UNP Union Pacific Corp

DESCRIPTION OF THE EXCHANGE NOTES

Set forth below is a description of the specific terms of the Exchange Notes. This description does not purport to be complete and is subject to, and is qualified in its entirety by reference to, all the provisions of the Indenture (as defined below). The particular provisions of the Indenture referred to below are incorporated by reference in this prospectus. Capitalized terms used in this “Description of the Exchange Notes” that are not defined in this prospectus have the meanings given to them in the Indenture. When used in this section, the terms “Union Pacific”, “we”, “our” and “us” refer solely to Union Pacific Corporation and not to our consolidated subsidiaries. The terms of the Exchange Notes are identical in all material respects to the terms of the Original Notes for which they will be exchanged, except that the Exchange Notes will be issued in a transaction registered under the Securities Act and the transfer restrictions and registration rights relating to such Original Notes, including the right to additional interest in certain circumstances, will not apply to such Exchange Notes.

General

The Original Notes were and the Exchange Notes will be issued under an indenture (the “Indenture”) dated as of April 1, 1999 between Union Pacific and The Bank of New York Mellon Trust Company, N.A., as successor to The Bank of New York Mellon (formerly known as The Bank of New York), as successor to JPMorgan Chase Bank, N.A. (formerly known as The Chase Manhattan Bank), as trustee (the “Trustee”).

Any Original Notes that remain outstanding after completion of the Exchange Offer, together with the Exchange Notes issued in the Exchange Offer, will be treated as a single series of securities under the Indenture. Each of the Original Notes and the Exchange Notes are initially limited in aggregate principal amount to $1,044,261,000. The Exchange Notes will be issued in fully registered, global form only, in denominations of $1,000 and integral multiples of $1,000 in excess thereof. The Exchange Notes will mature on October 1, 2051. The Exchange Notes will be issued as a series of senior debt securities under the Indenture. The Indenture does not limit the amount of other debt that we may incur. We may, from time to time, without the consent of the holders of the Notes, issue other debt securities under the Indenture in addition to the Exchange Notes as may be authorized from time to time by our board of directors. We may also, from time to time, without the consent of the holders of the Notes, issue additional debt securities having the same ranking and the same interest rate, maturity and other terms as each of the Original Notes or the Exchange Notes. Any additional debt securities having those similar terms, together with the Original Notes or the Exchange Notes, as applicable, will constitute a single series of debt securities under the Indenture if such additional debt securities are fungible with the Notes for U.S. federal income tax purposes.

The Exchange Notes will bear interest at the rate of 3.799% per annum from the most recent interest payment date to which interest on the Original Notes has been paid or, if no interest has been paid on the Original Notes, from October 4, 2016. Accrued and unpaid interest will be payable semiannually on April 1 and October 1 of each year, beginning on April 1, 2017, to the persons in whose names the Exchange Notes are registered at the close of business on the immediately preceding March 15 and September 15, respectively, whether or not that day is a business day.

The Exchange Notes will be unsecured obligations of Union Pacific and will rank pari passu with all other unsecured and unsubordinated indebtedness of Union Pacific.

The Exchange Notes do not provide for any sinking fund.

Other than the limitation on liens and the change of control repurchase event described below, the Indenture and the Exchange Notes do not contain any provisions that may afford you protection in the event of a highly leveraged transaction or other transaction that may occur in connection with a change of control of Union Pacific or any subsidiary.

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Ranking of the Exchange Notes; Holding Company Structure

The Exchange Notes will be our direct, unsecured unsubordinated obligations and will rank on a parity in right of payment with all of our other unsecured and unsubordinated indebtedness. As a holding company, we have no material assets other than our ownership of the common stock of our subsidiaries. We will rely primarily upon distributions and other amounts received from our subsidiaries to meet the payment obligations under the Exchange Notes. Our subsidiaries are separate and distinct legal entities and have no obligation, contingent or otherwise, to pay amounts due under the Exchange Notes or otherwise to make any funds available to us. This includes the payment of dividends or other distributions or the extension of loans or advances. Further, the ability of our subsidiaries to make any payments to us would be dependent upon the terms of any credit facilities or other debt instruments of the subsidiaries and upon the subsidiaries’ earnings, which are subject to various business and other risks. In a bankruptcy or insolvency proceeding, claims of holders of the Exchange Notes would be satisfied solely from our equity interests in our subsidiaries remaining after the satisfaction of claims of creditors of the subsidiaries. Accordingly, the Exchange Notes will be effectively subordinated to existing and future liabilities of our subsidiaries to their respective creditors.

Limitation on Liens of Domestic Subsidiaries

The Indenture provides that we will not, nor will we permit any Subsidiary to, create, assume, incur or suffer to exist any Mortgage upon any stock or indebtedness, whether owned on the date of the Indenture or thereafter acquired, of any Domestic Subsidiary, to secure any debt of the Company or any other person (other than the debt securities under the Indenture), without in any such case making effective provision whereby all the outstanding debt securities shall be directly secured equally and ratably with such debt. This restriction does not include any Mortgage upon stock or indebtedness of a corporation existing at the time such corporation becomes a Domestic Subsidiary or at the time stock or indebtedness of a Domestic Subsidiary is acquired and any extension, renewal or replacement of any such Mortgage. (Section 1006)

With respect to the foregoing and pursuant to Section 101 of the Indenture:

“Debt” means indebtedness for money borrowed.

“Domestic Subsidiary” means a Subsidiary incorporated or conducting its principal operations within the United States or any State thereof.

“Mortgage” means any mortgage, pledge, lien, encumbrance, charge or security interest of any kind.

“Subsidiary”, when used with respect to us, means any corporation of which a majority of the outstanding voting stock is owned, directly or indirectly, by us or by one or more of our other subsidiaries, or both.

Optional Redemption

At any time prior to April 1, 2051, the Exchange Notes will be redeemable in whole or in part, at our option, at a redemption price equal to the greater of (i) 100% of the principal amount of the Exchange Notes to be redeemed and (ii) the sum of the present values of the remaining scheduled payments of principal and interest on the Exchange Notes to be redeemed (exclusive of interest accrued to the date of redemption) discounted to the date of redemption on a semiannual basis (assuming a 360-day year consisting of twelve 30-day months) at the then current applicable Treasury Rate, plus 25 basis points, plus accrued and unpaid interest on the principal amount being redeemed to the date of redemption.

At any time on or after April 1, 2051, the Exchange Notes will be redeemable in whole or in part, at our option, at a redemption price equal to 100% of the principal amount of the Exchange Notes to be redeemed, plus accrued and unpaid interest on the principal amount being redeemed to the date of redemption.

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“Treasury Rate” means, with respect to the Exchange Notes, on any redemption date, (i) the yield, under the heading which represents the average for the immediately preceding week, appearing in the most recently published statistical release designated “H.15(519)” or any successor publication which is published weekly by the Board of Governors of the Federal Reserve System and which establishes yields on actively traded United States Treasury securities adjusted to constant maturity under the caption “Treasury Constant Maturities”, for the maturity corresponding to the related Comparable Treasury Issue (if no maturity is within three months before or after the Remaining Life, yields for the two published maturities most closely corresponding to that Comparable Treasury Issue shall be determined and the Treasury Rate shall be interpolated or extrapolated from such yields on a straight line basis, rounding to the nearest month) or (ii) if such release (or any successor release) is not published during the week preceding the calculation date or does not contain such yields, the rate per annum equal to the semiannual equivalent yield to maturity of the related Comparable Treasury Issue, calculated using a price for that Comparable Treasury Issue (expressed as a percentage of its principal amount) equal to the applicable Comparable Treasury Price for such redemption date. The Treasury Rate shall be calculated on the third Business Day preceding the redemption date.

“Business Day” means any calendar day that is not a Saturday, Sunday or legal holiday in New York, New York and on which banking institutions and trust companies are open for business in New York, New York.

“Comparable Treasury Issue” means the United States Treasury security selected in accordance with customary financial practice by an Independent Investment Banker as having a maturity comparable to the remaining term (“Remaining Life”) of the Exchange Notes to be redeemed.

“Comparable Treasury Price” means, with respect to any redemption date, the average of the Reference Treasury Dealer Quotations for such redemption date.

“Independent Investment Banker” means Credit Suisse Securities (USA) LLC, Barclays Capital Inc. or Citigroup Global Markets Inc. and their respective successors as appointed by us, or, if such firms are unwilling or unable to select the Comparable Treasury Issue, an independent investment banking institution of national standing appointed by us.

“Reference Treasury Dealer” means (i) Credit Suisse Securities (USA) LLC, Barclays Capital Inc. and Citigroup Global Markets Inc. and their respective successors, provided, however, that if any of the foregoing is not at the time a primary U.S. Government securities dealer in New York City (a “Primary Treasury Dealer”), we will substitute therefore another Primary Treasury Dealer and (ii) any other Primary Treasury Dealer selected by the Independent Investment Banker after consultation with us.

“Reference Treasury Dealer Quotations” means, with respect to each Reference Treasury Dealer and any redemption date, the average, as determined by the Independent Investment Banker, of the bid and asked prices for the related Comparable Treasury Issue (expressed in each case as a percentage of its principal amount) quoted in writing to the Independent Investment Banker at 5:00 p.m., New York City time, on the third Business Day preceding such redemption date.

Notice of the redemption will be mailed to holders of the Exchange Notes to be redeemed by first-class mail at least 30 and not more than 60 days prior to the date fixed for redemption. If fewer than all of the Exchange Notes are to be redeemed, the Trustee will select, not more than 60 days prior to the redemption date, the particular Exchange Notes or portions thereof for redemption from the outstanding Exchange Notes not previously called by such method as the Trustee deems fair and appropriate; provided that, in the case of Exchange Notes held as a global Exchange Note such Exchange Notes to be redeemed shall be selected in accordance with the applicable policies and procedures of DTC.

Change of Control Repurchase Event

If a change of control repurchase event occurs with respect to the Exchange Notes, unless we have exercised our right to redeem the Exchange Notes as described above, we will be required to make an offer to each holder

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of the Exchange Notes to repurchase all or any part (in integral multiples of $1,000) of that holder’s Exchange Notes at a repurchase price in cash equal to 101% of the aggregate principal amount of such Exchange Notes repurchased plus any accrued and unpaid interest on the Exchange Notes repurchased to, but not including, the date of repurchase. Within 30 days following a change of control repurchase event with respect to the Exchange Notes or, at our option, prior to a change of control, but after the public announcement of the change of control, we will mail a notice to each holder of the Exchange Notes, with a copy to the Trustee, describing the transaction or transactions that constitute or may constitute the change of control repurchase event and offering to repurchase Exchange Notes on the payment date specified in the notice, which date will be no earlier than 30 days and no later than 60 days from the date such notice is mailed. The notice shall, if mailed prior to the date of consummation of the change of control, state that the offer to purchase is conditioned on a change of control repurchase event occurring as to the Exchange Notes on or prior to the payment date specified in the notice. We will comply with the requirements of Rule 14e-1 under the Exchange Act, and any other securities laws and regulations thereunder to the extent those laws and regulations are applicable in connection with the repurchase of the Exchange Notes as a result of a change of control repurchase event. To the extent that the provisions of any securities laws or regulations conflict with the change of control repurchase event provisions of the Exchange Notes, we will comply with the applicable securities laws and regulations and will not be deemed to have breached our obligations under the change of control repurchase event provisions of the Exchange Notes by virtue of such conflict.

On the repurchase date following a change of control repurchase event with respect to the Exchange Notes, we will, to the extent lawful:

(1) accept for payment all Exchange Notes or portions of Exchange Notes properly tendered pursuant to our offer;

(2) deposit with the Trustee an amount equal to the aggregate purchase price in respect of all Exchange Notes or portions of Exchange Notes properly tendered; and

(3) deliver or cause to be delivered to the Trustee the Exchange Notes properly accepted, together with an officers’ certificate stating the aggregate principal amount of Exchange Notes being purchased by us and that all conditions precedent provided for in the Indenture to the repurchase offer and to the repurchase by us of Exchange Notes pursuant to the repurchase offer have been complied with.

The Trustee will promptly mail to each holder of Exchange Notes properly tendered the purchase price for the Exchange Notes, and the Trustee will promptly authenticate and mail (or cause to be transferred by book-entry) to each holder a note equal in principal amount to any unpurchased portion of any Exchange Notes surrendered; provided that each such note will be in a principal amount of an integral multiple of $1,000.

We will not be required to make an offer to repurchase the Exchange Notes upon a change of control repurchase event if a third party makes such an offer in the manner, at the times and otherwise in compliance with the requirements for an offer made by us and such third party purchases all Exchange Notes properly tendered and not withdrawn under its offer.

For purposes of the foregoing discussion of a repurchase at the option of holders, the following definitions are applicable:

“below investment grade ratings event” means, with respect to the Exchange Notes, on any day within the 60-day period (which period shall be extended so long as the rating of the Exchange Notes is under publicly announced consideration for a possible downgrade by any of the rating agencies) after the earlier of (1) the occurrence of a change of control; or (2) public notice of the occurrence of a change of control or the intention by Union Pacific to effect a change of control, the Exchange Notes are rated below investment grade by each of the rating agencies. Notwithstanding the foregoing, a below investment grade ratings event otherwise arising by

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virtue of a particular reduction in rating shall not be deemed to have occurred in respect of a particular change of control (and thus shall not be deemed a below investment grade ratings event for purposes of the definition of change of control repurchase event hereunder) if the rating agencies making the reduction in rating to which this definition would otherwise apply do not announce or publicly confirm or inform the Trustee in writing at our request that the reduction was the result, in whole or in part, of any event or circumstance comprised of or arising as a result of, or in respect of, the applicable change of control (whether or not the applicable change of control shall have occurred at the time of the ratings event).

“change of control” means the consummation of any transaction (including, without limitation, any merger or consolidation) the result of which is that any “person” or “group” (as those terms are used in Section 13(d)(3) of the Exchange Act), other than Union Pacific or our subsidiaries, becomes the beneficial owner (as defined in Rules 13d-3 and 13d-5 under the Exchange Act), directly or indirectly, of more than 50% of the combined voting power of our voting stock or other voting stock into which our voting stock is reclassified, consolidated, exchanged or changed measured by voting power rather than number of shares.

“change of control repurchase event” means the occurrence of both a change of control and a below investment grade ratings event with respect to the Exchange Notes.

“investment grade” means a rating of Baa3 or better by Moody’s (or its equivalent under any successor rating categories of Moody’s); a rating of BBB- or better by S&P (or its equivalent under any successor rating categories of S&P); and the equivalent investment grade credit rating from any additional rating agency or rating agencies selected by us.

“Moody’s” means Moody’s Investors Service, Inc.

“rating agency” means (1) each of Moody’s and S&P; and (2) if either of Moody’s or S&P ceases to rate the Exchange Notes or fails to make a rating of the Exchange Notes publicly available for reasons outside of our control, a “nationally recognized statistical rating organization” within the meaning of Rule 15c3-1(c)(2)(vi)(F) under the Exchange Act, selected by us (as certified by a resolution of our board of directors) as a replacement agency for Moody’s or S&P, or both of them, as the case may be.

“S&P” means S&P Global Ratings, a division of S&P Global, Inc.

“voting stock” of any specified “person” (as that term is used in Section 13(d)(3) of the Exchange Act) as of any date means the capital stock of such person that is at the time entitled to vote generally in the election of the board of directors of such person.

The change of control repurchase event feature of the Exchange Notes may in certain circumstances make more difficult or discourage a sale or takeover of Union Pacific and, thus, the removal of incumbent management. We could, in the future, enter into certain transactions, including asset sales, acquisitions, refinancings or other recapitalizations, that would not constitute a change of control repurchase event under the Exchange Notes, but that could increase the amount of indebtedness outstanding at such time or otherwise affect our capital structure or credit ratings on the Exchange Notes.

We may not have sufficient funds to repurchase all of the Exchange Notes upon a change of control repurchase event.

Consolidation, Merger, Sale or Conveyance

The Indenture provides that we may not consolidate with or merge into any other corporation or convey or transfer our properties and assets substantially as an entirety to any person, unless:

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In case of any such consolidation, merger, conveyance or transfer, such successor corporation will succeed to and be substituted for us as obligor on the debt securities, with the same effect as if it had been named in the Indenture as us. (Section 802)

Events of Default

The following events are defined in the Indenture as “Events of Default” with respect to the Exchange Notes:

1. default for 30 days in payment of any interest on the Exchange Notes;

2. default in payment of principal of or any premium on the Exchange Notes at maturity;

3. default in payment of any sinking or purchase fund or analogous obligation, if any, of the Exchange Notes;

4. a default by us in the performance of any other covenant or warranty contained in the Indenture for the benefit of the Exchange Notes which shall not have been remedied for a period of 90 days after we receive notice as specified in the Indenture; and

5. certain events of our bankruptcy, insolvency and reorganization. (Section 501)

A default under other indebtedness of the Company will not be a default under the Indenture and a default under one series of debt securities will not necessarily be a default under another series.

The Indenture provides that if an Event of Default described in clause (1), (2), (3) or (4) above (if the Event of Default under clause (4) is with respect to less than all series of debt securities then outstanding under the Indenture) shall have occurred and is continuing with respect to the Exchange Notes, either the Trustee or the holders of not less than 25% in aggregate principal amount of the Exchange Notes then outstanding may declare the principal amount of all outstanding Exchange Notes and the interest accrued thereon, if any, to be due and payable immediately. The Indenture provides that if an Event of Default described in clause (4) or (5) above (if the Event of Default under clause (4) is with respect to all series of debt securities then outstanding under the Indenture) shall have occurred and be continuing, either the Trustee or the holders of at least 25% in aggregate principal amount of all debt securities then outstanding under the Indenture, treated as one class, may declare the principal amount, or, if any series are original issue discount securities, such portion of the principal amount as specified in such series, of all debt securities then outstanding and the interest accrued thereon, if any, to be due and payable immediately. Upon certain conditions, such declarations may be annulled and past defaults may be waived by the holders of at least a majority in aggregate principal amount of the debt securities of such series then outstanding on behalf of the holders of all debt securities. However, defaults in the payment of principal of, any premium on, or any interest on such debt may not be waived. (Sections 502 and 513)

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Under the Indenture, the Trustee must give notice to the holders of the Exchange Notes of all uncured defaults known to it with respect to the Exchange Notes within 90 days after such a default occurs (the term default to include the events specified above without notice or grace periods). However, except in the case of default in the payment of principal of, any premium on, or any interest on any of the Exchange Notes, or default in the payment of any sinking or purchase fund installment or analogous obligations, the Trustee shall be protected in withholding such notice if it in good faith determines that the withholding of such notice is in the interests of the holders of the Exchange Notes. (Section 602)

A holder of the Exchange Notes may not institute any action under the Indenture unless:

The holders of a majority in aggregate principal amount of the Exchange Notes then outstanding will have the right, subject to certain limitations, to direct the time, method and place of conducting any proceeding for any remedy available to the Trustee or exercising any trust or power conferred on the Trustee with respect to the Exchange Notes. (Section 512) The Indenture provides that, in case an Event of Default shall occur and be continuing, the Trustee, in exercising its rights and powers under the Indenture, will be required to use the degree of care of a prudent man in the conduct of his own affairs. (Section 601) The Indenture further provides that the Trustee shall not be required to expend or risk its own funds or otherwise incur any financial liability in the performance of any of its duties under the Indenture unless it has reasonable grounds for believing that repayment of such funds or adequate indemnity against such risk or liability is reasonably assured to it. (Section 601)

Modification of the Indenture

We and the Trustee may, without the consent of the holders of the Exchange Notes, enter into one or more supplemental indentures for, among others, one or more of the following purposes, provided that in the case of clauses (2), (3), (4) and (6), the interests of the holders of the Exchange Notes would not be adversely affected:

1. to evidence the succession of another corporation to us, and the assumption by such successor of our obligations under the Indenture and the Exchange Notes;

2. to add covenants by us, or surrender any of our rights conferred by the Indenture, for the benefit of the holders of the Exchange Notes;

3. to cure any ambiguity, omission, defect or inconsistency in or make any other provision with respect to questions arising under the Indenture;

4. to establish the form or terms of any series of debt securities, including any subordinated securities;

5. to evidence and provide for the acceptance of any successor trustee with respect to the Exchange Notes or to facilitate the administration of the trusts thereunder by one or more trustees in accordance with the Indenture; and

6. to provide any additional Events of Default. (Section 901)

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The Indenture or the rights of the holders of the Exchange Notes may be modified by us and the Trustee with the consent of the holders of a majority in aggregate principal amount of the Exchange Notes then outstanding, but no such modification may be made without the consent of the holder of each outstanding Exchange Note affected thereby which would:

Sinking Fund

There is no provision for a sinking fund for the Exchange Notes.

Defeasance

Under certain circumstances, we will be deemed to have discharged the entire indebtedness on all of the outstanding Exchange Notes by defeasance. The provisions of Section 403 of the Indenture relating to defeasance and discharge of indebtedness will apply to the Exchange Notes.

We will be deemed to have paid and discharged the entire indebtedness on all the outstanding Exchange Notes by, in addition to meeting certain other conditions, depositing with the Trustee either:

(1) as trust funds in trust an amount sufficient to pay and discharge the entire indebtedness on all the Exchange Notes for principal, premium, if any, and interest; or

(2) as obligations in trust such amount of direct obligations of, or obligations the principal of and interest on which are fully guaranteed by, the U.S. government as will, together with the income to accrue thereon without consideration of any reinvestment thereof, be sufficient to pay and discharge the entire indebtedness on all Exchange Notes for principal, premium, if any, and interest, and satisfying certain other conditions precedent specified in the Indenture. (Section 403)

In the event of any such defeasance, holders of the Exchange Notes would be able to look only to such trust fund for payment of principal of, any premium on, and any interest on their debt securities.

A defeasance is likely to be treated as a taxable exchange by holders of the Exchange Notes for an issue consisting of either obligations of the trust or a direct interest in the cash and securities held in the trust, with the result that such holders would be required for tax purposes to recognize gain or loss as if such obligations or the cash or securities deposited, as the case may be, had actually been received by them in exchange for their Exchange Notes. In addition, if the holders are treated as the owners of their proportionate share of the cash or

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securities held in trust, such holders would then be required to include in their income for tax purposes any income, gain or loss attributable thereto even though no cash was actually received. Thus, such holders might be required to recognize income for tax purposes in different amounts and at different times than would be recognized in the absence of defeasance. You are urged to consult your own tax advisor as to the specific consequences of defeasance.

Governing Law

The Indenture and the Exchange Notes will be governed by, and construed in accordance with, the laws of the State of New York.

Concerning the Trustee

The Bank of New York Mellon Trust Company, N.A., as successor to The Bank of New York Mellon (formerly known as The Bank of New York), as successor to JPMorgan Chase Bank, N.A. (formerly known as The Chase Manhattan Bank), acts as Trustee under the Indenture. The Bank of New York Mellon Trust Company, N.A. conducts normal banking relationships with us and certain of our subsidiaries and, in addition, is a participant in various financial agreements of the Company. The Bank of New York Mellon Trust Company, N.A. acts as trustee under certain equipment trust agreements of Union Pacific Railroad Company and trustee under various indentures in respect of certain of our securities and of securities of our subsidiaries.

The Trust Indenture Act of 1939 contains limitations on the rights of the Trustee, should it become a creditor of Union Pacific, to obtain payment of claims in certain cases or to realize on certain property received by it in respect of those claims, as security or otherwise. The Trustee is permitted to engage in other transactions with Union Pacific and our subsidiaries from time to time, provided that if the Trustee acquires any conflicting interest it must eliminate the conflict upon the occurrence of an Event of Default under the Indenture, or else resign.

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