Exhibit 10.4
LOCKHEED MARTIN CORPORATION
DIRECTORS DEFERRED STOCK PLAN
TABLE OF CONTENTS
ARTICLE I
TITLE, PURPOSE AND AUTHORIZED SHARES
ARTICLE II
DEFINITIONS
ARTICLE III
PARTICIPATION
ARTICLE IV
DEFERRAL ACCOUNTS
4.1. Stock Unit Account ..................................................... 3
4.2. Dividend Equivalents; Dividend Equivalent Stock Account ................ 4
4.3. Vesting of Stock Unit Account and Dividend Equivalent Stock Account .... 4
4.4. Distribution of Benefits ............................................... 4
4.5. Adjustments in Case of Changes in Common Stock ......................... 5
4.6. Corporation's Right to Withhold ........................................ 5
4.7. Limitations on Rights Associated with Units ............................ 5
4.8. Restrictions on Resale ................................................. 5
ARTICLE VADMINISTRATION
5.1. Formula Plan ........................................................... 5
5.2. Decisions Final; Delegation; Reliance; and Limitation on Liability ..... 6
ARTICLE VI
PLAN CHANGES AND TERMINATION
6.1. Amendments ............................................................. 6
6.2. Term ................................................................... 6
6.3. Distribution of Shares ................................................. 6
ARTICLE VIIMISCELLANEOUS
7.1. Limitation on Directors' Rights ....................................... 6
7.2. Beneficiaries ........................................................ 6
7.3. Benefits Not Assignable; Obligations Binding Upon Successors ......... 7
7.4. Governing Law; Severability .......................................... 7
7.5. Compliance With Laws ................................................. 7
7.6. Plan Construction .................................................... 7
7.7. Headings Not Part of Plan ............................................ 7
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LOCKHEED MARTIN CORPORATION
DIRECTORS DEFERRED STOCK PLAN
March 15, 1995
As Amended February 27, 1997
As Amended February 24, 1999
As Amended October 24, 2002
ARTICLE I
TITLE, PURPOSE AND AUTHORIZED SHARES
This Plan shall be known as "Lockheed Martin Corporation Directors Deferred
Stock Plan" and shall become effective on March 15, 1995. The purpose of this
Plan is to attract, motivate and retain experienced and knowledgeable directors
of the Corporation and to further align their economic interest 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 50,000, subject to
adjustments contemplated by Section 4.6. Effective May 1, 1999, the Plan is
frozen. Other than Dividend Equivalents relating to Units credited to Directors'
Stock Unit Accounts prior to May 1, 1999, no further Awards shall be made under
this Plan on or after May 1, 1999. As of October 24, 2002, this Plan is amended
to provide directors greater flexibility in making elections as to the form in
which Awards are paid and to lengthen the maximum period of installment payouts
from five years to ten years.
ARTICLE II
DEFINITIONS
Whenever the following terms are used in this Plan they shall have the
meaning specified below unless the context clearly indicates to the contrary:
Accounts means a Director's Stock Unit Account and Dividend Equivalent
Stock Account.
Average Fair Market Value means the average of the Fair Market Values
of a share of Common Stock of the Corporation during the last 10 trading
days preceding the applicable date of determination.
Award means the crediting of a Unit or Units under this Plan. Each
Award shall be approved by the Board of Directors or a committee appointed
by the Board of Directors in accordance with Section 5.1.
Award Date means June 1 of each year, commencing in 1995.
Beneficiary shall have the meaning specified in Section 7.2(b).
Board of Directors or Board means the Board of Directors of the
Corporation.
Code means the Internal Revenue Code of 1986, as amended.
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Common Stock means shares of Common Stock of the Corporation, par
value $1.00 per share, subject to adjustments made under Section 4.5 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 eligible to receive compensation in the form of retainer fees for
services in such capacity and 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 paid by the Corporation on that number of shares of Common
Stock equivalent to the number of Stock Units then credited to a Director's
Stock Unit Account and Dividend Equivalent Stock Account, which amount
shall be allocated as additional Stock Units to the Director's Dividend
Equivalent Stock Account.
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 March 15, 1995.
Exchange Act means the Securities Exchange Act of 1934, as amended
from time to time.
Fair Market Value means the closing price of the Stock as reported on
the composite tape of New York Stock Exchange issues (or, if the Stock is
not so listed or if the principal market on which it is traded is not the
New York Stock Exchange, such other reporting system as shall be selected
by the Board) on the relevant date, or, if no sale of the Stock is reported
for that date, the next preceding day for which there is a reported sale.
Merger means the business combination described in Article I.
Plan means the Lockheed Martin Corporation Directors Deferred Stock
Plan.
Stock means Common Stock.
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 and includes fractional units.
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.
ARTICLE III
PARTICIPATION
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Each Director shall become a participant in the Plan upon the approval of
an Award to the Director.
ARTICLE IV
DEFERRAL ACCOUNTS
4.1. Stock Unit Account.
The Stock Unit Account of each Director shall be credited on each Award
Date with a number of Units determined by dividing $10,000 by the Average Fair
Market Value of the Common Stock on the Award Date, provided that the Board of
Directors previously approved the Award. A Director who is not serving as a
director on an Award Date is not eligible for any portion of the Award for the
applicable year.
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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 Account, whether before or after a termination
of service, which 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 each dividend payment date. The Units credited to a
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 4.5.
4.3. Vesting of Stock Unit Account and Dividend Equivalent Stock Account.
The rights of each Director in respect of his or her Stock Unit Account and
related Dividend Equivalent Stock Account shall vest immediately on crediting.
4.4. Distribution of Benefits.
(a) Commencement of Benefits Distribution. Subject to the terms of 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 Section 4.4.
(b) Manner of Distribution. The benefits payable under this Plan shall be
distributed to the Director (or, in the event of his or her death, the
Director's Beneficiary) in a lump sum, unless the Director elects in writing (on
forms provided by the Corporation) by the time specified in Section 4.4(f), to
receive a distribution of his or her benefits in respect of such Units in
approximately equal annual installments (before giving effect to
post-termination crediting of additional Dividend Equivalents before the
applicable payment date) for up to ten years thereafter. 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
attributable to those Dividend Equivalent Units. Subject to Section 4.4(f),
installment payments shall commence as of the date benefits become distributable
under Section 4.4(a). Notwithstanding the foregoing, if the vested balance
remaining in a Director's Stock Unit Account and Dividend Equivalent Stock
Account is less than 50 shares, then the remaining balance shall be distributed
in shares in a lump sum.
(c) Effect of Death or Disability. Notwithstanding Sections 4.4(a), (b)
and (f), if a Director's service as a director terminates by reason of
Disability, or a Director or former Director dies, the distribution of a
Director's Accounts (including remaining Account balances of a former Director)
shall be made immediately in a lump sum.
(d) Form of Distribution. Stock Units credited to a Director's Stock Unit
Account and Dividend Equivalent Stock Account shall be paid and distributed by
means of a distribution of an equivalent whole number of shares of the Common
Stock. Fractions shall be accumulated and converted to Units, but any fractional
interest in a Unit shall be paid in cash on final distribution. In the event of
a termination of service or retirement, a Director may elect, in accordance with
the provisions of Section 4.4(f), to have Stock Units credited to the Director's
Stock Unit Account and Dividend Share Equivalent
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Account paid and distributed in the form of cash or a combination of whole
shares of Common Stock and cash. Any such election shall be made at times and in
the manner specified in Section 4.4(f).
(e) 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).
(f) Timing of Elections. A Director may change any election as to the
manner of distribution and file a new election choosing a lump sum or
installment payments as provided in Section 4.4(b), with respect to all of the
Director's Accounts or with respect to one or more specific Awards, by executing
and delivering to the Company an election (on such form as prescribed by the
Company) within the time periods described in this Section 4.4(f). An election
must be made prior to the Director's termination of service as a director and
(i) at least six months before the date the first payment would be due and (ii)
in a calendar year prior to the calendar year in which the first payment would
be due. In the event an election fails to satisfy the terms of this Section
4.4(f), such election shall be void and payment of a Director's Award shall
commence under the Director's previous valid election or, if none exists, in a
lump sum. In addition, in the event of a termination of service or retirement,
at least six months prior to receipt by a Director of any distribution of
benefits under the Plan, the Director shall make a written election (on forms to
be provided by the Corporation) as to the percentage the Director elects to
receive in the form of cash and the percentage the Director elects to receive in
the form of whole shares of Common Stock.
4.5. Adjustments in Case of Changes in Common Stock. If there shall occur
any 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 non-cash dividend or other
extraordinary distribution in respect of the Stock (whether in the form of
Stock, other securities, 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,
proportionate and equitable adjustments consistent with the effect of such event
on stockholders generally (but without duplication of benefits if Dividend
Equivalents are credited) shall be made in the number and type of shares of
Common Stock (or other cash, property or securities in respect thereof)
reserved, and of Units, under this Plan.
4.6. 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 accounts by reducing the number of shares of Common Stock
otherwise deliverable to the Director by the appropriate number of shares (based
on the Average Fair Market Value) 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.
4.7. 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 eventually 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, 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 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 in the future as herein
provided. No Director shall be entitled to any voting or other stockholder
rights with respect to Units granted under this Plan. The
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number of Units credited under this Section shall be subject to adjustment in
accordance with Section 4.5.
4.8. Restrictions on Resale. Stock distributed in respect of those Stock
Units that were first credited under Section 4.1 within six months of the
distribution (and Dividend Equivalent Account Units credited under Section 4.2
solely in respect thereof) may be legended or otherwise restricted so as to
prevent a sale of the Stock within six months of the initial crediting of those
Stock Units. Installments shall be deemed payable and paid in the order (i.e.,
last-in, last-out) of the accrual of the underlying Units.
ARTICLE V
ADMINISTRATION
5.1. Administration. This Plan shall be construed, interpreted and, to the
extent required, administered by the Board or a committee appointed by the Board
to act on its behalf under this Plan. To the extent that the Plan is
administered by a committee of the Board of Directors, the committee shall
consist exclusively of "non-employee directors" as that term is defined in Rule
16b-3 ("Rule 16b-3") promulgated by the Securities and Exchange Commission under
Section 16 of the Exchange Act. Notwithstanding the foregoing, but subject to
Section 6.1 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). Subject to the foregoing, the Board may resolve any
questions and make all other determinations and adjustments required by this
Plan, maintain all the necessary records for the administration of this Plan,
and provide forms and procedures to facilitate the implementation of this Plan.
5.2. 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 on the part of the
Corporation.
ARTICLE VI
PLAN CHANGES AND TERMINATION
6.1. Amendments. The Board of Directors shall have the right to amend this
Plan in whole or in part from time to time or may at any time suspend or
terminate this Plan; provided, however, that no amendment or termination shall
cancel or otherwise adversely affect in any way, without his or her written
consent, any Director's rights with respect to Stock Units and Dividend
Equivalents credited to his or her Stock Unit Account or Dividend Equivalent
Stock Account.
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6.2. Term. This Plan shall continue for a period of 10 years from the
Effective Date, but continuance of this Plan is not assumed as a contractual
obligation of the Corporation. Effective May 1, 1999, the Plan is frozen. Other
than Dividend Equivalents relating to Units credited to Directors' Stock Unit
Accounts prior to May 1, 1999, no further Awards shall be made under this Plan
on or after May 1, 1999. Benefits under the Plan shall continue to be paid in
accordance with Section 4.4 on or after May 1, 1999. When all benefits under the
Plan have been paid, the Plan shall be terminated.
6.3. Distribution of Shares. If this Plan terminates pursuant to Section
6.2, the distribution of the Accounts of a Director shall be made at the time
provided in Section 4.4(a) and in a manner consistent with the elections made
pursuant to Sections 4.4(b) and (f), if any.
ARTICLE VII
MISCELLANEOUS
7.1. 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 herein provided. No Director shall have any
right to any payment or benefit hereunder except to the extent provided in this
Plan. This Plan shall create only a contractual obligation on the part of the
Corporation as to such amounts and shall not be construed as creating a trust.
This Plan, in and of itself, has no assets. Directors shall have only the rights
of general unsecured creditors of the Corporation with respect to amounts
credited or vested and benefits payable, if any, on their Accounts.
7.2. 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 7.3(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.
7.3. 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 7.2, shall not be permitted or recognized. Obligations of
the Corporation under this Plan shall be binding upon successors of the
Corporation.
7.4. 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.
7.5. 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
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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.
7.6. 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 avoidable liability thereunder. Any contrary
interpretation shall be avoided.
7.7. 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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