Document:

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                                                                    Exhibit 10.3

                              EMPLOYMENT AGREEMENT

              This EMPLOYMENT AGREEMENT (the "Agreement") is made and entered
into as of ________, 2002 by and between BRIDGE STREET FINANCIAL, INC., a
national corporation having an office at 44 East Bridge Street, Oswego, New York
13126 (the "Company") and GREGORY J. KREIS, an individual residing at P.O. Box
3011, Oswego, New York 13126 (the "Executive").

                             INTRODUCTORY STATEMENT

              OSWEGO COUNTY NATIONAL BANK, a national bank having an office at
44 East Bridge Street, Oswego, New York 13126 (the "Bank") has reorganized from
a New York savings bank to a national bank and has become a wholly-owned
subsidiary of the Company (the "Reorganization"). In connection with the
Reorganization, certain shares of the Company's common stock were sold in a
public stock offering. The Executive has served the Bank in an executive
capacity for many years and is familiar with the Bank's operations.

              The Board of Directors of the Company has concluded that it is in
the best interests of the Company and their prospective shareholders to secure a
continuity in management following the Reorganization. They also consider it
desirable to establish a working environment for the Executive which minimizes
the personal distractions that might result from possible business combinations
in which the Company might be involved. For these reasons, the Board of
Directors of the Company has decided to offer to enter into a contract with the
Executive for his future services. The Executive has accepted this offer.

              The terms and conditions which the Company and the Executive have
agreed to are as follows.

                                    AGREEMENT

              Section 1.   Employment.
                           ----------

              The Company hereby continues to employ the Executive, and the
Executive hereby accepts such continued employment, during the period and upon
the terms and conditions set forth in this Agreement.

              Section 2.   Employment Period; Remaining Unexpired Employment
                           -------------------------------------------------
                           Period.
                           ------

              (a)    The Company shall employ the Executive during an initial
period of three (3) years beginning on the effective date of the Reorganization
(the "Employment Commencement Date") and ending on the day before the third
(3rd) anniversary of the Employment Commencement Date, and during the period of
any additional extensions described in section 2(b) (the "Employment Period").

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              (b)    For purposes of determining the rights and obligations of
the Executive and the Company with respect to each other, on the day after the
Employment Commencement Date and oneach day thereafter, the Employment Period
shall be extended by one day, such that on any date the Employment Period will
expire on the day before the third (3rd) anniversary of such date. These
extensions shall continue in perpetuity until discontinued by: (i) notice to the
Executive given by the Company that they have elected to discontinue the
extensions; (ii) notice by the Executive to the Company that he has elected to
discontinue the extensions; or (iii) termination of the Executive's employment
with the Company, whether by resignation, discharge or otherwise. On the date on
which such a notice is deemed given, or on the effective date of a termination
of the Executive's employment with the Company, the Employment Period shall be
converted to a fixed period of three (3) years ending on the day before the
third (3rd) anniversary of such date.

              (c)    Except as otherwise expressly provided in this Agreement,
any reference in this Agreement to the term "Remaining Unexpired Employment
Period" as of any date shall mean the period beginning on such date and ending
on the day before the third (3rd) anniversary of the Employment Commencement
Date or, if later, on the day before the third (3rd) anniversary of the last
Anniversary Date as of which the Employment Period was extended pursuant to
section 2(b).

              (d)    Nothing in this Agreement shall be deemed to prohibit the
Company from terminating the Executive's employment before the end of the
Employment Period with or without notice for any reason. This Agreement shall
determine the relative rights and obligations of the Company and the Executive
in the event of any such termination. In addition, nothing in this Agreement
shall require the termination of the Executive's employment at the expiration of
the Employment Period. Any continuation of the Executive's employment beyond the
expiration of the Employment Period shall be on an "at-will" basis unless the
Company and the Executive agree otherwise.

              Section 3.   Duties.
                           ------

              The Executive shall serve as Chief Executive Officer and President
of the Company, having such power, authority and responsibility and performing
such duties as are prescribed by or under the Company's By-Laws and as are
customarily associated with such positions. The Executive shall devote his full
business time and attention (other than during weekends, holidays, approved
vacation periods, and periods of illness or approved leaves of absence) to the
business and affairs of the Company and shall use his best efforts to advance
their respective best interests.

              Section 4.   Cash Compensation.
                           -----------------

              In consideration for the services to be rendered by the Executive
hereunder, the Company shall pay to him a salary at an initial annual rate of
____________ DOLLARS ($_______), payable in approximately equal installments in
accordance with their respective customary payroll practices for senior
officers. The Company's Board of Directors shall review the Executive's annual
rate of salary at such times during the Employment Period as it deems
appropriate, but not less frequently than once every twelve (12) months, and
may, at its discretion, approve a salary increase.

                                      -2-

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In addition to salary, the Executive may receive other cash compensation from
the Company forservices hereunder at such times, in such amounts and on such
terms and conditions as the Board of Directors of the Company may determine.

              Section 5.   Employee Benefit Plans and Programs.
                           -----------------------------------

              During the Employment Period, the Executive shall be treated as an
employee of the Company and shall be entitled to participate in and receive
benefits under any and all qualified or non-qualified retirement, pension,
savings, profit-sharing or stock bonus plans, any and all group life, health
(including hospitalization, medical and major medical), dental, accident and
long-term disability insurance plans, and any other employee benefit and
compensation plans (including, but not limited to, any incentive compensation
plans or programs, stock option and appreciation rights plans and restricted
stock plans) as may from time to time be maintained by, or cover employees of,
the Company, in accordance with the terms and conditions of such employee
benefit plans and programs and compensation plans and programs and consistent
with the Company's customary practices.

              Section 6.   Indemnification and Insurance.
                           -----------------------------

              (a)    During the Employment Period and for a period of six years
thereafter, the Company shall cause the Executive to be covered by and named as
an insured under any policy or contract of insurance obtained by them to insure
their directors and officers against personal liability for acts or omissions in
connection with service as an officer or director of the Company or the Bank or
service in other capacities at their request. The coverage provided to the
Executive pursuant to this section 6 shall be of the same scope and on the same
terms and conditions as the coverage (if any) provided to other officers or
directors of the Company.

              (b)    To the maximum extent permitted under applicable law,
during the Employment Period and for a period of six years thereafter, the
Company shall indemnify the Executive against and hold him harmless from any
costs, liabilities, losses and exposures to the fullest extent and on the most
favorable terms and conditions that similar indemnification is offered to any
director or officer of the Company or any subsidiary or affiliate thereof.

              Section 7.   Outside Activities.
                           ------------------

                  The Executive may serve as a member of the boards of directors
of such business, community and charitable organizations as he may disclose to
and as may be approved by the Board of Directors of the Company (which approval
shall not be unreasonably withheld); provided, however, that such service shall
not materially interfere with the performance of his duties under this
Agreement. The Executive may also engage in personal business and investment
activities which do not materially interfere with the performance of his duties
hereunder; provided, however, that such activities are not prohibited under any
code of conduct or investment or securities trading policy established by the
Company and generally applicable to all similarly situated executives.

                                      -3-

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              Section 8.   Working Facilities and Expenses.
                           -------------------------------

              The Executive's principal place of employment shall be at the
Company's executive offices at the address first above written, or at such other
location as the Company and the Executive may mutually agree upon. The Company
shall provide the Executive at his principal place of employment with a private
office, secretarial services and other support services and facilities suitable
to his positions with the Company and necessary or appropriate in connection
with the performance of his assigned duties under this Agreement. The Company
shall reimburse the Executive for his ordinary and necessary business expenses,
including, without limitation, fees for memberships in such clubs and
organizations as the Executive and the Company shall mutually agree are
necessary and appropriate for business purposes, and his travel and
entertainment expenses incurred in connection with the performance of his duties
under this Agreement, in each case upon presentation to the payer of an itemized
account of such expenses in such form as the payer may reasonably require.

              Section 9.   Termination Due to Death.
                           ------------------------

              The Executive's employment with the Company shall terminate,
automatically and without any further action on the part of any party to this
Agreement, on the date of the Executive's death. In such event:

              (a)    The Company shall pay to the Executive's estate his earned
         but unpaid compensation (including, without limitation, salary and all
         other items which constitute wages under applicable law) as of the date
         of his termination of employment. This payment shall be made at the
         time and in the manner prescribed by law applicable to the payment of
         wages but in no event later than thirty (30) days after the date of the
         Executive's termination of employment.

              (b)    The Company shall provide the benefits, if any, due to the
         Executive's estate, surviving dependents or his designated
         beneficiaries under the employee benefit plans and programs and
         compensation plans and programs maintained for the benefit of the
         officers and employees of the Company. The time and manner of payment
         or other delivery of these benefits and the recipients of such benefits
         shall be determined according to the terms and conditions of the
         applicable plans and programs.

The payments and benefits described in sections 9(a) and (b) shall be referred
to in this Agreement as the "Standard Termination Entitlements."

                                      -4-

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              Section 10.  Termination Due to Disability.
                           -----------------------------

              The Company may terminate the Executive's employment upon a
determination, by vote of a majority of the members of the Board of Directors of
the Company, acting in reliance on the written advice of a medical professional
acceptable to them, that the Executive is suffering from a physical or mental
impairment which, at the date of the determination, has prevented the Executive
from performing his assigned duties on a substantially full-time basis for a
period of at least one hundred and fifty (150) days during the period of one (1)
year ending with the date of the determination or is likely to result in death
or prevent the Executive from performing his assigned duties on a substantially
full-time basis for a period of at least one hundred and fifty (150) days during
the period of one (1) year beginning with the date of the determination. In such
event:

              (a)    The Company shall pay and deliver to the Executive (or in
         the event of his death before payment, to his estate and surviving
         dependents and beneficiaries, as applicable) the Standard Termination
         Entitlements.

              (b)    In addition to the Standard Termination Entitlements, the
         Company shall continue to pay the Executive his base salary, at the
         annual rate in effect for him immediately prior to the termination of
         his employment, during a period ending on the earliest of: (i) the
         expiration of one hundred and eighty (180) days after the date of
         termination of his employment; (ii) the date on which long-term
         disability insurance benefits are first payable to him under any
         long-term disability insurance plan covering employees of the Company
         (the "LTD Eligibility Date"); (iii) the date of his death; and (iv) the
         expiration of the Remaining Unexpired Employment Period (the "Initial
         Continuation Period"). If the end of the Initial Continuation Period is
         neither the LTD Eligibility Date nor the date of his death, the Company
         shall continue to pay the Executive his base salary, at an annual rate
         equal to sixty percent (60%) of the annual rate in effect for him
         immediately prior to the termination of his employment, during an
         additional period ending on the earliest of the LTD Eligibility Date,
         the date of his death and the expiration of the Remaining Unexpired
         Employment Period.

A termination of employment due to disability under this section 10 shall be
effected by notice of termination given to the Executive by the Company and
shall take effect on the later of the effective date of termination specified in
such notice or the date on which the notice of termination is deemed given to
the Executive.

              Section 11.  Discharge with Cause.
                           --------------------
              (a)    The Company may terminate the Executive's employment
during the Employment Period, and such termination shall be deemed to have
occurred with "Cause", only if:

              (i)    The Board of Directors of the Company, by majority vote of
         their entire membership, determine that the Executive should be
         discharged because of personal dishonesty, incompetence, willful
         misconduct, breach of fiduciary duty

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         involving personal profit, intentional failure to perform stated
         duties, willful violationof any law, rule or regulation (other than
         traffic violations or similar offenses) or final cease and desist
         order, or any material breach of this Agreement; and

              (ii)   at least forty-five (45) days prior to the votes
         contemplated by section 11(a)(i), the Company has provided the
         Executive with notice of its intent to discharge the Executive for
         Cause, detailing with particularity the facts and circumstances which
         are alleged to constitute Cause (the "Notice of Intent to Discharge");
         and

              (iii)  after the giving of the Notice of Intent to Discharge
         and before the taking of the votes contemplated by section 11(a)(i),
         the Executive (together with his legal counsel, if he so desires) is
         afforded a reasonable opportunity to make both written and oral
         presentations before the Board of Directors of the Company for the
         purpose of refuting the alleged grounds for Cause for his discharge;
         and

              (iv)   after the votes contemplated by section 11(a)(i), the
         Company have furnished to the Executive a notice of termination which
         shall specify the effective date of his termination of employment
         (which shall in no event be earlier than the date on which such notice
         is deemed given) and include a copy of a resolution or resolutions
         adopted by the Board of Directors of the Company, certified by its
         corporate secretary and signed by each member of the Board of Directors
         voting in favor of adoption of the resolution(s), authorizing the
         termination of the Executive's employment with Cause and stating with
         particularity the facts and circumstances found to constitute Cause for
         his discharge (the "Final Discharge Notice").

              (b)    If the Executive is discharged during the Employment Period
with Cause, the Company shall pay and provide to him (or, in the event of his
death, to his estate, his surviving beneficiaries and his dependents) the
Standard Termination Entitlements only. Following the giving of a Notice of
Intent to Discharge, the Company may temporarily suspend the Executive's duties
and authority and, in such event, may also suspend the payment of salary and
other cash compensation, but not the Executive's participation in retirement,
insurance and other employee benefit plans. If the Executive is not discharged,
or is discharged without Cause, within forty-five (45) days after the giving of
a Notice of Intent to Discharge, payments of salary and cash compensation shall
resume, and all payments withheld during the period of suspension shall be
promptly restored. If the Executive is discharged with Cause not later than
forty-five (45) days after the giving of the Notice of Intent to Discharge, all
payments withheld during the period of suspension shall be deemed forfeited and
shall not be included in the Standard Termination Entitlements. If a Final
Discharge Notice is given later than forty-five (45) days, but sooner than
ninety (90) days, after the giving of the Notice of Intent to Discharge, all
payments made to the Executive during the period beginning with the giving of
the Notice of Intent to Discharge and ending with the Executive's discharge with
Cause shall be retained by the Executive and shall not be applied to offset the
Standard Termination Entitlements. If the Company does not give a Final
Discharge Notice to the Executive within ninety (90) days after giving a Notice
of Intent to Discharge, the Notice of Intent to Discharge shall be deemed
withdrawn and any future action to discharge the Executive with Cause shall
require the giving of a new Notice of Intent to Discharge.

                                      -6-

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              Section 12.  Discharge without Cause.
                           -----------------------

              The Company may discharge the Executive at any time during the
Employment Period and, unless such discharge constitutes a discharge with Cause:

              (a)    The Company shall pay and deliver to the Executive (or in
         the event of his death before payment, to his estate and surviving
         dependents and beneficiaries, as applicable) the Standard Termination
         Entitlements.

              (b)    In addition to the Standard Termination Entitlements:

                     (i)   During the Remaining Unexpired Employment Period, the
              the Company shall provide for the Executive and his dependents
              continued group life, health (including hospitalization, medical
              and major medical), dental, accident and long-term disability
              insurance benefits on substantially the same terms and conditions
              (including any required premium-sharing arrangements, co-payments
              and deductibles) in effect for them immediately prior to the
              Executive's termination. The coverage provided under this section
              12(b)(i) may, at the election of the Company, be secondary to the
              coverage provided as part of the Standard Termination
              Entitlements and to any employer-paid coverage provided by a
              subsequent employer or through Medicare, with the result that
              benefits under the other coverages will offset the coverage
              required by this section 12(b)(i).

                     (ii)  The Company shall make a lump sum payment to the
              Executive (or, in the event of his death before payment, to his
              estate), in an amount equal to the estimated present value of the
              salary that Executive would have earned if he had continued
              working for the Company during the Remaining Unexpired Employment
              Period at the highest annual rate of salary achieved during that
              portion of the Employment Period which is prior to Executive's
              termination of employment with the Company, where such present
              value is to be determined using a discount rate equal to the
              applicable short-term federal rate prescribed under section
              1274(d) of the Internal Revenue Code of 1986 ("Code"), compounded
              using the compounding period corresponding to the Company's
              regular payroll periods for its officers. Such lump sum shall be
              paid in lieu of all other payments of salary provided for under
              this Agreement in respect of the period following any such
              termination.

                     (iii) The Company shall make a lump sum payment to the
              Executive (or, in the event of his death before payment, to his
              estate), in an amount equal to the payments that would have been
              made to Executive under any cash bonus or long-term or short-term
              cash incentive compensation plan maintained by, or covering
              employees of, the Company if he had continued working for the
              Company during the Remaining Unexpired Employment

                                      -7-

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              Period and had earned the maximum bonus or incentive award in each
              calendar year that ends during the Remaining Unexpired Employment
              Period, such payments to be equal to the product of:

                           (A) the maximum percentage rate at which an award was
              ever available to Executive under such incentive compensation
              plan; multiplied by

                           (B) the salary that would have been paid to Executive
              during each such calendar year at the highest annual rate of
              salary achieved during that portion of the Employment Period which
              is prior to Executive's termination of employment with the
              Company.

         Such payment shall be made (without discounting for early payment)
         within thirty (30) days following the Executive's termination of
         employment.

                     (iv)  The Company shall pay to the Executive (or in the
              event of his death, to his estate), a lump sum payment in an
              amount equal to the excess (if any) of: (A) the present value of
              the aggregate benefits to which he would be entitled under any and
              all tax-qualified and non-tax-qualified defined benefit plans
              maintained by, or covering employees of, the Company or the Bank
              (the "Pension Plans") if he had continued working for the Company
              and the Bank during the Remaining Unexpired Employment Period;
              over (B) the present value of the benefits to which the Executive
              and his spouse and/or designated beneficiaries are actually
              entitled under such plans (the "Pension Severance Payment"). The
              Pension Severance Payment shall be computed according to the
              following formula:

                                 PSP = PPB - APB

              where "PSP" is the amount of the Pension Severance Payment (before
              deductions for applicable federal, state and local withholding
              taxes); "APB" is the aggregate lump sum present value of the
              actual vested pension benefits payable under the Pension Plans in
              the form of a straight life annuity beginning at the earliest date
              permitted under the Pension Plans, computed on the basis of the
              Executive's life expectancy at the earliest date on which payments
              under the Pension Plans could begin, determined by reference to
              Table VI of section 1.72-9 of the Income Tax Regulations (the
              "Assumed Life Expectancy"), and on the basis of an interest rate
              assumption equal to the average bond-equivalent yield on United
              States Treasury Securities with a Constant Maturity of 30 Years
              (or equivalent published rate) for the month prior to the month in
              which the Executive's termination of employment occurs (the
              "30-Year Treasury Rate"); and "PPB" is the lump sum present value
              of the pension benefits (whether or not vested) that would be
              payable under the Pension Plans in the form of a straight life
              annuity beginning at the

                                      -8-

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              earliest date permitted under the Pension Plans, computed on the
              basis that the Executive's actual age at termination of
              employment is his attained age as of his last birthday that would
              occur during the Remaining Unexpired Employment Period, that his
              service for benefit accrual purposes under the Pension Plans is
              equal to the aggregate of his actual service plus the Remaining
              Unexpired Employment Period, that his average compensation figure
              used in determining his accrued benefit is equal to the highest
              annual rate of salary achieved by the Executive during the period
              of three (3) years ending immediately prior to the date of
              termination, that the Executive's life expectancy at the earliest
              date on which payments under the Pension Plans could begin is the
              Assumed Life Expectancy and that the interest rate assumption
              used is equal to the 30-Year Treasury Rate. The Pension Severance
              Payment shall be made within five (5) business days after the
              Executive's termination of employment and shall be in lieu of any
              claim to any actual increase in his accrued in the Pension Plans
              in respect of the Remaining Unexpired Employment Period.

                     (v)   The Company shall pay to the Executive (or in the
              event of his death, to his estate) a lump sum payment in an
              amount equal to the present value of the additional employer
              contributions that would have been credited directly to his
              account(s) under any and all tax-qualified and non-tax qualified
              defined contribution plans maintained by, or covering employees
              of, the Bank and the Company (the "Non-ESOP DC Plans"), plus the
              fair market value of the additional shares of employer securities
              or other property that would have been allocated to his account
              as a result of employer contributions or dividends under any
              tax-qualified leveraged employee stock ownership plan and any
              related non-tax-qualified supplemental plan maintained by, or
              covering employees of, the Bank and the Company (the "ESOP
              Plans") if he had continued in employment during the Remaining
              Unexpired Employment Period (the "Defined Contribution Severance
              Payment"). The Defined Contribution Severance Payment shall be
              computed according to the following formula:

                  DCSP = [SSP x (EC / BS)] + [(STK + PROP) x Y]

              where: "DCSP" is the amount of the Defined Contribution Severance
              Payment before deductions for applicable federal, state and local
              withholding taxes); "SSP" is the amount of the Salary Severance
              Payment (before deductions for applicable federal, state and local
              withholding taxes); "EC" is the amount of employer contributions
              actually credited to the Executive's accounts under the Non-ESOP
              Plans for the last plan year to end before his termination of
              employment; "BS" is the Executive's compensation taken into
              account in computing EC; "Y" is the aggregate (expressed in years
              and fractions of years) of the Remaining Unexpired Employment
              Period and the number of years and fractions of years that have
              elapsed between the end

                                      -9-

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              of plan year for which EC was computed and the date of the
              Executive's termination of employment; "STK" is the fair market
              value (determined by the final reported sales price for stock of
              the same class on the last trading day before the Executive's
              termination of employment) of the employer securities actually
              allocated to the Executive's accounts under the ESOP Plans in
              respect of employer contributions and dividends applied to loan
              amortization payments for the last plan year to end before his
              termination of employment; and "PROP" is the fair market value
              (determined as of the day before the Executive's termination of
              employment using the same valuation methodology used to value the
              assets of the ESOP Plans) of the property other than employer
              securities actually allocated to the Executive's accounts under
              the ESOP Plans in respect of employer contributions and dividends
              applied to loan amortization payments for the last plan year to
              end before his termination of employment.

The payments and benefits described in section 12(b) are referred to in this
Agreement as the "Additional Termination Entitlements".

              Section 13.  Resignation.
                           -----------

              (a)    The Executive may resign from his employment with the
Company at any time. A resignation under this section 13 shall be effected by
notice of resignation given by the Executive to the Company and shall take
effect on the later of the effective date of termination specified in such
notice or the date on which the notice of termination is deemed given by the
Executive. The Executive's resignation of any of the positions within the Bank
or the Company to which he has been assigned shall be deemed a resignation from
all such positions.

              (b)    The Executive's resignation shall be deemed to be for "Good
Reason" if the effective date of resignation occurs within ninety (90) days
after any of the following:

              (i)    the failure of the Company (whether by act or omission of
         its Board of Directors, or otherwise) to appoint or re-appoint or elect
         or re-elect the Executive to the position(s) with the Company,
         specified in section 3 of this Agreement or to a more senior office;

              (ii)   if the Executive is or becomes a member of the Board of
         Directors of the Company or the Bank, the failure of their respective
         shareholders (whether in an election in which the Executive stands as a
         nominee or in an election where the Executive is not a nominee) to
         elect or re-elect the Executive to membership at the expiration of his
         term of membership, unless such failure is a result of the Executive's
         refusal to stand for election;

              (iii)  any reduction of the Executive's rate of base salary in
         effect from time to time, whether or not material, or any failure
         (other than due to reasonable

                                      -10-

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         administrative error that is cured promptly upon notice) to pay any
         portion of the Executive's compensation as and when due;

              (iv)   any change in the terms and conditions of any
         compensation or benefit program in which the Executive participates
         which, either individually or together with other changes, has a
         material adverse effect on the aggregate value of his total
         compensation package; provided that the Executive shall have given
         notice of such material adverse effect to the Company, and the Company
         has not fully cured such failure within thirty (30) days after such
         notice is deemed given; provided, however, that this section 13(b)(v)
         shall not apply if the change in terms and conditions of the
         compensation or benefit program affects all participants in such
         program equally;

              (v)    any material breach by the Company of any material term,
         condition or covenant contained in this Agreement; provided that the
         Executive shall have given notice of such material adverse effect to
         the Company, and the Company has not fully cured such failure within
         thirty (30) days after such notice is deemed given; or

              (vi)   a change in the Executive's principal place of employment
         to a place that is not the principal executive office of the Company,
         or a relocation of the Company's principal executive office to a
         location that is both more than fifty (50) miles away from the
         Executive's principal residence and more than fifty (50) miles away
         from the location of the Company's principal executive office on the
         date of this Agreement.

In all other cases, a resignation by the Executive shall be deemed to be without
Good Reason.

              (c)    In the event of the Executive's resignation before the
expiration of the Employment Period, the Company shall pay and deliver the
Standard Termination Entitlements. In addition, if the Executive's resignation
is deemed to be a resignation with Good Reason, the Company shall also pay and
deliver the Additional Termination Entitlements.

              Section 14.  Terms and Conditions of the Additional Termination
                           Entitlements.
                           ------------

              The Company and the Executive hereby stipulate that the damages
which may be incurred by the Executive following any termination of employment
are not capable of accurate measurement as of the date first above written and
that the Additional Termination Entitlements constitute reasonable damages under
the circumstances and shall be payable without any requirement of proof of
actual damage and without regard to the Executive's efforts, if any, to mitigate
damages. The Company and the Executive further agree that the Company may
condition the payment and delivery of the Additional Termination Entitlements on
the receipt of the Executive's resignation from any and all positions which he
holds as an officer, director or committee member with respect to the Company,
the Bank or any subsidiary or affiliate of either of them.

                                      -11-

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              Section 15.  Termination Upon or Following a Change of Control.
                           -------------------------------------------------

              (a)    A "Change of Control"  shall be deemed to have occurred
upon the happening of any of the following events:

              (i)    the consummation of a reorganization, merger or
         consolidation of the Company with one or more other persons, other than
         a transaction following which:

                     (A) at least 51% of the equity ownership interests of the
              entity resulting from such transaction are beneficially owned
              (within the meaning of Rule 13d-3 promulgated under the
              Securities Exchange Act of 1934, as amended ("Exchange Act")) in
              substantially the same relative proportions by persons who,
              immediately prior to such transaction, beneficially owned (within
              the meaning of Rule 13d-3 promulgated under the Exchange Act) at
              least 51% of the outstanding equity ownership interests in the
              Company; and

                     (B) at least 51% of the securities entitled to vote
              generally in the election of directors of the entity resulting
              from such transaction are beneficially owned (within the meaning
              of Rule 13d-3 promulgated under the Exchange Act) in
              substantially the same relative proportions by persons who,
              immediately prior to such transaction, beneficially owned (within
              the meaning of Rule 13d-3 promulgated under the Exchange Act) at
              least 51% of the securities entitled to vote generally in the
              election of directors of the Company;

              (ii)   the acquisition of all or substantially all of the assets
         of the Company or beneficial ownership (within the meaning of Rule
         13d-3 promulgated under the Exchange Act) of 25% or more of the
         outstanding securities of the Company entitled to vote generally in the
         election of directors by any person or by any persons acting in
         concert;

              (iii)  a complete liquidation or dissolution of the Company;

              (iv)   the occurrence of any event if, immediately following
         such event, at least 50% of the members of the Board of Directors of
         the Company do not belong to any of the following groups:

                     (A) individuals who were members of the Board of Directors
              of the Company on the date of this Agreement; or

                     (B) individuals who first became members of the Board of
              Directors of the Company after the date of this Agreement either:

                                      -12-

<PAGE>

                                    (1)  upon election to serve as a member of
                           the Board of Directors of the Company by affirmative
                           vote of three-quarters of the members of such board,
                           or of a nominating committee thereof, in office at
                           the time of such first election; or

                                    (2)  upon election by the shareholders of
                           the Board of Directors of the Company to serve as a
                           member of such board, but only if nominated for
                           election by affirmative vote of three-quarters of the
                           members of the Board of Directors of the Company, or
                           of a nominating committee thereof, in office at the
                           time of such first nomination;

                  provided, however, that such individual's election or
                  nomination did not result from an actual or threatened
                  election contest or other actual or threatened solicitation of
                  proxies or consents other than by or on behalf of the Board of
                  Directors of the Company; or

                     (v) any event which would be described in section 15(a)(i),
              (ii), (iii) or (iv) if the term "Bank" were substituted for the
              term "Company" therein.

In no event, however, shall a Change of Control be deemed to have occurred as a
result of any acquisition of securities or assets of the Company, the Bank, or a
subsidiary of either of them, by the Company, the Bank, or any subsidiary of
either of them, or by any employee benefit plan maintained by any of them. For
purposes of this section 15(a), the term "person" shall have the meaning
assigned to it under sections 13(d)(3) or 14(d)(2) of the Exchange Act.

              (b)    For purposes of this Agreement, a "Pending Change of
Control" shall mean: (i) the signing of a definitive agreement for a transaction
which, if consummated, would result in a Change of Control; (ii) the
commencement of a tender offer which, if successful, would result in a Change of
Control; or (iii) the circulation of a proxy statement seeking proxies in
opposition to management in an election contest which, if successful, would
result in a Change of Control.

              (c)    Notwithstanding anything in this Agreement to the contrary,
if the Executive's employment with the Bank and Company terminates due to death
or disability within one (1) year after the occurrence of a Pending Change of
Control and if a Change of Control occurs within two (2) years after such
termination of employment, he (or in the event of his death, his estate) shall
be entitled to receive the Standard Termination Entitlements and the Additional
Termination Entitlements that would have been payable if a Change of Control had
occurred on the date of his termination of employment and he had resigned with
Good Reason immediately thereafter; provided, that payment shall be deferred
without interest until, and shall be payable immediately upon, the actual
occurrence of a Change of Control.

              (d)    Notwithstanding anything in this Agreement to the contrary:
(i) in the event of the Executive's resignation within sixty (60) days after the
occurrence of a Change of Control, he shall be entitled to receive the Standard
Termination Entitlements and Additional Termination Entitlements that would be
payable if his resignation were a resignation for Good Reason, without

                                      -13-

<PAGE>

regard to the actual circumstances of his resignation; and (ii) for a period of
one (1) year after the occurrence of a Change of Control, no discharge of the
Executive shall be deemed a discharge with Cause unless the votes contemplated
by section 11(a) of this Agreement are supported by at least two-thirds of the
members of the Board of Directors of the Company and the Bank at the time the
vote is taken who were also members of the Board of Directors of the Company and
the Bank immediately prior to the Change of Control.

              (e)    Notwithstanding anything in this Agreement to the contrary,
for purposes of computing the Additional Termination Entitlements due upon a
termination of employment that occurs, or is deemed to have occurred, after a
Change of Control, the Remaining Unexpired Employment Period shall be deemed to
be three (3) full years.

              Section 16.  Covenant Not To Compete.
                           -----------------------

              The Executive hereby covenants and agrees that, in the event of
his termination of employment with the Company prior to the expiration of the
Employment Period, for a period of one year following the date of his
termination of employment with the Company, he shall not, without the written
consent of the Company, become an officer, employee, consultant, director or
trustee of any savings bank, savings and loan association, savings and loan
holding company, bank or bank holding company, any other entity engaged in the
business of accepting deposits or making loans or any direct or indirect
subsidiary or affiliate of any such entity, that entails working within 100
miles of the Bank's office at 44 East Bridge Street, Oswego, New York 13126;
provided, however, that this section 16 shall not apply if the Executive is
entitled to the Additional Termination Entitlements.

              Section 17.  Confidentiality.
                           ---------------

              Unless he obtains the prior written consent of the Company, the
Executive shall keep confidential and shall refrain from using for the benefit
of himself, or any person or entity other than the Company or any entity which
is a subsidiary of the Company or of which the Company is a subsidiary, any
material document or information obtained from the Company, or from its parent
or subsidiaries, in the course of his employment with any of them concerning
their properties, operations or business (unless such document or information is
readily ascertainable from public or published information or trade sources or
has otherwise been made available to the public through no fault of his own)
until the same ceases to be material (or becomes so ascertainable or available);
provided, however, that nothing in this section 17 shall prevent the Executive,
with or without the Company's consent, from participating in or disclosing
documents or information in connection with any judicial or administrative
investigation, inquiry or proceeding to the extent that such participation or
disclosure is required under applicable law.

                                      -14-

<PAGE>

              Section 18.  Solicitation.
                           ------------

              The Executive hereby covenants and agrees that, for a period of
one year following his termination of employment with the Company or the Bank,
he shall not, without the written consent of the Company, either directly or
indirectly:

              (a)    solicit, offer employment to, or take any other action
         intended, or that a reasonable person acting in like circumstances
         would expect, to have the effect of causing any officer or employee of
         the Company, the Bank or any of their respective subsidiaries or
         affiliates to terminate his or her employment and accept employment or
         become affiliated with, or provide services for compensation in any
         capacity whatsoever to, any savings bank, savings and loan association,
         bank, bank holding company, savings and loan holding company, or other
         institution engaged in the business of accepting deposits, making loans
         or doing business within the counties specified in section 16;

              (b)    provide any information, advice or recommendation with
         respect to any such officer or employee of any savings bank, savings
         and loan association, bank, bank holding company, savings and loan
         holding company, or other institution engaged in the business of
         accepting deposits, making loans or doing business within the counties
         specified in section 16; that is intended, or that a reasonable person
         acting in like circumstances would expect, to have the effect of
         causing any officer or employee of the Company, the Bank, or any of
         their respective subsidiaries or affiliates to terminate his employment
         and accept employment or become affiliated with, or provide services
         for compensation in any capacity whatsoever to, any savings bank,
         savings and loan association, bank, bank holding company, savings and
         loan holding company, or other institution engaged in the business of
         accepting deposits, making loans or doing business within the counties
         specified in section 16;

              (c)    solicit, provide any information, advice or recommendation
         or take any other action intended, or that a reasonable person acting
         in like circumstances would expect, to have the effect of causing any
         customer of the Company or the Bank to terminate an existing business
         or commercial relationship with the Company or the Bank.

              Section 19.  No Effect on Employee Benefit Plans or Programs.
                           -----------------------------------------------

              The termination of the Executive's employment during the term of
this Agreement or thereafter, whether by the Company or by the Executive, shall
have no effect on the rights and obligations of the parties hereto under the
Company's or the Bank's qualified or non-qualified retirement, pension, savings,
thrift, profit-sharing or stock bonus plans, group life, health (including
hospitalization, medical and major medical), dental, accident and long term
disability insurance plans or such other employee benefit plans or programs, or
compensation plans or programs, as may be maintained by, or cover employees of,
the Company or the Bank from time to time; provided, however, that nothing in
this Agreement shall be deemed to duplicate any compensation or benefits

                                      -15-

<PAGE>

provided under any agreement, plan or program covering the Executive to which
the Company or Bank is a party and any duplicative amount payable under any such
agreement, plan or program shall be applied as an offset to reduce the amounts
otherwise payable hereunder.

              Section 20.  Tax Indemnification.
                           -------------------

              (a)    If the Executive's employment terminates under
circumstances entitling him (or in the event of his death, his estate) to the
Additional Termination Entitlements, the Company shall pay to the Executive (or
in the event of his death, his estate) an additional amount intended to
indemnify him against the financial effects of the excise tax imposed on excess
parachute payments under section 280G of the Code (the "Tax Indemnity Payment").
The Tax Indemnity Payment shall be determined under the following formula:

                                                E x P
                  X  =   --------------------------------------------------
                                1 - [(FI x (1 - SLI)) + SLI + E + M]

                  where

                  E =      the percentage rate at which an excise tax is
                           assessed under section 4999 of the Code;

                  P =      the amount with respect to which such excise tax is
                           assessed, determined without regard to this section
                           20;

                  FI =     the highest marginal rate of income tax applicable to
                           the Executive under the Code for the taxable year in
                           question;

                  SLI =    the sum of the highest marginal rates of income tax
                           applicable to the Executive under all applicable
                           state and local laws for the taxable year in
                           question; and

                  M =      the highest marginal rate of Medicare tax
                           applicable to the Executive under the Code for the
                           taxable year in question.

Such computation shall be made at the expense of the Company by an attorney or a
firm of independent certified public accountants selected by the Executive and
reasonably satisfactory to the Company (the "Tax Advisor") and shall be based on
the following assumptions: (i) that a change in ownership, a change in effective
ownership or control, or a change in the ownership of a substantial portion of
the assets, of the Bank or the Company has occurred within the meaning of
section 280G of the Code (a "280G Change of Control"); (ii) that all direct or
indirect payments made to or benefits conferred upon the Executive on account of
his termination of employment are "parachute payments" within the meaning of
section 280G of the Code; and (iii) that no portion of such payments is
reasonable compensation for services rendered prior to the Executive's
termination of employment.

                                      -16-

<PAGE>

              (b)    With respect to any payment that is presumed to be a
parachute payment for purposes of section 280G of the Code, the Tax Indemnity
Payment shall be made to the Executive on the earlier of the date the Company,
the Bank or any direct or indirect subsidiary or affiliate of the Company or the
Bank is required to withhold such tax or the date the tax is required to be paid
by the Executive, unless, prior to such date, the Company delivers to the
Executive the written opinion, in form and substance reasonably satisfactory to
the Executive, of the Tax Advisor or of an attorney or firm of independent
certified public accountants selected by the Company and reasonably satisfactory
to the Executive, to the effect that the Executive has a reasonable basis on
which to conclude that (i) no 280G Change in Control has occurred, or (ii) all
or part of the payment or benefit in question is not a parachute payment for
purposes of section 280G of the Code, or (iii) all or a part of such payment or
benefit constitutes reasonable compensation for services rendered prior to the
280G Change of Control, or (iv) for some other reason which shall be set forth
in detail in such letter, no excise tax is due under section 4999 of the Code
with respect to such payment or benefit (the "Opinion Letter"). If the Company
delivers an Opinion Letter, the Tax Advisor shall recompute, and the Company
shall make, the Tax Indemnity Payment in reliance on the information contained
in the Opinion Letter.

              (c)    In the event that the Executive's liability for the excise
tax under section 4999 of the Code for a taxable year is subsequently determined
to be different than the amount with respect to which the Tax Indemnity Payment
is made, the Executive or the Company, as the case may be, shall pay to the
other party at the time that the amount of such excise tax is finally
determined, an appropriate amount, plus interest, such that the payment made
under section 20(b), when increased by the amount of the payment made to the
Executive under this section 20(c), or when reduced by the amount of the payment
made to the Company under this section 20(c), equals the amount that should have
properly been paid to the Executive under section 20(a). The interest paid to
the Company under this section 20(c) shall be determined at the rate provided
under section 1274(b)(2)(B) of the Code. The payment made to the Executive shall
include such amount of interest as is necessary to satisfy any interest
assessment made by the Internal Revenue Service and an additional amount equal
to any monetary penalties assessed by the Internal Revenue Service on account of
an underpayment of the excise tax. To confirm that the proper amount, if any,
was paid to the Executive under this section 20, the Executive shall furnish to
the Company a copy of each tax return which reflects a liability for an excise
tax, at least 20 days before the date on which such return is required to be
filed with the Internal Revenue Service. Nothing in this Agreement shall give
the Company any right to control or otherwise participate in any action, suit or
proceeding to which the Executive is a party as a result of positions taken on
his federal income tax return with respect to his liability for excise taxes
under section 4999 of the Code.

              Section 21.  Successors and Assigns.
                           ----------------------

              This Agreement will inure to the benefit of and be binding upon
the Executive, his legal representatives and testate or intestate distributees,
and the Company and their respective successors and assigns, including any
successor by merger or consolidation or a statutory receiver or any other person
or firm or corporation to which all or substantially all of the assets and
business of the Company may be sold or otherwise transferred. Failure of the
Company to obtain from any successor its express written assumption of the
Company's obligations hereunder at least sixty (60)

                                      -17-

<PAGE>

days in advance of the scheduled effective date of any such succession shall be
deemed a material breach of this Agreement.

              Section 22.  Notices.
                           -------

              Any communication required or permitted to be given under this
Agreement, including any notice, direction, designation, consent, instruction,
objection or waiver, shall be in writing and shall be deemed to have been given
at such time as it is delivered personally, or five (5) days after mailing if
mailed, postage prepaid, by registered or certified mail, return receipt
requested, addressed to such party at the address listed below or at such other
address as one such party may by written notice specify to the other party:

              If to the Executive:

                       Gregory J. Kreis
                       P.O. Box 3011
                       Oswego, New York 13126

              If to the Company:

                       Bridge Street Financial, Inc.
                       44 East Bridge Street
                       Oswego, New York 13126

                       Attention: Chairman, Personnel and Compensation Committee
                                  of the Board of Directors

              Section 23.  Waiver.
                           ------

              Failure to insist upon strict compliance with any of the terms,
covenants or conditions hereof shall not be deemed a waiver of such term,
covenant, or condition. A waiver of any provision of this Agreement must be made
in writing, designated as a waiver, and signed by the party against whom its
enforcement is sought. Any waiver or relinquishment of any right or power
hereunder at any one or more times shall not be deemed a waiver or
relinquishment of such right or power at any other time or times.

              Section 24.  Counterparts.
                           ------------

              This Agreement may be executed in two or more counterparts, each
of which shall be deemed an original, and all of which shall constitute one and
the same Agreement.

                                      -18-

<PAGE>

              Section 25.  Governing Law.
                           -------------

              This Agreement shall be governed by and construed and enforced in
accordance with the federal laws of the United States and, to the extent that
federal law is inapplicable, in accordance with the laws of the State of New
York applicable to contracts entered into and to be performed entirely within
the State of New York.

              Section 26.  Headings and Construction.
                           -------------------------

              The headings of sections in this Agreement are for convenience of
reference only and are not intended to qualify the meaning of any section. Any
reference to a section number shall refer to a section of this Agreement, unless
otherwise stated.

              Section 27.  Entire Agreement; Modifications.
                           -------------------------------

              This instrument contains the entire agreement of the parties
relating to the subject matter hereof, and supersedes in its entirety any and
all prior agreements, understandings or representations relating to the subject
matter hereof. No modifications of this Agreement shall be valid unless made in
writing and signed by the parties hereto.

              Section 28.  Non-duplication.
                           ---------------

              In the event that the Executive shall perform services for the
Bank or any other direct or indirect subsidiary or affiliate of the Company or
the Bank, any compensation or benefits provided to the Executive by such other
employer shall be applied to offset the obligations of the Company hereunder, it
being intended that this Agreement set forth the aggregate compensation and
benefits payable to the Executive for all services to the Company and all of its
respective direct or indirect subsidiaries and affiliates.

              Section 29.  Survival.
                           --------

              The provisions of sections 6, 16, 17, 18, 19 and 20 shall survive
the expiration of the Employment Period or termination of the Agreement.

              Section 30.  Indemnification for Attorneys' Fees.
                           -----------------------------------

              The Company shall indemnify, hold harmless and defend Executive
against reasonable costs, including legal fees, incurred by him in connection
with or arising out of any action, suit or proceeding in which he may be
involved, as a result of his efforts, in good faith, to defend or enforce the
terms of this Agreement; provided, however, that Executive shall have
substantially prevailed on the merits pursuant to a judgment, decree or order of
a court of competent jurisdiction or of an arbitrator in an arbitration
proceeding. The determination whether the Executive shall have substantially
prevailed on the merits and is therefore entitled to such indemnification, shall
be made by the court or arbitrator, as applicable. In the event of a settlement
pursuant to a settlement agreement, any indemnification payment under this
section 30 shall

                                      -19-

<PAGE>

be made only after a determination by the members of the Board (other than the
Executive and any other member of the Board to which the Executive is related by
blood or marriage) that the Executive has acted in good faith and that such
indemnification payment is in the best interests of the Company.

              Section 31.  Required Regulatory Provisions.
                           ------------------------------

              Notwithstanding anything herein contained to the contrary, any
payments to the Executive by the Company or the Bank, whether pursuant to this
Agreement or otherwise, are subject to and conditioned upon their compliance
with section 18(k) of the Federal Deposit Insurance Act ("FDI Act"), 12 U.S.C.
ss.1828(k), and any regulations promulgated thereunder.

              Section 31.  Guarantee.
                           ---------

              The Company hereby agrees to guarantee the payment by the Bank of
any benefits and compensation to which the Executive is or may be entitled to
under the terms and conditions of the employment agreement of even date herewith
between the Bank and the Executive.

              Section 32.  Effective Date.
                           --------------

              This Agreement shall become effective (the "Effective Date") upon
the effective date of the Bank's conversion from a New York savings bank to a
national bank pursuant to the Reorganization. The Company and the Executive each
hereby acknowledge and agree that the terms of this Agreement shall have no
force or effect prior to such Effective Date.

                                      -20-

<PAGE>

              IN WITNESS WHEREOF, the Company has caused this Agreement to be
executed and the Executive has hereunto set his hand, all as of the day and year
first above written.

                                               ---------------------------------
                                               GREGORY J. KREIS

                                               BRIDGE STREET FINANCIAL, INC.

Attest:

By                                             By
  ----------------------------------             -------------------------------
  Name:                                          Name:
  Title:                                         Title:

[Seal]

                                      -21-<PAGE>

                                                                    Exhibit 10.1

                           LOCKHEED MARTIN CORPORATION
                          DEFERRED MANAGEMENT INCENTIVE
                                COMPENSATION PLAN

                             (Adopted July 27, 1995)
                            As Amended August 1, 1998
                      As Amended Effective January 1, 1999
                            As Amended June 28, 2001
                           As Amended December 6, 2001
                           As Amended October 1, 2002

                                    ARTICLE I

PURPOSES OF THE PLAN

          The purposes of the Lockheed Martin Corporation Deferred Management
Incentive Compensation Plan (the "Deferral Plan") are to provide certain key
management employees of Lockheed Martin Corporation and its subsidiaries (the
"Company") the opportunity to defer receipt of Incentive Compensation awards
under the Lockheed Martin Corporation Management Incentive Compensation Plan
(the "MICP") and Long Term Incentive Award payments under the Lockheed Martin
Corporation 1995 Omnibus Performance Award Plan (the "Omnibus Plan"). Providing
this opportunity to defer income under the Deferral Plan will encourage key
employees to maintain a financial interest in the Company's performance. Except
as expressly provided hereinafter, the provisions of this Deferral Plan and the
MICP shall be construed and applied independently of each other.

          The Deferral Plan applies solely to MICP awards and Long Term
Incentive Award payments under the Omnibus Plan and expressly does not apply to
any special awards which may be made under any of the Company's other incentive
plans, except and to the extent specifically provided under the terms of such
other incentive plans and the relevant awards.

                                   ARTICLE II

                                   DEFINITIONS

          Unless the context indicates otherwise, the following words and
phrases shall have the meanings hereinafter indicated:

          1.    ACCOUNT -- The bookkeeping account maintained by the Company for
each Participant which is credited with the Participant's Deferred Compensation
and earnings (or losses) attributable to the investment options selected by the
Participant, and which is debited to reflect distributions and forfeitures; the
portions of a Participant's Account allocated to different investment options
and the portions attributable to the deferral of Incentive Compensation awards
and Long Term Incentive Award payments will be accounted for separately.

          2.    ACCOUNT BALANCE -- The total amount credited to a Participant's
Account at any point in time, including the portions of the Account allocated to
each investment option.

<PAGE>

                                      -2-

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

          4.    BENEFICIARY -- The person or persons (including a trust or
trusts) validly designated by a Participant, on the form provided by the
Company, to receive distributions of the Participant's Account Balance, if any,
upon the Participant's death. In the absence of a valid designation, or if the
designated Beneficiary has predeceased the Participant, the Beneficiary shall be
the person or persons entitled by will or the laws of descent and distribution
to receive the amounts otherwise payable to the Participant under this Deferral
Plan; a Participant may amend his or her Beneficiary designation at any time
before the Participant's death.

          5.    BOARD -- The Board of Directors of Lockheed Martin Corporation.

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

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

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

          9.    COMPANY STOCK INVESTMENT OPTION -- The investment option under
which the amount credited to a Participant's Account will be based on the market
value and investment return of the Company's Common Stock.

          10.   DEFERRAL AGREEMENT -- The written agreement executed by an
Eligible Employee on the form provided by the Company under which the Eligible
Employee elects to defer Incentive Compensation or a Long Term Incentive Award
for an Award Year.

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

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

          13.   ELIGIBLE EMPLOYEE -- An employee of the Company who is a
participant in the MICP or who receives a Long Term Incentive Award under the
Omnibus Plan and who has satisfied such additional requirements for
participation in this Deferral Plan as the Committee may from time to time
establish. In the exercise of its authority under this provision, the Committee
shall limit participation in the Plan to employees whom the Committee believes
to be a select group of management or highly compensated employees within the
meaning of Title I of the Employee Retirement Income Security Act of 1974, as
amended.

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

<PAGE>

                                       -3-

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

          16.   INTEREST OPTION -- The investment option under which earnings
will be credited to a Participant's Account based on the interest rate
applicable under Cost Accounting Standard 415, Deferred Compensation.

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

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

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

          20.   PARTICIPANT -- An Eligible Employee for whom Incentive
Compensation or a Long Term Incentive Award payment has been deferred for one or
more years under this Deferral Plan; the term shall include a former employee
whose Deferred Compensation has not been fully distributed.

          21.   PAYMENT DATE -- As to any Participant, the January 15 or July 15
on or about on which payment to the Participant is to begin in accordance with
the Participant's election made pursuant to Section 2 or 4 of Article V.

          22.   PERFORMANCE PERIOD -- The period set forth in a Long Term
Incentive Award over which the Company's performance is measured by reference to
total stockholder return to determine whether any payment will be made under
such Long Term Incentive Award.

          23.   SECTION 16 PERSON -- A Participant who at the relevant time is
subject to the reporting and short-swing liability provisions of Section 16 of
the Securities Exchange Act of 1934.

          24.   SUBSIDIARY -- As to any person, any corporation, association,
partnership, joint venture or other business entity of which 50% or more of the
voting stock or other equity interests (in the case of entities other than
corporation), is owned or controlled (directly or indirectly) by that entity, or
by one or more of the Subsidiaries of that entity, or by a combination thereof.

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

                                  ARTICLE III

                           ELECTION OF DEFERRED AMOUNT

<PAGE>

                                       -4-

                1.    Timing of Deferral Elections.

                (a)   An Eligible Employee may elect to defer Incentive
Compensation for an Award Year by executing and delivering to the Company a
Deferral Agreement no later than October 15 of the Award Year or such other date
established by the Committee for an Award Year that is not later than October 31
of that Award Year, provided that any election by a Section 16 Person shall be
subject to the provisions of Section 4 of Article IV. An employee who first
qualifies as an Eligible Employee after September 15 of an Award Year may elect
to defer Incentive Compensation for that Award Year by entering into a Deferral
Agreement up to thirty (30) days after the date on which such employee first
becomes a participant in the MICP.

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

                (c)   Irrevocability of Elections. An Eligible Employee's
Deferral Agreement shall be irrevocable when delivered to the Company. Each
Deferral Agreement shall apply only to amounts deferred in that Award Year and a
separate Deferral Agreement must be completed for each Award Year for which an
Eligible Employee defers Incentive Compensation or a Long Term Incentive Award.

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

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

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

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

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

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

                3.    Effect of Taxes on Deferred Compensation. The amount that
would otherwise be deferred and credited to an Eligible Employee's Account will
be reduced by the amount of any tax that the Company is required to withhold
with respect to the Deferred Compensation. The reduction for taxes

<PAGE>

                                      -5-

shall be made proportionately out of amounts otherwise allocable to the Interest
Option and the Company Stock Investment Option.

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

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

                                   ARTICLE IV

                              CREDITING OF ACCOUNTS

                1.    Crediting of Deferred Compensation. Incentive Compensation
or a Long Term Incentive Award payment that has been deferred hereunder shall be
credited to a Participant's Account as of the day on which the Incentive
Compensation would have been paid or the Long Term Incentive Award payment would
have made to the Participant if no Deferral Agreement had been made. Company
Deferrals shall be credited as of the last day of the Performance Period.

                2.    Crediting of Earnings. Earnings shall be credited to a
Participant's Account based on the investment option or options to which the
Account has been allocated, beginning with the day as of which Deferred
Compensation (or any reallocation under Section 4, 5, or 6 of Article IV) is
credited to the Participant's Account. Any amount distributed from a
Participant's Account shall be credited with earnings through the last day of
the month preceding the month in which a distribution is to be made pursuant to
the Participant's election as set forth in Article V. Company Deferrals shall be
credited with earnings through the second anniversary of the end of the
applicable Performance Period unless deferred further pursuant to a Deferral
Agreement. The earnings credited under each of the investment options shall be
determined as follows:

                            (a)   Interest Option: The portion of a
                Participant's Account allocated to the Interest Option shall be
                credited with interest, compounded monthly, at a rate equivalent
                to the then published rate for computing the present value of
                future benefits at the time cost is assignable under Cost
                Accounting Standard 415, Deferred Compensation, as determined by
                the Secretary of the Treasury on a semi-annual basis pursuant to
                Pub. L. 92-41, 85 Stat. 97.

<PAGE>

                                      -6-

                      (b)  Company Stock Investment Option: The portion of a
                Participant's Account allocated to the Company Stock Investment
                Option shall be credited as if such amount had been invested in
                the Company's Common Stock at the published closing price of the
                Company's Common Stock on the last Trading Day preceding the day
                as of which Deferred Compensation (or any reallocation under
                Section 4, 5, or 6 of Article IV) is credited to the
                Participant's Account; this portion of the Participant's Account
                Balance shall reflect any subsequent appreciation or
                depreciation in the market value of the Company's Common Stock
                based on the closing price of the stock on the New York Stock
                Exchange on the last Trading Day of each month and shall reflect
                dividends on the Company's Common Stock as if such dividends had
                been reinvested in the Company's Common Stock.

                      (c)  Interest Crediting For Late Payments: Notwithstanding
                the investment option to which a Participant's Account has been
                allocated, in the event payment does not commence by the last
                day of the month in which the Payment Date occurs, earnings
                shall be credited on the Participant's entire Account from the
                last day of the month preceding the Payment Date to the last day
                of the month preceding the actual commencement of payment at the
                rate set forth under Section 2(a) of this Article IV. Interest
                credited under this Section 2(c) of this Article IV shall be
                paid on the date payment under the Plan first commences.

                3.    Selection of Investment Options. Except as otherwise
provided in this Deferral Plan, a Participant's investment selections shall be
made as part of his or her Deferral Agreement for a particular type of award for
an Award Year and shall be irrevocable with respect to amounts deferred for that
type of award for that Award Year, and no subsequent reallocations shall be
made. At the time of entering into a Deferral Agreement for any subsequent Award
Year, a Participant shall select the investment options for the Deferred
Compensation to be credited to the Participant's Account for that Award Year. A
Participant's allocations between investment options shall be subject to such
minimum allocations as the Committee may establish.

                4.    Special Rules for Section 16 Persons. Notwithstanding the
foregoing, an election by a Section 16 Person to have Deferred Compensation
allocated to the Company Stock Investment Option shall be given effect only if
irrevocably made at least six months prior to the effective date of the
allocation. If a Section 16 Person's Deferral Agreement for an Award Year is
entered into less than six months prior to the date that Deferred Compensation
is credited for that Award Year, and if he or she has elected to have any
portion of the Deferred Compensation for that Award Year allocated to the
Company Stock Investment Option, that portion shall initially be allocated to
the Interest Option and shall be reallocated and credited to the Company Stock
Investment Option as of the first day of the seventh month following the month
in which the Deferral Agreement was made. An Eligible Employee who first becomes
a Section 16 Person after his or her Deferral Agreement has been entered into
for an Award Year shall be subject to the requirements of this Section 4, except
that such an Eligible Employee shall be permitted, within ten business days
after becoming a Section 16 Person, to make irrevocable modified investment
elections for that Award Year; any allocations to the Company Stock Investment
Option on behalf of such a Section 16 Person shall be deferred until the first
day of the seventh month following the month in which the Eligible Employee's
modified election is made (or, if later, the first day of the seventh month
following the month in which the election period expires without a modified
election having been made).

<PAGE>

                                      -7-

                5.    Reallocations to Company Stock Investment Option. Each
Eligible Employee for whom an account is maintained under the Deferred
Management Incentive Compensation Plan of Lockheed Corporation and its
Subsidiaries (the "Lockheed Plan") will be given a one-time opportunity during
calendar year 1996 to make an irrevocable election to have all or a portion of
that account balance credited to the Eligible Employee's Account under this
Deferral Plan and reallocated to the Company Stock Investment Option. That
reallocation shall be credited to the Participant's Account under this Deferral
Plan as of the first day of the month following the last month in which such
elections are permitted, but in the case of a Section 16 Person not earlier than
the first day of the seventh month after the month in which the election is
delivered to the Company. If such a reallocation is made, the Eligible
Employee's right to receive benefits under the Lockheed Plan will be reduced
accordingly, and the Company will be released from liability under the Lockheed
Plan for the amount reallocated. Although the terms of this Deferral Plan shall
generally apply to any amount so reallocated, the Eligible Employee's
irrevocable payment elections under the Lockheed Plan will continue to apply to
the reallocated amount.

                6.    Reallocations to Interest Option. If benefit payments to a
Participant or Beneficiary are to be paid or commenced to be paid over a period
that extends more than six months after the date of the Participant's
termination of employment with the Company, the Participant or Beneficiary, as
applicable, may elect irrevocably at any time after the Participant's
termination of employment and before the completion of benefit payments to have
the portion of the Participant's Account that is allocated to the Company Stock
Investment Option reallocated to the Interest Option. A reallocation under this
Section 6 shall take effect as of the first day of the month following the month
in which an executed reallocation election is delivered to the Company, but in
the case of a Section 16 Person not earlier than the first day of the seventh
month following the month in which the reallocation election is delivered to the
Company.

                                    ARTICLE V

                               PAYMENT OF BENEFITS

                1.    General. The Company's liability to pay benefits to a
Participant or Beneficiary under this Deferral Plan shall be measured by and
shall in no event exceed the Participant's Account Balance. Except as otherwise
provided in this Deferral Plan (including but not limited to Section 5 of
Article III with respect to Company Deferrals), a Participant's Account Balance
shall be paid to him in accordance with the Participant's elections under
Sections 2 and 3 of this Article, and such elections shall be continuing and
irrevocable. All benefit payments shall be made in cash and, except as otherwise
provided, shall reduce allocations to the Interest Option and the Company Stock
Investment Option in the same proportions that the Participant's Account Balance
is allocated between those investment options at the end of the month preceding
the date of distribution. Notwithstanding the foregoing, no amount shall be
distributed to a Section 16 Person under this Deferral Plan unless the amount
was allocated to the Participant's Account at least six months prior to the date
of distribution or no portion of the amount was allocated to the Company Stock
Investment Option.

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

<PAGE>

                                      -8-

                      (A)   Payment to begin on or about the January 15th or
                            July 15th next following the date of the
                            Participant's termination of employment with the
                            Company for any reason.

                      (B)   Payment to begin on or about January 15th of the
                            year next following the year in which the
                            Participant terminates employment with the Company
                            for any reason.

                      (C)   Payment to begin on or about the January 15th or
                            July 15th next following the date on which the
                            Participant has both terminated employment with the
                            Company for any reason and attained the age
                            designated by the Participant in the Deferral
                            Agreement.

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

                      (A)   A lump sum.

                      (B)   Annual payments for a period of years designated by
                            the Participant which shall not exceed fifteen (15).
                            The amount of each annual payment shall be
                            determined by dividing the Participant's Account
                            Balance at the end of the month prior to such
                            payment by the number of years remaining in the
                            designated installment period. The installment
                            period may be shortened, in the sole discretion of
                            the Committee, if the Committee at any time
                            determines that the amount of the annual payments
                            that would be made to the Participant during the
                            designated installment period would be too small to
                            justify the maintenance of the Participant's Account
                            and the processing of payments.

                4.    Prospective Change of Payment Elections. At the time of
entering into a Deferral Agreement for a particular type of award for an Award
Year, a Participant may modify his payment elections under Sections 2 and 3 with
respect to the portion of his or her Account allocable to the amounts to be
deferred for a particular type of award for that Award Year and subsequent Award
Years. If a Participant has different payment elections in effect, the Company
shall maintain sub-accounts for the Participant to determine the amounts subject
to each payment election; no modification of payment elections will be accepted
if it would require the Company to maintain more than five (5) sub-accounts
within the Participant's Account in order to make payments in accordance with
the Participant's elections.

                      (a) Payment Election Changes. Notwithstanding anything
                to the contrary in Sections 1 through 4 of this Article V, a
                Participant may make an election with respect to the
                commencement of payment (from among the options set forth in
                Section 2(A), (B), or (C) above) and form of payment (from among
                the options set forth in Section 3(A) or (B) above) of his or
                her entire Account Balance, or with respect to specific Award
                Years, by executing and delivering to the Company an election
                form on or after October 1, 2002 in such form as prescribed by
                the Company. If a Participant has different payment options in
                effect with respect to his or her Account Balance, the Company
                shall maintain sub-

<PAGE>

                                      -9-

                accounts for the Participant to determine the amounts subject to
                each payment election; however, no election or modification of
                an election will be accepted if it would require the Company to
                maintain more than five sub-accounts within the Participant's
                Account in order to make payments in accordance with the
                Participant's elections.

                In the event a Participant does not make a valid election with
                respect to the commencement of payment and form of benefit for
                an Award Year commencing on or after October 1, 2002, the
                Participant will be deemed to have elected that payment of
                benefits with respect to that Award Year be made in a lump sum
                on or about the January 15th or July 15th next following the
                date of the Participant's termination of employment.

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

                To constitute a valid election, an election made after October
                1, 2002 must be executed and delivered to the Company (i) at
                least six months before the date the first payment would be due
                under the Participant's previous election and (ii) in a
                different calendar year than the date the first payment would be
                due under the Participant's previous election. In the event an
                election fails to satisfy the provisions set forth in this
                paragraph, such election shall be void.

          No election will be considered valid to the extent the election would
          (i) result in a payment being made within six months of the date of
          the election or (ii) result in a payment in the same calendar year as
          the date of the election. In the event an election fails to satisfy
          the provisions set forth in this paragraph, the first payment under
          the election will be delayed until the first January 15 or July 15
          that is both (i) at least six months after the date of the election
          and (ii) in a calendar year after the date of the election.

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

                5.    Acceleration upon Early Termination. Notwithstanding a
Participant's payment elections under Sections 2 and 3, if the Participant
terminates employment with the Company other than by reason of layoff, death or
disability and before the Participant is eligible to commence receiving
retirement benefits under a pension plan maintained by the Company (or before
the Participant has attained age 55 if the Participant does not participate in
such a pension plan), except as provided in Section 5 of Article III with
respect to Company Deferrals, the Participant's Account Balance shall be
distributed to him or her in a lump sum on or about the January 15th or July
15th next following the date of the Participant's termination of employment with
the Company.

                6.    Acceleration Upon Conflict of Interest. Notwithstanding a
Participant's payment elections under Sections 2 and 3, if following a
Participant's termination of employment with the Company, the Participant takes
a position (or accepts a position) with a governmental entity, agency, or
instrumentality and that employer has determined or indicated that the
Participant's continued participation in the Plan may constitute a conflict of
interest precluding the Participant from continuing in his position (or from
accepting an offered position) with that employer or subjecting the Participant
to penalty, sanction, or otherwise limiting the Participant's responsibilities
for that employer, except as

<PAGE>

                                      -10-

provided in Section 5 of Article III with respect to Company Deferrals, then the
Participant's Account Balance shall be distributed to him or her in a lump sum
as soon as practical following the later of (i) the date on which the
Participant commences employment with the government employer; or (ii) the date
on which it is determined that the conflict of interest may exist.

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

                8.    Early Distributions in Special Circumstances.
Notwithstanding a Participant's payment elections under Sections 2 and 3 of this
Article V, a Participant or Beneficiary may request an earlier distribution in
the following limited circumstances (except as provided in Section 5 of Article
III with respect to Company Deferrals):

                      (a)   Hardship Distributions. Subject to the last sentence
                of this Section 8(a) with respect to Section 16 Persons, the
                Committee shall have the power and discretion at any time to
                approve a payment to a Participant if the Committee determines
                that the Participant is suffering from a serious financial
                emergency caused by circumstances beyond the Participant's
                control which would cause a hardship to the Participant unless
                such payment were made. Any such hardship payment will be in a
                lump sum and will not exceed the lesser of (i) the amount
                necessary to satisfy the financial emergency (taking account of
                the income tax liability associated with the distribution), or
                (ii) the Participant's Account Balance. In the event that a
                Section 16 Person seeks a hardship withdrawal under this Section
                8(a), the distribution will be made first out of the portion of
                the Participant's Account, if any, allocated to the Interest
                Option; if the hardship distribution cannot be satisfied in full
                out of amounts allocated to the Interest Option, no distribution
                will be made from the portion of the Participant's Account
                allocated to the Company Stock Investment Option until the
                seventh month following the month in which the Participant's
                application under this Section 8(a) was made, which application
                shall be irrevocable when made.

                      (b)   Withdrawal with Forfeiture. A Participant may elect
                at any time to withdraw ninety percent (90%) of the amount
                credited to the Participant's Account. If such a withdrawal is
                made, the remaining ten percent (10%) of the Participant's
                Account shall be permanently forfeited, and the Participant will
                be prohibited from deferring any amount under the Deferral Plan
                for the Award Year in which the withdrawal is received (or the
                first Award Year in which any portion of the withdrawal is
                received). In the event that a Section 16 Person seeks a
                withdrawal under this Section 8(b), any portion of the Section
                16 Person's Account allocated to the Company Stock Investment
                Option will not be subject to distribution or forfeiture until
                the seventh month following the month in which the Participant's
                election under this Section 8(b) was made, which election shall
                be irrevocable when made; any portion of the Section 16 Person's
                Account allocated to the Interest Option will be subject to
                immediate distribution and forfeiture; the ten

<PAGE>

                                      -11-

                percent forfeiture shall be separately applied to each such
                portion of the Section 16 Person's Account at the time of
                distribution.

                      (c)   Death or Disability. In the event that a Participant
                dies or becomes permanently disabled before the Participant's
                entire Account Balance has been distributed, the Committee, in
                its sole discretion, may modify the timing of distributions from
                the Participant's Account, including the commencement date and
                number of distributions, if it concludes that such modification
                is necessary to relieve the financial burdens of the Participant
                or Beneficiary.

                9.    Acceleration upon Change in Control.

                      (a)   Notwithstanding any other provision of the Deferral
                Plan, except as provided in Section 5 of Article III with
                respect to Company Deferrals, the Account Balance of each
                Participant shall be distributed in a single lump sum within
                fifteen (15) calendar days following a "Change in Control."

                      (b)   For purposes of this Deferral Plan, a Change in
                Control shall include and be deemed to occur upon the following
                events:

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

                            (2)   The Company is merged, combined, consolidated,
                      recapitalized or otherwise reorganized with one or more
                      other entities that are not Subsidiaries and, as a result
                      of the merger, combination, consolidation,
                      recapitalization or other reorganization, less than 75% of
                      the outstanding voting securities of the surviving or
                      resulting corporation shall immediately after the event be
                      owned in the aggregate by the stockholders of the Company
                      (directly or indirectly), determined on the basis of
                      record ownership as of the date of determination of
                      holders entitled to vote on the action (or in the absence
                      of a vote, the day immediately prior to the event).

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

                            (4)   At any time within any period of two years
                      after a tender offer, merger, combination, consolidation,
                      recapitalization, or other reorganization or a contested
                      election, or any combination of these events, the
                      "Incumbent Directors" shall cease to constitute at least a
                      majority of the authorized number of members of the Board.
                      For purposes hereof, "Incumbent Directors" shall mean the
                      persons who were members of the Board immediately before
                      the first of these events and the persons who were elected
                      or nominated as their

<PAGE>

                                      -12-

                      successors or pursuant to increases in the size of the
                      Board by a vote of at least three-fourths of the Board
                      members who were then Board members (or successors or
                      additional members so elected or nominated).

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

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

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

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

                10.   Deductibility of Payments. In the event that the payment
of benefits in accordance with the Participant's elections under Sections 2 and
3 would prevent the Company from claiming an income tax deduction with respect
to any portion of the benefits paid, the Committee shall have the right to
modify the timing of distributions from the Participant's Account as necessary
to maximize the Company's tax deductions. In the exercise of its discretion to
adopt a modified distribution schedule, the Committee shall undertake to have
distributions made at such times and in such amounts as most closely approximate
the Participant's elections, consistent with the objective of maximum
deductibility for the Company. The Committee shall have no authority to reduce a
Participant's Account Balance or to pay aggregate benefits less than the
Participant's Account Balance in the event that all or a portion thereof would
not be deductible by the Company.

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

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

<PAGE>

                                      -13-

Award payment deferred hereunder, any Federal, state, or local income or payroll
taxes required to be withheld and shall furnish the recipient and the applicable
government agency or agencies with such reports, statements, or information as
may be legally required.

                                   ARTICLE VI

                         EXTENT OF PARTICIPANTS' RIGHTS

                1.    Unfunded Status of Plan. This Deferral Plan constitutes a
mere contractual promise by the Company to make payments in the future, and each
Participant's rights shall be those of a general, unsecured creditor of the
Company. No Participant shall have any beneficial interest in any specific
assets that the Company may hold or set aside in connection with this Deferral
Plan. Notwithstanding the foregoing, to assist the Company in meeting its
obligations under this Deferral Plan, the Company may set aside assets in a
trust described in Revenue Procedure 92-64, 1992-2 C.B. 422, and the Company may
direct that its obligations under this Deferral Plan be satisfied by payments
out of such trust. The assets of any such trust will remain subject to the
claims of the general creditors of the Company. It is the Company's intention
that the Deferral Plan be unfunded for Federal income tax purposes and for
purposes of Title I of the Employee Retirement Income Security Act of 1974.

                2.    Nonalienability of Benefits. A Participant's rights under
this Deferral Plan shall not be assignable or transferable and any purported
transfer, assignment, pledge or other encumbrance or attachment of any payments
or benefits under this Deferral Plan, or any interest therein shall not be
permitted or recognized, other than the designation of, or passage of payment
rights to, a Beneficiary.

                                   ARTICLE VII

                            AMENDMENT OR TERMINATION

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

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

<PAGE>

                                      -14-

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

                                  ARTICLE VIII

                                 ADMINISTRATION

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

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

                3.    Exculpation and Indemnity. Neither the Company nor any
member of the Board or of the Committee, nor any other person participating in
any determination of any question under this Deferral Plan, or in the
interpretation, administration or application thereof, shall have any liability
to any party for any action taken or not taken in good faith under this Deferral
Plan or for the failure of the Deferral Plan or any Participant's rights under
the Deferral Plan to achieve intended tax consequences, to qualify for exemption
or relief under Section 16 of the Exchange Act and the rules thereunder, or to
comply with any other law, compliance with which is not required on the part of
the Company.

                4.    Facility of Payment. If a minor, person declared
incompetent, or person incapable of handling the disposition of his or her
property is entitled to receive a benefit, make an application, or make an
election hereunder, the Committee may direct that such benefits be paid to, or
such application or election be made by, the guardian, legal representative, or
person having the care and custody of such minor, incompetent, or incapable
person. Any payment made, application allowed, or election implemented in
accordance with this Section shall completely discharge the Company and the
Committee from all liability with respect thereto.

                5.    Proof of Claims. The Committee may require proof of the
death, disability, incompetency, minority, or incapacity of any Participant or
Beneficiary and of the right of a person to receive any benefit or make any
application or election.

<PAGE>

                                      -15-

                6.    Claim Procedures. The procedures when a claim under this
Deferral Plan is denied by the Committee are as follows:

                      (A)   The Committee shall:

                            (i)   notify the claimant within a reasonable time
                                  of such denial, setting forth the specific
                                  reasons therefore; and

                            (ii)  afford the claimant a reasonable opportunity
                                  for a review of the decision.

                      (B)   The notice of such denial shall set forth, in
                            addition to the specific reasons for the denial, the
                            following:

                            (i)   identification of pertinent provisions of this
                                  Deferral Plan;

                            (ii)  such additional information as may be relevant
                                  to the denial of the claim; and

                            (iii) an explanation of the claims review procedure
                                  and advice that the claimant may request an
                                  opportunity to submit a statement of issues
                                  and comments.

                      (C)   Within sixty days following advice of denial of a
                            claim, upon request made by the claimant, the
                            Committee shall take appropriate steps to review its
                            decision in light of any further information or
                            comments submitted by the claimant. The Committee
                            may hold a hearing at which the claimant may present
                            the basis of any claim for review.

                      (D)   The Committee shall render a decision within a
                            reasonable time (not to exceed 120 days) after the
                            claimant's request for review and shall advise the
                            claimant in writing of its decision, specifying the
                            reasons and identifying the appropriate provisions
                            of the Deferral Plan.

<PAGE>

                                      -16-

                                   ARTICLE IX

                      GENERAL AND MISCELLANEOUS PROVISIONS

                1.    Neither this Deferral Plan, a Company Deferral nor a
Participant's Deferral Agreement, either singly or collectively, shall in any
way obligate the Company to continue the employment of a Participant with the
Company, nor does either this Deferral Plan, a Company Deferral or a Deferral
Agreement limit the right of the Company at any time and for any reason to
terminate the Participant's employment. In no event shall this Deferral Plan, a
Company Deferral or a Deferral Agreement, either singly or collectively, by
their terms or implications constitute an employment contract of any nature
whatsoever between the Company and a Participant. In no event shall this
Deferral Plan, a Company Deferral or a Plan Agreement, either singly or
collectively, by their terms or implications in any way obligate the Company to
award Incentive Compensation, grant any award under the Omnibus Plan or make any
Long Term Incentive Award payment to any Eligible Employee for any Award Year,
whether or not the Eligible Employee is a Participant in the Deferral Plan for
that Award Year, nor in any other way limit the right of the Company to change
an Eligible Employee's compensation or other benefits.

                2.    Neither Incentive Compensation nor Long Term Incentive
Award payments deferred under this Deferral Plan shall be treated as
compensation for purposes of calculating the amount of a Participant's benefits
or contributions under any pension, retirement, or other plan maintained by the
Company, except as provided in such other plan.

                3.    Any written notice to the Company referred to herein shall
be made by mailing or delivering such notice to the Company at 6801 Rockledge
Drive, Bethesda, Maryland 20817, to the attention of the Vice President, Human
Resources. Any written notice to a Participant shall be made by delivery to the
Participant in person, through electronic transmission, or by mailing such
notice to the Participant at his or her last-known place of residence or
business address.

                4.    In the event it should become impossible for the Company
or the Committee to perform any act required by this Deferral Plan, the Company
or the Committee may perform such other act as it in good faith determines will
most nearly carry out the intent and the purpose of this Deferral Plan.

                5.    By electing to become a Participant hereunder, each
Eligible Employee shall be deemed conclusively to have accepted and consented to
all of the terms of this Deferral Plan and all actions or decisions made by the
Company, the Board, or Committee with regard to the Deferral Plan.

                6.    The provisions of this Deferral Plan and the Deferral
Agreements hereunder shall be binding upon and inure to the benefit of the
Company, its successors, and its assigns, and to the Participants and their
heirs, executors, administrators, and legal representatives.

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

<PAGE>

                                      -17-

                8.    The validity of this Deferral Plan or any of its
provisions shall be construed, administered, and governed in all respects under
and by the laws of the State of Maryland, except as to matters of Federal law.
If any provisions of this instrument shall be held by a court of competent
jurisdiction to be invalid or unenforceable, the remaining provisions hereof
shall continue to be fully effective.

                9.    This Deferral Plan and its operation, including but not
limited to, the mechanics of deferral elections, the issuance of securities, if
any, or the payment of cash hereunder is subject to compliance with all
applicable federal and state laws, rules and regulations (including but not
limited to state and federal insider trading, registration, reporting and other
securities laws) and such other approvals by any listing, regulatory or
governmental authority as may, in the opinion of counsel for the Company, be
necessary or advisable in connection therewith.

                10.   It is the intent of the Company that this Deferral Plan
satisfy and be interpreted in a manner, that, in the case of Participants who
are or may be Section 16 Persons, satisfies any applicable requirements of Rule
16b-3 of the Exchange Act or other exemptive rules under Section 16 of the
Exchange Act and will not subject Section 16 Persons to short-swing profit
liability thereunder. If any provision of this Deferral Plan would otherwise
frustrate or conflict with the intent expressed in this Section 10, that
provision to the extent possible shall be interpreted and deemed amended so as
to avoid such conflict. To the extent of any remaining irreconcilable conflict
with this intent, the provision shall be deemed disregarded. Similarly, any
action or election by a Section 16 Person with respect to the Deferral Plan to
the extent possible shall be interpreted and deemed amended so as to avoid
liability under Section 16 or, if this is not possible, to the extent necessary
to avoid liability under Section 16, shall be deemed ineffective.
Notwithstanding anything to the contrary in this Deferral Plan, the provisions
of this Deferral Plan may at any time be bifurcated by the Board or the
Committee in any manner so that certain provisions of this Deferral Plan are
applicable solely to Section 16 Persons. Notwithstanding any other provision of
this Deferral Plan to the contrary, if a distribution which would otherwise
occur is prohibited or proposed to be delayed because of the provisions of
Section 16 of the Exchange Act or the provisions of the Deferral Plan designed
to ensure compliance with Section 16, the Section 16 Person involved may
affirmatively elect in writing to have the distribution occur in any event;
provided that the Section 16 Person shall concurrently enter into arrangements
satisfactory to the Committee in its sole discretion for the satisfaction of any
and all liabilities, costs and expenses arising from this election.

                11.   Notwithstanding any other provision of this Deferral Plan,
each Eligible Employee who is a Section 16 Person and has entered into a
Deferral Agreement prior to the initial distribution of a prospectus relating to
this Deferral Plan shall be entitled, during a ten-business-day period following
the initial distribution of that prospectus, to make an irrevocable election to
(i) receive a distribution of all or any portion of his or her Account Balance
attributable to Deferred Compensation for the 1995 Award Year during the seventh
month following the month of the election, or (ii) reallocate all or any part of
his or her Account Balance attributable to Deferred Compensation for the 1995
Award Year to a different investment option as of the end of the sixth month
following the month of the election.

                12.   At no time shall the aggregate Account Balances of all
Participants to the extent allocated to the Company Stock Investment Option
exceed an amount equal to the then fair market value of 5,000,000 shares of the
Company's Common Stock, nor shall the cumulative amount of Incentive
Compensation and Long Term Incentive Award payments deferred under this Deferral
Plan by all Eligible Employees for all Award Years exceed $250,000,000.

<PAGE>

                                      -18-

                                    ARTICLE X

                     EFFECTIVE DATE AND SHAREHOLDER APPROVAL

          This Deferral Plan was adopted by the Board on July 27, 1995 and
became effective upon adoption to awards of Incentive Compensation for the
Company's fiscal year ending December 31, 1995 and subsequent fiscal years;
provided, however, that with respect to Section 16 Persons, the availability of
the Company Stock Investment Option is conditioned upon the approval of this
Deferral Plan by the stockholders of Lockheed Martin Corporation. In the event
that this Deferral Plan is not approved by the stockholders, then Section 16
Persons shall not be entitled to have Deferred Compensation allocated to the
Company Stock Investment Option; any prior elections by Section 16 Persons to
have allocations made to the Company Stock Investment Option shall retroactively
be deemed ineffective, and the Account Balances of those Section 16 Persons
shall be restated as if all of their Deferred Compensation had been allocated to
the Interest Option at all times. Subsequent amendments to the Deferral Plan are
effective as of the date stated in the amendment or the adopting resolution.

<PAGE>

                                      -19-

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

                                        LOCKHEED MARTIN CORPORATION

                                        Terry F. Powell
                                        Senior Vice President, Human Resources

                                        WITNESS:

                                        _______________________

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