<PAGE>

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                                CREDIT AGREEMENT

                                      among

                          IRON HORSE INVESTORS, L.L.C.,

                        UNITED DEFENSE INDUSTRIES, INC.,

                          VARIOUS LENDING INSTITUTIONS,

                         DEUTSCHE BANC ALEX. BROWN INC.


                                       and


                              LEHMAN BROTHERS INC.,
                              as CO-LEAD ARRANGERS,

                             BANKERS TRUST COMPANY,
                            as ADMINISTRATIVE AGENT,

                          LEHMAN COMMERCIAL PAPER INC.,
                              as SYNDICATION AGENT,


                                       and


                               CITICORP USA, INC.,

                             THE BANK OF NOVA SCOTIA

                                       and

                        CREDIT LYONNAIS NEW YORK BRANCH,
                             as DOCUMENTATION AGENTS

                       __________________________________

                           Dated as of August 13, 2001
                       __________________________________


                                  $800,000,000

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<PAGE>

         CREDIT AGREEMENT, dated as of August 13, 2001, among IRON HORSE
INVESTORS, L.L.C., a Delaware limited liability company, UNITED DEFENSE
INDUSTRIES, INC., a Delaware corporation, the lenders from time to time party
hereto (each, a "Lender" and, collectively, the "Lenders"), BANKERS TRUST
COMPANY, as Administrative Agent (the "Administrative Agent"), LEHMAN COMMERCIAL
PAPER INC., as Syndication Agent (the "Syndication Agent") and CITICORP USA,
INC., THE BANK OF NOVA SCOTIA and CREDIT LYONNAIS NEW YORK BRANCH, as
Documentation Agents (the "Documentation Agents" and together with the
Administrative Agent and the Syndication Agent, collectively, the "Agents").
Unless otherwise defined herein, all capitalized terms used herein and defined
in Section 10 are used herein as so defined.

                              W I T N E S S E T H:
                              - - - - - - - - - -


         WHEREAS, subject to and upon the terms and conditions herein set forth,
the Lenders are willing to make available to the Borrower the credit facilities
provided for herein;

         NOW, THEREFORE, IT IS AGREED:

         SECTION 1. Amount and Terms of Credit.
                    --------------------------

         1.01 Commitment. Subject to and upon the terms and conditions herein
              ----------
set forth, each Lender severally agrees to make a loan or loans (each, a "Loan"
and, collectively, the "Loans") to the Borrower, which Loans shall be drawn, to
the extent such Lender has a commitment under such Facility, under the A Term
Facility, the B Term Facility, and the Revolving Facility, as set forth below:

         (a)  Loans under the A Term Facility (each, an "A Term Loan" and,
collectively, the "A Term Loans") (i) shall be made pursuant to a single drawing
on the Initial Borrowing Date, (ii) except as hereinafter provided, may, at the
option of the Borrower, be incurred and maintained as, and/or converted into,
Base Rate Loans or Eurodollar Loans provided that all A Term Loans made as part
of the same Borrowing shall, unless specifically provided herein, consist of A
Term Loans of the same Type and (iii) shall not exceed in aggregate principal
amount for any Lender at the time of incurrence thereof the A Term Commitment,
if any, of such Lender as in effect on such date. Once repaid, A Term Loans may
not be reborrowed.

         (b)  Loans under the B Term Facility (each, a "B Term Loan" and,
collectively, the "B Term Loans") (i) shall be made pursuant to a single drawing
on the Initial Borrowing Date, (ii) except as hereinafter provided, may, at the
option of the Borrower, be incurred and maintained as, and/or converted into,
Base Rate Loans or Eurodollar Loans provided that all B Term Loans made as part
of the same Borrowing shall, unless specifically provided herein, consist of B
Term Loans of the same Type and (iii) shall not exceed in aggregate principal
amount for any Lender at the time of incurrence thereof the B Term Commitment,
if any, of such Lender as in effect on such date. Once repaid, B Term Loans may
not be reborrowed.

<PAGE>

         (c) Loans under the Revolving Facility (each, a "Revolving Loan" and,
collectively, the "Revolving Loans") (i) shall be made at any time and from time
to time on and after the Initial Borrowing Date and prior to the A/RF Maturity
Date, (ii) except as hereinafter provided, may, at the option of the Borrower,
be incurred and maintained as, and/or converted into, Base Rate Loans or
Eurodollar Loans provided that all Revolving Loans made as part of the same
Borrowing shall, unless otherwise specifically provided herein, consist of
Revolving Loans of the same Type, (iii) may be repaid and reborrowed in
accordance with the provisions hereof and (iv) shall not exceed (giving effect
to any incurrence thereof and the use of the proceeds of such incurrence) for
any Lender in aggregate principal amount at any time outstanding that amount
which, when combined with such Lender's Adjusted RF Percentage of the sum of (x)
the Letter of Credit Outstandings at such time and (y) the outstanding principal
amount of Swingline Loans at such time, equals the Revolving Commitment of such
Lender.

         (d) Subject to and upon the terms and conditions herein set forth, the
Swingline Lender agrees to make at any time and from time to time after the
Initial Borrowing Date and prior to the Swingline Expiry Date, a loan or loans
to the Borrower (each, a "Swingline Loan" and, collectively, the "Swingline
Loans"), which Swingline Loans (i) shall be made and maintained as Base Rate
Loans, (ii) may be repaid and reborrowed in accordance with the provisions
hereof and (iii) shall not exceed (giving effect to any incurrence thereof and
the use of the proceeds of such incurrence) in aggregate principal amount at any
time outstanding that amount which, when combined with the aggregate principal
amount of all Revolving Loans made by Non-Defaulting Lenders then outstanding
and the Letter of Credit Outstandings at such time, equals the Adjusted Total
Revolving Commitment then in effect (after giving effect to any changes thereto
on such date). The Swingline Lender will not make a Swingline Loan after it has
received written notice from the Required Lenders that one or more of the
applicable conditions to Credit Events specified in Section 5.02 are not then
satisfied until such conditions are satisfied.

         (e) On any Business Day, the Swingline Lender may, in its sole
discretion, give notice to the RF Lenders that its outstanding Swingline Loans
shall be funded with a Borrowing of Revolving Loans (provided that each such
                                                     --------
notice shall be deemed to have been automatically given upon the occurrence of
an Event of Default under Section 9.05 or upon the exercise of any of the
remedies provided in the last paragraph of Section 9), in which case a Borrowing
of Revolving Loans constituting Base Rate Loans (each such Borrowing, a
"Mandatory Borrowing") shall be made on the immediately succeeding Business Day
by all RF Lenders pro rata based on each RF Lender's Adjusted RF Percentage, and
                  --- ----
the proceeds thereof shall be applied directly to repay the Swingline Lender for
such outstanding Swingline Loans. Each RF Lender hereby irrevocably agrees to
make Base Rate Loans upon one Business Day's notice pursuant to each Mandatory
Borrowing in the amount and in the manner specified in the preceding sentence
and on the date specified in writing by the Swingline Lender notwithstanding:
(i) that the amount of the Mandatory Borrowing may not comply with the Minimum
Borrowing Amount otherwise required hereunder, (ii) whether any conditions
specified in Section 5.02 are then satisfied, (iii) whether a Default or an
Event of Default has occurred and is continuing, (iv) the date of such Mandatory
Borrowing and (v) the amount of the Total Revolving Commitment at such time. In
the event that any Mandatory Borrowing cannot for any reason be made on the date
otherwise required above (including, without limitation, as a result of the
commencement of a proceeding under the Bankruptcy Code in respect of the
Borrower), each RF Lender (other than

                                       -2-

<PAGE>

the Swingline Lender) hereby agrees that it shall forthwith purchase from the
Swingline Lender (without recourse or warranty) such assignment of the
outstanding Swingline Loans as shall be necessary to cause the RF Lenders to
share in such Swingline Loans ratably based upon their respective Adjusted RF
Percentages, provided that all interest payable on the Swingline Loans shall be
             --------
for the account of the Swingline Lender until the date the respective assignment
is purchased and, to the extent attributable to the purchased assignment, shall
be payable to the RF Lender purchasing same from and after such date of
purchase.

         1.02 Minimum Borrowing Amounts, etc. The aggregate principal amount of
              ------------------------------
each Borrowing shall not be less than the Minimum Borrowing Amount. More than
one Borrowing may be incurred on any day, provided that at no time shall there
be outstanding more than fifteen Borrowings of Eurodollar Loans.

         1.03 Notice of Borrowing. (a) Whenever the Borrower desires to incur
              -------------------
Loans under any Facility (excluding Borrowings of Swingline Loans and Mandatory
Borrowings), it shall give the Administrative Agent at its Notice Office, prior
to 12:00 Noon (New York time), at least three Business Days' prior written
notice (or telephonic notice promptly confirmed in writing) of each proposed
incurrence of Eurodollar Loans and at least one Business Day's prior written
notice (or telephonic notice promptly confirmed in writing) of each proposed
incurrence of Base Rate Loans. Each such notice (each, a "Notice of Borrowing")
shall be in the form of Exhibit A and shall be irrevocable and shall specify (i)
the Facility pursuant to which such incurrence is being made, (ii) the aggregate
principal amount of the Loans to be made pursuant to such incurrence, (iii) the
date of incurrence (which shall be a Business Day) and (iv) whether the
respective Borrowing shall consist of Base Rate Loans or Eurodollar Loans and,
if Eurodollar Loans, the Interest Period to be initially applicable thereto. The
Administrative Agent shall promptly give each Lender written notice (or
telephonic notice promptly confirmed in writing) of each proposed incurrence of
Loans of such Lender's proportionate share thereof and of the other matters
covered by the Notice of Borrowing.

         (b)  (i) Whenever the Borrower desires to make a Borrowing of Swingline
Loans hereunder, it shall give the Swingline Lender, prior to 2:00 P.M. (New
York time) on the day such Swingline Loan is to be made, written notice (or
telephonic notice promptly confirmed in writing) of each Swingline Loan to be
made hereunder. Each such notice shall be irrevocable and shall specify in each
case (x) the date of such Borrowing (which shall be a Business Day) and (y) the
aggregate principal amount of the Swingline Loan to be made pursuant to such
Borrowing.

         (ii) Mandatory Borrowings shall be made upon the notice specified in
Section 1.01(e), with the Borrower irrevocably agreeing, by its incurrence of
any Swingline Loan, to the making of Mandatory Borrowings as set forth in such
Section 1.01(e).

         (c)  Without in any way limiting the obligation of the Borrower to
confirm in writing any telephonic notice permitted to be given hereunder, the
Administrative Agent, the Swingline Lender (in the case of a Borrowing of
Swingline Loans), or the Letter of Credit Issuer (in the case of the issuance of
Letters of Credit), as the case may be, may prior to receipt of written
confirmation act without liability upon the basis of and consistent with such
telephonic notice, believed by the Administrative Agent, the Swingline Lender or
the Letter of Credit Issuer

                                       -3-

<PAGE>

in good faith to be from an Authorized Officer of the Borrower. In each such
case, the Borrower hereby waives the right to dispute the Administrative
Agent's, the Swingline Lender's or the Letter of Credit Issuer's record of the
terms of such telephonic notice, unless such record reflects gross negligence or
willful misconduct on the part of the Administrative Agent, the Swingline Lender
or the Letter of Credit Issuer, as the case may be.

         1.04 Disbursement of Funds. (a) No later than 1:00 P.M. (New York time)
              ---------------------
on the date specified in each Notice of Borrowing or 2:00 P.M. (New York time)
on the date specified in a notice described in Section 1.03(b)(i), each Lender
with a Commitment under the respective Facility will make available its pro rata
                                                                        --- ----
share of each Borrowing requested to be made on such date or in the case of
Swingline Loans, the Swingline Lender shall make available the full amount
thereof in the manner provided below. All such amounts shall be made available
to the Administrative Agent in Dollars and immediately available funds at the
Payment Office and the Administrative Agent promptly will make available to the
Borrower by depositing to its account at the Payment Office or as otherwise
directed in the applicable Notice of Borrowing the aggregate of the amounts so
made available in the type of funds received. Unless the Administrative Agent
shall have been notified by any Lender prior to the date of the proposed
incurrence that such Lender does not intend to make available to the
Administrative Agent its portion of the Borrowing or Borrowings to be made on
such date, the Administrative Agent may assume that such Lender has made such
amount available to the Administrative Agent on such date, and the
Administrative Agent, in reliance upon such assumption, may (in its sole
discretion and without any obligation to do so) make available to the Borrower a
corresponding amount. If such corresponding amount is not in fact made available
to the Administrative Agent by such Lender and the Administrative Agent has made
available same to the Borrower, the Administrative Agent shall be entitled to
recover such corresponding amount from such Lender. If such Lender does not pay
such corresponding amount forthwith upon the Administrative Agent's demand
therefor, the Administrative Agent may notify the Borrower, and, upon receipt of
such notice, the Borrower shall promptly pay such corresponding amount to the
Administrative Agent. The Administrative Agent shall also be entitled to recover
on demand from such Lender or the Borrower, as the case may be, interest on such
corresponding amount in respect of each day from the date such corresponding
amount was made available by the Administrative Agent to the Borrower to the
date such corresponding amount is recovered by the Administrative Agent, at a
rate per annum equal to (x) if paid by such Lender, the overnight Federal Funds
Effective Rate or (y) if paid by the Borrower, the then applicable rate of
interest, calculated in accordance with Section 1.08, for the respective Loans.

         (b)  Nothing herein shall be deemed to relieve any Lender from its
obligation to fulfill its commitments hereunder or to prejudice any rights which
the Borrower may have against any Lender as a result of any default by such
Lender hereunder.

         1.05 Notes. (a) The Borrower's obligation to pay the principal of, and
              -----
interest on, the Loans made to it by each Lender shall be evidenced (i) if A
Term Loans, by a promissory note substantially in the form of Exhibit B-1 with
blanks appropriately completed in conformity herewith (each, an "A Term Note"
and, collectively, the "A Term Notes"), (ii) if B Term Loans, by a promissory
note substantially in the form of Exhibit B-2 with blanks appropriately
completed in conformity herewith (each, a "B Term Note" and, collectively, the
"B Term Notes"), (iii) if Revolving Loans, by a promissory note substantially in
the form of Exhibit B-3

                                       -4-

<PAGE>

with blanks appropriately completed in conformity herewith (each, a "Revolving
Note" and, collectively, the "Revolving Notes") and (iv) if Swingline Loans, by
a promissory note substantially in the form of Exhibit B-4, with blanks
appropriately completed in conformity herewith (the "Swingline Note").

         (b) The A Term Note issued to each Lender that makes any A Term Loan
shall (i) be executed by the Borrower, (ii) be payable to the order of such
Lender and be dated the Initial Borrowing Date, (iii) be in a stated principal
amount equal to the A Term Loans made by such Lender on the Initial Borrowing
Date (or in the case of a new A Term Note issued pursuant to Section 1.13 or
12.04, the respective A Term Loans evidenced thereby at the time of issuance)
and be payable in the principal amount of A Term Loans evidenced thereby, (iv)
mature on the A/RF Maturity Date, (v) bear interest as provided in the
appropriate clause of Section 1.08 in respect of the Base Rate Loans and
Eurodollar Loans, as the case may be, evidenced thereby, (vi) be subject to
mandatory repayment as provided in Section 4.02 and (vii) be entitled to the
benefits of this Agreement and the other Credit Documents.

         (c) The B Term Note issued to each Lender that makes any B Term Loan
shall (i) be executed by the Borrower, (ii) be payable to the order of such
Lender and be dated the Initial Borrowing Date, (iii) be in a stated principal
amount equal to the B Term Loans made by such Lender on the Initial Borrowing
Date (or in the case of a new B Term Note issued pursuant to Section 1.13 or
12.04, the respective B Term Loans evidenced thereby at the time of issuance)
and be payable in the principal amount of B Term Loans evidenced thereby, (iv)
mature on the B Maturity Date, (v) bear interest as provided in the appropriate
clause of Section 1.08 in respect of the Base Rate Loans and Eurodollar Loans,
as the case may be, evidenced thereby, (vi) be subject to mandatory repayment as
provided in Section 4.02 and (vii) be entitled to the benefits of this Agreement
and the other Credit Documents.

         (d) The Revolving Note issued to each RF Lender shall (i) be executed
by the Borrower, (ii) be payable to the order of such RF Lender and be dated the
Initial Borrowing Date, (iii) be in a stated principal amount equal to the
Revolving Commitment of such RF Lender and be payable in the principal amount of
the Revolving Loans evidenced thereby, (iv) mature on the A/RF Maturity Date,
(v) bear interest as provided in the appropriate clause of Section 1.08 in
respect of the Base Rate Loans and Eurodollar Loans, as the case may be,
evidenced thereby, (vi) be subject to mandatory repayment as provided in Section
4.02 and (vii) be entitled to the benefits of this Agreement and the other
Credit Documents.

         (e) The Swingline Note issued to the Swingline Lender shall (i) be
executed by the Borrower, (ii) be payable to the order of the Swingline Lender
and be dated the Initial Borrowing Date, (iii) be in a stated principal amount
equal to the Maximum Swingline Amount and be payable in the principal amount of
Swingline Loans evidenced thereby, (iv) mature on the Swingline Expiry Date, (v)
bear interest as provided in Section 1.08 in respect of the Base Rate Loans
evidenced thereby, (vi) be subject to mandatory prepayment as provided in
Section 4.02 and (vii) be entitled to the benefits of this Agreement and the
other Credit Documents.

         (f) Each Lender will note on its internal records the amount of each
Loan made by it and each payment in respect thereof and will, prior to any
transfer of any of its Notes, endorse on the reverse side thereof the
outstanding principal amount of Loans evidenced thereby.

                                       -5-

<PAGE>

Failure to make any such notation shall not affect the Borrower's obligations in
respect of such Loans.

         1.06 Conversions. The Borrower shall have the option to convert on any
              -----------
Business Day all or a portion at least equal to the applicable Minimum Borrowing
Amount of the outstanding principal amount of the Loans (other than Swingline
Loans which at all times shall be maintained as Base Rate Loans) owing pursuant
to a single Facility into a Borrowing or Borrowings pursuant to such Facility of
another Type of Loan provided that (i) no partial conversion of a Borrowing of
Eurodollar Loans shall reduce the outstanding principal amount of the Eurodollar
Loans made pursuant to such Borrowing to less than the Minimum Borrowing Amount
applicable thereto, (ii) Base Rate Loans may not be converted into Eurodollar
Loans when a Default under Section 9.01 or an Event of Default is in existence
on the date of the proposed conversion if the Administrative Agent or the
Required Lenders shall have determined in its or their sole discretion not to
permit such conversion and (iii) Borrowings of Eurodollar Loans resulting from
this Section 1.06 shall be limited in number as provided in Section 1.02. Each
such conversion shall be effected by the Borrower giving the Administrative
Agent at its Notice Office, prior to 12:00 Noon (New York time), at least three
Business Days' (or one Business Day's, in the case of a conversion into Base
Rate Loans) prior written notice (or telephonic notice promptly confirmed in
writing) (each, a "Notice of Conversion") specifying the Loans to be so
converted (including the relevant Facility), the Type of Loans to be converted
into and, if to be converted into a Borrowing of Eurodollar Loans, the Interest
Period to be initially applicable thereto. The Administrative Agent shall give
each Lender prompt notice of any such proposed conversion affecting any of its
Loans.

         1.07 Pro Rata Borrowings. All Loans under this Agreement (other than
              -------------------
Swingline Loans) shall be made by the Lenders pro rata on the basis of their A
                                              --- ----
Term Commitments, B Term Commitments, or Revolving Commitments, as the case may
be, provided, that each Mandatory Borrowing shall be funded on the basis of
    --------
their Adjusted RF Percentages, if any. It is understood that no Lender shall be
responsible for any default by any other Lender in its obligation to make Loans
hereunder and that each Lender shall be obligated to make the Loans provided to
be made by it hereunder, regardless of the failure of any other Lender to
fulfill its commitments hereunder.

         1.08 Interest. (a) The unpaid principal amount of each Base Rate Loan
              --------
shall bear interest from the date of the Borrowing thereof until the earlier of
repayment or conversion thereof and maturity (whether by acceleration or
otherwise) at a rate per annum which shall at all times be the Applicable Base
Rate Margin plus the Base Rate in effect from time to time.

         (b)  The unpaid principal amount of each Eurodollar Loan shall bear
interest from the date of the Borrowing thereof until the earlier of repayment
or conversion thereof and maturity (whether by acceleration or otherwise) at a
rate per annum which shall at all times be the Applicable Eurodollar Margin plus
the relevant Eurodollar Rate.

         (c)  All overdue principal and, to the extent permitted by law, overdue
interest in respect of each Loan and any other overdue amount payable hereunder
shall bear interest at a rate per annum equal to the Base Rate in effect from
time to time plus the sum of (i) 2% and (ii) the Applicable Base Rate Margin
provided that principal in respect of Eurodollar Loans shall bear

                                       -6-

<PAGE>

interest from the date the same becomes due (whether by acceleration or
otherwise) until the end of the Interest Period then applicable to such
Eurodollar Loan at a rate per annum equal to 2% in excess of the rate of
interest applicable thereto on such date.

         (d)   Interest shall accrue from and including the date of any
Borrowing to but excluding the date of any repayment thereof and shall be
payable (i) in respect of each Base Rate Loan, quarterly in arrears on the last
Business Day of each January, April, July and October, (ii) in respect of each
Eurodollar Loan, on the last day of each Interest Period applicable thereto and,
in the case of an Interest Period in excess of three months, on each date
occurring at three month intervals after the first day of such Interest Period
and (iii) in respect of each Loan, on any prepayment or conversion (on the
amount prepaid or converted), at maturity (whether by acceleration or otherwise)
and, after such maturity, on demand.

         (e)   All computations of interest hereunder shall be made in
accordance with Section 12.07(b).

         (f)   The Administrative Agent, upon determining the interest rate for
any Borrowing of Eurodollar Loans for any Interest Period, shall promptly notify
the Borrower and the Lenders thereof.

         1.09  Interest Periods. (a) At the time the Borrower gives a Notice of
               ----------------
Borrowing or Notice of Conversion in respect of the making of, or conversion
into, a Borrowing of Eurodollar Loans (in the case of the initial Interest
Period applicable thereto) or prior to 12:00 Noon (New York time) on the third
Business Day prior to the expiration of an Interest Period applicable to a
Borrowing of Eurodollar Loans, it shall have the right to elect by giving the
Administrative Agent written notice (or telephonic notice promptly confirmed in
writing) of the Interest Period applicable to such Borrowing, which Interest
Period shall, at the option of the Borrower, be a one, two, three, six or, to
the extent available to all Lenders with a Commitment under the respective
Facility and so long as the Administrative Agent consents thereto, nine or
twelve month period. Notwithstanding anything to the contrary contained above:

         (i)   the initial Interest Period for any Borrowing of Eurodollar Loans
shall commence on the date of such Borrowing (including the date of any
conversion from a Borrowing of Base Rate Loans) and each Interest Period
occurring thereafter in respect of such Borrowing shall commence on the day on
which the next preceding Interest Period expires;

         (ii)  if any Interest Period begins on a day for which there is no
numerically corresponding day in the calendar month at the end of such Interest
Period, such Interest Period shall end on the last Business Day of such calendar
month;

         (iii) if any Interest Period would otherwise expire on a day which is
not a Business Day, such Interest Period shall expire on the next succeeding
Business Day, provided that if any Interest Period would otherwise expire on a
              --------
day which is not a Business Day but is a day of the month after which no further
Business Day occurs in such month, such Interest Period shall expire on the next
preceding Business Day;

         (iv)  no Interest Period with respect to a Borrowing of Revolving Loans
shall extend beyond the A/RF Maturity Date;

                                       -7-

<PAGE>

         (v)   no Interest Period with respect to any Term Loans under a
Facility may be elected that would extend beyond any date upon which a Scheduled
Repayment is required to be made in respect of such Term Loans if, after giving
effect to the selection of such Interest Period, the aggregate principal amount
of Term Loans maintained under the respective Facility as Eurodollar Loans with
Interest Periods ending after such date would exceed the aggregate principal
amount of Term Loans under such Facility permitted to be outstanding after such
Scheduled Repayment;

         (vi)  no Interest Period may be elected at any time when a Default
under Section 9.01 or an Event of Default is then in existence if the
Administrative Agent or the Required Lenders shall have determined in its or
their sole discretion not to permit such election; and

         (vii) Interest Periods of one or two weeks ending no later than the
60/th/ day following the Initial Borrowing Date (or if earlier and known at the
time, the Syndication Date) may be elected by the Borrower at any time prior to
the Syndication Date.

         (b)   If upon the expiration of any Interest Period, the Borrower has
failed to (or may not) elect a new Interest Period to be applicable to the
respective Borrowing of Eurodollar Loans as provided above, the Borrower shall
be deemed to have elected to convert such Borrowing into a Borrowing of Base
Rate Loans effective as of such expiration.

         1.10  Increased Costs, Illegality, etc. (a) In the event that (x) in
               --------------------------------
the case of clause (i) below, the Administrative Agent or (y) in the case of
clauses (ii) and (iii) below, any Lender shall have determined (which
determination shall, absent manifest error, be final and conclusive and binding
upon all parties hereto):

         (i)   on any date for determining the Eurodollar Rate for any Interest
Period that, by reason of any changes arising after the date of this Agreement
affecting the interbank Eurodollar market, adequate and fair means do not exist
for ascertaining the applicable interest rate on the basis provided for in the
definition of Eurodollar Rate or the making or continuance of any Eurodollar
Loan has become impracticable as a result of a contingency occurring after the
Effective Date which materially and adversely affects the interbank Eurodollar
market;

         (ii)  at any time, that such Lender shall incur increased costs or
reductions in the amounts received or receivable hereunder with respect to any
Eurodollar Loans (other than taxes covered by Section 4.04 and any increased
cost or reduction in the amount received or receivable resulting from the
imposition of or a change in the rate of taxes or similar charges) because of
(x) any change since the Effective Date in any applicable law, governmental
rule, regulation, guideline or order (or in the interpretation or administration
thereof and including the introduction of any new law or governmental rule,
regulation, guideline or order) (such as, for example, but not limited to, a
change in official reserve requirements, but, in all events, excluding reserves
required under Regulation D to the extent included in the computation of the
Eurodollar Rate) and/or (y) other circumstances first arising after the date
hereof affecting the interbank Eurodollar market or the position of such Lender
in such market; or

                                       -8-

<PAGE>

         (iii) at any time, that the making or continuance of any Eurodollar
Loan has become unlawful by compliance by such Lender in good faith with any
law, governmental rule, regulation, guideline or order (or would conflict with
any such governmental rule, regulation, guideline or order not having the force
of law but with which such Lender customarily complies even though the failure
to comply therewith would not be unlawful);

then, and in any such event, such Lender (or the Administrative Agent in the
case of clause (i) above) shall (x) on such date and (y) within ten Business
Days of the date on which such event no longer exists give notice (by telephone
confirmed in writing) to the Borrower and to the Administrative Agent of such
determination (which notice the Administrative Agent shall promptly transmit to
each of the other Lenders). Thereafter (x) in the case of clause (i) above,
Eurodollar Loans shall no longer be available until such time as the
Administrative Agent notifies the Borrower and the Lenders that the
circumstances giving rise to such notice by the Administrative Agent no longer
exist, and any Notice of Borrowing or Notice of Conversion given by the Borrower
with respect to Eurodollar Loans which have not yet been incurred shall be
deemed rescinded by the Borrower, (y) in the case of clause (ii) above, the
Borrower shall pay to such Lender, within 10 Business Days after Borrower's
receipt of written demand therefor, such additional amounts (in the form of an
increased rate of, or a different method of calculating, interest or otherwise
as such Lender in its reasonable discretion shall determine after consultation
with the Borrower) as shall be required to compensate such Lender for such
increased costs or reductions in amounts receivable hereunder (a written notice
as to the additional amounts owed to such Lender, describing the basis for such
increased costs and showing the calculation thereof, submitted to the Borrower
by such Lender shall, absent manifest error, be final and conclusive and binding
upon all parties hereto) and (z) in the case of clause (iii) above, the Borrower
shall take one of the actions specified in Section 1.10(b) as promptly as
possible and, in any event, within the time period required by law.

         (b)   At any time that any Eurodollar Loan is affected by the
circumstances described in Section 1.10(a)(ii), the Borrower may (and in the
case of a Eurodollar Loan affected pursuant to Section 1.10(a)(iii), the
Borrower shall within the time period required by law) either (x) if the
affected Eurodollar Loan is then being made pursuant to a Borrowing, cancel said
Borrowing by giving the Administrative Agent telephonic notice (confirmed
promptly in writing) thereof on the same date that the Borrower was notified by
a Lender pursuant to Section 1.10(a)(ii) or (iii), or (y) if the affected
Eurodollar Loan is then outstanding, upon at least three Business Days' notice
to the Administrative Agent, require the affected Lender to convert each such
Eurodollar Loan into a Base Rate Loan (which conversion, in the case of the
circumstances described in Section 1.10(a)(iii), shall occur no later than the
last day of the Interest Period then applicable to such Eurodollar Loan (or such
earlier date as shall be required by applicable law)); provided, that if more
                                                       --------
than one Lender is affected at any time, then all affected Lenders must be
treated the same pursuant to this Section 1.10(b). Each Lender, upon determining
in good faith that any additional amounts will be payable pursuant to this
Section 1.10(b), will give prompt written notice thereof to the Borrower, which
notice shall set forth the basis of the calculation of such additional amounts,
although the failure to give any such notice shall not release or diminish the
Borrower's obligations to pay additional amounts pursuant to this Section
1.10(b) upon the subsequent receipt of such notice.

                                       -9-

<PAGE>

         (c)  If any Lender shall have determined that the adoption or
effectiveness of any applicable law, rule or regulation regarding capital
adequacy, or any change therein, or any change in the interpretation or
administration thereof by any governmental authority, central bank or comparable
agency charged with the interpretation or administration thereof, in each case
after the Effective Date, or compliance by such Lender or its parent corporation
with any request or directive regarding capital adequacy (whether or not having
the force of law) of any such authority, central bank or comparable agency first
made after the Effective Date, has or would have the effect of reducing the rate
of return on such Lender's or its parent corporation's capital or assets as a
consequence of its commitments or obligations hereunder to a level below that
which such Lender or its parent corporation could have achieved but for such
adoption, effectiveness, change or compliance (taking into consideration such
Lender's or its parent corporation's policies with respect to capital adequacy),
then from time to time, within 10 Business Days after demand by such Lender
(with a copy to the Administrative Agent), the Borrower shall pay to such Lender
such additional amount or amounts as will compensate such Lender or its parent
corporation for such reduction. Each Lender, upon determining in good faith that
any additional amounts will be payable pursuant to this Section 1.10(c), will
give prompt written notice thereof to the Borrower, which notice shall describe
the basis for such claim and set forth in reasonable detail the calculation of
such additional amounts, although the failure to give any such notice shall not
release or diminish any of the Borrower's obligations to pay additional amounts
pursuant to this Section 1.10(c) upon the subsequent receipt of such notice.

         1.11 Compensation. (a) The Borrower shall compensate each Lender, upon
              ------------
its written request (which request shall set forth the basis for requesting such
compensation and reasonably detailed calculations thereof), for all reasonable
losses, expenses and liabilities (including, without limitation, any loss,
expense or liability incurred by reason of the liquidation or reemployment of
deposits or other funds required by such Lender to fund its Eurodollar Loans but
excluding in any event the loss of anticipated profits) which such Lender may
actually sustain: (i) if for any reason (other than a default by such Lender or
the Administrative Agent) a Borrowing of Eurodollar Loans does not occur on a
date specified therefor in a Notice of Borrowing or Notice of Conversion
(whether or not withdrawn by the Borrower or deemed withdrawn pursuant to
Section 1.10(a)); (ii) if any prepayment, repayment or conversion of any of its
Eurodollar Loans occurs on a date which is not the last day of an Interest
Period applicable thereto; (iii) if any prepayment of any of its Eurodollar
Loans is not made on any date specified in a notice of prepayment given by the
Borrower; or (iv) as a consequence of (x) any other default by the Borrower to
repay its Eurodollar Loans when required by the terms of this Agreement, (y) an
election made pursuant to Section 1.10(b) or (z) the early termination of an, or
the funding of a shortened, Interest Period (other than an Interest Period
elected pursuant to Section 1.09(a)(vii)) which may be required by any Lender in
connection with any assignment effected after the Initial Borrowing Date and
prior to the Syndication Date.

         (b)  Notwithstanding anything in this Agreement to the contrary, to the
extent any notice or request required by Section 1.10, 1.11, 2.05 or 4.04 is
given by any Lender more than 180 days after such Lender obtained, or reasonably
should have obtained, knowledge of the occurrence of the event giving rise to
the additional costs, reductions in amounts, losses, taxes or other additional
amounts of the type described in such Section, such Lender shall not be entitled
to compensation under Section 1.10, 1.11, 2.05 or 4.04 for any amounts incurred
or accruing prior to the giving of such notice to the Borrower.

                                      -10-

<PAGE>

         1.12 Change of Lending Office. Each Lender agrees that, upon the
              ------------------------
occurrence of any event giving rise to the operation of Section 1.10(a)(ii) or
(iii), 1.10(c), 2.05 or 4.04 with respect to such Lender, it will, if requested
by the Borrower, use reasonable efforts (subject to overall policy
considerations of such Lender) to designate another lending office for any Loans
or Letter of Credit participations affected by such event, provided that such
                                                           --------
designation is made on such terms that such Lender and its lending office suffer
no material economic, legal or regulatory disadvantage, with the object of
avoiding the consequence of the event giving rise to the operation of any such
Section. Nothing in this Section 1.12 shall affect or postpone any of the
obligations of the Borrower or the right of any Lender provided in Section 1.10,
2.05 or 4.04.

         1.13 Replacement of Lenders. (x) Upon the occurrence of any event
              ----------------------
giving rise to the operation of Section 1.10(a)(ii) or (iii), Section 1.10(c),
Section 1.11, Section 2.05 or Section 4.04 with respect to any Lender which
results in such Lender charging to the Borrower increased costs materially in
excess of those being charged generally by the Lenders, (y) if a Lender becomes
a Defaulting Lender and/or (z) in the case of a refusal by a Lender to consent
to a proposed change, waiver, discharge or termination with respect to this
Agreement which has been approved by the Required Lenders, the Borrower shall
have the right, if no Default under Section 9.01 or Event of Default then
exists, to replace such Lender (the "Replaced Lender") with one or more other
Eligible Transferee or Transferees, none of whom shall constitute a Defaulting
Lender at the time of such replacement (collectively, the "Replacement Lender")
reasonably acceptable to the Administrative Agent, provided that (i) at the time
of any replacement pursuant to this Section 1.13, the Replacement Lender shall
enter into one or more Assignment Agreements pursuant to Section 12.04(b) (and
with all fees payable pursuant to said Section 12.04(b) to be paid by the
Replacement Lender) pursuant to which the Replacement Lender shall acquire all
of the Commitments and outstanding Loans of, and in each case participations in
Letters of Credit by, the Replaced Lender and, in connection therewith, shall
pay to (x) the Replaced Lender an amount equal to the sum of (A) an amount equal
to the principal of, and all accrued and unpaid interest on, all outstanding
Loans of the Replaced Lender, (B) an amount equal to all Unpaid Drawings that
have been funded by (and not reimbursed to) such Replaced Lender, together with
all accrued and unpaid interest with respect thereto at such time and (C) an
amount equal to all accrued and unpaid Fees owing to the Replaced Lender
pursuant to Section 3.01, (y) each Letter of Credit Issuer an amount equal to
such Replaced Lender's Adjusted RF Percentage (for this purpose, and for the
purposes of clause (z) below, determined as if the adjustment described in
clause (y) of the immediately succeeding sentence had been made with respect to
such Replaced Lender) of any Unpaid Drawing (which at such time remains an
Unpaid Drawing) to the extent such amount was not theretofore funded by such
Replaced Lender and (z) the Swingline Lender, any portion of a Mandatory
Borrowing as to which the Replaced Lender is then in default, and (ii) all
obligations of the Borrower owing to the Replaced Lender (other than those
specifically described in clause (i) above in respect of which the assignment
purchase price has been, or is concurrently being, paid) shall be paid in full
to such Replaced Lender by the Borrower concurrently with such replacement. Upon
the execution of the respective Assignment Agreements, the payment of amounts
referred to in clauses (i) and (ii) above and, if so requested by the
Replacement Lender, delivery to the Replacement Lender of the appropriate Note
or Notes executed by the Borrower, (x) the Replacement Lender shall become a
Lender hereunder and the Replaced Lender shall cease to constitute a Lender
hereunder, except with respect to indemnification provisions applicable to the
Replaced Lender under this Agreement, which shall survive as to such Replaced
Lender and (y) in the case

                                      -11-

<PAGE>

of a replacement of a Defaulting Lender with a Non-Defaulting Lender, the
Adjusted RF Percentages of the respective Lenders and the Adjusted Total
Revolving Commitment shall be automatically adjusted at such time to give effect
to such replacement.

         SECTION 2. Letters of Credit.
                    -----------------

         2.01 Letters of Credit. (a) Subject to and upon the terms and
              -----------------
conditions herein set forth, the Borrower may request that the Letter of Credit
Issuer at any time and from time to time on or after the Initial Borrowing Date
and prior to the fifth Business Day prior to the A/RF Maturity Date to issue,
for the account of the Borrower and in support of (x) trade obligations of the
Borrower and its Subsidiaries incurred in the ordinary course of business
(letters of credit issued for such purposes, "Trade Letters of Credit") and (y)
any other lawful purposes of the Borrower and its Subsidiaries (letters of
credit issued for such purposes, "Standby Letters of Credit"), and subject to
and upon the terms and conditions herein set forth, the Letter of Credit Issuer
agrees to issue from time to time, irrevocable letters of credit denominated in
Dollars and issued on a sight basis only, in such form as may be approved by the
Letter of Credit Issuer and the Administrative Agent. "Letters of Credit" shall
include Trade Letters of Credit and Standby Letters of Credit, in each case
issued pursuant to this Section 2, and all Existing Letters of Credit (each of
which Existing Letters of Credit shall be deemed issued as Letters of Credit for
all purposes of this Agreement on the Initial Borrowing Date).

         (b)  Notwithstanding the foregoing, (i) no Letter of Credit shall be
issued if after giving effect thereto the sum of the Letter of Credit
Outstandings plus the aggregate principal amount of all Revolving Loans made by
Non-Defaulting Lenders then outstanding and Swingline Loans then outstanding
would exceed the Adjusted Total Revolving Commitment at such time; (ii) each
Standby Letter of Credit shall have an expiry date occurring not later than
three years after such Letter of Credit's date of issuance although (x) Standby
Letters of Credit issued to replace and/or support letters of credit existing on
the Initial Borrowing Date shall have an expiry date equal to the then expiry
date of the letter of credit being replaced or supported, (y) any Standby Letter
of Credit may be extendible for successive periods of up to 12 months, but not
beyond the third Business Day next preceding the A/RF Maturity Date, on terms
acceptable to the Letter of Credit Issuer and in no event shall any Standby
Letter of Credit have an expiry date occurring later than the third Business Day
next preceding the A/RF Maturity Date and (z) Letters of Credit in an aggregate
Stated Amount of up to $100,000,000 may be issued with an initial expiry date
occurring more than three years after the respective dates of issuance thereof
provided that in each case such expiry date shall not be later than the date
three months prior to A/RF Maturity Date; and (iii) each Trade Letter of Credit
shall have an expiry date occurring not later than (x) 180 days after such Trade
Letter of Credit's date of issuance or (y) the date three Business Days prior to
the A/RF Maturity Date.

         2.02 Letter of Credit Requests; Notices of Issuance. (a) Whenever it
              ----------------------------------------------
desires that an Letter of Credit be issued, the Borrower shall give the
Administrative Agent and the Letter of Credit Issuer written notice (including
by way of facsimile transmission) in the form of Exhibit C thereof prior to 1:00
P.M. (New York time) at least three Business Days (or such shorter period as may
be acceptable to the Letter of Credit Issuer) prior to the proposed date of
issuance (which shall be a Business Day) (each, a "Letter of Credit Request"),
which Letter of Credit Request

                                      -12-

<PAGE>

shall include any other documents that the Letter of Credit Issuer customarily
requires in connection therewith.

         (b)  The Letter of Credit Issuer shall, promptly after the issuance of
or amendment to a Standby Letter of Credit by it pursuant to this Section 2,
give the Administrative Agent and the Borrower, written notice of such issuance
or amendment and such notice shall be accompanied by a copy of such issuance or
amendment. Upon receipt of such notice, the Administrative Agent shall promptly
give each RF Lender a written notice of such issuance or amendment. If any RF
Lender should so request, the Administrative Agent shall provide copies of such
issuance or amendment to such RF Lender. With regards to Trade Letters of
Credit, the Letter of Credit Issuer shall on the first Business Day of each week
provide the Administrative Agent, by facsimile, with a report of the daily
aggregate outstanding Trade Letters of Credit issued by the Letter of Credit
Issuer for the previous calendar week.

         2.03 Agreement to Repay Letter of Credit Drawings. (a) The Borrower
              --------------------------------------------
hereby agrees to reimburse the Letter of Credit Issuer, by making payment to the
Administrative Agent at the Payment Office, for any payment or disbursement made
by the Letter of Credit Issuer under any Letter of Credit (each such amount so
paid or disbursed until reimbursed, an "Unpaid Drawing") promptly after, and in
any event within three Business Days after the date on which, the Borrower is
notified by the Letter of Credit Issuer of such payment or disbursement with
interest on the amount so paid or disbursed by the Letter of Credit Issuer, to
the extent not reimbursed prior to 1:00 P.M. (New York time) on the date of such
payment or disbursement, from and including the date paid or disbursed to but
not including the date the Letter of Credit Issuer is reimbursed therefor at a
rate per annum which shall be the Base Rate plus the Applicable Base Rate Margin
as in effect from time to time (plus an additional 2% per annum if not
reimbursed by the third Business Day after the date of such notice of payment or
disbursement), such interest also to be payable on demand.

         (b)  The Borrower's obligation under this Section 2.03 to reimburse the
Letter of Credit Issuer with respect to Unpaid Drawings (including, in each
case, interest thereon) shall be absolute and unconditional under any and all
circumstances and irrespective of any setoff, counterclaim or defense to payment
which the Borrower may have or have had against the Letter of Credit Issuer, the
Administrative Agent or any Lender, including, without limitation, any defense
based upon the failure of any drawing under a Letter of Credit to conform
substantially to the terms of the Letter of Credit or any non-application or
misapplication by the beneficiary of the proceeds of such drawing provided that
the Borrower shall not be obligated to reimburse the Letter of Credit Issuer for
any wrongful payment made by the Letter of Credit Issuer under a Letter of
Credit as a result of acts or omissions constituting willful misconduct or gross
negligence on the part of the Letter of Credit Issuer as determined by a court
of competent jurisdiction.

         2.04 Letter of Credit Participations. (a) Immediately upon the issuance
              -------------------------------
by the Letter of Credit Issuer of any Letter of Credit, the Letter of Credit
Issuer shall be deemed to have sold and transferred to each other RF Lender, and
each such RF Lender (each, a "Participant") shall be deemed irrevocably and
unconditionally to have purchased and received from such Letter of Credit
Issuer, without recourse or warranty, an undivided interest and participation,
to the extent of such Participant's Adjusted RF Percentage, in such Letter of
Credit, each substitute

                                      -13-

<PAGE>

letter of credit, each drawing made thereunder and the obligations of the
Borrower under this Agreement with respect thereto (although the Letter of
Credit Fee shall be payable directly to the Administrative Agent for the account
of the RF Lenders as provided in Section 3.01(b) and the Participants shall have
no right to receive any portion of any Facing Fees) and any security therefor or
guaranty pertaining thereto. Upon any change in the Adjusted RF Percentages
pursuant to Section 1.13 and/or 12.04(b) and/or as a result of a Lender Default,
it is hereby agreed that, with respect to all outstanding Letters of Credit and
Unpaid Drawings, there shall be an automatic adjustment to the participations
pursuant to this Section 2.04 to reflect the new Adjusted RF Percentages of all
of the Lenders with RF Commitments as a result thereof.

         (b) In determining whether to pay under any Letter of Credit, the
Letter of Credit Issuer shall not have any obligation relative to the
Participants other than to determine that any documents required to be delivered
under such Letter of Credit have been delivered and that they substantially
comply on their face with the requirements of such Letter of Credit. Any action
taken or omitted to be taken by the Letter of Credit Issuer under or in
connection with any Letter of Credit if taken or omitted in the absence of gross
negligence or willful misconduct as determined by a court of competent
jurisdiction, shall not create for the Letter of Credit Issuer any resulting
liability.

         (c) In the event that the Letter of Credit Issuer makes any payment
under any Letter of Credit and the Borrower shall not have reimbursed such
amount in full to the Letter of Credit Issuer pursuant to Section 2.03(a), the
Letter of Credit Issuer shall promptly notify the Administrative Agent, and the
Administrative Agent shall promptly notify each Participant of such failure, and
each Participant shall promptly and unconditionally pay to the Administrative
Agent for the account of the Letter of Credit Issuer, the amount of such
Participant's Adjusted RF Percentage of such payment in Dollars and in same day
funds provided that no Participant shall be obligated to pay to the
Administrative Agent its Adjusted RF Percentage of such unreimbursed amount for
any wrongful payment made by the Letter of Credit Issuer under a Letter of
Credit as a result of acts or omissions constituting willful misconduct or gross
negligence as determined by a court of competent jurisdiction on the part of the
Letter of Credit Issuer. If the Administrative Agent so notifies any Participant
prior to 11:00 A.M. (New York time) on any Business Day, such Participant shall
make available to the Administrative Agent, such Participant's Adjusted RF
Percentage of the amount of such payment on such Business Day in same day funds.
If and to the extent such Participant shall not have so made its Adjusted RF
Percentage of the amount of such Unpaid Drawing available to the Administrative
Agent, such Participant agrees to pay to the Administrative Agent for the
account of the Letter of Credit Issuer, forthwith on demand such amount,
together with interest thereon, for each day from such date until the date such
amount is so paid to the Administrative Agent at the overnight Federal Funds
Effective Rate. The failure of any Participant to so pay to the Administrative
Agent its Adjusted RF Percentage of any Unpaid Drawing shall not relieve any
other Participant of its obligation hereunder to so pay to the Administrative
Agent its Adjusted RF Percentage of any Unpaid Drawing on the date required, as
specified above, but no Participant shall be responsible for the failure of any
other Participant to so pay to the Administrative Agent such other Participant's
Adjusted RF Percentage of any such payment.

         (d) Whenever the Letter of Credit Issuer receives a payment of a
reimbursement obligation as to which the Administrative Agent has received for
the account of the Letter of

                                      -14-

<PAGE>

Credit Issuer any payments from the Participants pursuant to clause (c) above,
the Letter of Credit Issuer shall pay to the Administrative Agent and the
Administrative Agent shall promptly pay to each Participant which has paid its
Adjusted RF Percentage thereof, in Dollars and in same day funds, an amount
equal to such Participant's Adjusted RF Percentage of the principal amount
thereof and interest thereon accruing after the purchase of the respective
participations.

         (e)  The obligations of the Participants to make payments to the
Administrative Agent for the account of the Letter of Credit Issuer with respect
to Letters of Credit shall be irrevocable and not subject to counterclaim,
set-off or other defense or any other qualification or exception whatsoever
(provided that no Participant shall be required to make payments resulting from
the Administrative Agent's gross negligence or willful misconduct as determined
by a court of competent jurisdiction) and shall be made in accordance with the
terms and conditions of this Agreement under all circumstances, including,
without limitation, any of the following circumstances:

         (i)   any lack of validity or enforceability of this Agreement or any
of the other Credit Documents;

         (ii)  the existence of any claim, set-off, defense or other right which
any Credit Party or any of their Subsidiaries may have at any time against a
beneficiary named in a Letter of Credit, any transferee of any Letter of Credit
(or any Person for whom any such transferee may be acting), any Agent, the
Letter of Credit Issuer, any Lender or other Person, whether in connection with
this Agreement, any Letter of Credit, the transactions contemplated herein or
any unrelated transactions (including any underlying transaction between the
Borrower and the beneficiary named in any such Letter of Credit);

         (iii) any draft, certificate or other document presented under the
Letter of Credit proving to be forged, fraudulent, invalid or insufficient in
any respect or any statement therein being untrue or inaccurate in any respect;

         (iv)  the surrender or impairment of any security for the performance
or observance of any of the terms of any of the Credit Documents; or

         (v)   the occurrence of any Default or Event of Default.

         (f)  To the extent the Letter of Credit Issuer is not indemnified by
the Borrower, the Participants will reimburse and indemnify the Letter of Credit
Issuer, in proportion to their respective RF Percentages, for and against any
and all liabilities, obligations, losses, damages, penalties, claims, actions,
judgments, costs, expenses or disbursements of whatsoever kind or nature which
may be imposed on, asserted against or incurred by the Letter of Credit Issuer
in performing its respective duties in any way relating to or arising out of its
issuance of Letters of Credit; provided that no Participants shall be liable for
                               --------
any portion of such liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements resulting from the
Letter of Credit Issuer's gross negligence or willful misconduct as determined
by a court of competent jurisdiction.

         2.05 Increased Costs. If at any time after the Effective Date, the
              ---------------
adoption or initial effectiveness of any applicable law, rule or regulation, or
any change therein, or any


                                      -15-

<PAGE>

change in the interpretation or administration thereof by any governmental
authority, central bank or comparable agency charged with the interpretation or
administration thereof, or compliance by the Letter of Credit Issuer or any
Participant with any request or directive (whether or not having the force of
law) first made by any such authority, central bank or comparable agency, in
each case after the Effective Date, shall either (i) impose, modify or make
applicable any reserve, deposit, capital adequacy or similar requirement against
Letters of Credit issued by the Letter of Credit Issuer or such Participant's
participation therein, or (ii) shall impose on the Letter of Credit Issuer or
any Participant any other conditions affecting this Agreement, any Letter of
Credit or such Participant's participation therein; and the result of any of the
foregoing is to increase the cost to the Letter of Credit Issuer or such
Participant of issuing, maintaining or participating in any Letter of Credit, or
to reduce the amount of any sum received or receivable by the Letter of Credit
Issuer or such Participant hereunder (other than any increased cost or reduction
in the amount received or receivable resulting from the imposition of or a
change in the rate of taxes or similar charges), then, within 10 Business Days
of Borrower's receipt of a written demand to the Borrower by the Letter of
Credit Issuer or such Participant (a copy of which notice shall be sent by the
Letter of Credit Issuer or such Participant to the Administrative Agent), the
Borrower shall pay to the Letter of Credit Issuer or such Participant such
additional amount or amounts as will compensate the Letter of Credit Issuer or
such Participant for such increased cost or reduction. A certificate submitted
to the Borrower by the Letter of Credit Issuer or such Participant, as the case
may be (a copy of which certificate shall be sent by the Letter of Credit Issuer
or such Participant to the Administrative Agent), setting forth the basis for,
and reasonably detailed calculations of, the determination of such additional
amount or amounts necessary to compensate the Letter of Credit Issuer or such
Participant as aforesaid shall be conclusive and binding on the Borrower absent
manifest error, although the failure to deliver any such certificate shall not
release or diminish any of the Borrower's obligations to pay additional amounts
pursuant to this Section 2.05 upon the subsequent receipt thereof.

         SECTION 3. Fees; Commitments.
                    -----------------

         3.01 Fees. (a) The Borrower agrees to pay to the Administrative Agent a
              ----
commitment commission ("Commitment Commission") for the account of each RF
Lender that is a Non-Defaulting Lender for the period from and including the
Initial Borrowing Date to but not including the date upon which the Total
Revolving Commitment has been terminated, computed for each day at the rate per
annum equal to the Applicable Percentage for such day on the Unutilized
Revolving Commitment on such day of such Lender. Such Commitment Commission
shall be due and payable in arrears on the last Business Day of each January,
April, July and October and on the date upon which the Total Revolving
Commitment is terminated.

         (b)  The Borrower agrees to pay to the Administrative Agent, for the
account of each RF Lender that is a Non-Defaulting Lender, pro rata on the basis
                                                           --- ----
of their respective Adjusted RF Percentages, a fee in respect of all Letters of
Credit (the "Letter of Credit Fee") computed for each day at a per annum rate
equal to 50% of the Applicable Eurodollar Margin for Revolving Loans on such day
multiplied by the Stated Amount of all Letters of Credit outstanding on such
day. Accrued Letter of Credit Fees shall be due and payable quarterly in arrears
on the last Business Day of each January, April, July and October of each year
and on the date upon which the Total Revolving Commitment is terminated.

                                      -16-

<PAGE>

         (c) The Borrower agrees to pay to the Letter of Credit Issuer a fee in
respect of each Letter of Credit issued by it (the "Facing Fee") computed for
each day at the rate of 1/4 of 1% per annum on the Stated Amount of all Letters
of Credit outstanding on such day, provided that in no event shall the annual
Facing Fee with respect to any Letter of Credit be less than $500. Accrued
Facing Fees shall be due and payable quarterly in arrears on the last Business
Day of each January, April, July and October of each year and on the date upon
which the Total Revolving Commitment is terminated.

         (d) The Borrower agrees to pay directly to the Letter of Credit Issuer
upon each issuance of, payment under, and/or amendment of, a Letter of Credit
such amount as shall at the time of such issuance, payment or amendment be the
administrative charge which the Letter of Credit Issuer is customarily charging
for issuances of, payments under or amendments of, letters of credit issued by
it.

         (e) The Borrower shall pay to (x) each Agent on the Initial Borrowing
Date, for its own account and/or for distribution to the Lenders, such fees as
heretofore agreed by the Borrower and the Agents and (y) the Administrative
Agent, for its own account, such other fees as agreed to between the Borrower
and the Administrative Agent, when and as due.

         (f) All computations of Fees shall be made in accordance with Section
12.07(b).

         3.02 Voluntary Reduction of Commitments. Upon at least one Business
              ----------------------------------
Day's prior written notice (or telephonic notice confirmed in writing) to the
Administrative Agent at its Notice Office (which notice shall be deemed to be
given on a certain day only if given before 2:00 P.M. (New York time) on such
day and shall be promptly transmitted by the Administrative Agent to each of the
Lenders), the Borrower shall have the right, without premium or penalty, to
terminate or partially reduce the Total Unutilized Revolving Commitment provided
that (x) any such partial reduction shall apply to proportionately and
permanently reduce the Revolving Commitment of each Lender, (y) no such
reduction shall reduce any Non-Defaulting Lender's Revolving Commitment in an
amount greater than the then Unutilized Revolving Commitment of such Lender and
(z) any partial reduction pursuant to this Section 3.02 shall be in the amount
of at least $1,000,000.

         3.03 Mandatory Adjustments of Commitments, etc. (a) The Total
              -----------------------------------------
Commitment (and the A Term Commitment, B Term Commitment and Revolving
Commitment of each Lender) shall terminate in its entirety on the Expiration
Date unless the Initial Borrowing Date has occurred on or before such date.

         (b) Each of the Total A Term Commitment and Total B Term Commitment
shall terminate in its entirety on the Initial Borrowing Date (after giving
effect to the making of A Term Loans and B Term Loans on such date).

         (c) Each of the Total Revolving Commitment shall terminate in its
entirety on the A/RF Maturity Date.

         (d) Each partial reduction of the Commitments under a Facility pursuant
to this Section 3.03 shall apply proportionately to the Commitment under such
Facility of each Lender.

                                      -17-

<PAGE>

         SECTION 4. Payments.
                    --------

         4.01 Voluntary Prepayments. The Borrower shall have the right to prepay
              ---------------------
Loans in whole or in part, without premium or penalty, from time to time on the
following terms and conditions: (i) the Borrower shall give the Administrative
Agent at the Payment Office written notice (or telephonic notice promptly
confirmed in writing) of its intent to prepay the Loans, whether such Loans are
A Term Loans, B Term Loans, Revolving Loans or Swingline Loans, the amount of
such prepayment and (in the case of Eurodollar Loans) the specific Borrowing(s)
pursuant to which made, which notice shall be given by the Borrower prior to
3:00 P.M. (New York time) on the Business Day prior to the date of such
prepayment (or in the case of Swingline Loans on the day of prepayment), and
which notice shall promptly be transmitted by the Administrative Agent to each
of the Lenders; (ii) (x) each partial prepayment of any Borrowing (other than a
Borrowing of Swingline Loans) shall be in an aggregate principal amount of at
least $1,000,000 and (y) each partial prepayment of Swingline Loans shall be in
an aggregate principal amount of at least $250,000, provided that no partial
prepayment of Eurodollar Loans made pursuant to a Borrowing shall reduce the
aggregate principal amount of the Loans outstanding pursuant to such Borrowing
to an amount less than the Minimum Borrowing Amount applicable thereto; (iii)
each prepayment in respect of any Loans made pursuant to a Borrowing shall be
applied pro rata among such Loans provided that at the Borrower's election in
        --- ----
connection with any prepayment of Revolving Loans pursuant to this Section 4.01,
such prepayment shall not be applied to any Revolving Loans of a Defaulting
Lender; and (iv) each prepayment of Term Loans pursuant to this Section 4.01
shall be applied between the A Term Facility and B Term Facility as the Borrower
may elect, with any such prepayments to be allocated (I) first, in direct order
of maturity to those Scheduled Repayments under the respective Facility which
will be due and payable within 12 months after the date of the respective
payment and (II) second, to the extent in excess thereof, on a pro rata basis
                                                               --- ----
(based upon the then remaining principal amount thereof) to all remaining
Scheduled Repayments under such Facility.

         4.02 Mandatory Prepayments.
              ---------------------

         (A) Requirements:

         (a) (i) If on any date (and after giving effect to all other repayments
on such date) the sum of the aggregate outstanding principal amount of Revolving
Loans made by Non-Defaulting Lenders, the principal amount of Swingline Loans
and the Letter of Credit Outstandings exceeds the Adjusted Total Revolving
Commitment as then in effect, the Borrower shall repay on such date the
principal of outstanding Swingline Loans and, after all Swingline Loans have
been repaid in full, Revolving Loans of Non-Defaulting Lenders in an aggregate
amount equal to such excess. If after giving effect to the repayment of all
outstanding Swingline Loans and Revolving Loans of Non-Defaulting Lenders, the
Letter of Credit Outstandings exceeds the Adjusted Total Revolving Commitment
then in effect, the Borrower shall pay to the Administrative Agent an amount in
cash and/or Cash Equivalents equal to such excess and the Administrative Agent
shall hold such payment as security for the obligations of the Borrower in
respect of Letters of Credit pursuant to a cash collateral agreement to be
entered into in form and substance reasonably satisfactory to the Administrative
Agent (which shall permit certain investments in Cash Equivalents reasonably
satisfactory to the Administrative Agent, until all

                                       -18-

<PAGE>

proceeds are applied to the secured obligations or until all Letters of Credit
so secured expire undrawn or are otherwise terminated or all drawings thereunder
are paid, at which time such amount shall be returned to the Borrower).

         (ii) If on any date the aggregate outstanding principal amount of the
Revolving Loans made by a Defaulting Lender exceeds the Revolving Commitment of
such Defaulting Lender, the Borrower shall repay principal of Revolving Loans of
such Defaulting Lender in an amount equal to such excess.

         (b)  (i) On each date set forth below, the Borrower shall repay the
principal amount of A Term Loans set forth opposite such date (each such
repayment, together with each repayment of B Term Loans required by clause
(b)(ii) below, as the same may be reduced as provided in Sections 4.01 and
4.02(B), a "Scheduled Repayment"):

                                      -19-

<PAGE>

        Date                           Amount:
        ----                           -------

        September 30, 2001             $ 1,600,000.00
        December 31, 2001              $ 1,600,000.00

        March 31, 2002                 $ 4,400,000.00
        June 30, 2002                  $ 4,400,000.00
        September 30, 2002             $ 4,400,000.00
        December 31, 2002              $ 4,400,000.00

        March 31, 2003                 $ 4,400,000.00
        June 30, 2003                  $ 4,400,000.00
        September 30, 2003             $ 4,400,000.00
        December 31, 2003              $ 4,400,000.00

        March 31, 2004                 $ 4,400,000.00
        June 30, 2004                  $ 4,400,000.00
        September 30, 2004             $ 4,400,000.00
        December 31, 2004              $ 4,400,000.00

        March 31, 2005                 $ 4,400,000.00
        June 30, 2005                  $ 4,400,000.00
        September 30, 2005             $ 4,400,000.00
        December 31, 2005              $ 4,400,000.00

        March 31, 2006                 $ 4,400,000.00
        June 30, 2006                  $ 4,400,000.00
        September 30, 2006             $ 4,400,000.00
        December 31, 2006              $ 4,400,000.00

        March 31, 2007                 $ 4,400,000.00
        A/RF Maturity Date             $ 4,400,000.00


   (ii) On each date set forth below, the Borrower shall repay the principal
amount of B Term Loans set forth opposite such date:

        Date:                          Amount
        ----                           ------

        September 30, 2001             $ 1,250,000.00
        December 31, 2001              $ 1,250,000.00

        March 31, 2002                 $ 1,250,000.00
        June 30, 2002                  $ 1,250,000.00
        September 30, 2002             $ 6,250,000.00
        December 31, 2002              $ 6,250,000.00

                                      -20-

<PAGE>

        Date:                               Amount
        ----                                ------

        March 31, 2003                      $ 6,250,000.00
        June 30, 2003                       $ 6,250,000.00
        September 30, 2003                  $ 6,250,000.00
        December 31, 2003                   $ 6,250,000.00

        March 31, 2004                      $ 6,250,000.00
        June 30,2004                        $ 6,250,000.00
        September 30, 2004                  $ 6,250,000.00
        December 31, 2004                   $ 6,250,000.00

        March 31, 2005                      $ 6,250,000.00
        June 30, 2005                       $ 6,250,000.00
        September 30, 2005                  $ 6,250,000.00
        December 31, 2005                   $ 6,250,000.00

        March 31, 2006                      $ 6,250,000.00
        June 30, 2006                       $ 6,250,000.00
        September 30, 2006                  $ 6,250,000.00
        December 31, 2006                   $ 6,250,000.00

        March 31, 2007                      $ 6,250,000.00
        June 30, 2007                       $ 6,250,000.00
        September 30, 2007                  $46,250,000.00
        December 31, 2007                   $46,250,000.00

        March 31, 2008                      $46,250,000.00
        June 30, 2008                       $46,250,000.00
        September 30, 2008                  $46,250,000.00
        December 31, 2008                   $46,250,000.00

        March 31, 2009                      $46,250,000.00
        B Maturity Date                     $46,250,000.00

    (c) On the third Business Day following the date of receipt thereof by
Holdings and/or any of its Subsidiaries of the Net Cash Proceeds from any Asset
Sale, an amount equal to 100% of the Net Cash Proceeds from such Asset Sale
shall be applied as a mandatory repayment of principal of the then outstanding
Term Loans, provided that up to an aggregate of $20,000,000 per year (but no
            --------
more than $50,000,000 in the aggregate for all Asset Sales after the Initial
Borrowing Date) of the Net Cash Proceeds from Asset Sales shall not be required
to be used to so repay Term Loans to the extent the Borrower elects, as
hereinafter provided, to cause such Net Cash Proceeds to be reinvested in
Reinvestment Assets (a "Reinvestment Election"). The Borrower may exercise its
Reinvestment Election (within the parameters specified in the preceding
sentence) with respect to an Asset Sale if (x) no Default or Event of Default
exists and (y) the Borrower delivers a Reinvestment Notice to the Administrative
Agent no later than three Business Days following the

                                      -21-

<PAGE>

date of the consummation of the respective Asset Sale, with such Reinvestment
Election being effective with respect to the Net Cash Proceeds of such Asset
Sale equal to the Anticipated Reinvestment Amount specified in such Reinvestment
Notice.

           (d)  On the date of the receipt thereof by Holdings and/or any of its
Subsidiaries, an amount equal to 100% of the proceeds (net of underwriting
discounts and commissions and other reasonable costs associated therewith) of
the incurrence of Indebtedness by Holdings or any of its Subsidiaries (other
than Indebtedness permitted by Section 8.04), shall be applied as a mandatory
repayment of principal of the then outstanding Term Loans.

           (e)  On the date of the receipt thereof by Holdings or the Borrower,
an amount equal to the EP Percentage of the proceeds (net of underwriting
discounts and commissions and other reasonable costs associated therewith) of
any sale or issuance of its equity or any equity contribution (other than equity
issued to management and other employees of Holdings and its Subsidiaries) shall
be applied as a mandatory repayment of principal of the then outstanding Term
Loans.

           (f)  (i) On the date which is 120 days after the last day of the
fiscal year of the Borrower ending on December 31, 2001, an amount equal to 75%
(or, if the Leverage Ratio on the last day of such fiscal year is less than
3.0:1.0, 50%) of Excess Cash Flow for the last 6 months of such fiscal year (if
positive) shall be applied as a mandatory repayment of principal of the then
outstanding Term Loans.

           (ii) On each date which is 120 days after the last day of each fiscal
year of the Borrower (commencing with the fiscal year ending on December 31,
2002), an amount equal to 75% (or, if the Leverage Ratio on the last day of such
fiscal year is less than 3.0:1.0, 50%) of Excess Cash Flow for the fiscal year
then last ended (if positive) shall be applied as a mandatory repayment of
principal of the then outstanding Term Loans.

           (g)  On the Reinvestment Prepayment Date with respect to a
Reinvestment Election, an amount equal to the Reinvestment Prepayment Amount, if
any, for such Reinvestment Election shall be applied as a repayment of the
principal amount of the then outstanding Term Loans.

           (h)  An amount equal to the Net Funding Excess at such time shall be
applied on February 28, 2002 as a mandatory repayment of the outstanding Term
Loans.

           (i)  To the extent not theretofore repaid pursuant to the provisions
of this Agreement, (i) all then outstanding Swingline Loans shall be repaid in
full on the Swingline Expiry Date and (ii) all outstanding Swingline Loans and
Revolving Loans shall be repaid in full upon the termination of the Total
Revolving Commitment.

           (B)  Application:

           (a)  Each mandatory repayment of Term Loans required to be made
pursuant to Sections 4.02(A)(c) through (i) shall be applied to the outstanding
A Term Loans, if any, in an amount equal to the A TF Percentage of such
prepayment and to the outstanding B Term Loans, if any, in an amount equal to
the B TF Percentage of such prepayment, with any such


                                      -22-

<PAGE>

prepayments (except in the case of Section 4.02(A)(h)) to be allocated to reduce
the then remaining Scheduled Repayments of the respective Facility (I) first, in
direct order of maturity to those Scheduled Repayments which will be due and
payable within 12 months after the date of the respective payment and (II)
second, to the extent in excess thereof, on a pro rata basis (based upon the
                                              --- ----
then remaining principal amount of each such Scheduled Repayment). Any mandatory
prepayment of Term Loans required to be made pursuant to Section 4.02(A)(h)
shall be allocated to reduce the then remaining Scheduled Repayments of the
respective Facility on a pro-rata basis.
                         --- ----

          (b) With respect to each prepayment of Loans required by Section 4.02,
the Borrower may designate the Types of Loans which are to be prepaid and the
specific Borrowing(s) under the affected Facility pursuant to which made
provided that (i) if any prepayment of Eurodollar Loans made pursuant to a
--------
single Borrowing shall reduce the outstanding Loans made pursuant to such
Borrowing to an amount less than the Minimum Borrowing Amount for such
Borrowing, such Borrowing shall be immediately converted into Base Rate Loans;
(ii) each prepayment of any Loans under a Facility shall be applied pro rata
                                                                    --- ----
among such Loans; and (iii) except for the differing treatments of Defaulting
Lenders and Non-Defaulting Lenders as expressly provided in Section 4.02(A)(a),
each prepayment of any Eurodollar Loans made pursuant to a Borrowing shall be
applied pro rata among such Eurodollar Loans. In the absence of a designation by
        --- ----
the Borrower as described in the preceding sentence, the Administrative Agent
shall, subject to the above, make such designation in its sole discretion with a
view, but no obligation, to minimize breakage costs owing under Section 1.11.

          (c) Notwithstanding anything to the contrary contained in Section
4.02(B)(a), with respect to any mandatory repayments of B Term Loans otherwise
required pursuant to Section 4.02(A), if on or prior to the date the respective
mandatory repayment is otherwise required to be made pursuant to such Section,
the Borrower has given the Administrative Agent written notification that the
Borrower has elected, in its sole discretion, to give each Lender with a B Term
Loan the right to waive such Lender's rights to receive its pro rata percentage
                                                            --- ----
of such repayment (any such repayment, a "Specified Repayment"), the
Administrative Agent shall notify such Lenders thereof and the amount required
to be applied to each such Lender's B Term Loans pursuant to the Specified
Repayment. In the event any such Lender desires to waive its right to receive
any or all of its percentage of the Specified Repayment, such Lender shall so
advise in writing the Administrative Agent no later than 5:00 P.M. (New York
time) two Business Days after the date of such notice from the Administrative
Agent, which reply shall also include the amount, if any, of its portion of the
Specified Repayment that such Lender still desires to receive. If any such
Lender does not reply to the Administrative Agent within the two Business Day
period or responds but does not specify the amount of the Specified Repayment
that such Lender wishes to receive, if any, such Lender will be deemed to have
elected to receive 100% of the Specified Repayment. In the event that any such
Lender waives its right to any such Specified Repayment, the Administrative
Agent shall apply 100% of the amount so waived by such Lenders to repay the A
Term Loans as otherwise provided in this Section 4.02(B). All payments of the B
Term Loans shall be made pro rata among same reduced for any Lender who has
                         --- ----
waived any of its portion of a Specified Repayment by the amount so waived.

          4.03 Method and Place of Payment. Except as otherwise specifically
               ---------------------------
provided herein, all payments under this Agreement shall be made to the
Administrative Agent for the

                                      -23-

<PAGE>

ratable account of the Lenders entitled thereto, not later than 1:00 P.M. (New
York time) on the date when due and shall be made in immediately available funds
and in Dollars at the Payment Office, it being understood that written notice by
the Borrower to the Administrative Agent to make a payment from the funds in the
Borrower's account at the Payment Office shall constitute the making of such
payment to the extent of such funds held in such account. Any payments under
this Agreement which are made later than 1:00 P.M. (New York time) shall be
deemed to have been made on the next succeeding Business Day. Whenever any
payment to be made hereunder shall be stated to be due on a day which is not a
Business Day, the due date thereof shall be extended to the next succeeding
Business Day and, with respect to payments of principal, interest shall be
payable during such extension at the applicable rate in effect immediately prior
to such extension.

          4.04 Net Payments. (a) All payments made by any Credit Party hereunder
               ------------
or under any Note will be made without setoff, counterclaim or other defense.
Except as provided in Section 4.04(b), all such payments will be made free and
clear of, and without deduction or withholding for, any present or future taxes,
levies, imposts, duties, fees, assessments or other charges of whatever nature
now or hereafter imposed by any jurisdiction or by any political subdivision or
taxing authority thereof or therein with respect to such payments (but
excluding, except as provided in the second succeeding sentence, any tax imposed
on or measured by the net income or net profits of a Lender pursuant to the laws
of the jurisdiction in which it is organized or the jurisdiction in which the
principal office or applicable lending office of such Lender is located or any
subdivision thereof or therein) and all interest, penalties or similar
liabilities with respect to such non-excluded taxes, levies, imposts, duties,
fees, assessments or other charges (all such non-excluded taxes, levies,
imposts, duties, fees, assessments or other charges being referred to
collectively as "Taxes"). If any Taxes are so levied or imposed, the Borrower
agrees to pay the full amount of such Taxes, and such additional amounts as may
be necessary so that every payment of all amounts due under this Agreement or
under any Note, after withholding or deduction for or on account of any Taxes,
will not be less than the amount provided for herein or in such Note. If any
amounts are payable in respect of Taxes pursuant to the preceding sentence, the
Borrower agrees to reimburse each Lender, upon the written request of such
Lender, for taxes imposed on or measured by the net income or net profits of
such Lender pursuant to the laws of the jurisdiction in which such Lender is
organized or in which the principal office or applicable lending office of such
Lender is located or under the laws of any political subdivision or taxing
authority of any such jurisdiction in which such Lender is organized or in which
the principal office or applicable lending office of such Lender is located and
for any withholding of taxes as such Lender shall determine are payable by, or
withheld from, such Lender, in respect of such amounts so paid to or on behalf
of such Lender pursuant to the preceding sentence and in respect of any amounts
paid to or on behalf of such Lender pursuant to this sentence. The Borrower will
furnish to the Administrative Agent within 45 days after the date the payment of
any Taxes is due pursuant to applicable law certified copies of tax receipts
evidencing such payment by the Borrower. The Borrower agrees to indemnify and
hold harmless each Lender, and reimburse such Lender upon its written request,
for the amount of any Taxes so levied or imposed and paid by such Lender.

          (b) Each Lender that is not a United States person (as such term is
defined in Section 7701(a)(30) of the Code) for U.S. Federal income tax purposes
agrees to deliver to the Borrower and the Administrative Agent on or prior to
the Effective Date, or in the case of a

                                      -24-

<PAGE>

Lender that is an assignee or transferee of an interest under this Agreement
pursuant to Section 1.13 or 12.04 (unless the respective Lender was already a
Lender hereunder immediately prior to such assignment or transfer), on the date
of such assignment or transfer to such Lender, (i) two accurate and complete
original signed copies of Internal Revenue Service Form W-8ECI or Form W-8BEN
(with respect to a complete exemption under an income tax treaty) (or successor
forms) certifying to such Lender's entitlement to a complete exemption from
United States withholding tax with respect to payments to be made under this
Agreement and under any Note, or (ii) if the Lender is not a "bank" within the
meaning of Section 881(c)(3)(A) of the Code and cannot deliver either Internal
Revenue Service Form W-8ECI or Form W-8BEN (with respect to a complete exemption
under an income tax treaty) pursuant to clause (i) above, (x) a certificate
substantially in the form of Exhibit D (any such certificate, a "Section 4.04
Certificate") and (y) two accurate and complete original signed copies of
Internal Revenue Service Form W-8BEN (with respect to the portfolio interest
exception) (or successor form) certifying to such Lender's entitlement to a
complete exemption from United States withholding tax with respect to payments
of interest to be made under this Agreement and under any Note. In addition,
each Lender agrees that from time to time after the Effective Date, when a lapse
in time or change in circumstances renders the previous certification obsolete
or inaccurate in any material respect, it will deliver to the Borrower and the
Administrative Agent two new accurate and complete original signed copies of
Internal Revenue Service Form W-8ECI, W-8BEN (with respect to a complete
exemption under an income tax treaty) or Form W-8BEN (with respect to the
portfolio interest exemption) and a Section 4.04 Certificate, as the case may
be, and such other forms as may be required in order to confirm or establish the
entitlement of such Lender to a continued exemption from or reduction in United
States withholding tax with respect to payments under this Agreement and any
Note, or it shall immediately notify the Borrower and the Administrative Agent
of its inability to deliver any such Form or Certificate, in which case such
Lender shall not be required to deliver any such Form or Certificate pursuant to
this Section 4.04(b). Notwithstanding anything to the contrary contained in
Section 4.04(a), but subject to Section 12.04(b) and the immediately succeeding
sentence, (x) the Borrower shall be entitled, to the extent it is required to do
so by law, to deduct or withhold income or similar taxes imposed by the United
States (or any political subdivision or taxing authority thereof or therein)
from interest, Fees or other amounts payable hereunder for the account of any
Lender which is not a United States person (as such term is defined in Section
7701(a)(30) of the Code) for U.S. Federal income tax purposes to the extent that
such Lender has not provided to the Borrower U.S. Internal Revenue Service Forms
that establish a complete exemption from such deduction or withholding and (y)
the Borrower shall not be obligated pursuant to Section 4.04(a) hereof to
gross-up payments to be made to a Lender in respect of income or similar taxes
imposed by the United States if (I) such Lender has not provided to the Borrower
the Internal Revenue Service Forms required to be provided to the Borrower
pursuant to this Section 4.04(b) or (II) in the case of a payment, other than
interest, to a Lender described in clause (ii) above, to the extent that such
Forms do not establish a complete exemption from withholding of such taxes.
Notwithstanding anything to the contrary contained in the preceding sentence or
elsewhere in this Section 4.04 and except as set forth in Section 12.04(b), the
Borrower agrees to pay any additional amounts and to indemnify each Lender in
the manner set forth in Section 4.04(a) (without regard to the identity of the
jurisdiction requiring the deduction or withholding) in respect of any Taxes
deducted or withheld by it as described in the immediately preceding sentence as
a result of any changes after

                                       -25-

<PAGE>

the Effective Date in any applicable law, treaty, governmental rule, regulation,
guideline or order, or in the interpretation thereof, relating to the deducting
or withholding of such Taxes.

          SECTION 5. Conditions Precedent.
                     --------------------

          5.01  Conditions Precedent to Initial Borrowing Date. The obligation
                ----------------------------------------------
of the Lenders to make Loans, and of the Letter of Credit Issuer to issue
Letters of Credit, on the Initial Borrowing Date is subject to the satisfaction
of each of the following conditions at such time:

          (a)  Effectiveness; Notes. (i) The Effective Date shall have occurred
               --------------------
and (ii) there shall have been delivered to the Administrative Agent for the
account of each Lender the appropriate Note or Notes executed by the Borrower,
in each case, in the amount, maturity and as otherwise provided herein.

          (b)  Opinions of Counsel. The Administrative Agent shall have received
               -------------------
opinions, addressed to each Agent and each of the Lenders and dated the Initial
Borrowing Date, from (i) Latham & Watkins, special counsel to the Credit
Parties, which opinion shall cover the matters contained in Exhibit E hereto and
(ii) such local counsel, if any, satisfactory to the Administrative Agent as it
may request, which opinions shall cover the perfection of the security interests
granted pursuant to the Mortgages and such other matters incident to the
transactions contemplated herein as the Administrative Agent may reasonably
request and shall be in form and substance satisfactory to the Administrative
Agent.

          (c)  Corporate Proceedings. (I) The Administrative Agent shall have
               ---------------------
received a certificate, dated the Initial Borrowing Date, signed by the
President or any Vice-President of the Borrower in the form of Exhibit F with
appropriate insertions and deletions, together with (x) copies of the
certificate of incorporation, by-laws or other organizational documents of each
Credit Party, (y) the resolutions of each Credit Party referred to in such
certificate and all of the foregoing (including each such certificate of
incorporation and by-laws) shall be satisfactory to the Administrative Agent and
(z) a statement that all of the applicable conditions set forth in Sections
5.01(g) and 5.02 exist as of such date.

          (II) On the Initial Borrowing Date, the Administrative Agent shall
have received all information and copies of all certificates, documents and
papers, including good standing certificates and any other records of corporate
proceedings and governmental approvals, if any, which the Administrative Agent
may have reasonably requested in connection herewith, such documents and papers,
where appropriate, to be certified by proper corporate or governmental
authorities.

          (d)  Adverse Change, etc. Since December 31, 2000, nothing shall have
               -------------------
occurred, and the Administrative Agent shall not have become aware of any facts
or conditions not previously known, in each case which the Administrative Agent
shall determine (a) is reasonably likely to have a material adverse effect on
the rights or remedies of the Lenders or the Agents hereunder or under any other
Credit Document, or on the ability of the Credit Parties taken as a whole to
perform their obligations under the Credit Documents or (b) has had or is
reasonably likely to have a Material Adverse Effect.

                                      -26-

<PAGE>

          (e)  Litigation. There shall be no actions, suits or proceedings
               ----------
pending or threatened (a) with respect to this Agreement or any other Credit
Document or (b) which the Administrative Agent shall determine has had or is
reasonably likely to have a Material Adverse Effect.

          (f)  Approvals. All material necessary governmental (domestic and
               ---------
foreign) and third party approvals in connection with the Transaction and/or the
Credit Documents shall have been obtained and remain in effect, and all
applicable waiting periods shall have expired without any action being taken by
any competent authority which restrains or prevents such transactions.

          (g)  Tender Offer. On or prior to the Initial Borrowing Date, (i) the
               ------------
Senior Subordinated Notes shall have been tendered for pursuant to the Tender
Offer and (ii) the Supplemental Indenture (as defined in the Tender Offer) shall
have been executed by the parties thereto and shall have become effective.

          (h)  Subsidiary Guaranty. Each Domestic Subsidiary (other than any
               -------------------
Inactive Subsidiary) existing on the Initial Borrowing Date shall have duly
authorized, executed and delivered a Subsidiary Guaranty in the form of Exhibit
G hereto (as modified, amended or supplemented from time to time in accordance
with the terms hereof and thereof, the "Subsidiary Guaranty"), and the
Subsidiary Guaranty shall be in full force and effect.

          (i)  Security Documents. (I) Each Credit Party shall have each duly
               ------------------
authorized, executed and delivered a Pledge Agreement in the form of Exhibit H
(as modified, amended or supplemented from time to time in accordance with the
terms thereof and hereof, the "Pledge Agreement") and shall have delivered to
the Collateral Agent, as pledgee thereunder, all of the certificates
representing the Pledged Securities referred to therein, endorsed in blank or
accompanied by executed and undated stock powers, and the Pledge Agreement shall
be in full force and effect.

          (II) Each Credit Party shall have each duly authorized, executed and
delivered a Security Agreement substantially in the form of Exhibit I (as
modified, supplemented or amended from time to time, the "Security Agreement")
covering all of such Credit Party's present and future Security Agreement
Collateral, in each case together with:

          (i)    executed copies of Financing Statements (Form UCC-1) in
appropriate form for filing under the UCC of each jurisdiction as may be
necessary to perfect the security interests purported to be created by the
Security Agreement;

          (ii)   certified copies of Requests for Information or Copies (Form
UCC-11), or equivalent reports, each of recent date listing all effective
financing statements that name any Credit Party as debtor and that are filed in
the jurisdictions referred to in clause (i), together with copies of such
financing statements (none of which shall cover the Collateral except (x) those
with respect to which appropriate termination statements executed by the secured
lender thereunder have been filed or delivered to the Administrative Agent or
appropriate arrangements made therefor and (y) to the extent evidencing
Permitted Liens);

          (iii)  evidence of the completion of or arrangements for all other
recordings and filings of, or with respect to, the Security Agreement as may be
necessary or, in the reasonable

                                      -27-

<PAGE>

opinion of the Collateral Agent, desirable to perfect the security interests
intended to be created by the Security Agreement; and

          (iv)   evidence that all other actions necessary or, in the reasonable
opinion of the Collateral Agent, desirable to perfect and protect the security
interests purported to be created by the Security Agreement have been taken;

and the Security Agreement shall be in full force and effect.

          (III) The Collateral Agent shall have received:

          (i)    fully executed counterparts of deeds of trust, mortgages and
similar documents, in each case in form and substance reasonably satisfactory to
the Collateral Agent (as amended, modified or supplemented from time to time in
accordance with the terms thereof and hereof, each a "Mortgage" and,
collectively, the "Mortgages") with respect to each of the Mortgaged Properties,
and arrangements reasonably satisfactory to the Collateral Agent shall be in
place to provide that counterparts of such Mortgages shall be recorded on the
Initial Borrowing Date in all places to the extent necessary or desirable, in
the reasonable judgment of the Collateral Agent, effectively to create a valid
and enforceable first priority mortgage Lien, subject only to Permitted Liens,
on each such Mortgaged Property in favor of the Collateral Agent (or such other
trustee as may be required or desired under local law) for the benefit of the
Agents and the Lenders;

          (ii)   mortgagee title insurance policies (or binding commitments to
issue such title insurance policies) issued by title insurers reasonably
satisfactory to the Collateral Agent (the "Mortgage Policies") in amounts
reasonably satisfactory to the Collateral Agent and assuring the Collateral
Agent that the Mortgages are valid and enforceable first priority mortgage Liens
on the respective Mortgaged Properties, free and clear of all defects and
encumbrances except Permitted Liens, and such Mortgage Policies shall be in form
and substance reasonably satisfactory to the Collateral Agent and (A) shall
include (to the extent available in the respective jurisdiction of each
Mortgaged Property) an endorsement for future advances under this Agreement, the
Notes and the Mortgages, and for such other matters that the Collateral Agent in
its discretion may reasonably request and (B) shall not include an exception for
mechanics' liens; and

          (iii)  to the extent the absence of same would result in any
qualification to the related Mortgage Policies, surveys, in form and substance
satisfactory to the Collateral Agent, of the Mortgaged Properties, dated (or
updated) as of a recent date and certified in a manner acceptable to the
Collateral Agent by a licensed surveyor satisfactory to the Collateral Agent;

provided that any Mortgages, together with related Mortgage Policies and
surveys, that otherwise satisfy the provisions of this clause (III) may be
delivered after the Initial Borrowing Date but prior to the date 60 days
thereafter (with any failure to deliver such deferred documents and policies by
such 60th day to constitute an Event of Default).

          (j)  Solvency. The Borrower shall have delivered to the Administrative
               --------
Agent, a solvency opinion, dated the Initial Borrowing Date, in form and
substance satisfactory to the Administrative Agent from Valuation Research
setting forth the conclusions that, after giving ef-

                                      -28-

<PAGE>

fect to the Transaction and the incurrence of all the financings contemplated
herein, Holdings and its Subsidiaries taken as a whole are not insolvent and
will not be rendered insolvent by the indebtedness incurred in connection
therewith, and will not be left with unreasonably small capital with which to
engage in their businesses and will not have incurred debts beyond their ability
to pay such debts as they mature.

          (k) Insurance Policies. The Collateral Agent shall have received
              ------------------
evidence of insurance complying with the requirements of Section 7.03 for the
business and properties of Holdings and its Subsidiary Guarantors, in form and
substance reasonably satisfactory to the Administrative Agent and, with respect
to all casualty insurance, naming the Collateral Agent as an additional insured
and/or loss payee, and stating that such insurance shall not be canceled or
revised without at least 30 days' prior written notice by the insurer to the
Collateral Agent.

          (l) Existing Indebtedness. On the Initial Borrowing Date and after
              ---------------------
giving effect to the Transaction, the Loans then incurred and the Letters of
Credit then issued or deemed to be issued hereunder, neither Holdings nor any of
its Subsidiaries shall have any preferred stock or Indebtedness outstanding
except for (i) the Loans and the Letters of Credit, (ii) any Senior Subordinated
Notes which have not then been redeemed pursuant to the Tender Offer, and (iii)
the Indebtedness set forth on Annex V hereto (the amounts specified in clause
(iii), the "Existing Indebtedness").

          (m) Consent Letter. The Administrative Agent shall have received a
              --------------
letter from CT Corporation System, substantially in the form of Exhibit J
hereto, indicating its consent to its appointment by each Credit Party as its
agent to receive service of process.

          (n) Fees. The Borrower shall have paid to the Agents and the Lenders
              ----
all Fees and expenses agreed upon by such parties to be paid on or prior to the
Initial Borrowing Date.

          (o) Minimum Consolidated EBITDA. The Administrative Agent shall have
              ---------------------------
received a certificate of the chief financial officer or controller of the
Borrower certifying that Consolidated EBITDA for the full 12 month period ending
June 30, 2001 is not less than $165,000,000 and setting forth in reasonable
detail the calculation of Consolidated EBITDA for such period.

          5.02 Conditions Precedent to All Credit Events. The obligation of each
               -----------------------------------------
Lender to make Loans (including Loans made on the Initial Borrowing Date) and
the obligation of the Letter of Credit Issuer to issue any Letter of Credit is
subject, at the time of each such Credit Event, to the satisfaction of the
following conditions:

          (a) Notice of Borrowing; Letter of Credit Request. The Administrative
              ---------------------------------------------
Agent shall have received a Notice of Borrowing meeting the requirements of
Section 1.02 or a Letter of Credit Request meeting the requirements of Section
2.02, as the case may be.

          (b) No Default; Representations and Warranties. At the time of each
              ------------------------------------------
Credit Event and also after giving effect thereto, (i) there shall exist no
Default or Event of Default and (ii) all representations and warranties made by
any Credit Party contained herein or in the other Credit Documents shall be true
and correct in all material respects with the same effect as though

                                      -29-

<PAGE>

such representations and warranties had been made on and as of the date of such
Credit Event, except to the extent that such representations and warranties
expressly relate to an earlier date.

          The acceptance of the benefits of each Credit Event shall constitute a
representation and warranty by the Borrower that all of the applicable
conditions specified in Section 5.01 (in the case of Credit Events occurring on
the Initial Borrowing Date), and/or 5.02, as the case may be, exist as of that
time. All of the certificates, legal opinions and other documents and papers
referred to in Section 5.01, unless otherwise specified, shall be delivered to
the Administrative Agent for the account of each of the Lenders and, except for
the Notes, in sufficient counterparts for each of the Lenders and shall be
reasonably satisfactory in form and substance to the Administrative Agent.

          SECTION 6. Representations, Warranties and Agreements. In order to
                     ------------------------------------------
induce the Lenders to enter into this Agreement and to make the Loans and issue
and/or participate in Letters of Credit provided for herein, each of Holdings
and the Borrower makes the following representations and warranties to, and
agreements with, the Lenders, all of which shall survive the execution and
delivery of this Agreement and the making of the Loans:

          6.01 Corporate Status. Each of Holdings and its Subsidiaries (i) is a
               ----------------
duly organized and validly existing corporation, partnership and/or limited
liability company and is in good standing, in each case under the laws of the
jurisdiction of its organization and has the organizational power and authority
to own its property and assets and to transact the business in which it is
engaged and (ii) is duly qualified and is authorized to do business and, to the
extent relevant, is in good standing in all jurisdictions where it is required
to be so qualified and where the failure to be so qualified, authorized or in
good standing is reasonably likely to have a Material Adverse Effect.

          6.02 Corporate Power and Authority. Each Credit Party has the
               -----------------------------
organizational power and authority to execute, deliver and carry out the terms
and provisions of the Credit Documents to which it is a party and has taken all
necessary action to authorize the execution, delivery and performance of the
Credit Documents to which it is a party. Each Credit Party has duly executed and
delivered each Credit Document to which it is a party and each such Credit
Document constitutes the legal, valid and binding obligation of such Person
enforceable in accordance with its terms, except to the extent that the
enforceability thereof may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium and other similar laws relating to or affecting
creditors' rights generally, general equitable principles (regardless of whether
enforcement is sought in equity or at law).

          6.03 No Violation. Neither the execution, delivery or performance by
               ------------
any Credit Party of the Credit Documents to which it is a party nor compliance
with the terms and provisions thereof, (i) will contravene any applicable
provision of any law, statute, rule, regulation, order, writ, injunction or
decree of any court or governmental instrumentality, (ii) will conflict or be
inconsistent with or result in any breach of, any of the terms, covenants,
conditions or provisions of, or constitute a default under, or (other than
pursuant to the Security Documents) result in the creation or imposition of (or
the obligation to create or impose) any Lien upon any of the property or assets
of Holdings or any of its Subsidiaries pursuant to the terms of any indenture,
mortgage, deed of trust or other material agreement or instrument to which
Holdings

                                      -30-

<PAGE>

or any of its Subsidiaries is a party or by which it or any of its property or
assets are bound or to which it may be subject or (iii) will violate any
provision of the organizational documents (including by-laws) of Holdings or any
of its Subsidiaries.

          6.04 Litigation. There are no actions, suits or proceedings pending
               ----------
or, to the best of its knowledge, threatened with respect to Holdings or any of
its Subsidiaries (i) that have, or that could reasonably be expected to have, a
Material Adverse Effect or (ii) that have, or that could reasonably be expected
to have, a material adverse effect on (a) the rights or remedies of the Lenders
or on the ability of the Credit Parties taken as a whole to perform their
obligations under the other Credit Documents or (b) the consummation of the
Transaction.

          6.05 Margin Regulations. Neither the making of any Loan hereunder, nor
               ------------------
the use of the proceeds thereof, will violate the provisions of Regulation T, U
or X of the Board of Governors of the Federal Reserve System and no part of the
proceeds of any Loan will be used to purchase or carry any Margin Stock or to
extend credit for the purpose of purchasing or carrying any Margin Stock. The
proceeds of all Loans have been utilized in conformity with Section 7.11.

          6.06 Governmental Approvals. Except for filings and recordings in
               ----------------------
connection with the Security Documents and to the extent any Notices are
required to be filed, no order, consent, approval, license, authorization, or
validation of, or filing, recording or registration with, or exemption by, any
foreign or domestic governmental or public body or authority, or any subdivision
thereof, is required to authorize or is required in connection with (i) the
execution, delivery and performance of any Credit Document or (ii) the legality,
validity, binding effect or enforceability of any Credit Document except, in any
such case, as expressly provided herein or in the Security Documents.

          6.07 Investment Company Act. Neither Holdings nor any of its
               ----------------------
Subsidiaries is an "investment company" or a company "controlled" by an
"investment company" within the meaning of the Investment Company Act of 1940,
as amended.

          6.08 Public Utility Holding Company Act. Neither Holdings nor any of
               ----------------------------------
its Subsidiaries is a "holding company," or a "subsidiary company" of a "holding
company," or an "affiliate" of a "holding company" or of a "subsidiary company"
of a "holding company" within the meaning of the Public Utility Holding Company
Act of 1935, as amended.

          6.09 True and Complete Disclosure. All factual information (taken as a
               ----------------------------
whole) heretofore or contemporaneously furnished by or on behalf of Holdings or
any of its Subsidiaries in writing to the Agents or any Lender for purposes of
or in connection with this Agreement or any transaction contemplated herein is,
and all other such factual information (taken as a whole) hereafter furnished by
or on behalf of any Credit Party in writing to the Lenders hereunder will be,
true and accurate in all material respects on the date as of which such
information is dated or certified and not incomplete by omitting to state any
material fact necessary to make such information (taken as a whole) not
misleading at such time in light of the circumstances under which such
information was provided. The projections and pro forma financial information
                                              --- -----
contained in such materials are based on good faith estimates and assumptions
believed by Holdings and the Borrower to be reasonable at the time made, it
being recognized by the Lenders

                                      -31-

<PAGE>

that such projections as to future events are not to be viewed as facts and that
actual results during the period or periods covered by any such projections may
differ from the projected results. There is no fact known to Holdings or any of
its Subsidiaries (other than matters relating to general economic conditions or
conditions affecting the Business generally) which would have a Material Adverse
Effect, which has not been disclosed herein or in such other documents,
certificates and statements furnished to the Lenders for use in connection with
the transactions contemplated hereby.

          6.10 Financial Condition; Financial Statements. (a) On and as of the
               -----------------------------------------
Initial Borrowing Date, on a pro forma basis after giving effect to the
                             --- -----
Transaction and all Indebtedness incurred, and to be incurred (including,
without limitation, the Loans and the Senior Subordinated Notes), and Liens
created, and to be created, by each Credit Party in connection therewith, (x)
the fair valuation of all of the tangible and intangible assets of Holdings and
its Subsidiaries (on a consolidated basis) will exceed their debts, (y) Holdings
and its Subsidiaries will not have incurred or intended to incur debts beyond
their ability to pay such debts as such debts mature and (z) Holdings and its
Subsidiaries will not have unreasonably small capital with which to conduct
their business. For purposes of this Section 6.10, "debt" means any liability on
a claim, and "claim" means (i) right to payment whether or not such a right is
reduced to judgment, liquidated, unliquidated, fixed, contingent, matured,
unmatured, disputed, undisputed, legal, equitable, secured or unsecured; or (ii)
right to an equitable remedy for breach of performance if such breach gives rise
to a payment, whether or not such right to an equitable remedy is reduced to
judgment, fixed, contingent, matured, unmatured, disputed, undisputed, secured
or unsecured.

          (b) The consolidated balance sheet of the Borrower at December 31,
2000 and March 31, 2001 and the related consolidated statements of operations
and cash flows of the Borrower for the fiscal year or three month ended as of
said dates, which, in the case of the annual financial statements, have been
audited by Ernst & Young LLP independent certified public accountants, who
delivered an unqualified opinion in respect therewith, copies of all of which
have heretofore been furnished to the Administrative Agent, present fairly the
consolidated financial position of the Borrower and its Subsidiaries at the
dates of said statements and the results for the periods covered thereby in
accordance with GAAP, except to the extent provided in the notes to said
financial statements and, in the case of the March 31, 2001 financial
statements, subject to normal year-end audit adjustment. All such financial
statements have been prepared in accordance with GAAP and practices consistently
applied except to the extent provided in the notes to said financial statements.
The pro forma consolidated balance sheet of the Borrower as of May 31, 2001, a
    --- -----
copy of which has heretofore been furnished to the Administrative Agent,
presents a good faith estimate of the consolidated pro forma financial condition
                                                   --- -----
of the Borrower (after giving effect to the Transaction) as at the date thereof.
Nothing has occurred since December 31, 2000 that has had or is reasonably
likely to have a Material Adverse Effect.

          (c) Except as reflected in the financial statements described in
Section 6.10(b) or in the footnotes thereto, there were as of the Initial
Borrowing Date no liabilities or obligations with respect to Holdings or any of
its Subsidiaries of a nature (whether absolute, accrued, contingent or otherwise
and whether or not due) which, either individually or in aggregate, would

                                      -32-

<PAGE>

be material to Holdings and its Subsidiaries taken as a whole, except as
incurred in the ordinary course of business consistent with past practices.

          6.11 Security Interests. On and after the Initial Borrowing Date, each
               ------------------
of the Security Documents creates, as security for the obligations purported to
be secured thereby, a valid and enforceable security interest in and Lien on all
of the Collateral subject thereto, superior to and prior to the rights of all
third Persons and subject to no other Liens (other than Permitted Liens relating
thereto), in favor of the Collateral Agent for the benefit of the Secured
Creditors, which have been (or will be within the time required by the Credit
Documents) perfected under applicable law. No filings or recordings are required
in order to perfect, or continue the perfection of, the security interests
created under any Security Document except for filings or recordings required in
connection with any such Security Document (other than the Pledge Agreement)
which (x) shall have been made upon or prior to (or are the subject of
arrangements, reasonably satisfactory to the Administrative Agent, for filing on
or promptly after the date of) the execution and delivery thereof and/or (y)
constitute supplemental filings in respect of after acquired property or
continuation statements.

          6.12 Tax Returns and Payments. Each of Holdings and its Subsidiaries
               ------------------------
has filed all federal income tax returns and all other material tax returns,
domestic and foreign, required to be filed by it and has paid all material taxes
and assessments payable by it which have become due, except for those contested
in good faith and adequately disclosed and fully provided for on the financial
statements of Holdings, the Borrower and their respective Subsidiaries if and to
the extent required by GAAP. Each of Holdings and its Subsidiaries have at all
times paid, or have provided adequate reserves (in the good faith judgment of
the management of the Borrower) for the payment of, all federal, state and
foreign income taxes applicable for all prior fiscal years which are still open
for audit and for the current fiscal year to date. There is no action, suit,
proceeding, investigation, audit, or claim now pending or, to the knowledge of
Holdings or the Borrower, threatened by any authority regarding any taxes
relating to Holdings or any of its Subsidiaries which is reasonably likely to
have a Material Adverse Effect.

          6.13 Compliance with ERISA. (a) (i) Annex VI sets forth each Plan and
               ---------------------
Multiemployer Plan; (ii) except as set forth on Annex VI, each Plan (and each
related trust, insurance contract or fund) is in substantial compliance with its
terms and with all applicable laws, including without limitation ERISA and the
Code; each Plan (and each related trust, if any) which is intended to be
qualified under Section 401(a) of the Code has received a determination letter
from the Internal Revenue Service to the effect that it meets the requirements
of Sections 401(a) and 501(a) of the Code; no Reportable Event has occurred with
respect to a Plan; to the knowledge of Borrower, no Multiemployer Plan is
insolvent or in reorganization; no Plan has an Unfunded Current Liability which,
when added to the aggregate amount of Unfunded Current Liabilities with respect
to all other Plans, exceeds $10,000,000; no Plan which is subject to Section 412
of the Code or Section 302 of ERISA has an accumulated funding deficiency,
within the meaning of such sections of the Code or ERISA, or has applied for or
received a waiver of an accumulated funding deficiency or an extension of any
amortization period, within the meaning of Section 412 of the Code or Section
303 or 304 of ERISA; all contributions required to be made with respect to a
Plan or a Multiemployer Plan have been timely made; neither Holdings, the
Borrower nor any Subsidiary of the Borrower nor any ERISA Affiliate has incurred
any material liability (including any indirect, contingent or secondary
liability) to or on

                                      -33-

<PAGE>

account of a Plan or a Multiemployer Plan pursuant to Section 409, 502(i),
502(l), 515, 4062, 4063, 4064, 4069, 4201, 4204 or 4212 of ERISA or Section
401(a)(29), 4971 or 4975 of the Code or reasonably expects to incur any such
liability under any of the foregoing sections with respect to any Plan or any
Multiemployer Plan; no condition exists which presents a material risk to
Holdings, the Borrower or any Subsidiary of the Borrower or any ERISA Affiliate
of incurring a liability to or on account of a Plan or, to the knowledge of
Borrower, of any Multiemployer Plan pursuant to the foregoing provisions of
ERISA and the Code; no proceedings have been instituted to terminate or appoint
a trustee to administer any Plan which is subject to Title IV of ERISA; no
action, suit, proceeding, hearing, audit or investigation with respect to the
administration, operation or the investment of assets of any Plan (other than
routine claims for benefits) is pending, expected or threatened; using actuarial
assumptions and computation methods consistent with Part 1 of subtitle E of
Title IV of ERISA, the aggregate liabilities of Holdings, the Borrower and its
Subsidiaries and its ERISA Affiliates to all Multiemployer Plans in the event of
a complete withdrawal therefrom, as of the close of the most recent fiscal year
of each such Plan ended prior to the date of the most recent Credit Event, would
not exceed $10,000,000; except as would not result in a material liability, each
group health plan (as defined in Section 607(1) of ERISA or Section 4980B(g)(2)
of the Code) which covers or has covered employees or former employees of
Holdings, the Borrower, any Subsidiary of the Borrower, or any ERISA Affiliate
has at all times been operated in compliance with the provisions of Part 6 of
subtitle B of Title I of ERISA and Section 4980B of the Code; no lien imposed
under the Code or ERISA on the assets of Holdings, the Borrower or any
Subsidiary of the Borrower or any ERISA Affiliate exists or is reasonably likely
to arise on account of any Plan or Multiemployer Plan; and Holdings, the
Borrower and its Subsidiaries may cease contributions to or terminate any
employee benefit plan maintained by any of them without incurring any material
liability.

          (ii) Each Foreign Pension Plan has been maintained in substantial
compliance with its terms and with the requirements of any and all applicable
laws, statutes, rules, regulations and orders and has been maintained, where
required, in good standing with applicable regulatory authorities. All
contributions required to be made with respect to a Foreign Pension Plan have
been timely made. Neither Holdings, the Borrower nor any of its Subsidiaries has
incurred any obligation in connection with the termination of or withdrawal from
any Foreign Pension Plan. The present value of the accrued benefit liabilities
(whether or not vested) under each Foreign Pension Plan, determined as of the
end of the Borrower's most recently ended fiscal year on the basis of actuarial
assumptions, each of which is reasonable, did not exceed the current value of
the assets of such Foreign Pension Plan allocable to such benefit liabilities by
more than $1,000,000.

          6.14 Subsidiaries. On and as of the Initial Borrowing Date (i)
               ------------
Holdings has no direct Subsidiaries other than the Borrower and (ii) the
Borrower has no Subsidiaries other than those Subsidiaries listed on Annex III.
Annex III correctly sets forth, as of the Initial Borrowing Date, the percentage
ownership (direct and indirect) of the Borrower in each class of capital stock
of each of its Subsidiaries and also identifies the direct owner thereof.

          6.15 Intellectual Property. Each of Holdings and its Subsidiaries owns
               ---------------------
or holds a valid license to use all the patents, trademarks, service marks,
trade names, technology, know-how, copyrights, licenses, franchises and formulas
or rights with respect to the foregoing, that are used in the operation of the
business of Holdings or such Subsidiary as presently conducted and

                                      -34-

<PAGE>

are material to such business where the failure to own or hold a valid license
is reasonably likely to have a Material Adverse Effect.

          6.16 Environmental Matters. (a) Each of Holdings and its Subsidiaries
               ---------------------
is in compliance with all applicable Environmental Laws governing its business
for which failure to comply is reasonably likely to have a Material Adverse
Effect, and neither Holdings nor any of its Subsidiaries is liable for any
material penalties, fines or forfeitures for failure to comply with any of the
foregoing in the manner set forth above. All licenses, permits, registrations or
approvals required for the business of Holdings and each of its Subsidiaries, as
conducted as of the Initial Borrowing Date, under any Environmental Law have
been secured and each of Holdings and its Subsidiaries is in substantial
compliance therewith, except such licenses, permits, registrations or approvals
the failure to secure or to comply therewith is not reasonably likely to have a
Material Adverse Effect. Neither Holdings nor any of its Subsidiaries is in any
respect in noncompliance with, breach of or default under any applicable writ,
order, judgment, injunction, or decree to which Holdings or such Subsidiary is a
party or which could affect the ability of Holdings or such Subsidiary to
operate any real property and no event has occurred and is continuing which,
with the passage of time or the giving of notice or both, would reasonably be
expected to constitute noncompliance, breach of or default thereunder, except in
each such case, such noncompliance, breaches or defaults as are not reasonably
likely to, in the aggregate, have a Material Adverse Effect. There are as of the
Initial Borrowing Date no Environmental Claims pending or, to the best knowledge
of Holdings or the Borrower threatened, which (i) question the validity, term or
entitlement of the Borrower or any Subsidiary for any permit, license, order or
registration required for the operation of any facility which the Borrower or
any of its Subsidiaries currently operates and (ii) wherein any decision, ruling
or finding is reasonably likely to have a Material Adverse Effect. There are no
facts, circumstances, conditions or occurrences concerning the business or
operations of the Borrower or any of its Subsidiaries, or any Real Property at
any time owned or operated by the Borrower or any of its Subsidiaries or on any
property adjacent to any such Real Property that could reasonably be expected
(i) to form the basis of an Environmental Claim against Holdings, any of its
Subsidiaries or any of their respective Real Property or (ii) to cause any such
currently owned or operated Real Property to be subject to any restrictions on
the ownership, occupancy, use or transferability of such Real Property under any
Environmental Law, except in each such case, such Environmental Claims or
restrictions that individually, or in the aggregate, are not reasonably likely
to have a Material Adverse Effect.

          (b) Hazardous Materials have not at any time been (i) generated, used,
treated or stored on, or transported to or from, any Real Property owned or
operated by Holdings or any of its Subsidiaries or (ii) released on or from any
such Real Property, in each case where such occurrence or event individually or
in the aggregate is reasonably likely to have a Material Adverse Effect.

          6.17 Properties. Holdings and each of its Subsidiaries have good and
               ----------
marketable title to, or a validly subsisting leasehold interest in, all material
properties owned and used by them, including all Real Property reflected in the
consolidated balance sheet of Holdings at December 31, 2000 referred to in
Section 6.10(b), free and clear of all Liens, other than (i) as referred to in
the consolidated balance sheet or in the notes thereto or (ii) otherwise
permitted by Section 8.03. Annex IV contains a true and complete list of each
Real Property owned or leased

                                      -35-

<PAGE>

by the Borrower or any of its Subsidiaries (with an annual base rental
obligation in excess of $250,000) as of the Initial Borrowing Date, and the type
of interest therein held by Holdings or the respective Subsidiary.

               6.18 Labor Relations. No Credit Party is engaged in any unfair
                    ---------------
labor practice that could reasonably be expected to have a Material Adverse
Effect. There is (i) no unfair labor practice complaint pending against any
Credit Party or, to the best of its knowledge, threatened against any of them,
before the National Labor Relations Board, and no grievance or arbitration
proceeding arising out of or under any collective bargaining agreement is so
pending against any Credit Party or, to the best of its knowledge, threatened
against any of them, (ii) no strike, labor dispute, slowdown or stoppage pending
against any Credit Party or, to the best of its knowledge, threatened against
any Credit Party and (iii) no union representation question existing with
respect to the employees of any Credit Party and no union organizing activities
are taking place, except with respect to any matter specified in clause (i),
(ii) or (iii) above, either individually or in the aggregate, such as is not
reasonably likely to have a Material Adverse Effect.

               6.19 Compliance with Statutes, etc. Each of Holdings and each of
                    -----------------------------
its Subsidiaries is in compliance with all applicable statutes, regulations and
orders of, and all applicable restrictions imposed by, all governmental bodies,
domestic or foreign, in respect of the conduct of its business and the ownership
of its property, except such non-compliance as is not reasonably likely to,
individually or in the aggregate, have a Material Adverse Effect.

               6.20 Subordination. The subordination provisions contained in the
                    -------------
Senior Subordinated Notes are enforceable by the Lenders against the Borrower
and the holders of such Senior Subordinated Notes and all Obligations of the
Borrower are or will be within the definition of "Senior Indebtedness" included
in such provisions of the Senior Subordinated Note Documents.

               SECTION 7. Affirmative Covenants. Holdings and the Borrower
                          ---------------------
hereby covenant and agree that for so long as this Agreement is in effect and
until the Commitments have terminated, no Letters of Credit or Notes are
outstanding and the Loans and Unpaid Drawings, together with interest, Fees and
all other Obligations (other than any indemnities described in Section 12.13
which are not then owing) incurred hereunder, are paid in full:

               7.01 Information Covenants. Holdings will furnish to each Lender:
                    ---------------------

               (a) Annual Financial Statements. Within 120 days after the close
                   ---------------------------
of each fiscal year of the Borrower, the audited consolidated balance sheet of
the Borrower and its Subsidiaries, as at the end of such fiscal year and the
related consolidated statements of operations and of cash flows for such fiscal
year and setting forth comparative consolidated figures for the preceding fiscal
year, and examined by independent certified public accountants of recognized
national standing whose opinion shall not be qualified as to the scope of audit
and as to the status of the Borrower or any Subsidiary Guarantor as a going
concern, together with a certificate of such accounting firm stating that in the
course of its regular audit of the business of the Borrower and its
Subsidiaries, which audit was conducted in accordance with generally accepted
auditing standards, no Default or Event of Default which has occurred and is
continuing

                                       -36-

<PAGE>

has come to their attention or, if such a Default or Event of Default has come
to their attention a statement as to the nature thereof.

               (b) Quarterly Financial Statements. Within 45 days after the
                   ------------------------------
close of each of the first three quarterly accounting periods in each fiscal
year, the unaudited consolidated balance sheet of the Borrower and its
Subsidiaries, as at the end of such quarterly period and the related unaudited
consolidated statements of operations and of cash flows for such quarterly
period and for the elapsed portion of the fiscal year ended with the last day of
such quarterly period and setting forth comparative consolidated figures for the
related periods in the prior fiscal year, all of which shall be in reasonable
detail and certified by the chief financial officer or controller of the
Borrower, subject to changes resulting from audit and normal year-end audit
adjustments.

               (c) Monthly Reports. Within 45 days after the end of each monthly
                   ---------------
accounting period of each fiscal year (other than the last monthly accounting
period in such fiscal year) the unaudited consolidated balance sheet of the
Borrower and its Subsidiaries, as at the end of such period and the related
unaudited consolidated statements of operations and cash flows for such period
and setting forth comparative figures for the corresponding period of the
previous year, all of which shall be certified by the chief financial officer or
controller of the Borrower subject to changes resulting from audit and normal
year-end audit adjustments.

               (d) Budgets; etc. Not more than 60 days after the commencement of
                   ------------
each fiscal year of the Borrower, a consolidated budget of the Borrower and its
Subsidiaries in reasonable detail for each of the twelve months of such fiscal
year as customarily prepared by management for its internal use setting forth,
with appropriate discussion, the principal assumptions upon which such budgets
are based.

               (e) Officer's Certificates. At the time of the delivery of the
                   ----------------------
financial statements provided for in Sections 7.01(a), (b) and (c), a
certificate of the chief financial officer, controller or other Authorized
Officer of the Borrower to the effect that no Default or Event of Default exists
or, if any Default or Event of Default does exist, specifying the nature and
extent thereof, which certificate (x) in the case of the certificate delivered
pursuant to Sections 7.01(a) and (b), shall set forth the calculations required
to establish (I) the Leverage Ratio for the Test Period ending on the last day
of the fiscal period covered by such financial statements and (II) whether
Holdings and its Subsidiaries were in compliance with the provisions of Sections
8.11, 8.12, and 8.13 as at the end of such fiscal period, and (y) in the case of
the certificate delivered pursuant to Section 7.01(a), for each year commencing
with the year ending December 31, 2001, shall set forth the amount of the Excess
Cash Flow for the relevant period ending on the last day of the fiscal year
covered by such financial statements.

               (f) Notice of Default or Litigation. Promptly, and in any event
                   -------------------------------
within ten Business Days after any officer of Holdings or the Borrower obtains
knowledge thereof, notice of (x) the occurrence of any event which constitutes a
Default or Event of Default which notice shall specify the nature thereof, the
period of existence thereof and what action Holdings or the Borrower proposes to
take with respect thereto and (y) the commencement of, or any significant
adverse development in, any litigation or governmental proceeding pending
against Holdings or any of its Subsidiaries which is reasonably likely to have a
Material Adverse Effect or is

                                       -37-

<PAGE>

reasonably likely to have a material adverse effect on the ability of the Credit
Parties to perform their obligations under the Credit Documents.

               (g) Environmental Matters. Promptly after obtaining knowledge of
                   ---------------------
any of the following (but only to the extent (A) not disclosed in an
environmental report delivered to the Administrative Agent on or prior to the
Initial Borrowing Date and (B) that any of the following could reasonably be
expected to (x) have a Material Adverse Effect, either individually or in the
aggregate, or (y) result in a remedial cost to Holdings or any of its
Subsidaries (I) in respect of liabilities not otherwise covered by existing
indemnities, in excess of $5,000,000 or (II) in respect of liabilities covered
by existing indemnities, in excess of $20,000,000), written notice of:

               (i)   any pending or threatened Environmental Claim against
Holdings or any of its Subsidiaries or any Real Property owned or operated by
the Borrower or any of its Subsidiaries;

               (ii)  any condition or occurrence on any Real Property owned or
operated by the Borrower or any of its Subsidiaries that (x) results in
noncompliance by Holdings or any of its Subsidiaries with any applicable
Environmental Law or (y) is reasonably likely to result in an Environmental
Claim against Holdings or any of its Subsidiaries or any such Real Property;

               (iii) any condition or occurrence on any Real Property owned or
operated by the Borrower or any of its Subsidiaries that is reasonably likely to
result in such Real Property being subject to any restrictions on the ownership,
occupancy, use or transferability by Holdings or its Subsidiary, as the case may
be, of its interest in such Real Property under any Environmental Law; and

               (iv)  the taking of any removal or remedial action in response to
the actual or alleged presence of any Hazardous Material on any Real Property
owned or operated by the Borrower or any of its Subsidiaries.

All such notices shall describe in reasonable detail the nature of the claim,
investigation, condition, occurrence or removal or remedial action and Holdings'
or the relevant Subsidiary's response or proposed response thereto. In addition,
the Borrower agrees to provide the Lenders with such detailed reports relating
to any of the matters set forth in clauses (i)-(iv) above as may reasonably be
requested by the Administrative Agent or the Required Lenders.

               (h) Other Information. Promptly upon transmission thereof, (i)
                   -----------------
copies of any filings and registrations with, and reports to, the Securities and
Exchange Commission or any successor thereto (the "SEC") by Holdings or any of
its Subsidiaries, (ii) copies of all financial statements, proxy statements,
notices and reports as Holdings or any of its Subsidiaries shall send generally
to analysts and the holders of the Senior Subordinated Notes in their capacity
as such holders (to the extent not otherwise delivered to the Lenders pursuant
to this Agreement) and with reasonable promptness, such other reasonably
available information or documents (financial or otherwise) (other than
classified and other similarly sensitive material) as the Administrative Agent
on its own behalf or on behalf of the Required Lenders may reasonably request
from time to time.

                                       -38-

<PAGE>

               7.02 Books, Records and Inspections. Holdings will, and will
                    ------------------------------
cause its Subsidiaries to, permit, upon reasonable notice to the chief financial
officer, controller or any other Authorized Officer of the Borrower, officers
and designated representatives of the Administrative Agent or the Required
Lenders during normal business hours to visit and inspect any of the properties
or assets of Holdings and any of its Subsidiaries in their possession and to
examine the books of account of Holdings and any of its Subsidiaries and discuss
the affairs, finances and accounts of Holdings and of any of its Subsidiaries
with, and be advised as to the same by, its and their officers and independent
accountants, all at such reasonable times and intervals and to such reasonable
extent as the Administrative Agent or the Required Lenders may desire.

               7.03 Insurance. Holdings will, and will cause each of its
                    ---------
Subsidiaries to, at all times maintain in full force and effect insurance with
reputable and solvent insurers in such amounts, covering such risks and
liabilities and with such deductibles or self-insured retentions as are in
accordance with normal industry practice (which, in any event, shall not include
earthquake insurance for leased office, lab and shop space). Holdings will, and
will cause each of its Subsidiaries to, furnish to the Administrative Agent on
the Initial Borrowing Date and thereafter annually, upon request of the
Administrative Agent, a summary of the insurance carried together with
certificates of insurance and other evidence of such insurance, if any, naming
the Collateral Agent as an additional insured and/or loss payee, to the extent
of its interests therein.

               7.04 Payment of Taxes. Holdings will pay and discharge, and will
                    ----------------
cause each of its Subsidiaries to pay and discharge, all taxes, assessments and
governmental charges or levies imposed upon it or upon its income or profits, or
upon any properties belonging to it, prior to the date on which penalties attach
thereto, and all lawful claims which, if unpaid, would become a Lien or charge
upon any material properties of Holdings or any of its Subsidiaries, provided
that neither Holdings nor any Subsidiary shall be required to pay any such tax,
assessment, charge, levy or claim which is being contested in good faith and by
proper proceedings if it has maintained adequate reserves (in the good faith
judgment of the management of Holdings) with respect thereto in accordance with
GAAP.

               7.05 Corporate Franchises. Holdings will do, and will cause each
                    --------------------
Subsidiary to do, or cause to be done, all things reasonably necessary to
preserve and keep in full force and effect its existence and to preserve its
material rights and franchises, other than those the failure to preserve which
could not reasonably be expected to have a Material Adverse Effect, provided
                                                                    --------
that any transaction permitted by Section 8.02 will not constitute a breach of
this Section 7.05.

               7.06 Compliance with Statutes, etc. The Borrower will, and will
                    -----------------------------
cause each Subsidiary to, comply with all applicable statutes, regulations and
orders of, and all applicable restrictions imposed by, all governmental bodies,
domestic or foreign, in respect of the conduct of its business and the ownership
of its property other than those the non-compliance with which is not reasonably
likely to have a Material Adverse Effect or have a material adverse effect on
the ability of the Credit Parties to perform their obligations under the Credit
Documents.

               7.07 ERISA. As soon as possible and, in any event, within ten
                    -----
(10) days after Holdings or the Borrower knows or has reason to know of the
occurrence of any of the

                                      -39-

<PAGE>

following, the Borrower will deliver to each of the Lenders a certificate of the
chief financial officer of the Borrower setting forth the full details as to
such occurrence and the action, if any, that Holdings, the Borrower, any
Subsidiary or any ERISA Affiliate is required or proposes to take, together with
any notices required or proposed to be given to or filed with or by Holdings,
the Borrower, any Subsidiary, any ERISA Affiliate, the PBGC or any other
government agency, a Plan or Multiemployer Plan participant or the Plan
administrator with respect thereto: that a Reportable Event has occurred (except
to the extent that the Borrower has previously delivered to the Lender a
certificate and notices (if any) concerning such event pursuant to the next
clause hereof); that a contributing sponsor (as defined in Section 4001(a)(13)
of ERISA) of a Plan subject to Title IV of ERISA is subject to the advance
reporting requirement of PBGC Regulation Section 4043.61 (without regard to
subparagraph (b)(1) thereof), and an event described in subsection .62, .63,
 .64, .65, .66, .67 or .68 of PBGC Regulation Section 4043 is reasonably expected
to occur with respect to such Plan within the following 30 days; that an
accumulated funding deficiency, within the meaning of Section 412 of the Code or
Section 302 of ERISA, has been incurred or an application may reasonably be
expected to be or has been made for a waiver or modification of the minimum
funding standard (including any required installment payments) or an extension
of any amortization period under Section 412 of the Code or Section 303 or 304
of ERISA with respect to a Plan or Multiemployer Plan; that any contribution
required to be made with respect to a Plan, Multiemployer Plan or Foreign
Pension Plan has not been timely made; that a Plan or Multiemployer Plan has
been or may be reasonably be expected to be terminated, reorganized, partitioned
or declared insolvent under Title IV of ERISA; that a Plan or Multiemployer Plan
has an Unfunded Current Liability which, when added to the aggregate amount of
Unfunded Current Liabilities with respect to all other Plans, exceeds the
aggregate amount of such Unfunded Current Liabilities that existed on the
Initial Borrowing Date by $10,000,000; that proceedings may reasonably be
expected to be or have been instituted to terminate or appoint a trustee to
administer a Plan which is subject to Title IV of ERISA; that a proceeding has
been instituted pursuant to Section 515 of ERISA to collect a delinquent
contribution to a Plan or Multiemployer Plan; that Holdings, the Borrower, any
Subsidiary of the Borrower or any ERISA Affiliate will or may reasonably be
expected to incur any material liability (including any indirect, contingent, or
secondary liability) to or on account of the termination of or withdrawal from a
Plan or Multiemployer Plan under Section 4062, 4063, 4064, 4069, 4201,
4204 or 4212 of ERISA or with respect to a Plan under Section 401(a)(29), 4971,
4975 or 4980 of the Code or Section 409 or 502(i) or 502(l) of ERISA or with
respect to a group health plan (as defined in Section 607(1) of ERISA or Section
4980B(g)(2) of the Code) under Section 4980B of the Code; or that Holdings, the
Borrower or any Subsidiary of the Borrower may incur any material liability
pursuant to any employee welfare benefit plan (as defined in Section 3(1) of
ERISA) that provides benefits to retired employees or other former employees
(other than as required by Section 601 of ERISA) or any Plan or any Foreign
Pension Plan in addition to the liability that existed on the Initial Borrowing
Date pursuant to any such plan or plans. Upon request by any Lender, the
Borrower will deliver to such Lender a complete copy of the annual report (on
Internal Revenue Service Form 5500-series) of each Plan (including, to the
extent required, the related financial and actuarial statements and opinions and
other supporting statements, certifications, schedules and information) required
to be filed with the Internal Revenue Service. In addition to any certificates
or notices delivered to the Lenders pursuant to the first sentence hereof,
copies of any records, documents or other information required to be furnished
to the PBGC or any other government agency, and any material notices

                                       -40-

<PAGE>

received by Holdings, the Borrower, any Subsidiary of the Borrower or any ERISA
Affiliate with respect to any Plan, Multiemployer Plan or Foreign Pension Plan
shall be delivered to the Lender no later than ten days after the date such
records, documents and/or information has been furnished to the PBGC or any
other government agency or such notice has been received by Holdings, the
Borrower, the Subsidiary or the ERISA Affiliate, as applicable. Holdings will,
and will cause each Subsidiary to, ensure that all Foreign Pension Plans
administered by it or into which it makes payments obtains or retains (as
applicable) registered status under and as required by applicable law and is
administered in a timely manner in all respects in compliance with all
applicable laws except where the failure to do any of the foregoing would not be
reasonably likely to result in a Material Adverse Effect.

               7.08 Good Repair. Holdings will, and will cause each of its
                    -----------
Subsidiaries to, ensure that its material properties and equipment used or
useful in its business are kept in good repair, working order and condition,
normal wear and tear excepted, and, subject to Section 8.05, that from time to
time there are made in such properties and equipment all needful and proper
repairs, renewals, replacements, extensions, additions, betterments and
improvements thereto, to the extent and in the manner useful or customary for
companies in similar businesses.

               7.09 End of Fiscal Years; Fiscal Quarters. Holdings will, for
                    ------------------------------------
financial reporting purposes, cause (i) each of its, and each of its
Subsidiaries', fiscal years and fourth fiscal quarters to end on December 31 of
each year and (ii) each of its, and each of its Subsidiaries', first three
fiscal quarters to end on the last day of March, June and September of each
year.

               7.10 Additional Security; Further Assurances. (a) Holdings will
                    ---------------------------------------
cause the Borrower and the Subsidiary Guarantors to grant to the Collateral
Agent security interests and mortgages in owned Real Property with a fair market
value of $5,000,000 or more acquired after the Initial Borrowing Date as may be
reasonably requested from time to time by the Administrative Agent and/or the
Required Lenders (collectively, the "Additional Mortgages"). All such security
interests and mortgages shall be granted pursuant to documentation reasonably
satisfactory in form and substance to the Administrative Agent and shall
constitute valid and enforceable Liens superior to and prior to the rights of
all third Persons and subject to no other Liens except Permitted Liens. The
Additional Mortgages or instruments related thereto shall be duly recorded or
filed in such manner and in such places as are required by law to establish,
perfect, preserve and protect the Liens in favor of the Collateral Agent
required to be granted pursuant to the Additional Mortgages and all taxes, fees
and other charges payable in connection therewith shall be paid in full.
Furthermore, Holdings shall cause to be delivered to the Collateral Agent such
opinions of counsel, title insurance and other related documents as may be
reasonably requested by the Administrative Agent to assure itself that this
Section 7.10(a) has been complied with.

               (b)  Holdings will, and will cause its Subsidiaries to, at the
expense of the Borrower make, execute, endorse, acknowledge, file and/or deliver
to the Collateral Agent from time to time such vouchers, invoices, schedules,
confirmatory assignments, conveyances, financing statements, transfer
endorsements, powers of attorney, certificates, reports and other assurances or
confirmatory instruments and take such further steps relating to the collateral
covered by any of the Security Documents as the Collateral Agent may reasonably
require.

                                       -41-

<PAGE>

               (c) Each of the Credit Parties agrees that each action required
above by this Section 7.10(a) and (b) shall be completed as soon as possible,
but in no event later than 60 days after such action is requested to be taken by
the Administrative Agent, the Collateral Agent or the Required Lenders, as the
case may be, provided that in no event shall the Borrower be required to take
             --------
any action, other than using its reasonable commercial efforts without any
material expenditure, to obtain consents from third parties with respect to its
compliance with this Section 7.10.

               7.11 Use of Proceeds. (a) The Borrower will utilize the proceeds
                    ---------------
of all Term Loans (i) to finance the Special Dividend, the Refinancing and the
Tender Offer, (ii) to finance Investments, Permitted Acquisitions and/or an
Additional Dividend and (iii) to pay fees and expenses relating to the
Transaction (including fees payable to holders of the Senior Subordinated
Notes); provided that the aggregate amount of such fees and expenses shall not
exceed $45,000,000 (excluding accrued interest on the Senior Subordinated
Notes).

               (b) (i) The Borrower will utilize the proceeds of Revolving Loans
and Swingline Loans for general corporate and working capital purposes provided
that no more than $5,000,000 of the proceeds of Revolving Loans may be used for
the purposes described in Section 7.11(a)(i) and/or (iii).

               7.12 Interest Rate Agreement. The Borrower (x) will, no later
                    -----------------------
than the date occurring 90 days after the Initial Borrowing Date, enter into
Interest Rate Agreements which cover for at least three years from the Initial
Borrowing Date at least 40% of the outstanding Term Loans establishing a ceiling
on the Eurodollar Rate of 8% on terms reasonably satisfactory to the
Administrative Agent and (y) may enter into Interest Rate Agreements which cover
additional amounts of outstanding Term Loans on terms (and in such amounts)
reasonably satisfactory to the Administrative Agent.

               7.13 Compliance with Environmental Laws. (a)(i) The Borrower will
                    ----------------------------------
comply, and will cause each of its Subsidiaries to comply, with all
Environmental Laws applicable to the ownership, lease or use of all Real
Property now or hereafter owned, leased or operated by the Borrower or any of
its Subsidiaries, will promptly pay or cause to be paid all costs and expenses
incurred in connection with such compliance, and will keep or cause to be kept
all such Real Property free and clear of any Liens imposed pursuant to such
Environmental Laws and (ii) neither the Borrower nor any of its Subsidiaries
will generate, use, treat, store, release or dispose of, or permit the
generation, use, treatment, storage, release or disposal of Hazardous Materials
on any Real Property now or hereafter owned, leased or operated by the Borrower
or any of its Subsidiaries, or transport or permit the transportation of
Hazardous Materials to or from any such Real Property, except to the extent that
the failure to comply with the requirements specified in clause (i) or (ii)
above, either individually or in the aggregate, are not reasonably likely to
have a Material Adverse Effect. If legally required to do so under any
applicable directive or order of any governmental agency, the Borrower agrees to
undertake, and cause each of its Subsidiaries to undertake, any clean up,
removal, remedial or other action necessary to remove and clean up any Hazardous
Materials from any Real Property owned, leased or operated by the Borrower or
any of its Subsidiaries in accordance with, in all material respects, the
requirements of all applicable Environmental Laws and in accordance with, in all
material respects, such orders and directives of all governmental authorities,
except to the extent

                                       -42-

<PAGE>

that the Borrower or such Subsidiary is contesting such order or directive in
good faith and by appropriate proceedings and for which adequate reserves have
been established to the extent required by GAAP; provided that it will not
                                                 --------
constitute a breach of this Section 7.13 if a Person other than the Borrower and
its Subsidiaries takes such action on behalf of the Borrower and its
Subsidiaries.

               (b) At the request of the Administrative Agent or the Required
Lenders at any time and from time to time during the continuance of an Event of
Default, upon the reasonable belief by the Administrative Agent that the
Borrower or any of its Subsidiaries has breached in any material respect any
representation or covenant herein with respect to any environmental matters
affecting any Mortgaged Property and such breach is continuing and/or a notice
has been provided under Section 7.01(g), the Borrower will provide, at its sole
cost and expense (or will cause the relevant Subsidiary to provide at its sole
cost and expense), an environmental site assessment report reasonable in scope
concerning any Mortgaged Property that is the subject of the breach or notice of
the Borrower or its Subsidiaries, prepared by an environmental consulting firm
reasonably acceptable to the Administrative Agent, indicating the presence or
Release or absence of Hazardous Materials on or from any such Mortgaged Property
and the potential cost of any removal or remedial action in connection with any
Hazardous Materials on such Mortgaged Property. If the Borrower fails to provide
the same after thirty days' notice and the Event of Default is continuing, the
Administrative Agent may order the same, and the Borrower shall grant and hereby
grants to the Administrative Agent and the Lenders and their agents access to
such Mortgaged Property and specifically grants the Administrative Agent and the
Lenders an irrevocable non-exclusive license, subject to the rights of tenants,
to undertake such an assessment all at the Borrower's reasonable expense, which
assessments, if obtained, will be provided to the Borrower.

               7.14 Notices of Assignment. At any time, upon the written
                    ---------------------
request, and in the sole discretion, of the Required Lenders, each Credit Party
shall promptly, and in any event within 5 Business Days of the delivery of such
written request, deliver to the Administrative Agent duly completed Notices of
Assignment (the "Notices") pursuant to the provisions of the Assignment of
Claims Act of 1940, 31 U.S.C. (S) 3727(c), with respect to each material
contract of a Credit Party with the U.S. government or any branch, agency,
bureau or subdivision thereof and, until otherwise directed by the Required
Lenders, shall thereafter update each such Notice, and provide (and update)
Notices with respect to any additional contracts between a Credit Party and the
U.S. government or any branch, agency, bureau or subdivision thereof. Upon the
occurrence and during the continuation of any Event of Default, the Required
Banks may direct the Administrative Agent to file Notices with respect to any or
all of the contracts of the Credit Parties with the U.S. government or any
branch, agency, bureau or subdivision thereof. After any such filing and for so
long as an Event of Default is continuing, the Credit Parties shall take all
action necessary to maintain such filings and to make filings with respect to
any additional material contracts between a Credit Party and the U.S. government
or any branch, agency, bureau or subdivision thereof.

               SECTION 8. Negative Covenants. Holdings and the Borrower hereby
                          ------------------
covenant and agree that for so long as this Agreement is in effect and until the
Commitments have terminated, no Letters of Credit or Notes are outstanding and
the Loans and Unpaid Drawings,


                                       -43-

<PAGE>

together with interest, Fees and all other Obligations (other than any
indemnities described in Section 12.13 which are not then owing) incurred
hereunder, are paid in full:

               8.01 Changes in Business. (a) The Borrower will not permit at any
                    -------------------
time the business activities taken as a whole conducted by the Borrower and its
Subsidiaries to be materially different from the business activities taken as a
whole (including incidental activities) conducted by the Borrower and its
Subsidiaries on the Initial Borrowing Date and businesses reasonably related
thereto and reasonable extensions thereof targeted to governmental, commercial
and other customers (the "Business").

               (b) Holdings will not engage in any business other than its
ownership of the capital stock of, and the management of, the Borrower, provided
that Holdings may engage in those activities that are incidental to (x) the
maintenance of its corporate existence in compliance with applicable law, (y)
legal, tax and accounting matters in connection with any of the foregoing
activities and (z) the entering into, and performing its obligations under, this
Agreement and the other Documents to which it is a party.

               8.02 Consolidation, Merger, Sale or Purchase of Assets, etc.
                    ------------------------------------------------------
Holdings will not, and will not permit any Subsidiary to, wind up, liquidate or
dissolve its affairs, or enter into any transaction of merger or consolidation,
or convey, sell, lease or otherwise dispose of all or any part of its property
or assets (other than inventory or obsolete equipment or excess equipment no
longer needed in the conduct of the business in the ordinary course of business)
or purchase, lease or otherwise acquire all or any part of the property or
assets of any Person (other than purchases or other acquisitions of inventory,
leases, materials and equipment in the ordinary course of business) or agree to
do any of the foregoing at any future time without a contingency relating to
obtaining any required approval hereunder, except that the following shall be
permitted:

               (a) any Subsidiary of the Borrower may be merged or consolidated
with or into, or be liquidated into, the Borrower or a Subsidiary Guarantor (so
long as the Borrower or such Subsidiary Guarantor is the surviving corporation),
or all or any part of its business, properties and assets may be conveyed,
leased, sold or transferred to the Borrower or any Subsidiary Guarantor,
provided that neither the Borrower nor any Subsidiary Guarantor may be a party
--------
to any merger, consolidation or liquidation otherwise permitted by this clause
(a) involving a Person that is not a Wholly-Owned Subsidiary other than in a
Permitted Acquisition;

               (b) capital expenditures to the extent within the limitations set
forth in Section 8.05 hereof;

               (c) the investments, acquisitions and transfers or dispositions
of properties permitted pursuant to Section 8.06;

               (d) each of the Borrower and any Subsidiary may lease (as lessee)
real or personal property in the ordinary course of business (so long as such
lease does not create a Capitalized Lease Obligation not otherwise permitted by
Section 8.04(d) or would not violate Section 8.07);

                                       -44-

<PAGE>

               (e)  licenses or sublicenses by the Borrower and its Subsidiaries
of intellectual property in the ordinary course of business, provided, that such
                                                             --------
licenses or sublicenses shall not interfere with the business of the Borrower or
any Subsidiary;

               (f)  other sales or dispositions of assets to the extent that the
aggregate Net Cash Proceeds received from all such sales and dispositions
permitted by this clause (f) shall not exceed $60,000,000 in the aggregate and
$30,000,000 in any fiscal year of the Borrower, provided that (x) each such sale
                                                --------
shall be in an amount at least equal to the fair market value thereof and for
proceeds consisting of at least 75% cash (with the assumption of Indebtedness
and the sale for cash within 30 days of receipt of securities received counted
as cash) and (y) the Net Cash Proceeds of any such sale are applied to repay the
Loans to the extent required by Section 4.02(A)(c), and, provided further, that
                                                         ----------------
the sale or disposition of the capital stock of any Subsidiary of the Borrower
shall be prohibited unless it is for all of the outstanding capital stock of
such Subsidiary owned by the Borrower and its Subsidiaries;

               (g)  leases and subleases permitted under Section 8.03(g); and

               (h)  involuntary sales of interests in Joint Ventures and Foreign
Subsidiaries pursuant to mandatory puts, calls and similar arrangements (to the
extent in effect on the date hereof in the case of the Existing Joint Ventures
and Investments).

               8.03 Liens. Holdings will not, and will not permit any of its
                    -----
Subsidiaries to, create, incur, assume or suffer to exist any Lien upon or with
respect to any property or assets of any kind (real or personal, tangible or
intangible) of Holdings or any such Subsidiary whether now owned or hereafter
acquired, or sell any such property or assets subject to an understanding or
agreement, contingent or otherwise, to repurchase such property or assets
(including sales of accounts receivable or notes with recourse to Holdings or
any of its Subsidiaries) or assign any right to receive income, except:

               (a)  Liens for taxes not yet delinquent or Liens for taxes being
contested in good faith and by appropriate proceedings for which adequate
reserves (in the good faith judgment of the management of the Borrower) have
been established;

               (b)  Liens in respect of property or assets of the Borrower or
any of its Subsidiaries imposed by law which were incurred in the ordinary
course of business, such as carriers', warehousemen's and mechanics' Liens,
statutory landlord's Liens, and other similar Liens arising in the ordinary
course of business, and (x) which do not in the aggregate materially detract
from the value of such property or assets or materially impair the use thereof
in the operation of the business of the Borrower or any of its Subsidiaries or
(y) which are being contested in good faith by appropriate proceedings, which
proceedings have the effect of preventing the forfeiture or sale of the property
or asset subject to such Lien;

               (c)  Liens created by or pursuant to this Agreement or the other
Credit Documents;

               (d)  Liens created pursuant to Capital Leases permitted by
Section 8.04(c).

                                      -45-

<PAGE>

               (e)   Liens arising from judgments, decrees or attachments and
Liens securing appeal bonds arising from judgments, in each case in
circumstances not constituting an Event of Default under Section 9.09;

               (f)   Liens (other than any Lien imposed by ERISA) incurred or
deposits made in the ordinary course of business in connection with workers'
compensation, unemployment insurance and other types of social security, or to
secure the performance of tenders, statutory obligations, surety and appeal
bonds, bids, leases, government contracts, performance and return-of-money bonds
and other similar obligations incurred in the ordinary course of business
(exclusive of obligations in respect of the payment for borrowed money);

               (g)   leases or subleases granted to others not interfering in
any material respect with the business of the Borrower or any of its
Subsidiaries;

               (h)   easements, rights-of-way, restrictions, minor defects or
irregularities in title and other similar charges or encumbrances not
interfering in any material respect with the ordinary conduct of the business of
Holdings or any of its Subsidiaries;

               (i)   Liens arising from UCC financing statements regarding
leases permitted by this Agreement;

               (j)   (x) receipt of progress payments and advances from
customers in the ordinary course of business to the extent same creates a Lien
on the related inventory and (y) purchase money Liens securing payables arising
from the purchase by the Borrower or any Subsidiary Guarantor of any equipment
or goods in the normal course of business, provided that such payables shall not
                                           --------
constitute Indebtedness;

               (k)   any interest or title of a lessor under any lease permitted
by this Agreement;

               (l)   Liens in existence on, and which are to continue in effect
after, the Initial Borrowing Date which are listed, and the property subject
thereto described in, Annex VII, without giving effect to any extension or
renewal thereof; and

               (m)   Liens arising pursuant to purchase money mortgages or
security interests securing Indebtedness representing the purchase price (or
financing of the purchase price within 90 days after the respective purchase) of
assets acquired by the Borrower or any Subsidiary Guarantor after the Initial
Borrowing Date, provided that (x) any such Liens attach only to the assets so
                --------
acquired and proceeds thereof, (y) the Indebtedness secured by any such Lien
does not exceed 100%, nor is less than 70%, of the lesser of the fair market
value or purchase price of the property being purchased at the time of the
incurrence of such Indebtedness and (z) all Indebtedness secured by Liens
created pursuant to this clause (m) shall not exceed $20,000,000 at any time
outstanding.

               8.04  Indebtedness. Holdings will not, and will not permit any of
                     ------------
its Subsidiaries to, contract, create, incur, assume or suffer to exist any
Indebtedness, except:

               (a)   Indebtedness incurred pursuant to this Agreement and the
other Credit Documents;

                                      -46-

<PAGE>

               (b) Indebtedness owing by (i) any Subsidiary Guarantor to
another Subsidiary Guarantor or the Borrower and/or (ii) the Borrower to any
Subsidiary Guarantor;

               (c) Capitalized Lease Obligations of the Borrower and its
Subsidiary Guarantors initially incurred after the Initial Borrowing Date,
provided that the aggregate Capitalized Lease Obligations under all Capital
--------
Leases entered into after Initial Borrowing Date shall not exceed $20,000,000;

               (d) Indebtedness under Interest Rate Agreements to the extent
entered into in compliance with Section 7.12;

               (e) Indebtedness incurred pursuant to purchase money mortgages
or security interests permitted by Section 8.03(m);

               (f) Indebtedness of the Borrower evidenced by the Senior
Subordinated Notes and the guaranty of such Indebtedness by the Guarantors;

               (g) Existing Indebtedness, without giving effect to any
subsequent extension, renewal or refinancing thereof;

               (h) Contingent Obligations (including under letters of credit
and other guaranties) of the Borrower and its Subsidiaries with respect to
Indebtedness and other obligations of Joint Ventures and Foreign Subsidiaries in
an aggregate amount at any time outstanding which (x) when added to all
Investments made pursuant to Section 8.06(j) and then outstanding plus the Net
Acquisition Expenditure at the time, is not in excess of the Investment Basket
and (y) when added to all Investments made pursuant to Section 8.06(j) and then
outstanding, is not in excess of the Modified Investment Basket;

               (i) letters of credit under which the Borrower is the account
party denominated in other than Dollars in an aggregate amount not in excess of
the equivalent of $25,000,000; and

               (j) additional unsecured Indebtedness of the Borrower and the
Subsidiary Guarantors not to exceed an aggregate outstanding principal amount of
$15,000,000 at any time.

               8.05 Capital Expenditures. (a) Holdings will not, and will not
                    --------------------
permit any of its Subsidiaries to, incur Consolidated Capital Expenditures,
provided that the Borrower and its Subsidiaries may make Consolidated Capital
Expenditures not to exceed in the aggregate $40,000,000 during each fiscal year.

               (b) In the event that the maximum amount which is permitted to be
expended in respect of Consolidated Capital Expenditures during any fiscal year
pursuant to Section 8.05(a) (without giving effect to this clause (b)) is not
fully expended during such fiscal year, the maximum amount which may be expended
during the succeeding fiscal years pursuant to Section 8.05(a) shall be
increased by such unutilized amount provided that the maximum increase in any
fiscal year resulting from this clause (b) shall not exceed $15,000,000.

               8.06 Advances, Investments and Loans. Holdings will not, and will
                    -------------------------------
not permit any of its Subsidiaries to, lend money or credit or make advances to
any Person, or purchase or

                                       -47-

<PAGE>

acquire any stock, obligations or securities of, or any other interest in, or
make any capital contribution to any Person, except:

               (a) the Borrower or any Subsidiary may invest in cash and Cash
Equivalents;

               (b) the Borrower and any Subsidiary may acquire and hold
receivables owing to them, if created or acquired in the ordinary course of
business and payable or dischargeable in accordance with customary trade terms
and/or reasonable extensions thereof;

               (c) the intercompany Indebtedness described in Section 8.04(b)
shall be permitted;

               (d) loans and advances to officers, directors and employees in
the ordinary course of business (x) for relocation purposes or to purchase stock
of Holdings or the Borrower and (y) otherwise in an aggregate principal amount
not to exceed $2,500,000 at any time outstanding shall be permitted;

               (e) the Borrower and each Subsidiary may acquire and own
investments (including debt obligations) received in connection with the
bankruptcy or reorganization of suppliers and customers and in settlement of
delinquent obligations of, and other disputes with, customers and suppliers
arising in the ordinary course of business;

               (f) Interest Rate Agreements entered into pursuant to Section
7.12 shall be permitted;

               (g) advances, loans and investments in existence on the Effective
Date and listed on Annex VIII, without giving effect to any additions thereto or
replacements thereof, shall be permitted;

               (h) the Borrower and each Subsidiary may make capital
contributions to any of their Subsidiaries to the extent a Subsidiary Guarantor;

               (i) Subsidiaries may be established or created in accordance with
the provisions of Section 8.07;

               (j) the Borrower or any Subsidiary may enter into, invest in
(including contributions of cash, copyrights, patents and other intellectual
property, and the use of personnel and/or the issuance of non-exclusive licenses
of intellectual property) and make loans and advances to Joint Ventures and
Foreign Subsidiaries (all such investments, loans and advances, "Investments")
and the Borrower or any Subsidiary Guarantor may make Permitted Acquisitions,
provided that (i) the aggregate amount of Investments at any time outstanding
(calculated without regard to any write-downs or write-offs and excluding the
value of the use of personnel and/or non-exclusive licenses of intellectual
property) plus the Net Acquisition Expenditure at such time plus the aggregate
amount of all Contingent Obligations then outstanding pursuant to Section
8.04(h) shall not exceed the Investment Basket at such time and (ii) the
aggregate amount of Investments at any time outstanding plus the aggregate
amount of all Contingent Obligations then outstanding pursuant to Section
8.04(h) shall not exceed the Modified Investment Basket at such time;

                                       -48-

<PAGE>

               (k) the Borrower or any Subsidiary Guarantor may maintain the
loans to and investments in the Existing Joint Ventures and Investments and
Foreign Subsidiaries which are outstanding on the Initial Borrowing Date; and

               (l) loans and investments not otherwise permitted by the
foregoing clauses (a) through (k), provided that the aggregate amount of the
loans and investments made pursuant to this clause (l) shall not exceed
$10,000,000.

               8.07   Limitation on Creation of Subsidiaries. Holdings will not,
                      --------------------------------------
and will not permit any Subsidiary Guarantor to, establish, create or acquire
any direct Subsidiary and will not permit any Inactive Subsidiary to acquire
assets or commence business; provided that, the Borrower and its Subsidiaries
                             --------
shall be permitted to establish, create or acquire (x) Domestic Subsidiaries,
and/or an Inactive Subsidiary may cease to continue to be an Inactive Subsidiary
so long as (i) no less than 85% of the capital stock of such new Subsidiary (and
in any event all of such capital stock owned by Credit Parties) is pledged
pursuant to the Pledge Agreement and the certificates representing such stock,
together with stock powers duly executed in blank, are delivered to the
Collateral Agent and (ii) such new Subsidiary or former Inactive Subsidiary
executes a counterpart of the Subsidiary Guaranty, the Pledge Agreement and the
Security Agreement, in each case on the same basis (and to the same extent) as
such Subsidiary or former Inactive Subsidiary would have executed such Credit
Documents if it were a Credit Party on the Initial Borrowing Date and (y) Joint
Ventures and Foreign Subsidiaries to the extent otherwise permitted hereunder.

               8.08   Modifications. Holdings will not, and will not permit any
                      -------------
of its Subsidiaries to

               (a) make (or give any notice in respect thereof) any voluntary or
optional payment or prepayment or redemption or acquisition for value of
(including, without limitation, by way of depositing with the trustee with
respect thereto money or securities before due for the purpose of paying when
due) or exchange of the Senior Subordinated Notes (other than with the proceeds
of Term Loans on the Initial Borrowing Date (or the next Business Day
thereafter)) or any Existing Indebtedness;

               (b) except with the written consent of the Administrative Agent
(such consent not to be unreasonably withheld), amend or modify (or permit the
amendment or modification of) in any manner adverse to the interests of the
Lenders, any provisions of any Senior Subordinated Note Documents (other than in
accordance with or pursuant to the Tender Offer Documents); and/or

               (c) amend, modify or change in any manner adverse to the
interests of the Lenders the organizational documents (including by-laws) of any
Credit Party or any agreement entered into by the Borrower with respect to its
capital stock or enter into any new agreement in any manner adverse to the
interests of the Lenders with respect to the capital stock of the Borrower.

               8.09   Dividends, etc. (a) Holdings will not, and will not permit
                      --------------
any of its Subsidiaries to, declare or pay any dividends (other than dividends
payable solely in capital stock

                                       -49-

<PAGE>

of such Person) or return any capital to, its stockholders, members and/or other
owners or authorize or make any other distribution, payment or delivery of
property or cash to its stockholders, members and/or other owners as such, or
redeem, retire, purchase or otherwise acquire, directly or indirectly, for a
consideration, any shares of any class of its capital stock or other ownership
interests now or hereafter outstanding (or any warrants for or options or stock
appreciation rights in respect of any of such shares), or set aside any funds
for any of the foregoing purposes, or permit any of its Subsidiaries to purchase
or otherwise acquire for consideration any shares of any class of the capital
stock or other ownership interests of Holdings or any other Subsidiary, as the
case may be, now or hereafter outstanding (or any options or warrants or stock
appreciation rights issued by such Person with respect to its capital stock)
(all of the foregoing "Dividends"), except that:

               (i)   Holdings may pay Dividends in connection with a
recapitalization or other restructuring of its capital provided that (i) all
such Dividends will be paid to Carlyle and/or Carlyle Affiliates and/or members
of management who own capital stock of or membership interests and (ii) the
amount of Dividends so paid shall be not in excess of the proceeds of
substantially contemporaneous equity issuances to Carlyle and/or Carlyle
Affiliates;

               (ii)  at a time when no Event of Default exists, Holdings may pay
Dividends to some or all of the existing holders of its capital stock or
membership interests with the cash proceeds of (x) a capital contribution to
Holdings, or a sale or issuance by Holdings of Holdings capital stock or
membership interests, in each case consummated substantially contemporaneously
with the payment of such Dividend and/or (y) a Dividend paid to Holdings by the
Borrower with the proceeds of the sale or issuance by the Borrower consummated
substantially contemporaneously with such Dividend of the Borrower's capital
stock (which Dividend by the Borrower to be used by Holdings pursuant to this
clause (y) also is permitted), provided that (i) any such contribution, sale or
issuance does not result in a Change of Control occurring, (ii) any such
Dividend shall not exceed the net cash proceeds of the related capital
contribution or sale or issuance of capital stock or membership interests and
(iii) any stock of the Borrower so sold or issued is pledged in support of the
Obligations pursuant to an hypothecation reasonably satisfactory to the
Administrative Agent;

               (iii) any Subsidiary of the Borrower may pay Dividends or return
capital or make distributions and other similar payments with regard to its
capital stock or other membership interests to the Borrower or to a Subsidiary
of the Borrower;

               (iv)  each of Holdings and the Borrower may redeem or repurchase
(and the Borrower may pay Dividends to Holdings to be used by Holdings to redeem
or repurchase) its membership interests or stock from officers, employees and
directors (or their estates) upon the death, permanent disability, retirement or
termination of employment of any such Person or otherwise in accordance with any
stock option plan or any employee stock ownership plan, provided that (x) no
                                                        --------
Default or Event of Default is then in existence or would arise therefrom and
(y) the aggregate amount of all cash paid in respect of all such shares and
interests so redeemed or repurchased in any calendar year does not exceed
$5,000,000;

                                       -50-

<PAGE>

               (v)   the Borrower may pay dividends to Holdings when and to the
extent needed to permit Holdings to pay management fees under the Management
Agreement and its operational costs (to the extent related to activities
permitted by Section 8.01(b));

               (vi)  the Special Dividend shall be permitted; and

               (vii) the Additional Dividend shall be permitted.

               (b) Holdings will not, and will not permit any of its
Subsidiaries to, create or otherwise cause or suffer to exist (other than as a
result of a requirement of law) any encumbrance or restriction which prohibits
or otherwise restricts (A) the ability of any Subsidiary to (a) pay dividends or
make other distributions or pay any Indebtedness owed to Holdings or any
Subsidiary, (b) make loans or advances to Holdings or any Subsidiary, (c)
transfer any of its properties or assets to Holdings or any Subsidiary or (B)
the ability of Holdings or any other Subsidiary of Holdings to create, incur,
assume or suffer to exist any Lien upon its property or assets to secure the
Obligations, other than prohibitions or restrictions existing under or by reason
of: (i) this Agreement, the other Credit Documents and the Senior Subordinated
Note Documents; (ii) applicable law; (iii) customary non-assignment provisions
entered into in the ordinary course of business and consistent with past
practices; (iv) any restriction or encumbrance with respect to a Subsidiary
imposed pursuant to an agreement which has been entered into for the sale or
disposition of all or substantially all of the capital stock or assets of such
Subsidiary, so long as such sale or disposition is permitted under this
Agreement; and (v) Liens permitted under Sections 8.03(d) and (m) and any
documents or instruments governing the terms of any Indebtedness or other
obligations secured by any such Liens, provided that such prohibitions or
                                       --------
restrictions apply only to the assets subject to such Liens.

               8.10   Transactions with Affiliates. Holdings will not, and will
                      ----------------------------
not permit any Subsidiary to, enter into any transaction or series of
transactions after the Initial Borrowing Date whether or not in the ordinary
course of business, with any Affiliate other than on terms and conditions
substantially as favorable to Holdings or such Subsidiary as would be obtainable
by Holdings or such Subsidiary at the time in a comparable arm's- length
transaction with a Person other than an Affiliate, provided that the foregoing
                                                   --------
restrictions shall not apply to (i) the Management Agreement, (ii) employment
arrangements entered into in the ordinary course of business with officers of
Holdings and its Subsidiaries and (iii) customary fees paid to members of the
Board of Directors of Holdings and of its Subsidiaries.

               8.11   Interest Coverage Ratio. The Borrower will not permit the
                      -----------------------
ratio of (i) Consolidated EBITDA to (ii) Consolidated Interest Expense for any
Test Period ending on the last day of any fiscal quarter set forth below to be
less than the ratio set forth opposite such fiscal quarter:

                                       -51-

<PAGE>


                             Fiscal Quarter Ending                    Ratio
                             ---------------------                    -----

    September 30, 2001                                              2.50:1.00
     through December 31, 2002

    March 31, 2003                                                  2.60:1.00
     through December 31, 2003

    March 31, 2004                                                  2.80:1.00
     through December 31, 2004

    March 31, 2005                                                  3.10:1.00
    through December 31, 2005

    Thereafter                                                      3.50:1.00


               8.12. Leverage Ratio. The Borrower will not permit the Leverage
                     --------------
Ratio determined as at the end of any Test Period ending on the last day of any
fiscal quarter set forth below, to be more than the ratio set forth opposite
such fiscal quarter:

                             Fiscal Quarter Ending                    Ratio
                             ---------------------                    -----

    September 30, 2001                                              3.90:1.00
     through March 31, 2002

    June 30, 2002                                                   3.75:1.00
     through December 31, 2002

    March 31, 2003                                                  3.50:1.00
     through December 31, 2003

    March 31, 2004                                                  3.25:1.00
     through December 31, 2004

    March 31, 2005                                                  3.00:1.00
     through December 31, 2005

    Thereafter                                                      2.75:1.00


               8.13  Minimum Consolidated Net Worth. The Borrower will not
                     ------------------------------
permit Consolidated Net Worth at any time to be less than (x) 50% of Cumulative
Net Income at such time less (y) the sum of the Special Dividend and the
Additional Dividend.

               8.14  Limitation On Issuance of Stock. Holdings will not permit
                     -------------------------------
any of its Subsidiaries, directly or indirectly, to issue any shares of its
capital stock or other securities (or

                                       -52-

<PAGE>

warrants, rights or options to acquire shares or other equity securities),
except (i) for replacements of then outstanding shares of capital stock, (ii)
for stock splits, stock dividends and similar issuances which do not decrease
the percentage ownership of the Borrower and its Subsidiaries taken as a whole
in any class of the capital stock of such Subsidiary, (iii) for issuances to the
Borrower or any of its Subsidiaries in connection with the creation of new
Wholly-Owned Subsidiaries permitted under Section 8.07, (iv) to qualify
directors to the extent required by applicable law and (v) the Borrower may sell
and/or grant options to purchase (and, upon the exercise thereof, may issue) up
to an aggregate of 3,000,000 shares of its common stock to its management,
directors, other employees and/or advisors pursuant to stock option plans,
equity purchase plans, advisory agreements and/or similar plans or agreements.

               SECTION 9. Events of Default. Upon the occurrence of any of the
                          -----------------
following specified events (each, an "Event of Default"):

               9.01  Payments. The Borrower shall (i) default in the payment
                     --------
when due of any principal of the Loans or any Unpaid Drawing or (ii) default,
and such default shall continue for three or more Business Days, in the payment
when due of any interest on the Loans or any Fees or any other amounts owing
hereunder or under any other Credit Document; or

               9.02  Representations, etc. Any representation, warranty or
                     --------------------
statement made by any Credit Party herein or in any other Credit Document or in
any statement or certificate delivered or required to be delivered pursuant
hereto or thereto shall prove to be untrue in any material respect on the date
as of which made or deemed made; or

               9.03  Covenants. Any Credit Party shall (a) default in the due
                     ---------
performance or observance by it of any term, covenant or agreement contained in
Sections 7.10, 7.12 or 8, or (b) default in the due performance or observance by
it of any term, covenant or agreement (other than those referred to in Section
9.01, 9.02 or clause (a) of this Section 9.03) contained in this Agreement and
such default shall continue unremedied for a period of at least 30 days after
written notice to the defaulting party by the Administrative Agent or the
Required Lenders; or

               9.04  Default Under Other Agreements. (a) Holdings or any of its
                     --------------------------------
Subsidiaries shall (i) default in any payment with respect to any Indebtedness
(other than the Obligations) beyond the period of grace, if any, applicable
thereto or (ii) default in the observance or performance of any agreement or
condition relating to any such Indebtedness or contained in any instrument or
agreement evidencing, securing or relating thereto, or any other event shall
occur or condition exist, the effect of which default or other event or
condition is to cause, or to permit the holder or holders of such Indebtedness
(or a trustee or agent on behalf of such holder or holders) to cause any such
Indebtedness to become due prior to its stated maturity; or (b) any such
Indebtedness of Holdings or any of its Subsidiaries shall be declared to be due
and payable (or shall be required to be prepaid as a result of a default
thereunder or of an event of the type that constitutes an Event of Default)
prior to the stated maturity thereof, provided that it shall not constitute an
                                      --------
Event of Default pursuant to this Section 9.04 unless the aggregate principal
amount of all Indebtedness referred to in clauses (a) and (b) above exceeds
$10,000,000 in the aggregate at any one time; or

                                       -53-

<PAGE>

               9.05  Bankruptcy, etc. Holdings or any of its Material
                     ----------------
Subsidiaries shall commence a voluntary case concerning itself under Title 11 of
the United States Code entitled "Bankruptcy", as now or hereafter in effect, or
any successor thereto (the "Bankruptcy Code"); or an involuntary case is
commenced against Holdings or any of its Material Subsidiaries and the petition
is not controverted within 20 days, or is not dismissed within 60 days, after
commencement of the case; or a custodian (as defined in the Bankruptcy Code) is
appointed for, or takes charge of, all or substantially all of the property of
Holdings or any of its Material Subsidiaries; or Holdings or any of its Material
Subsidiaries commences any other proceeding under any reorganization,
arrangement, adjustment of debt, relief of debtors, dissolution, insolvency or
liquidation or similar law of any jurisdiction whether now or hereafter in
effect relating to Holdings or any of its Material Subsidiaries; or there is
commenced against Holdings or any of its Material Subsidiaries any such
proceeding which remains undismissed for a period of 60 days; or Holdings or any
of its Material Subsidiaries is adjudicated insolvent or bankrupt; or any order
of relief or other order approving any such case or proceeding is entered;
Holdings or any of its Material Subsidiaries suffers any appointment of any
custodian or the like for it or any substantial part of its property to continue
undischarged or unstayed for a period of 60 days; or Holdings or any of its
Material Subsidiaries makes a general assignment for the benefit of creditors;
or any corporate action is taken by Holdings or any of its Material Subsidiaries
for the purpose of effecting any of the foregoing; or

               9.06  ERISA. (a) Any Plan or Multiemployer Plan shall fail to
                     -----
satisfy the minimum funding standard required for any plan year or part thereof
under Section 412 of the Code or Section 302 of ERISA or a waiver of such
standard or extension of any amortization period is sought or granted under
Section 412 of the Code or Section 303 or 304 of ERISA, a Reportable Event shall
have occurred, a contributing sponsor (as defined in Section 4001(a)(13) of
ERISA) of a Plan subject to Title IV of ERISA shall be subject to the advance
reporting requirement of PBGC Regulation Section 4043.61 (without regard to
subparagraph (b)(1) thereof) and an event described in subsection .62, .63, .64,
 .65, .66, .67 or .68 of PBGC Regulation Section 4043 shall be reasonably
expected to occur with respect to such Plan within the following 30 days, any
Plan which is subject to Title IV of ERISA shall have had or is likely to have a
trustee appointed to administer such Plan, any Plan or Multiemployer Plan which
is subject to Title IV of ERISA is, shall have been or is likely to be
terminated or to be the subject of termination proceedings under ERISA, any Plan
shall have an Unfunded Current Liability, a contribution required to be made
with respect to a Plan, Multiemployer Plan or a Foreign Pension Plan has not
been timely made, Holdings, the Borrower or any Subsidiary of the Borrower or
any ERISA Affiliate has incurred or is likely to incur any liability to or on
account of a Plan or Multiemployer Plan under Section 409, 502(i), 502(l), 515,
4062, 4063, 4064, 4069, 4201, 4204 or 4212 of ERISA or Section 401(a)(29), 4971
or 4975 of the Code or on account of a group health plan (as defined in Section
607(1) of ERISA or Section 4980B(g)(2) of the Code) under Section 4980B of the
Code, or Holdings, the Borrower or any Subsidiary of the Borrower has incurred
or is likely to incur liabilities pursuant to one or more employee welfare
benefit plans (as defined in Section 3(1) of ERISA) that provide benefits to
retired employees or other former employees (other than as required by Section
601 of ERISA) or Plans or Foreign Pension Plans, a "default", within the meaning
of Section 4219(c)(5) of ERISA shall occur with respect to any Multiemployer
Plan, any applicable law, rule or regulation is adopted, changed or interpreted,
or the interpretation or administration thereof is changed, in each case after
the date hereof, by any governmental authority or agency or by any court (a
"Change in Law"), or, as a

                                       -54-

<PAGE>

result of a Change in Law, an event occurs following a Change in Law, with
respect to or otherwise affecting any Plan or Multiemployer Plan; (b) there
shall result from any such event or events the imposition of a lien, the
granting of a security interest, or a liability or a material risk of incurring
a liability; and (c) such lien, security interest or liability, individually,
and/or in the aggregate, in the opinion of the Required Lenders, has had, or is
reasonably likely to have, a Material Adverse Effect; or

               9.07  Security Documents. (a) Except in each case to the extent
                     ------------------
resulting from the negligent or willful failure of the Collateral Agent, any
Security Document shall cease to be, in any material respect, in full force and
effect, or shall cease, in any material respect, to give the Collateral Agent
the Liens, powers and privileges purported to be created thereby in favor of the
Collateral Agent, or (b) any Credit Party shall default in the due performance
or observance of any material term, covenant or agreement on its part to be
performed or observed pursuant to any such Security Document and such default
shall continue unremedied for a period of at least 30 days after written notice
to the respective Credit Party by the Administrative Agent; or

               9.08  Guaranty. Any of the Guaranties or any material provision
                     --------
thereof shall cease to be in full force and effect, or any Guarantor or any
Person acting by or on behalf of such Guarantor shall deny or disaffirm such
Guarantor's obligations under any Guaranty; or

               9.09  Judgments. One or more judgments or decrees shall be
                     ---------
entered against Holdings or any of its Subsidiaries involving a liability (to
the extent not paid or covered by insurance) in excess of $10,000,000 in the
aggregate for all such judgments and decrees for Holdings and its Subsidiaries
and all such judgments and decrees in excess of such amount shall not have been
vacated, discharged or stayed or bonded pending appeal within 60 days from the
entry thereof; or

               9.10  Change of Control. A Change of Control shall occur and be
                     -----------------

continuing; then, and in any such event, and at any time thereafter, if any
Event of Default shall then be continuing, the Administrative Agent shall, upon
the written request of the Required Lenders, by written notice to the Borrower
and Holdings, take any or all of the following actions, without prejudice to the
rights of the Administrative Agent or any Lender to enforce its claims against
any Guarantor or the Borrower, except as otherwise specifically provided for in
this Agreement (provided that, if an Event of Default specified in Section 9.05
                --------
shall occur with respect to the Borrower, the result which would occur upon the
giving of written notice by the Administrative Agent as specified in clauses (i)
and (ii) below shall occur automatically without the giving of any such notice):
(i) declare the Total Commitment terminated, whereupon the Commitment of each
Lender shall forthwith terminate immediately and any Commitment Commission shall
forthwith become due and payable without any other notice of any kind; (ii)
declare the principal of and any accrued interest in respect of all Loans and
all obligations owing hereunder (including Unpaid Drawings) and thereunder to
be, whereupon the same shall become, forthwith due and payable without
presentment, demand, protest or other notice of any kind, all of which are
hereby waived by the Borrower; (iii) enforce, as Collateral Agent (or direct the
Collateral Agent to enforce), any or all of the Liens and security interests
created pursuant to the Security Documents; (iv) terminate any Letter of Credit
which may be terminated in accordance with its terms; and (v) direct the
Borrower to pay (and the Borrower hereby agrees upon receipt of such notice, or
upon the occurrence of any

                                       -55-

<PAGE>

Event of Default specified in Section 9.05 in respect of the Borrower, it will
pay) to the Collateral Agent at the Payment Office such additional amounts of
cash, to be held as security for the Borrower's reimbursement obligations in
respect of Letters of Credit then outstanding equal to the aggregate Stated
Amount of all Letters of Credit then outstanding.

               SECTION 10.  Definitions. As used herein, the following terms
                            -----------
shall have the meanings herein specified unless the context otherwise requires.
Defined terms in this Agreement shall include in the singular number the plural
and in the plural the singular:

               "A Term Commitment" shall mean, with respect to each Lender, the
amount, if any, set forth opposite such Lender's name on Annex I hereto directly
below the column entitled "A Term Commitment" as the same may be terminated
pursuant to Section 3.03.

               "A Term Facility" shall mean the Facility evidenced by the Total
A Term Commitment.

               "A Term Loan" shall have the meaning provided in Section 1.01(a).

               "A Term Note" shall have the meaning provided in Section 1.05(a).

               "A TF Percentage" shall mean, at any time of determination
thereof, a fraction (expressed as a percentage) the numerator of which is equal
to the aggregate principal amount of A Term Loans outstanding at such time and
the denominator of which is equal to the aggregate principal amount of Term
Loans outstanding at such time, provided that at any time that no A Term Loans
are outstanding (including upon the application of only a portion of any
required prepayment of Term Loans under Section 4.02(A)), the A TF Percentage
shall be zero.

               "Acquisition Expenditures" shall mean at any time the amount (if
zero or positive) by which (i) the aggregate amount of cash then expended by the
Borrower and Subsidiary Guarantors to effect Permitted Acquisitions under
Section 8.06(j) exceeds (ii) the lesser of (x) $50,000,000 and (y) the aggregate
amount of cash contributed to Holdings as equity, or paid to Holdings to
purchase equity from Holdings, that is utilized to make Permitted Acquisitions
and not used to repay Term Loans under Section 4.02(A)(e).

               "Additional Dividend" shall mean one or more cash Dividends paid
by the Borrower to Holdings, with Holdings to use the proceeds thereof to
concurrently pay a cash Dividend of equal amount to its members, provided that
(i) all such Dividends shall be completed prior to February 28, 2002, (ii) after
giving effect to the payment by the Borrower of any such Dividend, the sum of
(x) the Total Unutilized Revolving Commitment plus (y) the unrestricted cash on
hand at the Borrower or any of its Subsidiaries or Foreign Subsidiaries shall be
at least $50,000,000 and (iii) the aggregate amount of all such Additional
Dividends paid by the Borrower shall not exceed $100,000,000.

               "Additional Mortgages" shall have the meaning provided in Section
7.10.

               "Adjusted Cash Flow" for any fiscal year shall mean Consolidated
Net Income for such fiscal year (after provision for taxes) plus (without
                                                            ----
duplication) the amount of all net non-cash charges (including, without
limitation, depreciation, deferred tax expense, non-cash interest

                                       -56-

<PAGE>

expense, amortization and other non-cash charges) that were deducted in arriving
at Consolidated Net Income for such fiscal year to the extent not representing a
cash payment to be made in the future, minus (without duplication) (x) the
                                       -----
amount of all non-cash gains and gains from sales of assets (other than sales of
inventory and equipment in the normal course of business) that were added in
arriving at Consolidated Net Income for such fiscal year and (y) the positive
difference, if any, between actual taxes paid in respect of such fiscal year and
tax expense deducted in arriving at Consolidated Net Income for such fiscal
year.

               "Adjusted RF Percentage" shall mean (x) at a time when no Lender
Default exists, for each Lender, such Lender's RF Percentage and (y) at a time
when a Lender Default exists (i) for each Lender that is a Defaulting Lender,
zero and (ii) for each Lender that is a Non-Defaulting Lender, the percentage
determined by dividing such Lender's Revolving Commitment at such time by the
Adjusted Total Revolving Commitment at such time, it being understood that all
references herein to Revolving Commitments and the Adjusted Total Revolving
Commitment at a time when the Total Revolving Commitment has been terminated
shall be references to the Revolving Commitments or Adjusted Total Revolving
Commitment, as the case may be, in effect immediately prior to such termination,
provided that (A) no Lender's Adjusted RF Percentage shall change upon the
--------
occurrence of a Lender Default from that in effect immediately prior to such
Lender Default if after giving effect to such Lender Default, and any repayment
of Revolving Loans and Swingline Loans at such time pursuant to Section
4.02(A)(a) or otherwise, the sum of (i) the aggregate outstanding principal
amount of Revolving Loans of all Non-Defaulting Lenders, plus (ii) the aggregate
outstanding principal amount of all Swingline Loans, plus (iii) the aggregate
amount of Letter of Credit Outstandings, exceeds the Adjusted Total Revolving
Commitment; (B) the changes to the Adjusted RF Percentage that would have become
effective upon the occurrence of a Lender Default but that did not become
effective as a result of the preceding clause (A) shall become effective on the
first date after the occurrence of the relevant Lender Default on which the sum
of (i) the aggregate outstanding principal amount of the Revolving Loans of all
Non-Defaulting Lenders, plus (ii) the aggregate outstanding principal amount of
all Swingline Loans, plus (iii) the aggregate amount of Letter of Credit
Outstandings is equal to or less than the Adjusted Total Revolving Commitment;
and (C) if (i) a Non-Defaulting Lender's Adjusted RF Percentage is changed
pursuant to the preceding clause (B) and (ii) any repayment of such Lender's
Revolving Loans, or Swingline Loans or Unpaid Drawings that were made during the
period commencing after the date of the relevant Lender Default and ending on
the date of such change to its Adjusted RF Percentage must be returned to the
Borrower as a preferential or similar payment in any bankruptcy or similar
proceeding of the Borrower, then the change to such Non-Defaulting Lender's
Adjusted RF Percentage effected pursuant to said clause (B) shall be reduced to
that positive change, if any, as would have been made to its Adjusted RF
Percentage if (x) such repayments had not been made and (y) the maximum change
to its Adjusted RF Percentage would have resulted in the sum of the outstanding
principal of Revolving Loans made by such Lender plus such Lender's new Adjusted
RF Percentage of the outstanding principal amount of Swingline Loans and of
Letter of Credit Outstandings equaling such Lender's Revolving Commitment at
such time.

               "Adjusted Total Revolving Commitment" shall mean at any time the
Total Revolving Commitment less the aggregate Revolving Commitments of all
Defaulting Lenders.


                                       -57-

<PAGE>

               "Administrative Agent" shall have the meaning provided in the
first paragraph of this Agreement and shall include any successor to the
Administrative Agent appointed pursuant to Section 11.09.

               "Affiliate" shall mean, with respect to any Person, any other
Person directly or indirectly controlling (including but not limited to all
directors and officers of such Person), controlled by, or under direct or
indirect common control with such Person. A Person shall be deemed to control a
corporation if such Person possesses, directly or indirectly, the power (i) to
vote 10% or more of the securities having ordinary voting power for the election
of directors of such corporation or (ii) to direct or cause the direction of the
management and policies of such corporation, whether through the ownership of
voting securities, by contract or otherwise.

               "Agents" shall have the meaning provided in the first paragraph
of this Agreement.

               "Agreement" shall mean this Credit Agreement, as the same may be
from time to time further modified, amended and/or supplemented.

               "Anticipated Reinvestment Amount" shall mean, with respect to any
Reinvestment Election, the amount specified in the Reinvestment Notice delivered
by the Borrower in connection therewith as the amount of the Net Cash Proceeds
from the related Asset Sale that the Borrower intends to use to purchase,
construct or otherwise acquire Reinvestment Assets.

               "Applicable Base Rate Margin" shall mean (i) in the case of A
Term Loans, Revolving Loans and Swingline Loans, 2.00% less the Margin Reduction
                                                       ----
Discount, if any and (ii) in the case of B Term Loans, 2.25% less the Margin
                                                             ----
Reduction Discount, if any.

               "Applicable Eurodollar Margin" shall mean (i) in the case of A
Term Loans and Revolving Loans, 3.00% less the Margin Reduction Discount, if any
                                      ----
and (ii) in the case of B Term Loans, 3.25% less the Margin Reduction Discount,
                                            ----
if any.

               "Applicable Percentage" shall mean (i) 0.375% at any time that
the Applicable Eurodollar Margin for Revolving Loans is 2.0% or less; and (ii)
 .50% at all other times.

               "Applicable Reserve Requirement" shall mean for any Eurodollar
Loan, the maximum rate, expressed as a decimal, at which reserves (including,
without limitation, any basic marginal, special, supplemental, emergency or
other reserves) are required to be maintained with respect thereto against
"Eurocurrency liabilities" (as such term is defined in Regulation D) under
regulations issued from time to time by the Board of Governors of the Federal
Reserve System or other applicable banking regulator. Without limiting the
effect of the foregoing, the Applicable Reserve Requirement shall reflect any
other reserves required to be maintained by such member banks with respect to
(i) any category of liabilities which includes overseas Dollar deposits by
reference to which the applicable Eurodollar Rate of a Loan is to be determined,
or (ii) any category of extensions of credit or other assets which include
Eurodollar Loans.

               "A/RF Maturity Date" shall mean the sixth anniversary of the
Initial Borrowing Date.

                                       -58-

<PAGE>

          "Asset Sale" shall mean and include (x) the sale, transfer or other
disposition by Holdings or any Subsidiary to any Person other than the Borrower
or any Subsidiary Guarantor of any asset of the Borrower or such Subsidiary
(other than sales, transfers or other dispositions in the ordinary course of
business of inventory and/or obsolete or excess equipment) and/or (y) the
receipt by Holdings or any Subsidiary of any insurance, condemnation or similar
proceeds in connection with a casualty or taking of any of its assets in excess
of the costs incurred by Holdings and its Subsidiaries in respect of such event
and of repairing or replacing the assets so damaged, destroyed or taken but in
all cases only to the extent that the aggregate Net Cash Proceeds of all such
sales, transfers, dispositions and receipts after the Initial Borrowing Date are
in excess of $10,000,000.

          "Assignment Agreement" shall mean the Assignment Agreement in the form
of Exhibit K (appropriately completed).

          "Authorized Officer" shall mean any senior officer of Holdings or the
Borrower designated as such in writing to the Administrative Agent by Holdings
or by the Borrower.

          "Average Daily Amount of Revolving Loans" for any Test Period shall
mean the average daily outstanding principal amount of Revolving Loans during
such Test Period.

          "B Maturity Date" shall mean the eighth anniversary of the Initial
Borrowing Date.

          "B Term Commitment" shall mean, with respect to each Lender, the
amount, if any, set forth opposite such Lender's name on Annex I hereto directly
below the column entitled "B Term Commitment" as the same may be terminated
pursuant to Section 3.03.

          "B Term Facility" shall mean the Facility evidenced by the Total B
Term Commitment.

          "B Term Loan" shall have the meaning provided in Section 1.01(b).

          "B Term Note" shall have the meaning provided in Section 1.05(a).

          "B TF Percentage" shall mean, at any time of determination thereof, a
fraction (expressed as a percentage) the numerator of which is equal to the
aggregate principal amount of B Term Loans outstanding at such time and the
denominator of which is equal to the aggregate principal amount of Term Loans
outstanding at such time, provided that the B TF Percentage shall be readjusted
for any required repayment of Term Loans under Section 4.02(A) at such time, if
any, that no A Term Loans remain outstanding.

          "Bankruptcy Code" shall have the meaning provided in Section 9.05.

          "Base Rate" at any time shall mean the higher of (i) the rate which is
1/2 of 1% in excess of the Federal Funds Effective Rate and (ii) the Prime
Lending Rate.

          "Base Rate Loan" shall mean each Loan bearing interest at the rates
provided in Section 1.08(a).

                                      -59-

<PAGE>

          "Borrower" shall mean United Defense Industries, Inc., a Delaware
corporation.

          "Borrowing" shall mean the incurrence of (i) Swingline Loans by the
Borrower from the Swingline Lender on a given date or (ii) one Type of Loan
pursuant to a single Facility by the Borrower from the Lenders having
Commitments with respect to such Facility on a pro rata basis on a given date
                                               --- ----
(or resulting from conversions on a given date), having in the case of
Eurodollar Loans the same Interest Period; provided that Base Rate Loans
                                           --------
incurred pursuant to Section 1.10(b) shall be considered part of any related
Borrowing of Eurodollar Loans.

          "BTCo" shall mean Bankers Trust Company in its individual capacity.

          "Business" shall have the meaning provided in Section 8.01(a).

          "Business Day" shall mean (i) for all purposes other than as covered
by clause (ii) below, any day excluding Saturday, Sunday and any day which shall
be in the City of New York a legal holiday or a day on which banking
institutions are authorized by law or other governmental actions to close and
(ii) with respect to all notices and determinations in connection with, and
payments of principal and interest on, Eurodollar Loans, any day which is a
Business Day described in clause (i) and which is also a day for trading by and
between banks in Dollar deposits in the interbank Eurodollar market.

          "Capital Lease" as applied to any Person shall mean any lease of any
property (whether real, personal or mixed) by that Person as lessee which, in
conformity with GAAP, is accounted for as a capital lease on the balance sheet
of that Person.

          "Capitalized Lease Obligations" shall mean all obligations under
Capital Leases of the Borrower or any of its Subsidiaries in each case taken at
the amount thereof accounted for as liabilities in accordance with GAAP.

          "Carlyle" shall mean TC Group L.L.C. (which operates under the trade
name "the Carlyle Group"), a Delaware limited liability company.

          "Carlyle Affiliate" shall mean any entity controlled directly or
indirectly by Carlyle.

          "Cash Equivalents" shall mean (i) securities issued or directly and
fully guaranteed or insured by the United States of America or any agency or
instrumentality thereof (provided that the full faith and credit of the United
                         --------
States of America is pledged in support thereof) having maturities of not more
than one year from the date of acquisition, (ii) Dollar denominated time
deposits, certificates of deposit and bankers' acceptances of (x) any Lender
that is a domestic commercial bank of recognized standing having capital and
surplus in excess of $500,000,000 or (y) any bank (or the parent company of such
bank) whose short-term commercial paper rating from Standard & Poor's Ratings
Services, a division of McGraw-Hill, Inc. ("S&P") is at least A-1 or the
equivalent thereof or from Moody's Investors Service, Inc. ("Moody's") is at
least P-1 or the equivalent thereof (any such bank, an "Approved Bank"), in each
case with maturities of not more than one year from the date of acquisition,
(iii) repurchase obligations with a term of not more than seven days for
underlying securities of the types described in clause (i) above entered into
with any bank meeting the qualifications specified in

                                      -60-

<PAGE>

clause (ii) above, (iv) commercial paper issued by any Approved Bank or by the
parent company of any Approved Bank and commercial paper issued by, or
guaranteed by, any industrial or financial company with a short-term commercial
paper rating of at least A-1 or the equivalent thereof by S&P or at least P-1 or
the equivalent thereof by Moody's, or guaranteed by any industrial company with
a long term unsecured debt rating of at least A or A2, or the equivalent of each
thereof, from S&P or Moody's, as the case may be, and in each case maturing
within six months after the date of acquisition, (v) marketable direct
obligations issued by any state of the United States of America or any political
subdivision of any such state or any public instrumentality thereof maturing
within one year from the date of acquisition thereof and, at the time of
acquisition, having one of the two highest ratings obtainable from either S&P or
Moody's, and (vi) investments in money market funds substantially all of whose
assets are comprised of securities of the type described in clauses (i) through
(v) above.

          "Cash Proceeds" shall mean, with respect to any Asset Sale, the
aggregate cash payments (including any cash received by way of deferred payment
pursuant to a note receivable issued in connection with such Asset Sale, other
than the portion of such deferred payment constituting interest, but only as and
when so received) received by the Borrower and/or any Subsidiary from such Asset
Sale.

          "CERCLA" shall mean the Comprehensive Environmental Response,
Compensation, and Liability Act of 1980, as amended, 42 U.S.C. (S) 9601 et seq.
                                                                        -- ---
          "Change of Control" shall mean, at any time and for any reason
whatsoever, (a) Holdings shall cease to own directly or indirectly 100% on a
fully diluted basis of the economic and voting interest in the Borrower's
capital stock other than up to 15% of such capital stock (on a fully diluted
basis) representing stock issued or issuable to management, directors, other
employees and/or advisors pursuant to stock option plans, equity purchase plans,
advisory agreements and/or similar plans or agreements or (b) Carlyle and
Carlyle Affiliates shall cease to have beneficial ownership (within the meaning
of Rule 13d-3 of the Exchange Act) on a fully diluted basis in the aggregate (i)
prior to any public offerings by Holdings of at least $40,000,000 of its capital
stock or membership interests (a "PO"), at least 50.1% of the economic and
voting interest in Holdings' capital stock and/or membership interests or on and
after a PO, at least 30% of the voting interests in Holdings capital stock
and/or membership interests or such higher percentage that exceeds the highest
percentage of Holdings' capital stock and/or membership interests owned by any
other person or group (as defined in Section 13(d) of the Exchange Act) or (c)
the Board of Directors of Holdings shall cease to consist of a majority of
Continuing Directors.

          "Code" shall mean the Internal Revenue Code of 1986, as amended from
time to time, and the regulations promulgated and rulings issued thereunder.
Section references to the Code are to the Code, as in effect at the date of this
Agreement and any subsequent provisions of the Code, amendatory thereof,
supplemental thereto or substituted therefor.

          "Collateral" shall mean all of the Collateral as defined in each of
the Security Documents.

                                      -61-

<PAGE>

          "Collateral Agent" shall mean the Administrative Agent acting as
collateral agent for the Lenders.

          "Commitment" shall mean, with respect to each Lender, such Lender's
Term Commitment and Revolving Commitment.

          "Commitment Commission" shall have the meaning provided in Section
3.01(a).

          "Consolidated Capital Expenditures" shall mean, for any period, the
aggregate of all cash expenditures (including in all events all amounts expended
under Capital Leases but excluding any amount representing capitalized interest)
by the Borrower and its Subsidiaries during that period that, in conformity with
GAAP, are or are required to be included in the property, plant or equipment
reflected in the consolidated balance sheet of the Borrower and its
Subsidiaries, provided that Consolidated Capital Expenditures shall in any event
              --------
(x) exclude the purchase price paid in cash in connection with the acquisition
of any Person (including through the purchase of all of the capital stock or
other ownership interests of such Person or through merger or consolidation) to
the extent allocable to property, plant and equipment and (y) exclude amounts
expended to acquire Reinvestment Assets.

          "Consolidated Debt" shall mean, as of any date of determination, (i)
the aggregate stated balance sheet amount of all Indebtedness of the Borrower
and its Subsidiaries on a consolidated basis as determined in accordance with
GAAP plus (ii) any Indebtedness for borrowed money of any other Person as to
which the Borrower and/or any of its Subsidiaries has created a guarantee or
other Contingent Obligation (but only to the extent of such guarantee or other
Contingent Obligation).

          "Consolidated EBIT" shall mean, for any period, (A) the sum of the
amounts for such period of (i) Consolidated Net Income, (ii) provisions for
taxes based on income, (iii) Consolidated Interest Expense, (iv) amortization or
write-off of deferred financing costs to the extent deducted in determining
Consolidated Net Income and (v) losses on sales of assets (excluding sales in
the ordinary course of business) and other extraordinary losses and other one
time charges less (B) the sum of (i) any cash payments made in such period in
             ----
respect of an event as to which a one-time non-cash charge was previously
incurred and (ii) gains on sales of assets (excluding sales in the ordinary
course of business) and other extraordinary gains and other one-time non-cash
gains, all as determined on a consolidated basis in accordance with GAAP.

          "Consolidated EBITDA" shall mean, for any period, the sum of the
amounts for such period of (i) Consolidated EBIT, (ii) depreciation expense,
(iii) amortization expense including any amortization or write-off related to
the write-up of any assets as a result of purchase accounting and (iv) LIFO
charges, provided that when determining the Leverage Ratio, Consolidated EBITDA
for any Test Period during which a Permitted Acquisition is consummated shall be
determined on a pro forma basis as if such Permitted Acquisition was consummated
                --- -----
on the first day of such Test Period.

          "Consolidated Interest Expense" shall mean, for any period, total
interest expense (including the portion that is attributable to Capital Leases
in accordance with GAAP) of the Borrower and its Subsidiaries on a consolidated
basis with respect to all outstanding

                                      -62-

<PAGE>

Indebtedness of the Borrower and its Subsidiaries (including, without
limitation, all commissions, discounts and other fees and charges owed with
respect to letters of credit and bankers' acceptance financing and without
duplication net costs and/or net benefits under Interest Rate Agreements, but
excluding, however, amortization of deferred financing costs to the extent
included in total interest expense) less (y) the interest income of such Persons
for such period.

          "Consolidated Net Income" shall mean for any period, the net income
(or loss) of the Borrower and its Subsidiaries on a consolidated basis for such
period taken as a single accounting period determined in conformity with GAAP,
provided that there shall be excluded from the calculation thereof (without
--------
duplication) (i) the income (or loss) of any Person (other than Subsidiaries of
the Borrower) in which any other Person (other than the Borrower or any of its
Subsidiaries) has a joint interest, except to the extent of the amount of
dividends or other distributions actually paid to the Borrower or any of its
Subsidiaries by such Person during such period, (ii) the income (or loss) of any
Person accrued prior to the date it becomes a Subsidiary of the Borrower or is
merged into or consolidated with the Borrower or any of its Subsidiaries or that
Person's assets are acquired by the Borrower or any of its Subsidiaries and
(iii) the income of any Subsidiary of the Borrower to the extent that the
declaration or payment of dividends or similar distributions by that Subsidiary
of that income is not at the time permitted by operation of the terms of its
charter or any agreement, instrument, judgment, decree, order, statute, rule or
governmental regulation applicable to that Subsidiary.

          "Consolidated Net Worth" shall mean, at any time for the determination
thereof, all amounts which, in conformity with GAAP, would be included under the
caption "total shareholders' equity" (or any like caption) on a consolidated
balance sheet of the Borrower and its Subsidiaries as at such date, provided
                                                                    --------
that any amortization of purchase accounting write-ups for inventory, property,
plant and equipment, and in-place research and development shall be excluded
from the calculation of Consolidated Net Worth.

          "Contingent Obligations" shall mean as to any Person any obligation of
such Person guaranteeing or intending to guarantee any Indebtedness, leases,
dividends or other obligations ("primary obligations") of any other Person (the
"primary obligor") in any manner, whether directly or indirectly, including,
without limitation, any obligation of such Person, whether or not contingent,
(a) to purchase any such primary obligation or any property constituting direct
or indirect security therefor, (b) to advance or supply funds (i) for the
purchase or payment of any such primary obligation or (ii) to maintain working
capital or equity capital of the primary obligor or otherwise to maintain the
net worth or solvency of the primary obligor, (c) to purchase property,
securities or services primarily for the purpose of assuring the owner of any
such primary obligation of the ability of the primary obligor to make payment of
such primary obligation or (d) otherwise to assure or hold harmless the owner of
such primary obligation against loss in respect thereof, provided, however, that
                                                         --------  -------
the term Contingent Obligation shall not include endorsements of instruments for
deposit or collection in the ordinary course of business. The amount of any
Contingent Obligation shall be deemed to be an amount equal to the stated
maximum of the Contingent Obligation or, if none, the stated or determinable
amount of the primary obligation in respect of which such Contingent Obligation
is made or, if there is no stated or determinable amount of the primary
obligation, the maximum reasonably anticipated liability in respect thereof
(assuming such Person is required to perform thereunder) as determined by such
Person in good faith.

                                      -63-

<PAGE>

          "Continuing Directors" shall mean the directors of Holdings on the
Initial Borrowing Date and each other director if such director's nomination for
the election to the Board of Directors of Holdings is recommended by a majority
of the then Continuing Directors.

          "Credit Documents" shall mean this Agreement, the Notes, the Security
Documents, the Subsidiary Guaranty and any documents executed in connection
therewith.

          "Credit Event" shall mean and include the making of a Loan or the
issuance of a Letter of Credit.

          "Credit Party" shall mean Holdings, the Borrower and the Subsidiary
Guarantors.

          "Cumulative Net Income" shall mean at any time, Consolidated Net
Income for the period (taken as one accounting period) commencing on October 1,
2001 and ending on the last day of the last fiscal quarter then ended.

          "Deemed ECF" shall mean for any fiscal year of Holdings any
prepayments of the principal of Term Loans made during such year pursuant to
Section 4.01.

          "Default" shall mean any event, act or condition which with notice or
lapse of time, or both, would constitute an Event of Default.

          "Defaulting Lender" shall mean any Lender with respect to which a
Lender Default is in effect.

          "Dividends" shall have the meaning provided in Section 8.09.

          "Documents" shall mean the Credit Documents.

          "Dollars" and the sign "$" shall each mean freely transferable lawful
money of the United States.

          "Domestic Subsidiary" shall mean each Subsidiary of the Borrower that
is not a Foreign Subsidiary.

          "Effective Date" shall have the meaning provided in Section 12.10.

          "Eligible Transferee" shall mean and include a commercial bank,
financial institution or other institutional "accredited investor" as defined in
SEC Regulation D.

          "Environmental Claims" means any and all administrative, regulatory or
judicial actions, suits, demands, demand letters, claims, liens, notices of
noncompliance or violation, investigations (other than internal reports prepared
by the Borrower or any of its Subsidiaries solely in the ordinary course of such
Person's business and not in response to any third party action or request of
any kind) or proceedings relating in any way to any Environmental Law or any
permit issued, or any approval given, under any such Environmental Law
(hereafter, "Claims"), including, without limitation, (a) any and all Claims by
governmental or regulatory authorities for enforcement, cleanup, removal,
response, remedial or other actions or damages

                                      -64-

<PAGE>

pursuant to any applicable Environmental Law, and (b) any and all Claims by any
third party seeking damages, contribution, indemnification, cost recovery,
compensation or injunctive relief resulting from Hazardous Materials arising
from alleged injury or threat of injury to health, safety or the environment.

          "Environmental Law" means any applicable Federal, state, foreign or
local statute, law, rule, regulation, ordinance, code and rule of common law now
or hereafter in effect and in each case as amended, and any binding judicial or
administrative interpretation thereof, including any binding judicial or
administrative order, consent decree or judgment, relating to the environment or
Hazardous Materials, including, without limitation, CERCLA; RCRA; the Federal
Water Pollution Control Act, as amended, 33 U.S.C. (S) 1251 et seq.; the Toxic
                                                            -- ---
Substances Control Act, 15 U.S.C. (S) 7401 et seq.; the Clean Air Act, 42 U.S.C.
                                           -- ---
(S) 7401 et seq.; the Safe Drinking Water Act, 42 U.S.C. (S) 3808 et seq.; the
         -- ---                                                   -- ---
Oil Pollution Act of 1990, 33 U.S.C. (S) 2701 et seq.; and any applicable state
                                              -- ---
and local or foreign counterparts or equivalents.

          "EP Percentage" shall mean in the case of (i) (x) equity issued to, or
equity contributions made by, (A) Persons (or controlling or controlled
affiliates thereof) who are owners of the equity of Holdings on the Initial
Borrowing Date and/or (B) any Person (whether or not an existing shareholder of
Holdings) the proceeds of which are to be utilized solely for investments in
privatizations, co-productions, Joint Ventures and Foreign Subsidiaries, to make
Permitted Acquisitions and/or to make Capital Expenditures and (y) equity
issuances and/or equity contributions utilized to fund (directly or indirectly)
a Dividend by Holdings permitted by Section 8.09(ii), 0% and (ii) all other
equity issuances and equity contributions, 100%.

          "ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended from time to time, and the regulations promulgated and rulings
issued thereunder. Section references to ERISA are to ERISA, as in effect at the
date of this Agreement and any subsequent provisions of ERISA, amendatory
thereof, supplemental thereto or substituted therefor.

          "ERISA Affiliate" shall mean each person (as defined in Section 3(9)
of ERISA) which together with Holdings, the Borrower or a Subsidiary of the
Borrower would be deemed to be a "single employer" (i) within the meaning of
Section 414(b), (c), (m) or (o) of the Code or (ii) as a result of the Borrower
or a Subsidiary of the Borrower being or having been a general partner of such
person.

          "Eurodollar Loans" shall mean each Loan bearing interest at the rates
provided in Section 1.08(b).

          "Eurodollar Rate" shall mean with respect to each Interest Period for
a Eurodollar Loan, the rate per annum obtained by dividing (and rounding upward
to the next whole multiple of 1/100 of 1%) (i) (a) the rate per annum (rounded
to the nearest 1/100 of 1%) equal to the rate determined by the Administrative
Agent to be the offered rate which appears on the page of the Telerate Screen
which displays an average British Bankers Association Interest Settlement Rate
(such page currently being page number 3740 or 3750, as applicable) for deposits
(for delivery on the first day of such period) with a term equivalent to such
period in Dollars, determined as of approximately 11:00 a.m. (London, England
time) on the date which is two Business Days prior

                                      -65-

<PAGE>

to the commencement of such Interest Period, or (b) in the event the rate
referenced in the preceding clause (a) does not appear on such page or service
or if such page or service shall cease to be available, the rate per annum
(rounded to the nearest 1/100 of 1%) equal to the rate determined by the
Administrative Agent to be the offered rate on such other page or other service
which displays an average British Bankers Association Interest Settlement Rate
for deposits (for delivery on the first day of such period) with a term
equivalent to such period in Dollars, determined as of approximately 11:00 a.m.
(London, England time) on the date which is two Business Days prior to the
commencement of such Interest Period, or (c) in the event the rates referenced
in the preceding clauses (a) and (b) are not available, the rate per annum
(rounded to the nearest 1/100 of 1%) equal to the offered quotation rate to
first class banks in the London interbank market by Administrative Agent for
deposits (for delivery on the first day of the relevant period) in Dollars of
amounts in same day funds comparable to the principal amount of the applicable
Loan of the Administrative Agent, in its capacity as a Lender, for which the
Eurodollar Rate is then being determined with maturities comparable to such
period as of approximately 11:00 a.m. (London, England time) on the date which
is two Business Days prior to the commencement of such Interest Period, by (ii)
an amount equal to (a) one minus (b) the Applicable Reserve Requirement.
                           -----

          "Event of Default" shall have the meaning provided in Section 9.

          "Excess Cash Flow" shall mean, for any period, the remainder of (i)
Adjusted Cash Flow for such period, plus (ii) to the extent not included in (i)
above, any amounts received by Holdings and its Subsidiaries in settlement of,
or in payment of any judgments resulting from, actions, suits or proceedings
with respect to Holdings and/or its Subsidiaries from the first day to the last
day of such period, minus (iii) the sum of (x) the amount of Consolidated
Capital Expenditures made in compliance with Section 8.05 during such period
(less any amount thereof financed through the incurrence of Indebtedness), (y)
any repayments or prepayments during such period of the principal amount of Term
Loans, except prepayments of the principal amount of Term Loans made pursuant to
Sections 4.02(A)(c), (d), (e), (f) and/or (g) and (z) the net amount of
investments, loans and advances made pursuant to Section 8.06 during such period
(giving effect to any return on any such investment, loan or advance) except to
the extent made in reliance on clause (ii) of the definition of Investment
Basket.

          "Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.

          "Existing Credit Agreement" shall mean the Credit Agreement, dated as
of October 6, 1997, among Holdings, the Borrower, various lending institutions,
Citicorp USA, Inc. and Lehman Commercial Paper Inc., as Documentation Agents,
and BTCo, as Administrative Agent and as Syndication Agent, as the same has been
amended, modified and/or supplemented on or prior to the Effective Date.

          "Existing Indebtedness" shall have the meaning provided in Section
5.01(l).

          "Existing Joint Ventures and Investments" shall mean each of FNSS,
United Defense Systems Ltd. and Omnitech Robotics, LLC.

                                      -66-

<PAGE>

          "Existing Letters of Credit" shall mean each letter of credit
outstanding on the Initial Borrowing Date that is (x) issued by a Person that
becomes a Lender hereunder on or prior to the Initial Borrowing Date, (y) to
remain outstanding after the Initial Borrowing Date and (z) listed on Annex V,
Part II, hereto, it being understood that each such letter of credit shall
retain the expiry applicable to it on the Initial Borrowing Date and may be
extendable upon expiry for successive periods of up to 12 months, but not beyond
the third Business Day prior to the A/RF Maturity Date, on terms acceptable to
the respective Letter of Credit Issuer and the Administrative Agent.

          "Expiration Date" shall mean September 30, 2001.

          "Facility" shall mean any of the credit facilities established under
this Agreement, i.e., the A Term Facility, the B Term Facility and the Revolving
                ----
Facility.

          "Facing Fee" shall have the meaning provided in Section 3.01(c).

          "Federal Funds Effective Rate" shall mean for any period, a
fluctuating interest rate equal for each day during such period to the weighted
average of the rates on overnight Federal Funds transactions with members of the
Federal Reserve System arranged by Federal Funds brokers, as published for such
day (or, if such day is not a Business Day, for the next preceding Business Day)
by the Federal Reserve Bank of New York, or, if such rate is not so published
for any day which is a Business Day, the average of the quotations for such day
on such transactions received by the Administrative Agent from three Federal
Funds brokers of recognized standing selected by the Administrative Agent.

          "Fees" shall mean all amounts payable pursuant to, or referred to in,
Section 3.01.

          "Final Maturity Date" shall mean the ninth anniversary of the Initial
Borrowing Date.

          "FNSS" shall mean FMC Savunma Sistemleri A.S. and its successors.

          "Foreign Pension Plan" shall mean any plan, fund (including, without
limitation, any superannuation fund) or other similar program established or
maintained outside the United States of America by Holdings, the Borrower or any
one or more of its Subsidiaries primarily for the benefit of employees of the
Borrower or such Subsidiaries residing outside the United States of America,
which plan, fund or other similar program provides, or results in, retirement
income, a deferral of income in contemplation of retirement or payments to be
made upon termination of employment, and which plan is not subject to ERISA or
the Code.

          "Foreign Subsidiary" shall mean each Subsidiary of the Borrower which
is not incorporated or organized in the United States or any State or territory
thereof.

          "GAAP" shall mean generally accepted accounting principles in the
United States of America as in effect on the date of this Agreement; it being
understood and agreed that determinations in accordance with GAAP for purposes
of Section 8, including defined terms as used therein, are subject (to the
extent provided therein) to Section 12.07(a).

                                      -67-

<PAGE>

          "Guaranteed Creditors" shall mean and include each of the Agents, the
Collateral Agent, the Lenders and each party (other than any Credit Party) party
to an Interest Rate Agreement to the extent that such party constitutes a
Secured Creditor.

          "Guaranteed Obligations" shall mean (i) the principal and interest on
each Note issued by the Borrower, and Loans made, under this Agreement and all
reimbursement obligations and Unpaid Drawings with respect to Letters of Credit,
together with all the other obligations (including obligations which, but for
the automatic stay under Section 362(a) of the Bankruptcy Code, would become
due) and liabilities (including, without limitation, indemnities, fees and
interest thereon) of the Borrower to any Lender or any Agent and/or the
Collateral Agent now existing or hereafter incurred under, arising out of or in
connection with this Agreement or any other Credit Document and the due
performance and compliance with all the terms, conditions and agreements
contained in the Credit Documents by the Borrower and (ii) all obligations
(including obligations which, but for the automatic stay under Section 362(a) of
the Bankruptcy Code, would become due) and liabilities of the Borrower owing
under any Interest Rate Agreement entered into by the Borrower with a Secured
Creditor, whether now in existence or hereafter arising, and the due performance
and compliance with all terms, conditions and agreements contained therein.

          "Guarantor" shall mean Holdings and each Subsidiary Guarantor.

          "Guaranty" shall mean and include each of the Holdings Guaranty and
the Subsidiary Guaranty.

          "Hazardous Materials" means (a) any petroleum or petroleum products,
radioactive materials, asbestos in any form that is or could become friable,
urea formaldehyde foam insulation, transformers or other equipment that
contains, electric fluid containing levels of polychlorinated biphenyls, and
radon gas and (b) any chemicals, materials or substances defined as or included
in the definition of "hazardous substances," "hazardous waste," "hazardous
materials," "extremely hazardous waste," "restricted hazardous waste," "toxic
substances," "toxic pollutants," "contaminants," or "pollutants," or words of
similar import, under any applicable Environmental Law.

          "Holdings" shall mean Iron Horse Investors, L.L.C., a Delaware limited
liability company.

          "Holdings Guaranty" shall mean the guaranty of Holdings pursuant to
Section 13.

          "Inactive Subsidiary" shall mean any Subsidiary of the Borrower that
owns (and continues to own) no assets (other than nominal assets, which shall
not include any partnership interest in UDLP) and is (and continues to be)
inactive.

          "Indebtedness" of any Person shall mean, without duplication, (i) all
indebtedness of such Person for borrowed money, (ii) the deferred purchase price
of assets or services which in accordance with GAAP would be shown on the
liability side of the balance sheet of such Person, (iii) the face amount of all
letters of credit issued for the account of such Person and, without
duplication, all drafts drawn thereunder, (iv) all Indebtedness of a second
Person secured by any Lien on any property owned by such first Person, whether
or not such indebtedness has

                                      -68-

<PAGE>

been assumed (to the extent of the fair market value of such property), (v) all
Capitalized Lease Obligations of such Person, (vi) all obligations of such
Person to pay a specified purchase price for goods or services whether or not
delivered or accepted, i.e., take-or-pay and similar obligations, (vii) all net
                       ----
obligations of such Person under Interest Rate Agreements and (viii) all
Contingent Obligations of such Person, (other than Contingent Obligations
arising from the guaranty by such Person of the obligations of the Borrower
and/or its Subsidiaries to the extent such guaranteed obligations do not
constitute Indebtedness and are otherwise permitted hereunder), provided that
                                                                --------
Indebtedness shall not include trade payables, accrued expenses and receipt of
progress and advance payments, in each case arising in the ordinary course of
business.

          "Initial Borrowing Date" shall mean the date upon which the initial
Borrowing of Loans occurs.

          "Interest Period" with respect to any Loan shall mean the interest
period applicable thereto, as determined pursuant to Section 1.09.

          "Interest Rate Agreement" shall mean any interest rate swap agreement,
any interest rate cap agreement, any interest rate collar agreement or other
similar agreement or arrangement designed to protect the Borrower or any
Subsidiary against fluctuations in interest rates.

          "Investments" shall have the meaning provided in Section 8.06(j).

          "Investment Basket" shall mean at any time the greater of (x)
$60,000,000 and (y) the sum of (i) $60,000,000 plus (ii) 25% (or, if the
Leverage Ratio on the last day of such fiscal year is less than 3.0:1.0, 50%) of
aggregate Excess Cash Flow for each period (an "ECF Period") then ended for
which Excess Cash Flow had been, at the time, determined for purposes of Section
4.02(A)(f) and as to which at least 120 days have passed since the end of such
period plus (iii) 25% (or if the Leverage Ratio on the last day of such fiscal
year is less than 3.0:1.0, 50%) of aggregate Deemed ECF for each ECF Period plus
(iv) if the Leverage Ratio at the end of the last Test Period then ended was
less than 3.0:1.0, $50,000,000.

          "Joint Venture" means any Person formed for the purpose of exploiting
business opportunities to the extent, in the case of any Person organized or
created under the laws of the United States or any State thereof, less than 80%
of the ownership interests therein are owned directly and indirectly by the
Borrower, and shall include in any event the Existing Joint Ventures and
Investments to the extent the Borrower continues to own directly and indirectly
less than 80% of the ownership interest therein.

          "Leasehold" of any Person means all of the right, title and interest
of such Person as lessee or licensee in, to and under leases or licenses of
land, improvements and/or fixtures.

          "Lender" shall have the meaning provided in the first paragraph of
this Agreement.

          "Lender Default" shall mean (i) the refusal (which has not been
retracted) of a Lender to make available its portion of any incurrence of Loans
or to fund its portion of any unreimbursed payment under Section 2.04(c) or (ii)
a Lender having notified the Administrative

                                      -69-

<PAGE>

Agent and/or the Borrower that it does not intend to comply with the obligations
under Section 1.01 or under Section 2.04(c), in the case of either clause (i) or
(ii) as a result of the appointment of a receiver or conservator with respect to
such Lender at the direction or request of any regulatory agency or authority.

          "Lender Register" shall have the meaning provided in Section 12.16.

          "Letter of Credit" shall have the meaning provided in Section 2.01(a).

          "Letter of Credit Fee" shall have the meaning provided in Section
3.01(b).

          "Letter of Credit Issuer" shall mean (i) BTCo or any of its
affiliates, including but not limited to Deutsche Bank AG, New York Branch, (ii)
with respect to each Existing Letter of Credit, the Lender issuing same and
(iii) any Lender which at the request of the Borrower and with the consent of
the Administrative Agent (such consent not to be unreasonably withheld) agrees
in such Lender's sole discretion to become a Letter of Credit issuer for the
purpose of issuing Letters of Credit pursuant to Section 2.

          "Letter of Credit Outstandings" shall mean, at any time, the sum of,
without duplication, (i) the aggregate Stated Amount of all outstanding Letters
of Credit and (ii) the aggregate amount of all Unpaid Drawings.

          "Letter of Credit Request" shall have the meaning provided in Section
2.02(a).

          "Leverage Ratio" shall mean, at any date of determination, the ratio
of (x) the sum of (i) Consolidated Debt on such date less the outstanding
principal amount of Revolving Loans on such date included in Consolidated Debt
plus (ii) the Average Daily Amount of Revolving Loans for the Test Period ended
on such date to (y) Consolidated EBITDA for the Test Period ending on such date.

          "Lien" shall mean any mortgage, pledge, security interest,
encumbrance, lien or charge of any kind (including any agreement to give any of
the foregoing, any conditional sale or other title retention agreement or any
lease in the nature thereof).

          "Loan" shall have the meaning provided in Section 1.01.

          "Management Agreement" shall mean the management agreement with
Carlyle and/or Carlyle Affiliates, as in effect on the Initial Borrowing Date.

          "Mandatory Borrowing" shall have the meaning provided in Section
1.01(e).

          "Margin Reduction Discount" shall mean zero, provided that the Margin
                                                       --------
Reduction Discount shall be increased to .25%, .50%, .75%, 1.0%, 1.25% or 1.50%
per annum as the case may be, as specified in clauses (i), (ii), (iii), (iv),
(v) or (vi) below, at any time after the Initial Borrowing Date, when, and for
so long as, the ratio set forth in such clause has been satisfied as at the end
of the then Relevant Test Periods:

                                      -70-

<PAGE>

                  (i)   the Margin Reduction Discount shall be .25% per annum in
the event that as of the end of the Relevant Test Period the Leverage Ratio is
equal to or greater than 2.50 to 1 but less than 3.00 to 1; or

                  (ii)  the Margin Reduction Discount shall be .50% per annum in
the event that as of the end of the Relevant Test Period the Leverage Ratio is
less than 2.50 to 1 and, in the case of A Term Loans and Revolving Loans, equal
to or greater than 2.25 to 1;

                  (iii) the Margin Reduction Discount for A Term Loans and
Revolving Loans shall be .75% per annum in the event that as of the end of the
Relevant Test Period the Leverage Ratio is equal to greater than 2.00 to 1 but
less than 2.25 to 1;

                  (iv)  the Margin Reduction Discount for A Term Loans and
Revolving Loans shall be 1.0% per annum in the event that as of the end of the
Relevant Test Period the Leverage Ratio is equal to or greater than 1.75 to 1
but less than 2.00 to 1;

                  (v)   the Margin Reduction Discount for A Term Loans and
Revolving Loans shall be 1.25% per annum in the event that as of the end of the
Relevant Test Period the Leverage Ratio is equal to or greater than 1.50 to 1
but less than 1.75 to 1; and

                  (vi)  the Margin Reduction Discount for A Term Loans and
Revolving Loans shall be 1.50% per annum in the event that as of the end of the
Relevant Test Period the Leverage Ratio is less than 1.50 to 1

The Leverage Ratio shall be determined for the Relevant Test Period, by delivery
of an officer's certificate of the Borrower to the Lenders pursuant to Section
7.01(e), which certificate shall set forth the calculation of the Leverage
Ratio. The Margin Reduction Discount so determined shall apply, except as set
forth below, from the date on which such officer's certificate is delivered to
the Administrative Agent to the earlier of (x) the date on which the next
certificate is delivered to the Administrative Agent pursuant to Section 7.01(e)
and (y) the 45th day following the end of the fiscal quarter in which such first
certificate was delivered to the Administrative Agent (or the 90th day if such
fiscal quarter was the last fiscal quarter of a fiscal year). Notwithstanding
anything to the contrary contained above, the Margin Reduction Discount shall be
zero (x) if no officer's certificate has been delivered to the Lenders pursuant
to Section 7.01(e) which sets forth the Leverage Ratio for the Relevant Test
Period or the financial statements upon which any such calculations are based
have not been delivered, until such a certificate and/or financial statements
are delivered and (y) at all times when there shall exist a Default under
Section 9.01 or an Event of Default. It is understood and agreed that the Margin
Reduction Discount as provided above shall in no event be cumulative and only
the Margin Reduction Discount available pursuant to any of clause (i), (ii),
(iii) or (iv) if any, contained in this definition shall be applicable.

                  "Margin Stock" shall have the meaning provided in Regulation
U.

                  "Material Adverse Effect" shall mean a material adverse effect
on the business, property, assets, liabilities or financial condition of
Holdings and its Subsidiaries taken as a whole.

                                      -71-

<PAGE>

                  "Material Subsidiary" shall mean any Subsidiary having gross
assets at any time with a value of at least 5% of consolidated gross assets of
the Borrower and its Subsidiaries and/or gross revenues for the last four fiscal
quarters of at least 5% of the consolidated gross revenues of the Borrower and
its Subsidiaries.

                  "Maximum Swingline Amount" shall mean the lesser of
$25,000,000 and the amount of the Total Revolving Commitment.

                  "Minimum Borrowing Amount" shall mean (i) for Term Loans,
Revolving Loans and Swingline Loans maintained as Base Rate Loans, $250,000 and
(ii) for Term Loans and Revolving Loans maintained as Eurodollar Loans,
$1,000,000.

                  "Modified Investment Basket" shall mean the Investment Basket
determined as if the two references therein to "$60,000,000" were references to
"$30,000,000".

                  "Mortgage" shall have the meaning provided in Section
5.01(i)(III).

                  "Mortgage Policies" shall have the meaning provided in Section
5.01(i)(III).

                  "Mortgaged Properties" shall mean the Real Property of the
Borrower and its Subsidiaries listed on Annex IV and designated as "Mortgaged
Properties" therein.

                  "Multiemployer Plan" shall mean any multiemployer plan as
defined in section 4001(a)(3) of ERISA which is contributed to by (or to which
there is an obligation to contribute of) Holdings or any of its Subsidiaries or
an ERISA Affiliate and each such plan for the five year period immediately
following the latest date on which Holdings, any such Subsidiary or ERISA
Affiliate contributed to or had an obligation to contribute to such plan.

                  "Net Acquisition Expenditure" shall mean at any time (A) the
aggregate Acquisition Expenditures then expended less (B) the sum of (i) the net
cash proceeds received from the sale by the Borrower or any Subsidiary Guarantor
of any assets or businesses acquired pursuant to Permitted Acquisitions effected
under Section 8.06(j) and (ii) the aggregate Adjusted Cash Flow to date that is
attributable to the assets and businesses acquired pursuant to Permitted
Acquisitions effected under Section 8.06(j) to the extent not included in a
determination of the amount specified in clause (ii) of the definition of
Investment Basket, with all amounts included in clauses (A) and (B) to be set
forth in a certificate of the Borrower in substance and in detail reasonably
satisfactory to the Administrative Agent that is delivered to the Administrative
Agent prior to the making of a Permitted Acquisition.

                  "Net Cash Proceeds" shall mean, with respect to any Asset
Sale, the Cash Proceeds resulting therefrom net (without duplication) of
expenses of sale (including payment of principal, premium and interest of
Indebtedness secured by the assets the subject of the Asset Sale and required to
be, and which is, repaid under the terms thereof as a result of such Asset
Sale), and incremental taxes paid or payable as a result thereof and other
amounts owing to governmental entities as a result of such sale.

                  "Net Funding Excess" shall mean on February 28, 2002 an amount
(if a positive number) equal to the lesser of (i) the excess of (A) $100,000,000
over (B) the aggregate amount

                                      -72-

<PAGE>

(if any) paid by the Borrower pursuant to the Additional Dividend and (ii) the
excess of (A) the sum of the Total Unutilized Revolving Commitment plus the
unrestricted cash on hand at the Borrower or any of its Subsidiaries or Foreign
Subsidiaries, in each case as determined as of the opening of business on such
date over (B) $50,000,000.

                  "Non-Defaulting Lender" shall mean a Lender that is not a
Defaulting Lender.

                  "Note" shall mean and include each A Term Note, each B Term
Note, each Revolving Note and the Swingline Note.

                  "Notice" shall have the meaning provided in Section 7.14.

                  "Notice of Borrowing" shall have the meaning provided in
Section 1.03.

                  "Notice of Conversion" shall have the meaning provided in
Section 1.06.

                  "Notice Office" shall mean the office of the Administrative
Agent at 130 Liberty Street, New York, New York or such other office as the
Administrative Agent may designate to the Borrower in writing from time to time.

                  "Obligations" shall mean all amounts, direct or indirect,
contingent or absolute, of every type or description, and at any time existing,
owing to any Agent, the Collateral Agent or any Lender pursuant to the terms of
this Agreement or any other Credit Document.

                  "Participant" shall have the meaning provided in Section
2.04(a).

                  "Payment Office" shall mean the office of the Administrative
Agent at 130 Liberty Street, New York, New York or such other office as the
Administrative Agent may designate to the Borrower in writing from time to time.

                  "PBGC" shall mean the Pension Benefit Guaranty Corporation
established pursuant to Section 4002 of ERISA, or any successor thereto.

                  "Permitted Acquisition" shall mean the acquisition by the
Borrower or a Subsidiary Guarantor of assets from, or no less than 85% of the
equity interests in, a Person or Persons engaged in the Business provided that
the Borrower shall be in compliance on a pro forma basis with all the covenants
                                         --- -----
contained in this Agreement after giving effect to each such acquisition.

                  "Permitted Liens" shall mean Liens described in Section 8.03.

                  "Person" shall mean any individual, partnership, joint
venture, firm, corporation, limited liability company, association, trust or
other enterprise or any government or political subdivision or any agency,
department or instrumentality thereof.

                  "Plan" shall mean any pension plan as defined in Section 3(2)
of ERISA (other than a multiemployer plan as defined in Section 3(37) of ERISA),
which is maintained or contributed to by (or to which there is an obligation to
contribute of) Holdings or any of its

                                      -73-

<PAGE>

Subsidiaries or an ERISA Affiliate, and each such plan for the five year period
immediately following the latest date on which Holdings, any such Subsidiary of
the Borrower or an ERISA Affiliate maintained, contributed to or had an
obligation to contribute to such plan.

                  "Pledge Agreement" shall have the meaning provided in Section
5.01(i)(I).

                  "Pledged Securities" shall mean all the Pledged Securities as
defined in the Pledge Agreement.

                  "Prime Lending Rate" shall mean the rate which Bankers Trust
Company announces from time to time as its prime lending rate, the Prime Lending
Rate to change when and as such prime lending rate changes. The Prime Lending
Rate is a reference rate and does not necessarily represent the lowest or best
rate actually charged to any customer. Bankers Trust Company may make commercial
loans or other loans at rates of interest at, above or below the Prime Lending
Rate.

                  "RCRA" shall mean the Resource Conservation and Recovery Act,
as amended, 42 U.S.C.(S)6901 et seq.
                             -- ---

                  "Real Property" of any Person shall mean all of the right,
title and interest of such Person in and to land, improvements and fixtures,
including Leaseholds.

                  "Refinancing" shall mean the repayment in full of all
outstanding Indebtedness under the Existing Credit Agreement, together with all
fees and other amounts owing thereunder, and the termination of all commitments
thereunder.

                  "Regulation D" shall mean Regulation D of the Board of
Governors of the Federal Reserve System as from time to time in effect and any
successor to all or a portion thereof establishing reserve requirements.

                  "Regulation U" shall mean Regulation U of the Board of
Governors of the Federal Reserve System as from time to time in effect and any
successor to all or a portion thereof establishing margin requirements.

                  "Reinvestment Assets" shall mean any assets to be employed in
the business of the Borrower and its Subsidiaries as described in Section 8.01.

                  "Reinvestment Election" shall have the meaning provided in
Section 4.02(A)(c).

                  "Reinvestment Notice" shall mean a written notice signed by an
Authorized Officer of the Borrower stating that the Borrower, in good faith,
intends and expects to use all or a specified portion of the Net Cash Proceeds
of an Asset Sale to purchase, construct or otherwise acquire Reinvestment
Assets.

                  "Reinvestment Prepayment Amount" shall mean, with respect to
any Reinvestment Election, the amount, if any, on the Reinvestment Prepayment
Date relating thereto by which (a) the Anticipated Reinvestment Amount in
respect of such Reinvestment

                                      -74-

<PAGE>

Election exceeds (b) the aggregate amount thereof expended by Holdings and its
Subsidiaries to acquire Reinvestment Assets.

                  "Related Funds" shall mean any entities that invest in loans
and are managed and/or advised by the same investment advisor.

                  "Reinvestment Prepayment Date" shall mean, with respect to any
Reinvestment Election, the earliest of (i) the date, if any, upon which the
Administrative Agent, on behalf of the Required Lenders, shall have delivered a
written termination notice to the Borrower, provided that such notice may only
be given while an Event of Default under 9.01 exists, (ii) the date occurring
360 days after such Reinvestment Election and (iii) the date on which the
Borrower shall have determined not to proceed with the purchase, construction or
other acquisition of Reinvestment Assets with the related Anticipated
Reinvestment Amount.

                  "Relevant Test Period" shall mean, at any time, the Test
Period ending on the last day of the then most recently ended fiscal quarter of
the Borrower with respect to which an officer's certificate has been delivered
to the Lenders pursuant to Section 7.01(e).

                  "Replaced Lender" shall have the meaning provided in Section
1.13.

                  "Replacement Lender" shall have the meaning provided in
Section 1.13.

                  "Reportable Event" shall mean an event described in Section
4043(c) of ERISA with respect to a Plan that is subject to Title IV of ERISA
other than those events as to which the 30-day notice period is waived under
subsection .22, .23, .25, .27 or .28 of PBGC Regulation Section 4043.

                  "Required Lenders" shall mean Non-Defaulting Lenders the
outstanding principal amount of Term Loans of which plus the Revolving
Commitments (or, if the Total Revolving Commitment has been terminated, the
Revolving Commitments immediately prior to such termination) of which constitute
greater than 50% of the sum of the total outstanding principal amount of Term
Loans and of the Revolving Commitments (or, if the Total Revolving Commitment
has been terminated, the Revolving Commitments immediately prior to such
termination) of all Non-Defaulting Lenders.

                  "Required TF Lenders" with respect to the A Term Facility or
the B Term Facility, respectively, shall mean Lenders the sum of whose
outstanding Term Loans under such Facility represents an amount greater than 50%
of the sum of all outstanding Term Loans under such Facility.

                  "Revolving Commitment" shall mean, with respect to each
Lender, the amount set forth opposite such Lender's name in Annex I hereto
directly below the column entitled "Revolving Commitment" as the same may be (x)
reduced or terminated from time to time pursuant to Section 3.02, 3.03 and/or 9
or (y) adjusted from time to time as a result of assignments to or from such
Lender pursuant to Section 1.13 and/or 12.04.

                  "Revolving Facility" shall mean the Facility evidenced by the
Total Revolving Commitment.

                                      -75-

<PAGE>

                  "Revolving Loan" shall have the meaning provided in Section
1.01(c).

                  "Revolving Note" shall have the meaning provided in Section
1.05(a).

                  "RF Lender" shall mean at any time each Lender with a
Revolving Commitment or with outstanding Revolving Loans.

                  "RF Percentage" shall mean at any time for each RF Lender, the
percentage obtained by dividing such Lender's Revolving Commitment by the Total
Revolving Commitment provided that if the Total Revolving Commitment has been
terminated, the RF Percentage of each RF Lender shall be determined by dividing
such RF Lender's Revolving Commitment immediately prior to such termination by
the Total Revolving Commitment immediately prior to such termination.

                  "Scheduled Repayment" shall have the meaning provided in
Section 4.02(A)(b).

                  "SEC" shall have the meaning provided in Section 7.01(h).

                  "SEC Regulation D" shall mean Regulation D as promulgated
under the Securities Act of 1933, as amended, as the same may be in effect from
time to time.

                  "Section 4.04 Certificate" shall have the meaning provided in
Section 4.04(b)(ii).

                  "Secured Creditor" shall mean and include any Secured Creditor
as defined in any Security Document.

                  "Security Agreement" shall have the meaning provided in
Section 5.01(i)(II).

                  "Security Agreement Collateral" shall mean all "Collateral" as
defined in the relevant Security Agreement.

                  "Security Documents" shall mean the Pledge Agreement, the
Security Agreement, each Mortgage and each Additional Mortgage, if any.

                  "Senior Subordinated Note Documents" shall mean and include
each of the documents, instruments (including the Senior Subordinated Notes) and
other agreements entered into by the Borrower (including, without limitation,
the Senior Subordinated Note Indenture and any documents in respect of any
Senior Subordinated Notes issued upon the exchange offer as contemplated by the
Senior Subordinated Note Indenture) relating to the issuance by the Borrower of
the Senior Subordinated Notes, as in effect on the Initial Borrowing Date and as
the same may be entered into, supplemented, amended or modified from time to
time in accordance with the terms hereof and thereof.

                  "Senior Subordinated Note Indenture" shall mean an Indenture
entered into by and between the Borrower and Norwest Bank Minnesota, N.A., as
trustee thereunder, with respect to Senior Subordinated Notes as in effect on
the Initial Borrowing Date and as the same may be executed, modified, amended or
supplemented from time to time in accordance with the terms hereof and thereof.

                                      -76-

<PAGE>

                  "Senior Subordinated Notes" shall mean the 8-3/4% Senior
Subordinated Notes due 2007 in an initial aggregate amount of $200,000,000 and
issued by the Borrower under the Senior Subordinated Note Indenture and to the
extent remaining outstanding after giving effect to the consummation of the
Tender Offer, as in effect on the Initial Borrowing Date and as the same may be
issued, supplemented, amended or modified from time to time in accordance with
the terms thereof and hereof.

                  "Specified Repayment" shall have the meaning provided in
Section 4.02(B)(c).

                  "Special Dividend" shall mean the payment by the Borrower to
Holdings on or about the Initial Borrowing Date of a Dividend in an aggregate
amount of up to $300,000,000 and the concurrent payment of the amount so
received by Holdings to its members as a Dividend.

                  "Standby Letter of Credit" shall have the meaning provided in
Section 2.01(a).

                  "Stated Amount" of each Letter of Credit shall mean the
maximum available to be drawn thereunder (regardless of whether any conditions
for drawing could then be met).

                  "Subsidiary" of any Person shall mean and include (i) any
corporation more than 50% of whose stock of any class or classes having by the
terms thereof ordinary voting power to elect a majority of the directors of such
corporation (irrespective of whether or not at the time stock of any class or
classes of such corporation shall have or might have voting power by reason of
the happening of any contingency) is at the time owned by such Person directly
or indirectly through Subsidiaries and (ii) any partnership, association, joint
venture or other entity in which such Person directly or indirectly through
Subsidiaries, has more than a 50% equity interest at the time, provided that
"Subsidiary" shall in no event include any Joint Venture or any Foreign
Subsidiary. Unless otherwise expressly provided, all references herein to
"Subsidiary" shall mean a Subsidiary of Holdings.

                  "Subsidiary Guarantors" shall mean each Domestic Subsidiary
other than Inactive Subsidiaries.

                  "Subsidiary Guaranty" shall have the meaning provided in
Section 5.01(h).

                  "Supermajority Lenders" shall mean Non-Defaulting Lenders the
outstanding principal amount of Term Loans of which plus the Revolving
Commitments (or, if the Total Revolving Commitment has been terminated, the
Revolving Commitments immediately prior to such termination) of which constitute
greater than 75% of the sum of the total outstanding principal amount of Term
Loans and of the Revolving Commitments (or, if the Total Revolving Commitment
has been terminated, the Revolving Commitments immediately prior to such
termination) of all Non-Defaulting Lenders.

                  "Swingline Expiry Date" shall mean the date which is five
Business Days prior to the A/RF Maturity Date.

                  "Swingline Lender" shall mean BTCo or, in the event BTCo
ceases to be Swingline Lender upon agreement with the Borrower, any Lender which
at the request of the

                                      -77-

<PAGE>

Borrower and the consent of the Administrative Agent agrees in such Lender's
sole discretion to become the Swingline Lender.

                  "Swingline Loan" shall have the meaning provided in Section
1.01(e).

                  "Swingline Note" shall have the meaning provided in Section
1.05(d).

                  "Syndication Date" shall mean the earlier of (x) the 45/th/
day following the Initial Borrowing Date and (y) the date upon which the Co-Lead
Arrangers determine in their sole discretion (and notify the Borrower) that the
primary syndication (and the resultant addition of Persons as Lenders pursuant
to Section 12.04) has been completed.

                  "Taxes" shall have the meaning provided in Section 4.04(a).

                  "Tender Offer" shall mean the offer to purchase and consent
solicitation relating to the Borrower's Senior Subordinated Notes in the form
first issued and as amended or modified in a manner reasonably satisfactory to
the Administrative Agent, provided that extensions to the "Expiration Date" and
"Consent Date" (as defined therein) do not have to be satisfactory to the
Administrative Agent, with all references to "Tender Offer" to include the
Borrower's early purchase option thereunder.

                  "Term Commitment" shall mean for any Lender the sum of its A
Term Commitment and its B Term Commitment .

                  "Term Loans" shall mean, collectively, the A Term Loans and
the B Term Loans.

                  "Test Period" shall mean at any time the four consecutive
fiscal quarters of the Borrower (taken as one accounting period) then ending or
then last ended.

                  "Total A Term Commitment" shall mean the sum of the A Term
Commitments of each of the Lenders.

                  "Total B Term Commitment" shall mean the sum of the B Term
Commitments of each of the Lenders.

                  "Total Commitment" shall mean the sum of the Total A Term
Commitment, the Total B Term Commitment and the Total Revolving Commitment.

                  "Total Revolving Commitment" shall mean the sum of the
Revolving Commitments of each of the Lenders.

                  "Total Term Commitment" shall mean, at any time, the sum of
the Total A Term Commitment and Total B Term Commitment.

                  "Total Unutilized Revolving Commitment" shall mean, at any
time, (i) the Total Revolving Commitment at such time less (ii) the sum of the
aggregate principal amount of all Revolving Loans and Swingline Loans plus the
Letter of Credit Outstandings at such time.

                                      -78-

<PAGE>

                  "Trade Letter of Credit" shall have the meaning provided in
Section 2.01(a).

                  "Transaction" shall mean (i) the payment of the Special
Dividend, (ii) the Refinancing, (iii) the Tender Offer and (iv) the incurrence
of Loans and issuance of Letters of Credit, if any, on the Initial Borrowing
Date.

                  "Type" shall mean any type of Loan determined with respect to
the interest option applicable thereto, i.e., a Base Rate Loan or Eurodollar
                                        -----
Loan.

                  "UCC" shall mean the Uniform Commercial Code.

                  "UDLP" shall mean United Defense, L.P., a Delaware limited
partnership.

                  "Unfunded Current Liability" of any Plan shall mean the
amount, if any, by which the actuarial present value of the accumulated plan
benefits under the Plan as of the close of its most recent plan year, determined
in accordance with actuarial assumptions at such time consistent with Statement
of Financial Accounting Standards No. 87, exceeds the market value of the assets
allocable thereto.

                  "Unpaid Drawing" shall have the meaning provided in Section
2.03.

                  "Unutilized Revolving Commitment" for any RF Lender at any
time shall mean the excess of (i) the Revolving Commitment of such Lender over
(ii) the sum of (x) the aggregate outstanding principal amount of Revolving
Loans and Swingline Loans made by such Lender plus (y) an amount equal to such
Lender's Adjusted RF Percentage of the Letter of Credit Outstandings at such
time.

                  "U.S." shall mean the United States of America.

                  "Wholly-Owned Subsidiary" of any Person shall mean any
Subsidiary of such Person to the extent all of the capital stock or other
ownership interests in such Subsidiary, other than directors' qualifying shares,
is owned directly or indirectly by such Person.

                  "Written" or "in writing" shall mean any form of written
communication or a communication by means of telex, facsimile transmission,
telegraph or cable.

                  SECTION 11.  The Agent.
                               ---------

                  11.01 Appointment. The Lenders hereby designate BTCo as
                        -----------
Administrative Agent (for purposes of this Section 11, the terms "Administrative
Agent" shall include BTCo in its capacity as Administrative Agent pursuant to
this Agreement and as Collateral Agent pursuant to the Security Documents) to
act as specified herein and in the other Credit Documents. The Lenders hereby
designate Lehman Commercial Paper Inc. as Syndication Agent to act as specified
herein and in the other Credit Documents. Each Lender hereby irrevocably
authorizes, and each holder of any Note by the acceptance of such Note shall be
deemed irrevocably to authorize, any Agent (other than the Documentation Agents)
to take such action on its behalf under the provisions of this Agreement, the
other Credit Documents and any other instruments and agreements referred to
herein or therein and to exercise such powers and to perform such

                                      -79-

<PAGE>

duties hereunder and thereunder as are specifically delegated to or required of
each Agent (other than the Documentation Agents) by the terms hereof and thereof
and such other powers as are reasonably incidental thereto. Each Agent may
perform any of their duties hereunder by or through their respective officers,
directors, agents, employees or affiliates. Deutsche Banc Alex. Brown Inc. and
Lehman Brothers Inc. shall have acted as Co-Lead Arrangers in connection with
initial syndication of this Agreement and shall have no further duties
hereunder.

                  11.02 Nature of Duties. The Agents shall not have any duties
                        ----------------
or responsibilities except those expressly set forth in this Agreement and the
Security Documents, if any. No Agent nor any of its respective officers,
directors, agents, employees or affiliates shall be liable for any action taken
or omitted by them hereunder or under any other Credit Document or in connection
herewith or therewith, unless caused by their gross negligence or willful
misconduct. The duties of the Agents, if any, shall be mechanical and
administrative in nature; the Agents shall not have by reason of this Agreement
or any other Credit Document a fiduciary relationship in respect of any Lender
or the holder of any Note; and nothing in this Agreement or any other Credit
Document, expressed or implied, is intended to or shall be so construed as to
impose upon the Agents any obligations in respect of this Agreement or any other
Credit Document except as expressly set forth herein or therein.

                  11.03 Lack of Reliance on the Agents. Independently and
                        ------------------------------
without reliance upon the Agents, each Lender and the holder of each Note, to
the extent it deems appropriate, has made and shall continue to make (i) its own
independent investigation of the financial condition and affairs of Holdings and
its Subsidiaries in connection with the making and the continuance of the Loans
and the taking or not taking of any action in connection herewith and (ii) its
own appraisal of the creditworthiness of Holdings and its Subsidiaries and,
except as expressly provided in this Agreement, the Agents shall not have any
duty or responsibility, either initially or on a continuing basis, to provide
any Lender or the holder of any Note with any credit or other information with
respect thereto, whether coming into its possession before the making of the
Loans or at any time or times thereafter. The Agents shall not be responsible to
any Lender or the holder of any Note for any recitals, statements, information,
representations or warranties herein or in any document, certificate or other
writing delivered in connection herewith or for the execution, effectiveness,
genuineness, validity, enforceability, perfection, collectibility, priority or
sufficiency of this Agreement or any other Credit Document or the financial
condition of Holdings and its Subsidiaries or be required to make any inquiry
concerning either the performance or observance of any of the terms, provisions
or conditions of this Agreement or any other Credit Document, or the financial
condition of Holdings and its Subsidiaries or the existence or possible
existence of any Default or Event of Default.

                  11.04 Certain Rights of the Agents. If the Agents shall
                        ----------------------------
request instructions from the Required Lenders with respect to any act or action
(including failure to act) in connection with this Agreement or any other Credit
Document, the Agents shall be entitled to refrain from such act or taking such
action unless and until the Agents shall have received instructions from the
Required Lenders; and the Agents shall not incur liability to any Person by
reason of so refraining. Without limiting the foregoing, neither any Lender nor
the holder of any Note shall have any right of action whatsoever against the
Agents as a result of the Agents acting or refraining from acting hereunder or
under any other Credit Document in accordance with the instructions of the
Required Lenders.

                                      -80-

<PAGE>

                  11.05 Reliance. Each of the Agents shall be entitled to rely,
                        --------
and shall be fully protected in relying, upon any note, writing, resolution,
notice, statement, certificate, telex, teletype, facsimile or telecopier
message, cablegram, radiogram, order or other document or telephone message
signed, sent or made by any Person that such Agent believed to be the proper
Person, and, with respect to all legal matters pertaining to this Agreement and
any other Credit Document and its duties hereunder and thereunder, upon advice
of counsel selected by such Agent.

                  11.06 Indemnification. To the extent the Agents are not
                        ---------------
reimbursed and indemnified by the Borrower, each Defaulting Lender (to the
extent so able) and the Non-Defaulting Lenders will reimburse and indemnify the
Agents, in proportion to their respective Loans and Commitments, for and against
any and all liabilities, obligations, losses, damages, penalties, claims,
actions, judgments, costs, expenses or disbursements of whatsoever kind or
nature which may be imposed on, asserted against or incurred by the Agents in
performing their respective duties hereunder or under any other Credit Document,
in any way relating to or arising out of this Agreement or any other Credit
Document; provided that no Lender shall be liable for any portion of such
          --------
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements resulting from the gross negligence or willful
misconduct of any Agent.

                  11.07 The Agents in Their Individual Capacity. With respect to
                        ----------------------------------------
its obligation to make Loans under this Agreement, the Agents shall have the
rights and powers specified herein for a "Lender" and may exercise the same
rights and powers as though it were not performing the duties specified herein;
and the term "Lenders," "Required Lenders," "holders of Notes" or any similar
terms shall, unless the context clearly otherwise indicates, include the Agents
in their individual capacity. The Agents may accept deposits from, lend money
to, and generally engage in any kind of banking, trust or other business with
any Credit Party or any Affiliate of any Credit Party as if it were not
performing the duties specified herein, and may accept fees and other
consideration from Holdings, or any other Credit Party for services in
connection with this Agreement and otherwise without having to account for the
same to the Lenders.

                  11.08 Holders. The Administrative Agent may deem and treat the
                        -------
payee of any Note as the owner thereof for all purposes hereof unless and until
a written notice of the assignment, transfer or endorsement thereof, as the case
may be, shall have been filed with the Administrative Agent. Any request,
authority or consent of any Person who, at the time of making such request or
giving such authority or consent, is the holder of any Note shall be conclusive
and binding on any subsequent holder, transferee, assignee or indorsee, as the
case may be, of such Note or of any Note or Notes issued in exchange therefor.

                  11.09 Resignation by the Administrative Agent. (a) The
                        ---------------------------------------
Administrative Agent may resign from the performance of all its functions and
duties hereunder and/or under the other Credit Documents at any time by giving
15 Business Days' prior written notice to the Borrower and the Lenders. Such
resignation shall take effect upon the appointment of a successor Administrative
Agent pursuant to clauses (b) and (c) below or as otherwise provided below.

                  (b) Upon any such notice of resignation, the Required Lenders
shall appoint a successor Administrative Agent hereunder or thereunder who shall
be a commercial bank or trust company reasonably acceptable to the Borrower.

                                      -81-

<PAGE>

                  (c) If a successor Administrative Agent shall not have been so
appointed within such 15 Business Day period, the Administrative Agent, with the
consent of the Borrower, shall then appoint a successor Administrative Agent who
shall serve as Administrative Agent hereunder or thereunder until such time, if
any, as the Required Lenders appoint a successor Administrative Agent as
provided above.

                  (d) If no successor Administrative Agent has been appointed
pursuant to clause (b) or (c) above by the 30th Business Day after the date such
notice of resignation was given by the Administrative Agent, the Administrative
Agent's resignation shall become effective and the Required Lenders shall
thereafter perform all the duties of the Administrative Agent hereunder and/or
under any other Credit Document until such time, if any, as the Required Lenders
appoint a successor Administrative Agent as provided above.

                  SECTION 12.  Miscellaneous.
                               -------------

                  12.01 Payment of Expenses, etc. The Borrower agrees to: (i)
                        -------------------------
whether or not the transactions herein contemplated are consummated, pay all
reasonable out-of-pocket costs and expenses of the Administrative Agent in
connection with the negotiation, preparation, execution and delivery of the
Credit Documents and the documents and instruments referred to therein and any
amendment, waiver or consent relating thereto (including, without limitation,
the reasonable fees and disbursements of White & Case LLP, counsel for the
Administrative Agent) and of the Agents and each of the Lenders in connection
with the enforcement of the Credit Documents and the documents and instruments
referred to therein (including, without limitation, the reasonable fees and
disbursements of counsel for the Agents and for each of the Lenders, provided
that, except in the case of a bankruptcy of any Credit Party, no more than one
counsel for the Agents and the Lenders may be used in any jurisdiction); (ii)
pay and hold each of the Lenders harmless from and against any and all present
and future stamp and other similar taxes with respect to the foregoing matters
and save each of the Lenders harmless from and against any and all liabilities
with respect to or resulting from any delay or omission (other than to the
extent attributable to such Lender) to pay such taxes; and (iii) indemnify each
Lender (including in its capacity as Agent or Letter of Credit Issuer), its
officers, directors, employees, representatives and agents from and hold each of
them harmless against any and all losses, liabilities, claims, damages or
expenses incurred by any of them as a result of, or arising out of, or in any
way related to, or by reason of, (a) any investigation, litigation or other
proceeding (whether or not the Agents or any Lender is a party thereto and
whether or not any such investigation, litigation or other proceeding is between
or among the Agents, any Lender, any Credit Party or any third Person or
otherwise) related to the entering into and/or performance of any Document or
the use of the proceeds of any Loans hereunder or the Transaction or the
consummation of any transactions contemplated in any Credit Document, or (b) the
actual or alleged presence of Hazardous Materials in the air, surface water or
groundwater or on the surface or subsurface of any Real Property owned or at any
time operated by the Borrower or any of its Subsidiaries, the release,
generation, storage, transportation, handling or disposal of Hazardous Materials
at any location, whether or not owned or operated by the Borrower or any of its
Subsidiaries, the non-compliance of any Real Property with foreign, federal,
state and local laws, regulations, and ordinances (including applicable permits
thereunder) applicable to any Real Property, or any Environmental Claim asserted
against the Borrower, any of its Subsidiaries or any Real Property owned or at
any time operated by Holdings or any of its Subsidiaries, including, in each
case, without limitation, the

                                      -82-

<PAGE>

reasonable fees and disbursements of counsel incurred in connection with any
such investigation, litigation or other proceeding (but excluding any such
losses, liabilities, claims, damages or expenses to the extent incurred by
reason of the gross negligence or willful misconduct of the Person to be
indemnified or of any other Indemnitee who is such Person or an affiliate of
such Person).

                  12.02 Right of Setoff. In addition to any rights now or
                        ---------------
hereafter granted under applicable law or otherwise, and not by way of
limitation of any such rights, if an Event of Default then exists, each Lender
is hereby authorized at any time or from time to time, without presentment,
demand, protest or other notice of any kind to any Credit Party or to any other
Person, any such notice being hereby expressly waived, to set off and to
appropriate and apply any and all deposits (general or special but not trust
accounts) and any other Indebtedness at any time held or owing by such Lender
(including, without limitation, by branches and agencies of such Lender wherever
located) to or for the credit or the account of any Credit Party against and on
account of the Obligations and liabilities of such Credit Party to such Lender
under this Agreement or under any of the other Credit Documents, including,
without limitation, all interests in Obligations of such Credit Party purchased
by such Lender pursuant to Section 12.06(b), and all other claims of any nature
or description arising out of or connected with this Agreement or any other
Credit Document, irrespective of whether or not such Lender shall have made any
demand hereunder and although said Obligations, liabilities or claims, or any of
them, shall be contingent or unmatured.

                  12.03 Notices. Except as otherwise expressly provided herein,
                        -------
all notices and other communications provided for hereunder shall be in writing
(including telegraphic, telex, telecopier, facsimile or cable communication) and
mailed, telegraphed, telexed, telecopied, faxed, cabled or delivered, if to a
Credit Party, at the address specified opposite its signature below or in the
other relevant Credit Documents, as the case may be; if to any Lender, at its
address specified for such Lender on Annex II hereto; or, at such other address
as shall be designated by any party in a written notice to the other parties
hereto. All such notices and communications shall be mailed, telegraphed,
telexed, telecopied, or cabled or sent by overnight courier, and shall be
effective when received.

                  12.04 Benefit of Agreement. (a) This Agreement shall be
                        --------------------
binding upon and inure to the benefit of and be enforceable by the respective
successors and assigns of the parties hereto, provided that neither the Borrower
                                              --------
nor Holdings may assign or transfer any of its rights or obligations hereunder
without the prior written consent of the Lenders. Each Lender may at any time
grant participations in any of its rights hereunder or under any of the Notes to
another financial institution, provided that in the case of any such
                               --------
participation, the participant shall not have any rights under this Agreement or
any of the other Credit Documents (the participant's rights against such Lender
in respect of such participation to be those set forth in the agreement executed
by such Lender in favor of the participant relating thereto) and all amounts
payable by the Borrower hereunder shall be determined as if such Lender had not
sold such participation, except that the participant shall be entitled to the
benefits of Sections 1.10, 2.05 and 4.04 of this Agreement to the extent that
such Lender would be entitled to such benefits if the participation had not been
entered into or sold, and, provided further, that no Lender shall transfer,
                           ----------------
grant or assign any participation under which the participant shall have rights
to approve any amend

                                      -83-

<PAGE>

ment to or waiver of this Agreement or any other Credit Document except to the
extent such amendment or waiver would (i) extend the final scheduled maturity of
any Loan or Note in which such participant is participating (it being understood
that any waiver of the application of any prepayment or the method of any
application of any prepayment to, the amortization of the Term Loans shall not
constitute an extension of the final maturity date), or reduce the rate or
extend the time of payment of interest or Fees thereon (except in connection
with a waiver of the applicability of any post-default increase in interest
rates), or reduce the principal amount thereof, or increase such participant's
participating interest in any Commitment over the amount thereof then in effect
(it being understood that a waiver of any Default or Event of Default or of a
mandatory reduction in the Total Commitment, or a mandatory prepayment, shall
not constitute a change in the terms of any Commitment), (ii) release all or
substantially all of the Collateral or (iii) consent to the assignment or
transfer by any Credit Party of any of its rights and obligations under this
Agreement or any other Credit Document.

                  (b) Notwithstanding the foregoing, (x) any Lender may assign
all or a portion of its outstanding A Term Loans and/or B Term Loans and/or
Revolving Commitment and its rights and obligations hereunder to (i) one or more
Lenders and/or Affiliates of such Lender which are Eligible Transferees or (ii)
in the case of any Lender that is a fund that invests in loans, any other fund
that invests in loans and is managed and/or advised by the same investment
advisor of such Lender or by an Affiliate of such investment advisor, and (y)
with the consent of the Administrative Agent and the Borrower (which consents
shall not be unreasonably withheld and (I) in the case of the Borrower, shall
not be required (A) if a Default or Event of Default shall have occurred and is
continuing or (B) in the case of assignments of B Term Loans made after the
Syndication Date and (II) in the case of the Administrative Agent, shall not be
required in the case of assignments of B Term Loans by Lehman Commercial Paper
Inc. (or any of its affiliates)), any Lender may assign all or a portion of its
outstanding A Term Loans and/or B Term Loans and/or Revolving Commitment and its
rights and obligations hereunder to one or more Eligible Transferees (treating
any fund that invests in loans and any other fund that invests in loans and is
managed and/or advised by the same investment advisor of such fund or by an
Affiliate of such investment advisor of such fund or by an Affiliate of such
investment advisor as a single Eligible Transferee). No assignment pursuant to
the immediately preceding sentence shall to the extent such assignment
represents an assignment to an institution other than one or more Lenders
hereunder, be in an aggregate amount less than (i) in the case of A Term Loans
and Revolving Commitments $5,000,000 (the "A/RF Minimum Assignment Amount") and
(ii) in the case of B Term Loans, $2,000,000 (the "B Minimum Assignment
Amount"), or result in a Lender holding (x) A Term Loans and a Revolving
Commitment in an amount greater than zero but less than the A/RF Minimum
Assignment Amount or (y) B Term Loans in an amount greater than zero but less
than B Minimum Assignment Amount. If any Lender so sells or assigns all or a
part of its rights hereunder or under the Notes, any reference in this Agreement
or the Notes to such assigning Lender shall thereafter refer to such Lender and
to the respective assignee to the extent of their respective interests and the
respective assignee shall have, to the extent of such assignment (unless
otherwise provided therein), the same rights and benefits as it would if it were
such assigning Lender. Each assignment pursuant to this Section 12.04(b) shall
be effected by the assigning Lender and the assignee Lender executing an
Assignment Agreement and giving the Administrative Agent written notice thereof.
At the time of any such assignment, (i) either the assigning or the assignee
Lender shall pay to the Administrative Agent a nonrefundable assignment fee of
$3,500 (or as otherwise agreed by the Administrative Agent), (ii) Annex I shall
be deemed to be amended to reflect the Commitments and Loans of the respective
assignee

                                      -84-

<PAGE>

(which shall result in a direct reduction to the Commitment or Commitments of
the assigning Lender) and of the other Lenders, and (iii) upon surrender of the
old Notes the Borrower will, at its own expense, issue new Notes to the
respective assignee and to the assigning Lender in conformity with the
requirements of Section 1.05, provided further that such transfer or assignment
                              ----------------
will not become effective until recorded by the Administrative Agent on the
Lender Register pursuant to Section 12.16. To the extent of any assignment
pursuant to this Section 12.04(b) to a Person which is not already a Lender
hereunder and which is not a United States Person (as such term is defined in
Section 7701(a)(30) of the Code) for Federal income tax purposes, the respective
assignee Lender shall provide to the Borrower and the Administrative Agent the
appropriate Internal Revenue Service Forms (and, if applicable, a Section 4.04
Certificate) described in Section 4.04(b). To the extent that an assignment
pursuant to this Section 12.04(b) would, at the time of such assignment, result
in increased costs under Section 1.10, 1.11, 2.05, or 4.04 from those being
charged by the respective assigning Lender prior to such assignment, then the
Borrower shall not be obligated to pay such increased costs (although the
Borrower shall be obligated to pay any other increased costs of the type
described above resulting from changes after the date of the respective
assignment). Nothing in this clause (b) shall prevent or prohibit any Lender
from pledging its Notes or Loans to a Federal Reserve Bank in support of
borrowings made by such Lender from such Federal Reserve Bank and, with notice
to (and, in the event such pledge or assignment effects a transfer of voting
rights from the pledgor to the pledgee, the consent of) the Administrative Agent
and the Borrower, any Lender which is a fund may, for the purpose of effecting a
securitization program, pledge or assign a security interest in all or any
portion of its Loans and Notes to any holder of obligations owed, or securities
issued, by such Lender including to any trustee for, or any other representative
of, such holders. No pledge or assignment pursuant to the preceding sentence
shall release the transferor Lender from any of its obligations hereunder, and
the Borrower, Agents, Letter of Credit Issuer and the other Lenders shall only
be required to deal with such transferor Lender for all purposes of this
Agreement.

                  (c) Notwithstanding any other provisions of this Section
12.04, no transfer or assignment of the interests or obligations of any Lender
hereunder or any grant of participation therein shall be permitted if such
transfer, assignment or grant would require the Borrower to file a registration
statement with the SEC or to qualify the Loans under the "Blue Sky" laws of any
State.

                  (d) Each Lender initially party to this Agreement hereby
represents, and each Person that became a Lender pursuant to an assignment
permitted by this Section 12 will, upon its becoming party to this Agreement,
represent that it is an Eligible Transferee which makes or invests in loans in
the ordinary course of its business and that it will make or acquire Loans for
its own account in the ordinary course of such business, provided that subject
                                                         --------
to the preceding clauses (a) and (b), the disposition of any promissory notes or
other evidences of or interests in Indebtedness held by such Lender shall at all
times be within its exclusive control.

                  12.05 No Waiver; Remedies Cumulative. No failure or delay on
                        ------------------------------
the part of any Agent or any Lender in exercising any right, power or privilege
hereunder or under any other Credit Document and no course of dealing between
any Credit Party and any Agent or any Lender shall operate as a waiver thereof;
nor shall any single or partial exercise of any right, power or privilege
hereunder or under any other Credit Document preclude any other or further

                                      -85-

<PAGE>

exercise thereof or the exercise of any other right, power or privilege
hereunder or thereunder. The rights and remedies herein expressly provided are
cumulative and not exclusive of any rights or remedies which any Agent or any
Lender would otherwise have. No notice to or demand on any Credit Party in any
case shall entitle any Credit Party to any other or further notice or demand in
similar or other circumstances or constitute a waiver of the rights of the
Agents or the Lenders to any other or further action in any circumstances
without notice or demand.

                  12.06 Payments Pro Rata. (a) The Administrative Agent agrees
                        -----------------
that promptly after its receipt of each payment from or on behalf of any Credit
Party in respect of any Obligations of such Credit Party hereunder, it shall
distribute such payment to the Lenders (other than any Lender that has expressly
waived its right to receive its pro rata share thereof) pro rata based upon
                                --- ----
their respective shares, if any, of the Obligations with respect to which such
payment was received.

                  (b) Each of the Lenders agrees that, if it should receive any
amount hereunder (whether by voluntary payment, by realization upon security, by
the exercise of the right of setoff or banker's lien, by counterclaim or cross
action, by the enforcement of any right under the Credit Documents, or
otherwise) which is applicable to the payment of the principal of, or interest
on, the Loans or Fees, of a sum which with respect to the related sum or sums
received by other Lenders is in a greater proportion than the total of such
Obligation then owed and due to such Lender bears to the total of such
Obligation then owed and due to all of the Lenders immediately prior to such
receipt, then such Lender receiving such excess payment shall purchase for cash
without recourse or warranty from the other Lenders an interest in the
Obligations of the respective Credit Party to such Lenders in such amount as
shall result in a proportional participation by all of the Lenders in such
amount, provided that if all or any portion of such excess amount is thereafter
        --------
recovered from such Lender, such purchase shall be rescinded and the purchase
price restored to the extent of such recovery, but without interest.

                  (c) Notwithstanding anything to the contrary contained herein,
the provisions of the preceding Sections 12.06(a) and (b) shall be subject to
the express provisions of this Agreement which require, or permit, differing
payments to be made to Non-Defaulting Lenders as opposed to Defaulting Lenders.

                  12.07 Calculations; Computations. (a) The financial statements
                        --------------------------
to be furnished to the Lenders pursuant hereto shall be made and prepared in
accordance with GAAP consistently applied throughout the periods involved
(except as set forth in the notes thereto or as otherwise disclosed in writing
by the Borrower to the Lenders), provided that (x) except as otherwise
                                 --------
specifically provided herein, all computations of Excess Cash Flow and all
computations determining compliance with Sections 8.11 through 8.13, inclusive,
including definitions used therein, shall utilize accounting principles and
policies in effect at the time of the preparation of, and in conformity with
those used to prepare, the December 31, 2000 annual consolidated financial
statements of Holdings delivered to the Lenders pursuant to Section 6.10(b) and
(y) that if at any time such computations utilize accounting principles
different from those utilized in the financial statements furnished to the
Lenders, such financial statements shall be accompanied by reconciliation
work-sheets.

                                      -86-

<PAGE>

                  (b) All computations of interest and Fees hereunder shall be
made on the actual number of days elapsed over a year of 365 or 366 days, as the
case may be, provided that interest on Eurodollar Loans shall be calculated on
the actual number of days elapsed over a year of 360 days.

                  12.08 Governing Law; Submission to Jurisdiction; Venue; Waiver
                        --------------------------------------------------------
of Jury Trial. (a) This Agreement and the other Credit Documents and the rights
-------------
and obligations of the parties hereunder and thereunder shall, except as
expressly provided for in the other Credit Documents, be construed in accordance
with and be governed by the law of the state of New York. Any legal action or
proceeding with respect to this Agreement or any other Credit Document may be
brought in the courts of the State of New York sitting in the Borough of
Manhattan or of the United States for the Southern District of New York, and, by
execution and delivery of this Agreement, each Credit Party hereby irrevocably
accepts for itself and in respect of its property, generally and
unconditionally, the jurisdiction of the aforesaid courts. Each Credit Party
further irrevocably consents to the service of process out of any of the
aforementioned courts in any such action or proceeding by the mailing of copies
thereof by registered or certified mail, postage prepaid, to each Credit Party
located outside New York City and by hand delivery to each Credit Party located
within New York City, at its address for notices pursuant to Section 12.03, such
service to become effective 30 days after such mailing. Each Credit Party hereby
irrevocably designates appoints and empowers CT Corporation System, with offices
on the date hereof located at 111 Eighth Avenue, New York, New York 10011, as
its agent for service of process in respect of any such action or proceeding.
Nothing herein shall affect the right of the Administrative Agent, any Lender to
serve process in any other manner permitted by law or to commence legal
proceedings or otherwise proceed against any Credit Party in any other
jurisdiction.

                  (b) Each Credit Party hereby irrevocably waives any objection
which it may now or hereafter have to the laying of venue of any of the
aforesaid actions or proceedings arising out of or in connection with this
Agreement or any other Credit Document brought in the courts referred to in
clause (a) above and hereby further irrevocably waives and agrees not to plead
or claim in any such court that any such action or proceeding brought in any
such court has been brought in an inconvenient forum.

                  (c) Each of the parties to this Agreement hereby irrevocably
waives all right to a trial by jury in any action, proceeding or counterclaim
arising out of or relating to this Agreement, the other Credit Documents or the
transactions contemplated hereby or thereby.

                  12.09 Counterparts. This Agreement may be executed in any
                        ------------
number of counterparts and by the different parties hereto on separate
counterparts, each of which when so executed and delivered shall be an original,
but all of which shall together constitute one and the same instrument. A set of
counterparts executed by all the parties hereto shall be lodged with the
Borrower and the Administrative Agent.

                  12.10 Effectiveness. This Agreement shall become effective on
                        -------------
the date (the "Effective Date") on which Holdings, the Borrower and each of the
Lenders shall have signed a copy hereof (whether the same or different copies)
and shall have delivered the same to the Administrative Agent at the Payment
Office of the Administrative Agent or, in the case of the

                                      -87-

<PAGE>

Lenders, shall have given to the Administrative Agent telephonic (confirmed in
writing), written telex or facsimile transmission notice (actually received) at
such office that the same has been signed and mailed to it.

                  12.11 Headings Descriptive. The headings of the several
                        --------------------
sections and subsections of this Agreement are inserted for convenience only and
shall not in any way affect the meaning or construction of any provision of this
Agreement.

                  12.12 Amendment or Waiver. Neither this Agreement nor any
                        -------------------
terms hereof may be changed, waived, discharged or terminated unless such
change, waiver, discharge or termination is in writing signed by the Borrower,
Holdings and the Required Lenders, provided that no such change, waiver,
                                   --------
discharge or termination shall, without the consent of each Lender (other than a
Defaulting Lender) directly affected thereby, (i) extend the A/RF Maturity Date
or the B Maturity Date (it being understood that any waiver of any prepayment
of, or the method of application of any prepayment to the amortization of, the
Loans shall not constitute any such extension), or extend any stated maturity of
any Letter of Credit beyond the A/RF Maturity Date, or reduce the rate or extend
the time of payment of interest (other than as a result of waiving the
applicability of any post-default increase in interest rates) or Fees thereon,
or reduce the principal amount thereof, or increase the Commitment of any Lender
over the amount thereof then in effect (it being understood that a waiver of any
Default or Event of Default or of a mandatory reduction in the Total Commitment
or an adjustment of the Adjusted RF Percentages as a result of a Defaulting
Lender shall not constitute a change in the terms of any Commitment of any
Lender), (ii) amend, modify or waive any provision of this Section 12.12, (iii)
reduce the percentage specified in, or (except to give effect to any additional
facilities hereunder) otherwise modify, the definition of "Required Lenders",
(iv) consent to the assignment or transfer by the Borrower or Holdings of any of
its rights and obligations under this Agreement or (v) release all or
substantially all of the Collateral; provided further, that no such change,
                                     ----------------
waiver, discharge or termination shall, (x) without the consent of the Required
TF Lenders under a Facility, amend the definition of "Required TF Lenders" or
amend, waive or reduce any Scheduled Repayment applicable to such Facility, (y)
without the consent of the Letter of Credit Issuer or the Agents, as the case
may be, amend any provision of Section 2, or 11, as the case may be or (z)
without the consent of the Supermajority Lenders, amend the definition of
"Supermajority Lenders" or release UDLP from the Subsidiary Guaranty.

                  12.13 Survival. All indemnities set forth herein including,
                        --------
without limitation, in Section 1.10, 1.11, 2.05, 4.04, 11.06 or 12.01 shall
survive the execution and delivery of this Agreement and the making and
repayment of the Loans.

                  12.14 Domicile of Loans. Each Lender may transfer and carry
                        -----------------
its Loans at, to or for the account of any branch office, subsidiary or
affiliate of such Lender, provided that the Borrower shall not be responsible
                          --------
for costs arising under Section 1.10, 2.05, or 4.04 resulting from any such
transfer (other than a transfer pursuant to Section 1.12) to the extent not
otherwise applicable to such Lender prior to such transfer.

                  12.15 Confidentiality. Each of the Lenders agrees that it will
                        ---------------
use its best efforts not to disclose without the prior consent of the Borrower
(other than to its employees, auditors, counsel or other professional advisors,
to affiliates or to another Lender if the Lender or such

                                      -88-

<PAGE>

Lender's holding or parent company in its sole discretion determines that any
such party should have access to such information) any information with respect
to Holdings or any of its Subsidiaries which is furnished pursuant to this
Agreement and which is designated by Holdings or the Borrower to the Lenders in
writing as confidential; provided, that any Lender may disclose any such
                         --------
information (a) as has become generally available to the public, (b) as may be
required or appropriate in any report, statement or testimony submitted to any
municipal, state or Federal regulatory body having or claiming to have
jurisdiction over such Lender or to the Federal Reserve Board or the Federal
Deposit Insurance Corporation or similar organizations (whether in the United
States or elsewhere) or their successors or to the NAIC, (c) as may be required
or appropriate in response to any summons or subpoena or in connection with any
litigation (notice of which will be promptly sent to the Borrower to the extent
permitted by Law), (d) in order to comply with any law, order, regulation or
ruling applicable to such Lender, (e) to any prospective transferee in
connection with any contemplated transfer of any of the Notes or any interest
therein by such Lender; provided, that such prospective transferee is notified
                        --------
of the confidentiality requirements relating thereto and agrees to abide by such
requirements and (f) to any direct or indirect contractual counterparty in swap
agreements or such contractual counterparty's professional advisors; provided,
                                                                     --------
that such contractual counterparty or such contractual counterparty's
professional advisors, as the case may be, is notified of the confidentiality
requirements relating thereto and agrees to abide by such requirements. No
Lender shall be obligated or required to return any materials furnished by
Holdings or any Subsidiary. The Borrower and Holdings hereby agree that the
failure of a Lender to comply with the provisions of this Section 12.15 shall
not relieve the Credit Parties of any of their obligations to such Lender under
this Agreement and the other Credit Documents.

               12.16  Lender Register. The Borrower hereby designates the
                      ---------------
Administrative Agent to serve as the Borrower's agent, solely for purposes of
this Section 12.16, to maintain a register (the "Lender Register") on which it
will record the Commitments from time to time of each of the Lender, the Loans
made by each of the Lender and each repayment in respect of the principal amount
of the Loans of each Lender. Failure to make any such recordation, or any error
in such recordation shall not affect the Borrower's obligations in respect of
such Loans. With respect to any Lender, the transfer of the Commitments of such
Lender and the rights to the principal of, and interest on, any Loan made
pursuant to such Commitments shall not be effective until such transfer is
recorded on the Lender Register maintained by the Administrative Agent with
respect to ownership of such Commitments and Loans and prior to such recordation
all amounts owing to the transferor with respect to such Commitments and Loans
shall remain owing to the transferor. The registration of assignment or transfer
of all or part of any Commitments and Loans shall be recorded by the
Administrative Agent on the Lender Register only upon the acceptance by the
Administrative Agent of a properly executed and delivered Assignment Agreement
pursuant to Section 12.04(b). The Borrower agrees to indemnify the
Administrative Agent from and against any and all losses, claims, damages and
liabilities of whatsoever nature which may be imposed on, asserted against or
incurred by the Administrative Agent in performing its duties under this Section
12.16 (but excluding such losses, claims, liabilities or liabilities incurred by
reason of the Administrative Agent's gross negligence or willful misconduct).
The Lender Register shall be available for inspection by the Borrower or any
Lender at any reasonable time, and from time to time, upon reasonable prior
notice.

               SECTION 13.  Holdings Guaranty.
                            -----------------

                                      -89-

<PAGE>

               13.01 The Guaranty. In order to induce the Lenders to enter into
                     ------------
this Agreement and to extend credit hereunder and in recognition of the direct
benefits to be received by Holdings from the proceeds of the Loans and the
issuance of the Letters of Credit, Holdings hereby unconditionally and
irrevocably guarantees, as primary obligor and not merely as surety the full and
prompt payment when due, whether upon maturity, acceleration or otherwise, of
any and all of the Guaranteed Obligations. If any of the Guaranteed Obligations
becomes due and payable hereunder, Holdings unconditionally promises to pay such
indebtedness to the Guaranteed Creditors, or order, on demand, together with any
and all expenses which may be actually incurred by the Guaranteed Creditors in
collecting any of the Guaranteed Obligations. If claim is ever made upon any
Guaranteed Creditor for repayment or recovery of any amount or amounts received
in payment or on account of any of the Guaranteed Obligations and any of the
aforesaid payees repays all or part of said amount by reason of (i) any
judgment, decree or order of any court or administrative body having
jurisdiction over such payee or any of its property or (ii) any settlement or
compromise of any such claim effected by such payee with any such claimant
(including the Borrower), then and in such event Holdings agrees that any such
judgment, decree, order, settlement or compromise shall be binding upon
Holdings, notwithstanding any revocation of this Guaranty or any other
instrument evidencing any liability of the Borrower, and Holdings shall be and
remain liable to the aforesaid payees hereunder for the amount so repaid or
recovered to the same extent as if such amount had never originally been
received by any such payee.

               13.02 Bankruptcy. Additionally, Holdings unconditionally and
                     ----------
irrevocably guarantees the payment of any and all of the Guaranteed Obligations
to the Guaranteed Creditors whether or not due or payable by the Borrower upon
the occurrence in respect of the Borrower of any of the events specified in
Section 9.05, and unconditionally promises to pay such indebtedness on demand,
in lawful money to the United States.

               13.03 Nature of Liability. The liability of Holdings hereunder is
                     -------------------
exclusive and independent of any security for or other guaranty of the
Guaranteed Obligations whether executed by Holdings, any other guarantor or by
any other party, and the liability of Holdings hereunder is not affected or
impaired by (a) any direction as to application of payment by the Borrower or by
any other party, or (b) any other continuing or other guaranty or undertaking as
to the Guaranteed Obligations, or (c) any payment on or in reduction of any such
other guaranty or undertaking, or (d) any dissolution, termination or increase,
decrease or change in personnel by the Borrower, or (e) any payment made to the
Guaranteed Creditors on the Guaranteed Obligations which any such Guaranteed
Creditor repays to the Borrower pursuant to court order in any bankruptcy,
reorganization, arrangement, moratorium or other debtor relief proceeding, and
Holdings waives any right to the deferral or modification of its obligations
hereunder by reason of any such proceeding.

               13.04 Independent Obligation. The obligations of Holdings
                     ----------------------
hereunder are independent of the obligations of any other guarantor, any other
party or the Borrower, and a separate action or actions may be brought and
prosecuted against Holdings whether or not action is brought against any other
guarantor, any other party or the Borrower and whether or not any other
guarantor, any other party or the Borrower be joined in any such action or
actions. Holdings waives, to the full extent permitted by law, the benefit of
any statute of limitations affecting its liability hereunder or the enforcement
hereof. Any payment by the Borrower or

                                      -90-

<PAGE>

other circumstance which operates to toll any statute of limitations as to the
Borrower shall operate to toll the statute of limitations as to Holdings.

               13.05 Authorization. Holdings authorizes the Guaranteed Creditors
                     -------------
without notice or demand (except as shall be required by applicable statute and
cannot be waived), and without affecting or impairing its liability hereunder,
from time to time to:

               (a)   change the manner, place or terms of payment of, and/or
change or extend the time of payment of, renew, increase, accelerate or alter,
any of the Guaranteed Obligations (including any increase or decrease in the
rate of interest thereon), any security therefor, or any liability actually
incurred directly or indirectly in respect thereof, and the Guaranty herein made
shall apply to the Guaranteed Obligations as so changed, extended, renewed or
altered;

               (b)   take and hold security for the payment of the Guaranteed
Obligations and sell, exchange, release, surrender, realize upon or otherwise
deal with in any manner and in any order any property by whomsoever at any time
pledged or mortgaged to secure, or howsoever securing, the Guaranteed
Obligations or any liabilities (including any of those hereunder) actually
incurred directly or indirectly in respect thereof or hereof, and/or any offset
thereagainst;

               (c)   exercise or refrain from exercising any rights against the
Borrower or others or otherwise act or refrain from acting;

               (d)   release or substitute any one or more endorsers,
guarantors, the Borrower or other obligors;

               (e)   settle or compromise any of the Guaranteed Obligations, any
security therefor or any liability (including any of those hereunder) actually
incurred directly or indirectly in respect thereof or hereof, and may substitute
the payment of all or any part thereof to the payment of any liability (whether
due or not) of the Borrower to its creditors other than the Guaranteed
Creditors;

               (f)   apply any sums by whomsoever paid or howsoever realized to
any liability or liabilities of the Borrower to the Guaranteed Creditors
regardless of what liability or liabilities of the Borrower remain unpaid;

               (g)   consent to or waive any breach of, or any act, omission or
default under, this Agreement, any other Credit Document or any of the
instruments or agreements referred to herein or therein, or otherwise amend,
modify or supplement this Agreement, any other Credit Document or any of such
other instruments or agreements; and/or

               (h)   take any other action which would, under otherwise
applicable principles of common law, give rise to a legal or equitable discharge
of Holdings from its liabilities under this Guaranty.

               13.06 Reliance. It is not necessary for the Guaranteed Creditors
                     --------
to inquire into the capacity or powers of the Borrower or the officers,
directors, partners or agents acting or purporting to act on their behalf, and
any Guaranteed Obligations made or created in reliance upon the professed
exercise of such powers shall be guaranteed hereunder.

                                      -91-

<PAGE>

               13.07 Subordination. Any of the indebtedness of the Borrower now
                     -------------
or hereafter owing to Holdings is hereby subordinated to the Guaranteed
Obligations of the Borrower; and if the Administrative Agent so requests at a
time when an Event of Default exists, all such indebtedness of the Borrower to
Holdings shall be collected, enforced and received by Holdings for the benefit
of the Guaranteed Creditors and be paid over to the Administrative Agent on
behalf of the Guaranteed Creditors on account of the Guaranteed Obligations, but
without affecting or impairing in any manner the liability of Holdings under the
other provisions of this Guaranty. Prior to the transfer by Holdings of any note
or negotiable instrument evidencing any of the indebtedness of the Borrower to
Holdings, shall mark such note or negotiable instrument with a legend that the
same is subject to this subordination. Without limiting the generality of the
foregoing, Holdings hereby agrees with the Guaranteed Creditors that it will not
exercise any right of subrogation which it may at any time otherwise have as a
result of this Guaranty (whether contractual, under Section 509 of the
Bankruptcy Code or otherwise) until all Guaranteed Obligations have been
irrevocably paid in full in cash.

               13.08 Waiver. (a) Holdings waives any right (except as shall be
                     ------
required by applicable statute and cannot be waived) to require any Guaranteed
Creditor (i) proceed against the Borrower, any other guarantor or any other
party, (ii) proceed against or exhaust any security held from the Borrower, any
other guarantor or any other party or (iii) pursue any other remedy in any
Guaranteed Creditor's power whatsoever. Holdings waives any defense based on or
arising out of any defense of the Borrower, any other guarantor or any other
party, other than payment in full of the Guaranteed Obligations, based on or
arising out the disability of the Borrower, any other guarantor or any other
party, or the unenforceability of the Guaranteed Obligations or any part thereof
from any cause, or the cessation from any cause of the liability of the Borrower
than payment in full of the Guaranteed Obligations. The Guaranteed Creditors
may, at their election, foreclose on any security held by the Collateral Agent
or any other Guaranteed Creditor by one or more judicial or nonjudicial sales,
whether or not every aspect of any such sale is commercially reasonable (to the
extent such sale is permitted by applicable law), or exercise any other right or
remedy the Guaranteed Creditors may have against the Borrower or any other
party, or any security, without affecting or impairing in any way the liability
of Holdings hereunder except to the extent the Guaranteed Obligations have been
paid.

               (b) Holdings waives all presentments, demands for performance,
protests and notices, including, without limitation, notices of nonperformance,
notices of protest, notices of dishonor, notices of acceptance of this Guaranty,
and notices of the existence, creation or incurring of new or additional
Guaranteed Obligations. Holdings assumes all responsibility for being and
keeping itself informed of the Borrower's financial condition and assets, and of
all other circumstances, bearing upon the risk of nonpayment of the Guaranteed
Obligations and the nature, scope and extent of the risks which Holdings assumes
and incurs hereunder, and agrees that the Guaranteed Creditors shall have no
duty to advise Holdings of information known to them regarding such
circumstances or risks.

               13.09 Enforcement. The Guaranteed Creditors agree that this
                     -----------
Guaranty may be enforced only by the action of the Administrative Agent or the
Collateral Agent, in each case acting upon the instructions of the Required
Lenders and no Guaranteed Creditor shall have any right individually to seek to
enforce or to enforce this Guaranty or to realize upon the security to be
granted by the Security Documents, it being understood and agreed that such
rights and

                                      -92-

<PAGE>

remedies may be exercised by the Administrative Agent or the Collateral Agent
for the benefit of the Creditors upon the terms of this Guaranty and the
Security Documents.

                                      * * *

                                      -93-

<PAGE>

               IN WITNESS WHEREOF, each of the parties hereto has caused a
counterpart of this Agreement to be duly executed and delivered as of the date
first above written.

1001 Pennsylvania Avenue, N.W.               IRON HORSE INVESTORS, L.L.C.
Suite 220 South
Washington, D.C. 20004
Telecopy No.: 202-347-9250
Attention: Allan M. Holt                     By:________________________________
                                                 Name:
                                                 Title:


1001 Pennsylvania Avenue, N.W.               UNITED DEFENSE INDUSTRIES, INC.
Suite 220 South
Washington, D.C. 20004
Telecopy No.: 202-347-9250
Attention: Allan M. Holt                     By:________________________________
                                                 Name:
                                                 Title:


                                             BANKERS TRUST COMPANY,
                                             Individually and as Administrative
                                             Agent


                                             By:________________________________
                                                 Name:
                                                 Title:


                                             LEHMAN COMMERCIAL PAPER INC.,
                                                 Individually and as Syndication
                                                 Agent



                                             By:________________________________
                                                 Name:
                                                 Title:

<PAGE>

                                   CITICORP USA, INC.,
                                       Individually and as a Documentation Agent



                                   By:________________________________
                                       Name:
                                       Title:

<PAGE>

                                 THE BANK OF NOVA SCOTIA,
                                     Individually and as a Documentation Agent

                                 By:________________________________
                                     Name:
                                     Title:

<PAGE>

                                  CREDIT LYONNAIS NEW YORK BRANCH,
                                      Individually and as a Documentation Agent



                                  By:________________________________
                                      Name:
                                      Title:

<PAGE>

                                      CREDIT INDUSTRIEL ET COMMERCIAL




                                      By:________________________________
                                          Name:
                                          Title:




                                      By:________________________________
                                          Name:
                                          Title:

<PAGE>

                                          TORONTO DOMINION TEXAS, INC.


                                          By: _______________________________
                                              Name:
                                              Title:

<PAGE>

                                         THE BANK OF NEW YORK


                                         By: _____________________________
                                             Name:
                                             Title:

<PAGE>

                                                                         ANNEX I
                                                                         -------

                                   COMMITMENTS
                                   -----------

<TABLE>
<CAPTION>
                                            A Term                   B Term                  Revolving
Lender                                    Commitment               Commitment               Commitment
------                                    ----------               ----------               ----------
<S>                                     <C>                      <C>                      <C>
Bankers Trust Company                   $16,666,666.67           $233,500,000.00          $35,833,333.33
Lehman Commercial Paper Inc.            $16,666,666.66           $236,500,000.00          $35,833,333.34
Citicorp USA, Inc.                      $15,000,000.00                        --          $30,000,000.00
The Bank of Nova Scotia                 $15,000,000.00           $ 10,000,000.00          $25,000,000.00
Credit Lyonnais New York Branch         $11,666,666.67                        --          $23,333,333.33
Toronto Dominion Texas, Inc.            $11,666,666.67           $ 10,000,000.00          $23,333,333.33
The Bank of New York                    $ 8,333,333.33           $  5,000,000.00          $16,666,666.67
Credit Industriel et Commercial         $ 5,000,000.00           $  5,000,000.00          $10,000,000.00
Total:                                  $  100,000,000           $   500,000,000          $  200,000,000
</TABLE>

<PAGE>

                                                                        ANNEX II
                                                                        --------

                                    ADDRESSES
                                    ---------

Bankers Trust Company                  Attention: Meg Sutton
130 Liberty Street                     Telephone: 212-250-3505
New York, NY 10006                     Facsimile: 212-250-7218
                                       E-mail:    marguerite.sutton@db.com

Lehman Commercial Paper Inc.           Attention: G. Andrew Keith
3 World Financial Center               Telephone: 212-526-5059
11th floor                             Facsimile: 212-526-4656
New York, NY 10285                     E-mail:    akeith@lehman.com

Citicorp USA, Inc.                     Attention: Thomas Halsch
388 Greenwich Street                   Telephone: 212-816-2313
19/th/ Floor                           Facsimile: 212-816-2613
New York, NY 10013                     E-mail:    thomas.halsch@citi.com

The Bank of Nova Scotia                Attention: Todd Meller
One Liberty Plaza                      Telephone: 212-225-5096
26/th/ Floor                           Facsimile: 212-225-5090
New York, NY 10006                     E-mail:    tmeller@scotiacapital.com

Credit Lyonnais New York Branch        Attention: Mark Koneval
1300 Avenue of the Americas            Telephone: 212-261-7867
New York, NY 10017                     Facsimile: 212-261-3375
                                       E-mail:    koneval@clamericas.com

TD Securities (USA) Inc.               Attention: Wade Jacobson
31 West 52/nd/ Street                  Telephone: 212-827-7560
New York, NY 10019                     Facsimile: 212-827-7245
                                       E-mail:    wadejacobson@tdsecurities.com

The Bank of New York                   Attention: Steven Cavaluzzo
One Wall Street                        Telephone: 212-635-1059
New York, NY 10266                     Facsimile: 212-635-6434
                                       E-mail:    scavaluzzo@bankofny.com

Compagnie Financiere de CIC            Attention: Brian O'Leary
et de L'Union Europeenne               Telephone: 212-715-4422
520 Madison Avenue                     Facsimile: 212-715-4535
New York, NY 10022                     E-mail:    boleary@cicny.com

                                      (v)

<PAGE>

                                                                       ANNEX III
                                                                       ---------

                            SUBSIDIARIES OF BORROWER
                            ------------------------

<TABLE>
<CAPTION>
                                    Class of Stock
                                          and
Name                             Percentage Ownership      Direct Owner
----                             --------------------      ------------
<S>                              <C>                          <C>
United Defense, L.P.             Common - 100%             Borrower - 99%
                                                           UDLP Holdings Corp. - 1%

UDLP Holdings Corp.              Common - 100%             Borrower

Barnes & Reinecke, Inc.          Common - 100%             Borrower

UDLP International, Inc.         Common - 100%             United Defense, L.P.

UDLP Overseas Limited            Common - 100%             United Defense, L.P.
</TABLE>


<PAGE>

                                                                        ANNEX IV
                                                                        --------

                                 REAL PROPERTIES
                                 ---------------

Mortgaged Properties:
--------------------

1.    Aiken, SC - Subject to the exceptions specified in the applicable title
      commitment, Lot #1 in the Aiken Airport Industrial Park and the entrance
      road between Lots #1 and #2 of the Aiken Airport Industrial Park.

2.    Minneapolis, MN - Subject to the exceptions specified in the applicable
      title commitment, the properties approximately comprising Sections
      Thirty-four and Twenty- seven, Township Thirty, Range Twenty-four, Anoka
      County, Minnesota.

3.    West Manchester Township, PA - Subject to the exceptions specified in the
      applicable title commitment, the three tracts of land situate in West
      Manchester Township, York County, Pennsylvania.

4.    Anniston, AL - Subject to the exceptions specified in the applicable title
      commitment, the properties approximately comprising Sections 1 and 12 in
      Township 16 South in Range 7 East, Lot Number Nine of Section 12, Township
      16, Range 8 East, and Lots 1 and 17 inclusive in Block 10, and certain
      parts of Lots 18 and 19, lying South of Eulaton road and Lots 1, 2, 3 and
      4 in Block 9 of the Pipe Works Subdivision, excluding the building known
      as the "Schoolhouse" and the approximately 8 acres of land thereunder or
      appurtenant thereto conveyed in Huron Valley Steel on August 15, 1997.

Owned Property:

1.    Aberdeen, SD - Subject to the exceptions specified in the applicable title
      commitment, the properties comprising approximately 21.5 acres in Brown
      County, South Dakota, described as FMC Outlet 1, located in the West Half
      of the Southeast Quarter of Section 8, Township 123 North, Range 63, West
      of the Fifth P.M., except the public roadway thereof.

Leased Properties:
-----------------

1.    Louisville, KY - Subject to the exceptions therefrom specified in the
      applicable Sublease of Real and Personal Property, the Naval Surface
      Welfare Center in Louisville, Kentucky.

2.    Fridley, MN - Subject to the exceptions therefrom specified in the
      contract #N00024-93- E-8521, the Naval Industrial Reserve Ordnance Plan in
      Fridley, Minnesota.

3.    San Jose, CA -

<PAGE>

      Leased from LNR Santa Clara I LLP:
      ---------------------------------
      Subject to the exceptions therefrom specified in the applicable Lease, the
      following properties:

      a.  1450 Coleman Avenue
      b.  328 Brokaw
      c.  340 Brokaw
      d.  Certain offices and lab space at 1205 Coleman Avenue (the Corporate
          Technology Center)

      Lease from Other Landlords:
      --------------------------

      a.  2830 De La Cruz
      b.  2890 De La Cruz
      c.  5925 Stone Ridge Dr.
          Pleasonton, CA

4.    Aiken, SC - Subject to the exceptions therefrom specified in the Sublease
      and Assignment of Option to Purchase Aiken, South Carolina Facilities,
      Lots 2 and 3 of the Aiken Airport Industrial Park.

5.    Anniston, AL - Lease on plant for M113 upgrade work until May 31, 2002,
      and options to extend in five successive periods of one year each.

6.    Arlington, VA - Office lease for world headquarters.

7.    Arlington Heights, IL - Lease from Arlington Heights I, L.P. of 55,904
      square feet used for headquarters and engineering design activities.

<PAGE>

                                                                         ANNEX V
                                                                         -------

                                  INDEBTEDNESS
                                  ------------

Part I:  Indebtedness
---------------------

There are no Parent Guaranties or Surety Bonds.

Part II: Existing Letters of Credit
-----------------------------------

See the attached page.


<PAGE>

                                                                        ANNEX VI
                                                                        --------

                                      ERISA
                                      -----

Plans:
-----

1.    United Defense Employees Pension Plan
2.    United Defense CSD Union Employees Pension Plan (determination letter
      under the name "BMY Hourly Employees Pension Plan")
3.    UDLP Excess Pension Plan
4.    UDLP Supplemental Retirement and Savings Plan
5     UDLP Minneapolis/Louisville Union Employees' Thrift Plan
6     UDLP Salaried Employees Plan (401(k))
7     United Defense Limited Partnership York Plan (401(k))
8.    UDLP Retiree Benefit Plan
9.    UDLP Welfare Benefits Program
10.   UDLP Educational Assistance Plans

<PAGE>

                                                                       ANNEX VII
                                                                       ---------

                                      LIENS
                                      -----

1.  See attached pages.

<PAGE>

  SCHEDULE OF EXISTING UCC LIENS FOR UNITED DEFENSE, L.P. AND RELATED ENTITIES

<TABLE>
<CAPTION>
               DEBTOR                 SECURED PARTY                FILE #             FILING DATE
------------------------------------------------------------------------------------------------------------
<S>                                  <C>                          <C>         <C>
Barnes & Reinecke, Inc.              Bank One, Illinois, NA       3707064;              6/20/97
425 E. Algonquin Road                111 North Canal Street
Arlington Hts., IL  60005            Suite 1500
                                     Chicago, IL  60606                        Partial Release filed on
                                                                              3/22/00 and assigned file #
                                                                                       4184650.
------------------------------------------------------------------------------------------------------------
Barnes & Reinecke, Inc.              Sanwa Leasing Corporation    3886046               7/28/98
1201 7/th/ Street                    P.O. Box 7023
East Moline, IL  61244               Troy, MI  48007-7023
------------------------------------------------------------------------------------------------------------
Barnes & Reinecke, Inc.              Sanwa Leasing Corporation    3985164               2/5/99
425 E. Algonquin Road                P.O. Box 7023
Arlington Hts., IL  60005            Troy, MI  48007-7023
------------------------------------------------------------------------------------------------------------
Barnes & Reinecke, Inc.              Sanwa Leasing Corporation    3985165               2/5/99
425 E. Algonquin Road                P.O. Box 7023
Arlington Hts., IL  60005            Troy, MI  48007-7023
------------------------------------------------------------------------------------------------------------
Barnes & Reinecke, Inc.              Sanwa Leasing Corporation    3986506               2/5/99
425 E. Algonquin Road                P.O. Box 7023
Arlington Hts., IL  60005            Troy, MI  48007-7023
------------------------------------------------------------------------------------------------------------
Barnes & Reinecke, Inc.              Sanwa Leasing Corporation    4216776               5/23/00
425 E. Algonquin Road                P.O. Box 7023
Arlington Hts., IL  60005            Troy, MI  48007-7023
------------------------------------------------------------------------------------------------------------
Iron Horse Investors, L.L.C.         Bankers Trust Company, as   19970034722            10/14/97
1001 Pennsylvania Avenue, NW         Collateral Agent
Suite 220 South                      130 Liberty Street
Washington, D.C.  20004              New York, NY  10006
------------------------------------------------------------------------------------------------------------
UDLP Holdings Corp.                  Bankers Trust Company, as   19970034724            10/14/97
1001 Pennsylvania Avenue, NW           Collateral Agent
Suite 220 South                      130 Liberty Street
Washington, D.C.  20004              New York, NY  10006
------------------------------------------------------------------------------------------------------------
United Defense, L.P.                 Sanwa Leasing Corporation    B96-40640              9/27/96
2101 West 10/th/ Street              P.O. Box 7023
Anniston, AL  36201                  Troy, MI  48007

 <CAPTION>
     JURISDICTION                               COLLATERAL
------------------------------------------------------------------------------------------------------------
<S>                                  <C>
Illinois - Secretary                 Remaining collateral consists only of the
of State                             following:  Monies, reserves, deposits, and
                                     deposit accounts and interest or dividends
                                     thereon, securities, cash, cash equivalents and
                                     other property now or at any time in the
                                     possession or under control of Bank.
------------------------------------------------------------------------------------------------------------
Illinois - Secretary                 Equipment - Copier
of State

------------------------------------------------------------------------------------------------------------
Illinois - Secretary                 Equipment - Copier
of State

------------------------------------------------------------------------------------------------------------
Illinois - Secretary                 Equipment - Copier
of State

------------------------------------------------------------------------------------------------------------
Illinois - Secretary                 Equipment - Copier
of State

------------------------------------------------------------------------------------------------------------
Illinois - Secretary                 Equipment - Copier
of State

------------------------------------------------------------------------------------------------------------
Delaware - Secretary                 Blanket Security Interest
of State


------------------------------------------------------------------------------------------------------------
Delaware - Secretary                 Blanket Security Interest
of State


------------------------------------------------------------------------------------------------------------
Alabama - Secretary                  Equipment - Copier
of State
</TABLE>

<PAGE>


  SCHEDULE OF EXISTING UCC LIENS FOR UNITED DEFENSE, L.P. AND RELATED ENTITIES

<TABLE>
<CAPTION>
               DEBTOR                    SECURED PARTY                              FILE #     FILING DATE
-----------------------------------------------------------------------------------------------------------
<S>                                      <C>                                      <C>           <C>
United Defense, L.P.                     Citicorp Del Lease, Inc.                 B98-23376      6/3/98
1525 Wilson Boulevard                    450 Mamaroneck Avenue
Arlington, VA  22209                     Harrison, NY  10528

-----------------------------------------------------------------------------------------------------------
United Defense, L.P.                     Citicorp Del Lease, Inc.                 B98-25472      6/16/98
1525 Wilson Boulevard                    450 Mamaroneck Avenue
Arlington, VA  22209                     Harrison, NY  10528

-----------------------------------------------------------------------------------------------------------
United Defense, L.P.                     MS&D Financial Services, a Division of   B98-43748     10/14/98
2101 West Tenth Street                   Electronic Data Systems Corporation
Anniston, AL  36202                      1200 Wall Street West
                                         Lyndhurst, NJ  07071

-----------------------------------------------------------------------------------------------------------
United Defense, L.P.                     McPherson Oil Company                   B2000-46329    11/29/00
2101 West Tenth Street                   P.O. Box 1112
Anniston, AL  36202                      Oneonta, AL  35121

-----------------------------------------------------------------------------------------------------------
United Defense LP                        Lehigh Safety Shoe Co. LLC              B2001-10665     3/20/00
Steel Prods. Div.                        120 Plaza Drive, Suite A
2101 W. 10/th/ Street                    Vestal, NY  13850
Anniston, AL  36201

-----------------------------------------------------------------------------------------------------------
United Defense, L.P.                     Bankers Trust Company, as                9728961068    10/14/97
1525 Wilson Boulevard                      Collateral Agent
Suite 700                                130 Liberty Street
Arlington, VA  22209-2411                New York, NY  10006

-----------------------------------------------------------------------------------------------------------
United Defense LP                        The Manifest Group                       0009660305     3/30/00
1205 Coleman Avenue                      100 E Saratoga
Santa Clara, CA  95950                   Marshall, MN  56258

-----------------------------------------------------------------------------------------------------------
United Defense, a Limited Partnership    Toyota Motor Credit Corporation           840-1998     10/22/98
300 University Drive                     P.O. Box 3457
Lemont Furnace, PA                       Torrance, CA  90510

-----------------------------------------------------------------------------------------------------------
United Defense, a Limited Partnership    Toyota Motor Credit Corporation           268-2000      3/27/00
300 University Drive                     P.O. Box 3457
Lemont Furnace, PA                       Torrance, CA  90510

<CAPTION>
      JURISDICTION                       COLLATERAL
-----------------------------------------------------------------------------------------------------------
<S>                                      <C>
Alabama - Secretary                      Equipment
of State

-----------------------------------------------------------------------------------------------------------
Alabama - Secretary                      Equipment
of State

-----------------------------------------------------------------------------------------------------------
Alabama - Secretary                      Equipment - Telecommunications Equipment
of State

-----------------------------------------------------------------------------------------------------------
Alabama - Secretary                      Equipment - Tank
of State

-----------------------------------------------------------------------------------------------------------
Alabama - Secretary                      Equipment - Lehigh footwear of all kinds.  Also,
of State                                 accounts receivable.

-----------------------------------------------------------------------------------------------------------
California -                             Blanket Security Interest
Secretary of State

-----------------------------------------------------------------------------------------------------------
California -                             Equipment
Secretary of State

-----------------------------------------------------------------------------------------------------------
Fayette County,                          Equipment - Forklift
California

-----------------------------------------------------------------------------------------------------------
Fayette County,                          Equipment - Forklift
California
</TABLE>

                                        2













<PAGE>

  SCHEDULE OF EXISTING UCC LIENS FOR UNITED DEFENSE, L.P. AND RELATED ENTITIES

<TABLE>
<CAPTION>
               DEBTOR                                SECURED PARTY                                FILE #                FILING DATE
------------------------------------------------------------------------------------------------------------------------------------
<S>                                                  <C>                                     <C>                        <C>
United Defense, a Limited Partnership                Toyota Motor Credit Corporation             269-2000                 3/27/00
300 University Drive                                 P.O. Box 3457
Lemont Furnace, PA                                   Torrance, CA  90510

------------------------------------------------------------------------------------------------------------------------------------
United Defense, a Limited Partnership                Toyota Motor Credit Corporation             562-2000                 6/30/00
300 University Drive                                 P.O. Box 3457
Lemont Furnace, PA                                   Torrance, CA  90510

------------------------------------------------------------------------------------------------------------------------------------
United Defense, L.P.                                 Bankers Trust Company, as                  19970034726              10/14/97
1525 Wilson Boulevard                                  Collateral Agent
Suite 700                                            130 Liberty Street
Arlington, VA  22209-2411                            New York, NY  10006

------------------------------------------------------------------------------------------------------------------------------------
United Defense, L.P.                                 Bankers Trust Company, as                     153616                10/14/97
1525 Wilson Boulevard                                  Collateral Agent
Suite 700                                            130 Liberty Street
Arlington, VA  22209-2411                            New York, NY  10006

------------------------------------------------------------------------------------------------------------------------------------
United Defense, L.P.                                 Bankers Trust Company, as                     153618                10/14/97
1525 Wilson Boulevard                                  Collateral Agent
Suite 700                                            130 Liberty Street
Arlington, VA  22209-2411                            New York, NY  10006

------------------------------------------------------------------------------------------------------------------------------------
United Defense, L.P.                                 Fleet Leasing Corporation                    9808574A                9/28/98
5403 Southside Drive                                 P.O. Box 7023
Louisville, KY 40214                                 Troy, MI

------------------------------------------------------------------------------------------------------------------------------------
United Defense, L.P.                                 Fleet Leasing Corporation                    99-09329A               12/3/99
163 Rochester Drive                                  P.O. Box 7023
Louisville, KY  40214                                Troy, MI

<CAPTION>
JURISDICTION                                         COLLATERAL
------------------------------------------------------------------------------------------------------------------------------------
<S>                                                  <C>
Fayette County,                                      Equipment - Forklift
California

------------------------------------------------------------------------------------------------------------------------------------
Fayette County,                                      Equipment - Forklift
California

------------------------------------------------------------------------------------------------------------------------------------
Delaware - Secretary                                 Blanket Security Interest
of State

------------------------------------------------------------------------------------------------------------------------------------
Kentucky - Secretary                                 Blanket Security Interest
of State

------------------------------------------------------------------------------------------------------------------------------------
Kentucky - Secretary                                 Blanket Security Interest
of State

------------------------------------------------------------------------------------------------------------------------------------
Jefferson County,                                    Lease Number 7-0198415
Kentucky

------------------------------------------------------------------------------------------------------------------------------------
Jefferson County,                                    Equipment - Copier
Kentucky
</TABLE>

                                        3

<PAGE>

  SCHEDULE OF EXISTING UCC LIENS FOR UNITED DEFENSE, L.P. AND RELATED ENTITIES

<TABLE>
<CAPTION>
               DEBTOR                SECURED PARTY                                            FILE #                  FILING DATE
------------------------------------------------------------------------------------------------------------------------------------
<S>                                  <C>                                                    <C>                       <C>
United Defense, L.P.                 Fleet Leasing Corporation                              99-09332A                   12/3/99
163 Rochester Drive                  P.O. Box 7023
Louisville, KY  40214                Troy, MI

------------------------------------------------------------------------------------------------------------------------------------
United Defense, L.P.                 Fleet Leasing Corporation                              99-09365A                   12/3/99
163 Rochester Drive                  P.O. Box 7023
Louisville, KY  40214                Troy, MI

------------------------------------------------------------------------------------------------------------------------------------
United Defense, L.P.                 Fleet Leasing Corporation                              99-09366A                   12/3/99
163 Rochester Drive                  P.O. Box 7023
Louisville, KY  40214                Troy, MI

------------------------------------------------------------------------------------------------------------------------------------
United Defense, L.P.                 Fleet Leasing Corporation                              99-09367A                   12/3/99
163 Rochester Drive                  P.O. Box 7023
Louisville, KY  40214                Troy, MI

------------------------------------------------------------------------------------------------------------------------------------
United Defense, L.P.                 Ikon Office Solutions                                   D479950                    2/18/99
31201 Chicago Road S                 2780 44/th/ Street
Suite B102                           Grand Rapids, MI  49509
Warren, MI  48093

------------------------------------------------------------------------------------------------------------------------------------
United Defense, L.P.                 AT&T Credit Corporation                                 2032891                    4/29/98
1525 Wilson Boulevard, #700          2 Gatehall Drive
Arlington, VA  22209                 Parsippany, NJ  07054

------------------------------------------------------------------------------------------------------------------------------------
United Defense, L.P.                 General Electric Capital Corporation                    2157010                    8/23/99
4800 East River Road                 4333 Edgewood Road
Minneapolis, MN  55421               Cedar Rapids, IA  52409

------------------------------------------------------------------------------------------------------------------------------------
United Defense, L.P.                 Danka Office Imaging                                    2223524                    4/28/00
4800 NE East River Road              11201 Danka Circle North
Minneapolis, MN  55421               St. Petersburg, FL  99999

------------------------------------------------------------------------------------------------------------------------------------
United Defense, L.P.                 Fleet Leasing Corporation                               2297597                    2/7/01
4800 NE East River Road              P.O. Box 7023
Minneapolis, MN  55421               Troy, MI

<CAPTION>
JURISDICTION                         COLLATERAL
------------------------------------------------------------------------------------------------------------------------------------
<S>                                  <C>
Jefferson County,                    Equipment - Copier
Kentucky

------------------------------------------------------------------------------------------------------------------------------------
Jefferson County,                    Equipment - Copier
Kentucky

------------------------------------------------------------------------------------------------------------------------------------
Jefferson County,                    Equipment - Copier
Kentucky

------------------------------------------------------------------------------------------------------------------------------------
Jefferson County,                    Equipment - Copier
Kentucky

------------------------------------------------------------------------------------------------------------------------------------
Michigan - Secretary                 Equipment - Copier
of State

------------------------------------------------------------------------------------------------------------------------------------
Minnesota - Secretary                Equipment
of State

------------------------------------------------------------------------------------------------------------------------------------
Minnesota - Secretary                Equipment - Copier
of State

------------------------------------------------------------------------------------------------------------------------------------
Minnesota - Secretary                Equipment
of State

------------------------------------------------------------------------------------------------------------------------------------
Minnesota - Secretary                Equipment
of State
</TABLE>

                                        4

<PAGE>

  SCHEDULE OF EXISTING UCC LIENS FOR UNITED DEFENSE, L.P. AND RELATED ENTITIES

<TABLE>
<CAPTION>
            DEBTOR         SECURED PARTY                     FILE #     FILING DATE    JURISDICTION                 COLLATERAL
------------------------------------------------------------------------------------------------------------------------------------
<S>                        <C>                               <C>        <C>            <C>                         <C>
United Defense, L.P.       Fleet Leasing Corporation          2297596       2/7/01     Minnesota -                 Equipment
4800 NE East River Road    P.O. Box 7023                                               Secretary of State
Minneapolis, MN  55421     Troy, MI
------------------------------------------------------------------------------------------------------------------------------------
United Defense, L.P.       Danka Office Imaging Commercial    2317981      4/20/01     Minnesota -                 Equipment
4800 East River Road       Finance Group                                               Secretary of State
Minneapolis, MN  55421     1023 W. Eighth Street
                           Cincinnati, OH  45203
------------------------------------------------------------------------------------------------------------------------------------
United Defense, L.P.       Bankers Trust Company, as          1796417     10/14/97     New Jersey -                Blanket Security
1525 Wilson Boulevard       Collateral Agent                                           Department of State         Interest
Suite 700                  130 Liberty Street
Arlington, VA  22209-2411  New York, NY  10006
------------------------------------------------------------------------------------------------------------------------------------
United Defense, L.P.       Bankers Trust Company, as          1796422     10/14/97     New Jersey -                Blanket Security
1525 Wilson Boulevard       Collateral Agent                                           Department of State         Interest
Suite 700                  130 Liberty Street
Arlington, VA  22209-2411  New York, NY  10006
------------------------------------------------------------------------------------------------------------------------------------
United Defense, L.P.       Deere Credit Inc.                 26201534     12/26/96     Pennsylvania -              Equipment - John
P.O. Box 15512             1415 28/th/ Street                                          Secretary of State          Deere
York, PA  17405            P.O. Box 65090
                           West Des Moines, IA  50265
------------------------------------------------------------------------------------------------------------------------------------
United Defense, L.P.       El Camino Resources, Ltd.         26430421       3/6/97     Pennsylvania -              Equipment
Wolf Church Road           21051 Warner Center Lane                                    Secretary of State
York, PA  17405            Woodland Hills, CA  01367
------------------------------------------------------------------------------------------------------------------------------------
United Defense, L.P.       Bankers Trust Company, as         28110106     10/14/97     Pennsylvania -              Blanket Security
1525 Wilson Boulevard       Collateral Agent                                           Secretary of State          Interest
Arlington, VA  22209       130 Liberty Street
                           New York, NY  10006
------------------------------------------------------------------------------------------------------------------------------------
United Defense, L.P.       Bankers Trust Company, as         28110132     10/14/97     Pennsylvania -              Blanket Security
1525 Wilson Boulevard       Collateral Agent                                           Secretary of State          Interest
Arlington, VA  22209       130 Liberty Street
                           New York, NY  10006
</TABLE>

                                        5

<PAGE>

  SCHEDULE OF EXISTING UCC LIENS FOR UNITED DEFENSE, L.P. AND RELATED ENTITIES

<TABLE>
<CAPTION>
          DEBTOR           SECURED PARTY                       FILE #          FILING DATE    JURISDICTION          COLLATERAL
-----------------------------------------------------------------------------------------------------------------------------------
<S>                        <C>                                 <C>             <C>            <C>                   <C>
United Defense, L.P.       Bankers Trust Company, as            28110159       10/14/97       Pennsylvania -        Blanket Security
1525 Wilson Boulevard       Collateral Agent                                                  Secretary of State    Interest
Arlington, VA  22209       130 Liberty Street
                           New York, NY  10006
-----------------------------------------------------------------------------------------------------------------------------------
United Defense, L.P.       Bankers Trust Company, as            28140632       10/23/97       Pennsylvania -        Blanket Security
1525 Wilson Boulevard       Collateral Agent                                                  Secretary of State    Interest
Arlington, VA  22209       130 Liberty Street
                           New York, NY  10006
-----------------------------------------------------------------------------------------------------------------------------------
United Defense LP          American Business Credit             28871117        4/30/98       Pennsylvania  -       Equipment -
1100 Bairs Road             Corporation                                                       Secretary of State    Copiers
York, PA  17404            4333 Edgewood Road NE, #400
                           Cedar Rapids, IA  52499
-----------------------------------------------------------------------------------------------------------------------------------
United Defense, LP         GTE Leasing Corporation              29281312        8/17/98       Pennsylvania -        Equipment
R.D. #6                    1907 US Hwy 301 N, Suite 270A                                      Secretary of State
York, PA  17405            Tampa, FL  33619-2639
-----------------------------------------------------------------------------------------------------------------------------------
United Defense,            Toyota Motor Credit                  29510571       10/22/98       Pennsylvania -        Equipment -
 a Limited Partnership      Corporation                                                       Secretary of State    Forklift
300 University Drive       P.O. Box 3457
Lemont Furnace, PA  15456  Torrance, CA  90510-3457
-----------------------------------------------------------------------------------------------------------------------------------
United Defense, LP         GTE Leasing Corporation              29731276       12/28/98       Pennsylvania -        Equipment
R.D. #6                    1907 US Hwy 301 N, Suite 270A                                      Secretary of State
York, PA  17405            Tampa, FL  33619-2639
-----------------------------------------------------------------------------------------------------------------------------------
United Defense             IBM Credit Corporation               29740729       12/29/98       Pennsylvania  -       Equipment -
 Industries Inc.           1 North Castle Drive                                               Secretary of State    Computer
1100 Bairs Road            Armonk, NY  10504
York, PA  17404
-----------------------------------------------------------------------------------------------------------------------------------
United Defense, LP         American Equipment Leasing, as       30120902,        4/9/99       Pennsylvania -        Equipment
1100 Bairs Road            Assignee of Commerce Bank, N.A.     Assignment                     Secretary of State
York, PA  17404            6 Commerce Drive                  filed on 5/3/00
                           Reading, PA  19607                 and assigned
                                                               file number
                                                                31581098
-----------------------------------------------------------------------------------------------------------------------------------
United Defense LP/Combat   GTE Leasing Corporation              30591774        8/11/99       Pennsylvania  -       Equipment -
 Systems Divisions         1907 US Hwy. 301 N, Suite 270A                                     Secretary of State    Communication
RD #6                      Tampa, FL  33619-2639                                                                    System
York, PA  17405
</TABLE>

                                       6

<PAGE>

  SCHEDULE OF EXISTING UCC LIENS FOR UNITED DEFENSE, L.P. AND RELATED ENTITIES

<TABLE>
<CAPTION>
           DEBTOR             SECURED PARTY                       FILE #       FILING DATE  JURISDICTION              COLLATERAL
------------------------------------------------------------------------------------------------------------------------------------
<S>                           <C>                                 <C>          <C>          <C>                   <C>
United Defense, a Limited     Toyota Motor Credit                 31430278       3/24/00    Pennsylvania -        Equipment -
 Partnership                   Corporation                                                  Secretary of State    Forklift
300 University Drive          P.O. Box 3457
Lemont Furnace, PA  15456     Torrance, CA  90510-3457
------------------------------------------------------------------------------------------------------------------------------------
United Defense, a Limited     Toyota Motor Credit                 31431301       3/27/00    Pennsylvania -        Equipment -
 Partnership                   Corporation                                                  Secretary of State    Forklift
300 University Drive          P.O. Box 3457
Lemont Furnace, PA  15456     Torrance, CA  90510-3457
------------------------------------------------------------------------------------------------------------------------------------
United Defense LP             General Electric Capital            31661510       5/26/00    Pennsylvania -        Equipment - Copier
P.O. Box 15512                 Corporation                                                  Secretary of State
 Wolf's Church Road           4333 Edgewood Road NE
York, PA  17405               Cedar Rapids, IA  52499
------------------------------------------------------------------------------------------------------------------------------------
United Defense, a             Toyota Motor Credit                 31791210       6/28/00    Pennsylvania -        Equipment -
 Limited Partnership          Corporation                                                   Secretary of State    Forklift
300 University Drive          P.O. Box 3457
Lemont Furnace, PA  15456     Torrance, CA  90510-3457
------------------------------------------------------------------------------------------------------------------------------------
United Defense LP             Deere Credit, Inc.               96-ST-02936      12/23/96    York County,          Equipment - John
P.O. Box 15512                P.O. Box 65090                                                Pennsylvania          Deere
York, PA  17405               1415 28/th/ Street
                              Des Moines, IA  50265
------------------------------------------------------------------------------------------------------------------------------------
United Defense LP             El Camino Resources, Ltd.        97-ST-00493        3/6/97    York County,          Equipment
Wolf Church Road              21051 Warner Center Lane                                      Pennsylvania
York, PA  17405               Woodland Hills, CA  91367
------------------------------------------------------------------------------------------------------------------------------------
United Defense, L.P.          Bankers Trust Company, as        97-ST-02599      10/23/97    York County,          Blanket Security
1525 Wilson Boulevard          Collateral Agent                                             Pennsylvania          Interest
Arlington, VA  22209          130 Liberty Street
                              New York, NY  10006
------------------------------------------------------------------------------------------------------------------------------------
United Defense, LP            GTE Leasing Corporation          98-ST-02000       8/19/98    York County,          Equipment
RD #6                         1907 US Hwy. 301 N. Suite 270A                                Pennsylvania
York, PA  17405               Tampa, FL  33619-2639
------------------------------------------------------------------------------------------------------------------------------------
United Defense LP             Commerce Bank, N.A.              99-ST-00882       4/12/99    York County,          Equipment
1100 Bairs Road               1701 Route 70 East                                            Pennsylvania
York, PA  17404               Cherry Hill, NJ  08034
------------------------------------------------------------------------------------------------------------------------------------
United Defense, LP            GTE Leasing Corporation          99-ST-02036       8/13/99    York County,          Equipment
RD #6                         1907 US Hwy. 301 N. Suite 270A                                Pennsylvania
York, PA  17405               Tampa, FL  33619-2639
</TABLE>

                                        7

<PAGE>

  SCHEDULE OF EXISTING UCC LIENS FOR UNITED DEFENSE, L.P. AND RELATED ENTITIES

<TABLE>
<CAPTION>

           DEBTOR           SECURED PARTY                     FILE #      FILING DATE  JURISDICTION        COLLATERAL
------------------------------------------------------------------------------------------------------------------------------------
<S>                         <C>                              <C>          <C>          <C>                 <C>
United Defense LP           General Electric Capital         2000-ST-       6/19/00    York County,        Equipment - Copier
P.O. Box 15512 Wolf's        Corporation                      01499                    Pennsylvania
 Church Road                4333 Edgewood Road NE
York, PA  17405             Cedar Rapids, IA  52499
------------------------------------------------------------------------------------------------------------------------------------
United Defense LP           Deere Credit Inc.                2001-ST-        4/2/01    York County,        Equipment - John Deere
P.O. Box 15512              6400 N.W. 86/th/ Street           00758                    Pennsylvania
York, PA  17405             P.O. Box 6630
                            Johnston, IA  50131
------------------------------------------------------------------------------------------------------------------------------------
United Defense, L.P.        Bankers Trust Company, as         154340A      10/14/97    South Carolina -    Blanket Security Interest
1525 Wilson Boulevard        Collateral Agent                                          Secretary of State
Suite 700                   130 Liberty Street
Arlington, VA  22209-2411   New York, NY  10006
------------------------------------------------------------------------------------------------------------------------------------
United Defense, L.P.        Bankers Trust Company, as         154257A      10/14/97    South Carolina -    Blanket Security Interest
1525 Wilson Boulevard        Collateral Agent                                          Secretary of State
Suite 700                   130 Liberty Street
Arlington, VA  22209-2411   New York, NY  10006
------------------------------------------------------------------------------------------------------------------------------------
United Defense, L.P.        Bankers Trust Company, as         124946B      10/14/97    South Carolina -    Blanket Security Interest
1525 Wilson Boulevard        Collateral Agent                                          Secretary of State
Suite 700                   130 Liberty Street
Arlington, VA  22209-2411   New York, NY  10006
------------------------------------------------------------------------------------------------------------------------------------
United Defense, L.P.        Bankers Trust Company, as         97-2208      10/29/97    Aiken County,       Blanket Security Interest
1525 Wilson Boulevard        Collateral Agent                                          South Carolina
Suite 700                   130 Liberty Street
Arlington, VA  22209-2411   New York, NY  10006
------------------------------------------------------------------------------------------------------------------------------------
United Defense, L.P.        Associates Commercial Corp.   961122 7327      11/22/96    Virginia - State    Equipment - Lift Truck
Eltham Avenue, Suite 107    8001 Ridgepoint Drive                                      Corporation
Norfolk, VA  23513          Irving, TX  75063-3117                                     Commission
</TABLE>

                                        8

<PAGE>


  SCHEDULE OF EXISTING UCC LIENS FOR UNITED DEFENSE, L.P. AND RELATED ENTITIES

<TABLE>
<CAPTION>
        DEBTOR                  SECURED PARTY                                     FILE #               FILING DATE
------------------------------------------------------------------------------------------------------------------------------------
<S>                          <C>                                              <C>                      <C>
United Defense, L.P.         Bankers Trust Company, as
1525 Wilson Boulevard         Collateral Agent                                  971014 7873             10/14/97
Suite 700                    130 Liberty Street
Arlington, VA 22209-2411     New York, NY 10006
                                                                              Partial Release
                                                                                 filed on
                                                                              11/30/98 and
                                                                              assigned file
                                                                                  number
                                                                               981130 7810
                                                                               for certain
                                                                                equipment,
                                                                              machinery and
                                                                                  assets
                                                                              transferred to
                                                                                Trinity GG,
                                                                                   Inc.
------------------------------------------------------------------------------------------------------------------------------------
United Defense, L.P.         International Software Finance Corp.
1525 Wilson Boulevard        45 Danbury Road                                   980126 7073               1/26/98
Suite 700                    Wilton, CT 06897
Arlington, VA 22209-2411

------------------------------------------------------------------------------------------------------------------------------------
United Defense, L.P.         Citicorp Del Lease, Inc.
1525 Wilson Boulevard        450 Mamaroneck Avenue                             980603 7144                6/3/98
Suite 700                    Harrison, NY  10528
Arlington, VA 22209-2411

------------------------------------------------------------------------------------------------------------------------------------
United Defense, L.P.         Citicorp Del Lease, Inc.
1525 Wilson Boulevard        450 Mamaroneck Avenue                             980616 7158               6/16/98
Suite 700                    Harrison, NY 10528
Arlington, VA 22209-2411

<CAPTION>
    JURISDICTION                    COLLATERAL
-----------------------------------------------------------------------
<S>                        <C>
   Virginia - State        Blanket Security Interest (excluding
   Corporation             certain equipment, machinery and assets
   Commission              assigned to Trinity GG, Inc. under an Asset
                           Purchase Agreement.












-----------------------------------------------------------------------

  Virginia - State         Equipment - Intervision Systems SGI
  Corporation              Hardware
  Commission

-----------------------------------------------------------------------

  Virginia - State         Equipment
  Corporation
  Commission

-----------------------------------------------------------------------

  Virginia - State         Equipment
  Corporation
  Commission
</TABLE>

                                       9

<PAGE>


  SCHEDULE OF EXISTING UCC LIENS FOR UNITED DEFENSE, L.P. AND RELATED ENTITIES

<TABLE>
<CAPTION>
               DEBTOR                   SECURED PARTY                                     FILE #                  FILING DATE
------------------------------------------------------------------------------------------------------------------------------------
<S>                                     <C>                                            <C>                        <C>
United Defense, L.P.                    Minolta Business Systems
1525 Wilson Boulevard                   P.O. Box 728                                   010423 7132                  4/23/01
Suite 700                               Parkridge, NJ 07656
Arlington, VA 22209-2411

------------------------------------------------------------------------------------------------------------------------------------
United Defense, L.P.                    Bankers Trust Company, as
1525 Wilson Boulevard                    Collateral Agent                                58816                     10/14/97
Suite 700                               130 Liberty Street
Arlington, VA 22209-2411                New York, NY 10006

------------------------------------------------------------------------------------------------------------------------------------
United Defense, L.P.                    Citicorp Del Lease, Inc.
1525 Wilson Boulevard                   450 Mamaroneck Avenue                            59703                       6/8/98
Suite 700                               Harrison, NY  10528
Arlington, VA 22209-2411

------------------------------------------------------------------------------------------------------------------------------------
United Defense, L.P.                    Citicorp Del Lease, Inc.
1525 Wilson Boulevard                   450 Mamaroneck Avenue                            59750                      6/18/98
Suite 700                               Harrison, NY 10528
Arlington, VA 22209-2411

------------------------------------------------------------------------------------------------------------------------------------
United Defense, L.P.                    Minolta Business Systems
1525 Wilson Boulevard                   P.O. Box 728                                     64159                      4/25/01
Suite 700                               Park Ridge, NJ 07656
Arlington, VA 22209-2411

------------------------------------------------------------------------------------------------------------------------------------
United Defense, L.P.                    Associates Commercial Corp.
Eltham Avenue, Suite 107                8001 Ridgepoint Drive                           96-2179                    11/22/96
Norfolk, VA 23513                       Irving, TX 75063-3117

------------------------------------------------------------------------------------------------------------------------------------
United Defense Industries, Inc.         Bankers Trust Company, as                     19970034717                  10/14/97
1001 Pennsylvania Avenue, NW             Collateral Agent
Suite 220 South                         130 Liberty Street
Washington, D.C. 20004                  New York, NY 10006

<CAPTION>
      JURISDICTION                    COLLATERAL
-----------------------------------------------------------------
<S>                          <C>
Virginia - State             Equipment
Corporation
Commission

-----------------------------------------------------------------
Arlington                    Blanket Security Interest
County, Virginia


-----------------------------------------------------------------
Arlington                    Equipment
County, Virginia


-----------------------------------------------------------------
Arlington                    Equipment
County, Virginia


-----------------------------------------------------------------
Arlington                    Equipment
County, Virginia


-----------------------------------------------------------------
Norfolk                      Equipment - Lift Truck
County,  Virginia

-----------------------------------------------------------------
Delaware -                   Blanket Security Interest
Secretary of State
</TABLE>

                                       10

<PAGE>


  SCHEDULE OF EXISTING UCC LIENS FOR UNITED DEFENSE, L.P. AND RELATED ENTITIES

<TABLE>
<CAPTION>
            DEBTOR                            SECURED PARTY                                  FILE #                  FILING DATE
------------------------------------------------------------------------------------------------------------------------------------
<S>                                          <C>                                         <C>                        <C>
 United Defense Industries, Inc.              Bankers Trust Company, as                   19970034720                 10/14/97
 1001 Pennsylvania Avenue, NW                  Collateral Agent
 Suite 220 South                              130 Liberty Street
 Washington, D.C. 20004                       New York, NY 10006
------------------------------------------------------------------------------------------------------------------------------------
 United Defense Industries, Inc.              Citicorp Del Lease, Inc.
 1525 Wilson Boulevard, #700                  450 Mamaroneck Avenue                        10409 7215                  4/9/01
 Arlington, VA 22209                          Harrison, NY 10528
------------------------------------------------------------------------------------------------------------------------------------
 United Defense Industries, Inc.              Citicorp Del Lease, Inc.
 1525 Wilson Boulevard, #700                  450 Mamaroneck Avenue                        10622 7202                  6/22/01
 Arlington, VA 22209                          Harrison, NY 10528
------------------------------------------------------------------------------------------------------------------------------------
 United Defense Industries, Inc.              Citicorp Del Lease, Inc.
 1525 Wilson Boulevard, #700                  450 Mamaroneck Avenue                          64090                     4/10/01
 Arlington, VA 22209                          Harrison, NY 10528
------------------------------------------------------------------------------------------------------------------------------------
 United Defense Industries, Inc.              Citicorp Del Lease, Inc.
 1525 Wilson Boulevard, #700                  450 Mamaroneck Avenue                          64442                     6/25/01
 Arlington, VA 22209                          Harrison, NY 10528
------------------------------------------------------------------------------------------------------------------------------------

<CAPTION>
       JURISDICTION                  COLLATERAL
------------------------------------------------------------------
<S>                             <C>
 Delaware -                     Blanket Security Interest
 Secretary of State



-----------------------------------------------------------------

 Virginia - State               Equipment
 Corporation Commission
-----------------------------------------------------------------

 Virginia - State               Equipment
 Corporation Commission
-----------------------------------------------------------------

 Arlington County,              Equipment
 Virginia
-----------------------------------------------------------------

 Arlington County,              Equipment
 Virginia
-----------------------------------------------------------------
</TABLE>

                                       11

<PAGE>

                                                                      ANNEX VIII
                                                                      ----------

                              EXISTING INVESTMENTS
                              --------------------

Daily cash investment activity is maintained with Wachovia Bank or other banks
chosen by the Borrower from time to time.

<PAGE>

                                TABLE OF CONTENTS
                                -----------------

<TABLE>
<CAPTION>
                                                                                                           Page
                                                                                                           ----
<S>                                                                                                        <C>
SECTION 1. Amount and Terms of Credit ..................................................................      1

     1.01  Commitment ..................................................................................      1
     1.02  Minimum Borrowing Amounts, etc...............................................................      3
     1.03  Notice of Borrowing .........................................................................      3
     1.04  Disbursement of Funds .......................................................................      4
     1.05  Notes .......................................................................................      4
     1.06  Conversions .................................................................................      6
     1.07  Pro Rata Borrowings .........................................................................      6
     1.08  Interest ....................................................................................      6
     1.09  Interest Periods ............................................................................      7
     1.10  Increased Costs, Illegality, etc.............................................................      8
     1.11  Compensation ................................................................................     10
     1.12  Change of Lending Office ....................................................................     11
     1.13  Replacement of Lenders ......................................................................     11

SECTION 2. Letters of Credit ...........................................................................     12

     2.01  Letters of Credit ...........................................................................     12
     2.02  Letter of Credit Requests; Notices of Issuance ..............................................     13
     2.03  Agreement to Repay Letter of Credit Drawings ................................................     13
     2.04  Letter of Credit Participations .............................................................     14
     2.05  Increased Costs .............................................................................     16

SECTION 3. Fees; Commitments ...........................................................................     16

     3.01  Fees ........................................................................................     16
     3.02  Voluntary Reduction of Commitments ..........................................................     17
     3.03  Mandatory Adjustments of Commitments, etc....................................................     17

SECTION 4. Payments ....................................................................................     18

     4.01  Voluntary Prepayments .......................................................................     18
     4.02  Mandatory Prepayments .......................................................................     18
     4.03  Method and Place of Payment .................................................................     24
     4.04  Net Payments ................................................................................     24

SECTION 5. Conditions Precedent ........................................................................     26

     5.01  Conditions Precedent to Initial Borrowing Date ..............................................     26
     5.02  Conditions Precedent to All Credit Events ...................................................     30
</TABLE>

                                      (i)

<PAGE>

<TABLE>
<S>                                                                                                          <C>
SECTION 6. Representations, Warranties and Agreements ....................................................   30

     6.01  Corporate Status ..............................................................................   30
     6.02  Corporate Power and Authority .................................................................   30
     6.03  No Violation ..................................................................................   31
     6.04  Litigation ....................................................................................   31
     6.05  Margin Regulations ............................................................................   31
     6.06  Governmental Approvals ........................................................................   31
     6.07  Investment Company Act ........................................................................   31
     6.08  Public Utility Holding Company Act ............................................................   31
     6.09  True and Complete Disclosure ..................................................................   32
     6.10  Financial Condition; Financial Statements .....................................................   32
     6.11  Security Interests ............................................................................   33
     6.12  Tax Returns and Payments ......................................................................   33
     6.13  Compliance with ERISA .........................................................................   33
     6.14  Subsidiaries ..................................................................................   35
     6.15  Intellectual Property .........................................................................   35
     6.16  Environmental Matters .........................................................................   35
     6.17  Properties ....................................................................................   36
     6.18  Labor Relations ...............................................................................   36
     6.19  Compliance with Statutes, etc..................................................................   36
     6.20  Subordination .................................................................................   36

SECTION 7. Affirmative Covenants .........................................................................   36

     7.01  Information Covenants .........................................................................   37
     7.02  Books, Records and Inspections ................................................................   39
     7.03  Insurance .....................................................................................   39
     7.04  Payment of Taxes ..............................................................................   39
     7.05  Corporate Franchises ..........................................................................   40
     7.06  Compliance with Statutes, etc..................................................................   40
     7.07  ERISA .........................................................................................   40
     7.08  Good Repair ...................................................................................   41
     7.09  End of Fiscal Years; Fiscal Quarters ..........................................................   41
     7.10  Additional Security; Further Assurances .......................................................   41
     7.11  Use of Proceeds ...............................................................................   42
     7.12  Interest Rate Agreement .......................................................................   42
     7.13  Compliance with Environmental Laws ............................................................   43
     7.14  Notices of Assignment .........................................................................   43

SECTION 8. Negative Covenants ............................................................................   44

     8.01  Changes in Business ...........................................................................   44
     8.02  Consolidation, Merger, Sale or Purchase of Assets, etc.........................................   44
     8.03  Liens .........................................................................................   45
     8.04  Indebtedness ..................................................................................   47
     8.05  Capital Expenditures ..........................................................................   48
     8.06  Advances, Investments and Loans ...............................................................   48
</TABLE>

                                      (ii)

<PAGE>

<TABLE>
<S>                                                                                                           <C>
      8.07   Limitation on Creation of Subsidiaries ......................................................    49
      8.08   Modifications ...............................................................................    50
      8.09   Dividends, etc...............................................................................    50
      8.10   Transactions with Affiliates ................................................................    52
      8.11   Interest Coverage Ratio .....................................................................    52
      8.12.  Leverage Ratio ..............................................................................    52
      8.13   Minimum Consolidated Net Worth ..............................................................    53
      8.14   Limitation On Issuance of Stock .............................................................    53

SECTION 9.   Events of Default ...........................................................................    53

      9.01   Payments ....................................................................................    53
      9.02   Representations, etc.........................................................................    53
      9.03   Covenants ...................................................................................    54
      9.04   Default Under Other Agreements ..............................................................    54
      9.05   Bankruptcy, etc..............................................................................    54
      9.06   ERISA .......................................................................................    54
      9.07   Security Documents ..........................................................................    55
      9.08   Guaranty ....................................................................................    55
      9.09   Judgments ...................................................................................    55
      9.10   Change of Control ...........................................................................    56

SECTION 10.  Definitions .................................................................................    56

SECTION 11.  The Agent ...................................................................................    80

      11.01  Appointment .................................................................................    80
      11.02  Nature of Duties ............................................................................    81
      11.03  Lack of Reliance on the Agents ..............................................................    81
      11.04  Certain Rights of the Agents ................................................................    81
      11.05  Reliance ....................................................................................    82
      11.06  Indemnification .............................................................................    82
      11.07  The Agents in Their Individual Capacity .....................................................    82
      11.08  Holders .....................................................................................    82
      11.09  Resignation by the Administrative Agent .....................................................    82

SECTION 12.  Miscellaneous ...............................................................................    83

      12.01  Payment of Expenses, etc. ...................................................................    83
      12.02  Right of Setoff .............................................................................    84
      12.03  Notices .....................................................................................    84
      12.04  Benefit of Agreement ........................................................................    84
      12.05  No Waiver; Remedies Cumulative ..............................................................    87
      12.06  Payments Pro Rata ...........................................................................    87
      12.07  Calculations; Computations ..................................................................    87
      12.08  Governing Law; Submission to Jurisdiction; Venue; Waiver of Jury Trial ......................    88
      12.09  Counterparts ................................................................................    88
      12.10  Effectiveness ...............................................................................    89
</TABLE>

                                     (iii)

<PAGE>

<TABLE>
<S>                                                                          <C>
     12.11  Headings Descriptive ..........................................   89
     12.12  Amendment or Waiver ...........................................   89
     12.13  Survival ......................................................   89
     12.14  Domicile of Loans .............................................   89
     12.15  Confidentiality ...............................................   90
     12.16  Lender Register ...............................................   90

SECTION 13. Holdings Guaranty .............................................   91

     13.01  The Guaranty ..................................................   91
     13.02  Bankruptcy ....................................................   91
     13.03  Nature of Liability ...........................................   91
     13.04  Independent Obligation ........................................   92
     13.05  Authorization .................................................   92
     13.06  Reliance ......................................................   93
     13.07  Subordination .................................................   93
     13.08  Waiver ........................................................   93
     13.09  Enforcement ...................................................   94
</TABLE>


ANNEX I      --  Commitments
ANNEX II     --  Addresses
ANNEX III    --  Subsidiaries
ANNEX IV     --  Real Properties
ANNEX V      --  Existing Indebtedness
ANNEX VI     --  ERISA
ANNEX VII    --  Liens
ANNEX VIII   --  Existing Investments

EXHIBIT A    --  Form of Notice of Borrowing
EXHIBIT B-1  --  Form of A Term Note
EXHIBIT B-2  --  Form of B Term Note
EXHIBIT B-3  --  Form of Revolving Note
EXHIBIT B-4  --  Form of Swingline Note
EXHIBIT C    --  Form of Letter of Credit Request
EXHIBIT D    --  Form of Section 4.04 Certificate
EXHIBIT E    --  Form of Opinion of Latham & Watkins
EXHIBIT F    --  Form of Officers' Certificate
EXHIBIT G    --  Form of Subsidiary Guaranty
EXHIBIT H    --  Form of Pledge Agreement
EXHIBIT I    --  Form of Security Agreement
EXHIBIT J    --  Form of Consent Letter
EXHIBIT K    --  Form of Assignment Agreement

                                      (iv)

<PAGE>

                                                                       EXHIBIT A
                                                                       ---------


                           FORM OF NOTICE OF BORROWING
                           ---------------------------

                                                                          [Date]



Bankers Trust Company,
   as Administrative Agent
   for the Lenders party to the
   Credit Agreement referred
   to below
130 Liberty Street
New York, New York  10006

Attention:  _____________

Ladies and Gentlemen:

          The undersigned, UNITED DEFENSE INDUSTRIES, INC. (the "Borrower"),
refers to the Credit Agreement, dated as of August 13, 2001 (as amended,
modified or supplemented from time to time, the "Credit Agreement"; the
capitalized terms defined therein being used herein as therein defined), among
Iron Horse Investors, L.L.C., the Borrower, the lenders from time to time party
thereto (the "Lenders"), Lehman Commercial Paper Inc., as Syndication Agent,
Citicorp USA, Inc., The Bank of Nova Scotia and Credit Lyonnais New York Branch
as Documentation Agents and you, as Administrative Agent, and, pursuant to
Section 1.03(a) of the Credit Agreement, hereby gives you irrevocable notice
that the undersigned hereby requests a Borrowing under the Credit Agreement, and
in that connection sets forth below the information relating to such Borrowing
(the "Proposed Borrowing") as required by Section 1.03(a) of the Credit
Agreement:

          (i)   The Proposed Borrowing is to consist of [A Term Loans] [B Term
     Loans] [Revolving Loans].

          (ii)  The aggregate principal amount of the Proposed Borrowing is
     $______.

          (iii) The Business Day of the Proposed Borrowing is [____________]./1/
                                                                              -

          (iv)  The Loans to be made pursuant to the Proposed Borrowing shall be
     initially maintained as [Base Rate Loans] [Eurodollar Loans].


______________________


/1/   Written notice (or telephonic notice promptly confirmed in writing) is
 -
      required prior to 12:00 Noon (New York time) (x) at least one Business Day
      prior to each incurrence of Base Rate Loans and (y) at least three
      Business Days prior to each incurrence of Eurodollar Loans.

<PAGE>
                                                                       Exhibit A
                                                                          Page 2

          [(v) The initial Interest Period for the Proposed Borrowing is _____
     months.]/2//
              -

          The undersigned hereby certifies that the following statements are
true on the date hereof, and will be true on the date of the Proposed Borrowing:

          (A) the representations and warranties contained in the Credit
     Agreement and the other Credit Documents are and will be true and correct
     in all material respects, both before and after giving effect to the
     Proposed Borrowing and to the application of the proceeds thereof, as
     though made on such date, unless stated to relate to a specific earlier
     date, in which case such representations and warranties shall be true and
     correct in all material respects as of such earlier date; and

          (B) no Default or Event of Default has occurred and is continuing, or
     would result from such Proposed Borrowing or from the application of the
     proceeds thereof.

                                            Very truly yours,

                                            UNITED DEFENSE INDUSTRIES, INC.



                                            By:_______________________________
                                               Name:
                                               Title:


_____________________

/2//    To be included for a Proposed Borrowing of Eurodollar Loans.
 -

<PAGE>


                                                                     EXHIBIT B-1


                               FORM OF A TERM NOTE
                               -------------------



$________                                                     New York, New York
                                                                _______ __, 2001


          FOR VALUE RECEIVED, UNITED DEFENSE INDUSTRIES, INC., a Delaware
corporation (the "Borrower"), hereby promises to pay to the order of
________________ (the "Lender"), in lawful money of the United States of America
in immediately available funds, at the Payment Office (as defined in the
Agreement referred to below) initially located at 130 Liberty Street, New York,
New York 10006, on the A/RF Maturity Date (as defined in the Agreement) the
principal sum of ___________ DOLLARS ($________) or, if less, the then unpaid
principal amount of all A Term Loans (as defined in the Agreement referred to
below) made by the Lender pursuant to the Agreement.

          The Borrower also promises to pay interest on the unpaid principal
amount hereof in like money at said office from the date hereof until paid at
the rates and at the times provided in Section 1.08 of the Agreement.

          This Note is one of the A Term Notes referred to in the Credit
Agreement, dated as of August 13, 2001, among the Borrower, the lenders from
time to time party thereto (including the Lender), Bankers Trust Company, as
Administrative Agent, Lehman Commercial Paper Inc., as Syndication Agent and
Citicorp USA, Inc., The Bank of Nova Scotia and Credit Lyonnais New York Branch
as Documentation Agents (as amended, modified or supplemented from time to time,
the "Agreement"), and is entitled to the benefits thereof and of the other
Credit Documents (as defined in the Agreement). This Note is secured pursuant to
the Security Documents (as defined in the Agreement) and is entitled to the
benefits of the Subsidiary Guaranty (as defined in the Agreement). As provided
in the Agreement, this Note is subject to voluntary prepayment and mandatory
repayment prior to the A/RF Maturity Date, in whole or in part, and A Term Loans
may be converted from one Type (as defined in the Agreement) into another Type
to the extent provided in the Agreement.

          In case an Event of Default (as defined in the Agreement) shall occur
and be continuing, the principal of and accrued interest on this Note may be
declared to be due and payable in the manner and with the effect provided in the
Agreement.

          The Borrower hereby waives presentment, demand, protest or notice of
any kind in connection with this Note.

          THIS NOTE SHALL BE CONSTRUED IN ACCORDANCE WITH AND BE GOVERNED BY THE
LAW OF THE STATE OF NEW YORK.

<PAGE>

                                                                     Exhibit B-1
                                                                          Page 2

                                      UNITED DEFENSE INDUSTRIES, INC.



                                      By:___________________________________
                                         Name:
                                         Title:

<PAGE>

                                                                     EXHIBIT B-2
                                                                     -----------

                               FORM OF B TERM NOTE
                               -------------------

$________                                                     New York, New York
                                                              _________ __, 2001

          FOR VALUE RECEIVED, UNITED DEFENSE INDUSTRIES, INC., a Delaware
corporation (the "Borrower"), hereby promises to pay to the order of
________________ (the "Lender"), in lawful money of the United States of America
in immediately available funds, at the Payment Office (as defined in the
Agreement referred to below) initially located at 130 Liberty Street, New York,
New York 10006, on the B Maturity Date (as defined in the Agreement) the
principal sum of ___________ DOLLARS ($________) or, if less, the then unpaid
principal amount of all B Term Loans (as defined in the Agreement referred to
below) made by the Lender pursuant to the Agreement.

          The Borrower also promises to pay interest on the unpaid principal
amount hereof in like money at said office from the date hereof until paid at
the rates and at the times provided in Section 1.08 of the Agreement.

          This Note is one of the B Term Notes referred to in the Credit
Agreement, dated as of August 13, 2001, among Iron Horse Investors, L.L.C., the
Borrower, the lenders from time to time party thereto (including the Lender),
Bankers Trust Company, as Administrative Agent, Lehman Commercial Paper Inc., as
Syndication Agent and Citicorp USA, Inc., The Bank of Nova Scotia and Credit
Lyonnais New York Branch as Documentation Agents (as amended, modified or
supplemented from time to time, the "Agreement"), and is entitled to the
benefits thereof and of the other Credit Documents (as defined in the
Agreement). This Note is secured pursuant to the Security Documents (as defined
in the Agreement) and is entitled to the benefits of the Subsidiary Guaranty (as
defined in the Agreement). As provided in the Agreement, this Note is subject to
voluntary prepayment and mandatory repayment prior to the B Maturity Date, in
whole or in part, and B Term Loans may be converted from one Type (as defined in
the Agreement) into another Type to the extent provided in the Agreement.

          In case an Event of Default (as defined in the Agreement) shall occur
and be continuing, the principal of and accrued interest on this Note may be
declared to be due and payable in the manner and with the effect provided in the
Agreement.

          The Borrower hereby waives presentment, demand, protest or notice of
any kind in connection with this Note.

<PAGE>

                                                                     Exhibit B-2
                                                                          Page 2

          THIS NOTE SHALL BE CONSTRUED IN ACCORDANCE WITH AND BE GOVERNED BY THE
LAW OF THE STATE OF NEW YORK.

                                            UNITED DEFENSE INDUSTRIES, INC.



                                            By:_________________________________
                                               Name:
                                               Title:

<PAGE>




                                                                     EXHIBIT B-3



                             FORM OF REVOLVING NOTE

$____________________                                         New York, New York
                                                               ________ __, 2001



                  FOR VALUE RECEIVED, UNITED DEFENSE INDUSTRIES, INC., a
Delaware corporation (the "Borrower"), hereby promises to pay to the order of
_____________ (the "RF Lender"), in lawful money of the United States of America
in immediately available funds, at the Payment Office (as defined in the
Agreement referred to below) initially located at 130 Liberty Street, New York,
New York 10006 on the A/RF Maturity Date (as defined in the Agreement) the
principal sum of ___________________ DOLLARS ($____________) or, if less, the
then unpaid principal amount of all Revolving Loans (as defined in the
Agreement) made by the RF Lender pursuant to the Agreement.

                  The Borrower also promises to pay interest on the unpaid
principal amount of each Revolving Loan made by the RF Lender in like money at
said office from the date hereof until paid at the rates and at the times
provided in Section 1.08 of the Agreement.

                  This Note is one of the Revolving Notes referred to in the
Credit Agreement, dated as of August 13, 2001 among Iron Horse Investors,
L.L.C., the Borrower, the lenders from time to time party thereto (including the
RF Lender), Bankers Trust Company, as Administrative Agent, Lehman Commercial
Paper Inc., as Syndication Agent and Citicorp USA, Inc., The Bank of Nova Scotia
and Credit Lyonnais New York Branch as Documentation Agents (as amended,
modified or supplemented from time to time, the "Agreement") and is entitled to
the benefits thereof and of the other Credit Documents (as defined in the
Agreement). This Note is secured pursuant to the Security Documents (as defined
in the Agreement) and is entitled to the benefits of the Subsidiary Guaranty (as
defined in the Agreement). As provided in the Agreement, this Note is subject to
voluntary prepayment and mandatory repayment prior to the A/RF Maturity Date, in
whole or in part, and Revolving Loans may be converted from one Type (as defined
in the Agreement) into another Type to the extent provided in the Agreement.

                  In case an Event of Default (as defined in the Agreement)
shall occur and be continuing, the principal of and accrued interest on this
Note may be declared to be due and payable in the manner and with the effect
provided in the Agreement.

                  The Borrower hereby waives presentment, demand, protest or
notice of any kind in connection with this Note.




<PAGE>



                                                                     Exhibit B-3

                                                                          Page 2


                  THIS NOTE SHALL BE CONSTRUED IN ACCORDANCE WITH AND BE
GOVERNED BY THE LAW OF THE STATE OF NEW YORK.



                                         UNITED DEFENSE INDUSTRIES, INC.



                                         By:___________________________________
                                            Name:
                                            Title:











<PAGE>

                                                                     EXHIBIT B-4
                                                                     -----------

                             FORM OF SWINGLINE NOTE
                             ----------------------

$________                                                     New York, New York
                                                                _______ __, 2001

          FOR VALUE RECEIVED, UNITED DEFENSE INDUSTRIES, INC., a Delaware
corporation (the "Borrower"), hereby promises to pay to the order of
________________ (the "Swingline Lender"), in lawful money of the United States
of America in immediately available funds, at the Payment Office (as defined in
the Agreement referred to below) initially located at 130 Liberty Street, New
York, New York 10006, on the Swingline Expiry Date (as defined in the Agreement)
the principal sum of ___________ DOLLARS ($________) or, if less, the then
unpaid principal amount of all Swingline Loans (as defined in the Agreement
referred to below) made by the Swingline Lender pursuant to the Agreement.

          The Borrower also promises to pay interest on the unpaid principal
amount of each Swingline Loan made by the Swingline Lender in like money at said
office from the date hereof until paid at the rates and at the times provided in
Section 1.08 of the Agreement.

          This Note is one of the Swingline Notes referred to in the Credit
Agreement, dated as of August 13, 2001, among Iron Horse Investors, L.L.C., the
Borrower, the lenders from time to time party thereto (including the Swingline
Lender), Bankers Trust Company, as Administrative Agent, Lehman Commercial Paper
Inc., as Syndication Agent and Citicorp USA, Inc., The Bank of Nova Scotia and
Credit Lyonnais New York Branch as Documentation Agents (as amended, modified or
supplemented from time to time, the "Agreement"), and is entitled to the
benefits thereof and of the other Credit Documents (as defined in the
Agreement). This Note is secured pursuant to the Security Documents (as defined
in the Agreement) and is entitled to the benefits of the Subsidiary Guaranty (as
defined in the Agreement). As provided in the Agreement, this Note is subject to
voluntary prepayment and mandatory repayment prior to the Swingline Expiry Date,
in whole or in part.

          In case an Event of Default (as defined in the Agreement) shall occur
and be continuing, the principal of and accrued interest on this Note may be
declared to be due and payable in the manner and with the effect provided in the
Agreement.

          The Borrower hereby waives presentment, demand, protest or notice of
any kind in connection with this Note.

<PAGE>

                                                                     Exhibit B-4
                                                                          Page 2

          THIS NOTE SHALL BE CONSTRUED IN ACCORDANCE WITH AND BE GOVERNED BY THE
LAW OF THE STATE OF NEW YORK.

                                      UNITED DEFENSE INDUSTRIES, INC.



                                      By:_________________________________
                                         Name:
                                         Title:

<PAGE>

                                                                       EXHIBIT C
                                                                       ---------

                        FORM OF LETTER OF CREDIT REQUEST
                        --------------------------------

Dated ______ ___,____/1/


Bankers Trust Company,
  as Administrative Agent, under
  the Credit Agreement referred to below
130 Liberty Street
New York, New York 10006

Attention:  _______________________

[Name and Address of applicable
Letter of Credit Issuer/2/__]

Ladies and Gentlemen:

               The undersigned, UNITED DEFENSE INDUSTRIES, INC. (the
"Borrower"), refers to the Credit Agreement, dated as of August 13, 2001 (as
amended, modified or supplemented from time to time, the "Credit Agreement"; the
capitalized terms defined therein being used herein as therein defined), among
Iron Horse Investors, L.L.C., the Borrower, the lenders from time to time party
thereto (the "Lenders"), Bankers Trust Company, as Administrative Agent, Lehman
Commercial Paper Inc., as Syndication Agent and Citicorp USA, Inc., The Bank of
Nova Scotia and Credit Lyonnais New York Branch as Documentation Agents.

               The undersigned hereby requests that the Letter of Credit Issuer
issue a [Standby] [Trade] Letter of Credit for the account of the undersigned on
______ ___, ____/3/ (the "Date of Issuance") in the aggregate Stated Amount of
$_______.

______________________________

/1/   Insert Date of Request

/2/   Insert name/address of applicable Letter of Credit Issuer (in the case of
      Letters of Credit to be issued by the Administrative Agent or its
      affiliates (i) for Standby Letters of Credit insert Bankers Trust Company,
      130 Liberty Street, New York, NY 10006, Attention: Commercial Loan
      Division, Standby Letter of Credit Unit - MS NYC02-1403 and (ii) for Trade
      Letters of Credit insert Deutsche Bank AG, New York Branch, 31 West 52nd
      Street, New York, NY 10019, Attention: Trade Finance, 12th Floor

/3/   Insert date of issuance which shall be a Business Day at least three (3)
      Business Days from the date hereof (or such shorter period as may be
      acceptable to the Issuing Bank)


<PAGE>

                                                                       Exhibit C
                                                                          Page 2

               The beneficiary of the requested Letter of Credit will be
__________,/4/ and such Letter of Credit will be in support of ______________/5/
and will have a stated expiration date of ____________/6/.

               The undersigned hereby certifies that the following statements
are true on the date hereof, and will be true on the Date of Issuance:

               (A) the representations and warranties contained in the Credit
Agreement and the other Credit Documents are and will be true and correct in all
material respects, before and after giving effect to the issuance of the Letter
of Credit requested hereby, as though made on the Date of Issuance, unless
stated to relate to a specific earlier date, in which case such representations
and warranties shall be true and correct in all material respects as of such
earlier date; and

               (B) no Default or Event of Default has occurred and is
continuing, or would result after giving effect to the issuance of the Letter of
Credit requested hereby.

               Copies of all relevant documentation with respect to the
supported transaction are attached hereto.


                                         UNITED DEFENSE INDUSTRIES, INC.



                                         By:_______________________________
                                            Name:
                                            Title:

_______________________________

/4/   Insert the name and address of the Beneficiary.

/5/   Insert a brief description of the supported obligations, name of agreement
      and/or commercial transaction to which this Letter of Credit relates.

/6/   Insert last date upon which drafts or demands for payment may be
      presented, which may not be later than (a) in the case of Standby Letters
      of Credit, the earlier of (x) 3 years after the date of issuance and (y)
      the 3/rd/ Business Day preceding the A/RF Maturity Date, provided that
      Standby Letters of Credit in an aggregate Stated Amount of up to
      $50,000,000 may be issued with an initial expiry date occurring more than
      three years after the respective dates of issuance thereof provided that
      in each case such expiry date shall not be later than the date three
      months prior to A/RF Maturity Date, provided further that Standby Letters
      of Credit issued to replace and/or support letters of credit existing on
      the Initial Borrowing Date shall have an expiry date equal to the then
      expiry date of the letter of credit being replaced or supported and (b) in
      the case of Trade Letters of Credit (x) 180 days after the date of
      issuance or (y) 3 days prior to the A/RF Maturity Date.

<PAGE>

                                                                       Exhibit C
                                                                          Page 3

<PAGE>

                                                                       EXHIBIT D
                                                                       ---------

                        FORM OF SECTION 4.04 CERTIFICATE
                        --------------------------------


     Reference is hereby made to the Credit Agreement, dated as of August 13,
2001, among Iron Horse Investors, L.L.C., United Defense Industries, Inc., the
various lenders from time to time party thereto, Bankers Trust Company, as
Administrative Agent, Lehman Commercial Paper Inc., as Syndication Agent and
Citicorp USA, Inc., The Bank of Nova Scotia and Credit Lyonnais New York Branch
as Documentation Agents (as amended, modified or supplemented from time to time,
the "Credit Agreement"). Capitalized terms used herein that are not defined
herein shall have the meanings ascribed to them in the Credit Agreement.
Pursuant to the provisions of Section 4.04(b)(ii) of the Credit Agreement, the
undersigned (the "Lender") hereby represents and warrants that:

     1. The Lender is not a "bank" for purposes of Section 881(c)(3)(A) of the
Internal Revenue Code of 1986, as amended (the "Code").

     2. The Lender is not subject to regulatory or other legal requirements as a
"bank" in any jurisdiction and has not been treated as a "bank" for purposes of
any tax, securities law or other filing or submission made to any governmental
authority, any application made to a rating agency or qualification for any
exemption from tax, securities law or other legal requirements.

     3. The Lender meets all of the requirements under Code Section 871(h) or
881(c) to be eligible for a complete exemption from withholding of United States
Taxes on interest payments made to it under the Credit Agreement.

     4. The Lender shall promptly notify the Borrower and the Administrative
Agent if any of the representations and warranties made herein are no longer
true and correct.


                                            [NAME OF LENDER]

                                            By: _____________________________
                                                Name:
                                                Title:

Date:  _______________, 2001

<PAGE>

                                                                       EXHIBIT F
                                                                       ---------

                          FORM OF OFFICERS' CERTIFICATE
                          -----------------------------

               I, the undersigned, Chief Financial Officer of UNITED DEFENSE
INDUSTRIES, INC., a corporation organized and existing under the laws of
Delaware (the "Company") do hereby certify on behalf of the Company that:

               1.  This Certificate is furnished pursuant to the Credit
Agreement, dated as of August 13, 2001, among Iron Horse Investors, L.L.C., the
Company, the financial institutions from time to time party thereto, Bankers
Trust Company, as Administrative Agent, Lehman Commercial Paper Inc., as
Syndication Agent and Citicorp USA, Inc., The Bank of Nova Scotia and Credit
Lyonnais New York Branch as Documentation Agents (such Credit Agreement, as in
effect on the date of this Certificate, being herein called the "Credit
Agreement"). Unless otherwise defined herein, capitalized terms used in this
Certificate shall have the meanings set forth in the Credit Agreement.

               2.  The following named individuals are elected or appointed
officers of the Company, each holds the office of the Company set forth opposite
his name and has held such office since _______, ____./1/ The signature written
opposite the name and title of each such officer is his genuine signature.

                  Name/2/             Office                Signature
                       -
               -------------      -------------           ---------------

               ______________     _____________           ________________

               ______________     _____________           ________________

               ______________     _____________           ________________

               3.  Attached hereto as Exhibit A is a certified copy of the
Certificate of Incorporation of the Company and each other Credit Party, as
filed in the Office of the Secretary of State of the State of Delaware, together
with all amendments thereto adopted through the date hereof.

___________________________

/1/  Insert a date prior to the time of any corporate action relating to the
     Credit Documents or related documentation.

/2/  Include name, office and signature of each officer who will sign any Credit
     Document or related documentation on behalf of the Company, including the
     officer who will sign the certification at the end of this Certificate.

<PAGE>

                                                                       Exhibit F
                                                                          Page 2

               4.  Attached hereto as Exhibit B is a true and correct copy of
the By-Laws of the Company and each other Credit Party which were duly adopted,
are in full force and effect on the date hereof, and have been in effect at all
times relevant to this transaction.

               5.  Attached hereto as Exhibit C is a true and correct copy of
resolutions of the Company and each other Credit Party which were duly adopted
on the respective dates set forth therein by unanimous written consent of the
Board of Directors of the Company or such Credit Party or by a telephonic
meeting of the Board of Directors of the Company or such Credit Party at which a
quorum was present and acting throughout as set forth in the attached
resolutions, and said resolutions have not been rescinded, amended or modified.
Except as attached hereto as Exhibit C, no resolutions have been adopted by the
Board of Directors of the Company which deal with the execution, delivery or
performance of any of the Documents to which the Company or any such Credit
Party is party.

               6.  On the date hereof, all of the conditions set forth in
Sections 5.01(g) have been satisfied.

               7.  On the date hereof, the representations and warranties
contained in the Credit Agreement and in the other Credit Documents are true and
correct in all material respects with the same effect as though such
representations and warranties had been made on the date hereof, both before and
after giving effect to the incurrence of Loans on the date hereof and the
application of the proceeds thereof, unless stated to relate to a specific
earlier date, in which case such representations and warranties were true and
correct in all material respects as of such earlier date.

               8.  On the date hereof, no Default or Event of Default has
occurred and is continuing or would result from the Borrowing to occur on the
date hereof or from the application of the proceeds thereof.

               9.  There is no proceeding for the dissolution or liquidation of
the Company or any of its Subsidiaries or threatening their existence.

               IN WITNESS WHEREOF, I have hereunto set my hand this __ day of
_____, 2001.



                                              UNITED DEFENSE INDUSTRIES, INC.



                                              By:_____________________________
                                                 Name:
                                                 Title:

<PAGE>

                                                                       Exhibit F
                                                                          Page 3

               [I, the undersigned, [Secretary] of the Company, do hereby
certify on behalf of the Company that:

               1.  [Name of Person making above certifications] is the duly
elected and qualified [Chief Financial Officer] of the Company and the signature
above is his genuine signature.

               2.  The certifications made by [name of Person making above
certifications] on behalf of the Company in Items 2, 3, 4, 5 and 9 above are
true and correct.

               IN WITNESS WHEREOF, I have hereunto set my hand this __ day of
_______, 2001.


                                             UNITED DEFENSE INDUSTRIES, INC.



                                             By:_______________________________
                                                Name:
                                                Title:






<PAGE>

                                                                       EXHIBIT G
                                                                       ---------
                                                         [Conformed as Executed]



                               SUBSIDIARY GUARANTY
                               -------------------

         SUBSIDIARY GUARANTY, dated as of August 13, 2001 (as amended, modified
or supplemented from time to time, this "Guaranty"), made by each of the
undersigned (each, a "Guarantor" and together with any other entity that becomes
a party hereto pursuant to Section 25 hereof, collectively, the "Guarantors").
Except as otherwise defined herein, terms used herein and defined in the Credit
Agreement (as defined below) shall be used herein as therein defined.

                              W I T N E S S E T H :
                              - - - - - - - - - -


         WHEREAS, Iron Horse Investors, L.L.C. ("Holdings"), United Defense
Industries, Inc. (the "Borrower"), the lenders from time to time party thereto
(the "Lenders"), and Bankers Trust Company, as Administrative Agent (the
"Administrative Agent"), Lehman Commercial Paper Inc., as Syndication Agent (the
"Syndication Agent") and Citicorp USA, Inc., The Bank of Nova Scotia and Credit
Lyonnais New York Branch as Documentation Agents (the "Documentation Agents" and
together with the Lenders, the Administrative Agent and the Syndication Agent,
the "Lender Creditors") have entered into a Credit Agreement, dated as of August
13, 2001 (as amended, modified or supplemented from time to time, the "Credit
Agreement") providing for the making of Loans and the issuance or creation of,
and participation in, Letters of Credit as contemplated therein;

         WHEREAS, Borrower may from time to time be party to one or more
Interest Rate Agreements (each such Interest Rate Agreement with an Interest
Rate Creditor (as defined below), a "Secured Interest Rate Agreement") with any
Lender or Lenders or a syndicate of financial institutions organized by a Lender
or an affiliate of a Lender (even if any such Lender subsequently ceases to be a
Lender under the Credit Agreement for any reason) and any institution that
participates therein, and in each case their subsequent assigns (collectively,
the "Interest Rate Creditors" and together with the Lender Creditors, the
"Creditors");

         WHEREAS, each Guarantor is a Domestic Subsidiary of Holdings;

         WHEREAS, it is a condition to the extensions of credit under the Credit
Agreement that each Guarantor shall have executed and delivered this Guaranty;
and

         WHEREAS, each Guarantor will obtain benefits from the extensions of
credit to the Borrower under the Credit Agreement and the entering into of
Interest Rate Agreements and, accordingly, desires to execute this Guaranty in
order to satisfy the conditions described in the preceding paragraph;

         NOW, THEREFORE, in consideration of the foregoing and other benefits
accruing to each Guarantor, the receipt and sufficiency of which are hereby
acknowledged, each Guarantor hereby makes the following representations and
warranties to the Creditors and hereby covenants and agrees with each Creditor
as follows:

<PAGE>

                                                                          Page 2

         1. Each Guarantor irrevocably and unconditionally, and jointly and
severally, guarantees:

         (i)  to the Lender Creditors, the full and prompt payment when due
     (whether at the stated maturity, by acceleration or otherwise) of (a) the
     principal of and interest on the Notes issued by, and the Loans made to,
     the Borrower under the Credit Agreement, (b) all reimbursement obligations
     and Unpaid Drawings with respect to Letters of Credit issued under the
     Credit Agreement and (c) all other obligations (including obligations
     which, but for any automatic stay under Section 362(a) of the Bankruptcy
     Code, would become due) and liabilities owing by the Borrower to the Lender
     Creditors under the Credit Agreement and the Credit Documents (including,
     without limitation, indemnities, Fees and interest thereon) now existing or
     hereafter incurred under, arising out of or in connection with the Credit
     Agreement or any other Credit Document and the due performance and
     compliance with the terms of the Credit Documents (all such principal,
     interest, liabilities and obligations, the "Credit Document Obligations");
     and

         (ii) to the Interest Rate Creditors, the full and prompt payment when
     due (whether at the stated maturity, by acceleration or otherwise) of all
     obligations (including obligations which, but for any automatic stay under
     Section 362(a) of the Bankruptcy Code, would become due) and liabilities
     owing by the Borrower under any Secured Interest Rate Agreement, whether
     now in existence or hereafter arising, and the due performance and
     compliance by the Borrower with all terms, conditions and agreements
     contained therein (all such obligations and liabilities, the "Interest Rate
     Obligations" and, together with the Credit Agreement Obligations are herein
     collectively called the "Guaranteed Obligations").

All payments by each Guarantor under this Guaranty shall be made on the same
basis as payments by the Borrower under Sections 4.03 and 4.04 of the Credit
Agreement.

         2. Additionally, each Guarantor, jointly and severally, unconditionally
and irrevocably, guarantees the payment of any and all Guaranteed Obligations
whether or not due or payable by the Borrower upon the occurrence in respect of
such Borrower of any of the events specified in Section 9.05 of the Credit
Agreement, and unconditionally and irrevocably, jointly and severally, promises
to pay such Guaranteed Obligations to the Creditors, on demand, in lawful money
of the United States. This Guaranty shall constitute a guaranty of payment, and
not of collection.

         3. The liability of each Guarantor hereunder is exclusive and
independent of any security for or other guaranty of the indebtedness of the
Borrower whether executed by such Guarantor, any other Guarantor, any other
guarantor or by any other party, and the liability of each Guarantor hereunder
shall not be affected or impaired by (a) any direction as to application of
payment by the Borrower or by any other party, (b) any other continuing or other
guaranty or undertaking of any other party as to the indebtedness of the
Borrower, (c) any payment on or in reduction of any such other guaranty or
undertaking, (d) any dissolution, termination or increase, decrease or change in
personnel by the Borrower or (e) any payment made to any Creditor on the
indebtedness which any Creditor repays to the Borrower pursuant to court order
in any bankruptcy, reorganization, arrangement, moratorium or other debtor
relief proceeding, and each

                                       -2-

<PAGE>

                                                                          Page 3

Guarantor waives any right to the deferral or modification of its obligations
hereunder by reason of any such proceeding.

         4. The obligations of each Guarantor hereunder are independent of the
obligations of any other Guarantor or any other guarantor of the Borrower, and a
separate action or actions may be brought and prosecuted against each Guarantor
whether or not action is brought against any other Guarantor or any other
guarantor of the Borrower and whether or not any other Guarantor or any other
guarantor of the Borrower is joined in any such action or actions.

         5. Each Guarantor hereby waives notice of acceptance of this Guaranty
and notice of any liability to which it may apply, and waives promptness,
diligence, presentment, demand of payment, protest, notice of dishonor or
nonpayment of any such liabilities, suit or taking of other action by the
Administrative Agent or any other Creditor against, and any other notice to, any
party liable thereon (including such Guarantor or any other guarantor of the
Borrower).

         6. Any Creditor may at any time and from time to time without the
consent of, or notice to, any Guarantor, without incurring responsibility to
such Guarantor, without impairing or releasing the obligations of such Guarantor
hereunder, upon or without any terms or conditions and in whole or in part:

         (i)   change the manner, place or terms of payment of, and/or change or
     extend the time of payment of, renew or alter, any of the Guaranteed
     Obligations, any security therefor, or any liability incurred directly or
     indirectly in respect thereof, and the guaranty herein made shall apply to
     the Guaranteed Obligations as so changed, extended, renewed or altered;

         (ii)  sell, exchange, release, surrender, realize upon or otherwise
     deal with in any manner and in any order any property by whomsoever at any
     time pledged or mortgaged to secure, or howsoever securing, the Guaranteed
     Obligations or any liabilities (including any of those hereunder) incurred
     directly or indirectly in respect thereof or hereof, and/or any offset
     thereagainst;

         (iii) exercise or refrain from exercising any rights against the
     Borrower, any other guarantor or others or otherwise act or refrain from
     acting;

         (iv)  settle or compromise any of the Guaranteed Obligations, any
     security therefor or any liability (including any of those hereunder)
     incurred directly or indirectly in respect thereof or hereof, and may
     subordinate the payment of all or any part thereof to the payment of any
     liability (whether due or not) of the Borrower to creditors of the Borrower
     (other than the Creditors);

         (v)   apply any sums by whomsoever paid or howsoever realized to any
     liability or liabilities of the Borrower to the Creditors regardless of
     what liabilities of the Borrower remain unpaid;

                                       -3-

<PAGE>

                                                                          Page 4

         (vi)  consent to or waive any breach of, or any act, omission or
     default under, any of the Credit Documents, the Interest Rate Agreements or
     any of the instruments or agreements referred to therein, or otherwise
     amend, modify or supplement any of the Credit Documents, the Interest Rate
     Agreements or any of such other instruments or agreements; and/or

         (vii) act or fail to act in any manner referred to in this Guaranty
     which may deprive such Guarantor of its right to subrogation against the
     Borrower to recover full indemnity for any payments made pursuant to this
     Guaranty.

         7.  No invalidity, irregularity or unenforceability of all or any part
of the Guaranteed Obligations or of any security therefor shall affect, impair
or be a defense to this Guaranty, and this Guaranty shall be primary, absolute
and unconditional notwithstanding the occurrence of any event or the existence
of any other circumstances which might constitute a legal or equitable discharge
of a surety or guarantor except payment in full of the Guaranteed Obligations.

         8.  This Guaranty is a continuing one and all liabilities to which it
applies or may apply under the terms hereof shall be conclusively presumed to
have been created in reliance hereon. No failure or delay on the part of any
Creditor in exercising any right, power or privilege hereunder shall operate as
a waiver thereof; nor shall any single or partial exercise of any right, power
or privilege hereunder preclude any other or further exercise thereof or the
exercise of any other right, power or privilege. The rights and remedies herein
expressly specified are cumulative and not exclusive of any rights or remedies
which any Creditor would otherwise have. No notice to or demand on any Guarantor
in any case shall entitle such Guarantor to any other further notice or demand
in similar or other circumstances or constitute a waiver of the rights of any
Creditor to any other or further action in any circumstances without notice or
demand. It is not necessary for any Creditor to inquire into the capacity or
powers of the Borrower or any of its Subsidiaries or the officers, directors,
partners or agents acting or purporting to act on its behalf, and any
indebtedness made or created in reliance upon the professed exercise of such
powers shall be guaranteed hereunder.

         9.  Any indebtedness of the Borrower now or hereafter held by any
Guarantor is hereby subordinated to the indebtedness of such Borrower to the
Creditors; and such Indebtedness of the Borrower to any Guarantor, if the
Collateral Agent, after an Event of Default (as hereinafter defined) has
occurred, so requests, shall be collected, enforced and received by such
Guarantor as trustee for the Creditors and be paid over to the Creditors on
account of the Indebtedness of the Borrower to the Creditors, but without
affecting or impairing in any manner the liability of such Guarantor under the
other provisions of this Guaranty. Prior to the transfer by any Guarantor of any
note or negotiable instrument evidencing any Indebtedness of the Borrower to
such Guarantor, such Guarantor shall mark such note or negotiable instrument
with a legend that the same is subject to this subordination.

         10. (a) Each Guarantor hereby waives any right (except as shall be
required by applicable statute and cannot be waived) to require the Creditors
to: (i) proceed against the Borrower, any other Guarantor, any other guarantor
of the Borrower or any other party; (ii) proceed against or exhaust any security
held from the Borrower, any other Guarantor, any other guarantor of

                                       -4-

<PAGE>

                                                                          Page 5

the Borrower or any other party; or (iii) pursue any other remedy in the
Creditors' power whatsoever. Each Guarantor waives any defense based on or
arising out of any defense of the Borrower, any other Guarantor, any other
guarantor of the Borrower or any other party other than payment in full of the
Guaranteed Obligations, including, without limitation, any defense based on or
arising out of the disability of the Borrower, any other Guarantor, any other
guarantor of the Borrower or any other party, or the unenforceability of the
Guaranteed Obligations or any part thereof from any cause, or the cessation from
any cause of the liability of the Borrower other than payment in full of the
Guaranteed Obligations of such Borrower. The Creditors may, at their election,
foreclose on any security held by the Administrative Agent, the Collateral Agent
or the other Creditors by one or more judicial or nonjudicial sales, whether or
not every aspect of any such sale is commercially reasonable (to the extent such
sale is permitted by applicable law), or exercise any other right or remedy the
Creditors may have against the Borrower or any other party, or any security,
without affecting or impairing in any way the liability of any Guarantor
hereunder except to the extent the Guaranteed Obligations have been paid in
full. Each Guarantor waives any defense arising out of any such election by the
Administrative Agent, the Collateral Agent and the other Creditors, even though
such election operates to impair or extinguish any right of reimbursement or
subrogation or other right or remedy of such Guarantor against the Borrower, any
other Guarantor or any other party or any security.

         (b) Each Guarantor waives all presentments, demands for performance,
protests and notices, including, without limitation, notices of nonperformance,
notices of protest, notices of dishonor, notices of acceptance of this Guaranty,
and notices of the existence, creation or incurring of new or additional
Indebtedness. Each Guarantor assumes all responsibility for being and keeping
itself informed of the Borrower's financial condition and assets, and of all
other circumstances bearing upon the risk of nonpayment of the Guaranteed
Obligations and the nature, scope and extent of the risks which such Guarantor
assumes and incurs hereunder, and agrees that the Creditors shall have no duty
to advise such Guarantor of information known to them regarding such
circumstances or risks.

         11. If and to the extent that any Guarantor makes any payment to any
Creditor or to any other Person pursuant to or in respect of this Guaranty, any
claim which such Guarantor may have against the Borrower by reason thereof shall
be subject and subordinate to the prior payment in full of the Guaranteed
Obligations to each Creditor. Prior to the transfer by any Guarantor of any note
or negotiable instrument evidencing any indebtedness of the Borrower to such
Guarantor, such Guarantor shall mark such note or negotiable instrument with a
legend that the same is subject to this subordination.

         12. Each Guarantor covenants and agrees that on and after the date
hereof and until the Total Commitment and all Interest Rate Agreements have been
terminated, no Note or Letter of Credit remains outstanding and all Guaranteed
Obligations have been paid in full, such Guarantor shall take, or will refrain
from taking, as the case may be, all actions that are necessary to be taken or
not taken so that no violation of any provision, covenant or agreement contained
in Section 7 or 8 of the Credit Agreement, and so that no Event of Default, is
caused by the actions of such Guarantor or any of its Subsidiaries.

         13. Each Guarantor hereby jointly and severally agrees to pay, to the
extent not paid by the Borrower pursuant to Section 12.01 of the Credit
Agreement, all reasonable out-of-pocket costs and expenses (including, without
limitation, the reasonable fees and disbursements

                                       -5-

<PAGE>

                                                                          Page 6

of counsel) of each Creditor in connection with the enforcement of this Guaranty
and in connection with any amendment, waiver or consent relating to this
Guaranty, provided that, except in the case of a bankruptcy of any Credit Party,
no more than one counsel for the Agents and the Lenders may be used in any
jurisdiction.

                  14. This Guaranty shall be binding upon each Guarantor and its
successors and assigns and shall inure to the benefit of the Creditors and their
successors and assigns to the extent permitted under the Credit Agreement.

                  15. Neither this Guaranty nor any provision hereof may be
changed, waived, discharged or terminated except with the written consent of the
Required Lenders (or to the extent required by Section 12.12 of the Credit
Agreement, with the written consent of each Lender) and each Guarantor affected
thereby (it being understood that the addition or release of any Guarantor
hereunder shall not constitute a change, waiver, discharge or termination
affecting any Guarantor other than the Guarantor so added or released), provided
that (x) no such change, waiver, modification or variance shall be made to the
last sentence of Section 1 or to this Section 15 without the consent of each
Creditor adversely affected thereby and (y) any change, waiver, modification or
variance affecting the rights and benefits of a single Class (as defined below)
(and not all Creditors in a like or similar manner) shall require the written
consent of the Requisite Creditors (as defined below) of such Class. For the
purpose of this Guaranty, the term "Class" shall mean (i) the Lender Creditors
or (ii) the Interest Rate Creditors. For the purpose of this Guaranty, the term
"Requisite Creditors" shall mean (i) with respect to the Lender Creditors, the
Required Lenders and (ii) with respect to the Interest Rate Creditors, the
holders of at least a majority of all obligations outstanding from time to time
under the Secured Interest Rate Agreements.

                  16. Each Guarantor acknowledges that an executed (or
conformed) copy of each of the Credit Documents and the Interest Rate Agreements
has been made available to its principal executive officers and such officers
are familiar with the contents thereof.

                  17. In addition to any rights now or hereafter granted under
applicable law (including, without limitation, Section 151 of the New York
Debtor and Creditor Law) and not by way of limitation of any such rights, upon
the occurrence and during the continuance of an Event of Default (such term
shall mean and include any Event of Default under the Credit Agreement or any
payment default under any Interest Rate Agreement continuing after any
applicable grace period), each Creditor is hereby authorized, at any time or
from time to time, without notice to any Guarantor or to any other Person, any
such notice being expressly waived, to set off and to appropriate and apply any
and all deposits (general or special but not trust accounts) and any other
indebtedness at any time held or owing by such Creditor to or for the credit or
the account of any Guarantor, against and on account of the obligations and
liabilities of such Guarantor to such Creditor under this Guaranty, irrespective
of whether or not such Creditor shall have made any demand hereunder and
although said obligations, liabilities, deposits or claims, or any of them,
shall be contingent or unmatured. Each Creditor agrees to promptly notify the
relevant Guarantor after any such set off and application, provided that the
failure to give such notice shall not affect the validity of such set off and
application.

                                       -6-

<PAGE>

                                                                          Page 7

                  18. All notices, requests, demands or other communications
provided for hereunder made in writing (including communications by facsimile
transmission) shall be deemed to have been duly given or made when delivered to
the Person to which such notice, request, demand or other communication is
required or permitted to be given or made under this Guaranty, addressed to such
party at (i) in the case of any Lender Creditor, as provided in the Credit
Agreement, (ii) in the case of each Guarantor, at its address set forth opposite
its signature below and (iii) in the case of any Interest Rate Creditor, at such
address as such Interest Rate Creditor shall have specified in writing to the
Guarantors; or in any case at such other address as any of the Persons listed
above may hereafter notify the others in writing.

                  19. If claim is ever made upon any Creditor for repayment or
recovery of any amount or amounts received in payment or on account of any of
the Guaranteed Obligations and any such Creditor repays all or part of said
amount by reason of (i) any judgment, decree or order of any court or
administrative body having jurisdiction over such Creditor or any of its
property or (ii) any settlement or compromise of any such claim effected by such
Creditor in good faith with any such claimant (including the Borrower), then and
in such event each Guarantor agrees that any such judgment, decree, order,
settlement or compromise shall be binding upon such Guarantor, notwithstanding
any revocation hereof or other instrument evidencing any liability of the
Borrower, and each Guarantor shall be and remain liable to such Creditor
hereunder for the amount so repaid or recovered to the same extent as if such
amount had never originally been received by any such Creditor.

                  20. (a) This Guaranty and the rights and obligations of the
Creditors and of the undersigned hereunder shall be governed by and construed in
accordance with the law of the State of New York. Any legal action or proceeding
with respect to this Guaranty may be brought in the courts of the State of New
York or of the United States of America for the Southern District of New York,
and, by execution and delivery of this Guaranty, each Guarantor hereby
irrevocably accepts for itself and in respect of its property, generally and
unconditionally, the jurisdiction of the aforesaid courts. Each Guarantor hereby
irrevocably designates, appoints and empowers CT Corporation System with offices
on the date hereof at 111 Eighth Avenue, New York, NY 10011, as its designee,
appointee and agent to receive, accept and acknowledge for and on its behalf,
and in respect of its property, service of any and all legal process, summons,
notices and documents which may be served in any such action or proceeding. If
for any reason such designee, appointee and agent shall cease to be available to
act as such, each Guarantor agrees to designate a new designee, appointee and
agent in New York City on the terms and for the purposes of this provision
satisfactory to the Administrative Agent under this Agreement. Each Guarantor
further irrevocably consents to the service of process out of any of the
aforementioned courts in any such action or proceeding by the mailing of copies
thereof by registered or certified mail, postage prepaid, to each Guarantor at
its address set forth opposite its signature below, such service to become
effective 30 days after such mailing. Nothing herein shall affect the right of
any of the Creditors to serve process in any other manner permitted by law or to
commence legal proceedings or otherwise proceed against any Guarantor in any
other jurisdiction.

                  (b) Each Guarantor hereby irrevocably waives any objection
which it may now or hereafter have to the laying of venue of any of the
aforesaid actions or proceedings arising out of or in connection with this
Guaranty or any other Credit Document brought in the courts referred

                                       -7-

<PAGE>

                                                                          Page 8

to in clause (a) above and hereby further irrevocably waives and agrees not to
plead or claim in any such court that such action or proceeding brought in any
such court has been brought in an inconvenient forum.

                  (c) Each Guarantor and each Creditor (by its acceptance of the
benefits of this Guaranty) hereby irrevocably waives all rights to a trial by
jury in any action, proceeding or counterclaim arising out of or relating to
this Guaranty, the other Credit Documents to which such Guarantor is a party or
the transactions contemplated hereby or thereby.

                  21. In the event that all of the capital stock of one or more
Guarantors is sold or otherwise disposed of or liquidated in compliance with the
requirements of Section 8.02 of the Credit Agreement (or such sale or other
disposition has been approved in writing by the Required Lenders (or all Lenders
if required by Section 12.12 of the Credit Agreement)) and the proceeds of such
sale, disposition or liquidation are applied, to the extent applicable, in
accordance with the provisions of the Credit Agreement, such Guarantor shall be
released from this Guaranty and this Guaranty shall, as to each such Guarantor
or Guarantors, terminate, and have no further force or effect (it being
understood and agreed that the sale of one or more Persons that own, directly or
indirectly, all of the capital stock or partnership interests of any Guarantor
shall be deemed to be a sale of such Guarantor for the purposes of this Section
21).

                  22. Each Guarantor, in addition to the subrogation rights it
shall have against the Borrower under applicable law as a result of any payment
it makes hereunder, shall also have a right of contribution against all other
Guarantors in respect of any such payment pro rata among same based on their
                                          --------
respective net fair value as enterprises, provided any such right of
                                          --------
contribution shall be subject and subordinate to the prior payment in full of
the Guaranteed Obligations (and such Guarantor's obligations in respect
thereof). It is the desire and intent of each Guarantor and the Creditors that
this Guaranty shall be enforced to the fullest extent permissible under the laws
and public policies applied in each jurisdiction in which enforcement is sought.
If and to the extent that the obligations of any Guarantor under this Guaranty
would, in the absence of this sentence, be adjudicated to be invalid or
unenforceable because of any applicable state or federal law relating to
fraudulent conveyances or transfers, then the amount of such Guarantor's
liability hereunder in respect of the Guaranteed Obligations shall be deemed to
be reduced ab initio to that maximum amount which would be permitted without
           -- ------
causing such Guarantor's obligations hereunder to be so invalidated.

                  23. The Creditors agree that this Guaranty may be enforced
only by the action of the Administrative Agent or the Collateral Agent, in each
case acting upon the instructions of the Required Lenders and that no other
Creditor shall have any right individually to seek to enforce or to enforce this
Guaranty or to realize upon the security to be granted by the Security
Documents, it being understood and agreed that such rights and remedies may be
exercised by the Administrative Agent or the Collateral Agent for the benefit of
the Creditors upon the terms of this Guaranty and the Security Documents. The
Creditors further agree that this Guaranty may not be enforced against any
director, officer or employee of any Guarantor.

                  24. This Guaranty may be executed in any number of
counterparts and by the different parties hereto on separate counterparts, each
of which when so executed and delivered shall be an original, but all of which
shall together constitute one and the same instrument. A set

                                       -8-

<PAGE>

                                                                          Page 9

of counterparts executed by all the parties hereto shall be lodged with the
Borrower and the Administrative Agent.

                  25. It is understood and agreed that any Subsidiary of the
Borrower that is required to execute a counterpart of this Guaranty after the
date hereof pursuant to the Credit Agreement (including the Subsidiary
Guarantors to the extent not parties hereto as of the date hereof) shall become
a Guarantor hereunder by executing a counterpart hereof and delivering the same
to the Administrative Agent.

                                       -9-

<PAGE>

                  IN WITNESS WHEREOF, each Guarantor has caused this Guaranty to
be executed and delivered as of the date first above written.

                                           UDLP HOLDINGS CORP.,
                                             as a Guarantor

                                           By: /s/ Francis Raborn
                                               ---------------------------------
                                               Title: Vice President &
                                                      Chief Financial Officer

                                           UNITED DEFENSE, L.P., as a Guarantor


                                           By:   UDP HOLDINGS CORP.,
                                                 its General Partner

                                           By: /s/ Francis Raborn
                                               ---------------------------------
                                               Title: Member of the Management
                                                      Committee

                                           BARNES & REIECNKE, INC.,
                                             as a Guarantor

                                           By: /s/ Francis Raborn
                                               ---------------------------------
                                               Title: Vice President &
                                                      Chief Financial Officer

Accepted and Agreed to:

BANKERS TRUST COMPANY,
 as Administrative Agent for the Lenders

By: /s/ Paddy Dowling
    --------------------------------------
     Title: Vice President

<PAGE>

                                                                       EXHIBIT H
                                                                       ---------
                                                         [Conformed as Executed]

                                PLEDGE AGREEMENT
                                ----------------


          PLEDGE AGREEMENT, dated as of August 13, 2001 (as amended, modified or
supplemented from time to time, the "Agreement"), made by each of the
undersigned (each, a "Pledgor" and together with any other entity that becomes a
party hereto pursuant to Section 23 hereof, collectively, the "Pledgors"), in
favor of BANKERS TRUST COMPANY, as Collateral Agent (including any successor
collateral agent, the "Pledgee") for the benefit of the Secured Creditors (as
defined below). Except as otherwise defined herein, terms used herein and
defined in the Credit Agreement shall be used herein as therein defined.


                              W I T N E S S E T H:
                              - - - - - - - - - -


          WHEREAS, Iron Horse Investors, L.L.C. ("Holdings"), United Defense
Industries, Inc. (the "Borrower"), the lenders from time to time party thereto
(the "Lenders"), Bankers Trust Company, as Administrative Agent (the
"Administrative Agent"), Lehman Commercial Paper Inc., as Syndication Agent (the
"Syndication Agent") and Citicorp USA, Inc., The Bank of Nova Scotia and Credit
Lyonnais New York Branch as Documentation Agents (the "Documentation Agents" and
together with the Lenders, the Administrative Agent, the Syndication Agent and
the Pledgee, the "Lender Creditors") have entered into a Credit Agreement, dated
as of August 13, 2001 (as amended, modified or supplemented from time to time,
the "Credit Agreement") providing for the making of Loans and the issuance or
creation of, and participation in, Letters of Credit as contemplated therein;

          WHEREAS, the Borrower may from time to time be a party to one or more
Interest Rate Agreements (each such Interest Rate Agreement with an Interest
Rate Creditor (as defined below), a "Secured Interest Rate Agreement") with any
Lender or Lenders or a syndicate of financial institutions organized by a Lender
or an affiliate of a Lender (even if any such Lender ceases to be a Lender under
the Credit Agreement for any reason) and any institution that participates
therein, and in each case their subsequent assigns (collectively, the "Interest
Rate Creditors" and together with the Lender Creditors, the "Secured
Creditors");

          WHEREAS, pursuant to the Subsidiary Guaranty dated as of even date
herewith (as amended, modified or supplemented from time to time, the
"Subsidiary Guaranty"), each Pledgor (other than the Borrower) has jointly and
severally guaranteed to the Secured Creditors the payment when due of the
Guaranteed Obligations (as and to the extent defined in the Subsidiary
Guaranty);

          WHEREAS, it is a condition precedent to the making of Loans and the
issuance or creation of, and participation in, Letters of Credit under the
Credit Agreement that each Pledgor shall have executed and delivered to the
Pledgee this Agreement; and

          WHEREAS, each Pledgor desires to execute this Agreement to satisfy the
conditions described in the preceding paragraph;

<PAGE>

                                                                          Page 2

          NOW, THEREFORE, in consideration of the benefits accruing to each
Pledgor, the receipt and sufficiency of which are hereby acknowledged, each
Pledgor hereby makes the following representations and warranties to the Pledgee
and hereby covenants and agrees with the Pledgee as follows:

          1. SECURITY FOR OBLIGATIONS. This Agreement is made by each Pledgor
             ------------------------
for the benefit of the Secured Creditors to secure:

          (i)   the full and prompt payment when due (whether at the stated
     maturity, by acceleration or otherwise) of all obligations (including
     obligations which, but for the automatic stay under Section 362(a) of the
     Bankruptcy Code, would become due) and liabilities of such Pledgor, now
     existing or hereafter incurred under, arising out of or in connection with
     any Credit Document to which such Pledgor is a party and the due
     performance of and compliance by such Pledgor with the terms of each such
     Credit Document by such Pledgor (all such obligations and liabilities under
     this clause (i), except to the extent consisting of obligations or
     indebtedness with respect to Secured Interest Rate Agreements, being herein
     collectively called the "Credit Document Obligations");

          (ii)  the full and prompt payment when due (whether at the stated
     maturity, by acceleration or otherwise) of all obligations (including
     obligations which, but for the automatic stay under Section 362(a) of the
     Bankruptcy Code, would become due) and liabilities of such Pledgor, now
     existing or hereafter incurred under, arising out of or in connection with
     any Secured Interest Rate Agreement, including, all obligations, if any, of
     such Pledgor under a Guaranty in respect of Secured Interest Rate
     Agreements (all such obligations and liabilities under this clause (ii)
     being herein collectively called the "Interest Rate Obligations");

          (iii) any and all sums advanced by the Pledgee under any Credit
     Document in order to preserve the Collateral and/or its security interest
     therein; and

          (iv)  in the event of any proceeding for the collection of the
     Obligations (as defined below) or the enforcement of this Agreement, after
     an Event of Default (such term, as used in this Agreement, shall mean any
     Event of Default under the Credit Agreement or any payment default by the
     Borrower under any Secured Interest Rate Agreement after the expiration of
     any applicable grace period) shall have occurred and be continuing, the
     reasonable expenses of retaking, holding, preparing for sale or lease,
     selling or otherwise disposing of or realizing on the Collateral, or of any
     exercise by the Pledgee of its rights hereunder, together with reasonable
     attorneys' fees and court costs;

all such obligations, liabilities, sums and expenses set forth in clauses (i)
through (iv) of this Section 1 being herein collectively called the
"Obligations".

          2. DEFINITION OF STOCK, NOTES, SECURITIES, PARTNERSHIP INTEREST, ETC.
             ------------------------------------------------------------------
(a) As used herein, (i) the term "Stock" shall mean (x) all of the issued and
outstanding shares of capital stock or other ownership interests of any Person
(other than a Person that is not organized under the laws of the United States
or any State or territory thereof

<PAGE>

                                                                          Page 3

(a "Foreign Person")) at any time directly owned by any Pledgor and (y) all of
the issued and outstanding shares of capital stock or other ownership interests
of any Foreign Person at any time owned by any Pledgor provided that such
Pledgor shall not be required to pledge hereunder (and the term "Stock" shall
not include) more than 65% of the total combined voting power of all classes of
capital stock or other ownership interests of any Foreign Person entitled to
vote, provided that, in each case, if any such capital stock or other ownership
interests are not permitted to be pledged hereunder pursuant to the terms
thereof and/or any shareholder, joint venture or similar agreement governing
same, then such stock and/or ownership interest shall not constitute "Stock"
hereunder; (ii) the term "Partnership Interest" shall mean the entire
partnership interests (whether general and/or limited partnership interests) at
any time directly owned by each Pledgor (limited to 65% of such interests in the
case of any partnership that is a Foreign Person), provided that if any such
partnership interests are not permitted to be pledged hereunder by the terms of
the relevant partnership agreement, then such interests shall not constitute
"Partnership Interests" hereunder; (iii) the term "Notes" shall mean all
promissory notes (to the extent having a principal amount of at least $250,000)
at any time issued to, or held by, any Pledgor but excluding Cash Equivalents;
and (iv) the term "Securities" shall mean all of the Stock, Partnership
Interests and Notes. Each Pledgor represents and warrants that on the date
hereof: (a) the Securities held by such Pledgor consists of the number and type
of shares of the capital stock, membership interests and Partnership Interests
described in Annex A (in the case of Stock), Annex B (in the case of Partnership
Interests) or Annex C (in the case of Notes); and (b) each such Pledgor is the
holder of record and sole beneficial owner of the Securities and Notes and there
exists no options or preemption rights in respect of any of the Securities. To
the extent the Pledgee is delivered certificates and/or instruments evidencing
more than 65% of the Stock and/or Partnership Interests owned by a Pledgor in
any Foreign Person, the Pledgee shall hold any such Stock and Partnership
Interests in excess of such 65% level as bailee for such Pledgor not subject to
the security interests created hereunder.

          3. PLEDGE OF SECURITIES, ETC.
             --------------------------

          3.1 Pledge. (a) To secure the Obligations and for the purposes set
              ------
forth in Section 1, each Pledgor hereby: (i) grants to the Pledgee a security
interest in all of the Collateral owned by such Pledgor; (ii) pledges and
deposits as security with the Pledgee the Securities owned by such Pledgor on
the date hereof, if any, and delivers to the Pledgee certificates or instruments
therefor, duly endorsed in blank in the case of Notes and accompanied by undated
stock powers duly executed in blank by such Pledgor (and accompanied by any
transfer tax stamps required in connection with the pledge of such Securities)
in the case of Stock, or such other instruments of transfer as are acceptable to
the Pledgee; (iii) grants to the Pledgee a security interest in all of such
Pledgor's right, title and interest in and to such Securities (and in and to the
certificates or instruments evidencing such Securities) and (iv) grants to the
Pledgee a security interest in such Pledgor's Partnership Interests (and
delivers any certificates or instruments evidencing such partnership interests,
duly endorsed in blank) and all of such Pledgor's right, title and interest
thereunder.

          3.2 Subsequently Acquired Securities and/or Partnership Interests. (a)
              -------------------------------------------------------------
If any Pledgor shall acquire (by purchase, stock dividend or otherwise) any
additional Stock or Notes at any time or from time to time after the date
hereof, such Pledgor will forthwith pledge and deposit such Securities (or
certificates or instruments representing such Securities) as security

<PAGE>

                                                                          Page 4

with the Pledgee and deliver to the Pledgee certificates or instruments thereof,
duly endorsed in blank in the case of Notes and accompanied by undated stock
powers duly executed in blank by such Pledgor (and accompanied by any transfer
tax stamps required in connection with the pledge of such Securities) in the
case of Stock, or such other instruments of transfer as are reasonably
acceptable to the Pledgee, and will promptly thereafter deliver to the Pledgee a
certificate executed by a principal executive officer of such Pledgor describing
such Securities and certifying that the same have been duly pledged with the
Pledgee hereunder.

          (b) If any Pledgor shall acquire (by purchase, distribution or
otherwise) any additional Partnership Interest at any time or from time to time
after the date hereof, and, to the extent such Partnership Interest is
certificated, such Pledgor shall forthwith deliver to the Pledgee certificates
therefor, accompanied by such instruments of transfer as are acceptable to the
Pledgee, and shall promptly thereafter deliver to the Pledgee a certificate
executed by a principal executive officer of such Pledgor describing such
Partnership Interest and certifying that the same has been duly pledged with the
Pledgee hereunder.

          (c) No Pledgor shall be required at any time to pledge hereunder any
Stock or Partnership Interest which is more than 65% of the total combined
voting power of all classes of capital stock or Partnership Interest of any
Foreign Person entitled to vote.

          3.3 Uncertificated Securities and Partnership Interests.
              ---------------------------------------------------
Notwithstanding anything to the contrary contained in Sections 3.1 and 3.2, if
any Securities (whether or not now owned or hereafter acquired) are
uncertificated securities, the respective Pledgor shall promptly notify the
Pledgee thereof, and shall promptly take all actions required to perfect the
security interest of the Pledgee under applicable law (including, in any event,
under Sections 8-106, 9-106(a) and 9-314(c) of the New York UCC if applicable).
Each Pledgor further agrees to take such actions as the Pledgee deems reasonably
necessary or desirable to effect the foregoing and to permit the Pledgee to
exercise any of its rights and remedies hereunder.

          3.4 Definitions of Pledged Stock, Pledged Notes, Pledged Securities
              ---------------------------------------------------------------
and Collateral. All Stock at any time pledged or required to be pledged
--------------
hereunder is hereinafter called the "Pledged Stock", all Notes at any time
pledged or required to be pledged hereunder are hereinafter called the "Pledged
Notes"; all Partnership Interests at any time pledged or required to be pledged
hereunder are hereinafter called the "Pledged Partnership Interests"; all
Pledged Stock, Pledged Notes and Pledged Partnership Interests together are
called the "Pledged Securities"; and the Pledged Securities, together with all
proceeds thereof, including any securities and moneys received and at the time
held by the Pledgee hereunder, are hereinafter called the "Collateral".

          4.  APPOINTMENT OF SUB-AGENTS; ENDORSEMENTS, ETC. The Pledgee shall
              ---------------------------------------------
have the right to appoint one or more sub-agents for the purpose of retaining
physical possession of the Pledged Securities, which may be held (in the
discretion of the Pledgee) in the name of the relevant Pledgor, endorsed or
assigned in blank or, after a Noticed Event of Default, in favor of the Pledgee
or any nominee or nominees of the Pledgee or a sub-agent appointed by the
Pledgee.

<PAGE>

                                                                          Page 5

          5.  VOTING, ETC., WHILE NO EVENT OF DEFAULT. Unless and until a
              ---------------------------------------
Noticed Event of Default (as defined below) shall have occurred and be
continuing, each Pledgor shall be entitled to exercise (i) all voting rights
attaching to any and all Pledged Securities owned by it, and to give consents,
waivers or ratifications in respect thereof, and (ii) voting, consent,
administration, management and other rights and remedies under any partnership
agreement or otherwise with respect to the Pledged Partnership Interests of such
Pledgor; provided that no vote shall be cast or any consent, waiver or
ratification given or any action taken which would violate or result in breach
of any covenant contained in or any of the terms of this Agreement, the Credit
Agreement, any other Credit Document or any Secured Interest Rate Agreement
(collectively, the "Secured Debt Agreements"), or which would have the effect of
materially impairing the position or interests of the Pledgee as pledgee
therein. All such rights of a Pledgor to vote and to give consents, waivers and
ratifications shall cease in case a Noticed Event of Default shall occur and be
continuing and Section 7 hereof shall become applicable. As used herein, a
"Noticed Event of Default" shall mean (i) an Event of Default with respect to
any Borrower under Section 9.05 of the Credit Agreement and (ii) any other Event
of Default in respect of which the Pledgee has given the Borrower notice that
such Event of Default constitutes a "Noticed Event of Default".

          6.  DIVIDENDS AND OTHER DISTRIBUTIONS. Unless and until a Noticed
              ---------------------------------
Event of Default (as defined below) shall have occurred and be continuing, all
cash dividends or other amounts payable in respect of any of the Collateral
shall be paid to the respective Pledgor. Subject to the provisions of Section
8.02 and 8.09 of the Credit Agreement, the Pledgee shall be entitled to receive
directly, and to retain as part of the Collateral:

          (i)   all other or additional stock, or other securities or
     partnership interests paid or distributed by way of dividend or otherwise
     in respect of the Collateral,

          (ii)  all other or additional stock or other securities or partnership
     interests paid or distributed in respect of the Collateral by way of
     stock-split, spin-off, split-up, reclassification, combination of shares or
     similar rearrangement; and

          (iii) all other or additional stock or other securities or partnership
     interests which may be paid in respect of the Collateral by reason of any
     consolidation, merger, exchange of stock, conveyance of assets, liquidation
     or similar corporate reorganization.

All dividends, distributions or other payments which are received by the
respective Pledgor contrary to the provisions of this Section 6 or Section 7
shall be received in trust for the benefit of the Pledgee and shall be forthwith
paid over to the Pledgee as Collateral in the same form as so received (with any
necessary endorsement).

          7.  REMEDIES IN CASE OF AN EVENT OF DEFAULT. In case a Noticed Event
              ---------------------------------------
of Default shall have occurred and be continuing, the Pledgee shall be entitled
to exercise all of the rights, powers and remedies (whether vested in it by this
Agreement or any other Secured Debt Agreement or by law) for the protection and
enforcement of its rights in respect of the Collateral, including, without
limitation, all the rights and remedies of a secured party upon default under
the UCC of the State of New York, and the Pledgee shall be entitled, without

<PAGE>

                                                                          Page 6

limitation, to exercise any or all of the following rights during the
continuance of such Noticed Events of Default, which each Pledgor hereby agrees
to be commercially reasonable:

          (i)   to receive all amounts payable in respect of the Collateral
     otherwise payable under Section 6 to such Pledgor;

          (ii)  to transfer all or any part of the Collateral into the Pledgee's
     name or the name of its nominee or nominees;

          (iii) to accelerate any Pledged Note which may be accelerated in
     accordance with its terms, and take any other lawful action to collect upon
     any Pledged Note (including, without limitation, to make any demand for
     payment thereon);

          (iv)  to vote all or any part of the Pledged Stock or Pledged
     Partnership Interests (whether or not transferred into the name of the
     Pledgee) and give all consents, waivers and ratifications in respect of the
     Collateral and otherwise act with respect thereto as though it were the
     outright owner thereof (each Pledgor hereby irrevocably constituting and
     appointing the Pledgee the proxy and attorney-in-fact of such Pledgor, with
     full power of substitution to do so); and

          (v)   at any time or from time to time to sell, assign and deliver, or
     grant options to purchase, all or any part of the Collateral, or any
     interest therein, at any public or private sale, without demand of
     performance or advertisement or to redeem or otherwise (all of which are
     hereby waived by each Pledgor to the full extent permitted by law), for
     cash, on credit or for other property, for immediate or future delivery
     without any assumption of credit risk, and for such price or prices and on
     such terms as the Pledgee in its reasonable discretion may determine,
     provided that at least 10 days' notice of the time and place of any such
     sale shall be given to such Pledgor. The Pledgee shall not be obligated to
     make such sale of Collateral regardless of whether any such notice of sale
     has theretofore been given. Each purchaser at any such sale shall hold the
     property so sold absolutely free from any claim or right on the part of any
     Pledgor, and each Pledgor hereby waives and releases to the fullest extent
     permitted by law any right or equity of redemption with respect to the
     Collateral, whether before or after sale hereunder, all rights, if any, of
     marshalling the Collateral and any other security for the Obligations or
     otherwise. At any such sale, unless prohibited by applicable law, the
     Pledgee on behalf of all Secured Creditors (or certain of them) may bid for
     and purchase all or any part of the Collateral so sold free from any such
     right or equity of redemption. Neither the Pledgee nor any Secured Creditor
     shall be liable for failure to collect or realize upon any or all of the
     Collateral or for any delay in so doing nor shall it be under any
     obligation to take any action whatsoever with regard thereto.

          8. REMEDIES, ETC., CUMULATIVE. Each right, power and remedy of the
             --------------------------
Pledgee provided for in this Agreement or any other Secured Debt Agreement, or
now or hereafter existing at law or in equity or by statute shall be cumulative
and concurrent and shall be in addition to every other such right, power or
remedy. The exercise or beginning of the exercise by the Pledgee or any other
Secured Creditor of any one or more of the rights, powers or remedies provided
for in this Agreement or any other Secured Debt Agreement or now or

<PAGE>

                                                                       Exhibit H
                                                                           Page7

hereafter existing at law or in equity or by statute or otherwise shall not
preclude the simultaneous or later exercise by the Pledgee or any other Secured
Creditor of all such other rights, powers or remedies, and no failure or delay
on the part of the Pledgee or any other Secured Creditor to exercise any such
right, power or remedy shall operate as a waiver thereof. Unless otherwise
required by the Credit Documents, no notice to or demand on any Pledgor in any
case shall entitle it to any other or further notice or demand in similar other
circumstances or constitute a waiver of any of the rights of the Pledgee or any
other Secured Creditor to any other further action in any circumstances without
demand or notice. The Secured Creditors agree that this Agreement may be
enforced only by the action of the Administrative Agent or the Pledgee, in each
case acting upon the instructions of the Required Lenders (or, after the date on
which all Credit Document Obligations have been paid in full, the holders of at
least the majority of the outstanding Interest Rate Obligations) and that no
other Secured Creditor shall have any right individually to seek to enforce or
to enforce this Agreement or to realize upon the security to be granted hereby,
it being understood and agreed that such rights and remedies may be exercised by
the Administrative Agent or the Pledgee or the holders of at least a majority of
the outstanding Interest Rate Obligations, as the case may be, for the benefit
of the Secured Creditors upon the terms of this Agreement.

               9.  APPLICATION OF PROCEEDS. (a) All moneys collected by the
                   -----------------------
Pledgee upon any sale or other disposition of the Collateral pursuant to the
terms of this Agreement, together with all other moneys received by the Pledgee
hereunder, shall be applied in the manner provided in Section 7.4 of the
Security Agreement.

               (b) It is understood and agreed that each Pledgor shall remain
liable to the extent of any deficiency between (x) the amount of the Obligations
for which it is responsible directly or as a Guarantor that are satisfied with
proceeds of the Collateral and (y) the aggregate outstanding amount of such
Obligations.

               10. PURCHASERS OF COLLATERAL. Upon any sale of the Collateral by
                   ------------------------
the Pledgee hereunder (whether by virtue of the power of sale herein granted,
pursuant to judicial process or otherwise), the receipt of the Pledgee or the
officer making the sale shall be a sufficient discharge to the purchaser or
purchasers of the Collateral so sold, and such purchaser or purchasers shall not
be obligated to see to the application of any part of the purchase money paid
over to the Pledgee or such officer or be answerable in any way for the
misapplication or nonapplication thereof.

               11. INDEMNITY. Each Pledgor jointly and severally agrees (i) to
                   ---------
indemnify and hold harmless the Pledgee and the other Secured Creditors from and
against any and all claims, demands, losses, judgments and liabilities
(including liabilities for penalties) of whatsoever kind or nature, and (ii) to
reimburse the Pledgee for all reasonable costs and expenses, including
reasonable attorneys' fees, growing out of or resulting from this Agreement or
the exercise by the Pledgee of any right or remedy granted to it hereunder or
under any other Secured Debt Agreement except, with respect to clauses (i) and
(ii) above, for those arising from the Pledgee's or any other Secured Creditor's
gross negligence or willful misconduct. In no event shall the Pledgee be liable,
in the absence of gross negligence or willful misconduct on its part, for any
matter or thing in connection with this Agreement other than to account for
moneys or other property actually received by it in accordance with the terms
hereof. If and to the extent that the

<PAGE>

                                                                       Exhibit H
                                                                          Page 8

obligations of any Pledgor under this Section 11 are unenforceable for any
reason, such Pledgor hereby agrees to make the maximum contribution to the
payment and satisfaction of such obligations which is permissible under
applicable law.

               12.  PLEDGEE NOT BOUND. (a) Nothing herein shall be construed to
                    -----------------
make the Pledgee or any other Secured Creditor liable as a general partner or
limited partner of any Pledged Partnership and the Pledgee or any other Secured
Creditor by virtue of this Agreement or otherwise (except as referred to in the
following sentence) shall not have any of the duties, obligations or liabilities
of a general partner or limited partner of any Pledged Partnership. The parties
hereto expressly agree that, unless the Pledgee shall become the absolute owner
of a Pledged Partnership Interest pursuant hereto, this Agreement shall not be
construed as creating a partnership or joint venture among the Pledgee, any
other Secured Creditor and/or any Pledgor.

               (b)  Except as provided in the last sentence of paragraph (a) of
this Section, the Pledgee, by accepting this Agreement, did not intend to become
a general partner or limited partner of any Pledged Partnership or otherwise be
deemed to be a co-venturer with respect to any Pledgor or any Pledged
Partnership either before or after an Event of Default shall have occurred. The
Pledgee shall have only those powers set forth herein and shall assume none of
the duties, obligations or liabilities of a general partner or limited partner
of any Pledged Partnership or of any Pledgor.

               (c)  The Pledgee shall not be obligated to perform or discharge
any obligation of any Pledgor as a result of the security interests and Liens
hereby effected.

               (d)  The acceptance by the Pledgee of this Agreement, with all
the rights, powers, privileges and authority so created, shall not at any time
or in any event obligate the Pledgee to appear in or defend any action or
proceeding relating to the Collateral to which it is not a party, or to take
any action hereunder or thereunder, or to expend any money or incur any expenses
or perform or discharge any obligation, duty or liability under the Collateral.

               13.  FURTHER ASSURANCES; POWER OF ATTORNEY. (a) Each Pledgor
                    -------------------------------------
agrees that it will join with the Pledgee in executing and, at such Pledgor's
own expense, file and refile under the UCC such financing statements,
continuation statements and other documents in such offices as the Pledgee may
reasonably deem necessary or appropriate and wherever required or permitted by
law in order to perfect and preserve the Pledgee's security interest in the
Collateral hereunder and hereby authorizes the Pledgee to file financing
statements and amendments thereto relative to all or any part of the Collateral
without the signature of such Pledgor where permitted by law, and agrees to do
such further acts and things and to execute and deliver to the Pledgee such
additional confirmatory conveyances, assignments, agreements and instruments as
the Pledgee may reasonably require or reasonably deem advisable to carry into
effect the purposes of this Agreement or to further assure and confirm unto the
Pledgee its rights, powers and remedies hereunder or thereunder.

               (b)  Each Pledgor hereby appoints the Pledgee such Pledgor's
attorney-in-fact, with full authority in the place and stead of such Pledgor and
in the name of such Pledgor or otherwise, to act from time to time solely after
the occurrence and during the continuance of a Noticed Event of Default in the
Pledgee's reasonable discretion to take any action and to execute

<PAGE>

                                                                       Exhibit H
                                                                          Page 9

any instrument which the Pledgee may deem reasonably necessary or advisable to
accomplish the purposes of this Agreement.

               14. THE PLEDGEE AS AGENT. The Pledgee will hold in accordance
                   --------------------
with this Agreement all items of the Collateral at any time received under this
Agreement. It is expressly understood and agreed that the obligations of the
Pledgee as holder of the Collateral and interests therein and with respect to
the disposition thereof, and otherwise under this Agreement, are only those
expressly set forth in this Agreement except as otherwise required by law. The
Pledgee shall act hereunder on the terms and conditions set forth herein, in
Section 11 of the Credit Agreement and as otherwise required by law.

               15. TRANSFER BY THE PLEDGORS. No Pledgor will sell or otherwise
                   ------------------------
dispose of, grant any option with respect to, or mortgage, pledge or otherwise
encumber any of the Collateral or any interest therein except in accordance with
the terms of this Agreement and the Credit Documents.

               16. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE PLEDGORS.
                   ---------------------------------------------------------
Each Pledgor represents, warrants and covenants that (i) it is the legal, record
and beneficial owner of all Pledged Securities pledged by it hereunder, subject
to no Lien (other than Permitted Liens); (ii) all the shares of Stock have been
duly and validly issued, are fully paid and non-assessable and are subject to no
options to purchase or similar rights granted by a Pledgee; (iii) as of the
Initial Borrowing Date, there are no certificates, instruments, documents or
other writings which evidence any Securities owned by such Pledgee which have
not been delivered to the Collateral Agent hereunder; (iv) a notice in the form
set forth in Annex D attached hereto and by this reference made a part hereof
(such notice the "Partnership Notice"), appropriately completed, notifying each
relevant partnership of the existence of this Agreement and a certified copy of
this Agreement have been delivered by each Pledgor to the relevant partnership,
and each such Pledgor has received and delivered to the Collateral Agent an
acknowledgment in the form set forth in Annex E attached hereto (such
acknowledgement, the "Partnership Acknowledgement"), duly executed by the
relevant Pledged Partnership; and (v) the chief executive office of such Pledgor
is set forth on Annex F hereto or such other office as such Pledgor may
establish in accordance with the terms of the Security Agreement. Each Pledgor
covenants and agrees that it will defend the Pledgee's right, title and security
interest in and to the Collateral against the claims and demands of all persons
whomsoever (other than holders of Permitted Liens created prior to the lien
created by this Agreement); and such Pledgor covenants and agrees that it will
have like title to and right to pledge any other property at any time hereafter
pledged to the Pledgee as Collateral hereunder and will likewise defend the
right thereto and security interest therein of the Pledgee and the other Secured
Creditors.

               17. PLEDGORS' OBLIGATIONS ABSOLUTE, ETC. The obligations of each
                   ------------------------------------
Pledgor under this Agreement shall be absolute and unconditional and shall
remain in full force and effect, until the Termination Date (as defined below in
Section 18) without regard to, and shall not be released, suspended, discharged,
terminated or otherwise affected by, any circumstance or occurrence whatsoever,
including, without limitation:

<PAGE>

                                                                       Exhibit H
                                                                         Page 10

          (i)   any renewal, extension, amendment or modification of, or
     addition or supplement to or deletion from any of the Secured Debt
     Agreements, or any other instrument or agreement referred to therein, or
     any assignment or transfer of any thereof;

          (ii)  any waiver, consent, extension, indulgence or other action or
     inaction under or in respect of any such agreement or instrument or this
     Agreement;

          (iii) any furnishing of any additional security to the Pledgee or its
     assignee or any acceptance thereof or any release of any security by the
     Pledgee or its assignee;

          (iv)  any limitation on any party's liability or obligations under any
     such instrument or agreement or any invalidity or unenforceability, in
     whole or in part, of any such instrument or agreement or any term thereof;
     or

          (v)   any bankruptcy, insolvency, reorganization, composition,
     adjustment, dissolution, liquidation or other like proceeding relating to
     such Pledgor or any Subsidiary of such Pledgor, or any action taken with
     respect to this Agreement by any trustee or receiver, or by any court, in
     any such proceeding, whether or not such Pledgor shall have notice or
     knowledge of any of the foregoing.

               18. TERMINATION; RELEASE. (a) After the Termination Date (as
                   --------------------
defined below), this Agreement shall terminate (provided that all indemnities
set forth herein including, without limitation, in Section 11 hereof shall
survive any such termination) and the Pledgee, at the request and expense of the
respective Pledgor, will execute and deliver to such Pledgor a proper instrument
or instruments acknowledging the satisfaction and termination of this Agreement
as provided above, and will duly assign, transfer and deliver to such Pledgor
(without recourse and without any representation or warranty) such of the
Collateral as may be in the possession of the Pledgee and as has not theretofore
been sold or otherwise applied or released pursuant to this Agreement, together
with any moneys at the time held by the Pledgee hereunder. As used in this
Agreement, "Termination Date" shall mean the date upon which the Total
Commitment and all Secured Interest Rate Agreements been terminated, no Letter
of Credit or Note under the Credit Agreement is outstanding and all other
Obligations have been paid in full (other than arising from indemnities for
which no request has been made).

               (b) In the event that any part of the Collateral is sold in
connection with a sale permitted by Section 8.02 of the Credit Agreement (it
being agreed for such purposes that a release will be deemed "permitted by
Section 8.02 of the Credit Agreement" if the proposed transaction constitutes an
exception to Section 8.02 of the Credit Agreement) or is otherwise released at
the direction of the Required Lenders (or all the Lenders if required by Section
12.12 of the Credit Agreement), and the proceeds of such sale or sales or from
such release are applied in accordance with the terms of the Credit Agreement to
the extent required to be so applied, the Pledgee, at the request and expense of
the respective Pledgor will release such Collateral from this Agreement, duly
assign, transfer and deliver to such Pledgor (without recourse and without any
representation or warranty) such of the Collateral as is then being (or has
been) so sold or released and as may be in possession of the Pledgee and has not
theretofore been released pursuant to this Agreement.

<PAGE>

                                                                       Exhibit H
                                                                        Page 11

               (c)   At any time that any Pledgor desires that Collateral be
released in connection with a sale permitted by Section 8.02 of the Credit
Agreement, it shall deliver to the Pledgee a certificate signed by an authorized
officer describing the Collateral to be sold and the relevant provision of
Section 8.02 of the Credit Agreement on which it is relying to make such sale.
The Pledgee shall have no liability whatsoever to any Secured Creditor as the
result of any release of Collateral by it as permitted by this Section 18.

               19.   NOTICES, ETC. All notices and other communications
                     -------------
hereunder shall be in writing and shall be delivered or mailed by first class
mail, postage prepaid, addressed:

               (i)   if to any Pledgor, at its address set forth opposite its
                     signature below;

               (ii)  if to the Pledgee, at:

                     Bankers Trust Company
                     130 Liberty Street
                     New York, New York  10006
                     Mailstop NYC02-2706
                     Attention: Marguerite J. Sutton
                     Tel: (212) 250 3505
                     Fax: (212) 250 2577

               (iii) if to any Lender (other than the Pledgee), at such
       address as such Lender shall have specified in the Credit Agreement;

               (iv)  if to any Interest Rate Creditor, at such address as such
     Interest Rate Creditor shall have specified in writing to the Pledgors and
     the Pledgee;

or at such other address as shall have been furnished in writing by any Person
described above to the party required to give notice hereunder.

               20. WAIVER; AMENDMENT. None of the terms and conditions of this
                   -----------------
Agreement may be changed, waived, modified or varied in any manner whatsoever
unless in writing duly signed by the Pledgee (with the consent of the Required
Lenders or, to the extent required by Section 12.12 of the Credit Agreement, all
of the Lenders), and each Pledgor affected thereby (it being understood that the
addition or release of any Pledgor hereunder shall not constitute a change,
waiver, discharge or variance affecting any Pledgor other than the Borrower and
the Pledgor so added or released) provided that (i) no such change, waiver,
modification or variance shall be made to, the last sentence of Section 1
hereof, Section 9 hereof (directly or indirectly by modifying Section 7.4 of the
Security Agreement) or this Section 21 without the consent of each Secured
Creditor adversely affected thereby and (ii) that any change, waiver,
modification or variance affecting the rights and benefits of a single Class of
Secured Creditors (and not all Secured Creditors in a like or similar manner)
shall require the written consent of the Requisite Creditors of such Class of
Secured Creditors. For the purpose of this Agreement, the term "Class" shall
mean each class of Secured Creditors, i.e., whether (x) the Lender Creditors as
holders of the Credit Document Obligations or (y) the Interest Rate Creditors as
holders of the Interest Rate Obligations. For the purpose of this Agreement, the
term "Requisite Creditors" of any Class shall mean each of (x) with respect to
each of the Credit Document Obligations, the

<PAGE>

                                                                       Exhibit H
                                                                         Page 12

Required Lenders and (y) with respect to the Interest Rate Obligations, the
holders of at least a majority of all obligations outstanding from time to time
under the Secured Interest Rate Agreements.

               21. MISCELLANEOUS. (a) This Agreement shall create a continuing
                   -------------
security interest in the Collateral and shall (i) remain in full force and
effect, subject to release and/or termination as set forth in Section 19, (ii)
be binding upon each Pledgor, its successors and assigns, and (iii) inure,
together with the rights and remedies of the Pledgee hereunder, to the benefit
of the Pledgee, the Secured Creditors and their respective successors,
transferees and assigns. This Agreement shall be construed in accordance with
and governed by the law of the State of New York. The headings of the several
sections and subsections in this Agreement are for purposes of reference only
and shall not limit or define the meaning hereof. This Agreement may be executed
in any number of counterparts, each of which shall be an original, but all of
which together shall constitute one instrument. In the event that any provision
of this Agreement shall prove to be invalid or unenforceable, such provision
shall be deemed to be severable from the other provisions of this Agreement
which shall remain binding on all parties hereto.

               (b) Notwithstanding anything to the contrary contained herein or
in the Credit Agreement, each Pledgor hereby covenants and agrees that with
respect to any Pledged Partnership Interest pledged by it hereunder, such
Pledgor will deliver to the respective Pledged Partnerships (with copies to the
Pledgee) a Partnership Notice (appropriately completed) and such Pledgor will
deliver to the Pledgee a Partnership Acknowledgement signed by the respective
Pledged Partnerships, in each case within forty-five days following the date any
such Pledged Partnership Interests are pledged hereunder.

               22. WAIVER OF JURY TRIAL. Each Pledgor hereby irrevocably waives
                   --------------------
all right to a trial by jury in any action, proceeding or counterclaim arising
out of or relating to this agreement or the transactions contemplated hereby.

               23. ADDITIONAL PLEDGORS. It is understood and agreed that any
                   -------------------
Subsidiary of Holdings that is required to execute a counterpart of this
Agreement after the date hereof pursuant to the Credit Agreement shall become a
Pledgor hereunder by executing a counterpart hereof and delivering the same to
the Pledgee, and Annexes A, B and C will be modified at such time in a manner
acceptable to the Pledgee to give effect to such additional Pledgors.

                                      * * *

<PAGE>

               IN WITNESS WHEREOF, each Pledgor and the Pledgee have caused this
Agreement to be executed and delivered by their duly authorized officers as of
the date first above written.

Addresses:

1001 Pennsylvania Avenue, N.W.           IRON HORSE INVESTORS, L.L.C.,
Suite 220 South                               as a Pledgor
Washington, D.C. 20004
Telecopy No.: 202-347-9250
Attention:                               By: /s/ Adam Palmer
                                             -----------------------------------
                                             Title: Vice President


                                         UNITED DEFENSE INDUSTRIES, INC., as a
                                             Pledgor



                                         By: /s/ Francis Raborn
                                             -----------------------------------
                                             Title: Vice President &
                                                    Chief Financial Officer


                                         UDLP HOLDINGS CORP., as a
                                             Pledgor


                                         By: /s/ Francis Raborn
                                             -----------------------------------
                                             Title: Vice President &
                                                    Chief Financial Officer


                                         UNITED DEFENSE, L.P., as a Pledgor
                                             By: UDLP HOLDINGS CORP., its
                                             General Partner


                                         By: /s/ Francis Raborn
                                             -----------------------------------
                                             Title: Member of the Management
                                                    Committee


                                         BARNES & REINECKE, INC., as a
                                             Pledgor



                                         By: /s/ Francis Raborn
                                             -----------------------------------
                                             Title: Vice President &
                                                    Chief Financial Officer

<PAGE>


                                         BANKERS TRUST COMPANY, as Collateral
                                            Agent, as Pledgee



                                         By: /s/ Paddy Dowling
                                             -----------------------------------
                                             Title: Vice President

<PAGE>

                                                                         ANNEX A
                                                                              to
                                                                PLEDGE AGREEMENT
                                                                ----------------

                                  LIST OF STOCK
                                  -------------

<TABLE>
<CAPTION>
                                                                           Percentage of
                                                               Number      Outstanding
      Name of Issuing                  Certificate   Type of     of        Shares of
      Corporation                      Number        Shares    Shares      Capital Stock
      -----------                      ------        ------    ------      -------------
      <S>                              <C>           <C>       <C>         <C>
I.    Iron Horse Investors, L.L.C.


      United Defense Industries,
      Inc.                              3            Common    17,300,000  100%

II.   United Defense Industries, Inc.


      UDLP Holdings Corp                1            Common         1,000  100%

      Barnes & Reinecke, Inc.           C-112        Common         5,472  100%

      *Bofors Defense Holdings SA       [_]                         1,000  100%

III.  UDLP Holdings Corp.

      None

IV.   United Defense, L.P.

      *UDLP Components, Limited         1            Common        50,000  100%

      UDLP International, Inc.          1            Common         1,000   50%

      UDLP International, Inc.          2            Common         1,000   50%

      *UD United Defense
      Internationsl Sales Corp.         1            Common           100  100%

      UDLP Overseas Limited             1            Common         1,000  100%

      *United Defense Systems           [_]

*     Only 65% being pledge.
</TABLE>

<PAGE>

                                                                         ANNEX B
                                                                              to
                                                                PLEDGE AGREEMENT
                                                                ----------------


                                 LIST OF NOTES
                                 -------------


I.      Iron Horse Investors, L.L.C.
        ----------------------------

        None

II.     United Defense Industries, Inc.
        -------------------------------

        None

III.    UDLP Holdings Corp.
        -------------------

        None

IV.     United Defense, L.P.
        --------------------

        None



<PAGE>
                                                                         ANNEX C
                                                                              to
                                                                PLEDGE AGREEMENT
                                                                ----------------


                              PARTNERSHIP INTERESTS
                              ---------------------


       Pledged                      Percentage          Type of
       Entities                     Owned               Partnership Interest
       --------                     -----               --------------------

I.     Iron Horse Investors, L.L.C.

       None

II.    United Defense Industries, Inc.

       United Defense, L.P.         99%                 Limited Partnership

III.   UDLP Holdings Corp.

       United Defense, L.P.          1%                 General Partnership

IV.    United Defense, L.P.

       G&F Company                  50%                 General Partnership

<PAGE>

                                                                         ANNEX D
                                                                              TO
                                                                PLEDGE AGREEMENT
                                                                ----------------




                           FORM OF PARTNERSHIP NOTICE
                           --------------------------

                             [Letterhead of Pledgor]

                                                                          [Date]

TO:  [Name of Pledged Partnership]

          Notice is hereby given that, pursuant to a Pledge Agreement (a true
and correct copy of which is attached hereto), dated as of August 13, 2001
(as amended, modified or supplemented from time to time in accordance with the
terms thereof, the "Pledge Agreement"), among [NAME OF PLEDGOR] (the "Pledgor"),
the other pledgors from time to time party thereto and Bankers Trust Company
(the "Pledgee"), as Collateral Agent on behalf of the Secured Creditors
described therein, the Pledgor has pledged to the Pledgee for the benefit of the
Secured Creditors, and granted to the Pledgee for the benefit of the Secured
Creditors, a continuing security interest in, all right, title and interest of
the Pledgor, whether now existing or hereafter arising or acquired, as a
[limited] [general] partner in [NAME OF PLEDGED PARTNERSHIP] (the
"Partnership"), and in, to and under the [TITLE OF APPLICABLE PARTNERSHIP
AGREEMENT] (the "Partnership Agreement").

          Pursuant to the Pledge Agreement, the Partnership is hereby authorized
and directed to register the Pledgor's pledge to the Pledgee on behalf of the
Secured Creditors of the interest of the Pledgor on the Partnership's books.

          The Pledgor hereby irrevocably agrees and authorizes and directs the
Partnership that instructions originated by the Pledgee on behalf of the Secured
Creditors (which shall state that a Noticed Event of Default has occurred) with
respect to the Pledgor's claims, rights, interests, powers, remedies,
authorities, options and privileges set forth above shall, unless written notice
to the contrary is given by the Pledgee to the Partnership, be complied with by
the Partnership, without further consent by the Pledgor.

<PAGE>

                                                                         Annex D
                                                                          Page 2

          The Pledgor hereby requests the Partnership to indicate the
Partnership's acceptance of this Notice and consent to and confirmation of its
terms and provisions by signing a copy hereof where indicated on the attached
page and returning the same to the Pledgee on behalf of the Secured Creditors.



                                              [NAME OF PLEDGOR]



                                              By:
                                                  ------------------------------
                                                  Name:
                                                  Title:

<PAGE>

                                                                         ANNEX E
                                                                              TO
                                                                PLEDGE AGREEMENT
                                                                ----------------

                             FORM OF ACKNOWLEDGMENT
                             ----------------------

     [NAME OF PLEDGED PARTNERSHIP] (the "Partnership") hereby acknowledges
receipt of a copy of the pledge by [NAME OF PLEDGOR] ("Pledgor") of its interest
under the [TITLE OF APPLICABLE PARTNERSHIP AGREEMENT] (the "Partnership
Agreement") pursuant to the terms of the Pledge Agreement, dated as of August
13, 2001 (as amended, modified or supplemented from time to time in accordance
with the terms thereof, the "Pledge Agreement"), among the Pledgor, the other
pledgors from time to time party thereto and Bankers Trust Company (the
"Pledgee"), as Collateral Agent on behalf of the Secured Creditors described
therein. The undersigned hereby further confirms the registration of the
Pledgor's pledge of its interest to the Pledgee on behalf of the Secured
Creditors on the Partnership's books.

     The Partnership hereby irrevocably agrees to comply with the instructions
originated by the Pledgee, on behalf of the Secured Creditors, of the type
referred to in the penultimate paragraph of the Partnership Notice dated
___________ __, 20__ signed by the Pledgor, without further consent by the
Pledgor.

Dated: ___________ __, ____


                                              [NAME OF PLEDGED PARTNERSHIP]


                                              By: ___________________________
                                                   Name:
                                                   Title:

<PAGE>

                                                                         ANNEX F
                                                                              to
                                                                PLEDGE AGREEMENT
                                                                ----------------


                                OFFICE LOCATIONS
                                ----------------


I.    Iron Horse Investors, L.L.C.
      ---------------------------

      c/o TC Group, L.L.C.
          Allan Holt
      1001 Pennsylvania Ave., NW
      Suite 220 South
      Washington, D.C. 20004

II.   United Defense Industries, Inc.
      -------------------------------

      1525 Wilson Blvd.
      Suite 700
      Arlington, VA 22209
      Attn.: David V. Kolovat

III.  UDLP Holdings Corp.
      -------------------

      1525 Wilson Blvd.
      Suite 700
      Arlington, VA 22209
      Attn.: David V. Kolovat

IV.   United Defense, L.P.
      --------------------

      1525 Wilson Blvd.
      Suite 700
      Arlington, VA 22209
      Attn.: David V. Kolovat

V.    Barnes & Reinecke, Inc.
      -----------------------

      425 East Algonquin Road
      Arlington Heights, IL 60005-4683

<PAGE>

                                                                       EXHIBIT I
                                                                       ---------
                                                         [Conformed as Executed]








================================================================================



                               SECURITY AGREEMENT

                                      among

                          IRON HORSE INVESTORS, L.L.C.,

                        UNITED DEFENSE INDUSTRIES, INC.,

             VARIOUS SUBSIDIARIES OF UNITED DEFENSE INDUSTRIES, INC.

                                       and

                             BANKERS TRUST COMPANY,

                               as Collateral Agent

                           Dated as of August 13, 2001



================================================================================

<PAGE>


                               SECURITY AGREEMENT
                               ------------------

                  SECURITY AGREEMENT, dated as of August 13, 2001, among each of
the undersigned (each, a "Grantor" and, together with any other entity that
becomes a party hereto pursuant to Section 10.12 hereof, collectively, the
"Assignors") and BANKERS TRUST COMPANY, as Collateral Agent (the "Collateral
Agent") for the Secured Creditors (as defined below). Capitalized terms used
herein shall have the meaning specified in Article IX herein or, if not defined
therein, as specified in the Credit Agreement.

                              W I T N E S S E T H :
                              - - - - - - - - - -

                  WHEREAS, Iron Horse Investors, L.L.C. ("Holdings"), United
Defense Industries, Inc. (the "Borrower"), the financial institutions from time
to time party thereto (the "Lenders"), Bankers Trust Company, as Administrative
Agent, Lehman Commercial Paper Inc., as Syndication Agent and Citicorp USA,
Inc., The Bank of Nova Scotia and Credit Lyonnais New York Branch as
Documentation Agents have entered into a Credit Agreement, dated as of August
13, 2001 (as amended, modified or supplemented from time to time, the "Credit
Agreement") providing for the making of Loans and the issuance or creation of,
and participation in, Letters of Credit as contemplated therein;

                  WHEREAS, the Borrower may from time to time be party to one or
more Interest Rate Agreements (each such Interest Rate Agreement with an
Interest Rate Creditor (as defined below), a "Secured Interest Rate Agreement")
with any Lender or Lenders or a syndicate of financial institutions organized by
a Lender or an affiliate of Lender (even if any such Lender ceases to be a
Lender under the Credit Agreement for any reason) and any institution that
participates therein, and in each case their subsequent assigns (collectively,
the "Interest Rate Creditors" and together with the Lender Creditors, the
"Secured Creditors");

                  WHEREAS, pursuant to the Subsidiary Guaranty dated as of even
date herewith (as amended, modified or supplemented from time to time, the
"Subsidiary Guaranty"), each Grantor (other than the Borrower) has jointly and
severally guaranteed to the Secured Creditors the payment when due of the
Guaranteed Obligations (as and to the extent defined in the Subsidiary
Guaranty);

                  WHEREAS, it is a condition precedent to the making of Loans
and the issuance or creation of, and participation in, Letters of Credit under
the Credit Agreement that each Grantor shall have executed and delivered to the
Collateral Agent this Agreement; and

                  WHEREAS, each Grantor desires to execute this Agreement to
satisfy the conditions described in the preceding paragraph;

                  NOW, THEREFORE, in consideration of the benefits accruing to
each Grantor, the receipt and sufficiency of which are hereby acknowledged, each
Grantor hereby makes the following representations and warranties and hereby
covenants and agrees as follows:

<PAGE>

                                                                       Exhibit I
                                                                          Page 2

                                   ARTICLE II

                               SECURITY INTERESTS

                  1.1 Grant of Security Interests. (a) As security for the
                      ---------------------------
prompt and complete payment and performance when due of all of its Obligations,
each Grantor does hereby grant to the Collateral Agent for the benefit of the
Secured Creditors, a continuing security interest in all of the right, title and
interest of such Grantor in, to and under all of the following, whether now
existing or hereafter from time to time acquired: (i) each and every Receivable,
(ii) all Contracts, together with all Contract Rights arising thereunder, (iii)
all Inventory, (iv) all Equipment, (v) all Marks, together with the
registrations and right to all renewals thereof, and the goodwill of the
business of such Grantor symbolized by the Marks, (vi) the Cash Collateral
Account established for such Grantor and all moneys securities and instruments
deposited or required to be deposited in such Cash Collateral Account pursuant
hereto, (vii) all Patents and Copyrights and all reissues, renewals or
extensions thereof, (viii) all computer programs of such Grantor and all
intellectual property rights therein and all other proprietary information of
such Grantor, (ix) all insurance policies, (x) all other Goods, General
Intangibles, Chattel Paper, Documents, Instruments and/or Investment Property,
and (xi) all Proceeds and products of any and all of the foregoing (all of the
above collectively, the "Collateral").

                  (b) The security interest of the Collateral Agent under this
Agreement extends to all Collateral of the kind which is the subject of this
Agreement which any Grantor may acquire at any time during the continuation of
this Agreement.

                  1.2 Power of Attorney. Each Grantor hereby constitutes and
                      -----------------
appoints the Collateral Agent its true and lawful attorney, irrevocably, with
full power after the occurrence of and during the continuance of an Event of
Default (in the name of such Grantor or otherwise) to act, require, demand,
receive, compound and give acquittance for any and all moneys and claims for
moneys due or to become due to such Grantor under or arising out of the
Collateral, to endorse any checks or other instruments or orders in connection
therewith and to file any claims or take any action or institute any proceedings
which the Collateral Agent may deem to be necessary or advisable in the
premises, which appointment as attorney is coupled with an interest.

                                   ARTICLE II

                GENERAL REPRESENTATIONS, WARRANTIES AND COVENANTS

                  Each Grantor represents, warrants and covenants, which
representations, warranties and covenants shall survive execution and delivery
of this Agreement, as follows:

                  2.1 Necessary Filings. All filings, registrations and
                      -----------------
recordings necessary or appropriate to create, preserve, protect and perfect the
security interest granted by such Grantor to the Collateral Agent hereby in
respect of all the Collateral have been accomplished or shall have been
accomplished within ten days of the Initial Borrowing Date and the security
interest granted to the Collateral Agent pursuant to this Agreement in and to
all the Collateral constitutes, upon satisfaction of such filings, registrations
and recordings, a perfected security interest therein

                                       -2-

<PAGE>

                                                                       Exhibit 1
                                                                          Page 3

superior and prior to the rights of all other Persons therein (other than any
such rights pursuant to Permitted Liens) and subject to no other Liens (other
than Permitted Liens) and is entitled to all the rights, priorities and benefits
afforded by the UCC or other relevant law as enacted in any relevant
jurisdiction to perfected security interests.

                  2.2 No Liens. Such Grantor is, and as to Collateral acquired
                      --------
by it from time to time after the date hereof such Grantor will be, the owner of
all Collateral free from any Lien, security interest, encumbrance or other
right, title or interest of any Person (other than Permitted Liens), and such
Grantor shall defend the Collateral against all claims and demands of all
Persons at any time claiming the same or any interest therein (other than in
connection with Permitted Liens) adverse to the Collateral Agent.

                  2.3 Other Financing Statements. As of the date hereof, there
                      --------------------------
is no financing statement (or similar statement or instrument of registration
under the law of any jurisdiction) covering or purporting to cover any interest
of any kind in the Collateral (other than financing statements filed in respect
of Permitted Liens) and so long as the Total Commitment has not been terminated
or any Note remains unpaid or any Letter of Credit remains outstanding or any of
the Obligations remain unpaid or any Secured Interest Rate Agreement remains in
effect, such Grantor will not execute or authorize to be filed in any public
office any financing statement (or similar statement or instrument of
registration under the law of any jurisdiction) or statements relating to the
Collateral, except financing statements filed or to be filed in respect of and
covering the security interests granted hereby by such Grantor or as permitted
by the Credit Agreement.

                  2.4 Chief Executive Office, Record Locations. The chief
                      ----------------------------------------
executive office of such Grantor is located at the address indicated on Annex A
hereto for such Grantor. Such Grantor will not move its chief executive office
except to such new location as such Grantor may establish in accordance with the
last sentence of this Section 2.4. The originals of all documents evidencing all
Receivables and Contract Rights of such Grantor and the only original books of
account and records of such Grantor relating thereto are, and will continue to
be, kept at such chief executive office, at one or more of the other locations
set forth on Annex A hereto or at such new locations as such Grantor may
establish in accordance with the last sentence of this Section 2.4. All
Receivables and Contract Rights of such Grantor are, and will continue to be,
maintained at, and controlled and directed (including, without limitation, for
general accounting purposes) from, the office locations described above or such
new location established in accordance with the last sentence of this Section
2.4. No Grantor shall establish new locations for such offices until (i) it
shall have given to the Collateral Agent not less than 5 days' prior written
notice of its intention to do so, clearly describing such new location and
providing such other information in connection therewith as the Collateral Agent
may reasonably request, and (ii) with respect to such new location, it shall
have taken all action reasonably satisfactory to the Collateral Agent to
maintain the security interest of the Collateral Agent in the Collateral
intended to be granted hereby at all times fully perfected and in full force and
effect.

                  2.5 Location of Inventory and Equipment. All Inventory and
                      -----------------------------------
Equipment held on the date hereof by each Grantor is located at one of the
locations shown on Annex B hereto for such Grantor. To the extent that any
Grantor desires to establish a new location for Inventory and Equipment that is
located in Alabama, Connecticut, Florida or Mississippi, such Grantor

                                       -3-

<PAGE>

                                                                       Exhibit I
                                                                          Page 4

only may do so if (i) it shall have given to the Collateral Agent not less than
5 days' prior written notice of its intention so to do, clearly describing such
new location and providing such other information in connection therewith as the
Collateral Agent may reasonably request, and (ii) with respect to such new
location, it shall have taken all action reasonably satisfactory to the
Collateral Agent to maintain the security interest of the Collateral Agent in
the Collateral intended to be granted hereby at all times fully perfected and in
full force and effect; provided, however, (x) from and after October 1, 2001,
                       --------  -------
the provisions of this sentence shall not be applicable if such new location is
located in Connecticut and (y) from and after January 1, 2002, the provisions of
this sentence shall not be applicable if such new location is located in
Alabama, Florida or Mississippi.

                  2.6 Jurisdiction and Type of Organization. The jurisdiction of
                      -------------------------------------
organization of each Grantor, and the type of organization of each Grantor, is
listed on Annex C hereto for such Grantor. No Grantor shall change its
jurisdiction of organization or its type of organization until (i) it shall have
given to the Collateral Agent not less than 5 days' prior written notice of
intention so to do, clearly describing such new jurisdiction of organization
and/or type of organization and providing such other information in connection
therewith as the Collateral Agent may reasonably request and (ii) with respect
to such new jurisdiction of organization and/or type of organization, it shall
have taken all actions reasonably requested by the Collateral Agent to maintain
the security interest of the Collateral Agent in the Collateral intended to be
granted hereby at all times fully perfected and in full force and effect.

                  2.7 Trade Names; Change of Name. As of the date hereof, such
                      ---------------------------
Grantor does not have or operate in any jurisdiction under, or in the preceding
12 months has not had or has not operated in any jurisdiction under, any trade
names, fictitious names or other names (including, without limitation, any names
of divisions or operations) except its legal name and such other trade,
fictitious or other names as are listed on Annex D hereto. Such Grantor shall
not change its legal name or assume or operate in any jurisdiction under any
trade, fictitious or other name except those names listed on Annex D hereto in
the jurisdictions listed with respect to such names and new names (including,
without limitation, any names of divisions or operations) and/or jurisdictions
established in accordance with the last sentence of this Section 2.7. Such
Grantor shall not assume or operate in any jurisdiction under any new trade,
fictitious or other name or operate under any existing name in any additional
jurisdiction until (i) it shall have given to the Collateral Agent prior written
notice of its intention so to do in sufficient time to effect the actions
described in clause (ii) below, clearly describing such new name and/or
jurisdiction and, in the case of a new name, the jurisdictions in which such new
name shall be used and providing such other information in connection therewith
as the Collateral Agent may reasonably request, and (ii) with respect to such
new name and/or new jurisdiction, it shall have taken all action necessary to
maintain the security interest of the Collateral Agent in the Collateral
intended to be granted hereby at all times fully perfected and in full force and
effect.

                  2.8 Recourse. This Agreement is made with full recourse to
                      --------
such Grantor and pursuant to and upon all the warranties, representations,
covenants, and agreements on the part of such Grantor contained herein, in the
Secured Interest Rate Agreements and otherwise in writing in connection herewith
or therewith.

                                       -4-

<PAGE>

                                                                       Exhibit I
                                                                          Page 5

                                   ARTICLE III

                          SPECIAL PROVISIONS CONCERNING
                    RECEIVABLES; CONTRACT RIGHTS; INSTRUMENTS

                  3.1 Further Actions. Each Grantor will, at its own expense,
                      ---------------
make, execute, endorse, acknowledge, file and/or deliver to the Collateral Agent
from time to time such vouchers, invoices, schedules, confirmatory assignments,
conveyances, financing statements, transfer endorsements, powers of attorney,
certificates, reports and other assurances or instruments and take such further
steps relating to its Receivables, Contracts, Instruments and other property or
rights covered by the security interest hereby granted, as the Collateral Agent
may reasonably require to give effect to the purposes of this Agreement.

                  3.2 Maintenance of Records. Each Grantor will keep and
                      ----------------------
maintain at its own cost and expense satisfactory and complete records of its
Receivables and Contracts, and such Grantor will make the same available to the
Collateral Agent for inspection, at such Grantor's own cost and expense, at any
and all reasonable times during normal business hours upon reasonable prior
notice to such Grantor. If requested by the Collateral Agent while an Event of
Default is in existence, such Grantor shall, at its own cost and expense,
deliver all tangible evidence of its Receivables and Contract Rights (including,
without limitation, copies of all documents evidencing the Receivables and all
Contracts) and such books and records to the Collateral Agent or to its
representatives (copies of which evidence and books and records may be retained
by such Grantor). If the Collateral Agent so directs, upon the occurrence and
during the continuance of an Event of Default, such Grantor shall legend, in
form and manner reasonably satisfactory to the Collateral Agent, the Receivables
and Contracts, as well as books, records and documents of such Grantor
evidencing or pertaining to such Receivables with an appropriate reference to
the fact that such Receivables and Contracts have been assigned to the
Collateral Agent and that the Collateral Agent has a security interest therein.

                  3.3 Modification of Terms; etc. No Grantor shall rescind or
                      --------------------------
cancel any indebtedness evidenced by any Receivable or under any Contract, or
modify any term thereof or make any adjustment with respect thereto, or extend
or renew the same, or compromise or settle any material dispute, claim, suit or
legal proceeding relating thereto, or sell any Receivable or Contract, or
interest therein, without the prior written consent of the Collateral Agent,
except (i) as permitted by Section 3.4 hereof and (ii) in accordance with such
Grantor's reasonable business practices.

                  3.4 Collection. Each Grantor shall endeavor in accordance with
                      ----------
reasonable business practices to cause to be collected from the account debtor
named in each of its Receivables or obligor under any Contract, as and when due
(including, without limitation, amounts which are delinquent, such amounts to be
collected in accordance with generally accepted lawful collection procedures)
any and all amounts owing under or on account of such Receivable or Contract,
and apply forthwith upon receipt thereof all such amounts as are so collected to
the outstanding balance of such Receivable or under such Contract, except that,
so long as no Event of Default is then continuing in respect of which the
Collateral Agent has given notice that this exception is no longer applicable,
any Grantor may allow in the ordinary course of business as adjustments to
amounts owing under its Receivables and Contracts (i) an extension or renewal of

                                       -5-

<PAGE>

                                                                        Page 6

the time or times of payment, or settlement for less than the total unpaid
balance, which such Grantor finds appropriate in accordance with sound business
judgment and (ii) a refund or credit due as a result of returned or damaged
merchandise or improperly performed services. The reasonable costs and expenses
(including, without limitation, reasonable attorneys' fees) of collection,
whether incurred by any Grantor or the Collateral Agent, shall be borne by such
Grantor.

         3.5  Direction to Account Debtors; etc. Upon the occurrence and during
              ---------------------------------
the continuance of an Event of Default, if the Collateral Agent so directs any
Grantor, to the extent permitted by applicable law, such Grantor agrees (x) to
cause all payments on account of the Receivables and Contracts to be made
directly to the Cash Collateral Account, (y) that the Collateral Agent may, at
its option, directly notify the obligors with respect to any Receivables and/or
under any Contracts to make payments with respect thereto as provided in
preceding clause (x) and (z) that the Collateral Agent may enforce collection of
any Receivables or Contracts and may adjust, settle or compromise the amount of
payment thereof, in the same manner and to the same extent as the Grantor.
During the continuance of an Event of Default, the Collateral Agent may apply
any or all amounts then in, or thereafter deposited in, the Cash Collateral
Account in the manner provided in Section 7.4 of this Agreement. The reasonable
costs and expenses (including reasonable attorneys' fees) of collection, whether
incurred by any Grantor or the Collateral Agent, shall be borne by such Grantor.
The Collateral Agent shall deliver a copy of each notice referred to in the
preceding clause (y) to the relevant Grantor; provided that, the failure of the
Collateral Agent to so notify such Grantor shall not affect the effectiveness of
such notice or the other rights of the Collateral Agent created by this Section
3.5.

                                   ARTICLE IV

                    SPECIAL PROVISIONS CONCERNING TRADEMARKS

         4.1  Additional Representations and Warranties. Each Grantor represents
              -----------------------------------------
and warrants that it is the true and lawful owner of the Patent and Trademark
Office registrations, and applications for registrations, of the Marks listed in
Annex E attached hereto and that Annex E lists, as of the date hereof, all the
United States Patent and Trademark Office, or the equivalent office thereof in
any foreign country, registrations and applications for registrations, of the
Marks that such Grantor now owns or uses in connection with its business. Each
Grantor represents and warrants that except with respect to those licensed marks
set forth in Annex E, it owns, is licensed to use or otherwise has the right to
use all material Marks that it uses. Each Grantor further warrants that it is
aware of no third party claim that any aspect of such Grantor's present or
contemplated business operations infringes or will infringe any material Mark.
Each Grantor represents and warrants that it is the true and lawful owner of or
otherwise has the right to use all U.S. trademark registrations and applications
listed in Annex E hereto and that said registrations are valid, subsisting, have
not been cancelled and that such Grantor is not aware of any third-party claim
that any of said registrations or applications for registration with respect to
a Mark is invalid or unenforceable or is not aware that there is any reason that
any of said registrations or applications for registration with respect to a
Mark is invalid or unenforceable. Each Grantor hereby grants to the Collateral
Agent an absolute power of attorney to sign, upon the occurrence and during the
continuance of an Event of Default, any document which may be required by the

                                       -6-

<PAGE>

                                                                        Page 7

United States Patent and Trademark Office in order to effect an absolute
assignment of all right, title and interest in each Mark owned by a Grantor, and
record the same. Notwithstanding the foregoing, the representations contained in
this Section 4.1 will be deemed to be breached only by matters that have, or
would reasonably be expected to have, a Material Adverse Effect.

         4.2  Licenses and Assignments. Except as otherwise permitted by the
              ------------------------
Credit Agreement and subject to the provisions of Sections 4.4 and 4.5, each
Grantor hereby agrees not to divest itself of any right under a Mark other than
in the ordinary course of business absent prior written approval of the
Collateral Agent.

         4.3  Infringements. Each Grantor agrees, promptly upon learning
              -------------
thereof, to notify the Collateral Agent in writing of the name and address of,
and to furnish such pertinent information that may be available with respect to,
any party who may be infringing or otherwise violating in any material respect
any of such Grantor's rights in and to any Mark which has a Material Adverse
Effect (each such Mark, a "Significant Mark"), or with respect to any party
claiming that such Grantor's use of any Significant Mark violates in any
material respect any property right of that party. Each Grantor further agrees,
unless otherwise directed by the Collateral Agent, diligently to prosecute any
Person infringing any Significant Mark owned by such Grantor in a manner
consistent with its past practice and in accordance with reasonable business
practices.

         4.4  Preservation of Marks. Each Grantor agrees to use or license the
              ---------------------
use of its Marks in interstate commerce during the time in which this Agreement
is in effect, sufficiently to preserve such Marks as trademarks or service marks
registered under the laws of the United States or the relevant foreign
jurisdiction; provided, that no Grantor shall be obligated to preserve any Mark
in the event such Grantor determines, in its reasonable business judgment, that
the preservation of such Mark is no longer necessary or desirable in the conduct
of its business.

         4.5  Maintenance of Registration. Each Grantor shall, at its own
              ---------------------------
expense, diligently process all documents required to maintain trademark
registrations, including but not limited to affidavits of use and applications
for renewals of registration in the United States Patent and Trademark Office or
equivalent governmental agency in any foreign jurisdiction for all of its Marks
(excluding unregistered Marks), the failure of which would reasonably be
expected to have a Material Adverse Effect and shall pay all fees and
disbursements in connection therewith, and shall not abandon any such filing of
affidavit of use or any such application of renewal prior to the exhaustion of
all administrative and judicial remedies without prior written consent of the
Collateral Agent; provided, that no Grantor shall be obligated to maintain any
Mark or prosecute any such application for registration in the event that such
Grantor determines, in its reasonable business judgment, that such application
is no longer necessary or desirable in the conduct of its business.

         4.6  Future Registered Marks. If any Mark registration issues hereafter
              -----------------------
to any Grantor as a result of any application now or hereafter pending before
the United States Patent and Trademark Office or equivalent governmental agency
in any foreign jurisdiction, within thirty (30) days of receipt of such
certificate such Grantor shall deliver a copy of such certificate, and a grant
of security in such mark to the Collateral Agent, confirming the grant thereof
hereunder, the form of such confirmatory grant to be substantially the same as
the form hereof.

                                       -7-

<PAGE>

                                                                          Page 8

          4.7 Remedies. If an Event of Default shall occur and be continuing,
              --------
the Collateral Agent may, by written notice to the relevant Grantor, take any or
all of the following actions in accordance with the provisions of Section 9 of
the Credit Agreement: (i) declare the entire right, title and interest of such
Grantor in and to each of the Marks, together with all trademark rights and
rights of protection to the same, vested, in which event such rights, title and
interest shall immediately vest, in the Collateral Agent for the benefit of the
Secured Creditors pursuant to a trademark security agreement in form and
substance satisfactory to the Collateral Agent, executed by such Grantor and
filed on the date hereof, pursuant to which all of such Grantor's rights, title
and interest in and to the Marks are assigned to the Collateral Agent for the
benefit of the Secured Creditors; (ii) take and use or sell the Marks and the
goodwill of such Grantor's business symbolized by the Marks and the right to
carry on the business and use the assets of such Grantor in connection with
which the Marks have been used; and (iii) direct such Grantor to refrain, in
which event such Grantor shall refrain, from using the Marks in any manner
whatsoever, directly or indirectly, and, if requested by the Collateral Agent,
change such Grantor's corporate name to eliminate therefrom any use of any Mark
and execute such other and further documents that the Collateral Agent may
request to further confirm this and to transfer ownership of the Marks and
registrations and any pending trademark application in the United States Patent
and Trademark Office or any equivalent governmental agency or office in any
foreign jurisdiction to the Collateral Agent.

                                    ARTICLE V

                          SPECIAL PROVISIONS CONCERNING
                   TRADE SECRET RIGHTS, PATENTS AND COPYRIGHTS

          5.1 Additional Representations and Warranties. Each Grantor represents
              -----------------------------------------
and warrants that to the best of its knowledge after due inquiry it is the true
and lawful owner or licensee of all rights in (i) all Trade Secret Rights, (ii)
the Patents of such Grantor listed in Annex G attached hereto and (iii) the
Copyrights of such Grantor listed in Annex G attached hereto and that said
Patents and Copyrights constitute all the registered copyrights and applications
for copyright registrations that such Grantor now owns as of the date hereof.

          5.2 Licenses and Assignments. Except as otherwise permitted under the
              ------------------------
Credit Agreement and subject to the provisions of Sections 5.4 and 5.5, each
Grantor hereby agrees not to divest itself of any right under a Patent or
Copyright other than in the ordinary course of business absent prior written
approval of the Collateral Agent, which approval shall not be unreasonably
withheld.

          5.3 Infringements. Each Grantor agrees, promptly upon learning
              -------------
thereof, to furnish the Collateral Agent in writing with all pertinent
information available to such Grantor with respect to any infringement or other
violation of such Grantor's rights in any Patent or Copyright that has a
Material Adverse Effect (each, a "Significant Patent" or "Significant
Copyright", as applicable), or with respect to any claim that the practice of
any Significant Patent or the use of any Significant Copyright violates in any
material respect any property right of a third party or with respect to any
misappropriation of any Trade Secret Right or any claim that the practice of any
Trade Secret Right violates any property right of a third party, in each case to

                                       -8-

<PAGE>

                                                                          Page 9

the extent that such infringement, violation or misappropriation would have a
Material Adverse Effect. To the extent consistent with its past practice and in
accordance with reasonable business practices, each Grantor further agrees,
absent direction of the Collateral Agent to the contrary, diligently to
prosecute any Person infringing any Significant Patent or Significant Copyright
owned by such Grantor or any Person misappropriating any material Trade Secret
Right.

          5.4 Maintenance of Patents or Copyrights. At its own expense, each
              ------------------------------------
Grantor shall make timely payment of all post-issuance fees required to maintain
in force its rights under each of its Significant Patents and Significant
Copyrights; provided, that no Grantor shall be obligated to maintain any Patent
or Copyright in the event such Grantor determines, in its reasonable business
judgment, that the maintenance of such Patent or Copyright is no longer
necessary or desirable in the conduct of its business.

          5.5 Prosecution of Patent or Copyright Application. At its own
              ----------------------------------------------
expense, each Grantor shall diligently prosecute all applications for (i)
Patents of such Grantor listed on Annex F hereto and (ii) Copyrights listed on
Annex G hereto, and, in each case, shall not abandon any such application prior
to exhaustion of all administrative and judicial remedies, absent written
consent of the Collateral Agent, which consent shall not be unreasonably
withheld, unless such Grantor shall determine that the pursuit or maintenance
thereof is no longer desirable in the conduct of the business of the Grantor.

          5.6 Other Patents and Copyrights. Within thirty (30) days of the
              ----------------------------
acquisition or issuance of a Patent or Copyright registration, or of filing of
an application for a Patent or Copyright registration, the relevant Grantor
shall deliver to the Collateral Agent a copy of said Patent or Copyright
registration, as the case may be, with a grant of security as to such Patent or
Copyright, as the case may be, confirming the grant thereof hereunder, the form
of such confirmatory grant to be substantially the same as the form hereof;
provided, that no Grantor shall be obligated to prosecute any application in the
event such Grantor determines, in its reasonable business judgment, that such
application is no longer necessary or desirable in the conduct of its business.

          5.7 Remedies. If an Event of Default shall occur and be continuing,
              --------
the Collateral Agent may by written notice to the relevant Grantor take any or
all of the following actions in accordance with the provisions of Section 9 of
the Credit Agreement: (i) declare the entire right, title and interest of such
Grantor in each of the Patents and Copyrights vested, in which event such right,
title and interest shall immediately vest in the Collateral Agent for the
benefit of the Secured Creditors, pursuant to a patent security agreement or
copyright security agreement, as the case may be, in form and substance
satisfactory to the Collateral Agent, executed by such Grantor and filed on the
date hereof, pursuant to which all of such Grantor's right, title, and interest
to such Patents and Copyrights are assigned to the Collateral Agent for the
benefit of the Secured Creditors; (ii) take and practice, use or sell the
Patents and Copyrights; (iii) direct such Grantor to refrain, in which event
such Grantor shall refrain, from practicing the Patents and using the Copyrights
directly or indirectly, and such Grantor shall execute such other and further
documents as the Collateral Agent may request further to confirm this and to
transfer ownership of the Patents and Copyrights to the Collateral Agent for the
benefit of the Secured Creditors.

                                       -9-

<PAGE>

                                                                         Page 10

                                   ARTICLE VI

                      PROVISIONS CONCERNING ALL COLLATERAL

          6.1 Protection of Collateral Agent's Security. Each Grantor will at
              -----------------------------------------
all times keep its Inventory and Equipment insured in favor of the Collateral
Agent, at its own expense, to the extent required by the Credit Agreement;
copies of all policies or certificates with respect to such insurance (i) shall
be endorsed to the Collateral Agent's reasonable satisfaction for the benefit of
the Collateral Agent (including, without limitation, by naming the Collateral
Agent as additional insured or loss payee), (ii) shall state that such insurance
policies shall not be cancelled or materially revised without at least 30 days'
(or at least 10 days' in the case of nonpayment of premium) prior written notice
thereof by the insurer to the Collateral Agent and (iii) shall be deposited with
the Collateral Agent. If any Grantor shall fail to insure such Inventory or
Equipment to the extent required by the Credit Agreement, or if any Grantor
shall fail to so endorse and deposit copies of all policies or certificates with
respect thereto, the Collateral Agent shall have the right (but shall be under
no obligation), upon prior written notice to such Grantor, to procure such
insurance and such Grantor agrees to reimburse the Collateral Agent for all
reasonable costs and expenses of procuring such insurance. Except as otherwise
provided in the Credit Agreement, the Collateral Agent shall apply any proceeds
of such insurance required after an Event of Default in accordance with Section
7.4. Each Grantor assumes all liability and responsibility in connection with
the Collateral acquired by it and the liability of such Grantor to pay its
Obligations shall in no way be affected or diminished by reason of the fact that
such Collateral may be lost, destroyed, stolen, damaged or for any reason
whatsoever unavailable to such Grantor.

          6.2 Further Actions. Each Grantor will, at its own expense, make,
              ---------------
execute, endorse, acknowledge, file and/or deliver to the Collateral Agent from
time to time such warehouse receipts, receipts in the nature of warehouse
receipts, bills of lading, documents of title, vouchers, invoices, schedules,
confirmatory assignments, conveyances, financing statements, transfer
endorsements, certificates, reports and other assurances and take such further
steps relating to the Collateral covered by the security interest hereby
granted, which the Collateral Agent deems reasonably necessary to perfect,
preserve or protect its security interest in the Collateral.

          6.3 Financing Statements. Each Grantor agrees to execute and deliver
              --------------------
to the Collateral Agent such financing statements, in form acceptable to the
Collateral Agent, as the Collateral Agent may from time to time reasonably
request or as are reasonably necessary or desirable in the reasonable opinion of
the Collateral Agent to establish and maintain a valid, enforceable, first
priority perfected security interest in the Collateral (subject to the Permitted
Liens) as provided herein and the other rights and security contemplated hereby
all in accordance with the UCC as enacted in any and all relevant jurisdictions
or any other relevant law. Each Grantor will pay any applicable filing fees,
recordation taxes and related expenses. Each Grantor hereby authorizes the
Collateral Agent to file any such financing statements without the signature of
such Grantor where permitted by law.

                                   ARTICLE VII

                                      -10-

<PAGE>

                                                                         Page 11

                  REMEDIES UPON OCCURRENCE OF EVENT OF DEFAULT

          7.1 Remedies; Obtaining the Collateral Upon Default. Each Grantor
              -----------------------------------------------
agrees that, if a Noticed Event of Default shall have occurred and be
continuing, then and in every such case, subject to any mandatory requirements
of applicable law then in effect, the Collateral Agent, in addition to any
rights now or hereafter existing under applicable law, shall have all rights as
a secured creditor under the UCC in all relevant jurisdictions and may:

          (i)   personally, or by agents or attorneys, immediately take
     possession of the Collateral or any part thereof, from such Grantor or any
     other Person who then has possession of any part thereof with or without
     notice or process of law other than the notice required by Section 9 of the
     Credit Agreement, and for that purpose may enter upon such Grantor's
     premises where any of the Collateral is located and remove the same and use
     in connection with such removal any and all services, supplies, aids and
     other facilities of such Grantor;

          (ii)  upon notice to the applicable Grantor if such notice is
     permitted to be given, instruct the obligor or obligors on any agreement,
     instrument or other obligation (including, without limitation, the
     Receivables and the Contracts) constituting the Collateral to make any
     payment required by the terms of such instrument or agreement directly to
     the Collateral Agent;

          (iii) withdraw all moneys, securities and other instruments in the
     Cash Collateral Account for application to the Obligations in accordance
     with Section 7.4 hereof;

          (iv)  sell, assign or otherwise liquidate, or direct such Grantor to
     sell, assign or otherwise liquidate, any or all of the Collateral or any
     part thereof in accordance with Section 7.2 hereof, and take possession of
     the proceeds of any such sale or liquidation;

          (v)   take possession of the Collateral or any part thereof, by
     directing such Grantor in writing to deliver the same to the Collateral
     Agent at any place or places in the country in which such Collateral is
     then located reasonably designated by the Collateral Agent, in which event
     such Grantor shall at its own expense:

                (A) forthwith cause the same to be moved to the place or places
          so designated by the Collateral Agent and there delivered to the
          Collateral Agent,

                (B) store and keep any Collateral so delivered to the Collateral
          Agent at such place or places pending further action by the Collateral
          Agent as provided in Section 7.2, and

                (C) while the Collateral shall be so stored and kept, provide
          such guards and maintenance services as shall be necessary to protect
          the same and to preserve and maintain them in good condition; and

          (vi)  license or sublicense whether on an exclusive or nonexclusive
     basis, any Marks, Patents or Copyrights included in the Collateral for such
     term and on such

                                      -11-

<PAGE>

                                                                       Exhibit I
                                                                         Page 12

     conditions and in such manner as the Collateral Agent shall in its sole
     judgment determine;

it being understood that such Grantor's obligation so to deliver the Collateral
is of the essence of this Agreement and that, accordingly, upon application to a
court of equity having jurisdiction, the Collateral Agent shall be entitled to a
decree requiring specific performance by such Grantor of said obligation. The
Secured Creditors agree that this Agreement may be enforced only by the action
of the Administrative Agent or the Collateral Agent, in each case acting upon
the instructions of the Required Lenders (or, after the date on which all Credit
Document Obligations have been paid in full, the holders of at least the
majority of the outstanding Interest Rate Obligations, to the extent same remain
outstanding) and that no other Secured Creditor shall have any right
individually to seek to enforce or to enforce this Agreement or to realize upon
the security to be granted hereby, it being understood and agreed that such
rights and remedies may be exercised by the Administrative Agent or the
Collateral Agent or the holders of at least a majority of the outstanding
Interest Rate Obligations, as the case maybe, for the benefit of the Secured
Creditors upon the terms of this Agreement.

          7.2 Remedies; Disposition of the Collateral. Upon the occurrence and
              ---------------------------------------
during the continuance of a Noticed Event of Default, any Collateral repossessed
by the Collateral Agent under or pursuant to Section 7.1 and any other
Collateral whether or not so repossessed by the Collateral Agent, may be sold,
assigned, leased or otherwise disposed of under one or more contracts or as an
entirety, and without the necessity of gathering at the place of sale the
property to be sold, and in general in such manner, at such time or times, at
such place or places and on such terms as the Collateral Agent may, in
compliance with any mandatory requirements of applicable law, determine to be
commercially reasonable. Any of the Collateral may be sold, leased or otherwise
disposed of, in the condition in which the same existed when taken by the
Collateral Agent or after any overhaul or repair which the Collateral Agent
shall determine to be commercially reasonable. Any such disposition which shall
be a private sale or other private proceedings permitted by such requirements
shall be made upon not less than ten (10) days' written notice to the relevant
Grantor specifying the time at which such disposition is to be made and the
intended sale price or other consideration therefor, and shall be subject, for
the ten (10) days after the giving of such notice, to the right of the relevant
Grantor or any nominee of such Grantor to acquire the Collateral involved at a
price or for such other consideration at least equal to the intended sale price
or other consideration so specified. Any such disposition which shall be a
public sale permitted by such requirements shall be made upon not less than ten
(10) days' written notice to the relevant Grantor specifying the time and place
of such sale and, in the absence of applicable requirements of law, shall be by
public auction (which may, at the Collateral Agent's option, be subject to
reserve), after publication of notice of such auction not less than 10 days
prior thereto in two newspapers in general circulation in the City of New York.
To the extent permitted by any such requirement of law, the Collateral Agent on
behalf of the Secured Creditors (or certain of them) may bid for and become the
purchaser (by bidding in the Obligations or otherwise) of the Collateral or any
item thereof, offered for sale in accordance with this Section without
accountability to the relevant Grantor (except to the extent of surplus money
received as provided in Section 7.4). If, under mandatory requirements of
applicable law, the Collateral Agent shall be required to make disposition of
the Collateral within a period of time which does not permit the giving of
notice to the relevant Grantor as hereinabove specified,

                                      -12-

<PAGE>

                                                                       Exhibit I
                                                                         Page 13

the Collateral Agent need give such Grantor only such notice of disposition as
shall be reasonably practicable in view of such mandatory requirements of
applicable law.

          7.3 Waiver of Claims. Except as otherwise provided in this Agreement,
              ----------------
EACH GRANTOR HEREBY WAIVES, TO THE EXTENT PERMITTED BY APPLICABLE LAW, NOTICE
AND JUDICIAL HEARING IN CONNECTION WITH THE COLLATERAL AGENT'S TAKING POSSESSION
OR THE COLLATERAL AGENT'S DISPOSITION OF ANY OF THE COLLATERAL, INCLUDING,
WITHOUT LIMITATION, ANY AND ALL PRIOR NOTICE AND HEARING FOR ANY PREJUDGMENT
REMEDY OR REMEDIES AND ANY SUCH RIGHT WHICH SUCH GRANTOR WOULD OTHERWISE HAVE
UNDER THE CONSTITUTION OR ANY STATUTE OF THE UNITED STATES OR OF ANY STATE, and
such Grantor hereby further waives, to the extent permitted by law:

          (i)   all damages occasioned by such taking of possession except any
     damages which are the direct result of the Collateral Agent's gross
     negligence or wilful misconduct;

          (ii)  all other requirements as to the time, place and terms of sale
     or other requirements with respect to the enforcement of the Collateral
     Agent's rights hereunder; and

          (iii) all rights of redemption, appraisement, valuation, stay,
     extension or moratorium now or hereafter in force under any applicable law
     in order to prevent or delay the enforcement of this Agreement or the
     absolute sale of the Collateral or any portion thereof, and each Grantor,
     for itself and all who may claim under it, insofar as it or they now or
     hereafter lawfully may, hereby waives the benefit of all such laws.

Any sale of, or the grant of options to purchase, or any other realization upon,
any Collateral shall operate to divest all right, title, interest, claim and
demand, either at law or in equity, of the relevant Grantor therein and thereto,
and shall be a perpetual bar both at law and in equity against such Grantor and
against any and all Persons claiming or attempting to claim the Collateral so
sold, optioned or realized upon, or any part thereof, from, through and under
such Grantor.

          7.4 Application of Proceeds. (a) All moneys collected by the
              -----------------------
Collateral Agent (or, to the extent the Pledge Agreement or the Mortgages
require proceeds of collateral thereunder to be applied in accordance with the
provisions of this Agreement, the Pledgee or Mortgagee thereunder) upon any sale
or other disposition of the Collateral, together with all other moneys received
by the Collateral Agent hereunder during the continuance of an Event of Default,
shall be applied as follows:

          (i)   first, to the payment of all Obligations owing to the Collateral
     Agent or Pledgee of the type described in clauses (iii) and (iv) of the
     definition of "Obligations" contained in Article IX hereof;

          (ii)  second, to the extent proceeds remain after the application
     pursuant to preceding clause (i), an amount equal to the outstanding
     Obligations to the Secured Creditors shall be paid to the Secured Creditors
     as provided in Section 7.4(d) with each Secured Creditor receiving an
     amount equal to its outstanding Obligations or, if the proceeds are

                                      -13-

<PAGE>

                                                                       Exhibit I
                                                                         Page 14

     insufficient to pay in full all such Obligations, its Pro Rata Share of the
     amount remaining to be distributed to be applied, with respect to the
     Credit Document Obligations, firstly to the payment of interest in respect
     of the unpaid principal amount of Loans outstanding, secondly to the
     payment of principal of Loans outstanding, then to the other Credit
     Document Obligations; and

          (iii) third, to the extent proceeds remain after the application
     pursuant to the preceding clauses (i) and (ii) to the relevant Grantor or,
     to the extent directed by such Grantor or a court of competent
     jurisdiction, to whomever may be lawfully entitled to receive such surplus.

          (b) For purposes of this Agreement, "Pro Rata Share" shall mean, when
                                               --- ----
calculating a Secured Creditor's portion of any distribution or amount, the
amount (expressed as a percentage) equal to a fraction the numerator of which is
the then outstanding amount of the relevant Obligations owed such Secured
Creditor and the denominator of which is the then outstanding amount of all
Obligations.

          (c) All payments required to be made to the (i) Lender Creditors
hereunder shall be made to the Administrative Agent for the account of the
respective Lender Creditors and (ii) Interest Rate Creditors hereunder shall be
made to the paying agent under the applicable Secured Interest Rate Agreement
or, in the case of Secured Interest Rate Agreements without a paying agent,
directly to the applicable Interest Rate Creditor.

          (d) For purposes of applying payments received in accordance with this
Section 7.4, the Collateral Agent shall be entitled to rely upon (i) the
Administrative Agent for a determination (which the Administrative Agent agrees
to provide upon request to the Collateral Agent) of the outstanding Credit
Document Obligations and (ii) upon any Interest Rate Creditor for a
determination (which each Interest Rate Creditor agrees to provide upon request
to the Collateral Agent) of the outstanding Interest Rate Obligations owed to
such Interest Rate Creditor. Unless it has actual knowledge (including by way of
written notice from a Secured Creditor) to the contrary, the Administrative
Agent under the Credit Agreement, in furnishing information pursuant to the
preceding sentence, and the Collateral Agent, in acting hereunder, shall be
entitled to assume that (x) no Credit Document Obligations other than principal,
interest and regularly accruing fees are owing to any Lender Creditor and (y) no
Secured Interest Rate Agreements or Interest Rate Obligations with respect
thereto are in existence.

          (e) It is understood that each Grantor shall remain liable to the
extent of any deficiency between (x) the amount of the obligations for which it
is liable directly or as a Guarantor that are satisfied with proceeds of the
Collateral and (y) the aggregate outstanding amount of such Obligations.

          7.5 Remedies Cumulative. Each and every right, power and remedy hereby
              -------------------
specifically given to the Collateral Agent shall be in addition to every other
right, power and remedy specifically given under this Agreement, any Secured
Interest Rate Agreement or the other Credit Documents or now or hereafter
existing at law or in equity, or by statute and each and every right, power and
remedy whether specifically herein given or otherwise existing may be exercised
from time to time or simultaneously and as often and in such order as may be

                                      -14-

<PAGE>

                                                                       Exhibit I
                                                                         Page 15

deemed expedient by the Collateral Agent. All such rights, powers and remedies
shall be cumulative and the exercise or the beginning of exercise of one shall
not be deemed a waiver of the right to exercise of any other or others. No delay
or omission of the Collateral Agent in the exercise of any such right, power or
remedy and no renewal or extension of any of the Obligations shall impair any
such right, power or remedy or shall be construed to be a waiver of any Default
or Event of Default or an acquiescence therein. In the event that the Collateral
Agent shall bring any suit to enforce any of its rights hereunder and shall be
entitled to judgment, then in such suit the Collateral Agent may recover
expenses, including reasonable attorneys' fees, and the amounts thereof shall be
included in such judgment.

          7.6 Discontinuance of Proceedings. In case the Collateral Agent shall
              -----------------------------
have instituted any proceeding to enforce any right, power or remedy under this
Agreement by foreclosure, sale, entry or otherwise, and such proceeding shall
have been discontinued or abandoned for any reason or shall have been determined
adversely to the Collateral Agent, then and in every such case the relevant
Grantor, the Collateral Agent and each holder of any of the Obligations shall be
restored to their former positions and rights hereunder with respect to the
Collateral subject to the security interest created under this Agreement, and
all rights, remedies and powers of the Collateral Agent shall continue as if no
such proceeding had been instituted (except to the extent of a determination
adverse to the Collateral Agent in such a proceeding).

                                      -15-

<PAGE>

                                                                       Exhibit I
                                                                         Page 16

                                  ARTICLE VIII

                                    INDEMNITY

          8.1 Indemnity. (a) Each Grantor jointly and severally agrees to
              ---------
indemnify, reimburse and hold the Collateral Agent, each Secured Creditor and
its respective successors, permitted assigns, employees, agents and servants
(hereinafter in this Section 8.1 referred to individually as "Indemnitee," and
collectively as "Indemnitees") harmless from any and all liabilities,
obligations, losses, damages, penalties, claims, demands, actions, suits,
judgments and any and all reasonable costs and expenses (including reasonable
attorneys' fees and expenses) (for the purposes of this Section 8.1 the
foregoing are collectively called "expenses") of whatsoever kind and nature
imposed on, asserted against or incurred by any of the Indemnitees in any way
relating to or arising out of this Agreement, any Secured Interest Rate
Agreement, any other Credit Document or the documents executed in connection
herewith and therewith or in any other way connected with the enforcement of any
of the terms of, or the preservation of any rights hereunder or thereunder, or
in any way relating to or arising out of the manufacture, ownership, ordering,
purchase, delivery, control, acceptance, lease, financing, possession,
operation, condition, sale, return or other disposition, or use of the
Collateral (including, without limitation, latent or other defects, whether or
not discoverable), the violation of the laws of any country, state or other
governmental body or unit, any tort (including, without limitation, claims
arising or imposed under the doctrine of strict liability, or for or on account
of injury to or the death of any Person (including any Indemnitee), or property
damage), or contract claim, in each relating to the Collateral; provided that
no Indemnitee shall be indemnified pursuant to this Section 8.1(a) for expenses,
losses, damages or liabilities to the extent caused by the gross negligence or
wilful misconduct of such Indemnitee or any of its affiliates, agents or
employees. Each Grantor agrees that upon written notice by any Indemnitee of the
assertion of such a liability, obligation, loss, damage, penalty, claim, demand,
action, judgment or suit, such Grantor shall assume full responsibility for the
defense thereof. Each Indemnitee agrees to use its best efforts to promptly
notify such Grantor of any such assertion of which such Indemnitee has
knowledge.

          (b) Without limiting the application of Section 8.1(a), each Grantor
agrees, jointly and severally, to pay, or reimburse the Collateral Agent for (if
the Collateral Agent shall have incurred fees, costs or expenses because such
Grantor shall have failed to comply with its obligations under this Agreement or
any Credit Document), any and all reasonable fees, costs and expenses of
whatever kind or nature incurred in connection with the creation, preservation
or protection of the Collateral Agent's Liens on, and security interest in, the
Collateral, including, without limitation, all fees and taxes in connection with
the recording or filing of instruments and documents in public offices, payment
or discharge of any taxes or Liens upon or in respect of the Collateral,
premiums for insurance with respect to the Collateral and all other reasonable
fees, costs and expenses in connection with protecting, maintaining or
preserving the Collateral and the Collateral Agent's interest therein, whether
through judicial proceedings or otherwise, or in defending or prosecuting any
actions, suits or proceedings arising out of or relating to the Collateral.

          (c) Without limiting the application of Section 8.1(a) or (b), each
Grantor jointly and severally agrees to pay, indemnify and hold each Indemnitee
harmless from and against any

                                      -16-

<PAGE>

                                                                       Exhibit I
                                                                         Page 17

loss, costs, damages and expenses which such Indemnitee may suffer, expend or
incur in consequence of or growing out of any material misrepresentation by an
Grantor in this Agreement, or in any statement or writing contemplated by or
made or delivered pursuant to or in connection with this Agreement.

          (d) If and to the extent that the obligations of any Grantor under
this Section 8.1 are unenforceable for any reason, each Grantor hereby agrees to
make the maximum contribution to the payment and satisfaction of such
obligations which is permissible under applicable law.

          8.2 Indemnity Obligations Secured by Collateral; Survival. Any amounts
              -----------------------------------------------------
paid by any Indemnitee as to which such Indemnitee has the right to
reimbursement shall constitute Obligations secured by the Collateral. The
indemnity obligations of each Grantor contained in this Article VIII shall
continue in full force and effect notwithstanding the full payment of all the
Notes issued under the Credit Agreement, the termination of all Secured Interest
Rate Agreements and the payment of all of the other Obligations and the
termination of the security interests and Liens created hereunder.

                                   ARTICLE IX

                                   DEFINITIONS

          The following terms shall have the meanings herein specified unless
the context otherwise requires. Such definitions shall be equally applicable to
the singular and plural forms of the terms defined.

          "Administrative Agent" shall have the meaning provided in the first
WHEREAS clause of this Agreement.

          "Agreement" shall mean this Security Agreement as the same may be
modified, supplemented or amended from time to time in accordance with its
terms.

          "Borrower" shall have the meaning provided in the first WHEREAS clause
of this Agreement.

          "Business Day" means any day excluding Saturday, Sunday and any day
which shall be in the City of New York a legal holiday or a day on which banking
institutions are authorized by law to close.

          "Cash" shall mean cash and Cash Equivalents.

          "Cash Collateral Account" shall mean a non-interest bearing cash
collateral account maintained with, and in the sole dominion and control of, the
Collateral Agent for the benefit of the Secured Creditors.

          "Chattel Paper" shall have the meaning assigned that term under the
UCC as in effect on the date hereof in the State of New York.

                                      -17-

<PAGE>

                                                                       Exhibit I
                                                                         Page 18

               "Class" shall have the meaning provided in Section 10.2 of this
Agreement.

               "Collateral" shall have the meaning provided in Section 1.1(a).

               "Collateral Agent" shall have the meaning specified in the first
paragraph of this Agreement.

               "Contract Rights" shall mean all rights of an Grantor (including,
without limitation, all rights to payment) under each Contract.

               "Contracts" shall mean all contracts between an Grantor and one
or more additional parties (including, without limitation, any Secured Interest
Rate Agreement and related documents entered into in connection therewith) to
the extent the grant by an Grantor of a security interest pursuant to this
Agreement in its right, title and interest in any such contract is not
prohibited by such contract without the consent of any other party thereto or
would not give any other party to such contract the right to terminate its
obligations thereunder; provided, that the foregoing limitation shall not
affect, limit, restrict or impair the grant by a Grantor of a security interest
pursuant to this Agreement in any account or any money or other amounts due or
to become due under any such contract, agreement, instrument or indenture.

               "Copyrights" shall mean any United States or foreign copyright
owned by any Grantor now or hereafter, including any registration of any
copyrights, in the United States Copyright Office or the equivalent thereof in
any foreign country, as well as any application for a United States or foreign
copyright registration now or hereafter made with the United States Copyright
Office or the equivalent thereof in any foreign jurisdiction by any Grantor.

               "Credit Agreement" shall have the meaning provided in the first
WHEREAS clause of this Agreement.

               "Credit Document Obligations" shall have the meaning provided in
the definition of "Obligations" in this Article IX.

               "Documents" shall have the meaning assigned that term under the
UCC as in effect on the date hereof in the State of New York.

               "Equipment" shall mean any "equipment," as such term is defined
in the UCC as in effect on the date hereof in the State of New York, now or
hereafter owned by any Grantor and, in any event, shall include, but shall not
be limited to, all machinery, equipment, furnishings, fixtures now or hereafter
owned by such Grantor and any and all additions, substitutions and replacements
of any of the foregoing, wherever located, together with all attachments,
components, parts, equipment and accessories installed thereon or affixed
thereto.

               "Event of Default" shall mean any Event of Default under the
Credit Agreement or any payment default, after any applicable grace period,
under any Secured Interest Rate Agreement.

               "General Intangibles" shall have the meaning assigned that term
under the UCC as in effect on the date hereof in the State of New York.

                                      -18-

<PAGE>

                                                                       Exhibit I
                                                                         Page 19

               "Goods" shall have the meaning assigned that term under the UCC
as in effect on the date hereof in the State of New York.

               "Grantor" shall have the meaning specified in the first paragraph
of this Agreement.

               "Holdings" shall have the meaning provided in the first WHEREAS
clause of this Agreement.

               "Indemnitee" shall have the meaning provided in Section 8.1.

               "Instrument" shall have the meaning assigned that term under the
UCC as in effect on the date hereof in the State of New York.

               "Interest Rate Creditors" shall have the meaning provided in the
second WHEREAS clause of this Agreement.

               "Interest Rate Obligations" shall have the meaning provided in
the definition of "Obligations" in this Article IX.

               "Inventory" shall mean merchandise, inventory and goods, and all
additions, substitutions and replacements thereof, wherever located, together
with all goods, supplies, incidentals, packaging materials, labels, materials
and any other items used or usable in manufacturing, processing, packaging or
shipping same; in all stages of production--from raw materials through
work-in-process to finished goods--and all products and proceeds of whatever
sort and wherever located and any portion thereof which may be returned,
rejected, reclaimed or repossessed by the Collateral Agent from a Grantor's
customers, and shall specifically include all "inventory" as such term is
defined in the UCC as in effect on the date hereof in the State of New York, now
or hereafter owned by a Grantor.

               "Investment Property" shall be a collective reference to (i) all
"investment property" as such term is defined in Section 9-102(a)(49) of the UCC
as in effect on the date hereof in the State of New York and (ii) whether or not
constituting "investment property" as so defined, all Underlying Investments
(including all rights arising therefrom to vote and/or to receive distributions
and all other rights of such Grantor in respect thereof) owned by or issued to
such Grantor.

               "Lender Creditor" shall have the meaning provided in the first
WHEREAS clause of this Agreement.

               "Lenders" shall have the meaning provided in the first WHEREAS
clause of this Agreement.

               "Liens" shall mean any security interest, mortgage, pledge, lien,
claim, charge, encumbrance, title retention agreement, lessor's interest in a
financing lease or analogous instrument, in, of, or on a Grantor's property.

                                      -19-

<PAGE>

                                                                       Exhibit I
                                                                         Page 20

               "Marketable Securities" shall mean any shares of capital stock,
membership interests, warrants, options, bonds, notes or debentures that are
traded on an established securities market or any secondary market or
substantial equivalent thereof.

               "Marks" shall mean all right, title and interest in and to any
United States or foreign trademarks, service marks and trade names now held or
hereafter acquired by any Grantor, including any registration or application for
registration of any trademarks and service marks now held or hereafter acquired
by a Grantor, which are registered in the United States Patent and Trademark
Office or the equivalent thereof in any State of the United States or in any
foreign country, as well as any unregistered marks used by any Grantor, and any
trade dress including logos, designs, company names, business names, fictitious
business names and other business identifiers used by any Grantor in the United
States or any foreign country, to the extent the grant by an Grantor of a
security interest pursuant to this Agreement thereto is not prohibited by any
contract creating the Grantor's rights therein without the consent of any other
party thereto or would not give any other party to such contract the right to
terminate its obligations thereunder.

               "Non-Cash Equivalents" shall mean all property and assets
including securities, other than Cash and Marketable Securities.

               "Noticed Event of Default" shall mean (i) an Event of Default
with respect to the Borrower under Section 9.05 of the Credit Agreement and (ii)
any other Event of Default in respect of which the Collateral Agent has given
the Borrower notice that such Event of Default constitutes a "Noticed Event of
Default."

               "Obligations" shall mean (i) the full and prompt payment when due
(whether at stated maturity, by acceleration or otherwise) of all obligations
(including obligations which, but for the automatic stay under Section 362(a) of
the Bankruptcy Code, would become due) and liabilities of each Grantor, now
existing or hereafter incurred under, arising out of or in connection with any
Credit Document to which it is a party and the due performance and compliance by
such Grantor with the terms of each such Credit Document (all such obligations
and liabilities under this clause (i), except to the extent consisting of
obligations or indebtedness with respect to Interest Rate Agreements, being
herein collectively called the "Credit Document Obligations"); (ii) the full and
prompt payment when due (whether at the stated maturity, by acceleration or
otherwise) of all obligations (including obligations which, but for the
automatic stay under Section 362(a) of the Bankruptcy Code, would become due)
and liabilities of each Grantor, now existing or hereafter incurred under,
arising out of or in connection with any Secured Interest Rate Agreement,
including all obligations, if any, under a Guaranty in respect of any Secured
Interest Rate Agreement (all such obligations and indebtedness under this clause
(ii) being herein collectively called the "Interest Rate Obligations"); (iii)
any and all sums advanced by the Collateral Agent or Pledgee in order to
preserve the Collateral or preserve its security interest in the Collateral;
(iv) in the event of any proceeding for the collection or enforcement of any
indebtedness, obligations, or liabilities of each Grantor referred to in clauses
(i), (ii), (iii) and (iv), after an Event of Default shall have occurred and be
continuing, the reasonable expenses of re-taking, holding, preparing for sale or
lease, selling or otherwise disposing of or realizing on the Collateral, or of
any exercise by the Collateral Agent or Pledgee of its rights hereunder,
together with reasonable attorneys' fees and court costs; and (v) all amounts
paid by any

                                      -20-

<PAGE>

                                                                       Exhibit I
                                                                         Page 21

Indemnitee as to which such Indemnitee has the right to reimbursement under
Section 8.1 of this Agreement.

               "Patents" shall mean any United States or foreign patent to which
any Grantor now or hereafter has title and any divisions or continuations
thereof, as well as any application for a United States or foreign patent now or
hereafter made by such Grantor.

               "Pledge Agreement" shall mean the Pledge Agreement, dated as of
the date hereof, among Holdings, the Borrower, the other pledgors party thereto
and the Collateral Agent, as Pledgee.

               "Pledgee" shall have the meaning provided in the Pledge
Agreement.

               "Proceeds" shall have the meaning assigned that term under the
UCC as in effect in the State of New York on the date hereof or under other
relevant law and, in any event, shall include, but not be limited to, (i) any
and all proceeds of any insurance, indemnity, warranty or guaranty payable to
the Collateral Agent or an Grantor from time to time with respect to any of the
Collateral, (ii) any and all payments (in any form whatsoever) made or due and
payable to a Grantor from time to time in connection with any requisition,
confiscation, condemnation, seizure or forfeiture of all or any part of the
Collateral by any governmental authority (or any person acting under color of
governmental authority) and (iii) any and all other amounts from time to time
paid or payable under or in connection with any of the Collateral.

               "Pro Rata Share" shall have the meaning provided in Section
                --- ----
7.4(b) of this Agreement.

               "Receivables" shall mean any "account" as such term is defined in
the UCC as in effect on the date hereof in the State of New York, now or
hereafter owned by a Grantor and, in any event, shall include, but shall not be
limited to, all of such Grantor's rights to payment for goods sold or leased or
services performed by such Grantor, whether now in existence or arising from
time to time hereafter, including, without limitation, rights evidenced by an
account, note, contract, security agreement, chattel paper, or other evidence of
indebtedness or security, together with (a) all security pledged, assigned,
hypothecated or granted to or held by such Grantor to secure the foregoing, (b)
all of such Grantor's right, title and interest in and to any goods, the sale of
which gave rise thereto, (c) all guarantees, endorsements and indemnifications
on, or of, any of the foregoing, (d) all powers of attorney for the execution of
any evidence of indebtedness or security or other writing in connection
therewith, (e) all books, records, ledger cards, and invoices relating thereto,
(f) evidences of the filing of financing statements and other statements and the
registration of other instruments in connection therewith and amendments
thereto, all notices to other creditors or secured parties, and certificates
from filing or other registration officers, (g) all credit information, reports
and memoranda relating thereto, and (h) all other writings related in any way to
the foregoing.

               "Requisite Creditors" shall have the meaning provided in Section
10.2 of this Agreement.

               "Secured Creditors" shall have the meaning provided in the second
WHEREAS clause of this Agreement.

                                      -21-

<PAGE>

                                                                       Exhibit I
                                                                         Page 22

               "Secured Interest Rate Agreements" shall have the meaning
provided in the second WHEREAS clause of this Agreement.

               "Significant Copyright" shall have the meaning provided in
Section 5.3 of this Agreement.

               "Significant Mark" shall have the meaning provided in Section 4.3
of this Agreement.

               "Significant Patent" shall have the meaning provided in Section
5.3 of this Agreement.

               "Subsidiary Guaranty" shall have the meaning provided in the
third WHEREAS clause to this Agreement.

               "Trade Secret Rights" shall mean the rights of a Grantor in any
Trade Secret it holds.

               "Trade Secrets" means any secretly held existing engineering and
other data, information, production procedures and other know-how relating to
the design, manufacture, assembly, installation, use, operation, marketing, sale
and servicing of any products or business of a Grantor worldwide whether written
or not written, to the extent the grant by an Grantor of a security interest
pursuant to this Agreement thereto is not prohibited by any contract creating
the Grantor's rights therein without the consent of any other party thereto or
would not give any other party to such contract the right to terminate its
obligations thereunder.

               "Underlying Investment" shall mean an investment or related
series of investments made by such Grantor in the equity interests of a Person
or group of affiliated Persons (which equity interests will not include when
made Margin Stock), and shall include any Non-Cash Equivalents received by such
Grantor in respect of such investment(s).

                                    ARTICLE X

                                  MISCELLANEOUS

               10.1 Notices. Except as otherwise specified herein, all notices,
                    -------
requests, demands or other communications to or upon the respective parties
hereto shall be deemed to have been duly given or made when delivered to the
party to which such notice, request, demand or other communication is required
or permitted to be given or made under this Agreement, addressed:

               (i)   if to any Grantor, at its address contained in the Credit
     Agreement (for the Borrower) or the Subsidiary Guaranty (for the other
     Grantors);

               (ii)  if to the Collateral Agent, at:

                                      -22-

<PAGE>

                                                                       Exhibit I
                                                                         Page 23

                         Bankers Trust Company
                         130 Liberty Street
                         New York, New York  10006
                         Mailstop NYC02-2706
                         Attn.:  Marguerite J. Sutton
                         Tel. No.: (212) 250 3505
                         Fax. No.: (212) 250 2577

               (iii) if to any Lender (other than the Collateral Agent), at such
     address as such Lender shall have specified in the Credit Agreement;

               (iv)  if to any Interest Rate Creditor, at such address as such
     Interest Rate Creditor shall have specified in writing to the Grantors and
     the Collateral Agent;

or at such other address as shall have been furnished in writing by any Person
described above to the party required to give notice hereunder.

               10.2 Waiver; Amendment. (a) None of the terms and conditions of
                    -----------------
this Agreement may be changed, waived, modified or varied in any manner
whatsoever unless in writing duly signed by the Collateral Agent (with the
consent of the Required Lenders or, to the extent required by Section 12.12 of
the Credit Agreement, all of the Lenders) and each Grantor affected thereby (it
being understood that the addition or release of any Grantor hereunder shall not
constitute a change, waiver, modification or variance affecting any Grantor
other than the Borrower and the Grantor so added or released) provided that (i)
no such change, waiver, modification or variance shall be made to Section 7.4 or
this Section 10.2(a) without the consent of each Secured Creditor adversely
affected thereby, and (ii) any change, waiver, modification or variance
affecting the rights and benefits of a single Class of Secured Creditors (and
not all Secured Creditors in a like or similar manner) shall require the written
consent of the Requisite Creditors of such Class of Secured Creditors. For the
purpose of this Agreement, the term "Class" shall mean each class of Secured
Creditors, i.e., whether (x) the Lender Creditors as holders of the Credit
Document Obligations or (y) the Interest Rate Creditors as holders of the
Interest Rate Obligations. For the purpose of this Agreement, the term
"Requisite Creditors" of any Class shall mean each of (x) with respect to the
Credit Document Obligations, the Required Lenders and (y) with respect to the
Interest Rate Obligations, the holders of at least a majority of all obligations
outstanding from time to time under the Secured Interest Rate Agreements.

               (b)  No delay on the part of the Collateral Agent in exercising
any of its rights, remedies, powers and privileges hereunder or partial or
single exercise thereof, shall constitute a waiver thereof. No notice to or
demand on any Grantor shall constitute a waiver of any of the rights of the
Collateral Agent to any other or further action without notice or demand to the
extent such action is permitted to be taken by the Collateral Agent without
notice or demand under the terms of this Agreement.

               10.3 Obligations Absolute. The obligations of each Grantor
                    --------------------
hereunder shall remain in full force and effect without regard to, and shall not
be impaired by, (a) any bankruptcy, insolvency, reorganization, arrangement,
readjustment, composition, liquidation or the like of any Grantor; (b) any
exercise or non-exercise, or any waiver of, any right, remedy,

                                      -23-

<PAGE>

                                                                       Exhibit I
                                                                         Page 24

power or privilege under or in respect of this Agreement or any other Credit
Document or any Secured Interest Rate Agreement except as specifically set forth
in a waiver granted pursuant to the restrictions of Section 10.2 hereof; or (c)
any amendment to or modification of any other Credit Document or any Secured
Interest Rate Agreement or any security for any of the Obligations; whether or
not any Grantor shall have notice or knowledge of any of the foregoing. The
rights and remedies of the Collateral Agent herein provided are cumulative and
not exclusive of any rights or remedies which the Collateral Agent would
otherwise have.

     10.4 Successors and Assigns. This Agreement shall be binding upon each
          ----------------------
Grantor and its successors and assigns and shall inure to the benefit of the
Collateral Agent and its permitted successors and assigns. All agreements,
statements, representations and warranties made by such Grantor herein or in any
certificate or other instrument delivered by each Grantor or on its behalf under
this Agreement shall be considered to have been relied upon by the Secured
Creditors and shall survive the execution and delivery of this Agreement, the
other Credit Documents and the Secured Interest Rate Agreements regardless of
any investigation made by the Secured Creditors on their behalf.

     10.5 Headings Descriptive. The headings of the several sections of this
          --------------------
Agreement are inserted for convenience only and shall not in any way affect the
meaning or construction of any provision of this Agreement.

     10.6 Severability. Any provision of this Agreement which is prohibited or
          ------------
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction.

     10.7 Governing Law. This Agreement and the rights and obligations of the
          -------------
parties hereunder shall be construed in accordance with and governed by the law
of the State of New York.

     10.8 Grantors' Duties. It is expressly agreed, anything herein contained to
          ----------------
the contrary notwithstanding, that each Grantor shall remain liable to perform
all of the obligations, if any, assumed by it with respect to the Collateral and
the Collateral Agent shall not have any obligations or liabilities with respect
to any Collateral by reason of or arising out of this Agreement, nor shall the
Collateral Agent be required or obligated in any manner to perform or fulfill
any of the obligations of any Grantor under or with respect to any Collateral.

     10.9 Termination; Release. (a) After the termination of the Total
          --------------------
Commitment and all Secured Interest Rate Agreements, when no Note or Letter of
Credit (which has not been cash collateralized to the satisfaction of the
Administration Agent) is outstanding and when all Loans and other Obligations
(other than indemnities not at the time owed) have been paid in full, this
Agreement shall terminate (provided that all indemnities set forth herein
including, without limitation, in Section 8.1 hereof shall survive such
termination), and the Collateral Agent, at the request and expense of the
relevant Grantor, will execute and deliver to such Grantor a proper instrument
or instruments (including UCC termination statements on form UCC-3)
acknowledging the satisfaction and termination of this Agreement, and will duly
assign, transfer

                                      -24-

<PAGE>

                                                                       Exhibit I
                                                                         Page 25

and deliver to such Grantor (without recourse and without any representation or
warranty) such of the Collateral as may be in the possession of the Collateral
Agent and as has not theretofore been sold or otherwise applied or released
pursuant to this Agreement.

    (b)   So long as no payment default on any of the Obligations is in
existence or would exist after the application of proceeds as provided below,
the Collateral Agent shall, at the request of the relevant Grantor, release any
or all of the Collateral, provided that (x) such release is permitted by the
terms of the Credit Agreement (it being agreed for such purposes that a release
will be deemed "permitted by the terms of the Credit Agreement" if the proposed
transaction constitutes an exception to Section 8.02 of the Credit Agreement) or
otherwise has been approved in writing as required under the Credit Agreement or
otherwise by the Required Lenders and (y) the proceeds of such Collateral are
applied as required pursuant to the Credit Agreement if applicable or any
consent or waiver with respect thereto.

    (c)   At any time that the relevant Grantor desires that the Collateral
Agent take any action to give effect to any release of Collateral pursuant to
the foregoing Section 10.9(b), it shall deliver to the Collateral Agent a
certificate signed by an authorized officer describing the Collateral to be sold
and the relevant provision of Section 8.02 of the Credit Agreement on which it
is relying to make such sale. In the event that any part of the Collateral is
released as provided in the preceding paragraph (b), the Collateral Agent, at
the request and expense of such Grantor, will duly release such Collateral and
assign, transfer and deliver to such Grantor or its designee (without recourse
and without any representation or warranty) such of the Collateral as is then
being (or has been) so sold or released and as may be in the possession of the
Collateral Agent and has not theretofore been released pursuant to this
Agreement. The Collateral Agent shall have no liability whatsoever to any
Secured Creditor as the result of any release of Collateral by it as permitted
by this Section 10.9. Upon any release of Collateral pursuant to Section 10.9(a)
or (b), none of the Secured Creditors shall have any continuing right or
interest in such Collateral, or the proceeds thereof.

    10.10 Collateral Agent. By accepting the benefits of this Agreement, each
          ----------------
Secured Creditor acknowledges and agrees that the rights and obligations of the
Collateral Agent shall be as set forth in Section 11 of the Credit Agreement.
Notwithstanding anything to the contrary contained in Section 10.2 of this
Agreement or Section 12.12 of the Credit Agreement, this Section 10.10, and the
duties and obligations of the Collateral Agent set forth in this Section 10.10,
may not be amended or modified without the consent of the Collateral Agent.

    10.11 Counterparts. This Agreement may be executed in any number of
          ------------
counterparts and by the different parties hereto on separate counterparts, each
of which when so executed and delivered shall be an original, but all of which
shall together constitute one and the same instrument. A set of counterparts
executed by all the parties hereto shall be lodged with the Borrower and the
Collateral Agent.

    10.12 Additional Grantors. It is understood and agreed that any Subsidiary
          -------------------
of Holdings that is required to execute a counterpart of this Agreement after
the date hereof pursuant to the Credit Agreement shall become a Grantor
hereunder by executing a counterpart hereof and delivering the same to the
Collateral Agent.

                                      -25-

<PAGE>

                                                                       Exhibit I
                                                                         Page 26

                                     *  *  *

                                      -26-

<PAGE>

     IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed and delivered by their duly authorized officers as of the date first
above written.

Addresses:

1001 Pennsylvania Avenue, N.W.      IRON HORSE INVESTORS, L.L.C.,
Suite 220 South                     as Grantor
Washington, D.C. 20004
Telecopy No.: 202-347-9250
                                    By /s/ Adam Palmer
                                       -------------------------------
                                       Title: Vice President

1001 Pennsylvania Avenue, N.W.      UNITED DEFENSE INDUSTRIES, INC.,
Suite 220 South                     as Grantor
Washington, D.C. 20004
Telecopy No.: 202-347-9250
                                    By /s/ Francis Raborn
                                       -------------------------------
                                       Title: Vice President &
                                              Chief Financial Officer

1001 Pennsylvania Avenue, N.W.      UDLP HOLDINGS CORP.,
Suite 220 South                     as Grantor
Washington, D.C. 20004
Telecopy No.: 202-347-9250
                                    By /s/ Francis Raborn
                                       -------------------------------
                                       Title: Vice President &
                                              Chief Financial Officer

1001 Pennsylvania Avenue, N.W.      UNITED DEFENSE, L.P.,
Suite 220 South                     as Grantor
Washington, D.C. 20004
Telecopy No.: 202-347-9250          By: UDLP Holdings Corp.,
Attention: Allan M. Holt            its General Partner


                                    By /s/ Francis Raborn
                                       -------------------------------
                                       Title: Member of the Management
                                              Committee

                                      -27-

<PAGE>

425 East Alongon Road                      BARNES & REINECKE, INC.
Arlington Heights, IL 60005-4683           as Grantor

                                           By /s/ Francis Raborn
                                              --------------------------------
                                              Title: Vice President &
                                                     Chief Financial Officer

130 Liberty Street                         BANKERS TRUST COMPANY
New York, New York 10006                   as Collateral Agent,
Attention: Meg Sutton                      as Assignee
Tel: 212-250-3505
Fax: 212-250-7218
                                           By /s/ Paddy Dowling
                                              --------------------------------
                                              Title: Vice President

<PAGE>

                                                                         ANNEX A
                                                                              TO
                                                              SECURITY AGREEMENT
                                                              ------------------

              SCHEDULE OF CHIEF EXECUTIVE OFFICES; RECORD LOCATIONS

<PAGE>

                                                                         ANNEX B
                                                                              TO
                                                              SECURITY AGREEMENT
                                                              ------------------

                  SCHEDULE OF INVENTORY AND EQUIPMENT LOCATIONS
                  ---------------------------------------------

<PAGE>

                                                                         ANNEX C
                                                                              TO
                                                              SECURITY AGREEMENT
                                                              ------------------

                SCHEDULE OF JURISDICTION AND TYPE OF ORGANIZATION
                -------------------------------------------------

<PAGE>

                                                                         ANNEX D
                                                                              TO
                                                              SECURITY AGREEMENT
                                                              ------------------


                     SCHEDULE OF TRADE AND FICTITIOUS NAMES
                     --------------------------------------

                                     [NONE]

<PAGE>

                                                                         ANNEX E
                                                                              TO
                                                              SECURITY AGREEMENT
                                                              ------------------

                                SCHEDULE OF MARKS
                                -----------------

1.   See attached pages.



<PAGE>

                                                                         ANNEX F
                                                                              TO
                                                              SECURITY AGREEMENT
                                                              ------------------



                   SCHEDULE OF PATENTS AND PATENT APPLICATIONS
                   -------------------------------------------

1.   See attached pages.

<PAGE>

                                                                         ANNEX G
                                                                              TO
                                                              SECURITY AGREEMENT
                                                              ------------------


                SCHEDULE OF COPYRIGHTS AND COPYRIGHT APPLICATIONS
                -------------------------------------------------

1.   See attached pages.

<PAGE>

                                                                       EXHIBIT J
                                                                       ---------

                      [LETTERHEAD OF CT CORPORATION SYSTEM]
                       -----------------------------------



                                                                          [Date]


To the Administrative Agent
   and the Lenders party to the
   Credit Agreement referred to
   below and the Administrative Agent under
   the Subsidiary Guaranty referred to below:

Ladies and Gentlemen:

                  Reference is made to (i) the Credit Agreement, dated as of
________ __, 2001, among Iron Horse Investors, L.L.C. ("Holdings"), United
Defense Industries, Inc. (the "Borrower"), the lenders from time to time party
thereto (the "Lenders"), Bankers Trust Company, as Administrative Agent (the
"Administrative Agent"), Lehman Commercial Paper Inc., as Syndication Agent and
Citicorp USA, Inc., The Bank of Nova Scotia and Credit Lyonnais New York Branch
as Documentation Agents (as such Credit Agreement may be modified, supplemented
or amended from time to time, the "Credit Agreement") and (ii) the Subsidiary
Guaranty, dated as of August 13, 2001, made by each Subsidiary Guarantor (as
such Subsidiary Guaranty may be amended, modified or supplemented from time to
time, the "Subsidiary Guaranty"). Unless otherwise defined herein, capitalized
terms used in this letter shall have the meanings set forth in the Credit
Agreement.

                  Pursuant to Section 12.08 of the Credit Agreement, Holdings
and the Borrower, and pursuant to Section 20 of the Subsidiary Guaranty, each
Subsidiary Guarantor, has irrevocably designated, appointed and empowered the
undersigned, CT Corporation System, with offices currently located at 111 Eighth
Street, New York, New York 10011, as its authorized designee, appointee and
agent to receive, accept and acknowledge for and on its behalf, and in respect
of its property, service of any and all legal process, summons, notices and
documents which may be served in any such action or proceeding brought in the
courts of the State of New York or of the United States of America for the
Southern District of New York with respect to (i) in the case of each of
Holdings and the Borrower, the Credit Agreement and each other Credit Document
to which it is a party and (ii) in the case of any Subsidiary Guarantor, the
Subsidiary Guaranty and each other Credit Document to which it is a party.

                  The undersigned hereby informs you that it irrevocably accepts
such appointment as agent as set forth in Section 12.08 of the Credit Agreement
and Section 20 of the Subsidiary Guaranty and agrees with you that the
undersigned (i) shall inform the Administrative Agent promptly in writing of any
change of its address in New York City, (ii) shall perform its obligations as
such process agent in accordance with the provisions of Section 12.08 of the
Credit Agreement and Section 20 of the Subsidiary Guaranty and (iii) shall
forward promptly to Holdings, the Borrower or the Subsidiary Guarantor, as the
case may be, any legal process, summons, notices and documents received by the
undersigned in its capacity as process agent.

<PAGE>

                  As process agent, the undersigned, and its successor or
successors, agree to discharge the above-mentioned obligations and will not
refuse fulfillment of such obligations under Section 12.08 of the Credit
Agreement or Section 20 of the Subsidiary Guaranty, as the case may be.

                                             Very truly yours,

                                             CT CORPORATION SYSTEM



                                             By________________________________
                                                Name:
                                                Title:

                                      -2-

<PAGE>

                                                                       EXHIBIT K
                                                                       ---------



                   FORM OF ASSIGNMENT AND ASSUMPTION AGREEMENT
                   -------------------------------------------

         This Assignment and Assumption Agreement (the "Assignment"), is dated
as of the Effective Date set forth below and is entered into by and between the
Assignor identified in item 1 below (the "Assignor") and the Assignee identified
in item 2 below (the "Assignee"). Capitalized terms used herein but not defined
herein shall have the meanings given to them in the Credit Agreement identified
below (as amended, restated, supplemented or otherwise modified from time to
time, the "Credit Agreement"), receipt of a copy of which is hereby acknowledged
by the Assignee. The Standard Terms and Conditions set forth in Annex 1 hereto
(the "Standard Terms and Conditions") are hereby agreed to and incorporated
herein by reference and made a part of this Assignment as if set forth herein in
full.

         For an agreed consideration, the Assignor hereby irrevocably sells and
assigns to the Assignee, and the Assignee hereby irrevocably purchases and
assumes from the Assignor, subject to and in accordance with the Standard Terms
and Conditions and the Credit Agreement, as of the Effective Date inserted by
the Administrative Agent as contemplated below, the interest in and to all of
the Assignor's rights and obligations under the Credit Agreement and any other
documents or instruments delivered pursuant thereto that represents the amount
and percentage interest identified below of all of the Assignor's outstanding
rights and obligations under the respective facilities identified below
(including, to the extent included in any such facilities, Letters of Credit and
Swingline Loans) (the "Assigned Interest"). Such sale and assignment is without
recourse to the Assignor and, except as expressly provided in this Assignment,
without representation or warranty by the Assignor.

1.       Assignor:


2.       Assignee:


3.       Credit Agreement:           Credit Agreement, dated as of August 13,
                                     2001, among Iron Horse Investors, L.L.C.,
                                     United Defense Industries, Inc. (the
                                     "Borrower"), the Lenders from time to time
                                     party thereto, Bankers Trust Company, as
                                     Administrative Agent, Lehman Commercial
                                     Paper, Inc. as Syndication Agent and
                                     Citicorp USA, Inc., The Bank of Nova Scotia
                                     and Credit Lyonnais New York Branch as
                                     Documentation Agents.

<PAGE>

                                                                          Page 2

4.   Assigned Interest:

<TABLE>
<CAPTION>
                                                  Aggregate                Amount of               Percentage
          Facility                          Amount of Commitment /     Commitment / Loans    Assigned of Commitment
          Assigned                          Loans for all Lenders           Assigned               / Loans/1/
----------------------------               ------------------------   -------------------- -------------------------
<S>                                        <C>                        <C>                  <C>
Revolving Loan Commitment /
 Revolving Loans                                      $                        $                   %

A Term Loans                                          $                        $                   %

B Term Loans                                          $                        $                   %
</TABLE>


5.   Effective Date:                        _____, 200_


The terms set forth in this Assignment are hereby agreed to:

NAME OF ASSIGNOR,
as Assignor


By:  ________________________

     ________________________
      (Print Name and Title)

NAME OF ASSIGNEE,
as Assignee


By:  ________________________

     ________________________
      (Print Name and Title)


_______________________________

/1/  Set forth, to at least 9 decimals, as a percentage of the Assignor's
interest in the aggregate Commitment/Loans thereunder.

<PAGE>

                                                                          Page 3

Assignor Instructions:
Payment:                              ________________________

                                      ________________________

                                      ________________________
                                      Reference: United Defense Industries, Inc.


Notice:                               ________________________

                                      ________________________

                                      ________________________
                                      Reference: United Defense Industries, Inc.


Assignee Instructions:
Payment:                              ________________________

                                      ________________________

                                      ________________________
                                      Reference: United Defense Industries, Inc.


Notice:                               ________________________

                                      ________________________

                                      ________________________
                                      Reference: United Defense Industries, Inc.


[Consented to and Accepted:

BANKERS TRUST COMPANY,
as Administrative Agent

By:  ________________________

     ________________________
      (Print Name and Title)


<PAGE>

                                                                          Page 4

UNITED DEFENSE INDUSTRIES, INC.,
  as Borrower

By:      ____________________________

         ____________________________
         (Print Name and Title)]/2/


_____________________________

/2/   Consents (which shall not be unreasonably withheld) of the Administrative
Agent and the Borrower are required in connection with any assignment subject to
the exceptions identified in clause (y) of Section 12.04(b) of the Credit
Agreement.

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                                                                         ANNEX 1
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                                                                          Page 1

                                     ANNEX I
                         UNITED DEFENSE INDUSTRIES, INC.

                                CREDIT AGREEMENT

                        STANDARD TERMS AND CONDITIONS FOR
                       ASSIGNMENT AND ASSUMPTION AGREEMENT

1.       Representations and Warranties.
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         1.1. Assignor. The Assignor (a) represents and warrants that (i) it is
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the legal and beneficial owner of the Assigned Interest, (ii) the Assigned
Interest is free and clear of any lien, encumbrance or other adverse claim and
(iii) it has full power and authority, and has taken all action necessary, to
execute and deliver this Assignment and to consummate the transactions
contemplated hereby; and (b) assumes no responsibility with respect to (i) any
statements, warranties or representations made in or in connection with any
Credit Document, (ii) the execution, legality, validity, enforceability,
genuineness, sufficiency or value of the Credit Agreement, any other Credit
Document or any other instrument or document delivered pursuant thereto, other
than this Assignment, or any collateral thereunder, (iii) the financial
condition of Holdings, any of its Subsidiaries or Affiliates or any other Person
obligated in respect of any Credit Document or (iv) the performance or
observance by Holdings, any of its Subsidiaries or Affiliates or any other
Person of any of their respective obligations under any Credit Documents.

         1.2. Assignee. The Assignee (a) represents and warrants that (i) it has
              --------
full power and authority, and has taken all action necessary, to execute an
deliver this Assignment and to consummate the transactions contemplated hereby
and to become a Lender under the Credit Agreement, (ii) it meets all
requirements of an Eligible Transferee under the Credit Agreement, (iii) from
and after the Effective Date, it shall be bound by the provisions of the Credit
Agreement and, to the extent of the Assigned Interest, shall have the
obligations of a Lender thereunder, (iv) it has received a copy of the Credit
Agreement, together with copies of the most recent financial statements
delivered pursuant to Section 7.01(a) thereof, as applicable, and such other
documents and information as it has deemed appropriate to make its own credit
analysis and decision to enter into this Assignment and to purchase the Assigned
Interest on the basis of which it has made such analysis and decision and (v) if
it is organized under the laws of a jurisdiction outside the United States,
attached to this Assignment is any documentation required to be delivered by it
pursuant to the terms of the Credit Agreement, duly completed and executed by
the Assignee; and (b) agrees that (i) it will, independently and without
reliance on the Administrative Agent, the Assignor or any other Lender, and
based on such documents and information as it shall deem appropriate at the
time, continue to make its own credit decisions in taking or not taking action
under the Credit Documents, and (ii) it will perform in accordance with their
terms all of the obligations which by the terms of the Credit Documents are
required to be performed by it as a Lender.

2.       Payment. From and after the Effective Date, the Administrative Agent
         -------
shall make all payment in respect of the Assigned Interest (including payments
of principal, interest, fees and other amounts) to the Assignor for amounts
which have accrued to but excluding the Effective Date and to the Assignee for
amounts which have accrued from and after the Effective Date.

3.       General Provisions. This Assignment shall be binding upon, and inure to
         ------------------
the benefit of, the parties hereto and their respective successors and assigns.
This Assignment may be executed in any number of counterparts, which together
shall constitute one instrument. Delivery of an executed counterpart of a
signature page of this Assignment by telecopy shall be effective as delivery of
a manually executed counterpart of this Assignment. THIS ASSIGNMENT SHALL BE
GOVERNED BY, AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAW OF THE STATE
OF NEW YORK (INCLUDING SECTION 5-1401 OF THE GENERAL OBLIGATIONS).

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