Document:

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                                                                   Exhibit 10(f)

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                                LIMITED GUARANTY

                           Dated as of March 31, 2000

                                       of

                              MINNESOTA POWER, INC.

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                                 Lease Financing
                              for ADESA Corporation
                             Auto Auction Facilities

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                                LIMITED GUARANTY

         THIS LIMITED GUARANTY, dated as of March 31, 2000 (this "GUARANTY"), is
made by MINNESOTA POWER,  INC., a Minnesota  corporation (the  "GUARANTOR"),  to
SUNTRUST BANK, a banking  corporation  duly organized and validly existing under
the laws of the State of Georgia (the "CREDIT  BANK"),  and ASSET  HOLDINGS III,
L.P., an Ohio limited partnership (the "LESSOR").  Capitalized terms used herein
and  not  defined  herein  shall  have  the  meanings  ascribed  to  them in the
Participation  Agreement  dated as of the date hereof  among the  Lessor,  ADESA
Corporation,  an  Indiana  corporation  (the  "LESSEE"),  the  Credit  Bank  and
Cornerstone Funding Corporation I, a Delaware corporation (the "ISSUER"), as the
same may be amended from time to time (the "PARTICIPATION AGREEMENT").

                                   WITNESSETH:

         WHEREAS, as contemplated by the Participation Agreement, the Lease, the
Reimbursement  Agreement,  the Borrower  Promissory Note and the other Operative
Documents,  at the request of the Lessee, (i) the Lessor has agreed to lease the
Leased  Property  to the  Lessee  and the  Lessee has agreed to lease the Leased
Property  from the Lessor  pursuant to the Lease,  (ii) the Issuer has agreed to
issue and sell its Floating Rate Notes, Series 2000A, in the aggregate principal
amount of $28,373,000  and lend the proceeds from the sale thereof to the Lessor
to  provide  refinancing  for  certain  indebtedness  incurred  by the Lessor in
connection  with its  acquisition  of the Leased  Property,  (iv) the Lessor has
agreed  to  invest  from  its  own  equity  resources  an  amount  equal  to the
Contribution  in the  principal  amount of  $877,515.46,  to pay  certain  costs
related to the  transactions  contemplated by the Operative  Documents,  (v) the
Credit Bank has agreed to issue the Letter of Credit to secure  repayment of the
Notes upon  compliance  with the other  terms and  conditions  of the  Operative
Documents,  and (vi) the Lessor  has in the  Reimbursement  Agreement  agreed to
reimburse the Credit Bank for Drawings under the Letter of Credit and to pay all
Letter of Credit Liabilities.

         WHEREAS,  as  security  for its  obligations  under  the  Reimbursement
Agreement,  the Lessor has,  INTER ALIA,  assigned  all of its right,  title and
interest in the Lease to Credit Bank  pursuant  to the  Assignment  of Lease and
Rents dated of even date herewith; and

         WHEREAS,  for the  purposes  of this  Guaranty,  the  term  "GUARANTEED
OBLIGATIONS"  means at any time, subject to the limitations set forth in Section
1 below, any or all of the following,  without  duplication:  (i) payment to the
Lessor and the Credit Bank of, and performance of, all of the obligations of the
Lessee  under  the  Lease,  the  Assignment  of Lease  and  Rents  and the other
Operative  Documents,  including  but not  limited  to the  payment of Rent (the
amount of which includes,  without limitation or duplication,  the amount of all
Drawings,  all Letter of Credit Fees and all Letter of Credit Liabilities),  the
payment of the Lease Balance and the payment of the Recourse  Deficiency Amount,
at the times and in the circumstances under which the payment of such amounts is
provided for in the Lease and the other Operative  Documents,  (iii) the payment
and performance of the obligations of the Lessee to pay the applicable  purchase
price and purchase the Leased  Property  pursuant to the  provisions of ARTICLES
XI,  XIV and XV of the  Lease,  and  (iv) the  payment  and  performance  of all
obligations  of the  Lessee  under  the  Participation  Agreement  and the

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other Operative  Documents,  all without  duplication and in accordance with the
respective  terms and provisions of the Lease, the  Participation  Agreement and
the other Operative Documents; and

         WHEREAS,  the Guarantor  intends this Guaranty to be an inducement  (i)
for the Credit  Bank to issue the Letter of Credit,  which the Credit Bank would
be unwilling to do if the  Guarantor  did not execute and deliver this  Guaranty
and (ii) for the  Lessor to invest  the  Contribution  and enter into the Lease,
which the Lessor would be unwilling to do if the  Guarantor  did not execute and
deliver this Guaranty.

         NOW,  THEREFORE,  in  consideration of the premises and intending to be
legally  bound by this  Guaranty,  the  Guarantor  hereby  agrees to be bound as
follows:

         1.  The Guarantor  hereby unconditionally guarantees to the Credit Bank
and the  Lessor  the due and  punctual  payment  and  performance  of all of the
Guaranteed Obligations,  and further unconditionally  guarantees and agrees with
the  Credit  Bank and the  Lessor  that all sums due or payable by the Lessee in
respect of the  Guaranteed  Obligations,  together with any other sums which may
become due and payable by the Lessee  pursuant to any  Operative  Document  with
respect to the Guaranteed  Obligations,  but only to the extent  provided in the
Operative Documents, whether the same shall accrue before or after the filing of
a proceeding  under the Bankruptcy Code, shall be promptly paid in full (a) when
due,  whether  at stated  maturity,  or on the  Lease  Termination  Date,  or by
acceleration or otherwise,  in accordance with the provisions of such Guaranteed
Obligations  and of the  Operative  Documents or (b) upon the  occurrence  of an
Event of Default hereunder.

         Notwithstanding  anything  to  the  contrary  herein  contained,  it is
expressly  understood  and agreed  that this  Guaranty  shall not  constitute  a
guaranty of an amount in excess of the Recourse  Deficiency  Amount in the event
that the Lessee shall (A) exercise the Remarketing Option in accordance with the
provisions  of SECTION  15.6 of the Lease,  (B)  timely  comply  with all of the
obligations  and satisfy  all of the  conditions  set forth in SECTION  15.6 (i)
through (xiii) of the Lease, including,  without limitation,  the timely payment
in full of the Recourse  Deficiency Amount pursuant to the provisions of SECTION
15.6(x) of the Lease and (C) return and  surrender  the Leased  Property  to the
Lessor or, if applicable, the independent purchaser thereof, pursuant to, and in
compliance with, the provisions of SECTION 15.8 of the Lease.

         This  Guaranty  shall  be  irrevocable,  and in  all  events  shall  be
continuing,  unconditional and absolute, and if for any reason any such sums, or
any part thereof,  shall not be paid promptly when due, the Guarantor  shall pay
the same to the Credit  Bank to and in  accordance  with the  provisions  of the
Guaranteed  Obligations and the Operative Documents,  regardless of any defenses
or rights of set-off or counterclaim, regardless of whether the Credit Bank, the
Lessor or any  successor  in  interest  of either of them,  shall have taken any
steps to enforce its or their rights against the Lessee, the Lessor or any other
Person,  to collect such sums, or any part thereof,  and regardless of any other
condition or  contingency.  The Guarantor also agrees to pay to the Credit Bank,
the Lessor and such  successors  in interest  such  further  amounts as shall be
sufficient  to cover the costs and  expense of  collecting  such  sums,  or part
thereof,  or of  otherwise  enforcing  this  Guaranty,  including,  in any case,
reasonable fees of their respective  attorneys for all services rendered in that
connection.

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         If the  Guarantor  shall be  required by  Applicable  Law to deduct any
charges from or in respect of any sum payable  hereunder to the Credit Bank, (i)
the sum payable by the Guarantor  shall be increased as may be necessary so that
after  making  all  required  deductions  (including  deductions  applicable  to
additional sums payable under this paragraph) the Credit Bank receives an amount
equal to the sum it would have been  entitled to receive from the Lessee and the
Lessor, as the case may be, under the Operative Documents had no such deductions
been  made,  (ii) the  Guarantor  shall  make  such  deductions,  and  (iii) the
Guarantor shall pay the full amount deducted to the relevant taxation  authority
or other authority in accordance with Applicable Law.

         The obligations of the Guarantor  hereunder shall be unaffected by, and
shall remain in full force and effect in the event that,  a bankruptcy  court or
other  court of  competent  jurisdiction  shall at any time  determine  that the
transactions  represented by the Lease and the other Operative  Documents (i) do
not constitute true leasing  transactions,  (ii) shall be treated as a financing
or loan transaction or shall otherwise be recharacterized, or (iii) shall in any
respect be held to be unenforceable in accordance with their respective terms.

         2.  The Guarantor  hereby  unconditionally  (a) waives any  requirement
that the Credit  Bank  first  make  demand  upon,  or seek to  enforce  remedies
against,  any other  Person or any of the  collateral  or property of such other
Person  before  demanding  payment  from,  or seeking to enforce  this  Guaranty
against, the Guarantor;  (b) covenants that this Guaranty will not be discharged
except by complete  satisfaction by indefeasible  payment in cash in full of all
payment obligations of Guarantor contained in the Guaranteed  Obligations and in
the Operative Documents with respect to the Guaranteed  Obligations;  (c) agrees
that, to the extent  permitted by law, this Guaranty shall remain in full effect
without  regard to, and shall not be affected or  impaired  by, any  invalidity,
illegality,  irregularity  or  unenforceability  in  whole  or in  part  of  the
Guaranteed  Obligations,  any other Operative Document (and the Guarantor hereby
waives any defense relating to the enforceability of the Operative  Documents or
any  provision  contained  therein),  or any  limitation of the liability of the
Guarantor  thereunder,  or any  limitation  on the  method  or terms of  payment
thereunder  which  may now or  hereafter  be  caused or  imposed  in any  manner
whatsoever;  (d) waives diligence,  presentment and protest with respect to, and
any notice of default in, the payment of any amount at any time payable under or
in connection with the Guaranteed Obligations or any of the Operative Documents;
and (e) agrees  that each and every  right,  power and remedy  given  under this
Guaranty or any other Operative  Document shall be cumulative and not exclusive,
and be in addition to all other  rights,  powers and  remedies  now or hereafter
granted or otherwise existing.

         3.  Notwithstanding  any  payment or payments  made by the Guarantor
hereunder or any set-off or  application of funds of the Guarantor by the Credit
Bank, until all of the Guaranteed  Obligations have been  indefeasibly  paid and
performed in full,  the Guarantor  shall not (a) be entitled to be subrogated to
any of the rights of the Credit Bank against the Lessee, the Lessor or any other
guarantor or in any  collateral  security or guaranty or right of offset held by
the Credit  Bank for the  payment  of any sums due in respect of the  Guaranteed
Obligations,  or (b) seek any reimbursement or contribution from the Lessee, the
Lessor or any other guarantor in respect of any payment,  set-off or application
of funds made by the Guarantor hereunder.

         4.  The  obligations, undertakings and  conditions to be  performed or
observed by the Guarantor  under this Guaranty shall not be affected or impaired
by  reason  of the  happening  from

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time to time of any of the following with respect to the Guaranteed  Obligations
and the other Operative Documents, all without notice to, or the further consent
of, the Guarantor:

             (a) the waiver by the  Lessor, the Credit  Bank or any other Person
         of  the  observance  or  performance  by  the  Guarantor  of any of the
         obligations,  undertakings  or  conditions  contained  in any  of  such
         Guaranteed Obligations or any of the Operative Documents, except to the
         extent of such waiver;

             (b) the waiver by the Lessor, the Credit Bank or any other Person,
         of the  observance or performance by the Lessor or the Lessee of any of
         the  obligations,  undertakings  or  conditions  contained  in any such
         Guaranteed Obligations or any of the Operative Documents;

             (c) the extension,  in whole or in part, of the time for payment of
         any amount owing or payable under any of the Guaranteed  Obligations or
         any  Operative  Document or of any other sums or  obligations  under or
         arising  out of or on  account  of the  Guaranteed  Obligations  or any
         Operative Document except to the extent of such extension;

             (d) the  modification  or  amendment   (whether  material  or
         otherwise) of any of the  obligations of the Lessor or the Lessee under
         or with  respect  to any of the  Guaranteed  Obligations  or any of the
         Operative Documents, or the modification or amendment (whether material
         or otherwise)  of any of the  obligations  of the  Guarantor  under any
         other Operative Document,  except to the extent of such modification or
         amendment;

             (e) the taking or the  omission of any of the  actions  referred to
         in  any  Guaranteed   Obligation  or  any  other   Operative   Document
         (including,  without limitation,  the giving of any consent referred to
         therein);

             (f) any failure, omission, delay or lack on the part of the Lessor,
         the Credit Bank, or any other Person to enforce, assert or exercise any
         right,  power or remedy conferred on the Lessor, the Credit Bank or any
         other  Person in any of  Operative  Documents  or with  respect  to the
         Guaranteed  Obligations  or any action on the part of the  Lessor,  the
         Credit Bank,  or any other Person  granting  indulgence or extension in
         any form;

             (g) the release or discharge of the Lessor, the Lessee, or any
         other Person from the  performance  or  observance  of any  obligation,
         undertaking  or condition to be performed by the Lessor,  the Lessee or
         any such Person under any Guaranteed  Obligation or any other Operative
         Document by operation of law;

             (h) the receipt and  acceptance by the Lessor, the Credit Bank,  or
         any other Person of notes,  checks or other instruments for the payment
         of money and extensions and renewals thereof;

             (i) any payment by the Lessee to the Credit Bank or the Lessor
         if such payment is held to constitute a preference under the bankruptcy
         laws, or if for any other reason Credit

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         Bank or Lessor is  required  by a court of  competent  jurisdiction  to
         refund such payment to the Lessor, the Lessee or pay the amount thereof
         to any other party ;

             (j) any  action,  inaction  or  election  of  remedies  by the
         Lessor,  the  Credit  Bank or any other  Person  which  results  in any
         impairment or destruction of any  subrogation  rights of the Guarantor,
         or any rights of the Guarantor to proceed  against any other Person for
         reimbursement;

             (k) the surrender by the Lessor,  the Credit Bank or any other
         Person  of any  security  at any  time  held  for  the  performance  or
         observance  of any of the  agreements,  covenants,  terms or conditions
         contained  in the  Operative  Documents or affecting in any respect the
         Guaranteed Obligations;

             (l) any event or circumstance (other than payment) which might
         otherwise  constitute  a legal or  equitable  discharge or defense of a
         guarantor,  indemnitor or surety under the laws of the State of Ohio or
         any other jurisdiction;

             (m) any other circumstances whatsoever (with or without notice to
         or knowledge of the Guarantor) which constitute,  or might be construed
         to  constitute,  an equitable or legal  discharge of the Guarantor with
         respect  to its  obligations  hereunder  or under the  other  Operative
         Documents,  in  bankruptcy  or in any other  instance,  except based on
         payment or performance;

             (n) any change in  circumstances,  whether or not  foreseen or
         foreseeable,  whether or not  imputable to the  Guarantor or the Lessor
         and whether or not such change in  circumstances  shall or might in any
         manner and to any extent vary the risk of the Guarantor hereunder; or

             (o) any other cause, whether similar or dissimilar to the
         foregoing;

         5.  It being  the  intention  of the  Guarantor  that this Guaranty  be
absolute and  unconditional in any and all  circumstances and that this Guaranty
shall be discharged  only by the  indefeasible  payment in full of all sums with
respect to which this Guaranty relates.

         6.  Each of the following  shall constitute an event of default ("EVENT
OF  DEFAULT"),  whatever  the  reason  for such  event and  whether  it shall be
voluntary or  involuntary  or be effected by operation of law or pursuant to any
judgment  or  order  of any  court  or any  order,  rule  or  regulation  of any
governmental or non-governmental body:

             (a) An Event of Default as defined in ARTICLE XIII of the Lease.

             (b) Any  default by the  Guarantor in the payment of any amount due
                 hereunder  which shall remain unremedied for five days after
                 written notice to the Guarantor.

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             (c) Any  representation  or  warranty  made  by the Guarantor under
         this Guaranty or any other agreement,  report,  certificate,  financial
         statement or other  instrument  referred to herein and furnished to the
         Credit Bank in connection  herewith shall prove incorrect or misleading
         in any material respect when made and shall remain  unremedied for five
         days after written notice to the Guarantor.

             (d) The  Guarantor   shall  default  in  the  performance  or
         observance  of any  agreement or covenant  contained  in this  Guaranty
         (other than a covenant or  agreement or default in the  performance  or
         observance  of  which  is  elsewhere  in this  Section  6  specifically
         addressed)  and such  default  shall  continue  for a period of 10 days
         after written notice to the Guarantor.

             (e) The filing by the Guarantor of a petition for the  appointment
         of a trustee with respect to itself or any of its property.

             (f) The making by the Guarantor of an assignment for the benefit of
         creditors.

             (g) The  commencement by  the Guarantor of a case  in bankruptcy or
         insolvency or for compromise, adjustment or other relief under the laws
         of the United States or of any state relating to the relief of debtors.

             (h) The  failure of the  Guarantor  to obtain  the  dismissal,
         within 60 days after service upon the  Guarantor of any case  commenced
         against  the  Guarantor  (i) for the  appointment  of a trustee for the
         Guarantor,  of any of its property or (ii) in  bankruptcy or insolvency
         or for  compromise,  adjustment  or other  relief under the laws of the
         United States or of any state relating to the relief of debtors.

             (i) The failure of the Guarantor to generally pay its debts as such
         debts become due.

             (j) The making, or the attempted making, by the Guarantor of a
         fraudulent  conveyance  within the  meaning of the  Uniform  Fraudulent
         Conveyances Act.

             (k) Any  "Event of  Default"  (as  defined  in any such  other
         Operative  Document)  under  any of the  Lease or any  other  Operative
         Document  (after  the  expiration  of all  applicable  cure and  notice
         periods) and such "Event of Default" shall continue for a period of ten
         (10) days after the Guarantor's  receipt of written notice thereof from
         the Credit Bank or the Lessor.

         7.  Notice of acceptance of this  Guaranty and notice of the execution
             and delivery of any other instrument  referred to in this Guaranty,
             are hereby waived by the Guarantor.

         8.  (a) If any  Event  of  Default  (other  than an  Event  of  Default
         specified  above in Section  6(e) through (h) hereof  inclusive)  shall
         have  occurred  and be  continuing,  the Credit  Bank may,  in its sole
         discretion  (i) require the Trustee to draw upon the full amount of the
         Letter of Credit then  available  to be drawn as provided in the Letter
         of

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         Credit  and the  Indenture,  (ii)  declare  all  obligations  of the
         Guarantor  under  this  Guaranty  to be  immediately  due and  payable,
         whereupon  all  such  obligations  shall  become  immediately  due  and
         payable,  and (iii)  proceed  first and directly  against the Guarantor
         under this Guaranty without  proceeding  first or concurrently  against
         the Lessee,  the Lessor or any other guarantor,  without exhausting any
         other remedies it may have (including, without limitation, any remedies
         under the Reimbursement  Agreement or the other Operative Documents) or
         without resorting to any other security held by the Credit Bank.

             (b) If any Event of Default  specified  above in Section  6(e)
         through (h) hereof  inclusive  shall occur (i) all  obligations  of the
         Guarantor  under this  Guaranty  shall  immediately  and  automatically
         become due and payable,  without  notice of any kind,  all of which are
         hereby  expressly  waived,  and (ii) the Credit  Bank may,  in its sole
         discretion, (A) require the Trustee to draw upon the full amount of the
         Letter of Credit then  available  to be drawn as provided in the Letter
         of Credit and the Indenture, and (B) proceed first and directly against
         the  Guarantor  under  this  Guaranty   without   proceeding  first  or
         concurrently  against  the Lessee,  the Lessor or any other  guarantor,
         without  exhausting any other remedies it may have (including,  without
         limitation,  any remedies  under the  Reimbursement  Agreement or other
         Operative Documents) or without resorting to any other security held by
         the Credit Bank.

         9.  In the event any payment by the Lessee, the Lessor or the Guarantor
to the Credit Bank or the Lessor,  as the case may be, is held to  constitute  a
preference under the bankruptcy laws, or if for any other reason the Credit Bank
or the Lessor, as the case may be, is required to refund by a court of competent
jurisdiction  any such  payment or pay the amount  thereof to any other  Person,
such  payment to the Credit  Bank or the Lessor,  as the case may be,  shall not
constitute or effect a release of Guarantor  from any liability  hereunder,  but
this Guaranty shall continue to be effective or shall be reinstated, as the case
may be, to the extent of any such  payment,  as though such payment had not been
made in the first instance,  and Guarantor agrees to pay an amount equal to such
payment to the Credit Bank or the Lessor,  as the case may be. The provisions of
this paragraph shall survive the termination of this Guaranty.

         10. The Guarantor does hereby represent and warrant that:

             (a) It  is a  corporation  duly organized,  existing and in good
         standing under the laws of the jurisdiction of its organization; it has
         corporate  power to enter into and perform all  agreements  on its part
         herein contained; the execution,  delivery and performance by Guarantor
         of this  Guaranty  has been  authorized  by all  necessary  and  proper
         corporate  action;  the  execution  and  delivery by  Guarantor of this
         Guaranty  does  not,  and  its  performance  of the  agreements  herein
         contained  will not,  contravene  or  constitute  a  default  under any
         agreement,  indenture,  commitment,  provision  of  its  organizational
         documents, or Requirements of Law to which it is a party or by which it
         is or may be bound,  the failure of which could  reasonably be expected
         to have a material adverse effect on the performance of its obligations
         hereunder.

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<PAGE>

             (b) This Guaranty is a valid,  legal and binding obligation of the
         Guarantor,   subject  only  to  certain  exceptions  in  the  event  of
         bankruptcy and the application of general principles of equity.

             (c) The waivers,  representations,  warranties, covenants, and
         agreements  contained in this  paragraph  and this Guaranty are for the
         benefit of and may be  enforced  by the Credit  Bank and the Lessor and
         their respective successors and assigns.

             (d) The Guarantor has such knowledge of the business and financial
         affairs of the Lessee as the Guarantor  deems necessary to evaluate the
         risks of executing and delivering  this Guaranty to the Credit Bank and
         the Lessor,  and is capable of  evaluating  such risks by reason of the
         Guarantor's  knowledge and  experience.  All  information has been made
         available to the  Guarantor  by the Lessee  which is necessary  for the
         evaluation of such risks. The Guarantor has consulted with and received
         advice from legal counsel and  financial  advisers with respect to such
         risks  and the  Guarantor  has not  relied,  and  shall not rely in the
         future, upon the Lessor or the Credit Bank to conduct any investigation
         of the Lessee's financial  condition or business prospects or to notify
         the  Guarantor  now or in the future of any  adverse  information  with
         respect  thereto which could increase the  Guarantor's  risk under this
         Guaranty.

         11. The Guarantor agrees to repay, to  the extent  included within  the
Guaranteed  Obligations,  all monies,  including  but not limited to  reasonable
attorneys'  fees, paid by the Lessor in defense of any action  asserted  against
the  Lessor  by  the  Lessee,  as a  debtor-in-possession,  or by a  trustee  in
bankruptcy in a proceeding brought under 11 U.S.C. Section 547 of the Bankruptcy
Code for the  recovery  of monies  received  by the Lessor  from the Lessee as a
result of the Guarantor's obligations hereunder. The Guarantor further agrees to
repay any  monies  paid by the  Lessor in  settlement  of any such  action or in
satisfaction of any judgment rendered against the Lessor in such an action.

         12. The Guarantor hereby subordinates any  and all claims which it now
has, or in the future may acquire, as a creditor of any of the Lessee or Lessor,
to the prior payment and satisfaction in full of this Guaranty. If, prior to the
payment  and  satisfaction  of  this  Guaranty,  the  Guarantor  would,  without
reference  to the  provisions  of this  Section  12, be  entitled to receive any
payment on account of any claim of the  Guarantor  against  the Lessee or any of
its Subsidiaries,  or the Lessor, all such payments shall be made instead to the
Credit Bank until the  Guaranteed  Obligations  have been paid and  satisfied in
full, and the Guarantor hereby so directs. If the Guarantor receives any payment
on  account  of any  claim of the  Guarantor  against  the  Lessee or any of its
Subsidiaries,  or the Lessor,  the Guarantor shall immediately pay the same over
to  the  Credit  Bank  to be  applied  to the  payment  or  satisfaction  of the
Guaranteed Obligations,  if any. Notwithstanding the foregoing, unless an "Event
of Default" (as defined in the  Participation  Agreement) has occurred,  and has
not been  either  waived or  acknowledged  to have been  cured in writing by the
Credit Bank,  the Guarantor  may receive and retain  payments from the Lessee or
any of its  Subsidiaries  on account of any claim of the  Guarantor  against the
Lessee or any such Subsidiary.

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<PAGE>

         13. This Guaranty shall remain in full force and effect until payment
in full of all sums payable under and in respect of the Guaranteed  Obligations,
and all Operative  Documents with respect to the  Guaranteed  Obligations by the
Guarantor  hereunder  and the  performance  in full  of all  obligations  of the
Guarantor in accordance with the provisions of this Guaranty. This Guaranty is a
guaranty of payment and not of collection merely.

         14. In case any provision of this Guaranty or any  application  thereof
shall  be  invalid,  illegal  or  unenforceable,   the  validity,  legality  and
enforceability  of the remaining  provisions and any other  application  thereof
shall not in any way be affected or impaired thereby.

         15. TIME IS OF THE ESSENCE IN THIS GUARANTY AND THE TERMS HEREIN SHALL
BE SO  CONSTRUED.  This  Guaranty  shall be binding upon the  Guarantor  and its
successors and shall inure to the benefit of, and be enforceable  by, the Credit
Bank and its successors and assigns as to the obligations  respectively owed and
guaranteed hereunder.  This Guaranty may not be changed,  waived,  discharged or
terminated  orally,  but only by a statement in writing  signed by the Guarantor
and the  Credit  Bank,  in  compliance  with the  requirements  set forth in the
Participation  Agreement.  This  Guaranty  may be enforced as to any one or more
defaults either separately or cumulatively.  THIS GUARANTY SHALL IN ALL RESPECTS
BE GOVERNED BY, AND CONSTRUED AND ENFORCED IN ACCORDANCE  WITH,  THE LAWS OF THE
STATE OF GEORGIA.

         16. All notices,  demands,  requests,  consents  approvals and other
instruments  hereunder  shall  be  given in the  manner  and at the  appropriate
address set forth in the  Participation  Agreement  or at such other  address as
such party shall designate by notice to each of the other parties hereto.

         17. This  Guaranty is  made by the Guarantor solely to the Credit Bank
and the Lessor  and their  respective  successors  and  assigns,  and may not be
relied upon by any other person, firm, corporation or entity.

         18. The Guarantor waives any and all notice of the creation,  renewal,
extension or accrual of any of the amounts  which the  Guarantor is obligated to
pay  hereunder  and notice of or proof of  reliance by the Credit Bank upon this
Guaranty or  acceptance  of this  Guaranty.  The  indebtedness  evidenced by the
Guaranteed  Obligations  shall  conclusively  be deemed  to have  been  created,
contracted, incurred, renewed, extended, amended or waived in reliance upon this
Guaranty,  and all  dealings  between  the  Guarantor  and the Credit Bank shall
likewise be  conclusively  presumed to have been had or  consummated in reliance
upon this Guaranty.

         19. Notwithstanding  anything to the contrary  herein or in any other
Operative  Document,  any payment by the  Guarantor  to the Lessor or the Credit
Bank pursuant to any other Operative Document shall discharge  dollar-for-dollar
the related  obligations of the Guarantor to the Credit Bank hereunder,  and any
payment by the  Guarantor to the Credit Bank shall  discharge  dollar-for-dollar
the related  obligations of the Guarantor to the Lessor or the Credit Bank under
any other Operative Document.

         20. The Guarantor hereby irrevocably and  unconditionally (i) submits
for itself and its property in any legal action or  proceeding  relating to this
Guaranty or any other Operative

                                      -9-
<PAGE>

Document, or for recognition and enforcement of any judgment in respect thereof,
to the non-exclusive general jurisdiction of the courts of the State of Georgia,
the courts of the United States of America for the Northern  District of Georgia
and  appellate  courts from any thereof,  (ii)  consents that any such action or
proceedings may be brought to such courts,  and waives any objection that it may
now or hereafter have to the venue of any such action or proceeding in any court
or that such  action or  proceeding  was  brought in an  inconvenient  court and
agrees not to plead or claim the same,  (iii)  agrees that service of process in
any such  action or  proceeding  may be  effected  by mailing a copy  thereof by
registered  or  certified  mail (or any  substantially  similar  form of  mail),
postage  prepaid,  to such party at its  address set forth in SECTION 8.2 of the
Participation  Agreement  or at such other  address  of which the other  parties
hereto  shall have been  notified  pursuant to SECTION 8.2 of the  Participation
Agreement  and (iv) agrees that nothing  herein shall affect the right to effect
service of process in any other manner  permitted by law. The Guarantor,  to the
extent permitted by law, hereby irrevocably and unconditionally waives any right
to have a jury  participate  in  resolving  any  dispute,  whether  sounding  in
contract,  tort, or otherwise,  among or between the parties  hereto arising out
of,  in  connection  with,   related  to,  or  incidental  to  the  relationship
established  among the  parties  in  connection  with this  Guaranty,  any other
Operative  Document or any other  document  executed or delivered in  connection
herewith or the  transactions  related hereto.  This waiver shall not in any way
affect,  waive,  limit,  amend or modify the  Guarantor's  ability to pursue any
remedies contained in this Guaranty,  the other Operative Documents or any other
agreement or document related hereto.

         21. The Guarantor  acknowledges that (i) Lessor has assigned its rights
under this Guaranty to the Credit Bank  pursuant to the  Assignment of Lease and
Rents,  and the Lessor and the Credit Bank, by their  respective  acceptances of
this Guaranty, direct the Guarantor to make payments directly to the Credit Bank
of amounts  which at any time may become  due to the Lessor  hereunder  and (ii)
pursuant to the Assignment of Lease and Rents, the power to enforce the Lessor's
rights hereunder has been irrevocably granted to the Credit Bank pursuant to the
power of attorney set forth in SECTION 3 of the Assignment of Lease and Rents.

                [REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]

                                      -10-
<PAGE>

         IN WITNESS  WHEREOF,  the Guarantor has caused this Limited Guaranty to
be duly executed as of the day and year first above written.

                                                   MINNESOTA POWER, INC.

                                                   By:  D. G. Gartzke
                                                      --------------------------
                                                   Its:
                                                       -------------------------

                                      -11-NORTHROP GRUMMAN CORPORATION

      NON-EMPLOYEE DIRECTORS EQUITY PARTICIPATION PLAN

                   Effective March 1, 1998

                      TABLE OF CONTENTS

ARTICLE 1-Introduction                                     1

     Section 1.01. Purpose                                 1
     Section 1.02. Effective Date                          1
ARTICLE 2-Definitions                                      2

     Section 2.01. Accruals                                2
     Section 2.02. Annual Accrual                          2
     Section 2.03. Annual Retainer Fee                     2
     Section 2.04. Board                                   2
     Section 2.05. Change in Control                       2
     Section 2.06. Common Stock                            2
     Section 2.07. Company                                 2
     Section 2.08. Conversion Date                         2
     Section 2.09. Debilitating Illness                    3
     Section 2.10. Director                                3
     Section 2.11. Dividend Equivalent                     3
     Section 2.12. Electing Outside Director               3
     Section 2.13. Equity Participation Account            3
     Section 2.14. Fair Market Value Of The Common
       Stock                                               3
     Section 2.15. Outside Director                        4
     Section 2.16. Participant                             4
     Section 2.17. Plan                                    4
     Section 2.18. Retired Outside Director                5
     Section 2.19. Retirement Plan                         5
     Section 2.20. Special Accrual                         5
     Section 2.21. Surviving Spouse                        5
     Section 2.22. Total Disability                        5
     Section 2.23. Unit                                    5
     Section 2.24. Year Of Service                         6
ARTICLE 3-Participation                                    7

     Section 3.01. In General                              7
ARTICLE 4-Entitlement To Benefits                          8

     Section 4.01. Normal Benefit                          8
     Section 4.02. Partial Benefit                         8
     Section 4.03. Change in Control Benefit               8
     Section 4.04. Better-Of Benefit                       9
     Section 4.05. Surviving Spouse Benefit                9
     Section 4.06. Other Participants                      9

ARTICLE 5-Amount Of Benefit                               10

     Section 5.01. Normal Benefit Amount                  10
     Section 5.02. Partial Benefit Amount                 10
     Section 5.03. Change in Control Benefit Amount       10
     Section 5.04. Better-Of Benefit Amount               10
ARTICLE 6-Accounts                                        12

     Section 6.01. Equity Participation Accounts          12
     Section 6.02. Annual Accruals                        12
     Section 6.03. Special Accruals                       13
     Section 6.04. Conversion Of Accruals Into Units      13
     Section 6.05. Dividend Equivalents                   14
     Section 6.06. Change in the Common Stock             14
ARTICLE 7-Distributions                                   15

     Section 7.01. In General                             15
     Section 7.02. Amount of Installments                 15
     Section 7.03. Conversion of Units into Dollars       16
     Section 7.04. T-Bond Election                        16
     Section 7.05. Payment to a Trust                     18
ARTICLE 8-Miscellaneous Provisions                        19

     Section 8.01. Amendment And Termination              19
     Section 8.02. Plan Unfunded                          19
     Section 8.03. No Assignments                         19
     Section 8.04. No Double Payment                      20
     Section 8.05. No Other Rights                        20
     Section 8.06. Successors of the Company              21
     Section 8.07. Law Governing                          21
     Section 8.08. Actions By Company                     21
     Section 8.09. Plan Representatives                   21
ARTICLE 5-Change In Control Benefits                      22

     Section A.01. In General                             22
     Section A.02. Change In Control                      22
     Section A.03. Override by Board                      24
     Section A.04. February, 1998 Vote                    24
     Section A.05. Vesting at Change in Control           25
     Section A.06. Limitation on Amendment Authority      25

                          ARTICLE 1

                        Introduction

     Section 1.01. Purpose. The purposes of the Plan are to

enable the Company to attract and retain outstanding

individuals to serve as non-employee directors of the

Company, and to further align the interests of non-employee

directors with the interests of the other shareholders of

the Company by making the amount of the compensation of non-

employee directors dependent in part on the value and

appreciation over time of the Common Stock of the Company.

     Section 1.02. Effective Date. This restatement of the

Plan is effective as of March 1, 1998. The Plan was

originally effective March 19, 1997.

                          ARTICLE 2

                         Definitions

     The following terms when used and capitalized in the

Plan will have the following meanings:

     Section 2.01. Accrual. Any dollar amounts credited to

the Equity Participation Account, including any Special

Accrual, Annual Accruals, Additional Accruals and Dividend

Equivalents.

     Section 2.02. Additional Accrual. This is defined in

Section 6.02.

     Section 2.03. Annual Accrual. This is defined in

Section 6.02.

     Section 2.04. Annual Retainer Fee. That fixed amount

paid to Directors exclusive of travel expenses, meeting

fees, committee fees, or any other similar remuneration.

     Section 2.05. Board. The Board of Directors of the

Company.

     Section 2.06. Change in Control. This is defined in

Sections A.02-A.04.

     Section 2.07. Common Stock. The Common Stock of the

Company.

     Section 2.08. Company. Northrop Grumman Corporation.

     Section 2.09. Conversion Date. The date the Outside

Director's service as a member of the Board terminates for

any reason, including death.

                              2

Section 2.10. Debilitating Illness. Any physical or mental

condition which renders an individual unable to carry on the

normal duties of his or her active business career.

     Section 2.11. Director. A member of the Board.

     Section 2.12. Dividend Equivalent. An amount equal to

the cash dividend per share which is payable on any dividend

payment date for the Common Stock.

     Section 2.13. Electing Outside Director. An Outside

Director participating in the Retirement Plan who, at the

inception of this Plan, elected to terminate participation

in the Retirement Plan and to participate in this Plan

instead.

     Section 2.14. Equity Participation Account. An unfunded

bookkeeping account maintained by the Company for a

Participant to which amounts are credited under the Plan.

     Section 2.15. Fair Market Value Of The Common Stock.

This is determined as follows:

     (a)  for relevant Accruals and Conversion Dates that occur

on or before February 18, 1998, the closing price of a share of

Common Stock as reported on the composite tape for

securities listed on the New York Stock Exchange (the

"Exchange") for the date in question. If no sales of Common

Stock were made on the Exchange on that date, the closing

price of a share of Common Stock as reported on said

composite tape for the preceding day on which sales of

Common Stock were made on the Exchange shall be substituted;

and

                              3

     (b) for relevant Accruals and Conversion Dates that

occur after February 18, 1998, the average of the daily

closing prices of a share of Common Stock as reported on the

composite tape for securities listed on the Exchange for the

20 trading days (counting as trading days only days on which

sales of Common Stock are reported) ending with the date in

question.

     Section 2.16. Outside Director. A Director who is not a

common law employee of the Company.

     Section 2.17. Participant. Each current or former

Outside Director eligible for benefits under the Plan who

has not yet received a complete distribution of his or her

benefits under the Plan, other than a former Outside

Director who terminated service with the Board without any

entitlement to benefits under Sections 4.01-4.03.

     Section 2.18. Plan. The Northrop Grumman Corporation

Non-Employee Directors Equity Participation Plan.

                              4

     Section 2.19. Retired Outside Director. An Outside

Director whose service as a member of the Board for any

reason has terminated and who is entitled to receive a

distribution.

     Section 2.20. Retirement Plan. The Northrop Grumman

Corporation Board of Directors Retirement Plan.

     Section 2.21. Special Accrual. This is defined in

Section 6.03.

     Section 2.22. Surviving Spouse. A person who:

     (a)was legally married to the Participant for at least

        one year prior to the date the Participant ceases

        to serve on the Board (including death while

        serving on the Board), and

     (b)outlives the deceased Participant by at least 30

        calendar days,

to the extent he or she is not prevented from receiving

benefits under the Plan by a court order or property

settlement at the time payments would otherwise be due.

     Section 2.23. Total Disability. Total disability as

defined in the Northrop Grumman Long-Term Disability

Insurance Plan.

     Section 2.24. Unit. An equivalent to a share of Common

Stock, which is the denomination into which all dollar

Accruals to any Equity Participation Account are to be

converted.

     Section 2.25. Year Of Service. A 12-consecutive-month

period of service as an Outside Director.

                              5

                          ARTICLE 3

                        Participation

     Section 3.01. In General. A Director is eligible to

participate in the Plan if he or she:

     (a) becomes an Outside Director after March 19, 1997,

or

     (b) is an Electing Outside Director.

                              6

                          ARTICLE 4

                   Entitlement To Benefits

     Section 4.01. Normal Benefit. Each Participant who

terminates service on the Board will be entitled to receive

a benefit under Section 5.01 if he or she satisfies (a) or

(b):

     (a) He or she completes at least three consecutive

Years of Service.

     (b) He or she retires from the Board as a result of

Total Disability or a Debilitating Illness.

     Section 4.02. Partial Benefit. A Participant will be

entitled to receive a partial benefit under Section 5.02 if:

     (a) he or she terminates service on the Board prior to

completing three consecutive Years of Service, and

     (b) his or her termination occurs because he or she

will have attained age 70 prior to the Annual Meeting of

Shareholders.

     Section 4.03. Change in Control Benefit. A Participant

who is not entitled to benefits under Section 4.01 will be

entitled to receive a Change in Control benefit under

Section 5.03 if the conditions described in Appendix A are

met.

                              7

     Section 4.04. Better-Of Benefit. A Participant entitled

to a benefit under Sections 4.01-4.03 will be entitled to

"better-of" benefits under Section 5.04 if he or she:

     (a) was a Participant in the Plan and a current Outside

Director as of March 1, 1998, and

     (b) terminates service on account of death,

Debilitating Illness or Total Disability.

     Section 4.05. Surviving Spouse Benefit. Upon a

Participant's death, his or her Surviving Spouse, if any,

will be eligible to receive the remainder of the payments

due the Participant. If there is no Surviving Spouse, all

payments will cease.

     Section 4.06. Other Participants. No benefits will be

paid with respect to a Participant who terminates service

with the Board unless the eligibility conditions of Section

4.01, 4.02 or 4.03 are satisfied.

                              8

                          ARTICLE 5

                      Amount Of Benefit

     Section 5.01. Normal Benefit Amount. The normal benefit

amount is the full balance of the Participant's Equity

Participation Account.

     Section 5.02. Partial Benefit Amount. The partial

benefit amount is the Participant's Equity Participation

Account multiplied by a fraction.

     (a) The numerator of the fraction is the number of the

Participant's completed consecutive Years of Service and the

denominator is three.

     (b) For purposes of (a), completed Years of Service

include completed months of service (rounded up to the

nearest month) expressed as a fraction of a year to the

nearest quarter.

     Section 5.03. Change in Control Benefit Amount. The

Change in Control benefit is equal to the full balance of

the Participant's Equity Participation Account.

     Section 5.04. Better-Of Benefit Amount. A Participant

entitled to "better-of" benefits will have his or her

benefits determined under this Section if that would result

in greater benefits than those provided under Sections 5.01-

5.03, as applicable.

                              9

     (a) The benefit under this Section equals the benefit

the Participant would receive (if any) if he or she were a

participant under the Retirement Plan.

     (b) If a Participant would not be entitled to any

benefit under the Retirement Plan (e.g., because he or she

failed to meet the five years of service requirement), this

Section will not provide any alternative benefits.

     (c) The Retirement Plan benefit will be considered

greater for purposes of this Section if the present value of

the projected Retirement Plan benefit is greater than the

Participant's balance in his or her Equity Participation

Account at the Conversion Date.

     (d) For purposes of determining the present value of

the Retirement Plan benefit, the following assumptions will

be used:

          (1) An interest rate assumption of 6.5% will be

used.

          (2) No mortality factor will be applied. The

Participant will be assumed to get all payments before

dying.

          (3) The Annual Retainer Fee used by the Retirement

Plan will be assumed to remain constant for all future

years.

                             11

                          ARTICLE 6

                          Accounts

     Section 6.01. Equity Participation Accounts. An Equity

Participation Account will be maintained for each

Participant having an amount to his or her credit under the

Plan. The account will keep track of Accruals and payments

for a Participant's benefit.

     Section 6.02. Annual Accruals. On each March 19, the

Company will credit an amount equal to 50% of the Annual

Retainer Fee in effect on that date (an "Annual Accrual") to

the Equity Participation Account of each Participant who

provided a full Year of Service in the immediately preceding

12-month period.

     (a) On each March 19 (starting in 2001), the Company

also will credit an amount equal to 5% of the Annual

Retainer Fee in effect on that date (an "Additional

Accrual") to the Equity Participation Account of each

Participant who provided a full Year of Service in the

immediately preceding 12-month period, if the following two

conditions are met:

(1)  an amount was appropriated for payment of awards with

  respect to the preceding calendar year pursuant to the

  Company's Incentive Compensation Plan, and

                             12

(2) the Company attained the pre-established financial and

non-financial measures set by the Compensation and

Management Development Committee for payment of awards

pursuant to such Incentive Compensation Plan with respect to

that preceding year.

     (b) No accrual will be made for any Outside Director

who has provided at least ten consecutive Years of Service.

     (c) Participants who have provided less than a full

Year of Service for the immediately preceding 12-month

period will receive a pro rated portion of the normal Annual

Accrual and any Additional Accrual based on their months of

service for the period (rounded up to the nearest month)

divided by 12.

     Section 6.03. Special Accruals. As of March 19, 1997,

the Company credited to the Equity Participation Account of

each Electing Outside Director a special, one-time credit (a

"Special Accrual"). The dollar amount of the Special Accrual

was equal to the present value (calculated at a 6.5%

discount rate) of the accrued benefits of an Electing

Outside Director under the Retirement Plan.

                             13

     Section 6.04. Conversion Of Accruals Into Units. Each

Accrual will be converted into Units by dividing the dollar

amount of the Accrual by the Fair Market Value of the Common

Stock on the day the Accrual is made. Units will be

calculated and recorded in Equity Participation Accounts

rounded to the third decimal place.

     Section 6.05. Dividend Equivalents. On each date on

which cash dividends are paid on shares of the Common Stock,

Equity Participation Accounts will be credited with one

Dividend Equivalent for each Unit credited to such Account.

     (a) Each fraction of a Unit will be credited with a

like fraction of a Dividend Equivalent on such date.

     (b) Dividend Equivalents credited to each Equity

Participation Account will be converted into Units by

dividing the dollar amount of the Dividend Equivalent by the

Fair Market Value of the Common Stock on the date the

Dividend Equivalent is accrued.

     Section 6.06. Change in the Common Stock. In the event

of any stock dividend, stock split, recapitalization,

distribution of property, merger, split-up, spin-off, or

other change affecting or distribution with respect to the

Common Stock of the Company (other than cash dividends), the

Units in each Account will be adjusted in the same manner

and proportion as the change to the Common Stock.

                             14

                          ARTICLE 7

                        Distributions

     Section 7.01. In General.

     (a) All distributions of Equity Participation Accounts

to Participants will be made in cash.

     (b) The Equity Participation Account of each Retired

Outside Director will be paid in a number of annual

installments equal to the number of full Years of Service

for which benefits have been accrued (not to exceed ten),

subject to (d).

     (c) Payments will commence on the 20th business day

following the Conversion Date for such Equity Participation

Account, and then on each anniversary of the Conversion

Date.

     (d) All payments will cease no later than:

          (1) upon the death of the Surviving Spouse, or

          (2) if there is no Surviving Spouse, upon the

death of the Participant.

     Section 7.02. Amount of Installments. Each installment

will be in an amount equal to the total dollar value of the

Equity Participation Account as of the Conversion Date or

the applicable anniversary date of the Conversion Date to

which the payment relates divided by the number of

installments remaining to be paid.

                             15

     Section 7.03. Conversion of Units into Dollars. The

total dollar value of the Equity Participation Account will

be determined by multiplying the number of Units then in the

account by the Fair Market Value of the Common Stock on the

Conversion Date or any applicable anniversary. The number of

Units in the account will be reduced by the Unit equivalent

of each payment.

     Section 7.04. T-Bond Election: If a Participant makes

an election under this section, the amount of each payment

will be determined under this section rather than under

Section 7.03. The timing and number of payments will still

be determined under Section 7.01.

     (a) Account Balance: If a Participant makes an election

under this section, his or her Equity Participation Account

will be converted to a deemed principal amount at the

Conversion Date which will earn deemed interest on the

remaining balance. The Account will be increased for deemed

interest and reduced for payments made. The Account will no

longer be based on the value of the Common Stock.

     (b)  Initial Principal Amount: The initial principal amount

for any Participant will be determined on the Conversion Date by multiplying

the number of Units in the Participant's Equity Participation Account by the

Fair Market Value of the Common Stock on the Conversion Date.

                             16

     (c) Initial Payment: The initial payment will be equal

to the Initial Principal Amount divided by the total number

of installments to be paid.

     (d) Later Payments: Each annual installment after the

Initial Payment will be equal to the remaining Account

balance at the applicable anniversary of the Conversion Date

divided by the number of remaining installments.

     (e) Interest Credits: Interest will be credited on the

amount remaining after the Initial Payment and future

account balances at the rate specified in (f), compounded

daily.

     (f) T-Bond Rate: The interest rate will be equal to the

average interest rate on 10-year U.S. Treasury bonds for the

52 weeks ending immediately prior to the applicable

anniversary of the Conversion Date.

     (g) Elections: An election under this subsection may be

made only by delivering a written election of this T-Bond

option to the Secretary of Northrop Grumman Corporation (or

its successor), on a form specified by the Secretary:

          (1)  no later than March 1, 1998, in the case of

Participants who were Outside Directors as of February 18, 1998, or

                             17

          (2) no later than 30 days after becoming an

Outside Director with respect to Participants who become

Outside Directors after March 1, 1998.

After the relevant date in (1) or (2), an election (or

failure to make an election) under this Section will become

irrevocable.

     Section 7.05. Payment to a Trust. The Participant may

elect that payments under this Article be made to a trust.

Any payments due will be made to the trust as long as the

election by the Participant remains in effect.

                             18

                          ARTICLE 8

                  Miscellaneous Provisions

     Section 8.01. Amendment And Termination. The Board may

at any time, or from time to time, amend or terminate the

Plan.

     (a) No such amendment or termination may reduce Plan

benefits which accrued prior to the amendment or termination

without the prior written consent of each person entitled to

receive benefits under the Plan who is adversely affected by

such action.

     (b) The amendment and termination power of this Section

is also subject to the provisions of Section A.06.

     Section 8.02. Plan Unfunded. The Plan is unfunded.

Benefits under the Plan represent only a general contractual

conditional obligation of the Company to pay in accordance

with the provisions of the Plan.

     Section 8.03. No Assignments. All payments under the

Plan will be made only to the Participant, to his or her

Surviving Spouse, or to any trust designated by the

Participant under Section 7.05. The right to receive

payments under the Plan may not otherwise be assigned or

transferred by, and is not subject to the claims of

creditors of, any Participant or his or her Surviving

Spouse.

                             19

     Section 8.04. No Double Payment. This Section applies

if, despite the prior Section, with respect to any

Participant (or his or her Surviving Spouse), the Company is

required to make payments under this Plan to a person or

entity other than the proper payees described in the Plan.

In such a case, any amounts due the Participant (or his or

her Surviving Spouse) under this Plan will be reduced by the

actuarial value of the payments required to be made to such

other person or entity.

     (a) Actuarial value will be determined using the

following actuarial assumptions specified by Treas. Reg.

1.417(e)-1(d)(2)-(4) (or any successor regulation).  The

stability period will be one calendar month and the lookback

month will be the second calendar month preceding the

stability period.

     (b) In dividing a Participant's benefit between the

Participant and another person or entity, consistent

actuarial assumptions and methodologies will be used so that

there is no increased cost to the Company on an actuarial

basis.

     Section 8.05. No Other Rights. Neither the

establishment of the Plan, nor any action taken under it,

will in any way obligate the Company to nominate an Outside

Director for re-election or continue to retain an

                             20

Outside Director on the Board or confer upon any Outside

Director any other rights with respect to the Company.

     Section 8.06. Successors of the Company. The Plan will

be binding upon any successor to the Company, whether by

merger, acquisition, consolidation or otherwise.

     Section 8.07. Law Governing. The Plan will be governed

by the laws of the State of California.

     Section 8.08. Actions By Company. Any powers

exercisable by the Company under the Plan will be utilized

by written resolution adopted by the Board or its delegate.

The Board may by written resolution delegate any of the

Company's powers under the Plan and any such delegations may

provide for subdelegations, also by written resolution.

     Section 8.09. Plan Representatives. Those authorized to

act as Plan representatives will be designated in writing by

the Board or its delegate.

                             21

                         APPENDIX A

                 Change In Control Benefits

     Section A.01. In General. This Appendix provides for

accelerated vesting of benefits in the event of a Change of

Control.

     Section A.02. Change In Control. Except as provided in

Sections A.03 and A.04, a Change in Control occurs under any

of the following circumstances:

     (a) Any "person" as such term is used in Sections

13(d)(3) and 14(d)(2) of the Securities Exchange Act of

1934, as amended ("Exchange Act") or any successor

provisions, other than a trustee or other fiduciary holding

securities under any other employee benefit plan of the

Company or an Affiliate, becomes the "beneficial owner" (as

defined in Rule 13d-3 under the Exchange Act or any

successor provisions), directly or indirectly, of securities

of the Company representing fifteen percent (15%) or more of

the combined voting power of the Company's then outstanding

securities (unless the event causing the fifteen percent

(15%) threshold to be crossed is an acquisition of

securities directly from the Company).

     (c)  During any period of two consecutive years, "Continuing

Directors", as described in (2), cease for any reason to constitute at least

a majority of the Board.

                             22

          (1) The period of two consecutive years does not

include any period prior to the adoption of this Plan on

March 19, 1997.

          (2) The term "Continuing Directors", for purposes

of this Appendix, means:

               (A) individuals who at the beginning of the

two-consecutive-year period constitute the Board, and

               (B) any new director whose nomination by the

Board or election by the Company's shareholders was approved

by a vote of at least two-thirds of the directors then still

in office who either were directors at the beginning of the

two-consecutive-year period or whose election or nomination

for election was previously so approved. This clause (B)

does not include a director designated by a person who has

entered into an agreement with the Company to effect a

transaction described in (a) or (c) of this Section.

     (c)  The shareholders of the Company approve a merger or

consolidation of the Company with any other corporation, but

only if the transaction closes or is otherwise effectuated.

This subsection (c) does not cover a merger or consolidation

which would result in the voting securities of the Company

outstanding immediately prior thereto continuing to

represent (either by remaining outstanding or by being

converted into

                             23

voting securities of the surviving entity) at least 80% of

the combined voting power of the voting securities of the

Company or such surviving entity outstanding immediately

after such merger or consolidation.

     (d) The shareholders of the Company approve a plan of

complete liquidation of the Company or an agreement for the

sale or disposition of the Company or all or substantially

all of the Company's assets, but only if the transaction

closes or is otherwise effectuated.

     Section A.03. Override by Board. Transactions described

in the previous Section do not constitute Changes in Control

if, immediately prior to the change in ownership, merger,

consolidation, sale or other disposition, liquidation or

change in the Board, the Board shall pass a resolution

approved by a vote of the majority of the Continuing

Directors to the effect that it has determined that such

transaction does not constitute a Change in Control within

the intention of this definition. In addition, if a Change

in Control has occurred, no subsequent event shall result in

another Change in Control.

     Section A.04. February, 1998 Vote. No Change in Control

will be deemed to have occurred by virtue of the vote of

shareholders on February 26, 1998 to merge with Lockheed

Martin Corporation unless and until that merger closes.

                             24

     Section A.05. Vesting at Change in Control. Any

Participant serving as an Outside Director at the time of a

Change in Control will immediately become entitled to Change

in Control benefits under Section 5.03. Actual payment of

benefits will not commence until termination of his or her

service in accordance with Section 7.01.

     Section A.06. Limitation on Amendment Authority. The

Plan may not be amended, terminated, or otherwise modified

or interpreted to eliminate, reduce or defer Change in

Control benefits with respect to the circumstances described

in Section A.02(c) or (d), between the date of the

shareholder vote and the closing or other effectuation of

the transaction. This Section is not intended to reduce the

Board's authority under Section A.03.

                             25

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