I'm not sure myself, but I'll see what I can find out.
Originally Posted by MediclesSuccinct, thorough, informative. Thanks for the solid answer.
You kill a guy, then you get a timed buff. You can see the buff below the small ingame window, where your armor, health and ammo is shown.
It procs for the max armor you have. Bonus armor doesnt count. But yeah, increasing your armor through attributes, brand sets and mods does eventually lets you hit harder with UF.
The 2% are weapon damage, which count only for weapons.