LOCKHEED MARTIN CORPORATION
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DEFERRED MANAGEMENT INCENTIVE
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COMPENSATION PLAN
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(Adopted July 27, 1995)
As Amended August 1, 1998
As Amended June 28, 2001
ARTICLE I
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PURPOSES OF THE PLAN
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The purposes of the Lockheed Martin Corporation Deferred
Management Incentive Compensation Plan (the "Deferral Plan") are to provide
certain key management employees of Lockheed Martin Corporation and its
subsidiaries (the "Company") the opportunity to defer receipt of Incentive
Compensation awards under the Lockheed Martin Corporation Management Incentive
Compensation Plan (the "MICP") and to encourage key employees to maintain a
financial interest in the Company's performance. Except as expressly provided
hereinafter, the provisions of this Deferral Plan and the MICP shall be
construed and applied independently of each other.
The Deferral Plan applies solely to MICP awards and expressly
does not apply to any special awards which may be made under any of the
Company's other incentive plans, except and to the extent specifically provided
under the terms of such other incentive plans and the relevant awards.
ARTICLE II
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DEFINITIONS
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Unless the context indicates otherwise, the following words
and phrases shall have the meanings hereinafter indicated:
1. ACCOUNT -- The bookkeeping account maintained by the
Company for each Participant which is credited with the Participant's Deferred
Compensation and earnings (or losses) attributable to the investment options
selected by the Participant, and which is debited to reflect distributions and
forfeitures; the portions of a Participant's Account allocated to different
investment options will be accounted for separately.
2. ACCOUNT BALANCE -- The total amount credited to a
Participant's Account at any point in time, including the portions of the
Account allocated to each investment option.
3. AWARD YEAR -- The calendar year with respect to which an
Eligible Employee is awarded Incentive Compensation.
4. BENEFICIARY -- The person or persons (including a trust or
trusts) validly designated by a Participant, on the form provided by the
Company, to receive distributions of the Participant's Account Balance, if any,
upon the Participant's death. In the absence of a valid designation, or if the
designated Beneficiary has predeceased the Participant, the Beneficiary shall be
the person or persons entitled by will or the laws of descent and distribution
to receive the amounts otherwise payable to the Participant under this Deferral
Plan; a Participant may amend his or her Beneficiary designation at any time
before the Participant's death.
5. BOARD -- The Board of Directors of Lockheed Martin
Corporation.
6. COMMITTEE -- The committee described in Section 1 of
Article VIII.
7. COMPANY -- Lockheed Martin Corporation and its
subsidiaries.
8. COMPANY STOCK INVESTMENT OPTION -- The investment option
under which the amount credited to a Participant's Account will be based on the
market value and investment return of the Company's Common Stock.
9. DEFERRAL AGREEMENT -- The written agreement executed by an
Eligible Employee on the form provided by the Company under which the Eligible
Employee elects to defer Incentive Compensation for an Award Year.
10. DEFERRAL PLAN -- The Lockheed Martin Corporation Deferred
Management Incentive Compensation Plan, adopted by the Board on July 27, 1995,
and as amended from time to time.
11. DEFERRED COMPENSATION -- The amount of Incentive
Compensation credited to a Participant's Account under the Deferral Plan for an
Award Year.
12. ELIGIBLE EMPLOYEE -- An employee of the Company who is a
participant in the MICP and who has satisfied such additional requirements for
participation in this Deferral Plan as the Committee may from time to time
establish. In the exercise of its authority under this provision, the Committee
shall limit participation in the Plan to employees whom the Committee believes
to be a select group of management or highly compensated employees within the
meaning of Title I of the Employee Retirement Income Security Act of 1974, as
amended.
13. EXCHANGE ACT -- The Securities Exchange Act of 1934.
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14. INCENTIVE COMPENSATION -- The MICP amount granted to an
employee for an Award Year.
15. INTEREST OPTION -- The investment option under which
earnings will be credited to a Participant's Account based on the interest rate
applicable under Cost Accounting Standard 415, Deferred Compensation.
16. MICP -- The Lockheed Martin Corporation Management
Incentive Compensation Plan.
17. PARTICIPANT -- An Eligible Employee for whom Incentive
Compensation has been deferred for one or more years under this Deferral Plan;
the term shall include a former employee whose Deferred Compensation has not
been fully distributed.
18. PAYMENT DATE -- Means, as to any Participant, the January
15 or July 15 on or about on which payment to the Participant is to begin in
accordance with the Participant's election made pursuant to Section 2 of Article
V.
19. SECTION 16 PERSON -- A Participant who at the relevant
time is subject to the reporting and short-swing liability provisions of Section
16 of the Securities Exchange Act of 1934.
20. SUBSIDIARY -- Means, as to any person, any corporation,
association, partnership, joint venture or other business entity of which 50% or
more of the voting stock or other equity interests (in the case of entities
other than corporation), is owned or controlled (directly or indirectly) by that
entity, or by one or more of the Subsidiaries of that entity, or by a
combination thereof.
21. TRADING DAY -- A day upon which transactions with respect
to Company Common Stock are reported in the consolidated transaction reporting
system.
ARTICLE III
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ELECTION OF DEFERRED AMOUNT
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1. Timing of Deferral Elections. An Eligible Employee may
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elect to defer Incentive Compensation for an Award Year by executing and
delivering to the Company a Deferral Agreement no later than October 15 of the
Award Year or such other date established by the Committee for an Award Year
that is not later than October 31 of that Award Year, provided that any election
by a Section 16 Person shall be subject to the provisions of Section 4 of
Article IV. An employee who first qualifies as an Eligible Employee after
September 15 of an Award Year may elect to defer Incentive Compensation for that
Award Year by entering into a Deferral Agreement up to thirty (30)
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days after the date on which such employee first becomes a participant in the
MICP. An Eligible Employee's Deferral Agreement shall be irrevocable when
delivered to the Company. Each Deferral Agreement shall apply only to amounts
deferred in that Award Year and a separate Deferral Agreement must be completed
for each Award Year for which an Eligible Employee defers Incentive
Compensation.
2. Amount of Deferral Elections. An Eligible Employee's
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deferral election may be stated as:
(a) a dollar amount which is at least $5,000 and is an even
multiple of $1,000,
(b) the greater of $5,000 or a designated percentage of the
Eligible Employee's Incentive Compensation (adjusted to the
next highest multiple of $1,000),
(c) the excess of the Eligible Employee's Incentive
Compensation over a dollar amount specified by the Eligible
Employee (which must be an even multiple of $1,000), or
(d) all of the Eligible Employee's Incentive Compensation.
An Eligible Employee's deferral election shall be effective only if the
Participant is awarded at least $10,000 of Incentive Compensation for that
Award Year, and, in the case of a deferral election under paragraph (c) of this
Section 2, only if the resulting excess amount is at least $5,000.
3. Effect of Taxes on Deferred Compensation. The amount that
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would otherwise be deferred and credited to an Eligible Employee's Account will
be reduced by the amount of any tax that the Company is required to withhold
with respect to the Deferred Compensation. The reduction for taxes shall be made
proportionately out of amounts otherwise allocable to the Interest Option and
the Company Stock Investment Option.
ARTICLE IV
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CREDITING OF ACCOUNTS
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1. Crediting of Deferred Compensation. Incentive
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Compensation that has been deferred hereunder shall be credited to a
Participant's Account as of the day on which the Incentive Compensation would
have been paid to the Participant if no Deferral Agreement had been made.
2. Crediting of Earnings. Earnings shall be credited to a
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Participant's Account based on the investment option or options to which the
Account has been allocated, beginning with the day as of which Deferred
Compensation (or any reallocation under Section 4, 5, or 6 of Article IV) is
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credited to the Participant's Account. Any amount distributed from a
Participant's Account shall be credited with earnings through the last day of
the month preceding the month in which a distribution is to be made pursuant to
the Participant's election as set forth in Article V. The earnings credited
under each of the investment options shall be determined as follows:
(a) Interest Option: The portion of a Participant's
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Account allocated to the Interest Option shall be credited
with interest, compounded monthly, at a rate equivalent to the
then published rate for computing the present value of future
benefits at the time cost is assignable under Cost Accounting
Standard 415, Deferred Compensation, as determined by the
Secretary of the Treasury on a semi-annual basis pursuant to
Pub. L. 92-41, 85 Stat. 97.
(b) Company Stock Investment Option: The portion of a
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Participant's Account allocated to the Company Stock
Investment Option shall be credited as if such amount had been
invested in the Company's Common Stock at the published
closing price of the Company's Common Stock on the last
Trading Day preceding the day as of which Deferred
Compensation (or any reallocation under Section 4, 5, or 6 of
Article IV) is credited to the Participant's Account; this
portion of the Participant's Account Balance shall reflect any
subsequent appreciation or depreciation in the market value of
the Company's Common Stock based on the closing price of the
stock on the New York Stock Exchange on the last Trading Day
of each month and shall reflect dividends on the Company's
Common Stock as if such dividends had been reinvested in the
Company's Common Stock.
(c) Interest Crediting For Late Payments:
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Notwithstanding the investment option to which a Participant's
Account has been allocated, in the event payment does not
commence by the last day of the month in which the Payment
Date occurs, earnings shall be credited on the Participant's
entire Account from the last day of the month preceding the
Payment Date to the last day of the month preceding the actual
commencement of payment at the rate set forth under Section
2(a) of this Article IV. Interest credited under this Section
2(c) of this Article IV shall be paid on the date payment
under the Plan first commences.
3. Selection of Investment Options. Except as otherwise
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provided in this Deferral Plan, a Participant's investment selections shall be
made as part of his or her Deferral Agreement for an Award Year and shall be
irrevocable with respect to amounts deferred for that Award Year, and no
subsequent reallocations shall be made. At the time of entering into a Deferral
Agreement for any subsequent Award Year, a Participant shall select the
investment options for the Deferred Compensation to be credited to the
Participant's Account for that Award Year. A Participant's allocations
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between investment options shall be subject to such minimum allocations as the
Committee may establish.
4. Special Rules for Section 16 Persons. Notwithstanding the
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foregoing, an election by a Section 16 Person to have Deferred Compensation
allocated to the Company Stock Investment Option shall be given effect only if
irrevocably made at least six months prior to the effective date of the
allocation. If a Section 16 Person's Deferral Agreement for an Award Year is
entered into less than six months prior to the date that Deferred Compensation
is credited for that Award Year, and if he or she has elected to have any
portion of the Deferred Compensation for that Award Year allocated to the
Company Stock Investment Option, that portion shall initially be allocated to
the Interest Option and shall be reallocated and credited to the Company Stock
Investment Option as of the first day of the seventh month following the month
in which the Deferral Agreement was made. An Eligible Employee who first becomes
a Section 16 Person after his or her Deferral Agreement has been entered into
for an Award Year shall be subject to the requirements of this Section 4, except
that such an Eligible Employee shall be permitted, within ten business days
after becoming a Section 16 Person, to make irrevocable modified investment
elections for that Award Year; any allocations to the Company Stock Investment
Option on behalf of such a Section 16 Person shall be deferred until the first
day of the seventh month following the month in which the Eligible Employee's
modified election is made (or, if later, the first day of the seventh month
following the month in which the election period expires without a modified
election having been made).
5. Reallocations to Company Stock Investment Option. Each
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Eligible Employee for whom an account is maintained under the Deferred
Management Incentive Compensation Plan of Lockheed Corporation and its
Subsidiaries (the "Lockheed Plan") will be given a one-time opportunity during
calendar year 1996 to make an irrevocable election to have all or a portion of
that account balance credited to the Eligible Employee's Account under this
Deferral Plan and reallocated to the Company Stock Investment Option. That
reallocation shall be credited to the Participant's Account under this Deferral
Plan as of the first day of the month following the last month in which such
elections are permitted, but in the case of a Section 16 Person not earlier than
the first day of the seventh month after the month in which the election is
delivered to the Company. If such a reallocation is made, the Eligible
Employee's right to receive benefits under the Lockheed Plan will be reduced
accordingly, and the Company will be released from liability under the
Lockheed Plan for the amount reallocated. Although the terms of this Deferral
Plan shall generally apply to any amount so reallocated, the Eligible Employee's
irrevocable payment elections under the Lockheed Plan will continue to apply to
the reallocated amount.
6. Reallocations to Interest Option. If benefit payments to a
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Participant or Beneficiary are to be paid or commenced to be paid over a period
that extends more than six months after the date of the Participant's
termination of employment with the Company or death, the Participant or
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Beneficiary, as applicable, may elect irrevocably at any time after the
Participant's termination of employment or death and before the commencement of
benefit payments to have the portion of the Participant's Account that is
allocated to the Company Stock Investment Option reallocated to the Interest
Option. A reallocation under this Section 6 shall take effect as of the first
day of the month following the month in which an executed reallocation election
is delivered to the Company, but in the case of a Section 16 Person not earlier
than the first day of the seventh month following the month in which the
reallocation election is delivered to the Company.
ARTICLE V
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PAYMENT OF BENEFITS
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1. General. The Company's liability to pay benefits to a
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Participant or Beneficiary under this Deferral Plan shall be measured by and
shall in no event exceed the Participant's Account Balance. Except as otherwise
provided in this Deferral Plan, a Participant's Account Balance shall be paid to
him in accordance with the Participant's elections under Sections 2 and 3 of
this Article, and such elections shall be continuing and irrevocable. All
benefit payments shall be made in cash and, except as otherwise provided, shall
reduce allocations to the Interest Option and the Company Stock Investment
Option in the same proportions that the Participant's Account Balance is
allocated between those investment options at the end of the month preceding the
date of distribution. Notwithstanding the foregoing, no amount shall be
distributed to a Section 16 Person under this Deferral Plan unless the amount
was allocated to the Participant's Account at least six months prior to the date
of distribution or no portion of the amount was allocated to the Company Stock
Investment Option.
2. Election for Commencement of Payment. At the time a
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Participant first completes a Deferral Agreement, he or she shall elect from
among the following options governing the date on which the payment of benefits
shall commence:
(A) Payment to begin on or about the January
15th or July 15th next following the date of
the Participant's termination of employment
with the Company for any reason.
(B) Payment to begin on or about January 15th of
the year next following the year in which
the Participant terminates employment with
the Company for any reason.
(C) Payment to begin on or about the January
15th or July 15th next following the date on
which the Participant has both terminated
employment with the Company for
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any reason and attained the age designated
by the Participant in the Deferral
Agreement.
3. Election for Form of Payment. At the time a
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Participant first completes a Deferral Agreement, he or she shall elect the form
of payment of his or her Account Balance from among the following options:
(A) A lump sum.
(B) Annual payments for a period of years
designated by the Participant which shall
not exceed fifteen (15). The amount of each
annual payment shall be determined by
dividing the Participant's Account Balance
at the end of the month prior to such
payment by the number of years remaining in
the designated installment period. The
installment period may be shortened, in the
sole discretion of the Committee, if the
Committee at any time determines that the
amount of the annual payments that would be
made to the Participant during the
designated installment period would be too
small to justify the maintenance of the
Participant's Account and the processing of
payments.
4. Prospective Change of Payment Elections. At the time of
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entering into a Deferral Agreement for an Award Year, a Participant may modify
his payment elections under Sections 2 and 3 with respect to the portion of his
or her Account allocable to the amounts to be deferred for that Award Year and
subsequent Award Years. If a Participant has different payment elections in
effect, the Company shall maintain sub-accounts for the Participant to determine
the amounts subject to each payment election; no modification of payment
elections will be accepted if it would require the Company to maintain more than
five (5) sub-accounts within the Participant's Account in order to make payments
in accordance with the Participant's elections.
5. Acceleration upon Early Termination. Notwithstanding a
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Participant's payment elections under Sections 2 and 3, if the Participant
terminates employment with the Company other than by reason of layoff, death or
disability and before the Participant is eligible to commence receiving
retirement benefits under a pension plan maintained by the Company (or before
the Participant has attained age 55 if the Participant does not participate in
such a pension plan), the Participant's Account Balance shall be distributed to
him or her in a lump sum on or about the January 15th or July 15th next
following the date of the Participant's termination of employment with the
Company.
6. Acceleration Upon Conflict of Interest. Notwithstanding a
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Participant's payment elections under Sections 2 and 3, if following a
Participant's termination of employment with the Company, the Participant takes
a position (or accepts a position) with a governmental entity, agency,
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or instrumentality and that employer has determined or indicated that the
Participant's continued participation in the Plan may constitute a conflict of
interest precluding the Participant from continuing in his position (or from
accepting an offered position) with that employer or subjecting the Participant
to penalty, sanction, or otherwise limiting the Participant's responsibilities
for that employer, then the Participant's Account Balance shall be distributed
to him or her in a lump sum as soon as practical following the later of (i) the
date on which the Participant commences employment with the government employer;
or (ii) the date on which it is determined that the conflict of interest may
exist.
7. Death Benefits. Upon the death of a Participant before a
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complete distribution of his or her Account Balance, the Account Balance will be
paid to the Participant's Beneficiary in accordance with the payment elections
applicable to the Participant. If a Participant dies while actively employed or
otherwise before the payment of benefits has commenced, payments to the
Beneficiary shall commence on the date payments to the Participant would have
commenced, taking account of the Participant's termination of employment (by
death or before) and, if applicable, by postponing commencement until after the
date the Participant would have attained the commencement age specified by the
Participant. Whether the Participant dies before or after the commencement of
distributions, payments to the Beneficiary shall be made for the period or
remaining period elected by the Participant.
8. Early Distributions in Special Circumstances.
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Notwithstanding a Participant's payment elections under Sections 2 and 3 of this
Article V, a Participant or Beneficiary may request an earlier distribution in
the following limited circumstances:
(a) Hardship Distributions. Subject to the last sentence
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of this Section 8(a) with respect to Section 16 Persons, the
Committee shall have the power and discretion at any time to
approve a payment to a Participant if the Committee determines
that the Participant is suffering from a serious financial
emergency caused by circumstances beyond the Participant's
control which would cause a hardship to the Participant unless
such payment were made. Any such hardship payment will be in a
lump sum and will not exceed the lesser of (i) the amount
necessary to satisfy the financial emergency (taking account
of the income tax liability associated with the distribution),
or (ii) the Participant's Account Balance. In the event that a
Section 16 Person seeks a hardship withdrawal under this
Section 8(a), the distribution will be made first out of the
portion of the Participant's Account, if any, allocated to the
Interest Option; if the hardship distribution cannot be
satisfied in full out of amounts allocated to the Interest
Option, no distribution will be made from the portion of the
Participant's Account allocated to the Company Stock
Investment Option until the seventh month following the month
in which the Participant's application under
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this Section 8(a) was made, which application shall be
irrevocable when made.
(b) Withdrawal with Forfeiture. A Participant may
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elect at any time to withdraw ninety percent (90%) of the
amount credited to the Participant's Account. If such a
withdrawal is made, the remaining ten percent (10%) of the
Participant's Account shall be permanently forfeited, and the
Participant will be prohibited from deferring any amount under
the Deferral Plan for the Award Year in which the withdrawal
is received (or the first Award Year in which any portion of
the withdrawal is received). In the event that a Section 16
Person seeks a withdrawal under this Section 8(b), any portion
of the Section 16 Person's Account allocated to the Company
Stock Investment Option will not be subject to distribution or
forfeiture until the seventh month following the month in
which the Participant's election under this Section 8(b) was
made, which election shall be irrevocable when made; any
portion of the Section 16 Person's Account allocated to the
Interest Option will be subject to immediate distribution and
forfeiture; the ten percent forfeiture shall be separately
applied to each such portion of the Section 16 Person's
Account at the time of distribution.
(c) Death or Disability. In the event that a
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Participant dies or becomes permanently disabled before the
Participant's entire Account Balance has been distributed, the
Committee, in its sole discretion, may modify the timing of
distributions from the Participant's Account, including the
commencement date and number of distributions, if it concludes
that such modification is necessary to relieve the financial
burdens of the Participant or Beneficiary.
9. Acceleration upon Change in Control.
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(a) Notwithstanding any other provision of the
Deferral Plan, the Account Balance of each Participant shall
be distributed in a single lump sum within fifteen (15)
calendar days following a "Change in Control."
(b) For purposes of this Deferral Plan, a Change in
Control shall include and be deemed to occur upon the
following events:
(1) A tender offer or exchange offer is
consummated for the ownership of securities of the
Company representing 25% or more of the combined
voting power of the Company's then outstanding voting
securities entitled to vote in the election of
directors of the Company.
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(2) The Company is merged, combined,
consolidated, recapitalized or otherwise reorganized
with one or more other entities that are not
Subsidiaries and, as a result of the merger,
combination, consolidation, recapitalization or other
reorganization, less than 75% of the outstanding
voting securities of the surviving or resulting
corporation shall immediately after the event be
owned in the aggregate by the stockholders of the
Company (directly or indirectly), determined on the
basis of record ownership as of the date of
determination of holders entitled to vote on the
action (or in the absence of a vote, the day
immediately prior to the event).
(3) Any person (as this term is used in
Sections 3(a)(9) and 13(d)(3) of the Exchange Act,
but excluding any person described in and satisfying
the conditions of Rule 13d-1(b)(1) thereunder),
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 entitled to
vote in the election of directors of the Company.
(4) At any time within any period of two
years after a tender offer, merger, combination,
consolidation, recapitalization, or other
reorganization or a contested election, or any
combination of these events, the "Incumbent
Directors" shall cease to constitute at least a
majority of the authorized number of members of the
Board. For purposes hereof, "Incumbent Directors"
shall mean the persons who were members of the Board
immediately before the first of these events and the
persons who were elected or nominated as their
successors or pursuant to increases in the size of
the Board by a vote of at least three-fourths of the
Board members who were then Board members (or
successors or additional members so elected or
nominated).
(5) The stockholders of the Company approve
a plan of liquidation and dissolution or the sale or
transfer of substantially all of the Company's
business and/or assets as an entirety to an entity
that is not a Subsidiary.
(c) Notwithstanding the provisions of Section 9(a),
if a distribution in accordance with the provisions of Section
9(a) would result in a nonexempt short-swing transaction under
Section 16(b) of the Exchange Act with respect to any Section
16 Person, then the date of distribution to such Section 16
Person shall be delayed until the earliest date upon which the
distribution either would not result in a nonexempt
short-swing transaction or would
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otherwise not result in liability under Section 16(b) of the
Exchange Act.
(d) This Section 9 shall apply only to a Change in
Control of Lockheed Martin Corporation and shall not cause
immediate payout of Deferred Compensation in any transaction
involving the Company's sale, liquidation, merger, or other
disposition of any subsidiary.
(e) The Committee may cancel or modify this Section 9
at any time prior to a Change in Control. In the event of a
Change in Control, this Section 9 shall remain in force and
effect, and shall not be subject to cancellation or
modification for a period of five years, and any defined term
used in Section 9 shall not, for purposes of Section 9, be
subject to cancellation or modification during the five year
period.
10. Deductibility of Payments. In the event that the payment
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of benefits in accordance with the Participant's elections under Sections 2 and
3 would prevent the Company from claiming an income tax deduction with respect
to any portion of the benefits paid, the Committee shall have the right to
modify the timing of distributions from the Participant's Account as necessary
to maximize the Company's tax deductions. In the exercise of its discretion to
adopt a modified distribution schedule, the Committee shall undertake to have
distributions made at such times and in such amounts as most closely approximate
the Participant's elections, consistent with the objective of maximum
deductibility for the Company. The Committee shall have no authority to reduce a
Participant's Account Balance or to pay aggregate benefits less than the
Participant's Account Balance in the event that all or a portion thereof would
not be deductible by the Company.
11. Change of Law. Notwithstanding anything to the contrary
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herein, if the Committee determines in good faith, based on consultation with
counsel, that the federal income tax treatment or legal status of the Plan has
or may be adversely affected by a change in the Internal Revenue Code, Title I
of the Employee Retirement Income Security Act of 1974, or other applicable law
or by an administrative or judicial construction thereof, the Committee may
direct that the Accounts of affected Participants or of all Participants be
distributed as soon as practicable after such determination is made, to the
extent deemed necessary or advisable by the Committee to cure or mitigate the
consequences, or possible consequences of, such change in law or interpretation
thereof.
12. Tax Withholding. To the extent required by law, the
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Company shall withhold from benefit payments hereunder, or with respect to any
Incentive Compensation deferred hereunder, any Federal, state, or local income
or payroll taxes required to be withheld and shall furnish the recipient and the
applicable government agency or agencies with such reports, statements, or
information as may be legally required.
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ARTICLE VI
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EXTENT OF PARTICIPANTS' RIGHTS
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1. Unfunded Status of Plan. This Deferral Plan constitutes a
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mere contractual promise by the Company to make payments in the future, and each
Participant's rights shall be those of a general, unsecured creditor of the
Company. No Participant shall have any beneficial interest in any specific
assets that the Company may hold or set aside in connection with this Deferral
Plan. Notwithstanding the foregoing, to assist the Company in meeting its
obligations under this Deferral Plan, the Company may set aside assets in a
trust described in Revenue Procedure 92-64, 1964-2 C.B. 44, and the Company may
direct that its obligations under this Deferral Plan be satisfied by payments
out of such trust. The assets of any such trust will remain subject to the
claims of the general creditors of the Company. It is the Company's intention
that the Plan be unfunded for Federal income tax purposes and for purposes of
Title I of the Employee Retirement Income Security Act of 1974.
2. Nonalienability of Benefits. A Participant's rights under
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this Deferral Plan shall not be assignable or transferable and any purported
transfer, assignment, pledge or other encumbrance or attachment of any payments
or benefits under this Deferral Plan, or any interest therein shall not be
permitted or recognized, other than the designation of, or passage of payment
rights to, a Beneficiary.
ARTICLE VII
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AMENDMENT OR TERMINATION
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1. Amendment. The Board may amend, modify, suspend or
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discontinue this Deferral Plan at any time subject to any shareholder approval
that may be required under applicable law, provided, however, that no such
amendment shall have the effect of reducing a Participant's Account Balance or
postponing the time when a Participant is entitled to receive a distribution of
his Account Balance. Further, no amendment may alter the formula for crediting
interest to Participants' Accounts with respect to amounts for which deferral
elections have previously been made, unless the amended formula is not less
favorable to Participants than that previously in effect, or unless each
affected Participant consents to such change.
2. Termination. The Board reserves the right to terminate this
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Plan at any time and to pay all Participants their Account Balances in a lump
sum immediately following such termination or at such time thereafter as the
Board may determine; provided, however, that if a distribution in accordance
with the provisions of this Section 2 would otherwise result in a nonexempt
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short-swing transaction under Section 16(b) of the Exchange Act, the date of
distribution with respect to any Section 16 Person shall be delayed until the
earliest date upon which the distribution either would not result in a nonexempt
short-swing transaction or would otherwise not result in liability under Section
16(b) of the Exchange Act.
3. Transfer of Liability. The Board reserves the right to
---------------------
transfer to another entity all of the obligations of Company with respect to a
Participant under this Plan if such entity agrees pursuant to a binding written
agreement to assume all of the obligations of the Company under this Plan with
respect to such Participant.
ARTICLE VIII
------------
ADMINISTRATION
--------------
1. The Committee. This Deferral Plan shall be administered by
-------------
the Compensation Committee of the Board or such other committee of the Board as
may be designated by the Board and constituted so as to permit this Deferral
Plan to comply with the disinterested administration requirements of Rule 16b-3
of the Exchange Act. The members of the Committee shall be designated by the
Board. A majority of the members of the Committee (but not fewer than two) shall
constitute a quorum. The vote of a majority of a quorum or the unanimous written
consent of the Committee shall constitute action by the Committee. The Committee
shall have full authority to interpret the Plan, and interpretations of the Plan
by the Committee shall be final and binding on all parties.
2. Delegation and Reliance. The Committee may delegate
-----------------------
to the officers or employees of the Company the authority to execute and deliver
those instruments and documents, to do all acts and things, and to take all
other steps deemed necessary, advisable or convenient for the effective
administration of this Deferral Plan in accordance with its terms and purpose,
except that the Committee may not delegate any authority the delegation of which
would cause this Deferral Plan to fail to satisfy the applicable requirements of
Rule 16b-3. In making any determination or in taking or not taking any action
under this Deferral Plan, the Committee may obtain and rely upon the advice of
experts, including professional advisors to the Company. No member of the
Committee or officer of the Company who is a Participant hereunder may
participate in any decision specifically relating to his or her individual
rights or benefits under the Deferral Plan.
3. Exculpation and Indemnity. Neither the Company nor any
-------------------------
member of the Board or of the Committee, nor any other person participating in
any determination of any question under this Deferral Plan, or in the
interpretation, administration or application thereof, shall have any liability
to any party for any action taken or not taken in good faith under this Deferral
Plan or for the failure of the Deferral Plan or any
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Participant's rights under the Deferral Plan to achieve intended tax
consequences, to qualify for exemption or relief under Section 16 of the
Exchange Act and the rules thereunder, or to comply with any other law,
compliance with which is not required on the part of the Company.
4. Facility of Payment. If a minor, person declared
-------------------
incompetent, or person incapable of handling the disposition of his or her
property is entitled to receive a benefit, make an application, or make an
election hereunder, the Committee may direct that such benefits be paid to, or
such application or election be made by, the guardian, legal representative, or
person having the care and custody of such minor, incompetent, or incapable
person. Any payment made, application allowed, or election implemented in
accordance with this Section shall completely discharge the Company and the
Committee from all liability with respect thereto.
5. Proof of Claims. The Committee may require proof of the
---------------
death, disability, incompetency, minority, or incapacity of any Participant or
Beneficiary and of the right of a person to receive any benefit or make any
application or election.
6. Claim Procedures. The procedures when a claim under this
----------------
Plan is denied by the Committee are as follows:
(A) The Committee shall:
(i) notify the claimant within a
reasonable time of such denial,
setting forth the specific
reasons therefor; and
(ii) afford the claimant a reasonable
opportunity for a review of the
decision.
(B) The notice of such denial shall set forth,
in addition to the specific reasons for the
denial, the following:
(i) identification of pertinent
provisions of this Plan;
(ii) such additional information as
may be relevant to the denial
of the claim; and
(iii) an explanation of the claims
review procedure and advice that
the claimant may request an
opportunity to submit a statement
of issues and comments.
(C) Within sixty days following advice of denial
of a claim, upon request made by the
claimant, the Committee shall take
appropriate steps to review its
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decision in light of any further
information or comments submitted by the
claimant. The Committee may hold a
hearing at which the claimant may
present the basis of any claim for review.
(D) The Committee shall render a decision within
a reasonable time (not to exceed 120 days)
after the claimant's request for review and
shall advise the claimant in writing of its
decision, specifying the reasons and
identifying the appropriate provisions of
the Plan.
ARTICLE IX
----------
GENERAL AND MISCELLANEOUS PROVISIONS
------------------------------------
1. Neither this Deferral Plan nor a Participant's Deferral
Agreement, either singly or collectively, shall in any way obligate the Company
to continue the employment of a Participant with the Company, nor does either
this Deferral Plan or a Deferral Agreement limit the right of the Company at any
time and for any reason to terminate the Participant's employment. In no event
shall this Plan or a Deferral Agreement, either singly or collectively, by their
terms or implications constitute an employment contract of any nature whatsoever
between the Company and a Participant. In no event shall this Plan or a Plan
Agreement, either singly or collectively, by their terms or implications in any
way obligate the Company to award Incentive Compensation to any Eligible
Employee for any Award Year, whether or not the Eligible Employee is a
Participant in the Deferral Plan for that Award Year, nor in any other way limit
the right of the Company to change an Eligible Employee's compensation or other
benefits.
2. Incentive Compensation deferred under this Deferral Plan
shall not be treated as compensation for purposes of calculating the amount of a
Participant's benefits or contributions under any pension, retirement, or other
plan maintained by the Company, except as provided in such other plan.
3. Any written notice to the Company referred to herein shall
be made by mailing or delivering such notice to the Company at 6801 Rockledge
Drive, Bethesda, Maryland 20817, to the attention of the Vice President, Human
Resources. Any written notice to a Participant shall be made by delivery to the
Participant in person, through electronic transmission, or by mailing such
notice to the Participant at his or her place of residence or business address.
4. In the event it should become impossible for the Company or
the Committee to perform any act required by this Plan, the Company or the
Committee may perform such other act as it in good faith determines will most
nearly carry out the intent and the purpose of this Deferral Plan.
- 16 -
5. By electing to become a Participant hereunder, each
Eligible Employee shall be deemed conclusively to have accepted and consented to
all of the terms of this Deferral Plan and all actions or decisions made by the
Company, the Board, or Committee with regard to the Deferral Plan.
6. The provisions of this Deferral Plan and the Deferral
Agreements hereunder shall be binding upon and inure to the benefit of the
Company, its successors, and its assigns, and to the Participants and their
heirs, executors, administrators, and legal representatives.
7. A copy of this Deferral Plan shall be available for
inspection by Participants or other persons entitled to benefits under the Plan
at reasonable times at the offices of the Company.
8. The validity of this Deferral Plan or any of its provisions
shall be construed, administered, and governed in all respects under and by the
laws of the State of Maryland, except as to matters of Federal law. If any
provisions of this instrument shall be held by a court of competent jurisdiction
to be invalid or unenforceable, the remaining provisions hereof shall continue
to be fully effective.
9. This Deferral Plan and its operation, including but not
limited to, the mechanics of deferral elections, the issuance of securities, if
any, or the payment of cash hereunder is subject to compliance with all
applicable federal and state laws, rules and regulations (including but not
limited to state and federal insider trading, registration, reporting and other
securities laws) and such other approvals by any listing, regulatory or
governmental authority as may, in the opinion of counsel for the Company, be
necessary or advisable in connection therewith.
10. It is the intent of the Company that this Deferral Plan
satisfy and be interpreted in a manner, that, in the case of Participants who
are or may be Section 16 Persons, satisfies any applicable requirements of Rule
16b-3 of the Exchange Act or other exemptive rules under Section 16 of the
Exchange Act and will not subject Section 16 Persons to short-swing profit
liability thereunder. If any provision of this Deferral Plan would otherwise
frustrate or conflict with the intent expressed in this Section 10, that
provision to the extent possible shall be interpreted and deemed amended so as
to avoid such conflict. To the extent of any remaining irreconcilable conflict
with this intent, the provision shall be deemed disregarded. Similarly, any
action or election by a Section 16 Person with respect to the Deferral Plan to
the extent possible shall be interpreted and deemed amended so as to avoid
liability under Section 16 or, if this is not possible, to the extent necessary
to avoid liability under Section 16, shall be deemed ineffective.
Notwithstanding anything to the contrary in this Deferral Plan, the provisions
of this Deferral Plan may at any time be bifurcated by the Board or the
Committee in any manner so that certain provisions of this Deferral Plan are
applicable solely to Section 16 Persons. Notwithstanding
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any other provision of this Deferral Plan to the contrary, if a distribution
which would otherwise occur is prohibited or proposed to be delayed because of
the provisions of Section 16 of the Exchange Act or the provisions of the
Deferral Plan designed to ensure compliance with Section 16, the Section 16
Person involved may affirmatively elect in writing to have the distribution
occur in any event; provided that the Section 16 Person shall concurrently enter
into arrangements satisfactory to the Committee in its sole discretion for the
satisfaction of any and all liabilities, costs and expenses arising from this
election.
11. Notwithstanding any other provision of this Deferral Plan,
each Eligible Employee who is a Section 16 Person and has entered into a
Deferral Agreement prior to the initial distribution of a prospectus relating to
this Deferral Plan shall be entitled, during a ten-business-day period following
the initial distribution of that prospectus, to make an irrevocable election to
(i) receive a distribution of all or any portion of his or her Account Balance
attributable to Deferred Compensation for the 1995 Award Year during the seventh
month following the month of the election, or (ii) reallocate all or any part of
his or her Account Balance attributable to Deferred Compensation for the 1995
Award Year to a different investment option as of the end of the sixth month
following the month of the election.
12. At no time shall the aggregate Account Balances of all
Participants to the extent allocated to the Company Stock Investment Option
exceed an amount equal to the then fair market value of 5,000,000 shares of the
Company's Common Stock, nor shall the cumulative amount of Incentive
Compensation deferred under this Deferral Plan by all Eligible Employees for all
Award Years exceed $250,000,000.
ARTICLE X
----------
EFFECTIVE DATE AND SHAREHOLDER APPROVAL
---------------------------------------
This Deferral Plan was adopted by the Board on July 27, 1995 and became
effective upon adoption to awards of Incentive Compensation for the Company's
fiscal year ending December 31, 1995 and subsequent fiscal years; provided,
however, that with respect to Section 16 Persons, the availability of the
Company Stock Investment Option is conditioned upon the approval of this
Deferral Plan by the stockholders of Lockheed Martin Corporation. In the event
that this Deferral Plan is not approved by the stockholders, then Section 16
Persons shall not be entitled to have Deferred Compensation allocated to the
Company Stock Investment Option; any prior elections by Section 16 Persons to
have allocations made to the Company Stock Investment Option shall retroactively
be deemed ineffective, and the Account Balances of those Section 16 Persons
shall be restated as if all of their Deferred Compensation had been allocated to
the Interest Option at all times. Subsequent amendments to the Deferral Plan are
effective as of the date stated in the amendment or the adopting resolution.
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Deferred Management Incentive Compensation Plan - Lockheed Martin Corp.
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