Exhibit 10
DIRECTORS EQUITY PLAN
As Amended May 1, 2000
TABLE OF CONTENTS
ARTICLE I
TITLE, PURPOSE AND AUTHORIZED SHARES
ARTICLE II
DEFINITIONS
ARTICLE III
PARTICIPATION
3.1. Award.................................................................A-3
3.2. Election..............................................................A-3
ARTICLE IV
STOCK UNITS
4.1. Stock Unit Account...................................................A-3
4.2. Dividend Equivalents; Dividend Equivalent Stock Account..............A-3
4.3. Vesting of Stock Unit Account and Dividend Equivalent Stock Account..A-3
4.4. Distribution of Benefits.............................................A-4
4.5. Limitations on Rights Associated with Units..........................A-4
ARTICLE V
STOCK OPTIONS
5.1. Exercise Price.......................................................A-5
5.2. Non-transferability of Options.......................................A-5
5.3. Vesting; Term of Options.............................................A-5
5.4. Payment of Exercise Price............................................A-5
5.5. Rights as Stockholder................................................A-5
ARTICLE VI
ADMINISTRATION
6.1. Administration.......................................................A-5
6.2. Decisions Final; Delegation; Reliance; and Limitation on Liability...A-5
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ARTICLE VII
PLAN CHANGES AND TERMINATION
7.1. Adjustments upon Changes in Common Stock............................A-6
7.2. Amendments..........................................................A-6
7.3. Term................................................................A-6
7.4. Distribution of Shares..............................................A-6
ARTICLE VIII
MISCELLANEOUS
8.1. Limitation on Directors' Rights......................................A-6
8.2. Beneficiaries........................................................A-6
8.3. Corporation's Right to Withhold......................................A-6
8.4. Benefits Not Assignable; Obligations Binding Upon Successors.........A-7
8.5. Governing Law; Severability..........................................A-7
8.6. Compliance With Laws.................................................A-7
8.7. Plan Construction....................................................A-7
8.8. Headings Not Part of Plan............................................A-7
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LOCKHEED MARTIN CORPORATION
DIRECTORS EQUITY PLAN
May 1, 1999
As Amended May 1, 2000
ARTICLE I
TITLE, PURPOSE AND AUTHORIZED SHARES
This Plan shall be known as "Lockheed Martin Corporation Directors
Equity Plan" and shall become effective on May 1, 1999. The purpose of this
Plan is to attract, motivate and retain experienced and knowledgeable directors
for the Corporation and to further align their economic interests with the
interests of stockholders generally. The total number of shares of Common Stock
that may be delivered pursuant to awards under this Plan is 1,000,000, subject
to adjustments contemplated by Section 7.1. Shares of Common Stock subject to
an Option terminating or expiring for any reason prior to its exercise, and
Units and Dividend Equivalents that are forfeited pursuant to the Plan, shall be
available for Awards to be granted during the term of the Plan.
ARTICLE II
DEFINITIONS
The following terms shall have the meaning specified below unless the
context clearly indicates otherwise:
Accounts means a Director's Stock Unit Account and Dividend
Equivalent Stock Account.
Award means an award granted pursuant to Section 3.1.
Award Date means May 1 of each year, commencing in 1999 (or if
May 1 falls on a weekend or holiday, the next following business day).
Beneficiary shall have the meaning specified in Section 8.2(b).
Board of Directors or Board means the Board of Directors of the
Corporation.
Change in Control means:
1) A tender offer or exchange offer is consummated for the
ownership of securities of the Corporation representing 25% or
more of the combined voting power of the Corporation's then
outstanding voting securities entitled to vote in the election of
directors of the Corporation.
2) The Corporation 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 Corporation (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 Corporation
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representing 25% or more of the combined voting power of the
Corporation's then outstanding securities entitled to vote in the
election of directors of the Corporation.
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 Corporation approve a plan of
liquidation and dissolution or the sale or transfer of
substantially all of the Corporation's business and/or assets as
an entirety to an entity that is not a Subsidiary.
Code means the Internal Revenue Code of 1986, as amended.
Common Stock or Stock means shares of Common Stock of the
Corporation, par value $1.00 per share, subject to adjustments made
under Section 7.1 or by operation of law.
Corporation means Lockheed Martin Corporation, a Maryland
corporation, and its successors and assigns.
Director means a member of the Board of Directors of the
Corporation who is not an officer or employee of the Corporation or any
of its subsidiaries.
Disability means a "permanent and total disability" within the
meaning of Section 22(e)(3) of the Code.
Dividend Equivalent means the amount of cash dividends or other
cash distributions that would have been paid by the Corporation on Stock
Units then credited to a Director's Stock Unit Account had those Stock
Units been shares of common stock.
Dividend Equivalent Stock Account means the bookkeeping account
maintained by the Corporation on behalf of a Director which is credited
with Dividend Equivalents in the form of Stock Units in accordance with
Section 4.2.
Effective Date means May 1, 1999.
Exchange Act means the Securities Exchange Act of 1934, as
amended from time to time.
Fair Market Value means in the case of a Stock Unit the closing
price of the Stock as reported on the composite tape of New York Stock
Exchange issues on the relevant date, or, if no sale of Stock is
reported for that date, the next preceding day for which there is a
reported sale and in the case of an Option shall mean the fair market
value of an option to buy Stock granted on the relevant day as
determined using the Black Scholes option pricing methodology.
Option means a Nonqualified Stock Option to purchase shares of
Common Stock with the terms and conditions as described in Article V.
Plan means the Lockheed Martin Corporation Directors Equity
Plan.
Retirement means retirement from the Corporation at the
expiration of a Director's term.
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Stock Unit or Unit means a non-voting unit of measurement that is
deemed for bookkeeping purposes to be equivalent to an outstanding share
of Common Stock of the Corporation.
Stock Unit Account means the bookkeeping account maintained by
the Corporation on behalf of each Director which is credited with Stock
Units in accordance with Section 4.1.
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 corporations), 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.
ARTICLE III
PARTICIPATION
3.1. Award. Commencing on May 1, 2000, and on each Award Date thereafter
during the term of this Plan, each Director shall be granted, in the form
elected by the Director pursuant to Section 3.2, one of the following Awards:
(a) Units with a Fair Market Value of $60,000 credited to the
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Director's Stock Unit Account;
(b) Units credited to the Director's Stock Unit Account with a
Fair Market Value of $30,000 and Options to purchase shares
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of Stock with a Fair Market Value of $30,000; or
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(c) Options to purchase shares of Stock with a Fair Market Value
of $60,000.
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For purposes of this Section 3.1, Fair Market Value shall be determined
on the Award Date.
3.2. Election. Prior to the Corporation's Annual Meeting of Stockholders
or, in the case of a new Director, before the commencement of the Director's
term of office, a Director must file an election form, as provided by the
Corporation, with the Secretary of the Corporation specifying the form of the
Award the Director elects to receive pursuant to Section 3.1. A Director's
election shall remain in effect for Awards made in each subsequent calendar
year, unless the Director files a revised election form or written revocation of
the election with the Secretary of the Corporation before the subsequent Annual
Meeting of Stockholders. A Director's election shall be irrevocable after the
Award for a particular year is made.
ARTICLE IV
STOCK UNITS
4.1. Stock Unit Account. If a Director elects the Award described in
either Section 3.1(a) or 3.1(b), the Stock Unit Account of such Director shall
be credited on the Award Date with either (i) Units determined pursuant to
Section 3.1(a) or (ii) Units determined pursuant to Section 3.1(b).
4.2. Dividend Equivalents; Dividend Equivalent Stock Account.
(a) Allocation of Dividend Equivalents. Each Director shall be
entitled to receive Dividend Equivalents on the Units credited to his or her
Stock Unit Account and Dividend Equivalent Stock Account, both before and after
a termination of service. The Dividend Equivalents shall be credited to the
Director's Dividend Equivalent Stock Account in accordance with Section 4.2(b)
below.
(b) Dividend Equivalent Stock Account. The Director's Dividend
Equivalent Stock Account shall be credited with an additional number of Units
determined by dividing the amount of Dividend Equivalents by the Fair Market
Value of a share of Common Stock as of the date on which the dividend is paid.
The Units credited to a
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Director's Dividend Equivalent Stock Account shall be allocated (for purposes of
distribution) in accordance with Section 4.4(b) and shall be subject to
adjustment in accordance with Section 7.1.
4.3. Vesting of Stock Unit Account and Dividend Equivalent Stock
Account. A Director's Units held in his or her Stock Unit Account shall vest on
the first anniversary of the Award Date for such Units. A Director's Units held
in his or her Dividend Equivalent Stock Account shall vest when the underlying
Units in the Stock Unit Account vest. If a Director's service as a Director
terminates for any reason, all nonvested Units and related Dividend Equivalents
shall be forfeited. Notwithstanding the provisions of this Section 4.3, all
nonvested Units and related Dividend Equivalents granted to a Director shall
vest upon a Change in Control or in the event of such Director's Retirement,
death or Disability.
4.4. Distribution of Benefits.
(a) Commencement of Benefits Distribution. Subject to the terms of
Section 4.3 and this Section 4.4, each Director shall be entitled to receive a
distribution of his or her Accounts upon a termination of service (including but
not limited to a retirement or resignation) as a director of the Corporation.
Benefits shall be distributed at the time or times set forth in this Section
4.4.
(b) Manner of Distribution. The benefits payable under this Section
shall be distributed to the Director in a lump sum, unless the Director elects
in writing (on forms provided by the Corporation) on or before the Award Date on
which the Units are granted to receive a distribution of benefits in
approximately equal annual installments for up to ten years. Elections with
respect to any Units in the Stock Unit Account shall apply to all Dividend
Equivalent Units attributable to those Stock Units, and to all Dividend
Equivalent Units. Installment payments shall commence as of the date the
Accounts become distributable under Section 4.4(a). The amount of each
installment shall be equal to (i) the Fair Market Value of the Units allocated
to Director's Stock Unit Account and Dividend Equivalent Account, on the day
immediately preceding the date of payment, divided by (ii) the number of
installments yet to be paid. Notwithstanding the foregoing, if the vested
balance remaining in a Director's Stock Unit Account and Dividend Equivalent
Stock Account is less than 50 Units, then the remaining balance shall be
distributed in a lump sum in the form of cash or Stock, as previously elected by
the Director. In the event of a Change in Control or a Director's termination of
services as a result of death or Disability, either prior to or after the
Director has terminated service, the benefits payable under this Section shall
be distributed in a lump sum in cash.
(c) Form of Distribution. Stock Units shall be paid and distributed
by means of a distribution of (i) an equivalent whole number of shares of Common
Stock or (ii) cash in an amount equal to the Fair Market Value of an equivalent
number of shares of Common Stock as of the business day immediately preceding
the distribution. Any fractional interest in a Unit shall be paid in cash on
final distribution. In the event of a termination of service, a Director may
elect to have Stock Units credited to the Director's Stock Unit Account and
Dividend Equivalent Stock Account paid and distributed in the form of cash or a
combination of whole shares of Common Stock and cash by making a written
election (on forms provided by the Corporation) at least six months prior to
receipt by a Director of any distribution as to the percentage the Director
elects to receive in the form of cash and the percentage the Director elects to
receive in whole shares of Common Stock.
(d) Sub-Accounts. The Administrator shall retain sub-accounts of a
Director's Accounts as may be necessary to determine which Units are subject to
any distribution elections under Section 4.4(b).
(e) Limitations of Distributions. Notwithstanding anything herein
to the contrary, no Units may be distributed prior to the six month anniversary
of the crediting of such Units to the Director's Stock Unit Account.
4.5. Limitations on Rights Associated with Units. A Director's Accounts
shall be memorandum accounts on the books of the Corporation. The Units
credited to a Director's Accounts shall be used solely as a device for the
determination of the number of shares of Common Stock to be distributed to such
Director in accordance with this Plan. The Units shall not be treated as
property or as a trust fund of any kind, and shall not create a security
interest in any property although the Corporation shall reserve shares of Common
Stock to satisfy its obligations under this Plan. All shares of Common Stock or
other amounts attributed to the Units shall be and
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remain the sole property of the Corporation, and each Director's rights in the
Units is limited to the right to receive shares of Common Stock or cash in the
future, in accordance with the Plan. No Director shall be entitled to any voting
or other stockholder rights with respect to Units granted under this Plan. The
number of Units credited under this Article shall be subject to adjustment in
accordance with Section 7.1.
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ARTICLE V
STOCK OPTIONS
All Options granted pursuant to the Plan shall be subject to the
following terms and conditions:
5.1. Exercise Price. The exercise price of an Option shall be equal to
100% of the Fair Market Value of the Stock on the day of the grant of the
Option.
5.2. Non-transferability of Options. Options shall not be assignable nor
transferable by the Director otherwise than by bequest or by the laws of
descent. Options shall be exercisable during the Director's lifetime only by the
Director or by his or her guardian or legal representative. The designation of a
Beneficiary is not a prohibited transfer.
5.3. Vesting; Term of Options. Options shall become exercisable on the
day following the first anniversary of the date the Options are granted and,
subject to Section 5.3, shall expire on the tenth anniversary of the date the
Options are granted. Notwithstanding the provisions of this Section 5.3, upon a
Change in Control or in the event a Director's service as director terminates by
reason of such Director's Retirement, death or Disability, all options shall
become exercisable.
5.4. Payment of Exercise Price. The Option's exercise price shall be
paid in cash at the time of exercise, except that in lieu of all or part of the
cash, the Director may tender Stock to the Corporation having a Fair Market
Value equal to the exercise price, (less any cash paid). The Fair Market Value
of tendered Stock shall be determined as of the close of the business day
immediately preceding the day on which the Options are exercised.
5.5 Rights as Stockholder. A Director shall have no rights as a Common
Stockholder with respect to any unissued shares of Common Stock covered by an
Option until the date the Director exercises the Options and becomes the holder
of record of those shares of Common Stock. Except as provided in Section 7.1, no
adjustment or other provision shall be made for dividends or other stockholder
rights.
ARTICLE VI
ADMINISTRATION
6.1. Administration. This Plan shall be self-executing and operated as a
formula plan. To the extent necessary for the operation of the Plan, it shall be
construed, interpreted and administered by the Board or a committee appointed by
the Board to act on its behalf under this Plan. Notwithstanding the foregoing,
but subject to Section 7.2 hereof, the Board shall have no discretionary
authority with respect to the amount or price of any Award granted under this
Plan and no Director shall participate in any decision relating solely to his or
her benefits (other than approval of the Award).
6.2. Decisions Final; Delegation; Reliance; and Limitation on Liability.
Any determination of the Board or committee made in good faith shall be
conclusive. In performing its duties, the Board or the committee shall be
entitled to rely on public records and on information, opinions, reports or
statements prepared or presented by officers or employees of the Corporation or
other experts believed to be reliable and competent. The Board or the committee
may delegate ministerial, bookkeeping and other non-discretionary functions to
individuals who are officers or employees of the Corporation.
Neither the Corporation nor any member of the Board, nor any other
person participating in any determination of any question under this Plan, or in
the interpretation, administration or application of this Plan, shall have any
liability to any party for any action taken or not taken in good faith under
this Plan or for the failure of an Award (or action or payment in respect of an
Award) to satisfy Code requirements for realization of intended tax
consequences, to qualify for exemption or relief under Rule 16b-3, or to comply
with any other law, compliance with which is not required by the Corporation.
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ARTICLE VII
PLAN CHANGES AND TERMINATION
7.1. Adjustments upon Changes in Common Stock. Upon the Corporation's
recapitalization, stock split (including a stock split in the form of a stock
dividend), reverse stock split, merger, combination, consolidation, or other
reorganization or any extraordinary dividend or other extraordinary distribution
in respect of the Stock (whether in the form of cash, Stock or other property),
or any split-up, spin-off, extraordinary redemption, or exchange of outstanding
Stock, or there shall occur any other similar corporate transaction or event in
respect of the Stock, or a sale of substantially all the assets of the
Corporation as an entirety, the Committee shall make a proportionate and
equitable adjustment consistent with the effect of any such event on
stockholders generally (but without duplication if Dividend Equivalents are
credited) in the maximum number of shares of Common Stock reserved under the
Plan, in the number of Units granted under the Plan, and in the number, kind and
exercise price of Options granted under the Plan to prevent dilution or
enlargement of the rights of Directors under the Plan and outstanding Options.
7.2. Amendments. The Board of Directors shall have the right to amend
this Plan in whole or in part or to suspend or terminate this Plan. No
amendment, suspension, or termination, however, may cancel or otherwise
adversely affect in any way, without written consent, any Director's rights with
respect to (i) Stock Units and Dividend Equivalents credited to his or her Stock
Unit Account or Dividend Equivalent Stock Account or (ii) Options awarded prior
to the effective date of the amendment, suspension or termination.
7.3. Term. This Plan shall remain in effect for a period of 10 years
from the Effective Date, but continuance of this Plan is not a contractual
obligation of the Corporation. In the event that the Board of Directors decides
to terminate this Plan, it shall notify the Directors of its action in writing,
and this Plan shall be terminated at the time set by the Board of Directors.
7.4. Distribution of Shares. If this Plan terminates pursuant to Section
7.2, the distribution of the Accounts of a Director shall be made at the time
provided in Section 4.4 and in a manner consistent with the elections made
pursuant to Section 4.4 if any.
ARTICLE VIII
MISCELLANEOUS
8.1. Limitation on Directors' Rights. Participation in this Plan shall
not give any Director the right to continue to serve as a member of the Board or
any rights or interests other than as provided in this Plan. No Director shall
have any right to any payment or benefit except to the extent provided in this
Plan. This Plan shall create only a contractual obligation of the Corporation to
provide the benefits described in the Plan and shall not be construed as
creating a trust. This Plan has no assets. Directors shall only have rights as
general unsecured creditors of the Corporation for any amounts credited or
vested and benefits payable under this Plan.
8.2. Beneficiaries.
(a) Beneficiary Designation. Upon forms provided and in accordance
with procedures established by the Corporation, each Director may designate in
writing (and change a designation of) the Beneficiary or Beneficiaries (as
defined in Section 8.2(b)) that the Director chooses to receive the Common Stock
payable under this Plan after his or her death, subject to applicable laws
(including any applicable community property and probate laws).
(b) Definition of Beneficiary. A Director's "Beneficiary" or
"Beneficiaries" shall be the person or persons, including a trust or trusts,
validly designated by the Director or, in the absence of a valid designation,
entitled by will or the laws of descent and distribution to receive the
Director's benefits under this Plan in the event of the Director's death.
8.3. Corporation's Right to Withhold. The Corporation shall satisfy
state or federal income tax withholding obligations, if any, arising upon
distribution of a Director's Account or of shares of Stock upon the exercise of
Options by reducing the number of shares of Common Stock otherwise deliverable
to the Director by the
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appropriate number of shares (based on the Fair Market Value on the day
immediately preceding the payment) required to satisfy such tax withholding
obligation. If the Corporation, for any reason, cannot satisfy the withholding
obligation in accordance with the preceding sentence, the Director shall pay or
provide for payment in cash of the amount of any taxes which the Corporation may
be required to withhold with respect to the benefits hereunder.
8.4. Benefits Not Assignable; Obligations Binding Upon Successors.
Benefits of a Director under this 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 Plan, or any interest therein,
other than pursuant to Section 8.2, shall not be permitted or recognized.
Obligations of the Corporation under this Plan shall be binding upon successors
of the Corporation.
8.5. Governing Law; Severability. The validity of this 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. 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.
8.6. Compliance With Laws. This Plan and the offer, issuance and
delivery of shares of Common Stock and/or the payment and deferral of
compensation under this Plan are subject to compliance with all applicable
federal and state laws, rules and regulations (including but not limited to
state and federal reporting, registration, insider trading and other securities
laws) and to such approvals by any listing agency or any regulatory or
governmental authority as may, in the opinion of counsel for the Corporation, be
necessary or advisable in connection therewith. Any securities delivered under
this Plan shall be subject to such restrictions, and the person acquiring the
securities shall, if requested by the Corporation, provide such assurances and
representations to the Corporation as the Corporation may deem necessary or
desirable to assure compliance with all applicable legal requirements.
8.7. Plan Construction. It is the intent of the Corporation that this
Plan satisfy and be interpreted in a manner that satisfies the applicable
requirements of Rule 16b-3 so that Directors will be entitled to the benefits of
Rule 16b-3 or other exemptive rules under Section 16 of the Exchange Act and
will not be subjected to liability thereunder. Any contrary interpretation shall
be avoided.
8.8. Headings Not Part of Plan. Headings and subheadings in this Plan
are inserted for reference only and are not to be considered in the construction
of this Plan.
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