Document:

dex105.htm

    
      

      

    

    
 

    Exhibit 10.5

    BURLINGTON
NORTHERN SANTA FE CORPORATION

     

    SENIOR
MANAGEMENT STOCK DEFERRAL PLAN

     

    As
Amended Effective January 1, 2008, January 1, 2005 and November 19,
2001

    Originally
Effective January 1, 1997

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    BURLINGTON
NORTHERN SANTA FE CORPORATION

     

    SENIOR
MANAGEMENT STOCK DEFERRAL PLAN

     

    Table of
Contents

                                                                                                                                                                                                                                                            
Page

     

     

    
      	
              1.

            	
              Purpose 

            	
              1

            

    

     

    
      	
              2.

            	
              Eligible
      Employees 

            	
              1

            

    

     

    
      	
              3.

            	
              Deferral
      Election 

            	
              1

            

    

     

    
      	
              4.

            	
              Special
      Rules for Exercise of Options 

            	
              2

            

    

     

    
      	
              5.

            	
              Withholding 

            	
              3

            

    

     

    
      	
              6.

            	
              Deferred
      Accounts 

            	
              3

            

    

     

    
      	
              7.

            	
              Dividends 

            	
              3

            

    

     

    
      	
              8.

            	
              Vesting
      in Share Units 

            	
              3

            

    

     

    
      	
              9.

            	
              Distribution
      of Account 

            	
              4

            

    

     

    
      	
              10.

            	
              Distribution
      Elections 

            	
              4

            

    

     

    
      	
              11.

            	
              Permissible
      Distribution Events 

            	
              4

            

    

     

    
      	
              12.

            	
              Specified
      Dates 

            	
              4 

            

    

     

    
      	
              13.

            	
              Distributions
      after Termination. 

            	
              4

            

    

     

    
      	
              14.

            	
              Changes
      to Distribution Elections 

            	
              6

            

    

     

    
      	
              15.

            	
              Hardship
      Withdrawals 

            	
              6

            

    

     

    
      	
              16.

            	
              Change
      in Control Distributions 

            	
              6

            

    

     

    
      	
              17.

            	
              Designation
      of Beneficiary 

            	
              6

            

    

     

    
      	
              18.

            	
              Statement
      of Deferred Accounts 

            	
              6

            

    

     

    
      	
              19.

            	
              Election
      Forms 

            	
              6

            

    

     

    
      	
              20.

            	
              Restrictions
      on Share Units 

            	
              6

            

    

     

    
      	
              21.

            	
              Rights
      to Shares 

            	
              7

            

    

     

    
      	
              22.

            	
              Plan
      Not Contract of Employment 

            	
              7

            

    

     

    
      	
              23.

            	
              Successors
      and Assigns 

            	
              7

            

    

     

    
      	
              24.

            	
              Administration 

            	
              7

            

    

     

    
      	
              25.

            	
              Amendment 

            	
              7

            

    

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

     

    Burlington
Northern Santa Fe Corporation

     

     

    Senior Management Stock
Deferral Plan

     

    The following sets forth the rules that
apply to the Burlington Northern Santa Fe Corporation Senior Management Stock
Deferral Plan (the “Plan”):

     

    1. Purpose.  The
purpose of the Plan is to permit eligible employees of Burlington Northern Santa
Fe Corporation and its principal subsidiary, The Burlington Northern and Santa
Fe Railway Company (collectively, the “Company”) to defer delivery of common
stock (“Stock”) of Burlington Northern Santa Fe Corporation otherwise
distributable to Eligible Employees (as defined below), and thereby to allow the
employees to defer a portion of their Stock income on a pre-tax
basis.  The “Effective Date” of the Plan is January 1,
1997.  The “Plan Year” is the calendar year.

     

    2. Eligible
Employees.  Participation in the Plan shall be limited to
“Eligible Employees.”  The determination of the persons selected as
“Eligible Employees” shall be made by the Committee (as described below), and
shall be limited to a select group of management or highly compensated
employees.  Beginning as of the Effective Date (as described below),
and until revised by the Committee, the “Eligible Employees” shall consist of
each of those Senior Management employees of the Company who: (i) is at salary
band 34 or higher; and (ii) has a total base salary plus target bonus of at
least $100,000.  An Eligible Employee who defers the delivery of Stock
in accordance with the Plan shall thereby become a “Participant” in the
Plan.

     

    3. Deferral
Election.  An employee may elect to defer the delivery of Stock
otherwise distributable to him or her under the Burlington Northern Santa Fe
1996 Stock Incentive Plan and any other stock-based compensation plan of the
Company, as well as any other predecessor plans and successor plans (the “Stock
Plans”) pursuant to (a) stock options (“Options”); and (b) restricted stock,
including matching stock with respect to such restricted stock (collectively,
“Restricted Stock”).  Such deferral shall be made by filing a
“Deferral Election” with the Company in accordance with the Plan, subject to the
following:

     

    
      	
              (a)  

            	
              A
      Deferral Election shall be effective only if the employee satisfies the
      requirements for an Eligible Employee at the time the Stock would have
      been delivered in the absence of the Deferral
  Election.

            

    

     

    
      	
              (b)  

            	
              A
      Participant’s Deferral Election with respect to Restricted Stock or
      Options shall identify the shares to be covered by the election, and may
      apply to all or any portion of the shares of such stock, provided that if
      the Participant elects deferral of an award of Restricted Stock or Options
      worth $20,000 or less, the entire stock award shall be subject to the
      Deferral Election.  The election with respect to Restricted
      Stock must be made prior to the date of grant of the Restricted Stock (or
      such earlier date established by the Committee), and will be
      irrevocable.

            

    

     

    
      	
              (c)  

            	
              A
      Participant’s Deferral Election with respect to Options shall identify the
      Options that are covered by the election, and may apply to any
      non-qualified stock option that is outstanding on the date the Deferral
      Election is made; provided that any Deferral Election shall apply to all
      (but not less than all) of the shares subject to any outstanding
      non-qualified stock options granted to the Participant on any grant
      date.  The same deferral period shall apply to all Options
      granted to a Participant on a single grant date, but, subject to the Plan,
      the Participant may elect different deferral periods for Options granted
      on different grant dates.  A Deferral Election may be made with
      respect to the delivery of Option stock by an Eligible Employee at any
      time the employee holds Options, except that no election may be made after
      the Participant's Termination of Employment.  The Deferral
      Election with respect to any Option will be
  irrevocable.

            

    

     

    
      	
              (d)  

            	
              The
      Deferral Election with respect to any shares of Stock shall specify the
      method of distribution of those shares at the end of the deferral period,
      as elected by the Participant and subject to the terms of the
      Plan.

            

    

     

    
      	
              (e)  

            	
              A
      Deferral Election will be deemed to be filed with the Company on the date
      it is received by the Director of
Compensation.

            

    

     

    
      	
              (f)  

            	
              Notwithstanding
      any other provisions of the Plan, no deferrals may be made into the Plan
      after December 31, 2004, and no Deferral Election may be made after
      December 31, 2004.

            

    

     

    4. Special Rules for Exercise
of Options.  The exercise of an Option subject to a Deferral
Election shall be subject to the following:

     

    
      	
              (a)  

            	
              The
      Deferral Election for any Option shall be effective for Option exercises
      occurring on or after the six-month anniversary of the date of such
      election.  The Deferral Election shall remain in effect for the
      period specified in such election but shall not be less than one
      year.  The Deferral Election shall expire upon the earlier of
      the date set forth in such election or the Option expiration
      date.

            

    

     

    
      	
              (b)  

            	
              After
      the Deferral Election is filed for any Option but before it becomes
      effective, the Option shall not be exercisable; provided, however, that
      the Deferral Election shall be cancelled, and the Option shall become
      exercisable (to the extent that it would have otherwise have been
      exercisable in the absence of the Deferral Election) upon the occurrence,
      prior to the date the election has become effective, of either a Change in
      Control or the Participant's Termination of
  Employment.

            

    

     

    
      	
              (c)  

            	
              Subject
      to the Plan, Options providing for deferred delivery of Option stock may
      be exercised by delivery to the Secretary of the Company of a notice of
      exercise specifying the number of shares to be purchased, and accompanied
      by shares of Stock then owned by the Participant having value sufficient
      to satisfy the exercise price (or, if permitted by the Company, by
      submitting a signed statement to the Director of Compensation that the
      Participant then owns sufficient shares).  The Company shall
      require evidence or attestation that the shares have been continuously
      owned by the Participant for not less than six months prior to the
      exercise.  For purposes of the foregoing requirement as to
      continuous ownership of shares, (i) shares subject to deferred delivery
      are not deemed owned until delivery occurs, and (ii) continuous ownership
      of the shares shall be deemed interrupted by delivery for a prior option
      exercise (so that the same shares may not be used to satisfy the purchase
      price of an Option more than once in any six-month
      period).  Shares which are delivered by the Participant to
      satisfy the exercise price shall be returned to the Participant as soon as
      practicable after delivery and
exercise.

            

    

     

    5. Withholding.  Any
tax withholding due at the time of crediting of Share Units to a Participant’s
Deferred Account, or at the time of vesting of such Share Units, shall be
payable by the Participant by check to the Company.  The Participant
may elect to have the withholding obligation which arises upon distribution of
the Deferred Account satisfied by the Stock credited to the Participant’s
Deferred Account (or that would otherwise be credited to that account)
sufficient to satisfy the withholding obligation.

     

    6. Deferred
Accounts.  The Company shall establish a Deferred Account (or
more than one Deferred Account, as described below) for each
Participant.  A separate Deferred Account shall be established for
each separate Restricted Stock award that is subject to deferral, and for each
exercise of an Option award that is subject to deferral.  Each
Deferred Account for a Participant shall be subject to the following
adjustments:

     

    
      	
              (a)  

            	
              For
      each Restricted Stock award subject to deferral, the Participant’s
      Deferred Account established for that award will be credited with the
      number of Share Units equal to the number of shares of Stock that the
      Participant would have received in the absence of the deferral, with such
      crediting occurring as of the date the shares would have been distributed
      in the absence of the deferral.

            

    

     

    
      	
              (b)  

            	
              For
      each Option award subject to deferral, the Participant’s Deferred Account
      established for that award will be credited with the number of Share Units
      equal to the net additional number of shares of Stock resulting from the
      Option exercise that the Participant would have received in the absence of
      the deferral, with such crediting occurring as of the date the shares
      would have been distributed in the absence of the
  deferral.

            

    

     

    
      	
              (c)  

            	
              As
      of the date of any distribution of shares of Stock with respect to a
      Participant's Deferred Account under the Plan, the Share Units credited to
      a Participant's Deferred Account shall be reduced by the number of Shares
      distributed to the Participant.

            

    

     

    
      	
              (d)  

            	
              The
      number of Share Units to be credited to a Participant’s Deferred Account
      in accordance with paragraphs (a) and (b), and the number of Share Units
      in the Deferred Account balance as of any date, shall be equitably
      adjusted by the Company for any change in the outstanding shares of common
      stock of the Company by reason of any stock dividend, split, spinoff,
      recapitalization or other similar change, to the same extent such
      adjustments would be made under the applicable Stock Plan with respect to
      shares of Stock, as necessary to preserve the benefit of the Plan for the
      Participant and the Company.

            

    

     

    7. Dividends.  As
of each dividend record date for Stock occurring on or after the date any
Share Units are credited to a Deferred Account of a Participant, and prior to
the date of distribution of shares of Stock with respect to those Share Units
(or, if applicable, the date of forfeiture of the Share Units), the Participant
shall receive a cash payment equal to the amount of the dividend that would be
payable with respect to the number of shares of Stock equal to the number of
Share Units credited to the Participant’s Deferred Account on the dividend
record date, with such payment made on the date of payment of the applicable
dividend.

     

    8. Vesting in Share
Units.  The vesting provisions that would have been applicable
to the shares of Stock in the absence of a Deferral Election shall apply to
Share Units credited to the Participant’s Deferred Account as though each Share
Unit represented one share of Stock; provided that dividends shall be fully
vested, to the extent that such dividends are payable with respect to Stock for
record dates occurring on or after the date the Share Units are credited to the
Participant’s Deferred Account and prior to any forfeiture of Share Units, and
would have been vested if the Stock were not subject to a Deferral
Election.

     

    9. Distribution of
Account.  The Participant shall receive a distribution of
shares of Stock equal to the number of Share Units credited to each of his or
her Deferred Accounts (excluding Share Units that are not vested), in accordance
with the terms of the applicable Deferral Election and subject to the terms of
the Plan.  Such shares may consist, either in whole or in part, of the
Company's authorized and unissued Stock or shares of the Company's authorized
and issued Stock reacquired by the Company and held in its
treasury.

     

    10. Distribution
Elections.  Subject to the provisions of the Plan,
distributions with respect to a Participant’s Deferred Accounts shall be made in
accordance with the election of the Participant.  Except as otherwise
provided in the Plan, the Participant may make a different distribution election
with respect to each Deferred Account.  Notwithstanding any other
provisions of the Plan, distribution elections must be made not later than
December 31, 2004, and distribution elections on file on December 31, 2004,
shall be irrevocable as of such date.  In the absence of a
distribution election, a Participant’s Deferred Account shall be distributed in
a lump sum within 60 days after Termination of Employment.

     

    11. Permissible Distribution
Events.  Notwithstanding anything to the contrary in any
Participant’s Deferral Election, no distributions with respect to any Deferred
Account (other than Grandfathered Accounts (as defined below)) shall be made at
any time or upon any event that is not a permissible payment event within the
meaning of Treas. Reg. § 1.409A-3(a)(1)-(6), and any provision in any such
Deferral Election to the contrary shall be null and void.  In the
event that, after giving effect to the foregoing sentence, a Participant’s
Deferral Election does not contain any such permissible payment event, the
applicable Deferred Account balance shall be distributed in a lump sum within 60
days after Termination of Employment.  A "Grandfathered Account” is
any Deferred Account that is exempt from the application of Section 409A of
the Internal Revenue Code of 1986, as amended, by virtue of Treas. Reg. §
1.409A-6.

     

    12. Specified
Dates.  A Participant’s Deferral Election for any Deferred
Account may provide that all of a Deferred Account balance will be paid on a
specified date, whether or not the Participant is employed by the Company or its
subsidiaries on such date; provided, however, that such date must be not less
than three years from the date on which the Deferral Account is
established.  Distributions made to a Participant on a date specified
in the Participant’s Deferral Election will be made in a lump sum on such
date.

     

    13. Distributions after
Termination.

     

    
      	
              (a)  

            	
              Termination of
      Employment.  For purposes of the Plan and any Deferral
      Election, “Termination of
      Employment”
      (including references to an individual’s employment termination, and an
      individual’s terminating employment) shall mean the individual ceasing to
      be employed by the Company and the Affiliates (as defined below), subject to the
      following:

            

    

     

    (1) The employment relationship will be
deemed to have ended at the time the employee, the Company and the Affiliates
reasonably anticipate that thelevel of bona fide services the employee
would perform for the Company and the Affiliates after such date (whether as an employee
or independent contractor, but not as a director) would permanently decrease to
no more than 20% of the average level of bona fide services performed over the
immediately preceding 36 month period (or the full period of service to the
Companyand the
Affiliatesif the employee
has performed services for the Company and the Affiliates for less than 36 months).  In
the absence of an expectation that the employee will perform at the
above-described level, the date of termination of employment will not be delayed
solely by reason of the employee continuing to be on the Company'sand the Affiliates’payroll after such date.  Such determination shall be
made in accordancewith, and in a manner intended to comply
with, the meaning of
"separation from service"
(as defined in Treas. Reg. § 1.409A-1).

     

    (2)  The employment relationship will
be treated as continuing intact while the employee is on a bona fide leave of
absence (determined in accordance with, and subject to,Treas. Reg.
§1.409A-1(h)).

     

                    (3)  For
purposes of the Plan, “Affiliate” means any entity with which the Company is
considered to be a single employer under Section 414(b) or Section 414(c)

                  
of the Code.

    

    
      	
              (b)  

            	
              Retirement.  A
      Participant’s Deferral Election for any Deferred Account may provide that
      the Deferred Account balance will be paid after the Participant’s
      Termination of Employment by reason of Retirement, in a lump sum, or in
      equal annual payments over a period of from two (2) to fifteen (15)
      years.  If distributions are made under this paragraph (b), all
      of the Participant’s Deferred Account balances shall be paid in the same
      manner.  Distributions following Termination of Employment by
      reason of Retirement will be made or commence not later than 60 days after
      the Participant’s date of Termination of Employment.  A
      Participant’s Termination of Employment will be considered by reason of
      “Retirement” if the Participant’s termination occurs after the Participant
      has attained age 55 and completed at least ten (10) years of service;
      provided that in 2008, a Participant’s Termination of Employment will be
      considered by reason of “Retirement” if the Participant’s termination
      occurs at the earlier of: (i) after the Participant has attained age 55
      and completed at least ten (10) years of service; or (ii) after the
      Participant has attained age 65.

            

    

     

    
      	
              (c)  

            	
              Termination before
      Retirement.  A Participant’s Deferral Election for any
      Deferred Account may provide that the Deferred Account balance will be
      paid after the Participant’s Termination of Employment prior to Retirement
      and death but only in a lump sum.  Payments under this paragraph
      (c) shall be made within 60 days following the Participant’s Termination
      of Employment.

            

    

     

    
      	
              (d)  

            	
              Death.  A
      Participant’s Deferral Election for any Deferred Account may provide that
      the Deferred Account balance will be paid after the Participant’s death in
      a lump sum.  Distributions following death will be made no later
      than 60 days after the Participant’s date of
  death.

            

    

     

    
      	
              (e)  

            	
              Beneficiary. If
      a Participant dies after Termination of Employment, but prior to receiving
      all of his or her benefits under the Plan, the Participant’s beneficiary
      will continue to receive the benefits at the time they would have been
      distributed to the Participant if the Participant had
      survived.

            

    

     

    
      	
              (f)  

            	
              Specified
      Employee.  Notwithstanding any other provision of the
      Plan, in the case of a Participant who is a “Specified Employee,” as
      defined in this paragraph (f), at the time of the Participant’s
      Termination of Employment, distributions with respect to the Participant’s
      Deferred Account following the Participant’s Termination of Employment may
      not be made before the first day of the month following the date that is
      six months after the date of Termination of Employment.  Any
      payment to which a Specified Employee would otherwise be entitled prior to
      the expiration of such six-month period shall be paid, without interest,
      on the first day of the month following the date that is six months after
      the date of Termination of Employment.  For purposes of the
      Plan, “Specified
      Employee” shall be defined in accordance with Treas. Reg.
      §1.409A-1(i) and such rules as may be established by the Chief Executive
      Officer of Burlington Northern Santa Fe Corporation or his or her delegate
      from time to time.

            

    

     

    14. Changes to Distribution
Elections.  [Reserved]

     

    15. Hardship
Withdrawals.  In the discretion of the Committee, upon a
showing of hardship, a Participant may receive a distribution with respect to
Share Units credited to his or her Deferred Accounts prior to the date otherwise
scheduled for distribution.  Notwithstanding the previous provisions
of this section, no hardship withdrawals will be permitted after December 31,
2004.

     

    16. Change in Control
Distributions.  All Deferral Elections shall be cancelled upon
the occurrence of a Change in Control, and all shares shall be delivered within
60 days after the date of such Change in Control.  For purposes of the
Plan, the term “Change in Control” shall have the meaning set forth in the
Burlington Northern Santa Fe 1996 Stock Incentive Plan, as it may be amended
from time to time, provided that a Change in Control shall only deemed to have
occurred to the extent such transaction or event also constitutes a “change in
the ownership or effective control” of the Company or a “change in ownership of
a substantial portion of the assets” of the Company, in each case within the
meaning of Treas. Reg. § 1.409A-3(a)(5).

     

    17. Designation of
Beneficiary.  Each Participant from time to time, by signing a
form furnished by the Committee, may designate any legal or natural person or
persons (who may be designated contingently or successively) to whom his or her
benefits under the Plan are to be paid if the Participant dies before receiving
all of his or her benefits.  A beneficiary designation form will be
effective only when the signed form is filed with the Company while the
Participant is alive and will cancel all beneficiary designation forms filed
earlier.  If a deceased Participant failed to designate a beneficiary
as provided above, or if the designated beneficiary of a deceased Participant
dies before the Participant or before complete payment of the Participant's
benefits, the benefits shall be paid to the legal representative or
representatives of the estate of the last to die of the Participant and
designated beneficiary.

     

    18. Statement of Deferred
Accounts .  As soon as practicable after the end of each Plan
Year, the Company shall provide each Participant with a statement of the
transactions in each of his or her Deferred Accounts during that year and his or
her Deferred Account balances as of the end of the year.

     

    19. Election
Forms.  Participant election forms made under the Plan shall be
in such form as may be established by the Committee.  The Committee
may establish additional rules applicable to such elections as may be set forth
in the election forms.

     

    20. Restrictions on Share
Units.  Until distribution, Share Units may not be sold,
assigned transferred, pledged or otherwise encumbered, and the Participant shall
not be treated as a stockholder with respect to Share Units.

     

    21. Rights to
Shares.  Neither the Participant nor any other person shall, by
reason of the Plan, acquire any right in or title to any assets, funds or
property of the Company whatsoever prior to the date shares of Stock are
distributed.  The Participant shall have only a contractual right to
the shares and cash distributable under the Plan, unsecured by any assets of the
Company or any subsidiary.

     

    22. Plan Not Contract of
Employment.  The Plan does not constitute a contract of
employment, and does not give the Participant the right to be retained in the
employ of the Company.

     

    23. Successors and
Assigns.  The Plan shall be binding upon, and inure to the
benefit of, the Company and its successors and assigns, and upon any person
acquiring, whether by merger, consolidation, purchase of assets or otherwise,
all or substantially all of the Company's assets and business.

     

    24. Administration.  The
authority to manage and control the operation and administration of the Plan
shall be vested in the BNSF Employee Benefits Committee (the
“Committee”).  The Committee is authorized to make appropriate
modifications of the Stock award agreements (including Stock Option and
Restricted Stock agreements) to reflect Deferral Elections under the
Plan.  Subject to the provisions of the Plan, the Committee will have
the authority and discretion to interpret the Plan, to establish, amend, and
rescind any rules and regulations relating to the Plan, to determine the terms
and provisions of any agreements made pursuant to the Plan, and to make all
other determinations that may be necessary or advisable for the administration
of the Plan.  Any interpretation of the Plan by the Committee and any
decision made by it under the Plan is final and binding on all
persons.  Except to the extent prohibited by applicable law or the
rules of any stock exchange, the Committee may allocate all or any portion of
its responsibilities and powers to any one or more of its members and, except as
otherwise provided by the Committee from time to time, the Committee delegates
its responsibilities to the Human Resources Department.  Any such
allocation or delegation may be revoked by the Committee at any
time.

     

    25. Amendment.  The
Plan may be amended from time to time by the Chief Executive Officer of the
Company, and additional rules may be established by the Chief Executive Officer
of the Company, except that amendments of the rules relating to distributions of
the Chief Executive Officer’s benefits may be amended by the Chief Executive
Officer only with the approval of the Committee.

     

    The
Burlington Northern Santa Fe Corporation Senior Management Stock Deferral Plan
is hereby adopted, effective January 1, 1997 by Burlington Northern Santa Fe
Corporation.dex107.htm

    
      

      

    

     

    Exhibit 10.7

    
      Amended
and Restated December 6, 2007

    BURLINGTON
NORTHERN SANTA FE 1996 STOCK INCENTIVE PLAN

    

    SECTION
1

    

    STATEMENT
OF PURPOSE

    

    1.1           
The BURLINGTON NORTHERN SANTA FE CORPORATION 1996 STOCK INCENTIVE PLAN (the
"Plan") has been established by BURLINGTON NORTHERN SANTA FE CORPORATION (the
"Company") to:

    

    
      	
               

            	
              (a)

            	
              attract
      and retain executive, managerial and other salaried employees;
      

            

    

    

    
      	
               

            	
              (b)

            	
              motivate
      participating employees, by means of appropriate incentives, to achieve
      long-range goals; 

            

    

    

    
      	
               

            	
              (c)

            	
              provide
      incentive compensation opportunities that are competitive with those of
      other major corporations; and 

            

    

    

    
      	
               

            	
              (d)

            	
              further
      identify a Participant's interests with those of the Company's other
      stockholders through compensation that is based on the Company's common
      stock; 

            

    

    

    and
thereby promote long-term financial interest of the Company and the Related
Companies, including the growth in value of the Company's equity and enhancement
of long-term stockholder return.

    

    SECTION
2

    

    DEFINITIONS

    

    2.1.           
Unless the context indicates otherwise, the following terms shall have the
meanings set forth below:

    

    
      	
               

            	
              (a)

            	
              Affiliate.  “Affiliate”
      shall mean all persons with whom the Company is considered to be a single
      employer under section 414 (b) of the Code and all persons with whom the
      Company would be considered a single employer under section 414 (c) of the
      Code. 

            

    

    

    
      	
               

            	
              (b)

            	
              Award.
      The term "Award" shall mean any award or benefit granted to any
      Participant under the Plan, including, without limitation, the grant of
      Options, Stock Appreciation Rights, Restricted Stock, Restricted Stock
      Units, Performance Stock, Stock acquired through purchase under Section
      12, or Performance Units. 

            

    

    

    
      	
               

            	
              (c)

            	
              Board.
      The term "Board" shall mean the Board of Directors of the Company.
      

            

    

    

    
      	
               

            	
              (d)

            	
              Cause.
      The term "Cause" shall mean (a) the willful and continued failure by the
      Participant to substantially perform his duties with the Company (other
      than any such failure resulting from his incapacity due to physical or
      mental illness), or (b) the willful engaging by the Participant in conduct
      which is demonstrably and materially injurious to the Company, monetarily
      or other-wise. For purposes of this definition, no act, or failure to act,
      shall be deemed "willful" unless done, or omitted to be done, by the
      Participant not in good faith and without reasonable belief that his
      action or omission was in the best interest of the Company.
    

            

    

    

    (e)           
Change in Control. A "Change in Control" shall be deemed to have occurred
if:

    

    
      	
               

            	
              (1)

            	
              any
      "person" as such term is used in Sections 13(d) and 14(d) of the
      Securities Exchange Act of 1934, as amended (the "Exchange Act") (other
      than the Company, any trustee or other fiduciary holding securities under
      an employee benefit plan of the Company, or any company owned, directly or
      indirectly, by the stockholders of the Company in substantially the same
      proportions as their ownership of stock of the Company), is or becomes the
      "beneficial owner" (as defined in Rule 13d-3 under the Exchange Act),
      directly or indirectly, of securities of the Company representing 25% or
      more of the combined voting power of the Company's then outstanding
      securities; 

            

    

    

    
      	
               

            	
              (2)

            	
              during
      any period of two consecutive years (not including any period prior to the
      effective date of this provision), individuals who at the beginning of
      such period constitute the Board, and any new director (other than a
      director designated by a person who has entered into an agreement with the
      Company to effect a transaction described in clause (1), (3) or (4) of
      this definition) whose election by the Board or nomination for election by
      the Company's stockholders was approved by a vote of at least two-thirds
      (2/3) of the directors then still in office who either were directors at
      the beginning of the period or whose election or nomination for election
      was previously so approved, cease for any reason to constitute at least a
      majority thereof; 

            

    

    

    
      	
               

            	
              (3)

            	
              the
      stockholders of the Company approve a merger or consolidation of the
      Company with any other company other than (i) a merger or consolidation
      which would result in the voting securities of the Company outstanding
      immediately prior thereto continuing to represent (either by remaining
      outstanding or by being converted into voting securities of the surviving
      entity) more than 80% of the combined voting power of the voting
      securities of the Company (or such surviving entity) outstanding
      immediately after such merger or consolidation, or (ii) a merger or
      consolidation effected to implement a recapitalization of the Company (or
      similar transaction) in which no "person" (as hereinabove defined)
      acquires more than 25% of the combined voting power of the Company's then
      outstanding securities; or 

            

    

    

    
      	
               

            	
              (4)

            	
              the
      stockholders of the Company adopt a plan of complete liquidation of the
      Company or approve an agreement for the sale or disposition by the Company
      of all or substantially all of the Company's assets. For purposes of this
      clause (4), the term "the sale or disposition by the Company of all or
      substantially all of the Company's assets" shall mean a sale or other
      disposition transaction or series of related transactions involving assets
      of the company or of any direct or indirect subsidiary of the Company
      (including the stock of any direct or indirect subsidiary of the Company)
      in which the value of the assets or stock being sold or otherwise disposed
      of (as measured by the purchase price being paid therefor or by such other
      method as the Board of Directors of the Company determines is appropriate
      in a case where there is no readily ascertainable purchase price)
      constitutes more than two-thirds of the fair market value of the Company
      (as hereinafter defined). For purposes of the preceding sentence, the
      "fair market value of the Company" shall be the aggregate market value of
      the outstanding shares of Stock (on a fully diluted basis) plus the
      aggregate market value of the Company's other outstanding equity
      securities. The aggregate market value of the shares of Stock (on a fully
      diluted basis) outstanding on the date of the execution and delivery of a
      definitive agreement with respect to the transaction or series or related
      transactions (the "Transaction Date") shall be determined by the average
      closing price of the shares of Stock for the ten trading days immediately
      preceding the Transaction Date. The aggregate market value of any other
      equity securities of the Company shall be determined in a manner similar
      to that prescribed in the immediately preceding sentence for determining
      the aggregate market value of the shares of Stock or by such other method
      as the Board of Directors of the Company shall determine is appropriate.
      

            

    

    

    Notwithstanding
the foregoing, a merger, consolidation, acquisition of common control, or
business combination of the Company and a Class I Railroad or a holding company
of a Class I Railroad that is approved by the Board shall not constitute a
"Change in Control" unless the Board makes a determination that the transaction
shall constitute a "Change in Control".

    

    
      	
               

            	
              (f)

            	
              Code.
      The term "Code" means the Internal Revenue Code of 1986, as amended. A
      reference to any provision of the Code shall include reference to any
      successor provision of the Code. 

            

    

    

    
      	
               

            	
              (g)

            	
              Date
      of Termination. “Date of Termination” shall mean “separation
      from service” (within the meaning of Section 409A of the Code).
      

            

    

    

    

    
      	
               

            	
              (h)

            	
              Deferred Compensation.  Payments or benefits that would be
      considered to be provided under a nonqualified deferred compensation plan
      as that term is defined in Treas. Reg.
  §1.409A-1.

            

    

    

    

    
      	
               

            	
              (i)

            	
              Disability.
      Except as otherwise provided by the Committee, a Participant shall be
      considered to have a "Disability" during the period in which he is unable,
      by reason of a medically determinable physical or mental impairment, to
      engage in any substantial gainful activity, which condition, in the
      discretion of the Committee, is expected to have a duration of not less
      than 120 days. 

            

    

    

    
      	
               

            	
              (j)

            	
              Employee.
      The term "Employee" shall mean a person with an employment relationship
      with the Company or a Related Company.

            

    

    

    
      	
               

            	
              (k)

            	
              Employer.
      The Company and each Related Company which, with the consent of the
      Company, participates in the Plan for the benefit of its eligible
      employees are referred to collectively as the "Employers" and individually
      as an "Employer". 

            

    

    

    
      	
               

            	
              (l)

            	
              Fair
      Market Value. The "Fair Market Value" of the Stock shall be the mean
      between the highest and lowest quoted sales prices of a share of Common
      Stock on the New York Stock Exchange Composite Transaction Report;
      provided, that if there were no sales on the valuation date but there were
      sales on dates within a reasonable period both before and after the
      valuation date, the Fair Market Value is the weighted average of the means
      between the highest and lowest sales on the nearest date before and the
      nearest date after the valuation date. The average is to be weighed
      inversely by the respective numbers of trading days between the selling
      dates and the valuation date and shall be determined in good faith by the
      Committee. In any event the determination of “Fair Market Value” shall be
      consistent with the requirements of Treasury Regulation Section
      1.409A-1(b)(5)(iv)(A). 

            

    

    

    
      	
               

            	
              (m)

            	
              Immediate
      Family. With respect to a particular Participant, the term "Immediate
      Family" shall mean the Participant's spouse, children, stepchildren,
      adoptive relationships, sisters, brothers and grandchildren.
    

            

    

    

    
      	
               

            	
              (n)

            	
              Option.
      The term "Option" shall mean any Incentive Stock Option or Non-Qualified
      Stock Option
      granted under the Plan. 

            

    

    

    
      	
               

            	
              (o)

            	
              Participant.
      The term "Participant" means an Employee who has been granted an award
      under the Plan. 

            

    

    

    
      	
               

            	
              (p)

            	
              Performance-Based
      Compensation. The term "Performance-Based Compensation" shall have the
      meaning ascribed to it in section 162(m)(4)(C) of the Code.
    

            

    

    

    
      	
               

            	
              (q)

            	
              Performance
      Period. The term "Performance Period" shall mean the period over which
      applicable performance is to be measured.

            

    

    

    
      	
               

            	
              (r)

            	
              Qualified
      Retirement Plan. The term "Qualified Retirement Plan" means any plan of
      the Company or a Related Company that is intended to be qualified under
      section 401(a) of the Code. 

            

    

    

    
      	
               

            	
              (s)

            	
              Related
      Companies. The term "Related Company" means any company during any period
      in which it is a "subsidiary corporation" (as that term is defined in Code
      section 424(f)) with respect to the Company.

            

    

    

    
      	
               

            	
              (t)

            	
              Restricted
      Period. The term "Restricted Period" shall mean the period of time for
      which Restricted Stock is subject to forfeiture pursuant to the Plan or
      during which Options and Stock Appreciation Rights are not exercisable.
      

            

    

    

    
      	
               

            	
              (u)

            	
              Retirement.
      "Retirement" of a Participant shall mean the occurrence of a Participant's
      Date of Termination under circumstances that constitute a retirement at
      normal requirement age under the terms of the Qualified Retirement Plan of
      an Employer or Related Company that is extended to the Participant
      immediately prior to the Participant's Date of Termination or, if no such
      plan is extended to the Participant on his Date of Termination, under the
      terms of any applicable retirement policy of the Participant's employer
      provided, that in respect to grants made on or after January 1, 1999, the
      following definition shall apply: 

            

    

    

    
      	
               

            	
              Retirement.
      “Retirement” of a Participant shall mean the occurrence of a Participant’s
      Date of Termination under circumstances that constitute a retirement with
      immediate eligibility for benefits under Article 6 or Article 7 of the
      Burlington Northern Santa Fe Retirement Plan, or under the terms of a
      Qualified Retirement Plan of an Employer or Related Company that is
      extended to the Participant immediately prior to the Participant’s Date of
      Termination, or if no such plan is extended to the Participant on his Date
      of Termination, under the terms of any applicable retirement policy of the
      Participant’s employer. 

            

    

    

    
      	
               

            	
              (v)

            	
              SEC.
      "SEC" shall mean the United States Securities and Exchange Commission.
      

            

    

    

    
      	
               

            	
              (x)

            	
              Specified
      Employee. “Specified Employee” shall be defined in accordance with Treas.
      Reg. §1.409A-1(i) and such rules as may be established by the Chief
      Executive Officer of the Corporation or his or her delegate from time to
      time. 

            

    

    

    

    
      	
               

            	
              (y)

            	
              Stock.
      The term "Stock" shall mean shares of common stock of the Company.
      

            

    

    SECTION
3

    ELIGIBILITY

    

    3.1.           
Subject to the discretion of the Committee and the terms and conditions of the
Plan, the Committee shall determine and designate from time to time, from among
the salaried, full-time officers and employees of the Employers those Employees
who will be granted one or more awards under the Plan.

    

    SECTION
4

    

    OPERATION
AND ADMINISTRATION

    

    4.1.           
Subject to the approval of the stockholders of the Company at the Company's 1996
annual meeting of the stockholders, the Plan shall be effective as of January 1,
1996 ("Effective Date"), provided however, that any awards made under the Plan
prior to approval by stockholders, shall be contingent on approval of the Plan
by stockholders of the Company and all dividends on Awards shall be held by the
Company and paid only upon such approval and all other rights of a Participant
in connection with an Award shall not be effective until such approval is
obtained. The Plan shall be unlimited and remain in effect until termination by
the Board, provided however, that no Incentive Stock Options may be granted
under the Plan on a date that is more than ten years from the Effective Date or,
if earlier, the date the Plan is adopted by the Board.

    

    4.2.           
The Plan shall be administered by the Compensation Committee of the Board which
shall be selected by the Board, shall consist of members of the Board who are
not employees of the Company and are not eligible to participate in the Plan,
and shall consist of not less than two members of the Board, or such greater
number as may be required for compliance with SEC Rule 16b-3. The authority to
manage and control the operation and administration of the Plan shall be vested
in the Committee, subject to the following:

    

    
      	
               

            	
              (a)

            	
              Subject
      to the provisions of the Plan, the Committee will have the authority and
      discretion to select Employees to receive Awards, to determine the time or
      times of receipt, to determine the types of Awards and the number of
      shares covered by the Awards, to establish the terms, conditions,
      performance criteria, restrictions, and other provisions of such Awards,
      and to cancel or suspend Awards. In making such Award determinations, the
      Committee may take into account the nature of services rendered by the
      respective Employee, his present and potential contribution to the
      Company's success and such other factors as the Committee deems relevant.
      

            

    

    

    
      	
               

            	
              (b)

            	
              Subject
      to the provisions of the Plan, the Committee will have the authority and
      discretion to determine the extent to which Awards under the Plan will be
      structured to conform to the requirements applicable to Performance-Based
      Compensation as described in Code section 162(m), and to take such action,
      establish such procedures, and impose such restrictions at the time such
      awards are granted as the Committee determines to be necessary or
      appropriate to conform to such requirements.

            

    

    

    
      	
               

            	
              (c)

            	
              The
      Committee will have the authority and discretion to interpret the Plan, to
      establish, amend, and rescind any rules and regulations relating to the
      Plan, to determine the terms and provisions of any agreements made
      pursuant to the Plan, and to make all other determinations that may be
      necessary or advisable for the administration of the Plan.
  

            

    

    

    
      	
               

            	
              (d)

            	
              Any
      interpretation of the Plan by the Committee and any decision made by it
      under the Plan is final and binding on all persons.
  

            

    

    

    
      	
               

            	
              (e)

            	
              Except
      as otherwise expressly provided in the Plan, where the Committee is
      authorized to make a determination with respect to any Award, such
      determination shall be made at the time the Award is made, except that the
      Committee may reserve the authority to have such determination made by the
      Committee in the future (but only if such reservation is made at the time
      the Award is granted and is expressly stated in the Agreement reflecting
      the Award). 

            

    

    

    
      	
               

            	
              (f)

            	
              Except
      to the extent prohibited by applicable law or the rules of any stock
      exchange, the Committee may allocate all or any portion of its
      responsibilities and powers to any one or more of its members and other
      than in respect to eligibility, times of Awards, and terms, conditions,
      performance criteria, restrictions and other provisions of Awards, and
      except as otherwise provided by the Committee from time to time, the
      Committee delegates its responsibilities and powers to the Senior Vice
      President-Employee Relations or his successor. Any such allocation or
      delegation may be revoked by the Committee at any time.
  

            

    

    

    
      	
               

            	
              (g)

            	
              No
      member or authorized delegate of the Committee shall be liable to any
      person for any action taken or omitted in connection with the
      administration of the Plan unless attributable to his own fraud or willful
      misconduct; nor shall the Employers be liable to any person for any such
      action unless attributable to fraud or willful misconduct on the part of a
      director or employee of the Employers. The Committee, the individual
      members thereof, and persons acting as the authorized delegates of the
      Committee under the plan, shall be indemnified by the Employers against
      any and all liabilities, losses, costs and expenses (including legal fees
      and expenses) of whatsoever kind and nature which may be imposed on,
      incurred by or asserted against the Committee or its members or authorized
      delegates by reason of the performance of a Committee function if the
      Committee or its members or authorized delegates did not act dishonestly
      or in willful violation of the law or regulation under which such
      liability, loss, cost or expense arises. This indemnification shall not
      duplicate but may supplement any coverage available under any applicable
      insurance. 

            

    

    

    4.3.           
Notwithstanding any other provision of the Plan to the contrary, no Participant
shall receive any Award of an Option or a Stock Appreciation Right under the
Plan to the extent that the sum of:

    

    
      	
               

            	
              (a)

            	
              the
      number of shares of Stock subject to such Award;
  

            

    

    

    
      	
               

            	
              (b)

            	
              the
      number of shares of Stock subject to all other prior Awards of Options and
      Stock Appreciation Rights under the Plan during the one-year period ending
      on the date of the Award; and 

            

    

    

    
      	
               

            	
              (c)

            	
              the
      number of shares of Stock subject to all other prior stock options and
      stock appreciation rights granted to the Participant under other plans or
      arrangements of the Employers and Related Companies during the one-year
      period ending on the date of the Award;

            

    

    

    would
exceed the Participant's Individual Limit under the Plan.  The
determination made under the foregoing provisions of this subsection 4.3 shall
be based on the shares subject to the awards at the time of grant, regardless of
when the awards become exercisable.  Subject to the provisions of
Section 14, a Participant's "Individual Limit" shall be 1,000,000 shares per
calendar year.

    

    4.4.           
To the extent that the Committee determines that it is necessary or desirable to
conform any Awards under the Plan with the requirements applicable to
“Performance-Based Compensation”, as that term is used in Code section
162(m)(4)(C), it may, at or prior to the time an Award is granted, take such
steps and impose such restrictions with respect to such Award as it determines
to be necessary to satisfy such requirements.  To the extent that is
necessary to establish performance goals for a particular performance period,
those goals will be based on one or more of the following business criteria: net
income, earnings per share, debt reduction, safety, on-time train performance,
return on investment, operating ratio, cash flow, return on assets, stockholders
return, revenue, customer satisfaction, and return on equity.  If the
Committee establishes performance goals for a performance period relating to one
or more of these business criteria, the Committee may determine to approve a
payment for that particular performance period upon attainment of the
performance goal relating to any one or more of such criteria.

    

    4.5.           
To the extent that the Plan and the Awards under the Plan are subject to the
rules applicable to nonqualified deferred compensation plans under section 409A
of the Code, such portion of the Plan and such awards are not intended to result
in acceleration of income recognition or imposition of penalty taxes by reason
of section 409A, and the terms of such portion of the Plan and such awards shall
be interpreted in a manner (and such portion of the Plan and such awards may be
amended to the extent determined necessary or appropriate by the Committee) to
avoid such acceleration and penalties.

    

    SECTION
5

    

    SHARES
AVAILABLE UNDER THE PLAN

    

    5.1           
The shares of Stock with respect to which Awards may be made under the Plan
shall be shares currently authorized but unissued or treasury shares acquired by
the Company, including shares purchased in open market or in private
transactions. Subject to the provisions of Section 14, the total number of
shares of Stock available for grant of Awards shall not exceed ten million
(10,000,000) shares of stock. Except as otherwise provided herein, any shares
subject to an Award which for any reason expires or is terminated without
issuance of shares (whether or not cash or other consideration is paid to a
Participant in respect to such Award) as well as shares used to pay an Option
Purchase Price under this Plan or a predecessor plan shall again be available
under the Plan.

    

    SECTION
6

    

    OPTIONS

    

    6.1.           
The grant of an "Option" under this Section 6 entitles the Participant to
purchase shares of Stock at a price fixed at the time the Option is granted, or
at a price determined under a method established at the time the Option is
granted, subject to the terms of this Section 6. Options granted under this
section may be either Incentive Stock Options or Non-Qualified Stock Options,
and subject to Sections 13 and 18, shall not be exercisable for six months from
date of grant, as determined in the discretion of the Committee. An "Incentive
Stock Option" is an Option that is intended to satisfy the requirements
applicable to an "incentive stock option" described in section 422(b) of the
Code. A "Non-Qualified Option" is an Option that is not intended to be an
"incentive stock option" as that term is described in section 422(b) of the
Code.

    

    6.2.           
The Committee shall designate the Participants to whom Options are to be granted
under this Section 6 and shall determine the number of shares of Stock to be
subject to each such Option. To the extent that the aggregate fair market value
of Stock with respect to which Incentive Stock Options are exercisable for the
first time by any individual during any calendar year (under all plans of the
Company and all Related Companies) exceeds $100,000, such options shall be
treated as Non-Qualified Stock Options, to the extent required by section 422 of
the Code.

    

    6.3.           
The determination and payment of the purchase price of a share of Stock under
each Option granted under this section shall be subject to the
following:

    

    
      	
               

            	
              (a)

            	
              The
      purchase price shall be established by the Committee or shall be
      determined by a method established by the Committee at the time the Option
      is granted; provided, however, that in no event shall such price be less
      than Fair Market Value on the date of the grant.
  

            

    

    

    
      	
               

            	
              (b)

            	
              Subject
      to the following provisions of this subsection 6.3, the full purchase
      price of each share of Stock purchased upon the exercise of any Option
      shall be paid at the time of such exercise and, as soon as practicable
      thereafter, a certificate representing the shares so purchased shall be
      delivered to the person entitled thereto.

            

    

    

    
      	
               

            	
              (c)

            	
              The
      purchase price shall be payable in cash or in shares of Stock (valued at
      Fair Market Value as of the day of exercise).

            

    

    

    
      	
               

            	
              (d)

            	
              A
      Participant may elect to pay the purchase price upon the exercise of an
      Option through a cashless exercise arrangement as may be established by
      the Company. 

            

    

    

    6.4.           
Except as otherwise expressly provided in the Plan, an Option granted under this
Section 6 shall be exercisable in accordance with the following terms of this
subsection 6.4:

    

    
      	
               

            	
              (a)

            	
              The
      terms and conditions relating to exercise of an Option shall be
      established by the Committee, and may include, without limitation,
      conditions relating to completion of a specified period of service,
      achievement of performance standards prior to exercise of the Option, or
      achievement of Stock ownership objectives by the Participant. No Option
      may be exercised by a Participant after the expiration date applicable to
      that Option. 

            

    

    

    
      	
               

            	
              (b)

            	
              The
      exercise of an Option will result in the surrender of the corresponding
      rights under a tandem Stock Appreciation Right, if any.
  

            

    

    

    6.5. The exercise period of
any Option shall be determined by the Committee and shall not extend more than
ten years after the Date of Grant.

    

    6.6.           
In the event the Participant exercises an Option under this Plan or a
predecessor plan of the Company or a Related Company and pays all or a portion
of the purchase price in Common Stock, in the manner permitted by subsection
6.3, such Participant, pursuant to the exercise of Committee discretion at the
time the Option is exercised or to the extent previously authorized by the
Committee, may be issued a new Option to purchase additional shares of Stock
equal to the number of shares of Stock surrendered to the Company in such
payment. Such new Option shall have an exercise price equal to the Fair Market
Value per share on the date such new Option is granted, shall first be
exercisable six months from the date of grant of the new Option and shall have
an expiration date on the same date as the expiration date of the original
Option so exercised by payment of the purchase price in shares of
Stock.

    

    SECTION
7

    

    STOCK
APPRECIATION RIGHTS

    

    7.1.            
Subject to the terms of this Section 7, a Stock Appreciation Right granted under
the Plan entitles the Participant to receive, in cash or Stock (as determined in
accordance with subsection 7.4), value equal to all or a portion of the excess
of: (a) the Fair Market Value of a specified number of shares of Stock at the
time of exercise; over (b) a specified price which shall not be less than 100%
of the Fair Market Value of the Stock at the time the Stock Appreciation Right
is granted, or, if granted in tandem with an Option, the exercise price with
respect to shares under the tandem Option.

    

    7.2.           
Subject to the provisions of the Plan, the Committee shall designate the
Participants to whom Stock Appreciation Rights are to be granted under the Plan,
shall determine the exercise price or a method by which the price shall be
established with respect to each such Stock Appreciation Right, and shall
determine the number of shares of Stock on which each Stock Appreciation Right
is based. A Stock Appreciation Right may be granted in connection with all or
any portion of a previously or contemporaneously granted Option or not in
connection with an Option. If a Stock Appreciation Right is granted in
connection with an Option then, in the discretion of the Committee, the Stock
Appreciation Right may, but need not, be granted in tandem with the
Option.

    

    7.3.           
The exercise of Stock Appreciation Rights shall be subject to the
following:

    

    
      	
               

            	
              (a)

            	
              If
      a Stock Appreciation Right is not in tandem with an Option, then the Stock
      Appreciation Right shall be exercisable in accordance with the terms
      established by the Committee in connection with such rights but, subject
      to Sections 13 and 18 shall not be exercisable for six months from the
      date of grant; and may include, without limitation, conditions relating to
      completion of a specified period of service, achievement of performance
      standards prior to exercise of the Stock Appreciation Rights, or
      achievement of objectives relating to Stock ownership by the Participant.
      However, except as otherwise expressly provided in the Plan, no Stock
      Appreciation Right subject to this paragraph (a) may be exercised by a
      Participant after the expiration date applicable to that Stock
      Appreciation Right. 

            

    

    

    
      	
               

            	
              (b)

            	
              If
      a Stock Appreciation Right is in tandem with an Option, then the Stock
      Appreciation Right shall be exercisable at the time the tandem Option is
      exercisable. The exercise of a Stock Appreciation Right will result in the
      surrender of the corresponding rights under the tandem Option.
      

            

    

    

    7.4.           
Upon the exercise of a Stock Appreciation Right, the value to be distributed to
the Participant, in accordance with subsection 7.1, shall be distributed in
shares of Stock (valued at their Fair Market Value at the time of exercise), in
cash, or in a combination thereof, in the discretion of the
Committee.

    

    7.5.           
The Committee may grant Limited Stock Appreciation Rights. Notwithstanding the
foregoing provisions of this Section 7, a Limited Stock Appreciation Rights
shall be subject to the following:

    

    
      	
               

            	
              (a)

            	
              A
      Limited Stock Appreciation Right may (but need not) be granted in
      connection with all or any portion of a previously or contemporaneously
      granted Option and shall not be exercisable for six months from the date
      of grant. A Limited Stock Appreciation Right may be granted in tandem with
      an Option regardless of whether the Option is in tandem with a Stock
      Appreciation Right. 

            

    

    

    
      	
               

            	
              (b)

            	
              A
      Limited Stock Appreciation Rights entitles the Participant to receive a
      cash payment in connection with a Change in Control. In the case of a
      Limited Stock Appreciation Right that is in tandem with an Option, the
      payment amount shall be equal to the difference between the exercise price
      per share of the Stock covered by the tandem Option and the Fair Market
      Value of a share of Stock upon the date of exercise.
  

            

    

    

    
      	
               

            	
              (c)

            	
              To
      the extent provided by the Committee, a Limited Stock Appreciation Right
      may be automatically exercisable at a time determined by the Committee, or
      it may be exercised by the Participant during the period beginning not
      earlier than the date of a Change in Control, and ending not later than
      ninety (90) days following the date of the Change in Control, and may be
      exercisable regardless of whether the Participant is then employed by an
      Employer or a Related Company. 

            

    

    

    
      	
               

            	
              (d)

            	
              If
      the Limited Stock Appreciation Right is in tandem with an Option, the
      exercise of the Limited Stock Appreciation Right shall result in the
      cancellation of the tandem Option (and any Stock Appreciation Right in
      tandem with such Option). 

            

    

    

    SECTION
8

    

    RESTRICTED
STOCK

    

    8.1.         
Subject to the terms of this Section 8, Restricted Stock Awards under the Plan
are grants of Stock to Participants, the vesting of which is subject to certain
conditions  established by the Committee, with some or all of those
conditions relating to events (such as performance or continued employment)
occurring after the date of grant, provided however that to the extent that
vesting of a Restricted Stock Award is contingent on continued employment, the
required employment period shall not generally be less than three years
following the grant of the Award unless such grant is in substitution for an
Award under this Plan or a predecessor plan of the Company or a Related
Company.

    

    8.2.           The
Committee shall designate the Participants to whom Restricted Stock is to be
granted, and the number of shares of Stock that are subject to each such Award.
The Award of shares under this Section 8 may, but need not, be made in
conjunction with a cash-based incentive compensation program maintained by the
Company, and may, but need not, be in lieu of cash otherwise awardable under
such program.

    

    8.3.         
Shares of Restricted Stock granted to Participants under the Plan shall be
subject to the following terms and conditions:

    

    
      	
               

            	
              (a)

            	
              Except
      as otherwise hereinafter provided, Restricted Stock granted to
      Participants may not be sold, assigned, transferred, pledged or otherwise
      encumbered during the Restricted Period. Except for such restrictions, the
      Participant as owner of such shares shall have all the rights of a
      stockholder, including but not limited to the right to vote such shares
      and, except as otherwise provided by the Committee or as otherwise
      provided by the Plan, the right to receive all dividends paid on such
      shares. 

            

    

    

    
      	
               

            	
              (b)

            	
              Each
      certificate issued in respect of shares of Restricted Stock granted under
      the Plan shall be registered in the name of the Participant and, at the
      discretion of the Committee, each such certificate may be deposited with
      the Company with a stock power endorsed in blank or in a bank designated
      by the Committee. 

            

    

    

    
      	
               

            	
              (c)

            	
              The
      Committee may award Performance-Based Restricted Stock, which shall be
      Restricted Stock that becomes vested (or for which vesting is accelerated)
      upon the achievement of performance goals established by the Committee.
      The Committee may specify the number of shares that will vest upon
      achievement of different levels of performance. Except as otherwise
      provided by the Committee, achievement of maximum targets during the
      Performance Period shall result in the Participant's receipt of the full
      Performance-Based Restricted Stock Award. For achievement of the minimum
      target but less than the maximum target the Committee may establish a
      portion of the Award which the Participant is entitled to receive.
      

            

    

    

    
      	
               

            	
              (d)

            	
              Except
      as otherwise provided by the Committee, any Restricted Stock which is not
      earned by the end of a Performance Period shall be forfeited. If a
      Participant's Date of Termination occurs during a Performance Period with
      respect to any Restricted Stock subject to a Performance Period granted to
      him, the Committee may determine that the Participant will be entitled to
      settlement of all or any portion of the Restricted Stock subject to a
      Performance Period as to which he would otherwise be eligible, and may
      accelerate the determination of the value and settlement of such
      Restricted Stock subject to a Performance Period or make such other
      adjustments as the Committee, in its sole discretion, deems desirable.
      Subject to the limitations of the Plan and the Award of Restricted Stock,
      upon the vesting of Restricted Stock, such Restricted Stock will be
      transferred free of all restrictions to a Participant (or his or her legal
      representative, beneficiary or heir).

            

    

    

    8.4 A grant
of Restricted Stock subject to a Performance Period shall be made in 1996 and
shall vest as follows:

    

    
      	
              (1)  

            	
              One-third
      of the Award shall vest after three years, but no later than six years
      from the date of grant upon attaining Fair Market Value equal to the Fair
      Market Value on date of grant increased by a 12% compound annual growth
      rate for a three year period, provided such price has been maintained for
      thirty (30) consecutive trading days either immediately prior to or any
      time after the third year;

            

    

    

    
      	
              (2)  

            	
              One-third
      of the Award shall vest after four years, but no later than six years from
      the date of grant upon attaining Fair Market Value equal to the Fair
      Market Value on date of grant increased by a 12% compound annual growth
      rate for a four year period, provided such price has been maintained for
      thirty (30) consecutive trading days either immediately prior to or any
      time after the fourth year;

            

    

    

    
      	
              (3)  

            	
              One-third
      of the Award shall vest after five years, but no later than six years from
      the date of grant upon attaining Fair Market Value equal to the Fair
      Market Value on date of grant increased by a 12% compound annual growth
      rate for a five year period, provided such price has been maintained for
      thirty (30) consecutive trading days either immediately prior to or any
      time after the fifth year.

            

    

    

    SECTION
9

    

    RESTRICTED
STOCK UNITS

    

    9.1.           
Subject to the terms of this Section 9, a Restricted Stock Unit entitles a
Participant to receive shares for the units at the end of a Restricted Period to
the extent provided by the Award with the vesting of such units to be contingent
upon such conditions as may be established by the Committee (such as continued
employment which, when required shall be not less than three years or
satisfaction of performance criteria).  The Award of Restricted Stock
Units under this Section 9 may, but need not, be made in conjunction with a
cash-based incentive compensation program maintained by the Company, and may,
but need not, be in lieu of cash otherwise awardable under such
program.

    

    9.2.           
The Committee shall designate the Participants to whom Restricted Stock Units
shall be granted and the number of units that are subject to each such Award.
During any period in which units are outstanding and have not been settled in
stock, the Participant shall not have the rights of a stockholder, but shall
have the right to receive a payment from the Company in lieu of a dividend in an
amount equal to such dividends and at such times as dividends would otherwise be
paid.

     

                    9.3.   If a
Participant's Date of Termination occurs during a Restricted Period with respect
to any Restricted Stock Units granted to him, the Committee may determine that
the Participant will be entitled to settlement of all or any portion of the
Restricted Stock Units as to which he would otherwise be eligible, and may
accelerate the determination of the value and settlement of such Restricted
Stock Units or make such other adjustments as the Committee, in its sole
discretion, deems desirable.

    

    

    SECTION
10

    PERFORMANCE
STOCK

    

    10.1.         Subject
to the terms of this Section 10, a Performance Stock Award provides for the
distribution of Stock to a Participant upon the achievement of performance
objectives established by the Committee. For purposes of the Plan, the
"Performance Period" with respect to any Award shall be the period over which
the applicable performance is to be measured.

    

    10.2.         The
Committee shall designate the Participants to whom Performance Stock Awards are
to be granted, and the number of shares of Stock that are subject to each such
Award. The Award of shares under this Section 10 may, but need not, be made in
conjunction with a cash-based incentive compensation program maintained by the
Company, and may, but need not, be in lieu of cash otherwise awardable under
such program.

    

    10.3.         If
a Participant's Date of Termination occurs during a Performance Period with
respect to any Performance Stock granted to him, the Committee may determine
that the Participant will be entitled to settlement of all or any portion of the
Performance Stock as to which he would otherwise be eligible, and may accelerate
the determination of the value and settlement of such Performance Stock or make
such other adjustments as the Committee, in its sole discretion, deems
desirable.

    

    SECTION
11

    

    PERFORMANCE
UNITS

    

    11.1.          Subject
to the terms of this Section 11, the Award of Performance Units under the Plan
entitles the Participant to receive value for the units at the end of a
Performance Period to the extent provided under the Award.  The number
of units earned, and value received for them, will be contingent on the degree
to which the performance measures established at the time of grant of the Award
are met.

    

    11.2.        
The Committee shall designate the Participants to whom Performance Units are
to be
granted, and the number of units to be the subject to each such
Award.

    

    11.3.         For
each Participant, the Committee will determine the value of units, which may be
stated either in cash or in units representing shares of Stock; the performance
measures used for determining whether the Performance Units are earned; the
Performance Period during which the performance measures will apply; the
relationship between the level of achievement of the performance measures and
the degree to which Performance Units are earned; whether, during or after the
Performance Period, any revision to the performance measures or Performance
Period should be made to reflect significant events or changes that occur during
the Performance Period; and the number of earned Performance Units that will be
settled in cash and/or shares of Stock.

    

    11.4.         Settlement
of Performance Units shall be subject to the following:

    

    
      	
               

            	
              (a)

            	
              The
      Committee will compare the actual performance to the performance measures
      established for the Performance Period and determine the number of units
      as to which settlement is to be made, and the value of such units.
      

            

    

    

    
      	
               

            	
              (b)

            	
              Settlement
      of units earned shall be wholly in cash, wholly in Stock or in a
      combination of the two, to be distributed in a lump sum or installments,
      as determined by the Committee. 

            

    

    

    
      	
               

            	
              (c)

            	
              Shares
      of Stock distributed in settlement of the units shall be subject to such
      vesting requirements and other conditions, if any, as the Committee shall
      determine. Such vesting restrictions may include, without limitation,
      restrictions of the type that may be imposed with respect to Restricted
      Stock under Section 8. 

            

    

    

    11.5.          If
a Participant's Date of Termination occurs during a Performance Period with
respect to any Performance Units granted to him, the Committee may determine
that the Participant will be entitled to settlement of all or any portion of the
Performance Units as to which he would otherwise be eligible, and may accelerate
the determination of the value and settlement of such Performance Units or make
such other adjustments as the Committee, in its sole discretion, deems
desirable.

    

    SECTION
12

    

    STOCK
PURCHASE PROGRAM

    

    12.1.         The
Committee may, from time to time, establish one or more programs under which
Participants will be permitted to purchase shares of Stock under the Plan, and
shall designate the Participants eligible to participate under such Stock
purchase programs. The purchase price for shares of Stock available under such
programs, and other terms and conditions of such programs, shall be established
by the Committee. The purchase price may not be less than 75% of the Fair Market
Value of the Stock at the time of purchase (or, in the Committee's discretion,
the average Stock value over a period determined by the Committee), and further
provided that the purchase price may not be less than par value.

    

    12.2.          The
Committee may impose such restrictions with respect to shares purchased under
this section, as the Committee determines to be appropriate. Such restrictions
may include, without limitation, restrictions of the type that may be imposed
with respect to Restricted Stock under Section 8.

    

    SECTION
13

    

    TERMINATION
OF EMPLOYMENT

    

    13.1.          If
a Participant's Date of Termination occurs for any reason other than death,
Disability, early retirement under the terms of a Qualified Retirement Plan of
an Employer, Retirement, or by reason of the Participant's employment being
terminated by the Participant's employer for any reason other than Cause, all
Awards shall be forfeited.

    

    13.2.          If
a Participant's Date of Termination occurs by reason of death, all Options and
Stock Appreciation Rights outstanding immediately prior to the Participant's
Date of Termination shall immediately become exercisable and all restrictions on
Restricted Stock, Restricted Stock Units, Performance Units, Performance Stock
and shares purchased under the Stock Purchase Program outstanding immediately
prior to the Participant's Date of Termination shall lapse.

    

    13.3.         
If a Participant's Date of Termination occurs by reason of Disability, early
retirement under the terms of a Qualified Retirement Plan of an Employer, or
Retirement, the Restricted Period shall lapse on a proportion of any Awards
outstanding immediately prior to the Participant's Date of Termination (except
to the extent that an Award of Restricted Stock, Restricted Stock Units,
Performance Units and Performance Stock is subject to a Performance Period, such
proportion of the Award shall remain subject to the same terms and conditions
for vesting as were in effect prior to termination). The proportion of an Award
upon which the Restricted Period shall lapse shall be a fraction, the
denominator of which is the total number of months of any Restricted Period
applicable to an Award and the numerator of which is the number of months of
such Restricted Period which elapsed prior to the Date of
Termination.

    

    13.4.          If
a Participant's Date of Termination occurs by reason of the Participant's
employment being terminated by the Participant's employer for any reason other
than for Cause, the Restricted Period shall lapse on a proportion of any
outstanding Awards (except Restricted Stock and Restricted Stock Units subject
only to a Performance Period, Performance Units and Performance Stock which
shall be forfeited). The proportion of an Award upon which the Restricted Period
shall lapse shall be a fraction, the denominator of which is the total number of
months of any Restricted Period applicable to an Award and the numerator of
which is the number of months of such Restricted Period which elapsed prior to
the Date of Termination.

    

    13.5.         Stock
Appreciation Rights and Non-Qualified Stock Options which are or become
exercisable by reason of death, Disability, early retirement under the terms of
a Qualified Retirement Plan of an Employer, or Retirement shall expire on the
expiration date set forth in the award or, if earlier:

    

    
      	
               

            	
                      
      (a)

            	
              three
      years after the Date of Termination, if the Participant’s termination
      occurs because of death, Disability, or Retirement; and
  

            

    

    

    
      	
              (b)  

            	
              three
      months after the Date of Termination, if the Participant’s employment is
      terminated by the Participant’s employer for reasons other than Cause or
      early retirement under the terms of a Qualified Retirement Plan of an
      Employer

            

    

    

    Incentive
stock options which are or become exercisable by reason of death, Disability,
early retirement under the terms of a Qualified Retirement Plan of an Employer,
or Retirement shall expire on the expiration date set forth in the award or, if
earlier;

    

    
      	
              (a)  

            	
              three
      years after the Date of Termination, if the Participant’s termination
      occurs because of death; and

            

    

    

    
      	
               

            	
                      
      (b)

            	
              three
      months after the Date of Termination, if the Participant’s is terminated
      because of Disability, by the Participant’s employer for reasons other
      than Cause, early retirement under the terms of a Qualified Retirement
      Plan of an Employer, or Retirement.

            

    

    

    Options
and Stock Appreciation Rights which are or become exercisable at the time of a
Participant’s death may be exercised by the Participant’s designated beneficiary
or, in the absence of such designation, by the person to whom the Participant’s
rights will pass by will or the laws of descent and distribution.

    

    13.6.          If
a Participant's employment is terminated by the Participant's employer for
reasons other than Cause in connection with a merger, consolidation, acquisition
of common control, or business combination of the Company and a Class I Railroad
or a holding company of a Class I Railroad:

    

    
      	
               

            	
                       
      (a)

            	
              All
      outstanding Options and Stock Appreciation Rights then held by the
      Participant shall become exercisable on the Participant’s Date of
      Termination. 

            

    

    

    
      	
               

            	
                       
      (b)

            	
              Any
      restrictions on Awards held by the Participant as of the Participant’s
      Date of Termination shall lapse and all Awards vested as if all
      performance objectives have been attained.

            

    

    

    13.7.  Except to
the extent the Committee shall otherwise determine, if as a result of a sale or
other transaction, a Participant's employer ceases to be a Related Company (and
the Participant's employer is or becomes an entity that is separate from the
Company), the occurrence of such transaction shall be treated as the
Participant's Date of Termination caused by the Participant being discharged by
the Employer.

    

    13.8.  Notwithstanding
the foregoing provisions of this section, the Committee may, with respect to any
Awards of a Participant (or portion thereof) that are outstanding immediately
prior to the Participant's Date of Termination, determine that a Participant's
Date of Termination will not result in forfeiture or other termination of the
Award.

    

    13.9.  Notwithstanding
the foregoing provisions of this section, Awards of Non-Qualified Stock Options
issued after January 1, 1999 which are or become exercisable upon early
retirement under the terms of a Qualified Retirement Plan shall expire on the
expiration date set forth in the award or, if earlier, three years after the
Date of Termination.

    

    SECTION
14

    

    ADJUSTMENTS
TO SHARES

    

    14.1.         If
the Company shall effect a reorganization, merger, or consolidation, or similar
event or effect any subdivision or consolidation of shares of Stock or other
capital readjustment, payment of stock dividend, stock split, spin-off,
combination of shares or recapitalization or other increase or reduction of the
number of shares of Stock outstanding without receiving compensation therefor in
money, services or property, then the Committee shall adjust equitably and
proportionally (i) the number of shares of Stock available under the Plan; (ii)
the number of shares available under any individual or other limits; (iii) the
number of shares of Stock subject to outstanding Awards; and (iv) the per-share
price under any outstanding Award to the extent that the Participant is required
to pay a purchase price per share with respect to the Award.

    

    SECTION
15

    

    TRANSFERABILITY
OF AWARDS

    

    15.1.         Awards
under the Plan are not transferable except as designated by the Participant by
will or by the laws of descent and distribution. To the extent that the
Participant who receives an Award under the Plan has the right to exercise such
Award, the Award may be exercised during the lifetime of the Participant only by
the Participant. Notwithstanding the foregoing provisions of this Section 15,
the Committee may permit Awards under the Plan (other than an Incentive Stock
Option) to be transferred by a Participant for no consideration to or for the
benefit of the Participant's Immediate Family (including, without limitation, to
a trust for the benefit of a Participant's Immediate Family or to a Family
Partnership for members of the Immediate Family), subject to such limits as the
Committee may establish and the transferee shall remain subject to all of the
terms and conditions applicable to such Award prior to such
transfer.

     

    SECTION
16

    

    AWARD
AGREEMENT

    

    16.1.         Each
employee granted an Award pursuant to the Plan shall sign an Award Agreement
which signifies the offer of the Award by the Company and the acceptance of the
Award by the employee in accordance with the terms of the Award and the
provisions of the Plan. Each Award Agreement shall reflect the terms and
conditions of the Award. Participation in the Plan shall confer no rights to
continued employment with the Company nor shall it restrict the right of the
Company to terminate a Participant's employment at any time.

    

    SECTION
17

    

    TAX
WITHHOLDING

    

    17.1.         All
Awards and other payments under the Plan are subject to withholding of all
applicable taxes, which withholding obligations shall be satisfied (without
regard to whether the Participant has transferred an Award under the Plan) by a
cash remittance, or with the consent of the Committee, through the surrender of
shares of Stock which the Participant owns or to which the Participant is
otherwise entitled under the Plan pursuant to an irrevocable election submitted
by the Participant to the Company at the office designated for such purpose. The
number of shares of Stock needed to be submitted in payment of the taxes shall
be determined using the Fair Market Value as of the applicable tax date rounding
down to the nearest whole share; provided that no election to have shares of
Stock withheld from an Award or submission of shares shall be effective with
respect to an Award which was transferred by a Participant in accordance with
the Plan.

    

    17.2   The
Committee may modify the time at which any Award will be transferred if it
determines that such modification may be necessary to avoid acceleration of tax
or imposition of penalties under section 409A of the Internal Revenue
Code.  Regardless of whether the Committee modifies or fails to modify
the time at which any such Award is transferred, the Employee shall be solely
liable for any taxes, including without limitation taxes that may be imposed
under section 409A of the Internal Revenue Code, penalties and interest incurred
by reason of such transfer.

    

    17.3.         If, at the time of an Employee’s
“separation from service” (within the meaning of Section 409Aof the Code), (a) the Employee shall be a Specified
Employee and (b) the Company shall make a good faith determination that an
issuance of Stock or payment of cash in settlement of an Award constitutes
Deferred Compensation, the payment of which is required to be delayed pursuant
to the six-month delay rule set forth in Section 409Aof the Codein order to avoid taxes or penalties
under Section 409Aof the
Code, then the Company
shall not issue such Stock or pay such cash, as applicable, but shall instead
accumulate and pay it, without interest, on the first business day of the
seventh month following such separation from service.

    

    SECTION
18

    

    CHANGE
IN CONTROL

    

    18.1.          Subject
to the provisions of Section 14 (relating to the adjustment of shares), and
except as otherwise provided in the Plan or the Agreement reflecting the
applicable Award, upon the occurrence of a Change in Control:

    

    
      	
               

            	
              (a)

            	
              All
      outstanding Options (regardless of whether in tandem with Stock
      Appreciation Rights) shall become fully exercisable, except to the extent
      that the right to exercise the Option is subject to any restrictions
      established in connection with a Limited Stock Appreciation Right that is
      in tandem with the Option. 

            

    

    

    
      	
               

            	
              (b)

            	
              All
      outstanding Stock Appreciation Rights (regardless of whether in tandem
      with Options) shall become fully exercisable, except that if Stock
      Appreciation Rights are in tandem with an Option, and the Option is in
      tandem with a Limited Stock Appreciation Right, the right to exercise the
      Stock Appreciation Right shall be subject to any restrictions established
      in connection with the Limited Stock Appreciation Right.
  

            

    

    

    
      	
               

            	
              (c)

            	
              All
      shares of Restricted Stock, Restricted Stock Units and Performance Stock
      shall become fully vested. 

            

    

    

    
      	
               

            	
              (d)

            	
              All
      vesting restrictions imposed under Section 12 (relating to restrictions on
      shares purchased by the Participants) shall cease to apply, and the
      Participant shall become fully vested in those shares.
  

            

    

    

    
      	
               

            	
              (e)

            	
              Performance
      Units may be paid out in such manner and amounts as determined by the
      Committee. 

            

    

    

    SECTION
19

    

    TERMINATION
AND AMENDMENT

    

    19.1.          The
Board may suspend, terminate, modify or amend the Plan, provided that any
amendment that would increase the aggregate number of shares which may be issued
under the Plan; materially increase the benefits accruing to Participants under
the Plan; or materially modify the requirements as to eligibility for
participation in the Plan, shall be subject to the approval of BNSF's
stockholders, except that any such increase or modification that may result from
adjustments authorized by Section 14 does not require such approval. No
suspension, termination, modification or amendment of the Plan may terminate a
Participant's existing Award or materially and adversely affect a Participant's
rights under such Award without the Participant's
consent.

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