes of determining benefits under the Supplemental Plan, any actuarial
adjustments for a delay in the commencement of payment beyond the Normal
Retirement Date or otherwise that apply under the Pension Plan in calculating
the benefit described in (b), above, shall also apply to calculate the benefit
described in (a), above.
2.2 Early Supplemental Pension.
(a) Participant Retires on Early Retirement Date. The
following provisions apply to a Participant retiring on an Early Retirement Date
under the Pension Plan:
(i) Benefit Payable on Normal Retirement Date.
Subject to the provisions of Articles Three, Five and Eleven, a Participant
retiring on an Early Retirement Date under the Pension Plan shall be entitled to
receive a Normal Supplemental Pension in the form of a single life annuity
commencing at Normal Retirement Date, computed in accordance with Section 2.1
based on Total Credited Service, Total Offset Service, etc. as of the
Participant's Early Retirement Date. A Participant retiring on an Early
Retirement Date shall include a Participant who has become a Disabled
Participant under the Pension Plan and who ceases to be a Disabled Participant
on an Early Retirement Date.
(ii) Benefit Payable on Early Retirement Date. In
lieu of the benefit described in (i), above, subject to the provisions of
Articles Three, Five and Eleven, such Participant may receive an Early
Supplemental Pension, in the form of a single life annuity commencing at the
date prior to his Normal Retirement Date on which he elects to start his
6
pension under the Pension Plan. The Early Supplemental Pension shall be computed
in the same manner as the Normal Supplemental Pension, but with the amounts
described in Sections 2.1(a) and (b) adjusted for payment as of the early
benefit start date in accordance with Section 6.03 of the Pension Plan, taking
into account any additional years of age described in Section 1.2(d)(ii) for
purposes of adjusting both the gross and offset portions of the benefit in
Section 2.1(a) (except as provided otherwise in Section 2.12 or 2.13).
(b) Participant Retires on Early Supplemental Pension
Retirement Date. The following provisions apply to a Participant retiring on an
Early Supplemental Pension Retirement Date:
(i) Participant Is Eligible to Start Pension Plan
Benefit. Subject to the provisions of Articles Three, Five and Eleven, a
Participant retiring on an Early Supplemental Pension Retirement Date who is
eligible to start a benefit under the Pension Plan upon his retirement may
receive a Normal or Early Supplemental Pension as described in subsection (a);
provided, however, that, for purposes of determining the Early Supplemental
Pension as described in (a)(ii), above:
(A) the amount described in Section 2.1(a)
shall be adjusted for payment as of the early benefit start date in accordance
with Section 6.03 of the Pension Plan, taking into account any additional years
of age described in Section 1.2(d)(ii) for purposes of adjusting both the gross
and offset portions of the benefit in Section 2.1(a) (except as provided
otherwise in Section 2.12 or 2.13); and
(B) the amount described in Section 2.1(b)
shall be adjusted for payment as of the early benefit start date in accordance
with Section 6.04 of the Pension Plan.
(ii) Participant Is Not Eligible to Start Pension
Plan Benefit. Subject to the provisions of Article Three, Five and Eleven, a
Participant retiring on an Early Supplemental Pension Retirement Date who either
is not vested in or is not eligible to start a benefit under the Pension Plan
upon his retirement shall receive an Early Supplemental Pension, in the form of
a single life annuity commencing on the first day of the month following his
Early Supplemental Pension Retirement Date, the amount of which shall be
determined as follows:
(A) Prior to the earliest date, if any, that
the Participant is eligible to start benefits under the Pension Plan, the Early
Supplemental Pension payable under this provision shall be computed in the same
manner as the Normal Supplemental Pension, except that:
(I) the amount described in Section
2.1(a) shall be adjusted for payment as of the early benefit start date as
described in Section 6.03 of the Pension Plan for Pension Plan payments starting
on an Early Retirement Date, taking into account any additional years of age
described in Section 1.2(d)(ii) for purposes of adjusting both the gross and
offset portions of the benefit in Section 2.1(a) (except as provided otherwise
in Section 2.12 or 2.13); and
7
(II) the amount described in
Section 2.1(b) shall be zero for purposes of determining the Early Supplemental
Pension payable prior to the earliest date, if any, on which the Participant is
eligible to start benefits under the Pension Plan.
(B) On and after the earliest date, if any,
that the Participant is eligible to start benefits under the Pension Plan, the
Early Supplemental Pension shall equal the excess of:
(I) the amount described in Section
2.2(b)(ii)(A)(I), above, calculated as of the early benefit start date on which
payments under the Supplemental Plan began, over
(II) the amount described in
Section 2.1(b) reduced for early payment in accordance with Section 6.04 of the
Pension Plan as of such "earliest date" whether or not the Participant's Pension
Plan benefit starts on that date.
Effective for benefits starting before July 25, 2002, payments under this
subparagraph (b)(ii) were made as described above unless the Administrator
advised the Participant to the contrary.
2.3 Postponed Supplemental Pension. Subject to the provisions of
Articles Three, Five and Eleven, a Participant who retires on a Postponed
Retirement Date shall be entitled to a Postponed Supplemental Pension, in the
form of a single life annuity commencing at the Postponed Retirement Date, which
is equal to the Normal Supplemental Pension, computed in accordance with Section
2.1 based on his Total Credited Service, Total Offset Service, etc. as of the
Participant's Postponed Retirement Date (instead of his Normal Retirement Date)
or, if earlier, as of his Required Beginning Date. If a Participant's benefits
begin on his Required Beginning Date and prior to his termination of Employment,
the Participant's benefits shall be adjusted thereafter as described in Section
8.06 of the Pension Plan.
2.4 Surviving Spouse's Pension (Post-Retirement Automatic Survivor
Annuity).
(a) The Surviving Spouse of a Participant who dies while
receiving a Normal or Postponed Supplemental Pension or an Early Supplemental
Pension determined under Section 2.2(a), relating to retirement on a date that
qualifies as an Early Retirement Date under the terms of the Pension Plan, shall
be entitled to a Surviving Spouse's Pension equal to one-half of the single life
annuity amount of the Normal, Early, or Postponed Supplemental Pension payable
to such deceased Participant under the Supplemental Plan. Such Surviving
Spouse's Pension shall be payable to such Spouse in equal monthly payments for
life, commencing on the first day of the month immediately following the death
of such Participant.
(b) The Surviving Spouse of a Participant who dies while
receiving an Early Supplemental Pension determined under Section 2.2(b),
relating to retirement on an Early Supplemental Pension Retirement Date (i.e., a
date that does not qualify as an Early Retirement Date under the terms of the
Pension Plan), shall be entitled to a Surviving Spouse's Pension. The Surviving
Spouse's Pension shall be payable in equal monthly payments for the Surviving
Spouse's life, commencing on the first day of the month immediately following
the Participant's death, which shall equal one-half of the single life annuity
amount calculated for the Participant
8
under Section 2.2(b)(i)(A) or 2.2(b)(ii)(A)(I), as appropriate, as of the
Participant's early benefit start date; provided, however, that monthly payments
to the Surviving Spouse shall be reduced by any pre-retirement survivor benefit
that the Surviving Spouse is entitled to receive from the Pension Plan from the
earliest date following the Participant's death that such survivor benefit is
payable from the Pension Plan, even if benefits to the Surviving Spouse have not
started on that earliest date. Effective for benefits starting before July 25,
2002, payments under this subsection (b) were made as described above unless the
Administrator advised the Participant and/or Surviving Spouse to the contrary.
(c) The Surviving Spouse's Pension described in this Section
2.4 is payable in addition to any other death benefit that may be payable to the
Surviving Spouse or other beneficiary of the Participant under the form of
payment in which the Participant's Supplemental Pension is paid pursuant to
Article Three. However, except with respect to Participants who qualify for the
enhancements described in Sections 2.8, 2.10, 2.11, 2.12 or 2.13, in no event
shall the Surviving Spouse who is entitled to the Surviving Spouse's Pension, if
also designated as the Participant's beneficiary under a joint and survivor
annuity payable under the Supplemental Plan, receive a total benefit from the
Supplemental Plan that is more than 100% of the retirement income otherwise
payable to the Participant under the Supplemental Plan.
2.5 Involuntary Termination Supplemental Pension.
(a) The following provisions apply with respect to Change in
Control occurring on or before November 15, 2000:
(i) In lieu of the benefit described in Section 2.1
or 2.2, if the Employment of any Participant (A) who is an elected officer, and
(B) whose highest annual Compensation (including Incentive Compensation) is not
less than $200,000, is involuntarily terminated prior to the 5th anniversary of
a Change in Control and prior to Normal Retirement Date, and if, at the time of
such involuntary termination, such Participant has completed 10 or more years of
Vesting Service and is within the 10-year period immediately preceding Normal
Retirement Date, such Participant shall be entitled to an Involuntary
Termination Supplemental Pension commencing at Normal Retirement Date, equal to
the Normal Supplemental Pension computed in accordance with Section 2.1 as of
his termination date, with the amount in Section 2.1(a) based on Total Credited
Service and Total Offset Service credited and as projected to be credited to the
5th anniversary of such Change in Control (or, if earlier, the Participant's
Normal Retirement Date). In lieu thereof, such Participant may elect an Early
Retirement Date and receive an Involuntary Termination Supplemental Pension
commencing on such Early Retirement Date equal to the Early Supplemental Pension
computed in accordance with Section 2.2 as of the Early Retirement Date, with
the amount in Section 2.1(a) based on Total Credited Service and Total Offset
Service credited and as projected to be credited to the 5th anniversary of such
Change in Control (or, if earlier, the Participant's Normal Retirement Date)
adjusted in accordance with Section 6.03 of the Pension Plan, but based on the
Participant's projected age on the 5th anniversary date of such Change in
Control (or, if earlier, Normal Retirement Date).
(ii) In lieu of the benefit described in Section 4.2,
if the Employment of any Participant (other than a Participant described in (i)
above), is involuntarily terminated prior to the 5th anniversary of a Change in
Control and prior to Normal Retirement Date, and if
9
such Participant would have attained age 55 and been credited with at least 15
years of Vesting Service had the Participant continued to be employed to such
5th anniversary, such Participant shall be entitled to an Involuntary
Termination Supplemental Pension commencing on the date provided for a benefit
described under Section 4.2, equal to the benefit amount computed under Section
4.2, with the amount in Section 2.1(a) based on Total Credited Service and Total
Offset Service credited and as projected to be credited to the 5th anniversary
of such Change in Control (or, if earlier, the Participant's Normal Retirement
Date) provided that, in the event such Participant elects to receive the
supplemental pension commencing on a date prior to his Normal Retirement Date,
the Actuarial Equivalent referred to in Section 4.2 shall be based on the
Participant's projected age on the 5th anniversary date of such Change in
Control (or, if earlier, his Normal Retirement Date).
(iii) For purposes of this subsection (a), the term
"involuntary termination" means any action taken subsequent to a Change in
Control by Union Pacific or the Company or any successor to, or assignee of, its
obligations under this Supplemental Plan, either (A) terminating Employment for
other than an unlawful act or, (B) without the consent of a Participant,
adversely affecting employment status by reducing earnings or demoting in title,
or lessening of authority or responsibilities, or changing the situs of
employment which requires a change of residence, of such Participant and, as a
result, such Participant terminates Employment.
(iv) In the event any amount paid or benefit
otherwise received by a Participant under the Supplemental Plan shall be
determined by the Internal Revenue Service to constitute an "excess parachute
payment" as such term is defined in section 280G of the Code, together with all
other payments and benefits outside of the Supplemental Plan that are taken into
account in making such determination, and to be subject to an excise tax under
section 4999 of the Code, or any successor provision thereto (collectively,
"Excise Tax"), the Company shall pay to the Participant an additional amount
such that after taking into account all income and employment taxes, including
the Excise Tax, interest and penalties with respect thereto, incurred by the
Participant on the receipt of such additional amount, the Participant is left
with the same after-tax amount the Participant would have been left with had no
Excise Tax been imposed.
(b) A Participant who is affected by a Change in Control
occurring on or after November 16, 2000 shall have his eligibility for and
amount of Supplemental Plan benefits determined pursuant to the terms of the
Union Pacific Corporation Key Employee Continuity Plan adopted November 16,
2000, as may be amended from time to time.
2.6 Suspension of Benefits.
(a) Date of Benefit Suspension. Notwithstanding any provisions
of Article Two or Article Four to the contrary, the payment of the pension to
which a Participant is otherwise entitled under the Supplemental Plan shall be
suspended during any period for which payment of a pension to which such
Participant may otherwise be entitled under the Pension Plan is (or would be)
suspended under the terms of the Pension Plan due to such Participant's return
to Employment. The pension payable to the Participant under the Supplemental
Plan which has been suspended shall resume on the same date as payments to the
Participant under the Pension Plan resume (or would resume if the Participant
had been entitled to such a pension).
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(b) Resumption of Payments. Upon the resumption of payment of
such pension hereunder to such Participant, the resumed benefits shall be
recalculated taking into account any increases in the Participant's Total
Credited Service, Total Offset Service, Incentive Compensation, age and so
forth. However, no actuarial or other adjustment shall be made to reflect such
suspension. The resumed benefit shall be offset, in a manner prescribed by the
Administrator, by (i) any benefit paid during a month in which benefits should
have been suspended but were not, which has not previously been repaid to the
Company by the Participant, and (ii) the Actuarial Equivalent of any benefits
paid prior to Normal Retirement Date.
(c) Form of Resumed Payments. The resumed payments (including
any additional benefits earned during the period of suspension) under the
Supplemental Plan shall be paid to the Participant in the same form of payment
as the Participant elects for his resumed payments under the Pension Plan. If
the Participant is not entitled to any benefits under the Pension Plan, the
resumed payments under the Supplemental Plan shall resume in the same form of
payment in effect for the Participant before payments were suspended.
2.7 Benefits for Special 1990-1992 Window Participants. Each Special
1990-1992 Window Participant (or the Surviving Spouse or other beneficiary of a
Special 1990-1992 Window Participant) shall receive from the Supplemental Plan
in each month the individual receives a payment from the Pension Plan prior to
November 1, 1994, an amount equal to the excess of:
(a) the amount that would have been payable to the individual
from the Pension Plan for that month, had the provisions of Section 6.12 (prior
to 1999, Section 6.11) of the Pension Plan not applied; over
(b) the amount actually paid to the individual from the
Pension Plan for that month.
2.8 Window Benefits for Highly Compensated Employees. Each Participant
who was a Covered Employee under the Pension Plan, who retired under an early
retirement window program described in Section 6.06, 6.07 or 6.09 of the Pension
Plan but on the relevant date was excluded from participation in the Pension
Plan pursuant to Section 3.01(c) of the Pension Plan or was excluded from
participation in the window program due to his status as an officer, shall be
deemed for all purposes under the Supplemental Plan to have the additional years
of service and the additional years of age that would have been credited to the
Participant under the Pension Plan pursuant to such program if Section 3.01(c)
of the Pension Plan had not applied to the Participant; provided, however, that
service credited pursuant to this Section shall not cause the Participant's
Total Credited Service or Total Offset Service to exceed 40 years, and no
Participant's deemed age shall exceed 65 years.
2.9 1991 Cost-of-Living Increase. Effective December 1, 1991, the
monthly benefit payment to any person who is (a) a former employee of the
Company then receiving retirement benefits under this Supplemental Plan
(regardless of the employee's termination date), or (b) a beneficiary or
surviving spouse then receiving death benefits under this Supplemental Plan
shall be increased by the percentage shown in the following table.
11
<Table>
<Caption>
Participant's Benefit Start Date or
Surviving Spouse's Benefit Start
Date for Pre-Retirement Death Benefits Increase in Supplemental Pension
- -------------------------------------- --------------------------------
1978 or earlier 19%
1979 16%
1980 13%
1981 10%
1982 7%
1983 6%
1984 5%
1985 4%
1986 3%
1987 2%
1988 or later 0%
</Table>
However, such increase shall only be applied to the portion, if any, of the
amount being received due to participation in this Supplemental Plan that does
not exceed the difference between $108,963 per year and the amount being
received by such person under the Pension Plan as increased by resolutions of
the Board of Directors of Union Pacific unanimously adopted on June 27, 1974 and
May 31, 1979 (before adjustment to reflect the increases effective December 1,
1991).
2.10 1999 Window Program.
(a) 1999 5x5 Program.
(i) Effective July 1, 1999, the benefit enhancements
described in subsection (ii) shall be provided to any Participant who is a
Covered Employee under the Pension Plan who satisfies the requirements of (i)(A)
and (B).
(A) The requirements of this subparagraph
are satisfied by a Covered Employee:
(I) whose 1998 Compensation, as
defined in Section 2.18(c) of the Pension Plan, is at least $110,000 and whose
annual salary rate as of July 1, 1999 is less than $140,000;
(II) who is at least age 55 by July
1, 2000;
(III) whose most recent date of
hire as an Employee is before June 30, 1994;
(IV) who, as of July 1, 1999, is
not a loaned executive, is not on long-term disability under the Union Pacific
Long-Term Disability Plan, has not previously been accepted to participate in a
voluntary force reduction program, does not have an existing termination
agreement in effect or is not on a leave of absence (except those granted a
leave under the Family and Medical Leave Act or as an accommodation under the
Americans with Disabilities Act);
12
(V) who agrees to terminate
employment with the Company and all Affiliated Companies on the date selected by
the Company, which date shall not occur after July 15, 2000, and continues to
provide satisfactory service as determined by the Company until that date; and
(VI) who elects to receive the
benefit enhancements described in subsection (ii) during the period beginning
July 1, 1999, and ending July 31, 1999, by submission of a written election and
execution of other documents, including a waiver of any and all rights or claims
(other than to benefits under the Supplemental Plan or the Pension Plan) that
the Employee may have against Company and any Affiliated Company, the
Supplemental Plan, the Pension Plan and their officers, agents and employees, in
the form and manner prescribed by the Company and does not revoke such waiver
within the time prescribed by the Company.
(B) The requirements of this paragraph are
satisfied by a Covered Employee who, as of May 18, 1999, is employed in one of
the following departments, provided that the number of Covered Employees of such
department satisfying paragraph (A) or the comparable requirements set forth in
the Pension Plan for Covered Employees whose 1998 Compensation, as defined in
Section 2.18(c) of the Pension Plan, is less than $110,000 do not exceed the
department's numerical limit set forth below. The departments referred to below
consist entirely of Union Pacific Railroad Company Covered Employees, unless
indicated to the contrary.
<Table>
<Caption>
DEPARTMENTAL
DEPARTMENTS LIMIT
----------- ------------
Corporate Relations (excluding Government Affairs) 4
Engineering (excluding employees who report
directly to a Regional office) 80
Finance (excluding Accounting, Real Estate and Tax) 3
Human Resources - Development & Training 5
Human Resources - Other 8
Information Technologies/Union Pacific Technologies
(excluding UPT employees working
exclusively on commercial business) 100
</Table>
13
<Table>
<Caption>
DEPARTMENTAL
DEPARTMENTS LIMIT
----------- ------------
Labor Relations 24
Law (excluding Little Rock) 10
Marketing & Sales - Damage Prevention 3
Marketing & Sales - Marketing Services (including NDMC) 20
Marketing & Sales - NCSC (excluding ICSC) 13
Marketing & Sales - Agricultural Products 7
Mechanical - Car (excluding employees who report
directly to a Regional office) 15
Mechanical - Locomotive (excluding employees who
report to directly to a Regional office) 18
Network Design and Integration 20
Risk Management - Police 10
Risk Management - Other 21
Supply 21
Operating Support Services/Quality 6
</Table>
In the event the number of Covered Employees satisfying paragraph (A) or the
comparable requirements set forth in the Pension Plan for Covered Employees
whose 1998 Compensation, as defined in Section 2.18(c) of the Pension Plan, is
less than $110,000 exceeds a Departmental Limit, such Covered Employees shall be
ranked based upon their combined age and Vesting Service (as determined under
Article IV of the Pension Plan), as of July 1, 1999, and the benefit
enhancements described in subsection (ii) or in the Pension Plan shall be
provided to the Covered Employees with the greatest combined age and Vesting
Service up to the Departmental Limit.
(ii) Each Covered Employee described in subsection
(i) shall:
14
(A) for purposes of calculating Vesting
Service, Total Credited Service and Total Offset Service and determining
actuarial reductions for payments beginning before Normal Retirement Date,
receive an additional 5 years of service (up to a maximum of 40 years of
service) and shall be deemed to have attained an age 5 years older than his
actual age (up to a maximum of age 65),
(B) be treated as having satisfied the
requirements to have an Early Supplemental Pension Retirement Date if he has not
satisfied the requirements to have an Early Retirement Date under the Pension
Plan, and
(C) be treated as having been a Covered
Employee for 60 full consecutive months for purposes of applying Section
4.02(c)(3) of the Pension Plan when calculating Total Credited Service and Total
Offset Service under this Supplemental Plan.
(b) 1999 5x5 Program II.
(i) Effective December 1, 1999, the benefit
enhancements described in subsection (ii) shall be provided to any Participant
who is a Covered Employee under the Pension Plan who satisfies the requirements
of (i)(A) and (B).
(A) The requirements of this subparagraph
are satisfied by a Covered Employee:
(I) whose 1998 Compensation, as
defined in Section 2.18(c) of the Pension Plan, is at least $110,000 and whose
annual salary rate as of December 1, 1999 is less than $140,000 (but excluding
any Covered Employee in the Marketing and Sales Department whose annualized 1999
base salary is more than $85,000);
(II) who is at least age 55 by July
1, 2000;
(III) whose most recent date of
hire as an Employee is before June 30, 1994;
(IV) who, as of December 1, 1999,
is not a loaned executive, is not on long-term disability under the Union
Pacific Long-Term Disability Plan, has not previously been accepted to
participate in a voluntary force reduction program, does not have an existing
termination agreement in effect or is not on a leave of absence (except those
granted a leave under the Family and Medical Leave Act or as an accommodation
under the Americans with Disabilities Act);
(V) who agrees to terminate
employment with the Company and all Affiliated Companies on the date selected by
the Company, which date shall not occur after July 15, 2000, and continues to
provide satisfactory service as determined by the Company until that date; and
(VI) who elects to receive the
benefit enhancements described in subsection (ii) during the period beginning
December 1, 1999, and ending December 31, 1999, by submission of a written
election and execution of other documents,
15
including a waiver of any and all rights or claims (other than to benefits under
the Supplemental Plan or the Pension Plan) that the Employee may have against
the Company and any Affiliated Company, the Supplemental Plan, the Pension Plan
and their officers, agents and employees, in the form and manner prescribed by
the Company, and does not revoke such waiver within the time prescribed by the
Company.
(B) The requirements of this subparagraph
are satisfied by a Covered Employee who, as of December 1, 1999, is employed in
one of the following departments, provided that the number of Covered Employees
of such department satisfying paragraph (A) or the comparable requirements set
forth in the Pension Plan for Covered Employees whose 1998 Compensation, as
defined in Section 2.18(c) of the Pension Plan, is less than $110,000 do not
exceed the department's numerical limit set forth below. The departments
referred to below consist entirely of Union Pacific Railroad Company Covered
Employees, unless indicated to the contrary.
<Table>
<Caption>
DEPARTMENTAL
DEPARTMENTS LIMIT
----------- ------------
Western Regional Staff (excluding Service Unit staff) 5
Northern Regional Staff (excluding Service Unit staff) 19
Southern Regional Staff (excluding Service Unit staff) 5
Commissary Services 3
Information Technologies/Union Pacific Technologies
(excluding UPT employees working
exclusively on commercial business) 51
Marketing & Sales - Commodity Groups 11
Marketing & Sales - Marketing Services (including NDMC) 10
Supply 8
</Table>
In the event the number of Covered Employees satisfying paragraph (A) or the
comparable requirements set forth in the Pension Plan for Covered Employees
whose 1998 Compensation, as defined in Section 2.18(c) of the Pension Plan, is
less than $110,000 exceeds a Departmental Limit, such Covered Employees shall be
ranked based upon their combined age and Vesting Service (as determined under
Article IV of the Pension Plan), as of December 1, 1999, and the benefit
enhancements described in subsection (ii) or in the Pension Plan shall be
provided to the
16
Covered Employees with the greatest combined age and Vesting Service up to the
Departmental Limit.
(ii) Each Covered Employee described in subsection
(a) shall:
(A) for purposes of calculating Vesting
Service, Total Credited Service and Total Offset Service and determining
actuarial reductions for payments beginning before Normal Retirement Date,
receive an additional 5 years of service (up to a maximum of 40 years of
service) and shall be deemed to have attained an age 5 years older than his
actual age (up to a maximum of age 65),
(B) be treated as having satisfied the
requirements to have an Early Supplemental Pension Retirement Date if he has not
satisfied the requirements to have an Early Retirement Date under the Pension
Plan,
(C) be treated as having been a Covered
Employee for 60 full consecutive months for purposes of applying Section
4.02(c)(3) of the Pension Plan when calculating Total Credited Service and Total
Offset Service under this Supplemental Plan, and
(D) for purposes of calculating benefits
payable under this Supplemental Plan, have the Railroad Retirement Annuity used
for his governmental offset described in Section 5.01(b) of the Pension Plan
determined as if his termination of Employment occurred on December 31, 1999.
2.11 2000 VERP
(a) Effective April 1, 2000, the benefit enhancements
described in subsection (b) shall be provided to any Participant who is a
Covered Employee under the Pension Plan who satisfies the requirements of (a)(i)
and (ii).
(i) The requirements of this subparagraph are
satisfied by a Covered Employee:
(A) whose 1999 Compensation, as defined in
Section 2.18(c) of the Pension Plan, is at least $110,000 and whose annual
salary rate as of April 1, 2000 is less than $140,000;
(B) who is at least age 55 by December 31,
2000;
(C) whose most recent date of hire as an
Employee is on or before March 31, 1995;
(D) who, as of April 1, 2000, is not a
loaned executive, is not on long-term disability under the Union Pacific
Long-Term Disability Plan, has not previously been accepted to participate in a
voluntary force reduction program, does not have an existing termination
agreement in effect or is not on a leave of absence (except those granted a
leave under the Family and Medical Leave Act or as an accommodation under the
Americans with Disabilities Act);
17
(E) who agrees to terminate employment with
the Company and all Affiliated Companies on the date selected by the Company,
which date shall not occur after December 31, 2000, and continues to provide
satisfactory service as determined by the Company until that date; and
(F) who elects to receive the benefit
enhancements described in subsection (b) during the period beginning April 1,
2000, and ending April 30, 2000, by submission of a written election and
execution of other documents, including a waiver of any and all rights or claims
(other than to benefits under the Supplemental Plan or the Pension Plan) that
the Employee may have against the Company and any Affiliated Company, the
Supplemental Plan, the Pension Plan and their officers, agents and employees, in
the form and manner prescribed by the Company, and does not revoke such waiver
within the time prescribed by the Company.
(ii) The requirements of this subparagraph are
satisfied by a Covered Employee who, as of April 1, 2000, is employed in one of
the following departments, provided that the number of Covered Employees of such
department satisfying subparagraph (i) or the comparable requirements set forth
in the Pension Plan for Covered Employees whose 1999 Compensation, as defined in
Section 2.18(c) of the Pension Plan, is less than $110,000 do not exceed the
department's numerical limit set forth below. The departments referred to below
consist entirely of Union Pacific Railroad Covered Employees, unless indicated
to the contrary.
<Table>
<Caption>
TOTAL ELIGIBLE
DEPARTMENT EMPLOYEES DEPARTMENTAL LIMIT
- ---------- -------------- ------------------
Network Design & Integration - Business Planning (Bulk), 2 2
Service Scheduling
Network Design & Integration - Car Management 8 4
Harriman Dispatching Center - Administrative Support in 2 1
Locomotive Management, Bulk Operations & Operations Support -
Administration
Harriman Dispatching Center - Directors in Locomotive 2 1
Management, Bulk Operations and Operations Support -
Administration
Harriman Dispatching Center - Managers in Locomotive 21 8
Management, Bulk Operations and Operations Support -
Administration
Mechanical Department- Car - Perishables - UPFE 4 4
Risk Management - UPRR - Police 51 4
</Table>
In the event the number of Covered Employees satisfying subparagraph (i) or the
comparable requirements set forth in the Pension Plan for Covered Employees
whose 1999 Compensation, as defined in Section 2.18(c) of the Pension Plan, is
less than $110,000 exceeds a Departmental
18
Limit, such Covered Employees shall be ranked based upon their combined age and
Vesting Service (as determined under Article IV of the Pension Plan) as of April
1, 2000, and the benefit enhancements described in subsection (b) or in the
Pension Plan shall be provided to the Covered Employees with the greatest
combined age and Vesting Service up to the Departmental Limit.
(b) Each Covered Employee described in subsection (a) shall:
(i) for purposes of calculating Vesting Service,
Total Credited Service and Total Offset Service and determining actuarial
reductions for payments beginning before Normal Retirement Date, receive an
additional 5 years of service (up to a maximum of 40 years of service) and shall
be deemed to have attained an age 5 years older than his actual age (up to a
maximum of age 65),
(ii) be treated as having satisfied the requirements
to have an Early Supplemental Pension Retirement Date if he has not satisfied
the requirements to have an Early Retirement Date under the Pension Plan, and
(iii) be treated as having been a Covered Employee
for 60 full consecutive months for purposes of Section 4.02(c)(3) of the Pension
Plan when calculating Total Credited Service and Total Offset Service under this
Supplemental Plan.
2.12 2001 VERP
(a) Effective March 1, 2001, the benefit enhancements
described in subsection (b) shall be provided to any Participant who is a
Covered Employee under the Pension Plan who satisfies the requirements of (a)(i)
and (ii).
(i) The requirements of this subparagraph are
satisfied by a Covered Employee:
(A) whose 2000 Compensation, as defined in
Section 2.18(c) of the Pension Plan, is at least $110,000 and whose annual
salary rate as of December 31, 2000 is less than $140,000;
(B) who is at least age 52 on or before May
1, 2001;
(C) who is an active non-agreement employee
on a Band D or lower position working in one of the departments listed in
subparagraph (a)(ii) as of December 31, 2000;
(D) who, as of March 1, 2001, is not a
loaned executive, is not on long-term disability under the Union Pacific
Long-Term Disability Plan, or is not on a leave of absence (except those granted
a leave under the Family and Medical Leave Act or as an accommodation under the
Americans with Disabilities Act);
(E) who agrees to terminate employment with
the Company and all Affiliated Companies on the date selected by the Company,
which date shall not occur
19
after September 30, 2001, and continues to provide satisfactory service as
determined by the Company until that date; and
(F) who elects to receive the benefit
enhancements described in subsection (b) during the period beginning February 2,
2001, and ending March 5, 2001, by submission of a written election and
execution of other documents, including a waiver of any and all rights or claims
(other than to benefits under the Supplemental Plan or Pension Plan) that the
Employee may have against the Company and any Affiliated Company, the
Supplemental Plan, the Pension Plan and their officers, agents and employees, in
the form and manner prescribed by the Company, and does not revoke such waiver
within the time prescribed by the Company.
(ii) The requirements of this subparagraph are
satisfied by a Covered Employee who, as of December 31, 2000, is employed in one
of the following departments, and is a Covered Employee on March 1, 2001,
provided that the number of Covered Employees of such department satisfying
subparagraph (i) or the comparable requirements set forth in the Pension Plan
for Covered Employees whose 2000 Compensation, as defined in Section 2.18(c) of
the Pension Plan, is less than $110,000 do not exceed the department's numerical
limit set forth below. The departments referred to below consist entirely of
Union Pacific Railroad Covered Employees, unless indicated to the contrary.
<Table>
<Caption>
DEPARTMENT SUB GROUP DEPARTMENTAL LIMIT
---------- --------- ------------------
Corporate Relations Communications 8
Government Affairs - Omaha 2
Executive Comissary 6
Finance Accounting - Omaha (excluding VP and Contr. 6
Staff)
Accounting - St. Louis 3
Banking & Credit 2
Financial Analysis 1
Planning & Analysis (excluding Bus. Dev. 3
Planning)
Real Estate - Admin. 2
Real Estate - Contracts 3
Real Estate - Facility Man 2
Real Estate - Field Ops 12
Real Estate - Ops Supp 3
Tax 4
Human Resources Planning & Development 8
Administrative Staff 1
All Other Groups 6
IT/UPT All 211
Labor Relations Administration 3
Benefits 1
Operations & Non-Ops 1
Peer Support 1
</Table>
20
<Table>
<Caption>
DEPARTMENT SUB GROUP DEPARTMENTAL LIMIT
---------- --------- ------------------
Law All 10
Marketing & Sales Ag Products 3
Autos 6
Chemicals 6
Customer Relations 2
Energy - Acct. Mgt. 1
Energy - Logistics 1
Industrial Products 12
Interline 2
Intermodal 6
NCSC 10
Revenue Information Mgt. 1
UPDS 2
Operating Car 15
CMS & Timekeeping 6
Engineering 135
HDC (excluding Train Dispatchers) 23
Locomotive - North Little Rock 4
Locomotive - Oper. Regions 5
Locomotive - All Other 9
Operating Practices & Safety 7
Operating Region - Northern (excluding Train --
Dispatchers & Metra)
Telecommunications 1
Signal 1
All Other 46
Operating Region - Southern (excluding Train 55
Dispatchers)
Operating Region - Western (excluding Train --
Dispatchers):
Admin. & Train Mgt. 2
Car 6
Engineering - Bridge 1
Engineering - Environmental 2
Engineering - Signal 2
Engineering - Track 5
Locomotive 2
Region Staff 5
Transportation 19
Risk Mgt. - Claims & Health Services 18
Risk Mgt. - Police (excluding Internal 1
Placement)
</Table>
21
<Table>
<Caption>
DEPARTMENT SUB GROUP DEPARTMENTAL LIMIT
---------- --------- ------------------
Support Serv. - Jt. Fac. & NRPC Op. 1
Support Serv. - All Other 1
NDI All 15
Supply All 17
UPC Corporate Audit 1
</Table>
In the event the number of Covered Employees satisfying subparagraph (i) or the
comparable requirements set forth in the Pension Plan for Covered Employees
whose 2000 Compensation, as defined in Section 2.18(c) of the Pension Plan, is
less than $110,000 exceeds a Departmental Limit, such Covered Employees shall be
ranked based upon their combined age and Vesting Service (as determined under
Article IV of the Pension Plan) as of March 31, 2001, and the benefit
enhancements described in subsection (b) or in the Pension Plan shall be
provided to the Covered Employees with the greatest combined age and Vesting
Service up to the Departmental Limit.
(b) Each Covered Employee described in subsection (a) shall:
(i) for purposes of calculating Vesting Service,
Total Credited Service and Total Offset Service and determining actuarial
reductions for payments beginning before Normal Retirement Date, receive an
additional 10 years in the aggregate (other than for purposes of determining any
actuarial reduction for payment before Normal Retirement Date for any
governmental or other offset described in Section 5.01(a)(1)(C) or in Table I,
Section XII, Part 1 C or D of the Pension Plan), which shall first be applied to
the Covered Employee's age (up to a maximum of age 65) then to service (up to a
maximum of 40 years of service),
(ii) be treated as having completed 5 years of actual
Vesting Service for purposes of Sections 4.1 and 4.2, and
(iii) be treated as having been a Covered Employee
for 60 full consecutive months for purposes of applying Section 4.02(c)(3) of
the Pension Plan when calculating Total Credited Service and Total Offset
Service under this Supplemental Plan.
(c) Effective April 1, 2001:
(i) notwithstanding anything to the contrary in
Section 2.12(a)(i)(E), but only with the consent of the Covered Employee, the
termination date selected by the Company for a Covered Employee in Real Estate -
Contracts, Real Estate - Field Ops, and Real Estate - Ops Supp may be any date
on or before December 31, 2001.
(ii) The Departmental Limit is increased for the
subgroups listed in Section 2.12(a)(ii) as set forth below:
22
<Table>
<Caption>
DEPARTMENT SUB GROUP REVISED DEPARTMENTAL LIMIT
---------- --------- --------------------------
Finance Accounting - Omaha (excluding VP and Contr. 7
Staff)
Real Estate - Ops Supp 5
Human Resources All Other Groups 8
Labor Relations Operations & Non-Ops 2
Marketing & Sales Ag Products 4
Energy - Logistics 2
Industrial Products 14
NCSC 17
Operating Operating Practices & Safety 11
Signal 3
All Other 47
Engineering - Signal 3
Engineering - Track 7
Region Staff 8
Transportation 27
</Table>
To be eligible for the benefit enhancement described in Section 2.12(b), a
Covered Employee must be described in Section 2.12(a)(i) and (ii) who, but for
the increase in the Departmental Limit, would not have received the benefit
enhancement described in 2.12(b) and who elects to receive the benefit
enhancement described in Section 2.12(b) by submitting a written election during
the period beginning April 2, 2001 and ending April 9, 2001.
2.13 Railroad 1996 Voluntary Early Retirement Program.
(a) Effective March 20, 1996, the benefit enhancements
described in subsection (b) shall be provided to any Participant who is a
Covered Employee under the Pension Plan who:
(i) is actively employed on March 20, 1996 by: (A)
Union Pacific Railroad Company ("Railroad"); (B) Union Pacific Motor Freight
Company ("Motor Freight"); (C) Union Pacific Technologies Transportation System,
Inc. ("UPTTS") or Union Pacific Distribution Services Company ("UPDS")
(collectively, the "VERP Companies");
(ii) is not a Grade 28 or above on March 20, 1996;
(iii) is not on terminal vacation or on a leave of
absence (other than one required by the Family and Medical Leave Act of 1993) on
March 20, 1996;
(iv) is not a loaned executive, in a temporary
position or in the internal placement program on March 20, 1996;
(v) has not previously been accepted to participate
in a voluntary force reduction program;
23
(vi) does not have an existing termination agreement
in effect with the VERP Companies;
(vii) is employed on March 20, 1996: (A) in Omaha,
Nebraska by the Railroad's Information Technologies Department or Marketing and
Sales Department; (B) in Omaha, Nebraska by UPTTS; (C) in Omaha, Nebraska by
UPDS, or (D) by Union Pacific Motor Freight Company;
(viii) had at least 10 years of Vesting Service under
the Pension Plan as of March 20, 1996 and will attain the age of at least 52 by
July 1, 1996;
(ix) had total pay in 1995 as reported on Form W-2,
plus amounts not included in taxable income due to a salary deferral election
made pursuant to the terms of a qualified cash or deferred arrangement (within
the meaning of section 401(k) of the Code) or a cafeteria plan (within the
meaning of section 125 of the Code) maintained by the Employer of $125,000 or
more;
(x) elects not earlier than March 20, 1996 and not
later than April 20, 1996 by submission of a written election in the form and
manner prescribed by the Administrator to retire and terminate Employment with
the benefit enhancements described in this Section; and
(xi) remains actively employed by the VERP Companies
through the date communicated to the Covered Employee in writing on or before
March 20, 1996, which date shall not thereafter be changed for any reason and
shall not be earlier than May 1, 1996 nor later than April 30, 1997, except that
the dates for the Railroad's Information Technologies Department are July 1,
1996 and June 30, 1997, respectively.
(b) Each Covered Employee described in subsection (a) shall:
(i) for purposes of calculating Vesting Service,
Total Credited Service and Total Offset Service and determining actuarial
reductions for payments beginning before Normal Retirement Date, receive an
additional 10 years in the aggregate (other than for purposes of determining any
actuarial reduction for payment before Normal Retirement Date for any
governmental or other offset described in Section 5.01(a)(1)(C) or in Table I,
Section XII, Part 1 C or D of the Pension Plan), which shall first be applied to
the Covered Employee's age (up to a maximum of age 65) then to service (up to a
maximum of 40 years of service);
(ii) be treated as having satisfied the requirements
to have an Early Supplemental Pension Retirement Date if he has not satisfied
the requirements to have an Early Retirement Date under the Pension Plan; and
(iii) be treated as having been a Covered Employee
for 60 full consecutive months for purposes of applying Section 4.02(c)(3) of
the Pension Plan when calculating Total Credited Service and Total Offset
Service under this Supplemental Plan.
24
ARTICLE THREE
MANNER OF PAYMENT
3.1 Payments For Retirements Under Section 2.1, 2.2(a), 2.2(b)(i) and
2.3. Except as provided in Section 3.3, if (a) a Participant retires on a Normal
Retirement Date, an Early Retirement Date, an Early Supplemental Pension
Retirement Date, or a Postponed Retirement Date under Section 2.1, 2.2(a),
2.2(b)(i) or 2.3, and (b) at retirement is eligible to start both a Supplemental
Pension under Article Two of this Supplemental Plan and a pension under the
Pension Plan, payment of the Supplemental Pension shall begin on the date the
Participant's Pension Plan benefits begin pursuant to his election under the
Pension Plan (and not earlier or later). In addition, the Supplemental Pension
shall be paid in the same form, and shall be subject to the same adjustment for
form of payment and the same Beneficiary designation, as apply to the
Participant's Pension Plan benefit; provided, however, that in the event the
Participant is eligible for and elects a level income option under the Pension
Plan, the Supplemental Pension shall be paid as a single life annuity.
3.2 Payments For Retirements Under Section 2.2(b)(ii). Except as
provided in Section 3.3, if a Participant retires on an Early Supplemental
Pension Retirement Date, and at retirement either is not vested in or is not
eligible to start a pension under the Pension Plan, payment of his Supplemental
Pension shall begin on the first day of the month next following the
Participant's Early Supplemental Pension Retirement Date. The Participant's
Supplemental Pension will be paid in the form of a single life annuity. The
Participant is not eligible to elect payment of his Supplemental Pension in any
other form.
3.3 Payments Starting Before July 25, 2002. Effective for benefits
starting before July 25, 2002, the Administrator may have permitted a
Participant described in Section 3.1 or 3.2 who was retiring on an Early
Supplemental Pension Retirement Date that did not qualify as an Early Retirement
Date under the Pension Plan to elect, in the manner prescribed by the
Administrator, to receive payment of his Supplemental Pension in any form of
payment described in Article VIII of the Pension Plan that would have been
available to the Participant had he retired on an Early Retirement Date under
the Pension Plan. If the Participant was permitted to and elected a form of
payment other than a single life annuity, the Supplemental Pension payments are
actuarially adjusted for the form of payment elected by the Participant, as
determined by the Administrator, using factors for that purpose set forth in the
Pension Plan.
25
ARTICLE FOUR
VESTING
4.1 Termination Prior to Vesting.
(a) A Participant whose Employment terminates before April 27,
1989, before Early or Normal Retirement Date, and before the completion of 10
years of Vesting Service (including within such Vesting Service not less than 5
years of actual Vesting Service under the Pension Plan) shall not be entitled to
any benefit under this Supplemental Plan.
(b) Except as provided in Section 2.5 or 2.12(b)(ii), a
Participant who terminates Employment on or after April 27, 1989, before Early
or Normal Retirement Date, and before completion of 5 years of actual Vesting
Service under the Pension Plan (treating as actual service for this purpose,
service described in Section 1.2(p)(ii) or credited under Section 2.5) shall not
be entitled to any benefit under this Supplemental Plan; provided, however, that
the Chief Executive Officer of Union Pacific may reduce the required years of
actual Vesting Service to 3 if the Chief Executive Officer of Union Pacific
determines that such change would not be disadvantageous to the Company in the
case of any Participant. The Chief Executive Officer of Union Pacific shall make
such determination by the date the Participant terminates Employment.
4.2 Termination After Vesting. Except as provided in Section 2.5,
2.12(b)(ii) or 4.4 or Articles Five and Eleven, a Participant who:
(a) terminates Employment before Normal or Early Retirement
Date and before Early Supplemental Pension Retirement Date but after (i)
completing 5 (or 3, if applicable) years of actual Vesting Service under the
Pension Plan (treating as actual service for this purpose, service described in
Section 1.2(p)(ii) or credited under Section 2.5) in the case of Employment
termination on or after April 27, 1989, or (ii) completing 10 years of Vesting
Service (including at least 5 years of actual Vesting Service under the Pension
Plan) in the case of Employment termination prior to April 27, 1989; or
(b) becomes a Disabled Participant under the Pension Plan and
ceases to be a Disabled Participant prior to Normal or Early Retirement Date,
shall be entitled to receive, commencing on the Participant's Normal Retirement
Date, the Normal Supplemental Pension computed under Section 2.1 as of the date
the Participant terminated Employment or ceased to be a Disabled Participant. In
lieu thereof, such Participant shall receive a Supplemental Pension commencing
on the earliest of:
(i) any date prior to the Participant's Normal
Retirement Date on which the Participant starts his benefit payments from the
Pension Plan;
(ii) in the case of a Participant who is credited
with additional years of age described in Section 1.2(d)(ii) and, as a result,
would be deemed to reach age 55 and become eligible to start his Supplemental
Plan benefits earlier than his Pension Plan benefits, the first day
26
of the month following the later of (A) the Participant's termination of
Employment, or (B) the Participant's 55th birthday (determined taking into
account additional years of age described in Section 1.2(d)(ii)); or
(iii) in the case of a Participant who is not vested
under the Pension Plan, the first day of the month following the later of (A)
the Participant's termination of Employment, or (B) the Participant's 55th
birthday (determined taking into account additional years of age described in
Section 1.2(d)(ii)), or the first day of any month thereafter that is prior to
the Participant's Normal Retirement Date on which the Participant elects to
start payment of his Supplemental Pension.
The election described in (iii) must be made in writing, in a form prescribed by
the Administrator, at least six (6) months before, and in the tax year of the
Participant immediately preceding, the elected benefit start date. Any
Supplemental Pension paid to the Participant commencing prior to Normal
Retirement Date shall equal (I) the amount described in Section 2.1(a) adjusted
for early payment as of the early benefit start date in accordance with Section
6.04 of the Pension Plan (taking into account any additional years of age
described in Section 1.2(d)(ii) for purposes of adjusting both the gross and
offset portions of the benefit except as provided otherwise in Section 2.12),
reduced by (II) the amount described in Section 2.1(b), if any, adjusted for
payment as of the early benefit start date in accordance with Section 6.04 of
the Pension Plan. Notwithstanding the preceding sentence, if the Participant's
Supplemental Pension begins prior to his Pension Plan benefit, the reduction
described in (II) shall be calculated and apply beginning on the earliest date
benefits are payable to the Participant under the Pension Plan, even if the
Participant's Pension Plan benefits do not actually start on that earliest date.
4.3 Form of Vested Benefit.
(a) Benefits Payable Under Supplemental Plan and Pension Plan.
Except as provided in Section 4.4, if a Participant is entitled to benefits
under both the Supplemental Plan and the Pension Plan and benefits under both
Plans start on the same date, the Supplemental Pension determined under Section
4.2 shall be paid in the same form, and shall be subject to the same adjustment
for form of payment and the same Beneficiary designation, as apply to the
Participant's Pension Plan benefit. If, however, such Participant's Supplemental
Plan benefit starts before his Pension Plan benefit, the Participant's
Supplemental Pension will be paid in the form of a single life annuity.
(b) No Benefits Payable Under Pension Plan. Except as provided
in Section 4.4, in the event a Participant is entitled to a benefit from the
Supplemental Plan but is not vested in a benefit under the Pension Plan, the
Participant shall receive payment of his Supplemental Pension determined under
Section 4.2 in the automatic form of payment described in Section 8.02 of the
Pension Plan that would have applied to the Participant had he been eligible for
and started payment under the Pension Plan on the same day. The Participant's
Supplemental Pension determined under Section 4.2 shall be adjusted for form of
payment, as appropriate, pursuant to Article VIII of the Pension Plan.
27
4.4 Payments Starting Before July 25, 2002. The rules set forth in
Sections 4.2 and 4.3, above, applied to Supplemental Plan benefits starting
before July 25, 2002, unless the Administrator advised the Participant to the
contrary.
28
ARTICLE FIVE
CERTAIN EMPLOYEE TRANSFERS
5.1 Transfers into Supplemental Plan from Resources Supplemental Plan.
If any employee who is a participant in the Supplemental Pension Plan for Exempt
Salaried Employees of Union Pacific Resources Company and Affiliates is
transferred on or before October 15, 1996 to the Company and becomes a
Participant after such transfer, such employee shall retain no rights in the
other supplemental pension plan and shall receive all benefits to which entitled
under this Supplemental Plan, based upon Total Credited Service and Total Offset
Service which shall include, as to such employee, any service which would have
been used in determining the Participant's benefits under such other
supplemental pension plan.
5.2 Transfers to Resources Supplemental Plan. If a Participant is
transferred on or before October 15, 1996 to an Affiliated Company participating
in the Supplemental Pension Plan for Exempt Salaried Employees of Union Pacific
Resources Company and Affiliates and becomes a participant in the supplemental
pension plan of the Affiliated Company after such transfer, such former
Participant shall retain no rights in this Supplemental Plan if such other
supplemental pension plan has provisions that substantially conform to the
transfer provisions for the protection of transferees that are contained in
Section 5.1.
5.3 No Duplication of Benefits. There shall under no circumstances be
any duplication of benefits under this Supplemental Plan or any supplemental
pension plan of an Affiliated Company or former Affiliated Company by reason of
the same period of employment.
29
ARTICLE SIX
PRE-RETIREMENT SURVIVOR'S BENEFIT
6.1 Eligibility. The Surviving Spouse of a Participant who either (a)
terminates Employment or ceases to be a Disabled Participant due to death, or
(b) (i) terminates Employment other than due to death after becoming entitled to
a Supplemental Pension under Article Two or Article Four, and (ii) dies prior to
the commencement of payment of the Supplemental Pension shall receive the
benefit determined pursuant to Section 6.2.
6.2 Surviving Spouse's Benefit
(a) Subsidized Death Benefits.
(i) Except as provided in subsection (ii) or Section
6.4, the benefit payable to the Surviving Spouse of a Participant described in
Section 6.1 who dies:
(A) on or after January 1, 1994 while a
Disabled Participant, but before Early or Normal Retirement Date under the terms
of the Pension Plan;
(B) on or after the Effective Date during
Employment, but before Early or Normal Retirement Date under the terms of the
Pension Plan;
(C) on or after the Effective Date during
Employment, but after Early or Normal Retirement Date under the terms of the
Pension Plan; or
(D) on or after the Effective Date after
terminating Employment or ceasing to be a Disabled Participant, providing such
termination or cessation occurred after Early or Normal Retirement Date under
the terms of the Pension Plan,
shall be a monthly annuity payable for the Surviving Spouse's life. Monthly
payments to the Surviving Spouse shall equal one-half of the monthly
Supplemental Pension such Participant would have received (assuming, for a
Participant described in Section 6.1(a), the Participant had vested) in the form
of a single life annuity (in the form of a Qualified Joint and Survivor Annuity
for a Participant described in (B) whose death occurs prior to 1994), if the
Participant had survived (but accrued no additional benefits after death) and
started his Supplemental Pension on the date Supplemental Plan benefits begin to
the Surviving Spouse under Section 6.3. Notwithstanding anything in the
Supplemental Plan to the contrary, the Surviving Spouse's benefit with respect
to a Participant described in (A) or (B), above, shall be determined by
applying, for purposes of any adjustment for payment prior to Normal Retirement
Date, the early retirement reduction factors of Section 6.03 of the Pension
Plan.
(ii) Except as provided in Section 6.4, the benefit
payable to the Surviving Spouse of a Participant described in Section 6.1, who
dies other than under circumstances described in Section 6.2(a)(i) but after
becoming eligible for an Early Supplemental Pension under Section 2.2 based on
an Early Supplemental Pension Retirement
30
Date or who dies under circumstances described in Section 6.2(a)(i) but is
described in Section 6.3(b), shall be an annuity payable for the Surviving
Spouse's life calculated as follows:
(A) In the case of a Participant who is
entitled to both a pension under the Supplemental Plan and a pension under the
Pension Plan, monthly payments to the Surviving Spouse shall equal one-half of
the monthly Supplemental Pension in the form of a single life annuity calculated
for the Participant as described in Section 2.2(b)(i)(A) as if the Participant
had survived (but accrued no additional benefits after death) and started his
Supplemental Pension on the date Supplemental Plan benefits begin to the
Surviving Spouse under Section 6.3, reduced by any survivor benefit that the
Surviving Spouse is entitled to receive from the Pension Plan from the earliest
date on or following the date payments begin to the Surviving Spouse that such
survivor benefit is payable from the Pension Plan (whether or not such survivor
benefit begins on the earliest date under the Pension Plan).
(B) In the case of a Participant who is
entitled to a pension under the Supplemental Plan but is not vested in a pension
under the Pension Plan, monthly payments to the Surviving Spouse shall equal
one-half of the monthly Supplemental Pension in the form of a single life
annuity calculated for the Participant as described in Section 2.2(b)(ii)(A)(I)
as if the Participant had survived (but accrued no additional benefits after
death) and started his Supplemental Pension on the date Supplemental Plan
benefits begin to the Surviving Spouse under Section 6.3.
(b) Non-Subsidized Death Benefits. Except as provided in
Section 6.4, the benefit payable to the Surviving Spouse of a Participant
described in Section 6.1 who dies under circumstances other than those described
in Section 6.2(a) shall be an annuity payable for the Surviving Spouse's life
with monthly payments equal to:
(i) Prior to the earliest date, if any, on which the
Surviving Spouse is eligible to start any survivor benefit payable under the
Pension Plan, 50% of the monthly Supplemental Pension the Participant would have
received in the form of a Qualified Joint and Survivor Annuity determined as if
the Participant is not entitled to a pension under the Pension Plan if the
Participant had survived (and accrued no additional benefits after his death)
and started his Supplemental Pension on the date Supplemental Plan benefits
begin to the Surviving Spouse under Section 6.3; and
(ii) On or after the earliest date, if any, on which
the Surviving Spouse is eligible to start any survivor benefit payable under the
Pension Plan, the amount described in (i), above, reduced by any survivor
benefit that the Surviving Spouse is entitled to receive from the Pension Plan
beginning on such earliest date (whether or not such survivor benefit begins on
the earliest date under the Pension Plan).
6.3 Timing of Surviving Spouse's Benefit. Except as provided in Section
6.4, the benefit to which a Surviving Spouse of a Participant shall be entitled
pursuant to Section 6.2(a) or (b) shall be paid monthly to such Surviving
Spouse, commencing as of the date such Surviving Spouse elects, or is required
to, start payment of any benefit to which the Surviving Spouse is entitled under
the Pension Plan. Notwithstanding the preceding sentence:
31
(a) if the Surviving Spouse is not entitled to any payment
from the Pension Plan, the Surviving Spouse shall receive payment of any
Supplemental Pension to which the Surviving Spouse is entitled under Section 6.2
beginning as of the later of (i) the first of the month following the
Participant's 55th birthday (determined taking into account any additional years
of age described in Section 1.2(d)(ii)), or (ii) the first of the month
following the date of the Participant's death.
(b) if the deceased Participant would have been entitled or
required to start his Supplemental Plan benefit on an earlier date than the
Participant would have been entitled to start his Pension Plan benefit had he
survived, the Surviving Spouse shall receive payment of any Supplemental Pension
to which the Surviving Spouse is entitled under Section 6.2 beginning as of the
later of (i) the earliest date as of which the Participant would have been
eligible or required to start payments pursuant to Article Two, Three or Four,
as appropriate, or (ii) the first of the month following the date of the
Participant's death.
Payments to the Surviving Spouse shall end with the payment made for the month
in which the Surviving Spouse dies.
6.4 Payments Starting Before July 25, 2002. The rules for
pre-retirement death benefits set forth in Sections 6.2 and 6.3, above, applied
to Supplemental Plan pre-retirement death benefits starting before July 25,
2002, unless the Administrator advised the Participant and/or Surviving Spouse
to the contrary.
32
ARTICLE SEVEN
FUNDING
7.1 Funding. The Company's obligations hereunder shall constitute a
general, unsecured obligation of the Company payable solely out of its general
assets, and no Participant or former Participant shall have any right to any
specific assets of the Company. To the extent that any Participant or former
Participant acquires a right to receive payments under the Plan, such right
shall be no greater than the right of an unsecured general creditor of the
Company. The Board of Directors of Union Pacific may, but shall not be required
to, authorize Union Pacific to establish a trust to hold assets to be used to
discharge the Company's obligations hereunder, provided that such trust shall
not confer upon Participants or former Participants any rights other than the
rights of unsecured general creditors of the Company.
7.2 Payment to James Otto. On or about December 1, 2000, James Otto was
paid in a single sum the actuarial equivalent value of the portion of his
Supplemental Pension, payable in the form of a 50% joint and survivor annuity
with his spouse as beneficiary, that was not funded through annuity purchases.
Such single sum payment of $501.40 was in full settlement of the Supplemental
Plan's obligation to pay such remaining benefit to James Otto or his Surviving
Spouse or other beneficiary.
33
ARTICLE EIGHT
ADMINISTRATION
8.1 Responsibilities and Powers of Administrator. Except for the
responsibilities and powers elsewhere herein given specifically to the Board of
Directors of Union Pacific, the Administrator shall have all responsibilities
for the operation and administration of the Supplemental Plan and shall have all
powers and discretionary authority necessary to carry out those responsibilities
hereunder. Without limiting the generality of the foregoing, the Administrator
shall have full power and discretionary authority to:
(a) keep and maintain such accounts and records with respect
to Participants, former Participants and Special 1990-1992 Window Participants
as are deemed necessary or proper;
(b) determine all questions of the eligibility for
participation and benefits and of the status and rights of Participants, former
Participants, Special 1990-1992 Window Participants and any other person
hereunder, make all required factual determinations, interpret and construe the
Supplemental Plan in connection therewith and correct defects, resolve
ambiguities therein and supply omissions thereto;
(c) adopt from time to time mortality and other tables and
interest rates upon which all actuarial calculations shall be based, including
the determination of the appropriate factors for the adjustment of pension
payments; and
(d) adopt from time to time rules and regulations governing
this Supplemental Plan.
The Administrator shall carry out all responsibilities and exercise all powers
in accordance with the terms of the Supplemental Plan. The determination of the
Administrator as to any questions involving the responsibilities hereunder shall
be final, conclusive and binding on all persons.
8.2 Certification and Payment of Benefits. The Administrator shall
compute the amount and manner of payment of benefits to which the Participants,
Special 1990-1992 Window Participants, former or retired Participants, Surviving
Spouses and beneficiaries become entitled. All payments of benefits shall be
made directly by the Company upon the instructions of the Administrator.
8.3 Reports to Board of Directors. As the Administrator deems necessary
or proper or as the Board of Directors of Union Pacific may require, but in any
event at least once during each calendar year, the Administrator shall report to
such Board on the operation and administration of the Supplemental Plan and on
any other matter concerning the Supplemental Plan deemed advisable or required
by such Board.
8.4 Designation and Delegation. The Administrator may designate other
persons to carry out such of the responsibilities hereunder for the operating
and administration of the Supplemental Plan as the Administrator deems advisable
and delegate to the persons so
34
designated such of the powers as the Administrator deems necessary to carry out
such responsibilities. Such designation and delegation shall be subject to such
terms and conditions as the Administrator deems necessary or proper. Any action
or determination made or taken in carrying out responsibilities hereunder by the
persons so designated by the Administrator shall have the same force and effect
for all purposes as if such action or determinations had been made or taken by
the Administrator.
8.5 Outside Services. The Administrator may engage counsel and such
clerical, medical, financial, actuarial, accounting and other specialized
services as is deemed necessary or desirable for the operation and
administration of the Supplemental Plan. The Administrator and persons so
designated shall be entitled to rely, and shall be fully protected in any action
or determination or omission taken or made or omitted in good faith in so
relying, upon any opinions, reports or other advice which is furnished by
counsel or other specialist engaged for that purpose.
8.6 Expenses. All expenses, including any fees for outside services
under Section 8.5, incurred by the Administrator and by persons designated by
the Administrator under Section 8.4 in the operation and administration of the
Supplemental Plan shall be paid by the Company. Neither the Administrator nor
any other person who is an employee of the Company or an Affiliated Company
shall receive any compensation solely for services in carrying out any
responsibility hereunder.
8.7 Bonding. No bond or other security shall be required of the
Administrator or of any person designated under Section 8.4.
8.8 Liability. The Administrator and persons designated by him under
Section 8.4 shall use ordinary care and diligence in the performance of their
duties. The Company shall indemnify and defend the Administrator and each other
person so designated under Section 8.4 against any and all claims, loss,
damages, expense (including reasonable counsel fees), and liability arising from
any action or failure to act or other conduct in their official capacity, except
when the same is due to the gross negligence or willful misconduct of the
Administrator or other persons.
8.9 Finality of Actions. Any action required of Union Pacific, the
Company, the Board of Directors of Union Pacific, or the Chief Executive Officer
of Union Pacific (the "CEO") under this Supplemental Plan, or made by the
Administrator acting on their behalf, shall be made in the Company's, the
Board's or the CEO's sole discretion, not in a fiduciary capacity and need not
be uniformly applied to similarly situated persons. Any such action shall be
final, conclusive and binding on all persons interested in the Supplemental
Plan.
35
ARTICLE NINE
AMENDMENT OR TERMINATION
9.1 Amendment or Termination. The Board of Directors of Union Pacific,
acting by written resolution, reserves the right to modify, alter, amend or
terminate the Supplemental Plan from time to time and to modify, withdraw or
terminate the Supplemental Plan, to any extent that it may deem advisable;
provided, that no such modification, alteration, amendment or termination shall
impair any rights which have accrued to Participants hereunder to the date of
such modification, alteration, amendment or termination. Notwithstanding the
foregoing, the Senior Vice President - Human Resources of Union Pacific may make
all technical, administrative, regulatory and compliance amendments to the
Supplemental Plan, and any other amendment that will not significantly increase
the cost of the Supplemental Plan to the Company, as he or she shall deem
necessary or appropriate.
36
ARTICLE TEN
GENERAL PROVISIONS
10.1 Certain Rights Reserved. Nothing herein contained shall confer
upon any Employee or other person the right (a) to continue in Employment or
service of the Company or affect any right that the Company may have to
terminate the Employment or service of (or to demote or to exclude from future
participation in the Supplemental Plan) any such Employee or other person at any
time for any reason, (b) to participate in the Supplemental Plan, or (c) to
receive an annual base salary of any particular amount.
10.2 Alienability of Benefits. Payments under the Supplemental Plan may
not be assigned, transferred, pledged or hypothecated, and to the extent
permitted by law, no such payments shall be subject to legal process or
attachment for the payment of any claims against any person entitled to receive
the same. Effective on and after July 25, 2002, compliance with the provisions
and conditions of any domestic relations order relating to an individual's
Supplemental Plan benefits, which the Administrator has determined must be
complied with under the terms of applicable law, shall not be considered a
violation of this provision.
10.3 Payment Due an Incompetent. If it shall be found that any person
to whom a payment is due hereunder is unable to care for that person's affairs
because of physical or mental disability, as determined by a licensed physician,
the Administrator shall have the authority to cause the payments becoming due
such person to be made to the legally appointed guardian of any such person or
to the spouse, brother, sister, or other person as it shall determine. Payments
made pursuant to such power shall operate as a complete discharge of the
Company's obligations.
10.4 Governing Law. The Supplemental Plan shall be construed and
enforced in accordance with the laws of the State of Nebraska (without regard to
the legislative or judicial conflict of laws rules of any state), except to the
extent superseded by any federal law.
10.5 Successors. This Supplemental Plan shall be binding upon any
successor (whether direct or indirect, by purchase, merger, consolidated or
otherwise) to all or substantially all of the business and/or assets of the
Company in the same manner and to the same extent that the Company would be
bound to perform if no such succession had taken place.
10.6 Titles and Headings Not To Control. The titles and Articles of the
Supplemental Plan and the headings of Sections and subsections of the
Supplemental Plan are placed herein for convenience of reference only and, as
such, shall have no force and effect in the interpretation of the Supplemental
Plan.
10.7 Severability. If any provisions of the Supplemental Plan shall be
held unlawful or otherwise invalid or unenforceable in whole or in part, the
unlawfulness, invalidity, or unenforceability shall not affect any provision of
the Plan or part thereof, each of which shall remain in full force and effect.
37
10.8 Determination and Withholding of Taxes. The Administrator shall
have full authority to satisfy the responsibility of Union Pacific or any
Affiliated Company to withhold taxes with respect to a Participant or former
Participant, including FICA taxes, by withholding such taxes from any
distributions under the Plan to the Participant or former Participant or his
beneficiary or estate. The Administrator shall also have full authority, with or
without the consent of the Participant of former Participant, to withhold from
the individual's compensation from any and all sources, any FICA or other taxes
applicable to benefits accrued under the Supplemental Plan.
38
ARTICLE ELEVEN
TRANSFERS TO NON-COVERED EMPLOYMENT
11.1 Notwithstanding any other provision of this Supplemental Plan to
the contrary, if a Participant is transferred to the employment of an Affiliated
Company that has not adopted the Supplemental Plan ("non-covered employment"),
upon the approval of the Chief Executive Officer of Union Pacific, any benefits
to which such Participant (or his Surviving Spouse or other beneficiary) would
be entitled under the Pension Plan, the Supplemental Plan, or both, by treating
such Participant's non-covered employment as if it were service covered by such
Plans and by aggregating such service with the Participant's other service
covered by the Plans shall be provided to the Participant under this Section
11.1 to the extent that such benefits exceed the aggregate of (a) the
Participant's benefits under the Pension Plan, (b) the Participant's benefits
under the Supplemental Plan determined without regard to this Section 11.1, and
(c) the Participant's benefits under any pension plan of the Affiliated Company
that are based on the Participant's non-covered employment and/or employment
otherwise covered by the Pension and Supplemental Plans.
39
ARTICLE TWELVE
CLAIMS PROCEDURE
12.1 Application for Benefits. Each Participant, former Participant,
Special 1990-1992 Window Participant, Surviving Spouse or other beneficiary, or
alternate payee under a domestic relations order believing himself or herself
eligible for a benefit under this Supplemental Plan shall apply for such benefit
by completing and filing with the Administrator an application for benefits on a
form supplied by the Administrator.
12.2 Claims Before January 1, 2002. The following provisions are
effective prior to January 1, 2002: In the event that any claim for benefits is
denied in whole or in part, the person whose claim has been so denied shall be
notified of such denial in writing by the Administrator. The notice advising of
the denial shall specify the reason or reasons for denial, make specific
reference to pertinent provisions of the Supplemental Plan, describe any
additional material or information necessary for the claimant to perfect the
claim (explaining why such material or information is needed), and shall advise
the claimant of the procedure for the appeal of such denial. All appeals shall
be made by the following procedure:
(a) The person whose claim has been denied shall file with the
Administrator a notice of desire to appeal the denial. Such notice shall be
filed within 60 days of notification by the Administrator of claim denial, shall
be made in writing, and shall set forth all of the facts upon which the appeal
is based. Appeals not timely filed shall be barred.
(b) The Administrator shall consider the merits of the
claimant's written presentations, the merits of any facts or evidence in support
of the denial of benefits, and such other facts and circumstances as the
Administrator shall deem relevant.
(c) The Administrator shall ordinarily render a determination
upon the appealed claim within 60 days after receipt which determination shall
be accompanied by a written statement as to the reasons therefor. However, in
special circumstances the Administrator may extend the response period for up to
an additional 60 days, in which event it shall notify the claimant in writing
prior to commencement of the extension. The determination so rendered shall be
binding upon all parties.
12.3 Claims On or After January 1, 2002. The following provisions are
effective on and after January 1, 2002:
(a) Claim for Benefits. A claim for Supplemental Plan benefits
may be filed by:
(i) any person (or his duly authorized
representative) who has applied for and/or received benefits from the
Supplemental Plan pursuant to Section 12.1 and who believes that the amount
and/or form of benefits provided (including no benefits) or any change in or
termination or reduction of benefits previously provided results in a denial of
benefits to which he is entitled for any reason (whether under the terms of the
Supplemental Plan or by reason of any provision of law); or
40
(ii) any Employee or other individual (or his duly
authorized representative) who believes himself to be entitled to benefits from
the Supplemental Plan.
A claim for benefits must be filed with the Administrator, in writing and in
accordance with such other requirements as may be prescribed by the
Administrator. Any claim shall be processed as follows:
(A) When a claim for benefits has been filed
by the claimant (or his duly authorized representative), such claim for benefits
shall be evaluated and the claimant shall be notified by the Administrator of
the approval or denial within a reasonable period of time, but not later than 90
days after the receipt of such claim unless special circumstances require an
extension of time for processing the claim. If such an extension of time for
processing is required, written notice of the extension shall be furnished to
the claimant prior to the termination of the initial 90-day period and shall
specify the special circumstances requiring an extension and the date by which a
final decision will be reached (which date shall not be later than 180 days
after the date on which the claim was received).
(B) A claimant shall be given written notice
in which the claimant shall be advised as to whether the claim is granted or
denied, in whole or in part. If a claim is denied, in whole or in part, the
claimant shall be given written notice which shall contain (I) the specific
reasons for the denial, (II) references to the specific Supplemental Plan
provisions upon which the denial is based, (III) a description of any additional
material or information necessary to perfect the claim and an explanation of why
such material or information is necessary, (IV) a statement that the claimant is
entitled to receive, upon request and free of charge, reasonable access to, and
copies of, all documents, records, and other information relevant to the claim,
(V) the claimant's rights to seek review of the denial and time limits and other
aspects of the Supplemental Plan's claim review procedures, and (VI) a statement
of the claimant's right to bring a civil action under ERISA section 502(a)
following an adverse determination upon review.
(b) Review of Claim Denial. If a claim for benefits is denied,
in whole or in part, the claimant (or his duly authorized representative) shall
have the right to request that the Administrator review the denial, provided
that the claimant files in accordance with such requirements as may be
prescribed by the Administrator a written request for review with the
Administrator within 60 days after the date on which the claimant received
written notification of the denial. A claimant (or his duly authorized
representative) may review relevant documents, records and other information
relevant to the claim (or receive copies free of charge) and may submit to the
Administrator with the written request for review documents, records, written
comments and other information relevant to the claim for benefits, which shall
be considered upon review whether or not such information and other items were
available when the claim was originally determined. Requests for review not
timely filed shall be barred. A timely request for claim review shall be
processed as follows:
(i) Within a reasonable period of time, but not later
than 60 days after a request for review is received, the review shall be made
and the claimant shall be advised in writing of the decision on review, unless
special circumstances require an extension of time for processing the review. If
an extension is needed, the claimant shall be given a written
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notification within such initial 60-day period specifying the reasons for the
extension and when such review shall be completed (provided that such review
shall be completed within 120 days after the date on which the request for
review was filed). However, if the period for deciding the claim has been
extended under this paragraph (i) due to a claimant's failure to provide
information necessary to decide a claim, the period for making a decision on
review shall be tolled from the date the claimant is sent written notice of the
extension until the date on which the claimant responds to the request for
information (or such earlier date as may be prescribed by the Administrator in
accordance with applicable law and regulations).
(ii) The decision on review shall be forwarded to the
claimant in writing and shall include (A) specific reasons for the decision, (B)
references to the specific Plan provisions upon which the decision is based, (C)
a statement that the claimant is entitled to receive, upon request and free of
charge, reasonable access to, and copies of, all documents, records, and other
information relevant to the claim, and (D) a statement of the claimant's right
to bring an action under ERISA section 502(a). A decision on review shall be
final and binding on all persons for all purposes.
(c) Exhaustion of Claims Review Process. A claimant shall have
no right to seek review of a denial of benefits, or to bring any action in any
court to enforce a claim for benefits prior to his filing a claim for benefits
and exhausting his rights to review under this Section 12.3.
12.4 Claims Related to Corrections Under Pension Plan Compliance
Statement. Notwithstanding any provision of the Supplemental Plan to the
contrary, any individual whose Supplemental Plan benefit is recalculated or
adjusted in connections with corrections made under the Compliance Statement
dated October 25, 2001 (that was issued for the Pension Plan under the Internal
Revenue Service Voluntary Compliance Resolution Program) and who believes that
such recalculation and/or adjustment results in a denial of benefits to which he
is entitled for any reason (whether under the terms of the Supplemental Plan or
by reason of any provision of law) may file a claim with the Administrator, in
writing, stating the reasons he disagrees with such recalculation and/or
adjustment and providing proof of any service, compensation or other facts that
he believes should be taken into account. In order to be considered by the
Supplemental Plan, such written claim and proof must be received by the
Administrator by the date specified in the written notice of such recalculation
and/or adjustment that is sent by the Administrator (or his delegate), by first
class mail, to the person's address reflected in Supplemental Plan records on
the date of the mailing. The deadline for filing a claim under this Section 12.4
that is specified in the written notice from the Administrator shall be a date
not earlier than 90 days after the date such notice is mailed to the person. Any
claim described in this Section 12.4 that is not received by the date specified
in the written notice of recalculation and/or adjustment shall be denied on the
grounds that it is untimely.
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