EMPLOYMENT AGREEMENT


 THIS EMPLOYMENT AGREEMENT, dated, and effective as of May 21, 1999 (the
 "Agreement"), is-made by and between United Defense Industries, Inc., a
 Delaware corporation (the "Company"), and Thomas W. Rabaut (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 Executive's

      (i)   failure substantially to 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 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;

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       (ii) the sale, transfer, exchange or other disposition of all or
            substantially all of the assets of the Company or any Controlled
            Entity;

      (iii) 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

      (iv)  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.

      As used in this Subsection 1 (e), "Controlled Entity" shall mean UDLP
      Holdings Corp. and/or United Defense, L. P.; "Affiliate", shall mean,
      with respect to the Company or either Controlled Entity, 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
      of the Securities Act; 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 absence of the Executive from the Executive's
     duties to the Company on a full-time basis for a total of six (6) months
     during any twelve (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 Term 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 have the meaning set forth in Subsection 5(b).
      Any Discretionary Bonus shall be paid no later than fifteen (15) business
      days following completion of the financial statements which permit
      calculation of the amount thereof.

(i)   "Effective Date" shall mean the date first set forth in the preamble
      hereto.

(j)   "Executive" shall have the meaning set forth in the preamble hereto.

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<PAGE>


(k)   The Executive shall have "Good Reason" to terminate his employment in
      the event that the Company either (i) 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 (ii) gives to the Executive a notice
      of non-extension under Subsection 2(b). The characteristics,
      attributes, and elements of Executive's employment and compensation set
      forth in sections 2 through 7 hereof shall each constitute a material
      undertaking of the Company to Executive under this Agreement.

(l)   "Notice of Termination" shall have the meaning set forth in Subsection
      6(b).

(m)   "Severance Period" shall have the meaning set forth in Subsection
      7(a)(i).
(n)   "Term" shall have the meaning set forth in Subsection 2(b).

 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 or positions set forth in Section 3, and upon the
      other terms and conditions herein provided. The initial term of
      employment under this Agreement (the "Initial Term") shall be for the
      period beginning on the Effective Date and ending on December 31,
      2001, unless earlier terminated as provided in Section 6.

 (b)  The employment term hereunder shall automatically be extended for
      successive one year periods ("Extension Terms," and, collectively with
      the Initial Term, the "Term") unless either party gives notice of
      non-extension to the other no later than 90 days prior to the
      expiration of the then-applicable Term.

 Section 3. Position and Duties.

 (a)  The Executive shall serve as the President and Chief Executive Officer
      of the Company and of its principal subsidiaries, UDLP Holdings Corp.,
      a Delaware corporation, and United Defense, L.P., a Delaware limited
      partnership. 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; provided, however, that
      Executive's responsibilities and authority shall not be reduced,
      without his prior written consent, below the level and range thereof
      prevailing as of 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 and its subsidiaries. The
      Executive shall not be required to per-form any of his duties in a
      manner inconsistent with applicable law or the Company's Code of
      Ethics and Standards of Conduct.

 (b)  If elected or appointed thereto, and only for the duration of such
      elected term or appointment, Executive shall, in addition to the
      position(s) set forth in Subsection

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<PAGE>


      3(a) above, serve as a director of the Company and/or any of its
      subsidiaries, and/or in one or more executive offices of any other
      subsidiaries of the Company, provided that the Executive is indemnified
      for serving in any and all such capacities on a basis consistent with
      that provided by the Company to other directors of the Company or
      similarly situated executive officers of any such other entities.

 (c)  In addition to the ongoing responsibilities of the Executive's
      position(s) identified in Subsection 3(a) above, Executive specifically
      acknowledges and agrees that his responsibilities under this Agreement
      shall include assisting, as directed by the Board, in the evaluation,
      preparation, and/or consummation of any sale, merger, consolidation, or
      other change of control or ownership of the Company (collectively, a
      "Corporate Transaction") as may be desired by the Company's majority
      owner. 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 and its business with any potential acquirer; assisting the
      Company 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 in which the Company may agree.

 Section 4. Place of Performance.

 In connection with his employment during the Term, the Executive shall be
 based in Arlington, Virginia.

 Section 5. Compensation and Related Matters.

 (a)    Annual Base Salary. During the Term, the Executive shall receive an
        Annual Base Salary which (i) is currently in the amount of $350,000
        and (ii) may be increased from time to time during the Term hereof in
        accordance with the Company's practices and procedures regarding
        employee salaries.

 (b)    Bonus. For each calendar year, or part, of the Term, the Executive
        shall be eligible to participate in the United Defense Management
        Incentive Plan (or any revision, supplement, or replacement thereof,
        however denominated; hereinafter, the "Bonus Plan") and to receive
        thereunder a Discretionary Bonus based upon a target bonus under such
        plan equal to 65% of the amount of the Executive's Annual Base Salary.

 (c)    Benefits. 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 United Defense Stock Option Plan, the

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<PAGE>


       Company's Qualified and Non-qualified Pension Plans, the Company's
       Qualified and Non-qualified Thrift Plans, the Executive Health Plan, the
       Short-Term and Long-Term Disability Plans, life insurance, and the
       Company's program and practices regarding vacations, personal days, and
       paid holidays.

 (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 sixty (60) days prior
             written notice to the Company. Any retirement by Executive after
             age 55 and upon sixty (60) days prior written notice shall also
             constitute Resignation without Good Reason hereunder.

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<PAGE>


 (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 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 four-teen 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 3 years (the "Severance Period"), such
             payment to be made as follows:

             (A)  if, within eighteen (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 eighteen (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 Executive's election, either in a lump sum
                  within thirty (30) days following the Date of Termination,
                  or in the manner specified by Subsection 7(a)(i)(A) above;
                  and

      (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 the actual results calculation with respect to such year is
             regularly made by the Company under the Bonus Plan; and

      (iii)  pay to the Executive, following the Date of Termination, a
             Discretionary Bonus for the Severance Period, consisting of the
             target bonus for each year of the Severance Period, such
             payments to be made as follows:

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<PAGE>


             (A) if, within eighteen (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 eighteen (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 Executive's election, either within thirty
                 (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, 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 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 Executive would
      otherwise be entitled under the Company's general severance policy
      pertaining to reductions in force.

 (b)  Pension and Retirement Benefits. In the event that Executive's
      employment is terminated under the circumstances contemplated by
      Subsection 7(a) above, the Company shall, either under this Agreement
      or via the Non-Qualified Pension Plan, make such payments at such times
      and in such amounts as necessary to produce the same chronological
      sequence and amount of payments which Executive would have been
      eligible in the context of such termination to receive under the UDLP
      Employees Pension Plan (the "Pension Plan") and other retirement
      benefit plans, were the terms of the Pension Plan and/or such other
      plans to include the following features: (i) period of service includes
      both actual credited service thereunder and the Severance Period, such
      total service period to be used for calculating the commencement of
      Executive's pension eligibility and the credited service which is used
      in calculating the amount of Executive's pension; (ii) Executive's age,
      as used in all calculations under the Pension Plan affecting
      Executive's pension eligibility and pension amount, shall be deemed to
      consist of his actual age plus the Severance Period; (iii) the
      Severance Period, and Executive's income during such period as paid
      pursuant to Subsection 7(a)(i), shall be included in the calculation
      base for Executive's "final average yearly earnings" under the Pension
      Plan; and (iv) any termination under Subsection 7(a) shall render the
      "rule of 65" applicable to Executive under the Pension Plan.

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<PAGE>


(c)   Tax Indemnification. With respect to any payment(s) made to Executive
      under this Section 7 or otherwise and any accelerated vesting and/or
      exercise of stock options under the United Defense Stock Option Plan,
      and only in the event that any thereof result in the assertion by the
      Internal Revenue Service ("IRS") that 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 socalled "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 Executive from and against any such demand
      or assertion from the IRS or any other taxing authority, by (i) paying
      to Executive an amount sufficient to cover both such asserted EPP Tax
      and any income or other tax payable by 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 Executive shall cooperate as reasonably requested by the Company
      in any such proceeding.

(d)   Survival. The expiration or termination of the Term of Employment shall
      not impair the rights or obligations of any party hereto which shall
      have accrued hereunder prior to such expiration.

 Section 8. Competition

 (a)  Executive shall not, at any time during the Term, and, if Executive's
      employment is terminated by the Executive not for Good Reason, or by
      the Company for Cause, then during the thirty-six (36) month period
      following such Date of Termination, 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 Executive shall be permitted to acquire a stock
      interest in such 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 Executive's Date of
      Termination, is established as either a prime contractor or major
      subcontractor (i.e., accounting for at least 25% of the prime contract
      value) on any military program for the design or production of armored
      tracked vehicles or naval guns or naval missile launchers.

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<PAGE>


(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, 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.

 (b)  Upon termination of Executive's employment with 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)  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.

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<PAGE>

 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 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, 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 Executive
 acknowledges that this Agreement is a personal services contract and is
 therefore not assignable by Executive.

 12.  Governing Law.

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

 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.

 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,

 United Defense, L.P.
 1525 Wilson Boulevard,
 Suite 700
 Arlington, VA 22209
 Attention: General Counsel

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(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 parties.

 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.

 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 and/or its
 subsidiaries, including but not limited to (i) the United Defense Stock
 Option Plan (the "Option Plan") and any Stock Option Agreement(s) between
 the Company and Executive in connection with the Option Plan; (ii) the
 United Defense Industries, Inc. Employee Equity Purchase Plan (the "Equity
 Plan") and documentation related thereto; (iii) any Stockholders
 Agreement(s) among Executive, the Company, and Iron Horse Investors, L.L.C.
 entered into in connection with the Equity Plan, the Option Plan, or
 otherwise; (iv) the so-called enhanced stock purchase plan under the Equity
 Plan, including any Promissory Notes(s) and/or Stock Pledge and Security
 Agreement(s) entered into in connection therewith; (v) the United Defense
 Employees Thrift Plan (also known as the 401(k) Plan) -and the ULDP
 Supplemental Retirement and Savings Plan (the latter being also known as the
 Non-Qualified Thrift Plan); and (vi) the UDLP Employees Pension Plan, into
 which the UDLP Salaried Employees Pension Plan was merged effective January
 1, 1999, and the Non-Qualified Pension Plan. As to all such plans, programs,
 and policies referred to in the preceding sentence (collectively, the "Other
 Company Plans"), the Company and 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 Other Company
 Plans, or (ii) the respective rights, powers, and obligations of the Company
 or the Executive under any of the Other Company Plans.

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 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 Chairman of the
 Board. 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
 panel of three arbitrators in Wilmington, Delaware, 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 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 arbitrators
 shall be borne- by the Company.

 Section 20. Stockholder Approval

 This Agreement shall become effective when signed, but shall be submitted
 for approval of the Company's stockholders within three (3) months after the
 date of the Board's initial authorization for this Agreement. If such
 approval has not been obtained by the end of such period, any payments to be
 made under Section 7 hereof shall be reduced to the maximum amount which,
 when aggregated with all other payments which are "parachute payments" as
 defined in Code Section 280G, would not exceed 2.99 times the Executive's
 "base amount" as defined in Code Section 280G. The

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 Company intends to seek such approval as contemplated by Section
 280G(b)(5)(A)(ii) of the Internal Revenue Code of 1986, as amended, and the
 regulations thereunder. Executive shall cooperate as requested by the
 Company in seeking any stockholder approval(s) of or with respect to this
 Agreement.

 Section 21. Executive Compensation Agreement.

 This agreement supersedes all provisions of the Executive Compensation
 Agreement dated June 30, 1997 to which Executive and the United Defense,
 L.P. are parties, which agreement shall be of no further force or effect.

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


                                      United Defense Industries, Inc.

                                      By: /s/ F. Raborn
                                          ---------------------------
                                      Name:  F. Raborn
                                      Title: CFO



                                      Executive


                                      /s/ Thomas W. Rabaut
                                      --------------------------------
                                      Name:    Thomas W. Rabaut
                                      Address: 10604 Dogwood Farm Lane
                                               Great Falls, Virginia 22066

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