Lockheed 1982 Employee Stock Purchase Program

LOCKHEED CORPORATION
1982 EMPLOYEE STOCK PURCHASE PROGRAM


A. PREAMBLE


The Lockheed Corporation (the "Company") 1982 Employee Stock Purchase Program (the "Program") is comprised of two separate stock option plans (collectively referred to as the "Plans"). The first of the Plans is called the Incentive Stock Option Plan (the "Incentive Plan") and is intended to be used exclusively for the grant of options qualifying under Section 422A of the Internal Revenue Code of 1954, as amended (the "Code"). The second Plan is called the Nonstatutory Stock Option Plan (the "Nonstatutory Plan") and is intended to be used exclusively for the grant of nonstatutory options, either with or without stock appreciation rights. Both the Incentive Plan and the Nonstatutory Plan, in addition to being subject to the requirements contained within the respective Plans, are subject to the General Program Requirements specified herein and these requirements are hereby expressly made a part and incorporated into the terms of each of the Plans.


B. GENERAL PROGRAM REQUIREMENTS


1. PURPOSE. The purpose of the Program is to strengthen the Company and its subsidiaries by providing an additional means of retaining and attracting competent management personnel and by providing to participating officers and other key employees an added incentive for high levels of performance and for unusual efforts to increase the earnings of the Company.


2. ADMINISTRATION. The Program shall be administered by the Management Development and Compensation Committee of the Board of Directors of the Company (the "Committee"), which Committee shall consist of three or more members of the Board of Directors who are not eligible to receive options or stock appreciation rights under the Program and who have not been eligible, at any time within one year prior to appointment to the Committee, for selection as a person to whom stock may be allocated or to whom options or stock appreciation rights may be granted pursuant to the Program or any other plan of the Company or any of its affiliates entitling the participants therein to acquire stock, stock appreciation rights or stock options of the Company or any of its affiliates.


Subject to the express provisions of the Program and each of the Plans, the Committee shall have authority to construe and interpret the Program, and to define the terms used herein, to prescribe, amend and rescind rules and regulations relating to the administration of the Program, to determine the duration and purpose of leaves of absence which may be granted to participants without constituting a termination of their employment for the purposes of the Program, and to make all other determinations necessary or advisable for the administration of the Program. The determinations of the Committee on the matters referred to in this Section shall be conclusive. Any action of the Committee with respect to the administration of the Program shall be taken pursuant to a majority vote, or to the written consent of a majority of its members.


3. PARTICIPATION. Subject to the express provisions of the Program, the Committee shall determine the officers and other key employees of the Company and its subsidiaries to whom options (including options with stock appreciation rights) shall be granted, the terms and provisions of the respective option agreement (which need not be identical), the time or times at which such options and stock appreciation rights shall be granted, and the number of shares subject to each option and, where applicable, companion stock appreciation rights. An individual who has been granted an option may, if he or she is otherwise eligible, be granted an additional option or options and, where applicable, companion stock appreciation right or rights, or stock appreciation rights on an option or options previously granted without companion stock appreciation rights, if the Committee shall so determine. Members of the Committee shall not be eligible, while members of the Committee, to receive the grant of options or stock appreciation rights under the Program.


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The determination of the Committee with respect to the granting of all options and stock appreciation rights shall be presented to the Board of Directors and grants shall not be made except upon the approval of such recommendations by the Board of Directors.


4. STOCK SUBJECT TO PROGRAM. Subject to adjustment as provided in Section B6 hereof, the stock to be offered under the Program shall be shares of the Company's authorized but unissued Common Stock, $1 par value (hereinafter called "Common Stock"), and the aggregate amount of stock to be delivered upon exercise of all options and stock appreciation rights granted under the Program shall not exceed 1,250,000 of such shares. If any option granted pursuant to the Program shall expire or terminate for any reason without having been exercised in full, the unissued shares subject thereto shall again be available for the purposes of the Program. For purposes of determining the number of shares to charge against the maximum limitation set forth above, the exercise of a stock appreciation right shall be treated as the exercise of the portion of the companion option which is surrendered in connection with exercise of the stock appreciation right.


5. NONTRANSFERABILITY. An option or stock appreciation right granted under the Program shall, by its terms, be nontransferable by the option holder other than by will or by the laws of descent and distribution, and shall be exercisable during his or her lifetime only by him or her.


6. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION. If the outstanding shares of the Common Stock of the Company are increased, decreased, changed into, or exchanged for a different number or kind of shares or securities of the Company through reorganization, merger, recapitalization, reclassification, stock split-up or otherwise, an appropriate and proportionate adjustment shall be made in the number and kind of shares as to which options may be granted. A corresponding adjustment changing the number or kind of shares allocated to unexercised options or portions thereof, which shall have been granted prior to any such change shall likewise be made. Any such adjustment, however, in the outstanding options shall be made without change in the total price applicable to the unexercised portion of the option but with a corresponding adjustment in the price for each share covered by the option. Corresponding adjustments shall be made with respect to stock appreciation rights.


Upon the dissolution or liquidation of the Company, or upon a reorganization, merger or consolidation, of the Company with one or more corporations as a result of which the Company is not the surviving corporation, or upon a sale of substantially all the property or stock of the Company to another corporation, and the new employer corporation (or an affiliate), if applicable, does not assume the options (with stock appreciation rights, if any) granted under the Program or substitute comparable options and rights therefor, the options (and, where applicable, companion stock appreciation rights) theretofore granted hereunder shall become exercisable to the full extent theretofore not exercised, but in no event after the option period specified in each individual option agreement.


Adjustments under this Section shall be made by the Board of Directors of the Company, whose determination as to what adjustments shall be made, and the extent thereof, shall be final, binding and conclusive. No fractional shares of stock shall be issued under the Program or any such adjustment. If for any reason any person becomes entitled to any interest in a fractional share, a cash payment shall be made of an equivalent value for such interest.


7. AMENDMENTS AND TERMINATION. The Board of Directors of the Company may at any time suspend, amend or terminate the Program or any part thereof and may, with the consent of an option holder, make such modifications of the terms and conditions of his or her options and, where applicable, companion stock appreciation rights, as it shall deem advisable; provided that except as permitted under the provisions of Section B6 of the Program, no amendment or modification may be adopted without further approval of the shareholders of the Company which would


(a) increase the maximum number of shares issuable under
the Program;


(b) decrease the minimum option price;


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(c) increase the maximum term of options or stock
appreciation rights provided for herein;


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