Exhibit 10.5
[Transfer/Incentive
Plan]
SUPPLEMENTAL
RETIREMENT BENEFIT PLAN
FOR CERTAIN
TRANSFERRED EMPLOYEES
OF LOCKHEED
MARTIN CORPORATION
(Effective
June 26, 2008)
ARTICLE
I
PURPOSES OF THE
PLAN
The purposes of
the Supplemental Retirement Benefit Plan for Certain Transferred
Employees of Lockheed Martin Corporation (the “Plan”)
are:
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(a)
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to provide an additional
retirement benefit for certain employees whose regular retirement
benefits have been limited as a result of employment service at a
Lockheed Martin company that does not have a Qualified Pension
Plan; and
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(b)
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to provide an additional
retirement benefit for certain employees hired on or after
January 1, 2006 (January 1, 2007 for KAPL, Inc.) at a Lockheed
Martin company that has a Qualified Pension Plan that is frozen to
new participants as of such date; and
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(c)
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to provide the above employees
with those benefits that cannot be paid from the tax-qualified
plans of Lockheed Martin Corporation and its subsidiaries because
of the limitations on contributions and benefits contained in
Internal Revenue Code sections 415 and 401(a)(17).
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The following
plans and predecessor plans were amended, restated and merged to
form this Plan, effective July 1, 2004:
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1.
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Supplemental Retirement
Benefit Plan for Certain Transferred Employees of Lockheed Martin
Corporation (formerly known as the Supplemental Retirement Benefit
Plan for Certain Transferred Employees of Lockheed
Corporation)
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2.
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Incentive Retirement Benefit
Plan for Certain Executives of Lockheed Martin Corporation
(formerly known as the Incentive Retirement Benefit Plan for
Certain Executives of Lockheed Corporation)
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The Plan was
amended and restated, effective January 1, 2005, in order to
comply with the requirements of Code section 409A. The 2005
amendment and restatement of the Plan applied only to the portion
of a Participant’s benefit that accrued on or after
January 1, 2005. The portion of a Participant’s benefit
that accrued prior to January 1, 2005 shall be governed by the
terms of the Plan in effect on December 31, 2004, attached as
Appendix A. The Plan is hereby amended and restated, generally
effective June 26, 2008, in order to clarify certain
provisions in accordance with the final Treasury Regulations issued
under Code section 409A and to make other clarifications with
respect to eligibility and benefits.
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ARTICLE
II
DEFINITIONS
Unless the
context indicates otherwise or the term is defined below, all terms
shall be defined in accordance with the Lockheed Martin Corporation
Salaried Employee Retirement Program:
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1.
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ACTUARIAL EQUIVALENT –
The Actuarial Equivalent shall mean a benefit which has the
equivalent value computed using the interest rate which would be
used by the Pension Benefit Guaranty Corporation to determine the
present value of an immediate lump sum distribution on termination
of a pension plan, as in effect on first day of the month of
termination of employment plus one percent (1%), and the 1983 Group
Annuity Mortality Table with sex distinction; provided that for
Years beginning on or after January 1, 2011, in no event shall
the interest rate plus 1% exceed 7% or be less than 4%.
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2.
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BENEFICIARY — The
Beneficiary of a Participant shall be (a) the
Participant’s Spouse or (b) if there is no Spouse
surviving the Participant, the Participant’s
estate.
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3.
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BOARD — The Board of
Directors of Lockheed Martin Corporation.
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4.
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CODE — The Internal
Revenue Code of 1986, as amended.
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5.
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COMMITTEE — The
committee described in Section 1 of Article VIII.
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6.
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COMPANY – Lockheed
Martin Corporation and its Subsidiaries.
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7.
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ELIGIBLE EMPLOYEE — An
employee of the Company who meets the eligibility criteria in
Section 1 of Article III or Section 1 of Article IV, and
who satisfies such additional requirements for participation in
this Plan as the Committee may from time to time establish. The
Lockheed Martin Pension Plans Administrative Committee (the
“Pension Committee”) shall interpret the participation
requirements established by the Committee for all Participants
except elected officers subject to Section 16(b) of the
Securities and Exchange Act of 1934. Determinations of
participation requirements for elected officers shall be made by
the Committee.
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8.
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GRANDFATHERED 2004 BENEFIT
— The benefit calculated under the terms of the Plan in
effect prior to January 1, 2005 (attached as Appendix A),
determined as if the Participant had terminated from employment on
December 31, 2004 (or the Participant’s actual
termination date, if earlier).
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PARTICIPANT — An
Eligible Employee who meets the requirements for participation
contained in Article III or Article IV; the term shall include a
former employee and survivors/beneficiaries whose benefit has not
been fully distributed. A Participant shall cease to be an active
Participant upon termination of employment, when he ceases to be an
Eligible Employee, or when he ceases to meet the requirements for
participation as amended from time to time.
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10.
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QUALIFIED PENSION PLAN –
The Lockheed Martin Corporation Retirement Plan for Certain
Salaried Employees, the Lockheed Martin Corporation Retirement
Income Plan and the Lockheed Martin Corporation Retirement Income
Plan III, or any successor plans.
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11.
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PLAN – The Supplemental
Retirement Benefit Plan for Certain Transferred Employees of
Lockheed Martin Corporation, or any successor plan.
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12.
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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.
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13.
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YEAR — The calendar
year.
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ARTICLE
III
TRANSFER
BENEFITS
1.
Eligibility . Benefits pursuant to this Article III are
available to employees of the Company who:
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(a)
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are Members of the Qualified
Pension Plan, and
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(i)
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are transferred to a
Participating Company that does not have a Qualified Pension Plan,
and
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(ii)
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are identified by such
Participating Company as a key employee at the time of such
transfer, and
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(iii)
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are designated in writing by
the Committee as a Participant in this Plan;
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(b)
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effective January 1, 2006
(January 1, 2007 for KAPL, Inc.), are not Members of the Qualified
Pension Plan, and
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(i)
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are hired by a Participating
Company on or after January 1, 2006 (or by KAPL, Inc. on or
after January 1, 2007), and
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(ii)
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are Vice Presidents (Level 8)
or above on their date of hire, or are promoted to Vice President
(Level 8) after their date of hire, and
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(iii)
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are not hired by a
Participating Company pursuant to the Company’s acquisition
of an entity that does not sponsor a qualified defined benefit
pension plan.
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A
“Participating Company” is a business unit designated
in writing by the Committee as a unit participating in this Plan. A
list of Participating Units is set forth in Schedule 1.
2. Amount of
Benefit . The benefit that each Participant shall be entitled
to receive under the Plan is the amount reasonably determined by
the Company to be the difference between the Participant’s
actual benefit, if any, under the Qualified Pension Plan and the
benefits that would have been payable under that Plan, subject to
the offset below, if:
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(a)
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the Qualified Pension Plan had
determined pensionable earnings on a “mix and match”
basis, as defined below;
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(b)
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the Participant’s period
of employment service as a Participant at a Participating Company
at which no Credited Service is earned was deemed to be years of
Credited Service under the Qualified Pension Plan; and
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(c)
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the Participant’s
benefit under the Qualified Pension Plan had not been limited by
Code section 415 and/or Code section 401(a)(17).
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If a
Participant’s compensation under the Management Incentive
Compensation Plan (“MICP”) is included in pensionable
earnings under the Qualified Pension Plan, the Participant’s
total pensionable earnings shall be determined on a “mix and
match” basis. The Participant’s annual compensation
earned under the MICP shall be calculated separately from other
annual pensionable earnings. The average of the three
(3) highest years of MICP compensation during the last 10
years shall be added to the average of the three (3) highest
years of other pensionable earnings during the last 10 years to
arrive at total final average pensionable earnings for the
applicable period under the Qualified Pension Plan.
The above benefit
(the “Transfer Benefit”) shall be offset by the
benefits payable on behalf of the Participant under the Lockheed
Martin Corporation Capital Accumulation Plan (the “Lockheed
Martin CAP”) and under the Lockheed Martin Account Balance
Retirement Plan (“ABRP”). In calculating the offset,
the Participant’s total account balance from the Lockheed
Martin CAP shall be converted into an annuity using the 1983 Group
Annuity Mortality Table for males and shall be calculated as of the
Participant’s termination of employment, using the
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PBGC immediate interest rate
for lump sums rate plus 1% and the Participant’s age on the
date of distribution. If the Participant received any prior
distributions from the Lockheed Martin CAP, the Transfer Benefit
shall be reduced by the annuity value of the prior distribution,
using the Lockheed Martin CAP distribution amount, the PBGC
interest rate plus 1% and Participant’s age on the date of
distribution. The Transfer Benefit is then reduced for the amount
of the normal retirement benefit from the ABRP.
Combined benefits
under this Article III, the Lockheed Martin CAP and the ABRP are
intended to supplement the Participant’s actual benefit under
the Qualified Pension Plan as necessary to provide the Participant
with the full benefit the Participant would have received under the
Qualified Pension Plan on a “mix and match” basis,
without regard to the limitations of Code section 415 and Code
section 401(a)(17), and with the special adjustments described
above. To prevent duplication of benefits, the full benefit under
the Qualified Pension Plan and the enhanced Transfer Benefit
described above shall be calculated without reduction for Code
section 415 and Code section 401(a)(17), then reduced by the
benefit payable from the Qualified Pension Plan (without regard to
the portion of such benefit attributable to employee contributions,
if any), then reduced by the benefit payable from the Lockheed
Martin CAP and ABRP, and then reduced by the 2004 Grandfathered
Benefit. The remainder of the benefit shall be paid from this Plan.
Participants have no right to duplicate benefits with respect to
the same period of service, and the Committee may make such
adjustments to the benefits under this Plan as the Committee deems
necessary to prevent duplication of benefits.
The benefit
payable under this Article III shall be payable to the Participant
or Beneficiary or any other person who is receiving or entitled to
receive benefits with respect to the Participant under the
Qualified Pension Plan.
If the benefits
payable under the Qualified Pension Plan to any Participant are
increased following the Participant’s retirement as a result
of a general increase in the benefits payable to retired employees
under that Plan, no such increase will be made under this
Plan.
ARTICLE
IV
INCENTIVE
BENEFITS
1.
Eligibility . Benefits pursuant to this Article IV are
available to the employees described below. However, an employee
who terminated employment with Lockheed Corporation prior to
January 1, 1984, when eligible for a deferred retirement
benefit under Section 5.03 of the Lockheed Retirement Plan for
Certain Salaried Employees is not eligible to receive a benefit
under this Article IV.
An employee or
former employee of Lockheed Martin Corporation and its subsidiaries
who:
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(a)
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is employed by a Lockheed
Martin business unit that is not covered by a Qualified Pension
Plan, and
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(b)
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is identified by such business
unit as a key employee, and
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(c)
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at the time of eligibility for
benefits is, or for any year during his or her last ten
(10) years of service with Lockheed Martin Corporation was, a
participant in the Lockheed Martin Corporation Management Incentive
Compensation Plan (including the Deferred Management Incentive
Compensation Plan of Lockheed Martin Corporation), or any incentive
compensation plan of any subsidiary or affiliated corporation of
Lockheed Martin Corporation which the Committee determines is a
corresponding incentive plan; and
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(d)
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who has been specifically
designated in writing by the Committee as a Participant;
and
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(e)
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who is not eligible for a
benefit under Article III of this Plan
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2. Amount of
Benefit .
A. Normal or
Disability Retirement . The benefit payable under this Article
IV to a Participant is the amount reasonably determined to be the
difference between the Participant’s actual benefit under the
Lockheed Martin Retirement Plan for Certain Salaried Employees (or
such other Qualified Pension Plan as designated by the Committee
(the “Designated Qualified Plan”) and the benefits that
would have been payable under that Plan, subject to the offset
below, if:
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(a)
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the Designated Qualified Plan
had determined pensionable earnings on a “mix and
match” basis, as defined below;
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(b)
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the Participant’s period
of employment service as a Participant with the Company during
which period no Credited Service is earned either because the
Participant was not in a covered group or because of a limitation
on Credited Service under the Qualified Pension, was deemed to be
years of Credited Service under the Designated Qualified Pension
Plan; and
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(c)
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the Participant’s
benefit under the Designated Qualified Plan had not been limited by
Code section 415 and/or Code section 401(a)(17).
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If a
Participant’s compensation under the Management Incentive
Compensation Plan (“MICP”) is included in pensionable
earnings under the Qualified Pension Plan, the Participant’s
total pensionable earnings shall be determined on a “mix and
match” basis. The Participant’s annual compensation
earned under the MICP shall be calculated separately from other
annual pensionable earnings. The average of the highest years of
MICP compensation shall
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be added to the average of
the highest years of other pensionable earnings to arrive at total
final average pensionable earnings for the applicable period under
the Qualified Pension Plan.
The above benefit
(the “Incentive Benefit”) shall be offset by the
benefits payable on behalf of the Participant under the Lockheed
Martin Corporation Capital Accumulation Plan (the “Lockheed
Martin CAP”) and under the Lockheed Martin Account Balance
Retirement Plan (“ABRP”). In calculating the offset,
the Participant’s total account balance from the Lockheed
Martin CAP shall be converted into an annuity using the 1983 Group
Annuity Mortality Table and shall be calculated as of the
Participant’s termination of employment, using the PBGC
immediate interest rate for lump sums rate plus 1% and
Participant’s age on the date of distribution. If the
Participant received any prior distributions from the Lockheed
Martin CAP, the Incentive Benefit shall be reduced by the annuity
value of the prior distribution, using the Lockheed Martin CAP
distribution amount, PBGC immediate interest rate for lump sums
rate plus 1% and Participant’s age on the date of
distribution. The Incentive Benefit is then reduced for the amount
of the Participant’s normal retirement benefit from the ABRP,
and then reduced by the Participant’s 2004 Grandfathered
Benefit.
C. No
Duplication . Combined benefits under this Article IV, the
Lockheed Martin CAP and the ABRP are intended to supplement the
Participant’s actual benefit under the Qualified Pension Plan
as necessary to provide the Participant with the full benefit the
Participant would have received under the Qualified Pension Plan on
a “mix and match” basis, without regard to the
limitations of Code section 415 and Code section 401(a)(17), and
with the special adjustments described above. To prevent
duplication of benefits, the full benefit under the Qualified
Pension Plan and the enhanced Incentive Benefit described above
shall be calculated without reduction for Code section 415 and Code
section 401(a)(17), then reduced by the benefit payable from the
Qualified Pension Plan then reduced by the benefit payable from the
Lockheed Martin CAP and ABRP, and then reduced by the
Participant’s 2004 Grandfathered Benefit. The remainder of
the benefit shall be paid from this Plan. Participants have no
right to duplicate benefits with respect to the same period of
service, and the Committee may make such adjustments to the
benefits under this Plan as the Committee deems necessary to
prevent duplication of benefits.
The benefit
payable under this Article IV shall be payable to the Participant
or Beneficiary or any other person who would be entitled to receive
benefits with respect to the Participant under the Designated
Qualified Plan.
If the benefits
that would be payable under the Designated Qualified Plan to any
Participant are increased following the Participant’s
retirement as a result of a general increase in the benefits
payable to retired employees under that Plan, no such increase will
be made under this Plan.
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ARTICLE
V
PAYMENT OF
BENEFITS
1. Vesting
. Except as provided in Article VI, and subject to the
Company’s right to discontinue the Plan as provided in
Article VII, a Participant shall have a non-forfeitable interest in
benefits payable under this Plan to the same extent as benefits are
vested under the applicable Qualified Pension Plan. As provided in
Article VI, if a Participant acquires a right to receive payments
under this Plan, such right shall be no greater than the right of
any unsecured general creditor of the Company.
2. Form and
Timing of Payment .
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(a)
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Regular Form
. A Participant
may elect to receive benefits in any annuity form that is available
under a Qualified Pension Plan on the date of the
Participant’s election that has been designated by the Senior
Vice President, Human Resources as available for election under
this Plan, provided (i) the election is filed with the Company
in writing no later than the later of (a) December 16,
2005 and (b) the date that is 30 days after the Participant
commences participation in the Plan, and (ii) the
Participant’s employment has not terminated prior to filing
the election. All elections under this Section 2.a. must be
made in the form and manner prescribed by the Company. If the
Participant has not validly elected any annuity form under this
Section 2.a. or a lump sum payment as provided in
Section 2.b. of Article V, (i) an unmarried Participant
shall be deemed to have elected payment in the form of a monthly
annuity for the life of the Participant with no further payments to
anyone after his or her death, and (ii) a married Participant
shall be deemed to have elected payment in the form of a reduced
monthly annuity for the life of the Participant with, after the
Participant’s death, a 50% survivor annuity for the life of
the Participant’s spouse. Actuarial adjustments shall be
based on the factors set forth in the Qualified Pension Plan.
Benefits paid in a form described in this Section 2.a. shall
commence as soon as administratively practicable following the
later of (i) the month in which the Participant terminates
employment, or (ii) the month in which the Participant attains
age fifty-five (55). Notwithstanding the foregoing sentence,
benefits paid in a form described in this Section 2.a. to a
Participant who is reasonably determined by the Company to be a
“specified employee” within the meaning of Code section
409A(2)(B)(i), shall not commence before six (6) months
following the later of (i) the month in which the Participant
terminates employment, or (ii) the month in which the
Participant attains age fifty-five (55). No interest shall be paid
between the date of termination of employment or attainment of age
fifty-five (55), as applicable, and the payment date.
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(b)
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Lump Sum
Option . In lieu of the forms
described in Section 2.a. of Article V, a Participant may make
a one-time election to receive a full lump sum payment
in
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an amount which
is the Actuarial Equivalent of a monthly annuity for the life of
the Participant with no further payments to anyone after his or her
death, provided the election is filed with the Company in writing
no later than December 15, 2008 and the Participant’s
employment has not terminated prior to filing the election. For all
Participants who elect a lump sum under this Section 2.b., the
lump sum payment shall be made six (6) months following the
later of (i) the month in which the Participant terminates
employment, or (ii) the month in which the Participant attains
age fifty-five (55). No interest shall be paid between the date of
termination of employment or attainment of age fifty-five (55), as
applicable, and the payment date. All elections under this
Section 2.b. must be made in the form and manner prescribed by
the Company. This Section shall not apply to Participants who first
become eligible for participation in the Plan after
December 16, 2005.
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(c)
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Cash-out of Small
Benefits . Notwithstanding the above,
if the Value of the sum of the benefits payable to a Participant or
Beneficiary under this Plan does not exceed $10,000, all such
benefits will be paid in a single lump sum payment in full
discharge of all liabilities with respect to such benefits. For
purposes of this Section, Value shall be determined as of the
Participant’s termination of employment or attainment of age
fifty-five (55), as applicable, and shall mean the present value of
a Participant’s or Beneficiary’s benefits, excluding
the Grandfathered 2004 Benefit, based (i) for terminations
prior to January 1, 2008 upon the applicable mortality table
and applicable interest rate in Code section 417(e)(3)(ii), or for
terminations on or after January 1, 2008, upon the applicable
mortality table and applicable interest rate under Code section
417(e)(3), as amended by the Pension Protection Act of 2006, for
the calendar month preceding the Plan Year in which the termination
of employment or attainment of age fifty-five (55) occurs.
Notwithstanding the foregoing sentence, benefits paid under this
Section 2.c. to a Participant who is reasonably determined by
the Company to be a “specified employee” within the
meaning of Code section 409A(2)(B)(i), shall not commence before
six (6) months following the later of (i) the month in
which the Participant terminates employment, or (ii) the month
in which the Participant attains age fifty-five (55). No interest
shall be paid between the date of termination of employment or
attainment of age fifty-five (55), as applicable, and the payment
date.
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(d)
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Payment Upon Death or
Disability .
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i.
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Death . No other death benefits are
provided under this Plan other than as specified in this
Section 2.d.i.
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A.
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Pre-Retirement Survivor
Benefit . In the event the Participant
dies prior to terminating employment or attaining age fifty-five
(55), a pre-retirement survivor benefit will be payable to the
Participant’s
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surviving
spouse (if any) (the “Pre-Retirement Survivor Benefit”
and the “Surviving Spouse”) in the form elected by the
Participant under the terms of the Plan. If the Participant’s
benefit was payable in a lump sum, the lump sum shall be the
Actuarial Equivalent of a monthly annuity payable for the life of
the Surviving Spouse with no further payments to anyone after his
or her death. The Pre-Retirement Survivor Benefit shall commence as
soon as administratively practicable following the later of
(i) the month in which the Participant dies, or (ii) the
month in which the Participant would have attained age fifty-five
(55). Notwithstanding the foregoing, with respect to all
Participants who elected a lump sum under Section 2.b., a lump
sum Pre-Retirement Survivor Benefit shall be paid to the
Participant’s Surviving Spouse six (6) months following
the later of (i) the month in which the Participant dies, or
(ii) the month in which the Participant would have attained
age fifty-five (55). No Pre-Retirement Survivor Benefit is payable
to anyone other than the Participant’s Surviving
Spouse.
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B.
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Death After Termination of
Employment or Attainment of Age 55 . If a Participant who is
required to wait six (6) months for a lump sum payment (in
accordance with Section 2 of Article V) dies after the
Participant’s termination of employment or attainment of age
fifty-five (55), as applicable, but before payment is made, the
lump sum payment shall be made to the Participant’s
Beneficiary.
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ii.
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Disability
. Notwithstanding
the provisions of this Article V, the benefit of a Disabled
Participant who is eligible for a disability pension from the
Lockheed Martin Retirement Income Plan or the Lockheed Martin
Corporation Retirement Income Plan III shall be paid in the form
elected by the Participant under the terms of the Plan as soon as
administratively practicable following the date the Participant is
reasonably determined by the Company to be Disabled. For the
purposes of this Section 2.d.ii., the terms
“Disabled” or “Disability” shall have the
meaning set forth in the Lockheed Martin Retirement Income Plan or
the Lockheed Martin Corporation Retirement Income Plan III, as
applicable, to the extent consistent with the requirements of Code
section 409A(a)(2(C).
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(e)
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Prospective
Change of Payment Elections . Participants may elect to
change the form of payment of benefits or further delay the
commencement of benefits as provided in this Section 2.e. All
elections under this Section 2.e. must be made in the form and
manner prescribed by the Company. This Section 2.e. does not
apply to Surviving Spouses or Beneficiaries. Subject to the
provisions of Section
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1 of Article
VIII, other changes in the form of benefit, including changes
between actuarially equivalent forms of benefit, if any, may be
made only as determined by the Senior Vice President, Human
Resources, of the Company in accordance with Code section
409A.
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i.
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Form of Payment
. A Participant
who has validly elected payment in a form described in
Section 2.a. of Article V or has elected a lump sum payment in
accordance with Section 2.b. of Article V may later elect to
receive payment in any other annuity form designated by the Senior
Vice President, Human Resources, of the Company, provided that such
election is made in writing not less than twelve (12) months
before the date the payment would have first commenced under the
Participant’s prior election. In addition, the first payment
under the new election must commence no earlier than sixty
(60) months from the date when the payment would have first
commenced under the Participant’s prior election. The timing
of the payment of any form available under this Section 2.e.i.
shall be governed by Section 2.a. of this Article
V.
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ii.
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Timing of Payment
. Regardless of
the form of payment, a Participant may elect to delay payment of
his benefit provided such election is made in writing not less than
twelve (12) months before the date the payment would have
first commenced under the Participant’s prior election. In
addition, the first payment under the new election must commence no
earlier than sixty (60) months from when the payment would
have first commenced under the Participant’s prior
election.
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This
Section 2.e. does not apply to Surviving Spouses or
Beneficiaries.
(f)
Notwithstanding the above, for periods prior to January 1,
2009, (or such later date as may be provided by the Internal
Revenue Service in guidance of general applicability), the Senior
Vice President, Human Resources may provide alternative rules for
elections with respect to the commencement of payment and form of
payment, provided that such rules conform to Code section 409A and
Internal Revenue Service guidance issued thereunder.
(g) If a
Participant participates in more than one supplemental pension plan
sponsored by the Corporation, the Participant must make a single
election that shall apply to his or her benefits under all such
plans with respect to the form of annuity (under Section 2.a.
of this Article 5) and with respect to prospective changes of
payment (under Section 2.e. of this Article 5).
3.
Deductibility of Payments . Subject to the provisions of
Section 1 of Article VIII , in the event that the payment of
benefits under Section 2 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
form and timing of distributions as necessary to maximize the
Company’s tax deductions. In the exercise of its discretion
to adopt a modified distribution
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schedule, the Committee shall
undertake to have distributions made at such times and in such
amounts as most closely approximate the payment method described in
Section 2 consistent with the objective of maximum
deductibility for the Company. The Committee shall have no
authority to reduce a Participant’s accrued benefit under
this Plan or to pay aggregate benefits less than the
Participant’s accrued benefit in the event that all or a
portion thereof would not be deductible by the Company.
4. Change of
Law . Notwithstanding anything to the contrary herein, subject
to the provisions of Section 1 of Article VIII, if the
Committee determines in good faith, based on consultation with
counsel, that the federal income tax treatment or legal status of
this Plan has or may be adversely affected by a change in the Code,
Title I of the Employee Retirement Income Security Act of 1974, or
other applicable law or by an administrative or judicial
construction thereof, the Committee may direct that the benefits 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.
5.
Acceleration upon Change in Control . Notwithstanding any
other provision of the Plan, the accrued benefit of each
Participant shall be one-hundred percent (100%) vested and be
distributed in a single lump sum within fifteen (15) calendar
days following a “Change in Control.”
For purposes of
this Plan, a Change in Control shall include and be deemed to occur
upon the following events:
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(a)
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A tender offer or exchange
offer is consummated for the ownership of securities of the Company
representing 25% or more of the combined voting power of the
Company’s then outstanding voting securities entitled to vote
in the election of directors of the Company.
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(b)
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The Company is merged,
combined, consolidated, recapitalized or otherwise reorganized with
one or more other entities that are not Subsidiaries and, as a
result of the merger, combination, consolidation, recapitalization
or other reorganization, less than 75% of the outstanding voting
securities of the surviving or resulting corporation shall
immediately after the event be owned in the aggregate by the
stockholders of the Company (directly or indirectly), determined on
the basis of record ownership as of the date of determination of
holders entitled to vote on the action (or in the absence of a
vote, the day immediately prior to the event).
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(c)
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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
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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.
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(d)
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At any time within any period
of two years after a tender offer, merger, combination,
consolidation, recapitalization, or other reorganization or a
contested election, or any combination of these events, the
“Incumbent Directors” shall cease to constitute at
least a majority of the authorized number of members of the Board.
For purposes hereof, “Incumbent Directors” shall mean
the persons who were members of the Board immediately before the
first of these events and the persons who were elected or nominated
as their successors or pursuant to increases in the size of the
Board by a vote of at least three-fourths of the Board members who
were then Board members (or successors or additional members so
elected or nominated).
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(e)
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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.
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Notwithstanding
the foregoing, no distribution shall be made solely on account of a
Change in Control and prior to the benefit commencement date
specified in Section 2 of Article V unless the Change in
Control is an event qualifying for a distribution of deferred
compensation under Section 409A(a)(2)(A)(v) of the
Code.
This
Section 5 shall apply only to a Change in Control of Lockheed
Martin Corporation and shall not cause immediate payout of benefits
under this Plan in any transaction involving the Company’s
sale, liquidation, merger, or other disposition of any
subsidiary.
The Committee may
cancel or modify this Section 5 at any time prior to a Change
in Control. In the event of a Change in Control, this
Section 5 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 5 shall not, for purposes
of Section 5, be subject to cancellation or modification
during the five year period
6. Tax
Withholding . To the extent required by law, the Company shall
withhold from benefit payments 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. No benefit payments shall be made to the
Participant until the withholding obligation for taxes under Code
sections 3101(a) and 3101(b) has been satisfied with respect to the
Participant.
7. Retiree
Medical Withholding . A Participant may direct the Company to
withhold from the Participant’s benefit payments hereunder
all or a portion of the amount that the Participant is required to
pay for Company-provided retiree medical coverage.
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8.
Reemployment . Subject to the provisions of Section 1
of Article VIII, the retirement benefit otherwise payable hereunder
to any Participant who previously retired or otherwise had a
Termination of Employment and is subsequently reemployed shall be
treated in a manner consistent with the treatment of the benefit
under the applicable Qualified Plan.
9. Mistaken
Payments . No Participant or Beneficiary shall have any right
to any payment made (1) in error, (2) in contravention to
the terms of the Plan, the Code, or ERISA, or (3) because the
Committee or its delegates were not informed of any death. The
Committee shall have full rights under the law and ERISA to recover
any such mistaken payment, and the right to recover
attorney’s fees and other costs incurred with respect to such
recovery. Recovery shall be made from future Plan payments, or by
any other available means.
ARTICLE
VI
EXTENT OF
PARTICIPANTS’ RIGHTS
1. Unfunded
Status of Plan . This 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 Plan. Notwithstanding the foregoing,
to assist the Company in meeting its obligations under this Plan,
the Company may set aside assets in a trust or trusts described in
Revenue Procedure 92-64, 1992-2 C.B. 422, and the Company may
direct that its obligations under this Plan be satisfied by
payments out of such trust or trusts. 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 Plan be
unfunded for Federal income tax purposes and for purposes of Title
I of the Employee Retirement Income Security Act of
1974.
2.
Nonalienability of Benefits . A Participant’s rights
under this Plan shall not be assignable or transferable and any
purported transfer, assignment, pledge or other encumbrance or
attachment of any payments or benefits under this Plan, or any
interest therein shall not be permitted or recognized, other than
the designation of, or passage of payment rights to, a Beneficiary
or transfer of an interest in this Plan to a Participant’s
former spouse incident to divorce under a Qualified Domestic
Relations Order.
3.
Forfeiture . If, following the date on which a Participant
shall retire under this Plan, a Participant shall engage in the
operation or management of a business, whether as owner,
stockholder, partner, officer, employee, consultant, or otherwise,
which at such time is in competition with the Company or any of its
subsidiaries, or shall disclose to unauthorized persons information
relative to the business of the Company or any of its subsidiaries
which the Participant shall have reason to believe is confidential,
or otherwise act, or conduct oneself, in a manner which the
Participant shall have reason to believe is contrary to the best
interest of the Company, or shall be found by the Committee to have
committed an act during the term of the
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Participant’s
employment which would have justified the Participant being
discharged for cause, the Participant’s retirement benefit
under this Plan shall terminate. Application of this Section will
be at the discretion of the Committee.
ARTICLE
VII
AMENDMENT OR
TERMINATION
1.
Amendment . The Board or its authorized delegate may amend,
modify, suspend or discontinue this Plan at any time subject to any
shareholder approval that may be required under applicable law,
provided, however, that no such amendmen
