As filed with the Securities and Exchange Commission on July 30, 1998
Registration No. 333-______
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
----------
FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
----------
UNITED DEFENSE INDUSTRIES, INC.
DELAWARE 52-2058782
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1525 WILSON BOULEVARD, SUITE 700
ARLINGTON, VIRGINIA 22209-2411
(703) 312-6100
(Address, including zip code and telephone number
of principal executive offices)
UDLP AMENDED AND RESTATED SUPPLEMENTAL RETIREMENT AND SAVINGS PLAN
UNITED DEFENSE STOCK OPTION PLAN
UNITED DEFENSE INDUSTRIES, INC. EMPLOYEE EQUITY PURCHASE PLAN
(Full Title of the Plans)
FRANCIS RABORN
1525 WILSON BOULEVARD, SUITE 700
ARLINGTON, VIRGINIA 22209-2411
(703) 312-6100
(Name, address, including zip code, and telephone
number of agent for service)
Copies To:
DANIEL T. LENNON
LATHAM & WATKINS
1001 PENNSYLVANIA AVENUE, NW
SUITE 1300
WASHINGTON, DC, 20004-2505
(202) 637-2200
<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
====================================================================================================================
Title of Each Proposed Maximum Proposed Maximum Amount of
Class of Securities Amount to be Offering Price Aggregate Registration
to be Registered Registered Per Share (1) Offering Fee
- --------------------------------------------------------------------------------------------------------------------
<S><C>
Common Stock, par value $0.01 per 1,759,170 shares $6.57 - $10.00 $11,557,747 $3,409.54
share (2) (3)
====================================================================================================================
</TABLE>
(1) For purposes of computing the registration fee only. Pursuant to Rule
457(h) under the Securities Act of 1933, the Proposed Maximum Offering
Price Per Share is based upon (i) with respect to 1,500,000 shares that
may be acquired pursuant to stock options that may be granted by United
Defense Industries, Inc. (the "Company") under the United Defense Stock
Option Plan (the "Option Plan") by the Company under the Option Plan
from time to time after the date hereof, $6.57 per share, which
represents the book value for shares of Common Stock, par value $0.01
per share of the Company ("Common Stock") on June 30, 1998, pursuant to
Rule 457(h)(1); and (ii) with respect to 259,170 shares of Common Stock
that may be issued under the United Defense Industries, Inc. Equity
Purchase Plan (the "Purchase Plan"), from time to time after the date
hereof, including, without limitation 49,870 shares of Common Stock
that may be issued under the UDLP Amended and Restated Supplemental
Retirement and Savings Plan (the "Savings Plan" and, together with the
Option Plan and the Purchase Plan, the "Plans"), from time to time
after the date hereof, $6.57 per share, which represents the book value
for shares of Common Stock on June 30, 1998, pursuant to Rule
457(h)(1).
(2) Pursuant to Rule 416(c) under the Securities Act of 1933, as amended
this registration statement on Form S-8 (this "Registration Statement")
also covers an indeterminate amount of interests to be offered or sold
pursuant to the Purchase Plan.
(3) The Option Plan authorizes the issuance of a maximum of 1,500,000
shares of Common Stock in the aggregate, none of which have been issued
as of the date of this Registration Statement. The Purchase Plan
authorizes the issuance of up to 259,170 additional shares of Common
Stock, none of which have been issued as of the date of this
Registration Statement, and 49,870 shares of which are authorized to be
issued to the UDLP Non-Qualified Trust (the "Trust") for the benefit of
certain employees of the Company and its subsidiaries under the Savings
Plan. None of the 540,830 shares of Common Stock issued pursuant to the
Purchase Plan prior to the date hereof are being registered pursuant to
this Registration Statement.
================================================================================
<PAGE>
PART I
ITEM 1. PLAN INFORMATION.
Not required to be filed with this Registration Statement.
ITEM 2. REGISTRANT INFORMATION AND EMPLOYEE PLAN ANNUAL INFORMATION
Not required to be filed with this Registration Statement.
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
ITEM 3. INCORPORATION OF DOCUMENTS BY REFERENCE.
The following documents previously filed by the Company with
the Securities and Exchange Commission (the "Commission") are incorporated as of
their respective dates in this Registration Statement by reference:
(a) the Company's Annual Report on Form 10-K (File No.
333-43619) for the year ended December 31, 1997, filed pursuant to Section 13(a)
of the Securities Exchange Act of 1934, as amended (the "Exchange Act"); and
(b) all other reports filed by the Company pursuant to Section
13(a) or 15(d) of the Securities Exchange Act of 1934, as amended (the "Exchange
Act") since the date of the Annual Report on Form 10-K referred to in (a) above
and prior to the date of this Registration Statement.
In April of 1998, the Board of Directors of the Company
approved an amendment to the Certificate of Incorporation of the Company
effecting a 173 for 1 stock split of the Common Stock of the Company. The
audited financial statements set forth in the Company's Annual Report on Form
10-K and such other reports as are described in (b) above are as of, and for a
period ended, a date prior to such amendment and therefore do not reflect such
change in the capitalization of the Company.
All documents subsequently filed by the Company pursuant to
Section 13(a), 13(c), 14 or 15(d) of the Exchange Act after the date of this
Registration Statement and prior to the filing of a post-effective amendment
which indicates that all securities offered have been sold or which deregisters
all securities then remaining unsold are deemed incorporated by reference in
this Registration Statement and are a part hereof from the date of filing of
such documents. Any statement contained in a document incorporated or deemed to
be incorporated by reference herein shall be deemed to be modified or superseded
for purposes of this Registration Statement to the extent that a statement
contained herein or in any other subsequently filed document which also is or is
deemed to be incorporated by reference herein modifies or supersedes such
statement. Any such statement so modified or superseded shall not be deemed,
except as so modified or superseded, to constitute a part of this Registration
Statement.
ITEM 4. DESCRIPTION OF SECURITIES.
Pursuant to the terms of the Certificate of Incorporation of
the Company, as amended as of the dated hereof, the Company's authorized capital
stock consists of 20,000,000 shares of Common Stock of which 17,840,830 shares
are issued and outstanding as of July 30, 1998.
Holders of Common Stock are entitled to one vote per share on
all matters to be voted on by the stockholders of the Company and do not have
cumulative voting rights. All holders of shares of Common Stock are
<PAGE>
entitled to receive such dividends, if any, as may be declared from time to time
by the Company's Board of Directors in its discretion from funds legally
available therefor and upon liquidation or dissolution are entitled to receive
all assets available for distribution to the holders of Common Stock. All of the
outstanding shares of Common Stock are fully paid and nonassessable. Holders of
Common Stock have no preemptive or other rights to subscribe for additional
shares. No shares of Common Stock are subject to redemption or a sinking fund.
The Company's ability to pay cash dividends on the Common Stock is limited by
its dependence upon the receipt of cash from its subsidiaries and by the
financial covenants and other restrictions which prohibit or restrict the
payment of dividends by the Company to its stockholders contained in the
Company's debt instruments, including, without limitation, the credit agreement
to which the Company is a party with respect to its senior credit facility and
the trust indenture pursuant to which the $200,000,000 8 3/4 Senior Subordinated
Notes Due 2007 were issued by the Company.
Each of the holders of Common Stock registered hereunder is a
party to, and each holder of options granted pursuant to the Option Plan as a
condition of exercising the options issued thereunder must execute and deliver
to the Company, a stockholders agreement (each a "Stockholders Agreement") by
and among the holder, the Company and Iron Horse Investors, L.L.C., a Delaware
limited liability company ("Iron Horse"), the record and beneficial holder of
the majority of Common Stock of the Company. The Stockholders Agreement provides
that no party thereto (other than Iron Horse) may sell, pledge or otherwise
transfer any of the shares of Common Stock held by such holder without the prior
written consent of the Company except by will or pursuant to the applicable laws
of descent and distribution. The Stockholders Agreement further provides that,
subject to certain exceptions, in the event that Iron Horse or its successors
proposes to sell, transfer or other otherwise dispose to a third party
purchaser, in one or more related transactions, more than twenty percent of the
aggregate number of shares of Common Stock then outstanding, Iron Horse may, but
shall not be required to, require each other holder of Common Stock to tender
for purchase a pro rata share of the total number of shares of Common Stock
being sold to such third party purchaser on the same terms and conditions that
apply to Iron Horse. In the event the Board of Directors of the Company approves
the sale of more than fifty percent of the Common Stock of the Company (whether
effected by a merger, a sale of the Common Stock, consolidation or otherwise) or
a sale of all or substantially all of the assets of the Company and its
Subsidiaries, the Stockholders Agreement also requires (subject to certain
exceptions) each holder of Common Stock to take all actions reasonably necessary
to effect such sale, including without limitation, voting such holder's shares
in favor of the transaction and refraining from the exercise of dissenters'
appraisal rights. Each certificate representing shares of Common Stock
registered hereby shall bear a legend indicating that such shares are subject to
restrictions on transfer and certain other agreements set forth in a
Stockholders Agreement.
ITEM 5. INTERESTS OF NAMED EXPERTS AND COUNSEL.
Not applicable.
ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The Company is a Delaware corporation and its Bylaws and
Certificate of Incorporation provide for indemnification of its directors,
officers, employees and agents to the fullest extent permitted by the Delaware
General Corporation Law (the "DGCL"), as the same exists or may hereafter be
amended. Section 145 of the DGCL provides in relevant part that a corporation
may indemnify any person who was or is a party or is threatened to be made a
party to any threatened, pending or completed action, suit or proceeding,
whether civil, criminal, administrative or investigative (other than an action
by or in the right of the corporation) by reason of the fact that such person is
or was a director, officer, employee, or agent of the corporation, or is or was
serving at the request of the corporation as a director, officer, employee or
agent of another corporation, partnership, joint venture, trust or other
enterprise, against expenses (including attorneys' fees), judgments, fines and
amounts paid in settlement actually and reasonably incurred by such person in
connection with such action, suit or proceeding if such person acted in good
faith and in a manner such person reasonably believed to be in or not opposed to
the best interests of the corporation, and, with respect to any criminal action
or proceeding, had no reasonable cause to believe such person's conduct was
unlawful.
<PAGE>
In addition, Section 145 of the DGCL provides that a
corporation may indemnify any person who was or is a party or is threatened to
be made a party to any threatened, pending or completed action or suit by or in
the right of the corporation to procure a judgment in its favor by reason of the
fact that such person is or was a director, officer, employee or agent of the
corporation, or is or was serving at the request of the corporation as a
director, officer, employee or agent of the corporation, partnership, joint
venture, trust or other enterprise against expenses (including attorneys' fees)
actually and reasonably incurred by such person in connection with the defense
or settlement of such action or suit if such person acted in good faith and in a
manner such person reasonably believed to be in or not opposed to the best
interests of the corporation and except that no indemnification shall be made in
respect of any claim, issue or matter as to which such person shall have been
adjudged to be liable to the corporation unless and only to the extent that the
Delaware Court of Chancery or the court in which such action or suit was brought
shall determine upon application that, despite the adjudication of liability but
in view of all the circumstances of the case, such person is fairly and
reasonably entitled to indemnity for such expenses which the Delaware Court of
Chancery or such other court shall deem proper. Delaware law further provides
that nothing in the above-described provisions shall be deemed exclusive of any
other rights to indemnification or advancement of expenses to which any person
may be entitled under any bylaw, agreement, vote of stockholders or
disinterested directors or otherwise.
Section 102(b)(7) of the DGCL eliminates the liability of a
corporation's directors to a corporation or its stockholders, except for
liabilities related to a breach of duty of loyalty, actions not in good faith,
and certain other liabilities.
ITEM 7. EXEMPTION FROM REGISTRATION CLAIMED.
Not applicable.
ITEM 8. EXHIBITS.
EXHIBIT
NUMBER DESCRIPTION
------- -----------
3.1 a Certificate of Incorporation of Iron Horse Acquisition Corp.
(n/k/a United Defense Industries, Inc.) (incorporated by
reference to Exhibit 3.1a to Amendment No. 2 to the Company's
Registration Statement on Form S-4 (File No. 333-43619))
3.1 b Certificate of Amendment of Certificate of Incorporation
Before Payment of Any Part of the Capital of Iron Horse
Acquisition Corp. (n/k/a United Defense Industries, Inc. )
(incorporated by reference to Exhibit 3.1b to Amendment No. 2
to the Company's Registration Statement on Form S-4 (File No.
333-43619))
3.1 c Certificate of Amendment of the Certificate of Incorporation
of United Defense Industries, Inc. (incorporated by reference
to Exhibit 3.1c to Amendment No. 2 to the Company's
Registration Statement on Form S-4 (File No. 333-43619))
*3.1 d Certificate of Amendment of the Certificate of Incorporation
of United Defense Industries, Inc.
3.2 By-laws of United Defense Industries, Inc. (incorporated by
reference to Exhibit 3.2 to Amendment No. 2 to the Company's
Registration Statement on Form S-4 (File No. 333-43619))
*4.7 Form of Stockholders Agreement, by and among Iron Horse
Investors, L.L.C., United Defense Industries, Inc. and each
other holder of Common Stock
*4.8 Stockholders Agreement, dated as of July 22, 1998, by and
between Iron Horse Investors, L.L.C., United Defense
Industries, Inc., the UDLP Non-Qualified Trust and United
Defense, L.P.
<PAGE>
*4.9 UDLP Amended and Restated Supplemental Retirement and Savings
Plan
*4.10 United Defense Stock Option Plan
*4.11 Form of Option Contract
*4.12 United Defense Industries, Inc. Equity Purchase Plan
*5.1 Opinion of Latham & Watkins
*23.1 Consent of Latham & Watkins (included as part of their opinion
listed as Exhibit 5.1)
*23.2 Consent of Ernst & Young LLP, Independent Auditors
*24.1 Power of Attorney of Registrants (included on signature page
to this Registration Statement)
* Filed herewith.
ITEM 9. UNDERTAKINGS.
The Company hereby agrees to furnish supplementally a copy of
any omitted schedule or exhibit to the Commission upon request.
The Company hereby undertakes:
(1) To file, during any period in which offers
or sales are being made, a post-effective
amendment to this Registration Statement to
include any material information with
respect to the plan of distribution not
previously disclosed in this Registration
Statement or any material change to such
information in this Registration Statement.
(2) That, for the purpose of determining any
liability under the Securities Act, each
such post-effective amendment shall be
deemed to be a new registration statement
relating to the securities offered therein,
and the offering of such securities at that
time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of a
post-effective amendment any of the
securities being registered which remain
unsold at the termination of the offering.
The Company hereby undertakes that, for purposes of
determining any liability under the Securities Act, each filing of the Company's
annual report pursuant to Section 13(a) or 15(d) of the Exchange Act that is
incorporated by reference in this Registration Statement shall be deemed to be a
new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and controlling
persons of the Registrant pursuant to the foregoing provisions, or otherwise,
the Registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Securities Act of 1933 and is, therefore, unenforceable. In the event
that a claim for indemnification against such liabilities (other than the
payment by the Registrant of expenses incurred or paid by a director, officer or
controlling person of the Registrant in the successful defense of any action,
suit or proceeding) is asserted by such director, officer or controlling person
in connection with the securities being registered, the Registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the
Securities Act of 1933 and will be governed by the final adjudication of such
issue.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1993,
the registrant certifies that it has reasonable grounds to believe that it meets
all of the requirements for filing on Form S-8 and has duly caused this
registration statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the District of Columbia on July 24, 1998.
UNITED DEFENSE INDUSTRIES, INC. ("UDI")
/s/ Francis Raborn
By: ______________________________________
Francis Raborn
CHIEF FINANCIAL OFFICER
AND PRINCIPAL FINANCIAL AND ACCOUNTING
OFFICER OF UDI
POWERS OF ATTORNEY
Each person whose signature appears below hereby authorizes
Thomas W. Rabaut, Francis Raborn, David V. Kolovat, or any of them, as his true
and lawful attorney-in-fact and agent, with full power of substitution and
resubstitution, for such person and in his name, place and stead, in any and all
capacities, to sign any or all further amendments (including post-effective
amendments) to this Registration Statement, and to file the same, with all
exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission granting unto said attorney-in-fact and
agent, full power and authority to do and perform each and every act and thing
requisite and necessary to be done in and about the premises, as fully to all
intents and purposes as he might or could do in person, hereby ratifying and
confirming all that said attorney-in-fact and agent, or his substitute or
substitutes, may lawfully do or cause to be done by virtue thereof.
Pursuant to the requirements of the Securities Act of 1933, as
amended, this registration statement has been signed below by the following
persons in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
NAME TITLE DATE
---- ----- ----
<S><C>
/s/ William E. Conway, Jr.
____________________________________ Chairman of the Board of UDI July 24, 1998
William E. Conway, Jr.
____________________________________ Director of UDI July __, 1998
Frank C. Carlucci
____________________________________ Director of UDI July __, 1998
J. H. Binford Peay, III
/s/ Allan M. Holt
____________________________________ Director of UDI July 24, 1998
Allan M. Holt
/s/ Peter J. Clare
____________________________________ Director of UDI July 24, 1998
Peter J. Clare
/s/ Thomas W. Rabaut
____________________________________ President, Chief Executive July 24, 1998
Thomas W. Rabaut Officer and Director of UDI
/s/ Francis Raborn
____________________________________ Director of UDI July 24, 1998
Francis Raborn
/s/ Robert M. Kimmitt
____________________________________ Director of UDI July 24, 1998
Robert M. Kimmitt
____________________________________ Director of UDI July __, 1998
John M. Shalikashvili
</TABLE>
<PAGE>
Pursuant to the requirements of the Securities Act of 1933,
the UDLP Amended and Restated Supplemental Retirement and Savings Plan has duly
caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the District of Columbia on July 24,
1998.
UNITED DEFENSE L.P., Plan Administrator
By: UDLP HOLDINGS CORP., its General Partner
/s/ Thomas W. Rabaut
By: ______________________________________
Thomas W. Rabaut
PRESIDENT
CERTIFICATE OF AMENDMENT
OF THE
CERTIFICATE OF INCORPORATION
OF
UNITED DEFENSE INDUSTRIES, INC.
Pursuant to Section 242 of the General Corporation Law of the
State of Delaware, United Defense Industries, Inc. (the "Corporation"), a
Delaware corporation, hereby certifies that:
1. The Certificate of Incorporation of the Corporation is hereby amended
by deleting the present Article FOURTH and inserting in lieu thereof a
new Article FOURTH, as follows:
FOURTH: The aggregate number of all classes of shares which
the Corporation shall have authority to issue is Twenty Million
(20,000,000) shares of common stock, par value of $.01 per share.
Immediately upon the effectiveness of this Certificate of Amendment to
the Certificate of Incorporation of the Corporation (the "Effective
Time"), each outstanding share of common stock, par value $.01 per
share, of the Corporation ("Old Common Stock"), shall automatically,
without further action on the part of the Corporation or any holder of
such Old Common Stock, be reclassified into One Hundred Seventy-Three
(173) validly issued, fully paid and nonassessable shares of common
stock, par value of $.01 per share, of the Corporation ("New Common
Stock"), as constituted following the Effective Time. The
reclassification of the Old Common Stock into New Common Stock will be
deemed to occur at the Effective Time, regardless of when the
certificates representing such shares of Old Common Stock are
physically surrendered to the Corporation in exchange for certificates
representing shares of New Common Stock. After the Effective Time,
certificates representing shares of Old Common Stock will, until such
shares are surrendered to the Corporation in exchange for certificates
representing shares of New Common Stock, represent the number and class
of shares of New Common Stock into which such shares of Old Common
Stock shall have been converted pursuant to the stock split and this
amendment.
No holder of shares of the Corporation of any class, now or
hereafter authorized, shall have any preferential or preemptive right
to subscribe for, purchase or receive any share of the Corporation of
any class, now or hereafter authorized, or any options or warrants for
such shares, or any rights to subscribe for or purchase such shares, or
any securities convertible into or exchangeable for such shares, which
may at any time or from time to time be issued, sold or
<PAGE>
offered for sale by the Corporation; provided, however, that in
connection with the issuance or sale of any such shares or securities,
the Board of Directors of the Corporation may, in its sole discretion,
offer such shares or securities, or any part thereof, for purchase or
subscription by the holders of shares of the Corporation, except as may
otherwise be provided by this Certificate of Incorporation, as amended
from time to time.
At all times, each holder of common stock of the Corporation
shall be entitled to one vote for each share of common stock held by
such stockholder standing in the name of such stockholder on the books
of the Corporation.
2. The Board of Directors of the Corporation, by written consent, declared
the foregoing amendment advisable and referred it to the sole
shareholder of the Corporation for a vote and approval; and
3. The sole shareholder of the Corporation, by written consent, has
adopted and approved the foregoing amendment.
[THIS SPACE INTENTIONALLY LEFT BLANK]
<PAGE>
IN WITNESS WHEREOF, the Corporation has caused this
Certificate of Amendment to the Certificate of Incorporation of the Corporation
to be executed in its corporate name by David V. Kolovat, its Vice President,
General Counsel and Assistant Secretary on this ____ day of April, 1998.
United Defense Industries, Inc.,
a Delaware corporation
By:___________________________________
David V. Kolovat
Vice President, General Counsel
and Secretary
STOCKHOLDERS AGREEMENT
----------------------
This Stockholders Agreement ("AGREEMENT") is entered into as
of this ___ day of ________, 1998, by and among United Defense Industries, Inc.,
a Delaware corporation (the "COMPANY"), Iron Horse Investors, L.L.C., a Delaware
corporation (the "IRON HORSE"), and the purchasers listed on the signature pages
attached hereto (individually, "PURCHASER," and collectively, "PURCHASERS").
These parties are sometimes referred to herein individually by name or as a
"PARTY" and collectively as the "PARTIES."
RECITALS:
--------
WHEREAS, each of the Purchasers is an employee or executive
officer of the Company or United Defense, L.P., a direct and indirect,
wholly-owned subsidiary of the Company;
WHEREAS, the Company has issued (or may hereafter issue) to
Purchasers shares of the common stock par value $0.01 per share, of the Company
("COMMON STOCK"), pursuant to the United Defense Industries, Inc. Employee
Equity Purchase Plan (the "STOCK PURCHASE PLAN") and/or as a result of the
exercise by Purchaser of vested options to purchase Common Stock ("VESTED
OPTIONS"), which options were issued (or may hereafter be issued) to Purchaser
pursuant to the United Defense Employee Stock Option Plan (the "STOCK OPTION
PLAN");
WHEREAS, Iron Horse is the record and beneficial holder of
17.3 Million shares of Common Stock of the Company; and
WHEREAS, the Company, Iron Horse and Purchasers desire to
enter into this Agreement to provide for certain matters with respect to the
ownership and transfer of the shares of Common Stock now or hereafter issued to
Purchaser pursuant to the Purchase Plan or issued to Purchaser as a result of
the exercise of Vested Options (collectively, the "RESTRICTED SHARES").
AGREEMENT:
---------
NOW, THEREFORE, in consideration of the foregoing, and the
mutual agreements set forth herein and other good and valuable consideration,
the receipt and adequacy of which is hereby acknowledged, the Parties hereto,
intending to be legally bound, hereby agree as follows:
SECTION 1. RESTRICTIONS ON TRANSFER.
Purchasers shall not sell, assign, transfer, convey, pledge or
otherwise dispose of (collectively, "TRANSFER") any Restricted Shares without
the prior written consent of the Company, which consent shall have been
authorized by a majority of the members of the Board of Directors of the
Company; provided, however, that this Section 1 shall not prevent the Transfer
of any Restricted Shares by will or pursuant to laws of descent and
distribution. Each Purchaser further agrees that in connection with any Transfer
consented to by the Company, such
<PAGE>
Purchaser shall, if requested by the Company, deliver to the Company an opinion
of counsel in form and substance reasonably satisfactory to the Company and
counsel for the Company, to the effect that such Transfer is not in violation of
this Agreement, the Securities Act of 1933, as amended, or the securities laws
of any state. Any purported Transfer in violation of the provisions of this
Section 1 shall be null and void and shall have no force or effect.
SECTION 2. RIGHTS TO REPURCHASE SHARES.
(a) For a period of six (6) months following the
later of (i) the Termination of Employment of Purchaser (as defined below) and
(ii) the expiration of all Vested Options held by Purchaser as of the time of
such Purchaser's Termination of Employment in accordance with the terms of the
Stock Option Plan, the Company shall have the option to repurchase all (but not
less than all) of the Restricted Shares held by such Purchaser or his or her
successor in interest thereunder ("CALL RIGHT"). The purchase price payable by
the Company upon exercise of the Call Right ("PURCHASE PRICE") shall be the fair
market value of the Restricted Shares subject to the Call Right on the date of
the Call Notice as determined in accordance with subsection (c) below. The Call
Right shall be exercised by written notice ("CALL NOTICE") to Purchaser given in
accordance with Section 6(g) of this Agreement on or prior to the last date on
which the Call Right may be exercised by the Company. For the purpose of this
Agreement, "TERMINATION OF EMPLOYMENT" shall mean such time as Purchaser no
longer has any employee-employer relationship with the Company or any of its
subsidiaries, without regard for the reason for such termination and whether
such termination was with or without cause, including, but not by way of
limitation, a termination by resignation, discharge, death or retirement, but
excluding a termination where there is a simultaneous reemployment by the
Company or one of its subsidiaries.
(b) The repurchase of Restricted Shares pursuant to
the exercise of a Call Right shall take place on a date specified by the
Company, but in no event later than sixty (60) days following the date of the
exercise of the Call Right or, if later, within ten (10) days following the
receipt by the Company of all necessary governmental approvals. On such date,
Purchaser shall transfer to the Restricted Shares subject to the Call Notice to
the Company, free and clear of all liens and encumbrances, by delivering to the
Company the certificates representing the Restricted Shares to be purchased,
duly endorsed for transfer to the Company or accompanied by a stock power duly
executed in blank, and the Company shall pay to Purchaser the Purchase Price in
cash or by bank or cashier's check. The Company and Purchaser each shall use his
or its reasonable efforts to expedite all proceedings contemplated hereunder to
obtain a determination of the Repurchase Price of the Restricted Shares at the
earliest practicable date.
(c) The fair market value of the Restricted Shares to
be repurchased shall be determined as of the date of the Call Notice by the
Board of Directors of the Company as follows:
(i) if the Common Stock is listed on one or
more National Securities Exchanges (within the meaning of the
Securities Exchange Act of 1934, as amended), each share of
the Common Stock to be repurchased shall be valued
2
<PAGE>
at the closing price of a share of the Common Stock on the
principal exchange on which such shares are then trading, on
the day previous to such date, or, if such shares were not
traded on the day previous to such date, then on the next
preceding trading day during which a sale occurred;
(ii) if the Common Stock is not traded on a
National Securities Exchange but is quoted on NASDAQ or a
successor quotation system, each share of the Common Stock to
be repurchased shall be valued at the last sales price on the
day previous to such date as reported by NASDAQ or such
successor quotation system or, if no shares were sold on the
day previous to such date, then on the next preceding day on
which a sale occurred; or
(iii) if the Common Stock is not publicly
traded on a National Securities Exchange and is not quoted on
NASDAQ or a successor quotation system, the fair market value
as determined in good faith by the Board of Directors.
SECTION 3. BRING-ALONG RIGHTS.
(a) If Iron Horse or any successor to all or any
portion of the shares of Common Stock held by Iron Horse at any time, or from
time to time, in one transaction or a series of related transactions, proposes
to Transfer a number of shares of Common Stock equal to more than twenty percent
(20%) of the aggregate number of shares of Common Stock then outstanding to one
or more persons not affiliated with Iron Horse or such successors (a "THIRD
PARTY"), then Iron Horse (or such successors) shall have the right (a
"BRING-ALONG RIGHT"), but not the obligation, to cause each of the Purchasers to
tender for purchase to the Third Party, on the same terms and conditions as
apply to Iron Horse, a number of shares of Common Stock equaling the lesser of
(x) the number derived by multiplying (i) the total number of shares to be
purchased by the Third Party, as specified in the Bring-Along Notice, by (ii) a
fraction, the numerator of which is the total number of shares of Common Stock
owned by such Purchaser and the denominator of which is the total number of the
then outstanding shares of Common Stock, or (y) such lesser number of shares as
Iron Horse shall designate in the Bring-Along Notice (defined below).
(b) If Iron Horse elects to exercise its Bring-Along
Right under this Section 3, then it shall so notify the Purchaser ("BRING-ALONG
NOTICE"). Each Bring-Along Notice shall set forth: (i) the name of the Third
Party or Third Parties and the number of shares of Common Stock proposed to be
purchased by such Third Party or Third Parties, (ii) the proposed amount and
form of consideration and terms and conditions of payment offered by the Third
Party and a summary of any other material terms pertaining to the Transfer
("THIRD PARTY TERMS") and (iii) the number of shares of Common Stock that Iron
Horse elects such Purchaser to sell in such Transfer. The Bring-Along Notice
shall be given at least ten (10) days before the closing of the proposed
Transfer.
3
<PAGE>
(c) Upon the giving of a Bring-Along Notice, each
Purchaser shall be obligated to sell the number of shares of Common Stock
required to be sold by Purchaser as set forth in the Bring-Along Notice on the
Third Party Terms.
(d) At the closing of the Transfer to any Third Party
pursuant to this Section 3, the Third Party shall remit to each Party the
consideration for the total sales price of the Common Stock of such Party sold
pursuant hereto (less any such consideration to be escrowed or otherwise held
back in accordance with the Third Party Terms), against delivery by such Party
of certificates for such Common Stock, duly endorsed for Transfer or with duly
executed stock powers, and the compliance by such Party with any other
conditions to closing generally applicable to Iron Horse and all Purchasers
selling shares in such transaction.
Notwithstanding the foregoing, the Bring-Along Rights
provided by this Section 3 shall terminate on the date on which a number of
shares of Common Stock equal to at least twenty-five percent (25%) of the
aggregate number of the then outstanding shares of Common Stock on a fully
diluted basis have been distributed to the public pursuant to one or more
effective registration statements under the Securities Act and/or pursuant to
Rule 144 promulgated thereunder; provided, however, that the Common Stock is
then publicly traded.
SECTION 4. COMPANY SALE.
(a) If the Board of Directors of the Company and the
holders of a majority of the outstanding shares of Common Stock approve a
Company Sale (as defined below), each Purchaser agrees that he or she shall
consent to and raise no objections against such Company Sale, and if the Company
Sale is structured as a sale of stock, each Purchaser shall sell all or any
portion of the Restricted Shares in connection with such Company Sale on the
terms and conditions approved by the Board of Directors and the holders of a
majority of the outstanding shares of Common Stock. Each Purchaser hereby agrees
to take all actions that the Board of Directors and the holders of a majority of
the outstanding shares of Common Stock reasonably deem necessary or desirable in
connection with the consummation of such Company Sale, including, without
limitation, voting the Restricted Shares in favor of such Company Sale and
refraining from the exercise of dissenters' appraisal rights with respect to
such Company Sale.
(b) If the Company or the holders of the Company's
securities enter into any negotiation with respect to a Company Sale which
involves the issuance of Securities to the holders of shares of Common Stock for
which Rule 506 (or any similar rule then in effect) promulgated under the Act
may be available, each Purchaser shall, if requested by the Company, appoint a
purchaser representative (as such term is defined in Rule 501 of the Act)
reasonably acceptable to the Company to advise Purchaser in connection with such
Company Sale. If such purchaser representative was designated by the Company,
the Company shall pay the fees of such purchaser representative, but if
Purchaser appoints another purchaser representative Purchaser shall be
responsible for the fees of the purchaser representative so appointed.
(c) Purchasers shall bear their pro-rata share (based
upon the number of shares held by Purchaser that are sold in such Company Stock)
of the costs of any sale of Common Stock pursuant to a Company Sale to the
extent such costs are incurred for the benefit of all holders of Common Stock
and are not otherwise paid by the Company or the acquiring party.
(d) For the purpose hereof, "COMPANY SALE" shall mean
the consummation of any transaction or series of transactions pursuant to which
one or more persons
4
<PAGE>
or entities or group of persons or entities (other than Iron Horse) acquires (i)
capital stock of the Company possessing the voting power sufficient to elect a
majority of the members of the Board of Directors of the Company or its
successor(s) (whether such transaction is effected by merger, consolidation,
sale or transfer of the Company's capital stock or otherwise) or (ii) all or
substantially all of the assets of the Company and its subsidiaries.
SECTION 5. MISCELLANEOUS.
(a) Legends. Each certificate representing the
Restricted Shares shall bear the following legend:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED
("ACT"), OR THE SECURITIES LAWS OF ANY STATE AND MAY NOT BE
SOLD OR TRANSFERRED IN THE ABSENCE OF AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE ACT AND SAID LAWS OR AN
EXEMPTION FROM THE REGISTRATION REQUIREMENTS THEREOF."
In addition to the foregoing, each certificate
representing Restricted Shares shall bear the following legend:
"THE SECURITIES REPRESENTED HEREBY ARE SUBJECT TO ADDITIONAL
RESTRICTIONS ON TRANSFER AND CERTAIN OTHER AGREEMENTS SET
FORTH IN A STOCKHOLDERS AGREEMENT BETWEEN THE ISSUER AND THE
INITIAL HOLDER HEREOF DATED AS OF ___________________, 199__.
A COPY OF SUCH AGREEMENT SHALL BE FURNISHED WITHOUT CHARGE BY
THE ISSUER TO THE HOLDER HEREOF UPON WRITTEN REQUEST."
Purchasers hereby agree that Purchasers shall not Transfer any Restricted Shares
without complying with each of the restrictions set forth herein and agree that
in connection with any such Transfer Purchasers shall, if requested by the
Company, deliver to the Company an opinion of counsel in form and substance
reasonably satisfactory to the Company and counsel for the Company, to the
effect that such Transfer is not in violation of this Agreement or the
securities laws of the United States of America or any state thereof.
(b) Successors, Assigns and Transferees. This
Agreement shall be binding upon and inure to the benefit of the Parties hereto
and their respective legal representatives, heirs, legatees, successors, and
assigns and any other transferee of the Restricted Shares and shall also apply
to any Restricted Shares acquired by Purchasers after the date hereof.
(c) Specific Performance, Etc. The Company, Iron
Horse and Purchasers, in addition to being entitled to exercise all rights
provided herein or granted by law, including recovery of damages, shall be
entitled to specific performance of Purchasers' obligations under this
Agreement. The Company, Iron Horse and Purchasers agree that monetary damages
would not be adequate compensation for any loss incurred by reason of a breach
by either of the provisions of this Agreement and each hereby agrees to waive
the defense in any action for specific performance that a remedy at law would be
adequate.
(d) Governing Law. This Agreement shall be governed
by and construed in accordance with the laws of the State of Delaware.
5
<PAGE>
(e) Interpretation. The headings of the Sections
contained in this Agreement are solely for the purpose of reference, are not
part of the agreement of the Parties and shall not affect the meaning or
interpretation of this Agreement.
(f) Notices. All notices and other communications
provided for or permitted hereunder shall be in writing and shall be deemed to
have been duly given and received when delivered by overnight courier or hand
delivery, when sent by telecopy, or five days after mailing if sent by
registered or certified mail (return receipt requested) postage prepaid, to the
Parties at the following addresses (or at such other address for any Party as
shall be specified by like notices, provided that notices of a change of address
shall be effective only upon receipt thereof).
(i) If to the Company, at:
United Defense Industries, Inc.
1525 Wilson Blvd.
Suite 700
Arlington, VA 22209
Attention: David V. Kolovat
with copies to:
Latham & Watkins
1001 Pennsylvania Avenue, N.W.
Suite 1300
Washington, D.C. 20004
Attention: Daniel T. Lennon
(ii) If to Iron Horse, at:
c/o TC Group, LLC
1001 Pennsylvania Avenue, NW
Suite 200S
Washington, D.C. 20004
Attention: Allan M. Holt
with copies to:
Latham & Watkins
1001 Pennsylvania Avenue, N.W.
Suite 1300
Washington, D.C. 20004
Attention: Daniel T. Lennon
(iii) If to Purchaser, to the addresses
set forth on the
6
<PAGE>
signature pages hereto.
(g) Recapitalization, Exchange, Etc. Affecting the
Company's Stock. The provisions of this Agreement shall apply, to the full
extent set forth herein, with respect to any and all shares of capital stock of
the Company or any successor or assign of the Company (whether by merger,
consolidation, sale of assets, or otherwise) that may be issued in respect of,
in exchange for, or in substitution of, the Restricted Shares and shall be
appropriately adjusted for any stock dividends, splits, reverse splits,
combinations, recapitalizations, and the like occurring after the date hereof.
(h) Counterparts. This Agreement may be executed in
two or more counterparts, each of which shall be deemed to be an original and
all of which together shall be deemed to constitute one and the same agreement.
(i) Attorneys' Fees. In any action or proceeding
brought to enforce any provision of this Agreement, the successful party shall
be entitled to recover reasonable attorneys' fees in addition to any other
available remedy.
(j) Severability. In the event that any one or more
of the provisions contained herein, or the application thereof in any
circumstances, is held invalid, illegal, or unenforceable in any respect for any
reason, the validity, legality, and enforceability of any such provision in
every other respect and of the remaining provisions contained herein shall not
be in any way impaired thereby.
(k) Amendment. This Agreement may be amended only by
written agreement signed by the parties holding a number of shares of Common
Stock equal to more than sixty-six and two-thirds percent (66 2/3%) of the
aggregate number of shares of Common Stock then outstanding on a fully diluted
basis.
(l) Tax Withholding. The Company shall be entitled
to require payment in cash or deduction from other compensation payable to
Purchaser of any sums required by federal, state, or local tax law to be
withheld with respect to the issuance, vesting, exercise, repurchase, or
cancellation of any Restricted Share or any option to purchase Restricted
Shares.
(m) Entire Agreement. This writing constitutes the
entire agreement of the Parties with respect to the subject matter hereof.
7
<PAGE>
IN WITNESS WHEREOF, the Parties have executed this Agreement
on the date first written above.
IRON HORSE INVESTORS, L.L.C.
By: _________________________
Name:
Title:
UNITED DEFENSE INDUSTRIES, INC.
By: _________________________
Name:
Title:
Accepted and agreed to:
_____________________________
Purchaser
_____________________________
_____________________________
_____________________________
Address
8
STOCKHOLDERS AGREEMENT
----------------------
This Stockholders Agreement ("AGREEMENT") is entered into as
of this ___ day of July, 1998, by and among United Defense Industries, Inc., a
Delaware corporation ( the "COMPANY"), Iron Horse Investors, L.L.C., a Delaware
corporation ( "IRON HORSE"), the UDLP Non-Qualified Trust (the "TRUST") and
United Defense, L.P., as sponsor and administrator of the Amended and Restated
UDLP Supplemental Retirement and Savings Plan Trust (the "PLAN ADMINISTRATOR").
These parties are sometimes referred to herein individually by name or as a
"PARTY" and collectively as the "PARTIES."
RECITALS:
--------
WHEREAS, United Defense, L.P., a Delaware limited partnership
of which the Company is the sole limited partner ("UDLP"), has established the
UDLP Amended and Restated Supplemental Retirement and Savings Plan (the "PLAN"),
a non-qualified deferred compensation plan for the benefit of certain of its
employees;
WHEREAS, UDLP has established the Trust as a means for paying
benefits payable under the Plan;
WHEREAS, pursuant to the terms of the trust agreement among
UDLP, the Company and Fidelity Management Trust Company, dated as of July 22,
1998, establishing and governing the Trust (the "TRUST Agreement"), and as
directed by the Plan Administrator in accordance therewith, the Trust shall
purchase _____ shares of the common stock, par value $0.01 per share, of the
Company ("COMMON STOCK") at a purchase price of $10 per share (the fair market
value per share as determined by the Plan Administrator) as soon as
administratively feasible following the Parties' execution and delivery of this
Agreement and the Trust Agreement;
WHEREAS, Iron Horse is the record and beneficial holder of
17.3 Million shares of Common Stock of the Company; and
WHEREAS, pursuant to the terms of the Plan and the Trust
Agreement, the Plan Administrator has the power to direct the disposition of the
assets of the Trust including, without limitation, the Common Stock held by it,
in accordance with the terms of the Plan and the Trust Agreement.
WHEREAS, the Company, Iron Horse, the Trust and the Plan
Administrator desire to enter into this Agreement to provide for certain matters
with respect to the ownership and transfer of the shares of Common Stock now
issued to the Trust (collectively, the "RESTRICTED SHARES").
AGREEMENT:
---------
NOW, THEREFORE, in consideration of the foregoing, and the
mutual agreements set forth herein and other good and valuable consideration,
the receipt and adequacy
<PAGE>
of which is hereby acknowledged, the Parties hereto, intending to be legally
bound, hereby agree as follows:
SECTION 1. RESTRICTIONS ON TRANSFER.
The Trust shall not sell, assign, transfer, convey, pledge or
otherwise dispose of (collectively, "TRANSFER"), and the Plan Administrator
shall not direct the Trust to Transfer, any Restricted Shares without the prior
written consent of the Company, which consent shall have been authorized by a
majority of the members of the Board of Directors of the Company; provided,
however, that this Section 1 shall not prevent, and no consent of the Company
shall be required with respect to, the Transfer of any Restricted Shares
pursuant to the directions from the Plan Administrator or any Transfer to
creditors of UDLP in the event UDLP is Insolvent (as defined in the Trust
Agreement), in accordance with the terms of the Plan and the Trust Agreement, or
transfers by will or pursuant to the laws of descent and distribution. The Trust
further agrees that in connection with any Transfer required to be consented to
by the Company, the Trust shall, if timely requested by the Company in writing,
deliver to the Company an opinion of counsel in form and substance reasonably
satisfactory to the Company, to the effect that such Transfer is not in
violation of this Agreement, the Securities Act of 1933, as amended, or the
securities laws of any state. Any purported Transfer in violation of the
provisions of this Section 1 shall be null and void and shall have no force or
effect.
SECTION 2. BRING-ALONG RIGHTS.
(a) If Iron Horse or any successor to all or any
portion of the shares of Common Stock held by Iron Horse at any time, or from
time to time, in one transaction or a series of related transactions, proposes
to Transfer a number of shares of Common Stock equal to more than twenty percent
(20%) of the aggregate number of shares of Common Stock then outstanding to one
or more persons not affiliated with Iron Horse or such successors (a "THIRD
PARTY"), then Iron Horse (or such successors) shall have the right (a
"BRING-ALONG RIGHT"), but not the obligation, to cause the Plan Administrator to
direct the Trust to tender for purchase, to the Third Party, on the same terms
and conditions as apply to Iron Horse, a number of shares of Common Stock
equaling the lesser of (x) the number derived by multiplying (i) the total
number of shares to be purchased by the Third Party, as specified in the
Bring-Along Notice, by (ii) a fraction, the numerator of which is the total
number of shares of Common Stock owned by the Trust and the denominator of which
is the total number of the then outstanding shares of Common Stock, or (y) such
lesser number of shares as Iron Horse shall designate in the Bring-Along Notice
(defined below); provided, however, that notwithstanding the foregoing, the
Trust shall only be required to tender shares of Restricted Stock in accordance
with directions from the Plan Administrator, in accordance with the Trust
Agreement.
(b) If Iron Horse elects to exercise its Bring-Along
Right under this Section 3, then it shall so notify the Plan Administrator and
the Trust ("BRING-ALONG NOTICE"). The Bring-Along Notice shall set forth: (i)
the name of the Third Party or Third Parties and the number of shares of Common
Stock proposed to be purchased by such Third Party or Third Parties, (ii) the
proposed amount and form of consideration and terms and conditions of payment
offered by the Third Party and a summary of any other material terms pertaining
to the Transfer
2
<PAGE>
("THIRD PARTY TERMS") and (iii) the number of shares of Common Stock that Iron
Horse elects the Trust to sell in such Transfer. The Bring-Along Notice shall be
given at least ten (10) business days before the closing of the proposed
Transfer.
(c) Upon the receipt of a Bring-Along Notice and
directions from the Plan Administrator, in accordance with the terms of the
Trust Agreement, the Trust shall be obligated to sell that number of shares of
Common Stock required to be sold by the Trust as set forth in the Bring-Along
Notice on the Third Party Terms.
(d) At the closing of the Transfer to any Third Party
pursuant to this Section 3, the Third Party shall remit to each Party the
consideration for the total sales price of the Common Stock of such Party sold
pursuant hereto (less any such consideration to be escrowed or otherwise held
back in accordance with the Third Party Terms), against delivery by such Party
of certificates for such Common Stock, duly endorsed for Transfer or with duly
executed stock powers, and the compliance by such Party with any other
reasonable conditions to closing generally applicable to Iron Horse and other
holders of Common Stock selling shares in such transaction.
Notwithstanding the foregoing, the Bring-Along
Rights provided by this Section 3 shall terminate on the date on which a number
of shares of Common Stock equal to at least twenty-five percent (25%) of the
aggregate number of the then outstanding shares of Common Stock on a fully
diluted basis have been distributed to the public pursuant to one or more
effective registration statements under the Securities Act and/or pursuant to
Rule 144 promulgated thereunder; provided, however, that the Common Stock is
then publicly traded.
SECTION 3. COMPANY SALE.
(a) If the Board of Directors of the Company and the
holders of a majority of the outstanding shares of Common Stock approve a
Company Sale (as defined below), and if so directed by the Plan Administrator in
accordance with the terms of the Trust Agreement, the Trust agrees that it shall
consent to and raise no objections against such Company Sale, and if the Company
Sale is structured as a sale of stock, the Trust shall, as directed by the Plan
Administrator in accordance with the terms of the Trust Agreement, sell all or
any portion of the Restricted Shares in connection with such Company Sale on the
terms and conditions approved by the Board of Directors and the holders of a
majority of the outstanding shares of Common Stock. The Plan Administrator
hereby agrees to take all actions, and give directions to the Trust to
effectuate such actions, that the Board of Directors and the holders of a
majority of the outstanding shares of Common Stock reasonably deem necessary or
desirable in connection with the consummation of such Company Sale, including,
without limitation, voting the Restricted Shares in favor of such Company Sale
and refraining from the exercise of dissenters' appraisal rights with respect to
such Company Sale; provided, however, that the Trust shall be only be required
to take such actions as are pursuant to the written direction of the Plan
Administrator in accordance with the terms of the Plan and the Trust Agreement.
(b) To the extent that the Trust Transfers shares
pursuant to a Company Sale, the Trust shall bear its pro-rata share (based upon
the number of shares held by the Trust that are sold in such Company Sale) of
the costs of any sale of Common Stock pursuant to a Company Sale to the extent
such costs are incurred for the benefit of all holders of Common Stock and are
not otherwise paid by the Company or the acquiring party; provided, however,
that nothing in this Agreement shall obligate the Trust to pay any amounts in
connection with a Company Sale in excess of the assets of the Trust Fund. To the
extent any such costs incurred by the Trust in connection with a Transfer
pursuant to a Company Sale are not deducted from the
3
<PAGE>
sale proceeds, the Trust shall pay any amounts owed under this Section 3 only as
directed by the Plan Administrator.
(c) For the purpose hereof, "COMPANY SALE" shall mean
the consummation of any transaction or series of transactions pursuant to which
one or more persons or entities or group of persons or entities (other than Iron
Horse) acquires (i) capital stock of the Company possessing the voting power
sufficient to elect a majority of the members of the Board of Directors of the
Company or its successor(s) (whether such transaction is effected by merger,
consolidation, sale or transfer of the Company's capital stock or otherwise) or
(ii) all or substantially all of the assets of the Company and its subsidiaries.
SECTION 4. INSOLVENCY.
Notwithstanding any other provision of this Agreement, the
provisions of this Section shall apply in the event that UDLP is Insolvent or
the Trustee must determine whether UDLP is Insolvent, in accordance with the
Trust Agreement. The Trust shall not be required to sell any Restricted Shares
pursuant to Sections 2 or 3 hereof unless the Trustee has determined that the
price to be paid for such Restricted Shares is equal to or greater than the fair
market value of such shares. In the event the Trustee has received notice of a
sale pursuant to Section 2 or 3 hereof, or the Trustee reasonably believes that
a valuation of the Restricted Shares is necessary for the proper administration
of the Trust under applicable federal and state laws, the Trustee shall so
notify the Company, which shall obtain an independent appraisal of the fair
market value of the Company's shares from an independent appraiser reasonably
satisfactory to the Trustee. In the event the Company and the Trustee cannot
agree on a mutually acceptable independent appraiser and the Company so
requests, the Trustee shall designate an independent appraiser within three
business days of such request and if the Trustee fails to so timely designate an
appraiser, the Trustee shall accept the independent appraiser selected by the
Company. Each appraisal obtained in accordance with the foregoing shall be
conclusive evidence of the fair market value of the shares to be sold, and
absent manifest error, shall be binding on the Trust and the Trustee. In the
event no appraisal is performed, the Trustee may, but shall not have the
obligation to (1) participate in any sale pursuant to Section 2 or 3 hereof,
and/or (2) obtain an independent appraisal of the shares, and charge the costs
of such appraisal against the assets of the Trust in accordance with the
provisions of the Trust Agreement.
SECTION 5. MISCELLANEOUS.
(a) Legends. Each certificate representing the
Restricted Shares shall bear the following legend:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED
("ACT"), OR THE SECURITIES LAWS OF ANY STATE AND MAY NOT BE
SOLD OR TRANSFERRED IN THE ABSENCE OF AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE ACT AND SAID LAWS OR AN
EXEMPTION FROM THE REGISTRATION REQUIREMENTS THEREOF."
4
<PAGE>
In addition to the foregoing, each certificate
representing Restricted Shares shall bear the following legend:
"THE SECURITIES REPRESENTED HEREBY ARE SUBJECT TO ADDITIONAL
RESTRICTIONS ON TRANSFER AND CERTAIN OTHER AGREEMENTS SET
FORTH IN A STOCKHOLDERS AGREEMENT BETWEEN THE ISSUER AND THE
INITIAL HOLDER HEREOF DATED AS OF JULY __, 1998. A COPY OF
SUCH AGREEMENT SHALL BE FURNISHED WITHOUT CHARGE BY THE ISSUER
TO THE HOLDER HEREOF UPON WRITTEN REQUEST."
Purchasers hereby agree that Purchasers shall not Transfer any Restricted Shares
without complying with each of the restrictions set forth herein and agree that
in connection with any such Transfer Purchasers shall, if requested by the
Company, deliver to the Company an opinion of counsel in form and substance
reasonably satisfactory to the Company and counsel for the Company, to the
effect that such Transfer is not in violation of this Agreement or the
securities laws of the United States of America or any state thereof.
(b) Successors, Assigns and Transferees. This
Agreement shall be binding upon and inure to the benefit of the Parties hereto
and their respective legal representatives, heirs, legatees, successors, and
assigns and any other transferee of the Restricted Shares and shall also apply
to any Restricted Shares acquired by the Trust after the date hereof. This
Agreement shall be binding upon any successor of the Plan Administrator.
(c) Governing Law. This Agreement shall be governed
by and construed in accordance with the laws of the State of Delaware.
(d) Interpretation. The headings of the Sections
contained in this Agreement are solely for the purpose of reference, are not
part of the agreement of the Parties and shall not affect the meaning or
interpretation of this Agreement.
(e) Notices. All notices and other communications
provided for or permitted hereunder shall be in writing and shall be deemed to
have been duly given and received when delivered by overnight courier or hand
delivery, when sent by telecopy, or five days after mailing if sent by
registered or certified mail (return receipt requested) postage prepaid, to the
Parties at the following addresses (or at such other address for any Party as
shall be specified by like notices, provided that notices of a change of address
shall be effective only upon receipt thereof).
(i) If to the Company, at:
United Defense Industries, Inc.
1525 Wilson Blvd.
Suite 700
Arlington, VA 22209
Attention: David V. Kolovat
with copies to:
Latham & Watkins
1001 Pennsylvania Avenue, N.W.
Suite 1300
Washington, D.C. 20004
Attention: Daniel T. Lennon
5
<PAGE>
(ii) If to Iron Horse, at:
c/o TC Group,
LLC 1001 Pennsylvania Avenue, NW
Suite 200S
Washington, D.C. 20004
Attention: Allan M. Holt
with copies to:
Latham & Watkins
1001 Pennsylvania Avenue, N.W.
Suite 1300
Washington, D.C. 20004
Attention: Daniel T. Lennon
(iii) If to the Trust, at:
Fidelity Management Trust Company,
Trustee
c/o Fidelity Investments
82 Devonshire Street
Boston, MA 02109
Attention: John M. Kimpel
(iv) If to the Plan Administrator:
United Defense, L.P.
1525 Wilson Boulevard
Suite 700
Arlington, VA 22209
Attention: David V. Kolovat,
General Counsel
(f) Recapitalization, Exchange, Etc. Affecting the
Company's Stock. The provisions of this Agreement shall apply, to the full
extent set forth herein, with respect to any and all shares of capital stock of
the Company or any successor or assign of the Company (whether by merger,
consolidation, sale of assets, or otherwise) that may be issued in respect of,
in exchange for, or in substitution of, the Restricted Shares and shall be
appropriately adjusted for any stock dividends, splits, reverse splits,
combinations, recapitalizations, and the like occurring after the date hereof.
(g) Counterparts. This Agreement may be executed in
two or more counterparts, each of which shall be deemed to be an original and
all of which together shall be deemed to constitute one and the same agreement.
(h) Severability. In the event that any one or more
of the provisions contained herein, or the application thereof in any
circumstances, is held invalid, illegal, or unenforceable in any respect for any
reason, the validity, legality, and enforceability of any such
6
<PAGE>
provision in every other respect and of the remaining provisions contained
herein shall not be in any way impaired thereby.
(i) Amendment. This Agreement may be amended only by
written agreement signed by the Parties hereto.
(j) Entire Agreement. This writing constitutes the
entire agreement of the Parties with respect to the subject matter hereof.
IN WITNESS WHEREOF, the Parties have executed this Agreement
on the date first written above.
IRON HORSE INVESTORS, L.L.C.
By: __________________________
Name:
Title:
UNITED DEFENSE INDUSTRIES, INC.
By: __________________________
Name:
Title:
THE UDLP SUPPLEMENTAL RETIREMENT
AND SAVINGS PLAN:
By: Fidelity Management Trust Company,
Solely it its capacity as Trustee
and not in its corporate capacity
By: __________________________
Vice President
UNITED DEFENSE, L.P.
By: __________________________
Name:
Title:
7
AMENDED AND RESTATED
UDLP SUPPLEMENTAL RETIREMENT AND SAVINGS PLAN
United Defense, L.P., a Delaware limited partnership (the "Company"),
adopted the UDLP Supplemental Retirement and Savings Plan effective July 1,
1994. In order to amend the UDLP Supplemental Retirement and Savings Plan in
certain respects, effective as of ___________________ __, 1998, the Company
hereby adopts the Amended and Restated UDLP Supplemental Retirement and Savings
Plan (the "Plan"). This Plan is maintained primarily for the purpose of
providing deferred compensation for a select group of management or highly
compensated employees, within the meaning of Sections 201(2), 301(a)(3) and
401(a)(1) of the Employee Retirement Income Security Act of 1974, as amended
("ERISA") and is not intended to comply with the requirements of Section 401(a)
of the Internal Revenue Code. The Plan is intended to be exempt from most of the
requirements of ERISA.
ARTICLE I.
PURPOSE
The purpose of the Plan is to provide to designated employees the
opportunity to defer compensation and/or the retirement benefits they would be
eligible to receive under the UDLP Salaried Employees' 401k Plan (the "Qualified
Plan") but for the loss of benefits resulting from the exclusion of deferred
compensation or other amounts ("Excluded Compensation") from compensation taken
into account for purposes of computing benefits under the Qualified Plans,
either pursuant to the terms of the Qualified Plan or pursuant to Section 401
(a)(17) of the Internal Revenue Code of 1986, as amended (the "Code"). The Plan
also permits Participants to have amounts deferred or otherwise credited under
the Plan grow at rates reflecting the growth of the value of the stock of United
Defense Industries, Inc., the limited partner of the Company, and other
investments.
ARTICLE II.
DEFINITIONS
For the purposes of this Plan the following words and phrases shall
have the meanings indicated, unless the context clearly indicates otherwise:
Section 2.1. Accounts
--------
"Accounts" or "Account" of a Participant means, as the context
indicates, any one or more of such Participant's Deferral Account or Matching
Account, if any, established under Sections 7.1 and 7.2.
Section 2.2. Administrator
-------------
"Administrator" means the Company, acting through its Management
Committee or the delegates thereof. The Administrator shall have all duties and
responsibilities imposed by ERISA.
<PAGE>
Section 2.3. Affiliate
---------
"Affiliate" means any employer which, at the time of reference, was,
with the Company, a member of a controlled group of corporations or trades or
businesses under common control, or a member of an affiliated service group, as
determined under regulations issued by the Secretary of the Treasury or his or
her delegate under Code Sections 414(b), (c), (m) and 415(h) and any other
entity required to be aggregated with the Company pursuant to regulations issued
under Code Section 414(o).
Section 2.4. Beneficiary
-----------
"Beneficiary" means the person, persons or entity designated by the
Participant to receive any death benefits payable under the Plan. Any
beneficiary designation shall be made in a written instrument filed with the
Administrator.
Section 2.5. Benefit Commencement Date
-------------------------
"Benefit Commencement Date" is defined in Section 10.1.
Section 2.6. Code
----
"Code" means the Internal Revenue Code of 1986, as amended from time to
time.
Section 2.7. Company
-------
"Company" means United Defense, L.P., a Delaware limited partnership.
Section 2.8. Company Contributions
---------------------
"Company Contributions " with respect to a Participant means "Company
Contributions" on his or her behalf to the Qualified Plan.
Section 2.9. Compensation
------------
"Compensation" of a Participant for any Plan Year means his or her
wages for such Plan Year for services rendered to the Company, as reported on
such Participant's Form W-2 for such Plan Year, as described in Treas. Reg. ss.
1.415-2(d)(11)(i), but
(a) including compensation deferred under the Plan and amounts not
includable in gross income by reason of Code Sections 125, 402(a)(8), 402(h) or
403(b), and
(b) excluding all reimbursements or other expense allowances, income
from the exercise of stock options, fringe benefits (cash or non-cash), moving
expenses and welfare benefits (including severance benefits), even if includable
in gross income.
2
<PAGE>
Section 2.10. Deferral Account
----------------
"Deferral Account" of a Participant means the bookkeeping account
established on behalf of such Participant in accordance with Section 7.1.
Section 2.11. Deferred Compensation
---------------------
"Deferred Compensation" of a Participant means the amounts deferred by
such Participant under Section 5.1 of the Plan.
Section 2.12. Determination Date
------------------
"Determination Date," with respect to the United Defense Industries,
Inc. Common Stock Investment Fund, means the first date on which such Investment
Fund is first authorized by the Administrator for deemed investment of
Participants' Accounts and the date on which there occurs a Liquidity Event;
provided, however, that the Administrator, in its sole discretion, may choose
any additional date or dates as a Determination Date(s).
Section 2.13. Employee
--------
"Employee" means any person who renders services to the Company in the
status of an employee as that term is defined in Code Section 3121(d),
including officers, but excluding leased employees treated as employees of the
Company pursuant to Code Sections 414(n) and 414(o).
Section 2.14. Employee Contributions
----------------------
"Employee Contributions" of a Participant means "Employee-Elected
Company Contributions" on his or her behalf to the Qualified Plan.
Section 2.15. ERISA
-----
"ERISA" shall mean the Employee Retirement Income Security Act of 1974,
as amended from time to time.
Section 2.16. Hardship
--------
(a) "Hardship" of a Participant, as determined by the Administrator in
its discretion on the basis of all relevant facts and circumstances and in
accordance with nondiscriminatory and objective standards, uniformly interpreted
and consistently applied, means a severe financial hardship resulting from:
(i) any one or more of the following:
(A) the sudden and unexpected illness or accident of such
Participant or one of his or her dependents,
(B) the loss of such Participant's property due to casualty, or
3
<PAGE>
(C) other similar extraordinary and unforeseeable circumstances
arising as a result of events beyond the control of such
Participant,
(ii) but only to the extent that the hardship may not be relieved
(A) through reimbursement or compensation by insurance or
otherwise, or
(B) by liquidation of such Participant's assets, to the extent
that such would not itself cause severe financial hardship.
(b) A financial need shall not constitute a Hardship unless it is for
at least $1,000 (or the entire principal amount of the Participant's Accounts,
if less).
Section 2.17. Investment Fund
---------------
"Investment Fund" means one of the investment alternatives which is
authorized by the Administrator at the time of reference for deemed investment
of Participants' Accounts pursuant to Article IV. The range of available
Investment Funds need not be the same with respect to all Participants, but
shall be specified as to each Participant on Schedule A hereto, as amended,
modified and supplemented from time to time.
Section 2.18. Liquidity Event
---------------
"Liquidity Event" means one of the following events (i) a merger or
consolidation of United Defense with an unaffiliated entity in which the
stockholders of United Defense receive cash, securities and/or other marketable
property in exchange for their common stock in United Defense; (ii) a sale to
an unaffiliated entity of all or substantially all of the assets of United
Defense; (iii) the liquidation, dissolution or winding up of United Defense
(other than in a restructuring that results in the continuation of United
Defense's business by an affiliated entity) or (iv) a public offering of more
than fifty percent (50%) of United Defense common stock then outstanding
pursuant to a registration statement (other than pursuant to Form S8) filed
under the Securities Act of 1933.
Section 2.19. Management Committee
---------------------
"Management Committee" means the Management Committee of the Company.
Section 2.20. Matching Account
----------------
"Matching Account" of a Participant means the bookkeeping account established on
behalf of such Participant in accordance with Section 7.2.
Section 2.21. Matching Contributions
----------------------
"Matching Contributions" of a Participant means the amounts contributed
to the Plan on behalf of such Participant pursuant to Section 6.1(b) of the
Plan.
4
<PAGE>
Section 2.22. Participant
-----------
"Participant" means any person included in the Plan as provided in
Article IV.
Section 2.23. Payday
------
"Payday" of a Participant means the regular and recurring established
day for the payment of Compensation to Employees in his or her classification or
position
Section 2.24. Plan
----
"Plan" means the Amended and Restated UDLP Supplemental Retirements and
Savings Plan, as amended from time to time.
Section 2.25. Plan Year
---------
"Plan Year" means the twelve month period commencing on each January 1,
and ending on the next following December 31.
Section 2.26. Qualified Plan
--------------
"Qualified Plan" means the UDLP Salaried Employees' 401(k) Plan, as
amended from time to time.
Section 2.27. Rules of the Plan
-----------------
"Rules of the Plan" means the rules adopted by the Administrator
pursuant to Section 3.1 for the administration, interpretation or application of
the Plan.
Section 2.28. Spouse
------
"Spouse" with respect to a Participant means such Participant's wife or
husband who is lawfully married to the Participant immediately prior to the
distribution of such Participant's Accounts under this Plan.
Section 2.29. Termination of Employment
-------------------------
"Termination of Employment" with respect to a Participant means the
time when the employer-employee relationship between the Company (or any
Affiliate) and such Participant is terminated for any reason, including, but
not by of limitation, resignation, discharge, disability, death or retirement,
but excluding transfers among or between the Company and any Affiliate. The
Administrator, in its sole discretion, shall determine the effect of all matters
and questions relating to Termination of Employment, including, but not by way
of limitation, the question of whether a particular leave of absence
constitutes a Termination of Employment.
Section 2.30. Valuation Date
--------------
5
<PAGE>
"Valuation Date" means the last day of each calendar quarter ending on
March 31, June 30, September 30 and December 31, and any other date as of which
the Administrator elects to make a valuation of Accounts.
Section 2.31. Vested
------
"Vested" with respect to a Participant's Accounts means not subject to
forfeiture and unconditionally subject to distribution on his or her behalf in
accordance with the Plan.
ARTICLE III.
ADMINISTRATION
Section 3.1. Administrator's Duties and Powers
---------------------------------
(a) The Administrator shall conduct the general administration of the
Plan in accordance with the Plan and shall have all the necessary power and
authority to carry out that function. Among its necessary powers and duties, are
the following:
(i) To delegate all or part of its function as Administrator
to others and to revoke any such delegation.
(ii) To determine questions of eligibility of Participants
and their entitlement to benefits.
(iii) To select and engage attorneys, accountants, actuaries,
trustees, appraisers, brokers, consultants, administrators, physicians
or other persons to render service or advice with regard to any
responsibility the Administrator has under the Plan, or otherwise, to
designate such persons to carry out responsibilities under the Plan,
and (with the Company, the Management Committee and the Company's
officers, trustees and employees) to rely upon the advice, opinions or
valuations of any such persons, to the extent permitted by law, being
fully protected in acting or relying thereon in good faith.
(iv) To interpret the Plan for purpose of the administration
and application of the Plan, in a manner not inconsistent with the Plan
or applicable law and to amend or revoke any such interpretation.
(v) To adopt Rules of the Plan that are not inconsistent with
the Plan or applicable law and to amend or revoke any such rules.
(vi) To determine the form of distribution of Accounts
pursuant to Article X.
(vii) To conduct claims procedures as provided in Article
XIII.
(b) Every finding, decision, and determination made by the
Administrator shall, to the full extent permitted by law, be final and binding
upon all parties, except to the extent found by a court of competent
jurisdiction to constitute an abuse of discretion.
6
<PAGE>
Section 3.2. Limitations Upon Powers
-----------------------
(a) The Plan shall be uniformly and consistently administered,
interpreted and applied with regard to all Participants in similar
circumstances. The Plan shall be administered, interpreted and applied fairly
and equitably and in accordance with the specified purposes of the Plan.
(b) Members of the Management Committee may be Participants under this
Plan; provided, that no individual may act or vote with respect to a decision of
the Administrator specifically relating to his or her own participation in the
Plan.
Section 3.3. Indemnification by the Company; Liability Insurance
---------------------------------------------------
(a) The Company shall pay or reimburse any of its officers, directors
or employees who administer the Plan for all expenses incurred by such persons
in, and shall indemnify and hold them harmless from, all claims, liability and
costs (including reasonable attorneys' fees) arising out of the good faith
performance of their Plan functions.
(b) The Company may obtain and provide for any such person, at its
expense, liability insurance against liabilities imposed on him or her by law.
Section 3.4. Recordkeeping
-------------
(a) The Administrator shall maintain suitable records as follows:
(i) Records of each Participant's individual Accounts which, among
other things, shall show separately Deferred Compensation, Matching
Contributions and the gains and losses thereon.
(ii) Records which show the operations of the Plan during each Plan
Year.
(iii) Records of its deliberations and decisions.
(b) The Administrator may appoint a secretary to keep the record of
proceedings, to transmit its decisions, instructions, consents or directions to
any interested party, to execute and file, on behalf of the Administrator, such
documents, reports or other matters as may be necessary or appropriate under
ERISA, and to perform ministerial acts.
(c) The Administrator shall not be required to maintain any records or
accounts which duplicate any records or accounts maintained by the Company.
Section 3.5. Inspection of Records
---------------------
Copies of the Plan and records of a Participant's Accounts shall be
open to inspection by such Participant or his or her duly authorized
representative(s) at the office of the Company at any reasonable business hour.
7
<PAGE>
Section 3.6. Conflicting Claims
------------------
If the Administrator is confronted with conflicting claims concerning a
Participant's Accounts, the Administrator may interplead the claimants in an
action at law, or in an arbitration conducted in accordance with the rules of
the American Arbitration Association, as the Administrator shall elect in its
sole discretion, and in either case, the attorneys' fees, expenses and costs
reasonably incurred by the Administrator in such proceeding shall be paid from
the Participant's Accounts.
Section 3.7. Service of Process
------------------
The Secretary of the Company is hereby designated as agent of the Plan
for the service of legal process.
Section 3.8. Service in More than One Capacity
---------------------------------
Any person or group of persons may serve in more than one capacity with
respect to the Plan.
Section 3.9. Majority Rule
-------------
The Administrator shall act by a majority of its members in office;
provided, however, that the Administrator may appoint one of its members or a
delegate to act on its behalf on matters arising in the ordinary course of
administration of the Plan or on specific matters.
Section 3.10. Statement to Participants
-------------------------
The Administrator shall submit to each Participant after each Valuation
Date a statement setting forth the balance to the credit of such Participant in
his or her Accounts as of the Valuation Date.
ARTICLE IV.
PARTICIPATION
Section 4.1. Eligibility for Participation
-----------------------------
Each Employee whose Compensation for any Plan Year is expected by the
Administrator to exceed the limit imposed by Code Section 401(a)(17) for such
Plan Year shall be eligible to be a Participant for such Plan Year on the date
on which the Administrator notifies the Employee of such eligibility.
Section 4.2. Designation of Beneficiary
--------------------------
(a) Each Participant or former Participant shall have the right to
designate, revoke and redesignate Beneficiaries hereunder and to direct payment
of the amount credited to his or her Accounts to such Beneficiaries upon his
death.
8
<PAGE>
(b) Designation, revocation and redesignation of Beneficiaries must be
made in writing in accordance with the Rules of the Plan on a form provided by
the Administrator and shall be effective upon delivery to the Administrator.
Section 4.3. Deferral Election Procedure
---------------------------
The Administrator shall give each Employee who is eligible to be a
Participant in the Plan a deferral election form on which the Participant may
elect to defer Compensation under Article V. Each such Employee electing to
defer Compensation under Article V shall complete and sign the deferral election
form and return it to the Administrator.
Section 4.4. Content of Deferral Election Form
---------------------------------
The Participant shall set forth on the deferral election form;
(a) his or her consent that such Participant, his or her successors in
interest and assigns, and all persons claiming under him or her shall be bound~~
to the extent authorized by law, by the statements contained therein and by the
provisions of the Plan as they now exist, and as they may be amended from time
to time;
(b) the amount of Compensation to be deferred under Article V and, in
such case, the Participant's authorization to the Company to reduce his or her
Compensation in accordance with Section 6.1 (a);
(c) the date of distribution of his or her Accounts, which shall be any
date selected by such Participant which is not earlier than the first
anniversary of his or her initial election to participate in the Plan; and
(d) such other information as may be required for the administration of
the Plan.
Such deferral election form shall be in the form specified by the
Administrator.
ARTICLE V.
PARTICIPANTS' DEFERRALS
Section 5.1. Deferral of Compensation
------------------------
Each Participant who has deferred the maximum dollar amount permitted
(whether pursuant to the rules of the Qualified Plan or otherwise) for him or
her under the Qualified Plan for any Plan Year may elect to defer to his or her
Deferral Account for such Plan Year any whole number percentage of his or her
Compensation as designated by such Participant.
Such election shall be effective upon such prior written notice to the
Administrator as is required by the Administrator, and shall remain in effect
for each Plan Year during which such Employee is a Participant until
discontinued or changed under Section 5.2; provided, however, that such election
shall be effective no earlier than the first day of the next succeeding Plan
Year
9
<PAGE>
unless such election is received by the Administrator within 30 days after the
date on which the Employee first becomes eligible to be a Participant pursuant
to Section 4.1.
Section 5.2. Discontinuance of Deferral; Change of Deferral
----------------------------------------------
A Participant may elect, upon such prior written notice as is required
by the Administrator, to discontinue deferral of his or her Compensation under
the Plan or to change the amount of his or her Deferred Compensation for any
Plan Year commencing after the effective date of such notice.
ARTICLE VI.
CREDITING OF DEFERRALS AND COMPANY MATCHING CONTRIBUTIONS
Section 6.1. Determination of Credits
------------------------
(a) Pursuant to the Rules of the Plan, for each Payday, each
Participant's Deferral Account shall be credited with an amount which is equal
to the amount of Compensation such Participant elected to defer under Section
5.1.
(b) Pursuant to the Rules of the Plan, for each Plan Year, the Matching
Account of each Participant who elected to defer Compensation under the Plan for
the Plan Year in question shall be credited with an amount which is equal to the
excess, if any, of
(i) the lesser of
(A) the product of
(1) such Participant's Compensation for such Plan
Year, and
(2) the rate of Company Contributions to the Qualified
Plan for such Plan Year (expressed as a percentage of the
Participant's compensation" as defined under the Qualified
Plan), and
(B) the sum of such Participant's Employee Contributions
and Deferred Compensation for such Plan Year, over
(ii) the amount of such Participant's Company Contributions
for such Plan Year.
ARTICLE VII.
ACCOUNTS
Section 7.1. Deferral Account
----------------
The Administrator shall establish and maintain for each Participant a
Deferral Account to which shall be credited the amounts determined under
Section 6.1(a) and credited or debited the amounts determined under Article
VIII.
10
<PAGE>
Section 7.2. Matching Account
----------------
The Administrator shall establish and maintain for each Participant a
Matching Account to which shall be credited the amounts determined under Section
6.1(b) and credited or debited the amounts determined under Article VIII.
Section 7.3. Assignments etc. Prohibited
---------------------------
No part of the Accounts of a Participant shall be liable for the debts,
contracts or engagements of such Participant, his or her Beneficiaries or
successors in interest, or be taken in execution by levy, attachment or
garnishment or by any other legal or equitable proceeding, nor shall any such
person have any rights to alienate, anticipate, commute, pledge, encumber or
assign any benefits or payments hereunder in any manner whatsoever except to
designate a Beneficiary as provided in Section 4.2 hereof.
Section 7.4. Trust
-----
The Administrator shall establish a trust for the benefit of Plan
Participants to which the Company shall contribute assets equal to the amounts
credited to Participants' Accounts; provided, however, that such trust shall
remain a general asset of the Company subject to the rights of creditors of the
Company in the event of the Company's bankruptcy or insolvency as defined in
such trust agreement.
ARTICLE VIII.
DEEMED INVESTMENT OPTIONS; VALUATION OF ACCOUNTS
Section 8.1. Investment Options
------------------
(a) Each Participant may elect in accordance with the Rules of the
Plan:
(i) effective upon becoming a Participant or as permitted
thereafter under the Rules of the Plan, to have amounts credited to his
or her Accounts deemed to be invested entirely in any one or more
Investment Funds available to such Participant under the Rules of the
Plan, in such proportions as are permitted by the Administrator under
the Rules of the Plan, or to change any prior such election, and
(ii) effective as permitted under the Rules of the Plan, to have
his or her Accounts, as any such Account is then stated, be deemed to
be held and invested under any Investment Fund available to the Account
in question under paragraph (i) or to change any such prior election.
(b) Any such election under subsection (a)(i) shall remain in effect
until revoked or modified by the Participant as permitted under the Rules of the
Plan.
(c) Deemed purchases and sales of assets in the Investment Funds
pursuant to the Participant's elections under this Section shall be made within
a reasonable time after the Participant notifies the Administrator of any such
change, and such Participant's Accounts shall
11
<PAGE>
be adjusted to reflect amounts deemed paid or realized in such transactions.
(d) If a Participant fails or declines to make an election under this
Section, such Participant's Accounts shall be deemed held in one or more
Investment Funds as directed by the Administrator.
Section 8.2. Investment Credits and Debits
-----------------------------
On each Valuation Date, additional amounts shall be credited (or
debited) to each Participant's Deferral Account and Matching Account, such
amounts to be equal to the earnings (or losses) that would have been credited
(or debited) had such Accounts been invested as specified by the Participant
between successive Valuation Dates.
Section 8.3. Determination of Values
-----------------------
As of each Valuation Date, the Administrator shall determine the fair
market value of each Investment Fund, based upon the information reasonably
available to the Administrator including the data from, but not limited to,
newspapers and financial publications of general circulation, statistical and
valuation services, records of securities exchanges, appraisals by qualified
persons, transactions and bona fide offers in assets of the type in question and
other information customarily used in the valuation of property for the purposes
of the Code. With respect to securities for which there is a generally
recognized market, the published selling prices on or nearest to such Valuation
Date shall establish fair market value of such security. Fair market value so
determined shall be conclusive for all purposes of the Plan.
Notwithstanding the foregoing provisions of this Article VIII, the fair
market value of the United Defense Industries, Inc. Common Stock Investment Fund
shall be determined as of each Determination Date and the value as so determined
shall remain the value of such Investment Fund for the period between successive
Determination Dates.
Section 8.4. Applicability of Account Values
-------------------------------
The value of an Account as determined as of a given date under this
Article, plus any amounts subsequently allocated thereto under Sections 6.1(a)
and (b), and less any amounts subsequently distributed therefrom under Article
X, shall remain the value thereof for all purposes of the Plan until revalued
hereunder.
ARTICLE IX.
VESTING OF ACCOUNTS
Section 9.1. Vesting of Accounts
-------------------
(a) Each Participant's interest in his or her Deferral Account shall be
fully Vested at all times.
(b) The Vested portion of a Participant's Matching Account as of any
date of determination shall be the percentage of such Account as equals the
Participant's then vested
12
<PAGE>
percentage in his or her Company Contributions Account in the Qualified Plan.
ARTICLE X.
DISTRIBUTION OF ACCOUNTS
Section 10.1. Benefit Commencement Date
-------------------------
The Benefit Commencement Date for distribution of the Participant's
Vested Accounts shall be any date within 60 days following the earlier of
(a) the date selected by the Participant pursuant to Section 4.4, or
(b) the date of his or her Termination of Employment for any reason.
Section 10.2. Form of Distribution
--------------------
(a) Each Participant's Vested Accounts shall be distributed to him or
her in cash and/or, as determined by the Administrator in its sole discretion,
in property representing in whole or in part the deemed investment of the
Participant's Accounts pursuant to Article VIII.
(b) Subject to subsection (c), distribution to the Participant shall be
made in a lump sum payment on his or her Benefit Commencement Date or in
substantially equal annual installments beginning on his or her Benefit
Commencement Date and ending not later than the tenth anniversary thereof, as
selected by the Participant pursuant to Section 10.3.
(c) Notwithstanding any Participant's election under Section 10.3, upon
the Participant's death, the Vested balance of his or her Accounts, if any,
shall be distributed to his or her Beneficiaries in one lump sum payment within
60 days following the Valuation Date coincident with or next following the date
of the Administrator's receipt of written notification of the Participant's
death.
Section 10.3. Election of Distribution
------------------------
(a) The form of distribution of the Participant's Accounts shall be
elected by the Participant within thirty days following the later of (i) the
effective date of this Amended and Restated UDLP Supplemental Retirement and
Savings Plan and (ii) the effective date of the Participant's first election to
participate in the Plan.
(b) The Participant may elect at least one year prior to his or her
then scheduled Benefit Commencement Date to change the form of distribution
previously elected pursuant to this Section 10.3, provided, however, that no
such election shall be effective if made prior to the fifth anniversary of the
date of the Participant's most recent preceding election hereunder, and provided
further, that if the Participant is age 55 or older, no such election shall be
effective if made prior to the third anniversary of the date of the Participant'
s most recent preceding election hereunder.
(c) If any Participant shall have failed to select a form of
distribution pursuant to this
13
<PAGE>
Section 10.3, the Administrator shall distribute the balance of his or her
Accounts in substantially equal installments over a period of 10 years
commencing on his or her Benefit Commencement Date.
Section 10.4. Hardship Distributions from Accounts
------------------------------------
A Participant may apply to the Administrator for a distribution from
his or her Accounts on account of his or her Hardship, subject to the
requirement that the distribution not exceed the amount which is necessary to
satisfy the Hardship. If the Participant has more than one Account under the
Plan, any such Hardship distribution shall be made pro rata from each of the
Participant's Accounts unless otherwise determined by the Administrator.
ARTICLE XI.
AMENDMENT AND TERMINATION OF PLAN
Section 11.1. Amendment
---------
The Company may at any time amend the Plan in whole or in part,
provided however, that no amendment shall either (i) decrease the balance to the
credit of any Account as of the date of such amendment, (ii) change in any way
any deferral, investment, or distribution election theretofore made by any
Participant, or (iii) reduce in amount or extend in time any Participant's right
or entitlement to any payment under the Plan.
Section 11.2. The Company's Right to Terminate
--------------------------------
The Company may at any time terminate the Plan. Upon termination of the
Plan, the Company may discharge in full its obligations to any Participant upon
payment of the Participant's Vested Account balances as of the date of such
termination.
ARTICLE XII.
GENERAL PROVISIONS
Section 12.1. Not a Contract of Employment
----------------------------
The terms and conditions of this Plan shall not be deemed to constitute
a contract of employment with the Company, and the Participant (and his or her
Beneficiary) shall have no rights against the Company except as may be
specifically provided herein. Moreover, nothing in this Plan shall be deemed to
give a Participant the right to be retained in the service of the Company or to
interfere with the right of the Company to discipline or discharge him or her at
any time for any reason whatsoever.
Section 12.2. Protective Provisions
---------------------
Each Participant shall cooperate with the Company and Administrator by
furnishing any and all information requested by the Company or the Administrator
in order to facilitate the payment of benefits hereunder, and by taking such
other action as may be reasonably requested by the Company or Administrator.
14
<PAGE>
Section 12.3. Terms
-----
Whenever any words are used herein in the masculine, they shall be
construed as though they were used in the feminine in all cases where they would
so apply; and wherever any words are used herein in the singular or in the
plural, they shall be construed as though they were used in the plural or in the
singular, as the case may be, in all cases where they would so apply.
Section 12.4. Captions
--------
The captions of the articles, sections and paragraphs of this Plan are
for convenience only and shall not control or affect the meaning or construction
of any of its provisions.
Section 12.5. Governing Law
-------------
The provisions of this Plan shall be construed and interpreted
according to the laws of the State of Delaware.
Section 12.6. Validity
--------
In case any provision of this Plan shall be illegal or invalid for any
reason, said illegality or invalidity shall not affect the remaining parts
hereof and this Plan shall be construed and enforced as if such illegal and
invalid provision had never been inserted herein.
Section 12.7. Notice
------
Any notice or filing required or permitted to be given to the
Administrator under this Plan shall be sufficient if in writing and hand
delivered, or sent by registered or certified mail, to the Administrator at the
executive office of the Company. Such notice shall be deemed given as of the
date of delivery or, if delivery is made by mail, as of the date shown on the
postmark on the receipt for registration or certification.
Section 12.8. Successors
----------
The provisions of this Plan shall bind and inure to the benefit of the
Company and its successors and assigns. The term successors as used herein shall
include any corporate or other business entity which shall, whether by merger,
consolidation, purchase or otherwise, acquire all or substantially all of the
business and assets of the Company, and successors of any such corporation or
other business entity.
Section 12.9. Incompetency
------------
In the event that it shall be found upon evidence satisfactory to the
Administrator that any Participant or Beneficiary to whom a benefit is payable
under this Plan is unable to care for his or her affairs because of illness or
accident, any payment due (unless prior claim therefore shall have been made by
a duly authorized guardian or other legal representative) may be paid, upon
appropriate indemnification of the Company and Administrator, to the Spouse or
other person deemed by the Administrator to have incurred expense for such
Participant (or Beneficiary).
15
<PAGE>
Any such payment shall be a payment for the account of the Participant and shall
be a complete discharge of any liability of the Plan and the Company to the
extent of the amount paid.
ARTICLE XIII.
CLAIMS PROCEDURE
Section 13.1. Claim
-----
Any person claiming a benefit or requesting an interpretation or ruling
under the Plan shall present the request in writing to the Administrator, which
shall respond in writing as soon as practicable.
Section 13.2. Denial of Claim
---------------
If the claim or request is denied, the written notice of denial shall
state:
(a) The reason for denial with specific reference to the Plan
provisions on which the denial was based;
(b) A description of any additional material or information required
and an explanation of why it is necessary; and
(c) An explanation of the Plan's claim review procedure.
Section 13.3. Review of Claim
---------------
Any person whose claim or request is denied or who has not received a
response within 60 days may request review by notice given in writing to the
Administrator. The claim or request shall be reviewed by the Administrator which
may grant the claimant a hearing or request a hearing to clarify any related
matters which it deems appropriate. On review, the claimant may have
representation, examine pertinent documents, and submit issues and comments in
writing.
Section 13.4. Final Decision
--------------
The decision on review shall normally be made by the Administrator
within 60 days of the date of the review of claim authorized by Section 13.3. If
an extension of time is required for a hearing or other special circumstances,
the claimant shall be notified and the time limit shall be 120 days. The
decision shall be in writing and shall state the reason and the relevant Plan
provisions.
Section 13.5. Arbitration
-----------
Any claim or dispute arising hereunder which is not resolved upon
conclusion of the procedures heretofore provided in this Article XIII shall,
upon request of either the Company or the claiming or requesting person, be
decided by arbitration in the metropolitan area where the Participant is, or was
most recently, employed by the Company, in accordance with the Commercial
Arbitration Rules of the American Arbitration Association. The award rendered in
16
<PAGE>
such arbitration shall be final, and judgment on such award may be entered in
any court, state or federal, having jurisdiction thereover. In no event however,
should the arbitrator be given authority to judge any decision which is the
subject of the Administrator's exercise of its discretion in accordance with the
terms of this Plan.
IN WITNESS WHEREOF, the Company has caused this Amended and Restated
UDLP Supplemental Retirement and Savings Plan to be executed on this ___ day of
____________, 1998.
______________________________
Secretary
17
UNITED DEFENSE STOCK OPTION PLAN
United Defense Industries, Inc. (the "Company"), a Delaware
corporation, hereby adopts this United Defense Stock Option Plan. The purposes
of this Plan are as follows:
(1) To further the growth, development, and financial success of the
Company and its Affiliates (as defined herein), by providing additional
incentives to employees and directors of the Company and employees of
its Affiliates who have been or will be given responsibility for the
management or administration of the Company's (and/or one or more of
its Affiliates') business affairs, by assisting them to become owners
of Common Stock, thereby benefiting directly from the growth,
development and financial success of the Company.
(2) To enable the Company (and its Affiliates) to obtain and retain the
services of the type of professional, technical, and managerial
employees and directors considered essential to the long-range success
of the Company by providing and offering them an opportunity to become
owners of Common Stock under Options, including, in the case of
Employees of the Company and its Subsidiaries, Options that are
intended to qualify as "incentive stock options" under Section 422 of
the Code (as defined herein).
ARTICLE I.
DEFINITIONS
-----------
Whenever the following terms are used in this Plan, they shall have the
meaning specified below unless the context clearly indicates to the contrary.
The singular pronoun shall include the plural where the context so indicates.
Section 1.1. Affiliate
- ------------ ---------
"Affiliate" shall mean, with respect to any Person, any other Person
directly or indirectly controlling, controlled by, or under common control with,
such Person where "control" shall have the meaning given such term under Rule
405 of the Securities Act.
Section 1.2. Board
- ------------ -----
"Board" shall mean the Board of Directors of the Company.
Section 1.3. CEO
- ------------ ---
"CEO" shall mean Chief Executive Officer of the Company.
Section 1.4. Code
- ------------ ----
"Code" shall mean the Internal Revenue Code of 1986, as amended.
<PAGE>
Section 1.5. Committee
- ------------ ---------
"Committee" shall mean the Compensation Committee of the Board, or
another committee or subcommittee of the Board, appointed as provided in Section
6.1.
Section 1.6. Common Stock
- ------------ ------------
"Common Stock" shall mean the common stock, par value $0.01 per share,
of the Company.
Section 1.7. Company
- ------------ -------
"Company" shall mean United Defense Industries, Inc. In addition,
"Company" shall mean any corporation assuming, or issuing new employee stock
options in substitution for, Incentive Stock Options outstanding under the Plan
in a transaction to which Section 424(a) of the Code applies.
Section 1.8. Controlled Entity
- ------------ -----------------
"Controlled Entity" shall mean either of (i) UDLP Holdings Corp. or
(ii) the Partnership.
Section 1.9. Corporate Event
- ------------ ---------------
"Corporate Event" is defined in Section 7.1(a).
Section 1.10. Director
- ------------- --------
"Director" shall mean a member of the Board.
Section 1.11. Eligible Representative
- ------------- -----------------------
"Eligible Representative" for an Optionee shall mean such Optionee's
personal representative or such other person as is empowered under the deceased
Optionee's will or the then applicable laws of descent and distribution to
represent the Optionee hereunder.
Section 1.12. Employee
- ------------- --------
"Employee" shall mean any employee (as defined in accordance with the
regulations and revenue rulings then applicable under Section 3401(c) of the
Code) of the Company and/or one or more of its Affiliates, whether such employee
is so employed at the time this Plan is adopted or becomes so employed
subsequent to the adoption of this Plan.
Section 1.13. Exchange Act
- ------------- ------------
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
Section 1.14. Incentive Stock Option
- ------------- ----------------------
"Incentive Stock Option" shall mean an Option which qualifies under
Section 422 of the Code and which is designated as an Incentive Stock Option by
the Committee.
2
<PAGE>
Section 1.15. Independent Director
- ------------- --------------------
"Independent Director" shall mean a member of the Board who is not an
Employee of the Company.
Section 1.16. Non-Qualified Option
- ------------- --------------------
"Non-Qualified Option" shall mean an Option which is not an "incentive
stock option" under Section 422 of the Code and shall include an Option which is
designated as a Non-Qualified Option by the Committee.
Section 1.17. Officer
- ------------- -------
"Officer" shall mean an officer of the Company, as defined in Rule
16a-1(f) under the Exchange Act, as such Rule may be amended in the future.
Section 1.18. Option
- ------------- ------
"Option" shall mean an option granted under the Plan to purchase
Common Stock. "Options" includes both Incentive Stock Options and Non-Qualified
Options.
Section 1.19. Optionee
- ------------- --------
"Optionee" shall mean an Employee or Independent Director to whom an
Option is granted under the Plan.
Section 1.20. Person
- ------------- ------
"Person" shall mean an individual, partnership, corporation, limited
liability company, business trust, joint stock company, trust, unincorporated
association, joint venture, governmental authority or other entity of whatever
nature.
Section 1.21. Plan
- ------------- ----
"Plan" shall mean this United Defense Stock Option Plan.
Section 1.22. Secretary
- ------------- ---------
"Secretary" shall mean the Secretary of the Company.
Section 1.23. Securities Act
- ------------- --------------
"Securities Act" shall mean the Securities Act of 1933, as amended.
Section 1.24. Stock Option Agreement
- ------------- ----------------------
"Stock Option Agreement" shall mean the written Stock Option Agreement
between the Company and an Optionee evidencing an Option granted under the Plan
as described in Section 4.1.
3
<PAGE>
Section 1.25. Stockholders Agreement
- ------------- ----------------------
"Stockholders Agreement" shall mean the Stockholders Agreement by and
among United Defense Industries, Inc., Iron Horse Investors, L.L.C. and an
Optionee, as amended from time to time.
Section 1.26. Subsidiary
- ------------- ----------
"Subsidiary" of any entity shall mean any corporation in an unbroken
chain of corporations beginning with such entity if each of the corporations
other than the last corporation in the unbroken chain then owns stock possessing
50% or more of the total combined voting power of all classes of stock in one of
the other corporations in such chain.
Section 1.27. Termination of Directorship
- ------------- ---------------------------
"Termination of Directorship" shall mean the time when an Optionee who
is an Independent Director ceases to be a Director for any reason, including but
not by way of limitation, a termination by resignation, failure to be elected or
appointed, death or retirement. The Board, in its sole discretion, shall
determine the effect of all matters and questions relating to Termination of
Directorship.
Section 1.28. Termination of Employment
- ------------- -------------------------
"Termination of Employment" shall mean the time when the
employee-employer relationship between the Optionee and the Company (and/or one
or more of its Affiliates) is terminated for any reason, with or without cause,
including, but not by way of limitation, a termination by resignation,
discharge, death or retirement, but excluding a termination where the Optionee
is simultaneously reemployed by, or remains employed by, the Company and/or one
or more of its Affiliates or a successor entity thereto. The Committee shall
determine the effect of all matters and questions relating to Termination of
Employment, including, but not by way of limitation, the question of whether a
Termination of Employment resulted from a discharge for good cause, and all
questions of whether a particular leave of absence constitutes a Termination of
Employment; provided, however, that, with respect to Incentive Stock Options, a
leave of absence shall constitute a Termination of Employment if, and to the
extent that, such leave of absence interrupts employment for the purposes of
Section 422(a)(2) of the Code and the then applicable regulations and revenue
rulings under said Section of the Code.
ARTICLE II.
SHARES SUBJECT TO PLAN
----------------------
Section 2.1. Shares Subject to Plan
- ------------ ----------------------
The shares of stock subject to Options shall be shares of Common Stock.
Subject to Section 7.1, the aggregate number of such shares which may be issued
upon exercise of Options shall not exceed 1,500,000.
4
<PAGE>
Section 2.2. Unexercised Options
- ------------ -------------------
If any Option (or portion thereof) expires or is canceled without
having been fully exercised, the number of shares subject to such Option (or
portion thereof) but as to which such Option was not exercised prior to its
expiration or cancellation may again be optioned hereunder, subject to the
limitations of Section 2.1.
ARTICLE III.
GRANTING OF OPTIONS
-------------------
Section 3.1. Eligibility
- ------------ -----------
Any executive or other key Employee of the Company and/or of one or
more of its Affiliates and any Independent Director shall be eligible to be
granted Options, except as provided in Section 3.2.
Section 3.2. Qualification of Incentive Stock Options
- ------------ ----------------------------------------
No Incentive Stock Option shall be granted to any person who is not an
Employee of the Company and/or one of its Subsidiaries.
Section 3.3. Granting of Options to Employees
- ------------ --------------------------------
(a) The Committee shall from time to time:
(i) Determine which Employees are executive or other key
Employees and select from among them (including those to whom Options
have been previously granted under the Plan) such of them as in its
opinion should be granted Options;
(ii) Determine the number of shares to be subject to such
Options granted to such Employees, and determine whether such Options
are to be Incentive Stock Options or Non-Qualified Options; and
(iii) Determine the terms and conditions of such Options,
consistent with the Plan.
(b) Upon the selection of an executive or other key Employee to be
granted an Option pursuant to Section 3.3(a), the Committee shall instruct the
Secretary to issue such Option and may impose such conditions on the grant of
such Option as it deems appropriate. Without limiting the generality of the
preceding sentence, the Committee may require as a condition on the grant of an
Option to an Employee that the Employee surrender for cancellation some or all
of the unexercised Options which have been previously granted to him or her. An
Option the grant of which is conditioned upon such surrender may have an Option
price lower (or higher) than the Option price of the surrendered Option, may
cover the same (or a lesser or greater) number of shares as the surrendered
Option, may contain such other terms as the Committee deems appropriate and
shall be exercisable in accordance with its terms, without regard to the number
of shares, price, period of exercisability or any other term or condition of the
surrendered Option.
5
<PAGE>
Section 3.4. Granting of Option to Independent Directors
- ------------ -------------------------------------------
(a) The Board shall from time to time:
(i) Select from among the Independent Directors (including
those to whom Options have previously been granted under the Plan) such
of them as in its opinion should be granted Options;
(ii) Determine the number of shares to be subject to such
Options granted to such selected Independent Directors;
(iii) Determine the terms and conditions of such Options,
consistent with the Plan; provided, however, that all Options granted
to Independent Directors shall be Non-Qualified Options.
(b) Upon the selection of an Independent Director to be granted an
Option pursuant to Section 3.4(a), the Board shall instruct the Secretary to
issue such Option and may impose such conditions on the grant of such Option as
it deems appropriate. Without limiting the generality of the preceding sentence,
the Board may require as a condition on the grant of an Option to an Independent
Director that the Independent Director surrender for cancellation some or all of
the unexercised Options which have been previously granted to him or her. An
Option the grant of which is conditioned upon such surrender may have an Option
price lower (or higher) than the Option price of the surrendered Option, may
cover the same (or a lesser or greater) number of shares as the surrendered
Option, may contain such other terms as the Board deems appropriate and shall be
exercisable in accordance with its terms, without regard to the number of
shares, price, period of exercisability or any other term or condition of the
surrendered Option.
ARTICLE IV.
TERMS OF OPTIONS
----------------
Section 4.1. Option Agreement
- ------------ ----------------
Each Option shall be evidenced by a written Stock Option Agreement,
which shall be executed by the Optionee and an authorized Officer of the Company
and which shall contain such terms and conditions as the Committee (or the
Board, in the case of Options granted to Independent Directors) shall determine,
consistent with the Plan. Stock Option Agreements evidencing Incentive Stock
Options shall contain such terms and conditions as may be necessary to qualify
such Options as "incentive stock options" under Section 422 of the Code.
Section 4.2. Exercisability of Options
- ------------ -------------------------
(a) Each Option shall become exercisable according to the terms of the
applicable Stock Option Agreement; provided, however, that by a resolution
adopted after an Option is granted the Committee (or the Board, in the case of
Options granted to Independent Directors) may, on such terms and conditions as
it may determine to be appropriate and subject to Sections 4.2(b) and 4.2(c),
accelerate the time at which such Option or any portion thereof may be
exercised.
6
<PAGE>
(b) No portion of an Option which is unexercisable at Termination of
Employment or Termination of Directorship shall thereafter become exercisable
unless the Committee shall determine otherwise.
(c) To the extent that the aggregate fair market value (determined as
of the date of grant of the Option granted with respect to such stock) of shares
with respect to which "incentive stock options" (within the meaning of Section
422 of the Code, but without regard to Section 422(d) of the Code) are
exercisable for the first time by an Optionee during any calendar year (under
the Plan and all other incentive stock option plans of the Company or any
Subsidiary thereof) exceeds $100,000, such options shall be treated and taxable
as Non-Qualified Options. The rule set forth in the preceding sentence shall be
applied by taking options into account in the order in which they were granted,
and the stock issued upon exercise of options shall designate whether such stock
was acquired upon exercise of an Incentive Stock Option.
Section 4.3. Option Price
- ------------ ------------
(a) The price of the shares subject to each Option shall be set by the
Committee (or the Board, in the case of Options granted to Independent
Directors) provided, however, that in the case of an Incentive Stock Option, the
price per share shall be not less than 100% of the fair market value of such
shares on the date such Option is granted; and that in the case of an individual
then owning (within the meaning of Section 424(d) of the Code) more than 10% of
the total combined voting power of all classes of stock of the Company, the
price per share shall not be less than 110% of the fair market value of such
shares on the date such Incentive Stock Option is granted.
(b) For purposes of the Plan, the fair market value of a share of the
Common Stock as of a given date shall be: (i) the closing price of a share of
the Common Stock on the principal exchange on which such shares are then
trading, if any, on the day previous to such date, or, if shares were not traded
on the day previous to such date, then on the next preceding trading day during
which a sale occurred; or (ii) if such Common Stock is not traded on an exchange
but is quoted on NASDAQ or a successor quotation system, (A) the last sales
price (if the Common Stock is then listed as a National Market Issue under the
NASD National Market System) or (B) the mean between the closing representative
bid and asked prices (in all other cases) for the Common Stock on the day
previous to such date as reported by NASDAQ or such successor quotation system;
or (iii) if such Common Stock is not publicly traded on an exchange and not
quoted on NASDAQ or a successor quotation system, the mean between the closing
bid and asked prices for the Common Stock, on the day previous to such date, as
determined in good faith by the Committee; or (iv) if the Common Stock is not
publicly traded, the fair market value established by the Committee acting in
good faith and taking account of factors applicable to such shares such as their
status as minority or non-controlling shares and any restrictions on the shares
contained in this Plan or the Stockholders Agreement.
Section 4.4. Expiration of Options
- ------------ ---------------------
(a) No Option may be exercised to any extent by the Optionee or his or
her Eligible Representative after the first to occur of the following events:
(i) The expiration of ten years from the date the Option was
granted; or
7
<PAGE>
(ii) With respect to an Incentive Stock Option in the case of
an Optionee owning (within the meaning of Section 424(d) of the Code),
at the time the Incentive Stock Option was granted, more than 10% of
the total combined voting power of all classes of stock of the Company
or any subsidiary corporation, the expiration of five years from the
date the Incentive Stock Option was granted; or
(iii) Except as the Committee (or the Board, in the case of
Options granted to Independent Directors) may provide in the terms of
the applicable Stock Option Agreement or otherwise approve, for any
reason other than death or disability (as defined in Section 22(e)(3)
of the Code); or
(iv) In the case of an Optionee whose Termination of
Employment is by reason of his or her disability (within the meaning of
Section 22(e)(3) of the Code), the expiration of 12 months from the
date of the Optionee's Termination of Employment unless the Optionee
dies within said 12 month period, in which case the Option shall cease
to be exercisable upon the expiration of 180 days from the date of the
Optionee's death; or
(v) The expiration of 180 days from the date of the
Optionee's death.
ARTICLE V.
EXERCISE OF OPTIONS
-------------------
Section 5.1. Person Eligible to Exercise
- ------------ ---------------------------
During the lifetime of the Optionee, only he or she may exercise an
Option (or any portion thereof) granted to him or her; provided, however, that
the Optionee's Eligible Representative may exercise the Optionee's Option during
the period of the Optionee's disability (as defined in Section 22(e)(3) of the
Code) notwithstanding that an Option so exercised will not qualify as an
Incentive Stock Option. After the death of the Optionee, any exercisable portion
of an Option may, prior to the time when such portion becomes unexercisable
under the Plan or the applicable Stock Option Agreement, be exercised by the
Optionee's Eligible Representative.
Section 5.2. Partial Exercise
- ------------ ----------------
At any time and from time to time prior to the time when any
exercisable Option or exercisable portion thereof becomes unexercisable under
the Plan or the applicable Stock Option Agreement, such Option or portion
thereof may be exercised in whole or in part; provided, however, that the
Company shall not be required to issue fractional shares and the Committee (or
the Board, in the case of Options granted to Independent Directors) may, by the
terms of the Option, require any partial exercise to be with respect to a
specified minimum number of shares.
Section 5.3. Manner of Exercise
- ------------ ------------------
An exercisable Option, or any exercisable portion thereof, may be
exercised solely by delivery to the Secretary of all of the following prior to
the time when such Option or such portion becomes unexercisable under the Plan
or the applicable Stock Option Agreement:
8
<PAGE>
(a) Notice in writing signed by the Optionee or his or her Eligible
Representative, stating that such Option or portion is exercised, and
specifically stating the number of shares with respect to which the Option is
being exercised;
(b) A copy of the Stockholders Agreement signed by the Optionee or
Eligible Representative, as applicable;
(c) (i) Full payment (in cash or by personal, certified or bank
cashier check) for the shares with respect to which such Option or
portion is thereby exercised; or
(ii) With the consent of the Committee (or the Board, in the case
of Options granted to Independent Directors), (A) shares of Common
Stock owned by the Optionee duly endorsed for transfer to the Company
or (B) except with respect to Incentive Stock Options, shares of the
Common Stock issuable to the Optionee upon exercise of the Option, with
a fair market value (as determined under Section 4.3(b)) on the date of
Option exercise equal to the aggregate Option price of the shares with
respect to which such Option or portion is thereby exercised; or
(iii) With the consent of the Committee (or the Board, in the case
of Options granted to Independent Directors), any combination of the
consideration provided in the foregoing subsections (i) and (ii);
(d) The payment to the Company of all amounts necessary to satisfy any
and all federal, state and local tax withholding requirements arising in
connection with the exercise of the Option;
(e) Such representations and documents as the Committee (or the Board,
in the case of Options granted to Independent Directors) deems necessary or
advisable to effect compliance with all applicable provisions of the Securities
Act and any other federal or state securities laws or regulations. The Committee
(or the Board, in the case of Options granted to Independent Directors) may, in
its sole discretion, also take whatever additional actions it deems appropriate
to effect such compliance including, without limitation, placing legends on
share certificates and issuing stop-transfer orders to transfer agents and
registrars; and
(f) In the event that the Option or portion thereof shall be exercised
pursuant to Section 5.1 by any person or persons other than the Optionee,
appropriate proof of the right of such person or persons to exercise the Option
or portion thereof.
Section 5.4. Conditions to Issuance of Stock Certificates
- ------------ --------------------------------------------
The shares of stock issuable and deliverable upon the exercise of an
Option, or any portion thereof, may be either previously authorized but unissued
shares or issued shares which have then been reacquired by the Company. A
certificate of shares will be delivered to the Optionee at the Company's
principal place of business within ten days of receipt by the Company of the
written notice and payment, unless an earlier date is agreed upon or required by
law or other ruling or regulation. Notwithstanding the above, the Company shall
not be required to issue or deliver any certificate or certificates for shares
of stock purchased upon the exercise of any Option or portion thereof prior to
fulfillment of all of the following conditions:
9
<PAGE>
(a) The admission of such shares to listing on any and all stock
exchanges on which such class of stock is then listed;
(b) The completion of any registration or other qualification of such
shares under any state or federal law or under the rulings or regulations of the
Securities and Exchange Commission or any other governmental regulatory body,
which the Committee (or the Board, in the case of Options granted to Independent
Directors) shall, in its sole discretion, deem necessary or advisable;
(c) The obtaining of any approval or other clearance from any state or
federal governmental agency which the Committee (or the Board, in the case of
Options granted to Independent Directors) shall, in its sole discretion,
determine to be necessary or advisable; and
(d) The payment to the Company of all amounts which it is required to
withhold under federal, state or local law in connection with the exercise of
the Option.
Section 5.5. Rights as Stockholders
- ------------ ----------------------
The holder of an Option shall not be, nor have any of the rights or
privileges of, a stockholder of the Company in respect of any shares purchasable
upon the exercise of any part of an Option unless and until such holder has
signed a Stockholders Agreement and certificates representing such shares have
been issued by the Company to such holder.
Section 5.6. Transfer Restrictions
- ------------ ---------------------
Shares acquired upon exercise of an Option shall be subject to the
terms and conditions of a Stockholders Agreement. In addition, the Committee (or
the Board, in the case of Options granted to Independent Directors), in its sole
discretion, may impose further restrictions on the transferability of the shares
purchasable upon the exercise of an Option as it deems appropriate. Any such
restriction shall be set forth in the respective Stock Option Agreement and may
be referred to on the certificates evidencing such shares. The Committee may
require the Employee to give the Company prompt notice of any disposition of
shares of stock acquired by exercise of an Incentive Stock Option within two
years from the date of granting such Option or one year after the transfer of
such shares to such Employee. The Committee may direct that the certificates
evidencing shares acquired by exercise of an Option refer to such requirement.
ARTICLE VI.
ADMINISTRATION
--------------
Section 6.1. Committee
- ------------ ---------
The Committee shall consist of two or more Directors, appointed by and
holding office at the pleasure of the Board. Appointment of Committee members
shall be effective upon acceptance of appointment. Committee members may resign
at any time by delivering written notice to the Board. Vacancies in the
Committee shall be filled by the Board.
Section 6.2. Delegation by Committee
- ------------ -----------------------
10
<PAGE>
The Committee may delegate to the CEO any of its rights, powers and
duties under the Plan (except those granted pursuant to Sections 3.3, 4.3,
5.3(c) and (e), 5.6 and Article VII).
Section 6.3. Duties and Powers of CEO and the Committee
- ------------ ------------------------------------------
It shall be the duty of the Committee (and/or the CEO, as applicable)
to conduct the general administration of the Plan in accordance with its
provisions. Except with respect to Options granted to Independent Directors, the
Committee shall have the authority to grant Options and to specify the terms and
conditions, including, without limitation, performance targets, of Options in
accordance with the Plan. The Committee (and/or the CEO, as applicable) shall
also have the power to interpret the Plan and the Options and to adopt such
rules for the administration, interpretation and application of the Plan as are
consistent therewith and to interpret, amend or revoke any such rules.
Notwithstanding the foregoing, the full Board, acting by a majority of its
members in office, shall conduct the general administration of the Plan with
respect to Options granted to Independent Directors. Any such interpretations
and rules in regard to Incentive Stock Options shall be consistent with the
terms and conditions applicable to "incentive stock options" within the meaning
of Section 422 of the Code. All determinations and decisions made by the
Committee (and/or the CEO, as applicable) under any provision of the Plan or of
any Option granted thereunder shall be final, conclusive and binding on all
persons.
Section 6.4. Compensation; Professional Assistance; Good Faith Actions
- ------------ ---------------------------------------------------------
The members of the Committee shall receive such compensation for their
services hereunder as may be determined by the Board. All expenses and
liabilities incurred by the members of the Committee or the Board in connection
with the administration of the Plan shall be borne by the Company. The Committee
or the Board may employ attorneys, consultants, accountants, appraisers, brokers
or other persons. The Committee, the Company and its Officers and Directors
shall be entitled to rely upon the advice, opinions or valuations of any such
persons. All actions taken and all interpretations and determinations made by
the CEO, the Committee and the Board in good faith shall be final and binding
upon all Optionees, the Company and all other interested persons. No member of
the Board shall be personally liable for any action, determination or
interpretation made in good faith with respect to the Plan or the Options, and
all members of the Board shall be fully protected by the Company in respect to
any such action, determination or interpretation.
ARTICLE VII.
OTHER PROVISIONS
----------------
Section 7.1. Changes in Common Stock or Assets of the Company, Acquisition
or Liquidation of the Company and Other Corporate Events.
- ------------ ---------------------------------------------------------
(a) Subject to Section 7.1(d) and the terms of outstanding Options, in
the event that the Committee (or the Board, in the case of Options granted to
Independent Directors) determines, in its sole discretion, that any dividend or
other distribution (whether in the form of cash, Common Stock, other securities,
or other property), recapitalization, reclassification, stock split, reverse
stock split, reorganization, merger, consolidation, split-up, spin-off,
combination, repurchase, liquidation, dissolution, or sale, transfer, exchange
or other disposition of all or substantially all of the assets of the Company,
or exchange of Common Stock or other securities
11
<PAGE>
of the Company, issuance of warrants or other rights to purchase Common Stock or
other securities of the Company, public offering of Common Stock, or other
similar corporate transaction or event (each such transaction or event being
referred to herein as a "Corporate Event"), affects the Common Stock such that
an adjustment is determined by the Committee (or the Board, in the case of
Options granted to Independent Directors) to be appropriate in order to prevent
dilution, reduction or enlargement of the benefits or potential benefits
intended to be made available under the Plan or with respect to an Option, then
the Committee (or the Board, in the case of Options granted to Independent
Directors) shall, in good faith and in such manner as it may deem equitable in
order to prevent such dilution, reduction or enlargement, adjust any or all of
(i) The number and kind of shares of Common Stock (or other
securities or property) with respect to which Options may be granted
under the Plan (including, but not limited to, adjustments of the
limitations in Section 2.1 on the maximum number and kind of shares
which may be issued);
(ii) The number and kind of shares of Common Stock (or other
securities or property) subject to outstanding Options;
(iii) The exercise price with respect to any Option; and
(iv) The financial or other "targets" specified in each Stock
Option Agreement for determining the exercisability of Options.
(b) Subject to Section 7.1(d) and the terms of outstanding Options,
upon the occurrence of any Corporate Event or any unusual or nonrecurring
transaction or event affecting the Company or any Affiliate of the Company or
the financial statements of the Company or any Affiliate, or changes in
applicable laws, regulations, or accounting principles, the Committee (or the
Board, in the case of Options granted to Independent Directors), in its sole
discretion, is hereby authorized to take any one or more of the following
actions, either by the terms of the applicable Stock Option Agreement or by
action taken prior to the occurrence of such event, whenever the Committee (or
the Board, in the case of Options granted to Independent Directors) determines,
in good faith, that such action is appropriate in order to prevent dilution or
enlargement of the benefits or potential benefits intended to be made available
under the Plan or with respect to any Option under this Plan, to facilitate such
event or to give effect to such changes in laws, regulations or principles:
(i) provide, either automatically or upon the Optionee's
request, that on or following the effective time of such event the
Option shall be exercisable only for (A) the aggregate consideration
(whether in the form of cash or otherwise) into which shares of Common
Stock issuable upon the exercise of such Option would have been
converted (or for which such shares would have been exercisable) if
such Option had been exercised immediately prior to the event, or (B)
the amount of cash equal to the value of the consideration described in
(A);
(ii) provide, either automatically or upon the Optionee's
request, for the replacement of such Option with other rights or
property selected by the Committee (or the Board, in the case of
Options granted to Independent Directors) in its sole discretion;
12
<PAGE>
(iii) provide, that the Option cannot be exercised after such
event;
(iv) provide that for a specified period of time prior to
such event, such Option shall be exercisable as to all shares covered
thereby, notwithstanding anything to the contrary in (A) Section 4.2 or
(B) the provisions of the applicable Stock Option Agreement;
(v) provide that upon such event such Option be assumed by
the successor or survivor corporation, or a parent or subsidiary
thereof, or shall be substituted for by similar options, rights or
awards covering the stock of the successor or survivor corporation, or
a parent or subsidiary thereof, with appropriate adjustments as to the
number and kind of shares and prices; and
(vi) make adjustments in the number and type of shares of
Common Stock (or other securities or property) subject to outstanding
Options and/or in the terms and conditions of (including the exercise
price), and the criteria included in, outstanding Options and Options
which may be granted in the future.
(c) Subject to Sections 7.1(d), the Committee (or the Board, in the
case of Options granted to Independent Directors) may, in its sole discretion,
include such further provisions and limitations in any Stock Option Agreement as
it may deem equitable and in the best interests of the Company and its
Affiliates.
(d) With respect to Incentive Stock Options, no adjustment or action
described in this Section 7.1 or in any other provision of the Plan shall be
authorized to the extent that such adjustment or action would cause the Plan to
violate Section 422(b)(1) of the Code or any successor provisions thereto,
unless the Committee determines that the Plan and/or the Options are not to
comply with Section 422(b)(1) of the Code. The number of shares of Common Stock
subject to any Option shall always be rounded up to the next higher whole
number.
Section 7.2. Options Not Transferable
- ------------ ------------------------
No Option or interest or right therein or part thereof shall be liable
for the debts, contracts or engagements of the Optionee or his or her successors
in interest or shall be subject to disposition by transfer, alienation,
anticipation, pledge, encumbrance, assignment or any other means whether such
disposition be voluntary or involuntary or by operation of law, by judgment,
levy, attachment, garnishment or any other legal or equitable proceedings
(including bankruptcy), and any attempted disposition thereof shall be null and
void and of no effect; provided, however, that nothing in this Section 7.2 shall
prevent transfers by will or by the applicable laws of descent and distribution.
Section 7.3. Amendment, Suspension or Termination of the Plan
- ------------ ------------------------------------------------
The Plan may be wholly or partially amended or otherwise modified,
suspended or terminated at any time or from time to time by the Board or the
Committee. However, without the approval of stockholders given within twelve
months before or after such action, no action of the Board or the Committee may,
except as provided in Section 7.1, change the class of employees eligible to
receive options under the Plan, increase any limit imposed in Section 2.1 on the
maximum number of shares which may be issued on exercise of Options, reduce the
minimum Option price requirements of Section 4.3(a), or extend the limit
13
<PAGE>
imposed in this Section 7.3 on the period during which options may be granted.
Except as provided by Section 7.1, neither the amendment, suspension nor
termination of the Plan shall, without the consent of the holder of the Option,
alter or impair any rights or obligations under any Option theretofore granted.
No Option may be granted during any period of suspension nor after termination
of the Plan, and in no event may any Option be granted under this Plan after the
expiration of ten years from the date the Plan is adopted by the Board.
Section 7.4. Effect of Plan Upon Other Option and Compensation Plans
- ------------ -------------------------------------------------------
The adoption of this Plan shall not affect any other compensation or
incentive plans in effect for the Company or any Affiliate. Nothing in this Plan
shall be construed to limit the right of the Company or any Affiliate (a) to
establish any other forms of incentives or compensation for directors or
employees of the Company (or any Affiliate) or (b) to grant or assume options
otherwise than under this Plan in connection with any proper corporate purpose,
including, but not by way of limitation, the grant or assumption of options in
connection with the acquisition by purchase, lease, merger, consolidation or
otherwise, of the business, stock or assets of any corporation, firm or
association.
Section 7.5. Approval of Plan by Stockholders
- ------------ --------------------------------
This Plan will be submitted for the approval of the Company's
stockholders within twelve months after the date of the Board's initial adoption
of this Plan and the Plan and the Options granted hereunder shall be effective
upon approval by such stockholders as provided in Section 280G(b)(5)(A)(ii) of
the Code and regulations thereunder. No Option may be exercised to any extent by
anyone unless and until the Plan is so approved by the stockholders, and if such
approval has not been obtained by the end of said twelve-month period, the Plan
and all Options theretofore granted shall thereupon be canceled and become null
and void.
Section 7.6. Titles
- ------------ ------
Titles are provided herein for convenience only and are not to serve as
a basis for interpretation or construction of the Plan.
Section 7.7. Conformity to Securities Laws
- ------------ -----------------------------
The Plan is intended to conform to the extent necessary with all
provisions of the Securities Act and the Exchange Act and any and all
regulations and rules promulgated by the Securities and Exchange Commission
thereunder to the extent the Company and its employees are subject to the
provisions thereof. Notwithstanding anything herein to the contrary, the Plan
shall be administered, and Options shall be granted and may be exercised, only
in such a manner as to conform to such laws, rules and regulations. To the
extent permitted by applicable law, the Plan and Options granted hereunder shall
be deemed amended to the extent necessary to conform to such laws, rules and
regulations.
Section 7.8. Governing Law
- ------------ -------------
To the extent not preempted by federal law, the Plan shall be construed
in accordance with and governed by the laws of the State of Delaware.
14
<PAGE>
Section 7.9. Severability
- ------------ ------------
In the event any portion of the Plan or any action taken pursuant
thereto shall be held illegal or invalid for any reason, the illegality or
invalidity shall not affect the remaining parts of the Plan, and the Plan shall
be construed and enforced as if the illegal or invalid provisions had not been
included, and the illegal or invalid action shall be null and void.
* * * *
I hereby certify that the foregoing Plan was duly adopted by the Board
of Directors of United Defense Industries, Inc. on _______________ _____, 1998.
Executed on this ____ day of ____________, 1998.
-----------------------------
Secretary
15
STOCK OPTION AGREEMENT
THIS AGREEMENT, dated _________________ ____, 19____, is made by and
between United Defense Industries, Inc. a Delaware corporation (the "Company"),
and ___________________, an employee of the Company (or one of its Subsidiaries,
as defined herein), hereinafter referred to as "Optionee."
WHEREAS, the Company wishes to afford the Optionee the opportunity to
purchase shares of its common stock, par value $0.01 per share (the "Common
Stock"); and
WHEREAS, the Company wishes to carry out the United Defense Stock
Option Plan (the "Plan"), the terms of which are hereby incorporated by
reference and made a part of this Agreement; and
WHEREAS, the Committee appointed to administer the Plan has determined
that it would be to the advantage and best interest of the Company and its
shareholders to grant the stock option provided for herein to the Optionee as an
inducement to enter into or remain in the service of the Company (or one of its
Subsidiaries) and as an incentive for increased efforts during such service, and
has advised the Company thereof and instructed the undersigned officers to issue
said Option;
NOW, THEREFORE, in consideration of the mutual covenants herein
contained and other good and valuable consideration, receipt of which is hereby
acknowledged, the parties hereto do hereby agree as follows:
ARTICLE I.
DEFINITIONS
-----------
Whenever the following terms are used in this Agreement, they shall
have the meaning specified below unless the context clearly indicates to the
contrary. Capitalized terms used in this Agreement and not defined below shall
have the meaning given such terms in the Plan. The singular pronoun shall
include the plural, where the context so indicates.
Section 1.1. Cash Flow for Debt Amortization; Cumulative Cash Flow for Debt
Amortization
"Cash Flow for Debt Amortization" for a given period shall mean the
consolidated free cash flow of the Company and its consolidated Controlled
Entities available for, or used for, principal repayments of debt of the Company
or its Controlled Entities. "Cumulative Cash Flow for Debt Amortization" as of a
given date means the total of Cash Flow for Debt Amortization from and after
October 6, 1997 through that date.
Section 1.2. Cash Flow for Debt Amortization Target; Cumulative Cash Flow
for Debt Amortization Target
"Cash Flow for Debt Amortization Target" and "Cumulative Cash Flow for
Debt Amortization Target" for a period shall be as set forth in Appendix A to
this Agreement, subject to the provisions of Section 4.6.
<PAGE>
Section 1.3. Controlled Entity
- ------------ -----------------
"Controlled Entity" shall mean either UDLP Holdings Corp. or United
Defense, L.P., as the case may be; "Controlled Entities" shall mean both UDLP
Holdings Corp. and United Defense, L.P.
Section 1.4. Corporate Transaction
- ------------ ---------------------
"Corporate Transaction" shall mean any of the following events:
(a) a merger or consolidation of the Company or any Controlled
Entity with a theretofore unaffiliated entity in which the stockholders or
interestholders of the Company or Controlled Entity (as applicable) receive
cash, securities and/or other marketable property in exchange for their voting
stock or partnership interests;
(b) the sale, transfer, exchange or other disposition of all
or substantially all of the assets of the Company or any Controlled Entity;
(c) the acquisition by an unaffiliated Person, of (i) more
than 50% of the Common Stock then outstanding or (ii) more than 50% of the
voting stock or partnership interests of any Controlled Entity then outstanding;
or
(d) the liquidation, dissolution, or winding up of the Company
or any Controlled Entity (other than a restructuring transaction which results
in the continuation of the Company's or Controlled Entity's (as applicable)
business by an Affiliate).
Section 1.5. EBITDA; Cumulative EBITDA; Cumulative EBITDA Excess
- ------------ ---------------------------------------------------
"EBITDA" for a given period shall mean consolidated earnings before
interest and taxes (excluding management fees) adjusted by (x) adding thereto
(without duplication) the amount of all amortization of intangibles and
depreciation and all non-cash charges in respect of LIFO adjustments and pension
and retiree benefits, in each case that were deducted in arriving at
consolidated earnings before interest and taxes for such period and (y)
subtracting therefrom the amount of all non-cash income in respect of LIFO
adjustments and pension and retiree benefit plans, all as reflected on the
Company's audited consolidated financial statements for such period. "Cumulative
EBITDA" as of a given date means the total of EBITDA from and after October 6,
1997 through that date. "Cumulative EBITDA Excess" as of a given date means the
lesser of (i) $10,000,000 or (ii) the excess, if any, of Cumulative EBITDA as of
such date over the Cumulative EBITDA Target for the period from October 6, 1997
through such date; provided, however, that if the Cumulative EBITDA Target as of
such date equals or exceeds Cumulative EBITDA as of such date, "Cumulative
EBITDA Excess" as of such date shall be zero.
Section 1.6. EBITDA Target; Cumulative EBITDA Target
- ------------ ---------------------------------------
"EBITDA Target" and "Cumulative EBITDA Target" for a period shall be as
set forth in Appendix A of this Agreement, subject to the provisions of Section
4.6.
<PAGE>
Section 1.7. Option
- ------------ ------
"Option" shall mean the Incentive Stock Option to purchase Common Stock
granted under this Agreement.
Section 1.8. Person
- ------------ ------
"Person" shall mean an individual, partnership, corporation, limited
liability company, business trust, joint stock company, trust, unincorporated
association, joint venture, governmental authority or other entity of whatever
nature.
Section 1.9. Plan
- ------------ ----
"Plan" shall mean the United Defense Stock Option Plan adopted by the
Corporation on ______, 1998, as amended from time to time.
Section 1.10. Stockholders Agreement
- ------------- ----------------------
"Stockholders Agreement" shall mean the Stockholders Agreement by and
among the Company, Iron Horse Investors, L.L.C., and the Optionee.
Section 1.11. Subsidiary
- ------------- ----------
"Subsidiary" of any entity shall mean any corporation in an unbroken
chain of corporations beginning with such entity if each of the corporations
other than the last corporation in the unbroken chain then owns stock possessing
50% or more of the total combined voting power of all classes of stock in one of
the other corporations in such chain.
ARTICLE II.
GRANT OF OPTION
---------------
Section 2.1. Grant of Option
- ------------ ---------------
In consideration of the Optionee's agreement to remain in the employ of
the Company and/or one or more of its Subsidiaries and for other good and
valuable consideration, on the date hereof the Company irrevocably grants to the
Optionee the Option to purchase any part or all of an aggregate of
___________________________________________ shares of Common Stock upon the
terms and conditions set forth in the Plan and this Agreement. The Option is
intended to qualify as an Incentive Stock Option under ss.422 of the Internal
Revenue Code. The Optionee hereby agrees that except as required by law, he or
she will not disclose to any person, other than the Optionee's spouse (if any),
attorney, accountant, and/or other professional advisor(s), the grant of the
Option or any of the terms or provisions hereof without the prior approval of
the Committee, and the Optionee agrees that, in the discretion of the Committee,
the Option shall terminate and any unexercised portion of such Option (whether
or not then exercisable) shall be forfeited if the Optionee violates the
non-disclosure provisions of this Section 2.1.
Section 2.2. Option Subject to Plan
- ------------ ----------------------
3
<PAGE>
The Option granted hereunder is subject to the terms and provisions of
the Plan, including without limitation, Article V and Sections 7.1, 7.2 and 7.3
thereof.
Section 2.3. Option Price
- ------------ ------------
The purchase price of the shares of Common Stock covered by the Option
shall be $10.00 per share (without commission or other charge).
ARTICLE III.
EXERCISABILITY
--------------
Section 3.1. Commencement of Exercisability
- ------------ ------------------------------
Subject to subsection (g) and Section 3.3,
(a) 25% of the Option shall become exercisable in four
cumulative installments as follows:
(i) The first installment shall consist of ten
percent of the shares covered by such Option and shall become
exercisable on December 31, 1998;
(ii) The second installment shall consist of five
percent of the shares covered by such Option and shall become
exercisable on December 31, 1999;
(iii) The third installment shall consist of five
percent of the shares covered by such Option and shall become
exercisable on December 31, 2000;
(iv) The fourth installment shall consist of five
percent of the shares covered by such Option and shall become
exercisable on December 31, 2001;
(b) 75% of the Option shall become fully exercisable on the
day immediately preceding the tenth anniversary following the date of grant,
provided that the Optionee remains continuously employed in active service by
the Company from the date of grant through such date.
(c) Notwithstanding Section 3.1(b),
(i) (A) An installment consisting of 10% of the
shares covered by the Option shall become exercisable
on, or within 90 days following, the December 31 of
each calendar year 1998 through 1999 as determined by
the Committee in its sole discretion if (i) the Cash
Flow for Debt Amortization as of such December 31
equals or exceeds 50% of the Cash Flow for Debt
Amortization Target for such year, and (ii) the
Cumulative Cash Flow for Debt Amortization as of such
December 31 equals or exceeds the Cumulative Cash
Flow for Debt Amortization Target through such
December 31.
4
<PAGE>
(B) An installment consisting of 7.5% of the
shares covered by the Option shall become exercisable
within 90 days following each of December 31, 2000
through December 31, 2002 if (i) the Cash Flow for
Debt Amortization as of such December 31 equals or
exceeds 50% of the Cash Flow for Debt Amortization
Target for such calendar year, and (ii) the
Cumulative Cash Flow for Debt Amortization as of such
December 31 equals or exceeds the Cumulative Cash
Flow for Debt Amortization Target through such
December 31.
(i) If the Cumulative Cash Flow for Debt Amortization
as of the end of any calendar year 1998 through 2002 is less than the
Cumulative Cash Flow for Debt Amortization Target through the end of
such year, but Cash Flow for Debt Amortization for such year is at
least 80% of the Cash Flow for Debt Amortization Target for such year,
that portion of the Option that was subject to accelerated
exercisability pursuant to Section 3.1(c)(i) with respect to such year
shall become exercisable on, or within 90 days following, the last day
of the first calendar year ending on or prior to December 31, 2002 as
of which the Cumulative Cash Flow for Debt Amortization equals or
exceeds the Cumulative Cash Flow for Debt Amortization Target through
such December 31.
(ii) If the Cash Flow for Debt Amortization for any
calendar year 1998 through 2002 is less than 80% of the Cash Flow for
Debt Amortization Target for such year, that portion of the Option that
was subject to accelerated exercisability pursuant to Section 3.1(c)(i)
with respect to such year shall become exercisable only in accordance
with Section 3.1(b).
(d) Notwithstanding Section 3.1(b),
(i) An installment consisting of 5.0% of the shares
covered by the Option shall become exercisable within 90 days following
the December 31 of each calendar year 1998 through 1999 if the EBITDA
for the year ending on such December 31 plus the Cumulative EBITDA
Excess as of such December 31 equals or exceeds the EBITDA Target for
such year.
(ii) An installment consisting of 7.5% of the shares
covered by the Option shall become exercisable within 90 days following
each of December 31, 2000 through December 31, 2002 if the EBITDA as of
such December 31 plus the Cumulative EBITDA Excess as of such December
31 equals or exceeds the EBITDA Target for such year.
(iii) If the EBITDA for any calendar year 1998
through 2002 plus the Cumulative EBITDA Excess as of the December 31 of
such year is less than the EBITDA Target for such year, that portion of
the Option that was subject to accelerated exercisability pursuant to
Section 3.1(d)(i) or (ii) with respect to such year shall become
exercisable only in accordance with Section 3.1(b).
(e) Notwithstanding the foregoing provisions of this Section
3.1, but subject to subsection (g), upon the occurrence of the first Corporate
Transaction,
5
<PAGE>
(i) that portion of the Option that remains eligible
to become exercisable pursuant to Section 3.1(a), and
(ii) that portion of the of the Option that remains
eligible to become exercisable pursuant to Sections 3.1(c)(i) or (ii)
or 3.1(d)(i) or (ii)
at any time on or after the effective date of such Corporate Transaction shall,
immediately prior to the effective date of such Corporate Transaction,
automatically become exercisable in full. However, no outstanding Option (or any
portion thereof) shall so accelerate if and to the extent such Option (or
portion thereof) is, in connection with the Corporate Transaction, either to be
assumed by the successor or survivor corporation (or parent thereof) or to be
replaced with a comparable right with respect to shares of the capital stock of
the successor or survivor corporation (or parent thereof) or with respect to
other property. The determination of comparability of rights under the preceding
sentence shall be made by the Committee, and its determination shall be final,
binding and conclusive.
(f) The Committee shall make the determination as to whether
the respective Cash Flow for Debt Amortization Targets, Cumulative Cash Flow for
Debt Amortization Targets and EBITDA Targets have been met, and shall determine
the extent, if any, to which the Option has become exercisable, on any such date
as the Committee in its sole discretion shall determine; provided, however, that
with respect to each calendar year such date shall not be later than the 90th
day following December 31 of such calendar year.
(g) No portion of the Option which is unexercisable at
Termination of Employment shall thereafter become exercisable.
Section 3.2. Duration of Exercisability
- ------------ --------------------------
The installments provided for in Section 3.1 are cumulative. Each such
installment which becomes exercisable pursuant to Section 3.1 shall remain
exercisable until it becomes unexercisable.
Section 3.3. Expiration of Option
- ------------ --------------------
(a) The Option may not be exercised to any extent by anyone
after the first to occur of the following events:
(i) The expiration of ten years from the date the
Option was granted; or
(ii) In the case of an Optionee owning (within the
meaning of Section 424(d) of the Code), at the time the Incentive Stock
Option was granted, more than 10% of the total combined voting power of
all classes of stock of the Company or any Subsidiary corporation, the
expiration of five years from the date the Incentive Stock Option was
granted; or
6
<PAGE>
(iii) Except as the Committee may otherwise approve,
the date of the Optionee's Termination of Employment for any reason
other than death or disability (as defined in Section 22(e)(3) of the
Code); or
(iv) In the case of an Optionee whose Termination of
Employment is by reason of his or her disability (within the meaning of
Section 22(e)(3) of the Code), the expiration of 12 months from the
date of the Optionee's Termination of Employment, unless the Optionee
dies within said 12 month period, in which case the Option shall cease
to be exercisable upon the expiration of 180 days from the date of the
Optionee's death; or
(v) The expiration of 180 days from the date of the
Optionee's death.
Section 3.4. Partial Exercise
- ------------ ----------------
Any exercisable portion of the Option or the entire Option, if then
wholly exercisable, may be exercised in whole or in part at any time prior to
the time when the Option or portion thereof becomes unexercisable; provided,
however, that each partial exercise shall be for not less than one hundred (100)
shares (or the minimum installment set forth in Section 3.1, if a smaller number
of shares) and shall be for whole shares only.
Section 3.5. Exercise of Option
- ------------ ------------------
The exercise of the Option shall be governed by the terms of this
Agreement and the terms of the Plan, including, without limitation, the
provisions of Article V of the Plan.
Section 3.6. Special Tax Consequences
- ------------ ------------------------
The Optionee acknowledges that, to the extent that the aggregate fair
market value of stock with respect to which "incentive stock options" (within
the meaning of Section 422 of the Code, but without regard to Section 422(d) of
the Code), including the Option, are exercisable for the first time by the
Optionee during any calendar year (under the Plan and all other stock option
plans of the Company, any Subsidiary and any parent corporation) exceeds
$100,000, such options shall be treated as not qualifying under Section 422 of
the Code but rather shall be treated and taxable as non-qualified options. The
Optionee further acknowledges that the rule set forth in the preceding sentence
shall be applied by taking options into account in the order in which they were
granted, and the stock certificate issued upon exercise of options shall
designate whether such stock was acquired upon exercise of an Incentive Stock
Option. For purposes of these rules, the fair market value of stock shall be
determined as of the date of grant of the applicable option covering such stock.
ARTICLE IV.
OTHER PROVISIONS
----------------
Section 4.1. Not a Contract of Employment
- ------------ ----------------------------
Nothing in this Agreement or in the Plan shall confer upon the Optionee
any right to continue in the employ of the Company or any of its Subsidiaries or
shall interfere with or restrict
7
<PAGE>
in any way the rights of the Company or its Subsidiaries, which are hereby
expressly reserved, to discharge the Optionee at any time for any reason
whatsoever, with or without cause.
Section 4.2. Shares Subject to Plan and Stockholders Agreement
- ------------ -------------------------------------------------
The Optionee acknowledges that any shares acquired upon exercise of the
Option are subject to the terms of the Plan and the Stockholders Agreement
including without limitation, the restrictions set forth in Sections 5.5 and 5.6
of the Plan.
Section 4.3. Construction
- ------------ ------------
This Agreement shall be administered, interpreted and enforced under
the laws of the State of Delaware.
Section 4.4. Conformity to Securities Laws
- ------------ -----------------------------
The Optionee acknowledges that the Plan is intended to conform to the
extent necessary with all provisions of the Securities Act and the Exchange Act
and any and all regulations and rules promulgated thereunder by the Securities
and Exchange Commission, including without limitation Rule 16b-3.
Notwithstanding anything herein to the contrary, the Plan shall be
administered, and the Option is granted and may be exercised, only in such a
manner as to conform to such laws, rules and regulations. To the extent
permitted by applicable law, the Plan and this Agreement shall be deemed amended
to the extent necessary to conform to such laws, rules and regulations.
Section 4.5. Stockholder Approval
- ------------ --------------------
The Plan will be submitted for approval by the Company's stockholders
within twelve months after the date the Plan was initially adopted by the Board
and the Plan and this Agreement will be effective upon approval by such
stockholders as provided in Section 280G(b)(5)(A)(ii) of the Code and
regulations thereunder. This Option may not be exercised to any extent by anyone
unless and until the Plan is so approved by the stockholders, and if such
approval has not been obtained by the end of said twelve-month period, this
Option shall thereupon be canceled and become null and void. The Company shall
take such actions as may be necessary to satisfy any applicable requirements of
Rule 16b-3(b).
Section 4.6. Adjustments in Cash Flow for Debt Amortization and EBITDA
Targets
The Cash Flow for Debt Amortization Targets and EBITDA Targets
(including the Cumulative Cash Flow for Debt Amortization Targets and Cumulative
EBITDA Targets) specified in Appendix A are based upon certain revenue and
expense assumptions about the future business of the Company and its Controlled
Entities as of the date the Option is granted. Accordingly, in the event that,
after such date, the Committee determines, in its sole discretion, that any
acquisition of any business by the Company or any of its Controlled Entities or
any dividend or other distribution (whether in the form of cash, Common Stock,
other securities, or other property), recapitalization, reclassification, stock
split, reverse stock split, reorganization, merger, consolidation, split-up,
spin-off, combination, repurchase, or exchange of Common Stock or other
securities of the Company,
8
<PAGE>
issuance of warrants or other rights to purchase Common Stock or other
securities of the Company, any unusual or nonrecurring transactions or events
affecting the Company, any affiliate of the Company, or the financial statements
of the Company or any affiliate, or change in applicable laws, regulations, or
accounting principles occurs such that an adjustment is determined by the
Committee to be appropriate in order to prevent dilution or enlargement of the
benefits or potential benefits intended to be made available under the Plan or
with respect to the Option, then the Committee shall, in good faith and in such
manner as it may deem equitable, adjust the financial targets set forth on
Appendix A to reflect the projected effect of such transaction(s) or event(s) on
Cash Flow for Debt Amortization and/or EBITDA, subject to Section 7.1 of the
Plan.
* * * * *
IN WITNESS WHEREOF, this Agreement has been executed and
delivered by the parties hereto.
United Defense Industries, Inc.
By: ___________________________
Title: ________________________
- ----------------------------
Optionee
- ----------------------------
- ----------------------------
Address
Optionee's Taxpayer Identification Number: ____________________________
9
<PAGE>
APPENDIX A
INCENTIVE STOCK OPTION AGREEMENT
EBITDA AND CASH FLOW TARGETS
($ MILLIONS)
<TABLE>
<CAPTION>
CALENDAR YEAR ENDING DECEMBER 31
PERFORMANCE MEASURE Q4 1997 1998 1999 2000 2001 2002
- --------------------------------------------------------------------------------------------------------------------------
<S><C>
EBITDA 32.5 130.0 120.0 125.0 130.0 135.0
CUMULATIVE EBITDA 32.5 162.5 282.5 407.5 537.5 672.5
CASH FLOW FOR DEBT
AMORTIZATION 12.8 68.0 23.4 34.3 49.4 61.6
CUMULATIVE CASH FLOW FOR
DEBT AMORTIZATION 12.8 80.8 104.2 138.5 187.9 249.5
</TABLE>
10
UNITED DEFENSE INDUSTRIES, INC.
EMPLOYEE EQUITY PURCHASE PLAN
The Board of Directors (the "Board") of United Defense
Industries, Inc. (the "Company") hereby adopts the United Defense Industries,
Inc. Employee Equity Purchase Plan (the "Plan") in order to further the growth,
development and financial success of the Company by allowing key employees of
the Company and its direct and indirect subsidiaries, including, without
limitation, United Defense, L.P., to purchase common stock, par value $0.01, of
the Company (the "Common Stock") and thereby better align the interests of such
key employees with the Company and its stockholders.
1. The aggregate number of shares of Common Stock that may be
awarded under the Plan shall not exceed Eight Hundred Thousand ($800,000).
2. The Board shall have full discretion to make awards under
the Plan to such employees (either directly or indirectly through any trust or
other deferred compensation arrangement as may be designated by any or all such
employees and approved by the Board in its sole discretion) of the Company and
its direct and indirect subsidiaries as the Board may designate (each a "Plan
Participant") and shall specify the purchase price per share of Common Stock,
which the Board shall establish in its sole discretion at the time such shares
are purchased. The initial Plan Participants approved by the Board and the
number of shares of Common Stock which such Plan Participants elect to purchase
pursuant to the Plan shall be set forth on Exhibit A. The Board shall amend
Exhibit A hereto from time to time to reflect any additional shares of Common
Stock purchased hereunder.
3. The terms and conditions of this program are set forth
herein and in the Stockholders Agreement (the "Stockholders Agreement") by and
among the Company, Iron Horse Investors, L.L.C. and certain other stockholders
of the Company who are signatories thereto. The Stockholders Agreement is
incorporated by reference herein. An unexecuted copy of the Stockholders
Agreement is attached hereto as Exhibit B. Each Plan Participant shall execute a
copy of the Stockholders Agreement at or prior to the time such Plan Participant
first purchases any Common Stock of the Company pursuant to an award made
hereunder.
4. The Board shall administer the Plan and have full
discretion to interpret the Plan and the Stockholders Agreement.
5. The Board in its sole discretion may amend or terminate the
Plan at any time.
6. The Board's authorization of the sale of shares hereunder
to a Plan Participant shall not constitute an offer to sell such shares, and the
Board of Directors reserves the right in its sole discretion to revoke its
authorization for any or all Plan Participants to purchase any Common Stock
pursuant to the Plan at any time and for any reason prior to the issuance of
such shares by the Company.
<PAGE>
7. The offering and sale of Common Stock to the Plan
Participants hereunder is intended to be exempt from registration under the
Securities Act of 1933 by virtue of Section 4(2) of the Securities Act if 1933,
as amended, and/or Regulation D and/or Rule 701 promulgated thereunder by the
Securities and Exchange Commission. The Company is not under any obligation to
register any shares of Common Stock issued pursuant to this Plan on behalf of
any of the Plan Participants or to assist any of the Plan Participants in
complying with any exemption from registration.
<PAGE>
Exhibit A
Authorized Plan Participants
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------
Name Price Per Share Number of Shares Purchased
- --------------------------------------------------------------------------------------------------------------------
<S><C>
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
Exhibit B
Form of Stockholders Agreement
<TABLE>
<S><C>
LATHAM & WATKINS
ATTORNEYS AT LAW
PAUL R. WATKINS (1899 - 1973) 1001 PENNSYLVANIA AVE., N.W. NEW YORK OFFICE
DANA LATHAM (1898 - 1974) SUITE 1300 ---------------
WASHINGTON, D.C. 20004-2505 885 THIRD AVENUE, SUITE 1000
CHICAGO OFFICE TELEPHONE (202) 637-2200 NEW YORK, NEW YORK 10022-4802
-------------- FAX (202) 637-2201 PHONE (212) 906-1200, FAX 751-4864
SEARS TOWER, SUITE 5800
CHICAGO, ILLINOIS 60606 ORANGE COUNTY OFFICE
PHONE (312) 876-7700, FAX 993-9767 --------- --------------------
650 TOWN CENTER DRIVE, SUITE 2000
HONG KONG OFFICE COSTA MESA, CALIFORNIA 92626-1925
---------------- PHONE (714) 540-1235, FAX 755-8290
23RD FLOOR
STANDARD CHARTERED BANK BUILDING SAN DIEGO OFFICE
4 DES VOEUX ROAD CENTRAL, HONG KONG ----------------
PHONE + 852-2905-6400, FAX 2905-6940 701 "B" STREET, SUITE 2100
SAN DIEGO, CALIFORNIA 92101-8197
LONDON OFFICE PHONE (619) 236-1234, FAX 696-7419
-------------
ONE ANGEL COURT SAN FRANCISCO OFFICE
LONDON EC2R 7HJ ENGLAND --------------------
PHONE + 44-171-374-4444, FAX 374-4460 505 MONTGOMERY STREET, SUITE 1900
SAN FRANCISCO, CALIFORNIA 94111-2562
LOS ANGELES OFFICE PHONE (415) 391-0600, FAX 395-8095
------------------
633 WEST FIFTH STREET, SUITE 4000 SILICON VALLEY OFFICE
LOS ANGELES, CALIFORNIA 90071-2007 ---------------------
PHONE (213) 485-1234, FAX 891-8763 75 WILLOW ROAD
MENLO PARK, CALIFORNIA 94025-3656
MOSCOW OFFICE PHONE (650) 328-4600, FAX 463-2600
-------------
ULITSA GASHEKA, 7, 9TH FLOOR SINGAPORE OFFICE
MOSCOW 125047, RUSSIA ----------------
PHONE + 7-095-785-1234, FAX 785-1235 20 CECIL STREET, #25-02/03/04
THE EXCHANGE, SINGAPORE 049705
NEW JERSEY OFFICE PHONE + 65-536-1161, FAX 536-1171
-----------------
ONE NEWARK CENTER, 16TH FLOOR TOKYO OFFICE
NEWARK, NEW JERSEY 07101-3174 ------------
PHONE (973) 639-1234, FAX 639-7298 INFINI AKASAKA, 8-7-15, AKASAKA, MINATO-KU
TOKYO 107, JAPAN
PHONE + 813-3423-3970, FAX 3423-3971
</TABLE>
July 28, 1998
United Defense Industries, Inc.
1525 Wilson Blvd., Suite 700
Arlington, Virginia 22209-2411
Re: United Defense Industries, Inc.; Common Stock., par value
$0.01 per share
Ladies and Gentlemen:
We have acted as special counsel to United Defense Industries,
Inc. (the "Company"), and we have examined the Registration Statement on Form
S-8 (the "Registration Statement") to be filed with the Securities and Exchange
Commission in connection with the registration under the Securities Act of 1993,
as amended, of (i) 1,500,000 shares of Common Stock, par value $0.01 per share
(the "Stock Option Plan Shares"), to be issued by the Company under the United
Defense Stock Option Plan (the "Stock Option Plan") and (ii) 259,170 shares of
Common Stock, par value $0.01 per share (the "Purchase Plan Shares"), to be
issued by the Company under the United Defense Industries, Inc. Equity Purchase
Plan (the "Purchase Plan").
We have examined such questions of law and fact as we have
considered necessary or appropriate for purposes of this opinion.
We are opining herein as to the effect on the subject
transaction of only the General Corporation Law of the State of Delaware, and we
express no opinion with respect to the applicability thereto or the effect
thereon of any other laws or as to any matters of municipal law or any other
local agencies within any state.
<PAGE>
LATHAM & WATKINS
United Defense Industries, Inc.
July 28, 1998
Page 2
Subject to the foregoing and in reliance thereon, it is our
opinion that:
(i) Upon the exercise of options granted pursuant to the Stock
Option Plan and subject to the Company completing all actions and proceedings
required on its part to be taken prior to the issuance of the Stock Option Plan
Shares pursuant to the terms of the Stock Option Plan and the Registration
Statement, including, without limitation, collection of required payment for
such shares, the Stock Option Plan Shares will be validly issued, fully paid and
non-assessable securities of the Company; and
(ii) Upon the purchase of shares awarded pursuant to the
Purchase Plan and subject to the Company completing all actions and proceedings
required on its part to be taken prior to the issuance of the Purchase Plan
Shares pursuant to the terms of the Purchase Plan and the Registration
Statement, including, without limitation, collection of required payment for
such shares, the Purchase Plan Shares will be validly issued, fully paid and
non-assessable securities of the Company.
We consent to your filing this opinion as an exhibit to the
Registration Statement and to the reference to this opinion centered under the
heading "Legal Matters."
Very truly yours,
/s/ Latham & Watkins
____________________
CONSENT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
We consent in the Registration Statement on Form S-8 pertaining to the UDLP
Amended and Restated Supplemental Retirement and Savings Plan and the United
Defense Stock Option Plan of United Defense Industries, Inc. to the
incorporation by reference therein of our reports dated April 2, 1998, with
respect to the consolidated financial statements of United Defense Industries,
Inc., Iron Horse Investors, L.L.C., and United Defense, L.P. included in its
Annual Report (Form 10-K) for the year ended December 31, 1998, filed with the
Securities and Exchange Commission.
/s/ Ernst & Young LLP
_____________________
Washington, D.C.
July 24, 1998
