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<DESCRIPTION>EXHIBIT 99.1
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EXHIBIT 99.1
LOCKHEED MARTIN [LOGO]
Corporate Headquarters
Corporate Policy Statement CPS-704
Revision No: 2
Effective: September 3, 2002
Copyright 2002 Lockheed Martin Corporation
Current policies and procedures are on the Lockheed Martin Intranet
International Consultants
Restrictions | Preliminary Legal Determination | Approval Procedure | Terms of
Agreement | Payment of Fees and Expenses | Administration | General
Applicability Statement | ( All Exhibits and Forms required by this policy are
in the International Consultant Administration Manual)
<PAGE>
1.0 Policy
1.1 It is Lockheed Martin policy to contract for international consultants on a
selective, as-needed basis and only after determining that the special expertise
needed is not available within the Corporation. All international consultants
must comply with the laws and regulations of the foreign countries in which they
operate (except to the extent inconsistent with United States law) and the laws
and regulations of the US, particularly the provisions of the Foreign Corrupt
Practices Act (FCPA) (see CPS-730, Compliance with the Foreign Corrupt Practices
Act), the Consent Decree dated April 13, 1976 between Lockheed Corporation and
the Securities and Exchange Commission, and the Consent Order dated June 23,
1978 between Lockheed Corporation and the Federal Trade Commission. (If there is
a real or apparent inconsistency between the requirements of US and foreign law,
the matter will be resolved by the Assistant General Counsel-International.)
1.2 It is Lockheed Martin policy that its consultants be bound by the applicable
provisions of the Corporation's Code of Ethics and Business Conduct, Setting the
Standard (the "Code").
1.3 The use of an individual or firm that has been convicted of a felony
offense, or is debarred, suspended, proposed for debarment or otherwise
ineligible for government procurement programs may affect the present
responsibility of the Corporation in connection with government contracts and
may impair the Corporation's ability to defend against certain types of legal
actions. For these reasons, subject to any applicable law or regulation,
Lockheed Martin will not knowingly retain as an international consultant any
individual or firm that has been convicted of a felony offense in any
jurisdiction or country, or is presently listed by any government agency as
debarred, suspended, proposed for debarment, or otherwise ineligible for
government procurement programs. The element's senior executive may authorize an
exception to these prohibitions following consultation with the corporate
Assistant General Counsel-International.
1.4 It is Lockheed Martin policy that no payments will be made to, and no work
for the Corporation will be done by, any international consultant as defined by
this policy until a written agreement, approved as provided in this policy, has
been executed by both parties. Refer to CMS-550, Accounting for Consultant
Commissions and Other Costs, for appropriate accounting policy and procedures.
1.5 Violation of this policy, or the making of any commitment in violation of
this policy, may result in disciplinary action, including termination of
employment.
1.6 It is Lockheed Martin policy that, with respect to entities controlled (but
not wholly-owned) by the Corporation (normally an ownership interest in excess
of 50%), the Assistant General Counsel-International will ensure that policies
substantially similar to this policy are adopted. With respect to entities in
which the Corporation has a substantial
<PAGE>
(but not controlling) ownership interest, (i.e., 20%-50%), the Assistant General
Counsel-International will ensure that such entities have adopted appropriate
controls and are taking the steps necessary to effect compliance with the
requirements of this policy by all of their officers, employees, and
consultants.
2.0 Definitions
International Consultant - An individual or firm possessing special knowledge,
expertise, skill, or training which may be combined with operational experience.
The capabilities possessed by a consultant are generally not available within
the Corporation. For purposes of this policy, the term "international
consultant" or "consultant" will include any agent, representative, broker, or
any other person or firm by whatever name known, of US or any other nationality,
who has or is likely to have contact with a foreign customer (including contact
in the US) and is hired or otherwise retained to provide services directly
related to obtaining, retaining, or facilitating business or business
opportunities, including offset/countertrade commitments to foreign governments,
in or with any foreign country or foreign firm by: (a) advising Lockheed Martin
management in connection with business development, acquisition, or retention in
such environment; or (b) representing Lockheed Martin in connection with sales
efforts involving foreign customers, foreign firms, or foreign governments,
except as specifically excluded in section 3.0 below.
Note: In any instance where it is not clear whether an individual or firm
is a consultant, the matter must be referred to the element's Legal
department for determination.
Convicted - For the purposes of this policy, includes any plea (including pleas
of nolo contendere, no contest or guilty), bail forfeiture, or verdict or
finding of guilt, regardless of whether adjudication was withheld or any
sentence or fine was imposed by the court.
Consultant Review Board (CRB) - The CRB is responsible for reviewing and
approving proposed consultant arrangements that exceed the thresholds set forth
in Exhibit C, Consultant Review Board/Consultant Review Committee Guidelines
(CRB/CRC Guidelines). The composition of the CRB will be the Vice President
Corporate Communications, Controller, Treasurer, and Associate General
Counsel-Litigation & Compliance. A quorum will constitute three of the four CRB
members. The corporate Director Consultant Services will serve as a nonvoting
Executive Director.
Consultant Review Committee (CRC) - The CRC is responsible for reviewing and
approving proposed consultant arrangements that exceed the thresholds set forth
in the CRB/CRC Guidelines. The CRC also is responsible for approving corporate
policies and procedures with respect to international consultants; approving the
Corporation's standard terms and conditions for use in all consultant
agreements; and establishing the CRB and CRC review thresholds. The composition
of the CRC will be the Chief Financial Officer, General Counsel, and corporate
Vice President Business Development. A business area Executive Vice President
will participate on a rotating, non-conflict basis.
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Firm - A corporation, partnership, joint venture, or any other business entity.
Government Official - Any officer or employee of a government or any department,
agency, or instrumentality thereof, or any person acting in an official capacity
for or on behalf of such government or department, agency or instrumentality, or
any official, employee, or person acting on behalf of a public international
organization.
3.0 Exclusions
3.1 Domestic business development consultant services will be retained in
accordance with CPS-703, Domestic Business Development Consultants.
3.2 An individual or firm that purchases products for resale is a distributor,
not a consultant, and falls outside the scope of this policy. The determination
that a distributor relationship is bona fide, and is not a consultant
relationship, must be made by the element's Legal department.
3.3 An individual or firm performing proposal or contract support services under
a services contract or services subcontract, including without limitation
post-award services and offset-related services (collectively, "services
contract"), is a services subcontractor, not a consultant. Such a services
contract will always include a written statement of work whose achievement can
be objectively verified in terms of a tangible delivered work product such as a
product or component design, a technical proposal, editing or artwork, or other
technical service.
3.3.1 A services contract may not be entered into for the purposes of
obtaining consultant services. A services contract will not be entered
into with an individual or firm that is or, within the five years
prior to the effective date of the services contract, has been a
consultant for any Lockheed Martin entity, unless prior written
approval is obtained from the Assistant General Counsel-International,
for services contracts not in excess of $250,000 a year or $500,000
for any one (multi-year) contract; the CRB for services contracts in
excess of these amounts, up to $1,000,000 a year or $2,000,000 for any
one (multi-year) contract; and from the CRC for services contracts in
excess of these amounts.
3.4 Persons or companies supplementing in-house skills on a temporary basis are
not considered consultants. Contracts for such services will be processed in
accordance with normal procurement procedures. Examples of such services are
clerical, administrative, and housekeeping services, facilities and grounds
maintenance, and equipment servicing.
3.5 Services performed by individuals requiring professional qualifications,
such as certified public accountants, attorneys, architects, registered
engineers, plant physicians, and nurses will be contracted for as specified in
normal procurement and other applicable procedures. Legal services will be
contracted for in accordance with CPS-701, Performance of Legal Activities.
Purchases of outside accounting and related services, and all consulting
services from Lockheed Martin's independent accountants will be
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contracted for in accordance with CPS-419, Control of Accounting Operations, and
Controller's Manual Statement CMS-010, Purchase of Outside Accounting and
Related Services.
4.0 Restrictions
4.1 No consultant will be a government official or an official of a political
party or a candidate for political office.
4.2 No consultant will be an officer, director, employee, or "affiliate" (as
that term is defined under the Securities Act of 1933) of any customer, unless
such dual activity is permissible in the country involved and is approved in
writing by the chief executive officer of such customer. The Director Consultant
Services will maintain such written approval.
Note: The criteria set forth in 4.1 and 4.2 above apply to the owners, principal
shareholders, officers, and active representatives of a consultant organization,
or anyone in receipt of compensation from a consultant organization.
4.3 No payments to or agreements with any consultant will be made in violation
of applicable US law, the law of the affected foreign country, or the Code.
4.4 No payment will be made and no other thing of value will be given to any
consultant if there is reason to believe that, in connection with the
consultant's performance under its agreement with Lockheed Martin or on Lockheed
Martin's behalf, all or any portion of the payment or other thing of value will
be offered, given or promised, directly or indirectly, to any government
official or any political party or official thereof, or any candidate for
political office. This prohibition will not apply to:
(a) Reasonable provision for facilitating or expediting payments of
money, gifts, or other things of value to government officials (except
for US federal, state, or local officials) whose duties are
essentially non-discretionary or clerical, where such payments or
gifts are necessary to ensure or expedite performance of the
official's duties (e.g., as specified in the FCPA, facilitating or
expediting payments for routine governmental actions such as payments
for expediting shipments through Customs or overseas phone calls, or
to ensure police protection or mail delivery) and are not for the
purpose of obtaining or retaining business for Lockheed Martin or
directing business to any person. Such expediting payments are
discouraged and may only be made where necessary to secure adequate
performance of a service or action that Lockheed Martin is entitled to
have performed in any case and that is necessary to the conduct of its
business and where the conditions set forth in CPS-730, Exhibit B,
Operational Directions, have been satisfied, or
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(b) Furnishing meals, refreshments, entertainment, or transportation
of reasonable value, or furnishing pictures, models of Lockheed Martin
products of little or no intrinsic value, or other items of small
dollar value marked with the Lockheed Martin logo that are distributed
for advertising or commemorative purposes, where the conditions set
forth in CPS-730, Exhibit E, Hospitality Guidelines, have been
satisfied.
5.0 Preliminary Legal Determination
5.1 The Legal department of the element desiring to retain the prospective
consultant, in conjunction with the corporate Legal department, is responsible
for determining the legality of contracting with the prospective consultant.
5.2 The requester also must coordinate with the Director Consultant Services to
ascertain whether the prospective consultant is already under agreement with the
Corporation.
6.0 Approval Procedure
The actions required for the initial appointment or renewal of any international
consultant are provided below. Actions that are optional for renewal of a
consultant are marked with an asterisk (*).
Procedure
Element requesting the consultant services
1. No later than 90 days prior to the desired appointment/renewal
date, submit an appointment/renewal package to the proposed consultant
with the following enclosures:
(a) Form C-704-1, Application for International Consultant
Appointment, or form C-704-2, Application for International
Consultant Renewal, as applicable
(b) *The Code, which in appropriate cases should be provided in
the native language of the consultant
(c) *Form C-704-3, International Consultant Letter of Appointment
(optional)
(d) *Form C-704-4, Disclaimer Letter, and
(e) *Exhibit A, Lockheed Martin International Consultant
Agreement, or Exhibit B, Lockheed Martin International
Representative Agreement (collectively, "the Agreement"), as
applicable, provided for information purposes only.
<PAGE>
2. Prepare form C-704-6, Regional President's Recommendation - New
International Consultant, or form C-704-7, Regional President's
Recommendation - Renewal of International Consultant or Change in
Product Coverage (collectively, "the Recommendation") as applicable,
and submit it to the cognizant Regional President.
Cognizant Regional President
3. Review, complete, and approve the Recommendation, ensuring that it
fully justifies the retainer and/or commission recommended.
4. *Perform a preliminary due diligence by meeting with the proposed
consultant, visiting the proposed consultant's offices in the country
where services would be performed, and obtaining an International
Company Profile (ICP) from the US Embassy in that country (when
available) or otherwise obtaining the US Embassy's evaluation of the
consultant.
5. Submit the completed Recommendation and ICP (or US Embassy
evaluation), and other information deemed relevant or appropriate to
the requesting element.
Requesting element's Legal department
6. Review the due diligence. Obtain legal opinions from competent
outside counsel (or use existing legal opinions that are deemed
applicable and current [less than two years old]) that address the
following:
(a) Whether the proposed agreement, including the proposed
activities of the consultant as set forth in the Agreement,
complies with local law
(b) Whether the specific compensation to be paid complies with
local law and does not seem unreasonable or excessive
(c) Whether the proposed relationship with the consultant
gives rise to concerns under local anti-bribery statutes and
the FCPA, and
(d) Whether the proposed consultant could be considered to be
a government official in that territory.
7. *Check references listed by the consultant. As appropriate, consult
with external companies working with the proposed consultant in the
same or a related industry as an additional background check and to
avoid potential conflicts of interest.
8. Initiate form C-704-8, International Consultant Approval ("the
Approval").
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9. *If the proposed consultant is a former Lockheed Martin employee,
obtain the signature of the element's senior Human Resources executive
or designee on the Approval. This approval verifies that there is no
potential for improper employment practice and that the provisions of
CPS-524, Re-employing or Obtaining the Services of Retired Salaried
Personnel, are observed when applicable.
10. Provide the Approval and the appointment package to the Director
Consultant Services, who will review the package for completeness and
forward the completed package to the Assistant General
Counsel-International.
Assistant General Counsel-International
11. Coordinate with the requesting element's Legal department to
complete the due diligence background check on the proposed
consultant, including:
(a) Reviewing the legal opinion from outside counsel,
confirming that the Agreement with the proposed consultant is
lawful and that the proposed level of compensation is
reasonable, given the expected norms for the product and
country
(b) Reviewing the relevant corporate policies and procedures
to confirm that retention of the proposed consultant would be
in compliance with corporate direction
(c) Reviewing legal compliance in order to confirm that
retention of the proposed consultant would be consistent with
the FCPA and other applicable US and local law requirements,
including disclosure requirements such as those in Part 130 of
the International Traffic in Arms Regulations (ITAR)
(d) Evaluating the character of the proposed consultant to
confirm that the consultant appears to be of high integrity
and is likely to comply with the requirements of the Code.
This evaluation will include a personal interview with and
briefing of the consultant to ensure that the consultant fully
understands and agrees to comply with the Code, the FCPA, and
other applicable US and foreign legal requirements. At the
conclusion of the briefing, have the consultant sign form
C-704-9, International Consultant Compliance Acknowledgment,
with respect to such requirements, and
(e) Reviewing the Corporation's standard terms and conditions
with the proposed consultant, including contract negotiation
as required.
Corporate Director Consultant Services
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12. Obtain the signatures of the following corporate staff or
designees on the Approval form:
(a) Director Industrial Participation, if the proposed
consultant services will involve or affect
offset/countertrade agreements.
(b) Vice President Washington Operations, if the consultant
will interface with Lockheed Martin's Washington DC-based
customer community as described in CPS-045, Washington
Operations.
(c) Treasurer, if the consultant will provide customer
financing.
(d) Assistant General Counsel-International.
(e) Vice President International Operations.
(f) Vice President Business Development.
Assistant General Counsel-International
13. Upon satisfactory completion of the due diligence, and any
necessary coordination with the element's Legal department, prepare
the Agreement, using Exhibit A when compensation will be by retainer,
or Exhibit B when compensation will be by commission.
Note: All Agreements with consultants will be written in the name of
Lockheed Martin Overseas Corporation (LMOC). The Assistant General
Counsel-International will ensure that the Agreement is in accordance
with the applicable corporate policies and procedures.
CRB Executive Director
14. Submit any Agreement that exceeds the thresholds set forth in the
CRB/CRC Guidelines for the review and approval of the CRB or CRC as
required.
Note: The Assistant General Counsel-International or corporate Vice
President International Operations also may elect to refer any
proposed Agreement (including those under CRB/CRC thresholds) for
CRB/CRC review for any reason. The CRB Executive Director will notify
the appropriate business area Vice President and General Counsel of
any proposed Agreement that will be submitted to the CRB/CRC.
Corporate Director Consultant Services
15. Forward the Agreement to the proposed consultant for signature
and, upon return, to the LMOC President or delegatee for execution.
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Corporate Vice President Business Development or designee
16. Notify the designated agreement monitor of his or her duties and
responsibilities. Give the monitor a copy of Exhibit D, Agreement Monitor
Guidelines.
7.0 Terms of Agreement
7.1 Statement of Work and Agreement Monitor. The Agreement must set forth a
precise statement of work, including deliverable items such as documented
analyses, reports, or other materials. The Agreement will identify the Lockheed
Martin employee who has been designated by the element to serve as the agreement
monitor.
7.2 Consultant Compensation. Compensation for services to be performed by the
consultant must be reasonable and consistent with compensation for similar work
within the industry or field of technology in the country where such services
are to be performed and must be permissible under local law. The total corporate
commitment for retainer fees and expenses or commissions to any entity or
individual for consulting services will be approved in accordance with the
CRB/CRC Guidelines.
7.3 Consultant Expense Reimbursement. The Agreement must require that the
agreement monitor personally approve in writing in advance any extraordinary
expenditures, such as travel by the consultant to a facility in the US. The
consultant's travel and subsistence expense records must be documented with an
explanation of each trip's purpose and itinerary with pre-authorization to
travel. Reimbursement for domestic air and rail travel is limited to economy
coach accommodations. Reimbursement for international air travel is limited to
business class. The consultant is required to attach receipts for such
expenditures to invoices in a form satisfactory to the agreement monitor and to
the LMOC Controller. The consultant must strictly observe the applicable
prohibitions relating to the entertainment of military and government officials
and the prohibitions against giving anything of value to such officials.
7.4 Ethics. The Director Consultant Services will retain the Code acknowledgment
card in the consultant's file. If the Code is revised at any time during the
term of the Agreement, a copy of the revised Code will be furnished to the
consultant. A clause in the Agreement must state that by execution of the
Agreement the consultant warrants that the consultant has received a copy of,
and will comply with, the Code.
7.4.1 Further, it is the Corporation's policy, to the extent reasonably
possible, that the consultant will receive at least one hour of training
concerning the Code and associated business conduct policies by an
authorized representative of the Corporation on an annual basis. This
training will be as directed by the corporate Vice President Ethics and
Business Conduct. The agreement monitor will ensure the consultant has
received such annual ethics training as evidenced by a signed
acknowledgment form forwarded to the Director Consultant Services for
filing.
<PAGE>
7.5 Duration of Agreement and Expiration or Termination. The Agreement will
state its duration in terms of a commencement date and an ending date, for a
term not to exceed two years, unless otherwise approved by the CRC or CRB. The
Agreement must contain a clause permitting Lockheed Martin to terminate the
Agreement without cause and with 60 days or less notice, and limit Lockheed
Martin's liability to fees earned and expenses incurred to the date of
termination. The Agreement also must contain a clause stating that the Agreement
will terminate immediately and all payments that are due or have been made under
the Agreement will be forfeited if, in the rendering of services, illegal
payments are made, or any part of the fee or expenses payable under the
Agreement is used for an illegal purpose, or paid to a third party with the
knowledge that the money will be used for an illegal purpose, or conduct is
engaged in that is in violation of local foreign law or the laws of the US,
including specifically the FCPA, the ITAR, and the US antiboycott laws. In this
regard, the consultant will be required upon execution of the Agreement to
furnish representations and warranties that:
(a) No payments or gifts have been or will be made, offered, or promised to
improperly influence foreign officials
(b) No foreign official has any legal or beneficial interest in such
business or in any commission or payment Lockheed Martin makes
(c) The consultant will disclose to Lockheed Martin any payment of, or
offer to pay, political contributions, fees, or commissions pursuant to
Part 130.12 of the ITAR, and
(d) The consultant is fully qualified to assist Lockheed Martin under US
and applicable foreign law and has complied with any applicable
registration and licensing requirements.
Breach of any such warranties will be cause for termination of the Agreement.
7.6 Independent Contractor. All Agreements will contain a provision making the
consultant an independent contractor and clearly prohibiting the consultant from
making any binding commitments on behalf of Lockheed Martin.
7.7 Consultant Certifications. The Agreement will contain the following:
(a) A clause to the effect that the consultant has not been convicted of,
or within the past five years charged with, any felony offense in any
jurisdiction or country, and is not presently listed by any government
agency as debarred, suspended, proposed for debarment, or otherwise
ineligible for government procurement programs. If the consultant is a
firm, the representations and certifications will apply not only to the
individual(s) who will be performing the consulting services but also to
the principal officers and owners of the firm
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(b) A clause where the consultant agrees that in performance of the
Agreement he or she will comply with applicable laws and regulations of the
US and the Territory (except to the extent inconsistent with US laws and
regulations), and will not make or permit to be made or knowingly allow a
third party to make any improper payments, or to perform an unlawful act.
To that end, the consultant will execute the Consultant Certifications
attached to the Agreement, and agree to furnish such further certifications
as may be required from time to time. Failure or refusal to promptly
furnish any required certificate or disclosure upon request from Lockheed
Martin will be the basis for immediate termination of the Agreement, and
(c) Such other terms and conditions as are required and approved by the
Assistant General Counsel-International or the element's Legal department.
8.0 Payment of Fees and Expenses
The actions required for the authorization and payment of consulting fees,
commissions, and/or reimbursable expenses are provided below. No element may
make any payment to a consultant without LMOC authorization as described below.
Procedure
Consultant
1. Submits the following to the Agreement Monitor:
(a) An invoice substantially in the form as set forth in form
C-704-11, International Invoice for Retainer/Fees/Expenses, or form
C-704-12, International Invoice for Commission/Success Fee
(b) Required receipts, and
(c) Form C-704-13, International Consultant Activity Report (the
"Activity Report") that correlates work product with payment
requested. Even though activities may involve highly classified or
highly sensitive matters, a meaningful non-classified Activity Report
is required in order to substantiate payment.
Agreement Monitor (or individual delegated this authority in writing for
purposes of approving invoices)
2. Review the Activity Report, invoice, and receipts to verify that
services have been properly rendered, documented, and supported. Upon
satisfactory completion of these verifications, sign the Activity Report,
signifying approval for payment, and provide the Activity Report, invoice,
and receipts to Consultant Services.
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Consultant Services (on behalf of LMOC)
3. Verify that: (a) the Activity Report and invoice bear the signature of
the consultant and have agreement monitor approval; and (b) the name and
address on the invoice, bank/wire transfer instructions, and period of
performance are consistent with the Agreement. Upon satisfactory completion
of these verifications, authorize payment of the invoice.
Lockheed Martin element retaining the consultant services
4. Upon receipt of authorization from Consultant Services, pay the
consultant through the element's normal disbursement channels.
Note: All payments to a consultant will be made by check or wire transfer
to an account in the name of the consultant in the country where a
substantial portion of the related services are performed or the country
from which the consultant normally conducts business, except where
specifically approved in writing by the Assistant General
Counsel-International or the CRB.
9.0 Administration
9.1 The corporate Vice President Internal Audit will ensure that the
international consultant review and approval process is audited at least
annually.
9.2 The Director Consultant Services will maintain the International Consultant
Administration Manual.
9.3 The Regional President, agreement monitor, and Vice President Washington
Operations or designee (if the consultant has contact with Congress or the
Washington DC-based Executive Branch) must, on at least an annual basis, provide
a written evaluation of the consultant, using form C-704-10, International
Consultant Evaluation. These Evaluations will be reviewed by the corporate Vice
President Business Development and the Assistant General Counsel-International.
9.4 The following documents will be retained for six years from the date of
final payment under the Agreement or until audit activities are completed,
whichever is later:
Documents Retained by
--------- -----------
Signed original Agreement, Corporate Director Consultant Services
certifications, disclosures, and
forms
Consultant payment information, Lockheed Martin element retaining the
invoices, and supporting documents consultant services
Consultant work product, including Agreement Monitor
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reports, presentations, and
related documents
9.5 It is the continuing responsibility of the agreement monitor to be aware of
all Agreement terms and conditions (including the stated expiration date of the
Agreement), and all applicable provisions of this policy. If it is intended to
renew or extend the Agreement, the monitor must begin this process in a timely
manner to avoid the possibility of the consultant having to stop work until the
Agreement extension or renewal contract is finalized.
/s/ Frank H. Menaker, Jr.
General Counsel
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