DIRECTORS EQUITY PLAN
May 1, 1999
As Amended May 1, 2000
As Amended Effective January 1, 2002
As Amended Effective October 24, 2002
As Amended Effective January 1, 2005
As Amended Effective January 1, 2007
TITLE, PURPOSE AND AUTHORIZED SHARES
This Plan shall be known as “Lockheed Martin Corporation Directors Equity Plan” and shall become effective on May 1, 1999. The purpose of this Plan is to attract, motivate and retain experienced and knowledgeable directors for the Corporation and to further align their economic interests with the interests of stockholders generally. The total number of shares of Common Stock that may be delivered pursuant to awards under this Plan is 1,000,000, subject to adjustments contemplated by Section 7.1. Shares of Common Stock subject to an Option terminating or expiring for any reason prior to its exercise, and Units and Dividend Equivalents that are forfeited pursuant to the Plan, shall be available for Awards to be granted during the term of the Plan.
The Plan is amended and restated, effective January 1, 2005, in order to comply with the requirements of Code section 409A. This amendment and restatement of the Plan shall apply only to the portion of a Participant’s Account Balance that is earned or becomes vested on or after January 1, 2005 (and any earnings attributable to that portion). The portion of a Participant’s Account Balance that was earned and vested prior to January 1, 2005 (and any earnings attributable to that portion) shall be governed by the terms of the Plan in effect on December 31, 2004, which is attached hereto as Appendix A.
The following terms shall have the meaning specified below unless the context clearly indicates otherwise:
Accounts means a Director’s Stock Unit Account and Dividend Equivalent Stock Account.
Award means an award granted pursuant to Section 3.1.
Award Date means January 15 of each year (or if January 15 falls on a weekend or holiday, the next following business day).
Beneficiary shall have the meaning specified in Section 8.2(b).
Board of Directors or Board means the Board of Directors of the Corporation.
Change in Control means:
1) A tender offer or exchange offer is consummated for the ownership of securities of the Corporation representing 25% or more of the combined voting power of the Corporation’s then outstanding voting securities entitled to vote in the election of directors of the Corporation.
2) The Corporation 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 Corporation (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 Corporation representing 25% or more of the combined voting power of the Corporation’s then outstanding securities entitled to vote in the election of directors of the Corporation.
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 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 Corporation approve a plan of liquidation and dissolution or the sale or transfer of substantially all of the Corporation’s business and/or assets as an entirety to an entity that is not a Subsidiary.
Code means the Internal Revenue Code of 1986, as amended.
Common Stock or Stock means shares of Common Stock of the Corporation, par value $1.00 per share, subject to adjustments made under Section 7.1 or by operation of law.
Corporation means Lockheed Martin Corporation, a Maryland corporation, and its successors and assigns.
Director means a member of the Board of Directors of the Corporation who is not an officer or employee of the Corporation or any of its subsidiaries.
Disability means “disabled” within the meaning of Section 409A(a)(2)(C) of the Code.
Dividend Equivalent means the amount of cash dividends or other cash distributions that would have been paid by the Corporation on Stock Units then credited to a Director’s Stock Unit Account had those Stock Units been shares of common stock.
Dividend Equivalent Stock Account means the bookkeeping account maintained by the Corporation on behalf of a Director which is credited with Dividend Equivalents in the form of Stock Units in accordance with Section 4.2.
Effective Date means May 1, 1999, or such later date as is specified in an amendment or in the Plan.
Exchange Act means the Securities Exchange Act of 1934, as amended from time to time.
Fair Market Value means, for purposes of determining the exercise price of an Option or in the case of determining a Stock Unit, the closing price of the Stock as reported on the composite tape of the New York Stock Exchange issues on the relevant date, or, if no sale of Stock is reported for that date, the next preceding day for which there is a reported sale. In the case of determining the number of Options issued pursuant to Section 3.1(c), Fair Market Value shall mean the fair market value of an option to buy Stock granted on the relevant day as determined using the Black Scholes option pricing methodology.
Option means a Nonqualified Stock Option to purchase shares of Common Stock with the terms and conditions as described in Article V.
Plan means the Lockheed Martin Corporation Directors Equity Plan.
Retirement means retirement from the Corporation pursuant to Section 2.03 of the Corporation’s By-Laws at the expiration of a Director’s term.
Stock Unit or Unit means a non-voting unit of measurement that is deemed for bookkeeping purposes to be equivalent to an outstanding share of Common Stock of the Corporation.
Stock Unit Account means the bookkeeping account maintained by the Corporation on behalf of each Director which is credited with Stock Units in accordance with Section 4.1.
Subsidiary means, 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 corporations), 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.
3.1. Award. On each Award Date during the term of this Plan, each Director shall be granted, in the form elected by the Director pursuant to Section 3.2, one of the following Awards:
||Units with a Fair Market Value of $110,000 for awards made on or after January 1,2007 credited to the Director's Stock Unit Account; |
||Units credited to the Director's Stock Unit Account with a Fair Market Value of 55,000 for awards made on or after January 1, 2007 and Options to purchase shares of Stock with a Fair Market Value of $55,000 for awards on or after January 1, 2007; or |
||Options to purchase shares of Stock with a Fair Market Value of $110,000 for awards made on or after January 1, 2007. |
||In the case of any Director who is not serving as a Director on the Award Date but becomes a Director following the immediately succeeding annual meeting of the Corporation, the Award granted to the Director on May 1 will be two-thirds (2/3) of the amount of the form elected by the Director pursuant to Section 3.1(a), (b), or (c). Awards made upon the filling of a vacancy in the Board of Directors at any other time of the year will be similarly prorated to reflect the portion of the year during which the individual serves as a Director. |
||In the case of a Director who will be eligible for Retirement on or before the annual meeting following an Award Date, the award to be made to that Director will be one-third (1/3) of the amount of the form elected by the Director pursuant to Section 3.1(a), (b), or (c). |
For purposes of this Section 3.1, Fair Market Value shall be determined on the Award Date.
3.2. Election. By December 31 of the calendar year prior to each Award Date, a Director must file an election form, as provided by the Corporation, with the Secretary of the Corporation specifying the form of the Award the Director elects to receive pursuant to Section 3.1. A Director’s election shall be irrevocable during any calendar year in which it is in effect. A Director’s election shall remain in effect and shall be deemed to have been made for a subsequent calendar year unless the Director files a revised election form with the Secretary of the Corporation by December 31 of the preceding calendar year. Notwithstanding the preceding sentences of Section 3.2, in a Director’s first year of service on the Board, an election shall be valid if it is filed within 30 days after the Director commenced service as a Director (but in any event prior to the date on which Units are credited). At the time of filing the election form specifying the Award the Director elects to receive pursuant to Section 3.1, the Director shall also specify the manner and form of distribution, pursuant to Section 4.4, for the particular Award to which the election relates. In the absence of an initial election as to the manner and form of distribution, the Director’s distribution for an applicable Award shall be a lump sum payment in cash.