Exhibit 10.1

 

This document constitutes part of a prospectus covering securities that have
been registered under the Securities Act of 1933.

 

LOCKHEED MARTIN CORPORATION

DEFERRED MANAGEMENT INCENTIVE

COMPENSATION PLAN

(As Amended and Restated Generally Effective May 16, 2016)

ARTICLE I

PURPOSES OF THE DEFERRAL PLAN

The purposes of the Lockheed Martin Corporation Deferred Management Incentive
Compensation Plan (“Deferral Plan”) are to provide certain key management
employees of Lockheed Martin Corporation and its subsidiaries (“Company”) the
opportunity to defer receipt of (i) Incentive Compensation awards; (ii) Long
Term Incentive Award payments and (iii) certain benefits payable under the Death
Benefit Plan, as defined herein. Providing this opportunity to defer income
under the Deferral Plan will 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 plan documents and award agreements
that govern Incentive Compensation, Long Term Incentive Awards, and the Death
Benefit Plan shall be construed and applied independently of each other.
Capitalized terms in this Article I shall have the meanings indicated in the
following Article II.

The Deferral Plan applies solely to MICP awards, Long Term Incentive Award
payments, and certain payments under the Death Benefit Plan, 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.

The Deferral Plan was amended and restated, effective January 1, 2005, in order
to comply with the requirements of Code section 409A. The 2005 amendment and
restatement of the Deferral Plan applied only to the portion of a Participant’s
Account Balance that is earned or becomes vested on or after January 1, 2005
(and any earnings or losses attributable to that portion). The portion of a
Participant’s Account Balance that was earned and vested prior to January 1,
2005 (and any earnings or losses attributable to that portion) shall be governed
by the terms of the Deferral Plan in effect on December 31, 2004, which is
attached hereto as Appendix A. The Deferral Plan was subsequently amended and
restated, effective January 1, 2007, to permit eligible executives of the
Company to defer payments that are available to them pursuant to the partial
termination of the Death Benefit Plan.

The Deferral Plan was amended and restated, effective January 1, 2008 to modify
the annual installment payment option to conform to other nonqualified plans
maintained by the Company. The Deferral Plan and Appendix A were further amended
and restated, effective

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January 1, 2008, to provide for new investment options in which Participants may
invest their Account Balances, whether earned and vested before or after
January 1, 2005. The addition of the new investment option in Appendix A is not
intended to constitute a material modification within the meaning of Code
section 409A.

The Deferral Plan was amended and restated, effective June 26, 2008, to clarify
certain provisions in accordance with the final Treasury regulations issued
under Code section 409A, and to make other administrative changes. The Deferral
Plan was amended and restated, effective December 31, 2008, to clarify
additional provisions in accordance with the final Treasury regulations issued
under Code section 409A and to make other administrative clarifications. The
Deferral Plan was amended and restated, effective February 26, 2009, to
prospectively eliminate an investment option and change the number of available
installment payments.

The Deferral Plan was amended and restated, effective December 31, 2010, to
clarify additional provisions in accordance with the final Treasury regulations
issued under Code section 409A and to make other administrative clarifications.
The Deferral Plan was amended and restated, effective October 25, 2011, to
reflect changes to the administrative requirements for Company Deferrals for
certain Long Term Incentive Awards issued in 2011 and later years and to permit
participants in the Sandia National Laboratories, Inc. Long Term Incentive
Performance Award Plan to defer cash awards to the Deferral Plan. The Deferral
Plan was amended and restated, effective January 26, 2012, to permit
participants in the Applied NanoStructured Solutions, LLC Management Incentive
Compensation Plan to defer cash awards to the Deferral Plan. The Plan was
amended and restated, effective December 14, 2012, to permit participants in the
Lockheed Martin Corporation Attorney Incentive Plan to defer cash awards to the
Deferral Plan.

The Deferral Plan was amended and restated, effective January 1, 2015, to
(i) clarify that Long Term Incentive Awards granted under the Lockheed Martin
Corporation Amended and Restated 2011 Incentive Performance Award Plan may be
deferred under the Deferral Plan, (ii) Incentive Compensation under the Sandia
Corporation 2015 Management Incentive Compensation Plan may be deferred under
the Deferral Plan, (iii) limit Deferral Plan eligibility to employees of the
Company who are employed on or before May 1 of each Award Year, and (iv) provide
the Committee with the discretionary authority to cash out Account Balances that
do not exceed the limit under Code section 402(g) for the year in which the cash
out occurs in circumstances permitted under Code section 409A.

The Deferral Plan is hereby amended and restated, effective May 13, 2016, to
provide that awards of Incentive Compensation under Sikorsky Aircraft
Corporation’s (“Sikorsky”) Annual Executive Incentive Compensation Plan may be
deferred under the Deferral Plan, beginning with 2016 awards paid in 2017, to
clarify certain administrative provisions, and to remove certain out of date
administrative provisions.

 

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ARTICLE II

DEFINITIONS

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
and the portions attributable to the deferral of Incentive Compensation awards,
Long Term Incentive Award payments, and Death Benefit payments 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 -- As to Incentive Compensation, the calendar year with
respect to which an Eligible Employee is awarded Incentive Compensation; as to a
Long Term Incentive Award payment, the first calendar year in the Performance
Period for which the Long Term Incentive Award is effective with respect to an
Eligible Employee.

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 Participant’s Beneficiary shall
be the personal representative of the Participant’s estate in the event of a
Participant’s death. 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.         CODE – the Internal Revenue Code of 1986, as amended from time to
time, including the regulations and guidance of general applicability
thereunder.

7.         COMMITTEE -- The committee described in Section 1 of Article VIII.

8.         COMMON STOCK -- The $1.00 par value common stock of the Company.

9.         COMPANY -- Lockheed Martin Corporation and its Subsidiaries.

10.       [Reserved]

 

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11.       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.

12.       DEATH BENEFIT -- The amount payable to an Eligible Employee pursuant
to Article X, Section 1 of the Death Benefit Plan.

13.       DEATH BENEFIT PLAN – The Lockheed Martin Corporation Post-Retirement
Death Benefit Plan for Elected Officers.

14.       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, a Long Term Incentive
Award for an Award Year, or a Death Benefit payable pursuant to the Death
Benefit Plan. A Deferral Agreement made by June 30, 2012 by an employee whose
participation in the Lockheed Martin Corporation Management Incentive
Compensation Plan was transferred to the Lockheed Martin Corporation Attorney
Incentive Plan shall continue to apply to any amount awarded the employee for
2012 under the Lockheed Martin Corporation Attorney Incentive Plan.

15.       DEFERRAL PLAN -- The Lockheed Martin Corporation Deferred Management
Incentive Compensation Plan, adopted by the Board on July 27, 1995, and as
amended from time to time.

16.       DEFERRED COMPENSATION -- The amount of Incentive Compensation credited
to a Participant’s Account under the Deferral Plan, the amount of any Long Term
Incentive Award payment credited to a Participant’s Account under the Deferral
Plan, and the amount of the Death Benefit payment credited to a Participant’s
Account under the Deferral Plan.

17.       ELIGIBLE EMPLOYEE -- An employee of the Company on or before May 1 of
the Award Year who is a participant in the MICP, who receives a Long Term
Incentive Award, or who is eligible to receive a Death Benefit under the Death
Benefit Plan, 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.

18.       EXCHANGE ACT -- The Securities Exchange Act of 1934.

19.       INCENTIVE COMPENSATION -- The MICP amount granted to an employee for
an Award Year.

20        IPA PLAN -- The Lockheed Martin Corporation Amended and Restated 2003
Incentive Performance Award Plan or the Lockheed Martin Corporation Amended and
Restated 2011 Incentive Performance Award Plan, or any successor plan or plans.

 

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21.       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.

22.       INVESTMENT FUND OPTION – The investment option under which earnings
will be credited to a Participant’s Account based on the market value and
investment return of the investment options (including target date funds and
core funds (and successor funds), and excluding the Company Stock Fund, ESOP
Fund, and Self-Managed Account) that are available to participants pursuant to
the terms of the Qualified Savings Plan, provided that the Committee retains the
discretion to add certain funds to, or to exclude certain funds from, the
Investment Fund Option.

23.       LONG TERM INCENTIVE AWARD - A long term incentive performance award
granted to an employee under the Omnibus Plan, the IPA Plan, or the Sandia
Corporation Long Term Incentive Performance Award Plan.

24.       MICP -- The Lockheed Martin Corporation Management Incentive
Compensation Plan, the 2006 Lockheed Martin Corporation Management Incentive
Compensation Plan (for incentive compensation awarded after February 1, 2006),
the Applied NanoStructured Solutions, LLC Management Incentive Compensation Plan
(beginning with the 2012 Award Year), the Lockheed Martin Corporation Attorney
Incentive Plan (beginning with the 2013 Award Year), the Sandia Corporation 2015
Management Incentive Compensation Plan (beginning with the 2015 Award Year), or
Sikorsky’s Annual Executive Incentive Compensation Plan (beginning with the 2016
Award Year).

25.       OMNIBUS PLAN - The Lockheed Martin Corporation 1995 Omnibus
Performance Award Plan.

26.       PARTICIPANT -- An Eligible Employee for whom Incentive Compensation, a
Long Term Incentive Award payment, or a Death Benefit payment 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.

27.       PAYMENT DATE -- As to any Participant, the January 15 or July 15 on or
about on which payment to the Participant is to be made or to begin in
accordance with Article V.

28.       PERFORMANCE PERIOD - The period set forth in a Long Term Incentive
Award over which the Company’s performance is measured by reference to stated
performance metrics to determine whether any payment will be made under such
Long Term Incentive Award.

29.       QUALIFIED SAVINGS PLAN – The Lockheed Martin Corporation Salaried
Savings Plan or any successor plan.

30.       SECTION 16 PERSON -- A Participant who is subject to the reporting and
short-swing liability provisions of Section 16 of the Securities Exchange Act of
1934 on the date a Deferral Agreement or other election form is delivered to the
Company in accordance with the terms of this Deferral Plan.

 

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31.       SPECIFIED EMPLOYEE – A Participant who is reasonably determined to a
be a “specified employee” within the meaning of Code section 409A(2)(B)(i) as of
December 31 of a calendar year and who shall be treated as such for the 12-month
period beginning the next April 1 and for twelve calendar months thereafter.

32.       SUBSIDIARY -- 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.

32A.    TERMINATION OF EMPLOYMENT – A separation from service as such term is
defined in Code section 409A and the regulations thereunder.

33.       TRADING DAY -- A day upon which transactions with respect to Company
Common Stock are reported in the consolidated transaction reporting system.

ARTICLE III

ELECTION OF DEFERRED AMOUNT

1.         Timing of Deferral Elections.

(a)       Incentive Compensation. An Eligible Employee may elect to defer
Incentive Compensation for an Award Year by executing and delivering to the
Company a Deferral Agreement no later than June 30 of the Award Year.

(b)       Long Term Incentive Awards An Eligible Employee may elect to defer the
payment of a Long Term Incentive Award for an Award Year by executing and
delivering to the Company a Deferral Agreement as of a date specified by the
Senior Vice President, Human Resources, which shall be no later than six months
prior to the end of the Performance Period.

(c)       Irrevocability of Elections. No Eligible Employee shall have the right
to modify or revoke a Deferral Agreement after the applicable deadline described
in Section 1(a), Section 1(b), or Section 1(d), of this Article III for
delivering a Deferral Agreement to the Company, or as described in Article
V.4(f), provided no Section 16 Person shall have the right to modify or revoke a
Deferral Agreement after such applicable deadline or, if earlier, after the date
the agreement has been delivered to the Company. The Senior Vice President,
Human Resources may establish policies and procedures to determine when a
Deferral Agreement or other election called for under this Plan has been
delivered to the Company. Each Deferral Agreement that relates to an Award Year
shall apply only to amounts deferred in that Award Year, and a separate Deferral

 

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Agreement must be completed for each Award Year for which an Eligible Employee
defers Incentive Compensation or a Long Term Incentive Award. A Deferral
Agreement relating to a Death Benefit payment shall relate only to such Death
Benefit payment.

(d)       Death Benefit. An Eligible Employee may elect to defer a Death Benefit
payable under the Death Benefit Plan by executing and delivering to the Company
a Deferral Agreement no later than the date specified by the Senior Vice
President, Human Resources in accordance with Code section 409A.

2.         Amount of Deferral Elections. An Eligible Employee’s deferral
election may be stated as:

(a)       a dollar amount which is at least $5,000 and is an even multiple of
$1,000;

(b)       the greater of $5,000 or a designated percentage of the Eligible
Employee’s Incentive Compensation, Long Term Incentive Award payment, or Death
Benefit payment;

(c)       the excess of the Eligible Employee’s Incentive Compensation, Long
Term Incentive Award payment, or Death Benefit payment over a dollar amount
specified by the Eligible Employee; or

(d)       all of the Eligible Employee’s Incentive Compensation, Long Term
Incentive Award payment, or Death Benefit payment.

In the case of a deferral election under paragraph (c) of this Section 2, an
Eligible Employee’s deferral election shall be effective only if the resulting
excess amount is at least $5,000.

3.         Effect of Taxes on Deferred Compensation. The amount that would
otherwise be deferred and credited to an Eligible Employee’s Account will be
reduced by the amount of any tax that the Company is required to withhold with
respect to the Deferred Compensation. The reduction for taxes shall be made
proportionately out of amounts otherwise allocable to the Interest Option, the
Company Stock Investment Option, or the Investment Fund Option.

4.         Multiple Awards. In the case of an Eligible Employee who receives
more than one Long Term Incentive Award with respect to the same Performance
Period, the elections made by the Eligible Employee under this Article III as
well as under Articles V and VI for the first Long Term Incentive Award granted
to the Eligible Employee with respect to a Performance Period shall be deemed to
be the elections made by that Eligible Employee for any other Long Term
Incentive Awards granted to that Eligible Employee with respect to that same
Performance Period.

5.         Company Deferrals. Pursuant to the terms of certain Long Term
Incentive Awards issued under the Omnibus Plan or the IPA Plan through the
2011-2013 Performance Period, 50% of the amount payable at the end of each
Performance Period was automatically

 

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deferred to an account in this Deferral Plan until the second anniversary (or
first anniversary, if applicable) of the last day of the Performance Period with
respect to a particular award (“Company Deferrals”). If the Participant elected
to defer the Company Deferrals beyond the second anniversary of the end of the
Performance Period, the deferrals were treated as made under this Deferral Plan
for the period following the second anniversary of the end of the Performance
Period. No Company Deferrals have been made under this Deferral Plan since the
2011-13 Performance Period.

ARTICLE IV

CREDITING OF ACCOUNTS

1.         Crediting of Deferred Compensation. Incentive Compensation or a Long
Term Incentive Award payment, that a Participant has elected to defer under this
Deferral Plan shall be credited to the Participant’s Account as of the Trading
Day set by action of the Committee or, if the Committee does not act to set such
a day, on the second Trading Day which follows the date of approval of the
related Incentive Compensation or Long Term Incentive Award payment. A Death
Benefit payment that a Participant has elected to defer under this Deferral Plan
shall be credited to the Participant’s Account as of the date on which the
amount of the Death Benefit payment was determined and paid to eligible
employees absent any election to defer. Any Deferred Compensation credits under
this Section 1 which are allocable to the Interest Option shall be credited at
the dollar amount of such credits. Any Deferred Compensation a credits under
this Section 1 which are allocable to the Company Stock Investment Option shall
be credited as if the dollar amount of credits had been invested in the
Company’s Common Stock at the published closing price of the Company’s Common
Stock on the applicable Trading Day described in this Section 1. Any Deferred
Compensation credits under this Section 1 which are allocable to the Investment
Fund Option shall be credited as if the dollar amount of credits had been
invested in the applicable fund at the published closing price of the applicable
fund on the applicable Trading Day described in this Section 1.

2.         Crediting of Earnings.

(a)       General Rules.

(i)       Earnings (or losses) shall be credited to a Participant’s Account
based on the investment option or options to which the Account has been
allocated beginning with the applicable Trading Day described in this Article
IV.

(ii)       Any amount distributed from a Participant’s Account in cash pursuant
to Article V shall be credited with earnings (or losses) through the Trading Day
that is four (4) business days prior to the date on which a distribution is to
be made. Any amount distributed from a Participant’s Account in stock pursuant
to Article V shall be credited with earnings (or losses) through the last
Trading Day preceding the date on which a distribution is to be made.

(b)       Interest Option. The portion of a Participant’s Account allocated or
reallocated to the Interest Option shall be credited with interest, valued
daily,

 

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while so allocated or reallocated 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. Effective with respect to amounts deferred on or
after February 26, 2009, no Incentive Compensation may be invested in the
Interest Option. Amounts deferred prior to February 26, 2009 may remain invested
in the Interest Option until such amounts are transferred to the Company Stock
Investment Option or the Investment Fund Option on or after July 1, 2009. No
amounts may be credited or reallocated to the Interest Option on or after
July 1, 2009.

(c)       Company Stock Investment Option.

(i)       The portion of a Participant’s Account allocated to the Company Stock
Investment Option shall be credited when so allocated on the applicable Trading
Day described in this Article IV 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 such Trading Day.

(ii)      The portion of the Participant’s Account Balance allocated to the
Company Stock Investment Option shall reflect any post-allocation appreciation
or depreciation in the market value of the Company’s Common Stock based on the
published closing price of the stock on each Trading Day and shall reflect
dividends paid and any other distributions made with respect to the Company’s
Common Stock.

(iii)     Cash dividends shall be treated as if such dividends had been
reinvested in the Company’s Common Stock at the published closing price of the
Company’s Common Stock on the Trading Day on which the cash dividend is paid or,
if the dividend is paid on a day which is not a Trading Day, on the Trading Day
which immediately precedes the day the dividend is paid.

(d)      Investment Fund Option. Earnings (or losses) shall be credited to a
Participant’s Account based on the investment option or options within the
Investment Fund Option to which his or her Account has been allocated. The
manner in which earnings (or losses) are credited under each of the investment
options shall be determined in the same manner as under the Qualified Savings
Plan. The procedures for directing the allocation and reallocation among the
investment options in the Investment Fund Option shall be the same as the
procedures for making allocations under the Qualified Savings Plan.

3.         Election of Investment Options. A Participant’s initial investment
elections for a particular type of award for an Award Year or a Death Benefit
shall be made in his or her Deferral Agreement for such Award Year or Death
Benefit, and no Participant shall have the right to modify or revoke any such
election after the time the Participant no longer has the right to make or
revoke a Deferral Agreement under Section 1 of Article II. A Participant’s
allocations between investment options shall be subject to such minimum
allocations as the

 

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Committee may establish. In the event a Participant fails to specify an
investment election in his or her Deferral Agreement, the amount subject to that
Deferral Agreement shall be deemed allocated to the Interest Option for amounts
credited before December 31, 2008 and to the default option designated under the
Qualified Savings Plan for amounts credited on or after December 31, 2008.

4.         Reallocation Among Investment Options. Effective June 16, 2008, a
Participant may reallocate the portion of his Account Balance that is invested
in the Interest Option and the Investment Fund Option to the Interest Option
(through June 30, 2009), the Company Stock Investment Option, and the various
investment funds in the Investment Fund Option, subject to the trading
restrictions that apply to the transfer and reallocation of investments under
the terms of the Qualified Savings Plan, applied as if such Qualified Savings
Plan restrictions also pertain to the Interest Option; provided that a
Participant may not at any time reallocate the portion of his Account Balance
that has been invested at any time in the Company Stock Investment Option.
Notwithstanding the foregoing, any election by a Section 16 Person to reallocate
any portion of his Account Balance to the Company Stock Investment Option shall
only become effective if the election is made at least six months following the
most recent election with respect to any plan of the Corporation that involved
the disposition of the Corporation’s equity securities pursuant to a
“Discretionary Transaction” (as defined in Exchange Act Rule 16b-3). No amounts
may be credited or reallocated to the Interest Option on or after July 1, 2009.

ARTICLE V

PAYMENT OF BENEFITS

1.         General.

(a)         Account Balance and Elections. The Company’s liability to pay
benefits to a Participant or Beneficiary under this Deferral Plan shall be
measured by and shall in no event exceed the Participant’s Account Balance.
Except as otherwise provided in this Deferral Plan, a Participant’s Account
Balance shall be paid to him in accordance with the Participant’s elections
under this Article V.

(b)         Cash and Stock Payments. All benefit payments shall be made in cash
to the extent a Participant’s Account is allocated to the Interest Option or
Investment Fund Option and shall be made in whole shares of the Company’s Common
Stock to the extent that a Participant’s Account is allocated to the Company
Stock Investment Option and, except as otherwise provided, shall reduce
allocations to the Interest Option, Investment Fund 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 of
Deferred Compensation attributable to the Company Stock Investment Option shall
be distributed to a Section 16 Person under this Deferral Plan unless

 

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such amount was allocated to the Company Stock Investment Option in accordance
with Section 1 of Article IV at least six months prior to the date of
distribution. At the Company’s discretion a distribution of Common Stock may be
made directly to a Participant or to a brokerage account opened in the name of
the Participant. When an Account is distributed in a lump sum or, if an Account
is distributed in installments, cash shall be distributed (or withheld for
payment of applicable taxes) at that time in lieu of any fractional share of
Common Stock. The cash distribution in lieu of fractional shares shall be based
on the published closing price of the Company’s Common Stock on the last Trading
Day preceding the date the distribution is scheduled to be made.

2.         Election for Commencement of Payment. At the time a Participant
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 the Payment Date next following the date of the
Participant’s Termination of Employment with the Company for any reason.

(b)       Payment to begin on the first Payment Date of the year next following
the year in which the Participant has a Termination of Employment with the
Company for any reason.

(c)       Payment to begin on the first Payment Date of the year next following
the date on which the Participant has both had a Termination of Employment with
the Company for any reason and attained the age designated by the Participant in
the Deferral Agreement.

Notwithstanding a Participant’s election or any other provision of the Deferral
Plan, the following specific rules apply to Participants who are Section 16
Persons or Specified Employees. Subject to the rules regarding distributions to
a Specified Employee, any payment of benefits in the form of shares of Common
Stock that would result in a nonexempt short-swing transaction under
Section 16(b) of the Exchange Act shall be delayed until the earliest date upon
which the Company reasonably anticipates that 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. Any distributions to a
Specified Employee (including a Section 16 Person) on account of a termination
of employment shall commence or be made on the Payment Date determined pursuant
to the Specified Employee’s election (or as otherwise provided under this
Deferral Plan), except that if such Payment Date would be within six (6) months
of the date of the Specified Employee’s Termination of Employment from the
Company, distributions shall commence or be made on the next date that is at
least six (6) months following such termination of employment, regardless of
whether such date is a Payment Date.

3.         Election for Form of Payment. At the time a Participant completes a
Deferral Agreement, he or she shall elect the form of payment of his or her
Deferred Compensation for the specified Award Year or Death Benefit, as
applicable, from among the following options:

(a)       A lump sum.

 

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 (b)        Annual installment payments for a period of years designated by the
Participant not to exceed:

(i)       Fifteen (15) annual installments for distributions commencing prior to
January 1, 2008:

(ii)       Twenty (20) annual installments for distributions commencing on or
after January 1, 2008 and prior to January 1, 2010:

(iii)       Twenty-Five (25) annual installments for distributions commencing on
or after January 1, 2010;

Such election shall be irrevocable except as provided in Section 4 of this
Article V. 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 installment payments then remaining in the designated installment
period.

Notwithstanding the foregoing, if the Account Balance of a Participant who is
entitled to begin payment equals $10,000 or less, the Participant’s Account
Balance shall be paid in a single lump sum payment in full discharge of all
liabilities with respect to such benefits.

Further notwithstanding the foregoing, if at any time the Account Balance of a
Participant who is not an active employee of the Corporation and who is entitled
to begin payment or who has begun payment pursuant to an annual installment
payment election under Section 3(b) is not greater than the applicable dollar
limit under Code section 402(g)(1)(B) for the calendar year, then the Claims
Administrator (or its delegate) may determine, in writing, that the Company
shall pay the Participant’s Account Balance in a single lump sum payment,
provided that the payment (I) results in termination and liquidation of the
entirety of the Participant’s interest under the Deferral Plan and any other
agreement, program or arrangement that is treated as a single nonqualified
deferred compensation plan under Treas. Reg. § 1.409A-1(c)(2) with respect to
the Participant and (II) is not greater than the applicable dollar amount under
Code section 402(g)(1)(B) for the year in which the lump sum payment is made.

4.          Prospective Change of Payment Elections.

(a)         If a Participant has different payment options in effect with
respect to his or her Account Balance, the Company shall maintain sub-accounts
for the Participant to determine the amounts subject to each payment election.

(b)         In the event a Participant does not make a valid election with
respect to the commencement of payment and form of benefit for an Award

 

12

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Year or for a Death Benefit, the Participant will be deemed to have elected that
payment of benefits with respect to that Award Year or Death Benefit be made in
a lump sum on or about the Payment Date next following the date of the
Participant’s termination of employment.

(c)         A Participant’s election with respect to an Award Year or Death
Benefit (including a “deemed election” in accordance with the preceding
paragraph) shall remain in effect unless and until such election is modified by
a subsequent election in accordance with (d) below.

(d)         Notwithstanding anything to the contrary in this Article V, a
Participant may make a new election with respect to the commencement of payment
and form of payment with respect to any sub-account maintained for Award Years
or a Death Benefit or with respect to his or her entire Account Balance. A new
election under this section shall be made by executing and delivering to the
Company an election in such form as prescribed by the Company. To constitute a
valid election by a Participant making a prospective change to a previous
election, (i) the prospective election must be executed and delivered to the
Company at least twelve (12) months before the date the first payment would be
due under the Participant’s previous election, and (ii) the first payment must
be delayed by at least sixty (60) months from the date the first payment would
be due under the Participant’s previous election, and (iii) such change in
election shall not be given effect until twelve 12 months from the date that the
change in election is delivered to the Company. In the event an election fails
to satisfy the provisions set forth in this paragraph, such election shall be
void and, if such an election is void, payment shall be made in accordance with
the most recent election which was valid.

(e)         Notwithstanding the above, for periods prior to January 1, 2009, (or
such later date as may be provided by the Internal Revenue Service in guidance
of general applicability), the Senior Vice President, Human Resources may
provide alternative rules for elections with respect to the commencement of
payment and form of payment that conform to the rules provided in Notice 2005-1,
and subsequent Internal Revenue Service guidance providing transition relief
under Code section 409A.

(f)         A Participant may not make, modify, or revoke an election with
respect to commencement of payment or form of payment after the date a
Participant terminates employment.

5.         Distribution upon Early Termination. Notwithstanding a Participant’s
payment elections under this Article V, subject to the requirements of Code
section 409A, if the Participant terminates employment with the Company, other
than by reason of death or disability (as defined in Section 8(b) of this
Article V), and before the Participant has attained age 55, the Participant’s
Account Balance shall be distributed to him or her in a lump sum on or about the
Payment Date next following the date of the Participant’s Termination of
Employment with the Company; provided, however, that if a distribution in
accordance with the provisions of

 

13

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this Section 6 from the portion of the Participant’s Account allocated to the
Company Stock Investment Option would otherwise result in a nonexempt
short-swing transaction under Section 16(b) of the Exchange Act, the date of
distribution with respect to such portion to such Section 16 Person shall be
delayed until the earliest date upon which the Company reasonably anticipates
that 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. Distributions under this Section 5 are subject to any delay in
distribution required for Specified Employees as provided in Section 2 of this
Article V.

6.         Acceleration Upon Conflict of Interest. Notwithstanding a
Participant’s payment elections under this Article V, if following a
Participant’s termination of employment with the Company, the Participant takes
a position (or accepts a position) with a governmental entity, agency, or
instrumentality and that employer has determined that the Participant’s
continued participation in the Plan may constitute a conflict of interest
precluding the Participant from continuing in his position (or from accepting an
offered position) with that employer or subjecting the Participant to penalty,
sanction, or otherwise limiting the Participant’s responsibilities for that
employer, then, to the extent reasonably necessary, the Participant’s Account
Balance shall be distributed to him or her in a lump sum as soon as practical
(but no later than 90 days) following the later of (i) the date on which the
Participant commences employment with the government employer; or (ii) the date
on which it is determined or indicated that the conflict of interest may exist;
provided, however, that if a distribution in accordance with the provisions of
this Section 6 from the portion of the Participant’s Account allocated to the
Company Stock Investment Option would otherwise result in a nonexempt
short-swing transaction under Section 16(b) of the Exchange Act, the date of
distribution with respect to such portion to such Section 16 Person shall be
delayed until the earliest date upon which the Company reasonably anticipates
that 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. This Section 6 of Article V shall apply, however, only to the
extent that the accelerated payment upon a conflict of interest determination
conforms to Code section 409A.

7.         Benefits Payable Upon Death. Upon the death of a Participant before a
complete distribution of his or her Account Balance, the Account Balance will be
paid to the Participant’s Beneficiary in accordance with the payment elections
applicable to the Participant. If a Participant dies while actively employed or
otherwise before the payment of benefits has commenced, payments to the
Beneficiary shall commence on the date payments to the Participant would have
commenced, taking account of the Participant’s Termination of Employment (by
death or before) and, if applicable, by postponing commencement until after the
date the Participant would have attained the commencement age specified by the
Participant. Whether the Participant dies before or after the commencement of
distributions, payments to the Beneficiary shall be made for the period or
remaining period elected by the Participant.

8.         Early Distributions in Special Circumstances. Notwithstanding a
Participant’s payment elections under this Article V, a Participant or
Beneficiary may request an earlier distribution in the following limited
circumstances:

(a)       Hardship Distributions. A Participant may apply for a hardship
distribution pursuant to this Section 8(a) on such form and in such manner as
the

 

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Committee shall prescribe and, subject to the last sentence of this Section 8(a)
with respect to Section 16 Persons, the Committee shall have the power and
discretion at any time to approve a payment to a Participant if the Committee
determines that the Participant is suffering from an unforeseeable severe
financial emergency (within the meaning of Code section 409A(A)(2)(A)(vi) and
409A(A)(2)((B)(ii)) 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; provided, however, that if a distribution in
accordance with the provisions of this Section 8(a) from the portion of the
Participant’s Account allocated to the Company Stock Investment Option would
otherwise result in a nonexempt short-swing transaction under Section 16(b) of
the Exchange Act, the date of distribution with respect to such portion to such
Section 16 Person shall be delayed until the earliest date upon which the
Company reasonably anticipates that 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. The Committee’s determination under
this Section 8(a) shall conform to the requirements of Code section
409A(a)(2)(B)(iv).

(b)       Disability. If the Committee determines that a Participant has become
permanently disabled within the meaning of Section 409A(a)(2)(C) of the Code
before the Participant’s entire Account Balance has been distributed, the
Participant’s remaining Account Balance will be distributed within 90 days in a
lump sum payment; provided, however, that if a distribution in accordance with
the provisions of this Section 8(b) from the portion of the Participant’s
Account allocated to the Company Stock Investment Option would otherwise result
in a nonexempt short-swing transaction under Section 16(b) of the Exchange Act,
the date of distribution with respect to such portion to any Section 16 Person
shall be delayed until the earliest date upon which the Company reasonably
anticipates that 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.

9.            Acceleration upon Change in Control.

(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:

(i)        A tender offer or exchange offer is consummated for the ownership of
securities of the Company representing 25% or more of the combined voting power
of the Company’s then outstanding voting securities entitled to vote in the
election of directors of the Company.

 

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(ii)         The Company is merged, combined, consolidated, recapitalized or
otherwise reorganized with one or more other entities that are not the Company’s
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).

(iii)       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.

(iv)       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).

(v)         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 Company
Subsidiary.

Notwithstanding the foregoing, no distribution shall be made solely on account
of a Change in Control and prior to the benefit commencement date specified in
Section 2 of Article V unless the Change in Control is an event qualifying for a
distribution of deferred compensation under both the definition of Change in
Control in this Plan and in Section 409A(a)(2)(A)(v) of the Code.

(c)         Notwithstanding the provisions of Section 9(a), if a distribution in
accordance with the provisions of Section 9(a) would result in a nonexempt
short-

 

16

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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 Company reasonably anticipates
that 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 9 shall apply only to a Change in Control of Lockheed
Martin Corporation and shall not cause immediate payout of Deferred Compensation
in any transaction involving the Company’s sale, liquidation, merger, or other
disposition of any subsidiary.

(e)         The Committee may cancel or modify this Section 9 at any time prior
to a Change in Control. In the event of a Change in Control, this Section 9
shall remain in force and effect, and shall not be subject to cancellation or
modification for a period of five years, and any defined term used in Section 9
shall not, for purposes of Section 9, be subject to cancellation or modification
during the five-year period.

10.         Deductibility of Payments. Subject to the provisions of Code section
409A, in the event that the Company reasonably anticipates that the payment of
benefits in accordance with the Participant’s election under Section 3 of this
Article VI would prevent the Company from claiming an income tax deduction with
respect to any portion of the benefits paid under Code section 162(m), the
Committee shall have the right to delay 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 delayed distribution schedule, the
Committee shall undertake to have distributions made at such times and in such
amounts as the Company reasonably anticipates, or should reasonably anticipate,
that if the payment is made during such year, the deduction will not be barred
by Code section 162(m) or upon a Termination of Employment in accordance with
Treasury Regulation section 1.409A-2(b)(7)(i), 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. All scheduled payments under this Plan
and any other plan required to be aggregated with this Plan must be delayed in
order for such payment to be delayed pursuant to this Section 8.

11.         Change of Law. Notwithstanding anything herein to the contrary, if
the Committee determines in good faith, based on consultation with counsel and
in accordance with the requirements of Code section 409A, that the Federal
income tax treatment or legal status of the Plan has or may be adversely
affected by a change in the Code, Title I of the Employee Retirement Income
Security Act of 1974, or other applicable law or by an administrative or
judicial construction thereof, the Committee may direct that the Accounts of
affected Participants or of all Participants be distributed as soon as
practicable after such determination is made, to the extent deemed necessary or
advisable by the Committee to cure or mitigate the consequences, or possible
consequences of, such change in law or interpretation thereof.

12.         Tax Withholding. To the extent required by law, the Company shall
withhold from benefit payments hereunder, or with respect to any Incentive
Compensation, Long

 

17

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Term Incentive Award, or Death Benefit payment deferred hereunder or credit
contributed by the Company under Article IV, 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

EXTENT OF PARTICIPANTS’ RIGHTS

1.         Unfunded Status of Plan. This Deferral Plan constitutes a mere
contractual promise by the Company to make payments in the future, and each
Participant’s rights shall be those of a general, unsecured creditor of the
Company. No Participant shall have any beneficial interest in any specific
assets that the Company may hold or set aside in connection with this Deferral
Plan. Notwithstanding the foregoing, to assist the Company in meeting its
obligations under this Deferral Plan, the Company may set aside assets in a
trust described in Revenue Procedure 92-64, 1992-2 C.B. 422, 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 Deferral 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 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 shall not be permitted or recognized, other than
the designation of, or passage of payment rights to, a Beneficiary.
Notwithstanding, any portion of a Participant’s benefit under this Plan may be
paid to a spouse, former spouse, or child pursuant to the terms of a domestic
relations order (which shall be interpreted and administered in accordance with
Code sections 414(p)(1)(B) and 409A), provided that the form of payment
designated in such order is a lump sum payment described in Section 3(a) of
Article V of this Deferral Plan.

ARTICLE VII

AMENDMENT OR TERMINATION

1.         Amendment. The Board or its authorized delegate may amend, modify,
suspend or discontinue this Deferral Plan at any time subject to any shareholder
approval that may be required under applicable law, provided, however, that no
such amendment shall have the effect of reducing a Participant’s Account Balance
or postponing the time when a Participant is entitled to receive a distribution
of his Account Balance. Further, no amendment may alter the formula for
crediting interest to Participants’ Accounts with respect to amounts for which
deferral elections have previously been made, unless the amended formula is not
less favorable to Participants than that previously in effect, or unless each
affected Participant consents to such change.

2.         Termination. The Board reserves the right to terminate this Plan at
any time and to pay all Participants their Account Balances in any form and at
such times that the

 

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Board reasonably determines in its discretion is appropriate and conforms to the
requirements of Code section 409A; 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 to
another entity all of the obligations of Company with respect to a Participant
under this Plan if such entity agrees pursuant to a binding written agreement to
assume all of the obligations of the Company under this Plan with respect to
such Participant.

ARTICLE VIII

ADMINISTRATION

1.         The Committee. This Deferral Plan shall be administered by the
Management Development and 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 and the Claims Administrator (identified in
Section 6 below) shall have full authority to interpret the Plan, and
interpretations of the Plan by the Committee or the Claims Administrator shall
be final and binding on all parties. Notwithstanding anything contained in the
Deferral Plan or in any document issued under the Deferral Plan, it is intended
that the Deferral Plan will at all times conform to the requirements of Code
section 409A and any regulations or other guidance issued thereunder, and that
the provisions of the Deferral Plan will be interpreted to meet such
requirements. If any provision of the Deferral Plan is determined not to conform
to such requirements, the Deferral Plan shall be interpreted to omit such
offending provision.

2.         Delegation and Reliance. The Committee has delegated to the officers
or employees of the Company the authority to execute and deliver those
instruments and documents, to do all acts and things, and to take all other
steps deemed necessary, advisable or convenient for the effective administration
of this Deferral Plan in accordance with its terms and purpose, except that the
Committee has not delegated (and 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 or its delegate 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.

 

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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 or the Claims Administrator 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 (or the Claims Administrator) from all liability with respect thereto.

5.         Proof of Claims. The Committee or the Claims Administrator 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 Deferral
Plan is wholly or partially denied by the Claims Administrator are as follows:

(a)         The Claims Administrator shall, within 90 days after receipt of a
claim, furnish to claimant a written notice setting forth, in a manner
calculated to be understood by claimant: (1) the specific reason or reasons for
the denial; (2) specific reference to pertinent Deferral Plan provisions on
which the denial is based; (3) a description of any additional materials or
information necessary for the claimant to perfect the claim and an explanation
of why such material or information is necessary; (4) an explanation of the
steps to be taken if the claimant wishes to have the denial reviewed; and (5) a
statement of the claimant’s right to bring a civil action under section 502(a)
of ERISA following an adverse determination on review. The 90-day period may be
extended for not more than an additional 90 days if special circumstances make
such an extension necessary. The Claims Administrator shall give the claimant,
before the end of the initial 90-day period, a written notice of such extension,
stating such special circumstances and the date by which the Claims
Administrator expects to render a decision.

(b)         By a written application filed with the Claims Administrator within
60 days after receipt by claimant of the written notice described in paragraph
(a), the claimant or his duly authorized representative may request review of
the denial of his claim.

 

20

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(c)         In connection with such review, the claimant or his duly authorized
representative may submit issues, comments, documents, records and other
information relating to the claim for benefits to the Claims Administrator. In
addition, the claimant will be provided, upon request and free of charge,
reasonable access to and copies of all documents, records, or other information
“relevant” to claimant’s claim for benefits. A document, record, or other
information is “relevant” if it: (1) was relied upon in making the benefit
determination; (2) was submitted, considered or generated in the course of
making the benefit determination, without regard to whether such document,
record or information was relied upon in making the benefit determination; or
(3) demonstrates compliance with administrative processes and safeguards
required under Federal law.

(d)         The Deferral Plan will provide an impartial review that takes into
account all comments, records and other information submitted by the claimant
relating to the claim, without regard to whether such information was submitted
or considered in the initial benefit determination. The Claims Administrator
shall make a decision and furnish such decision in writing to the claimant
within 60 days after receipt by the Claims Administrator of the request for
review. This period may be extended to not more than 120 days after such receipt
if special circumstances make such an extension necessary. The claimant will be
notified in writing prior to the expiration of the original 60-day period if
such an extension is required, and such notice will include the reason for the
extension and the date by which it is expected that a decision will be reached.
The decision on review shall be in writing, set forth in a manner calculated to
be understood by the claimant and shall include: (1) the specific reasons for
the decision; (2) specific reference to the pertinent Deferral Plan provisions
on which the decision is based; (3) a statement that the claimant is entitled to
receive, upon request and free of charge, reasonable access to and copies of all
documents, records, and other information “relevant” to the claimant’s claim for
benefits; (4) a description of any additional material or information necessary
for the claimant to perfect the claim and an explanation of why such material or
information is necessary; (5) a statement describing any voluntary appeal
procedures and the claimant’s right to obtain information about such procedures,
if any; and (6) a statement of the claimant’s right to bring a civil action
under section 502(a) of ERISA following an adverse benefit determination on
review. If in the event that the reviewing committee must make a determination
of disability in order to decide a claim, the reviewing committee shall follow
the special claims procedures for disability benefits described in Department of
Labor Regulation section 2560.503-1(d). The reviewing committee shall render a
decision within a reasonable time (not to exceed 90 days) after the claimant’s
request for review, rather than within 120 days as set forth in the above
paragraph.

(e)         The Claims Administrator shall be the Lockheed Martin Corporation
Savings Plan Administrative Committee. Notwithstanding the foregoing, with
respect to claims and appeals brought by elected officers of the Company, the
Claims Administrator shall be the Committee.

 

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ARTICLE IX

GENERAL AND MISCELLANEOUS PROVISIONS

1.         No Guarantee of Employment or Award. 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 Deferral Planor 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 Deferral Plan or a Deferral Agreement,
either singly or collectively, by their terms or implications in any way
obligate the Company to award Incentive Compensation, grant any award under the
Omnibus Plan or IPA Plan, pay any Death Benefit, or make any Long Term Incentive
Award payment 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.         Notice. 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 Senior Vice President,
Human Resources. Any written notice to a Participant shall be made by delivery
to the Participant in person, through electronic transmission, or by mailing
such notice to the Participant at his or her last-known place of residence or
business address.

3.         Performance of Acts. In the event it should become impossible for the
Company or the Committee to perform any act required by this Deferral 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.

4.         Employee Consent. 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.

5.         Terms Binding. 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.

6.         Copy of Plan. A copy of this Deferral Plan shall be available for
inspection by Participants or other persons entitled to benefits under the
Deferral Plan at reasonable times at the offices of the Company.

7.         State Law. 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.

 

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8.         Regulatory Requirements. This Deferral Plan and its operation,
including but not limited to, the mechanics of deferral elections, the
reallocation of all or a portion of a Participant’s Account Balance, 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.

9.         Section 16 of Exchange Act. 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 9, that provision to the extent possible shall be interpreted and deemed
amended so as to avoid such conflict. To the extent of any remaining
irreconcilable conflict with this intent, the provision shall be deemed
disregarded. Similarly, any action or election by a Section 16 Person with
respect to the Deferral Plan to the extent possible shall be interpreted and
deemed amended so as to avoid liability under Section 16 or, if this is not
possible, to the extent necessary to avoid liability under Section 16, shall be
deemed ineffective. Notwithstanding anything to the contrary in this Deferral
Plan, the provisions of this Deferral Plan may at any time be bifurcated by the
Board or the Committee in any manner so that certain provisions of this Deferral
Plan are applicable solely to Section 16 Persons. Notwithstanding 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.

10.       Securities Laws. This Deferral Plan, allocations to and from the
Company Stock Investment Option and the issuance and delivery of shares of
Common Stock and/or other securities or property or the payment of cash under
this Deferral Plan, are 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
Federal margin requirements) and to such approvals by any listing, regulatory or
governmental authority as may, in the opinion of counsel for the Company be
necessary or advisable to comply with all legal requirements. Any securities
delivered under this Deferral Plan shall be subject to such restrictions (and
the person acquiring such securities shall, if requested by the Company provide
such evidence, assurance and representations to the Company as to compliance
with any thereof) as counsel to the Company may deem necessary or desirable to
assure compliance with all applicable legal requirements.

 

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11.       Electronic Notice and Signatures. Whenever a signature notice or
delivery of a document is required or appropriate under this Deferral Plan,
signature, notice or delivery may be accomplished by paper or written format or,
to the extent authorized by the Committee, by electronic means. In the event the
Committee authorizes electronic means for the signature, notice or delivery of a
document under this Deferral Plan, the electronic record or confirmation of that
signature, notice or delivery maintained by or on behalf of the Committee shall
for purposes of this Deferral Plan be treated as if it was a written signature
or notice and was delivered in the manner provided herein for a written
document.

ARTICLE X

EFFECTIVE DATE

This Deferral Plan was originally 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.
Subsequent amendments to the Deferral Plan are effective as of the date stated
in the amendment or the adopting resolution.

This Deferral Plan has been amended and restated effective as of the date stated
on the first page herein.

 

LOCKHEED MARTIN CORPORATION /s/ Patricia L. Lewis                            
By: Patricia L. Lewis Senior Vice President, Human Resources
5/16/16                                                  Date

 

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APPENDIX A

This Appendix A shall govern the portion of a Participant’s Account Balance that
was earned and vested prior to January 1, 2005 (and any earnings attributable to
that portion). This Appendix A shall not apply to the portion of a Participant’s
Account Balance that is earned or becomes vested on or after January 1, 2005
(and any earnings attributable to that portion).

ARTICLE I

PURPOSES OF THE PLAN

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 (i) Incentive Compensation awards under the
Lockheed Martin Corporation Management Incentive Compensation Plan (the “MICP”)
and (ii) Long Term Incentive Award payments under the Lockheed Martin
Corporation 1995 Omnibus Performance Award Plan (the “Omnibus Plan”) and the
Lockheed Martin Corporation 2003 Incentive Performance Award Plan (the “IPA
Plan”). Providing this opportunity to defer income under the Deferral Plan will
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, the Omnibus Plan and the IPA Plan shall be construed
and applied independently of each other.

The Deferral Plan applies solely to MICP awards and Long Term Incentive Award
payments under the Omnibus Plan and the IPA Plan 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

DEFINITIONS

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
and the portions attributable to the deferral of Incentive Compensation awards
and Long Term Incentive Award payments will be accounted for separately.

 

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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 - As to Incentive Compensation, the calendar year with
respect to which an Eligible Employee is awarded Incentive Compensation; as to a
Long Term Incentive Award payment and the related Company Deferral, the first
calendar year in the Performance Period for which the Long Term Incentive Award
is effective with respect to an Eligible Employee.

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 Participant’s Beneficiary shall
be the personal representative of the Participant’s estate in the event of a
Participant’s death. 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.       COMMON STOCK -- The $1.00 par value common stock of the Company.

8.       COMPANY -- Lockheed Martin Corporation and its subsidiaries.

9.       COMPANY DEFERRALS -- The amount deferred by the Company, and not at the
election of the Participant, for the two-year period following the end of a
Performance Period for a Long Term Incentive Award.

10.     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.

11.     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, or a Long Term
Incentive Award and any related Company Deferral for an Award Year.

12.     DEFERRAL PLAN -- The Lockheed Martin Corporation Deferred Management
Incentive Compensation Plan, adopted by the Board on July 27, 1995, and as
amended from time to time.

13.     DEFERRED COMPENSATION -- The amount of Incentive Compensation credited
to a Participant’s Account under the Deferral Plan and the amount of any Long
Term Incentive Award payment credited to a Participant’s Account under the
Deferral Plan (other than Company Deferrals).

 

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14.     ELIGIBLE EMPLOYEE -- An employee of the Company who is a participant in
the MICP or who receives a Long Term Incentive Award under the Omnibus Plan or
the IPA Plan 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.

15.     EXCHANGE ACT -- The Securities Exchange Act of 1934.

16.     INCENTIVE COMPENSATION -- The MICP amount granted to an employee for an
Award Year.

17.     IPA PLAN -- The Lockheed Martin Corporation 2003 Incentive Performance
Award Plan.

18.     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.

19.     INVESTMENT FUND OPTION – The investment option under which earnings (or
losses)will be credited to a Participant’s Account based on the market value and
investment return of the investment options (including target date funds and
core funds (and successor funds), and excluding the Company Stock Fund, ESOP
Fund, and Self-Managed Account) that are available to participants pursuant to
the terms of the Qualified Savings Plan, provided that the Committee retains the
discretion to add certain funds to, or to exclude certain funds from, the
Investment Fund Option.

20.     LONG TERM INCENTIVE AWARD - A long term incentive award granted to an
employee under the Omnibus Plan or the IPA Plan.

21.     MICP -- The Lockheed Martin Corporation Management Incentive
Compensation Plan.

22.     OMNIBUS PLAN - The Lockheed Martin Corporation 1995 Omnibus Performance
Award Plan.

23.     PARTICIPANT -- An Eligible Employee for whom Incentive Compensation or a
Long Term Incentive Award payment 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.

24.     PAYMENT DATE -- As to any Participant, the January 15 or July 15 on or
about on which payment to the Participant is to be made or to begin in
accordance with Article V.

 

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25.     PERFORMANCE PERIOD - The period set forth in a Long Term Incentive Award
over which the Company’s performance is measured by reference to total
stockholder return to determine whether any payment will be made under such Long
Term Incentive Award.. QUALIFIED SAVINGS PLAN – The Lockheed Martin Corporation
Salaried Savings Plan or any successor plan.

26.     REALLOCATION EFFECTIVE DATE -- The date a reallocation elected by a
Participant or Beneficiary under Section 6(a) of Article IV is effected, which
shall be the June 30, July 31, August 31 or September 30 immediately following
the end of the Reallocation Election Period in which his or her election under
Section 6(a) becomes irrevocable.

27.     REALLOCATION ELECTION PERIOD -- A period in which a Participant or
Beneficiary may under Section 6(a) of Article IV elect a reallocation of his or
her Account Balance from one investment option to another investment option, and
there shall be four such election periods: June 1 through June 15, 2004, June 16
through July 15, 2004, July 16 through August 15, 2004 and August 16 through
September 15, 2004.

28.     SECTION 16 PERSON -- A Participant who is subject to the reporting and
short-swing liability provisions of Section 16 of the Securities Exchange Act of
1934 on the date a Deferral Agreement or other election form is delivered to the
Company in accordance with the terms of this Deferral Plan.

29.     SUBSIDIARY -- 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.

30.     TRADING DAY -- A day upon which transactions with respect to Company
Common Stock are reported in the consolidated transaction reporting system.

ARTICLE III

ELECTION OF DEFERRED AMOUNT

1.       Timing of Deferral Elections.

(a)       Incentive Compensation. An Eligible Employee may elect to defer
Incentive Compensation for an Award Year by executing and delivering to the
Company a Deferral Agreement no later than October 31 of the Award Year,
provided that any election by a Section 16 Person shall be subject to the
provisions of Section 4 of Article IV.

(b)       Long Term Incentive Awards and Company Deferrals. An Eligible Employee
may elect to defer the payment of a Long Term Incentive Award and a Company
Deferral for an Award Year by executing and delivering to the Company a Deferral
Agreement no later than October 31 of the Award Year, provided that any election
by a Section 16 Person shall be subject to the provisions of Section 4 of
Article IV.

 

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(c)       Irrevocability of Elections. No Eligible Employee shall have the right
to modify or revoke a Deferral Agreement for an Award Year after the applicable
deadline described in Section 1(a) and Section 1(b) of this Article III for
delivering a Deferral Agreement to the Company for such Award Year, provided no
Section 16 Person shall have the right to modify or revoke a Deferral Agreement
after such applicable deadline or, if earlier, after the date the agreement has
been delivered to the Company. The Committee may establish policies and
procedures to determine when a Deferral Agreement or other election called for
under this Plan has been 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 or a Long Term Incentive Award.

2.       Amount of Deferral Elections. An Eligible Employee’s deferral election
may be stated as:

(a)       a dollar amount which is at least $5,000 and is an even multiple of
$1,000,

(b)       the greater of $5,000 or a designated percentage of the Eligible
Employee’s Incentive Compensation or Long Term Incentive Award payment (adjusted
to the next highest multiple of $1,000),

(c)       the excess of the Eligible Employee’s Incentive Compensation or Long
Term Incentive Award payment over a dollar amount specified by the Eligible
Employee (which must be an even multiple of $1,000), or

(d)       all of the Eligible Employee’s Incentive Compensation or Long Term
Incentive Award payment.

An Eligible Employee’s deferral election shall be effective only if the
Participant is awarded, in the case of Incentive Compensation, at least $10,000
of Incentive Compensation for that Award Year, or in the case of Long Term
Incentive Award, at least $10,000 is payable to the Participant in cash at the
conclusion of the Performance Period applicable to a Long Term Incentive Award
payment. In addition, in the case of a deferral election under paragraph (c) of
this Section 2, an Eligible Employee’s deferral election shall be effective only
if the resulting excess amount is at least $5,000.

3.       Effect of Taxes on Deferred Compensation. The amount that would
otherwise be deferred and credited to an Eligible Employee’s Account will be
reduced by the amount of any tax that the Company is required to withhold with
respect to the Deferred Compensation. The reduction for taxes shall be made
proportionately out of amounts otherwise allocable to the Interest Option and
the Company Stock Investment Option.

4.       Multiple Awards. In the case of an Eligible Employee who receives more
than one Long Term Incentive Award with respect to the same Performance Period,
the

 

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elections made by the Eligible Employee under this Article III as well as under
Articles V and VI for the first Long Term Incentive Award granted to the
Eligible Employee with respect to a Performance Period shall be deemed to be the
elections made by that Eligible Employee for any other Long Term Incentive
Awards granted to that Eligible Employee with respect to that same Performance
Period.

5.       Company Deferrals. Pursuant to the terms of the Long Term Incentive
Awards, 50% of the amount payable at the end of the Performance Period will be
automatically deferred until the second anniversary of the last day of the
Performance Period with respect to a particular award. The Company may establish
an account for Company Deferrals under the Company Stock Investment Option of
this Deferral Plan. However, the terms governing the Company Deferrals will be
governed for the two year period of deferral by the terms of the award agreement
entered into under the Omnibus Plan or the IPA Plan with respect to the Long
Term Incentive Award and not by this Deferral Plan except to the extent the
award agreement expressly refers to the terms of this Deferral Plan.
Notwithstanding the foregoing, if the Participant elects to defer the Company
Deferrals beyond the second anniversary of the end of the Performance Period,
the deferrals will be treated as made under this Deferral Plan for the period
following the second anniversary of the end of the Performance Period.

ARTICLE IV

CREDITING OF ACCOUNTS

1.       Crediting of Deferred Compensation. Incentive Compensation or a Long
Term Incentive Award payment that a Participant has elected to defer under this
Deferral Plan shall be credited to the Participant’s Account as of the Trading
Day set by action of the Committee or, if the Committee does not act to set such
a day, on the second Trading Day which follows the date of approval of the
related Incentive Compensation or Long Term Incentive Award. If the Company
establishes an account for Company Deferrals pursuant to Section 5 of Article
III, the Company Deferrals shall be credited to such account as of the last
Trading Day in the Performance Period. Any Deferred Compensation credits under
this Section 1 which are allocable to the Interest Option shall be credited at
the dollar amount of such credits. Any Deferred Compensation and Company
Deferral credits under this Section 1 which are allocable to the Company Stock
Investment Option shall be credited as if the dollar amount of credits had been
invested in the Company’s Common Stock at the published closing price of the
Company’s Common Stock on the applicable Trading Day described in this
Section 1. Any Deferred Compensation and Company Deferral credits under this
Section 1 which are allocable to the Investment Fund Option shall be credited as
if the dollar amount of credits had been invested in the applicable fund at the
published closing price of the applicable fund on the applicable Trading Day
described in this Section 1.

 

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2.      Crediting of Earnings (Losses) and Reallocations.

(a)       General Rules.

(i)       Earnings (or losses) shall be credited to a Participant’s Account
based on the investment option or options to which the Account has been
allocated beginning with the applicable Trading Day described in this Article
IV.

(ii)      Earnings (or losses) on amounts reallocated in accordance with this
Article IV shall be credited to the Participant’s Account as of the applicable
day or Trading Day described for such reallocation in this Article IV.

(iii)     Any amount distributed from a Participant’s Account in cash pursuant
to Article V shall be credited with earnings (or losses) through the Trading Day
that is four (4) business days prior to the Payment Date on which a distribution
is to be made. Any amount distributed from a Participant’s Account in stock
pursuant to Article V shall be credited with earnings (or losses) through the
last Trading Day preceding the date on which a distribution is to be made.

(iv)     Company Deferrals shall be credited with earnings (or losses) through
the last Trading Day in the period which ends on the second anniversary of the
end of the applicable Performance Period unless deferred further pursuant to a
Deferral Agreement.

(b)      Interest Option. The portion of a Participant’s Account allocated or
reallocated to the Interest Option shall be credited with interest, valued
daily, while so allocated or reallocated 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. No amounts may be reallocated to the Interest Option
on or after July 1, 2009. Amounts deferred prior to January 1, 2005 may remain
invested in the Interest Option until such amounts are transferred to the
Company Stock Investment Option or the Investment Fund Option on or after
July 1, 2009.

(c)      Company Stock Investment Option.

(i)       The portion of a Participant’s Account allocated or reallocated to the
Company Stock Investment Option shall be credited when so allocated or
reallocated on the applicable Trading Day described in this Article IV 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 such Trading Day.

(ii)      The portion of the Participant’s Account Balance allocated to the
Company Stock Investment Option shall reflect any post-allocation appreciation
or depreciation in the market value of the Company’s Common Stock based on the
published closing price of the stock on each Trading Day and shall reflect
dividends paid and any other distributions made with respect to the Company’s
Common Stock.

(iii)     Cash dividends shall be treated as if such dividends had been
reinvested in the Company’s Common Stock at the published closing price of the

 

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Company’s Common Stock on the Trading Day on which the cash dividend is paid or,
if the dividend is paid on a day which is not a Trading Day, on the Trading Day
which immediately precedes the day the dividend is paid.

(iv)     If any portion of a Participant’s Account was reallocated in accordance
with paragraph 5 (or paragraph 4 prior to October 1, 2004) of this Article IV
from the Company Stock Investment Option to the Interest Option or the , the
reallocation shall be credited to the Interest Option as if the Company’s Common
Stock had been bought or sold at the published closing price of the Company’s
Common Stock on the Trading Day on which the reallocation is effective, or if
the reallocation is effective as of the day that is not a Trading Day, the
Trading Day which immediate precedes the effective date of the reallocation.

(d)          Investment Fund Option. Earnings (or losses) shall be credited to a
Participant’s Account based on the investment option or options within the
Investment Fund Option to which his or her Account has been allocated. The
manner in which earnings (or losses) are credited under each of the investment
options shall be determined in the same manner as under the Qualified Savings
Plan. The procedures for directing the allocation and reallocation among the
investment options in the Investment Fund Option shall be the same as the
procedures for making allocations under the Qualified Savings Plan.

3.     Election of Investment Options. A Participant’s initial investment
elections for a particular type of award for an Award Year shall be made in his
or her Deferral Agreement for such Award Year, and no Participant shall (except
as provided for in Section 6 and Section 7 of this Article IV) have the right to
modify or revoke any such election after the time the Participant no longer has
the right to modify or revoke a Deferral Agreement under Section 1 of Article
III. A Participant’s allocations between investment options shall be subject to
such minimum allocations as the Committee may establish.

4.     Special Rule for Section 16 Persons. An election by a Section 16 Person
to have any Deferred Compensation allocated to the Company Stock Investment
Option shall be effective on the Trading Day described in Section 1 of this
Article IV unless he or she delivers the related Deferral Agreement to the
Company less than six months before such Trading Day. If he or she delivers the
related Deferral Agreement to the Company less than six months before such date,
his or her Company Stock Investment Option election automatically shall be
treated as an Interest Option election under Section 1 of this Article IV until
the first Trading Day of the seventh month following the month in which the
Deferral Agreement is delivered to the Company. The Deferred Compensation so
allocated to the to the Interest Option together with any related interest
credits shall by operation of this Deferral Plan automatically be reallocated
and credited to the Company Stock Investment Option on such Trading Day in
accordance with Section 2(b) of this Article IV.

Reallocations to Interest Option (deleted effective September 30, 2004). If
benefit payments to a 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, the Participant or
Beneficiary, as applicable, may make a one-time

 

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irrevocable election under this Section 5 at any time after the Participant’s
termination of employment and before the completion 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 Trading Day of the month following
the month in which an executed reallocation election is delivered to the
Company, provided an election by a Participant or Beneficiary who is a
Section 16 Person on the date the election is delivered to the Company shall be
effective only if such election satisfies on such date all the requirements of
the exemption under Rule l6b-3 of the Exchange Act for a “discretionary
transaction” or otherwise would not result in a short swing profit recovery
pursuant to Rule 16b-3 under the Exchange Act. In the event such election does
not satisfy the exemption pursuant to Rule l6b-3 under the Exchange Act for a
“discretionary transaction” and if giving effect to the election would result in
liability under Section 16(b) of the Exchange Act, the election shall not be
given effect until the first Trading Day of the month following the month in
which the election could be given effect without creating liability under
Section 16(b) of the Exchange Act. Notwithstanding anything herein to the
contrary, no election may be made under this Section 5 after September 15, 2004,
and any such election made during September 2004 will be valued and take effect
as of September 30, 2004.

5.     One-Time Reallocation Right.

(a)       General Rule. Subject to Section 5(b) of this Article IV, a
Participant or Beneficiary may during a Reallocation Election Period execute and
deliver to the Company an election made on such form and in such manner as
prescribed by the Committee to the Company to reallocate all or a portion (in
five (5) percent increments) of his or her Account Balance (other than Company
Deferrals) which is then allocated to one investment option to the other
investment option. Any such election shall be irrevocable when received by the
Company, and the reallocation which the Participant or Beneficiary elects shall
be effective as of the Reallocation Effective Date that immediately follows the
end of the Reallocation Election Period in which his or her election becomes
irrevocable. Only one reallocation election may be made by a Participant or
Beneficiary with the result that a reallocation made in one Reallocation
Election Period will preclude a reallocation election in a subsequent
Reallocation Election Period.

(b)       Exception. If a Participant or a Beneficiary is a Section 16 Person on
any date in a Reallocation Election Period and delivers an election to the
Company in such period, such election shall have no force or effect under
Section 6(a) unless such election complies with the exemption under Rule l6b-3
of the Exchange Act for a “discretionary transaction”.

(c)       Additional Credit. The Company shall credit to the Account of each
Participant or Beneficiary that has Deferred Compensation (other than Company
Deferrals) credited to the Stock Investment Option as of September 30, 2004 an
amount equal to the greater of (i) $24.95 per Account Balance; or (ii) $0.10 for
each whole share of Common Stock reflected in the Participant’s or Beneficiary’s
Account Balance (exclusive of Company Deferrals). Such amount shall be allocated
and credited to the Interest Option as of September 30, 2004, after taking into
account any reallocation under Section 6(a) of this Article IV.

 

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6.        Reallocation Among Investment Options. Effective June 16, 2008, a
Participant may reallocate the portion of his Account Balance that is invested
in the Interest Option and the Investment Fund Option to the Interest Option
(through June 30, 2009), the Company Stock Investment Option, and the various
investment funds in the Investment Fund Option, subject to the trading
restrictions that apply to the transfer and reallocation of investments under
the terms of the Qualified Savings Plan, applied as if such Qualified Savings
Plan restrictions also pertain to the Interest Option; provided that a
Participant may not at any time reallocate the portion of his Account Balance
that is invested at any time in the Company Stock Investment Option.
Notwithstanding the foregoing, any election by a Section 16 Person to reallocate
any portion of his Account Balance to the Company Stock Investment Option shall
only become effective if the election is made at least six months following the
most recent election with respect to any plan of the Corporation that involved
the disposition of the Corporation’s equity securities pursuant to a
“Discretionary Transaction” (as defined in Exchange Act Rule 16b-3). . No
amounts may be reallocated to the Interest Option on or after July 1, 2009.

ARTICLE V

PAYMENT OF BENEFITS

1.     General.

(a)        Account Balance and Elections. The Company’s liability to pay
benefits to a Participant or Beneficiary under this Deferral Plan shall be
measured by and shall in no event exceed the Participant’s Account Balance.
Except as otherwise provided in this Deferral Plan (including but not limited to
Section 5 of Article III with respect to Company Deferrals), a Participant’s
Account Balance shall be paid to him in accordance with the Participant’s
elections under this Article V.

(b)        Cash Only Payment. With respect to benefit payments made on a Payment
Date which is on or before September 30, 2004, all such benefit payments shall
be made in accordance with the terms of this Deferral Plan as in effect on such
date in cash and, except as otherwise provided under such terms, 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 of Deferred Compensation
shall be distributed to a Section 16 Person under this Deferral Plan which is
attributable to the Stock Investment Option unless such amount was allocated to
the Participant’s Account in accordance with Section 1 of Article 4 at least six
months prior to the date of distribution or no portion of such amount was
allocated to the Company Stock Investment Option in the six months prior to
distribution.

(c)        Cash and Stock Payments. With respect to benefit payments made after
September 30, 2004, all such benefit payments shall be made in cash to the
extent a Participant’s Account is allocated to the Interest Option or Investment
Fund Option or is attributable to Company Deferrals and shall be made in whole
shares of the Company’s Common Stock to the

 

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extent that a Participant’s Account is allocated to the Company Stock Investment
Option (other than with respect to Company Deferrals) and, except as otherwise
provided, shall reduce allocations to the Interest Option, the Investment Fund
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 (for distributions
occurring prior to June 16, 2008) or the Trading Day that is four (4) business
days prior to the date of the distribution (for distributions occurring on or
after June 16, 2008). Notwithstanding the foregoing, no amount of Deferred
Compensation shall be distributed to a Section 16 Person under this Deferral
Plan unless such amount was allocated to the Participant’s Account in accordance
with Section 1 of Article 4 at least six months prior to the date of
distribution. At the Company’s discretion a distribution of Common Stock may be
made directly to a Participant or to a brokerage account opened in the name of
the Participant. When an Account is distributed in a lump sum or, if an Account
is distributed in installments, when the final installment is made, cash shall
be distributed (or withheld for applicable taxes) at that time in lieu of any
fractional share of Common Stock. The cash distribution in lieu of fractional
shares shall be based on the published closing price of the Company’s Common
Stock on the last Trading Day preceding the date the distribution is scheduled
to be made.

2.       Election for Commencement of Payment. At the time a Participant first
completes a Deferral Agreement, he or she shall elect from among the following
options governing the date on which the payment of benefits shall commence:

(a)         Payment to begin on the Payment Date next following the date of the
Participant’s termination of employment with the Company for any reason.

(b)         Payment to begin on the first Payment Date of the year next
following the year in which the Participant terminates employment with the
Company for any reason.

(c)         Payment to begin on the Payment Date 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.

Notwithstanding a Participant’s election, any payment of benefits in the form of
shares of Common Stock that would otherwise commence within six months of the
date on which a Participant ceased to be Section 16 Person shall not be paid on
that date but instead shall be paid on the first Payment Date that is at least
six months after the date on which that Participant ceased to be a Section 16
Person.

3.       Election for Form of Payment. At the time a Participant first completes
a Deferral Agreement, he or she shall elect the form of payment of his or her
Account Balance from among the following options:

 

  (A) A lump sum.

 

  (B)

Annual installment payments for a period of years designated by the Participant,
which shall not exceed fifteen (15) annual installments. The amount of each
annual payment shall be determined by dividing the Participant’s Account Balance
at the

 

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  end of the month prior to such payment by the number of installment payments
then 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.

(a)         Notwithstanding anything to the contrary in this Article V, a
Participant may make an election with respect to the commencement of payment
(from among the options set forth in Section 2(A), (B), or (C) above) and form
of payment (from among the options set forth in Section 3(A) or (B) above) of
his or her entire Account Balance, or with respect to specific Award Years, by
executing and delivering to the Company an election form on or after October 1,
2002 in such form as prescribed by the Company. If a Participant has different
payment options in effect with respect to his or her Account Balance, the
Company shall maintain sub-accounts for the Participant to determine the amounts
subject to each payment election; however, no election or modification of an
election will be accepted if it would require the Company to maintain more than
five sub-accounts within the Participant’s Account in order to make payments in
accordance with the Participant’s elections.

(b)         In the event a Participant does not make a valid election with
respect to the commencement of payment and form of benefit for an Award Year
commencing on or after October 1, 2002, the Participant will be deemed to have
elected that payment of benefits with respect to that Award Year be made in a
lump sum on or about the Payment Date next following the date of the
Participant’s termination of employment.

(c)         A Participant’s election with respect to an Award Year (including a
“deemed election” in accordance with the preceding paragraph) shall remain in
effect unless and until such election is modified by a subsequent election in
accordance with the second preceding paragraph above.

(d)         To constitute a valid election by a Participant making a prospective
change to a previous election, the prospective election must be executed and
delivered to the Company (i) at least six months before the date the first
payment would be due under the Participant’s previous election and (ii) in a
different calendar year than the date the first payment would be due under the
Participant’s previous election. In the event an election fails to satisfy the
provisions set forth in this paragraph, such election shall be void and, if such
an election is void, payment shall be made in accordance with the most recent
election which was valid. In addition, no prospective election will be
considered valid to the extent the prospective election would (i) result in a
payment being made within six months of the date of the prospective election or
(ii) result in a payment under the prospective election in the same calendar
year as the date of the prospective election. In the event a prospective
election fails to satisfy the provisions set forth in the preceding sentence,
the first payment under the prospective election will be delayed until the first
Payment Date that is both (i) at least six months after the date of the
prospective election and (ii) in a calendar year after the date of the
prospective election.

(e)         A Participant may not make or modify an election with respect to
commencement of payment or form of payment after the date a Participant
terminates employment.

 

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5.       Acceleration upon Early Termination. Notwithstanding a Participant’s
payment elections under this Article V, 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), except
as provided in Section 5 of Article III with respect to Company Deferrals, the
Participant’s Account Balance shall be distributed to him or her in a lump sum
on or about the Payment Date next following the date of the Participant’s
termination of employment with the Company; provided, however, that if a
distribution in accordance with the provisions of this Section 5 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.

6.       Acceleration Upon Conflict of Interest. Notwithstanding a Participant’s
payment elections under this Article V, if following a Participant’s termination
of employment with the Company, the Participant takes a position (or accepts a
position) with a governmental entity, agency, or instrumentality and that
employer has determined or indicated that the Participant’s continued
participation in the Plan may constitute a conflict of interest precluding the
Participant from continuing in his position (or from accepting an offered
position) with that employer or subjecting the Participant to penalty, sanction,
or otherwise limiting the Participant’s responsibilities for that employer,
except as provided in Section 5 of Article III with respect to Company
Deferrals, then the Participant’s Account Balance shall be distributed to him or
her in a lump sum as soon as practical following the later of (i) the date on
which the Participant commences employment with the government employer; or
(ii) the date on which it is determined or indicated that the conflict of
interest may exist. This Section 6 shall be applicable only to the extent that
such distribution conforms to Code section 409A.

7.       Death Benefits.

(a)         General Rule. Upon the death of a Participant before a complete
distribution of his or her Account Balance, the Account Balance will be paid to
the Participant’s Beneficiary in accordance with the payment elections
applicable to the Participant. If a Participant dies while actively employed or
otherwise before the payment of benefits has commenced, payments to the
Beneficiary shall commence on the date payments to the Participant would have
commenced, taking account of the Participant’s termination of employment (by
death or before) and, if applicable, by postponing commencement until after the
date the Participant would have attained the commencement age specified by the
Participant. Whether the Participant dies before or after the commencement of
distributions, payments to the Beneficiary shall be made for the period or
remaining period elected by the Participant.

 

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(b)         Special Rule. Notwithstanding Section 7(a) of this Article V, in the
event that a Participant dies before the Participant’s entire Account Balance
has been distributed, the Committee, in its sole discretion, may modify the
timing of distributions from the Participant’s Account, including the
commencement date and number of distributions, if it concludes that such
modification is necessary to relieve the financial burdens of the Participant’s
Beneficiary; provided, however, that if a distribution in accordance with the
provisions of this Section 7(b) from the portion of the Participant’s Account
allocated to the Company Stock Investment Option would otherwise result in a
nonexempt short-swing transaction under Section 16(b) of the Exchange Act, the
date of distribution with respect to such portion 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.

8.       Early Distributions in Special Circumstances. Notwithstanding a
Participant’s payment elections under this Article V, a Participant or
Beneficiary may request an earlier distribution in the following limited
circumstances (except as provided in Section 5 of Article III with respect to
Company Deferrals):

 (a)         Hardship Distributions. A Participant may apply for a hardship
distribution pursuant to this Section 8(a) on such form and in such manner as
the Committee shall prescribe and, subject to the last sentence of this
Section 8(a) with respect to Section 16 Persons, the Committee shall have the
power and discretion at any time to approve a payment to a Participant if the
Committee determines that the Participant is suffering from a serious financial
emergency caused by circumstances beyond the Participant’s control which would
cause a hardship to the Participant unless such payment were made. Any such
hardship payment will be in a lump sum and will not exceed the lesser of (i) the
amount necessary to satisfy the financial emergency (taking account of the
income tax liability associated with the distribution), or (ii) the
Participant’s Account Balance; provided, however, that if a distribution in
accordance with the provisions of this Section 8(a) from the portion of the
Participant’s Account allocated to the Company Stock Investment Option would
otherwise result in a nonexempt short-swing transaction under Section 16(b) of
the Exchange Act, the date of distribution with respect to such portion 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.

 (b)         Withdrawal with Forfeiture. A Participant may elect on such form
and in such manner as the Committee shall prescribe at any time to withdraw
ninety percent (90%) of the amount credited to the Participant’s Account. If
such a withdrawal is made, the remaining ten percent (10%) of the Participant’s
Account shall be permanently forfeited, and the Participant will be prohibited
from deferring any amount under the Deferral Plan for the Award Year in which

 

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the withdrawal is received (or the first Award Year in which any portion of the
withdrawal is received); provided, however, that if a distribution in accordance
with the provisions of this Section 8(b) from the portion of the Participant’s
Account allocated to the Company Stock Investment Option would otherwise result
in a nonexempt short-swing transaction under Section 16(b) of the Exchange Act,
the date of distribution with respect to such portion 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.

  (c)         Disability. If the Committee determines that a Participant has
become permanently disabled before the Participant’s entire Account Balance has
been distributed, the Committee, in its sole discretion, may modify the timing
of distributions from the Participant’s Account, including the commencement date
and number of distributions, if it concludes that such modification is necessary
to relieve the financial burdens of the Participant; provided, however, that if
a distribution in accordance with the provisions of this Section 8(c) from the
portion of the Participant’s Account allocated to the Company Stock Investment
Option would otherwise result in a nonexempt short-swing transaction under
Section 16 (b) of the Exchange Act, the date of distribution with respect to
such portion 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.

9.       Acceleration upon Change in Control.

  (a)         Notwithstanding any other provision of the Deferral Plan, except
as provided in Section 5 of Article III with respect to Company Deferrals, 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)

 

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  (3)         Any person (as this term is used in Sections 3(a)(9) and 13(d)(3)
of the Exchange Act, but excluding any person described in and satisfying the
conditions of Rule 13d-1 (b)(1) thereunder), becomes the beneficial owner (as
defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of
securities of the Company representing 25% or more of the combined voting power
of the Company’s then outstanding securities entitled to vote in the election of
directors of the Company.

  (4)         At any time within any period of two years after a tender offer,
merger, combination, consolidation, recapitalization, or other reorganization or
a contested election, or any combination of these events, the “Incumbent
Directors” shall cease to constitute at least a majority of the authorized
number of members of the Board. For purposes hereof, “Incumbent Directors” shall
mean the persons who were members of the Board immediately before the first of
these events and the persons who were elected or nominated as their successors
or pursuant to increases in the size of the Board by a vote of at least
three-fourths of the Board members who were then Board members (or successors or
additional members so elected or nominated)

  (5)         The stockholders of the Company approve a plan of liquidation and
dissolution or the sale or transfer of substantially all of the Company’s
business and/or assets as an entirety to an entity that is not a Subsidiary.

  (c)         Notwithstanding the provisions of Section 9(a), if a distribution
in accordance with the provisions of Section 9(a) would result in a nonexempt
short-swing transaction under Section 16(b) of the Exchange Act with respect to
any Section 16 Person, then the date of distribution to such Section 16 Person
shall be delayed until the earliest date upon which the distribution either
would not result in a nonexempt short-swing transaction or would otherwise not
result in liability under Section 16(b) of the Exchange Act.

  (d)         This Section 9 shall apply only to a Change in Control of Lockheed
Martin Corporation and shall not cause immediate payout of Deferred Compensation
in any transaction involving the Company’s sale, liquidation, merger, or other
disposition of any subsidiary.

  (e)         The Committee may cancel or modify this Section 9 at any time
prior to a Change in Control. In the event of a Change in Control, this
Section 9 shall remain in force and effect, and shall not be subject to
cancellation or modification for a period of five years, and any defined term
used in Section 9 shall not, for purposes of Section 9, be subject to
cancellation or modification during the five-year period.

 

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10.     Deductibility of Payments. In the event that the payment of benefits in
accordance with the Participant’s elections under this Article V would prevent
the Company from claiming an income tax deduction with respect to any portion of
the benefits paid, the Committee shall have the right to modify the timing of
distributions from the Participant’s Account as necessary to maximize the
Company’s tax deductions. In the exercise of its discretion to adopt a modified
distribution schedule, the Committee shall undertake to have distributions made
at such times and in such amounts as most closely approximate the Participant’s
elections, consistent with the objective of maximum deductibility for the
Company. The Committee shall have no authority to reduce a Participant’s Account
Balance or to pay aggregate benefits less than the Participant’s Account Balance
in the event that all or a portion thereof would not be deductible by the
Company.

11.     Change of Law. Notwithstanding anything to the contrary herein, if the
Committee determines in good faith, based on consultation with counsel, that the
Federal income tax treatment or legal status of the Plan has or may be adversely
affected by a change in the Code, Title I of the Employee Retirement Income
Security Act of 1974, or other applicable law or by an administrative or
judicial construction thereof, the Committee may direct that the Accounts of
affected Participants or of all Participants be distributed as soon as
practicable after such determination is made, to the extent deemed necessary or
advisable by the Committee to cure or mitigate the consequences, or possible
consequences of, such change in law or interpretation thereof.

12.     Tax Withholding. To the extent required by law, the Company shall
withhold from benefit payments hereunder, or with respect to any Incentive
Compensation or Long Term Incentive Award payment deferred hereunder or credit
contributed by the Company under Article IV, 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

EXTENT OF PARTICIPANTS’ RIGHTS

1.       Unfunded Status of Plan. This Deferral Plan constitutes a mere
contractual promise by the Company to make payments in the future, and each
Participant’s rights shall be those of a general, unsecured creditor of the
Company. No Participant shall have any beneficial interest in any specific
assets that the Company may hold or set aside in connection with this Deferral
Plan. Notwithstanding the foregoing, to assist the Company in meeting its
obligations under this Deferral Plan, the Company may set aside assets in a
trust described in Revenue Procedure 92-64, 1992-2 C.B. 422, 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 Deferral 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 Deferral
Plan shall not be assignable or transferable and any purported transfer,
assignment, pledge or

 

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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.
Notwithstanding, any portion of a Participant’s benefit under this Plan may be
paid to a spouse or former spouse pursuant to the terms of a domestic relations
order (as defined in Code section 414(p)(1)(B)), provided that the form of
payment designated in such order is one that is provided for under Section 3 of
Article V of this Deferral Plan.

ARTICLE VII

AMENDMENT OR TERMINATION

1.       Amendment. The Board or its authorized delegate may amend, modify,
suspend or discontinue this Deferral Plan at any time subject to any shareholder
approval that may be required under applicable law, provided, however, that no
such amendment shall have the effect of reducing a Participant’s Account Balance
or postponing the time when a Participant is entitled to receive a distribution
of his Account Balance. Further, no amendment may alter the formula for
crediting interest to Participants’ Accounts with respect to amounts for which
deferral elections have previously been made, unless the amended formula is not
less favorable to Participants than that previously in effect, or unless each
affected Participant consents to such change.

2.       Termination. The Board reserves the right to terminate this Plan at any
time and to pay all Participants their Account Balances in a lump sum
immediately following such termination or at such time thereafter as the Board
may determine; provided, however, that if a distribution in accordance with the
provisions of this Section 2 would otherwise result in a nonexempt short-swing
transaction under Section 16(b) of the Exchange Act, the date of distribution
with respect to any Section 16 Person shall be delayed until the earliest date
upon which the distribution either would not result in a nonexempt short-swing
transaction or would otherwise not result in liability under Section 16(b) of
the Exchange Act.

3.       Transfer of Liability. The Board reserves the right to transfer to
another entity all of the obligations of Company with respect to a Participant
under this Plan if such entity agrees pursuant to a binding written agreement to
assume all of the obligations of the Company under this Plan with respect to
such Participant.

ARTICLE VIII

ADMINISTRATION

1.       The Committee. This Deferral Plan shall be administered by the
Compensation Committee of the Board or such other committee of the Board as may
be designated by the Board and constituted so as to permit this Deferral Plan to
comply with the disinterested administration requirements of Rule 16b-3 of the
Exchange Act. The members of the Committee shall be designated by the Board. A
majority of the members of the Committee (but not fewer than two) shall
constitute a quorum. The vote of a majority of a quorum or the unanimous written
consent of the Committee shall constitute action by the Committee. The Committee
or its delegate shall have full authority to interpret the Plan, and
interpretations of the Plan by the Committee or its delegate shall be final and
binding on all parties.

 

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2.       Delegation and Reliance. The Committee may delegate to the officers or
employees of the Company the authority to execute and deliver those instruments
and documents, to do all acts and things, and to take all other steps deemed
necessary, advisable or convenient for the effective administration of this
Deferral Plan in accordance with its terms and purpose, except that the
Committee may not delegate any authority the delegation of which would cause
this Deferral Plan to fail to satisfy the applicable requirements of Rule 16b-3.
In making any determination or in taking or not taking any action under this
Deferral Plan, the Committee may obtain and rely upon the advice of experts,
including professional advisors to the Company. No member of the Committee or
officer of the Company who is a Participant hereunder may participate in any
decision specifically relating to his or her individual rights or benefits under
the Deferral Plan.

3.       Exculpation and Indemnity. Neither the Company nor any member of the
Board or of the Committee, nor any other person participating in any
determination of any question under this Deferral Plan, or in the
interpretation, administration or application thereof, shall have any liability
to any party for any action taken or not taken in good faith under this Deferral
Plan or for the failure of the Deferral Plan or any 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 or its delegate 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 (or its delegate) from all liability with respect thereto.

5.       Proof of Claims. The Committee or its delegate 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. If a claim under this Deferral Plan is denied by the
Committee, the Committee or its delegate shall communicate such denial and shall
provide an opportunity to appeal such denial in a manner which the Committee
deems appropriate under the circumstances, which may include following the then
applicable claims procedures under the Employee Retirement Income Security Act
of 1974, as amended.

 

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ARTICLE IX

GENERAL AND MISCELLANEOUS PROVISIONS

1.       No Guarantee of Employment or Award. Neither this Deferral Plan, a
Company Deferral 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, a Company
Deferral 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
Deferral Plan, a Company Deferral 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 Deferral Plan, a Company Deferral or a Deferral Agreement, either
singly or collectively, by their terms or implications in any way obligate the
Company to award Incentive Compensation, grant any award under the Omnibus Plan
or IPA Plan or make any Long Term Incentive Award payment 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.       Affect on Retirement Plans. Neither Incentive Compensation nor Long
Term Incentive Award payments deferred under this Deferral Plan shall 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.       Notice. Any written notice to the Company referred to herein shall be
made by mailing or delivering such notice to the Company at 6801 Rockledge
Drive, Bethesda, Maryland 20817, to the attention of the Vice President, Human
Resources. Any written notice to a Participant shall be made by delivery to the
Participant in person, through electronic transmission, or by mailing such
notice to the Participant at his or her last-known place of residence or
business address.

4.       Performance of Acts. In the event it should become impossible for the
Company or the Committee to perform any act required by this Deferral 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.       Employee Consent. 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.       Terms Binding. 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.

 

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7.       Copy of Plan. A copy of this Deferral Plan shall be available for
inspection by Participants or other persons entitled to benefits under the
Deferral Plan at reasonable times at the offices of the Company.

8.       State Law. 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.       Regulatory Requirements. This Deferral Plan and its operation,
including but not limited to, the mechanics of deferral elections, the
reallocation of all or a portion of a Participant’s Account Balance, 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.     Section 16 of Exchange Act. It is the intent of the Company that this
Deferral Plan satisfy and be interpreted in a manner, that, in the case of
Participants who are or may be Section 16 Persons, satisfies any applicable
requirements of Rule 16b-3 of the Exchange Act or other exemptive rules under
Section 16 of the Exchange Act and will not subject Section 16 Persons to
short-swing profit liability thereunder. If any provision of this Deferral Plan
would otherwise frustrate or conflict with the intent expressed in this
Section 10, that provision to the extent possible shall be interpreted and
deemed amended so as to avoid such conflict. To the extent of any remaining
irreconcilable conflict with this intent, the provision shall be deemed
disregarded. Similarly, any action or election by a Section 16 Person with
respect to the Deferral Plan to the extent possible shall be interpreted and
deemed amended so as to avoid liability under Section 16 or, if this is not
possible, to the extent necessary to avoid liability under Section 16, shall be
deemed ineffective. Notwithstanding anything to the contrary in this Deferral
Plan, the provisions of this Deferral Plan may at any time be bifurcated by the
Board or the Committee in any manner so that certain provisions of this Deferral
Plan are applicable solely to Section 16 Persons. Notwithstanding 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.     Securities Laws. This Deferral Plan, allocations to and from the Company
Stock Investment Option and the issuance and delivery of shares of Common Stock
and/or other securities or property or the payment of cash under this Deferral
Plan, are 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

 

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Federal margin requirements) and to such approvals by any listing, regulatory or
governmental authority as may, in the opinion of counsel for the Company be
necessary or advisable to comply with all legal requirements. Any securities
delivered under this Deferral Plan shall be subject to such restrictions (and
the person acquiring such securities shall, if requested by the Company provide
such evidence, assurance and representations to the Company as to compliance
with any thereof) as counsel to the Company may deem necessary or desirable to
assure compliance with all applicable legal requirements.

12.       1995 Awards. 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.

13.         Limits on Accounts. 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 and Long Term Incentive Award payments deferred under this Deferral
Plan by all Eligible Employees for all Award Years exceed $250,000,000.

14.         Electronic Notice and Signatures. Whenever a signature notice or
delivery of a document is required or appropriate under this Deferral Plan,
signature, notice or delivery may be accomplished by paper or written format or,
to the extent authorized by the Committee, by electronic means. In the event the
Committee authorizes electronic means for the signature, notice or delivery of a
document under this Deferral Plan, the electronic record or confirmation of that
signature, notice or delivery maintained by or on behalf of the Committee shall
for purposes of this Deferral Plan be treated as if it was a written signature
or notice and was delivered in the manner provided herein for a written
document.

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

 

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those Section 16 Persons shall be restated as if all of their Deferred
Compensation had been allocated to the Interest Option at all times. Subsequent
amendments to the Deferral Plan are effective as of the date stated in the
amendment or the adopting resolution.

This Deferral Plan has been amended and restated effective as of the date stated
on the first page herein.

 

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