Exhibit 10.40

Lockheed Martin Corporation

6801 Rockledge Drive Bethesda, MD 20817

Telephone 301-897-6208 Facsimile 301-897-6758

E-mail: john.t.lucas@lmco.com

 

LOGO [g221578ex10_40.jpg]

John T. Lucas

Senior Vice President, Human Resources

Retirement Transition Agreement

January 26, 2012

Ralph D. Heath

Lockheed Martin Corporation

Executive Vice President, Aeronautics

P. O. Box 748

Ft. Worth, Texas 76101

Dear Mr. Heath:

This letter agreement (“Agreement”) confirms our discussions concerning your
desire to retire, and the compensation and benefits you will receive in
retirement in recognition of your contributions to the Corporation and your
effective leadership of the Aeronautics Business Area.

1. Change in Position; Retirement. Effective April 1, 2012, you will step down
voluntarily as Executive Vice President, Aeronautics, but will remain an elected
Executive Vice President of the Corporation reporting to Chris Kubasik,
President and Chief Operating Officer. As an elected officer and Executive Vice
President, you will continue to be entitled to all the benefits of an Executive
Vice President, subject to the terms of this Agreement. During the period from
April 1, 2012 to April 30, 2012 you will assist in the orderly transition of
your responsibilities and knowledge to your successor as Executive Vice
President, Aeronautics and will perform such other duties as may be assigned to
you by the President and Chief Operating Officer or the Senior Vice President,
Human Resources. Your employment will terminate effective at the close of
business on April 30, 2012 and your retirement will be effective as of May 1,
2012, provided that you accept the terms of this Agreement and do not revoke
your acceptance.

2. Benefits. In consideration of the Corporation entering into this Agreement
and the benefits provided herein, you will receive the benefits set forth in
this paragraph 2 (collectively, the “Benefits”). Acceptance of the terms of this
Agreement, which incorporates herein by reference the release of claims attached
as Addendum A (the “Second Release”), must occur no later than February 16,
2012, twenty-one (21) days following your receipt of this Agreement. Provided
that you accept the terms of this Agreement, do not revoke your acceptance as
provided for in Paragraph 13 (c), this Agreement shall be effective and you will
be eligible to receive the Benefits set forth in Paragraph 2(a), (b), (e),
(f) and (g). Upon my

EXECUTION VERSION

--------------------------------------------------------------------------------

Ralph D. Heath - Retirement Transition Agreement

January 26, 2012

Page 2 of 8

 

execution, return and non-revocation of the Second Release no earlier than
April 30, 2012, you will be eligible to receive the Benefits set forth in
Paragraph 2(c) and (d).

(a) Compensation. You will remain on the Corporation’s payroll through April 30,
2012. During this period, you will continue to receive base pay at your current
rate of $760,000 annually, with payments to be made on the Corporation’s regular
pay days, less appropriate deductions for federal and state withholdings, other
applicable taxes, and any lawfully authorized or required payroll deductions. On
or around April 30, 2012, you will be issued a final paycheck that will include
payment for all accrued but unused vacation as of April 30, 2012.

(b) Employee Benefit Plans. During the period set forth in paragraph 2(a), you
may continue to participate in those employee benefit plans of the Corporation
in which you currently participate, except that you will not be eligible for
additional equity incentive grants or long term incentive performance awards
under the Corporation’s long term incentive plans. Previous awards of equity
grants and long term incentive payments will vest in accordance with the
retirement provisions of the applicable plan. Except as provided for in
paragraph 2(c) and paragraph 2(d), your active employee benefits will cease on
April 30, 2012.

(c) Payment. Provided that you have signed the Second Release, no later than
June 1, 2012 you will receive a payment of $950,000, less appropriate deductions
for federal and state withholding, and other applicable taxes.

(d) Consulting Agreement. As of May 1, 2012, the Corporation will execute a
consulting agreement for the period from May 1, 2012 – April 30, 2013 in a form
substantially similar to that attached as Exhibit A to this Agreement, at a rate
of $5,000 per day, plus expenses, with the number of days worked not to exceed
52.

(e) Nonqualified Deferred Compensation Payments. You will receive a pay-out of
your nonqualified deferred compensation in accordance with your elections and
the terms of the applicable plan documents. Any amounts due in 2012 related to
your separation from service with the Corporation will be subject to a six-month
delay until approximately November 1, 2012.

(f) Tax Assistance. The Corporation will provide tax assistance if your 2010 tax
return is selected for audit.

(g) Retirement and Post Employment Benefits. Following your retirement, subject
to the terms and conditions of the applicable benefit plans and arrangements
with the Corporation, you will be entitled to participate in those
post-employment health benefits that you are eligible to receive as of the date
of your retirement and will be entitled to any vested benefits you are entitled
to receive under the Corporation’s retirement plans or programs in which you
participate as of the date of your retirement.

3. Other Compensation and Benefits. Except for the payment specified in
paragraph 2(c), you agree that you will not be entitled to and will not receive
any severance or termination benefits in connection with your termination of
employment with the Corporation, including but not limited to severance or
termination benefits under the Corporation’s existing or any future severance
pay policies or plans.

 

EXECUTION VERSION

--------------------------------------------------------------------------------

Ralph D. Heath - Retirement Transition Agreement

January 26, 2012

Page 3 of 8

 

4. Employee’s Acknowledgment. You hereby affirm that you understand and
acknowledge that a portion of the Benefits being provided to you by the
Corporation under this Agreement are beyond any that otherwise are or would be
owed to you by the Corporation, and that the Benefits are being provided to you
in consideration for your entering into this Agreement, including but not
limited to the Releases of Claims set forth in paragraph 9.

5. Nondisclosure. You acknowledge that during the course of your employment with
the Corporation you have acquired, and may have generated, a substantial amount
of information that the Corporation deems confidential and/or proprietary to the
Corporation and/or subject to attorney client privilege. In addition, you have
had access to certain third-party information that has been provided to the
Corporation on a confidential basis. You agree that you may not use or disclose
or allow the use or disclosure by others of any Corporation confidential,
proprietary or attorney client privileged information, or any information of
others provided to the Corporation on a confidential basis, without the prior
express written consent of the Corporation.

6. Disclosure of this Agreement. You understand and agree that the Corporation
is required to disclose the existence and terms of this Agreement, and to file a
copy of this Agreement with the Securities and Exchange Commission as an exhibit
to its periodic reports under the Securities Exchange Act of 1934, as amended
(the “Exchange Act”). You consent to any such disclosure and filings deemed
necessary or appropriate and made by the Corporation under the Exchange Act and
pursuant to any other laws or regulations.

7. Non-Disparagement. You agree that you will not make any statements, whether
verbal or written, that disparage or may reasonably be interpreted to disparage
the Corporation or its stockholders, directors, officers, employees, agents,
attorneys, representatives, technology or products with respect to any matter
whatsoever. The Corporation agrees not to make any statements, whether verbal or
written, that disparages or may reasonably be interpreted to disparage you or
your performance as an officer and employee of the Corporation. You and the
Corporation acknowledge and agree that neither this provision nor any other
provision of this Agreement affects your obligations or the Corporation’s
obligations to cooperate with any government investigation or to respond
truthfully to any lawful governmental inquiry or to give truthful testimony in
court.

8. Cooperation in Litigation and Investigations. You agree and covenant that you
will, to the extent reasonably requested by the Corporation, cooperate with the
Corporation in any pending or future litigation or investigations in which the
Corporation or any of its subsidiaries or affiliates is a party and regarding
which you, by virtue of your employment with the Corporation or any of its
subsidiaries or affiliates, have knowledge or information relevant to the
litigation or investigation. You further agree and covenant that, in any such
litigation or investigation, you will, without the necessity of a subpoena,
provide truthful testimony relevant to the litigation or investigation in any
jurisdiction in which the Corporation requests. The Corporation will reimburse
you for reasonable expenses incurred by you in complying with this paragraph 8
to the extent such expenses are incurred on or after April 30, 2012 provided
that the Corporation has authorized the incurrence of such expenses in advance.

9. Release. In consideration of the Benefits being provided to you under this
Agreement, which, absent this Agreement, a portion of which you otherwise would
not be entitled to receive, you, on behalf of yourself, your heirs, estate,
executors, administrators, representatives, successors and assigns, and anyone
claiming to be acting on your behalf or in your interest, hereby irrevocably and
unconditionally release, acquit and forever discharge the Corporation, its
affiliates, subsidiaries, benefit plans, related companies, partnerships and
joint

 

EXECUTION VERSION

--------------------------------------------------------------------------------

Ralph D. Heath - Retirement Transition Agreement

January 26, 2012

Page 4 of 8

 

ventures, and their former, current and future officers, directors,
shareholders, partners, employees, fiduciaries, agents, attorneys, insurers and
representatives, whether acting in their individual or official capacities, and
all persons acting by, through, or in concert with any of them, and all their
predecessors, successors and assigns (all of which are hereinafter collectively
referred to as the “Released Parties”), from any and all claims, demands,
losses, liabilities, and causes of action or similar rights of any type arising
or accruing on or before the date this Agreement is executed (whether known or
unknown), as a result of or because of any act, omission, or failure to act by
the Released Parties, including but not limited to those arising out of or
relating in any way to your employment by, association with, or termination of
employment with the Corporation (hereinafter collectively referred to as
“Claims”). THIS IS A GENERAL RELEASE, subject only to the specific exceptions
set forth in subparagraphs 9(b), (c) and (d).

(a) These Claims include, but are not limited to, any claims for monetary
damages, wages, bonuses, commissions, unused sick pay, severance or similar
benefits, expenses, attorneys’ fees or other indemnities, or other personal
remedies or damages sought in any legal proceeding or charge filed with any
court arising under the Age Discrimination in Employment Act (“ADEA”), including
but not limited to the Older Workers Benefit Protection Act (“OWBPA”), except as
it relates to the validity of this release under the ADEA as amended by the
OWBPA, and Executive Order 11141, Executive Order 11246, Title VII of the Civil
Rights Act of 1964, the Americans with Disabilities Act, the Rehabilitation Act
of 1973, the Civil Rights Act of 1866, the Civil Rights Act of 1991, the Federal
Equal Pay Act, the Family and Medical Leave Act, the Immigration Reform and
Control Act, the Uniformed Services Employment and Reemployment Rights Act, the
Employee Retirement Income Security Act, the Workers Adjustment and Retraining
Notification Act, the Fair Labor Standards Act, the Texas Commission on Human
Rights Act or claims arising under the Civil Rights Division of the Texas
Workforce Commission, Texas law on communicable diseases, Texas disability
discrimination law, anti-discrimination provisions of the Texas Workers
Compensation Act, §451.001 of the Texas Labor Code, Texas wage payment laws. The
Claims released include, but are not limited to, claims arising under any other
federal, state, or local laws or regulations restricting an employer’s right to
terminate employees, or otherwise regulating employment, including but not
limited to any federal, state, or local law enforcing express or implied
employment contracts or covenants; any other federal, state or local laws
providing relief for alleged wage and hour violations; wrongful discharge;
breach of contract, including any and all tort claims, including but not limited
to, physical or personal injury in any way related to your employment or
termination of employment; emotional distress or stress claims in any way
related to your employment or termination of employment, intentional or
negligent infliction of emotional distress, fraud, negligent misrepresentation,
defamation, invasion of privacy, violation of public policy and similar or
related claims and any and all claims arising under common law. The claims
released include claims that in any way are brought by or on behalf of the
government, whether or not the government joins the action such as in the case
of a qui tam.

(b) Without limiting the generality of the foregoing, you agree not to file any
lawsuit seeking monetary damages for yourself and asserting any claims that are
lawfully released in paragraph 9(a). You further hereby irrevocably and
unconditionally waive any and all rights to recover any relief and damages
concerning the claims that are lawfully released in paragraph 9(a).

(c) Notwithstanding the foregoing, you are not releasing (1) your right to
enforce this Agreement; (2) any rights to benefits you may have under the
Corporation’s retirement plans or programs; (3) any claims arising under any
Federal or state securities laws that you

 

EXECUTION VERSION

--------------------------------------------------------------------------------

Ralph D. Heath - Retirement Transition Agreement

January 26, 2012

Page 5 of 8

 

may have as a stockholder of the Corporation; (4) any claims for unemployment
compensation; (5) any claims under applicable workers’ compensation laws;
(6) any claims solely relating to the validity of this Release of Claims under
the ADEA, as amended, (7) any indemnification rights, under the same eligibility
rules, as afforded to all other current or former officers of the Corporation
pursuant to the Corporation’s bylaws and/or applicable state law; or (8) your
right to file a charge with the U.S. Equal Employment Opportunity Commission or
any similar state or local government agency.

(d) No Federal, state or local government agency is a party to this Agreement,
and none of the provisions of this Agreement restrict or in any way affect a
government agency’s authority to investigate or seek relief in connection with
any of the Claims. However, if a government agency were to pursue any matters
falling within the Claims, which it is free to do, you and the Corporation agree
that, as between you and the Corporation, this Agreement will control as the
exclusive remedy and full settlement of all such Claims by you for money
damages. The Agreement is a binding contract between two private parties—you and
the Corporation. Therefore, the Agreement affects the two parties’ rights only,
with no impact on any government agency.

(e) You hereby represent and warrant that you have not previously filed or
joined in any Claims released herein against any of the Released Parties or
assigned any Claims described in this Release to any third parties. You affirm
that you have been paid and/or have received all compensation, wages, penalties,
and/or benefits to which you are entitled and that no other compensation, wages,
penalties, and/or benefits are due, except as otherwise provided in this
Release. You affirm furthermore that you have no known injuries arising out of
or in the course of your employment with the Corporation, and you have been
provided and/or have not been denied leave requested under the Family and
Medical Leave Act or any equivalent state statute or local ordinance.

10. Corporation. For the purposes of this Agreement, the term “Corporation” or
“Lockheed Martin” includes the Corporation and its affiliates as well as the
predecessors and successors of the Corporation and their affiliates.

11. Entire Agreement. The understandings set forth in this Agreement represent
the entire agreement between you and the Corporation with respect to the matters
contained herein. Neither you nor the Corporation has relied upon any other
agreements, understandings or representations. This Agreement supersedes any
prior agreements or representations between you and the Corporation as to the
subject matter contained herein. The Agreement may not be altered or modified
except by mutual agreement between you and the Corporation, evidenced in writing
and executed by both you and the Corporation and specifically identified as an
amendment to this Agreement. This Agreement shall be governed by and interpreted
in accordance with the laws of the State of Maryland, without giving effect to
the conflict of law provisions thereof.

You represent and acknowledge that, other than as expressly set forth in this
Agreement, in executing this Agreement you are not relying upon any
representation or statement made by any officer, director, employee, agent or
other representative of the Corporation with regard to the subject matter, basis
or effect of this Agreement.

 

EXECUTION VERSION

--------------------------------------------------------------------------------

Ralph D. Heath - Retirement Transition Agreement

January 26, 2012

Page 6 of 8

 

12. Review and Revocation Rights. By signing below, you acknowledge that:

(a) You have been advised by the Corporation to consult with an attorney prior
to executing this Agreement. You have requested and received from the
Corporation any information that you need in order to make a knowing and
voluntary release of all Claims;

(b) You understand that you can take up to 21 days to consider this Release. To
the extent you have signed this Release prior to the expiration of the 21 days,
you hereby waive your right to the balance of such period of consideration and
acknowledge and represent that your waiver of such period is knowing and
voluntary and has not been induced by the Corporation; and

(c) You understand that you have seven days following signing of this Agreement
to revoke it, and that the Agreement will not become effective until the
seven-day revocation period has expired without your revocation of this
Agreement. You further understand and acknowledge that to be effective, any
revocation must be in writing and either personally delivered to the
Corporation, care of John T. Lucas, Senior Vice President, Human Resources or
sent by certified mail, return receipt requested to Mr. John T. Lucas at 6801
Rockledge Drive, Bethesda, Maryland 20817, by 5:00 p.m., Bethesda, Maryland
time, on or before the seventh calendar day after you sign this Agreement.

By signing below, you acknowledge that you have read the terms of this
Agreement, fully understand the terms and their effect, are voluntarily agreeing
to those terms of your own free will, and intend to be legally bound. Please
return this Agreement to me by no later than February 16, 2012.

 

Sincerely,

/s/ John T. Lucas

John T. Lucas

THIS AGREEMENT CONTAINS A GENERAL RELEASE OF CLAIMS, PLEASE READ CAREFULLY
BEFORE SIGNING.

Agreed to:

 

/s/ Ralph D. Heath

   

 

Name: Ralph D. Heath     Date: January 26, 2012

 

 

EXECUTION VERSION

--------------------------------------------------------------------------------

Ralph D. Heath - Retirement Transition Agreement

January 26, 2012

Page 7 of 8

 

ADDENDUM

Second Release of Claims

In consideration of the payments and other benefits being provided to you under
the terms of the January26, 2012 Agreement between Lockheed Martin Corporation
(“Corporation”) and Ralph Heath, concerning the separation of your employment
from the Corporation (the “Agreement”), which, absent the Agreement, you
otherwise would not be entitled to receive, on behalf of your heirs, estate,
executors, administrators, representatives, successors and assigns, and anyone
claiming to be acting on your behalf or in my interest, hereby irrevocably and
unconditionally release, acquit and forever discharge the Corporation, its
affiliates, subsidiaries, benefit plans, related companies, partnerships and
joint ventures, and their former, current and future officers, directors,
shareholders, partners, employees, fiduciaries, agents, attorneys, insurers and
representatives, whether acting in their individual or official capacities, and
all persons acting by, through, or in concert with any of them, and all their
predecessors, successors and assigns (all of which are hereinafter collectively
referred to as the “Released Parties”), from any and all claims, demands,
losses, liabilities, and causes of action or similar rights of any type arising
or accruing on or before the date this Second Release of Claims executed
(whether known or unknown), as a result of or because of any act, omission, or
failure to act by the Released Parties, including but not limited to, those
arising out of or relating in any way to your employment by, association with,
or separation of employment from the Corporation (hereinafter collectively
referred to as “Claims”). THIS IS A GENERAL RELEASE, subject only to the
specific exceptions set forth in subparagraphs (b), (c) and (d) below.

(a) These Claims include, but are not limited to, any claims for monetary
damages, wages, bonuses, commissions, unused sick pay, severance or similar
benefits, expenses, attorneys’ fees or other indemnities, or other personal
remedies or damages sought in any legal proceeding or charge filed with any
court arising under the Age Discrimination in Employment Act (“ADEA”), including
but not limited to the Older Workers Benefit Protection Act (“OWBPA”), except as
it relates to the validity of this release under the ADEA as amended by the
OWBPA, and Executive Order 11141, Executive Order 11246, Title VII of the Civil
Rights Act of 1964, the Americans with Disabilities Amendments Act, the
Rehabilitation Act of 1973, the Civil Rights Act of 1866, the Civil Rights Act
of 1991, the Federal Equal Pay Act, the Family and Medical Leave Act, the
Immigration Reform and Control Act, the Employee Retirement Income Security Act,
the Workers Adjustment and Retraining Notification Act, the Texas Commission on
Human Rights Act or claims arising under the Civil Rights Division of the Texas
Workforce Commission, Texas law on communicable diseases, Texas disability
discrimination law, anti-discrimination provisions of the Texas Workers
Compensation Act, §451.001 of the Texas Labor Code, Texas wage payment laws. The
Claims released include, but are not limited to, claims arising under any other
federal, state, or local laws or regulations restricting an employer’s right to
terminate employees, or otherwise regulating employment, including but not
limited to any federal, state, or local law enforcing express or implied
employment contracts or covenants; any other federal, state or local laws
providing relief for alleged wrongful discharge; breach of contract, including
any and all tort claims, including but not limited to, physical or personal
injury in any way related to my employment or separation from employment;
emotional distress or stress claims in any way related to my employment or
separation from employment, intentional or negligent infliction of emotional
distress, fraud, negligent misrepresentation, defamation, invasion of privacy,
violation of public policy and similar or related claims and any and all claims
arising under common law. The claims released also include claims that in any
way are brought by or on behalf of the government, whether or not the government
joins the action such as in the case of a qui tarn proceeding filed under the
civil False Claims Act.

(b) Without limiting the generality of the foregoing, you agree not to file any
lawsuit seeking monetary damages for yourself and asserting any claims that are
lawfully released in this Second Release of Claims. You further hereby
irrevocably and unconditionally

--------------------------------------------------------------------------------

Ralph D. Heath - Retirement Transition Agreement

January 26, 2012

Page 8 of 8

 

waive any and all rights to recover any relief and damages concerning the claims
that are lawfully released in this Second Release of Claims.

(c) Notwithstanding the foregoing, you are not releasing: (1) your right to
enforce this Agreement; (2) any rights to benefits you may have under the
Corporation’s retirement plans, LTIP and deferred compensation plans; (3) any
claims arising under any Federal or state securities laws that you may have as a
stockholder of the Corporation; (4) any claims for unemployment compensation;
(5) any claims for workers compensation benefits under Texas state law; (6) any
claims solely relating to the validity of this Release of Claims under the ADEA,
as amended, (7) any indemnification rights, under the same eligibility rules, as
afforded to all other current or former officers of the Corporation pursuant to
the Corporation’s bylaws and/or applicable state law; or (8) my right to file a
charge with the U.S. Equal Employment Opportunity Commission or any similar
state or local government agency.

(d) No Federal, state or local government agency is a party to the Agreement or
this Second Release of Claims, and none of the provisions of the Agreement or
this Second Release of Claims restricts or in any way affects a government
agency’s authority to investigate or seek relief in connection with any of the
Claims. However, if a government agency were to pursue any matters falling
within the Claims, which it is free to do, the Corporation and you agree that,
as between the Corporation and you, the Agreement and this Second Release of
Claims will control as the exclusive remedy and full settlement of all such
Claims by me for money damages. The Agreement and this Second Release of Claims
are binding agreements between two private parties—you and the Corporation.
Therefore, the Agreement and this Second Release of Claims affect the two
parties’ rights only, with no impact on any government agency.

(e) You hereby represent and warrant that you have not previously filed or
joined in any Claims released herein against any of the Released Parties or
assigned any Claims described in this Second Release of Claims to any third
parties. You affirm that you have been paid and/or have received all
compensation, wages, and/or benefits to which you are entitled and that no other
compensation, wages, and/or benefits are due me, except as provided in the
January 26, 2012 agreement. You further affirm that you have no known injuries
arising out of or in the course of my employment with the Corporation, and that
I have been provided and/or have not been denied leave requested under the
Family and Medical Leave Act or any equivalent state statute or local ordinance.

THIS AGREEMENT CONTAINS A GENERAL RELEASE OF CLAIMS, PLEASE READ CAREFULLY
BEFORE SIGNING.

Accepted and agreed to as of this          day of          2012.

 

 

Ralph Heath

--------------------------------------------------------------------------------

Exhibit A to Retirement Transition Agreement

PROFESSIONAL SERVICES AGREEMENT

This Professional Services Agreement is made and entered into effective as of
May 1, 2012 by and between the Lockheed Martin Corporation (hereinafter
“Corporation”) and Ralph Heath (hereinafter “Consultant”).

WITNESSED:

That in consideration of the promises and mutual obligations hereinafter set
forth, the parties hereto agree as follows:

 

1. SERVICES BY CONSULTANT

For the term of this Agreement, the CONSULTANT will provide consulting services
and advice to the Corporation (the “Services”) as follows:

 

  A. In order to facilitate an orderly transition of management within the
Corporation’s Aeronautics business area, CONSULTANT shall provide historical
background information, factual and management assistance, guidance, and counsel
to the Executive Vice President, Aeronautics (the “Services”),.

These Services will be provided on an “as needed”, “on call” basis; provided
that, the Corporation must give the CONSULTANT reasonable advance notice as to
when the CONSULTANT’s services will be required. The Corporation will provide
the CONSULTANT with proper credentials (badges, passes, etc.) to perform any
assignment.

CONSULTANT’S primary billing contact shall be John Lucas, SVP, Human Resources,
referred to hereinafter as the Agreement Monitor.

 

2. TERM

The term of this Agreement shall commence May 1, 2012 and shall end April 30,
2013 unless terminated earlier in accordance with Section 11 below. This
Agreement will not be renewed by its own terms. This Agreement may be extended
beyond April 30, 2013 by mutual agreement of the parties.

 

3. COMPENSATION FOR SERVICES

 

  A. The Corporation agrees to pay the CONSULTANT, as compensation for the
Services, a retainer of $5,000 per day for Services rendered pursuant to this
Agreement. CONSULTANT shall not provide more than 52 days of Services during the
12-month term of this Agreement. For the purposes of this Agreement, one (1) day
of Services shall equal eight (8) hours of work. CONSULTANT acknowledges that
exceeding these limitations on the number of days worked may result in
CONSULTANT being deemed not to have separated from service or retired from
LMC. If this occurs, it may trigger early inclusion in income of all amounts
deferred by CONSULTANT under LMC’s nonqualified deferred compensation plans as
well as a twenty percent (20%) penalty tax and an interest rate based tax on
these amounts in addition to those taxes that would ordinarily be due on the
receipt of such amounts. CONSULTANT acknowledges that all such additional taxes
will be the sole responsibility of CONSULTANT and LMC will have no obligation to
pay such taxes or reimburse CONSULTANT for such taxes.

 

  B. Corporation shall reimburse CONSULTANT for reasonable and actual expenses
of travel required to provide the services hereunder where such expenses are
incurred by the CONSULTANT following prior approval of the Agreement Monitor of
the trip in question.

 

1

--------------------------------------------------------------------------------

  C. Because the CONSULTANT is not an employee of Corporation, Corporation will
not withhold or deduct from the compensation due to the CONSULTANT any amounts
for federal, state and local taxes, the payment of which is the sole
responsibility of the CONSULTANT. At the end of each calendar year, Corporation
will issue to the CONSULTANT a Form 1099 with respect to the compensation paid
under this Agreement. CONSULTANT acknowledges that the payments under this
Agreement and any taxable benefits made available under this Agreement will be
taxable as income to him and will be reported as such by Corporation to the IRS.

 

4. PAYMENT AND INVOICE

 

  A. CONSULTANT must submit monthly invoices describing in reasonable detail the
services performed, the number of hours during which services were performed,
and any related expenses incurred. Subject to the limitations set forth in this
Agreement, Corporation shall reimburse CONSULTANT for reasonable expenses
incurred and approved under Section 3.B or C of this Agreement within thirty
(30) days following receipt and approval of an invoice that complies with the
requirements of this Agreement. CONSULTANT must submit all invoices pertaining
to expenses incurred during a calendar year prior to February 5 of the following
year.

 

  B. CONSULTANT must attach to invoices submitted to Corporation for payment all
receipts and explanations for any expenditures in excess of $75.00. If original
receipts are not furnished, the reimbursement made to the CONSULTANT may be
subject to federal, state and local taxes for reimbursement of the expenditures.

 

  C. With each invoice, CONSULTANT must submit an Activity Report, in a format
which provides an itemized account of the services rendered, date of service and
if business travel was incurred in rendering the services, the geographic
location.

 

  D. Corporation will pay CONSULTANT on a monthly basis after the end of each
month during the term of this Agreement for services rendered at the hourly rate
specified in Section 3.A.

 

  E. Each invoice submitted must also contain the following Statement:
“Submission of this invoice certifies compliance with the terms and conditions
of my Professional Services Agreement under which this invoice is submitted and
certifies compliance with all laws, regulations and Lockheed Martin policies and
procedures and standards of conduct referenced therein.”

 

  F. Invoices and required supporting documentation must be submitted to:

Lockheed Martin Corporation

John Lucas

6801 Rockledge Drive

Bethesda, MD 20817

Invoices not in compliance with the requirements of this Agreement will be
returned to the CONSULTANT for correction and resubmission.

 

  G. Notwithstanding to the contrary, all amounts owed to CONSULTANT, whether as
compensation for Services or reimbursement of expenses shall be paid no later
than March 15 of the year following the year in which the Services were
performed (in the case of compensation for services) or the year in which the
expense was incurred (for reimbursement of expenses). Requests for reimbursement
of expenses after this date shall not be subject to reimbursement.

 

5. INDEPENDENT CONTRACTOR RELATIONSHIP

 

  A.

Neither this Agreement nor CONSULTANT’s performance hereunder constitutes or
creates an employee/employer relationship. The Parties understand and agree that
CONSULTANT is not an employee of the Corporation. CONSULTANT will render
Services hereunder as an independent contractor and not as an employee, agent,
partner, or joint venturer of the Corporation or any of its affiliates or
related entities. This Agreement does not require CONSULTANT’s services on a
full-

 

2

--------------------------------------------------------------------------------

  time basis. CONSULTANT is not eligible for any benefits applicable to active
employees of the Corporation. CONSULTANT is and must act solely as an
independent contractor and not as an employee or agent of the Corporation.
CONSULTANT’s authority is limited to providing the consulting Services described
above and CONSULTANT has no authority, nor may he make any attempt, without the
express written consent of the Agreement Monitor, to incur any obligation or
liability, or make any commitments on behalf of the Corporation.

 

  B. CONSULTANT is an independent contractor under this Agreement and no
provision of, or action taken under, this Agreement will entitle CONSULTANT to
any rights under any of the Corporation’s compensation, employee benefit and
welfare plans, programs, or practices. Neither will any provision of, or action
taken under, this Agreement affect in any way the CONSULTANT’s rights or
obligations under any of the Corporation’s compensation, employee benefit and
welfare plans, programs, or practices as these exist by virtue of his
preretirement service as an employee of the Corporation. CONSULTANT and the
Corporation agree that CONSULTANT will render Services according to the
CONSULTANT’s own methods and is subject to the Corporation’s control only with
regard to the CONSULTANT’s final product or result. The Corporation will not
exercise direct control or supervision over the means CONSULTANT uses to provide
Services pursuant to this Agreement.

 

6. CONFLICT OF INTEREST

 

  A. CONSULTANT shall not engage in any activity which presents a conflict of
interest in the line of his relationship with Corporation.

 

  B. CONSULTANT hereby acknowledges receipt of a copy of the Corporation Code of
Ethics and Business Conduct and, by executing this Agreement, CONSULTANT agrees
that CONSULTANT will strictly comply with the provisions of the Code in the
performance of the Services hereunder.

 

7. NON-DISCLOSURE OF PROPRIETARY OR CONFIDENTIAL INFORMATION

 

  A. CONSULTANT agrees not to disclose to others, either during or subsequent to
the term of this Agreement, any Corporation information, knowledge, or data
which CONSULTANT may receive, or have access to, or which may otherwise be
disclosed to CONSULTANT, proprietary or confidential information as further
defined herein. “Proprietary or Confidential Information” as used herein means
any information of Corporation or of others which has come into Corporation’s or
CONSULTANT’S possession, custody or knowledge in the course of performing
services under this Agreement that has independent economic value as a result of
its not being generally known to the public and is the subject of reasonable
means to preserve the confidentiality of the information. Proprietary or
Confidential Information includes (without limitation) information, whether
written or otherwise, regarding Corporation’s personnel, proceedings of the
Board of Directors or its committees, earnings, expenses, marketing information,
cost estimates, forecasts, bid and proposal data, financial data, trade secrets,
products, procedures, inventions, systems or designs, manufacturing or research
processes, material sources, equipment sources, customers and prospective
customers, business plans, strategies, buying practices and procedures,
prospective and executed contracts and other business arrangements or business
prospects, except to the extent such information become readily available to the
general public lawfully and without breach of a confidential, contractual, or
fiduciary duty. CONSULTANT acknowledges and agrees that he has a continuing
obligation to not use or disclose Proprietary or Confidential Information.

 

  B. CONSULTANT agrees that Proprietary or Confidential Information shall be
used solely for the purpose of performing the Services required under this
Agreement, and further agrees that except as may strictly be required by
CONSULTANT’S obligations under this Agreement, CONSULTANT shall not reproduce,
nor allow any third party to use or reproduce, any Proprietary of Confidential
Information or any documents or other material containing Proprietary or
Confidential information.

 

  C.

All materials to which CONSULTANT had access, or which were furnished or
otherwise made available to CONSULTANT in connection with the Services performed
hereunder, shall be and remain the property of Corporation. Upon expiration or
termination of this agreement, or upon

 

3

--------------------------------------------------------------------------------

  request of Corporation, CONSULTANT shall return to Corporation all such
materials, documents and information, including any Proprietary or Confidential
Information and all reproductions thereof, then in CONSULTANT’S possession or
control, and CONSULTANT in connection with this Agreement in accordance with
specific instructions issued by Corporation to CONSULTANT, shall comply with any
instructions within five (5) days of receipt thereof.

 

8. COOPERATION IN LITIGATION AND INVESTIGATIONS

During the term of this Agreement and thereafter, CONSULTANT agrees to the
extent reasonably requested, to cooperate with Corporation in any pending or
future litigation (including alternative dispute resolution proceedings) or
investigations in which the Corporation or any of its subsidiaries or affiliates
is a party or is required or requested to provide testimony and regarding which,
as a result of CONSULTANT’s prior employment with the Corporation or services
under this Agreement, CONSULTANT reasonably could be expected to have knowledge
or information relevant to the litigation or investigation. CONSULTANT’s efforts
and time spent in satisfaction of CONSULTANT’s obligation to cooperate will be
without charge to Corporation and will not be considered time worked under this
Agreement, except that Corporation will reimburse CONSULTANT’s for
any-out-of-pocket expenses incurred in connection with cooperating with
Corporation in any litigation or investigation in accordance with Sections 3 and
4 above. Notwithstanding any other provision of this Agreement, nothing in this
Agreement shall affect CONSULTANT’s obligation to cooperate with any
governmental inquiry or investigation or to give truthful testimony in court.

 

9. LIABILITY

 

  A. Corporation shall not be liable to CONSULTANT for any loss, injury, damage,
expense or any liability whatsoever arising out of, or in connection with, the
performance of the services required by this Agreement.

 

  B. Each party shall be responsible to the other for any costs or expenses
including attorney’s fees, all expenses of litigation and/or settlement, and
court costs, arising from the default of such party, its officers, employees,
agents, suppliers, or subConsultants at any tier, in the performance of any of
its obligations under this Agreement.

 

10. GOVERNING LAW

This Agreement shall be governed by, subject to, and construed according to the
laws of the State of Maryland excluding its choice of law rules. CONSULTANT
shall comply with all applicable Federal, state and local laws, orders and
regulations, as well as with all Corporation policies, operating instructions,
rules and regulations applicable to the performance of this Agreement.

 

11. DEFAULT AND CONTRACT TERMINATION

 

  A. DEFAULT. If CONSULTANT fails to comply with any of the terms of this
Agreement, fails to make progress as to endanger performance of this Agreement,
or fails to provide adequate assurance of future performance Corporation, by
written notice, may terminate this Agreement for default, in whole or in part.
CONSULTANT shall have ten (10) days (or such longer period as Corporation may
authorize in writing) to cure any such failure after receipt of notice from
Corporation. Corporation shall not be liable for any Services not accepted;
however, Corporation may require CONSULTANT to deliver to Corporation any
supplies and materials, manufacturing materials, and manufacturing drawings that
CONSULTANT has specifically produced or acquired for the terminated portion of
this Agreement. Corporation and CONSULTANT shall agree on the amount of payment
for these other deliverables. CONSULTANT shall continue all Services not
terminated.

 

  B. CONTRACT TERMINATION

 

  i) Corporation may unilaterally terminate this Agreement, in whole or in part,
upon 30 days written notice to CONSULTANT for any reason.

 

4

--------------------------------------------------------------------------------

  ii) CONSULTANT may terminate this Agreement upon 30 days written notice to
Corporation; provided that, if CONSULTANT terminates this Agreement in order to
accept other consulting or employment engagements, he must comply with the
non-competition obligations as set forth in other agreements with Corporation.

 

  iii) This Agreement shall terminate immediately and all payments due shall be
forfeited if, in rendering Services hereunder, improper payments are made,
unlawful conduct is engaged in, or any part of the fee or expenses payable under
this Agreement is used for an illegal purpose.

 

  iv) In the event this Agreement is terminated under any provision herein
(other than under Section 11.A or 11.B.iii), CONSULTANT shall not be required to
repay any of the consideration already paid under the Agreement to date.

 

12. SEVERABILITY

If any provision of this Agreement shall be held illegal or unenforceable, the
remainder of the Agreement or the application of any other provisions to the
parties shall not be affected thereby.

 

13. ACCESS TO CLASSIFIED INFORMATION

If clearance is required, business area HR should consult LMS-001 and complete
the LMS-F17 form, if applicable, in addition to this agreement. If access to
classified information in the performance of this Agreement is required,
CONSULTANT shall furnish the Corporation Security Department with all data
required to obtain or verify a personal security clearance with access to such
Classified Information. CONSULTANT agrees to comply with the terms of LMSecurity
Procedures LMS-001. Under no circumstances shall CONSULTANT perform service(s)
involving access to classified information until CONSULTANT’S security clearance
has been obtained or verified by Corporation.

 

14. ACCEPTANCE OF CONTRACT/TERMS AND CONDITIONS

 

  A. This Agreement integrates, merges, and supersedes any prior offers,
negotiations, and agreements concerning the subject matter hereof and
constitutes the entire agreement between the Parties.

 

  B. CONSULTANT’S acknowledgment, acceptance of payment, or commencement of
performance, shall constitute CONSULTANT’S unqualified acceptance of this
Agreement.

 

  C. Additional or differing terms or conditions proposed by CONSULTANT or
included in CONSULTANT’S acknowledgement hereof are hereby objected to by
Corporation and have no affect unless accepted in writing by Corporation.

 

15. ASSIGNMENT

Any assignment of CONSULTANT’S contract rights or delegation of duties shall be
void, unless prior written consent is given by Corporation.

 

16. CONTRACT AMENDMENT AND NOTICES

 

  A. Only the Corporation’s Senior Vice President, Human Resources or his
designee has authority to make changes in or amendments to this Agreement. Such
changes or amendments must be in writing.

 

  B. All notices by Corporation or CONSULTANT shall be given in writing by mail
or fax, if applicable, to the following locations:

 

5

--------------------------------------------------------------------------------

 

CONSULTANT:    Ralph D. Heath, 455 Wood Lake Road, Aledo, TX 76008-4634 COMPANY:
  

John Lucas, 6801 Rockledge Drive, Bethesda, MD, 20817

Telephone: 301-897- 6208; Fax 301-897-6758

 

17. DISPUTES

All disputes under this Agreement which are not disposed of by mutual agreement
may be decided by recourse to an action at law or in equity. Until final
resolution of any dispute hereunder, CONSULTANT shall diligently proceed with
the performance of this Agreement as directed by Corporation.

 

18. GRATUITIES/KICKBACKS

No gratuities (in the form of entertainment, gifts or otherwise) or kickbacks
shall be offered or given by CONSULTANT, to any employee of Corporation with a
view toward securing favorable treatment as a supplier.

 

19. INTELLECTUAL PROPERTY

 

  A. CONSULTANT agrees that Corporation shall be the owner of all inventions,
technology, designs, works of authorship, mask works, technical information,
computer software, business information and other information conceived,
developed or otherwise generated in the performance of this Agreement by or on
behalf of CONSULTANT. CONSULTANT hereby assigns and agrees to assign all right,
title and interest in the foregoing to Corporation, including without limitation
all copyrights, patent rights and other intellectual property rights therein and
further agrees to execute, at Corporation’s request and expense, all
documentation necessary to perfect title therein in Corporation. CONSULTANT
agrees that it will maintain and disclose to Corporation written records of, and
otherwise provide Corporation with full access to, the subject matter covered by
this Agreement and that all such subject matter will be deemed Proprietary or
Confidential Information of Corporation and subject to the protection provisions
of the paragraph 7 of this Agreement. CONSULTANT agrees to assist Corporation,
at Corporation’s request and expense, in every reasonable way, in obtaining,
maintaining, and enforcing patent and other intellectual property protection on
the subject matter covered by this Clause.

 

  B. CONSULTANT warrants that the Services performed and delivered under this
Agreement will not infringe or otherwise violate the intellectual property
rights of any third party in the United States or any foreign country.
CONSULTANT agrees to defend, indemnity and hold harmless Corporation and its
customers from and against any claims, damages, losses costs an expenses,
including reasonable attorney’s fees, arising out of any action by a third party
that is based upon a claim that the Services performed or delivered under this
Agreement infringes or otherwise violates the intellectual property rights of
any person or entity.

 

20. RELEASE OF INFORMATION

Except as required by law, no public release of any information, or confirmation
or denial of same, with respect to this Agreement or the subject matter hereof,
will be made by CONSULTANT without the prior written approval of Corporation.

 

21. TIMELY PERFORMANCE

 

  A. CONSULTANT’S timely performance is a critical element of this Agreement.

 

  B. If CONSULTANT becomes aware of difficulty in performing the Services,
CONSULTANT shall timely notify Corporation, in writing, giving pertinent
details. This notification shall not change any delivery schedule.

 

6

--------------------------------------------------------------------------------

22. WAIVER, APPROVAL, AND REMEDIES

 

  A. Failure by Corporation to enforce any of the provision(s) of this Agreement
shall not be construed as a waiver of the requirement(s) of such provision(s),
or as a waiver of the right of Corporation thereafter to enforce each and every
such provision(s).

 

  B. Corporation’s approval of documents shall not relieve CONSULTANT from
complying with any requirements of this Agreement.

 

  C. The rights and remedies of Corporation in this Agreement are cumulative and
in addition to any other rights and remedies provided by law or in equity.

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
as of the day and year first above written.

 

LOCKHEED MARTIN CORPORATION     CONSULTANT

/s/ John T. Lucas

   

/s/ Ralph D. Heath

Signature     Signature

1/26/12

   

1/26/12

Date     Date

Receipt and Acknowledgment

I acknowledge that I have received my personal copy of Setting the Standard, the
Lockheed Martin Code of Ethics and Business Conduct. I understand that each
Lockheed Martin employee, agent, consultant, or representative is responsible
for knowing and adhering to the principles and standards of the Code.

Signature    /s/ Ralph D. Heath

 

Printed Name            Ralph D. Heath

 

Date            1/26/12

 

 

7