Document:

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                                                                   EXHIBIT 10(a)

                            SUPPLEMENTAL PENSION PLAN

                            FOR OFFICERS AND MANAGERS

                                       OF

                            UNION PACIFIC CORPORATION

                                       AND

                                   AFFILIATES

                    (AS AMENDED AND RESTATED IN ITS ENTIRETY

            EFFECTIVE AS OF JANUARY 1, 1989, INCLUDING ALL AMENDMENTS

                         ADOPTED THROUGH JULY 25, 2002)

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                                TABLE OF CONTENTS

<Table>
<Caption>

Article                                                        Page
-------                                                        ----
<S>       <C>                                                  <C>
 ONE      SCOPE OF SUPPLEMENTAL PLAN AND DEFINITIONS..........  1

 TWO      AMOUNT AND PAYMENT OF PENSION.......................  6

 THREE    MANNER OF PAYMENT..................................  25

 FOUR     VESTING............................................  26

 FIVE     CERTAIN EMPLOYEE TRANSFERS.........................  29

 SIX      PRE-RETIREMENT SURVIVOR'S BENEFIT..................  30

 SEVEN    FUNDING............................................  33

 EIGHT    ADMINISTRATION.....................................  34

 NINE     AMENDMENT OR TERMINATION...........................  36

 TEN      GENERAL PROVISIONS.................................  37

 ELEVEN   TRANSFERS TO NON-COVERED EMPLOYMENT................  39

 TWELVE   CLAIMS PROCEDURE...................................  40
</Table>

                                       ii

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                                   ARTICLE ONE

                   SCOPE OF SUPPLEMENTAL PLAN AND DEFINITIONS

         1.1 Introduction. This "Supplemental Plan," amended and restated
effective as of January 1, 1989, and as it may hereafter be amended from time to
time, establishes the rights to specified benefits for certain officers and
managers or highly compensated employees who retire or otherwise terminate their
Employment on or after January 1, 1989. The rights of any such individual who
retired or otherwise terminated Employment prior to January 1, 1989 shall be
subject to the terms of the Supplemental Plan as in effect at the date of
retirement or termination, except to the extent otherwise provided herein. This
Supplemental Plan is intended to be a non-qualified supplemental retirement plan
which is unfunded and maintained primarily for the purpose of providing deferred
compensation for a select group of management or highly compensated employees of
the Company, pursuant to sections 201, 301 and 401 of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA") and, as such, to be exempt
from the provisions of Parts 2, 3 and 4 of Subtitle B of Title I of ERISA.

         1.2 Definitions. As used in this Supplemental Plan, the following terms
have the meanings set forth below, unless a different meaning is plainly
required by the context:

                  (a) "Administrator" means the Senior Vice President-Human
         Resources of Union Pacific or, if there is no such Senior Vice
         President - Human Resources, such person or persons appointed by the
         Board of Directors of Union Pacific or, in the absence of any such
         appointment, Union Pacific, who shall administer this Supplemental
         Plan.

                  (b) "Change in Control":

                           (i) prior to November 16, 2000, means:

                                    (A) any person (within the meaning of
Section 13(d) of the Securities Exchange Act of 1934 (the "Act")), other than
Union Pacific or a subsidiary or any employee benefit plan sponsored by Union
Pacific or a subsidiary, becomes the beneficial owner (as such term is defined
in Rule 13d-3 under the Act) directly or indirectly of 30% or more of the
outstanding stock of Union Pacific (calculated as provided in Rule 13d-3(d)
under the Act in the case of rights to acquire common stock);

                                    (B) the shareholders of Union Pacific
approve (I) any consolidation or merger of Union Pacific in which Union Pacific
is not the continuing or surviving corporation or pursuant to which shares of
common stock of Union Pacific would be converted into cash, securities or other
property, other than a merger of Union Pacific in which holders of common stock
of Union Pacific immediately prior to the merger have the same proportionate
ownership of common stock of the surviving corporation immediately after the
merger as immediately before or (II) any sale, lease, exchange or other transfer
(in one transaction or a series of related transactions) of all or substantially
all the assets of Union Pacific; or

                                    (C) there shall have been a change in the
composition of the Board of Directors of Union Pacific such that within any
period of two consecutive years or less

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individuals who at the beginning of such period constituted such Board, together
with any new directors whose election, or nomination for election by Union
Pacific's shareholders, was approved by a vote of at least two-thirds of the
directors then in office who were directors at the beginning of such period,
shall for any reason no longer constitute a majority of the directors of Union
Pacific.

                           (ii) on or after November 16, 2000, means a "Change
in Control" as defined in the Union Pacific Corporation Key Employee Continuity
Plan adopted November 16, 2000, as may be amended from time to time.

                  (c) "Company" means Union Pacific and any Affiliated Company
which is included in the Supplemental Plan by written action of (i) its board of
directors and (ii) either the Board of Directors of Union Pacific or the
Administrator acting on behalf of the Board of Directors of Union Pacific;
provided, however, that if an Affiliated Company (other than an Affiliated
Company that would remain such if the phrase "100 percent" were substituted for
the phrase "at least 80 percent" in section 1563(a)(1) of the Code, which is
then incorporated by reference in sections 414(b) and (c) of the Code) is
included in the Supplemental Plan by virtue of action by the Administrator,
unless the Board of Directors of Union Pacific ratifies such action not later
than its first regularly scheduled meeting held subsequent to the taking of such
action by the Administrator, such Affiliated Company shall cease to be so
included as of the close of business on the last day of the month in which such
meeting occurs and no employee of such Affiliated Company shall accrue a benefit
under the Supplemental Plan.

                  (d) "Early Supplemental Pension Retirement Date" means,
subject to Sections 2.10(a)(ii)(B) and (b)(ii)(B), Section 2.11(b)(ii) and
Section 2.13(b)(ii), the date of a Participant's termination of Employment after
he becomes vested in his Supplemental Plan benefit under Section 4.2, before his
Normal Retirement Date, and after either attainment of age 55 and completion of
10 years of Vesting Service or attainment of age 65, determined after taking
into account (i) additional service credited under Section 1.2(p) and/or (ii)
additional years of age, not exceeding five (5), as may be approved by the Chief
Executive Officer of Union Pacific prior to the Participant's termination of
Employment or as may be credited to the Participant pursuant to Section 2.5,
2.8, 2.10. 2.11, 2.12 or 2.13; provided, however that such date does not qualify
as an Early Retirement Date under the terms of the Pension Plan.

                  (e) "Early Supplemental Pension" means the pension provided
for in Section 2.2.

                  (f) "Effective Date" means January 1, 1989, the effective date
of this amendment and restatement; provided, however, that when a provision of
this Supplemental Plan states an effective date other than January 1, 1989, such
stated special effective date shall apply as to that provision.

                  (g) "Incentive Compensation" means:

                           (i) incentive compensation awarded a Participant
under the Executive Incentive Plan of Union Pacific Corporation and
Subsidiaries, as amended and restated as of

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April 15, 1988 and as it may thereafter be amended from time to time (the
"Executive Incentive Plan");

                           (ii) for 1999 and later years, incentive compensation
foregone by a Participant for an award under the Executive Incentive Premium
Exchange Program of Union Pacific Corporation and Subsidiaries;

                           (iii) such other incentive compensation as may be
included in Incentive Compensation for a Participant at the discretion of the
Board of Directors of Union Pacific; or

                           (iv) the amount of retention stock (or retention
units) awarded a Participant by the Compensation and Benefits Committee of the
Company's Board of Directors (or any successor thereto) in lieu of a cash award
under the Executive Incentive Plan,

but only to the extent that such incentive compensation or retention stock (or
retention units) is not taken into account in computing the Participant's Final
Average Compensation under the Pension Plan for reasons other than the annual
compensation limit under section 401(a)(17) of the Code or the provisions of
Alternative II-D set forth in Section 3.01(c) of the Pension Plan. Awards of
Incentive Compensation shall be taken into account at the time such awards would
have been paid but for the Participant's election to forego or defer payment
under a plan of the Company or an Affiliated Company; provided, however, that
for purposes of calculating a Participant's benefit under this Supplemental Plan
no more than the three highest awards of Incentive Compensation shall be counted
in the Participant's highest 36 consecutive months of Compensation determined
taking all Incentive Compensation into account.

                  (h) "Involuntary Termination Supplemental Pension" means the
pension provided for in Section 2.5.

                  (i) "Normal Supplemental Pension" means the pension provided
for in Section 2.1.

                  (j) "Participant" means any Employee of the Company on or
after the Effective Date who is or once was a Covered Employee under the Pension
Plan and:

                           (i) whose Total Credited Service under Section 1.2(p)
includes years that are not taken into account as Credited Service under the
Pension Plan (including years not taken into account due to application of the
provisions of Alternative II-D set forth in Section 3.01(c) of the Pension
Plan);

                           (ii) who has Incentive Compensation within the
120-calendar-month period immediately preceding the date on which the
Participant ceases to be a Covered Employee;

                           (iii) whose Final Average Compensation is not fully
recognized under the Pension Plan due to application of the annual compensation
limit under section 401(a)(17) of the Code or the provisions of Alternative II-D
set forth in Section 3.01(c) of the Pension Plan;

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                           (iv) whose benefit under the Pension Plan is reduced
as a result of the limitation described in Section 5.02 of the Pension Plan; or

                           (v) who is credited with additional years of age as
described in Section 1.2(d)(ii), and

who has been designated by the Administrator as eligible to participate in the
Supplemental Plan. In the event of the death or incompetency of a Participant,
the term shall mean the Participant's personal representative or guardian for
whatever amounts remain payable to the Participant under the terms of the
Supplemental Plan.

                  (k) "Pension Plan" means the Pension Plan for Salaried
Employees of Union Pacific Corporation and Affiliates, as amended from time to
time.

                  (l) "Postponed Supplemental Pension" means the pension
provided for in Section 2.3.

                  (m) "Special 1990-1992 Window Participant" means a Pension
Plan participant who retired under an early retirement window program described
in Section 6.07 or 6.09 of the Pension Plan and who was prohibited under Section
6.12 (prior to 1999, Section 6.11) of the Pension Plan from receiving the
benefits of the window program in any payment from the Pension Plan made for a
month prior to November 1, 1994.

                  (n) "Surviving Spouse" means:

                           (i) where payments to the Participant have not begun
under the Supplemental Plan at the time of the Participant's death, the spouse
who was legally married to the Participant continuously during the 12 months
ending on the date of the Participant's death;

                           (ii) where payments to the Participant have begun
under the Supplemental Plan prior to January 1, 1995 and prior to the
Participant's death, the spouse who was legally married to the Participant
continuously during the 12 months ending on the date that such payments began or
who was legally married to the Participant on the date such payments began and
for a period of at least 12 months ending on or before the date of the
Participant's death;

                           (iii) where payments to the Participant have begun
under the Supplemental Plan on or after January 1, 1995 but prior to the
Participant's death:

                                    (A) in the case of a Participant whose
Supplemental Plan and Pension Plan benefit began on the same date or who is not
vested in a Pension Plan benefit, the spouse who was legally married to the
Participant on the date that his Supplemental Plan payments began;

                                    (B) in the case of a Participant whose
Supplemental Plan benefits began on a date earlier than the date on which his
Pension Plan benefits began, the spouse who was legally married to the
Participant on the date his Pension Plan benefits began; or

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                                    (C) in the case of a Participant whose
Supplemental Plan benefits began but whose vested Pension Plan benefits had not
started prior to this death, the spouse who was legally married to the
Participant on the date of his death;

provided, however, that, for benefits starting before July 25, 2002, the
Surviving Spouse shall be determined as described in this paragraph (iii) unless
the Administrator advised the Participant to the contrary.

                  (o) "Surviving Spouse's Pension" means the pension provided
for in Section 2.4.

                  (p) "Total Credited Service" means:

                           (i) all years of Credited Service (and portions
thereof) as set forth in the Article IV of the Pension Plan, including Credited
Service for years of Employment that are not taken into account under the
Pension Plan solely due to application of the provisions of Alternative II-D set
forth in Section 3.01(c) of the Pension Plan;

                           (ii) such additional years of training prior to the
Participant's Employment Commencement Date, as may have especially qualified the
Participant for service with the Company, as determined by the Board of
Directors, in its sole discretion;

                           (iii) such additional years of service, not exceeding
five (5), as may be approved by the Chief Executive Officer of Union Pacific
prior to the Participant's termination of Employment; and

                           (iv) such additional years of service as may be
credited to the Participant pursuant to Section 2.5, 2.8, 2.10, 2.11, 2.12 or
2.13.

                  (q) "Total Offset Service" means (i) all years of "offset
service" (including portions thereof) as set forth in Article V of the Pension
Plan, including years of offset service for years of Employment that are not
taken into account under the Pension Plan solely due to application of the
provisions of Alternative II-D set forth in Section 3.01(c) of the Pension Plan;
and (ii) any additional years as credited in accordance with Section 1.2(p)(ii),
(iii) or (iv).

                  (r) "Union Pacific" means Union Pacific Corporation, or any
successor to that corporation.

                  (s) "Vesting Service" means (i) all years of Vesting Service
(including portions thereof) as set forth in Article IV of the Pension Plan; and
(ii) any additional years as credited in accordance with Section 1.2(p)(ii),
(iii) or (iv).

                  (t) All other capitalized terms shall have the respective
meanings set forth in the definition provisions of Article II of the Pension
Plan.

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                                   ARTICLE TWO

                          AMOUNT AND PAYMENT OF PENSION

         2.1 Normal Supplemental Pension. Subject to the provisions of Articles
Three, Five and Eleven, a Participant retiring on a Normal Retirement Date under
the Pension Plan (including a Participant who has become a Disabled Participant
under the Pension Plan and who ceases to be such on the Normal Retirement Date)
shall be entitled to receive a Normal Supplemental Pension, in the form of a
single life annuity commencing on the Participant's Normal Retirement Date,
equal to the excess, if any, of:

                  (a) the annual Accrued Benefit payable at Normal Retirement
Date computed on the basis of the formula provided in Section 5.01 of the
Pension Plan, determined without regard to the limitation described in Section
5.02 of the Pension Plan, and including under such formula any amounts of Final
Average Compensation that were excluded from consideration for the Participant
under the Pension Plan and all Incentive Compensation payable to the Participant
within the 120-calendar-month period immediately preceding the date on which the
Participant ceases to be a Covered Employee, and utilizing Total Credited
Service up to 40 years in place of Credited Service under Article IV of the
Pension Plan and Total Offset Service up to 40 years in place of "offset
service" under Article V of the Pension Plan, over

                  (b) the annual nonforfeitable Accrued Benefit payable at
Normal Retirement Date actually determined to be due under the Pension Plan.

For purposes of determining benefits under the Supplemental Plan, any actuarial
adjustments for a delay in the commencement of payment beyond the Normal
Retirement Date or otherwise that apply under the Pension Plan in calculating
the benefit described in (b), above, shall also apply to calculate the benefit
described in (a), above.

         2.2 Early Supplemental Pension.

                  (a) Participant Retires on Early Retirement Date. The
following provisions apply to a Participant retiring on an Early Retirement Date
under the Pension Plan:

                           (i) Benefit Payable on Normal Retirement Date.
Subject to the provisions of Articles Three, Five and Eleven, a Participant
retiring on an Early Retirement Date under the Pension Plan shall be entitled to
receive a Normal Supplemental Pension in the form of a single life annuity
commencing at Normal Retirement Date, computed in accordance with Section 2.1
based on Total Credited Service, Total Offset Service, etc. as of the
Participant's Early Retirement Date. A Participant retiring on an Early
Retirement Date shall include a Participant who has become a Disabled
Participant under the Pension Plan and who ceases to be a Disabled Participant
on an Early Retirement Date.

                           (ii) Benefit Payable on Early Retirement Date. In
lieu of the benefit described in (i), above, subject to the provisions of
Articles Three, Five and Eleven, such Participant may receive an Early
Supplemental Pension, in the form of a single life annuity commencing at the
date prior to his Normal Retirement Date on which he elects to start his

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pension under the Pension Plan. The Early Supplemental Pension shall be computed
in the same manner as the Normal Supplemental Pension, but with the amounts
described in Sections 2.1(a) and (b) adjusted for payment as of the early
benefit start date in accordance with Section 6.03 of the Pension Plan, taking
into account any additional years of age described in Section 1.2(d)(ii) for
purposes of adjusting both the gross and offset portions of the benefit in
Section 2.1(a) (except as provided otherwise in Section 2.12 or 2.13).

                  (b) Participant Retires on Early Supplemental Pension
Retirement Date. The following provisions apply to a Participant retiring on an
Early Supplemental Pension Retirement Date:

                           (i) Participant Is Eligible to Start Pension Plan
Benefit. Subject to the provisions of Articles Three, Five and Eleven, a
Participant retiring on an Early Supplemental Pension Retirement Date who is
eligible to start a benefit under the Pension Plan upon his retirement may
receive a Normal or Early Supplemental Pension as described in subsection (a);
provided, however, that, for purposes of determining the Early Supplemental
Pension as described in (a)(ii), above:

                                    (A) the amount described in Section 2.1(a)
shall be adjusted for payment as of the early benefit start date in accordance
with Section 6.03 of the Pension Plan, taking into account any additional years
of age described in Section 1.2(d)(ii) for purposes of adjusting both the gross
and offset portions of the benefit in Section 2.1(a) (except as provided
otherwise in Section 2.12 or 2.13); and

                                    (B) the amount described in Section 2.1(b)
shall be adjusted for payment as of the early benefit start date in accordance
with Section 6.04 of the Pension Plan.

                           (ii) Participant Is Not Eligible to Start Pension
Plan Benefit. Subject to the provisions of Article Three, Five and Eleven, a
Participant retiring on an Early Supplemental Pension Retirement Date who either
is not vested in or is not eligible to start a benefit under the Pension Plan
upon his retirement shall receive an Early Supplemental Pension, in the form of
a single life annuity commencing on the first day of the month following his
Early Supplemental Pension Retirement Date, the amount of which shall be
determined as follows:

                                    (A) Prior to the earliest date, if any, that
the Participant is eligible to start benefits under the Pension Plan, the Early
Supplemental Pension payable under this provision shall be computed in the same
manner as the Normal Supplemental Pension, except that:

                                             (I) the amount described in Section
2.1(a) shall be adjusted for payment as of the early benefit start date as
described in Section 6.03 of the Pension Plan for Pension Plan payments starting
on an Early Retirement Date, taking into account any additional years of age
described in Section 1.2(d)(ii) for purposes of adjusting both the gross and
offset portions of the benefit in Section 2.1(a) (except as provided otherwise
in Section 2.12 or 2.13); and

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                                             (II) the amount described in
Section 2.1(b) shall be zero for purposes of determining the Early Supplemental
Pension payable prior to the earliest date, if any, on which the Participant is
eligible to start benefits under the Pension Plan.

                                    (B) On and after the earliest date, if any,
that the Participant is eligible to start benefits under the Pension Plan, the
Early Supplemental Pension shall equal the excess of:

                                             (I) the amount described in Section
2.2(b)(ii)(A)(I), above, calculated as of the early benefit start date on which
payments under the Supplemental Plan began, over

                                             (II) the amount described in
Section 2.1(b) reduced for early payment in accordance with Section 6.04 of the
Pension Plan as of such "earliest date" whether or not the Participant's Pension
Plan benefit starts on that date.

Effective for benefits starting before July 25, 2002, payments under this
subparagraph (b)(ii) were made as described above unless the Administrator
advised the Participant to the contrary.

         2.3 Postponed Supplemental Pension. Subject to the provisions of
Articles Three, Five and Eleven, a Participant who retires on a Postponed
Retirement Date shall be entitled to a Postponed Supplemental Pension, in the
form of a single life annuity commencing at the Postponed Retirement Date, which
is equal to the Normal Supplemental Pension, computed in accordance with Section
2.1 based on his Total Credited Service, Total Offset Service, etc. as of the
Participant's Postponed Retirement Date (instead of his Normal Retirement Date)
or, if earlier, as of his Required Beginning Date. If a Participant's benefits
begin on his Required Beginning Date and prior to his termination of Employment,
the Participant's benefits shall be adjusted thereafter as described in Section
8.06 of the Pension Plan.

         2.4 Surviving Spouse's Pension (Post-Retirement Automatic Survivor
Annuity).

                  (a) The Surviving Spouse of a Participant who dies while
receiving a Normal or Postponed Supplemental Pension or an Early Supplemental
Pension determined under Section 2.2(a), relating to retirement on a date that
qualifies as an Early Retirement Date under the terms of the Pension Plan, shall
be entitled to a Surviving Spouse's Pension equal to one-half of the single life
annuity amount of the Normal, Early, or Postponed Supplemental Pension payable
to such deceased Participant under the Supplemental Plan. Such Surviving
Spouse's Pension shall be payable to such Spouse in equal monthly payments for
life, commencing on the first day of the month immediately following the death
of such Participant.

                  (b) The Surviving Spouse of a Participant who dies while
receiving an Early Supplemental Pension determined under Section 2.2(b),
relating to retirement on an Early Supplemental Pension Retirement Date (i.e., a
date that does not qualify as an Early Retirement Date under the terms of the
Pension Plan), shall be entitled to a Surviving Spouse's Pension. The Surviving
Spouse's Pension shall be payable in equal monthly payments for the Surviving
Spouse's life, commencing on the first day of the month immediately following
the Participant's death, which shall equal one-half of the single life annuity
amount calculated for the Participant

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under Section 2.2(b)(i)(A) or 2.2(b)(ii)(A)(I), as appropriate, as of the
Participant's early benefit start date; provided, however, that monthly payments
to the Surviving Spouse shall be reduced by any pre-retirement survivor benefit
that the Surviving Spouse is entitled to receive from the Pension Plan from the
earliest date following the Participant's death that such survivor benefit is
payable from the Pension Plan, even if benefits to the Surviving Spouse have not
started on that earliest date. Effective for benefits starting before July 25,
2002, payments under this subsection (b) were made as described above unless the
Administrator advised the Participant and/or Surviving Spouse to the contrary.

                  (c) The Surviving Spouse's Pension described in this Section
2.4 is payable in addition to any other death benefit that may be payable to the
Surviving Spouse or other beneficiary of the Participant under the form of
payment in which the Participant's Supplemental Pension is paid pursuant to
Article Three. However, except with respect to Participants who qualify for the
enhancements described in Sections 2.8, 2.10, 2.11, 2.12 or 2.13, in no event
shall the Surviving Spouse who is entitled to the Surviving Spouse's Pension, if
also designated as the Participant's beneficiary under a joint and survivor
annuity payable under the Supplemental Plan, receive a total benefit from the
Supplemental Plan that is more than 100% of the retirement income otherwise
payable to the Participant under the Supplemental Plan.

         2.5 Involuntary Termination Supplemental Pension.

                  (a) The following provisions apply with respect to Change in
Control occurring on or before November 15, 2000:

                           (i) In lieu of the benefit described in Section 2.1
or 2.2, if the Employment of any Participant (A) who is an elected officer, and
(B) whose highest annual Compensation (including Incentive Compensation) is not
less than $200,000, is involuntarily terminated prior to the 5th anniversary of
a Change in Control and prior to Normal Retirement Date, and if, at the time of
such involuntary termination, such Participant has completed 10 or more years of
Vesting Service and is within the 10-year period immediately preceding Normal
Retirement Date, such Participant shall be entitled to an Involuntary
Termination Supplemental Pension commencing at Normal Retirement Date, equal to
the Normal Supplemental Pension computed in accordance with Section 2.1 as of
his termination date, with the amount in Section 2.1(a) based on Total Credited
Service and Total Offset Service credited and as projected to be credited to the
5th anniversary of such Change in Control (or, if earlier, the Participant's
Normal Retirement Date). In lieu thereof, such Participant may elect an Early
Retirement Date and receive an Involuntary Termination Supplemental Pension
commencing on such Early Retirement Date equal to the Early Supplemental Pension
computed in accordance with Section 2.2 as of the Early Retirement Date, with
the amount in Section 2.1(a) based on Total Credited Service and Total Offset
Service credited and as projected to be credited to the 5th anniversary of such
Change in Control (or, if earlier, the Participant's Normal Retirement Date)
adjusted in accordance with Section 6.03 of the Pension Plan, but based on the
Participant's projected age on the 5th anniversary date of such Change in
Control (or, if earlier, Normal Retirement Date).

                           (ii) In lieu of the benefit described in Section 4.2,
if the Employment of any Participant (other than a Participant described in (i)
above), is involuntarily terminated prior to the 5th anniversary of a Change in
Control and prior to Normal Retirement Date, and if

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such Participant would have attained age 55 and been credited with at least 15
years of Vesting Service had the Participant continued to be employed to such
5th anniversary, such Participant shall be entitled to an Involuntary
Termination Supplemental Pension commencing on the date provided for a benefit
described under Section 4.2, equal to the benefit amount computed under Section
4.2, with the amount in Section 2.1(a) based on Total Credited Service and Total
Offset Service credited and as projected to be credited to the 5th anniversary
of such Change in Control (or, if earlier, the Participant's Normal Retirement
Date) provided that, in the event such Participant elects to receive the
supplemental pension commencing on a date prior to his Normal Retirement Date,
the Actuarial Equivalent referred to in Section 4.2 shall be based on the
Participant's projected age on the 5th anniversary date of such Change in
Control (or, if earlier, his Normal Retirement Date).

                           (iii) For purposes of this subsection (a), the term
"involuntary termination" means any action taken subsequent to a Change in
Control by Union Pacific or the Company or any successor to, or assignee of, its
obligations under this Supplemental Plan, either (A) terminating Employment for
other than an unlawful act or, (B) without the consent of a Participant,
adversely affecting employment status by reducing earnings or demoting in title,
or lessening of authority or responsibilities, or changing the situs of
employment which requires a change of residence, of such Participant and, as a
result, such Participant terminates Employment.

                           (iv) In the event any amount paid or benefit
otherwise received by a Participant under the Supplemental Plan shall be
determined by the Internal Revenue Service to constitute an "excess parachute
payment" as such term is defined in section 280G of the Code, together with all
other payments and benefits outside of the Supplemental Plan that are taken into
account in making such determination, and to be subject to an excise tax under
section 4999 of the Code, or any successor provision thereto (collectively,
"Excise Tax"), the Company shall pay to the Participant an additional amount
such that after taking into account all income and employment taxes, including
the Excise Tax, interest and penalties with respect thereto, incurred by the
Participant on the receipt of such additional amount, the Participant is left
with the same after-tax amount the Participant would have been left with had no
Excise Tax been imposed.

                  (b) A Participant who is affected by a Change in Control
occurring on or after November 16, 2000 shall have his eligibility for and
amount of Supplemental Plan benefits determined pursuant to the terms of the
Union Pacific Corporation Key Employee Continuity Plan adopted November 16,
2000, as may be amended from time to time.

         2.6 Suspension of Benefits.

                  (a) Date of Benefit Suspension. Notwithstanding any provisions
of Article Two or Article Four to the contrary, the payment of the pension to
which a Participant is otherwise entitled under the Supplemental Plan shall be
suspended during any period for which payment of a pension to which such
Participant may otherwise be entitled under the Pension Plan is (or would be)
suspended under the terms of the Pension Plan due to such Participant's return
to Employment. The pension payable to the Participant under the Supplemental
Plan which has been suspended shall resume on the same date as payments to the
Participant under the Pension Plan resume (or would resume if the Participant
had been entitled to such a pension).

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                  (b) Resumption of Payments. Upon the resumption of payment of
such pension hereunder to such Participant, the resumed benefits shall be
recalculated taking into account any increases in the Participant's Total
Credited Service, Total Offset Service, Incentive Compensation, age and so
forth. However, no actuarial or other adjustment shall be made to reflect such
suspension. The resumed benefit shall be offset, in a manner prescribed by the
Administrator, by (i) any benefit paid during a month in which benefits should
have been suspended but were not, which has not previously been repaid to the
Company by the Participant, and (ii) the Actuarial Equivalent of any benefits
paid prior to Normal Retirement Date.

                  (c) Form of Resumed Payments. The resumed payments (including
any additional benefits earned during the period of suspension) under the
Supplemental Plan shall be paid to the Participant in the same form of payment
as the Participant elects for his resumed payments under the Pension Plan. If
the Participant is not entitled to any benefits under the Pension Plan, the
resumed payments under the Supplemental Plan shall resume in the same form of
payment in effect for the Participant before payments were suspended.

         2.7 Benefits for Special 1990-1992 Window Participants. Each Special
1990-1992 Window Participant (or the Surviving Spouse or other beneficiary of a
Special 1990-1992 Window Participant) shall receive from the Supplemental Plan
in each month the individual receives a payment from the Pension Plan prior to
November 1, 1994, an amount equal to the excess of:

                  (a) the amount that would have been payable to the individual
from the Pension Plan for that month, had the provisions of Section 6.12 (prior
to 1999, Section 6.11) of the Pension Plan not applied; over

                  (b) the amount actually paid to the individual from the
Pension Plan for that month.

         2.8 Window Benefits for Highly Compensated Employees. Each Participant
who was a Covered Employee under the Pension Plan, who retired under an early
retirement window program described in Section 6.06, 6.07 or 6.09 of the Pension
Plan but on the relevant date was excluded from participation in the Pension
Plan pursuant to Section 3.01(c) of the Pension Plan or was excluded from
participation in the window program due to his status as an officer, shall be
deemed for all purposes under the Supplemental Plan to have the additional years
of service and the additional years of age that would have been credited to the
Participant under the Pension Plan pursuant to such program if Section 3.01(c)
of the Pension Plan had not applied to the Participant; provided, however, that
service credited pursuant to this Section shall not cause the Participant's
Total Credited Service or Total Offset Service to exceed 40 years, and no
Participant's deemed age shall exceed 65 years.

         2.9 1991 Cost-of-Living Increase. Effective December 1, 1991, the
monthly benefit payment to any person who is (a) a former employee of the
Company then receiving retirement benefits under this Supplemental Plan
(regardless of the employee's termination date), or (b) a beneficiary or
surviving spouse then receiving death benefits under this Supplemental Plan
shall be increased by the percentage shown in the following table.

                                       11
<PAGE>

<Table>
<Caption>

  Participant's Benefit Start Date or
    Surviving Spouse's Benefit Start
Date for Pre-Retirement Death Benefits       Increase in Supplemental Pension
--------------------------------------       --------------------------------
<S>                                          <C>
          1978 or earlier                                  19%
               1979                                        16%
               1980                                        13%
               1981                                        10%
               1982                                         7%
               1983                                         6%
               1984                                         5%
               1985                                         4%
               1986                                         3%
               1987                                         2%
           1988 or later                                    0%
</Table>

However, such increase shall only be applied to the portion, if any, of the
amount being received due to participation in this Supplemental Plan that does
not exceed the difference between $108,963 per year and the amount being
received by such person under the Pension Plan as increased by resolutions of
the Board of Directors of Union Pacific unanimously adopted on June 27, 1974 and
May 31, 1979 (before adjustment to reflect the increases effective December 1,
1991).

         2.10 1999 Window Program.

                  (a) 1999 5x5 Program.

                           (i) Effective July 1, 1999, the benefit enhancements
described in subsection (ii) shall be provided to any Participant who is a
Covered Employee under the Pension Plan who satisfies the requirements of (i)(A)
and (B).

                                    (A) The requirements of this subparagraph
are satisfied by a Covered Employee:

                                             (I) whose 1998 Compensation, as
defined in Section 2.18(c) of the Pension Plan, is at least $110,000 and whose
annual salary rate as of July 1, 1999 is less than $140,000;

                                             (II) who is at least age 55 by July
1, 2000;

                                             (III) whose most recent date of
hire as an Employee is before June 30, 1994;

                                             (IV) who, as of July 1, 1999, is
not a loaned executive, is not on long-term disability under the Union Pacific
Long-Term Disability Plan, has not previously been accepted to participate in a
voluntary force reduction program, does not have an existing termination
agreement in effect or is not on a leave of absence (except those granted a
leave under the Family and Medical Leave Act or as an accommodation under the
Americans with Disabilities Act);

                                       12
<PAGE>

                                             (V) who agrees to terminate
employment with the Company and all Affiliated Companies on the date selected by
the Company, which date shall not occur after July 15, 2000, and continues to
provide satisfactory service as determined by the Company until that date; and

                                             (VI) who elects to receive the
benefit enhancements described in subsection (ii) during the period beginning
July 1, 1999, and ending July 31, 1999, by submission of a written election and
execution of other documents, including a waiver of any and all rights or claims
(other than to benefits under the Supplemental Plan or the Pension Plan) that
the Employee may have against Company and any Affiliated Company, the
Supplemental Plan, the Pension Plan and their officers, agents and employees, in
the form and manner prescribed by the Company and does not revoke such waiver
within the time prescribed by the Company.

                                    (B) The requirements of this paragraph are
satisfied by a Covered Employee who, as of May 18, 1999, is employed in one of
the following departments, provided that the number of Covered Employees of such
department satisfying paragraph (A) or the comparable requirements set forth in
the Pension Plan for Covered Employees whose 1998 Compensation, as defined in
Section 2.18(c) of the Pension Plan, is less than $110,000 do not exceed the
department's numerical limit set forth below. The departments referred to below
consist entirely of Union Pacific Railroad Company Covered Employees, unless
indicated to the contrary.

<Table>
<Caption>

                                                                DEPARTMENTAL
                     DEPARTMENTS                                    LIMIT
                     -----------                                ------------
<S>                                                             <C>
Corporate Relations (excluding Government Affairs)                   4

Engineering (excluding employees who report
directly to a Regional office)                                      80

Finance (excluding Accounting, Real Estate and Tax)                  3

Human Resources - Development & Training                             5

Human Resources - Other                                              8

Information Technologies/Union Pacific Technologies
(excluding UPT employees working
exclusively on commercial business)                                100
</Table>

                                       13
<PAGE>

<Table>
<Caption>

                                                                DEPARTMENTAL
                     DEPARTMENTS                                    LIMIT
                     -----------                                ------------
<S>                                                             <C>
Labor Relations                                                     24

Law (excluding Little Rock)                                         10

Marketing & Sales - Damage Prevention                                3

Marketing & Sales - Marketing Services (including NDMC)             20

Marketing & Sales - NCSC (excluding ICSC)                           13

Marketing & Sales - Agricultural Products                            7

Mechanical - Car (excluding employees who report
directly to a Regional office)                                      15

Mechanical - Locomotive (excluding employees who
report to directly to a Regional office)                            18

Network Design and Integration                                      20

Risk Management - Police                                            10

Risk Management - Other                                             21

Supply                                                              21

Operating Support Services/Quality                                   6
</Table>

In the event the number of Covered Employees satisfying paragraph (A) or the
comparable requirements set forth in the Pension Plan for Covered Employees
whose 1998 Compensation, as defined in Section 2.18(c) of the Pension Plan, is
less than $110,000 exceeds a Departmental Limit, such Covered Employees shall be
ranked based upon their combined age and Vesting Service (as determined under
Article IV of the Pension Plan), as of July 1, 1999, and the benefit
enhancements described in subsection (ii) or in the Pension Plan shall be
provided to the Covered Employees with the greatest combined age and Vesting
Service up to the Departmental Limit.

                           (ii) Each Covered Employee described in subsection
(i) shall:

                                       14
<PAGE>

                                    (A) for purposes of calculating Vesting
Service, Total Credited Service and Total Offset Service and determining
actuarial reductions for payments beginning before Normal Retirement Date,
receive an additional 5 years of service (up to a maximum of 40 years of
service) and shall be deemed to have attained an age 5 years older than his
actual age (up to a maximum of age 65),

                                    (B) be treated as having satisfied the
requirements to have an Early Supplemental Pension Retirement Date if he has not
satisfied the requirements to have an Early Retirement Date under the Pension
Plan, and

                                    (C) be treated as having been a Covered
Employee for 60 full consecutive months for purposes of applying Section
4.02(c)(3) of the Pension Plan when calculating Total Credited Service and Total
Offset Service under this Supplemental Plan.

         (b) 1999 5x5 Program II.

                           (i) Effective December 1, 1999, the benefit
enhancements described in subsection (ii) shall be provided to any Participant
who is a Covered Employee under the Pension Plan who satisfies the requirements
of (i)(A) and (B).

                                    (A) The requirements of this subparagraph
are satisfied by a Covered Employee:

                                             (I) whose 1998 Compensation, as
defined in Section 2.18(c) of the Pension Plan, is at least $110,000 and whose
annual salary rate as of December 1, 1999 is less than $140,000 (but excluding
any Covered Employee in the Marketing and Sales Department whose annualized 1999
base salary is more than $85,000);

                                             (II) who is at least age 55 by July
1, 2000;

                                             (III) whose most recent date of
hire as an Employee is before June 30, 1994;

                                             (IV) who, as of December 1, 1999,
is not a loaned executive, is not on long-term disability under the Union
Pacific Long-Term Disability Plan, has not previously been accepted to
participate in a voluntary force reduction program, does not have an existing
termination agreement in effect or is not on a leave of absence (except those
granted a leave under the Family and Medical Leave Act or as an accommodation
under the Americans with Disabilities Act);

                                             (V) who agrees to terminate
employment with the Company and all Affiliated Companies on the date selected by
the Company, which date shall not occur after July 15, 2000, and continues to
provide satisfactory service as determined by the Company until that date; and

                                             (VI) who elects to receive the
benefit enhancements described in subsection (ii) during the period beginning
December 1, 1999, and ending December 31, 1999, by submission of a written
election and execution of other documents,

                                       15
<PAGE>

including a waiver of any and all rights or claims (other than to benefits under
the Supplemental Plan or the Pension Plan) that the Employee may have against
the Company and any Affiliated Company, the Supplemental Plan, the Pension Plan
and their officers, agents and employees, in the form and manner prescribed by
the Company, and does not revoke such waiver within the time prescribed by the
Company.

                                    (B) The requirements of this subparagraph
are satisfied by a Covered Employee who, as of December 1, 1999, is employed in
one of the following departments, provided that the number of Covered Employees
of such department satisfying paragraph (A) or the comparable requirements set
forth in the Pension Plan for Covered Employees whose 1998 Compensation, as
defined in Section 2.18(c) of the Pension Plan, is less than $110,000 do not
exceed the department's numerical limit set forth below. The departments
referred to below consist entirely of Union Pacific Railroad Company Covered
Employees, unless indicated to the contrary.

<Table>
<Caption>

                                                              DEPARTMENTAL
                      DEPARTMENTS                                 LIMIT
                      -----------                             ------------
<S>                                                           <C>
Western Regional Staff (excluding Service Unit staff)               5

Northern Regional Staff (excluding Service Unit staff)             19

Southern Regional Staff (excluding Service Unit staff)              5

Commissary Services                                                 3

Information Technologies/Union Pacific Technologies
(excluding UPT employees working
exclusively on commercial business)                                51

Marketing & Sales - Commodity Groups                               11

Marketing & Sales - Marketing Services (including NDMC)            10

Supply                                                              8
</Table>

In the event the number of Covered Employees satisfying paragraph (A) or the
comparable requirements set forth in the Pension Plan for Covered Employees
whose 1998 Compensation, as defined in Section 2.18(c) of the Pension Plan, is
less than $110,000 exceeds a Departmental Limit, such Covered Employees shall be
ranked based upon their combined age and Vesting Service (as determined under
Article IV of the Pension Plan), as of December 1, 1999, and the benefit
enhancements described in subsection (ii) or in the Pension Plan shall be
provided to the

                                       16
<PAGE>

Covered Employees with the greatest combined age and Vesting Service up to the
Departmental Limit.

                           (ii) Each Covered Employee described in subsection
(a) shall:

                                    (A) for purposes of calculating Vesting
Service, Total Credited Service and Total Offset Service and determining
actuarial reductions for payments beginning before Normal Retirement Date,
receive an additional 5 years of service (up to a maximum of 40 years of
service) and shall be deemed to have attained an age 5 years older than his
actual age (up to a maximum of age 65),

                                    (B) be treated as having satisfied the
requirements to have an Early Supplemental Pension Retirement Date if he has not
satisfied the requirements to have an Early Retirement Date under the Pension
Plan,

                                    (C) be treated as having been a Covered
Employee for 60 full consecutive months for purposes of applying Section
4.02(c)(3) of the Pension Plan when calculating Total Credited Service and Total
Offset Service under this Supplemental Plan, and

                                    (D) for purposes of calculating benefits
payable under this Supplemental Plan, have the Railroad Retirement Annuity used
for his governmental offset described in Section 5.01(b) of the Pension Plan
determined as if his termination of Employment occurred on December 31, 1999.

         2.11 2000 VERP

                  (a) Effective April 1, 2000, the benefit enhancements
described in subsection (b) shall be provided to any Participant who is a
Covered Employee under the Pension Plan who satisfies the requirements of (a)(i)
and (ii).

                           (i) The requirements of this subparagraph are
satisfied by a Covered Employee:

                                    (A) whose 1999 Compensation, as defined in
Section 2.18(c) of the Pension Plan, is at least $110,000 and whose annual
salary rate as of April 1, 2000 is less than $140,000;

                                    (B) who is at least age 55 by December 31,
2000;

                                    (C) whose most recent date of hire as an
Employee is on or before March 31, 1995;

                                    (D) who, as of April 1, 2000, is not a
loaned executive, is not on long-term disability under the Union Pacific
Long-Term Disability Plan, has not previously been accepted to participate in a
voluntary force reduction program, does not have an existing termination
agreement in effect or is not on a leave of absence (except those granted a
leave under the Family and Medical Leave Act or as an accommodation under the
Americans with Disabilities Act);

                                       17
<PAGE>

                                    (E) who agrees to terminate employment with
the Company and all Affiliated Companies on the date selected by the Company,
which date shall not occur after December 31, 2000, and continues to provide
satisfactory service as determined by the Company until that date; and

                                    (F) who elects to receive the benefit
enhancements described in subsection (b) during the period beginning April 1,
2000, and ending April 30, 2000, by submission of a written election and
execution of other documents, including a waiver of any and all rights or claims
(other than to benefits under the Supplemental Plan or the Pension Plan) that
the Employee may have against the Company and any Affiliated Company, the
Supplemental Plan, the Pension Plan and their officers, agents and employees, in
the form and manner prescribed by the Company, and does not revoke such waiver
within the time prescribed by the Company.

                           (ii) The requirements of this subparagraph are
satisfied by a Covered Employee who, as of April 1, 2000, is employed in one of
the following departments, provided that the number of Covered Employees of such
department satisfying subparagraph (i) or the comparable requirements set forth
in the Pension Plan for Covered Employees whose 1999 Compensation, as defined in
Section 2.18(c) of the Pension Plan, is less than $110,000 do not exceed the
department's numerical limit set forth below. The departments referred to below
consist entirely of Union Pacific Railroad Covered Employees, unless indicated
to the contrary.

<Table>
<Caption>
                                                                   TOTAL ELIGIBLE
DEPARTMENT                                                            EMPLOYEES         DEPARTMENTAL LIMIT
----------                                                         --------------       ------------------
<S>                                                                <C>                  <C>

Network Design & Integration - Business Planning (Bulk),                  2                     2
Service Scheduling

Network Design & Integration - Car Management                             8                     4

Harriman Dispatching Center - Administrative Support in                   2                     1
Locomotive Management, Bulk Operations & Operations Support -
Administration

Harriman Dispatching Center - Directors in Locomotive                     2                     1
Management, Bulk Operations and Operations Support -
Administration

Harriman Dispatching Center - Managers in Locomotive                      21                    8
Management, Bulk Operations and Operations Support -
Administration

Mechanical Department- Car - Perishables - UPFE                           4                     4

Risk Management - UPRR - Police                                           51                    4
</Table>

In the event the number of Covered Employees satisfying subparagraph (i) or the
comparable requirements set forth in the Pension Plan for Covered Employees
whose 1999 Compensation, as defined in Section 2.18(c) of the Pension Plan, is
less than $110,000 exceeds a Departmental

                                       18
<PAGE>

Limit, such Covered Employees shall be ranked based upon their combined age and
Vesting Service (as determined under Article IV of the Pension Plan) as of April
1, 2000, and the benefit enhancements described in subsection (b) or in the
Pension Plan shall be provided to the Covered Employees with the greatest
combined age and Vesting Service up to the Departmental Limit.

                  (b) Each Covered Employee described in subsection (a) shall:

                           (i) for purposes of calculating Vesting Service,
Total Credited Service and Total Offset Service and determining actuarial
reductions for payments beginning before Normal Retirement Date, receive an
additional 5 years of service (up to a maximum of 40 years of service) and shall
be deemed to have attained an age 5 years older than his actual age (up to a
maximum of age 65),

                           (ii) be treated as having satisfied the requirements
to have an Early Supplemental Pension Retirement Date if he has not satisfied
the requirements to have an Early Retirement Date under the Pension Plan, and

                           (iii) be treated as having been a Covered Employee
for 60 full consecutive months for purposes of Section 4.02(c)(3) of the Pension
Plan when calculating Total Credited Service and Total Offset Service under this
Supplemental Plan.

         2.12 2001 VERP

                  (a) Effective March 1, 2001, the benefit enhancements
described in subsection (b) shall be provided to any Participant who is a
Covered Employee under the Pension Plan who satisfies the requirements of (a)(i)
and (ii).

                           (i) The requirements of this subparagraph are
satisfied by a Covered Employee:

                                    (A) whose 2000 Compensation, as defined in
Section 2.18(c) of the Pension Plan, is at least $110,000 and whose annual
salary rate as of December 31, 2000 is less than $140,000;

                                    (B) who is at least age 52 on or before May
1, 2001;

                                    (C) who is an active non-agreement employee
on a Band D or lower position working in one of the departments listed in
subparagraph (a)(ii) as of December 31, 2000;

                                    (D) who, as of March 1, 2001, is not a
loaned executive, is not on long-term disability under the Union Pacific
Long-Term Disability Plan, or is not on a leave of absence (except those granted
a leave under the Family and Medical Leave Act or as an accommodation under the
Americans with Disabilities Act);

                                    (E) who agrees to terminate employment with
the Company and all Affiliated Companies on the date selected by the Company,
which date shall not occur

                                       19
<PAGE>

after September 30, 2001, and continues to provide satisfactory service as
determined by the Company until that date; and

                                    (F) who elects to receive the benefit
enhancements described in subsection (b) during the period beginning February 2,
2001, and ending March 5, 2001, by submission of a written election and
execution of other documents, including a waiver of any and all rights or claims
(other than to benefits under the Supplemental Plan or Pension Plan) that the
Employee may have against the Company and any Affiliated Company, the
Supplemental Plan, the Pension Plan and their officers, agents and employees, in
the form and manner prescribed by the Company, and does not revoke such waiver
within the time prescribed by the Company.

                           (ii) The requirements of this subparagraph are
satisfied by a Covered Employee who, as of December 31, 2000, is employed in one
of the following departments, and is a Covered Employee on March 1, 2001,
provided that the number of Covered Employees of such department satisfying
subparagraph (i) or the comparable requirements set forth in the Pension Plan
for Covered Employees whose 2000 Compensation, as defined in Section 2.18(c) of
the Pension Plan, is less than $110,000 do not exceed the department's numerical
limit set forth below. The departments referred to below consist entirely of
Union Pacific Railroad Covered Employees, unless indicated to the contrary.

<Table>
<Caption>
     DEPARTMENT                           SUB GROUP                      DEPARTMENTAL LIMIT
     ----------                           ---------                      ------------------
<S>                     <C>                                              <C>

Corporate Relations                    Communications                            8
                                 Government Affairs - Omaha                      2
Executive                                Comissary                               6
Finance                 Accounting - Omaha (excluding VP and Contr.              6
                                           Staff)
                                   Accounting - St. Louis                        3
                                      Banking & Credit                           2
                                     Financial Analysis                          1
                          Planning & Analysis (excluding Bus. Dev.               3
                                         Planning)
                                    Real Estate - Admin.                         2
                                  Real Estate - Contracts                        3
                                 Real Estate - Facility Man                      2
                                  Real Estate - Field Ops                       12
                                   Real Estate - Ops Supp                        3
                                            Tax                                  4
Human Resources                    Planning & Development                        8
                                    Administrative Staff                         1
                                      All Other Groups                           6
IT/UPT                                      All                                 211
Labor Relations                        Administration                            3
                                          Benefits                               1
                                    Operations & Non-Ops                         1
                                        Peer Support                             1
</Table>

                                       20
<PAGE>

<Table>
<Caption>
     DEPARTMENT                         SUB GROUP                     DEPARTMENTAL LIMIT
     ----------                         ---------                     ------------------
<S>                  <C>                                              <C>
Law                                        All                                 10
Marketing & Sales                      Ag Products                              3
                                          Autos                                 6
                                        Chemicals                               6
                                    Customer Relations                          2
                                   Energy - Acct. Mgt.                          1
                                    Energy - Logistics                          1
                                   Industrial Products                         12
                                        Interline                               2
                                        Intermodal                              6
                                           NCSC                                10
                                 Revenue Information Mgt.                       1
                                           UPDS                                 2
Operating                                  Car                                 15
                                    CMS & Timekeeping                           6
                                       Engineering                             135
                            HDC (excluding Train Dispatchers)                  23
                              Locomotive - North Little Rock                    4
                                Locomotive - Oper. Regions                      5
                                  Locomotive - All Other                        9
                               Operating Practices & Safety                     7
                       Operating Region - Northern (excluding Train            --
                                   Dispatchers & Metra)
                                    Telecommunications                          1
                                          Signal                                1
                                        All Other                              46
                       Operating Region - Southern (excluding Train            55
                                       Dispatchers)
                       Operating Region - Western (excluding Train             --
                                      Dispatchers):
                                   Admin. & Train Mgt.                          2
                                           Car                                  6
                                   Engineering - Bridge                         1
                               Engineering - Environmental                      2
                                   Engineering - Signal                         2
                                   Engineering - Track                          5
                                        Locomotive                              2
                                       Region Staff                             5
                                      Transportation                           19
                           Risk Mgt. - Claims & Health Services                18
                          Risk Mgt. - Police (excluding Internal                1
                                        Placement)
</Table>

                                       21
<PAGE>

<Table>
<Caption>
     DEPARTMENT                         SUB GROUP                     DEPARTMENTAL LIMIT
     ----------                         ---------                     ------------------
<S>                  <C>                                              <C>
                           Support Serv. - Jt. Fac. & NRPC Op.                  1
                                Support Serv. - All Other                       1
NDI                                        All                                 15
Supply                                     All                                 17
UPC                                  Corporate Audit                            1
</Table>

In the event the number of Covered Employees satisfying subparagraph (i) or the
comparable requirements set forth in the Pension Plan for Covered Employees
whose 2000 Compensation, as defined in Section 2.18(c) of the Pension Plan, is
less than $110,000 exceeds a Departmental Limit, such Covered Employees shall be
ranked based upon their combined age and Vesting Service (as determined under
Article IV of the Pension Plan) as of March 31, 2001, and the benefit
enhancements described in subsection (b) or in the Pension Plan shall be
provided to the Covered Employees with the greatest combined age and Vesting
Service up to the Departmental Limit.

                  (b) Each Covered Employee described in subsection (a) shall:

                           (i) for purposes of calculating Vesting Service,
Total Credited Service and Total Offset Service and determining actuarial
reductions for payments beginning before Normal Retirement Date, receive an
additional 10 years in the aggregate (other than for purposes of determining any
actuarial reduction for payment before Normal Retirement Date for any
governmental or other offset described in Section 5.01(a)(1)(C) or in Table I,
Section XII, Part 1 C or D of the Pension Plan), which shall first be applied to
the Covered Employee's age (up to a maximum of age 65) then to service (up to a
maximum of 40 years of service),

                           (ii) be treated as having completed 5 years of actual
Vesting Service for purposes of Sections 4.1 and 4.2, and

                           (iii) be treated as having been a Covered Employee
for 60 full consecutive months for purposes of applying Section 4.02(c)(3) of
the Pension Plan when calculating Total Credited Service and Total Offset
Service under this Supplemental Plan.

                  (c) Effective April 1, 2001:

                           (i) notwithstanding anything to the contrary in
Section 2.12(a)(i)(E), but only with the consent of the Covered Employee, the
termination date selected by the Company for a Covered Employee in Real Estate -
Contracts, Real Estate - Field Ops, and Real Estate - Ops Supp may be any date
on or before December 31, 2001.

                           (ii) The Departmental Limit is increased for the
subgroups listed in Section 2.12(a)(ii) as set forth below:

                                       22
<PAGE>

<Table>
<Caption>
  DEPARTMENT                            SUB GROUP                    REVISED DEPARTMENTAL LIMIT
  ----------                            ---------                    --------------------------
<S>                    <C>                                           <C>

Finance                Accounting - Omaha (excluding VP and Contr.              7
                                          Staff)
                                  Real Estate - Ops Supp                        5
Human Resources                      All Other Groups                           8
Labor Relations                    Operations & Non-Ops                         2
Marketing & Sales                      Ag Products                              4
                                    Energy - Logistics                          2
                                   Industrial Products                         14
                                           NCSC                                17
Operating                      Operating Practices & Safety                    11
                                          Signal                                3
                                        All Other                              47
                                   Engineering - Signal                         3
                                   Engineering - Track                          7
                                       Region Staff                             8
                                      Transportation                           27
</Table>

To be eligible for the benefit enhancement described in Section 2.12(b), a
Covered Employee must be described in Section 2.12(a)(i) and (ii) who, but for
the increase in the Departmental Limit, would not have received the benefit
enhancement described in 2.12(b) and who elects to receive the benefit
enhancement described in Section 2.12(b) by submitting a written election during
the period beginning April 2, 2001 and ending April 9, 2001.

         2.13 Railroad 1996 Voluntary Early Retirement Program.

                  (a) Effective March 20, 1996, the benefit enhancements
described in subsection (b) shall be provided to any Participant who is a
Covered Employee under the Pension Plan who:

                           (i) is actively employed on March 20, 1996 by: (A)
Union Pacific Railroad Company ("Railroad"); (B) Union Pacific Motor Freight
Company ("Motor Freight"); (C) Union Pacific Technologies Transportation System,
Inc. ("UPTTS") or Union Pacific Distribution Services Company ("UPDS")
(collectively, the "VERP Companies");

                           (ii) is not a Grade 28 or above on March 20, 1996;

                           (iii) is not on terminal vacation or on a leave of
absence (other than one required by the Family and Medical Leave Act of 1993) on
March 20, 1996;

                           (iv) is not a loaned executive, in a temporary
position or in the internal placement program on March 20, 1996;

                           (v) has not previously been accepted to participate
in a voluntary force reduction program;

                                       23
<PAGE>

                           (vi) does not have an existing termination agreement
in effect with the VERP Companies;

                           (vii) is employed on March 20, 1996: (A) in Omaha,
Nebraska by the Railroad's Information Technologies Department or Marketing and
Sales Department; (B) in Omaha, Nebraska by UPTTS; (C) in Omaha, Nebraska by
UPDS, or (D) by Union Pacific Motor Freight Company;

                           (viii) had at least 10 years of Vesting Service under
the Pension Plan as of March 20, 1996 and will attain the age of at least 52 by
July 1, 1996;

                           (ix) had total pay in 1995 as reported on Form W-2,
plus amounts not included in taxable income due to a salary deferral election
made pursuant to the terms of a qualified cash or deferred arrangement (within
the meaning of section 401(k) of the Code) or a cafeteria plan (within the
meaning of section 125 of the Code) maintained by the Employer of $125,000 or
more;

                           (x) elects not earlier than March 20, 1996 and not
later than April 20, 1996 by submission of a written election in the form and
manner prescribed by the Administrator to retire and terminate Employment with
the benefit enhancements described in this Section; and

                           (xi) remains actively employed by the VERP Companies
through the date communicated to the Covered Employee in writing on or before
March 20, 1996, which date shall not thereafter be changed for any reason and
shall not be earlier than May 1, 1996 nor later than April 30, 1997, except that
the dates for the Railroad's Information Technologies Department are July 1,
1996 and June 30, 1997, respectively.

                  (b) Each Covered Employee described in subsection (a) shall:

                           (i) for purposes of calculating Vesting Service,
Total Credited Service and Total Offset Service and determining actuarial
reductions for payments beginning before Normal Retirement Date, receive an
additional 10 years in the aggregate (other than for purposes of determining any
actuarial reduction for payment before Normal Retirement Date for any
governmental or other offset described in Section 5.01(a)(1)(C) or in Table I,
Section XII, Part 1 C or D of the Pension Plan), which shall first be applied to
the Covered Employee's age (up to a maximum of age 65) then to service (up to a
maximum of 40 years of service);

                           (ii) be treated as having satisfied the requirements
to have an Early Supplemental Pension Retirement Date if he has not satisfied
the requirements to have an Early Retirement Date under the Pension Plan; and

                           (iii) be treated as having been a Covered Employee
for 60 full consecutive months for purposes of applying Section 4.02(c)(3) of
the Pension Plan when calculating Total Credited Service and Total Offset
Service under this Supplemental Plan.

                                       24
<PAGE>

                                  ARTICLE THREE

                                MANNER OF PAYMENT

         3.1 Payments For Retirements Under Section 2.1, 2.2(a), 2.2(b)(i) and
2.3. Except as provided in Section 3.3, if (a) a Participant retires on a Normal
Retirement Date, an Early Retirement Date, an Early Supplemental Pension
Retirement Date, or a Postponed Retirement Date under Section 2.1, 2.2(a),
2.2(b)(i) or 2.3, and (b) at retirement is eligible to start both a Supplemental
Pension under Article Two of this Supplemental Plan and a pension under the
Pension Plan, payment of the Supplemental Pension shall begin on the date the
Participant's Pension Plan benefits begin pursuant to his election under the
Pension Plan (and not earlier or later). In addition, the Supplemental Pension
shall be paid in the same form, and shall be subject to the same adjustment for
form of payment and the same Beneficiary designation, as apply to the
Participant's Pension Plan benefit; provided, however, that in the event the
Participant is eligible for and elects a level income option under the Pension
Plan, the Supplemental Pension shall be paid as a single life annuity.

         3.2 Payments For Retirements Under Section 2.2(b)(ii). Except as
provided in Section 3.3, if a Participant retires on an Early Supplemental
Pension Retirement Date, and at retirement either is not vested in or is not
eligible to start a pension under the Pension Plan, payment of his Supplemental
Pension shall begin on the first day of the month next following the
Participant's Early Supplemental Pension Retirement Date. The Participant's
Supplemental Pension will be paid in the form of a single life annuity. The
Participant is not eligible to elect payment of his Supplemental Pension in any
other form.

         3.3 Payments Starting Before July 25, 2002. Effective for benefits
starting before July 25, 2002, the Administrator may have permitted a
Participant described in Section 3.1 or 3.2 who was retiring on an Early
Supplemental Pension Retirement Date that did not qualify as an Early Retirement
Date under the Pension Plan to elect, in the manner prescribed by the
Administrator, to receive payment of his Supplemental Pension in any form of
payment described in Article VIII of the Pension Plan that would have been
available to the Participant had he retired on an Early Retirement Date under
the Pension Plan. If the Participant was permitted to and elected a form of
payment other than a single life annuity, the Supplemental Pension payments are
actuarially adjusted for the form of payment elected by the Participant, as
determined by the Administrator, using factors for that purpose set forth in the
Pension Plan.

                                       25
<PAGE>

                                  ARTICLE FOUR

                                     VESTING

         4.1 Termination Prior to Vesting.

                  (a) A Participant whose Employment terminates before April 27,
1989, before Early or Normal Retirement Date, and before the completion of 10
years of Vesting Service (including within such Vesting Service not less than 5
years of actual Vesting Service under the Pension Plan) shall not be entitled to
any benefit under this Supplemental Plan.

                  (b) Except as provided in Section 2.5 or 2.12(b)(ii), a
Participant who terminates Employment on or after April 27, 1989, before Early
or Normal Retirement Date, and before completion of 5 years of actual Vesting
Service under the Pension Plan (treating as actual service for this purpose,
service described in Section 1.2(p)(ii) or credited under Section 2.5) shall not
be entitled to any benefit under this Supplemental Plan; provided, however, that
the Chief Executive Officer of Union Pacific may reduce the required years of
actual Vesting Service to 3 if the Chief Executive Officer of Union Pacific
determines that such change would not be disadvantageous to the Company in the
case of any Participant. The Chief Executive Officer of Union Pacific shall make
such determination by the date the Participant terminates Employment.

         4.2 Termination After Vesting. Except as provided in Section 2.5,
2.12(b)(ii) or 4.4 or Articles Five and Eleven, a Participant who:

                  (a) terminates Employment before Normal or Early Retirement
Date and before Early Supplemental Pension Retirement Date but after (i)
completing 5 (or 3, if applicable) years of actual Vesting Service under the
Pension Plan (treating as actual service for this purpose, service described in
Section 1.2(p)(ii) or credited under Section 2.5) in the case of Employment
termination on or after April 27, 1989, or (ii) completing 10 years of Vesting
Service (including at least 5 years of actual Vesting Service under the Pension
Plan) in the case of Employment termination prior to April 27, 1989; or

                  (b) becomes a Disabled Participant under the Pension Plan and
ceases to be a Disabled Participant prior to Normal or Early Retirement Date,

shall be entitled to receive, commencing on the Participant's Normal Retirement
Date, the Normal Supplemental Pension computed under Section 2.1 as of the date
the Participant terminated Employment or ceased to be a Disabled Participant. In
lieu thereof, such Participant shall receive a Supplemental Pension commencing
on the earliest of:

                           (i) any date prior to the Participant's Normal
Retirement Date on which the Participant starts his benefit payments from the
Pension Plan;

                           (ii) in the case of a Participant who is credited
with additional years of age described in Section 1.2(d)(ii) and, as a result,
would be deemed to reach age 55 and become eligible to start his Supplemental
Plan benefits earlier than his Pension Plan benefits, the first day

                                       26
<PAGE>

of the month following the later of (A) the Participant's termination of
Employment, or (B) the Participant's 55th birthday (determined taking into
account additional years of age described in Section 1.2(d)(ii)); or

                           (iii) in the case of a Participant who is not vested
under the Pension Plan, the first day of the month following the later of (A)
the Participant's termination of Employment, or (B) the Participant's 55th
birthday (determined taking into account additional years of age described in
Section 1.2(d)(ii)), or the first day of any month thereafter that is prior to
the Participant's Normal Retirement Date on which the Participant elects to
start payment of his Supplemental Pension.

The election described in (iii) must be made in writing, in a form prescribed by
the Administrator, at least six (6) months before, and in the tax year of the
Participant immediately preceding, the elected benefit start date. Any
Supplemental Pension paid to the Participant commencing prior to Normal
Retirement Date shall equal (I) the amount described in Section 2.1(a) adjusted
for early payment as of the early benefit start date in accordance with Section
6.04 of the Pension Plan (taking into account any additional years of age
described in Section 1.2(d)(ii) for purposes of adjusting both the gross and
offset portions of the benefit except as provided otherwise in Section 2.12),
reduced by (II) the amount described in Section 2.1(b), if any, adjusted for
payment as of the early benefit start date in accordance with Section 6.04 of
the Pension Plan. Notwithstanding the preceding sentence, if the Participant's
Supplemental Pension begins prior to his Pension Plan benefit, the reduction
described in (II) shall be calculated and apply beginning on the earliest date
benefits are payable to the Participant under the Pension Plan, even if the
Participant's Pension Plan benefits do not actually start on that earliest date.

         4.3 Form of Vested Benefit.

                  (a) Benefits Payable Under Supplemental Plan and Pension Plan.
Except as provided in Section 4.4, if a Participant is entitled to benefits
under both the Supplemental Plan and the Pension Plan and benefits under both
Plans start on the same date, the Supplemental Pension determined under Section
4.2 shall be paid in the same form, and shall be subject to the same adjustment
for form of payment and the same Beneficiary designation, as apply to the
Participant's Pension Plan benefit. If, however, such Participant's Supplemental
Plan benefit starts before his Pension Plan benefit, the Participant's
Supplemental Pension will be paid in the form of a single life annuity.

                  (b) No Benefits Payable Under Pension Plan. Except as provided
in Section 4.4, in the event a Participant is entitled to a benefit from the
Supplemental Plan but is not vested in a benefit under the Pension Plan, the
Participant shall receive payment of his Supplemental Pension determined under
Section 4.2 in the automatic form of payment described in Section 8.02 of the
Pension Plan that would have applied to the Participant had he been eligible for
and started payment under the Pension Plan on the same day. The Participant's
Supplemental Pension determined under Section 4.2 shall be adjusted for form of
payment, as appropriate, pursuant to Article VIII of the Pension Plan.

                                       27
<PAGE>

         4.4 Payments Starting Before July 25, 2002. The rules set forth in
Sections 4.2 and 4.3, above, applied to Supplemental Plan benefits starting
before July 25, 2002, unless the Administrator advised the Participant to the
contrary.

                                       28
<PAGE>

                                  ARTICLE FIVE

                           CERTAIN EMPLOYEE TRANSFERS

         5.1 Transfers into Supplemental Plan from Resources Supplemental Plan.
If any employee who is a participant in the Supplemental Pension Plan for Exempt
Salaried Employees of Union Pacific Resources Company and Affiliates is
transferred on or before October 15, 1996 to the Company and becomes a
Participant after such transfer, such employee shall retain no rights in the
other supplemental pension plan and shall receive all benefits to which entitled
under this Supplemental Plan, based upon Total Credited Service and Total Offset
Service which shall include, as to such employee, any service which would have
been used in determining the Participant's benefits under such other
supplemental pension plan.

         5.2 Transfers to Resources Supplemental Plan. If a Participant is
transferred on or before October 15, 1996 to an Affiliated Company participating
in the Supplemental Pension Plan for Exempt Salaried Employees of Union Pacific
Resources Company and Affiliates and becomes a participant in the supplemental
pension plan of the Affiliated Company after such transfer, such former
Participant shall retain no rights in this Supplemental Plan if such other
supplemental pension plan has provisions that substantially conform to the
transfer provisions for the protection of transferees that are contained in
Section 5.1.

         5.3 No Duplication of Benefits. There shall under no circumstances be
any duplication of benefits under this Supplemental Plan or any supplemental
pension plan of an Affiliated Company or former Affiliated Company by reason of
the same period of employment.

                                       29
<PAGE>

                                   ARTICLE SIX

                        PRE-RETIREMENT SURVIVOR'S BENEFIT

         6.1 Eligibility. The Surviving Spouse of a Participant who either (a)
terminates Employment or ceases to be a Disabled Participant due to death, or
(b) (i) terminates Employment other than due to death after becoming entitled to
a Supplemental Pension under Article Two or Article Four, and (ii) dies prior to
the commencement of payment of the Supplemental Pension shall receive the
benefit determined pursuant to Section 6.2.

         6.2 Surviving Spouse's Benefit

                  (a) Subsidized Death Benefits.

                           (i) Except as provided in subsection (ii) or Section
6.4, the benefit payable to the Surviving Spouse of a Participant described in
Section 6.1 who dies:

                                    (A) on or after January 1, 1994 while a
Disabled Participant, but before Early or Normal Retirement Date under the terms
of the Pension Plan;

                                    (B) on or after the Effective Date during
Employment, but before Early or Normal Retirement Date under the terms of the
Pension Plan;

                                    (C) on or after the Effective Date during
Employment, but after Early or Normal Retirement Date under the terms of the
Pension Plan; or

                                    (D) on or after the Effective Date after
terminating Employment or ceasing to be a Disabled Participant, providing such
termination or cessation occurred after Early or Normal Retirement Date under
the terms of the Pension Plan,

shall be a monthly annuity payable for the Surviving Spouse's life. Monthly
payments to the Surviving Spouse shall equal one-half of the monthly
Supplemental Pension such Participant would have received (assuming, for a
Participant described in Section 6.1(a), the Participant had vested) in the form
of a single life annuity (in the form of a Qualified Joint and Survivor Annuity
for a Participant described in (B) whose death occurs prior to 1994), if the
Participant had survived (but accrued no additional benefits after death) and
started his Supplemental Pension on the date Supplemental Plan benefits begin to
the Surviving Spouse under Section 6.3. Notwithstanding anything in the
Supplemental Plan to the contrary, the Surviving Spouse's benefit with respect
to a Participant described in (A) or (B), above, shall be determined by
applying, for purposes of any adjustment for payment prior to Normal Retirement
Date, the early retirement reduction factors of Section 6.03 of the Pension
Plan.

                           (ii) Except as provided in Section 6.4, the benefit
payable to the Surviving Spouse of a Participant described in Section 6.1, who
dies other than under circumstances described in Section 6.2(a)(i) but after
becoming eligible for an Early Supplemental Pension under Section 2.2 based on
an Early Supplemental Pension Retirement

                                       30
<PAGE>

Date or who dies under circumstances described in Section 6.2(a)(i) but is
described in Section 6.3(b), shall be an annuity payable for the Surviving
Spouse's life calculated as follows:

                                    (A) In the case of a Participant who is
entitled to both a pension under the Supplemental Plan and a pension under the
Pension Plan, monthly payments to the Surviving Spouse shall equal one-half of
the monthly Supplemental Pension in the form of a single life annuity calculated
for the Participant as described in Section 2.2(b)(i)(A) as if the Participant
had survived (but accrued no additional benefits after death) and started his
Supplemental Pension on the date Supplemental Plan benefits begin to the
Surviving Spouse under Section 6.3, reduced by any survivor benefit that the
Surviving Spouse is entitled to receive from the Pension Plan from the earliest
date on or following the date payments begin to the Surviving Spouse that such
survivor benefit is payable from the Pension Plan (whether or not such survivor
benefit begins on the earliest date under the Pension Plan).

                                    (B) In the case of a Participant who is
entitled to a pension under the Supplemental Plan but is not vested in a pension
under the Pension Plan, monthly payments to the Surviving Spouse shall equal
one-half of the monthly Supplemental Pension in the form of a single life
annuity calculated for the Participant as described in Section 2.2(b)(ii)(A)(I)
as if the Participant had survived (but accrued no additional benefits after
death) and started his Supplemental Pension on the date Supplemental Plan
benefits begin to the Surviving Spouse under Section 6.3.

                  (b) Non-Subsidized Death Benefits. Except as provided in
Section 6.4, the benefit payable to the Surviving Spouse of a Participant
described in Section 6.1 who dies under circumstances other than those described
in Section 6.2(a) shall be an annuity payable for the Surviving Spouse's life
with monthly payments equal to:

                           (i) Prior to the earliest date, if any, on which the
Surviving Spouse is eligible to start any survivor benefit payable under the
Pension Plan, 50% of the monthly Supplemental Pension the Participant would have
received in the form of a Qualified Joint and Survivor Annuity determined as if
the Participant is not entitled to a pension under the Pension Plan if the
Participant had survived (and accrued no additional benefits after his death)
and started his Supplemental Pension on the date Supplemental Plan benefits
begin to the Surviving Spouse under Section 6.3; and

                           (ii) On or after the earliest date, if any, on which
the Surviving Spouse is eligible to start any survivor benefit payable under the
Pension Plan, the amount described in (i), above, reduced by any survivor
benefit that the Surviving Spouse is entitled to receive from the Pension Plan
beginning on such earliest date (whether or not such survivor benefit begins on
the earliest date under the Pension Plan).

         6.3 Timing of Surviving Spouse's Benefit. Except as provided in Section
6.4, the benefit to which a Surviving Spouse of a Participant shall be entitled
pursuant to Section 6.2(a) or (b) shall be paid monthly to such Surviving
Spouse, commencing as of the date such Surviving Spouse elects, or is required
to, start payment of any benefit to which the Surviving Spouse is entitled under
the Pension Plan. Notwithstanding the preceding sentence:

                                       31
<PAGE>

                  (a) if the Surviving Spouse is not entitled to any payment
from the Pension Plan, the Surviving Spouse shall receive payment of any
Supplemental Pension to which the Surviving Spouse is entitled under Section 6.2
beginning as of the later of (i) the first of the month following the
Participant's 55th birthday (determined taking into account any additional years
of age described in Section 1.2(d)(ii)), or (ii) the first of the month
following the date of the Participant's death.

                  (b) if the deceased Participant would have been entitled or
required to start his Supplemental Plan benefit on an earlier date than the
Participant would have been entitled to start his Pension Plan benefit had he
survived, the Surviving Spouse shall receive payment of any Supplemental Pension
to which the Surviving Spouse is entitled under Section 6.2 beginning as of the
later of (i) the earliest date as of which the Participant would have been
eligible or required to start payments pursuant to Article Two, Three or Four,
as appropriate, or (ii) the first of the month following the date of the
Participant's death.

Payments to the Surviving Spouse shall end with the payment made for the month
in which the Surviving Spouse dies.

         6.4 Payments Starting Before July 25, 2002. The rules for
pre-retirement death benefits set forth in Sections 6.2 and 6.3, above, applied
to Supplemental Plan pre-retirement death benefits starting before July 25,
2002, unless the Administrator advised the Participant and/or Surviving Spouse
to the contrary.

                                       32
<PAGE>

                                  ARTICLE SEVEN

                                     FUNDING

         7.1 Funding. The Company's obligations hereunder shall constitute a
general, unsecured obligation of the Company payable solely out of its general
assets, and no Participant or former Participant shall have any right to any
specific assets of the Company. To the extent that any Participant or former
Participant acquires a right to receive payments under the Plan, such right
shall be no greater than the right of an unsecured general creditor of the
Company. The Board of Directors of Union Pacific may, but shall not be required
to, authorize Union Pacific to establish a trust to hold assets to be used to
discharge the Company's obligations hereunder, provided that such trust shall
not confer upon Participants or former Participants any rights other than the
rights of unsecured general creditors of the Company.

         7.2 Payment to James Otto. On or about December 1, 2000, James Otto was
paid in a single sum the actuarial equivalent value of the portion of his
Supplemental Pension, payable in the form of a 50% joint and survivor annuity
with his spouse as beneficiary, that was not funded through annuity purchases.
Such single sum payment of $501.40 was in full settlement of the Supplemental
Plan's obligation to pay such remaining benefit to James Otto or his Surviving
Spouse or other beneficiary.

                                       33
<PAGE>

                                  ARTICLE EIGHT

                                 ADMINISTRATION

         8.1 Responsibilities and Powers of Administrator. Except for the
responsibilities and powers elsewhere herein given specifically to the Board of
Directors of Union Pacific, the Administrator shall have all responsibilities
for the operation and administration of the Supplemental Plan and shall have all
powers and discretionary authority necessary to carry out those responsibilities
hereunder. Without limiting the generality of the foregoing, the Administrator
shall have full power and discretionary authority to:

                  (a) keep and maintain such accounts and records with respect
to Participants, former Participants and Special 1990-1992 Window Participants
as are deemed necessary or proper;

                  (b) determine all questions of the eligibility for
participation and benefits and of the status and rights of Participants, former
Participants, Special 1990-1992 Window Participants and any other person
hereunder, make all required factual determinations, interpret and construe the
Supplemental Plan in connection therewith and correct defects, resolve
ambiguities therein and supply omissions thereto;

                  (c) adopt from time to time mortality and other tables and
interest rates upon which all actuarial calculations shall be based, including
the determination of the appropriate factors for the adjustment of pension
payments; and

                  (d) adopt from time to time rules and regulations governing
this Supplemental Plan.

The Administrator shall carry out all responsibilities and exercise all powers
in accordance with the terms of the Supplemental Plan. The determination of the
Administrator as to any questions involving the responsibilities hereunder shall
be final, conclusive and binding on all persons.

         8.2 Certification and Payment of Benefits. The Administrator shall
compute the amount and manner of payment of benefits to which the Participants,
Special 1990-1992 Window Participants, former or retired Participants, Surviving
Spouses and beneficiaries become entitled. All payments of benefits shall be
made directly by the Company upon the instructions of the Administrator.

         8.3 Reports to Board of Directors. As the Administrator deems necessary
or proper or as the Board of Directors of Union Pacific may require, but in any
event at least once during each calendar year, the Administrator shall report to
such Board on the operation and administration of the Supplemental Plan and on
any other matter concerning the Supplemental Plan deemed advisable or required
by such Board.

         8.4 Designation and Delegation. The Administrator may designate other
persons to carry out such of the responsibilities hereunder for the operating
and administration of the Supplemental Plan as the Administrator deems advisable
and delegate to the persons so

                                       34
<PAGE>

designated such of the powers as the Administrator deems necessary to carry out
such responsibilities. Such designation and delegation shall be subject to such
terms and conditions as the Administrator deems necessary or proper. Any action
or determination made or taken in carrying out responsibilities hereunder by the
persons so designated by the Administrator shall have the same force and effect
for all purposes as if such action or determinations had been made or taken by
the Administrator.

         8.5 Outside Services. The Administrator may engage counsel and such
clerical, medical, financial, actuarial, accounting and other specialized
services as is deemed necessary or desirable for the operation and
administration of the Supplemental Plan. The Administrator and persons so
designated shall be entitled to rely, and shall be fully protected in any action
or determination or omission taken or made or omitted in good faith in so
relying, upon any opinions, reports or other advice which is furnished by
counsel or other specialist engaged for that purpose.

         8.6 Expenses. All expenses, including any fees for outside services
under Section 8.5, incurred by the Administrator and by persons designated by
the Administrator under Section 8.4 in the operation and administration of the
Supplemental Plan shall be paid by the Company. Neither the Administrator nor
any other person who is an employee of the Company or an Affiliated Company
shall receive any compensation solely for services in carrying out any
responsibility hereunder.

         8.7 Bonding. No bond or other security shall be required of the
Administrator or of any person designated under Section 8.4.

         8.8 Liability. The Administrator and persons designated by him under
Section 8.4 shall use ordinary care and diligence in the performance of their
duties. The Company shall indemnify and defend the Administrator and each other
person so designated under Section 8.4 against any and all claims, loss,
damages, expense (including reasonable counsel fees), and liability arising from
any action or failure to act or other conduct in their official capacity, except
when the same is due to the gross negligence or willful misconduct of the
Administrator or other persons.

         8.9 Finality of Actions. Any action required of Union Pacific, the
Company, the Board of Directors of Union Pacific, or the Chief Executive Officer
of Union Pacific (the "CEO") under this Supplemental Plan, or made by the
Administrator acting on their behalf, shall be made in the Company's, the
Board's or the CEO's sole discretion, not in a fiduciary capacity and need not
be uniformly applied to similarly situated persons. Any such action shall be
final, conclusive and binding on all persons interested in the Supplemental
Plan.

                                       35
<PAGE>

                                  ARTICLE NINE

                            AMENDMENT OR TERMINATION

         9.1 Amendment or Termination. The Board of Directors of Union Pacific,
acting by written resolution, reserves the right to modify, alter, amend or
terminate the Supplemental Plan from time to time and to modify, withdraw or
terminate the Supplemental Plan, to any extent that it may deem advisable;
provided, that no such modification, alteration, amendment or termination shall
impair any rights which have accrued to Participants hereunder to the date of
such modification, alteration, amendment or termination. Notwithstanding the
foregoing, the Senior Vice President - Human Resources of Union Pacific may make
all technical, administrative, regulatory and compliance amendments to the
Supplemental Plan, and any other amendment that will not significantly increase
the cost of the Supplemental Plan to the Company, as he or she shall deem
necessary or appropriate.

                                       36
<PAGE>

                                   ARTICLE TEN

                               GENERAL PROVISIONS

         10.1 Certain Rights Reserved. Nothing herein contained shall confer
upon any Employee or other person the right (a) to continue in Employment or
service of the Company or affect any right that the Company may have to
terminate the Employment or service of (or to demote or to exclude from future
participation in the Supplemental Plan) any such Employee or other person at any
time for any reason, (b) to participate in the Supplemental Plan, or (c) to
receive an annual base salary of any particular amount.

         10.2 Alienability of Benefits. Payments under the Supplemental Plan may
not be assigned, transferred, pledged or hypothecated, and to the extent
permitted by law, no such payments shall be subject to legal process or
attachment for the payment of any claims against any person entitled to receive
the same. Effective on and after July 25, 2002, compliance with the provisions
and conditions of any domestic relations order relating to an individual's
Supplemental Plan benefits, which the Administrator has determined must be
complied with under the terms of applicable law, shall not be considered a
violation of this provision.

         10.3 Payment Due an Incompetent. If it shall be found that any person
to whom a payment is due hereunder is unable to care for that person's affairs
because of physical or mental disability, as determined by a licensed physician,
the Administrator shall have the authority to cause the payments becoming due
such person to be made to the legally appointed guardian of any such person or
to the spouse, brother, sister, or other person as it shall determine. Payments
made pursuant to such power shall operate as a complete discharge of the
Company's obligations.

         10.4 Governing Law. The Supplemental Plan shall be construed and
enforced in accordance with the laws of the State of Nebraska (without regard to
the legislative or judicial conflict of laws rules of any state), except to the
extent superseded by any federal law.

         10.5 Successors. This Supplemental Plan shall be binding upon any
successor (whether direct or indirect, by purchase, merger, consolidated or
otherwise) to all or substantially all of the business and/or assets of the
Company in the same manner and to the same extent that the Company would be
bound to perform if no such succession had taken place.

         10.6 Titles and Headings Not To Control. The titles and Articles of the
Supplemental Plan and the headings of Sections and subsections of the
Supplemental Plan are placed herein for convenience of reference only and, as
such, shall have no force and effect in the interpretation of the Supplemental
Plan.

         10.7 Severability. If any provisions of the Supplemental Plan shall be
held unlawful or otherwise invalid or unenforceable in whole or in part, the
unlawfulness, invalidity, or unenforceability shall not affect any provision of
the Plan or part thereof, each of which shall remain in full force and effect.

                                       37
<PAGE>

         10.8 Determination and Withholding of Taxes. The Administrator shall
have full authority to satisfy the responsibility of Union Pacific or any
Affiliated Company to withhold taxes with respect to a Participant or former
Participant, including FICA taxes, by withholding such taxes from any
distributions under the Plan to the Participant or former Participant or his
beneficiary or estate. The Administrator shall also have full authority, with or
without the consent of the Participant of former Participant, to withhold from
the individual's compensation from any and all sources, any FICA or other taxes
applicable to benefits accrued under the Supplemental Plan.

                                       38
<PAGE>

                                 ARTICLE ELEVEN

                       TRANSFERS TO NON-COVERED EMPLOYMENT

         11.1 Notwithstanding any other provision of this Supplemental Plan to
the contrary, if a Participant is transferred to the employment of an Affiliated
Company that has not adopted the Supplemental Plan ("non-covered employment"),
upon the approval of the Chief Executive Officer of Union Pacific, any benefits
to which such Participant (or his Surviving Spouse or other beneficiary) would
be entitled under the Pension Plan, the Supplemental Plan, or both, by treating
such Participant's non-covered employment as if it were service covered by such
Plans and by aggregating such service with the Participant's other service
covered by the Plans shall be provided to the Participant under this Section
11.1 to the extent that such benefits exceed the aggregate of (a) the
Participant's benefits under the Pension Plan, (b) the Participant's benefits
under the Supplemental Plan determined without regard to this Section 11.1, and
(c) the Participant's benefits under any pension plan of the Affiliated Company
that are based on the Participant's non-covered employment and/or employment
otherwise covered by the Pension and Supplemental Plans.

                                       39
<PAGE>

                                 ARTICLE TWELVE

                                CLAIMS PROCEDURE

         12.1 Application for Benefits. Each Participant, former Participant,
Special 1990-1992 Window Participant, Surviving Spouse or other beneficiary, or
alternate payee under a domestic relations order believing himself or herself
eligible for a benefit under this Supplemental Plan shall apply for such benefit
by completing and filing with the Administrator an application for benefits on a
form supplied by the Administrator.

         12.2 Claims Before January 1, 2002. The following provisions are
effective prior to January 1, 2002: In the event that any claim for benefits is
denied in whole or in part, the person whose claim has been so denied shall be
notified of such denial in writing by the Administrator. The notice advising of
the denial shall specify the reason or reasons for denial, make specific
reference to pertinent provisions of the Supplemental Plan, describe any
additional material or information necessary for the claimant to perfect the
claim (explaining why such material or information is needed), and shall advise
the claimant of the procedure for the appeal of such denial. All appeals shall
be made by the following procedure:

                  (a) The person whose claim has been denied shall file with the
Administrator a notice of desire to appeal the denial. Such notice shall be
filed within 60 days of notification by the Administrator of claim denial, shall
be made in writing, and shall set forth all of the facts upon which the appeal
is based. Appeals not timely filed shall be barred.

                  (b) The Administrator shall consider the merits of the
claimant's written presentations, the merits of any facts or evidence in support
of the denial of benefits, and such other facts and circumstances as the
Administrator shall deem relevant.

                  (c) The Administrator shall ordinarily render a determination
upon the appealed claim within 60 days after receipt which determination shall
be accompanied by a written statement as to the reasons therefor. However, in
special circumstances the Administrator may extend the response period for up to
an additional 60 days, in which event it shall notify the claimant in writing
prior to commencement of the extension. The determination so rendered shall be
binding upon all parties.

         12.3 Claims On or After January 1, 2002. The following provisions are
effective on and after January 1, 2002:

                  (a) Claim for Benefits. A claim for Supplemental Plan benefits
may be filed by:

                           (i) any person (or his duly authorized
representative) who has applied for and/or received benefits from the
Supplemental Plan pursuant to Section 12.1 and who believes that the amount
and/or form of benefits provided (including no benefits) or any change in or
termination or reduction of benefits previously provided results in a denial of
benefits to which he is entitled for any reason (whether under the terms of the
Supplemental Plan or by reason of any provision of law); or

                                       40
<PAGE>

                           (ii) any Employee or other individual (or his duly
authorized representative) who believes himself to be entitled to benefits from
the Supplemental Plan.

A claim for benefits must be filed with the Administrator, in writing and in
accordance with such other requirements as may be prescribed by the
Administrator. Any claim shall be processed as follows:

                                    (A) When a claim for benefits has been filed
by the claimant (or his duly authorized representative), such claim for benefits
shall be evaluated and the claimant shall be notified by the Administrator of
the approval or denial within a reasonable period of time, but not later than 90
days after the receipt of such claim unless special circumstances require an
extension of time for processing the claim. If such an extension of time for
processing is required, written notice of the extension shall be furnished to
the claimant prior to the termination of the initial 90-day period and shall
specify the special circumstances requiring an extension and the date by which a
final decision will be reached (which date shall not be later than 180 days
after the date on which the claim was received).

                                    (B) A claimant shall be given written notice
in which the claimant shall be advised as to whether the claim is granted or
denied, in whole or in part. If a claim is denied, in whole or in part, the
claimant shall be given written notice which shall contain (I) the specific
reasons for the denial, (II) references to the specific Supplemental Plan
provisions upon which the denial is based, (III) a description of any additional
material or information necessary to perfect the claim and an explanation of why
such material or information is necessary, (IV) a statement that the claimant is
entitled to receive, upon request and free of charge, reasonable access to, and
copies of, all documents, records, and other information relevant to the claim,
(V) the claimant's rights to seek review of the denial and time limits and other
aspects of the Supplemental Plan's claim review procedures, and (VI) a statement
of the claimant's right to bring a civil action under ERISA section 502(a)
following an adverse determination upon review.

                  (b) Review of Claim Denial. If a claim for benefits is denied,
in whole or in part, the claimant (or his duly authorized representative) shall
have the right to request that the Administrator review the denial, provided
that the claimant files in accordance with such requirements as may be
prescribed by the Administrator a written request for review with the
Administrator within 60 days after the date on which the claimant received
written notification of the denial. A claimant (or his duly authorized
representative) may review relevant documents, records and other information
relevant to the claim (or receive copies free of charge) and may submit to the
Administrator with the written request for review documents, records, written
comments and other information relevant to the claim for benefits, which shall
be considered upon review whether or not such information and other items were
available when the claim was originally determined. Requests for review not
timely filed shall be barred. A timely request for claim review shall be
processed as follows:

                           (i) Within a reasonable period of time, but not later
than 60 days after a request for review is received, the review shall be made
and the claimant shall be advised in writing of the decision on review, unless
special circumstances require an extension of time for processing the review. If
an extension is needed, the claimant shall be given a written

                                       41
<PAGE>

notification within such initial 60-day period specifying the reasons for the
extension and when such review shall be completed (provided that such review
shall be completed within 120 days after the date on which the request for
review was filed). However, if the period for deciding the claim has been
extended under this paragraph (i) due to a claimant's failure to provide
information necessary to decide a claim, the period for making a decision on
review shall be tolled from the date the claimant is sent written notice of the
extension until the date on which the claimant responds to the request for
information (or such earlier date as may be prescribed by the Administrator in
accordance with applicable law and regulations).

                           (ii) The decision on review shall be forwarded to the
claimant in writing and shall include (A) specific reasons for the decision, (B)
references to the specific Plan provisions upon which the decision is based, (C)
a statement that the claimant is entitled to receive, upon request and free of
charge, reasonable access to, and copies of, all documents, records, and other
information relevant to the claim, and (D) a statement of the claimant's right
to bring an action under ERISA section 502(a). A decision on review shall be
final and binding on all persons for all purposes.

                  (c) Exhaustion of Claims Review Process. A claimant shall have
no right to seek review of a denial of benefits, or to bring any action in any
court to enforce a claim for benefits prior to his filing a claim for benefits
and exhausting his rights to review under this Section 12.3.

         12.4 Claims Related to Corrections Under Pension Plan Compliance
Statement. Notwithstanding any provision of the Supplemental Plan to the
contrary, any individual whose Supplemental Plan benefit is recalculated or
adjusted in connections with corrections made under the Compliance Statement
dated October 25, 2001 (that was issued for the Pension Plan under the Internal
Revenue Service Voluntary Compliance Resolution Program) and who believes that
such recalculation and/or adjustment results in a denial of benefits to which he
is entitled for any reason (whether under the terms of the Supplemental Plan or
by reason of any provision of law) may file a claim with the Administrator, in
writing, stating the reasons he disagrees with such recalculation and/or
adjustment and providing proof of any service, compensation or other facts that
he believes should be taken into account. In order to be considered by the
Supplemental Plan, such written claim and proof must be received by the
Administrator by the date specified in the written notice of such recalculation
and/or adjustment that is sent by the Administrator (or his delegate), by first
class mail, to the person's address reflected in Supplemental Plan records on
the date of the mailing. The deadline for filing a claim under this Section 12.4
that is specified in the written notice from the Administrator shall be a date
not earlier than 90 days after the date such notice is mailed to the person. Any
claim described in this Section 12.4 that is not received by the date specified
in the written notice of recalculation and/or adjustment shall be denied on the
grounds that it is untimely.

                                       42<PAGE>
                                                                   EXHIBIT 10(b)

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

                                      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, JANUARY 25, 2001 AND MAY 30, 2002)

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

<PAGE>

                   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

<PAGE>

(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.

                                       2
<PAGE>

         "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. In connection with the
administration of the Plan, the Committee may establish, verify the extent of
satisfaction

                                       3
<PAGE>

of, adjust, reduce, waive any performance goals or other conditions applicable
to the grant, issuance, exercisability, vesting and/or ability to retain any
Option or Award. Each Option and grant of Retention Shares or Stock Units shall,
if required by the Committee, be evidenced by an 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.

                                       4
<PAGE>

         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 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

                                       5
<PAGE>

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 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. Unless the Committee provides otherwise,
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:

            (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

                                       6
<PAGE>

                  result of disability or gross misconduct, but including a
                  termination described in subsection (iii) and (iv) 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) 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

                                       7
<PAGE>

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 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:

                                       8
<PAGE>

            (i)   Retirement. An incentive stock option shall expire, unless
                  exercised, three (3) months 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. 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:

                                       9
<PAGE>

         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 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.

                                       10
<PAGE>

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 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

                                       11
<PAGE>

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
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).

                                       12
<PAGE>

            (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 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

                                       13
<PAGE>

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 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
<PAGE>

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.

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.

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>

18.      EFFECTIVE DATE

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

                                       16

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