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                                                                   EXHIBIT 10(m)

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                                      1993

                      STOCK OPTION AND RETENTION STOCK PLAN

                                       OF

                            UNION PACIFIC CORPORATION

                           (EFFECTIVE APRIL 16, 1993 -
                         AS AMENDED SEPTEMBER 30, 1993,
                         JULY 28, 1994, APRIL 24, 1997,
              NOVEMBER 20, 1997, SEPTEMBER 24, 1998, MAY 27, 1999,
              MAY 25, 2000, NOVEMBER 16, 2000 AND JANUARY 25, 2001)

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                   1993 STOCK OPTION AND RETENTION STOCK PLAN
                          OF UNION PACIFIC CORPORATION

1.       PURPOSE

         The purpose of the 1993 Stock Option and Retention Stock Plan of Union
Pacific Corporation is to promote and closely align the interests of employees
of Union Pacific Corporation and its shareholders by providing stock based
compensation. The Plan is intended to strengthen Union Pacific Corporation's
ability to reward performance which enhances long term shareholder value; to
increase employee stock ownership through performance based compensation plans;
and to strengthen the company's ability to attract and retain an outstanding
employee and executive team.

2.       DEFINITIONS

         The following terms shall have the following meanings:

         "Act" means the Securities Exchange Act of 1934, as amended.

         "Affiliate" shall have the meaning set forth in Rule 12b-2 under
Section 12 of the Act.

         "Approved Leave of Absence" means a leave of absence of definite length
approved by the Senior Vice President - Human Resources of the Company, or by
any other officer of the Company to whom the Committee delegates such authority.

         "Award" means an award of Retention Shares or Stock Units pursuant to
the Plan.

         "Beneficial Owner" shall have the meaning set forth in Rule 13d-3 under
the Act.

         "Beneficiary" means any person or persons designated in writing by a
Participant to the Committee on a form prescribed by it for that purpose, which
designation shall be revocable at any time by the Participant prior to his or
her death, provided that, in the absence of such a designation or the failure of
the person or persons so designated to survive the Participant, "Beneficiary"
shall mean such Participant's estate; and further provided that no designation
of Beneficiary shall be effective unless it is received by the Company before
the Participant's death.

         "Board" means the Board of Directors of the Company.

         "Change in Control" means the occurrence of any one of the following:

(i)      any Person is or becomes the Beneficial Owner, directly or indirectly,
         of securities of the Company (not including in the securities
         beneficially owned by such Person any securities acquired directly from
         the Company or its Affiliates) representing 20% or more of the combined
         voting power of the Company's then outstanding securities, excluding
         any Person who becomes such a Beneficial Owner in connection with a
         transaction described in clause (A) of paragraph (iii) below; or

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(ii)     the following individuals cease for any reason to constitute a majority
         of the number of directors then serving: individuals who, on November
         16, 2000, constitute the Board and any new director (other than a
         director whose initial assumption of office is in connection with an
         actual or threatened election contest, including but not limited to a
         consent solicitation, relating to the election of directors of the
         Company) whose appointment or election by the Board or nomination for
         election by the Company's shareholders was approved or recommended by a
         vote of at least two-thirds (2/3) of the directors then still in office
         who either were directors on the date hereof or whose appointment,
         election or nomination for election was previously so approved or
         recommended; or

(iii)    there is consummated a merger or consolidation of the Company or any
         direct or indirect subsidiary of the Company with any other
         corporation, other than (A) a merger or consolidation which would
         result in the voting securities of the Company outstanding immediately
         prior to such merger or consolidation continuing to represent (either
         by remaining outstanding or by being converted into voting securities
         of the surviving entity or any parent thereof) more than 50% of the
         combined voting power of the securities of the Company or such
         surviving entity or any parent thereof outstanding immediately after
         such merger or consolidation or (B) a merger or consolidation effected
         to implement a recapitalization of the Company (or similar transaction)
         in which no Person is or becomes the Beneficial Owner, directly or
         indirectly, of securities of the Company (not including in the
         securities Beneficially Owned by such Person any securities acquired
         directly from the Company or its Affiliates) representing 20% or more
         of the combined voting power of the Company's then outstanding
         securities; or

(iv)     the shareholders of the Company approve a plan of complete liquidation
         or dissolution of the Company or there is consummated an agreement for
         the sale or disposition by the Company of all or substantially all of
         the Company's assets, other than a sale or disposition by the Company
         of all or substantially all of the Company's assets to an entity, more
         than 50% of the combined voting power of the voting securities of which
         is owned by shareholders of the Company in substantially the same
         proportions as their ownership of the Company immediately prior to such
         sale.

         "Code" means the Internal Revenue Code of 1986, as amended, or the
corresponding provisions of any successor statute.

         "Committee" means the Committee designated by the Board to administer
the Plan pursuant to Section 3.

         "Common Stock" means the Common Stock, par value $2.50 per share, of
the Company.

         "Company" means Union Pacific Corporation, a Utah corporation, or any
successor corporation.

         "Option" means each non-qualified stock option, incentive stock option
and stock appreciation right granted under the Plan.

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         "Optionee" means any employee of the Company or a Subsidiary (including
directors who are also such employees) who is granted an Option under the Plan.

         "Participant" means any employee of the Company or a Subsidiary
(including directors who are also such employees) who is granted an Award under
the Plan.

         "Person" shall have the meaning given in Section 3(a)(9) of the Act, as
modified and used in Sections 13(d) and 14(d) thereof, except that such term
shall not include (i) the Company or any of its Affiliates, (ii) a trustee or
other fiduciary holding securities under an employee benefit plan of the Company
or any of its subsidiaries, (iii) an underwriter temporarily holding securities
pursuant to an offering of such securities or (iv) a corporation owned, directly
or indirectly, by the shareholders of the Company in substantially the same
proportions as their ownership of stock of the Company.

         "Plan" means this 1993 Stock Option and Retention Stock Plan, as
amended from time to time.

         "Retention Shares" means shares of Common Stock subject to an Award
granted under the Plan.

         "Restriction Period" means the period defined in Section 9(a).

         "Stock Unit" means the right to receive in the future a share of Common
Stock.

         "Subsidiary" means any corporation of which the Company owns directly
or indirectly at least a majority of the outstanding shares of voting stock.

         "Unit Restriction Period" means the period defined in Section 10.

         "Unit Vesting Condition" means any condition to the vesting of Stock
Units established by the Committee pursuant to Section 10.

         "Vesting Condition" means any condition to the vesting of Retention
Shares established by the Committee pursuant to Section 9.

3.       ADMINISTRATION

         The Plan shall be administered by the Committee, which shall be
comprised of not less than three members of the Board, none of whom shall be
employees of the Company or any Subsidiary. The Committee shall (i) grant
Options to Optionees and make Awards of Retention Shares and Stock Units to
Participants, and (ii) determine the terms and conditions of such Options and
Awards of Retention Shares and Stock Units, all in accordance with the
provisions of the Plan. The Committee shall have full authority to construe and
interpret the Plan, to establish, amend and rescind rules and regulations
relating to the Plan, to administer the Plan, and to take all such steps and
make all such determinations in connection with the Plan and Options and Awards
granted thereunder as it may deem necessary or advisable. Each Option and grant
of Retention Shares or Stock Units shall, if required by the Committee, be
evidenced by an

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agreement to be executed by the Company and the Optionee or Participant,
respectively, and contain provisions not inconsistent with the Plan. All
determinations of the Committee shall be by a majority of its members and shall
be evidenced by resolution, written consent or other appropriate action, and the
Committee's determinations shall be final. Each member of the Committee, while
serving as such, shall be considered to be acting in his or her capacity as a
director of the Company.

4.       ELIGIBILITY

         To be eligible for selection by the Committee to participate in the
Plan an individual must be an employee of the Company or a Subsidiary. Directors
who are not full-time salaried employees shall not be eligible. In granting
Options or Awards of Retention Shares or Stock Units to eligible employees, the
Committee shall take into account the duties of the respective employees, their
present and potential contributions to the success of the Company or a
Subsidiary, and such other factors as the Committee shall deem relevant in
connection with accomplishing the purpose of the Plan.

5.       STOCK SUBJECT TO THE PLAN

         Subject to the provisions of Section 13 hereof, the maximum number and
kind of shares as to which Options, or Retention Shares or Stock Units may at
any time be granted under the Plan are 16 million shares of Common Stock. Shares
of Common Stock subject to Options or Awards under the Plan may be either
authorized but unissued shares or shares previously issued and reacquired by the
Company. Upon the expiration, termination or cancellation (in whole or in part)
of unexercised Options, shares of Common Stock subject thereto shall again be
available for option or grant as Retention Shares or Stock Units under the Plan.
Shares of Common Stock covered by an Option, or portion thereof, which is
surrendered upon the exercise of a stock appreciation right, shall thereafter be
unavailable for option or grant as Retention Shares or Stock Units under the
Plan. Upon the forfeiture (in whole or in part) of a grant of Retention Shares
or Stock Units, the shares of Common Stock subject to such forfeiture shall
again be available for option or grant as Retention Shares or Stock Units under
the Plan if no dividends have been paid on the forfeited shares, and otherwise
shall be unavailable for such an option or grant.

6.       TERMS AND CONDITIONS OF NON-QUALIFIED OPTIONS

         All non-qualified options under the Plan shall be granted subject to
the following terms and conditions:

         a. Option Price. The option price per share with respect to each option
shall be determined by the Committee but shall not be less than 100% of the fair
market value of the Common Stock on the date the option is granted, such fair
market value to be determined in accordance with the procedures to be
established by the Committee.

         b. Duration of Options. Options shall be exercisable at such time or
times and under such conditions as set forth in the written agreement evidencing
such option, but in no event

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shall any option be exercisable subsequent to the tenth anniversary of the date
on which the option is granted.

         c. Exercise of Option. Except as provided in Section 6(h), 6(i), 8(c)
or 8(d), the shares of Common Stock covered by an option may not be purchased
prior to the first anniversary of the date on which the option is granted
(unless the Committee shall determine otherwise), or such longer period or
periods, and subject to such conditions, as the Committee may determine, but
thereafter may be purchased at one time or in such installments over the balance
of the option period as may be provided in the option. Any shares not purchased
on the applicable installment date may, unless the Committee shall have
determined otherwise, be purchased thereafter at any time prior to the final
expiration of the option. To the extent that the right to purchase shares has
accrued thereunder, options may be exercised from time to time by notice to the
Company stating the number of shares with respect to which the option is being
exercised.

         d. Payment. Shares of Common Stock purchased under options shall, at
the time of purchase, be paid for in full. All, or any portion, of the option
exercise price may, at the discretion of the Committee, be paid by the surrender
to the Company, at the time of exercise, of shares of previously acquired Common
Stock owned by the Optionee, to the extent that such payment does not require
the surrender of a fractional share of such previously acquired Common Stock. In
addition, to the extent permitted by the Committee, the option exercise price
may be paid by authorizing the Company to withhold Common Stock otherwise
issuable on exercise of the option. Such shares previously acquired or shares
withheld to pay the option exercise price shall be valued at fair market value
on the date the option is exercised in accordance with the procedures to be
established by the Committee. A holder of an option shall have none of the
rights of a stockholder until the shares of Common Stock are issued to him or
her. If an amount is payable by an Optionee to the Company or a Subsidiary under
applicable withholding tax laws in connection with the exercise of non-qualified
options, the Committee may, in its discretion and subject to such rules as it
may adopt, permit the Optionee to make such payment, in whole or in part, by
electing to authorize the Company to withhold or accept shares of Common Stock
having a fair market value equal to the amount to be paid under such withholding
tax laws.

         e. Restrictions. The Committee shall determine, with respect to each
option, the nature and extent of the restrictions, if any, to be imposed on the
shares of Common Stock that may be purchased thereunder including restrictions
on the transferability of such shares acquired through the exercise of such
option. Without limiting the generality of the foregoing, the Committee may
impose conditions restricting absolutely or conditionally the transferability of
shares acquired through the exercise of options for such periods, and subject to
such conditions, including continued employment of the Optionee by the Company
or a Subsidiary, as the Committee may determine.

         f. Purchase for Investment. The Committee shall have the right to
require that each Optionee or other person who shall exercise an option under
the Plan represent and agree that any shares of Common Stock purchased pursuant
to such option will be purchased for investment and not with a view to the
distribution or resale thereof or that such shares will not be

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sold except in accordance with such restrictions or limitations as may be set
forth in the written agreement granting such option.

         g. Non-Transferability of Options. During an Optionee's lifetime, the
option may be exercised only by the Optionee. Options shall not be transferable,
except for exercise by the Optionee's legal representatives or heirs.

         h. Termination of Employment. Upon the termination of an Optionee's
employment for any reason other than death, then, except as provided below, the
option shall be exercisable only as to those shares of Common Stock which were
then subject to the exercise of such option (provided that the Committee may
determine that particular limitations and restrictions under the Plan shall not
apply) and such option shall expire according to the following schedule (unless
the Committee shall provide for shorter periods at the time the option is
granted):

                  (i)      Retirement. Option shall expire, unless exercised,
                           five (5) years after the Optionee's retirement from
                           the Company or any Subsidiary under the provisions of
                           the Company's or a Subsidiary's pension plan.

                  (ii)     Disability. Any holding period required by Section
                           6(c) shall automatically be deemed to be satisfied
                           and Option shall expire, unless exercised, five (5)
                           years after the date the Optionee is eligible to
                           receive disability benefits under the provisions of
                           the Company's or a Subsidiary's long-term disability
                           plan.

                  (iii)    Disposition of Business. In the case of a termination
                           resulting from the disposition by the Company or any
                           of its Subsidiaries of all or a part of its interest
                           in, or the discontinuance of a business of, a
                           subsidiary, division or other business unit, unvested
                           options shall not be forfeited, but any holding
                           period required by Section 6(c) shall be satisfied in
                           accordance with its original schedule (including any
                           holding period associated with an option that becomes
                           a non-qualified option in accordance with Section
                           8(c)) and Option shall expire, unless exercised, five
                           (5) years after the date of termination;

                  (iv)     Force Reduction Program. In the case of a termination
                           (other than retirement) resulting from a force
                           reduction program instituted by the Company or any of
                           its Subsidiaries, the Option shall expire, unless
                           exercised, three (3) years from the date of
                           termination.

                  (v)      Gross Misconduct. Option shall expire upon receipt by
                           the Optionee of the notice of termination if he or
                           she is terminated for deliberate, willful or gross
                           misconduct as determined by the Company.

                  (vi)     Change in Control. In the event an Optionee's
                           employment is involuntarily terminated by the Company
                           (other than termination as a result of disability or
                           gross misconduct, but including a termination
                           described in subsection (iii) and (iv) above) within
                           two years following a

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                           Change in Control all options shall become fully
                           vested and the option shall remain exercisable for a
                           period of three (3) years following such termination
                           (or five (5) years following such termination in the
                           case of a termination described in Subsection (i),
                           (iii) or (iv) above) but in no event after the
                           expiration of the option, and the option shall expire
                           thereafter.

                  (vii)    All Other Terminations. Option shall expire, unless
                           exercised, three (3) months after the date of such
                           termination.

         i. Death of Optionee. Upon the death of an Optionee during his or her
period of employment, the option shall be exercisable only as to those shares of
Common Stock which were subject to the exercise of such option at the time of
his or her death, provided that (i) any holding period required by Section 6(c)
shall automatically be deemed to be satisfied and (ii) the Committee may
determine that particular limitations and restrictions under the Plan shall not
apply, and such option shall expire, unless exercised by the Optionee's legal
representatives or heirs, five (5) years after the date of death (unless the
Committee shall provide for a shorter period at the time the option is granted).

         j. Deferral. The Committee may permit an Optionee to elect to defer
receipt of all or part of the Common Stock issuable upon the exercise of an
option, pursuant to rules and regulations adopted by the Committee. The
Committee may not permit the payment of cash in lieu of Common Stock upon
payment of the deferred amount.

In no event, however, shall any option be exercisable pursuant to Sections 6(h)
or (i) subsequent to the tenth anniversary of the date on which it is granted.

7.       TERMS AND CONDITIONS OF STOCK APPRECIATION RIGHTS

         a. General. The Committee may also grant a stock appreciation right in
connection with a non-qualified option, either at the time of grant or by
amendment. Such stock appreciation right shall cover the same shares covered by
such option (or such lesser number of shares of Common Stock as the Committee
may determine) and shall, except for the provisions of Section 6(d) hereof, be
subject to the same terms and conditions as the related non-qualified option.

         b. Exercise and Payment. Each stock appreciation right shall entitle
the Optionee to surrender to the Company unexercised the related option, or any
portion thereof, and to receive from the Company in exchange therefor an amount
equal to the excess of the fair market value of one share of Common Stock over
the option price per share times the number of shares covered by the option, or
portion thereof, which is surrendered. Payment shall be made in shares of Common
Stock valued at fair market value, or in cash, or partly in shares and partly in
cash, all as shall be determined by the Committee. The fair market value shall
be the value determined in accordance with procedures established by the
Committee. Stock appreciation rights may be exercised from time to time upon
actual receipt by the Company of written notice stating the number of shares of
Common Stock with respect to which the stock appreciation right is being
exercised, provided that if a stock appreciation right expires unexercised, it
shall be deemed exercised on the expiration date if any amount would be payable
with respect thereto. No

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fractional shares shall be issued but instead cash shall be paid for a fraction
or, if the Committee should so determine, the number of shares shall be rounded
downward to the next whole share. If an amount is payable by an Optionee to the
Company or a Subsidiary under applicable withholding tax laws in connection with
the exercise of stock appreciation rights, the Committee may, in its discretion
and subject to such rules as it may adopt, permit the Optionee to make such
payment, in whole or in part, by electing to authorize the Company to withhold
or accept shares of Common Stock having a fair market value equal to the amount
to be paid under such withholding tax laws.

         c. Restrictions. The obligation of the Company to satisfy any stock
appreciation right exercised by an Optionee subject to Section 16 of the Act
shall be conditioned upon the prior receipt by the Company of an opinion of
counsel to the Company that any such satisfaction will not create an obligation
on the part of such Optionee pursuant to Section 16(b) of the Act to reimburse
the Company for any statutory profit which might be held to result from such
satisfaction.

8.       TERMS AND CONDITIONS OF INCENTIVE STOCK OPTIONS.

         a. General. The Committee may also grant incentive stock options as
defined under Section 422 of the Code. All incentive stock options issued under
the Plan shall, except for the provisions of Sections 6(h) and (i) and Section 7
hereof, be subject to the same terms and conditions as the non-qualified options
granted under the Plan. In addition, incentive stock options shall be subject to
the conditions of Sections 8(b), (c), (d) and (e).

         b. Limitation of Exercise. The aggregate fair market value (determined
as of the date the incentive stock option is granted) of the shares of stock
with respect to which incentive stock options are exercisable for the first time
by such Optionee during any calendar year, under this Plan or any other stock
option plans adopted by the Company, its Subsidiaries or any predecessor
companies thereof, shall not exceed $100,000. If any incentive stock options
become exercisable in any year in excess of the $100,000 limitation, options
representing such excess shall become non-qualified options exercisable pursuant
to the terms of Section 6 hereof and shall not be exercisable as incentive stock
options.

         c. Termination of Employment. Upon the termination of an Optionee's
employment, for any reason other than death, his or her incentive stock option
shall be exercisable only as to those shares of Common Stock which were then
subject to the exercise of such option except as provided below (provided that
the Committee may determine that particular limitations and restrictions under
the Plan shall not apply) and such option shall expire as an incentive stock
option according to the following schedule (unless the Committee shall provide
for shorter periods at the time the incentive stock option is granted) but
shall, in all cases other than 8(c)(iii) and 8(c)(iv), at the end of the period
referred to below become a non-qualified option exercisable pursuant to the
terms of Section 6 hereof (including Sections 6(h) and (i)) less the period
already elapsed under such Section:

                  (i)      Retirement. An incentive stock option shall expire,
                           unless exercised, three (3) months after the
                           Optionee's retirement from the Company or any

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                           Subsidiary under the provisions of the Company's or a
                           Subsidiary's pension plan.

                  (ii)     Disability. In the case of an Optionee who is
                           disabled within the meaning of Section 22(e)(3) of
                           the Code, any holding period required by Section 6(c)
                           shall automatically be deemed to be satisfied and an
                           incentive stock option shall expire, unless
                           exercised, one (1) year after the earlier of the date
                           the Optionee terminates employment or the date the
                           Optionee is eligible to receive disability benefits
                           under the provisions of the Company's or a
                           Subsidiary's long-term disability plan.

                  (iii)    Gross Misconduct. An incentive stock option shall
                           expire upon receipt by the Optionee of the notice of
                           termination if he or she is terminated for
                           deliberate, willful or gross misconduct as determined
                           by the Company.

                  (iv)     All Other Terminations. An incentive stock option
                           shall expire, unless exercised, three (3) months
                           after the date of such termination.

         d. Incentive Stock Options Granted On and After May 25, 2000. In the
case of an incentive stock option granted on or after May 25, 2000, the
following additional provisions shall apply:

                  (i)      Disposition of Business. Subject to Section 8(e), in
                           the case of a termination resulting from the
                           disposition by the Company or any of its Subsidiaries
                           of all or a part of its interest in, or the
                           discontinuance of a business of, a subsidiary,
                           division or other business unit, unvested options
                           shall not be forfeited, but any holding period
                           required by Section 6(c) shall be satisfied in
                           accordance with its original schedule and the Option
                           shall expire, unless exercised, three (3) months
                           after the date of termination, but shall at the end
                           of such three month period become a non-qualified
                           option exercisable pursuant to the terms of Section 6
                           hereof (including Section 6(h)(iii), less the period
                           already elapsed hereunder);

                  (ii)     Force Reduction Program. Subject to Section 8(e), in
                           the case of a termination (other than retirement)
                           resulting from a force reduction program instituted
                           by the Company or any of its Subsidiaries, the Option
                           shall expire, unless exercised, three (3) months
                           after the date of termination, but shall at the end
                           of such three (3) month period become a non-qualified
                           option exercisable pursuant to the terms of Section 6
                           hereof (including Section 6(h)(iv), less the period
                           already elapsed hereunder).

         e. Additional Provisions Regarding Incentive Stock Options Granted On
Or After November 16, 2000. In the case of an incentive stock option granted on
or after November 16, 2000, the following additional provisions shall apply:

         In the event an Optionee's employment is involuntarily terminated by
         the Company (other than termination as a result of disability or gross
         misconduct, but including a

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         termination described in subsections (d)(i) or (d)(ii) above) within
         two years following a Change in Control, all options shall become fully
         vested and the option shall remain exercisable for a period of three
         (3) months following such termination (but in no event after the
         expiration of the option) and shall at the end of such three (3) month
         period become a non-qualified option exercisable pursuant to the terms
         of Section 6 hereof (including Section 6(h)(vii), less the period
         already elapsed hereunder).

         f. Additional Provisions Regarding Certain Incentive Stock Options
Granted Before May 25, 2000. In the case of an incentive stock option granted
before May 25, 2000, the following additional provisions shall apply:

                  (i)      Disposition of Business. In the case of incentive
                           stock options granted after September 24, 1998 and
                           before May 25, 2000, in the event that a termination
                           results from the disposition by the Company of all or
                           a part of its interest in, or the discontinuance of
                           the business of, a subsidiary, division or other
                           business unit of the Company, the Committee may
                           extend the period during which an incentive stock
                           option may be exercised as a non-qualified option to
                           up to five (5) years from the date of such
                           termination.

                  (ii)     Other Terminations. In the case of incentive stock
                           options granted after April 24, 1997 and before May
                           25, 2000, the Committee may extend the period during
                           which an incentive stock option may be exercised as a
                           non-qualified stock option to up to three (3) years
                           from the date of a termination not due to retirement,
                           disability or gross misconduct or, if later, three
                           (3) years from the date the option becomes
                           exercisable but not more than five years after the
                           date of such termination.

         g. Death of Optionee. Upon the death of an Optionee during his or her
period of employment, the incentive stock option shall be exercisable as an
incentive stock option only as to those shares of Common Stock which were
subject to the exercise of such option at the time of death, provided that (i)
any holding period required by Section 6(c) shall automatically be deemed to be
satisfied, and (ii) the Committee may determine that particular limitations and
restrictions under the Plan shall not apply, and such option shall expire,
unless exercised by the Optionee's legal representatives or heirs, five (5)
years after the date of death (unless the Committee shall provide for a shorter
period at the time the option is granted).

         h. Leave of Absence. A leave of absence, whether or not an Approved
Leave of Absence, shall be deemed a termination of employment for purposes of
Section 8.

In no event, however, shall any incentive stock option be exercisable pursuant
to Sections 8(c) or (d) subsequent to the tenth anniversary of the date on which
it was granted.

9.       TERMS AND CONDITIONS OF AWARDS OF RETENTION STOCK

         a. General. Retention Shares may be granted only to reward the
attainment of individual, Company or Subsidiary goals, or to attract or retain
officers or other employees of the

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Company or any Subsidiary, and shall be granted subject to the attainment of
performance goals unless the Committee shall determine otherwise. With respect
to each grant of Retention Shares under the Plan, the Committee shall determine
the period or periods, including any conditions for determining such period or
periods, during which the restrictions set forth in Section 9(b) shall apply,
provided that in no event, other than as provided in Section 9(c) or in the next
sentence, shall such restrictions terminate prior to 3 years after the date of
grant (the "Restriction Period"), and may also specify any other terms or
conditions to the right of the Participant to receive such Retention Shares
("Vesting Conditions"). The Committee may determine in its sole discretion to
waive any or all of such restrictions prior to end of the Restriction Period or
the satisfaction of any Vesting Condition. Subject to Section 9(c) and any such
Vesting Condition, a grant of Retention Shares shall be effective for the
Restriction Period and may not be revoked; provided, however, in the event of a
Change in Control of the Company (i) with respect to Retention Shares (other
than Retention Shares granted pursuant to the Executive Incentive Premium
Exchange Program ("PEP Plan") or the 2001 Long Term Plan (the "LTP")), the
Restricted Period shall end with respect to that number of such Retention Shares
calculated by multiplying such Retention Shares by the fraction obtained by
dividing the number of full months during such Restricted Period through the
date of such Change in Control by the total number of months contained in such
Restricted Period (determined without regard to this proviso), (ii) with respect
to Retention Shares granted to such Participant pursuant to the PEP Plan, the
Restricted Period shall end with respect to that number of such Retention Shares
equal to (x) that number of such Retention Shares with a fair market value (as
of the date of grant) equal to the amount of incentive award such Participant
elected to forego in exchange for such Retention Shares (the "Original Retention
Shares"), and (y) number of Retention Shares which the Participant received as a
premium under the PEP Plan (the "Premium Retention Shares") calculated by
multiplying such Premium Retention Shares by the fraction obtained by dividing
the number of full months during such Restricted Period through the date of such
Change in Control by the total number of months contained in such Restricted
Period, and (iii) Retention Shares granted to such Participant pursuant to the
LTP shall be subject to the terms of the applicable agreement issued under the
LTP. In the event a payment becomes due, the Committee may, in its sole
discretion, elect to make such payment either in cash, in shares of Common
Stock, in shares of equity securities of the entity (or its parent) resulting
from such Change in Control or in any combination of the foregoing.

         b. Restrictions. At the time of grant of Retention Shares to a
Participant, a certificate representing the number of shares of Common Stock
granted shall be registered in the Participant's name but shall be held by the
Company for his or her account. The Participant shall have the entire beneficial
ownership interest in, and all rights and privileges of a stockholder as to,
such Retention Shares, including the right to vote such Retention Shares and,
unless the Committee shall determine otherwise, the right to receive dividends
thereon, subject to the following: (i) subject to Section 9(c), the Participant
shall not be entitled to delivery of the stock certificate until the expiration
of the Restriction Period and the satisfaction of any Vesting Conditions; (ii)
none of the Retention Shares may be sold, transferred, assigned, pledged, or
otherwise encumbered or disposed of during the Restriction Period or prior to
the satisfaction of any Vesting Conditions; and (iii) all of the Retention
Shares shall be forfeited and all rights of the Participant to such Retention
Shares shall terminate without further obligation on the part of the Company
unless the Participant remains in the continuous employment of the Company or a

                                       11
<PAGE>   13

Subsidiary for the entire Restriction Period, except as provided by Sections
9(a) and 9(c), and any applicable Vesting Conditions have been satisfied. Any
shares of Common Stock or other securities or property received as a result of a
transaction listed in Section 13 shall be subject to the same restrictions as
such Retention Shares unless the Committee shall determine otherwise.

         c. Termination of Employment.

                  (i)      Disability and Retirement. Unless the Committee shall
                           determine otherwise at the time of grant of Retention
                           Shares, if (A) a Participant ceases to be an employee
                           of the Company or a Subsidiary prior to the end of a
                           Restriction Period, by reason of disability under the
                           provisions of the Company's or a Subsidiary's
                           long-term disability plan or retirement under the
                           provisions of the Company's or a Subsidiary's pension
                           plan either (i) at age 65 or (ii) prior to age 65 at
                           the request of the Company or a Subsidiary, and (B)
                           all Vesting Conditions have been satisfied, the
                           Retention Shares granted to such Participant shall
                           immediately vest and all restrictions applicable to
                           such shares shall lapse. A certificate for such
                           shares shall be delivered to the Participant in
                           accordance with the provisions of Section 9(d).

                  (ii)     Death. Unless the Committee shall determine otherwise
                           at the time of grant of Retention Shares, if (A) a
                           Participant ceases to be an employee of the Company
                           or a Subsidiary prior to the end of a Restriction
                           Period by reason of death, and (B) all Vesting
                           Conditions have been satisfied, the Retention Shares
                           granted to such Participant shall immediately vest in
                           his or her Beneficiary, and all restrictions
                           applicable to such shares shall lapse. A certificate
                           for such shares shall be delivered to the
                           Participant's Beneficiary in accordance with the
                           provisions of Section 9(d).

                  (iii)    All Other Terminations. If a Participant ceases to be
                           an employee of the Company or a Subsidiary prior to
                           the end of a Restriction Period for any reason other
                           than death, disability or retirement as provided in
                           Section 9(c)(i) and (ii) or a termination pursuant to
                           Section 9(c)(v), the Participant shall immediately
                           forfeit all Retention Shares then subject to the
                           restrictions of Section 9(b) in accordance with the
                           provisions thereof, except that the Committee may, if
                           it finds that the circumstances in the particular
                           case so warrant, allow a Participant whose employment
                           has so terminated to retain any or all of the
                           Retention Shares then subject to the restrictions of
                           Section 9(b) and all restrictions applicable to such
                           retained shares shall lapse. A certificate for such
                           retained shares shall be delivered to the Participant
                           in accordance with the provisions of Section 9(d).

                  (iv)     Vesting Conditions. Unless the Committee shall
                           determine otherwise at the time of grant of Retention
                           Shares, if a Participant ceases to be an employee of
                           the Company for any reason prior to the satisfaction
                           of any Vesting Conditions, the Participant shall
                           immediately forfeit all Retention Shares then subject
                           to the restrictions of Section 9(b) in accordance
                           with

                                       12
<PAGE>   14

                           the provisions thereof, except that the Committee
                           may, if it finds that the circumstances in the
                           particular case so warrant, allow a Participant whose
                           employment has so terminated to retain any or all of
                           the Retention Shares then subject to the restrictions
                           of Section 9(b) and all restrictions applicable to
                           such retained shares shall lapse. A certificate for
                           such retained shares shall be delivered to the
                           Participant in accordance with the provisions of
                           Section 9(d).

                  (v)      Change in Control. In the event a Participant's
                           employment is involuntarily terminated by the Company
                           (other than a termination as a result of death,
                           disability, retirement or gross misconduct) within
                           two years following a Change in Control, the
                           remaining restrictions with respect to all Original
                           Retention Shares and all Premium Retention Shares
                           shall lapse and the Committee may, in its sole
                           discretion, elect to make such payment either in
                           cash, in shares of Common Stock, in shares of equity
                           securities of the entity (or its parent) resulting
                           from such Change in Control or in any combination of
                           the foregoing.

         d. Payment of Retention Shares. At the end of the Restriction Period
and after all Vesting Conditions have been satisfied, or at such earlier time as
provided for in Section 9(c) or as the Committee, in its sole discretion, may
otherwise determine, all restrictions applicable to the Retention Shares shall
lapse, and a stock certificate for a number of shares of Common Stock equal to
the number of Retention Shares, free of all restrictions, shall be delivered to
the Participant or his or her Beneficiary, as the case may be. If an amount is
payable by a Participant to the Company or a Subsidiary under applicable
withholding tax laws in connection with the lapse of such restrictions, the
Committee, in its sole discretion, may permit the Participant to make such
payment, in whole or in part, by authorizing the Company to transfer to the
Company Retention Shares otherwise deliverable to the Participant having a fair
market value equal to the amount to be paid under such withholding tax laws.

         e. Deferral. The Committee may permit a Participant to elect to defer
receipt of all or part of any Retention Shares that would otherwise be
delivered, pursuant to rules and regulations adopted by the Committee. The
Committee may permit the payment of cash in lieu of Common Stock upon payment of
the deferred amount.

10.      STOCK UNITS

         The Committee may also grant Awards of Stock Units under the Plan. The
vesting of Awards of Stock Units shall be subject to the requirement that a
Participant continue employment with the Company or a Subsidiary for a certain
period of no less than three years (the "Unit Restriction Period"), and may be
subject to the satisfaction of other conditions or contingencies ("Unit Vesting
Condition"), in order for a Participant to receive payment of such Award, as
established by the Committee at the time of the Award. The Committee may
determine in its sole discretion to waive any such requirement, condition or
contingency. Awards of Stock Units shall be payable in shares of Common Stock.
The Committee may permit a Participant to elect to defer receipt of payment of
all or part of any Award of Stock Units pursuant to rules and regulations
adopted by the Committee. Unless the Committee

                                       13
<PAGE>   15

provides otherwise at the time an Award of Stock Units to a Participant is made,
the provisions of Section 9(c) of the Plan relating to the vesting and
forfeiture of Retention Stock upon termination of employment shall apply to any
termination of employment by such Participant during the Unit Restricted Period
or prior to the satisfaction of any Unit Vesting Condition for such Award.

11.      DIVIDENDS AND DIVIDEND EQUIVALENTS

         Any Option or Award of Stock Units may provide the Participant with the
right to receive dividend payments or dividend equivalent payments on the Common
Stock subject to the Option or Award, whether or not such Option or Award has
been exercised or is vested. Such payments may be made in cash or may be
credited to a Participant's account and later settled in cash or Common Stock or
a combination thereof, as determined by the Committee. Such payments and credits
may be subject to such conditions and contingencies as the Committee may
establish.

12.      REGULATORY APPROVALS AND LISTING

         The Company shall not be required to issue to an Optionee, Participant
or a Beneficiary, as the case may be, any certificate for any shares of Common
Stock upon exercise of an option or for any Retention Shares granted under the
Plan or to make any payment with respect to any Stock Unit granted under the
Plan prior to (i) the obtaining of any approval from any governmental agency
which the Company, in its sole discretion, shall determine to be necessary or
advisable, (ii) the admission of such shares to listing on any stock exchange on
which the Common Stock may then be listed, and (iii) the completion of any
registration or other qualification of such shares or units under any state or
federal law or rulings or regulations of any governmental body which the
Company, in its sole discretion, shall determine to be necessary or advisable.

13.      ADJUSTMENT IN EVENT OF CHANGES IN CAPITALIZATION

         In the event of a recapitalization, stock split, stock dividend,
combination or exchange of shares, merger, consolidation, rights offering,
separation, spin-off, reorganization or liquidation, or any other change in the
corporate structure or shares of the Company, the Board, upon recommendation of
the Committee, may make such equitable adjustments as it may deem appropriate in
the number and kind of shares and Stock Units authorized by the Plan, in the
option price of outstanding Options, and in the number and kind of shares, Stock
Units or other securities or property subject to Options or covered by
outstanding Awards.

14.      TERM OF THE PLAN

         No Options, or Retention Shares or Stock Units shall be granted
pursuant to the Plan after April 16, 2003, but grants of Options, or Retention
Shares or Stock Units theretofore granted may extend beyond that date and the
terms and conditions of the Plan shall continue to apply thereto.

                                       14
<PAGE>   16

15.      TERMINATION OR AMENDMENT OF THE PLAN

         The Board may at any time terminate the Plan with respect to any shares
of Common Stock or Stock Units not at that time subject to outstanding Options
or Awards, and may from time to time alter or amend the Plan or any part thereof
(including, but without limiting the generality of the foregoing, any amendment
deemed necessary to ensure that the Company may obtain any approval referred to
in Section 12 or to ensure that the grant of Options or Awards, the exercise of
Options, the payment of Retention Shares or the payment with respect to Stock
Units or any other provision of the Plan complies with Section 16(b) of the
Act), provided that no change with respect to any Options, Retention Shares or
Stock Units theretofore granted may be made which would impair the rights of an
Optionee or Participant without the consent of such Optionee or Participant and,
further, that without the approval of stockholders, no alteration or amendment
may be made which would (i) increase the maximum number of shares of Common
Stock and Stock Units subject to the Plan as set forth in Section 5 (except by
operation of Section 13), (ii) extend the term of the Plan or (iii) change the
class of eligible persons who may receive Options or Awards of Retention Shares
or Stock Units under the Plan. The Committee may amend the Plan to extend the
exercise period following an optionee's termination of an option granted prior
to September 24, 1998, but not beyond: (i) in the case of a termination
resulting from the disposition by the Company of all or a part of its interest
in, or the discontinuance of the business of, a subsidiary, division or other
business unit of the Company, five years from the date of termination and (ii)
in the case of all other terminations, not more than three years from the date
of termination, or, if later, three years from the date the option becomes
exercisable, but not more than five years after the date of such termination.

16.      LEAVE OF ABSENCE

         Unless the Committee shall determine otherwise, a leave of absence
other than an Approved Leave of Absence shall be deemed a termination of
employment for purposes of the Plan. An Approved Leave of Absence shall not be
deemed a termination of employment for purposes of the Plan (except for purposes
of Section 8), but the period of such Leave of Absence shall not be counted
toward satisfaction of any Restriction Period or Unit Restriction Period or any
holding period described in Section 6(c).

17.      GENERAL PROVISIONS

         a. Neither the Plan nor the grant of any Option or Award nor any action
by the Company, any Subsidiary or the Committee shall be held or construed to
confer upon any person any right to be continued in the employ of the Company or
a Subsidiary. The Company and each Subsidiary expressly reserve the right to
discharge, without liability but subject to his or her rights under the Plan,
any Optionee or Participant whenever in the sole discretion of the Company or a
Subsidiary, as the case may be, its interest may so require.

         b. All questions pertaining to the construction, regulation, validity
and effect of the Plan shall be determined in accordance with the laws of the
State of Utah, without regard to conflict of laws doctrine.

                                       15
<PAGE>   17

18.      EFFECTIVE DATE

         The Plan shall become effective upon approval of the stockholders of
the Company.

                                       16<PAGE>   1

                                                                   EXHIBIT 10(o)

================================================================================

                            UNION PACIFIC CORPORATION
                          KEY EMPLOYEE CONTINUITY PLAN

                          Dated as of November 16, 2000

================================================================================

<PAGE>   2

                            UNION PACIFIC CORPORATION
                          KEY EMPLOYEE CONTINUITY PLAN

                  The Company hereby adopts the Union Pacific Corporation Key
Employee Continuity Plan for the benefit of certain employees of the Company and
its Affiliates, on the terms and conditions hereinafter stated. All capitalized
terms used herein are defined in Section 1 hereof. The Plan, as a "severance pay
arrangement" within the meaning of Section 3(2)(B)(i) of ERISA, is intended to
be excepted from the definitions of "employee pension benefit plan" and "pension
plan" set forth under Section 3(2) of ERISA, and is intended to meet the
descriptive requirements of a plan constituting a "severance pay plan" within
the meaning of regulations published by the Secretary of Labor at Title 29, Code
of Federal Regulations, Section 2510.3-2(b).

SECTION 1. DEFINITIONS. As hereinafter used:

SECTION 1.1 "Affiliate" shall have the meaning set forth in Rule 12b-2 under
Section 12 of the Exchange Act.

SECTION 1.2 "Beneficial Owner" shall have the meaning set forth in Rule 13d-3
under the Exchange Act.

SECTION 1.3 "Board" means the Board of Directors of the Company.

SECTION 1.4 "Cause" means (i) the willful and continued failure by the Eligible
Employee to substantially perform the Eligible Employee's duties with the
Employer (other than any such failure resulting from the Eligible Employee's
incapacity due to physical or mental illness), or (ii) the willful engaging by
the Eligible Employee in conduct which is demonstrably injurious to the Company,
monetarily or otherwise. For purposes of this definition, no act, or failure to
act, on the Eligible Employee's part shall be deemed "willful" unless done, or
omitted to be done, by the Eligible Employee not in good faith or without
reasonable belief that the Eligible Employee's act, or failure to act, was in
the best interest of the Company.

SECTION 1.5 A "Change in Control" shall be deemed to have occurred if the event
set forth in any one of the following paragraphs shall have occurred:

                           (i) any Person is or becomes the Beneficial Owner,
directly or indirectly, of securities of the Company (not including in the
securities beneficially owned by such Person any securities acquired directly
from the Company or its Affiliates) representing 20% or more of the combined
voting power

                                       2

<PAGE>   3

of the Company's then outstanding securities, excluding any Person who becomes
such a Beneficial Owner in connection with a transaction described in clause (A)
of paragraph (iii) below; or

                           (ii) the following individuals cease for any reason
to constitute a majority of the number of directors then serving: individuals
who, on November 16, 2000, constitute the Board and any new director (other than
a director whose initial assumption of office is in connection with an actual or
threatened election contest, including but not limited to a consent
solicitation, relating to the election of directors of the Company) whose
appointment or election by the Board or nomination for election by the Company's
shareholders was approved or recommended by a vote of at least two-thirds (2/3)
of the directors then still in office who either were directors on the date
hereof or whose appointment, election or nomination for election was previously
so approved or recommended; or

                           (iii) there is consummated a merger or consolidation
of the Company or any direct or indirect subsidiary of the Company with any
other corporation, other than (A) a merger or consolidation which would result
in the voting securities of the Company outstanding immediately prior to such
merger or consolidation continuing to represent (either by remaining outstanding
or by being converted into voting securities of the surviving entity or any
parent thereof) more than 50% of the combined voting power of the securities of
the Company or such surviving entity or any parent thereof outstanding
immediately after such merger or consolidation or (B) a merger or consolidation
effected to implement a recapitalization of the Company (or similar transaction)
in which no Person is or becomes the Beneficial Owner, directly or indirectly,
of securities of the Company (not including in the securities Beneficially Owned
by such Person any securities acquired directly from the Company or its
Affiliates) representing 20% or more of the combined voting power of the
Company's then outstanding securities; or

                           (iv) the shareholders of the Company approve a plan
of complete liquidation or dissolution of the Company or there is consummated an
agreement for the sale or disposition by the Company of all or substantially all
of the Company's assets, other than a sale or disposition by the Company of all
or substantially all of the Company's assets to an entity, more than 50% of the
combined voting power of the voting securities of which is owned by shareholders
of the Company in substantially the same proportions as their ownership of the
Company immediately prior to such sale.

SECTION 1.6 "Code" means the Internal Revenue Code of 1986, as it may be amended
from time to time.

                                       3
<PAGE>   4

SECTION 1.7 "Company" means Union Pacific Corporation, a Utah corporation, or
any successors thereto.

SECTION 1.8 "Eligible Employee" means any employee who is a Tier 1, Tier 2 or
Tier 3 Employee. An Eligible Employee becomes a "Severed Employee" once he or
she incurs a Severance.

SECTION 1.9 "Employer" means the Company or any of its Affiliates which is an
employer of an Eligible Employee.

SECTION 1.10 "Equity Award" shall mean stock options, restricted stock and other
similar equity-based awards which are granted to an Eligible Employee by the
Company (excluding, however, (i) any incentive stock options (as defined under
Section 422 of the Code) granted prior to November 16, 2000, (ii) awards made
under the Company's Executive Stock Purchase Incentive Plan, and (iii) awards
made under the Company's 2001 Long Term Plan (the "2001 LTP")).

SECTION 1.11 "Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended from time to time.

SECTION 1.12 "Excise Tax" shall mean any excise tax imposed under section 4999
of the Code or any successor provision thereto.

SECTION 1.13 "Good Reason" means the occurrence, on or after the date of a
Change in Control and without the affected Eligible Employee's written consent,
of any of the following: (i) the assignment to the Eligible Employee of duties
that are materially inconsistent with the Eligible Employee's duties immediately
prior to the Change in Control (other than pursuant to a transfer or promotion
to a position of equal or enhanced responsibility or authority) or any
diminution in the nature or scope of the Eligible Employee's responsibilities
from those in effect immediately prior to the Change in Control; (ii) a
reduction by the Employer (or any member of the Parent Group) in the Eligible
Employee's annual base salary or annual incentive opportunity from that in
effect immediately prior to the Change in Control; (iii) a material reduction by
the Employer (or any member of the Parent Group) in the pension, thrift, medical
or long term disability benefits provided to the Eligible Employee from those
provided to the Eligible Employee immediately prior to the Change in Control; or
(iv) the failure by any successor (whether direct or indirect, by purchase,
merger, consolidation or otherwise), to all or substantially all of the business
and/or assets of the Company, to expressly assume and agree to perform this Plan
in the same manner and to the same extent that the Company would be required to
perform it if no succession had taken place.

                                       4
<PAGE>   5

SECTION 1.14 "Gross-Up Payment" shall have the meaning set forth in Section 2.5
hereof.

SECTION 1.15 "Parent" shall mean the ultimate parent, if any, of the Company
after a Change in Control.

SECTION 1.16 "Parent Group" shall mean, collectively, the Parent and its
Affiliates.

SECTION 1.17 "Person" shall have the meaning given in Section 3(a)(9) of the
Exchange Act, as modified and used in Sections 13(d) and 14(d) thereof, except
that such term shall not include (i) the Company or any of its Affiliates, (ii)
a trustee or other fiduciary holding securities under an employee benefit plan
of the Company or any of its subsidiaries, (iii) an underwriter temporarily
holding securities pursuant to an offering of such securities or (iv) a
corporation owned, directly or indirectly, by the shareholders of the Company in
substantially the same proportions as their ownership of stock of the Company.

SECTION 1.18 "Plan" means the Union Pacific Corporation Key Employee Continuity
Plan, as set forth herein, as it may be amended from time to time.

SECTION 1.19 "Plan Administrator" means the person or persons appointed from
time to time by the Board which appointment may be revoked at any time by the
Board.

SECTION 1.20 A "Potential Change in Control" shall be deemed to have occurred if
the event set forth in any one of the following paragraphs shall have occurred:

                           (a) the Company enters into an agreement, the
consummation of which would result in the occurrence of a Change in Control;

                           (b) the Company or any Person publicly announces an
intention to take or to consider taking actions which, if consummated, would
constitute a Change in Control;

                           (c) any Person becomes the Beneficial Owner, directly
or indirectly, of securities of the Company (not including in the securities
beneficially owned by such Person any securities acquired directly from the
Company or its Affiliates) representing fifteen (15%) or more of either the then
outstanding shares of common stock of the Company or the combined voting power
of the Company's then outstanding securities; or

                                       5
<PAGE>   6

                           (d) the Board adopts a resolution to the effect that
a Potential Change in Control has occurred.

SECTION 1.21 "Severance" means the termination of an Eligible Employee's
employment with the Employer on or within two years following the date of the
Change in Control, (i) by the Employer, other than for Cause or pursuant to
mandatory retirement policies of the Employer that existed prior to the Change
of Control, or (ii) by the Eligible Employee for Good Reason. An Eligible
Employee will not be considered to have incurred a Severance if his or her
employment is (a) discontinued by reason of the Eligible Employee's death or a
physical or mental condition causing such Eligible Employee's inability to
substantially perform his or her duties with the Employer, including, without
limitation, such condition entitling him or her to benefits under any sick pay
or disability income policy or program of the Employer or (b) discontinued by
reason of the divestiture of a facility, sale of a business or business unit, or
the outsourcing of a business activity with which the Eligible Employee is
affiliated, if the Eligible Employee is offered comparable employment by the
entity which acquires such facility, business or business unit or which succeeds
to such outsourced business activity and such entity agrees to assume the
obligations of the Employer to the Eligible Employee under this Plan.

SECTION 1.22 "Severance Date" means the date on or after the date of the Change
in Control on which an Eligible Employee incurs a Severance.

SECTION 1.23 "Severance Payment" means the payment determined pursuant to
Section 2.1 hereof.

SECTION 1.24 "Tier 1 Employee" means any employee of the Employer designated as
such by a resolution of the Board.

SECTION 1.25 "Tier 2 Employee" means any employee of the Employer designated as
such by a resolution of the Board.

SECTION 1.26 "Tier 3 Employee" means any employee of the Employer designated as
such by a resolution of the Board.

SECTION 2. BENEFITS.

SECTION 2.1 Each Eligible Employee who incurs a Severance shall be entitled,
subject to Section 2.9 hereof, to receive a Severance Payment equal to the
product of (i) the sum of (A) such Eligible Employee's annual base salary as in
effect immediately prior to such Severance, plus (B) the average annual
incentive

                                       6
<PAGE>   7

compensation earned (or foregone at the election of the Eligible Employee) by
such Eligible Employee in respect of the three (or fewer, as hereinafter
described) annual incentive compensation determinations (including
determinations that no annual incentive compensation will be awarded)
immediately preceding the Severance (or, if higher, in respect of the three (or
fewer, as hereinafter described) annual incentive compensation determinations
immediately preceding the Change in Control) multiplied by (ii) in the case of a
Tier 1 Employee, three (3), in the case of a Tier 2 Employee, two (2); and in
the case of a Tier 3 Employee, one and one-half (1.5). For purposes of clause
(A) above, annual base salary shall be determined immediately prior to the
Severance (without regard to any reductions therein which constitute Good
Reason) and for purposes of clause (B) above, annual incentive compensation
determinations prior to 2000 (with respect to annual incentive compensation
earned for plan years prior to 1999) shall be disregarded. The Severance Payment
shall be paid to a Severed Employee in a cash lump sum, as soon as practicable
following the Severance Date, but in no event later than twenty (20) business
days immediately following the expiration of the revocation period, if any,
applicable to such Severed Employee's release described in Section 2.9 hereof.

SECTION 2.2 Each Eligible Employee who incurs a Severance and who is, at the
time of such Severance, a participant either in the Supplemental Pension Plan
for Officers and Managers of Union Pacific Corporation and Affiliates (the "UPC
SERP") or in the Overnite Transportation Company Supplemental Executive
Retirement Plan (the "Overnite SERP") shall, for purposes of the UPC SERP or the
Overnite SERP, as applicable, (i) be deemed to have accumulated an additional
thirty-six (36) months of age and service credit beyond the Severance Date (but
in no event beyond age 65 and in no event shall aggregate service under the UPC
SERP exceed forty (40) years or under the Overnite SERP exceed thirty (30)
years), and (ii) be deemed to be fully vested under such SERP.

SECTION 2.3 (a) For a period of three years following a Severed Employee's
Severance Date (or, if sooner, until such Severed Employee attains the age of
fifty-two (52), at which time the Severed Employee shall become entitled to
receive benefits under the Company's retiree welfare benefit plans), the Company
shall provide such Severed Employee and anyone entitled to claim under or
through such Severed Employee all benefits under any medical, dental or life
insurance program (as described in subsection (b) below), or other present or
future similar group employee benefit plan or program of the Employer (but
excluding any long-term disability plan), to the same extent as if such Severed
Employee had continued to be an employee during such period; provided, however,
that benefits otherwise receivable by or in respect of a Severed Employee
hereunder shall be reduced to the extent benefits of the same type are received
by such Severed Employee from a subsequent employer (and the Severed Employee
shall report the receipt of such

                                       7
<PAGE>   8

benefits to the Company). The coverage period for purposes of the group health
continuation requirements of section 4980B of the Code shall commence on the
Severance Date.

                           (b) With respect to continuation of Executive Life
Insurance Plan coverage (i) for a Severed Employee who has attained the age of
fifty-two (52) years on his or her Severance Date, the Company shall pay
premiums for a life insurance policy (in amount equal to one-half (1/2) of such
Severed Employee's annual salary as in effect immediately prior to Severance
Date), until fully funded; (ii) for a Severed Employee who attains the age of
fifty-two (52) during the three-year period following his or her Severance Date,
the Company shall, for the period prior to such Severed Employee reaching the
age of fifty-two (52), treat such Severed Employee as if he or she were an
active employee of the Company, and at such time as such Severed Employee
attains the age of fifty-two (52), treat such Severed Employee in accordance
with clause (i) above; and (iii) for a Severed Employee who will not attain the
age of fifty-two (52) during the three-year period following his or her
Severance Date, the Company shall, during such period, pay premiums on such
Severed Employee's life insurance policy as though such Severed Employee were an
active employee.

SECTION 2.4 (a) In the event an Eligible Employee incurs a Severance, the
Eligible Employee shall become fully vested in all outstanding Equity Awards. In
the case of an Equity Award consisting of (1) a stock option, such option shall
continue to be exercisable for a period of three years from the Severance Date
(or such longer period as may be prescribed in the plan or agreement governing
such option), but in no event later than the expiration date of such option; and
(2) retention stock units, the Company shall make payment of or on such units
within five (5) days following the Severed Employee's Severance Date.

                           (b) In the event an Eligible Employee incurs a
Severance, the Company shall make payment of or on all retention shares or
retention stock units and any cash award earned under the 2001 LTP within five
(5) days following the Severed Employee's Severance Date.

SECTION 2.5 (a) Whether or not the Eligible Employee becomes entitled to the
Severance Payment, if any payment or benefit received or to be received by the
Eligible Employee in connection with a Change in Control or the termination of
the Eligible Employee's employment (whether pursuant to the terms of this Plan
or any other plan, arrangement or agreement with the Company, any Person whose
actions result in a Change in Control or any Person affiliated with the Company
or such Person) (all such payments and benefits, including the Severance
Payment, being hereinafter called "Total Payments") will be subject (in whole or

                                       8
<PAGE>   9

part) to the Excise Tax, then, subject to the provisions of subsection (b) of
this Section 2.5, the Company shall pay to the Eligible Employee an additional
amount (the "Gross-Up Payment") such that the net amount retained by the
Eligible Employee, after deduction of any Excise Tax on the Total Payments and
any federal, state and local income and employment taxes and Excise Tax upon the
Gross-Up Payment, shall be equal to the Total Payments. For purposes of
determining the amount of the Gross-Up Payment, the Eligible Employee shall be
deemed to pay federal income taxes at the highest marginal rate of federal
income taxation in the calendar year in which the Gross-Up Payment is to be made
and state and local income taxes at the highest marginal rate of taxation in the
state and locality of the Eligible Employee's residence on the Severance Date
(or if there is no Severance Date, then the date on which the Gross-Up Payment
is calculated for purposes of this Section 2.5), net of the maximum reduction in
federal income tax which could be obtained from deduction of such state and
local taxes.

                           (b) In the event that the amount of the Total
Payments exceeds 100% of, but does not exceed 110% of, the largest amount that
would result in no portion of the Total Payments being subject to the Excise Tax
(the "Safe Harbor"), then subsection (a) of this Section 2.5 shall not apply and
the Severance Payments under Section 2.1 shall be reduced (if necessary, to
zero) so that the amount of the Total Payments is equal to the Safe Harbor.

                           (c) For purposes of determining whether any of the
Total Payments will be subject to the Excise Tax and the amount of such Excise
Tax, (i) all of the Total Payments shall be treated as "parachute payments"
within the meaning of section 280G(b)(2) of the Code, unless in the opinion of
tax counsel ("Tax Counsel") reasonably acceptable to the Eligible Employee and
selected by the accounting firm which was, immediately prior to the Change in
Control, the Company's independent auditor (the "Auditor"), such other payments
or benefits (in whole or in part) do not constitute parachute payments,
including by reason of section 280G(b)(4)(A) of the Code, (ii) all "excess
parachute payments" within the meaning of section 280G(b)(l) of the Code shall
be treated as subject to the Excise Tax unless, in the opinion of Tax Counsel,
such excess parachute payments (in whole or in part) represent "reasonable
compensation for services actually rendered", within the meaning of section
280G(b)(4)(B) of the Code, in excess of the "base amount" within meaning of
Section 280G(b)(3) of the Code allocable to such reasonable compensation, or are
otherwise not subject to the Excise Tax, and (iii) the value of any noncash
benefits or any deferred payment or benefit shall be determined by the Auditor
in accordance with the principles of sections 280G(d)(3) and (4) of the Code.
Prior to the payment date set forth in Section 2.6 hereof, the Company shall
provide the Eligible Employee with its calculation of the amounts referred to in
this Section 2.5(c) and such supporting materials as are reasonably necessary
for the

                                       9
<PAGE>   10

Eligible Employee to evaluate the Company's calculations. If the Eligible
Employee disputes the Company's calculations (in whole or in part), the
reasonable opinion of Tax Counsel with respect to the matter in dispute shall
prevail.

                           (d) In the event that the Excise Tax is finally
determined to be less than the amount taken into account hereunder in
calculating the Gross-Up Payment, and after giving effect to such
redetermination, the Severance Payment under Section 2.1 are to be reduced
pursuant to subsection (b) of this Section 2.5, the Eligible Employee shall
repay to the Company, within five (5) business days following the time that the
amount of such reduction in Excise Tax is finally determined, the portion of the
Gross-Up Payment attributable to such reduction (plus that portion of the
Gross-Up Payment attributable to the Excise Tax and federal, state and local
income and employment taxes imposed on the Gross-Up Payment being repaid by the
Eligible Employee), to the extent that such repayment results in (i) no portion
of the Total Payments being subject to the Excise Tax and (ii) a
dollar-for-dollar reduction in the Eligible Employee's taxable income and wages
for purposes of federal, state and local income and employment taxes, plus
interest on the amount of such repayment at the rate provided in section
1274(b)(2)(b) of the Code. In the event that (x) the Excise Tax is finally
determined to exceed the amount taken into account hereunder at the time of the
termination of the Eligible Employee's employment (including by reason of any
payment the existence or amount of which cannot be determined at the time of the
Gross-Up Payment) and (y) after giving effect to such redetermination, the
Severance Payment under Section 2.1 should not have been reduced pursuant to
subsection (b) of this Section 2.5, the Company shall make the previously
reduced Severance Payment and shall make an additional Gross-Up Payment in
respect of such excess and in respect of any portion of the Excise Tax with
respect to which the Company had not previously made a Gross-Up Payment (plus
any interest, penalties or additions payable by the Eligible Employee with
respect to such excess and such portion) within five (5) business days following
the time that the amount of such excess is finally determined.

SECTION 2.6 The payments provided in subsection (a) of Section 2.5 hereof shall
be made not later than the fifth day following the Severance Date; provided,
however, that if the amounts of such payments, and the limitations on such
payments set forth in Section 2.5 hereof, cannot be finally determined on or
before such day, the Company shall pay to the Eligible Employee on such day an
estimate of the minimum amount of such payments to which the Eligible Employee
is clearly entitled and shall pay the remainder of such payments (together with
interest on the unpaid remainder (or on all such payments to the extent the
Company fails to make such payments when due) at the rate provided in section
1274(b)(2)(B) of the Code) as soon as the amount thereof can be determined but
in no event later than the thirtieth (30th) day after the Severance Date.

                                       10
<PAGE>   11

SECTION 2.7 The Company shall reimburse the Eligible Employee for all reasonable
legal fees and expenses incurred by the Eligible Employee in seeking to obtain
or enforce any benefit or right provided by this Plan, so long as the Eligible
Employee prevails in substantial part on the merits of his or her claim. The
Company shall reimburse the Eligible Employee for all reasonable legal fees and
expenses incurred by the Eligible Employee in connection with any tax audit or
proceeding to the extent attributable to the application of section 4999 of the
Code to any payment or benefit provided hereunder.

SECTION 2.8 In the event of a claim for benefits hereunder by an Eligible
Employee, such Eligible Employee shall present the reason for his or her claim
in writing to the Plan Administrator. The Plan Administrator shall, within
thirty (30) days after receipt of such written claim, send a written
notification to the Eligible Employee as to its disposition. In the event the
claim is wholly or partially denied, such written notification shall (a) state
the specific reason or reasons for the denial, (b) make specific reference to
pertinent Plan provisions on which the denial is based, (c) provide a
description of any additional material or information necessary for the Eligible
Employee to perfect the claim and an explanation of why such material or
information is necessary, and (d) set forth the procedure by which the Eligible
Employee may appeal the denial of his or her claim. In the event an Eligible
Employee wishes to appeal the denial of his or her claim, he or she may request
a review of such denial by making application in writing to the Plan
Administrator within sixty (60) days after receipt of such denial. Such Eligible
Employee (or his or her duly authorized legal representative) may, upon written
request to the Plan Administrator, review any documents pertinent to his or her
claim, and submit in writing, issues and comments in support of his or her
position. Within forty-five (45) days after receipt of a written appeal (unless
special circumstances, such as the need to hold a hearing, require an extension
of time, but in no event more than one hundred twenty (120) days after such
receipt), the Plan Administrator shall notify the Eligible Employee of the final
decision. The final decision shall be in writing and shall include specific
reasons for the decision, written in a manner calculated to be understood by the
claimant, and specific references to the pertinent Plan provisions on which the
decision is based.

SECTION 2.9 No Severed Employee shall be eligible to receive a Severance Payment
or other benefits under the Plan unless he or she first executes a written
release substantially in the form attached hereto as Schedule A.

SECTION 2.10 An Employer shall be entitled to withhold from amounts to be paid
to the Severed Employee hereunder any federal, state or local withholding or
other taxes or charges which it is from time to time required to withhold.

                                       11
<PAGE>   12

SECTION 3. PLAN ADMINISTRATION.

SECTION 3.1 The Plan Administrator shall administer the Plan and may interpret
the Plan, prescribe, amend and rescind rules and regulations under the Plan and
make all other determinations necessary or advisable for the administration of
the Plan, subject to all of the provisions of the Plan.

SECTION 3.2 The Plan Administrator may delegate any of its duties hereunder to
such person or persons from time to time as it may designate.

SECTION 3.3 The Plan Administrator is empowered, on behalf of the Plan, to
engage accountants, legal counsel and such other personnel as it deems necessary
or advisable to assist it in the performance of its duties under the Plan. The
functions of any such persons engaged by the Plan Administrator shall be limited
to the specified services and duties for which they are engaged, and such
persons shall have no other duties, obligations or responsibilities under the
Plan. Such persons shall exercise no discretionary authority or discretionary
control respecting the management of the Plan. All reasonable expenses thereof
shall be borne by the Employer.

SECTION 4. PLAN MODIFICATION OR TERMINATION.

         The Plan may be amended or terminated by the Board at any time;
provided, however, that, during the following periods, the Plan may not be
terminated nor may the Plan be amended in any manner adverse to the interests of
any Eligible Employee (including, without limitation, any adverse changes to a
person's status as an Eligible Employee) without such Eligible Employee's
written consent (and any such termination or amendment shall be void and of no
force and effect): (i) within one year preceding a Potential Change in Control
(in the case of any action (other than in connection with a termination of
employment) pursuant to which an individual ceases to be designated as an
Eligible Employee or is designated in a lower tier of Eligible Employee) or
within 90 days preceding a Potential Change in Control (in the case of
termination of the Plan or any other amendment which is adverse to the interests
of any Eligible Employee), (ii) during the pendency of or within 90 days
following the cessation of a Potential Change in Control or (iii) within two
years following a Change in Control. This Plan shall terminate automatically two
years and one day after a Change in Control. No Plan termination shall, without
such Eligible Employee's written consent, adversely affect any rights of any
Eligible Employee which accrued under this Plan prior to such termination.

                                       12
<PAGE>   13

SECTION 5. GENERAL PROVISIONS.

SECTION 5.1 Except as otherwise provided herein or by law, no right or interest
of any Eligible Employee under the Plan shall be assignable or transferable, in
whole or in part, either directly or by operation of law or otherwise, including
without limitation by execution, levy, garnishment, attachment, pledge or in any
manner; no attempted assignment or transfer thereof shall be effective; and no
right or interest of any Eligible Employee under the Plan shall be liable for,
or subject to, any obligation or liability of such Eligible Employee. When a
payment is due under this Plan to a Severed Employee who is unable to care for
his or her affairs, payment may be made directly to his or her legal guardian or
personal representative.

SECTION 5.2 If an Employer is obligated by law, contract, policy or otherwise to
pay severance pay, a termination indemnity, notice pay, or the like, or if an
Employer is obligated by law to provide advance notice of separation ("Notice
Period"), then any Severance Payment hereunder shall be reduced by the amount of
any such severance pay, termination indemnity, notice pay or the like, as
applicable, and by the amount of any compensation received during any Notice
Period.

SECTION 5.3 Neither the establishment of the Plan, nor any modification thereof,
nor the creation of any fund, trust or account, nor the payment of any benefits
shall be construed as giving any Eligible Employee, or any person whomsoever,
the right to be retained in the service of the Employer, and all Eligible
Employees shall remain subject to discharge to the same extent as if the Plan
had never been adopted.

SECTION 5.4 If any provision of this Plan shall be held invalid or
unenforceable, such invalidity or unenforceability shall not affect any other
provisions hereof, and this Plan shall be construed and enforced as if such
provisions had not been included.

SECTION 5.5 This Plan shall inure to the benefit of and be binding upon the
heirs, executors, administrators, successors and assigns of the parties,
including each Eligible Employee, present and future, and any successor to the
Employer. If a Severed Employee shall die while any amount would still be
payable to such Severed Employee hereunder if the Severed Employee had continued
to live, all such amounts, unless otherwise provided herein, shall be paid in
accordance with the terms of this Plan to the executor, personal representative
or administrators of the Severed Employee's estate.

                                       13
<PAGE>   14

SECTION 5.6 The headings and captions herein are provided for reference and
convenience only, shall not be considered part of the Plan, and shall not be
employed in the construction of the Plan.

SECTION 5.7 The Plan shall not be funded. No Eligible Employee shall have any
right to, or interest in, any assets of any Employer which may be applied by the
Employer to the payment of benefits or other rights under this Plan.

SECTION 5.8 Any notice or other communication required or permitted pursuant to
the terms hereof shall have been duly given when delivered or mailed by United
States mail, first class, postage prepaid, addressed to the intended recipient
at his, her or its last known address.

SECTION 5.9 This Plan shall be construed and enforced according to the laws of
Nebraska, to the extent not preempted by federal law, which shall otherwise
control.

                                       14
<PAGE>   15
                                                                      SCHEDULE A

                     WAIVER AND RELEASE OF CLAIMS AGREEMENT

YOU HAVE BEEN ADVISED TO CONSULT AN ATTORNEY PRIOR TO SIGNING THIS AGREEMENT.

                  YOU HAVE [FORTY-FIVE] [TWENTY-ONE] DAYS AFTER RECEIVING THIS
AGREEMENT TO CONSIDER WHETHER TO SIGN IT.

                  AFTER SIGNING THIS AGREEMENT, YOU HAVE ANOTHER SEVEN DAYS IN
WHICH TO REVOKE IT, AND IT DOES NOT TAKE EFFECT UNTIL THOSE SEVEN DAYS HAVE
ENDED.

                  In consideration of, and subject to, the payments to be made
to me by [Name of Employer Corporation] ("Union Pacific") or any of its
subsidiaries, pursuant to the Union Pacific Corporation Key Employee Continuity
Plan (the "Plan"), which I acknowledge that I would not otherwise be entitled to
receive, I hereby waive any claims I may have for employment or re-employment by
Union Pacific or any subsidiary or parent of Union Pacific after the date
hereof, and I further agree to and do release and forever discharge Union
Pacific or any subsidiary or parent of Union Pacific and their respective past
and present officers, directors, shareholders, employees and agents from any and
all claims and causes of action, known or unknown, arising out of or relating to
my employment with Union Pacific or any subsidiary or parent of Union Pacific or
the termination thereof, including, but not limited to, by reason of any event,
matter, cause or thing which has occurred to the date of execution of this
Release relating in any way to my employment relationship with Union Pacific or
to my termination of employment thereof, whether for severance or based on
statutory or common law claims for employment discrimination, wrongful
discharge, breach of contract or any other theory, whether legal or equitable,
or arising under any statute or regulation, including the Age Discrimination in
Employment Act of 1967, Title VII of the Civil Rights Act of 1964, the Civil
Rights Act of 1991, the Americans with Disabilities Act of 1990, the Employee
Retirement Income Security Act of 1974, and the Family Medical Leave Act of
1993, each as amended, or any other federal, state or local law, regulation,
ordinance or common law.

                  Notwithstanding the foregoing or any other provision hereof,
nothing in this Waiver and Release of Claims Agreement shall adversely affect
(i) my rights under the Plan; (ii) my rights to benefits other than severance
benefits under plans,

<PAGE>   16

programs and arrangements of Union Pacific or any subsidiary or parent of Union
Pacific; or (iii) my rights to indemnification under any indemnification
agreement, applicable law and the certificates of incorporation and bylaws of
Union Pacific and any subsidiary or parent of Union Pacific, and my rights under
any director's and officer's liability insurance policy covering me.

                  I acknowledge that I have signed this Waiver and Release of
Claims Agreement voluntarily, knowingly, of my own free will and without
reservation or duress, and that no promises or representations, written or oral,
have been made to me by any person to induce me to do so other than the promise
of payment set forth in the first paragraph above and Union Pacific's
acknowledgment of my rights reserved under the second paragraph above.

                  I understand that this release will be deemed to be an
application for benefits under the Plan, and that my entitlement thereto shall
be governed by the terms and conditions of the Plan, and I expressly hereby
consent to such terms and conditions.

                  I acknowledge that I have been given not less than [forty-five
(45)] [twenty-one (21)] days to review and consider this Waiver and Release of
Claims Agreement, and that I have had the opportunity to consult with an
attorney or other advisor of my choice and have been advised by Union Pacific to
do so if I choose. I may revoke this Waiver and Release of Claims Agreement
seven days or less after its execution by providing written notice to Union
Pacific.

                  Finally, I acknowledge that I have carefully read this Waiver
and Release of Claims Agreement and understand all of its terms. This is the
entire Agreement between the parties and is legally binding and enforceable.

                                       2
<PAGE>   17

                  This Waiver and Release of Claims Agreement shall be governed
and interpreted under federal law and the laws of Nebraska.

                  I knowingly and voluntarily sign this Waiver and Release of
Claims Agreement.

Date Delivered to Employee:                       [Name of Employer Corporation]

---------------------------------
                                                  By:
Date Signed by Employee:                             ---------------------------

---------------------------------                 Title:
                                                        ------------------------
Seven-Day Revocation Period Ends:

---------------------------------

Signed:                                           Date:
       --------------------------                      -------------------------

---------------------------------
    (Print Employee's Name)

                                       3

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