10(ll) Lockheed Martin Corporation Deferred Management Incentive
Compensation Plan
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
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
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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.
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.
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.
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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 elect to
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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) 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 deferral
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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
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(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 would
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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 Compensation that
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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
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 Account
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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.
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(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: Notwithstanding the
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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 provided in
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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 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
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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 Eligible
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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
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 5 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.
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ARTICLE V
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PAYMENT OF BENEFITS
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1. General. The Company's liability to pay benefits to a Participant
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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 Participant
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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 any reason and
attained the age designated by the Participant in the
Deferral Agreement.
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3. Election for Form of Payment. At the time a Participant first
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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 entering
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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. Death Benefits. Upon the death of a Participant before a complete
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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.
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7. Early Distributions in Special Circumstances. Notwithstanding a
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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 of
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this Section 7(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 7(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 this Section 7(a) was made, which application shall
be irrevocable when made.
(b) Withdrawal with Forfeiture. A Participant may elect at any time
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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 7(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 7(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 Participant dies or
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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
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of distributions, if it concludes that such modification is necessary
to relieve the financial burdens of the Participant or Beneficiary.
8. 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.
(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
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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 8(a), if a
distribution in accordance with the provisions of Section 8(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 otherwise not result in
liability under Section 16(b) of the Exchange Act.
(d) This Section 8 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 8 at any
time prior to a Change in Control. In the event of a Change in
Control, this Section 8 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 8 shall not, for purposes
of Section 8, be subject to cancellation or modification during the
five year period.
9. Deductibility of Payments. In the event that the payment of
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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.
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10. Change of Law. Notwithstanding anything to the contrary herein,
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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.
11. Tax Withholding. To the extent required by law, the Company
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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.
ARTICLE VI
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EXTENT OF PARTICIPANTS' RIGHTS
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1. Unfunded Status of Plan. This Deferral Plan constitutes a mere
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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 this
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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.
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ARTICLE VII
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AMENDMENT OR TERMINATION
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1. Amendment. The Board may amend, modify, suspend or discontinue
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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 Plan
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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 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
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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
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ADMINISTRATION
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1. The Committee. This Deferral Plan shall be administered by the
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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
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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,
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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 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;
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(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 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
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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
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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.
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
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Board or the Committee in any manner so that certain provisions of this Deferral
Plan are applicable solely to Section 16 Persons. Notwithstanding 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.