Exhibit 10.8
SUPPLEMENTAL RETIREMENT BENEFIT
PLAN
FOR CERTAIN TRANSFERRED
EMPLOYEES
OF LOCKHEED MARTIN
CORPORATION
(Effective December 31,
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 was amended and restated, 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. The Plan is hereby amended and restated
effective December 31, 2008 to order to make further
clarifications in accordance with the final Treasury Regulations
issued under Code section 409A and to make other administrative
clarifications.
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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, to the extent permissible under Code section 409A. 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
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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
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other annual pensionable earnings. The average
of the highest years of MICP compensation shall 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, to the extent permissible under Code section
409A.
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, to the extent permissible under Code section
409A. 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
. Except as otherwise provided herein, a Participant may make an
initial payment election between an annuity and a lump sum payment
under the terms and conditions described in this Section 2.
All elections under this Section 2 must be made in the form
and manner prescribed by the Senior Vice President, Human
Resources. No election made pursuant to this Section 2 may
affect a payment due in the same calendar year in which the
election is made or accelerate payment into the calendar year in
which the election is made.
(a) Regular Form . Unless a
Participant has elected a lump sum payment under Section 2(b)
of this Article V, benefits under this Plan shall be paid in the
form of an annuity. Participants who first become eligible for
participation in the Plan after December 16, 2005 shall
receive their benefits in the form of an annuity. Benefits paid in
a form described in this Section 2(a) shall commence as soon
as administratively practicable (but no more than 90 days)
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
the later of (i) six (6) months following 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.
i. Selection of Annuity Form
. Prior to his termination of employment, a Participant may elect
to receive benefits in any actuarially equivalent annuity form that
is available under the applicable 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. If the Participant has not validly
elected an annuity form before his termination of employment 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.
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(b) Lump Sum Option . This
Section shall not apply to Participants who first become eligible
for participation in the Plan after December 16, 2005. In lieu
of the forms described in Section 2(a) of Article V, a
Participant may make a one-time initial election to receive a full
lump sum payment in 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 31,
2008 (or such other date determined by the Senior Vice President,
Human Resources and communicated to Participants) and the
Participant’s employment has not terminated employment 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 (b) must be made in the
form and manner prescribed by the Company.
(c) 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.
(d) 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 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) 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 Code section
409A, 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 . Form of
Payment . A Participant who has validly elected (or deemed to
have elected) payment as an annuity (as described in
Section 2(a) of Article V) or has validly elected a lump sum
payment (in accordance with Section 2(b) of Article V) may
later elect to receive payment in any form (annuity or lump sum)
designated by the Senior Vice President, Human Resources, of the
Company, provided that such election is made in the form and manner
determined by the Senior Vice President, Human Resources 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.
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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 in the form
and manner determined by the Senior Vice President, Human
Resources, 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. 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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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).
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h. No payment shall commence or be
made under this Section 2 on account of a Participant’s
termination of employment unless the termination of employment
constitutes a “separation from service” under Code
section 409A(a)(2)(a)(i).
3. Deductibility of Payments
. Subject to the provisions of Code section 409A, 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 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 herein to the contrary, if the Committee
determines in good faith, based on consultation with counsel and in
accordance with the requirements of Code section 409A, 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
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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 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 both an
event qualifying for a distribution of deferred compensation under
Section 409A(a)(2)(A)(v) of the Code and an event qualifying
under this Section 5.
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
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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.
8. Reemployment . The
retirement benefit otherwise payable hereunder to any Participant
who previously retired or otherwise had a Termination of Employment
and is subsequently reemployed may not be suspended during the
Participant’s period of reemployment except as permitted
under Code section 409A.
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
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Beneficiary or transfer of an interest in this
Plan to a Participant’s spouse, former spouse, or child
incident to divorce under a Qualified Domestic Relations Order
(which shall be interpreted and administered in accordance with
Code sections 414(p)(1)(B) and 409A), provided that the form of
payment designated in such order is an annuity as provided in
Section 2(a) of Article V.
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 Participant’s
employment which would have justified the Participant being
dis
