Trust Agreement

TRUST AGREEMENT


TRUST AGREEMENT made this 22nd day of December, 1994, by and between Lockheed Corporation, a corporation organized and existing under the laws of the State of Delaware ("Company") and J. P. Morgan California, a California chartered trust company ("Trustee");


WHEREAS, Company has adopted the nonqualified deferred compensation plans and other contractual arrangements as listed in Appendix A (hereinafter called the "Plans");


WHEREAS, Company has incurred or expects to incur liability under the terms of such Plans with respect to the individuals participating in such Plans;


WHEREAS, Company wishes to establish a trust (hereinafter called the "Trust") and to contribute to the Trust assets that shall be held therein, subject to the claims of Company's creditors in the event of Company's Insolvency, as herein defined, until paid to Plan participants and their beneficiaries in such manner and at such times as specified in the Plans;


WHEREAS, it is the intention of the parties that this Trust shall constitute an unfunded arrangement and, to the extent applicable, shall not affect the status of the Plans as unfunded plans maintained for the purpose of providing deferred compensation for a select group of management or highly compensated employees for purposes of Title I of the Employee Retirement Income Security Act of 1974 (hereinafter called "ERISA");


WHEREAS, it is the intention of Company to make contributions to the Trust to provide itself with a source of funds to assist it in the meeting of its liabilities under the Plans;


NOW, THEREFORE, the parties do hereby establish the Trust and agree that the Trust shall be comprised, held and disposed of as follows:


SECTION 1. ESTABLISHMENT OF TRUST.


(a) Company hereby deposits with Trustee in trust the cash and/or property shown on Appendix B, which shall become the principal of the Trust to be held, administered and disposed of by Trustee as provided in this Trust Agreement.


(b) The Trust hereby established shall be irrevocable. 2
(c) The Trust is intended to be a grantor trust, of which Company is the grantor, within the meaning of subpart E, part I, subchapter J, chapter 1, subtitle A of the Internal Revenue Code of 1986, as amended, and shall be construed accordingly.


(d) The principal of the Trust and any earnings thereon shall be held separate and apart from other funds of Company and shall be used exclusively for the uses and purposes of Plan participants and their beneficiaries and Company's general creditors as herein set forth. Plan participants and their beneficiaries shall have no preferred claim on, or any beneficial ownership interest in, any assets of the Trust. Any rights created under the Plans and this Trust Agreement shall be mere unsecured contractual rights of Plan participants and their beneficiaries against Company. Any assets held by the Trust will be subject to the claims of Company's general creditors under federal and state law in the event of Insolvency, as defined in Section 3(a) herein.


(e) Company shall make additional irrevocable contributions to the Trust of cash or other property acceptable to Trustee pursuant to any applicable terms of the Plans. In addition, Company, in its sole discretion, may at any time, or from time to time, make additional irrevocable contributions of cash or other property acceptable to the Trustee. Such additional contribution shall augment the principal to be held, administered and disposed of by Trustee as provided in this Trust Agreement.


(f) Upon a Potential Change in Control of Company (as defined in Section 13(f) below), Company shall, as soon as possible, but in no event later than thirty (30) days following such Potential Change in Control, (1) deliver to Trustee a Payment Schedule (as defined in Section 2(a) below) for each of the Plans indicating the benefits which would be payable if a Change in Control of Company (as defined in Section 13(g) below) had occurred on the date of the Potential Change in Control and (2) make an irrevocable contribution to the Trust of cash or other property acceptable to Trustee that is sufficient, when added to the then principal of the Trust, to pay each Plan participant or beneficiary the benefits to which Plan participants or their beneficiaries would be entitled pursuant to the terms of the Plans if a Change in Control of Company had occurred on the date of the Potential Change in Control of Company.


(g) Upon a Change of Control of Company (as defined in Section 13(g) below), Company shall, as soon as possible, but in no event later than ten (10) days following such Change of Control, (1) deliver to Trustee a Payment Schedule (as defined in Section 2(a) below) for each of the Plans indicating the benefits which are payable as of the date of such Change in Control and


2 3 (2) make an irrevocable contribution to the Trust of cash or other property acceptable to Trustee that is sufficient, when added to the then principal of the Trust, to pay each Plan participant or beneficiary the benefits to which Plan participants or their beneficiaries are entitled pursuant to the terms of the Plans as of the date on which the Change of Control occurred.


SECTION 2. PAYMENTS TO PLAN PARTICIPANTS AND THEIR BENEFICIARIES.


(a) From time to time Company or such party as it shall designate in writing to Trustee shall deliver to Trustee a schedule or schedules (each, a "Payment Schedule") that indicates the amounts payable and applicable withholding taxes in respect of each Plan participant (and his or her beneficiaries), or that provides a formula or other instructions acceptable to Trustee for determining the amounts so payable, the form in which such amount is to be paid (as provided for or available under the Plans), and the time of commencement for payment of such amounts. Except as otherwise provided herein, Trustee shall make payments to the Plan participants and their beneficiaries in accordance with such Payment Schedule. Trustee shall deduct from any such payments any withholding taxes which Company has determined apply and remit such withholding taxes to Company. Company shall be responsible for payment and reporting of such withholding taxes to the appropriate taxing authorities.


(b) The entitlement of a Plan participant or his or her beneficiaries to benefits under the Plans shall be determined by Company or such party as it shall designate under the Plans, and any claim for such benefits shall be considered and reviewed under the procedures set out in the Plans. Under no circumstances shall Trustee have any duty to determine any person's payment rights or other entitlements under the Plans.


(c) Company may make payment of benefits directly to Plan participants or their beneficiaries as they become due under the terms of the Plans. Company shall notify Trustee of its decision to make payment of benefits directly prior to the time amounts are payable to participants or their beneficiaries. In addition, if the principal of the Trust, and any earnings thereon, are not sufficient to make payments of benefits in accordance with the terms of the Plans, as reflected on a Payment Schedule, Company shall make the balance of each such payment as it falls due. Trustee shall notify Company where principal and earnings of the Trust are not sufficient to make any such payments.


(d) Notwithstanding anything contained in this Section 2 to the contrary, Company has contracted with a third-party (a "Third Party Payor") for each Plan, as indicated in Appendix A,


3 4 to pay benefits to participants and beneficiaries under that Plan. Accordingly, from time to time, Company or such party as it shall designate in writing to Trustee shall deliver to Trustee a Payment Schedule with instructions to pay the amounts described therein to the appropriate Third Party Payor(s). Except as otherwise provided herein, Trustee shall make payments to the Third Party Payor(s) in accordance with such Payment Schedule and such instructions, which Payment Schedule and instructions shall provide whether (1) Trustee shall pay to the Third Party Payor the gross amount payable to Plan participants and beneficiaries, with the Third Party Payor responsible for withholding any applicable withholding taxes and reporting and remitting such withholding taxes to the appropriate taxing authorities or (2) Trustee shall pay to the Third Party Payor the amount of benefits net of withholding taxes (as set forth in the Payment Schedule) and pay to Company the amount of the withholding taxes, with Company responsible for reporting and remitting to the appropriate taxing authorities. If any financial institution that has been designated a Third Party Payor for a particular Plan for any reason ceases to act as Third Party Payor for that Plan, Company shall designate a successor Third Party Payor and provide Trustee with written notice of such designation, or, if Company fails to make such a designation within thirty (30) days after the date on which such Third Party Payor ceases to so act, Trustee may designate a successor Third Party Payor. Any successor Third Party Payor designated by the Trustee shall be a bank or trust company qualified and authorized to do trust business in the State of California and having on the date of designation combined capital and surplus and undivided profits of at least $1,000,000,000 or total assets of at least $10,000,000,000. The provisions of Section 2(a) shall apply to benefits payable under a Plan at any time that there is no designated Third Party Payor for such Plan.


SECTION 3. TRUSTEE RESPONSIBILITY REGARDING PAYMENTS TO TRUST BENEFICIARY WHEN COMPANY IS INSOLVENT.


(a) Trustee shall cease payment of benefits to Plan participants and their beneficiaries or the Third Party Payor(s) if the Company is Insolvent. Company shall be considered "Insolvent" for purposes of this Trust Agreement if (i) Company is unable to pay its debts as they become due, or (ii) Company is subject to a pending proceeding as a debtor under the United States Bankruptcy Code.


(b) At all times during the continuance of this Trust, as provided in Section 1(d) hereof, the principal and income of the Trust shall be subject to claims of general creditors of Company under federal and state law as set forth below.


(1) The Board of Directors and the Chief Executive
Officer of Company shall have the duty to inform
Trustee in


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writing of Company's Insolvency. If a person claiming to be a
creditor of Company alleges in writing to Trustee that Company has
become Insolvent, Trustee shall determine whether Company is Insolvent
and, pending such determination, Trustee shall discontinue payment of
benefits to Plan participants or their beneficiaries.


(2) Unless Trustee has actual knowledge of Company's
Insolvency, or has received notice from Company or a person claiming
to be a creditor alleging that Company is Insolvent, Trustee shall
have no duty to inquire whether Company is Insolvent. Trustee may in
all events rely on such evidence concerning Company's solvency as may
be furnished to Trustee and that provides Trustee with a reasonable
basis for making a determination concerning Company's solvency.


(3) If at any time Trustee has determined that Company is
Insolvent, Trustee shall discontinue payments to Plan participants or
their beneficiaries or the Third Party Payor(s) and shall hold the
assets of the Trust for the benefit of Company's general creditors.
Nothing in this Trust Agreement shall in any way diminish any rights
of Plan participants or their beneficiaries to pursue their rights as
general creditors of Company with respect to benefits due under the
Plans or otherwise.


(4) Trustee shall resume the payment of benefits to Plan
participants or their beneficiaries or the Third Party Payor(s) in
accordance with Section 2 of this Trust Agreement only after Trustee
has determined that Company is not Insolvent (or is no longer
Insolvent).


(c) Provided that there are sufficient assets, if Trustee discontinues the payment of benefits from the Trust pursuant to Section 3(b) hereof and subsequently resumes such payments, the first payment following such discontinuance shall include the aggregate amount of all payments due to Plan participants or their beneficiaries under the terms of the Plans, or the Third Party Payor(s) pursuant to the Payment Schedule, for the period of such discontinuance, less the aggregate amount of any payments made to Plan participants or their beneficiaries or the Third Party Payor(s) by Company in lieu of the payments provided for hereunder during any such period of discontinuance.


SECTION 4. PAYMENTS TO COMPANY.


Except as provided in Section 2 or Section 3 hereof, Company shall have no right or power to direct Trustee to return to Company or to divert to others any of the Trust assets before all payment of benefits have been made to Plan participants and their beneficiaries pursuant to the terms of the Plans.


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SECTION 5. INVESTMENT AUTHORITY.


(a) Trustee shall have full investment authority with respect to the Trust assets, subject to the right of Company to designate in writing a general investment policy with respect to Trust assets which policy may be amended from time to time in Company's sole discretion. Subject to any such general investment policy, Trustee may invest and reinvest in and acquire by purchase, exchange or otherwise property of any character whatsoever, foreign or domestic, or interests or participations therein. Without limiting the foregoing, but subject to any such general investment policy, Trustee (1) shall have the powers regarding Trust investments set forth in California Probate Code Sections 16223 through 16225 as such provisions existed on the date of execution of this instrument, and (2) shall have the power to invest in (i) common or collective trust funds advised or managed by Trustee or an affiliate of Trustee, and (ii) shares of or interests in any mutual fund or any investment company for which Trustee or an affiliate of Trustee performs investment advisory, custody, distribution, management or other services.


Company recognizes that allocation by Trustee of Trust assets among such funds or companies may affect the compensation of Trustee or such affiliate with respect to such funds or companies. Trustee's compensation as provided for in Section 9 hereof shall not be reduced by the compensation, if any, with respect to such funds or companies received by Trustee or such affiliate. Company specifically waives any rule of undivided loyalty or any other conflict of interest with respect to such investment.


(b) Subject to the Company's written general investment policy, Trustee is authorized to exercise from time to time in its sole discretion the following powers in respect of any property of the Trust, it being intended that these powers be construed in the broadest possible manner:


(1) Power to sell at public or private sale for cash and
upon such terms ...