Exhibit 10.6

EMPLOYMENT AGREEMENT

     THIS EMPLOYMENT AGREEMENT, dated as of December 12, 2002 (the “Agreement”),
is made by and between United States Marine Repair, Inc., a Delaware corporation
(the “Company”), and Alexander J. Krekich (the “Executive”).

     WHEREAS, it is the desire of the Company to assure itself of the services
of the Executive by engaging the Executive to perform such services under the
terms hereof; and

     WHEREAS, the Executive desires to commit himself to serve the Company on
the terms herein provided;

     NOW THEREFORE, in consideration of the foregoing and of the respective
covenants and agreements set forth below, the parties hereto agree as follows:

     Section 1. Certain Definitions.

(a)      “Annual Base Salary” shall have the meaning set forth in Subsection
5(a).

(b)      “Board” shall mean the Board of Directors of the Company or any
Committee thereof duly created or authorized by the Board to act in its behalf.

(c)       The Company shall have “Cause” to terminate the Executive’s employment
hereunder upon the Executive’s:

  (i)   failure to substantially perform his duties hereunder, other than any
such failure resulting from the Executive’s Disability, after notice and
reasonable opportunity for cure, all as determined by the Board;     (ii)  
conviction of a felony or a crime involving moral turpitude; or     (iii)  
fraud or personal dishonesty involving the Company’s assets.

(d)      “Company” shall have the meaning set forth in the preamble hereto.

(e)      “Corporate Transaction” shall mean any of the following events:

  (i)   a merger or consolidation of the Company with a theretofore unaffiliated
entity in which the stockholders or interest holders of the Company

 

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      receive cash, securities and/or other marketable property in exchange for
their voting stock or partnership interests;     (ii)   the sale, transfer,
exchange or other disposition of all or substantially all of the assets of the
Company;     (iii)   the acquisition by an unaffiliated Person, of (i) more than
50% of the Common Stock then outstanding; or     (iv)   the liquidation,
dissolution, or winding up of the Company, other than a restructuring
transaction which results in the continuation of the Company’s business by an
Affiliate.         As used in this Subsection 1(e); “Affiliate”, shall mean,
with respect to the Company, any Person which, prior to such Corporate
Transaction, was directly or indirectly controlling, controlled by, or under
common control with such entity, where “control” shall have the meaning given
such term under Rule 405 promulgated under the Securities Act of 1933; and
“Person” shall mean any individual, corporation, partnership, limited liability
company, business trust, joint stock company, trust, unincorporated association,
joint venture, governmental authority, or other entity of whatever nature.

(f)      “Date of Termination” shall mean (i) if the Executive’s employment is
terminated by his death, the date of his death, or (ii) if the Executive’s
employment is terminated pursuant to any other provision of Subsection 6(a), the
date specified in the Notice of Termination.

(g)      “Disability” shall mean the Executive’s inability to perform the
Executive’s duties to the Company on a full-time basis for a total of 6 months
during any 12 month period as a result of incapacity due to any injury or to
mental or physical illness which is determined to be reasonably likely to extend
beyond the completion of the Employment Period by a physician selected by the
Company and acceptable to the Executive or the Executive’s legal representative
(such agreement as to acceptability not to be withheld unreasonably).

(h)      “Discretionary Bonus” shall mean the bonus payable under the Bonus Plan
set forth in Subsection 5(b).

(i)      “Effective Date” shall mean the date first set forth in the initial
paragraph of this Agreement.

(j)      “Employment Period” shall have the meaning set forth in Subsection
2(b).

(k)      “Executive” shall have the meaning set forth in the preamble hereto.

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(l)      The Executive shall have “Good Reason” to terminate his employment in
the event that the Company either (1) fails to make any payment or provide any
benefit hereunder or commits a material breach of this Agreement and does not
cure such failure or breach after notice and a reasonable opportunity to cure;
or (2) gives to the Executive a notice of non-extension under Subsection 2(b).
As used in the preceding sentence, a “material breach” of this Agreement shall,
without limitation, include any of the following events:

  (i)   Reduction in the Executive’s salary and/or Bonus Plan eligibility;    
(ii)   Relocation of the Executive’s current Norfolk, Virginia metropolitan area
employment location, without the Executive’s prior written consent; and    
(iii)   Substantial diminution of the Executive’s job responsibilities as such
responsibilities existed on the Effective Date, without the Executive’s prior
written consent.

(m)      “Notice of Termination” shall have the meaning set forth in Subsection
6(b).

(n)      “Severance Period” shall have the meaning set forth in Subsection
7(a)(i).

(o)      “UDII” shall mean United Defense Industries, Inc., a Delaware
corporation, the parent entity which owns the stock of the Company.

Section 2. Employment.

(a)      The Company shall employ the Executive and the Executive shall work in
the employ of the Company for the period set forth in this Section 2, in the
position set forth in Section 3, and upon the other terms and conditions herein
provided. The initial term of employment under this Agreement (the “Initial
Employment Period”) shall be for the period beginning on the Effective Date and
ending on the first anniversary of the Effective Date, unless earlier terminated
as provided in Section 6.

(b)      The Initial Employment Period shall automatically be extended for
successive one-year periods (“Extension Periods,” and, collectively with the
Initial Employment Period, the “Employment Period”) unless either party gives
notice of non-extension to the other no later than 90 days prior to the
expiration of the then applicable Employment Period.

Section 3. Position and Duties.

(a)      The Executive shall serve as the President of the Company. In such
capacity, the Executive shall have such customary responsibilities, duties, and
authority as may from time to time be assigned to the Executive by the Board or
its delegate; provided, however, that the Executive’s responsibilities and
authority shall not be reduced, without his prior written consent, below the
level and range thereof prevailing as of

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the Effective Date of this Agreement. The Executive shall devote substantially
all his working time and efforts to the business and affairs of the Company. The
Executive shall not be required to perform any of his duties in a manner
inconsistent with applicable law or the United Defense Code of Ethics and
Standards of Conduct.

(b)      In addition to the ongoing responsibilities of the Executive’s position
identified in Subsection 3(a) above, the Executive specifically acknowledges and
agrees that his responsibilities under this Agreement shall include assisting,
as directed by the President & CEO of UDII, in the evaluation, preparation,
and/or consummation of any sale, merger, consolidation, or other change of
control or ownership of the Company or UDII (collectively, a “Corporate
Transaction”) as may be desired by UDII. Such assistance shall include, without
limitation, the preparation and production of materials and records of interest
to a potential acquirer; participation in meetings and presentations regarding
the Company or UDII and its business with any potential acquirer; assisting the
Company or UDII in providing materials and information to, and/or participating
in meetings with and presentations to any governmental agency or agencies which
may have a jurisdictional or other appropriate interest in a Corporate
Transaction; and the preparation and production of any materials required in
order to consummate any Corporate Transaction to which the Company or UDII may
agree.

Section 4. Place of Performance.

     In connection with his employment during the Employment Period, the
Executive shall be based in Norfolk, Virginia.

Section 5. Compensation and Related Matters.

(a)      Annual Base Salary. During the Employment Period, the Executive shall
receive an Annual Base Salary which (i) is currently in the amount of $275,000
and (ii) may be increased from time to time during the Employment Period hereof
in accordance with the Company’s practices and procedures regarding employee
salaries.

(b)      Bonus. For each calendar year, or part, of the Employment Period, the
Executive shall be eligible to participate in the Company’s Key Employee Bonus
Plan (or any revision, supplement, or replacement thereof, however denominated;
hereinafter, the “Bonus Plan”).

(c)      Benefits. During the Employment Period, the Executive shall be entitled
to participate in the other employee benefit plans, programs, and arrangements
of the Company now or hereafter in effect which are applicable to the senior
officers of the Company, subject to and on a basis consistent with the terms,
conditions, and overall administration thereof, including but not limited to the
Company’s Non-qualified Deferred Compensation Plan, the Executive Wellness Plan,
Medical Plan, Dental Plan, Vision Plan, Short and Long Term Disability Plans,
Life, AD&D, and Travel

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Accident Insurance, and the Company’s programs and practices regarding
vacations, personal days, and paid holidays. In addition, during the Employment
Period, the Executive shall be entitled to a car allowance of $12,000 per
calendar year payable in accordance with the Company’s customs and practices for
payment of such amounts to senior officers.

(d)      Expenses. The Company shall reimburse the Executive for all reasonable
travel and other business expenses incurred by him in the performance of his
duties to the Company, in accordance with the Company’s expense reimbursement
policy.

Section 6. Termination.

     The Executive’s employment hereunder may be terminated by the Company or
the Executive, as applicable, without any breach of this Agreement only under
the following circumstances:

   (a)         (i)      Death. The Executive’s employment hereunder shall
terminate upon his death.

  (ii)   Disability. If the Company determines in good faith that the Executive
has incurred a Disability, the Company may give the Executive written notice of
its intention to terminate the Executive’s employment. In such event, the
Executive’s employment with the Company shall terminate effective on the 30th
day after receipt of such notice by the Executive, provided that within 30 days
after such receipt, the Executive shall not have returned to full-time
performance of his duties. The Executive shall continue to receive his Annual
Base Salary until the Date of Termination.     (iii)   Cause. The Company may
terminate the Executive’s employment hereunder for Cause.     (iv)   Good
Reason. The Executive may terminate his employment for Good Reason.     (v)  
Without Cause. The Company may terminate the Executive’s employment hereunder
without Cause.     (vi)   Resignation without Good Reason. The Executive may
resign his employment without Good Reason upon 60 days prior written notice to
the Company. Without limiting the meaning of the term “without Good Reason”, a
resignation from employment for purposes of retirement or to take other
employment shall constitute a resignation without Good Reason.

(b)      Notice of Termination. Any termination of the Executive’s employment by
the Company or by the Executive under this Section 6, other than termination
pursuant to Subsection 6(a)(i), shall be communicated by written notice to the
other party hereto

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indicating the specific termination provision in this Agreement relied upon,
setting forth in reasonable detail the facts and circumstances claimed to
provide a basis for termination of the Executive’s employment under the
provision so indicated, and specifying a Date of Termination which, except in
the case of termination for Cause, shall be at least 14 days following the date
of such notice (a “Notice of Termination”).

     Section 7. Severance Payments.

(a)      Termination without Cause or for Good Reason. If the Executive’s
employment shall terminate without Cause pursuant to Subsection 6(a)(v) above,
or for Good Reason pursuant to Section 6(a)(iv) above, the Company shall:

  (i)   pay to the Executive, following the Date of Termination, an amount equal
to the Annual Base Salary that the Executive would have been entitled to receive
had he continued his employment hereunder for a period of 2 years (the
“Severance Period”), such payment to be made as follows:

  (A)   if, within 18 months prior to the Date of Termination, no Corporate
Transaction has occurred, then the Annual Base Salary amounts for the Severance
Period shall be paid over the duration of the Severance Period in accordance
with the Company’s regular payroll practice for salaried employees; or     (B)  
if, within 18 months prior to the Date of Termination, a Corporate Transaction
has occurred, then the Annual Base Salary amounts for the Severance Period shall
be paid, at the Executive’s election, either in a lump sum within 30 days
following the Date of Termination, or in the manner specified by Subsection
7(a)(i)(A) above;

  (ii)   pay to the Executive a prorated Discretionary Bonus for that portion of
the calendar year in which the Date of Termination occurred during which the
Executive was employed by the Company (i.e., the period commencing January 1 of
such year and ending on the Date of Termination), calculated at the higher of
the target bonus or the bonus payable upon actual results in accordance with the
Bonus Plan, such payment to be made at the time bonuses are generally payable
under the terms of the Bonus Plan; and     (iii)   pay to the Executive,
following the Date of Termination, a Discretionary Bonus for the Severance
Period, consisting for each year of the Severance Period of an amount equal to
the Executive’s target bonus for the calendar year immediately preceding the
Date of Termination, such payments to be made as follows:

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  (A)   if, within 18 months prior to the Date of Termination, no Corporate
Transaction has occurred, then the Discretionary Bonus shall be paid pro rata on
a monthly basis over the duration of the Severance Period; or,     (B)   if,
within 18 months prior to the Date of Termination, a Corporate Transaction has
occurred, then the Discretionary Bonus for all portions of the Severance Period
shall be paid, at the Executive’s election, either within 30 days following the
Date of Termination, or in the manner specified by Subsection 7(a)(iii)(A)
above; and

  (iv)   continue, for the remainder of the Severance Period, the Executive’s
coverage under all Company welfare benefit plans and programs in which the
Executive was entitled to participate immediately prior to the Date of
Termination, at the same premium cost, and at the same coverage level, as in
effect immediately preceding the Date of Termination. However, in the event the
premium cost shall change for all employees of the Company, or for management
employees with respect to supplemental benefits, the cost shall change for the
Executive in a corresponding manner.

The payments required by Subsections 7(a)(i), 7(a)(ii), and, 7(a)(iii) above
shall be in lieu of any payments to which the Executive would otherwise be
entitled under the Company’s general severance policy pertaining to reductions
in force.

(b)      Excise Tax Indemnification. With respect to any payment(s) made to the
Executive under this Section 7 or otherwise and any accelerated vesting and/or
exercise of stock options under any Company stock plan, and only in the event
that any thereof result in the assertion by the Internal Revenue Service (“IRS”)
that the Executive is liable under Section 280G and/or 4999 of the Internal
Revenue Code of 1986, as amended (the “Code”) for the payment of an excise tax
on so-called “excess parachute payments” under such Code sections, or for any
other tax or imposition, however denominated, and whether federal, state, or
local, in addition to or excess of ordinary income tax rates (any such tax being
hereinafter referred to as an “EPP Tax”), then the Company shall indemnify and
hold harmless the Executive from and against any such demand or assertion from
the IRS or any other taxing authority, by (i) paying to the Executive an amount
sufficient to cover both such asserted EPP Tax and any income or other tax
payable by the Executive on or on account of receiving such indemnification
payment, and/or (ii) at the Company’s sole election, contesting, at the
Company’s expense and with counsel and/or other advisors of the Company’s
choosing, the applicability or amount of such EPP Tax with the IRS or other
taxing authority, in which event the Executive shall cooperate as reasonably
requested by the Company in any such proceeding.

(c)      Survival. The expiration or termination of the Employment Period shall
not impair the rights or obligations of any party hereto as existing or accrued
through the Date of Termination.

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Section 8. Competition.

(a)      The Executive shall not, at any time during the Employment Period, and,
if severance payments are made pursuant to Section 7 hereof, then also during
the Severance Period, without the prior written consent of the Board, directly
or indirectly engage in, or have any interest in or manage or operate any
Competitor (as such term is defined in the last sentence of this Subsection
8(a)), whether such engagement occurs in the capacity of a director, officer,
employee, agent, representative, partner, security holder, consultant, or
otherwise; provided, however, that the Executive shall be permitted to acquire a
stock interest in a Competitor which is a corporation provided such stock is
publicly traded and the stock so acquired is not more than one percent of the
outstanding shares of such corporation. As used in the preceding sentence,
“Competitor” shall mean any business organization, whether in corporate,
partnership, or other form, and whether located in the United States or
elsewhere, which, as of the Executive’s Date of Termination, is established as a
private-sector provider of ship repair, maintenance, overhaul, and/or
modernization services.

(b)      In the event that the provisions of Subsection 8(a) shall be determined
by any court of competent jurisdiction to be unenforceable by reason of its
extending for too great a period of time or over too great a geographical area
or by reason of its being too extensive in any other respect, then such
provisions shall be interpreted to extend only over the maximum period of time
for which it may be enforceable, and/or over the maximum geographical area as to
which it may be enforceable, and/or to the maximum extent in all other respects
as to which it may be enforceable, all as determined by such court in such
action.

Section 9. Nondisclosure of Proprietary Information.

(a)      Except as required in the faithful performance of the Executive’s
duties hereunder or pursuant to Subsection 9(c) below, the Executive shall, in
perpetuity, maintain in confidence and shall not directly or indirectly use,
disseminate, disclose, or publish, or use for his benefit or the benefit of any
person, firm, corporation, or other entity any confidential or proprietary
information or trade secrets of or relating to the Company, including, without
limitation, information with respect to the Company’s operations, processes,
products, inventions, business practices, finances, principals, vendors,
suppliers, customers, potential customers, marketing methods, costs, prices,
contractual relationships, regulatory sums, compensation paid to employees or
other terms of employment, or deliver to any person, firm, corporation or other
entity any document, record, notebook, computer program, or similar repository
of or containing any such confidential or proprietary information or trade
secrets. The parties hereby stipulate and agree that as between them the
foregoing matters are important, material, confidential, and proprietary
information and trade secrets and affect the successful conduct of the business
of the Company.

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(b)      Upon termination of the Executive’s employment with the Company for any
reason, the Executive shall promptly deliver to the Company all correspondence,
drawings, manuals, letters, notes, notebooks, reports, programs, plans,
proposals, financial documents, or any other documents which either concern the
Company’s customers, business plans, marketing strategies, products, or
processes, or which contain proprietary information or trade secrets of the
Company.

(c)      The Executive may respond to a lawful and valid subpoena or other legal
process seeking any of the information or material referred to in Subsection
9(a) or 9(b) above, but shall give the Company the earliest possible notice
thereof, and shall, as much in advance of the return date as possible, make
available to the Company and its counsel the documents and other information
sought and shall assist such counsel in resisting or otherwise responding to
such process.

10. Injunctive Relief.

     The Executive recognizes and acknowledges that a breach of the covenants
contained in Sections 8 and 9 would cause irreparable damage to the Company and
its goodwill, the exact amount of which would be difficult or impossible to
ascertain, and that the remedies at law for any such breach would be inadequate.
Accordingly, the Executive agrees that in the event of a breach of any of the
covenants contained in Sections 8 and 9, in addition to any other remedy which
may be available at law or in equity, the Company shall be entitled to specific
performance and injunctive relief.

11. Successors and Assigns.

     This Agreement shall be binding upon and inure to the benefit of the
Company, the Executive, and their respective successors, assigns, personnel and
legal representatives, executors, administrators, heirs, distributees, devisees,
and legatees, as applicable; provided, however, that the Executive acknowledges
that this Agreement is a personal services contract and is therefore not
assignable by the Executive.

12. Governing Law.

     This Agreement shall be governed, construed, interpreted, and enforced in
accordance with the laws of the State of Virginia.

13. Validity.

     The invalidity or unenforceability of any provision or provisions of his
Agreement shall not affect the validity or enforceability of any other provision
of this Agreement, which shall remain in full force and effect.

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14. Notices.

     Any notice, request, claim, demand, document, or other communication
hereunder to any party shall be effective upon receipt (or refusal of receipt)
and shall be in writing and delivered personally or sent by telex, telecopy, or
certified or registered mail, postage prepaid, as follows:

  (a)   If to the Company,         USMR Board of Directors
c/o Thomas W. Rabaut
United Defense Industries, Inc.
1525 Wilson Blvd., Suite 700
Arlington, VA 22209-2444         With a copy to:         United Defense
Industries, Inc.
1525 Wilson Blvd., Suite 700
Arlington, VA 22209-2444
Attention: David V. Kolovat
                    Vice President and
                    General Counsel     (b)   If to the Executive, to him at the
address set forth below under his signature on the last page of this Agreement;

or to any other address as any party shall have specified for itself by notice
in writing to the other party.

Section 15. Counterparts.

     This Agreement may be executed in several counterparts, each of which shall
be deemed to be an original, but all of which together will constitute one and
the same Agreement, which shall be sufficiently evidenced by any one of such
original counterparts.

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Section 16. Scope of Agreement.

     The terms of this Agreement are intended by the parties to constitute the
final expression of their agreement with respect to the employment of the
Executive by the Company and may not be contradicted by evidence of any prior or
contemporaneous agreement. The parties further intend that this Agreement shall
constitute the complete and exclusive statement of its terms and that no
extrinsic evidence whatsoever may be introduced in any judicial, administrative,
or other legal proceeding to vary the terms of this Agreement. The parties also
recognize that each of them has or may have rights powers, and obligations
arising under or with respect to various employee benefit plans, programs,
and/or policies of the Company (collectively, the “Company Plans”). The Company
and the Executive intend and agree that, except as specifically provided in this
Agreement, neither the existence, provisions, operation, nor enforcement of this
Agreement shall in any way impair, alter, of vary either (i) the terms and
conditions of any of the Company Plans, or (ii) the respective rights, powers,
and obligations of the Company or the Executive under any of the Company Plans.

Section 17. Amendments and Waivers.

     This Agreement may not be modified, amended, or terminated except by an
instrument in writing, signed by the Executive and the Board or its delegate. No
right or power under this Agreement, including but not limited to any right of
termination by either party under Section 6, shall be waived except by an
instrument in writing, signed by the party whose right or power is thereby being
waived. No such waiver shall operate as a waiver of, or estoppel with respect
to, any other or subsequent failure. No failure to exercise and no delay in
exercising any right, remedy, or power hereunder shall preclude any other or
further exercise of such or any other right, remedy, or power provided herein or
by law or in equity.

Section 18. No Inconsistent Actions.

     The parties hereto shall not voluntarily undertake or fail to undertake any
action or course of action inconsistent with the provisions or essential intent
of this Agreement. Furthermore, it is the intent of the parties hereto to act in
a fair and reasonable manner with respect to the interpretation and application
of the provisions of this Agreement.

Section 19. Arbitration.

     Any dispute or controversy arising under or in connection with this
Agreement shall be settled exclusively by arbitration, conducted before a single
arbitrator in Norfolk, Virginia, in accordance with the rules of the American
Arbitration Association then in effect. Judgment may be entered on the
arbitrator’s award in any court having jurisdiction; provided, however, that the
Company shall be entitled to seek a restraining order or injunction in any court
of competent jurisdiction to prevent any continuation of any violation of the
provisions of Sections 8 or 9 of this Agreement and the Executive

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hereby consents that such restraining order or injunction may be granted without
the necessity of the Company’s posting any bond and provided further that the
Executive shall be entitled to seek specific performance of his right to be paid
until the Date of Termination during the pendency of any dispute or controversy
arising under or in connection with this Agreement. The fees and expenses of the
arbitrator shall be borne by the Company.

Section 20. Prior Employment Agreements.

     This Agreement terminates and supersedes any and all prior employment
agreements or understandings, written or oral, between the Executive and the
Company or any of its subsidiaries or affiliates.

     IN WITNESS WHEREOF, the parties have executed this Agreement on the date
and year first above written.

      United States Marine Repair, Inc.
By:___________________________
Name:_________________________
Title:__________________________
Date of signature:________________         Executive        
______________________________
Name: Alexander J. Krekich
Address:______________________________
               ______________________________
        Date of signature: _____________________

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