STOCKHOLDERS AGREEMENT
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This Stockholders Agreement ("AGREEMENT") is entered into as
of this ___ day of July, 1998, by and among United Defense Industries, Inc., a
Delaware corporation ( the "COMPANY"), Iron Horse Investors, L.L.C., a Delaware
corporation ( "IRON HORSE"), the UDLP Non-Qualified Trust (the "TRUST") and
United Defense, L.P., as sponsor and administrator of the Amended and Restated
UDLP Supplemental Retirement and Savings Plan Trust (the "PLAN ADMINISTRATOR").
These parties are sometimes referred to herein individually by name or as a
"PARTY" and collectively as the "PARTIES."
RECITALS:
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WHEREAS, United Defense, L.P., a Delaware limited partnership
of which the Company is the sole limited partner ("UDLP"), has established the
UDLP Amended and Restated Supplemental Retirement and Savings Plan (the "PLAN"),
a non-qualified deferred compensation plan for the benefit of certain of its
employees;
WHEREAS, UDLP has established the Trust as a means for paying
benefits payable under the Plan;
WHEREAS, pursuant to the terms of the trust agreement among
UDLP, the Company and Fidelity Management Trust Company, dated as of July 22,
1998, establishing and governing the Trust (the "TRUST Agreement"), and as
directed by the Plan Administrator in accordance therewith, the Trust shall
purchase _____ shares of the common stock, par value $0.01 per share, of the
Company ("COMMON STOCK") at a purchase price of $10 per share (the fair market
value per share as determined by the Plan Administrator) as soon as
administratively feasible following the Parties' execution and delivery of this
Agreement and the Trust Agreement;
WHEREAS, Iron Horse is the record and beneficial holder of
17.3 Million shares of Common Stock of the Company; and
WHEREAS, pursuant to the terms of the Plan and the Trust
Agreement, the Plan Administrator has the power to direct the disposition of the
assets of the Trust including, without limitation, the Common Stock held by it,
in accordance with the terms of the Plan and the Trust Agreement.
WHEREAS, the Company, Iron Horse, the Trust and the Plan
Administrator desire to enter into this Agreement to provide for certain matters
with respect to the ownership and transfer of the shares of Common Stock now
issued to the Trust (collectively, the "RESTRICTED SHARES").
AGREEMENT:
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NOW, THEREFORE, in consideration of the foregoing, and the
mutual agreements set forth herein and other good and valuable consideration,
the receipt and adequacy
of which is hereby acknowledged, the Parties hereto, intending to be legally
bound, hereby agree as follows:
SECTION 1. RESTRICTIONS ON TRANSFER.
The Trust shall not sell, assign, transfer, convey, pledge or
otherwise dispose of (collectively, "TRANSFER"), and the Plan Administrator
shall not direct the Trust to Transfer, any Restricted Shares without the prior
written consent of the Company, which consent shall have been authorized by a
majority of the members of the Board of Directors of the Company; provided,
however, that this Section 1 shall not prevent, and no consent of the Company
shall be required with respect to, the Transfer of any Restricted Shares
pursuant to the directions from the Plan Administrator or any Transfer to
creditors of UDLP in the event UDLP is Insolvent (as defined in the Trust
Agreement), in accordance with the terms of the Plan and the Trust Agreement, or
transfers by will or pursuant to the laws of descent and distribution. The Trust
further agrees that in connection with any Transfer required to be consented to
by the Company, the Trust shall, if timely requested by the Company in writing,
deliver to the Company an opinion of counsel in form and substance reasonably
satisfactory to the Company, to the effect that such Transfer is not in
violation of this Agreement, the Securities Act of 1933, as amended, or the
securities laws of any state. Any purported Transfer in violation of the
provisions of this Section 1 shall be null and void and shall have no force or
effect.
SECTION 2. BRING-ALONG RIGHTS.
(a) If Iron Horse or any successor to all or any
portion of the shares of Common Stock held by Iron Horse at any time, or from
time to time, in one transaction or a series of related transactions, proposes
to Transfer a number of shares of Common Stock equal to more than twenty percent
(20%) of the aggregate number of shares of Common Stock then outstanding to one
or more persons not affiliated with Iron Horse or such successors (a "THIRD
PARTY"), then Iron Horse (or such successors) shall have the right (a
"BRING-ALONG RIGHT"), but not the obligation, to cause the Plan Administrator to
direct the Trust to tender for purchase, to the Third Party, on the same terms
and conditions as apply to Iron Horse, a number of shares of Common Stock
equaling the lesser of (x) the number derived by multiplying (i) the total
number of shares to be purchased by the Third Party, as specified in the
Bring-Along Notice, by (ii) a fraction, the numerator of which is the total
number of shares of Common Stock owned by the Trust and the denominator of which
is the total number of the then outstanding shares of Common Stock, or (y) such
lesser number of shares as Iron Horse shall designate in the Bring-Along Notice
(defined below); provided, however, that notwithstanding the foregoing, the
Trust shall only be required to tender shares of Restricted Stock in accordance
with directions from the Plan Administrator, in accordance with the Trust
Agreement.
(b) If Iron Horse elects to exercise its Bring-Along
Right under this Section 3, then it shall so notify the Plan Administrator and
the Trust ("BRING-ALONG NOTICE"). The Bring-Along Notice shall set forth: (i)
the name of the Third Party or Third Parties and the number of shares of Common
Stock proposed to be purchased by such Third Party or Third Parties, (ii) the
proposed amount and form of consideration and terms and conditions of payment
offered by the Third Party and a summary of any other material terms pertaining
to the Transfer
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("THIRD PARTY TERMS") and (iii) the number of shares of Common Stock that Iron
Horse elects the Trust to sell in such Transfer. The Bring-Along Notice shall be
given at least ten (10) business days before the closing of the proposed
Transfer.
(c) Upon the receipt of a Bring-Along Notice and
directions from the Plan Administrator, in accordance with the terms of the
Trust Agreement, the Trust shall be obligated to sell that number of shares of
Common Stock required to be sold by the Trust as set forth in the Bring-Along
Notice on the Third Party Terms.
(d) At the closing of the Transfer to any Third Party
pursuant to this Section 3, the Third Party shall remit to each Party the
consideration for the total sales price of the Common Stock of such Party sold
pursuant hereto (less any such consideration to be escrowed or otherwise held
back in accordance with the Third Party Terms), against delivery by such Party
of certificates for such Common Stock, duly endorsed for Transfer or with duly
executed stock powers, and the compliance by such Party with any other
reasonable conditions to closing generally applicable to Iron Horse and other
holders of Common Stock selling shares in such transaction.
Notwithstanding the foregoing, the Bring-Along
Rights provided by this Section 3 shall terminate on the date on which a number
of shares of Common Stock equal to at least twenty-five percent (25%) of the
aggregate number of the then outstanding shares of Common Stock on a fully
diluted basis have been distributed to the public pursuant to one or more
effective registration statements under the Securities Act and/or pursuant to
Rule 144 promulgated thereunder; provided, however, that the Common Stock is
then publicly traded.
SECTION 3. COMPANY SALE.
(a) If the Board of Directors of the Company and the
holders of a majority of the outstanding shares of Common Stock approve a
Company Sale (as defined below), and if so directed by the Plan Administrator in
accordance with the terms of the Trust Agreement, the Trust agrees that it shall
consent to and raise no objections against such Company Sale, and if the Company
Sale is structured as a sale of stock, the Trust shall, as directed by the Plan
Administrator in accordance with the terms of the Trust Agreement, sell all or
any portion of the Restricted Shares in connection with such Company Sale on the
terms and conditions approved by the Board of Directors and the holders of a
majority of the outstanding shares of Common Stock. The Plan Administrator
hereby agrees to take all actions, and give directions to the Trust to
effectuate such actions, that the Board of Directors and the holders of a
majority of the outstanding shares of Common Stock reasonably deem necessary or
desirable in connection with the consummation of such Company Sale, including,
without limitation, voting the Restricted Shares in favor of such Company Sale
and refraining from the exercise of dissenters' appraisal rights with respect to
such Company Sale; provided, however, that the Trust shall be only be required
to take such actions as are pursuant to the written direction of the Plan
Administrator in accordance with the terms of the Plan and the Trust Agreement.
(b) To the extent that the Trust Transfers shares
pursuant to a Company Sale, the Trust shall bear its pro-rata share (based upon
the number of shares held by the Trust that are sold in such Company Sale) of
the costs of any sale of Common Stock pursuant to a Company Sale to the extent
such costs are incurred for the benefit of all holders of Common Stock and are
not otherwise paid by the Company or the acquiring party; provided, however,
that nothing in this Agreement shall obligate the Trust to pay any amounts in
connection with a Company Sale in excess of the assets of the Trust Fund. To the
extent any such costs incurred by the Trust in connection with a Transfer
pursuant to a Company Sale are not deducted from the
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sale proceeds, the Trust shall pay any amounts owed under this Section 3 only as
directed by the Plan Administrator.
(c) For the purpose hereof, "COMPANY SALE" shall mean
the consummation of any transaction or series of transactions pursuant to which
one or more persons or entities or group of persons or entities (other than Iron
Horse) acquires (i) capital stock of the Company possessing the voting power
sufficient to elect a majority of the members of the Board of Directors of the
Company or its successor(s) (whether such transaction is effected by merger,
consolidation, sale or transfer of the Company's capital stock or otherwise) or
(ii) all or substantially all of the assets of the Company and its subsidiaries.
SECTION 4. INSOLVENCY.
Notwithstanding any other provision of this Agreement, the
provisions of this Section shall apply in the event that UDLP is Insolvent or
the Trustee must determine whether UDLP is Insolvent, in accordance with the
Trust Agreement. The Trust shall not be required to sell any Restricted Shares
pursuant to Sections 2 or 3 hereof unless the Trustee has determined that the
price to be paid for such Restricted Shares is equal to or greater than the fair
market value of such shares. In the event the Trustee has received notice of a
sale pursuant to Section 2 or 3 hereof, or the Trustee reasonably believes that
a valuation of the Restricted Shares is necessary for the proper administration
of the Trust under applicable federal and state laws, the Trustee shall so
notify the Company, which shall obtain an independent appraisal of the fair
market value of the Company's shares from an independent appraiser reasonably
satisfactory to the Trustee. In the event the Company and the Trustee cannot
agree on a mutually acceptable independent appraiser and the Company so
requests, the Trustee shall designate an independent appraiser within three
business days of such request and if the Trustee fails to so timely designate an
appraiser, the Trustee shall accept the independent appraiser selected by the
Company. Each appraisal obtained in accordance with the foregoing shall be
conclusive evidence of the fair market value of the shares to be sold, and
absent manifest error, shall be binding on the Trust and the Trustee. In the
event no appraisal is performed, the Trustee may, but shall not have the
obligation to (1) participate in any sale pursuant to Section 2 or 3 hereof,
and/or (2) obtain an independent appraisal of the shares, and charge the costs
of such appraisal against the assets of the Trust in accordance with the
provisions of the Trust Agreement.
SECTION 5. MISCELLANEOUS.
(a) Legends. Each certificate representing the
Restricted Shares shall bear the following legend:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED
("ACT"), OR THE SECURITIES LAWS OF ANY STATE AND MAY NOT BE
SOLD OR TRANSFERRED IN THE ABSENCE OF AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE ACT AND SAID LAWS OR AN
EXEMPTION FROM THE REGISTRATION REQUIREMENTS THEREOF."
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In addition to the foregoing, each certificate
representing Restricted Shares shall bear the following legend:
"THE SECURITIES REPRESENTED HEREBY ARE SUBJECT TO ADDITIONAL
RESTRICTIONS ON TRANSFER AND CERTAIN OTHER AGREEMENTS SET
FORTH IN A STOCKHOLDERS AGREEMENT BETWEEN THE ISSUER AND THE
INITIAL HOLDER HEREOF DATED AS OF JULY __, 1998. A COPY OF
SUCH AGREEMENT SHALL BE FURNISHED WITHOUT CHARGE BY THE ISSUER
TO THE HOLDER HEREOF UPON WRITTEN REQUEST."
Purchasers hereby agree that Purchasers shall not Transfer any Restricted Shares
without complying with each of the restrictions set forth herein and agree that
in connection with any such Transfer Purchasers shall, if requested by the
Company, deliver to the Company an opinion of counsel in form and substance
reasonably satisfactory to the Company and counsel for the Company, to the
effect that such Transfer is not in violation of this Agreement or the
securities laws of the United States of America or any state thereof.
(b) Successors, Assigns and Transferees. This
Agreement shall be binding upon and inure to the benefit of the Parties hereto
and their respective legal representatives, heirs, legatees, successors, and
assigns and any other transferee of the Restricted Shares and shall also apply
to any Restricted Shares acquired by the Trust after the date hereof. This
Agreement shall be binding upon any successor of the Plan Administrator.
(c) Governing Law. This Agreement shall be governed
by and construed in accordance with the laws of the State of Delaware.
(d) Interpretation. The headings of the Sections
contained in this Agreement are solely for the purpose of reference, are not
part of the agreement of the Parties and shall not affect the meaning or
interpretation of this Agreement.
(e) Notices. All notices and other communications
provided for or permitted hereunder shall be in writing and shall be deemed to
have been duly given and received when delivered by overnight courier or hand
delivery, when sent by telecopy, or five days after mailing if sent by
registered or certified mail (return receipt requested) postage prepaid, to the
Parties at the following addresses (or at such other address for any Party as
shall be specified by like notices, provided that notices of a change of address
shall be effective only upon receipt thereof).
(i) If to the Company, at:
United Defense Industries, Inc.
1525 Wilson Blvd.
Suite 700
Arlington, VA 22209
Attention: David V. Kolovat
with copies to:
Latham & Watkins
1001 Pennsylvania Avenue, N.W.
Suite 1300
Washington, D.C. 20004
Attention: Daniel T. Lennon
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(ii) If to Iron Horse, at:
c/o TC Group,
LLC 1001 Pennsylvania Avenue, NW
Suite 200S
Washington, D.C. 20004
Attention: Allan M. Holt
with copies to:
Latham & Watkins
1001 Pennsylvania Avenue, N.W.
Suite 1300
Washington, D.C. 20004
Attention: Daniel T. Lennon
(iii) If to the Trust, at:
Fidelity Management Trust Company,
Trustee
c/o Fidelity Investments
82 Devonshire Street
Boston, MA 02109
Attention: John M. Kimpel
(iv) If to the Plan Administrator:
United Defense, L.P.
1525 Wilson Boulevard
Suite 700
Arlington, VA 22209
Attention: David V. Kolovat,
General Counsel
(f) Recapitalization, Exchange, Etc. Affecting the
Company's Stock. The provisions of this Agreement shall apply, to the full
extent set forth herein, with respect to any and all shares of capital stock of
the Company or any successor or assign of the Company (whether by merger,
consolidation, sale of assets, or otherwise) that may be issued in respect of,
in exchange for, or in substitution of, the Restricted Shares and shall be
appropriately adjusted for any stock dividends, splits, reverse splits,
combinations, recapitalizations, and the like occurring after the date hereof.
(g) Counterparts. This Agreement may be executed in
two or more counterparts, each of which shall be deemed to be an original and
all of which together shall be deemed to constitute one and the same agreement.
(h) Severability. In the event that any one or more
of the provisions contained herein, or the application thereof in any
circumstances, is held invalid, illegal, or unenforceable in any respect for any
reason, the validity, legality, and enforceability of any such
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provision in every other respect and of the remaining provisions contained
herein shall not be in any way impaired thereby.
(i) Amendment. This Agreement may be amended only by
written agreement signed by the Parties hereto.
(j) Entire Agreement. This writing constitutes the
entire agreement of the Parties with respect to the subject matter hereof.
IN WITNESS WHEREOF, the Parties have executed this Agreement
on the date first written above.
IRON HORSE INVESTORS, L.L.C.
By: __________________________
Name:
Title:
UNITED DEFENSE INDUSTRIES, INC.
By: __________________________
Name:
Title:
THE UDLP SUPPLEMENTAL RETIREMENT
AND SAVINGS PLAN:
By: Fidelity Management Trust Company,
Solely it its capacity as Trustee
and not in its corporate capacity
By: __________________________
Vice President
UNITED DEFENSE, L.P.
By: __________________________
Name:
Title:
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