UNITED DEFENSE, L.P. OPTION PLAN
1. Purpose of the Plan. This plan shall be known as United
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Defense L. P. Option Plan (the Plan). The purpose of the Plan
is to provide compensation incentives to eligible employees of
United Defense, L. P. (the Employer) and to attract and retain
the highest quality employees for positions of substantial
responsibility so as to promote the success of the Employer.
2. Definitions. As used herein, the following definitions shall
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apply:
(a) "Affiliated Group" shall mean (i) the Employer and (ii)
any corporation or unincorporated trade or business
(including an affiliate) in which the Employer and/or
one or more affiliates own either stock possessing at
least 80 percent of the total combined voting power of
all classes of stock entitled to vote or at least 80
percent of the total value of all shares of all classes
of stock (or in the case of an unincorporated trade or
business, or "controlling interest" as defined in
regulations under Section 414(c) of the Code).
(b) "Board" shall mean the governing board of the Employer.
(c) "Change in Control" means (1) the purchase or other
acquisition by any person, entity or group of persons,
within the meaning of Section 13(d) or 14(d) of the
Securities Exchange Act of 1934 ("the Act"), or any
comparable successor provisions, of beneficial ownership
(within the meaning of Rule 13d-3 under the Act) of
thirty percent (30%) or more of either the outstanding
shares of common stock or the combined voting power of
the Employer's then outstanding voting securities
entitled to vote generally, or (2) the approval by the
stockholders of the Employer of a reorganization, merger
or consolidation, in each case with respect to which
persons who were stockholders/owners of the Employer
immediately prior to such reorganization, merger or
consolidation do not, immediately thereafter, own more
than fifty percent (50%) of the combined voting power
entitled to vote generally in the election of directors
of the reorganized, merged, or consolidated entity's
then outstanding securities, or (3) a liquidation or
dissolution of the Employer, or (4) the sale of
substantially all of the Employer's assets. In the case
of a Change in Control event affecting an Employer that
is not the common law Employer of the Participant, such
event shall be deemed to constitute a Change in Control
only if the Change in Control event affects an Employer
that owns, directly or through one or more controlled
entities, the stock or other equity interests of the
Participant's common law Employer.
(d) Code" shall mean the Internal Revenue Code of 1986, as
amended.
(e) "Company Contributions" shall mean "Company Contributions,"
as defined in Section 19(k) of the Qualified Plan.
(f) "Compensation" shall mean a Participant's wages for the
Plan Year for services rendered to the Employer, as
described in Treas. Reg. 1.415-2(d)(11)(i), but
(i) including compensation deferred under the
Qualified Plan and amounts not includible in
gross income by reason of Code sections 125,
402(a)(8), 402(h), and 403(b), and
(ii) excluding all reimbursements or other expense
allowances, income from the exercise of stock
options, fringe benefits
(cash or non-cash), moving expenses and welfare
benefits (including severance benefits), even if
includible in gross income, except that short
term disability, salary continuation, and
vacation pay will not be excluded.
(g) "Employee" shall mean any employee of the Employer.
(h) "Employee Benefits Committee" or "EB Committee" shall mean
the so-named committee (i) created by the Management
Committee by resolution adopted December 31, 1997, (ii)
authorized by subsequent Management Committee resolution to
administer this Plan, and (iii) composed from time to time
of individuals designated as its members by the Management
Committee.
(e) "Employee Contributions" shall mean "Employee-Elected
Company Contributions," as defined in Section 19(q) of the
Qualified Plan, and "Special Employee Contributions," as
defined in Section 19(mm) of the Qualified Plan.
(f) "Employer" shall mean United Defense, L. P. or UDLP
Holdings Corp.
(g) "Employer Credit" shall mean an amount that the Employer
credits on behalf of the Participant pursuant to Section 6
of this Plan at the time an Option is granted.
(h) "Employer Matching Contribution" shall mean an amount that
the Employer will provide under this Plan to a Participant
only if and when the Participant chooses to exercise an
Option granted pursuant to this Plan.
(i) "Fair Market Value" shall mean, for any particular day, the
closing price of the share on such date, unless the
Management Committee, in its sole discretion, shall
determine otherwise in a fair and uniform manner.
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(j) "Management Committee" shall mean the Management Committee
of United Defense, L. P.
(k) "Option" shall mean an option to purchase one or more
Shares granted pursuant to this Plan.
(m) "Option Agreement" means a written agreement evidencing the
award of an Option under the Plan.
(n) "Participant" shall mean any Employee who receives an
Option under the Plan, as evidenced by an Option Agreement
entered into between such Employee and the Employer.
(o) "Plan Year" shall mean the calendar year.
(p) "Prior Plan" shall mean the Amended and Restated UDLP
Supplemental Retirement and Savings Plan.
(q) "Qualified Plan" shall mean the UDLP Salaried Employees'
401(k) Plan, as amended from time to time.
(r) "Plan" shall mean the United Defense, L. P. Option Plan, as
amended from time to time.
(s) "Shares" shall mean the shares of mutual funds referenced
in the Option Agreement, but may in no way be expanded to
include units of any money market funds or other cash
equivalents.
(t) "Year of Service" shall mean a twelve (12) consecutive
month period during which the Employee is employed by the
Affiliated Group and paid by, or entitled to be paid by,
the Affiliated Group.
3. Establishment of Plan and Plan Year. The Plan as adopted by the
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Management Committee shall become effective January 1, 2001 and
shall continue in effect until terminated pursuant to paragraph
15 below.
4. Shares Subject to the Plan. The aggregate number and type of
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Shares subject to Options shall be fully described in each
Option Agreement.
5. Eligibility. All Employees of the Employer who are designated
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by the Management Committee or its designee are eligible to
receive Options under the Plan. The EB Committee or its designee
shall designate, prior to each Plan Year or during the Plan Year
as appropriate, which Employees are eligible to participate in
the Plan. Each Participant designated as eligible to receive
Options for any Plan Year shall
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elect, prior to the start of participating in the Plan, what
portion of his or her Compensation to forego in exchange for
receiving the Option(s).
6. Grant of Options. The EB Committee shall determine in its sole
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discretion the number of Shares to be offered from time to time
and grant Options under the Plan. Such determination shall
generally be made by the EB Committee in advance for options
granted prospectively on a payroll period basis, in accordance
with information provided by the Employee. Information provided
by the employee will determine when the employee actually
chooses to forego compensation and receive options.
The foregoing determination shall be evidenced by a blanket
written Option Agreement covering the grant on a payroll period
basis, approved annually by the Participant. The Plan
recordkeeper shall maintain records which reflect that
individual options that are granted each payroll period in total
make up a particular Plan Year's award. Such Option shall be
tracked on the basis of the plan year award.
Options shall granted at the Participant's election to replace
the Participant's account balance in the Prior Plan.
The grant of Options shall be evidenced by written Option
Agreements containing such terms and provisions as are approved
by the EB Committee. The Option Agreements shall be executed on
behalf of the Employer upon instructions from the EB Committee.
The actual number of Options granted and the number of Shares
associated with such Options shall generally be based upon the
Fair Market Value of the Shares and the amount of Compensation
that the Participant agrees to forego.
When any Participant enters into an Option Agreement, the
Employer shall credit an account on its books on behalf of such
Participant with an Employer Credit, in an amount equal to the
Company Contribution associated with elective contributions to
the Qualified Plan pursuant to a salary reduction agreement made
by such Participant based on the amount of Compensation which
has been foregone by such Participant in exchange for Options
under the Plan. The Employer Credit does not create a beneficial
ownership right to such amount for any Participant. The Employer
Credit shall remain within the general assets of the Employer.
The Employer Match shall not be payable to any particular
Participant unless such Participant exercises an Option and then
only to the extent that such amount is vested in accordance with
Section 7 below.
With regard to Options granted in replacement of a Participant's
Prior Plan balance, the Employer Credit shall be 25% of the Fair
Market Value of the shares optioned by such grant. The Employer
Matching Contribution, which shall be equal to the Employer
Credit in the case of such replacement Options, shall be granted
to the Participant by the Employer only upon exercise of the
Option. The vesting
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provisions in Section 7 below do not apply to this Employer
Matching Contributions pertaining to such replacement Options.
Employee Contributions and Employer Credits shall be tracked as
separate sources of funds.
Prior to each Plan Year or during the Plan Year as appropriate,
each Participant shall designate how the Employer shall invest
the amounts credited to such Participant's account on the
Employer's books for the Plan Year. In making such designation,
such Participant shall choose an investment option(s) from among
mutual funds offered for the Plan by Fidelity Investments for
all amounts credited to such Participant's account on the
Employer's books, including earnings. Each Participant may
change investment designations at any time prior to exercise of
an Option.
7. Vesting of Employer Credit/Employer Matching Contribution. If a
Participant does not exercise an Option, the Employer Credit in
respect thereof shall not be available to such Participant, and
such Participant shall not receive such Employer Matching
Contribution. The Employer Matching Contribution shall become
available only upon exercise and then only to the extent the (a)
amounts are vested in accordance with the following schedule or
(b) the exceptions in the subsequent paragraph apply.
VESTING SCHEDULE
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Option Plan - United Defense LP
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