Employment Agreement - United Defense LP and Francis ""Buzz"" Raborn


 
                              UNITED DEFENSE, L.P.

                                  June 30, 1997

Francis 'Buzz' Raborn

             Re:   Executive Compensation Agreement

Dear Buzz:

            This Letter Agreement serves to confirm the discussion between Larry
D. Brady and you ('Executive') concerning the decision of the Board of Directors
of FMC Corporation ('FMC' or the 'General Partner'), the general partner of
United Defense, L.P. (the 'Company'), to (i) solicit potential buyers for a
possible sale of the outstanding general partner interests, or outstanding
general partner and limited partner interests, of the Company (a 'Sale of the
Company') and (ii) to consider a spin-off of the Company in a transaction or
series of related transactions pursuant to which the stockholders of FMC would
become the holders of FMC's equity interests in the Company as a result of a
distribution of such interests (a 'Spin-Off'). Each of a Sale of the Company and
a Spin-Off are referred to herein as a 'Transaction.' In connection with such
decision, the Company hereby agrees with Executive, effective as of the date
written above, to the following terms and conditions set forth in this Letter
Agreement.

1.    Compensation Arrangements. In consideration of Executive's agreement to
      cooperate with the General Partner in pursuing a Transaction and to
      fulfill Executive's other obligations set forth in this Letter Agreement,
      Executive shall be entitled to receive the payments and benefits described
      below:

      (a)   Performance Incentive: If a Transaction is consummated, Executive
            shall be entitled to a bonus (the 'Performance Incentive Bonus') of
            $150,000 payable 30 days after the consummation of such Transaction
            (the 'Final Transaction Date'); provided, however, that (i) the
            Performance Incentive Bonus shall not be payable if, prior to the
            Final Transaction Date, Executive's employment with the Company is
            voluntarily terminated without Good Reason or is involuntarily
            terminated for Cause and (ii) the Performance Incentive Bonus shall
            be payable if Executive's employment is voluntarily terminated with
            Good Reason or involuntarily terminated not for Cause prior to the
            Final Transaction Date. Notwithstanding the foregoing and paragraph
            1(b) below, both the Performance Incentive Bonus and the Premium
            Incentive Bonus (as defined in such paragraph 1(b)) shall be payable
            if Executive voluntarily terminates his employment prior to the
            Final Transaction Date in order to accept an offer of employment
            from FMC.

      (b)   Premium Incentive: If a Sale of the Company is consummated (but not
            a Spin-Off), Executive shall be entitled to a bonus (the 'Premium
            Incentive Bonus') in an amount ranging from $0 to $150,000 based on
            the price obtained for such Sale of the Company and Executive's
            contribution to the process of consummating such Sale of

 
            the Company, as determined by Larry D. Brady and Thomas W. Rabaut in
            their sole discretion. Any Premium Incentive Bonus shall be payable
            30 days after the Final Transaction Date; provided, however, that
            (i) the Premium incentive Bonus shall not be payable if, prior to
            the Final Transaction Date, Executive's employment with the Company
            is voluntarily terminated without Good Reason or is involuntarily
            terminated for Cause and (ii) the Premium Incentive Bonus shall be
            payable if Executive is voluntarily terminated with Good Reason or
            involuntarily terminated not for Cause prior to the Final
            Transaction Date.

      (c)   Severance Pay: Subject to consummation of a Sale of the Company (but
            not a Spin-Off), if Executive is terminated by the Company not for
            Cause, or if Executive voluntarily terminates his employment with
            the Company with Good Reason, at any time after the Final
            Transaction Date up to and including the two-year anniversary of the
            Final Transaction Date, Executive shall be entitled to receive from
            the Company the following:

            (i)   An amount equal to Executive's annualized base salary in
                  effect at the effective time of such termination plus an
                  amount equal to Executive's (A) earned and unused and (B)
                  accrued vacation pay through the effective time of such
                  termination plus an amount calculated to provide Executive
                  with $150,000 on an after-tax basis.

            (ii)  An amount equal to the greater of (A) Executive's target bonus
                  established for the plan period commencing January 1, 1997 and
                  (B) Executive's target bonus established for the plan period
                  commencing in the year of such termination.

            (iii) A continuation of the welfare benefits of health care
                  (including dental insurance coverage), life and accidental
                  death and dismemberment and long-term disability insurance
                  coverage for one full year after the effective time of such
                  termination. These benefits shall be provided to Executive at
                  the same premium cost, and at the same coverage level, as in
                  effect as of the effective time of such termination. However,
                  in the event the premium cost and/or level of coverage shall
                  change for all employees of the Company, or for management
                  employees with respect to supplemental benefits, the cost
                  and/or coverage level, as applicable, shall change for
                  Executive in a corresponding manner.

            (iv)  Executive outplacement assistance in accordance with FMC's
                  customary practices for persons in Executive's employment
                  position from the outplacement firm employed by FMC as of the
                  effective time of such termination.


                                      -2-

 
            (v)   If applicable, the Company will provide or cause to be
                  provided to Executive supplemental pension benefits equal to
                  the difference between the pension benefits actually payable
                  under the Company and/or FMC pension plan applicable to
                  Executive and the pension benefits which would have been
                  payable had Executive accrued employment service through the
                  age of 55 prior to receipt of pension benefits.

            Executive shall also be entitled to receive severance benefits under
            this paragraph 1(c) upon voluntary termination of employment with
            the Company prior to the Final Transaction Date if the buyer of
            partnership interests of the Company ('Buyer') indicates in writing
            to FMC prior to the Final Transaction Date that Buyer intends to
            cause the Company to terminate Executive following the Final
            Transaction Date, unless Executive accepts an offer of employment
            with FMC prior to the Final Transaction Date. A liquidation or
            dissolution of the Company in connection with a Sale of the Company
            or as part of the integration of the operations of the Company and
            Buyer shall not be deemed to involve a termination of Executive for
            purposes of this paragraph 1(c), but in such event this paragraph
            1(c) is intended to apply to and be binding on the successor of the
            Company.

      (d) FMC 1995 Management Incentive Plan:

            (i)   Bonus Performance Incentive Award. Whether or not Executive
                  completes the Three-Year Period (as defined in the FMC 1995
                  Management Incentive Plan (the 'MIP')) ending December 31,
                  1997 as an employee of the Company, Executive shall receive a
                  BPI Award (as defined below) with respect to such Three-Year
                  Period based on the greater of the at-target performance and
                  the actual performance of the Company for such Three-Year
                  Period. Such BPI Award shall be reduced by the amount of the
                  draw against such BPI Award previously paid to Executive and,
                  as so reduced, shall be payable at the time when FMC makes
                  payment of the BPI Awards to other participants in the MIP.
                  For purposes of this Letter Agreement, the term 'BPI Award'
                  shall mean a Three-Year Incentive Award within the meaning of
                  the MIP.

            (ii)  Annual Performance Incentive Award. Whether or not Executive
                  completes the calendar year ending December 31, 1997 as an
                  employee of the Company, Executive shall receive an annual
                  performance incentive award with respect to such period based
                  on a review of Executive's performance during such period.
                  Such annual performance incentive award shall be payable at
                  the time when FMC makes payment of the annual performance
                  incentive awards to other participants in the MIP.


                                      -3-

 
      (e)   Equity Incentive Awards: Notwithstanding any contrary term contained
            in any applicable FMC stock option plan (the 'Option Plan') or any
            applicable stock option agreement, but subject to the approval of
            the Compensation and Organization Committee of the Board of
            Directors of FMC or any other appropriate committee, Executive shall
            have the right to exercise any outstanding stock options granted to
            him under the Option Plan that are vested as of the Final
            Transaction Date within the earlier of (A) two years from the Final
            Transaction Date and (B) the scheduled expiration date of such
            options under the Option Plan and the applicable stock option
            agreements.

2. Obligations of Executive:

      (a)   Nondisclosure of Transaction Matters. Except as required by any
            court or governmental entity, Executive agrees not to disclose or
            discuss with any person (regardless of any termination of this
            Letter Agreement or any determination by FMC to no longer pursue a
            Transaction) the existence or terms of this Letter Agreement, the
            fact that a Transaction is being considered, the terms or conditions
            of a Transaction or the status of any Transaction discussions or
            negotiations; provided, however, that (i) Executive shall be free to
            consult with the other officers of the Company or with his or their
            legal counsel, accountants and financial advisors in connection with
            this Letter Agreement and any Transaction; and (ii) Executive shall
            be free to disclose and discuss such matters in connection with any
            Transaction as authorized by FMC officials leading FMC's efforts in
            connection with any such Transaction.

      (b)   Executive Cooperation in Transaction Efforts. Executive agrees to
            cooperate with the partners of the Company in their respective
            efforts to negotiate and close a Transaction, regardless of whether
            Executive or any other member of the management of the Company
            ('Management') becomes a participant in such Transaction. Without
            limiting the generality of the foregoing, (i) Executive shall not
            take any action which could be reasonably expected to give
            Management or any investors who propose to participate with
            Management in a Transaction an advantage over other potential
            participants in such Transaction or any alternative Transaction;
            (ii) Executive shall make himself available at FMC's request from
            time to time to answer questions and provide information to
            potential participants in a Transaction, which shall be done in a
            manner consistent with the policies, procedures and guidelines
            established by FMC; and (iii) Executive shall otherwise promote any
            Transaction consistent with his duty to act in the best interest of
            the Company and shall continue his flanctional responsibilities and
            assist FMC in connection with the negotiation and consummation of
            any such Transaction, consistent with Executive's demonstrated
            capabilities.

      (c)   Representations and Warranties Relating to any Transaction.
            Executive understands that FMC and/or the limited partner of the
            Company may decide to make certain


                                      -4-

 
            representations and warranties relating to the business and
            operations of the Company to participants in a Transaction under the
            terms of the definitive agreements with such participants (the
            'Definitive Agreements') Executive agrees that, prior to the
            execution of the Definitive Agreements and prior to the closing of
            any such Transaction, Executive will (i) review all such
            representations and warranties and (ii) certify in writing to FMC
            and/or the limited partner of the Company (the 'Certificate') (A)
            that Executive knows of no material misstatement or omission
            contained in such representations and warranties or (B) that
            Executive has identified to FMC and/or the limited partner of the
            Company in writing any material misstatements or omissions contained
            in such representations and warranties. Executive understands and
            acknowledges that such certification is customary in connection with
            transactions such as such Transaction and that FMC will rely on such
            certification in executing the Definitive Agreement and in closing
            such Transaction.

3.    No Contract of Employment. This Letter Agreement is not a contract of
      employment. Nothing expressed or implied in this Letter Agreement shall
      create any right or duty of Executive's continued employment by FMC or the
      Company, and the Company reserves all rights to terminate Executive's
      employment at any time for or not for Cause, subject to the provisions
      hereof.

4.    Certain Definitions.

      (a)   The term 'Cause' as used herein shall mean (i) Executive's willful
            and continued failure to substantially perform his duties with the
            Company (other than any such failure resulting from disability or
            occurring after issuance by Executive of a notice of termination
            with Good Reason), after a written demand for substantial
            performance is delivered to Executive that specifically identifies
            the manner in which the Company believes that Executive has
            willfully failed to substantially perform his duties, and after
            Executive has failed to resume substantial performance of his duties
            on a continuous basis within thirty (30) calendar days of receiving
            such demand, (ii) the commission by Executive of an act of fraud,
            misappropriation, embezzlement or any other act involving moral
            turpitude or constituting a felony, or (iii) the commission by
            Executive of any act of dishonesty which injures the Company, any
            partner of the Company or Buyer, as the case may be.

      (b)   The term 'Good Reason' as used herein shall mean the occurrence of
            one or more of the following events without Executive's consent: (i)
            Executive's base salary as of the date hereof is reduced for any
            reason by more than 5% other than as a result of the termination of
            Executive's employment or (ii) after the Final Transaction Date,
            Executive's employment with the Company is not on terms comparable
            to Executive's employment with the Company as of the date hereof in
            terms of compensation, responsibility and authority. Executive shall
            notify the Company within 15 days after Executive knows of the
            occurrence of any event within the


                                      -5-

 
            meaning of clauses (i) or (ii) above and the Company may cure any
            such event and notify Executive thereof within 15 days of the
            Company's receipt of Executive's notice. Within 15 days after
            expiration of such 15-day period, Executive must voluntarily
            terminate his employment with the Company in order to be entitled to
            benefits hereunder.

5.    General Provisions: It is expressly understood and agreed: (i) that all of
      the terms and conditions of the compensation plans described in paragraph
      1 above are to remain in full force and effect as applied to Executive and
      (ii) that, except as specifically modified by this Letter Agreement, any
      payments and distributions made pursuant to paragraph 1 above are in lieu
      of any other payments which would otherwise be due under the same
      compensation plan for the same relevant time period. It is further
      understood and agreed that the following provisions shall apply to this
      Letter Agreement:

      (a)   Irreparable Harm. Executive acknowledges and agrees that the failure
            of Executive to comply with any of the terms of paragraph 2 will
            irreparably harm the Company and that money damages would not
            adequately compensate them for such harm. Thus, Executive agrees
            that, in addition to any other remedies that the Company may have
            hereunder or otherwise, the Company shall be entitled to injunctive
            or other equitable relief to restrain any breach by Executive of
            such terms, and further that the Company shall be entitled to apply
            for such relief in any court of competent jurisdiction without the
            posting of a bond or any other security.

      (b)   Assignment. Neither this Letter Agreement nor any of the rights,
            interests or obligations hereunder may be assigned by Executive.
            This Letter Agreement may be assigned by the Company and is intended
            to be binding on any successor to the Company.

      (c)   Governing Law. This Letter Agreement shall be governed by and
            construed in accordance with the laws of the State of Illinois
            without reference to the choice of law principles thereof

      (d)   Parol Integration. The rights and benefits granted pursuant to this
            Letter Agreement are in addition to, and not in lieu of, any rights
            and other benefits to which Executive may be entitled.

      (e)   Arbitration. Each of Executive and the Company hereby irrevocably
            agree that, except as provided in paragraph 5(a), any dispute
            arising out of or relating in any way to this Letter Agreement shall
            be settled solely by arbitration in the City of Chicago, Illinois to
            be administered by the American Arbitration Association in
            accordance with its then prevailing rules.

      (f)   Status of Payments. No payments made to Executive by the Company
            pursuant to this Letter Agreement (other than with respect to the
            MIP) shall be deemed to be


                                      -6-

 
            pensionable income or compensation for purposes of Executive's
            rights under the FMC and/or Company pension plan applicable to
            Executive.

                              *    *    *    *    *


                                      -7-

 
            If you agree that the foregoing correctly sets forth the agreement
between us, please sign the enclosed copy of this Letter Agreement in the space
indicated below and return it to the Company.

                                Very truly yours,

                                UNITED DEFENSE, L.P.

                                By:   FMC Corporation

                                Its:  General Partner 


                                      By: /s/ Thomas W. Rabaut
                                         ------------------------------

                                      Its: Vice President
                                         ------------------------------

Agreed to as of the day and 
year first written above:


/s/ Francis Raborn
-----------------------------
Francis 'Buzz' Raborn

7/6/97
-----------------------------
Date of Signature


                                      -8-

 
To: F. 'Buzz' Raborn

                    Re: Amendment to Executive Compensation Agreement 

Dear Buzz:

In connection with the Letter Agreement dated as of June 30, 1997, between you
('Executive') and United Defense L.P. (the 'Company'), the Company desires, in
order to more fully realize the objectives of the Letter Agreement, to amend the
same to clarify certain additional aspects of your compensation not addressed or
only partially addressed therein, as follows:

FMC Stock Option Plan: Certain options have been granted to you in connection
with such plan (the 'Option Plan') under one or more stock option agreements
which, among other things, ordinarily subject the right of exercise to the
condition precedent that Executive shall have been continuously employed by the
Company or one of its affiliates between the grant date for such options and
December 31, 1997. Regarding such options, the condition regarding such period
of continuous employment shall be deemed fully satisfied if Executive remains
continuously employed from the grant date until the earlier of December 31, 1997
or the Final Transaction Date.

Any terms not separately defined above shall have the same definitions set forth
In the Letter Agreement.

If you are in agreement with the foregoing, please execute both originals of
this Amendment, keep one original for your records, and return the other
original to the Company, whereupon the Letter Agreement shall become amended in
the manner set forth above.

                                           Very truly yours,

                                           UNITED DEFENSE, L.P.
                                           By FMC Corporation, acting as
                                           General Partner of United
                                           Defense, L.P., and acting for
                                           itself regarding the Option Plan


                                           By:  Thomas W. Rabaut
                                              -------------------------------

                                           Its:  Vice President  
                                              -------------------------------
Accepted and agreed to as of the
date and year first written above


/s/ F. Raborn
-----------------------------
F. 'Buzz' Raborn

7/22/97
-----------------------------
Date of Signature