Real Estate Contracts Group Renay J. Robison Director – Real Estate May 28, 2014

Lincoln Signs Pacific Railroad Act in 1862 Our founder was none other than Abraham Lincoln. Imagine the moment, the county divided North against South. Lincoln signs the Pacific Railway Act of 1862, on July 1, establishing the original Union Pacific. The act granted government land and a loan financed with government bonds for a new corporation that was called the Union Pacific Railroad Company. Ground was broken in Omaha, Nebraska, in 1863, but actual construction was delayed for 18 months. The delay was caused by a familiar foe: there simply wasn’t enough money, material or manpower.

Union Pacific 2013 Fast Facts Revenue $22.0 B Seattle Eastport Portland Duluth 2013 Fast Facts Revenue $22.0 B Route Miles 31,800 in 23 States through 7,000 Communities Employees 45,400 Annual Payroll $4.3 B Customers 10,000 Locomotives 8,300 Twin Cities Chicago This is a snapshot of Union Pacific today. We operate in 23 states, mainly west of the Mississippi River and serve, or run through more than 7,000 communities. As the saying goes, we are a 32,000-mile factory without a roof. This means blizzards, floods, tornadoes and hurricanes are part of our life at the railroad. Our employees are out there in the bitter cold of the Sierra Nevada and the brutal heat of the Mojave Desert. It’s certainly not your average desk job. That’s one of the reasons why we are extremely proud of our 46,000 employees. Omaha SLC Oakland Denver KC St. Louis LA Memphis Calexico Dallas New Orleans Nogales El Paso Houston Eagle Pass Laredo Brownsville

Union Pacific in Texas 2013 Fast Facts Miles of Track 6,314 Annual Payroll $726 M In-State Purchases $2.45 B Capital Spending $589 M Employees 8,196 U.S. Jobs Supported* 36,882 Community Giving $1.5 M *Each American freight rail job supports 4.5 jobs elsewhere in the U.S. economy. (Association of American Railroads)

Strengthening the Franchise We make capital investments to enhance safety, improve customer service, increase productivity and add capacity to handle our customers’ growth. Keeping what amounts to a privately owned steel highway in top condition is an expensive proposition. After oil and gas companies, railroads top the charts as the most capital-intensive businesses today. For 2014, our capital plan totals a record $3.9 billion. Almost half of that is replacement spending to harden the infrastructure, making the network more safe and resilient. To accomplish that, on average, we replace more than 2 miles of track and install 10,000 ties a day. On top of that to enhance service, growth and productivity, we’ll spend upwards of $1.5 billion on capacity, commercial facilities, 200 new locomotives and equipment. We plan also to spend about $450 million this year to comply with the government mandate to install Positive Train Control, which is likely to cost $2 billion before its all done. * Includes cash capital, leases and other non-cash capital.

Supporting Our Communities Union Pacific has deep ties to the communities we serve. It is where we live, where our children go to school and where new employees are recruited. It is important to our company that these communities thrive. All towns and cities have different struggles. We understand this, and through our programs, we try to address the unique needs of the region. In 2013, the Union Pacific supported 2,271 nonprofit organizations. In 2013, Union Pacific donated nearly $14.3 million to community efforts. (Note: 2013 State Community Giving Amounts available on respective state pages of the U.S. Guide on the UP public site - http://www.uprr.com/aboutup/usguide/index.shtml) 2013 Supported 2,271 Nonprofits Donated ~$14.3 M Union Pacific Foundation

UNION PACIFIC RAILROAD Real Estate Department 15 Full Time Employees 2 Part Time Employees Public Projects (Road X) Utility Licenses Rights of Entry Mineral/Water Rights - Signboards Property Management / Leases Industry Track Agreements Property Sales Acquisitions Facilities Group CONTRACTS GROUP There are approximately 90 employees working in UP Real Estate Department. 17 of which work in the Contracts Group.

Safety - Top Priority at Union Pacific There are additional benefits railroads bring to the communities beyond the goods we haul. Not only is rail the safest mode of transportation, it is one of the safest industries. At Union Pacific we have a diligent focus on three key areas -- employee, customer and public safety. We have reduced employee reportable injuries by 46 percent over the last 10 years. Although we are proud of this improvement, we will not be satisfied until we are at zero accidents. To achieve the 23 percent reduction in reportable derailments of customer goods, UP employs state-of-the art technology. In the area of public safety, we’ve experienced a 15 percent reduction in crossing accidents. Employee Customer Public Reportable Injuries Per 200,000 Work Hours Reportable Derailments Per Million Train Miles Grade Crossing Accidents Per Million Train Miles 4.22 2.61 1.93 23% 15% 2.22 3.24 46% 1.05 2003 2013 2003 2013 2003 2013

CONTRACTS GROUP ROLE PRESERVE UPRR ROW FOR RAIL TRANSPORTATION PRIORITY IS SAFETY FOR COMMUNITY, UTILITY’S AND UP’S EMPLOYEES PRESERVE UPRR ROW FOR RAIL TRANSPORTATION SAFETY, SAFETY, SAFETY The #1 priority for each and every contract is to ensure safety for the community and Union Pacific employees as well as preserve the right of way for rail transportation.

UNION PACIFIC RAILROAD Over 1,100,000 Real Estate agreement records in storage… Deeds, leases, licenses, easements, rights of entry If you can’t find your record, we probably can, but finding a 80 year old agreement can be a laborious task. Historical records are off site, although over 300,000 are stored electronically. More are being scanned in every year. Most of those are geolocated. Retrieving the original records or those that have not been scanned is very costly. Several records systems must be searched, predecessor audit numbers matched to UP numbers, valuation maps reviewed to determine where it is stored. Then personnel must physically locate the agreement from offsite storage, and deliver the documents to Real Estate.

UTILITY GROUP STATISTICS 2013 NEW APPLICATIONS 3,000 We are adding thousands of records a year. The Contract Group alone adds 3,000 documents a year. AGREEMENTS PROCESSED New Contracts 2,900 Supplements 400 TOTAL 3,300

PUBLIC PROJECTS GROUP http://www.uprr.com/reus/roadxing/index.shtml All road crossing applications, whether from a public entity or a private citizen or business, begins with the Manager of Public and Industry Projects. Until their review, the application does not come to Real Estate. http://www.uprr.com/reus/roadxing/index.shtml

PUBLIC PROJECTS GROUP http://www.uprr.com/reus/roadxing/cross_tex.shtml

Public And Private Road Crossings Public Roads Overpass Underpass At-grade Private Roads Commercial Residential Farm CONSIDERATIONS FOR APPROVAL - New or existing crossing - Types of vehicles - Number of daily crossings - Proximity to other crossings - Surrounding Land Uses - Location - Site lines for train and for users - Availability of alternative access

APPLICANT IS RESPONSIBLE FOR ALL COSTS Engineering design and review Construction and installation of new crossing including work performed by Union Pacific Relocation of utilities Any current and future warning devices (passive or active) Insurance as required by UPRR All liability for accidents or injuries arising from construction, maintenance or use of the crossing Ongoing maintenance

Special Projects Contracts must be in place for special projects such as flood gates and levies.

UTILITIES MANAGEMENT GROUP CROSSINGS ENCROACHMENTS RIGHTS OF ENTRY -Nonintrusive Survey -Environmental -Utility Service for UP -Archeology -Contractor -Movies, others

UTILITIES MANAGEMENT GROUP http://www.uprr.com/reus/index.shtml

UTILITY CROSSINGS

UTILITIES MANAGEMENT GROUP Online application process saves 7-10 days over mail or email submission methods New online application process (to be rolled out 2015) will be even more efficient. Step by step instructions to assist in generating application and compliant exhibit documents. Application fees and license fees can be paid online.

APPLICATION REVIEW PROCESS PRIOR TO EXECUTION OF AGREEMENT UTILITY CROSSINGS APPLICATION REVIEW PROCESS PRIOR TO EXECUTION OF AGREEMENT WHY FOLLOW GUIDELINES? PROTECTION OF UTILITY AND RAILROAD PERSONNEL AND PUBLIC IS CRUCIAL! Online submission Geolocation and determination of UPRR property rights. Review for compliance with engineering and safety standards Property valuation Preparation and transmission of standard agreement Return of executed agreement to Railroad with applicable fees. Prior to entering into an agreement, the following steps must be taken. Again, safety and right of way preservation are the key factors in all decisions.

APPLICATION REVIEW PROCESS UTILITY CROSSINGS APPLICATION REVIEW PROCESS PRIOR TO INSTALLATION Confirmation of compliance with required insurance coverage limits. Purchase of Railroad Protective Liability Insurance policy. Contact UPRR Fiber Hotline Contact local One-Call line to locate buried utilities. Notification of Managers of Track Maintenance and Signal Maintenance. Arrange for Flagging

INSTALLATION REQUIREMENTS TERMINATION REQURIMENTS UTILITY CROSSINGS INSTALLATION REQUIREMENTS Pipeline Follow AREMA Standards Wireline Follow NESC +3 feet The American Railway Engineering and Maintenance of Way Association (AREMA) provide construction guidelines for railways including proper pipeline installations. The National Electrical Safety Code + 3 feet for overhead powerlines. Why the extra 3 feet? To ensure 3-tier railcars, cranes and other equipment using the right of way can safely pass under wires. TERMINATION REQURIMENTS Notification Engineering Approval Removal and Certification Abandonment in Place under track

UTILITY GROUP SPECIAL AGREEMENT TYPES Modification Supplements Maintenance Consent Contractor’s Right of Entry Emergency RMCC:1-888-877-7267 Assignments Non Intrusive Civil Surveys

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