The Burlington Northern Santa Fe Supplemental Retirement Plan, as amended

1.1.  

Establishment of Supplemental Plan and Purpose.

(a)

The purpose of the Supplemental Plan is to enable eligible employees of the Employers to receive retirement income and other benefits in addition to the retirement income and other benefits payable under the qualified plans of the Company.  The Company and each Affiliated Company which, with the consent of the Chief Executive Officer or Board of Directors of the Company, adopts the Supplemental Plan are referred to herein collectively as the "Employers" and individually as an “Employer.”   The term “Affiliated Company” shall mean all persons with whom the Company is considered to be a single employer under section 414(b) of the Internal Revenue Code of 1986, as amended (hereinafter, the “Code”) and all persons with whom the Company would be considered a single employer under section 414(c) of the Code.

(b)

The Supplemental Plan as set forth herein shall apply to distributions under the Supplemental Plan commencing on or after January 1, 2005 (the “Effective Date” of the Supplemental Plan as set forth herein), excluding payments made before or made after the Effective Date that are part of a series of installment or annuity payments that commenced prior to the Effective Date; provided that payments that commenced prior to the Effective Date will be subject to the applicable provisions of the Supplemental Plan as in effect prior to the Effective Date.

(c)

Notwithstanding the foregoing, if a Participant’s Termination Date occurred before January 1, 2009, and payment of his Supplemental Plan benefits did not commence before the Effective Date, then:

1.2.  

ERISA

1.3.  

Administration

1.4.  

Source of Benefits

1.5.  

Applicable Laws

1.6.  

Gender and Number

1.7.  

Capitalized Terms

1.8.  

Severability of Supplemental Plan Provisions

1.9.  

Notices

(a)

he is a participant in the Retirement Plan; and

(b)

his benefits under the Retirement Plan are limited or affected by any of the provisions set forth in subparagraphs (i), (ii) or (iii) below:

(a)

the amount of the monthly benefit to which the Participant, surviving spouse, or other Contingent Annuitant as defined in the Retirement Plan would be entitled under the Retirement Plan, if (i) such benefit were determined without regard to the compensation limitations of section 401(a)(17) of the Code and without regard to the limitations imposed by section 415 of the Code, and (ii) the Retirement Plan included as compensation any Participant contributions under a non-qualified deferred compensation arrangement, or compensation foregone in exchange for a Company stock award as set forth in Schedule A(1) to this Supplemental Plan, or (iii) any other such compensatory arrangement as may be established by the Company as set forth in Schedule A(2), if not otherwise credited under the Retirement Plan.  To the extent that any compensation is taken into account under the Excess Plan, such compensation shall not be taken into account under the Management Plan.

(b)

the value of the benefits under the Retirement Plan that are payable to or on account of the Participant, surviving spouse, and other Contingent Annuitants; provided that if benefit payments under the Retirement Plan to or on account of the Participant, surviving spouse, or other Contingent Annuitants have not commenced on or before the Benefit Commencement Date, the amount determined under this paragraph (b) shall equal the value of the benefits that would be payable under the Retirement Plan to or on account of the Participant, surviving spouse, and other Contingent Annuitants if such benefit payments under the Retirement Plan had commenced on the Benefit Commencement Date.

(a)

A Participant’s election as to whether his benefits are to be distributed as an Annuity, in a Lump Sum Form, or in an Installment Form shall be made by the Participant by filing a Distribution Election with the Administrator no later than the 30th day following the date on which the Participant first becomes eligible to participate in the Supplemental Plan in accordance with subsection 2.1, or is deemed to participate in the Supplemental Plan in accordance with Treasury Regulation Section 1.409A-2(a).  However, individuals who are Participants in the Supplemental Plan on or prior to January 1, 2009 may file a Distribution Election with the Administrator no later than November 30, 2008, subject to the provisions of section 409A of the Code and applicable guidance issued thereunder (“Section 409A”).

(b)

If a Participant fails to file a Distribution Election in a timely manner in accordance with this subsection 4.2, or if the Participant files a Distribution Election providing for payment in the form of an Annuity but does not specify the form of Annuity, payment will be made in the Life Annuity Form.

(c)

If the Participant has elected in accordance with the foregoing provisions of this Section 4 to have benefits paid as an Annuity (or amounts are otherwise to be paid as an Annuity), he may at any time before the date any Annuity payments have commenced, modify his election by choosing that payments will be made in a different form of Annuity, and/or choosing a different Contingent Annuitant of the Annuity; provided that such change may not modify the Benefit Commencement Date; and further provided that this paragraph (c) is subject to subsection 4.8, if that subsection is otherwise applicable.  If the Participant has elected in accordance with the foregoing provisions of this Section 4 to have benefits paid as an Annuity (or amounts are otherwise to be paid as an Annuity), and fails to elect the form of Annuity prior to the date Annuity payments have commenced, payment will be made in the Single Life Annuity Form if the Participant is not married on the Benefit Commencement Date and in the 50% Joint and Survivor Annuity Form with the Participant’s spouse as the Contingent Annuitant if the Participant is married on the Benefit Commencement Date.

(a)

the calendar month in which occurs the Participant’s Termination Date; and

(b)

if the Participant has completed 10 Years of Vesting Service on or before his Termination Date, the calendar month in which the Participant attains age 55, or if the Participant has not completed at least 10 Years of Vesting Service on his Termination Date, the calendar month in which the Participant attains age 65.

(a)

The employment relationship will be deemed to have ended at the time the employee and his employer reasonably anticipate that a level of bona fide services the employee would perform for the Company and the Affiliated Companies 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 Company and the Affiliated Companies if the employee has performed services for the Company and the Affiliated Companies 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's and the Affiliated Companies' payroll after such date.

(b)

The employment relationship will be treated as continuing intact while the employee is on a bona fide leave of absence (determined in accordance with Treasury Regulation Section 1.409A-1(h)).

(a)

Single Life Annuity Form.  Under the Single Life Annuity Form, a Participant’s Supplemental Retirement Benefit will be paid to him monthly, commencing on his Benefit Commencement Date, and ending with the payment for the month during which his death occurs.

(b)

Joint and Survivor Annuity Form.  Under the Joint and Survivor Annuity Form, the Participant will receive a reduced monthly amount commencing on the Benefit Commencement Date and payable for the life of the Participant and, upon his death, a continuing monthly payment to the Contingent Annuitant of 25%, 50%, 66-2/3%, or 100% of the monthly amount the Participant was receiving, with the payments to the Contingent Annuitant to continue for the Contingent Annuitant’s life.  The Contingent Annuitant under the Joint and Survivor Annuity Form may be designated by the Participant (and may be changed by the Participant) at any time before the Benefit Commencement Date.

(c)

Period Certain and Life Annuity Form.  Under the Period Certain and Life Annuity Form, the Participant will receive a reduced monthly amount commencing on the Benefit Commencement Date and payable to the Participant for life and, upon his death, a continuing monthly payment to the Contingent Annuitant of the same amount for the remainder of the 120 months beginning with the month that includes the Benefit Commencement Date.  The Contingent Annuitant may be designated by the Participant (and may be changed by the Participant) at any time before the Participant's death.  If the Contingent Annuitant designated by the Participant predeceases the Participant, the Contingent Annuitant shall receive no benefits under this subsection 4.5, and the benefits will be paid to the Participant or, if the Participant dies prior to the payment of the 120 monthly payments, the remainder will be paid to the Participant’s estate at the same time and in the same manner as they would have been paid to the Participant had he survived to the end of the 120 month period after the Benefit Commencement Date.  Subject to the applicable provisions of subsection 4.8, if the Contingent Annuitant designated by the Participant survives the Participant but dies prior to payment of all period certain benefits, the benefits, if any, that would be payable to the Contingent Annuitant shall be paid to the Contingent Annuitant’s estate (or to a secondary Contingent Annuitant to the extent designated in an effective Contingent Annuitant Designation Form) at the same time and in the same manner as they would have been payable to the Contingent Annuitant if the Contingent Annuitant had survived.

(d)

Lump Sum Form.  Under the Lump Sum Form, the Participant will receive a single sum in full satisfaction of any liability under the Supplemental Plan to such Participant.  

(e)

Installment Form.  Under the Installment Form, the Participant will receive monthly installments over a period of five or ten years, beginning on the Benefit Commencement Date, and if the Participant dies prior to payment of all such installments, the remainder shall be paid to the Contingent Annuitant.  The Contingent Annuitant with respect to the Installment Form may be designated by the Participant (and may be changed by the Participant) at any time before the Participant's death.  If the Contingent Annuitant designated by the Participant predeceases the Participant, the Contingent Annuitant shall receive no benefits under this subsection 4.5, and the installments will be paid to the Participant or, if the Participant dies prior to the payment of payment of all of the installments, the remainder will be paid to the Participant’s estate at the same time and in the same manner as they would have been paid to the Participant had he survived during the entire installment payment period.  Subject to the applicable provisions of subsection 4.8, if the Contingent Annuitant designated by the Participant survives the Participant but dies prior to payment of all installments, then the installments, if any, that would be payable to the Contingent Annuitant shall be paid to the Contingent Annuitant’s estate (or to a secondary Contingent Annuitant to the extent designated in an effective Contingent Annuitant Designation Form) at the same time and in the same manner as they would have been payable to the Contingent Annuitant if the Contingent Annuitant had survived.

(f)

Annuity Form of Payment.  For purposes of this Supplemental Plan, the term “Annuity” means the Life Annuity Form, the Joint and Survivor Annuity Form, and the Period Certain and Life Annuity Form.

(a)

Annuity Form.  If the Participant’s Distribution Election provides for payment of his benefits as an Annuity (or benefits are otherwise to be paid as in an Annuity), then the Surviving Spouse will be entitled to the Pre-Retirement Surviving Spouse Benefit in the form of an annuity payable for her lifetime to which the Surviving Spouse would have been entitled under the Retirement Plan if the benefit had been determined under the Retirement Plan in accordance with subsection 3.1 of this Supplemental Plan, including the reduction provided by paragraph 3.1(b) (the “Supplemental Plan Pre-Retirement Surviving Spouse Benefit”).  

(b)

Installment and Lump Sum Forms.  If the Participant’s Distribution Election provides for payment of his benefits in the Installment Form or the Lump Sum Form, and such election is in effect and has not been revoked before the Participant’s death, then the Surviving Spouse will be entitled to the Installment Form of payment over a period of five or ten years or to the Lump Sum Form, (with choice of the Lump Sum Form or the Installment Form, and the number of years of installments if applicable, to be as elected by the Participant in his Distribution Election), and such Installment Form or Lump Sum Form to be the actuarial equivalent of the Supplemental Plan Pre-Retirement Surviving Spouse Benefit.

(c)

Time of Benefit Commencement.  Benefits to the Surviving Spouse under this subsection 4.8 will commence (or in the case of the Lump Sum Form, will be made) on the Participant’s Benefit Commencement Date.  

(d)

Death after Benefit Commencement.  If a Participant dies on or after his Benefit Commencement Date, no death benefits will be payable under the Supplemental Plan except as may be provided under the distribution method applicable to such benefits in accordance with subsection 4.5 hereof.

(e)

Designation of Contingent Annuitant.  If the Participant dies before his Benefit Commencement Date, then, for purposes of this subsection 4.8, the Participant’s designation of a Contingent Annuitant other than the Surviving Spouse will be disregarded, and instead the Participant will be treated as though he had designated the Surviving Spouse as his Contingent Annuitant.

(f)

Application to Specified Employees.  For purposes of this subsection 4.8, the provisions of subsection 4.7 will be disregarded in determining the Participant’s Benefit Commencement Date.

Notwithstanding any other provisions of this Supplemental Plan, it is intended that the Supplemental Plan shall in all respects be operated in accordance with Section 409A.  Further, the Administrator may modify the time of payment of the Participant’s benefits if it determines that such modification may be necessary to avoid acceleration of tax or imposition of penalties under Section 409A.  Regardless of whether the Administrator modifies or fails to modify the time at which any such benefit is settled, paid-out, vested or transferred, the Participant shall be solely liable for any taxes, including without limitation taxes that may be imposed under Section 409A, additional taxes and interest incurred by reason of such transfer.

The Employers may withhold from any payment of benefits hereunder any taxes, RRTA or FICA Amounts (defined in paragraph (d)) required to be withheld and such sum as the Employers may reasonably estimate to be necessary to cover any taxes for which the Employers may be liable and which may be assessed with regard to such payment.

If, with respect to a Participant’s Plan benefits, RRTA or FICA Amounts (defined in paragraph (d)) are due from a Participant more than 31 days before the Benefit Commencement Date for those benefits, the Company will pay to the applicable tax authorities:

The term “RRTA or FICA Amounts” means the Railroad Retirement Tax Act tax imposed under Code section 3201, section 3211, section 3231(e)(1), and section 3231(e)(8), and the Federal Insurance Contributions Act tax imposed under Code section 3101, section 3121(a), and section 3121(v)(2) where applicable.  The term “Income Tax Withholding Amounts” means the income tax at source on wages imposed under Code section 3401 or the corresponding withholding provisions of applicable state, local, or foreign tax laws as a result of the payment of the FICA or RRTA Amounts, and the additional income tax at source on wages attributable to the pyramiding section 3401 wages.

(a)

to adopt and apply in a uniform and nondiscriminatory manner to all persons similarly situated, such rules of procedure and regulations as, in its opinion, may be necessary for the proper and efficient administration of the Supplemental Plan and as are consistent with the provisions of the Supplemental Plan;

(b)

to enforce the Supplemental Plan in accordance with its terms and with such applicable rules and regulations as may be adopted by the Administrator;

(c)

to determine conclusively all questions arising under the Supplemental Plan, including the power to determine the eligibility of employees and the rights of Participants and other persons entitled to benefits under the Supplemental Plan and their respective benefits, to make factual findings and to remedy ambiguities, inconsistencies or omissions of whatever kind;

(d)

to maintain and keep adequate records concerning the Supplemental Plan and concerning its proceedings and acts in such form and detail as the Administrator may decide;

(e)

to direct all payment of benefits under the Supplemental Plan; and

(f)

to employ such agents, attorney, accountants or other persons (who may also be employed by or represent the Employers) for such purposes as the Administrator considers necessary or desirable to discharge the Administrator’s duties.

(a)

reduce or impair the interests of Participants in benefits being paid under the Supplemental Plan as of the date of the amendment or termination, as the case may be; or

(b)

reduce the amount of Supplemental Retirement Benefits payable to or on account of an employee of an Employer to an amount which is less that the amount to which he would be entitled in accordance with the provisions of the Supplemental Plan if the employee terminated employment immediately prior to the date of the amendment or termination, as the case may be, and the employee were fully vested in his benefits accrued through the date of such amendment or termination.

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;

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;

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

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 of 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.

(1)

Plans and Programs providing for non-qualified deferred compensation or compensation foregone in exchange for a Company stock award which is not taken into account under the Retirement Plan but which is taken into account under the Supplemental Plan

 

Burlington Northern Inc. Deferred Compensation Plan

 

Santa Fe Pacific Supplemental Deferred Compensation Plan

 

Burlington Northern Santa Fe Incentive Bonus Stock Program

 

Burlington Northern Santa Fe Salary Exchange Option Program

 

Burlington Northern Santa Fe Estate Enhancement Program

 

Santa Fe Pacific Supplemental Retirement and Savings Plan

 

Burlington Northern Santa Fe Supplemental Investment and Retirement Plan

(2)

Other compensatory arrangement established by the Company relating to benefits under the Supplemental Plan

 

Retirement Benefit Agreement between R. D. Krebs and Santa Fe Pacific Corporation, dated March 24, 1992

 

Retirement Benefit Agreement between R. D. Krebs and Burlington Northern Santa  Fe Corporation, dated December 12, 2001

 

Retirement Benefit Agreement between M. D. Dealy and The Atchison, Topeka and Santa Fe Railway Company, dated July 19, 1993

 

Retirement Benefit Agreement between BNSF Corporation and John Klaus, dated January 22, 2000

 

Retirement Benefit Agreement between Burlington Northern Santa Fe Corporation and Mr. Craig Hill, dated January 26, 2000

 

Retirement Benefit Agreement between BNSF Corporation and Sami Shalah, dated January 27, 2000

 

Retirement Benefit Agreement between BNSF Corporation and Gloria Zamora, dated October 30, 2001

 

Retirement Benefit Agreement between Burlington Northern Santa Fe Corporation and Mr. Matthew K. Rose, dated April 19, 2002

 

Retirement Benefit Agreement between Burlington Northern Santa Fe Corporation and Mr. Charles L. Schultz, dated May 22, 2003

 

Retirement Benefit Agreement between BNSF Corporation and John Lanigan, dated March 20, 2003