EXHIBIT 10.3

 

Execution Copy

 

PARENT GUARANTY AGREEMENT

 

THIS PARENT GUARANTY AGREEMENT (the “Agreement”), dated as of July 18, 2005, by
and among UNITED INDUSTRIAL CORPORATION, a Delaware corporation (the
“Guarantor”) and SUNTRUST BANK, a Georgia banking corporation, as administrative
agent (the “Administrative Agent”) for the benefit of itself and the several
banks and other financial institutions (the “Lenders”) from time to time party
to the Revolving Credit Agreement, dated as of the date hereof, by and among the
AAI Corporation, a Maryland corporation (the “Borrower”), Guarantor, the several
banks and other financial institutions from time to time party thereto(the
“Lenders”), the Administrative Agent, and SunTrust Bank, as Issuing Bank and as
Swingline Lender (as amended, restated, supplemented or otherwise modified from
time to time, the “Credit Agreement”; capitalized terms used herein and not
otherwise defined herein shall the meanings assigned to such terms in the Credit
Agreement).

 

W I T N E S S E T H:

 

WHEREAS, pursuant to the Credit Agreement, the Lenders have agreed to establish
a revolving credit facility in favor of the Borrower;

 

WHEREAS, the Guarantor is the parent of the Borrower and will derive substantial
benefit from the making of Loans by the Lenders and the issuance of Letters of
Credit by the Issuing Bank; and

 

WHEREAS, it is a condition precedent to the obligations of the Administrative
Agent, the Issuing Bank, the Swingline Lender, and the Lenders under the Credit
Agreement that the Guarantor execute and deliver to the Administrative Agent a
Parent Guaranty Agreement in the form hereof, and the Guarantor wishes to
fulfill said condition precedent;

 

NOW, THEREFORE, in order to induce Lenders to extend the Loans and the Issuing
Bank to issue Letters of Credit and to make the financial accommodations as
provided for in the Credit Agreement and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto agree as follows:

 

SECTION 1.  GUARANTEE.  THE GUARANTOR UNCONDITIONALLY GUARANTEES, AS A PRIMARY
OBLIGOR AND NOT MERELY AS A SURETY, (I) THE DUE AND PUNCTUAL PAYMENT OF ALL
OBLIGATIONS INCLUDING, WITHOUT LIMITATION, (A) THE PRINCIPAL OF AND PREMIUM, IF
ANY, AND INTEREST (INCLUDING INTEREST ACCRUING DURING THE PENDENCY OF ANY
BANKRUPTCY, INSOLVENCY, RECEIVERSHIP OR OTHER SIMILAR PROCEEDING, REGARDLESS OF
WHETHER ALLOWED OR ALLOWABLE IN SUCH PROCEEDING) ON THE LOANS, WHEN AND AS DUE,
WHETHER AT MATURITY, BY ACCELERATION, UPON ONE OR MORE DATES SET FOR PREPAYMENT
OR OTHERWISE, (B) EACH PAYMENT REQUIRED TO BE MADE BY THE BORROWER UNDER THE
CREDIT AGREEMENT IN RESPECT OF ANY LETTER OF CREDIT, WHEN AND AS DUE, INCLUDING
PAYMENTS IN RESPECT OF REIMBURSEMENT OR DISBURSEMENTS, INTEREST THEREON AND
OBLIGATIONS TO PROVIDE CASH COLLATERAL, AND (C) ALL OTHER MONETARY OBLIGATIONS,
INCLUDING FEES, COSTS, EXPENSES AND INDEMNITIES, WHETHER PRIMARY, SECONDARY,
DIRECT, CONTINGENT, FIXED OR OTHERWISE (INCLUDING MONETARY OBLIGATIONS INCURRED
DURING

 

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THE PENDENCY OF ANY BANKRUPTCY, INSOLVENCY, RECEIVERSHIP OR OTHER SIMILAR
PROCEEDING, REGARDLESS OF WHETHER ALLOWED OR ALLOWABLE IN SUCH PROCEEDING), OF
THE LOAN PARTIES TO THE ADMINISTRATIVE AGENT AND THE LENDERS UNDER THE CREDIT
AGREEMENT AND THE OTHER LOAN DOCUMENTS, (II) THE DUE AND PUNCTUAL PERFORMANCE OF
ALL COVENANTS, AGREEMENTS, OBLIGATIONS AND LIABILITIES OF THE LOAN PARTIES UNDER
OR PURSUANT TO THE CREDIT AGREEMENT AND THE OTHER LOAN DOCUMENTS; AND (III) THE
DUE AND PUNCTUAL PAYMENT AND PERFORMANCE OF ALL OBLIGATIONS OF THE BORROWER,
MONETARY OR OTHERWISE, ARISING UNDER ANY HEDGING TRANSACTION INCURRED TO LIMIT
INTEREST RATE OR FEE FLUCTUATION WITH RESPECT TO THE LOANS AND LETTERS OF CREDIT
ENTERED INTO WITH A COUNTERPARTY THAT WAS A LENDER OR AN AFFILIATE OF A LENDER
AT THE TIME SUCH HEDGING TRANSACTION WAS ENTERED INTO (EACH SUCH PERSON A
“SPECIFIED HEDGE PROVIDER”; THE ADMINISTRATIVE AGENT, THE LENDERS AND THE
SPECIFIED HEDGE PROVIDERS, COLLECTIVELY, THE “SECURED PARTIES” AND EACH
INDIVIDUALLY A “SECURED PARTY”) (ALL THE MONETARY AND OTHER OBLIGATIONS REFERRED
TO IN THE PRECEDING CLAUSES (I) THROUGH (III) BEING COLLECTIVELY CALLED THE
“GUARANTEED OBLIGATIONS”).  THE GUARANTOR FURTHER AGREES THAT THE GUARANTEED
OBLIGATIONS MAY BE EXTENDED OR RENEWED, IN WHOLE OR IN PART, WITHOUT NOTICE TO
OR FURTHER ASSENT FROM SUCH GUARANTOR, AND THAT SUCH GUARANTOR WILL REMAIN BOUND
UPON ITS GUARANTEE NOTWITHSTANDING ANY EXTENSION OR RENEWAL OF ANY GUARANTEED
OBLIGATIONS.

 

SECTION 2.  OBLIGATIONS NOT WAIVED.  TO THE FULLEST EXTENT PERMITTED BY
APPLICABLE LAW, THE GUARANTOR WAIVES PRESENTMENT OR PROTEST TO, DEMAND OF OR
PAYMENT FROM THE OTHER LOAN PARTIES OF ANY OF THE GUARANTEED OBLIGATIONS, AND
ALSO WAIVES NOTICE OF ACCEPTANCE OF ITS GUARANTEE AND NOTICE OF PROTEST FOR
NONPAYMENT.  TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, THE OBLIGATIONS
OF THE GUARANTOR HEREUNDER SHALL NOT BE AFFECTED BY (I) THE FAILURE OF THE
ADMINISTRATIVE AGENT OR ANY LENDER TO ASSERT ANY CLAIM OR DEMAND OR TO ENFORCE
OR EXERCISE ANY RIGHT OR REMEDY AGAINST THE BORROWER OR ANY OTHER GUARANTOR
UNDER THE PROVISIONS OF THE CREDIT AGREEMENT, ANY OTHER LOAN DOCUMENT OR
OTHERWISE, (II) THE FAILURE OF ANY SECURED PARTY TO ASSERT ANY CLAIM OR DEMAND
OR TO ENFORCE OR EXERCISE ANY RIGHT OR REMEDY AGAINST THE BORROWER OR ANY OTHER
GUARANTOR UNDER THE PROVISIONS OF ANY INSTRUMENTS, AGREEMENTS OR DOCUMENTS
EXECUTED IN CONNECTION WITH ANY HEDGING TRANSACTION INCURRED TO LIMIT INTEREST
RATE OR FEE FLUCTUATION WITH RESPECT TO THE LOANS AND LETTERS OF CREDIT ENTERED
INTO WITH A SPECIFIED HEDGE PROVIDER (EACH SUCH DOCUMENT, A “HEDGING DOCUMENT”)
(III) ANY RESCISSION, WAIVER, AMENDMENT OR MODIFICATION OF, OR ANY RELEASE FROM
ANY OF THE TERMS OR PROVISIONS OF, THIS AGREEMENT, ANY OTHER LOAN DOCUMENT, ANY
HEDGING DOCUMENT, ANY GUARANTEE OR ANY OTHER AGREEMENT, INCLUDING WITH RESPECT
TO ANY OTHER GUARANTOR UNDER THIS AGREEMENT, OR (IV) THE FAILURE TO PERFECT ANY
SECURITY INTEREST IN, OR THE RELEASE OF, ANY OF THE SECURITY HELD BY OR ON
BEHALF OF THE ADMINISTRATIVE AGENT OR ANY SECURED PARTY.

 

SECTION 3.  GUARANTEE OF PAYMENT.  THE GUARANTOR FURTHER AGREES THAT ITS
GUARANTEE CONSTITUTES A GUARANTEE OF PAYMENT WHEN DUE AND NOT OF COLLECTION, AND
WAIVES ANY RIGHT TO REQUIRE THAT ANY RESORT BE HAD BY THE ADMINISTRATIVE AGENT
OR ANY SECURED PARTY TO ANY OF THE SECURITY HELD FOR PAYMENT OF THE GUARANTEED
OBLIGATIONS OR TO ANY BALANCE OF ANY DEPOSIT ACCOUNT OR CREDIT ON THE BOOKS OF
THE ADMINISTRATIVE AGENT OR ANY SECURED PARTY IN FAVOR OF THE BORROWER OR ANY
OTHER PERSON.

 

SECTION 4.  NO DISCHARGE OR DIMINISHMENT OF GUARANTEE.  THE OBLIGATIONS OF THE
GUARANTOR HEREUNDER SHALL NOT BE SUBJECT TO ANY REDUCTION, LIMITATION,
IMPAIRMENT OR TERMINATION FOR ANY REASON (OTHER THAN THE INDEFEASIBLE PAYMENT IN
FULL IN CASH OF THE GUARANTEED OBLIGATIONS), INCLUDING ANY CLAIM OF WAIVER,
RELEASE, SURRENDER, ALTERATION OR COMPROMISE OF ANY

 

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OF THE GUARANTEED OBLIGATIONS, AND SHALL NOT BE SUBJECT TO ANY DEFENSE OR
SETOFF, COUNTERCLAIM, RECOUPMENT OR TERMINATION WHATSOEVER BY REASON OF THE
INVALIDITY, ILLEGALITY OR UNENFORCEABILITY OF THE GUARANTEED OBLIGATIONS OR
OTHERWISE.  WITHOUT LIMITING THE GENERALITY OF THE FOREGOING, THE OBLIGATIONS OF
THE GUARANTOR HEREUNDER SHALL NOT BE DISCHARGED OR IMPAIRED OR OTHERWISE
AFFECTED BY THE FAILURE OF THE ADMINISTRATIVE AGENT OR ANY SECURED PARTY TO
ASSERT ANY CLAIM OR DEMAND OR TO ENFORCE ANY REMEDY UNDER THE CREDIT AGREEMENT,
ANY OTHER LOAN DOCUMENT, ANY HEDGING DOCUMENT OR ANY OTHER AGREEMENT, BY ANY
WAIVER OR MODIFICATION OF ANY PROVISION OF ANY THEREOF, BY ANY DEFAULT, FAILURE
OR DELAY, WILLFUL OR OTHERWISE, IN THE PERFORMANCE OF THE GUARANTEED
OBLIGATIONS, OR BY ANY OTHER ACT OR OMISSION THAT MAY OR MIGHT IN ANY MANNER OR
TO THE EXTENT VARY THE RISK OF ANY GUARANTOR OR THAT WOULD OTHERWISE OPERATE AS
A DISCHARGE OF THE GUARANTOR AS A MATTER OF LAW OR EQUITY (OTHER THAN THE
INDEFEASIBLE PAYMENT IN FULL IN CASH OF ALL THE OBLIGATIONS).

 

SECTION 5.  DEFENSES OF BORROWER WAIVED.  TO THE FULLEST EXTENT PERMITTED BY
APPLICABLE LAW, THE GUARANTOR WAIVES ANY DEFENSE BASED ON OR ARISING OUT OF ANY
DEFENSE OF ANY LOAN 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 ANY LOAN PARTY, OTHER THAN THE FINAL AND INDEFEASIBLE PAYMENT IN
FULL IN CASH OF THE GUARANTEED OBLIGATIONS.  THE ADMINISTRATIVE AGENT AND THE
SECURED PARTIES MAY, AT THEIR ELECTION, FORECLOSE ON ANY SECURITY HELD BY ONE OR
MORE OF THEM BY ONE OR MORE JUDICIAL OR NONJUDICIAL SALES, ACCEPT AN ASSIGNMENT
OF ANY SUCH SECURITY IN LIEU OF FORECLOSURE, COMPROMISE OR ADJUST ANY PART OF
THE GUARANTEED OBLIGATIONS, MAKE ANY OTHER ACCOMMODATION WITH ANY OTHER LOAN
PARTY OR ANY OTHER GUARANTOR, WITHOUT AFFECTING OR IMPAIRING IN ANY WAY THE
LIABILITY OF ANY GUARANTOR HEREUNDER EXCEPT TO THE EXTENT THE GUARANTEED
OBLIGATIONS HAVE BEEN FULLY, FINALLY AND INDEFEASIBLY PAID IN CASH.  PURSUANT TO
APPLICABLE LAW, THE GUARANTOR WAIVES ANY DEFENSE ARISING OUT OF ANY SUCH
ELECTION EVEN THOUGH SUCH ELECTION OPERATES, PURSUANT TO APPLICABLE LAW, TO
IMPAIR OR TO EXTINGUISH ANY RIGHT OF REIMBURSEMENT OR SUBROGATION OR OTHER RIGHT
OR REMEDY OF SUCH GUARANTOR AGAINST THE BORROWER OR ANY OTHER GUARANTOR OR
GUARANTOR, AS THE CASE MAY BE, OR ANY SECURITY.

 

SECTION 6.  AGREEMENT TO PAY; SUBORDINATION.  IN FURTHERANCE OF THE FOREGOING
AND NOT IN LIMITATION OF ANY OTHER RIGHT THAT THE ADMINISTRATIVE AGENT OR ANY
SECURED PARTY HAS AT LAW OR IN EQUITY AGAINST ANY GUARANTOR BY VIRTUE HEREOF,
UPON THE FAILURE OF THE BORROWER OR ANY OTHER LOAN PARTY TO PAY ANY OBLIGATION
WHEN AND AS THE SAME SHALL BECOME DUE, WHETHER AT MATURITY, BY ACCELERATION,
AFTER NOTICE OF PREPAYMENT OR OTHERWISE, THE GUARANTOR HEREBY PROMISES TO AND
WILL FORTHWITH PAY, OR CAUSE TO BE PAID, TO THE ADMINISTRATIVE AGENT FOR THE
BENEFIT OF THE SECURED PARTIES IN CASH THE AMOUNT OF SUCH UNPAID OBLIGATION. 
UPON PAYMENT BY ANY GUARANTOR OF ANY SUMS TO THE ADMINISTRATIVE AGENT, ALL
RIGHTS OF SUCH GUARANTOR AGAINST ANY LOAN PARTY ARISING AS A RESULT THEREOF BY
WAY OF RIGHT OF SUBROGATION, CONTRIBUTION, REIMBURSEMENT, INDEMNITY OR OTHERWISE
SHALL IN ALL RESPECTS BE SUBORDINATE AND JUNIOR IN RIGHT OF PAYMENT TO THE PRIOR
INDEFEASIBLE PAYMENT IN FULL IN CASH OF ALL THE GUARANTEED OBLIGATIONS.  IN
ADDITION, ANY INDEBTEDNESS OF ANY LOAN PARTY NOW OR HEREAFTER HELD BY ANY
GUARANTOR IS HEREBY SUBORDINATED IN RIGHT OF PAYMENT TO THE PRIOR PAYMENT IN
FULL IN CASH OF THE GUARANTEED OBLIGATIONS.  IF ANY AMOUNT SHALL ERRONEOUSLY BE
PAID TO ANY GUARANTOR ON ACCOUNT OF (I) SUCH SUBROGATION, CONTRIBUTION,
REIMBURSEMENT, INDEMNITY OR SIMILAR RIGHT OR (II) ANY SUCH INDEBTEDNESS OF ANY
LOAN PARTY, SUCH AMOUNT SHALL BE HELD IN TRUST FOR THE BENEFIT OF THE
ADMINISTRATIVE AGENT AND THE SECURED PARTIES AND SHALL FORTHWITH BE PAID TO THE
ADMINISTRATIVE AGENT TO BE CREDITED AGAINST THE

 

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PAYMENT OF THE GUARANTEED OBLIGATIONS, WHETHER MATURED OR UNMATURED, IN
ACCORDANCE WITH THE TERMS OF THE LOAN DOCUMENTS.

 

SECTION 7.  INFORMATION.  THE GUARANTOR ASSUMES ALL RESPONSIBILITY FOR BEING AND
KEEPING ITSELF INFORMED OF OTHER LOAN PARTIES’ 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 THAT SUCH
GUARANTOR ASSUMES AND INCURS HEREUNDER, AND AGREES THAT NONE OF THE
ADMINISTRATIVE AGENT OR THE SECURED PARTIES WILL HAVE ANY DUTY TO ADVISE THE
GUARANTOR OF INFORMATION KNOWN TO IT OR ANY OF THEM REGARDING SUCH CIRCUMSTANCES
OR RISKS.

 

SECTION 8.  INDEMNITY AND SUBROGATION.  IN ADDITION TO ALL SUCH RIGHTS OF
INDEMNITY AND SUBROGATION AS THE GUARANTOR MAY HAVE UNDER APPLICABLE LAW (BUT
SUBJECT TO SECTION 6), THE BORROWER AGREES THAT (A) IN THE EVENT A PAYMENT SHALL
BE MADE BY ANY GUARANTOR UNDER THIS AGREEMENT, THE BORROWER SHALL INDEMNIFY SUCH
GUARANTOR FOR THE FULL AMOUNT OF SUCH PAYMENT AND SUCH GUARANTOR SHALL BE
SUBROGATED TO THE RIGHTS OF THE PERSON TO WHOM SUCH PAYMENT SHALL HAVE BEEN MADE
TO THE EXTENT OF SUCH PAYMENT AND (B) IN THE EVENT ANY ASSETS OF ANY GUARANTOR
SHALL BE SOLD TO SATISFY A CLAIM OF ANY SECURED PARTY UNDER THIS AGREEMENT, THE
BORROWER SHALL INDEMNIFY SUCH GUARANTOR IN AN AMOUNT EQUAL TO THE GREATER OF THE
BOOK VALUE OR THE FAIR MARKET VALUE OF THE ASSETS SO SOLD.

 

SECTION 9.  CONTRIBUTION AND SUBROGATION.  THE GUARANTOR (A “CONTRIBUTING
GUARANTOR”) AGREES (SUBJECT TO SECTION 6) THAT, IN THE EVENT A PAYMENT SHALL BE
MADE BY ANY OTHER GUARANTOR UNDER THIS AGREEMENT OR ASSETS OF ANY OTHER
GUARANTOR SHALL BE SOLD TO SATISFY A CLAIM OF ANY SECURED PARTY AND SUCH OTHER
GUARANTOR (THE “CLAIMING GUARANTOR”) SHALL NOT HAVE BEEN FULLY INDEMNIFIED BY
THE BORROWER AS PROVIDED IN SECTION 8, THE CONTRIBUTING GUARANTOR SHALL
INDEMNIFY THE CLAIMING GUARANTOR IN AN AMOUNT EQUAL TO THE AMOUNT OF SUCH
PAYMENT OR THE GREATER OF THE BOOK VALUE OR THE FAIR MARKET VALUE OF SUCH
ASSETS, AS THE CASE MAY BE, IN EACH CASE MULTIPLIED BY A FRACTION OF WHICH THE
NUMERATOR SHALL BE THE NET WORTH OF THE CONTRIBUTING GUARANTOR ON THE DATE
HEREOF AND THE DENOMINATOR SHALL BE THE AGGREGATE NET WORTH OF THE GUARANTOR ON
THE DATE HEREOF.  ANY CONTRIBUTING GUARANTOR MAKING ANY PAYMENT TO A CLAIMING
GUARANTOR PURSUANT TO THIS SECTION 9 SHALL BE SUBROGATED TO THE RIGHTS OF SUCH
CLAIMING GUARANTOR UNDER SECTION 8 TO THE EXTENT OF SUCH PAYMENT.

 

SECTION 10.  SUBORDINATION.  NOTWITHSTANDING ANY PROVISION OF THIS AGREEMENT TO
THE CONTRARY, ALL RIGHTS OF THE GUARANTOR UNDER SECTION 8 AND SECTION 9 AND ALL
OTHER RIGHTS OF INDEMNITY, CONTRIBUTION OR SUBROGATION UNDER APPLICABLE LAW OR
OTHERWISE SHALL BE FULLY SUBORDINATED TO THE INDEFEASIBLE PAYMENT IN FULL IN
CASH OF THE GUARANTEED OBLIGATIONS.  NO FAILURE ON THE PART OF THE BORROWER OR
ANY GUARANTOR TO MAKE THE PAYMENTS REQUIRED UNDER APPLICABLE LAW OR OTHERWISE
SHALL IN ANY RESPECT LIMIT THE OBLIGATIONS AND LIABILITIES OF ANY GUARANTOR WITH
RESPECT TO ITS OBLIGATIONS HEREUNDER, AND THE GUARANTOR SHALL REMAIN LIABLE FOR
THE FULL AMOUNT OF THE OBLIGATIONS OF SUCH GUARANTOR HEREUNDER.

 

SECTION 11.  REPRESENTATIONS AND WARRANTIES.  THE GUARANTOR REPRESENTS AND
WARRANTS AS TO ITSELF THAT ALL REPRESENTATIONS AND WARRANTIES RELATING TO IT (AS
A PARENT OF THE BORROWER) CONTAINED IN THE CREDIT AGREEMENT ARE TRUE AND
CORRECT.

 

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SECTION 12.  TERMINATION.  THE GUARANTEES MADE HEREUNDER (I) SHALL TERMINATE
WHEN ALL THE GUARANTEED OBLIGATIONS (OTHER THAN THOSE GUARANTEED OBLIGATIONS
RELATING TO THE HEDGING OBLIGATIONS) HAVE BEEN PAID IN FULL IN CASH AND THE
LENDERS HAVE NO FURTHER COMMITMENT TO LEND UNDER THE CREDIT AGREEMENT, THE LC
EXPOSURE HAS BEEN REDUCED TO ZERO AND THE ISSUING BANK HAS NO FURTHER OBLIGATION
TO ISSUE LETTERS OF CREDIT UNDER THE CREDIT AGREEMENT AND (II) SHALL CONTINUE TO
BE EFFECTIVE OR BE REINSTATED, AS THE CASE MAY BE, IF AT ANY TIME PAYMENT, OR
ANY PART THEREOF, OF ANY OBLIGATION IS RESCINDED OR MUST OTHERWISE BE RESTORED
BY ANY LENDER OR ANY GUARANTOR UPON THE BANKRUPTCY OR REORGANIZATION OF THE
BORROWER, ANY GUARANTOR OR OTHERWISE.  IN CONNECTION WITH THE FOREGOING, THE
ADMINISTRATIVE AGENT SHALL EXECUTE AND DELIVER TO SUCH GUARANTOR OR GUARANTOR’S
DESIGNEE, AT SUCH GUARANTOR’S EXPENSE, ANY DOCUMENTS OR INSTRUMENTS, WITHOUT
REPRESENTATION OR RECOURSE, WHICH SUCH GUARANTOR SHALL REASONABLY REQUEST FROM
TIME TO TIME TO EVIDENCE SUCH TERMINATION AND RELEASE.

 

SECTION 13.  BINDING EFFECT; SEVERAL AGREEMENT; ASSIGNMENTS.  WHENEVER IN THIS
AGREEMENT ANY OF THE PARTIES HERETO IS REFERRED TO, SUCH REFERENCE SHALL BE
DEEMED TO INCLUDE THE SUCCESSORS AND ASSIGNS OF SUCH PARTY; AND ALL COVENANTS,
PROMISES AND AGREEMENTS BY OR ON BEHALF OF THE GUARANTOR THAT ARE CONTAINED IN
THIS AGREEMENT SHALL BIND AND INURE TO THE BENEFIT OF EACH PARTY HERETO AND
THEIR RESPECTIVE SUCCESSORS AND ASSIGNS.  THIS AGREEMENT SHALL BECOME EFFECTIVE
AS TO ANY GUARANTOR WHEN A COUNTERPART HEREOF EXECUTED ON BEHALF OF SUCH
GUARANTOR SHALL HAVE BEEN DELIVERED TO THE ADMINISTRATIVE AGENT, AND A
COUNTERPART HEREOF SHALL HAVE BEEN EXECUTED ON BEHALF OF THE ADMINISTRATIVE
AGENT, AND THEREAFTER SHALL BE BINDING UPON SUCH GUARANTOR AND THE
ADMINISTRATIVE AGENT AND THEIR RESPECTIVE SUCCESSORS AND ASSIGNS, AND SHALL
INURE TO THE BENEFIT OF SUCH GUARANTOR, THE ADMINISTRATIVE AGENT AND THE SECURED
PARTIES, AND THEIR RESPECTIVE SUCCESSORS AND ASSIGNS, EXCEPT THAT NO GUARANTOR
SHALL HAVE THE RIGHT TO ASSIGN ITS RIGHTS OR OBLIGATIONS HEREUNDER OR ANY
INTEREST HEREIN (AND ANY SUCH ATTEMPTED ASSIGNMENT SHALL BE VOID).  IF ALL OF
THE CAPITAL STOCK OF A GUARANTOR IS SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF
PURSUANT TO A TRANSACTION PERMITTED BY THE CREDIT AGREEMENT, SUCH GUARANTOR
SHALL BE RELEASED FROM ITS OBLIGATIONS UNDER THIS AGREEMENT WITHOUT FURTHER
ACTION.  THIS AGREEMENT SHALL BE CONSTRUED AS A SEPARATE AGREEMENT WITH RESPECT
TO THE GUARANTOR AND MAY BE AMENDED, MODIFIED, SUPPLEMENTED, WAIVED OR RELEASED
WITH RESPECT TO ANY GUARANTOR WITHOUT THE APPROVAL OF ANY OTHER GUARANTOR AND
WITHOUT AFFECTING THE OBLIGATIONS OF ANY OTHER GUARANTOR HEREUNDER.

 

SECTION 14.  WAIVERS; AMENDMENT.

 

(A)                                  NO FAILURE OR DELAY OF THE ADMINISTRATIVE
AGENT OF ANY KIND IN EXERCISING ANY POWER, RIGHT OR REMEDY HEREUNDER AND NO
COURSE OF DEALING BETWEEN ANY GUARANTOR ON THE ONE HAND THE AND ADMINISTRATIVE
AGENT OR ANY HOLDER OF ANY NOTE ON THE OTHER HAND SHALL OPERATE AS A WAIVER
THEREOF, NOR SHALL ANY SINGLE OR PARTIAL EXERCISE OF ANY SUCH POWER, RIGHT OR
REMEDY HEREUNDER, UNDER ANY OTHER LOAN DOCUMENT OR UNDER ANY HEDGING DOCUMENT,
OR ANY ABANDONMENT OR DISCONTINUANCE OF STEPS TO ENFORCE SUCH A POWER, RIGHT OR
REMEDY, PRECLUDE ANY OTHER OR FURTHER EXERCISE THEREOF OR THE EXERCISE OF ANY
OTHER POWER, RIGHT OR REMEDY.  THE RIGHTS OF THE ADMINISTRATIVE AGENT HEREUNDER
AND OF THE SECURED PARTIES UNDER THE OTHER LOAN DOCUMENTS AND THE HEDGING
DOCUMENTS, AS APPLICABLE, ARE CUMULATIVE AND ARE NOT EXCLUSIVE OF ANY RIGHTS OR
REMEDIES THAT THEY WOULD OTHERWISE HAVE.  NO WAIVER OF ANY PROVISION OF THIS
AGREEMENT OR CONSENT TO ANY DEPARTURE BY ANY GUARANTOR THEREFROM SHALL IN ANY
EVENT BE EFFECTIVE UNLESS THE SAME SHALL BE PERMITTED BY SUBSECTION (B) BELOW,
AND THEN SUCH WAIVER AND CONSENT SHALL BE EFFECTIVE ONLY IN THE SPECIFIC
INSTANCE AND FOR THE PURPOSE FOR WHICH GIVEN.  NO

 

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NOTICE OR DEMAND ON ANY GUARANTOR IN ANY CASE SHALL ENTITLE SUCH GUARANTOR TO
ANY OTHER OR FURTHER NOTICE IN SIMILAR OR OTHER CIRCUMSTANCES.

 

(B)                                 NEITHER THIS AGREEMENT NOR ANY PROVISION
HEREOF MAY BE WAIVED, AMENDED OR MODIFIED EXCEPT PURSUANT TO A WRITTEN AGREEMENT
ENTERED INTO BETWEEN THE GUARANTOR WITH RESPECT TO WHICH SUCH WAIVER, AMENDMENT
OR MODIFICATION RELATES AND THE ADMINISTRATIVE AGENT, WITH THE PRIOR WRITTEN
CONSENT OF THE REQUIRED LENDERS (EXCEPT AS OTHERWISE PROVIDED IN THE CREDIT
AGREEMENT).

 

SECTION 15.  NOTICES.  ALL COMMUNICATIONS AND NOTICES HEREUNDER SHALL BE IN
WRITING AND GIVEN AS PROVIDED IN SECTION 10.1 OF THE CREDIT AGREEMENT.  ALL
COMMUNICATIONS AND NOTICES HEREUNDER TO THE GUARANTOR SHALL BE GIVEN TO IT AT
ITS ADDRESS SET FORTH ON SCHEDULE I ATTACHED HERETO.

 

SECTION 16.  SEVERABILITY.  ANY PROVISION OF THIS AGREEMENT HELD TO BE ILLEGAL,
INVALID OR UNENFORCEABLE IN ANY JURISDICTION, SHALL, AS TO SUCH JURISDICTION, BE
INEFFECTIVE TO THE EXTENT OF SUCH ILLEGALITY, INVALIDITY OR UNENFORCEABILITY
WITHOUT AFFECTING THE LEGALITY, VALIDITY OR ENFORCEABILITY OF THE REMAINING
PROVISIONS HEREOF OR THEREOF; AND THE ILLEGALITY, INVALIDITY OR UNENFORCEABILITY
OF A PARTICULAR PROVISION IN A PARTICULAR JURISDICTION SHALL NOT INVALIDATE OR
RENDER UNENFORCEABLE SUCH PROVISION IN ANY OTHER JURISDICTION.

 

SECTION 17.  COUNTERPARTS; INTEGRATION.  THIS AGREEMENT MAY BE EXECUTED IN
COUNTERPARTS, EACH OF WHICH SHALL CONSTITUTE AN ORIGINAL, BUT ALL OF WHICH WHEN
TAKEN TOGETHER SHALL CONSTITUTE A SINGLE CONTRACT (SUBJECT TO SECTION 13), AND
SHALL BECOME EFFECTIVE AS PROVIDED IN SECTION 13.  DELIVERY OF AN EXECUTED
SIGNATURE PAGE TO THIS AGREEMENT BY FACSIMILE TRANSMISSION SHALL BE AS EFFECTIVE
AS DELIVERY OF A MANUALLY EXECUTED COUNTERPART OF THIS AGREEMENT.  THIS
AGREEMENT CONSTITUTES THE ENTIRE AGREEMENT AMONG THE PARTIES HERETO REGARDING
THE SUBJECT MATTERS HEREOF AND SUPERSEDES ALL PRIOR AGREEMENTS AND
UNDERSTANDINGS, ORAL OR WRITTEN, REGARDING SUCH SUBJECT MATTER.

 

SECTION 18.  RULES OF INTERPRETATION.  THE RULES OF INTERPRETATION SPECIFIED IN
SECTION 1.4 OF THE CREDIT AGREEMENT SHALL BE APPLICABLE TO THIS AGREEMENT.

 

SECTION 19.  GOVERNING LAW; JURISDICTION; CONSENT TO SERVICE OF PROCESS.

 

(A)                                  THIS AGREEMENT SHALL BE CONSTRUED IN
ACCORDANCE WITH AND BE GOVERNED BY THE LAW OF THE STATE OF NEW YORK.

 

(B)                                 EACH PARTY TO THIS AGREEMENT HEREBY
IRREVOCABLY AND UNCONDITIONALLY SUBMITS, FOR ITSELF AND ITS PROPERTY, TO THE
NON-EXCLUSIVE JURISDICTION OF THE UNITED STATES COURTS LOCATED WITHIN THE
SOUTHERN DISTRICT IN THE STATE OF NEW YORK, AND OF ANY STATE COURT OF THE STATE
OF NEW YORK LOCATED IN NEW YORK COUNTY AND ANY APPELLATE COURT FROM ANY THEREOF,
IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT, ANY
OTHER LOAN DOCUMENT OR ANY HEDGING DOCUMENT OR THE TRANSACTIONS CONTEMPLATED
HEREBY OR THEREBY, OR FOR RECOGNITION OR ENFORCEMENT OF ANY JUDGMENT, AND EACH
OF THE PARTIES HERETO HEREBY IRREVOCABLY AND UNCONDITIONALLY AGREES THAT ALL
CLAIMS IN RESPECT OF ANY SUCH ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED
IN SUCH NEW YORK STATE COURT OR, TO THE EXTENT PERMITTED BY APPLICABLE LAW, SUCH
FEDERAL COURT.  EACH OF THE PARTIES HERETO AGREES THAT A FINAL JUDGMENT IN ANY
SUCH ACTION OR

 

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PROCEEDING SHALL BE CONCLUSIVE AND MAY BE ENFORCED IN OTHER JURISDICTIONS BY
SUIT ON THE JUDGMENT OR IN ANY OTHER MANNER PROVIDED BY LAW.  NOTHING IN THIS
AGREEMENT SHALL AFFECT ANY RIGHT THAT THE ADMINISTRATIVE AGENT, THE ISSUING BANK
OR ANY SECURED PARTY MAY OTHERWISE HAVE TO BRING ANY ACTION OR PROCEEDING
RELATING TO THIS AGREEMENT AGAINST ANY GUARANTOR OR ITS PROPERTIES IN THE COURTS
OF ANY JURISDICTION.

 

(C)                                  EACH PARTY TO THIS AGREEMENT IRREVOCABLY
AND UNCONDITIONALLY WAIVES ANY OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO
THE LAYING OF VENUE OF ANY SUCH SUIT, ACTION OR PROCEEDING DESCRIBED IN
PARAGRAPH (B) OF THIS SECTION AND BROUGHT IN ANY COURT REFERRED TO IN
PARAGRAPH (B) OF THIS SECTION.  EACH PARTY HERETO IRREVOCABLY WAIVES, TO THE
FULLEST EXTENT PERMITTED BY APPLICABLE LAW, THE DEFENSE OF AN INCONVENIENT FORUM
TO THE MAINTENANCE OF SUCH ACTION OR PROCEEDING IN ANY SUCH COURT.

 

(D)                                 EACH PARTY TO THIS AGREEMENT IRREVOCABLY
CONSENTS TO THE SERVICE OF PROCESS IN THE MANNER PROVIDED FOR NOTICES IN
SECTION 10.1 OF THE CREDIT AGREEMENT.  NOTHING IN THIS AGREEMENT WILL AFFECT THE
RIGHT OF THE ADMINISTRATIVE AGENT OR ANY SECURED PARTY TO SERVE PROCESS IN ANY
OTHER MANNER PERMITTED BY LAW.

 

SECTION 20.  WAIVER OF JURY TRIAL.  EACH PARTY HERETO IRREVOCABLY WAIVES, TO THE
FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY
JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF THIS
AGREEMENT, ANY OTHER LOAN DOCUMENT OR ANY HEDGING DOCUMENT OR THE TRANSACTIONS
CONTEMPLATED HEREBY OR THEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER
THEORY).  EACH PARTY HERETO (I) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR
ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH
OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING
WAIVER, AND (II) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN
INDUCED TO ENTER INTO THIS AGREEMENT, THE OTHER LOAN DOCUMENTS AND THE HEDGING
DOCUMENTS BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS
SECTION.

 

SECTION 21.  RIGHT OF SETOFF.  IF AN EVENT OF DEFAULT SHALL HAVE OCCURRED AND BE
CONTINUING, EACH SECURED PARTY IS HEREBY AUTHORIZED AT ANY TIME AND FROM TIME TO
TIME, TO THE FULLEST EXTENT PERMITTED BY LAW, TO SET OFF AND APPLY ANY AND ALL
DEPOSITS (GENERAL OR SPECIAL, TIME OR DEMAND, PROVISIONAL OR FINAL) AT ANY TIME
HELD AND OTHER INDEBTEDNESS AT ANY TIME OWING BY SUCH SECURED PARTY TO OR FOR
THE CREDIT OR THE ACCOUNT OF ANY GUARANTOR AGAINST ANY OR ALL THE OBLIGATIONS OF
SUCH GUARANTOR NOW OR HEREAFTER EXISTING UNDER THIS AGREEMENT, THE OTHER LOAN
DOCUMENTS AND THE HEDGING DOCUMENTS HELD BY SUCH SECURED PARTY, IRRESPECTIVE OF
WHETHER OR NOT SUCH PERSON SHALL HAVE MADE ANY DEMAND UNDER THIS AGREEMENT, ANY
OTHER LOAN DOCUMENT OR ANY HEDGING DOCUMENT AND ALTHOUGH SUCH OBLIGATIONS MAY BE
UNMATURED.  THE RIGHTS OF EACH SECURED PARTY UNDER THIS SECTION 21 ARE IN
ADDITION TO OTHER RIGHTS AND REMEDIES (INCLUDING OTHER RIGHTS OF SETOFF) THAT
SUCH SECURED PARTY MAY HAVE.

 

[Signatures Follow]

 

7

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IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as of
the day and year first above written.

 

 

UNITED INDUSTRIAL CORPORATION

 

 

 

 

 

By:

/s/ James H. Perry

 

 

 

Name:

James H. Perry

 

 

Title:

Vice President and Chief
Financial Officer

 

[SIGNATURE PAGE TO PARENT GUARANTY AGREEMENT]

 

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SUNTRUST BANK, as

Administrative Agent

 

 

By:

/s/

 

 

Name:

 

Title:

 

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SCHEDULE I TO THE

PARENT GUARANTY AGREEMENT

 

 

United Industrial Corporation

124 Industry Lane

Hunt Valley, MD  21030

 

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