COMSAT CORPORATION

            DIRECTORS AND EXECUTIVES DEFERRED COMPENSATION PLAN





                     Restated effective January 1, 1997

                        (except as otherwise stated)

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<TABLE>
<CAPTION>
<S>         <C>                                                          <C>    

                             TABLE OF CONTENTS
                             -----------------

                                                                           PAGE
                                                                           ----
             SECTION 1 - Purpose and Effective Date
             --------------------------------------

     1.1     Purpose                                                         3
     1.2     Effective Date                                                  3

             SECTION 2 - Definitions and Construction
             ----------------------------------------

     2.1     Definitions                                                     3
     2.2     Construction                                                    6

             SECTION 3 - Eligibility and Participation
             -----------------------------------------

     3.1     Eligibility                                                     6
     3.2     Participation; Deferral Elections                               6
     3.3     Initial Eligibility During the Plan Year                        7
     3.4     Modification of Deferral Election                               7
     3.5     Rollover Election                                               7

             SECTION 4 - Deferred Compensation Accounts
             ------------------------------------------

     4.1     Maintenance of Accounts                                         8
     4.2     Interest                                                        8

             SECTION 5 - Payment of Benefits
             -------------------------------

     5.1     Payment Upon Termination of Service                             9
     5.2     Payments Upon Death                                            10
     5.3     Hardship Distributions                                         10
     5.4     Form of Payment                                                11
     5.5     Commencement of Payments                                       11
     5.6     Change in Control                                              12
     5.7     Payment as of January 1, 2000                                  12
     5.8     Payment as of January 1, 2001                                  13

             SECTION 6 - Administration
             --------------------------

     6.1     Committee; Duties                                              14
     6.2     Appointment of Agents                                          14

             SECTION 7 - Amendment or Termination of Plan
             --------------------------------------------

     7.1     Right to Amend or Terminate                                    14
     7.2     Effect of Amendment or Termination                             14

             SECTION 8 - Miscellaneous Provisions
             ------------------------------------

     8.1     No Implied Rights                                              14
     8.2     Insurance Policies                                             15
     8.3     No Assignment or Alienation                                    15
     8.4     Expenses                                                       15
     8.5     Applicable Laws                                                15

</TABLE>

<PAGE>     

                  Section 1 - Purpose and Effective Date
                  --------------------------------------

     1.1  Purpose.  The purpose of this Plan is to provide Directors and key
executives of the Corporation with supplemental retirement income and death
benefits in order to assist the  Corporation  in  attracting  and retaining
Directors and executives of outstanding ability.

     1.2  Effective Date.  The Plan shall become effective upon approval by
the Board.


                  Section 2 - Definitions and Construction
                  ----------------------------------------

     2.1  Definitions.  For purposes of the Plan, unless a different meaning
is  plainly  required  by  the  context,  the  following   definitions  are
applicable:

     (a)  "Beneficiary"  means the person  designated by a Participant,  in
accordance with Section 5.4(a),  to receive benefits payable under the Plan
upon the death of the Participant.

     (b)  "Board"  means the Board of Directors of COMSAT Corporation or
any successor to such Corporation.

     (c)  "Change in Control" means, with respect to COMSAT Corporation,
the occurrence of any of the following events:

          (i) The  acquisition by any  individual,  entity or group (within
the meaning of Sections 13(d)(3) or 14(d)(2) of the Securities Exchange Act
of 1934, as amended (the "Exchange Act")) of beneficial  ownership  (within
the  meaning of Rule 13d-3  promulgated  under the  Exchange  Act) of fifty
percent (50%) or more of the combined voting power of the then  outstanding
voting securities of the Corporation; provided, however, that the following
acquisitions  shall not constitute a Change in Control for purposes of this
definition: (A) any acquisitions of voting securities of the Corporation by
the  Corporation,  or (B) any  acquisitions  of  voting  securities  of the
Corporation  by any  employee  benefit or stock  ownership  plan or related
trust  sponsored or  maintained by the  Corporation  for the benefit of its
employees;

          (ii) Any  change in the  composition  of the Board  such that the
individuals who, as of May 17, 1996,  constitute those members of the Board
who have been elected by the  shareholders of the Corporation in accordance
with the provisions of Section 303(a) of the  Communications  Satellite Act
of 1962, as amended (the  "Incumbent  Directors"),  cease for any reason to
constitute a majority of the Board at any time; provided, however, that any

                                     3

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individual becoming a director  subsequent to such date whose election,  or
nomination for election,  was approved by a vote of at least  three-fourths
(3/4) of the then  Incumbent  Directors  shall be considered as though such
individual were an Incumbent Director;

          (iii)  Approval  by  the  shareholders  of the  Corporation  of a
merger,  share exchange,  swap,  consolidation,  recapitalization  or other
business   combination   involving  any  other  corporation  or  entity  (a
"Transaction"),  the effect of which would  result in the  combined  voting
securities of the Corporation  immediately  prior to the  effectiveness  of
such  Transaction  continuing to represent less than sixty percent (60%) of
the combined voting power of the voting  securities of the Corporation,  or
of any surviving  entity of, or parent entity  following,  the Transaction,
immediately after the effectiveness of the Transaction;

          (iv) Approval by the  shareholders  of the  Corporation  of (A) a
complete liquidation or dissolution of the Corporation,  or (B) the sale or
disposition by the  Corporation of all or  substantially  all of its assets
other than to a corporation or entity with respect to which  following such
sale or  other  disposition  more  than  eighty  percent  (80%) of the then
combined  voting  power of the voting  securities  of such  corporation  or
entity is,  immediately  following such sale or  disposition,  beneficially
owned (within the meaning of Rule 13d-3 promulgated under the Exchange Act)
by all or  substantially  all of the  individuals and entities who were the
beneficial  owners of the  voting  securities  of the  Corporation  upon or
immediately before such approval; or

          (v) Any event that would be  required  to be reported in response
to Item 6(e) or any  successor  thereto of Schedule 14A of  Regulation  14A
promulgated under the Exchange Act;

provided, however, that none of the events described in clauses (i) through
(v) shall be deemed to  constitute  a Change in  Control  if,  prior to the
occurrence  of such  event,  the  Board  adopts a  resolution  specifically
providing  that the event  shall not be  deemed to  constitute  a Change in
Control for purposes of the Plan.

     (d)  "Committee" means the Committee on Compensation and Management
Development of the Board.

     (e)  "Compensation" means:

          (i) In the case of an Employee,  the following amounts payable or
awarded to the Employee by the Corporation with respect to a Plan Year: (1)

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base salary,  (2) Incentive  Compensation,  (3) dividend  equivalents  from
Restricted  Stock Units and Phantom Stock Units, and (4) cash proceeds from
vested Restricted Stock Units and Phantom Stock Units, or

          (ii) In the case of a Director,  the fees and retainer payable to
the  Director  by the  Corporation  with  respect  to a Plan  Year,  before
reduction for any amounts deferred  pursuant to this Plan or any other plan
of the  Corporation,  and not including any expense  reimbursements  or any
form of non-cash compensation and benefits.

     (f)  "Corporation" means COMSAT Corporation or any successor thereto, and
any subsidiary of such Corporation.

     (g)  "Deferral Election" means an election made by the Participant,  in
accordance  with  Section  3.2 or 3.3,  to defer an amount of  Compensation
payable or awarded to the Participant with respect to a Plan Year.

     (h)  "Deferred Compensation Account" means the account maintained for a
Participant  by the  Corporation,  in  accordance  with Section  4.1,  with
respect to the  Compensation  for which the Participant has made a Deferral
Election.

     (i)  "Determination Date" means (i) for purposes of Sections 4.2(a) and
(b), the last Friday of each biweekly  payroll  period of the  Corporation,
and (ii) for  purposes  of Section  4.2(c),  the last day of each  calendar
quarter in each Plan Year.

     (j)  "Director" means any member of the Board who is not an Employee.

     (k)  "Disability" means total disability as defined in the Corporation's
Long-Term Disability Plan.

     (l)  "Employee" means any person who is employed by the Corporation.

     (m)  "Hardship"  means the  immediate  and heavy  financial  need of a
Participant  as  determined  by the  Committee in  accordance  with uniform
standards established by the Committee.

     (n)  "Inactive  Participant"  means a  Participant  who is no longer an
Employee or Director  but who has an interest in the Plan which has not yet
been fully distributed.

     (o)  "Incentive Compensation" means the additional compensation awarded
a Participant  with respect to a Plan Year under the  Corporation's  Annual
Incentive  Plan and such  other  incentive  plans  or  arrangements  of the
Corporation  as designated by the Committee from time to time as such plans
 
                                    5

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or arrangements may be amended from time to time.

     (p)  "Participant"  means (i) an Employee or Director  participating in
the Plan in accordance with Section 3, and (ii) an Inactive Participant.

     (q)  "Phantom  Stock  Units" means  phantom  stock units  awarded to a
Participant under the Corporation's Annual Incentive Plan.

     (r)  "Plan"  means the COMSAT  Corporation  Directors  and  Executives
Deferred Compensation Plan, as amended from time to time.

     (s)  "Plan  Year"  means the period  beginning  as soon as  practicable
after the effective date of the Plan and ending December 31, 1986, and each
calendar year thereafter.

     (t)  "Restricted Stock Units" means restricted stock units awarded to a
Participant under the Corporation's 1986 or 1990 Key Employee Stock Plans.

     (u)  "Retirement  Plan"  means  the  Corporation's  qualified  defined
benefit pension plan, currently known as the COMSAT Corporation  Retirement
Plan, as amended from time to time, or any successor thereto.

     (v)  "Rollover  Election"  means an election made by the Participant in
accordance with Section 3.5.

     2.2  Construction.  Wherever  applicable,  the masculine pronoun shall
mean or include the  feminine  pronoun,  and the words used in the singular
shall include the plural, and vice versa.


                 Section 3 - Eligibility and Participation
                 -----------------------------------------

     3.1  Eligibility.  Eligibility to participate in the Plan is limited to
(a) Directors and (b) Employees who are designated as eligible by the Board.

     3.2  Participation;   Deferral  Elections.  An  eligible  Employee  or
Director may elect to participate in the Plan with respect to any Plan Year
by filing a Deferral  Election,  in the form and manner  prescribed  by the
Committee,  by December 15 of the immediately  preceding Plan Year,  except
that a Deferral Election with respect to the first Plan Year shall be filed
at such time  before the  commencement  of such Plan Year as the  Committee
shall  determine.  The  Participant  may elect in the Deferral  Election to
defer Compensation with respect to the Plan Year as follows:

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     (a)  If the Participant is an Employee,  he may elect to defer, subject
to a minimum  deferral of $1,000,  (i) base salary  payable during the Plan
Year in  increments  of 5  percent  up to a  maximum  of 25  percent,  (ii)
Incentive  Compensation awarded with respect to the Plan Year in increments
of 25 percent up to a maximum of 100 percent,  (iii)  dividend  equivalents
from  Restricted  Stock Units payable during the Plan Year in increments of
25 percent  up to a maximum of 100  percent,  and (iv) cash  proceeds  from
vested Restricted Stock Units payable during the Plan Year in increments of
25 percent up to a maximum of 100 percent.

     (b)  If the Participant is a Director, he may elect to defer any amount
or percentage  of fees and retainer  payable with respect to the Plan Year,
subject to a minimum deferral of $1,000.

     3.3  Initial  Eligibility  During the Plan  Year.  If an  Employee  or
Director  first becomes  eligible to  participate in the Plan during a Plan
Year, he may elect to participate  with respect to such Plan Year by filing
a  Deferral  Election  for such  Plan  Year not  later  than 30 days  after
notification  to him by the Committee of his  eligibility to participate in
the Plan.  The  Participant  may elect in such  Deferral  Election to defer
Compensation  with  respect  to the Plan Year  which is  payable or awarded
following  the filing of the  Deferral  Election,  in  accordance  with the
limitations of Section 3.2(a) and (b) as if such period were an entire Plan
Year.

     3.4  Modification  of  Deferral  Election.  A Deferral  Election  made
pursuant  to  Section  3.2 or 3.3  shall be  irrevocable,  except  that the
Committee in its discretion may at any time reduce,  or waive the remainder
of, the amount to be deferred under the Deferral  Election upon determining
that the Participant has suffered a Hardship.

     3.5  Rollover  Election.  When an Employee or Director  first  becomes
eligible to participate in the Plan,  but not  thereafter,  he may elect to
rollover  to the Plan  all,  but not less  than  all,  of his  then-current
account balance of any amounts previously deferred, plus interest credited,
under  the  Corporation's  Annual  Incentive  Plan  or  its  Insurance  and
Retirement Plan for Directors.  Such Rollover Election shall be made at the
time,  and in the form  and  manner  prescribed  by the  Committee.  If the
eligible Employee or Director makes a Rollover Election,  he shall become a
Participant in the Plan,  whether or not he also files a Deferral  Election
pursuant to Section 3.2 or 3.3, and the amount rolled over shall thereafter
be subject in full to the provisions of this Plan.

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                 Section 4 - Deferred Compensation Accounts
                 ------------------------------------------


     4.1  Maintenance of Accounts.  The  Corporation  shall  maintain,  for
record-keeping  purposes  only,  a Deferred  Compensation  Account for each
Participant  who  files a  Deferral  Election  or  Rollover  Election.  The
Compensation  deferred pursuant to a Deferral Election shall be credited to
the  Participant's  Deferred  Compensation  Account as it  otherwise  would
become  payable to the  Participant.  The amount  rolled over pursuant to a
Rollover  Election  shall  be  credited  to  the   Participant's   Deferred
Compensation  Account  upon  the  filing  of the  Rollover  Election.  Each
Participant's  Deferred  Compensation  Account shall be subdivided into the
following sub-accounts, as applicable:

     (a)  Sub-account  A,  which  shall  include  amounts  credited  to the
Participant's  Deferred  Compensation  Account  prior to January  31,  1994
pursuant to a Deferral Election or Rollover Election.

     (b)  Sub-account  B, which shall  include (i) amounts  credited to the
Participant's  Deferred  Compensation  Account  after  January 30, 1994 but
prior to  January  1, 1997  pursuant  to a Deferral  Election  or  Rollover
Election,  plus (ii) any  amount  credited  to the  Participant's  Deferred
Compensation  Account  after  December  31, 1996 which is  attributable  to
Incentive  Compensation  awarded in Plan Year 1997 with  respect to which a
Deferral Election was made in Plan Year 1996.

     (c)  Sub-account  C,  which  shall  include  amounts  credited  to the
Participant's   Deferred  Compensation  Account  after  December  31,  1996
pursuant to a Deferral  Election or Rollover  Election,  but  excluding any
amount described in paragraph (b)(ii) above.

     4.2  Interest.   Each   sub-account   in  a   Participant's   Deferred
Compensation Account shall be credited with interest at the applicable rate
for such  sub-account as of each  Determination  Date for such  sub-account
based upon the balance of such sub-account as of the immediately  preceding
Determination Date. The applicable interest rate for each sub-account shall
be as follows:

     (a)  For  sub-account  A, the  interest  rate shall be  Moody's  plus 6
percent.  For this purpose,  "Moody's" means the effective  annual yield on
Moody's Seasoned  Corporate Bond Yield Index as determined during the first
week of the Plan  Year  from  Moody's  Bond  Record  published  by  Moody's
Investors Service,  Inc., or any successor thereto. If Moody's annual yield
is no longer published,  the rate of interest for purposes of sub-account A
shall be based on a  substantially  similar  annual  yield  selected by the
Committee.

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<PAGE>

     (b)  For  sub-account  B, the interest rate shall be the  Corporation's
Cost of Capital.  For this  purpose,  "Cost of  Capital"  means the cost of
funds  employed  in  the  Corporation's   business  as  determined  by  the
Corporation's Chief Financial Officer effective as of the first day of each
Plan Year.

     (c)  For  sub-account  C, the  interest  rate  shall  be  Prime  plus 1
percent. For this purpose, "Prime" means the prime rate as published in the
Wall  Street  Journal  on the last  business  day of the  calendar  quarter
preceding the calendar  quarter which  includes the relevant  Determination
Date.


                      Section 5 - Payment of Benefits
                      -------------------------------


     5.1  Payment Upon Termination of Service.
          -----------------------------------

     (a)  A Participant whose service with the  Corporation  terminates for
any of the  following  reasons shall be entitled to receive an amount equal
to the balance of his Deferred Compensation Account, payable as provided in
Sections 5.4 and 5.5:

          (i) retirement  under the  Corporation's  Retirement  Plan or its
Insurance and Retirement Plan for Executives, as those plans may be amended
from time to time;

          (ii)   Disability;

          (iii)  the convenience of the Corporation as determined by the
Committee; or

          (iv)  if the Participant is a Director, termination of service for
any reason other than death.

     (b)  A Participant whose service with the  Corporation  terminates for
any reason other than death or the reasons  specified in paragraphs  (a) or
(c) shall be entitled to receive an amount, payable as provided in Sections
5.4 and 5.5,  equal to the balance of his  Deferred  Compensation  Account,
calculated by recomputing (i) all interest credited to sub-account A of his
Deferred  Compensation  Account at a rate equal to Moody's  plus 2 percent,
and  (ii)  all  interest   credited  to   sub-account  B  of  his  Deferred
Compensation  Account  at a rate  equal  to the  Cost  of  Capital  minus 4
percent.

     (c)  A Participant,  other than a  Director,  whose  service  with the
Corporation is terminated for cause shall be entitled to receive an amount,
payable as provided in  Sections  5.4 and 5.5,  equal to the balance of his
Deferred Compensation  Account,  calculated by recomputing (i) all interest
credited to  sub-account A of his Deferred  Compensation  Account at a rate

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<PAGE>

equal to Moody's,  and (ii) all interest  credited to  sub-account B of his
Deferred  Compensation Account at a rate equal to the Cost of Capital minus
6 percent.  For this purpose, a Participant's  service with the Corporation
shall be considered to be terminated for cause only if: (i) the Participant
is  convicted  of a felony,  without  regard to his right to appeal,  which
involves the Corporation's real, tangible or intellectual  property, any of
its  personnel  or any  person  with whom the  Corporation  has a  business
relationship,  and (ii) at least  two-thirds  of the  members  of the Board
affirmatively   vote,   in  their  sole   discretion,   to  terminate   the
Participant's employment with the Corporation because of such conviction.

     5.2  Payments Upon Death.
          -------------------

     (a)  Each Participant may designate a Beneficiary or  Beneficiaries to
receive  payment of the amounts  provided in paragraph  (b) in the event of
his death. Each Beneficiary designation:  (i) shall be made on a form filed
in the manner  prescribed by the Committee,  (ii) shall be effective  when,
and  only  if made  and  filed  in such  manner  during  the  Participant's
lifetime,  and (iii)  upon such  filing,  shall  automatically  revoke  all
previous Beneficiary designations.

     (b)  Upon the death of a Participant,  the  Participant's  Beneficiary
shall  be  entitled  to  receive  an  amount  equal to the  balance  of the
Participant's Deferred Compensation Account payable as provided in Sections
5.4 and 5.5.

     (c)  If the payments  to be made  pursuant  to  paragraph  (b) are not
subject to a valid Beneficiary designation at the time of the Participant's
death (because the designated  Beneficiary  predeceased  the Participant or
for  any  other  reason),  the  estate  of  the  Participant  shall  be the
Beneficiary.  If a Beneficiary designated by the Participant to receive all
or any part of the Participant's  Deferred  Compensation Account dies after
the Participant  but before  complete  distribution of that portion of that
Deferred  Compensation  Account, and at the time of the Beneficiary's death
there is no valid  designation of a contingent  Beneficiary,  the estate of
such Beneficiary shall be the Beneficiary of the portion in question.

     (d)  Any payments made to a Participant's Beneficiary pursuant to life
insurance  policies on the life of the  Participant  which are purchased in
connection with this Plan shall be offset against, and shall to that extent
reduce  the  payments  otherwise  required  to be made to such  Beneficiary
pursuant to Section 5.2(b).

     5.3 Hardship Distributions. The Committee may, in its sole discretion,
make distributions to a Participant from his Deferred  Compensation Account

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<PAGE>

prior to his  termination of service with the  Corporation if the Committee
determines that the Participant has suffered a Hardship.  The amount of any
such distribution  shall be limited to the amount  reasonable  necessary to
meet the Participant's needs created by the Hardship.

     5.4  Form of Payment.
          ---------------

     (a)  Except  as  provided  in  paragraph   (c),  the  amount  which  a
Participant or Beneficiary  becomes entitled to receive pursuant to Section
5.1 or 5.2 shall be paid either:

          (i)  as a lump sum, or

          (ii) in regular annual  installments over a period of time not to
exceed 15 years. The amount of each annual  installment shall be determined
by dividing the balance of the Deferred Compensation Account as of the most
recent Determination Date, as defined in Section 2.1(i)(ii),  by the number
of  remaining   installments.   The  remaining   balance  of  the  Deferred
Compensation  Account  shall  continue  to be  credited  with  interest  in
accordance with Section 4.2.

     (b)  Except as provided below in this paragraph  (b), the  Participant
shall elect, at the time and in the manner prescribed by the Committee, the
form  specified in paragraph  (a) in which  payment  shall be made.  If the
Participant  fails to elect the form of payment,  payment  shall be made in
accordance with paragraph (a) (ii) over a period of 15 years, provided that
in the case of such a Participant's  death, the  Participant's  Beneficiary
may elect the form of  payment.  In the case of a  Participant  who becomes
entitled to receive payment pursuant to Section 5.1(a)(iii),  the Committee
shall  determine the form specified in paragraph (a) in which payment shall
be made.

     (c)  Notwithstanding any other provision of this Plan, the amount which
a Participant  becomes entitled to receive pursuant to paragraph (b) or (c)
of Section 5.1 shall be paid in a lump sum.

     5.5  Commencement of Payments.
          ------------------------

     (a)  Payment which a Participant or  Beneficiary  becomes  entitled to
receive in the event of the Participant's death,  Disability or termination
of service  pursuant to paragraph (b) or (c) of Section 5.1 shall  commence
or be made, as the case may be, as soon as practicable after the occurrence
of such event.

     (b)  Payment  which a  Participant becomes  entitled  to receive  upon
termination of service pursuant to Section 5.1(a)(iii) shall commence or be
made, as determined by the Committee, on the first day of any month between
the date the Participant's service terminates and his 66th birthday.

                                    11

<PAGE>

     (c)  Payment which a  Participant  becomes  entitled  to receive  upon
termination  of service for any other reason shall  commence or be made, as
elected by the Participant at the time and in the manner  prescribed by the
Committee,  on the  first  day of any month  between  the date his  service
terminates and (i) in the case of an Employee,  his 66th birthday,  or (ii)
in the case of a Director, his 73rd birthday.

     5.6  Change in Control.*  Notwithstanding any other  provision of this
Plan,  a  Participant  shall be entitled to receive an  immediate  lump sum
payment  in an amount  equal to the  balance of his  Deferred  Compensation
Account upon the occurrence of a Change in Control.

     5.7  Payment as of January 1, 2000
          -----------------------------

     (a)  An Employee or Director who is an active Participant  on April 1,
1991 may, by an  instrument  in writing  filed with the Vice  President  of
Human Resources and Organization Development no later than August 31, 1991,
elect that the amount  described in paragraph  (b) shall be paid to him or,
if applicable, to his Beneficiary on January 1, 2000.

     (b)  Notwithstanding any other provision of this Plan:

          (i)  a Participant whose service with the Corporation has not
terminated before January 1, 2000, or

          (ii) a Participant  or Beneficiary  who is receiving  installment
payments  pursuant  to Section  5.4 as of January  1, 2000,  shall,  if the
Participant  has  made the  election  provided  for in  paragraph  (a),  be
entitled  to receive  an amount,  payable on January 1, 2000 as a lump sum,
equal to the portion of the Participant's Deferred Compensation Account, to
the  extent  such  portion  has  not  previously  been  distributed  to the
Participant,  or, if applicable,  his Beneficiary  pursuant to Sections 5.3
and 5.4,  which  consists  of the  balance  of the  Participant's  Deferred
Compensation  Account as of March 31, 1991 together with interest  credited
to such balance  pursuant to Section 4.2 from April 1, 1991 to December 31,
2000.  Solely for purposes of this  Section  5.7,  interest on such balance
from  January 1, 2000 to December  31, 2000 shall be credited as of January
1, 2000.



* Effective as of February 16, 1996.

                                    12

<PAGE>

     (c)  Any balance remaining in the Participant's Deferred  Compensation
Account  on  January 1, 2000  after  payment  of the  amount  described  in
paragraph  (b),   together  with  any  amounts  credited  to  his  Deferred
Compensation  Account  after such  date,  shall  continue  to be payable in
accordance with the provisions of Sections 5.1 through 5.6.


     5.8  Payment as of January 1, 2001
          -----------------------------

     (a)  An Employee or Director who is an active Participant on January 1,
1992 may, by an  instrument  in writing  filed with the Vice  President  of
Human  Resources and  Organization  Development no later than May 31, 1992,
elect that the amount  described in paragraph  (b) shall be paid to him or,
if applicable, to his Beneficiary on January 1, 2001.

     (b)  Notwithstanding any other provision of this Plan:

          (i)  a Participant whose service with the Corporation has not
terminated before January 1, 2001, or

          (ii) a Participant  or Beneficiary  who is receiving  installment
payments  pursuant  to Section  5.4 as of January  1, 2001,  shall,  if the
Participant  has  made the  election  provided  for in  paragraph  (a),  be
entitled  to receive  an amount,  payable on January 1, 2001 as a lump sum,
equal to the portion of the Participant's Deferred Compensation Account, to
the  extent  such  portion  has  not  previously  been  distributed  to the
Participant,  or, if applicable,  his Beneficiary  pursuant to Sections 5.3
and 5.4,  which  consists  of the  difference  between  the  balance of the
Participant's  Deferred  Compensation  Account as of March 31, 1992 and the
balance of such Deferred Compensation Account as of March 31, 1991 together
with  interest  credited  to such  difference  pursuant to Section 4.2 from
April 1, 1992 to December  31,  2001.  Solely for  purposes of this Section
5.8,  interest on such  balance  from  January 1, 2001 to December 31, 2001
shall be credited as of January 1, 2001.

     (c)  Any balance remaining in the Participant's Deferred  Compensation
Account  on  January 1, 2001  after  payment  of the  amount  described  in
paragraph  (b),   together  with  any  amounts  credited  to  his  Deferred
Compensation  Account  after such  date,  shall  continue  to be payable in
accordance with the provisions of Sections 5.1 through 5.6.


                                    13

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                         Section 6 - Administration
                         --------------------------


     6.1  Committee;   Duties.  The  Plan  shall  be  administered  by  the
Committee,  which shall have the  responsibility  and  authority  to, among
other  things,  (a)  interpret  and  construe the terms of the Plan and (b)
adopt such  regulations,  rules,  procedures and forms  consistent with the
Plan as it considers  necessary or desirable for the  administration of the
Plan.  In all  cases the  determination  of the  Committee  shall be final,
conclusive and binding on all persons.

     6.2  Appointment  of Agents.  The  Committee  shall  appoint  the Vice
President  of  Human  Resources  and  Organization  Development  to be  the
Committee's  agent and shall delegate to him its duties with respect to the
day-to-day  administration of the Plan. The Committee may from time to time
appoint other agents and delegate to them such administrative  duties as it
sees fit.  Notwithstanding the above, the Committee may not delegate to any
agent its duties under the Plan provided in Sections  2.1(o),  3.4, 4.2(a),
5.1(a)(iii) and 5.3.


                Section 7 - Amendment or Termination of Plan
                --------------------------------------------


     7.1  Right to Amend  or  Terminate.  The  Board  reserves  in its sole
discretion  the  right,  at any  time and  from  time to time,  to amend or
terminate the Plan.

     7.2  Effect of Amendment or Termination. No amendment or termination of
the  Plan  pursuant  to  Section  7.1  shall  deprive  any  Participant  or
Beneficiary  of any part of his  benefits  under the Plan accrued as of the
time of such  amendment or  termination.  If the Plan is  terminated,  each
Participant  shall be paid the full  amount  of his  Deferred  Compensation
Account in a lump sum within 90 days of the date of termination.


                    Section 8 - Miscellaneous Provisions
                    ------------------------------------


     8.1  No Implied  Rights.  Nothing in this Plan shall be deemed to: (a)
give  to any  Employee  the  right  to be  retained  in the  employ  of the
Corporation  or to interfere  with the right of the  Corporation to dismiss
any Employee at any time, or (b) give to any Participant or Beneficiary (i)
any right to any payments except as  specifically  provided for in the Plan
or (ii) any interest in any insurance  policies acquired by the Corporation
in accordance with Section 8.2

                                    14

<PAGE>

     8.2  Insurance Policies.  The  Corporation in its discretion  may, but
shall not be  required  to,  provide  for its  obligations  under this Plan
through the purchase of one or more life insurance  policies on the life of
a Participant.  Each  Participant  agrees,  as a condition to receiving any
benefits  under this Plan, to cooperate in securing  life  insurance on his
life by furnishing  such  information as the Corporation or any insurer may
require,  by submitting to such physical  examinations as may be necessary,
and by taking such other actions as may be required by the  Corporation  or
any insurer to obtain and maintain such insurance coverage.

     8.3  No Assignment or Alienation.  To the extent  permitted by law, no
benefit  provided under the Plan shall be anticipated,  assigned (either at
law or in equity), alienated or subject to attachment,  garnishment,  levy,
execution,  or other process.  Any attempt to perform any such action shall
be void.

     8.4  Expenses.  The Corporation shall pay all expenses incident to the
operation and administration of the Plan.

     8.5  Applicable Laws. Except as otherwise required by federal law, the
provisions  of the Plan and the rules,  regulations  and  decisions  of the
Board and the Committee  shall be construed  and enforced  according to the
laws of the State of Maryland.

                                    15
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